Lords Sitting of 21 December 1966

Preamble
The House met at eleven of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Truro.

USE OF IMPORTED HARDWOOD IN PUBLIC BUILDINGS
11.5 a.m.
LORD INGLEWOOD: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government why imported hardwood is being used in the extension and renovation work being carried out in the Old Bailey, the Royal Courts of Justice, the Imperial War Museum and other public buildings in preference to English oak which is more in keeping with tradition.]
LORD HILTON OF UPTON: My Lords, English oak is used a great deal. However, other hardwoods are sometimes chosen to meet special requirements or achieve variety and interest.
English oak was used throughout in the six new courts recently added to the Royal Courts of Justice, but in the new court block now being built Commonwealth hardwoods may also be used to give variety. At the Imperial War Museum where new fire-resisting doors, hand-rails and panelling were fitted, Commonwealth hardwoods were considered more suitable. Work at the Old Bailey is not the responsibility of Her Majesty's Government but of the City of London Corporation.
LORD INGLEWOOD: My Lords, I thank the noble Lord for that Answer. While I agree entirely that we want variety in this connection, may I ask whether he will at least see that architects in the public service do not follow the rather unfortunate fashion of the moment of prescribing imported hardwoods in
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place of British hardwoods which are traditional, because they are deemed to be on the safe side. Does the noble Lord realise that very large quantities of English oak of constructional and decorative quality for which there is little market are just sawn up in a wasteful way to provide fencing for the motorways?
LORD HILTON OF UPTON: My Lords, I am quite prepared to pass on what the noble Lord has said to my right honourable friend. If I may give one illustration which I think will prove that the Government are doing what the noble Lord would wish, I can take the Palace of Westminster. English oak has been used throughout both in the scheme to provide new accommodation in the roof space and in the new building in the Star Chamber Court for the other place. I am aware of the noble Lord's keen interest in this, and I hope that the example I have given will go some way to prove that my right honourable friend is also keen to use English oak wherever possible.
LORD INGLEWOOD: My Lords, may I ask a further question? I would say, incidentally, that I had these buildings in mind to use as an example should the discussion have gone that way. Will the noble Lord also look into the question of flooring? A vast amount of hardwood flooring is now used in hospitals, schools and other public buildings. Practically none of it is home-grown timber—and this at a time when we are thinking so seriously about the balance of payments. Will he please treat this as a serious question?
LORD HILTON OF UPTON: My Lords, I can assure the noble Lord that I will do that.
THE DUKE OF BUCCLEUCH AND QUEENSBERRY: My Lords, as President of the Commonwealth Forestry Association, I was glad to hear the emphasis given on the use of hardwoods from the countries in the Commonwealth; but, at the same time, I should like to know if there is any country in the Commonwealth which can compete with English oak. I do not think this is possible. May I ask whether the noble Lord will keep in mind the fact that the Forestry Commission now find it is very

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costly to grow oak in England and are rather tending to give this up and to say that Departments could find timber merchants on all occasions who would be able to secure really high-class English oak for use by Government Departments. In view of the difficulty and cost of growing it, will the noble Lord keep this in mind with a view to helping those who are trying to grow it.
LORD HILTON OF UPTON: My Lords, I cannot say from the information I have at the moment whether any other Commonwealth country can compete with this country, so far as oak is concerned; but I will certainly pass the point to my right honourable friend. So far as the second part of the question is concerned, I think the noble Duke can be assured that the Department concerned is as keen as any Member of your Lordships' House to ensure that we get the right type of timber at competitive prices. In any case I will pass his question to my right honourable friend.

GUMMED ECONOMY LABELS
LORD STRANGE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether it is true that owing to the rise in printing costs their gummed economy labels now cost more than envelopes.]
LORD SHEPHERD: My Lords, the Answer is that it is not true.
LORD STRANGE: My Lords, I thank the noble Lord for his reply. Would he not agree that this practice, expedient fifty years ago, makes our Civil Service look very down-at-heel and out-at-elbow? Would he not further agree that, when more mechanisation comes into the Post Office, these gummed labels stuck on by furious taxpayers will tend to gum up the machinery? Is it not time that it came to an end?
LORD SHEPHERD: My Lords, to the first question of the noble Lord, the answer is, No. The second question is, I think, rather hypothetical.

INDONESIA AND WEST IRIAN PLEBISCITE
LORD OGMORE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether their attention has been drawn to the formal renunciation by Indonesia of her pledge to the United Nations to hold a plebiscite with United Nations participation in West Irian not later than 1969; and whether Her Majesty's Government will, as a matter of urgency, bring this issue before the Security Council in order that a plebiscite be held, and the vital interests of the West Irian people be safeguarded.]
THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR COMMONWEALTH AFFAIRS (LORD BESWICK): My Lords, the Indonesian Government have assured Her Majesty's Government that it is their intention to hold the plebiscite to which the noble Lord refers. The second part of the Question does not, therefore, arise.
LORD OGMORE: My Lords, can the noble Lord inform the House why the Indonesian Government made a formal renunciation of their pledge, if they now intend to hold the plebiscite? Is it not a fact that if they do not hold the plebiscite they will be in flagrant defiance of the United Nations? Furthermore, is the noble Lord aware that when, on November 21, 1963, I asked the then Government in this House whether they would ensure that the rights of the West Irian people are being preserved, the Government spokesman assured me that United Nations experts would visit the territory from time to time and report to the United Nations?
LORD BESWICK: My Lords, I think that what the noble Lord is referring to is a Press report in this country, based on a foreign agency report, which was not accurate. As I have said, the Indonesian Government have since assured Her Majesty's Government that they propose to hold this plebiscite. There is therefore no question of any formal renunciation.
THEEARL OF DUNDEE: My Lords, may I ask the noble Lord whether he is aware that when this pledge was given to the United Nations at the end of 1962, a much better plan, which would have placed West Irian under the direct rule of the United Nations, obtained a clear majority in the General Assembly, but not a two-thirds majority? Next, is the noble Lord aware that in order to get agreement on this question, general agreement, the Dutch were prevailed on by very strong pressure from their friends and allies to acquiesce in this present arrangement, although they were very unhappy about it, on the strength of this pledge? Finally, does the noble Lord really confirm that reports that the pledge is not going to be observed are untrue, and, to the best of the Government's knowledge, is the plebiscite going to be held under the auspices of the United Nations and not under the auspices of the Indonesians?
LORD BESWICK: My Lords, the answer to the first two of the noble Earl's questions is that I was aware of the earlier history. So far as the later and more recent history is concerned, and that is what we are concerned with, the fact is that this pledge was given and the present Government intend to honour the pledge. I feel that it is possibly a little unreasonable to assume that the present Indonesian Government, which has done so much to establish her place in international affairs and which has already rejoined the United Nations, intends to dishonour that pledge.
LORD OGMORE: My Lords, may I ask the noble Lord whether he is aware that I am delighted with the news that he has given us this morning, and that it is most unfortunate that this statement about the renunciation was very widely publicised and in fact had the honour of a leader in The Times, so that it was not a mere rumour and must have been some very serious misapprehension? Furthermore, may I ask the noble Lord, as I asked his predecessor in 1963, whether the United Nations will send experts into Indonesia from time to time and whether these experts will report on what they have seen so that we, who are responsible as members of the Security Council, will know the extent to which the wishes and desires of the Security Council have been carried out?
LORD BESWICK: My Lords, I am afraid that I cannot, obviously, give any undertaking in answer to the second part of the noble Lord's question. I will make inquiries and let the noble Lord know the result of those inquiries.

ITALIAN FLOOD DISASTER: BRITISH AID
11.16 a.m.
LORD SNOW: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether, in view of the disappointing amounts so far contributed in the country to aid for Florence, they will consider organising or encouraging a united national appeal.]
LORD BESWICK: My Lords, I cannot agree with the noble Lord that the amounts so far contributed in this country to Italian flood relief have been disappointing. My right honourable friend the Foreign Secretary described in detail what was being done in his statement in another place on November 18. The latest figures suggest that the sums given or pledged to date by the voluntary societies, Her Majesty's Government, other bodies and private individuals, amount to some £200,000 for Italy as a whole. This is apart from the sums being collected by the Italian Art and Archives Rescue Fund, under the chairmanship of Sir Ashley Clarke, which has already sent to Florence nearly £50,000 in cash or materials.
In addition, I understand that a Trust Fund is to be set up, under the chairmanship of Lord Hastings, for the relief of human victims of the floods, both in Florence and in other parts of Italy. I am told the Fund will be opened officially in January, after the necessary preparations have been made. Her Majesty's Government welcome the intention to establish this Fund and wish it every success. I should like to take this opportunity of paying tribute to the efforts of the voluntary societies as well as to the public spirit of the private individuals who have contributed towards or are helping to organise relief.
LORD SNOW: My Lords, obviously there can be differences of opinion about the meaning of "disappointing", but I should have thought that £200,000from a country so interested in Italian art was (shall I say?) pitiable? On the other hand, I am delighted at the news that a Trust Fund, under the chairmanship of the noble Lord, Lord Hastings, is to be set up. I cannot imagine any person who would preside over it with more drive and love. May I therefore ask Her Majesty's Government whether this particular exercise will act as a guide to them in what must be a similar appeal for Venice on a much bigger scale in the near future?
LORD BESWICK: My Lords, so far as the noble Lord's expression of opinion about this being "pitiable" is concerned, I think he will probably agree that all those who share his view will have an opportunity to set the matter right when the Trust Fund is established in the New Year. I agree that if one compares it with the most remarkable sums collected for the national tragedies both at Aberfan and at Shepherd's Bush recently the amount is smaller. But, as the Italian Red Cross made clear, Italy is not herself a poor country, and I should have thought that in all the circumstances what has been done was not inconsiderable. As to the latter part of the noble Lord's question, again I will make inquiries and let him have the answer.
LORD SOMERS: My Lords, can the noble Lord, Lord Beswick, give any figures which show how our contribution compares with the contributions of other countries?
LORD BESWICK: My Lords, I understand that in some cases our contribution is smaller, for example, in relation to that of the United States. In relation to other countries it is, of course, larger.
LORD FARINGDON: My Lords, I wonder whether the noble Lord would not agree that perhaps the most useful help we could give to Italy at this time would be the help of our experts and skilled people who have rare knowledge of the repairs that are needed, rather than actual sums of money?
LORD BESWICK: My Lords, I am quite certain that what the noble Lord says is correct. A good deal has been done, and every encouragement is being given for further help of this kind to be given.

THE TIMES MERGER
LORD SHEPHERD: My Lords, immediately after the Royal Commission at 12 noon my noble friend Lord Rhodes will be making a statement on the Monopolies Commission Report on The Times merger.

GENERAL RATE BILL [H.L.]
11.21 a.m.
Order of the Day for the Second Reading read.
THE LORD CHANCELLOR (LORD GARDINER): My Lords, I beg to move that this Bill be now read a second time. This is a Consolidation Bill and therefore will go in the usual way to the Joint Committee on Consolidation Bills. It is a major piece of consolidation relating to our laws of rating and valuation and consolidates Acts going back 366 years. If it is possible for the Committee to deal with it so that it can become law by April 1, the beginning of the new rating year, that will, of course, be extremely convenient.
Moved, That the Bill be now read 2a.—(The Lord Chancellor.)
On Question, Bill read 2a, and referred to the Joint Committee on Consolidation Bills.

AIR CORPORATIONS BILL [H.L.]
Order of the Day for the Second Reading read.
THE LORD CHANCELLOR: My Lords, I beg to move that this Bill be now read a second time. This also is a Consolidation Bill, to consolidate four Acts dealing with Air Corporations.
Moved, That the Bill be now read 2a.—(The Lord Chancellor.)
On Question, Bill read 2a, and referred to the Joint Committee on Consolidation Bills.

REGIONAL RAILWAY BOARDS ORDER 1966
11.22 a.m.
LORD LINDGREN LORD LINDGREN: rose to move that an humble Address be presented to Her Majesty praying that the Regional Railway Boards Order 1966 (S.I. 1966, 1508), laid before this House on December 7, be annulled. The noble Lord said: My Lords, in moving this Prayer against Order No. 1508, I should perhaps declare an indirect interest. Many of the staff adversely affected by the Order are those among whom I worked before entering Parliament and in the brief period between my leaving another place and entering this House. Also, for many years I was a voluntary officer of the Transport Salaried Staffs Association, which is the trade union catering for the clerical, professional and technical staffs affected by this Order.
The Order facilitates the amalgamation of the Railways Board Eastern and North Eastern Regions and the establishment of a new regional headquarters at York. Some 5,500 staff are affected, almost equally divided between the two regions. To-day I am most concerned with the 2,800 Eastern Region headquarters staff at present located in London. Although for the North-Eastern Region headquarters staff it will mean some dislocation and uncertainty as to their future, for the Eastern Region headquarters staff it will mean a major upheaval, the movement of homes from London and the Home Counties, interruption of children's education, the loss of one social life and the making of another.
I ask the House to remember that this is a movement of a complete range of staff, from the youngster who has not been very long in the service to those with 30 to 45 years' service, many of whom are reaching retirement age. I ask the House to remember, too, that over the past ten years staff have suffered many organisational upheavals. They have been centralised, decentralised, reorganised, and, in fact, disorganised. The Prices and Incomes Board, in their recent Report on pay and conditions of British Railways staffs, referred to—and I quote:
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"reorganisations following in quick succession as policy changed, leaving the staff bewildered and dispirited."
And in paragraph 79 of the same Report, the Board said:
"Difficulties over past years and continued contraction of the industry have led to a lack of sense of direction in the minds of management and to insecurity in the minds of the staff."
In this proposed merger we have a further example of a change of policy and." lack of sense of direction" by management, and again "a bewildered and dispirited staff". Can one wonder that the staff are asking: "Just when and where is it all going to end?" They say, too, that if management would give their mind to running the railways and securing traffic, instead of to successive changes in structure, organisation and administration, we might get somewhere.
My Lords, there are compelling reasons why this merger should not go through. In July of this year, we had the White Paper on Transport Policy, outlining the Government's ideas, which showed that some major changes are likely in the organisation and administration of transport in this country. New concepts, such as the National Freight Organisation and the conurbation transport authorities, were put forward. If these changes come about—and discussions on them have already begun between the management, the staff and the Government—it will mean another upheaval in railway organisation and further movement of staff, many of whom are affected by this Order. I ask: Why not wait until the implementation of the White Paper proposals, until the implications are known, before deciding whether this merger is advisable?
The Minister herself must have some doubts, for she has set up a steering group, under the chairmanship of the Joint Parliamentary Secretary, Mr. John Morris, M.P., the terms of reference of which include
"…to consider the suitability of the Board's management, structure and procedures for the future operation of the system in the light of the context of the White Paper and of the changes which may stem therefrom.…
"To make consequential recommendations, including suggestions for possible legislative changes."
How daft can you get! Surely, having set up a steering committee to examine these matters, it is only right to await

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its report before embarking on a further reorganisation affecting many hundreds of staff.
The new region will cover a vast straggling area, from South end to Berwick-on-Tweed, an area with such different problems as the London conurbation, the rural areas of East Anglia and the heavily industrialised North and North-East. I ask—and I hope that my noble friend will be able to reply: is the Minister satisfied that it will be possible to administer such a vast region efficiently? I am delighted to see the noble Lord, Lord Hurcomb, here this morning, because in his days at the British Transport Commission the Eastern and North-Eastern Regions were kept separate, in view of the dissimilarity of the functions they have to perform.
The White Paper on Transport Policy, to which I previously referred, says:
"The Government is deeply conscious of the difficulties of the past which, in the atmosphere of an unstable and declining industry, have inhibited the fullest co-operation among all concerned."
British Rail staff are wondering when stability is going to come to them. Time and time again railway staff have been told, "This is the last reorganization".Is it any wonder that they are sceptical of the statement that this proposed merger will be the last reorganisation that will affect them, especially when they have no confidence that the Railways Board themselves are sure of the direction in which they are going?
Further, they have studied the White Paper, and know that radical changes are bound to come from it. They know of the John Morris Committee and its terms of reference. They feel that this is just another gimmick of accountants who know very little about transport in general, and perhaps even less about railways in particular. They know that, as with other schemes of centralisation, some other bright boy will come along a little later with a further scheme of decentralisation to fit in with the National Freight Organisation and the conurbation transport authorities. They feel that they will again have to pack up their bags and move.
I ask the House to remember that it is not only the employees themselves who are involved: their wives and families
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have to move with them. There are bound to be major housing and educational problems with thousands of people converging on York. I should like to ask what arrangements have been made in regard to housing. Is the Minister satisfied that adequate educational facilities exist in York to provide for this influx of a child population? Even at this late stage, I would ask the Minister to reconsider her decision, and to withdraw her consent to the proposed merger, so that we might await the result of our own investigations and the implementation of our own White Paper before there are further upheavals of staff. I beg to move.
Moved, That an humble Address be presented to Her Majesty praying that the Regional Railway Boards Order 1966 (S.I. 1966, 1508), laid before this House on 7th December, be annulled.—(Lord Lindgren.)
11.32 a.m.
LORD POPPLEWELL: My Lords, I congratulate my noble friend Lord Lindgren on bringing this very vexed question before the House. I am sorry that I cannot agree completely with his line of argument. Probably I ought to declare an interest inasmuch as for all my working life, before going into the House of Commons in 1945, I was a working railway man. The constant changes that have taken place in recent years, as referred to by my noble friend, are something that few people are aware of. I think it is right to say that during the last three or four years something like 150,000 railway men's jobs have been dispensed with. A gigantic reorganisation has taken place. We have often heard the railwaymen condemned for the particular line they have adopted in regard to branch lines, liner trains and such like, but little or nothing has been said with regard to the wonderful co-operation that has taken place (and here I want to choose my words carefully)
"particularly by the better trade unions in the railway world, and I specifically refer to the N.U.R."
My noble friend understands that I am quoting his own words used in a speech about the N.U.R. on May 27, 1965. In the speech that my noble friend then made he referred to this and made it clear
"that at no time has the Labour Party or his trade union"—

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referring to the speech of one of his friends—
"gone on record in support of a policy of petrifying the present railway structure".—[OFFICIAL REPORT, Vol. 266, col. 991; May 27, 1965.]
It is odd that, with all these 150,000 changes, when we get what is in my opinion a really common-sense change—that is, the amalgamation of the Eastern and North-Eastern Regions—which will mean a saving of £1,500,000 in administrative costs, criticism is made. In my view, this is a step in the right direction. I think that one of the weaknesses of the 1947 Act was that it established too many regions. It established six regions. 1 never thought, with all due deference to my noble friend, that there was any justification for this. The noble Lord, Lord Hurcomb, was in charge, and I can well understand his difficulty, because there was this nationalistic wave of feeling that Scotland must have a separate region. I think the structure of the old 1921 Act, with just the four big group companies—the L.N.E.R., Great Western, L.M.S. and the Southern—was the best administrative structure that has yet been established. To be quite frank, I should like to see a return to that situation because, as has been said, the railway unions, and particularly the better ones, among which is the N.U.R., are not against efficiency. They are seeking a greater degree of efficiency.
My noble friend refers to 5,500 staff being affected. Of course, there are not 5,500 staff affected in this merger. I am told that it is likely to affect rather less than 2,000, so far as the Eastern headquarters is concerned. But I also understand that out of these 2,000 there are some 400 who will remain in London in the departments that are to be there. My noble friend shakes his head, but if he checks I think he will find this is the correct position.
I think my noble friend was right to bring to the notice of the House the hardship and the human problems involved in all these changes. I, for my part, feel that I also am right in bringing to the notice of the House the wonderful co-operation that has constantly been given by the organisations concerned within this service. Just think, my Lords, 150,000 jobs have been dispensed with
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in the railway service in the last three or four years without a murmur, without any strike, and purely by wonderful co-operation!
In this particular merger, the redundancy and transfer arrangements include even the paying of legal charges for the cost of a house in the new area, and this has been undertaken by the Railways Board. I think that every man in the Eastern Region who is to be transferred up to York is being contacted to find out whether he is willing to go, and if not, so far as possible, arrangements are being made for employees to remain where they are. I think this is an indication of the good will existing between the Railways Board and the men concerned in the changed policy. I think it is as well that these thoughts should be expressed in this House, because it will give all of us a better appreciation of what is taking place. My noble friend will no doubt know that it is not possible to make any change at the moment, and I am sure that he will withdraw the Prayer.
11.39 a.m.
LORD HURCOMB: My Lords, I will not detain your Lordships for more than a few moments, but as my memory goes back to the original amalgamations under the Geddes régime in 1921, and as I was personally responsible for the reorganisation of the regions of British Railways upon nationalisation in 1947, I should like to make one or two observations on both of the speeches that have just been made. The Geddes reorganisation into the four amalgamated railways lasted, after all, from 1921 to 1947. As some of your Lordships who were in another place at that time may possibly remember, it was the Scots who forced upon Sir Eric Geddes what he did not want to do—namely, the amalgamation of the numerous Scottish railways of that day with what they thought were the wealthy North-Eastern and Great Northern Railways south of the Border who could carry their financial burdens. It was on that political ground that Sir Eric Geddes got rid of the railways in Scotland and some of them went into the North-Eastern group and some into the London, Midland and Scottish group.
When I became Chairman of the Transport Commission in 1947 almost the first problem I had to consider was what

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should be the regions in the new régime and what changes, if any, should be made. I thought then, and I still think, that on on any ground, not merely that of national feeling but that of efficiency, the formation of the Scottish railways into a single group instead of being split as they were then between the two sides of the country, was sound. It was really intolerable that every time the businessmen of Glasgow and other Scottish interests wanted a decision they should have had to come up to Euston or King's Cross.
On the other hand, the North-Easternarea presented a problem. York is one of the great cities of the world, and happens also to have a fine railway tradition. Names of great managers and engineers are attached to it, and there is there an admirable local museum, among other things. It is a very good centre. I thought then, in 1947, that the industrial interests of Tyneside and Teesside, and many of the great Yorkshire manufacturing cities, were entitled to have access to management rather closer to their own doors than London. It was an easy change to make, and it worked very smoothly.
So far as I can remember, in all my six years, if there was one region that caused the Transport Commission and the Railway Executive no trouble at all it was the North-Eastern Region. It was well staffed, both on the engineering and on the commercial and management side. Now, apparently, the emphasis has shifted even further. The business interests and the freight traffic element in what is at present two regions has shifted preponderantly to the North. The doubt I have—and I am sure the noble Lord, Lord Champion, when he replies will deal with it—is whether on this reamalgamation the passenger interests that centre on the Metropolis, and the important transport interests of East Anglia, will get sufficient attention. The argument which convinced me in favour of the division in 1947 might now be turned round. Instead of saying that we must give more weight to the freight interests in the North, shall we now have to say, "Will enough weight be given to the passenger interests in the southern part of the area if in future they are managed from York?".
I am sure that the answer to that problem can be found by internal reorganisation
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on the commercial and managerial side. On the engineering side, the civil engineering problems are dealt with in divisions in any case, and I should have thought presented no difficulty at all. But the passenger interests in the southern part of this combined area will remain very important.
Incidentally, may I say how glad I am that the present Minister killed the proposal to close the railway from Ipswich to Lowestoft? Though I am entirely in favour, and always have been, of getting rid of many small spur lines on which the traffic only goes by rail to suit individual convenience on odd occasions, and does not carry the regular traffic which goes by road, 1 think it is quite wrong to say that you cannot serve an area from Ipswich to Lowestoft with a railway.
On balance, I should have thought that the present proposal tore amalgamate the two regions was right. In saying that, I feel that in point of fact the shift of staff would not be so great as the noble Lord, Lord Lindgren, fears. One does not want to underestimate the inconvenience and even the hardship when people are required to move their homes, but, after all, transport, the railway transport largely, lives by shifting people about from one place to another, and occasionally those who serve in that industry must be asked to move. That does not seem to me to be unreasonable, because in spite of what the noble Lord, Lord Lindgren, said, in this matter there has been great stability over a very long period. As I say, the amalgamated railways in their original form lasted from 1921 to 1947, and the reorganisations of 1947 have again lasted nearly twenty years. Therefore, if the noble Lord who is to reply can give us some assurance that the passenger interests of East Anglia and London will not be handled from some remote centre in York, but will receive proper and adequate attention under this reorganisation, I feel that I am bound to support the change which is now proposed. As to the level of the economies, I have no knowledge. They will undoubtedly be substantial, and that again is another reason why the change should be accepted.
If I may conclude, I would say that my own experience in the past was that in these matters (though I cannot honestly say that either management or the trade

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unions were as enthusiastic about integration as they might have been) I had nothing but co-operation from the leaders of the great railway unions, and in the "great unions" I am bound to say that I include all three of them, not merely the N.U.R.
11.47 a.m.
LORD INGLEWOOD: My Lords, may I, as one who has always lived in the North of England, add one word to this debate? Half my life I have lived in the North-East, and half in the North-West. Though I appreciate all that the noble Lord, Lord Lindgren, has said about the interests of the staff, with which we all sympathise, there are other interests involved, and the noble Lord, Lord Hurcomb, has touched upon them. Latterly, railway organisation, as seen from the north of England, has of course included one great difference: the North-East had its area headquarters in its own area; the North-West was dependent upon Euston.
I should like to ask the noble Lord who is to reply one question: whether he can assure us that that feeling of remoteness which we have in the North-West of England—it is no good gainsaying it—will not be repeated under this new organisation, because I think there is an advantage, as the noble Lord, Lord Hurcomb, has said, in having the centre of railway management at least not too far distant. This looks a little as if the disadvantage which we have in the North-West may be repeated in the North-East. I am sure that that is not in the interests of passengers or of local people.
11.49 a.m.
THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION): My Lords, my noble friend Lord Lindgren and I share a common trade union experience, although in different trade unions, and with a very short break have spent some 21 years of Parliamentary life together. I think I can say that this is the first occasion upon which I have been at variance with him in any matter. In the case of the Order against which he has tabled a Prayer, he feels that the Minister has acted with undue haste in respect of the reorganisation mentioned in the Order while I, speaking for the Government, have to justify the Minister's decision. I hasten to add that, having studied all
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the papers available to me on the matter, I am bound to say that not only am I about to justify a decision taken by someone else but I would have taken the same decision as the Minister has taken, had the task of deciding fallen upon me personally; and this, despite the fact that, as a railway trade unionst, I would be well aware of the consequences of my decision on many of the staff who will have to uproot themselves and their families, and the upheaval in their lives that the decision would involve.
It seems to me that the Minister had to consider and answer three main questions. First, was the Board's proposal one that would fit into the transport policy outlined in the White Paper of July last, and also into any developments of that policy which it is expected to flow from the studies now going on? Second, will the change in the managerial and administrative proposal, and the siting of the headquarters away from London, affect beneficially or otherwise the running of the two merged Railway Regions; and is the change likely to bring about any really worthwhile economy? Third, are the advantages and savings projected of the order that would justify the staffing upheavals involved?
My Lords, the Minister has answered the first of those questions by saying that on a careful study of the problem, together with the closest consultation with the Railways Board, who are well aware of the implications upon their administrative machine of the possible setting up of a national freight organisation, that she is satisfied that the proposed amalgamation will not conflict with the scheme she has in mind. She is satisfied that, whatever changes result from the policy review, there will be a continuing need for an administrative centre at York of the kind mentioned in this Order. Such a centre would always be required for the efficient operation of an East Coast railway network.
On the second question, there are good geographical and business reasons for merging the Eastern and North-Eastern Regions and siting their headquarters at York. I believe the very fact that they will be sited at York should remove any feeling of remoteness to which the noble Lord, Lord Inglewood, referred. This would be very much nearer to them,

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covering the whole region. There is, I am sure, no need for me to stress the importance of the railway system to the developing North-East of the country. The increasingly large-scale movement of coal to the new power stations, and the development of the Humberside area in relation to our traffic into Europe are factors known to us all. This last factor is perhaps an addition to the factors which caused the noble Lord, Lord Hurcomb, to feel that York was a useful centre for the Eastern Region, as it then was. On this aspect of the merger and the placing of the administrative centre, the Minister has been advised by the Board, who are, after all, the experts in this matter and would not lightly advise the Minister to agree to the change unless they were absolutely convinced of its desirability. All this, is in addition to annual savings which are estimated at a figure of the order of £1½ million a year by 1969.
This close look at the headquarters staffing of our railways certainly appeals to me, for in so many of the talks I have had with my old railway colleagues in the uniform and comparable grades about the reduction of railway manpower that has been going on over the past few years—resulting, as my noble friend Lord Popplewell said in a reduction of some 150,000 staff in that short period alone—I have always been faced with the bitter comment: "We are being cut to the bone, but what about those 'so-and-so's' at headquarters; they seem to be dodging all this and we are having to carry the swollen administrative weight at the top." I have always felt that there was just a little something to be said in justification of that feeling which did, and does, undoubtedly exist in the uniformed and comparable grades. Added to all this, there is the fact of the release of valuable office accommodation in London, and the movement outwards is very much in line with the Government's policy of moving as much as possible of offices and office staff out of this overcrowded South-East Region.
In answer to my noble friend Lord Hurcomb, who asked about the administration of the area around London, especially the commuter services and the passenger services, I would say that there will, of course, be strong divisional
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management retained in London to ensure that this part of it is not neglected.
My Lords, I have just had a note passed to me to the effect that I must be down by 11.55 a.m.; it is now 11.56 a.m., so, with your Lordships' permission, I will postpone the remainder of my remarks, which will not take long, until after the Royal Commission.

HOUSING (SCOTLAND) BILL [H.L.]
Returned from the Commons, agreed to.

INDUSTRIAL REORGANISATION CORPORATION BILL LOCAL GOVERNMENT (SCOTLAND) BILL POLICE (SCOTLAND) BILL LEE VALLEY REGIONAL PARK BILL
Returned from the Commons, with the Amendments agreed to.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION
12 noon.
The following Bills received the Royal Assent:

Armed Forces,

Bus Fuel Grants,

National Coal Board (Additional Powers),

Films,

Housing (Scotland),

Industrial Reorganisation Corporation,

Local Government (Scotland),

Police (Scotland),

Ross and Cromarty (Strathcarron—South Strome Road) Order Confirmation,

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Liverpool Corporation (General Powers),

Lee Valley Regional Park.

House adjourned during pleasure.
House resumed.

REGIONAL RAILWAY BOARDS ORDER 1966
12.15 p.m.
Debate resumed.
LORD CHAMPION: My Lords, when my great oration was torn in twain by the Royal Commission I could not help feeling that this was the first time I have ever seen it happen in this House; but I have seen it happen so often in the other place, and I can well understand how Members feel when this does happen there, and why the whole matter of the Royal Commission is now being looked at.
I return to what I was saying. On the third question that I posed at the outset about upheaval in the life of the staff, I know that this is an aspect of the problem that has greatly exercised the mind of the Minister, for she, too, realises the difficulties which staffing removals and possible redundancies cause to the men and their families, the people who will be involved. This is a point which the noble Lord, Lord Lindgren, stressed, and rightly so in this connection. As I understand it, it is likely that between 1,100 and 1,800 employees will be required to move to York, and while the Board have a system of allowances incorporating payment of disturbance allowance, additional allowance for redundant staff, the reimbursement of legal charges in connection with the sale and purchase of houses and loans to redundant staff to assist in house purchase, I am, as is the Minister, well aware that these allowances cannot compensate for the family upheavals involved.
In addition to the figures I have just given, of between 1,100 and 1,800 required to move, there will be in addition some staff savings, expected to be of the order of some 1,500 posts. But this number of people will not be put out of jobs, for about half of the posts represent unfilled vacancies at present and the
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Board will be able to absorb some of the remainder in other places.
There has been a fear that because of changes of structure within the railway industry some of the men involved will perhaps be concerned in a double move, first to York and then subsequently to somewhere else. I am assured by the Railways Board that no more than a score are likely to be affected in this way, and any staff whose place in the York headquarters is not immediately clear will be kept in London. Perhaps I ought to add that, before taking her decision, my right honourable friend the Minister met representatives of the T.S.S.A. and the N.U.R. to hear their views—this, of course, in addition to the normal joint consultation which would take place about this sort of proposal.
My noble friend Lord Lindgren asked me about housing at York. Pending the Minister's decision to make the Order, the Railways Board have felt constrained not to enter into official discussions with the York Corporation on possible housing problems. They intend, however, to get into touch with the Corporation formally quite soon, and they intend to maintain close liaison with York City housing authority, other adjacent local authorities and the private building industry. The Board's impression is that there is no chronic housing shortage in the York area, and they do not expect any serious problems to arise. An approach has already been made by the local building firms to the General Manager, Eastern Region, offering their services. I hope that these moves, which are projected and are taking place, will help with the difficulties of housing, which of course are always a problem to a shifting family.
Viewed in the light of the railway finances and the necessity for relieving the taxpayer of the burden of subsidising the railways to the greatest possible extent, consistent with providing uneconomic services where the national and local situation demands it, and of bringing about, what I have always felt should be aimed at (though this has at times brought me into conflict with some of my own trade union colleagues)—that is, a streamlined railway system employing more and more highly skilled, and much more highly paid, workpeople—it seems to me that we ought to allow the Order to pass this House and that we I should reject the Prayer.

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I can well understand my noble friend's motives in bringing forward this matter to the House and putting his point of view so forcefully. I felt that the House agreed with him that these moves should be kept to the absolute limit, consistent with producing the sort of railway system about which I have been talking. I appeal to my noble friend to withdraw his Prayer, although I understand completely, as I am sure do most Members of this House, his motives in tabling the Motion.
LORD LINDGREN: My Lords, first I would thank my noble friend for his reply. One point I should like to make is that I am not against the dispersal of staff. In fact, I spent a lifetime in the New Towns movement, and in any movement of staff surely the first thing that is necessary is to move with the staff the housing, the schools, the church and social facilities. My noble friend has had to admit that, in regard to this move of 1,500 staff—which was the figure he mentioned, though my information is that the number who will be moved is 2,800—negotiations have not yet started, although the Order comes into effect on January 1.
LORD CHAMPION: The move will not take place straight away.
LORD LINDGREN: My noble friend says that the move will not take place straight away, but in fact the moves have already started. Some of the staff have undertaken preliminary arrangements to move very early in the New Year.
Then not one word was said about educational facilities for the children. The upheaval of a child's education is perhaps not so vital a matter as the loss of the breadwinner's earnings, because he has to maintain the home, but for parents who care about their children's future the educational opportunities available are very important, and any interruption of them is a vital matter. I should like to thank the noble Lord, Lord Hurcomb, for his contribution, with his extensive knowledge of the railway world. So far as my noble friend Lord Popple well is concerned, I do not propose to enter into an inter-union dispute. I would, however, tell him that, in spite of what he said, not a single member of the N.U.R. is affected by this.
LORD POPPLEWELL: My noble friend is wrong. There are quite a number of N.U.R. members involved.
LORD LINDGREN: There is not a single N.U.R. member affected. The N.U.R. caters for porters, platelayers, signalmen; and so far as clerical, professional and technical staff are concerned, the N.U.R. membership is nil. Equally, I would say to my noble friend Lord Popple well that, while I appreciate all that has been done, perhaps we could have had a little more co-operation on liner trains. But, this being the last day before the Christmas Recess, and finding myself in a Christmas mood, I will, in order to facilitate the business of the House, beg leave to withdraw the Prayer.
Motion, by leave, withdrawn.

THE TIMES TRANSFER TO THOMSON ORGANISATION
12.25 p.m.
TIIE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES): My Lords, I should like to repeat a Statement which is being made in another place by my right honourable friend the President of the Board of Trade on the proposed transfer of The Times and The Sunday Times to a newspaper proprietor. The Statement is as follows:—
"I have received the Report of the Monopolies Commission, which is being published to-day. The Commission concluded that the proposed transfer may be expected not to operate against the public interest. I accept their conclusion and have accordingly given my consent to the proposed transfer.
The Thomson Organisation have formally confirmed to me the personal assurances given by Lord Thomson to the Monopolies Commission about the preservation of the separate identities of The Times and The Sunday Times, and about the maintenance of the independence of their editors."
LORD ERROLL OF HALE: My Lords, I should like to thank the noble Lord, Lord Rhodes, for repeating the Statement which has just been made in another place. On behalf of noble Lords on this side of the House I would say that we are glad that the Commission

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have found that the proposed merger will not operate against the public interest. We are glad to learn of the formal assurances given by the Thomson Organisation. May I ask one question? Will there be any surveillance over the keeping of those assurances in the years to come?
LORD WADE: My Lords, may I, too, thank the noble Lord for repeating the Statement? I am afraid I listened to it with no great enthusiasm. It seems sad that a paper with such a long tradition as The Times should be taken over by a large combine. May I press the noble Lord a little further as to the assurances given by Lord Thomson of Fleet, particularly with reference to the separate identity of The Times and the independence of editors? What will be the long-term position? Will there be any particular safeguards? Would it not have been better if a trust had been set up? I wonder if the noble Lord could say whether Lord Thomson of Fleet was asked about the possibility of creating a trust, or whether this was considered by the Monopolies Commission.
LORD RHODES: My Lords, the question of alternatives was considerd by the Monopolies Commission. They concluded, however, that there was no alternative at present in sight which could give any more grounds for confidence than the proposals under investigation. They also recognised the need to bring to an end the uncertainty about the future of The Times. They believe the conclusion they have reached to be the right one. With regard to the continuance of surveillance, all I can say is that the assurances have been given by Lord Thomson, and, so far as I know, they will be carried on in the future. I cannot say more than that.
LORD MERRIVALE: My Lords, a very important recommendation was made on page 44 of the Report by Mr. Davidson. I was wondering whether the noble Lord could say if this was one of the
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assurances which was given by Lord Thomson of Fleet. The recommendation was that Times Newspapers Ltd., when incorporated, should give and honour a similar formal undertaking.
LORD RHODES: My Lords, the assurances given by Lord Thomson of Fleet were that in regard to the office of the editor-in-chief of Times Newspapers Ltd. it was not the intention that that office should infringe in any way on the independent responsibility of the two editors in matters of editorial opinion. I may say that this assurance has been formally confirmed to the President of the Board of Trade.
LORD MERRIVALE: That relates to the first recommendation made by Mr. Davidson on page 44. I am seeking assurance on the second recommendation.
LORD RHODES: My Lords, I cannot reassure the noble Lord any further than I have done at the moment.
BARONESS STOCKS: My Lords, did the noble Lord, Lord Thomson of Fleet, in his evidence express any intentions with regard to those papers which now compete with The Times? One has especially in mind the Observer and the Guardian and the Observer is surely at risk since it prints with The Times.
LORD RHODES: My Lords, with regard to The Observer and The Guardian, the Commission noted the dependence of both these papers on the new company for their printing. But they concluded that this should not be made the subject of conditions to a consent for the transfer, expressing the view that it was a matter which must be left for commercial negotiation between the parties. I would say at this juncture that the Observer has, in any event, secured revised arrangements to come into effect if the transfer is effective, and the Guardian is negotiating for such arrangements.

COMPANIES BILL [H.L.]
12.31 p.m.
Order of the Day for the House to be again in Committee read.
Moved, That the House do now resolve itself into Committee.—(Lord Champion.)
On Question, Motion agreed to.
House in Committee accordingly.
[The BARONESS WOOTTON OF ABINGER in the Chair.]
Clause 43 agreed to.
Clause 44 [Resriction of carrying on insurance business.]
Restriction of carrying on insurance business
44.—(1) No person shall carry on in Great Britain insurance business of a class specified in section 1(1) of the principal Act except—
(a) a company incorporated, whether under the Companies Act 1948 or otherwise, which is authorised by or under the following provisions of this Part of this Act to carry on business of that class;
(d) a member of Lloyd's, or of any other association of underwriters approved by the Board of Trade, who carries on insurance business of any class and complies with the requirements set out in Schedule 1 to the principal Act and applicable to business of that class.
THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR THE ROYAL NAVY (LORD WINTERBOTTOM)THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR THE ROYAL NAVY (LORD WINTERBOTTOM) moved in subsection (1), after "Act" where that word occurs a first time, to insert "(other than industrial assurance business)". The noble Lord said: Before we launch ourselves into the discussion of the various clauses in Part II of this Bill, may I say that I know there is a conflict between the wish of my noble friend the Chief Whip that progress should be made and the need to consider many of these Amendments carefully. The point is that there has been a whole series of Government Amendments since the Bill was first tabled, and I feel that, for the guidance of this Committee, and in view of the work which will have to be done on the Bill in another place, I should explain in some detail the reasons for these Amendments. So I hope that noble Lords will forgive me if I spend some time on explaining the reasons for certain Government measures.
The first Amendment to Clause 44 is No. 43A on Marshalled List No. 5, and it relates to a whole series of Amendments covering life assurance business which apparently was insufficiently considered in the Bill as it was first drafted. I wonder whether it would be convenient to the House if I enumerated them and if we then agreed to take them together. The Amendments are Nos. 43A, 44C, 44D, 44F, 44G, 44J, 44K, 63B, 91 and 94. These Amendments are designed to clarify the law as to the persons who may carry on industrial assurance business and to co-ordinate that law with the provisions of Clause 44 of the Bill defining the persons who may carry on insurance business of any class. "Industrial assurance business" means life assurance business on which the premiums are payable at intervals of less than two months and are collected by collectors making house-to-house visits. The business is subject to special controls imposed by the Industrial Assurance Acts for the protection of this class of policyholder. Section 1 of the Industrial Assurance Act 1923 provides that industrial assurance business shall not be carried on except by, one, insurance companies under the Act of 1958 which are registered in this country; and, two, registered friendly societies (called "collecting societies" if they do such business).
Clause 44(1) of the Bill restricts the persons who may carry on insurance business of any of the supervised classes, and it is therefore appropriate that the further restrictions on the persons who may carry on industrial assurance business should be embodied in this clause rather than in the Industrial Assurance Act. Amendments 43A and 44C achieve this by exempting industrial assurance business from the restriction imposed by subsection (1) of the Bill, and then by enacting in the new subsections (1A) and (1B) a narrower restriction on the persons who may carry on industrial assurance business. The result is to preserve the present law as to the class of persons who may carry on this business, except that the opportunity has been taken to widen that class so as to include any incorporated company authorised by the Board of Trade to do industrial assurance business, and therefore an overseas company which has been so authorised. At present, Section 1(1) of the Industrial Assurance Act 1923, restricts the business

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to companies registered in this country, and it is the only instance in which British insurance law discriminates against overseas companies. It is thought expedient to remove this ban, though overseas companies are unlikely to want to embark on industrial assurance business having regard to the specialised domestic nature of that business.
Going on to another group of Amendments, Nos. 44F, 44G, 44J, and 44K, they relate to the authorisation of companies within the permitted class; that is, within paragraph (a) of the new subsection (1A) of Clause 44. The effect of the Amendments is that companies which are already lawfully doing such business will automatically have authority, under subsection (1) of Clause 45, to continue to do it. New companies or companies not now doing the business will need the Board of Trade's authorisation under subsection (2) before they can do it. Because of the wording of paragraph (b) of the new subsection (1B) of Clause 44, a registered friendly society will not need Board of Trade authorisation to do industrial assurance business; nor, because of Clause 44(1C), will it need such authorisation for its other insurance business. This, in effect, preserves the present position under which these societies are exempted from all the controls imposed on insurance business by the Insurance Companies Act 1958. This is thought to be right in view of the supervision of these societies by the Registrar of Friendly Societies, who is of course also the Industrial Assurance Commissioner under the powers given him by the Friendly Societies Acts and the Industrial Assurance Acts.
Then, going further to Amendment 63B, which is on Clause 87, and Amendment 91, which is an Amendment to Schedule 6, these provide for two consequential repeals to the Industrial Assurance Act 1923. They are to repeal Section 1 of that Act, which imposes the present restriction on the persons who may carry on industrial insurance business, and Section 39, subsection (4), which is a provision penalising the unauthorized carrying on of industrial insurance business. This provision will be superseded by the final subsection of Clause 44 of this Bill, under which any unauthorized person who carries on such
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business will be liable to the penalties there provided.
Amendment No. 94 is consequential on the repeal by Amendment No. 91 of certain words in Section 1, subsection (1), of the 1923 Act. In Amendment No. 44D, the changing of "subsection" to "subsections" is consequential on the addition of the two new subsections proposed in Amendment No. 44C. The addition of the words "guilty of an offence and" result from the necessity of the clause to stipulate, before specifying the appropriate penalty, that the contravention of any of the subsections of Clause 44 constitutes an offence. It has been found necessary, in Amendments Nos. 44C, 44G and 44K, to make reference to "society" as well as to "company" in consequence of the 38 Government Amendments put down in place of Amendment No. 44, which is in the name of the noble Lord, Lord Peddie, and which we are about to come to. I hope that is a fairly clear explanation of the reasons for these many changes. I beg to move.
Amendment moved—
Page 42, line 21, after ("Act") insert ("(other than industrial assurance business)").—(Lord Winterbottom.)
LORD DRUMALBYN: I think I can only express my thanks to the noble Lord, Lord Winterbottom, for having made clear what all these Amendments are about. I must say it is very surprising to find such a welter of Amendments coming on the Order Paper at such a late stage. It now transpires that this is due to the vigilance of the noble Lord behind him, the noble Lord, Lord Peddle, who was able to draw attention to this particular omission. I am quite certain that what is being done here is the right course; I do not think there can be any doubt of that. Again, I would merely express our gratitude to the noble Lord.
VISCOUNT ECCLES: I should very much like to congratulate the noble Lord, Lord Winterbottom, on these Amendments—and, indeed, on all the other Amendments on the Paper. We were told by the Lord Chancellor that this was a Bill we could not lengthen. We were told, "Oh! it must stay in its present proportions because there is such a lot of work in another place." My noble friend Lady Elliot of Harwood and the

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noble Lord, Lord Peddie, received this message the other night about their Amendments; I received this message on the Amendments about no par value shares. I hope that, after dealing with the Order Paper before us to-day, we shall never again hear from the Government Bench that moving large new clauses or Amendments to the Bill or to the Schedules, and all the rest, is in bad form—because, after all, we must follow what the Government do.
LORD WINTERBOTTOM: The noble Viscount, Lord Eccles, has, I think, misunderstood what my noble and learned friend the Lord Chancellor said. What the Lord Chancellor said was that we could not extend this Part II of the Bill to other fields. But may I say that I rather share the view of the noble Lord, Lord Drumalbyn, that this rash of Amendments at a late stage does rather confuse our proceedings.
On Question, Amendment agreed to.
12.45 p.m.
LORD PEDDIE LORD PEDDIE moved, in subsection 1(a), after "otherwise" to insert:
"or a society registered under the Industrial and Provident Societies Act 1965".
The noble Lord said: This Amendment is quite a simple and apparently innocuous one, but it does draw attention to a serious omission in the Bill as it now stands. Since the Amendment was put down, as we have just heard, there has been a long series of consequential Amendments which I think will remedy the situation, but I think it is right and proper on my part to endeavour to explain the situation which called for the Amendment being put down in my name.
As the Bill now stands, Part II relates to insurance companies, and it would indeed leave the Co-operative Insurance Society completely outside the range and scope of the Bill. Indeed, if the Bill as it now stands became an Act, that considerable insurance organisation would be in a legal limbo. The Co-operative Insurance Society is not registered under the Companies Act; it is registered under the Industrial and Provident Societies Act; but I would point out to your Lordships that it is the second largest industrial organisation in this country, with a premium income of £75 million a year
2098
and with 15 million policyholders. It seems strange indeed that the Bill as it originally stood completely left that organisation out of account.
I think your Lordships are entitled to know how the omission occurs. Clause 43 of the Bill defines the principal Act for the purpose of Part II as being the Insurance Companies Act, 1958, and Section 1 of the 1958 Act indicates the companies to which the Act applies. Section 1, subsection (1), provides that the Act applies to all insurance companies which undertake insurance within Great Britain and within the classes mentioned in the Act.
Section 33 of that same Act indicates that
"'insurance company' means a person or body of persons (whether incorporated or not) carrying on insurance business",
but Section 2(1) of the 1958 Act provides—and I now quote:
"Subject to the provisions of subsections (5) and (6) of section one of this Act and of the Second Schedule thereto, no person shall carry on in Great Britain insurance business of a class specified in subsection (1) of the said section one …except a company incorporated, whether under the Companies Act, 1948, or otherwise, and having a paid up share capital of not less than £50,000:
"Provided"—
and this is the point—
"that this subsection shall not apply to any insurance company which, immediately before the 29th day of October, 1945, was carrying on in Great Britain insurance business of a class specified in section one of this Act in compliance with such of the provisions of the Assurance Companies Act, 1909, as then applied to the company and to that class of business".
It will therefore be seen that from Section 1 of the 1958 Act the Co-operative Insurance Society was an insurance company, but that Section 2(1) of that Act would have barred the C.I.S. from business had it not been for the proviso to that subsection, which related to the fact that the C.I.S. was operating before October 29, 1945. Thus, the legal mandate upon which the Co-operative Insurance Society operated rested on that.
Now, the combined effect of Clause 44(1) and Clause 46(1) of the Bill will be to repeal the whole of Section 2 of the 1958 Act. Therefore, the proviso to Section 2 will disappear, and so will the right of the Co-operative Insurance Society to function. Thus, the restriction on insurance business will be contained

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in Clause 44(1) which I need not bother to quote in full. Clause 44(1) says:
"No person shall carry on in Great Britain insurance business of a class specified in section 1(1) of the principal Act except—
"(a) a company incorporated, whether under the Companies Act 1948 or otherwise, which is authorised by or under the following provisions of this Part of this Act to carry on business of that class …".
It is that clause I wish to amend. Thus it will be seen that with no clause in the Bill equivalent to the one that is eliminated in the 1958 Act the Cooperative Insurance Society would have no right to function. I would emphasise that the C.I.S. is not a company: it is registered under the Industrial and Provident Societies Act. I am pleased that the Amendments which stand in the name of my noble friend Lord Winterbottom have been put down and I should be glad to have an assurance—which I am sure will be forthcoming—that the combined effect of these Amendments will be to remedy the situation to which I have drawn the attention of the Committee. I beg to move.
Amendment moved—
Page 42, line 23, after ("otherwise") insert ("or a society registered under the Industrial and Provident Societies Act 1965").—(Lord Peddie.)
LORD WINTERBOTTOM: I hope it will be for the convenience of the Committee if I list the 38 Amendments which have been designed to meet the important point raised by my noble friend Lord Peddie. In Clause 44, we have Amendment No. 44A; in Clause 45, Amendments 44E and 44H; in Clause 46, Amendments 44L, 44M, 44N, 440, 44P, 440, 44R, 44S, 44T, 44U;in Clause 47, Amendments 44V, 44W, 44X; in Clause 48, Amendments 44Y and 44Z; in Clause 49, Amendments 46A, 46B, 46C, 46D, 46E and also Amendments 47A, 47B and 47C. In Clause 51 we have Amendments 48A and 49A; in Clause 73, Amendments 60C, 60D, 60E, 60F, 60G, 60H, 60J, 60K and 60L; and in Clause 78, Amendment 60P. That is the group relating to my noble friend Lord Peddie's Amendment.
May I say that the Government are grateful to the noble Lord for having brought to their attention an omission from the Bill? It has caused us a sub-
2100
stantial amount of work, but surely this is the function of the Committee stage of the Bill where the combined knowledge of the House can be brought to bear on Government measures. Before moving the various Amendments standing in my name, I would ask the noble Lord, Lord Peddie, if he is willing to withdraw his Amendment.
LORD PEDDIE: In view of the gracious manner in which my comments have been received by my noble friend, and of the explanation he has offered, I am certain that the Amendments indicated will cover the position. I therefore beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
LORD WINTERBOTTOM: I beg to move Amendment No. 44A.
Amendment moved—
Page 42, line 25, at end insert ("or a registered society which is so authorised to carry on business of that class").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: This Amendment by the Government is designed to make it clear that the approval by the Board of Trade of associations of underwriters comparable with Lloyd's is, in fact, approval for the purpose of Clause 44 of the Bill rather than approval for the purpose of non-compliance with Section 1(6) of the Insurance Companies Act 1958. This Amendment is linked with Amendment No. 86 to Schedule 4, for of course the Schedule must tie up with changes in the structure of the Bill as we go along. This later approval is now given automatically following the approval for the purpose of carrying on an insurance business by the Amendment to Schedule 4. This is a measure of foresight, since no association comparable with Lloyd's is in existence to-day; although a similar association existed in the past and may exist in the future. I beg to move.
Amendment moved—
Page 42, line 36, leave out from (" approved") to end of line 39 and insert ("for the purposes of this Part of this Act by the Board of Trade").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move Amendment No. 44C.
Amendment moved—
Page 42, line 39, at end insert—
("(1A) No person shall carry on in Great Britain industrial assurance business except—

(a) a company incorporated, whether under the Companies Act 1948 or otherwise which is authorised by or under the following provisions of this Part of this Act to carry on such business or a registered society which is so authorised to carry on such business;

(b) a society registered under the Friendly Societies Act 1896, being a friendly society within the meaning of that Act.

(1B) No person shall carry on in the Isle of Man or any of the Channel Islands industrial assurance business except—

(a) a company incorporated, whether under the Companies Act 1948 or otherwise or a registered society;

(b) such a society as falls within paragraph (b) of the last foregoing subsection.").—(Lord Winterbottom.)

On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move Amendment No. 44D.
Amendment moved—
Page 43, line 2, leave out ("the foregoing subsecton shall be") and insert ("any of the foregoing subsections shall be guilty of an offence and").—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 44, as amended, agreed to.
Clause 45 [Authorisations for purposes of Section 44]:
LORD WINTERBOTTOM: I beg to move Amendment No. 44E.
Amendment moved—
Page 43, line 9, after ("company") insert ("or society").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move Amendment 44F.
Amendment moved—
Page 43, line 14, after ("Act") insert ("(other than industrial assurance business)").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move No. 44G.
Amendment moved—
Page 43, line 15, at end insert ("and any company or society such as is mentioned in the said paragraph (a) which, immediately before the said day, was lawfully carrying on in Great Britain industrial assurance business shall, by virtue of this subsection, be authorised to carry on in Great Britain such business").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move Amendment 44H.
Amendment moved—
Page 43, line 17, after ("company") insert ("society").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 43, line 19, at end insert ("(other than industrial assurance business)").—(Lord Witnerbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move Amendment 44K.
Amendment moved—
Page 43 line 20 at end insert ("and may authorise any such company or society as aforesaid to carry on in Great Britain industrial assurance business").—(Lord Winterbottom.)
On Question, Amendment agreed to.
On Question, Whether Clause 45, as amended, shall stand part of the Bill?
1.0 p.m.
LORD DRUMALBYN: I should like to raise a rather difficult matter of drafting. Subsection (1) of Clause 45, as I understand it, automatically authorises companies at present carrying on business to carry on the type of business that they are at present carrying on; whereas subsection (2) gives the Board of Trade power to authorise companies to carry on business. It seems to me that a certain confusion arises because authorisation is a positive act in the normal way, and if you have some companies authorised by the Board of Trade and some which are deemed to be authorised and there is no positive act of authorisation involved at all, it may in future give rise to misconceptions, confusion and possibly oven difficulty.
One sees the effect of this in Clauses 47, 48 and 49. The Board of Trade is told what it may not authorise in Clauses 47 and 48, and Clause 49 gives it power to impose conditions for the proper conduct of business. Reading this it would appear that the Board of Trade could impose the conditions on any company, whereas of course it can impose only on companies which the Board of Trade itself is to authorise. I am not sure that this is a very desirable form of drafting.

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I think it could be done more clearly. I wonder whether the noble Lord will look again at the drafting of subsection (1). All that is meant is the usual enabling provision that any Act of Parliament gives in the form of "may", and all that you have to do is to say is:
"may…carry on in Great Britain insurance business …"
This would draw the distinction between authority given by the Board of Trade and deemed authority under the Act.
LORD WINTERBOTTOM: I think there is some point in the criticism of the drafting by the noble Lord, Lord Drumalbyn. I will see whether we can improve it at Report stage, or I will explain to the noble Lord why we think that would be undesirable.
Clause 45, as amended, agreed to.
Clause 46 [Provisions for securing initial sufficiency of assets and capital of insurance companies]:
THE DEPUTY CHAIRMAN OF COMMITTEES: I understand that Amendments Nos. 44L to 44U are consequential Amendments. Does the noble Lord, Lord Winterbottom, wish to move them en bloc or separately?
LORD WINTERBOTTOM: With the permission of the Committee I should like to move the Amendments en bloc.
Amendments moved—
Page 43, line 22, at end insert ("society")
Page 43, line 24, after ("company") insert ("society")
Page 43, line 39, after ("company") insert ("society")
Page 44, line 4, after ("company") insert ("society")
Page 44, line 14, after ("company") insert ("society")
Page 44, line 25, after ("company's") insert ("society's or body's")
Page 44, line 32, after ("company") insert ("society")
Page 44, line 34, after ("company") insert ("society")
Page 44, line 38, after ("company") insert ("society")
Page 44, line 40 after ("company") insert ("society")
—(Lord Winterbottom.)
On Question, Amendments agreed to.
On Question, Whether Clause 46, as amended, shall stand part of the Bill?
LORD HAWKE: There are some people who think that the provisions in this Bill are not sufficiently stringent, in view of the conditions which now appertain in the insurance world. For insurance purposes you need three things: the cash to start a company, and it is a very small amount in the Bill; the permission of the Board of Trade, and the Board of Trade finds it difficult to deny permission if you have cash and are a respectable person with a decent manager or underwriter; and, thirdly, you have to get the business. In the past business was always rather difficult to get because to get it you had to undercut existing companies and it was a very cut business anyway, and anyone who undercut existing companies must be suspected of underwriting irresponsibly.
To-day there is an enormous class of business for which it is almost impossible to quote an actuarial premium. I am referring to the motor business. There are so many people to-day whose risks vary from above the normal to risks that really ought to be completely uninsurable, young men in sports cars and the like. The established companies will quote the most tremendous premiums for some of these risks because they just do not want to insure them. On the other hand, everybody who owns a motor car feels that he is entitled to find someone to insure him. He goes to a broker and it is the business of the broker to hunt round until he finds someone who will insure the motorist; hence the mushroom companies.
Anybody can set up to-day and get a large book of motor insurance business at rates which are completely unacceptable to the normal market: but the Almighty alone knows whether the rates are profitable or not, so that it has never been so easy to set up an insurance business and collect premiums. There is a provision that a person has to have assets of £50,000 surplus over the liabilities. I am not quite sure whether those assets need all to be in this country. There are various provisions regulating that. Just consider if a person has taken on a portfolio of young men in sports cars and everyone is involved in an accident in which he has killed a pasenger or somebody else, and is subject to the adjudication of the courts, which may take

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almost years to arrive at and the ultimate damages are completely unknown. They may vary from a few thousand pounds to £30,000 or so. Where are his surplus assets going?
I know that there is a clause requiring the Board of Trade to be satisfied that the reinsurance provisions are right, but even then the person may probably be reinsuring with a similar type of company. I do not think that this is very good and I do not honestly know what the Board of Trade ought to do about it. It would be very difficult to alter the Bill at any rate at this stage and in this Committee, but I beg the Government to think most carefully about this, having regard to what I say about the new class of business which it is only too easy to pick up.
LORD DRUMALBYN: May I, before the Minister replies, add a word to what my noble friend Lord Hawke has said? We all realise the essential difficulties which exist in this matter. I do not think that any of us desires to create a completely closed shop in insurance. It must be possible for new entrants to be admitted subject to proper supervision, and new entrants have to start in a comparatively small way. As this seems almost to be a Second Reading debate on principles, could I say in a couple of sentences what I think about it? The Government have got this just about right. They have increased the amount of share capital that is required, and related the amount by which the assets must exceed liabilities to the permanent income; and they are taking powers to supervise an insurance company authorised under Clause 45(2) in the early stages of its existence. It is difficult to see how much further they could go without making it far from easy for a company to come into insurance at all. I know that this is a difficult choice and we all share the anxieties of my noble friend Lord Hawke on this. I would like to have a word when we come to the question of a fit and proper person, because probably this is the key to the whole policy and a very important one. This is a great step forward and I hope that with the supervision that the Board of Trade will now be empowered to exercise, this will work, otherwise further measures will have to be taken.
LORD WINTERBOTTOM: I am grateful to both noble Lords for welcoming the general context of this clause. The noble Lord, Lord Hawke, expressed exactly the problems that the Board of Trade were facing when they started to draft the clause and we have done our best to strike a balance between so tightly restricting entrance into insurance business that a company with limited resources but sound ideas might be kept out and the risk that a company might try to break into the insurance business by taking a whole number of foolish risks just to get a start. As the noble Lord, Lord Drumalbyn, knows this is not the last Companies Bill. There is another that, for better or for worse, will appear in due course and if, in the course of our experience during the next year or two, the provisions of Clause 46 seem obviously inadequate and out of balance, there will be a fairly early opportunity to correct any misjudgments made.
Clause 46, as amended, agreed to.
Clause 47 [Provisions for securing that risks insured are capable of being borne]:
LORD WINTERBOTTOM: I beg to move this Amendment.
Amendment moved—
Page 44, line 43, after ("company") insert ("society").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move this Amendment.
Amendment moved—
Page 45, line 1, after ("company") insert ("society").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move this Amendment.
Amendment moved—
Page 45, line 4, at end insert ("society").—(Lord Winterhottom.)
On Question, Amendment agreed to.
On Question, Whether Clause 47, as amended, shall stand part of the Bill?
LORD DRUMALBYN: Arising out of what my noble friend Lord Hawke said on the last clause, may I ask whether the words"adequate arrangements "will be interpreted to enable the Board of Trade to black-list any companies from having reinsurance arrangements made with

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them? Plainly, arrangements would not be adequate if they were with companies that were themselves in difficulties or with companies which, as my noble friend said, were new, inexperienced or about which there might be some dubiety.
LORD WINTERBOTTOM: The noble Lord's point is extremely interesting. A company could be entirely sound but might be reinsuring with a company that was not sound. I am certain that the Board of Trade will note this point and watch it.
LORD MITCHISON: If my noble friend is considering this matter, I would ask him to remember that an insured person has a claim against the insurance company whatever that company may have done to protect itself by way of reinsurance. Therefore, this is a point that arises more between an insurance company and the re-insurer and not as regards the original insured. May I take the opportunity of throwing a pebble into the water? I listened to the noble Lord, Lord Hawke, with great attention and respect, as I always do, and I have the feeling that this business of motor insurance is gradually becoming beyond the capacity of the insurance market. I have long wondered, since the time when motor insurance was made compulsory and the insurance companies were charged with responsibility of a semi-public character, whether the consequence of that was not going to be, sooner or later, that the ultimate insurer would have to be the State.
Clause 47, as amended, agreed to.
Clause 48 [Provisions for preventing unfit persons from being associated with insurance companies]:
LORD WINTER BOTTOM: I beg to move the next Amendment, No. 44Y.
Amendment moved—
Page 45, line 20, after ("to") insert ("registered society or").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move this Amendment.
Amendment moved—
Page 45, line 21, at end insert ("society or").—(Lord Winterbottom.)
On Question, Amendment agreed to.
1.19 p.m.
LORD ERROLL OF HALE LORD ERROLL OF HALE moved to add to the clause:
"Any person dissatisfied with the decision of the Board of Trade under this section may appeal to the High Court."
The noble Lord said: I beg to move Amendment No. 45 standing in the name of my noble friend Lord Drumalbyn and myself. This is a difficult field of activity for the Board of Trade, because under the clause they have the right to decide whether a person is or is not a fit and proper person to be associated with a company. This gives the Board of Trade, or the Executive, a very powerful say over what an individual may or may not do. It must depend entirely on the "say-so" of officials and of the Minister who carries the ultimate responsibility.
I fully recognise that in this matter, which has to be conducted informally, there may come to the notice of the Board of Trade certain facts about a person which obviously render him unsuitable for work in this field, and it is probably right to allow the Executive this sanction. On the other hand, what troubles my noble friends on this side of the House is the fact that there is no right of appeal; that the Board of Trade may simply say that a man cannot do this, and that is the end of the matter. We have tabled this Amendment to make it possible for anybody dissatisfied with the decision of the Board of Trade to appeal to the High Court. Our wording may not be the best or most suitable solution, but it is the best we could think of. If the noble Lord in charge of this section of the Bill can put forward a better proposal, naturally we shall be glad to consider it.
The practical difficulty, whatever course is pursued, is that the Board of Trade's sources of information in this delicate field must be kept confidential. It might be difficult for them to go into open court and reveal what they know, since not only might it be highly embarrassing in itself, but it might mean that a source of information of particular reliability would dry up in future. It would be equally hazardous for the individual to appeal to the High Court, because the Board of Trade would intimate that certain features of his past life would come out into the open, and that might well not be desirable from his point of view. So

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I should think that the difficulties are about equal as between the possible difficulties of the appellant and the possible difficulties of the respondent.
I have taken the opportunity to discuss this point with my noble friend Lord Eccles, who was President of the Board of Trade when I was Parliamentary Secretary. He had one or two particularly difficult experiences in this field, where the decision fell to him to decide in the case of other legislation where similar provisions apply; and I myself, when President of the Board of Trade, also had a particularly difficult one. In both cases, we simply had to "stonewall", and say: "No. You shall not do this or do that"(naturally I do not want to give away precise details), and when the individual asked what was the matter with him, there was nothing we could say. It is a harsh responsibility for the Minister to have to carry. The matters can be raised in Parliament; but he still has to "stonewall". The individual never knows the nature of the case laid against him, and under present procedures there is no possible opportunity of clearing it up. We have tabled this Amendment because we feel that, while the appeal procedure will be used only rarely, the individual ought to have the right to appeal to an individual body, such as the High Court, if he so wishes, and, of course, taking a chance on what the consequences may be. I beg to move.
Amendment moved—
Page 45, line 22, at end insert the said words.—(Lord Erroll of Hale.)
LORD ROYLE: I should like in a few wards to support this Amendment. Noble Lords may be good enough to remember that I referred to this question on Second Reading, and I said at that time that it caused me a great deal of concern. All my sympathies here are with the Board of Trade. We need to have all the safeguards that we can, but it may well be that, in the end, this may appear to be, if nothing higher, a contradiction of our ideas of British justice. It seems to me that to leave the matter entirely in the hands of officials of the Board of Trade (subject ultimately, I know, to the Minister) to decide whether people are suitable to take their place on the boards of insurance companies or to act as
2110
officials, may be a dangerous procedure.
If your Lordships will bear with me for a moment, I should like to quote two small passages from the Second Reading debate. I had support on this matter from my noble friend Lord Stow Hill, and as your Lordships will appreciate, he has tremendous knowledge of these matters. This is what he said:
"But for somebody in the Board of Trade to say, 'I hear that X is to be a director of such-and-such an insurance company. He has not been to prison; he is not in prison at the moment, and he is not bankrupt, but we do not like it. We think he is a person of potential bad character', there being no appeal against that decision, and no recourse to any other authority against it, is a very stringent measure, and your Lordships may wish to examine that in Committee."—[OFFICIAL REPORT, Vol. 278 (No. 72), col. 191: 22/11/66.]
I am sure those are better words than I was able to use. When my noble friend Lord Brown came to reply on this particular issue he said—and I think this indicates a feeling of doubt in the mind of the Board of Trade on this very issue:
"It is a very far-reaching measure to put the Board of Trade into a position where, on the basis of their assesment for their suspicions, they can exercise a veto of this sort. But in the light of the events which have taken place over the last three or four years, it would appear to be necessary." (col. 227.)
I think this shows great doubt, certainly in the mind of my noble friend Lord Brown, and, I would suggest, a doubt in the mind of the Board of Trade generally. If that is so, I am supporting the noble Lord, Lord Erroll of Hale (at this stage there is no question of pushing or anything like that) in asking my noble friend to have another look at this point, so that before it gets to another place this matter can be put right.
There is just one thing on which I am not in agreement with the noble Lord, Lord Erroll of Hale, and that is as to where the appeal shall be. In the Amendment the Court of Appeal is suggested. I feel that there is possibly a better tribunal. Under the Fraud Acts there exist tribunals of an independent character to consider matters of this kind, and it seems that this would be a much more suitable way to deal with appeals, rather than to give them the full publicity of the High Court. I think that, on consideration, noble Lords opposite might

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well feel that this is a better way to do it. This, I think, indicates that it is not something to take a decision on to-day, but something about which a decision might be taken by the Board of Trade before the Bill reaches another place. I would entreat my noble friend to give an assurance that this Bill will be looked at again, and I give all the support I can to the principle of the Amendment.
THE EARL OF SELKIRK: I am grateful to the noble Lord, Lord Erroll of Hale, for raising this matter. I can only regard this as a most peculiar clause. While I appreciate the difficulty the Board of Trade are clearly in, I am concerned at the absolutely unfettered discretion which they have to exercise in this matter. I would not cast any reflection on the manner in which it has been done, but this discretion could be misused grossly and extravagantly. I do not think we should accept a clause of this character. If we look at the subsection above, we see the words, "are accustomed to act". That is purely an arbitrary decision. Someone has to form a judgment on it, and it is an open question as to how that judgment should be formed.
The noble Lord who has just sat down raised the point as to whether the appeal proposed is the best form of appeal. I agree that it is difficult to see exactly what the form of appeal should be, particularly when, as the noble Lord, Lord Erroll of Hale said, there are many matters of a highly discreet character which have to be dealt with. But if there is an appeal—and I am not really concerned to what body the appeal should lie—I think it will act as a sort of moderating influence on the Board of Trade, and will probably discourage a man who has a really bad record from ever using the appeal. Though I agree that this is perhaps not the ideal form of appeal, I should be satisfied with the Amendment as it stands.
LORD AUCKLAND: This Amendment is an important one. I speak as one who until the end of last year, had been seventeen years in Lloyd's, during which time I handled a number of difficult claims and saw some of the problems which the bona fide insurance companies
2112
face. As my noble friend Lord Erroll of Hale said, the wording of the Amendment is flexible. I am rather inclined to the view of the noble Lord, Lord Royle, that a tribunal might be the best answer to this problem of where the appeal should lie, because if it goes direct to the Board of Trade, there will presumably be no representative from the British Insurance Association or from Lloyd's, as the case may be, to assist the person who is in difficulties.
I know that we are all out to catch the unscrupulous insurance broker or underwriter, or the one who fails to comply with the requirements of the Table in Clause 46. But I think we must be careful not to penalise the person who may have to pay out an abnormally large claim while waiting for his premium income to come in. Therefore, if the Amendment moved by my noble friend Lord Erroll of Hale cannot be accepted in entirety, I hope the Government will consult with the British Insurance Association and, if necessary, with Lloyd's, and put down a suitable Amendment on the Report stage.
1.31 p.m.
LORD MITCHISON: I, too, have had some experience of insurance from a different angle, and I hope the Government will be rather careful about this Amendment. It seems to me, with great respect to those who moved it, and for the reasons which they largely gave themselves, that this Amendment is quite useless, and for this reason. It does not make at all clear what question is to be put to the High Court Judge, and on what evidence he is to come to his conclusion. Either the whole of the information in the hands of the Board of Trade has to be published after being given in court—for I do not imagine that anyone is suggesting that this is really a case for in camera proceedings—or he has to proceed on an incomplete knowledge of the facts and circumstances of the case.
The reason why one has to make special provision for insurance business is that it involves the public in a different way from any other kind of business. It is said always to be founded on the maximum of confidence—I forbear using the Latin phrase—and there are provisions as to dishonesty and matters of that kind which are special to insurance business because of its rather remarkable

2113
character. I say quite frankly that we should be rather proud of ourselves in this country about our insurance business. It started under a terrible cloud. It was first of all regarded as gambling, and gambling with the lives of men, whether in the form of life policies or of marine policies, and it emerged from that cloud with considerable difficulty at only about the beginning of the nineteenth century. Latterly it has had some unfortunate experiences, as has banking, which is another business upon which we pride ourselves in this country. Therefore, I think one can feel that the great majority of insurance business in this country is a matter of pride and confidence, and that there may be something in the slightly irreverent point I made when I last rose in this connection.
At any rate, we are not dealing with the great majority of insurance business. Lloyd's have had some rather bad cases—the Harrison frauds are so long ago that I suppose I can safely mention them now. They have been far from free from trouble, and they had to tighten up considerably their own arrangements about security. They are a remarkable body.
I once had to contend before a court that a Lloyd's underwriter's income was earned, and I was laughed out of court, or my learned leader was. They are an odd arrangement. Leaving that aside for the moment, I do not think it is there that one has to look for trouble. I think they have met it. I think the trouble lies in these mushroom cases we have had recently, which have amounted to a serious volume of insurance in a field that particularly affects the public. We have yet to reach the semi-fraudulent marine underwriter. I do not know whether he will turn up—perhaps he is there, and I have not seen him.
In these circumstances I find it difficult to see what we are to do by way of an appeal. The reason why the Board of Trade come in in matters of this kind seems to me to be the public interest. I should have thought that if you sought to appeal from the Board of Trade, or rather the President of the Board of Trade as the responsible judge of the public interest in this matter, to some judicial body, whatever the judicial body was you would always get into insuperable difficulties about the kind of question they
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had to consider, and the kind of information on which they were to act. I quite see that this is an arguable case, and that it can be put the other way. I do not see that even if the ingenious suggestion, if I may say so, of my noble friend Lord Royle about the prevention of fraud and other tribunals would quite work here. It would take a long time to go into that, and I do not want to take up the time of the Committee.
But I feel some difficulty about it. After all, if one wanted to be thoroughly irreverent one might say that what the President of the Board of Trade might do would be to consult the other members of the Board of Trade. That could be raking back into the past. A number of people would be really astonished to find that they were members of the Board of Trade. I do not put that forward seriously. But on the absolutely laytribunal—for that is what it would be, if you did it—I feel doubtful. I find it so difficult to envisage the right tribunal that I feel doubtful about the suggestion.
May I say one other word very shortly? This does not provide for the right of being heard at all by the man who is going to be judged an unfit and improper person. In some cases he would be heard if he asked to be. I am not so certain about others. There are obviously cases in which he would not want to be heard. But I think it might be considered whether some right of hearing of this sort might be given. It is very common in other connections. In planning decisions there are rights of hearing. I may have missed it in the clause, but I did not notice it there.
LORD DRUMALBYN: Before the noble Lord replies, I wonder whether I might ask him whether he would clear up certain points, about which I personally am not sure. First of all, what exactly is meant by "fit and proper person"?—because this may be a matter of honesty, or a matter of experience. I imagine that some insurance companies go wrong because people who start them have not had the necessary background and experience to start with. I hope the noble Lord will give us guidance in exactly what is meant by this.
As to both questions, I imagine that the noble Lord will have sources of information, and among those sources will

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obviously be the insurance industry itself. One way of tackling this whole problem would be to bring it to the insurance industry in the first place, as it is left, for example, to doctors and certain of the professions to consider whether someone is a fit and proper person. I do not know whether that would be practicable. If it were, I do not know whether it would be easy for the appeal to lie to the Board of Trade. In considering this, we have always to recognise that this must be a most invidious and unwelcome task to perform anyway, and it is certainly not one the Board of Trade would seek.
Both my noble friend and I have had experience of these problems in the Board of Trade, and I do not know that there is a less pleasant job than we had to do there. However, one did it, certainly in the maximum good faith, and I think one would not object to this. But as my noble friend, Lord Auckland, said there are the marginal cases. There are cases which are plumb unlucky, and in such cases a person should be entitled to come along and say, "Something went wrong, but it was not my fault", and this is where the remark made by the noble Lord, Lord. Mitchison, comes in. Clearly there ought to be a right to be heard. Whether that ought also to be in the Bill I am not sure, but we should like to hear an expression of opinion from the noble Lord on this.
Nor does it follow that we have necessarily chosen the right appeal. We were uncertain where the appeal should lie. It might lie to the Privy Council, as it does in the professions, for example, or it might start with the profession itself and then go to the Board of Trade; but I think enough has been said in the debate to make clear to the noble Lord that there is a certain sense of unease about this, and at the same time an uncertainty whether anything can be done about it. I think one wants to summarise it as fairly as possible and we should like to hear why the Board of Trade made the provision in this way, because it must obviously have considered whether an appeal was possible and, if so, to whom it should be.
LORD WINTERBOTTOM: This House is always rightly concerned to protect
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the individual against the State, and of course I share this concern. But this Committee must also concern itself with the hazards of many individuals who may suffer from dishonest insurance companies and people running a wrongly conceived insurance business. The recent failure of one company, as we know, affected 280,000 policyholders who had a statutory duty to insure themselves against motoring risks and who, as a result, were at risk because of the failure of one company which was, at best, incompetently conducted.
I find myself at some disadvantage to noble Lords opposite, all of whom have had personal experience at the Board of Trade and personal experience of these particular problems, and of course their disquiet has been reinforced by that expressed by the noble Lord, Lord Stow Hill, who was himself a Home Secretary. They are all men with experience of reaching unpopular decisions on evidence which they cannot make public. I think the hard fact of the situation is that the Board of Trade has its sources of information, and the first and most important of these sources must be, as the noble Lord, Lord Drumalbyn, has said, the insurance industry. The noble Lord asked me how this question of unfitness can be defined. Of course, "unfitness" is not only dishonesty. It may be inexperience, as the noble Lord has said; it may be a record of a known reputation for recklessness and incompetence.
A man may have got away with reckless conduct in the past and been lucky at the end of the day, but nevertheless in a business which has a statutory requirement placed upon it he is not, in the opinion of the Board of Trade, a suitable person to take the money of the public, which they are forced to give to an insurance company as a prepayment for services that may have to be rendered in the future. If the sources of information open to the Board of Trade on the characters and record of individuals were made public many of these sources of information would immediately dry up and the Board of Trade would not be able to protect individuals who might suffer from the failure of insurance companies.
My noble friend Lord Royle mentioned the tribunal procedure under Section 6 of the Prevention of Fraud (Investments)

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Act 1958. However, Section 6 does not cover all aspects of that Act. That same Act, in Section 17, has complete discretion to authorise a unit trust scheme, and there is no appeal from their decision. Nor is there any appeal under that Act from a decision of the Board to refuse to exempt a dealer. So although the tribunal is permitted to operate under Section 6 of the Act, under Section 17, so far as unit trusts are concerned (which, in a sense, involve a similar sort of prepayment for services) they are excluded and there is no appeal to a tribunal. In this case, if the Board of Trade feels that a person or company proposing to start a unit trust scheme is unsuitable to do so it refuses permission and that is the end of the matter. Of course, it is not only individuals who are going to manage the company but also a person controlling one-third or more of the votes; a controlling shareholder must also be considered a suitable person before authorisation is given.
However, I have one suggestion to put to the Committee which may help us. I do not say it will help us completely but to a certain extent, in overcoming our doubts about the wisdom of the course proposed. The Parliamentary Commissioner will be functioning in the not too distant future, and he will have a limited power to investigate decisions made under this clause. Of course, he could only adjudicate on maladministration or malice, but I think that what we are really fearing at the moment is that malice will in fact be the factor which prevents an honest and prudent man entering this field of business. We fear that somewhere or other his face may not fit or he may have "got across" some official and he will be blocked from entering the business of his choice.
LORD DRUMALBYN: Or the information given by the Board of Trade may not be correct.
LORD WINTERBOTTOM: That is an important additional point. I should have thought that at least some safeguards would exist if, through his Member of Parliament, the individual who felt himself ill-treated could at least put his preliminary case to the Parliamentary Commissioner. This would be done in private, sources of information would not be damaged, and the individual would at least have some safeguard.
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I am afraid we cannot free Ministers completely from the burden of making unpopular and difficult decisions, but I agree completely with the noble Lord that in the process of knocking this Bill into shape we should at least try to make the work as sane and easy as possible. I think the point made by the noble Lord about the starting point for judging the fitness of the individual being the industry itself is an important one. I do not think this needs legislation but simply machinery for consultation. I will discuss this point with my noble friends in the Board of Trade to find out whether we can give some sort of answer at Report stage. I think it is entirely possible and, indeed, desirable. The world of insurance and finance is a small one; most individuals are known to each other, and character judgments, I am certain, should be made much more easy to the Board of Trade if the industry itself advises it before any decisions are made.
1.50 p.m.
LORD MITCHISON: Since the noble Lord was good enough to answer every suggestion which was made to him except the one I made, may I repeat it? I have looked again at this clause and it contains no provision for the person in question to be heard. There are persons who will not want to be heard; there are persons for whom a hearing would serve no conceivable purpose. But there is an intermediate class of people who certainly ought to be heard, and I feel quite definitely there ought to be some provision for hearing in a case of this sort. It is all very well to say the Ombudsman will meet it. We can deal with the Ombudsman when he comes, but my impression about his functions is that they are rather too limited to serve this particular point and, in particular, that this is not really the constituency kind of case that the Ombudsman is intended to meet. I hope, therefore, that my noble friend will consider the possibility in these circumstances of giving the person, whether it is an individual or a company, the right to be heard if he chooses to exercise it.
LORD WINTERBOTTOM: May I ask my noble friend, heard by whom? The Board of Trade?
LORD MITCHISON: Yes, certainly. That was the intention, and if this seems

2119
strange to my noble friend would he consider that there is a similar right, as I told him before, in planning legislation. It takes various forms; it is usually an alternative to the more elaborate procedure of having an inspector and a public inquiry. He will find clauses, which I am sure will be useful to him and his advisers, specifically providing for a right to be heard. It is not always as good as you think it is, because it does not say by whom you are going to be heard and you may have a rather junior official. But it is worth having, none the less, and in a doubtful case it might be very well worth having.
LORD ROYLE: On the point with regard to the Ombudsman, supposing I was under suspicion in a matter of this kind, since I have not got a Parliamentary vote have I Member of Parliament to appeal to?
LORD ERROLL OF HALE: We have all been most interested in the suggestion put forward by the noble Lord who replied for the Government. I think we have had a useful debate on the subject, including contributions by the noble Lord, Lord Mitchison, and others from both sides. I must say I am rather attracted by this idea of using the Parliamentary Commissioner, because it looks as if he is not going to have a great deal of work to do, and this may be a useful outlet for his energy. It has the advantage that it enables the proceedings to take place in private. I disagree with the noble Lord, Lord Mitchison, that it is not a proper use of the Parliamentary Commissioner; it is not a constituency matter; it is a matter of relations between the central Government and individuals.
LORD MITCHISON: I did not want to go as far as that. We do not know what he is going to do yet.
LORD ERROLL OF HALE: That is a slight private quarrel emerging on the other side of the House. It means that a man must be prepared to go to his M.P. and reveal enough information to make the M.P. go to the Parliamentary Commissioner. That is a useful safeguard. I have two questions on that. First, will an Amendment be necessary on Report stage if the Parliamentary Commissioner idea is to run, and, if so, can we rely on the Government to table
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an Amendment? Secondly, although I do not know yet all the Parliamentary Commissioner is going to do and his functions, I think there was some talk that he would have to produce a report of all his activities. Would that mean that if somebody had his case investigated, albeit in private, there would none the less have to be some reference in the Parliamentary Commissioner's Report that this person's application had been investigated and accepted or rejected? It may make a rather inhibiting bar to the applicant, knowing that it would appear after the event that he had applied under this section of the Act and everybody would know there had been doubt cast upon his fitness to be in the insurance world. The Bill ought to contain an Amendment excluding from the Parliamentary Commissioner the duty to report on cases referred to him under this section of the Bill.
LORD BROWN: My noble friend Lord Winterbottom has asked me to make a comment. There really is no difference in principle between any of us as to intention; it is a matter of mechanics really. I cannot give chapter and verse to support the contention that the Ombudsman is a reasonably sound mechanism to give people who felt they had been the victim of administrative incompetence, et cetera, the right to be heard; nor can I give chapter and verse for the fact that the Ombudsman would not have to make a report on these proceedings. But this matter has been explored. I have discussed it with my right honourable friend the President of the Board of Trade. We went over the facets of this problem quite closely, and the conclusion we reached was that the use of the Ombudsman was a viable means of meeting the natural desire of people that a person should not be "done down", so to speak, without some sort of hearing.
In response to the noble Lord, Lord Mitchison, may I say that we also considered the proposition of having a hearing within the Board of Trade. The difficulty there was that the persons who would be responsible for hearing the information and for doing investigations are not confined to any particular level of the Board of Trade; although they are confined to fairly senior level, many people are involved, so there is no separation, so to speak. The President himself might well be involved in the

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initial decision, and to have a hearing by a person who had already come to a conclusion in the matter did not seem to be a very satisfactory solution. It might have turned out to be reasonably satisfactory to have a kind of second hearing, but if you try to put that on paper you are open to the charge, so to speak, of giving a right of appeal to a person who has already been a judge in the situation.
The final outcome of all these discussions was a feeling that the reliance upon the Ombudsman, after due investigation of what his position will be, seemed to be the most viable way of meeting the problems which we all feel exist. If there is still anxiety about this it is perfectly possible for it to be looked at; the debate will be noted and we can have another look at it. I believe we shall come out with the view that the proposal put forward by the noble Lord, Lord Winterbottom, is probably the best that can be managed in a rather difficult situation where we really cannot give a right of appeal to the courts, for reasons which have been explained.
LORD MITCHISON: I have had my answer and it is a very unsatisfactory one. What the Ministry of Housing and Local Government can do and does do every day is not completely beyond the powers of the Board of Trade.
LORD DRUMALBYN: Surely it is quite possible simply to notify an intention to make an order and give an opportunity to be heard. There is no difficulty about it at all; it is common form in a great deal of legislation.
LORD WINTERBOTTOM: We have offered to look at this. Let us see what we can produce on Report.
LORD ERROLL OF HALE: In view of the generous assurance given by the Government that they are going to do a lot of work during the Recess, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 48, as amended, agreed to.
Clause 49:
Provisions for securing proper conduct of business
49.—(1) Where the Board of Trade issue under section 45 of this Act an authorisation with respect to a company or body, they may,
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when they issue it, impose on the company or body, for the purpose of securing the proper conduct of the business of the company or body, all or any of the following requirements, namely,—
(b) a requirement that, after the day on which the requirement is imposed, a specified proportion of the assets of the company or body or assets of its to a specified value shall be maintained in Great Britain or that, after the expiration of a specified period or such longer period as the Board may allow, a specified proportion of the assets of the company or body or assets of its to a specified value shall be so maintained;
LORD WINTERBOTTOM: I beg to move Amendment 46A.
Amendment moved—
Page 45, line 24, after ("company") insert ("society").—(Lord Winterbottom.)
On Question, Amendment agreed to.
THE DEPUTY CHAIR MAN OF COMMITTEES: I understand that Amendments Nos. 46B to 46E are consequential Amendments. Does the noble Lord wish to move them en bloc or separately?
LORD WINTERBOTTOM: With the permission of the Committee, I will move them en bloc.
Amendments moved—
Page 45, line 25, after ("company") insert ("society")
Page 45, line 27, after ("company") insert ("society")
Page 45, line 29, after ("company") insert ("society")
Page 45, line 37, after ("company") insert ("society").
—(Lord Winterbottom.)
On Question, Amendments agreed to.
2.1 p.m.
LORD DRUMALBYN LORD DRUMALBYN moved, in subsection (1)(b), to leave out "Great Britain" and insert "such manner as is prescribed in the requirement". The noble Lord said: This Amendment would substitute the words "such manner as is prescribed in the requirement" for the words "Great Britain". The effect would be to make the clause read:
"…a requirement that, after the day on which the requirement is imposed, a specified proportion of the assets of the company or body or assets of its to a specified value shall be maintained in such manner as is prescribed in the requirement …".
I wonder whether the words "Great Britain" are not unduly narrow. For one

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thing, it could extend to Northern Ireland; and for another, I am not clear that it would not be an adequate safeguard to specify countries other than Great Britain.
On the second point, the more difficult one, my Amendment clearly goes rather wider than just a question of place. Place is obviously what the Government are after here. This is apt to cut both ways, and I wonder whether a rather wider power is not required than just as to place. These are the two points that I should like to make. Perhaps the noble Lord would care to comment on them.
Amendment moved—
Page 45, line 38, leave out ("Great Britain") and insert the said new words.—(Lord Drumalbyn.)
LORD WINTERBOTTOM: Perhaps it would be to the convenience of the Committee if we take Amendment No. 47 with Amendment No. 52, which I believe also relates to the same words.
LORD DRUMALBYN: Yes.
LORD WINTERBOTTOM: I thank the noble Lord. There are two points I want to make. The noble Lord, Lord Drumalbyn, first of all referred to Northern Ireland. If he will look at Clause 80 he will see that this Bill does not apply to Northern Ireland. Assurances are under the control of the Northern Ireland Parliament, and for this reason we are not here legislating for Northern Ireland. I presume that if the Northern Ireland Parliament wishes to have parallel legislation it will introduce it.
LORD DRUMALBYN: But is not the point of this provision to have some control over the funds that are invested? All I am asking is whether there is adequate safeguard for controlling funds which happen to be invested in Northern Ireland, as well as funds in this country. It is not a question of separate legislation.
LORD WINTERBOTTOM: I should like to give the noble Lord an answer which I think is a valid one at this stage, particularly as Northern Ireland is excluded from the Bill under Clause 80. Perhaps again this is some information which we can give at a later stage. On the other point, the material of the Amendment, which we are discussing
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now, as the noble Lord knows I had the benefit of a discussion elsewhere on this particular point and consideration has been given to this problem since that particular set of discussions. I regret to say that, although the Government have considerable sympathy with the point of view put forward by the noble Lord, we have not yet found an answer, although we are trying to seek one.
I understand that the British Insurance Association are concerned about this rather narrow point. The objection is that there is a specific reference to a power to require assets to be held in Great Britain, not to give them freedom to spread their assets in other parts of the world where it would benefit their shareholders and their policyholders to the maximum. I understand that there are no objections to taking powers to ensure that a company operating here, whether just within the United Kingdom itself or as part of an international business, should hold assets to cover its liabilities under British policies.
We must not forget that this power can be used only during the first five years after authorisation, or when evidence comes forward that a company is becoming insolvent. This is protection for policy holders during the early stages of a new company's career in this country, or at a point when an existing and established company is running into difficulties. The power here is, in fact, one that is insisted upon by most developed countries. This country has been a great deal freer, up to now, than many other countries in permitting individuals to start insurance companies. We have been much more flexible. I do not think our experience has been too bad. On the other hand, the picture seems to be changing. Many companies are flowing in from abroad to take advantage of the expanding motor market, and so on, and their standards may be different from ours. Therefore, we believe that these new safeguards are required.
I understand that the British Insurance Association fear that a provision in British legislation for the localisation of assets might be seized upon as a justification for excessive localisation requirements in other countries, untrammelled by the condition which the British power

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is circumscribing; that is to say, while the powers which we are giving to the Board of Trade are limited, the powers of some other country looking enviously upon the funds of insurance companies might be unlimited.
I also understand that the British Insurance Association, while wishing to achieve the object of the Government, would like it to be phrased in such a way that they are not exposed to unnecessary difficulties when trading in emerging countries, where there is little experience of the functioning of an insurance business and where local opinion may be that the funds being accumulated for local insurance should be limited to investment in the country concerned, where, of course, opportunities for profitable investment were very limited. We all agree that this is desirable, but we are afraid that even if we do modify the Bill, the requirements will allow them to be imposed whether a precedent can be found in British legislation or not. We are always at risk on this matter in a difficult world.
As I said earlier, the Government have sympathy with this Amendment, but see serious drafting difficulties. I wonder whether the noble Lord would agree to withdraw his Amendment, on the understanding that the Government will try to put forward a suitable Amendment on the Report stage? If further consideration shows that it is impossible to meet the wishes of the British Insurance Association and the noble Lord, we will give a full explanation at that moment. We are groping, but I hope that we may be able to find an answer.
LORD MITCHISON: I hope that the Government will make clear what they mean. The kind of point I have in mind is that there is a certain value from the point of view of policyholders and others whose security we are now considering, in having scrip in this country; that is to say, the actual share certificate, or whatever it is. The late Clarance Hatry, I think, succeeded in raising a lot of money by pledging scrip. When he ran short of it he produced some more. So that scrip, as such, has its value. That is what is meant by "assets in Great Britain."
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Suppose, for instance, an insurance company has a number of shares in, let us say, a French concern. Is it "assets in Great Britain" if they hold the scrip of that company over here? It might be said, on the other hand, that that is not really assets in Great Britain, that it is merely bits of paper which, whatever their value proved to be to Mr. Hatry, represent only an asset in another country. There is always this difficulty about the location of shares and scrip, and I do not see why the matter should not be cleared up by definition. If they do not know what they mean, then I am sorry for them. If they do, then they should tell us, for it would be a help to people who have to consider the clause and, ultimately, to people who have to live with it. We fully recognise that this is a clause to deal with pretty bad cases, but that is all the more reason for knowing quite clearly what it is all about. Therefore, I trust that a definition of "assets in Great Britain", or some form of explanation as to what is meant by it, will be put into the Bill.
LORD WINTERBOTTOM: I know that my noble friend Lord Brown will note what the noble Lord has said.
LORD DRUMALBYN: I am grateful to the noble Lord for his approach to the question. I do not think it can be emphasised too strongly that these are, in a sense, as the noble Lord said, default powers; they are not a regular insistence, so to speak. All the same one does not want to give any other country an opportunity to say, "You do this. Why should not we?". However, I think I can safely leave this to the noble Lord. I am sure that we are at one in intention on this matter, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD WINTERBOTTOM: I think that it will be convenient to move Amendments 47A to C together.
Amendments moved—
Page 45, line 41, after ("company") insert ("society").
Page 45, line 44, after ("company") insert ("society").
Page 46, line 1, after ("company") insert ("society").—(Lord Winterbottom.)
On Question, Amendments agreed to.
Clause 49, as amended, agreed to.
Clause 50 [Power of Board of Trade to restrict conduct of insurance business, and effect of exercise of that power]:
LORD WINTERBOTTOM: This is purely a drafting Amendment. I beg to move.
Amendment moved—
Page 47, line 7, after ("notice") insert ("stating").—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 50, as amended, agreed to.
Clause 51:
Power of Board of Trade to revoke authorisation for purposes of section 44 on company's ceasing to carry on business
51. Authorisation to a company or body, either under subsection (1) of section 45 of this Act or under subsection (2) of that section, to carry on insurance business of a class may he revoked by the Board of Trade if the company or body ceases to carry on business of that class, but the revocation shall be without prejudice to a subsequent issue, under the said subsection (2), of authorisation to carry on business of that class.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 48, line 37, after ("company") insert ("society").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, after the first "on" to insert "in Great Britain". The noble Lord said: I think that it would be for the convenience of the Committee if we take Amendments Nos. 49 and 50 together, since they are interrelated. The reason for these two Amendments is that the addition of the words "in Great Britain "in line 39 makes clear that the authorisation given under Clause 45, which may be revoked, is one under Section 45 which can only be one to carry on business in this country. The second Amendment permits revocation where a company fails to commence business here within twelvemonths of authorisation. We believe that this power is required to prevent companies from commencing business more than a year after authorisation where any of the circumstances in which authorisation had been given had changed materially subsequent to the granting of authorisation—for example, the sale of the company to other owners or the dissipation of its assets.
The new subsection (2) replaces the words deleted at the end of the existing clause which refer to revocation, being without prejudice to a possible fresh authorisation. The reference is now extended to cover revocation resulting from failure to commence an authorised class as well as resulting from a cessation of such a class. In fact, if something has been authorised and the company does not do it it may enable someone else to do the wrong thing under the authorisation.
Amendment moved—
Page 48, line 39, after ("on") insert ("in Great Britain").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 48, line 40, after ("company") insert ("society").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move.
Amendment moved—
Page 48, line 41, leave out from ("on") to end of line 43 and insert ("in Great Britain such business of that class, and authorisation to a company or body under the said subsection (2) to carry on in Great Britain such business of a class may be so revoked if the company or body does not, before the expiration of twelve months beginning with the day next following that on which the authorisation is granted, commence to carry on in Great Britain such business of that class.
(2) The revocation, under the foregoing subsection, of authorisation to carry on in Great Britain insurance business of a class shall be without prejudice to a subsequent issue, under section 45(2) of this Act, of authorisation to carry on in Great Britain such business of that class.")—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 51, as amended, agreed to.
Clause 52 agreed to.
Clause 53 [Substitution of new provisions for those of section 9 (audit of accounts) of the principal Act.]
On Question, Whether Clause 53 shall stand part of the Bill?
LORD DRUMALBYN: May I ask the noble Lord a question on this clause? In line 12, on page 50, there appear the words "by such person". This has to

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do with the auditing of accounts, and it says that:
"The accounts and balance sheets of every insurance company to which this Act applies shall be audited by such person and in such manner as may be prescribed".
This does not appear in Section 9 of the 1958 Act and it is not clear what it means. It is very unusual to prescribe that a particular person shall audit the accounts. I do not know whether it means the Government Actuary or something of that kind, or whether it means a person with such qualifications as may be prescribed. If so, ought the Bill not to say that? Certainly it does not appear to be at all clear. Could the noble Lord explain the situation?
LORD WINTERBOTTOM: I am afraid that at this moment I am not able to explain to your Lordships. Perhaps it will be convenient if I write to the noble Lord and give him the information which he requires.
Clause 53 agreed to.
Clause 54 [Powers of Board of Trade and Industrial Assurance Commissioner to alter insurance companies' financial years]:
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, in subsection (2)(a), to leave out "no business" and insert
"in Great Britain no business of a class specified in section 1(1) of the principal Act".
The noble Lord said: I am given to understand that as at present worded the clause would make the Board of Trade the appropriate authority where a company carries on in Great Britain industrial assurance business and business of a class not specified in subsection (1) of the Act of 1958 and also where a company carries on industrial insurance business in Great Britain and another class of business overseas. In this particular case the Amendment makes the Industrial Assurance Commissioner the appropriate authority. This is just an Amendment for clarification.
Amendment moved—
Page 50, line 33, leave out ("no business") and insert the said new words.—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 54, as amended, agreed to.
Clauses 55 to 57 agreed to.
2.20 p.m.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, after Clause 57, to insert the following new clause:
Additional copy of accounts, &c., to be deposited by industrial or provident society.

"—(1) A registered society shall, in addition to depositing with the Board of Trade (as required by subsection (1) of section 8 of the principal Act) four copies of each account, balance sheet, extract, statement or report required by that Act, deposit, within the time limited by virtue of that subsection for depositing them, a copy with the appropriate registrar, being a copy signed by the like persons as those by whom the copies deposited under that section are required to be signed.

(2) Subsection (3) of the said section 8 (deposit with every revenue account and balance sheet of a company of any report on the affairs of the company submitted to its shareholders or policy holders in respect of the financial year to which the account and balance sheet relate) shall have effect in relation to the deposit by virtue of this section of accounts and balance sheets as it has effect in relation to the deposit by virtue of that section of accounts and balance sheets.

(3) Section 71(1) of the Industrial and Provident Societies Act 1965 (which empowers the Treasury to make regulations respecting, inter alia, the inspection of documents kept by the appropriate registrar under that Act) shall have effect as if the reference to documents so kept included a reference to documents deposited in pursuance of this section.

(4) In this section 'appropriate registrar' has the meaning assigned to it by section 73(1) of the Industrial and Provident Societies Act 1965."

The noble Lord said: This Amendment is designed simply for the convenience of persons who want to search the file of an insurance company which is registered under the Industrial and Provident Societies Act 1965. Section 30 of the Insurance Companies Act 1958 provides that the Board of Trade may direct that documents or copies of documents deposited with them by insurance companies are to be kept by the Registrar of Companies or by some other officer of the Board and there be open to public inspection. A few insurance companies are registered under the Industrial and Provident Societies Act, and are required by that Act to send their rules and annual returns not to the Registrar of Companies but to the Registrar of Friendly Societies, whose file containing those documents is open to public inspection. It is therefore considered convenient that copies of the insurance returns which these societies have to

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deposit with the Board of Trade under the Act of 1958 should also be placed on the file of the Registrar of Friendly Societies, thus securing that all the statutory returns submitted by these societies, as well as their registered rules, will be available for public inspection in one place.
The new clause achieves this result by requiring the societies to deposit with the appropriate Registrar—that is, the Registrar of Friendly Societies—a copy of each document deposited with the Board of Trade and providing for public inspection of the copies kept by the Registrar. The documents in question are those required by Section 8 of the Insurance Companies Act 1958; that is, accounts, balance sheets, statements of business and valuation reports relating to insurance business, and any report on the company's affairs submitted to its shareholders or policy holders during the accounting year. The meaning of a registered society under this clause—that is, a society registered or deemed to be registered under the Industrial and Provident Societies Act—is given by Amendment 60P to Clause 78. The purpose of this legislation, as noble Lords know, is to keep not only the Board of Trade but also the public better informed, and this is an Amendment which will enable the public to be better informed of the state of affairs of insurance and friendly societies. I beg to move.
Amendment moved—
After Clause 57, insert the said clause.—(Lord Winterbotiom.)
LORD DRUMALBYN: May I just ask whether or not this involves any duplication? One knows that in the case of insurance companies there is a duplication as between the accounts required by the Companies Act and the Insurance Companies Act. Does this involve a duplication?
Loin WINTERBOTTOM: I should have thought it must involve some duplication, although I am speaking subject to correction. But I should think the advantages overrule the problem of duplication.
On Question, Amendment agreed to.
Clause 58. [Margin of solvency for general business]:
LORD WINTERBOTTOM LORD WINTERBOTTOM moved in subsection (3), to leave out words from
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the beginning down to and including "aid subsection (1)" and substitute:
"Subject to the provisions of the following subsection, the Board of Trade may, at any time before the expiration of the period of two years beginning with the day on which this Act is passed, direct that, until the expiration of such period (expiring not later than the expiration of the period aforesaid) as may be specified in the direction, the subsection substituted by subsection (1) above."
The noble Lord said: Perhaps it would be to the convenience of the Committee if we took Amendments 50A and 50B together, since they are interrelated. The reason for these Amendments is that as at present worded subsection (3) of Clause 58 would permit the Board of Trade to relax in individual cases, for a period not exceeding two years from the operative date of subsection (1)—that is, from three months after the Bill is enacted—the more stringent solvency margin requirements imposed on insurance companies by subsection (1) of the clause.
The existing subsection allows the Board, however, to use this power only during the three months between the enactment of the Bill and the coming into operation of subsection (1). On further consideration the Government feel that there may well be cases where a company, although unable to comply with the new solvency provisions, does not obtain a direction under subsection (3) within the period of three months, although it is a company to which the Board would wish to give a direction. For instance, in the opinion of the Board, a company might take an over-optimistic view of its ability to raise fresh capital and find, in spite of undertakings given, that at the end of the period of three months it had failed to raise this necessary capital and had thus put itself in an unsatisfactory position financially.
The first of the Amendments would, therefore, enable the Board to give direction at any time during the whole period of two years from the passing of the Act, inclusive of the three months mentioned above. Such a direction could be in any period but not exceeding the balance period of two years. The second Amendment ensures that the relaxative power provided by subsection (3) as amended is not exercisable, so long as a petition to wind up a particular company is before the court. It is felt that it would be inappropriate for the Board to intervene in matters relating to the solvency of a

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company, if its solvency were being considered by the court at that time. I beg to move.
Amendment moved—
Page 52, line 16, leave out from beginning to ("shall" in line 21 and insert the said new words.—(Lord Winterbottom.)
LORD DRUMALBYN: I should like simply to ask the noble Lord how it is that the Board of Trade came to consider it necessary to make this relaxation. Did particular cases come to their attention since the publication of the Bill, or how is it that this arose?
LORD WINTER BOTTOM: I am afraid I cannot give the reasons why these Amendments were tabled by the Board. As the noble Lord knows, a great deal of intensive work has been going on, with the help of a number of bodies and individuals, since the first publication of the Bill early in November, and I imagine that from experience and advice given during that period these two Amendments have been found necessary. Three months is quite a short time, and it is clear that the Board considers that this is quite insufficient to keep control of the situation which they find now.
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move.
Amendment moved—
Page 52, line 24, at end insert—
("( ) The power conferred by the last foregoing subsection on the Board of Trade shall not be exercisable in relation to a company so long as a petition to wind it up is before the court.")—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 58, as amended, agreed to.
Clause 59 [Provision for securing that a company's solvency is maintained]:
LORD WINTERBOTTOM: Perhaps, again, it would be to the convenience of the Committee if we took Amendments 51, 53 and 54 together. The reason for leaving out the words "or body" is that these two words are made superfluous by the use in line 26 of the words "insurance company". This term is so defined in Section 33 of the Insurance Companies Act, which is applied to this part of the Bill by Clause 78(1)(b), as to include
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bodies other than companies. This is purely drafting. I beg to move.
Amendment moved—
Page 52, line 38, leave out ("or body").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move Amendment No. 53.
Amendment moved—
Page 52, line 43, leave out ("or body").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move No. 54.
Amendment moved—
Page 52, line 46, leave out ("or body").—(Lord Winterbottom.)
On Question, Amendment agreed to.
2.31 p.m.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, after subsection (1)(c), to insert:
"( ) a requirement that the company shall take all such steps as are requisite to secure that the aggregate of the premiums to be received by it inconsideration of the undertaking by it, during a specified period beginning not earlier than twenty-eight clear days after the requirement is imposed, of liabilities in the course of carrying on business of a specified class (being one of the classes specified in section 1(1) of the principal Act) shall not exceed a specified amount;".
The noble Lord said: Amendments Nos. 55 and 56 are related. The addition to subsection (1) provides the Board of Trade with an alternative, less stringent power to that of restricting business which is provided for in Clause 50. The use of that power would oblige the company to cease writing new insurance contracts and not to renew existing contracts, thus cutting off all further income from premiums and leaving it to discharge its liabilities under existing contracts. The use of the power would have to be publicised. Its use under Clause 50(1)(c) would probably be limited to situations in which, first, evidence of insolvency was not far short of being sufficient for the Board to petition for winding up: secondly, the remaining evidence required would take some time to assemble; and, thirdly, it was in the public interest that the company should in the meantime be prevented from taking any further money from policyholders.
The use of the new power provided by the Amendment would not cut off all premium income. A requirement would normally be expressed so as to require the company to hold the premium income at the existing level, or so as to set a limit to the rate of expansion. The exercise of this power would not necessarily have to be publicly announced, although the Board would not be prevented from doing so where this was deemed to be desirable in the public interest. The use of the power would be less damaging to the company than the power in Clause 50, and the Board would, therefore, be readier to use it.
The use of the additional power would be appropriate where a new company grew rapidly by charging low premiums and alleged that its lower than average reserves were adequate because its underwriting policy was very selective. Such an assertion is not easy to disprove until there has been a reasonable period over which the claims results of the company can be tested. In such a case, the Board's doubts about the adequacy of both premium rates and reserves might suggest to them a risk of insolvency which would be increased if the company's rapid growth continued. At the same time, there might not be sufficient evidence of insolvency to justify the invocation of Clause 50.
The new subsection proposed identifies the case of the company which carries on in Great Britain only industrial assurance business, since the powers given by the clause are to be exercised in relation to such a company by the Industrial Assurance Commissioner as provided for in subsection (3). This particular Amendment, I think, covers one of the points made by the noble Lord, Lord Hawke, earlier in our discussions. I beg to move.
Amendment moved—
Page 53,line 2, at end insert the said subsection.—(Lord Winterbottom.)
LORD HAWKE: I think the explanation provided by the noble Lord amply justifies my fears that the size of company allowed to start up through this Bill is much too small.
LORD MITCHISON: There is one point here that I should rather like cleared up. I see that according to subsection (3) of Clause 50 the very stringent
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powers given under Clause 50 can be exercised only after there has been a written notice and the Board have considered any representations made to them. Apparently there is no such provision in this clause, and I wonder why not. The Board of Trade come to a decision to operate this clause, and there is then an interval of 28 days before it has any effect. I find it a little difficult to see why it should be so hard to allow the company concerned to make representations, as they would do if the powers of Clause 50 were to be exercised. I should have thought there was at least as much a case for doing it where the insolvency, or the pending insolvency, was a doubtful matter as there was in the case of the more stringent conditions of Clause 50.
LORD BROWN: It is possible to conduct a very long debate on these matters of nice judgment, as to whether, in the one case, the Board of Trade must give notice of intention, and, in relation to a matter that looks of a similar kind, they should not have to do so. But these are matters of nice judgment based on long-term experience of trying to deal with some of these insurance affairs—and, as the Committee knows, they have recently been somewhat murky. Where notice has to be given—and, admittedly, it is putting very great power in the hands of the Board of Trade—it sometimes makes it possible for evidence which one would otherwise have obtained not to be given. I can only say in answer to the noble Lord, Lord Mitchison, that these are matters of nice judgment based on a great deal of experience inside the Board of Trade, and I would ask that the Committee accept that this experience has been imported into this post-legislation in such a way as to help the Board of Trade to control a very serious matter in the future.
LORD MITCHISON: I am afraid that does not quite meet the point I was making. May I repeat it? I have no doubt that the Board of Trade have very wide experience in all these matters—nobody disputes that for a minute—but I do not think they can have much experience of operating this clause, because I do not think there has ever been a clause like it before. If there has, perhaps we can be told. But the position

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here is that a company is required at the end of 28 days from the date of the requirement to restrict its business, or not to expand it, and this is said to be a less stringent step than the steps that are open to the Board under Clause 50. It is therefore intended to be used in cases where there is some doubt about the matter; and I suppose the requirement certainly involves notice to the company in some form or another. There is not much difference between a notice and a requirement.
What is so curious about it is that if the more stringent powers are to be exercised—and that would be done only in a fairly clear case, as I understand the views of the Board—representations are to be considered. On the other hand, where the matter is more doubtful—and here I should have thought there were more cases in which companies might wish to make representations, and that the Board of Trade might benefit from hearing them—no provision is made for such representations. I wonder whether the fact of the matter is not that the Board of Trade have not really considered the question of representations in connection with this clause, although they have done so in connection with Clause 50.
LORD DRUMALBYN: May I add a word? First of all, this seems to me to be a useful addition to the powers. Secondly, is it not a power which, in the nature of things, can be exercised only in consultation with the concern in question? I cannot see how it will be possible to determine what the level of premiums should be in order to maintain the solvency except in consultation with the company. If that is so, I wonder if this would not meet the noble Lord's point.
LORD BROWN: We are always ready to consider these matters; but it has already been noted, from what my noble friend Lord Mitchison said, that the powers under Clause 50 are somewhat more stringent than those under Clause 59. Under Clause 50 formal notice has to be given; under Clause 59 this is not so. I think it is within the experience of many Members of your Lordships' House that the production of a formal notice can be a somewhat lengthy procedure.
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The less stringent powers under Clause 59 could, therefore, so long as the Amendment is accepted, be operated more rapidly if there is no requirement for some form of official notice in advance. Of course, there will have to be consultation with the company concerned. With respect, I think it would be better if this matter were left as it is and in accordance with the Amendment. Of course if noble Lords have hesitation about this, but see fit to pass the Amendment, the comments that have been made will be taken into consideration before the Report stage.
LORD MITCHISON: I am glad to hear that the comments will be taken into consideration, because the point about notice is a thoroughly bad one. One cannot impose a requirement on a company without telling the company what the requirement is: that is the same thing as giving them notice under Clause 50. The point is that when they are given notice under Clause 50 they are allowed to make representations, which have to be considered. I am not going into the matter in detail again, but I hope that the Board of Trade will consider what are the advantages and disadvantages of putting a similar provision into this clause.
On Question, Amendment agreed to.
Loan WINTERBOTTOM: I beg to move Amendment No. 56.
Amendment moved—
Page 53, line 7, at end insert—
("( ) In relation to a company which carries on in Great Britain no business of any of the classes specified in section 1(1) of the principal Act other than industrial assurance business, paragraph ( ) of the foregoing subsection shall have effect with the substitution, for the words business of a specified class (being one of the classes specified in section 1(1) of the principal Act)', of the words industrial assurance business'.").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: This Amendment meets the necessity to insert the words "Great Britain" into paragraph 59(3)(a). I beg to move.
Amendment moved—
Page 53, line 14, leave out ("no business") and insert ("in Great Britain no business of a class specified in section 1(1) of the principal Act").—(Lord Winterbottom.)
On Question, Amendment agreed to.
2.44 p.m.
On Question, Whether Clause 59, as amended, shall stand part of the Bill?
LORD DRUMALBYN: May I make two points? One is of some substance; the other is purely drafting. The point of substance is that the power given in this clause is to impose requirements where it appears to the appropriate authority—generally the Board of Trade—that there is a risk. This is an extremely wide and nebulous power and, in the nature of all risk-taking, it seems to give the Board of Trade a power to intervene at any time they think fit. This is one of the things that led me to suppose that the Board of Trade will be proceeding by way of close consultation with companies and that this will merely give the Board a general power to intervene, if they think fit, before a serious risk emerges.
I think it is important that the Committee should know what the intention is here. How soon are the Board of Trade likely to intervene? What is the intention behind this clause? Is it to enable requirements to be imposed when there is the slightest sign of danger, or only when there obviously appears to be something going wrong? It is a question of degree and a difficult thing to be precise about. All the same, I think it is important that the Committee should know what is in the mind of the Government.
The other matter is a minor one. I personally dislike the phrase "assets of its". It is a most horrible phrase; it lacks euphony. Surely we can say "assets of the company". The other phrase is a nasty piece of jingle.
LORD HAWKE: I wonder whether, in looking at the clause again, the Government would reconsider the words
"if it appears…that the business…is being so conducted that there is a risk of the company's becoming insolvent…".
I am not sure that the word "insolvent" is the happiest word; for without specifically saying so, it gives a connotation that the company is being conducted in an improper way. I take up exactly the same stand as that of my noble friend Lord Drumalbyn: that an insurance company is always conducted in such a way that it is in risk of becoming insolvent. It is the nature of the beast. For that
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reason I should have thought that the wording of the clause ought to be somehow reinforced to make it clear that it refers only to cases where the business is being improperly conducted.
LORD BROWN: I will take Lord Hawke's point first. The responsibility of the Board of Trade is, in this connection, the protection of the policyholders. It is difficult to ask for these enormous powers—and admittedly they are enormous—unless it is clearly directed to the protection of the policyholders; and there is clearly no risk to the policyholders unless there is a risk of a company's going insolvent. That is the main issue on which we seek the powers to protect the policyholders. We must be careful not to get into a situation where the Board of Trade are seeking powers to make sure that these insurance companies are running their businesses in a manner which appears to the Board of Trade to be efficient; and I am quite sure that this House will not want powers of that kind to be bestowed upon the Board of Trade.
LORD HAWKE: I do not think the noble Lord has quite met my point. My point is that if he used the words, for instance, that the company was "so improperly conducted", the clause would be considerably less wide, and the Board of Trade would then not have powers to step in where a company was being conducted in the normal manner but might go into insolvency—as all companies can, particularly if they are small.
LORD BROWN: We will consider the point. We are dealing with a semantic problem here.
Let me turn now to Lord Drumalbyn's comments. These are enormous powers, and we recognise that. I doubt whether similar powers have ever before been given to a Department of Government. But insurance is an unusual subject. So far as motor insurance is concerned, it is compulsory, which means that large numbers of people have to take out policies. In otherrespects—in house and property insurance and so on—insurance is of great importance to the policyholder, because if the policy is not supported then he loses his house. It is a major tragedy to the individual. The other feature of insurance is that the people providing the service collect the money long before they do anything for the person who is

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paying for the service. This means that a man can go into business, collect the money and, if he is dishonest, decamp with the lot, leaving behind a series of tragedies.
The experience of the Board of Trade over recent years has been a very unfortunate one. We have been under criticism from the public for apparently being helpless in the face of approaching disaster for thousands of policyholders. The Fire and Auto Marine case is an example. We must be in a position to stop this sort of thing happening again. It is difficult to see exactly what powers are necessary to stop all the myriad types of murky operation that we shall have to face from the growing number of small insurance companies; so one can say that this is a blanket request for authority, because before we have the authority we cannot precisely say what we are proposing to do with it in every case. In some of the cases, where personalities are involved, we want to step in very early, because we think that a risk is developing. In other cases, where we are more assured of the history and stability of the concern, it might take more to disturb us seriously, and I suppose that the Board of Trade would take longer to step in. It is very difficult to give a more direct answer than that to the noble Lord's question.
LORD HAWKE: Would the noble Lord consider inserting the words:
"conducted in such a way that"?
That is much more pointed.
LORD BROWN: I have undertaken that this will be considered, and I should hesitate to accept any wording here because there are drafting problems which could possibly arise if I accepted any words.
LORD CHORLEY: I should like to intervene for a moment on this matter because the suggestion that insurance business is much more risky than any other sort of business is not in fact borne out by experience. I practised a good deal in insurance cases and it has been one of my subjects as an academic lawyer. I should say that if they are conducted in a responsible way the risk of insurance companies going insolvent is less than in almost any other sort of business. If the noble Lord, Lord Hawke,
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would study insolvencies in the City over the period between the wars, and indeed since the last war, I think he would find that it is very unusual indeed for a syndicate at Lloyd's to be wound up. It happens only once in quite a large number of years. It is in the type of insurance business which is notoriously being carried on in a semi-fraudulent way that this sort of difficulty arises; and it is just for that sort of case that the Board of Trade needs these powers. But I should not like it to go out from this place that insurance is an eminently risky business. There are large areas of it in which, if the business is properly conducted, it is very sound business indeed and there is no reason to suppose there will be insolvency.
LORD HAWKE: Can the noble Lord, Lord Chorley, tell me how many companies in this country made underwriting profits last year?
LORD CHORLEY: Last year was a very exceptional year.
LORD MITCHISON: If the Board of Trade is going to look at this clause again, I hope that the part they will look at is paragraph (d) of subsection (1). This provides that in certain circumstances the appropriate authority may impose a requirement. Now we come to the requirement:
"that the company, shall at specified times or intervals, furnish to the appropriate authority information about specified matters, being, if that authority so require, information verified in a specific manner".
I am all for the Board of Trade in this little battle, or perhaps it is a big battle. I know how exceedingly difficult the operation of this clause may be. I fully recognise that it will be used only in rather exceptional cases. If you take that statutory provision as written, it is a requirement in circumstances considered by the clause which are a matter of opinion in the first place. The clause states:
"If it appears to the appropriate authority…"
In those circumstances you can require any information about anything and it can be verified in any way whatever. That is pretty wide drafting. I do not know what the Board of Trade may want to ask, but it would cover all kinds of things that they really do not need to ask at all and things which, so far as I

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can see, are outside the purposes of this Bill. Powers of that sort are too wide. I suggest that the Board might look at it and see what it is they want to get by way of information in cases which we all agree are rather serious, and when dealing with people who may well be, to use a colloquial phrase, "pretty slippery customers".
LORD BROWN: I must make clear that we have not undertaken to have another look at Clause 59 as a whole. It is significant, in reference to the point raised by the noble Lord, Lord Mitchison—I think I am correct—that the British Insurance Association and insurance companies have not objected to these very wide powers. They know the dangers which exist. The point the noble Lord raised was about protection to insurance companies against being, bothered by these wide powers. I do not think those who are liable to be bothered are as alarmed about the possibility of being so bothered as they are about the possibility of the continuance and growth of much more serious things which have been worrying them in recent years, for example, about murky behaviour on the part of a very small number of insurance companies.
Clause 59, as amended, agreed to.
Clauses 60 to 62 agreed to.
Clause 63. [Provision for security of information]:
LORD WINTER BOTTOM: Perhaps it would be convenient if Amendments Nos. 57, 58 and 59 were taken together. These are all drafting Amendments to improve the Bill. I beg to move.
Amendment moved—
Page 56, line 17, at end insert ("or any criminal proceedings for an offence entailing misconduct in connection with the management of the body's affairs or misapplication or wrongful retainer of property of its;").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 56, line 18, after ("Board") insert ("of Trade").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 56, line 25, leave out ("as aforesaid") and insert ("there under by the Board").—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 63, as amended, agreed to.
Clauses 64 to 67 agreed to.
Clause 68. [Penalty for non-compliance with Part II or the principal Act]:
2.58 p.m.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, in subsection (1), after "be" to insert "guilty of an offence and". The noble Lord said: This is an Amendment which arrived at a very late stage. It is necessary for the Bill to stipulate, before specifying the appropriate penalty, that the defaults described in subsection (1) of this clause constitute an offence, and the first Amendment does that. This has the further effect of making a default under the principal Act which occurs after the passing of this Act
"an offence under this part of this Act".
Consequently it is possible to simplify subsections (1), (2), (3) and (4) of Clause 69 and Clause 71(1) by deleting—in Amendments Nos. 59D, 59E, 59F, 59G, and 59H, respectively—the references to
"offences under the principal Act committed after the passing of this Act"
and relying on the reference to
"an offence under this part of this Act".
Since the Bill is to repeal Section 26(1) and (2) of the Insurance Companies Act1958, Section 39(2) of the Industrial Assurance Act 1923, which indirectly applies that section to contraventions by industrial assurance companies of any provision of the 1923 Act, would become meaningless if left unamended. The Amendments to Clause 68 meet this by enacting in the new subsection (1)(a) a provision for the penalising of any contravention of the 1923 Act by an industrial assurance company after the enactment of the Bill, and by providing in Amendment 59C that Section 39(2) of the 1923 Act is to cease to have effect except in relation to contraventions of that Act occurring before the enactment

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of the Bill. Consequentially Amendment No. 39 preserves Section 21(6) of the 1958 Act for the purpose of any contravention for which Section 39(2) of the 1923 Act is preserved.
The new subsection (1)(a) of Clause 68, in Amendment No. 59B, at the same time brings the penalty for any contravention of the 1923 Act by an industrial assurance company into line with the penalty imposed on insurance companies for any default in complying with the 1958 Act or Part II of the Bill—that is, a fine not exceeding £200. The new subsection (1)(b) of Clause 68 brings the penalty imposed on a collecting society for a contravention of the 1923 Act into line with the penalty which subsection (1)(a) imposes on an industrial assurance company for a like contravention—that is, a fine not exceeding £200.
Under the present law the penalty for a contravention of the 1923 Act by a collecting society or industrial assurance company is a fine not exceeding £100, and in the case of a continuing default a fine not exceeding £50 a day during continuance. Subsection (1)(b) substitutes in the case of the collecting society a penalty of a fine not exceeding £200 and drops the fine of £50 a day for continuing default. The combined effect of subsection (1)(a) and subsection (1)(b) of Clause 68 is thus to bring all these penalties into line with the standard penalties for defaults in complying with the 1958 Act or Part II of the Bill.
Amendment moved—
Page 59, line 6, after ("be") insert ("guilty of an offence and").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 59, line 7, at end insert—
"(1A) An industrial assurance company (within the meaning of the Industrial Assurance Act 1923) which, after the passing of this Act contravenes or fails to comply with any of the provisions of that Act or any directions given there under by the Industrial Assurance Commissioner shall be guilty of an offence and liable, on summary conviction, to a fine not exceeding £200.
(1B) The maximum penalty that may be inflicted on a society registered under the Friendly Societies Act 1896, being a friendly society within the meaning of that Act, for an offence under the Industrial Assurance Act 1923 committed after the passing of this Act shall, instead
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of being a fine not exceeding £100 or. in the case of a continuing office, a fine not exceeding £50 a day during which the offence continues, be a fine not exceeding £200. and, accordingly, section 39(1) of that Act shall, in relation to an offence under that Act so committed by a society so registered, being such a friendly society as aforesaid, have effect with the substitution, for the proviso thereto, of the following proviso:—
'Provided that the maximum penalty that may be inflicted for an offence under this Act shall be a fine not exceeding £200'.)"
—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move this Amendment, which has been covered by the reasons which I have given for the Amendments to Clause 68.
Amendment moved—
Page 59, line 11, at end insert—
("and section 39(2) of the Industrial Assurance Act 1923 (penalization of contraventions of, and failures to comply with, the provisions of that Act or directions given there under by the Industrial Assurance Commissioner) shall cease to have effect, except in relation to contraventions or failures occuring before the passing of this Act.")—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 68, as amended, agreed to.
Clause 69 [Proceedings against unincorporated bodies for offences under Part II for the principal Act]:
LORD WINTER BOTTOM: I beg to move.
Amendment moved—
Page 59, line 14, leave out from ("body") to ("shall") in line 15.—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move.
Amendment moved—
Page 59, line 21, leave out from ("Act") to ("shall") in line 23.—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move.
Amendment moved—
Page 59, line 29, leave out from ("Act") to first ("in") in line 31.—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 59, line 35, leave out from ("body") to ("section") in line 37.—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 69, as amended, agreed to.
Clause 70 [Criminal liability of directors, etc.]:
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 59, line 41, leave out from ("corporate") to ("is") in line 42.—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move the Amendment standing in the name of my noble friend Lord Shepherd, who is here to see that I give the correct explanation. With permission, I would take this Amendment and No. 61 to Clause 78 together. It is appropriate to apply the exclusion of a professional adviser, such as a solicitor or accountant, from the definition of "a person in accordance with whose directions or instructions any of the directors of a company or other body corporate are accustomed to act", to the reference of such a person in Clause 48(b) as well as to that in Clause 70. This was omitted in the Bill and these Amendments rectify that omission.
Amendment moved—
Page 60, line 7, leave out from ("act") to end of line 10.—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 70, as amended, agreed to.
Clause 71 [Application of certain provisions of Part I to summary proceedings under Part II of the principal Act]:
LORD WINTERBOTTOM: This Amendment ensures that the extension of time for the bringing of summary proceedings for an offence under Part II of the Bill shall apply from the date on which the evidence comes to knowledge of the Industrial Assurance Commissioner as well as to the Board of Trade and to the Director of Public Prosecutions. This is necessary because offences under Part II may relate to industrial assurance business. It brings the Bill into line with the provisions of the Industrial Assurance Act. I beg to move.
Amendment moved—
Leave out Clause 71, and insert the following new clause:
(Application of certain provisions of Part I to summary proceedings in respect of offences under Part II
"71. Subsections (2) to (5) (both inclusive) of section 35 of this Act shall apply to, and in connection with, summary proceedings for offences under this Part of this Act and to informations relating to offences there under which are triable summarily as they apply to, and in connection with, such proceedings for offences under the Companies Act 1948 and Part I of this Act and to informations relating to offences there under that are triable summarily, but subject to the modification of the inclusion, after the references to the Board of Trade, of references to the Industrial Assurance Commissioner.")—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 72 [Restriction of institution of proceedings in respect of offences under Part II or the principal Act]:
LORD WINTERBOTTOM: This Amendment ensures that proceedings for offences under Part II of the Bill may be brought by or with the consent of the Industrial Assurance Commissioner as well as by the Board of Trade. This is necessary because offences under Part II of the Bill may relate to industrial assurance business. I beg to move.
Amendment moved—
Page 60, line 21, leave out from ("Trade") to end of line 24, and insert ("the Industrial Assurance Commissioner or the Director of Public Prosecutions").—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 72, as amended, agreed to.
Clause 73 [Power of Board of Trade to exempt certain companies from certain provisions of the principal Act]:
LORD WINTER BOTTOM: With the consent of the Committee I should like to move Amendments 60C to 60L together. I beg to move.
Amendments moved—
Page 60, line 27, at end insert ("or of a registered society")
Page 60, line 29, after ("company") insert ("or society")
Page 60, line 34, after ("company") insert ("or society")
Page 60, line 36, after ("company") insert ("or society")
Page 60, line 40, after ("company") insert ("or society")
Page 60, line 46, after ("company") insert ("or society")
Page 61, line 1, after ("company") insert ("or society")
Page 61, line 6, after ("company") insert ("or society")
Page 61, line 8, after ("company") insert ("or society").—(Lord Winterbottom.)
On Question, Amendments agreed to.
Clause 73, as amended, agreed to.
Clause 74 agreed to.
3.12 p.m.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, after Clause 74, to insert the following new clause:
Construction (as to Northern Ireland) of certain references
". In section 1(5) of the principal Act and in section 44(1)(c) of this Act, the expression 'Acts' shall include Acts of the Parliament of Northern Ireland, and in section 44(1A)(b) of this Act the reference to the Friendly Societies Act 1896 shall include a reference to that Act as it applies in Northern Ireland and to any enactment of the Parliament of Northern Ireland re-enacting that Act (whether with or without modifications)".
The noble Lord said: I beg to move to add this new clause to the Bill. The reasons for it are that Section 1(5) of the Insurance Companies Act 1958 excepts from the restrictions imposed by that Act on insurance business.
"a body registered under the Acts relating to friendly societies or trade unions",
and Clause 44(1)(c) of the Bill uses the same words to except those bodies from the restrictions which will be imposed by the Bill. The new clause, by providing that the "Acts" in question shall include Northern Ireland Acts, ensures that any friendly societies or trade unions which in future may be registered in Northern Ireland under Northern Ireland Statutes relating to such bodies are within the exception. I beg to move.
Amendment moved—
After Clause 74, insert the said new clause.—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 75 [Annual report by Board of Trade]:
On Question, Whether Clause 75 shall stand part of the Bill?
LORD DRUMALBYN: I should like to ask the reason for the change in this clause. The information that is required to be given under the redrafted clause that is to take the place of Section 10 of the present Act is very much less detailed. What is the reason for this?
LORD WINTERBOTTOM: I am afraid there was some confusion, and I did not quite catch the question the noble Lord asked.
LORD DRUMALBYN: Clause 75 has the effect, if taken together with line 10 on page 95 of the Bill, of repealing the whole of Section 10 of the present Act, and Clause 75 substitutes a very much shortened version of that section. I am wondering why this has been done: whether it is intended to give much less information, and, if so, why?
LORD WINTERBOTTOM: I do not think it is a question of less information; it is a question of compression. The two things are not quite the same. This clause requires the Board of Trade to make an annual report on the working of the Act. The requirement is expressed in terms similar to that of Section 451 of the Companies Act, leaving the Board a certain latitude as to what is included. At present the Board are in principle required by Section 10 of the principal Act to lay all the documents received in accordance with the Act annually before Parliament. This procedure was found to be inconvenient and of little practical value in informing Members, and the public at large, about the financial position of insurers and it was abandoned by general consent within a few years of its introduction in the Life Assurance Companies Act 1870. At that time some 50 companies were involved; there are now over 500.
Although the requirement was not repealed and was carried over when the Acts were consolidated in 1958, its literal terms have remained unobserved since the 1890s and the Board of Trade have since published the documents, in lieu of laying them. Since 1924 they have been published in summarised form and it is proposed under the clause to continue this, although changes in form will now he possible where this appears useful. It is also envisaged that the report will give an account of the use made by the Board of the new powers provided in

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this Bill relating to authorisation, restriction of business and directions. Section 10 of the principal Act is repealed in Part II of Schedule 6.
LORD DRUMALBYN: I am obliged to the noble Lord.
Clause 75 agreed to.
Clause 76 [Amendments (of minor nature or consequential on Part II) of the principal Act and the Industrial Assurance Act 1923]:
LORD WINTERBOTTOM: This is a drafting Amendment, which arises mainly from the fact that several amendments of the Industrial Assurance Act 1923 are now proposed to be made in Part II of Schedule 4 to the Bill, whereas the original Part II of Schedule 4 amended only one provision (Section 7) of that Act. I beg to move.
Amendment moved—
Page 61, line 30, leave out from ("Schedule") to ("consequential") in line 34 and insert ("and the provisions of the Industrial Assurance Act 1923 specified in column 1 of Part II of that Schedule shall have effect subject to the amendments respectively specified in relation thereto in column 2 of that Part of that Schedule (being, in each case, amendments of a minor nature or").—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 76, as amended, agreed to.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, after Clause 76, to insert the following new clause:
Repeal of certain provisions of section 18 of the Industrial Assurance Act 1923 and of Schedule 2 thereto.
". The following provisions of the Industrial Assurance Act 1923 shall cease to have effect, namely,—

(a) section 18(1)(b) (basis of valuation of liabilities of collecting society or industrial assurance company);

(b) in section 18(1)(g) (power of Industrial Assurance Commissioner to require collecting society to furnish information additional to that required to be furnished under section 28 of the Friendly Societies Act 1896, and industrial assurance company to furnish information additional to that required to be furnished under the principal Act), the words 'all or any of such particulars as are mentioned in the Second Schedule to this Act, and'; and

(c) Schedule 2."

The noble Lord said: This new clause repeals certain provisions which are no
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longer needed in Section 18 of the Industrial Assurance Act 1923 and in the related Schedule 2 to that Act. Section 18(1)(b) of the 1923 Act prescribes in general terms the basis of valuation for an industrial assurance company or a collecting society. There is no similar prescription for other insurance company valuations, and it is thought inappropriate that legislation should attempt to lay down the principles of valuation. This is a matter which can safely be left in the hands of the professional actuaries who carry out valuations.
Section 18(1)(g) of the 1923 Act empowers the Industrial Assurance Commissioner to direct a collecting society or an industrial assurance company to furnish certain particulars relating to its valuation which are set out in Schedule 2 to that Act. So far as these particulars are needed they can be prescribed by the Commissioner, in the case of industrial assurance companies, by Regulations under Section 34 of the Insurance Companies Act 1958, and in the case of collecting societies under the power conferred on him by Section 98(3) of the Friendly Societies Act 1896. The power given by Section 18(1)(g) of the 1923 Act and the Second Schedule to that Act are therefore redundant. I beg to move.
Amendment moved—
After Clause 76, insert the said new clause.—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 77 agreed to.
Clause 78 [Interpretation of Part II]:
LORD WINTER BOTTOM: We have discussed this Amendment previously. I beg to move.
Amendment moved—
Page 62, line 7, after ("Act") insert ("'registered society' means a society registered or deemed to be registered under the Industrial and Provident Societies Act 1965").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: This Amendment was the subject of earlier discussion. I beg to move.
Amendment moved—
Page 62, line 11, at end insert—
("(3) A person shall not be deemed to be within the meaning of any provision of this

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Part of this Act a person in accordance with whose directions or instructions the directors of a company or other body corporate or any of them are accustomed to act by reason only that the directors of the body act on advice given by him in a professional capacity").—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 78, as amended, agreed to.
Clauses 79 and 80 agreed to.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, after Clause 80, to insert the following new clause:
The Isle of Man and the Channel Islands
".—(1) The provisions of this Act specified in subsection (3) below shall extend to the Isle of Man subject to such of the modifications specified in section 103 of the Friendly Societies Act 1896 as are relevant in the circumstances; and, notwithstanding anything in section 11 of the Petty Sessions and Summary Jurisdiction Act 1927 (an Act of Tynwald), a complaint relating to an offence under section 44 or 68 of this Act which is triable by a court of summary jurisdiction in the Isle of Man may be so tried if it is made at any time within three years after the commission of the offence and within twelve months after the date on which evidence sufficient in the opinion of the Attorney General of the Isle of Man to justify the proceedings comes to his knowledge, and for this purpose a certificate of the said Attorney General as to the date on which such evidence as aforesaid came to his knowledge shall be conclusive evidence.
(2) The provisions of this Act specified in the following subsection shall extend to the Bailiwick of Jersey subject to such of the modifications specified in section 104(1) of the Friendly Societies Act 1896 as are relevant in the circumstances and to the Bailiwick of Guernsey subject to such of the modifications specified in section 104(2) of that Act as are so relevant.
(3) The provisions of this Act referred to in subsections (1) and (2) above are the following, namely,—

(a) subsection (1B) of section 44 and subsection (2) thereof so far as it relates to carrying on business in contravention of the first-mentioned subsection;

(b) section 68(1A) and (1B);

(c) section 68(2) so far as it relates to section 39(2) of the Industrial Assurance Act 1923;

(d) section 71 so far as it applies section 35(2) of this Act to offences under subsection (2) of section 44 consisting in carrying on business in contravention of subsection (1B) thereof and offences under section 68(1A);

(e) section 76 and Schedule 4 so far as they relate to the said Act of 1923; and

(f) section (Repeal of certain provisions of section 18 of the Industrial Assurance Act 1923 and of Schedule 2 thereto)."

The noble Lord said: I beg to move the new clause. There are related Amendments, Nos. 61A, 63A and 63C and perhaps it would be for the convenience of the Committee if we dealt with them together, the new clause and the Amendments to Clauses 86 and 87. These Amendments extend certain provisions of the Bill concerning industrial assurance to the Isle of Man and the Channel Islands. This is necessary because the Industrial Assurance Act 1923 and the Industrial Assurance and Friendly Societies Act 1948 both extend to those Islands. The provisions of the Bill which Amendment No. 61Awill extend to the Islands are: (a) Clause 44(1B) and (2), which take over from Section 1 of the Industrial Assurance Act 1923 the restriction there imposed on the persons who may carry on industrial assurance business; (b) the provisions of Clauses 68(1A) and (1B), Clause 68(2) and Clause 71 relating to offences under the Act of 1923; and (c) provisions of Clause 76, Schedule 4 and the new clause to be inserted after Clause 76 which amend or repeal provisions of the Act of 1923.
Amendment No. 61A modifies the extension of the above provisions to the Isle of Man and the Channel Islands in the same way as the extension of the 1923 Act to those Islands was modified: that is to say, by reference to provisions in Sections 103 and 104 of the Friendly Societies Act 1896, which adapt expressions used and procedures laid down in that Act to the local law and procedures of the Islands. Amendment Nos. 63A and 63C are closely related. These extend to the Isle of Man and the Channel Islands the provisions of Clause 86 and Schedule 5 which repeal spent or obsolete provisions of the Industrial Assurance Acts 1923 and 1948, and the provisions of Clause 87 and Schedule 6 which repeal provisions of the Act of 1923 consequentially on provisions of the Bill. I beg to move.
Amendment moved—
After Clause 80 insert the said new clause.—(Lord Winterbottom.)
LORD HAWKE: I am afraid I have not understood a single word of what the noble Lord has said, but may I ask him a question? Does this control over mushroom insurance companies extend to companies set up in the Channel

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Islands, the Isle of Man and Northern Ireland?
LORD WINTERBOTTOM: This clause relates specifically to the Isle of Man and the Channel Islands. As we have seen from Clause 80, Northern Ireland is exempted from the impact of this Bill.
LORD HAWKE: If I wish to start a mushroom insurance company, do I start it in Northern Ireland, or is there a local provision there for local supervision?
LORD WINTERBOTTOM: Certainly the Northern Ireland Government will be expected to control this offence within its own sphere of legislation. Since this is a tricky point of law—I will not say of international law—I should like to write to the noble Lord on this subject. I do not know whether the cri de haro would apply in the circumstances since local procedures are being harmonised.
LORD MITCHISON: I hope that the Board of Trade are satisfied that they have covered all the Channel Islands. The Bailiwick of Jersey and Guernsey appears to include Alderney, Sark, Herm and Jethou, but I understand that there are small islands off the coast where there is still a dispute between this country and France as to which is the sovereign Power. No doubt on a matter of this importance—because one must chase fraudulent promoters to the very ends of the earth; they love setting up companies just about there—the Board of Trade has consulted the Foreign Office on the proper status of these islands.
LORD DRUMALBYN: May I ask the noble Lord a question of the same sort that I asked before? How is it that this Amendment comes to be moved at this time? I should have thought that if there was a question of extending this legislation to the Isle of Man and to the Channel Islands it would have been under consideration for some time. Like my noble friend, I am afraid I have not managed to grasp everything the noble Lord has said. We will, of course, study it between now and the next stage. But perhaps in the meantime I could at least ask this question. Has the noble Lord any reason to believe that any evasions of this Bill and of the Act of 1958, which is now in force affecting the people of
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this country, are taking place operated from the Isle of Man or the Channel Islands?
LORD BROWN: I think it would be fair to state that the original Bill which was drafted before the last Election did not have a great deal of insurance legislation in it, so the proposed legislation in this Bill is of fairly recent vintage and is extremely complex. It has made necessary a great deal of discussion with the profession of insurance, and it is not surprising that Amendments of this sort have had to be put in at this stage. It is not altogether a question of omission by forgetting or overlooking; it is a question of trying to get the Bill before the House on the date the Government wanted it, in the light of the fact that there were clauses that still had to be drafted. I am sure the noble Lord is familiar with the difficulties officials suffer from in this respect.
With regard to the second part of the question, as to whether we have anxiety about loopholes of this kind, I am afraid that to be quite certain I have to take note of the question and put it to those who drafted the Bill. We have to be very careful indeed about this. I have not researched into the matter, but I take it that it has been constantly in mind. It is a good question, and I will make it my business to inquire further.
LORD DRUMALBYN: Perhaps I could ask a further question. I apologise for my ignorance in this matter, but is it a fairly common procedure that the Board of Trade acts, or rather claims jurisdiction, if one can put it in that way, in certain spheres so far as the Channel Islands and the Isle of Man are concerned, this particular sphere being the insurance one? I should like to know how far this is common practice and, apropos of that, whether the approaches for the Isle of Man and the Channel Islands to be brought into this orbit came from this side or from the Isle of Man and the Channel Islands.
LORD BROWN: I confess that I should like to know the answer to that question also. I will seek it out and let the noble Lord have an answer as soon as possible.
On Question, Amendment agreed to.
Clauses 81 and 82 agreed to.
Clause 83 [Functions of Board of Trade under Acts relating to Companies]:
THE LORD CHANCELLOR: Clause 83 provides that the functions of the Board of Trade under the Companies Act, Insurance Companies Act and the Bill may be carried out by the President of the Board of Trade or Ministers of State, Parliamentary Secretaries or certain specified officials. These clauses are in the usual form, but the Board of Trade's functions under the Moneylenders Act 1900 (to exempt companies from the requirements of the Act by Order) should also be exercisable in the same way. This is achieved by this Amendment. I beg to move.
Amendment moved—
Page 63, line 23, after ("under") insert ("the Moneylenders Act 1900,").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 83, as amended, agreed to.
3.31 p.m.
LORD MACPHERSON OF DRUMOCHTER LORD MACPHERSON OF DRUMOCHTER moved, after Clause 83, to insert the following new clause:
Amendment of Registration of Business Names Act 1916
". The Registration of Business Names Act 1916, shall be amended as follows:—
(1) In section 1, at end insert the following new paragraph:
'(e) Every association of firms, individuals and companies, which individually are either companies within the meaning of the Companies Act 1948, or fall within the provisions of this section, whether or not such association is carrying on a business for profit.'.
(2 In section 14, at end insert the following new subsection:
'(3) The Board of Trade may prohibit the registration under this Act and the use of any name by any association of firms, individuals or companies to which this Act applies, if in the opinion of the Board the registration or use of such name is undesirable'."
The noble Lord said: This Amendment is, I hope, a non-controversial one and would implement one of the recommendations of the Company Law Committee. I am moving this Amendment principally in order to protect the chamber of commerce movement in this country by preventing the indiscriminate use of the name "Chamber of Commerce". The Association of British Chambers of Commerce submitted written evidence to
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the Jenkins Committee, the main point being that there is nothing to prevent any group of firms or individuals from presenting themselves to the public as a chamber of commerce, even though they may be quite unrepresentative of any particular business interests.
This is obviously an unsatisfactory situation which, so far as the public is concerned, has two major adverse effects. First, overseas interests, which are accustomed to chambers of commerce being semi-public law bodies, are misled into thinking that every so-called chamber of commerce in the United Kingdom is of the same standing. Secondly, there is no means of distinguishing between a genuine chamber of commerce, which is representative of industry, commerce, transport and the professions in the area, and an organisation which has a predominantly retail membership but which chooses to call itself a chamber of commerce rather than, as would be correct, a chamber of trade.
In the Memorandum submitted to the Jenkins Committee both incorporated and unincorporated chambers of commerce were dealt with. The position with regard to incorporated chambers does not in practice cause any difficulty because, although the title has no statutory protection, the Board of Trade uses the powers which it has under Section 17 of the Companies Act 1946 to ensure that no association of firms is incorporated as a chamber of commerce unless it can genuinely claim to be such. Therefore, the practical difficulties arise only in connection with unincorporated chambers because the Registration of Business Names Act 1916 does not give the Board of Trade power to refuse to register a business name on the grounds that it is undesirable. In the case of companies the Board has such power by virtue of Section 17 of the Companies Act and it uses it to ensure, after inquiry and consultation with the Association of British Chambers of Commerce, that only truly representative chambers are registered as companies. The Jenkins Committee accepted this point and recommended in paragraph 444 of their Report that the Registration of Business Names Act 1916 should be amended accordingly.
The first new clause which I am proposing would give the Board of Trade

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powers to deal, where necessary, with unincorporated chambers. Section 1 of the Registration of Business Names Act 1916 lists those classes of individual firms and companies to which the Act applies, and at present no provision is made for the registration of associations of individuals who would have to register on their own account if they adopted a business name. My first proposed Amendment remedies this omission. Section 14 of the Registration of Business Names Act is entitled "Misleading business names" but in fact it does no more than give the Registrar the right, subject to appeal to the Board of Trade, to refuse to register a business name which falsely implies British ownership, and forbids the use of a registered name where such would be prohibited on other grounds.
Subsection (2) of the proposed new clause would give the Board of Trade the right, through the register of business names, to refuse to register the name of an association of firms on the same grounds of undesirability as the Registrar of Companies is empowered to refuse to register the name of a company.
I should like to draw your Lordships' attention to the fact that my Amendment has been worded to cover only associations of firms, and thus the implementation of paragraph 444 of the Jenkins Report, and will not result in the Registrar of Business Names having to concern himself with other associations, such as social and sporting clubs. It will in fact do no more than give the Board of Trade the same power in respect of unincorporated business associations, including chambers of commerce, as it already has and uses in respect of incorporated associations. I beg to move,
Amendment moved—
After Clause 83, insert the said new clause.—(Lord Macpherson of Drumochter.)
THE LORD CHANCELLOR: I am, of course, familiar with the evidence given by the Association of British Chambers of Commerce before the Jenkins Committee and with the recommendation made by that Committee. I appreciate very much, if I may say so, the great clarity with which the noble Lord has put forward his Amendments. I should be inclined to think that in his first Amendment the first line in subsection (1)(e) should read,
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"Every association of firms, individuals or companies,"
rather than "and companies".
I am afraid I am unable to advise the Committee to accept the Amendment because this is dealing again with the question of names. We have already considered what Amendments there should be in relation to the Board's powers with regard to companies' names, and the Committee negatived this because it was assured that the whole question of names, which includes of course the Business Names Act, was being favourably considered by my right honourable friend for the next Companies Bill. I do not know whether the noble Lord was here on Monday.
LORD MACPHERSON OF DRUMOCHTER: I have read the noble and learned Lord's speech.
THE LORD CHANCELLOR: I was hoping that I might not have to inflict the speech on the Committee again; noble Lords opposite are familiar with it. I am afraid that is the position. There are, as I have said, some questions which my right honourable friend has had an opportunity to consider with his Department, but there are other questions which he has not so considered, and I am afraid the subject matter already chosen for this Bill goes as far as the Government can go in this Bill. Therefore I hope the Committee will take the same course with regard to this Amendment as it did with the other Amendment dealing with names.
LORD MACPHERSON OF DRUMOCHTER: I have been privileged to lead two delegations to Europe this year on behalf of the London Chamber of Commerce, to promote our export trade both in Northern France and in the Netherlands, and I can assure your Lordships that now that we are trying to move closer to our European neighbours it is imperative that we do not allow unscrupulous people to take unfair advantage of the present position and possibly prejudice our prospects. It must be borne in mind that chambers of commerce in certain circumstances are responsible for the issuing of such documents as certificates of origin. I am, of course, aware that the Government are trying to limit the Amendments to this Bill, and

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I have carefully studied the noble and learned Lord's speech on Monday evening and note that a further Companies Bill will be presented to Parliament some time in the future. But in the same speech the noble and learned Lord goes to great lengths to advise your Lordships of the tremendous amount of work being done and to be done by the Government and how difficult it is to plan and meet commitments in the Parliamentary programme. I should, therefore, like to ask the noble and learned Lord to allow this very small but so important Amendment to go forward and thus show the Government's support for those people who are dedicated to the promotion of our export trade. I assure your Lordships that this is a point of urgency to-day.
LORD ERROLL OF HALE: I wonder whether I may reinforce the powerful plea of the noble Lord, because here I speak also as a representative of a chamber of commerce being currently President of the London Chamber of Commerce. While I appreciate the noble and learned Lord's point on consistency, that having rejected one Amendment we should, to be consistent, reject this one, I submit that the two are not on all fours. This is a rather special Amendment dealing with the particular position of chambers of commerce and their role in the export drive. These certificates of origin are becoming of increasing importance to our export drive, where they are being increasingly required as proof of the origin of the goods being British. At the moment there is nothing to stop an unincorporated body from calling itself a chamber of commerce and proceeding to issue certificates of origin. This could be a very serious matter and prejudice the widespread acceptance of the authority and integrity of the certificates of origin at present issued by reputable chambers of commerce. It is for this reason, as well as for the fact that it was a strong recommendation of the Jenkins Report, that the noble Lord put forward the Amendment, which has the full support of the chamber of commerce movement.
In his long speech on Monday night—I have heard some of my noble friends describe it as a lecture rather than a speech—the noble and learned Lord suggested the Government had a great deal to do and even referred to the export
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drive. Here is a way in which the noble and learned Lord can live up to the lecture by applying its lessons to himself and accepting this Amendment, even in the slightly modified form in which he suggested it should be considered by the Committee. If he cannot give a direct answer to-day, perhaps he will say that he will consult his right honourable and very busy friend the President of the Board of Trade. He is no busier than I was, and we got through it without squealing; we did not need our Lord Chancellor to come and apologise for our being busy; we did not need that support and assistance. If the noble and learned Lord would undertake to put this matter to his right honourable friend, I am sure we might be able to persuade the noble Lord, Lord Macpherson of Drumochter, to withdraw his Amendment.
LORD BROWN: May I start by pointing out that the noble Lord, Lord Erroll of Hale, during his tenure of the Board of Trade never introduced a Companies Bill or an amending Bill, and that is why he had time to think about so many other things. I am impressed, as no doubt I was expected to be, by the reference to the important connection between this Amendment and exports. I say now that I will think about it and probably discuss it. I do not hold out strong hopes of amendment, for this reason; I think, with great respect, that the importance of the points made have been a little exaggerated. For example, it is not true that anybody can form themselves into an unincorporated chamber of commerce and proceed to issue documents of origin. The control over bodies that have that right is now very tight indeed. It is administered by the Association of British Chambers of Commerce, and a body cannot achieve that right unless it meets extremely stringent conditions laid down by the A.B.C.C., as it is referred to; so if this is one of the main legs of the argument, I do not think it stands. I accept that there is a great deal of concern about this subject, but the extent of the practice of irresponsible chambers of commerce is, I believe, extremely limited. Until legislation pursuing the line of this Amendment is introduced in a further Companies Bill—and we have intentions to look at it very seriously then—I do not

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think there is a great deal of danger of things going awry. It has been a matter of a good deal of scrutiny recently by the Board of Trade.
LORD MACPHERSON OF DRUMOCHTER: I should like to quote to the noble Lord an extract from the written evidence given to the Jenkins Committee on the use of the title "Chamber of Commerce":
"The Association is much concerned at the possible misuse of the title 'Chamber of Commerce'. A separate memorandum on the question is attached making suggestions how the matter should be regulated. Added importance is attached to the subject because Chambers of Commerce may in certain circumstances be required to give certificates of origin in connection with European Free Trade Area."
LORDBROWN: I note the paragraph. I personally had to deal with the Association of British Chambers of Commerce quite recently over new arrangements for the certification of other chambers of commerce. I can only repeat the information already given to the House. The matter is under strict control and no body of the sort indicated by the noble Lord can achieve to-day the responsibility of issuing certificates of origin. In the light of the discussion and the assurance that we will have another look at it and will take this point very seriously into account when we come to the further Companies Bill which we hope to introduce in the life of this Government, I hope the noble Lord will see fit to withdraw his Amendment.
LORD MACPHERSON OF DRUMOCHTER: I am not very experienced in the ways of this House. If I understood the noble Lord correctly that he says he will consider this matter, then I should be ready to withdraw my Amendment. But if his answer is that consideration will be given to it in another Companies Bill, I should feel slightly differently.
LORD BROWN: I think I ought to be quite specific about this. In the light of the important connection between the Amendment and exports, which the noble Lord has fairly successfully forged in his earlier remarks, I think it would be proper for me to say I will have this matter considered. But I added that I do not think the chances of getting this included
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in the present Bill are high, because of our desire to limit this Bill for reasons already given. In saying I will have it reconsidered, I do not want to mislead the noble Lord into thinking that the prospects of the Amendment, or words to give effect to the Amendment, being included in the Bill are high. Nevertheless, I will have it reviewed. Subject to that, I hope the noble Lord will withdraw his Amendment. I am not giving him a great deal of hope; I am giving him just a chink.
LORD MACPHERSON OF DRUMOCHTER: In view of the noble Lord's remarks, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 84 agreed to.
Clause 85 agreed to.
Clause 86 [Cesser of spent or obsolete enactments]:
LORD WINTERBOTTOM: I beg to move No. 63A.
Amendment moved—
Page 64, line 12, at end insert—
"(2) This section, and Schedule 5 to this Act, so far as they relate to the Industrial Assurance Act 1923 and the Industrial Assurance and Friendly Societies Act 1948, shall extend to the Isle of Man and the Channel Islands.")—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 86, as amended, agreed to.
Clause 87 [Short title, citation and repeal]:
LORD WINTER BOTTOM: I beg to move.
Amendment moved—
Page 64, line 21, at end insert—
("(a) each of the provisions of the Industrial Assurance Act 1923 specified in column 1 of Part (Repeals in the Industrial Assurance Act 1923) of Schedule 6 to this Act shall. to the extent specified in relation to it in column 2 of that Part, be repealed at the time so specified in column 3 thereof.")—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move.
Amendment moved—
Page 64, line 44, at end insert ("and this section and Schedule 6 to this Act, so far as

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they relate to the Industrial Assurance Act 1923, shall extend to the Isle of Man and the Channel Islands.")—(Lord Winierbottom.)
On Question, Amendment agreed to.
Clause 87, as amended, agreed to.
Schedule 1 [Amendments of Schedule 8 to the Companies Act 1948]:
3.52 p.m.
LORD DRUMALBYN LORD DRUMALBYN had given Notice of several Amendments, the first being, in paragraph 12(2)(c), after "tax" to insert "properly chargeable against profits" The noble Lord said: With the permission of the Committee I should like to take Amendments Nos. 64, 65, 74, 75, 77, 78, 83 and 84 together. They deal with the same point. The point here relates to capital gains tax. I am not absolutely certain that it is rightly taken in the first two Amendments but at any rate the point is relevant to Schedule 1. It is that capital gains tax is not always properly chargeable against profits. Indeed, if I could give the example of the investment trust companies, both by their articles and by law, under Section 37 of the Finance Act, 1965, they are prohibited from distributing capital surpluses as dividend. They are prohibited from taking capital surpluses to the credit of the profit and loss account. It would therefore he quite misleading to shareholders to show net profit after deduction of the taxation charge on these capital surpluses, as well as being contrary, I am told, to good accounting practice.
It is true that under the Finance Act 1965 capital gains taxes are included as profits subject to corporation tax; but it does not follow that in all cases the tax charge on capital gains should be shown as a charge against profits in the profit and loss account. There is surely no justification for confusing capital and income in company accounts. Whether it suits the Chancellor of the Exchequer to treat capital as income or not, it is surely indefensible to require companies to falsify their net profits by deducting a capital charge from revenue profit. Even the Finance Act 1965 recognises that, at least in the case of investment trusts, capital gains and tax chargeable on them are essentially capital items, since capital gains are charged at a special rate and credit for any capital gains reduced by tax is permitted to be passed on to shareholders. Clearly, this should
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be reflected in the accounts of the company.
Whether or not it is right in some circumstances for capital gains tax to be deducted from the profits in the profit and loss account, it is plainly wrong in the case of investment trusts. Amendment No. 65, therefore, qualifies the words "taxation of capital gains" by the words "properly chargeable against profits"; while the effect of Amendment No. 64 would be that only so much of corporation tax as was properly chargeable against profits would be shown. As I said, I am not at all certain that my Amendments are the right way to deal with the point; but at least I am certain that putting down these Amendments is as good a way as any of drawing Government attention to it. I beg to move the first Amendment.
Amendment moved—
Page 69, line 2, after ("tax") insert ("properly chargeable against profits").—(Lord Drumalbyn.)
LORD BROWN: I find myself in an unusual situation because the purpose of the words in paragraph 12(2)(c) are that the company is asked in its profit and loss account to show
"the amount of the charge for United Kingdom corporation tax"
and so on. On reading the noble Lord's Amendment I was of the mind that this meant that the whole of the corporation tax was to be charged in this way to the profit and loss account; in other words, when I was reading it I was of the same mind as I think was the noble Lord himself, and thus the Amendment. I have sought legal advice inside the Board of Trade trenchantly on the point, and I am advised that these words are intended to be construed, and indeed can be construed, in such a way that part of corporation tax can he charged against the profit and loss account and part against capital reserve, according to what looks to be common sense to the company concerned. In other words, if those who drafted this paragraph are right in the interpretation that can be put upon this matter, then the result will be a degree of flexibility which I believe will he quite salutary to all concerned.
I expect the noble Lord will agree with me on this point, because those of us who are concerned with company

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matters know that situations can easily arise where it becomes a matter of judgment as to whether one is dealing with a capital gain or a profit on current account. There are such occasions—if necessary I could give examples—where one requires flexibility. If the noble Lord will accept that the words are intended to mean what I have said they are intended to mean, and that they can be so construed, perhaps he will not persist with these Amendments. I will have the matter examined closely, because there has not been much time to make sure on this point, and if it is found that the flexibility that is intended to be written into this clause is not there, we will amend the clause to give that flexibility.
LORD ERROLL OF HALE: We are grateful to the noble Lord for the work that he has already done and is proposing to do in this matter. In his further examination would he make absolutely certain that the option will lie entirely with the company as to whether it charges the tax to capital or to profit and loss account to its own better advantage, and that such a determination cannot be upset by the Inland Revenue? Will he also ensure that the company may change the balance of the options at any time to suit its own advantage without the Inland Revenue being able to upset such a changed determination?
LORD BROWN: I will undertake to go into that point. I cannot, here and now, undertake to give total assurance on that point. I have not looked at this issue yet. One might be giving the most glorious loophole for tax avoidance, or something like that, that anybody ever dreamed of by agreeing to such a thing. But the intention in the paragraph as printed was to give flexibility at the discretion of the company, although I am sure it would not give flexibility for the company to indulge in massive tax avoidance, or anything like that. If we may leave the matter there, we will, as I say, take note of the discussion. I am sure that the intention on both sides of the Committee is the same, although the question of the best wording seems to be a little difficult.
LORD DRUMALBYN: I am grateful to the noble Lord for the assurance he has given. It is rather an odd defence
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of drafting to say "Well, the words can be interpreted in the sense in which the Board of Trade intended they should be interpreted." If he had said they can be interpreted only in that way, that would have been a different matter. But surely, while retaining flexibility, we must have some sort of clarity. I thought that my wording did just that. I hope that the noble Lord will, as he has said, look at the matter again. If he thinks it can be dealt with rather better as the Bill stands, that is fine; but I should have thought that if he cannot say more for the drafting of the Bill as it is now, then it should be altered.
LORD BROWN: I do not want to prolong this discussion, but it is only proper that I should defend the very hardworking officials who helped to draft these provisions. I think I have understood them aright in saying that they can be interpreted only in this way, and in giving me this advice the officials have referred to other provisions of the Bill which would back up that interpretation, but which I have not given the Committee, in order not to prolong the discussion. I do not think I want to be quoted as saying that it "can" be interpreted in this way. My advice is that it should be, and can only be, interpreted in that way. But I should like to be a little more certain on the point.
LORD HAWKE: The noble Lord has spoken of possible loopholes for tax avoidance, and so on. Surely this is quite irrelevant. Tax is determined by the Finance Acts. This matter is only a question of giving information to the stockholders.
LORD DRUMALBYN: Surely one comes back again to the same point. The noble Lord now says that he is advised that this can be interpreted only in this way. I concede that he means that it can be legally interpreted only in this way, but the fact is quite clear: that it has been, and will be, interpreted in other ways unless he does something about it. So will he please do something about it? I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.3 p.m.
LORD ERROLL OF HALE LORD ERROLL OF HALE moved in paragraph 12(3), after "(ga)" to insert "Subject to sub-paragraph (3) of this

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Paragraph". The noble Lord said: I think that it would be for the convenience of the Committee to discuss Amendments 67, 68, 69 and 70 at the same time. This deals with an important matter which was raised on Second Reading concerning private companies which are at present exempt companies. It follows one of the recommendations of the Jenkins Committee that, while exemption should be withdrawn in the case of private companies, nevertheless they should not be required to show details of three things: turnover, directors' emoluments, and rents. As time is getting on, I will not trouble the Committee by putting the whole argument again.
I would just point out briefly that the disclosure of rents in the case of a small company can be a very serious embarrassment to it when it has been encroached upon by a large company. This applies particularly to the retail trade, and can also apply to the small manufacturing business the subject of approaches by a larger firm who wish to take them over. If they know that the rent is small they can lower their bid, and it can put the small company at a serious disadvantage. Without prejudice to our consideration of the other two matters, namely, turnover and emoluments, I hope that the noble Lord can consider favourably exempting rents in the case of non-quoted companies.
Amendment moved—
Page 69, line 12, after ("(ga)") insert the said new words.—(Lord Erroll of Hale.)
LORD BROWN: Like the noble lord, I shall deal quite quickly with this matter, because I think that I can probably satisfy him. We do not agree that disclosure of charges for hire of plant is harmful; we do not agree that disclosure of rents receivable where they are material in the case of revenue is harmful. We cannot, for reasons I have explained on many occasions, treat one class of company differently from another, but we agree that disclosure of rents payable may be harmful. Therefore, we are prepared to omit from the Bill altogether the need to disclose rents payable.
Perhaps I could add the explanation that the original inclusion of the rents payable was in line with the Jenkins Report to take account of the company—and there have been a large number of cases of this kind in recent years—which has sold its property to receive
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capital and has rented it back on long leases. It seemed appropriate that these should be disclosed. Our difficulty was that in getting this information disclosed we also brought to bear the same onus on the tiny companies. We have come to the conclusion that it is not as important as it might appear because if a company in fact sells property in this way and leases it back, it will have to explain the source of the large amount of capital which it has acquired. In that sense disclosure of these major deals will come about automatically. Therefore, we propose to withdraw altogether the question of disclosure of rents payable. If noble Lords who have moved this big block of Amendments are prepared to withdraw them, we will make consequential Amendments to the Bill to give effect to what I have stated to be our intention.
LORD HAWKE: Is this matter of withdrawing the provision to disclose rent to apply to all companies? That would appear to be logical. I know what was exercising the noble Lord's mind in regard to the selling and renting back, but when one considers that the normal company expects to make far more money on the capital employed than it would be paying in percentage on the capital sunk in rent I think his point falls.
LORD ERROLL OF HALE: May 1 say how grateful we are for what the Minister has just said? It is a pity that he could not go all the way with us, but I am sure this important change will make a very great deal of difference to the large number of small companies, which at present feel they have been rather hard done by, under this Bill. We look forward to seeing the Amendments in the New Year—more hard work, I am afraid, for the noble Lord's Department. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD DRUMALBYN LORD DRUMALBYN moved, in the proposed new paragraph 13A of Schedule 8 of the 1948 Act to insert:
"(1) This paragraph shall apply except where the company is a private company or a company none of whose shares or debentures are for the time being dealt in or quoted on a prescribed stock exchange."
The noble Lord said: It might be convenient to take Amendments 71 and 73 together. These two Amendments deal

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with the other of the two recommendations made by Jenkins in paragraph 352 (ii)—namely, that unquoted companies should not have to disclose their turnover. The noble Lord, Lord Brown, has resisted the exclusion of unquoted companies from the requirement in Clause 17, but that clause does not affect companies which deal only in one class of goods. In any case, it only requires companies dealing in two or more classes of goods which differ substantially from each other to state the proportions—and only the proportions—in which turnover is divided between classes. The total turnover, therefore, cannot be deduced from the figures required by Clause 17 to be given.
As the Jenkins Report observed, the principal object of their recommendation that the privilege of exemption from filing accounts with the Registrar should be withdrawn was to provide creditors and prospective creditors of limited companies with adequate information from which to judge their credit status. Commenting on their recommendation that unquoted companies should not have to disclose turnover, the Committee said:
"We do not think that this limited exemption will materially reduce the value to creditors of the filed accounts of such companies."
It went on, after other observations, to say:
"We have limited the scope of the exemption to companies in which the general investing public will not be interested."
Disclosure of turnover could harm the interests of local companies. For one thing, it could make them vulnerable to attack in a number of ways by companies with much greater resources, especially to attempts to squeeze them out by the use of monopolistic practices of one kind or another. I think it is sufficient for me to move this Amendment quite briefly in those terms. I beg to move.
Amendment moved—
Page 69, line 44, after "13A" insert the said new paragraph.—(Lord Drumalbyn.)
LORD BROWN: The noble Lords on the opposite Bench have been so polite and courteous at various stages of this Bill that if my heart were in the right place I should almost want to give way, lust for the sake of being courteous: but I am afraid I cannot do so. It is the Government's view that the accounts which a limited company should publish for the
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benefit of those who trade with and extend credit to it should include information about turnover. The trend of turnover of three or four years could be significant information for creditors. There are other reasons, also, which I have given in arguing a similar point on other Amendments. There is a general wish on the part of the Government to have one class of limited company. We think we are doing something very important here in the long run.
If the Amendment is accepted, there will be exclusion of a large number of private companies which are of a very substantial size, and we do not wish to exclude them. Disclosure of turnover is of significant value to shareholders if they are watchful ones, and there are some watchful ones. Disclosure by the tiny firms, we admit, may be very bothering, but we think that this also has a silver lining to it. In many small towns all over America people know a great deal about each other's business. It is a stimulus to those tiny traders to know that somebody else, with the same kind of market and stock, is doing twice the turnover.
This is really the philosophy of being against secrecy. It is said that if we disclose the information there are dangers everybody is going to be frightened about it: it is a big change. But then we have steadily gone through the years towards more disclosure and less secrecy, and every step in this direction has resulted in people being fearful. Yet when we have got used to it for a bit we have looked back and said that it was rather foolish to be so secretive in the past. We must go on advancing in this way. As a nation we tend to be more secretive than other nations, and I think we have got to be a little bold. It is for these reasons that I would once more turn to noble Lords and say, "Please would you be good enough to withdraw your Amendment in the light of the comments that I have made?"
LORD INGLEWOOD: The noble Lord referred to my noble friend's Amendment as being concerned not only with small companies but with companies which were of substantial size. I wonder whether he would consider at a later stage changing these words so that companies of small size are exempted, because it seems to me, whatever he may say and

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with all his courtesy and smiling ways, that on balance small companies are going to be harmed as a result of this Bill.
I do not agree with him entirely that it is the function of Government to apply this stimulus. 1 should have thought that small companies ought to be allowed to be the better judge of their own affairs. On balance, I should have thought, certainly so far as smaller companies were concerned, that this was a body blow. I hope the noble Lord will look at the Amendment again, if he feels that as worded now it also exempts a number of companies of a very large size, who are in a position to defend themselves against the dangers to which the Bill at the moment exposes them.
LORD BROWN: This, again, is a point which has already been debated vis-à-vis other Amendments, and had we been able to exclude the "tinier", as I like to refer to them, we should have done so. But attempts were made by the Cohen Committee in 1945 to work out a boundary separating the very small companies from their larger brethren, and they gave up the job. They could not do it on any of the criteria available, and they produced the exempt private company scheme which we all know has proved an open gateway. We now have 300,000 exempt private companies. We do not know how to work out a de minimis provision. There is no watertight way of doing it, and the worst thing you can possibly do is to think you have erected a fence over which people cannot scramble, when in fact it is not that sort of fence at all and it lets everybody in. So we have come to the conclusion that we shall have to let the "tinies" face the brunt of these disclosures. You can make a horrifying story about this and say that it is going to be bothering for them, but it is going to have its good side.
LORD INGLEWOOD: Not very often.
LORD DRUMALBYN: I think that this is a matter on which at this stage, just before Christmas, we shall have to agree to differ. I think we can draw the margin of difference quite clearly. At no time have the Government been able to tell us how many of these 300,000 companies they think ought to be subject to the full rigours of disclosure, so we
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do not know what the division is. They have been prepared to concede that there are companies—and it must in the nature of things be a very large number of companies—which are going to be harmed at the smaller end. It must be so, because there are so many more smaller ones than bigger ones.
LORD BROWN: May I just interject to say that I must dispute the fact that they are going to be harmed? I used the word "bothered", but bothering may in very many cases be good for them.
LORD DRUMALBYN: I am not certain. I think that the noble Lord is underestimating the damage that can come to these companies as a result of making their affairs generally known. Some people will be avid to acquire them, and so forth. There are not many advantages to the small companies that I can see in this. The general point is, surely, that under Clause 2 of the Bill we are calling for a great change, the abolition of the exempt private company, with most of the privileges of exemption. Jenkins has recommended that all the privileges of exemption should not disappear at one time, and the question which the Committee has to decide is whether it is right to try to take this one very big step at one time, irrespective of the consequences, or whether, as the Jenkins Committee recommended, we should to some extent temper the wind to the lambs that are going to be shorn. I have tried to express it quite objectively, but I think this is the difference between us. We shall have to reserve our position on this matter until the next stage of the Bill. Meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.18 p.m.
LORD DRUMALBYN: This is a slightly different point, and I hope that the Minister will at least concede that sometimes disclosure of turnover may involve a risk of harm to a company and to the community in which is operates—a harm much greater than any likely gain. All this new sub-paragraph asks is that if a company feels that it can make a case, it will have an opportunity to do so to the Board of Trade, and it will be open to the Board of Trade to grant exemption. I beg to move.
Amendment moved—
Page 70, line 7, at end insert—
("(5) The Board of Trade may direct that this paragraph shall not apply to a company where they are satisfied that its application is not required in the public interest and would prejudice the company or might have a misleading effect.").—(Lord Drumalbyn.)
LORD BROWN: I do not think this Amendment is specifically directed at disclosure overseas. Had it been so directed, I should have been prepared to say that if the noble Lord would withdraw it I would have it looked at from that point of view. I think there may be a case for considering whether we should release a company from disclosure, in the event of unforeseen overseas occurrences. But if we were to agree in principle that the Board of Trade should receive on general grounds claims for exemption from companies which were not making the case that it was overseas reasons which caused them, then we should have an enormous number of claims for exemption which would be completely unhandleable. The whole purpose of the Bill in this respect would thereby be defeated, by the flow of claims.
So I would ask the noble Lord to withdraw this Amendment, and I will cause consideration to be given to a different type of Amendment that would possibly give leave for claiming exemption on the ground that overseas interests would be affected. I cannot guarantee that we will introduce such an Amendment—we shall want to look at it—but we will seriously consider doing so.
LORD HAWKE: The noble Lord has an obvious remedy if he is frightened of being overwhelmed. He should exempt all these people from having to produce the figure of their turnover. But he is quite right: there are many people who, if he accepted this Amendment, would come along with very legitimate reasons for wishing not to disclose their turnover. Think of the numerous component manufacturers scattered all over the Midlands, making components for the motor trade, for the big stores and so on. It is greatly to their disadvantage that perhaps their only buyer should know precisely what their turnover is. He can find their profit; he will know exactly what their margin of profit is, and the next time he goes along to buy from them he will try
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to screw them down a bit tighter still. The noble Lord does not really realise what an appalling disadvantage these firms are going to be put to by having to disclose their turnover.
LORD INGLEWOOD: May I suggest another example in support of my noble friend? Take the case of a small hotel of which the obvious purchaser is a large brewery company. The disclosure of turnover year after year puts that hotel in a far weaker position should the small company which owns it be obliged, for some reason or other, to dispose of it. It will be very cruel, and I cannot believe that it is the purpose of noble Lords opposite that every village pub and every small hotel should have its days numbered and should fall, one by one, into the hands of very large brewery companies. Yet that will be one of the results of these provisions, and that, I should have thought, was a bit more than this rather mild word "bothering", of which the noble Lord told us in the previous debate.
LORD ERROLL OF HALE: I should like the noble Lord particularly to think of the administrative problems involved. He is going to have to look through 300,000 company accounts every year to see if the turnover figure is put in. If you got anything like a sit-down strike on this matter and some 50,000 firms decided not to put the turnover figures into their accounts or their directors' reports, what are the Board of Trade going to do about it? They cannot run 50,000 prosecutions a year on this one point. There is a lot more of the Bill which is rather like this, and which it will he quite impossible to police. We should try to be law-abiding whenever the laws permit us to be law-abiding, and I am sure regarding most features of this Bill that most companies will try to put into their accounts all the unnecessary information which this Bill is demanding. But here is an item on which many small firms feel very strongly. They will say, "It will ruin our business to publish this. It is better to be called a law-breaker and be fined than to give this information away. "The Board of Trade will not he able to police this provision, and if there is mass evasion the whole thing becomes a nonsense. I do urge the noble Lord to think along these lines as well when considering the matter further.
LORD BROWN: It is strange that what appear to be quite logical ideas can be supported against or for a single idea. May I take the points which have just been made? The noble Lord, Lord Hawke, has referred to the single-customer concern in the Midlands supplying components, and how he is going to be damaged by a disclosure of turnover. It is possible to hypothesise a company which has a single customer in this way, but it is a jolly sight more difficult to produce a handful of them. If you liked to work on the basis of hypothesis, you could invent all sorts of situations in which this Bill would be extremely damaging, whereas on looking round one finds they do not in fact exist, or that one may be able to pick up just two or three examples out of 400,000 companies. That is my response to the noble Lord, Lord Hawke.
The question of hotels disclosing turnover and being snapped up has been raised. It was also raised in an earlier part of the debate on this Amendment. There are many small businesses in this country which are avid to be snapped up. You would not believe how many applications the larger companies get from smaller companies who wish to be taken over. This may be news to some people. Here is a privately-owned company—owned, perhaps, by the landlord and his sons and brothers—and they are approached by somebody who wants to take them over because they have seen that they have a large turnover. Why should this bother them? If I owned something which was valuable to me and somebody wanted to buy it, I should not mind so long as I had the discretion as to whether I sold it or not. I should be in a very good position. I may be very pleased to sell it in this way.
LORD SOMERS: Might I suggest to the noble Lord that the only reason for these large numbers of small companies who wish to be taken over is that present Government legislation makes it so difficult for them to carry on what they have to do?
LORD BROWN: That is rather a different point. But this cuts both ways. The disclosure of information always does. Those who argue that it is either good or damaging for somebody are
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always faced with the fact that disclosure of information can do anything.
LORD INGLEWOOD: Will the noble Lord allow me to ask him a question? He mentioned a turnover level, but, of course, turnover levels are going to go up and clown, so naturally they could be damaging. But why is it necessary for the Government to risk damaging these small businesses? That is what is not clear.
LORD BROWN: I have given the reasons—and I do not want to go all over them again—why the Government wish companies to disclose turnover. I merely wanted to deal with the questions raised by the noble Lord when he suggested that it would be damaging to these small businesses when somebody approached and wanted to buy them. I merely make the point that it is sometimes a very good thing. If it is a company with a large number of shareholders, then it is quite unfair to hide the turnover in order to prevent others from coming along and offering the existing shareholders a very good price, because they are entitled to have a situation in which it might be possible for them to get much more for their shares than they would expect from the trickle of income they may be getting from them. I do not want to go further into the point.
Finally, to come to the point made by the noble Lord, Lord Erroll of Hale, about examination of returns, he is well aware that the examination of returns by Companies House is done on a sampling basis. It must be. Returns of this kind are not done on a 100 per cent. inspection basis, and we are assured that this is not too much of a load on the people concerned. I do not think this is really a point which is going to disturb us a great deal in the future. We in this country are, fortunately, by and large, a law-abiding country. I know that the crime figures worry us all, but in matters of this sort the average citizen is inclined to obey the law rather than try to "jump" it. It is because of this that we are able to maintain law and order by taking samples.
So, having done my best to reply to the points made, I would again request noble Lords that they withdraw this Amendment in the light of my assurance

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that I will have the position examined vis-àvis the overseas situation.
LORD DRUMALBYN: I am grateful to the noble Lord for his willingness to examine this point further. My difficulty is to see how the overseas situation could possibly be affected, because there is only one single figure called for: the figure for turnover. Therefore, it can be affected only where a company is doing only an overseas turnover, so far as I can see. I may be wrong about that, but to the extent that I am wrong then I think the noble Lord's argument also falls regarding the sole buyer or sole customer, because it is not so much the case of the sole customer as of the case of the dominant customer being able to see the extent of his dominance. That is the case the noble Lord will really have to look at.
The point about this Amendment is not the question we were arguing on the last Amendment, whether small firms would or would not be harmed. Here, it is not a question of our claiming that all small firms will be harmed. What we are claiming is that they may be harmed. All this Amendment does is to enable those small firms that can show that there is a strong likelihood that they would be harmed to go to the Board of Trade and say, "Look, here is the situation. Will you kindly exempt us from giving this figure?". That is all. I do not propose to pursue this matter any further now. I know the noble Lord will look at these arguments again, and, on that assurance, I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
4.30 p.m.
LORD DRUMALBYN LORD DRUMALBYN moved, after paragraph 32, to insert:
"(32A) For the purposes of any requirements in Part II of this Schedule relating to turnover a subsidiary incorporated outside the United Kingdom or, being incorporated in the United Kingdom carries on business outside the United Kingdom, of another body corporate shall not be treated as a subsidiary of that body corporate nor that body corporate as its holding company."
The noble Lord said: This Amendment would limit the content of the figure for turnover to companies and their subsidiaries in the United Kingdom. This is probably more the kind of point the noble Lord had in mind. Considering
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that the Government are anxious that the value of exports from the United Kingdom should be disclosed, I think it is logical that the value of the turnover should also relate to the same source of supply, so to speak. In the case of an international company with headquarters in Britain, a global figure for a turnover (including the turnover of subsidiaries all over the world) converted into sterling at some arbitrary rate of exchange would, in some cases, be completely meaningless. I cannot believe that that is what the Government want. If they want the turnover, it surely should be the turnover in this country; then, if they are going to insist on exports being shown separately, a separate figure should be shown for exports. But it seems to me, even supposing you have just the turnover as a whole, that you can deduct the export figure but you will not in that case, for a company as a whole, get its turnover at home, because of the turnover of subsidiaries elsewhere. I suggest to the noble Lord that he is really asking for a completely meaningless figure here. I suggest that it be looked at again. I beg to move.
Amendment moved—
Page 74, line 18, at end insert the said paragraph.—(Lord Drumalbyn.)
LORD BROWN: The Government are looking at the question of the division of turnover because we are not satisfied that we have got it right. I do not want to go at this late hour into all the considerations that are passing through our minds. The effect of the Amendment would be to treat for this purpose certain companies which, in fact, are within the group as though they were outside it. Let us take the simple example of a holding company with one subsidiary. The Schedule as drafted requires the holding company to show its turnover with its subsidiary separately from its turnover with all other persons. If the subsidiary were incorporated abroad, or incorporated in the United Kingdom and operating abroad, the Amendment would permit the holding company to show a single figure for turnover; that is, to regard its trade with its subsidiary as trade with persons outside the company. I do not want to go into all the accounting reasons but, in fact, this could lead to something that would be an innocent falsification of the accounts. It is for this reason that we want to look at this

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question again; we do not think it is necessarily the right way to do it. If the noble Lord will withdraw his Amendment, the comments he made will be looked at seriously along with other considerations which are in our mind about the division of turnover into external and internal components.
LORD DRUMALBYN: I am much obliged to the noble Lord and I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
First Schedule agreed to.
LORD DRUMALBYN: I do not propose to move any of the Amendments (Nos. 77 to 84 inclusive) to the Second Schedule.
Second Schedule agreed to.
Third Schedule agreed to.
Fourth Schedule [Amendments (of minor nature or consequential on Part II of the Insurance Companies Act 1958 and the Industrial Assurance Act 1923]:
LORD WINTERBOTTOM: I beg to move Amendment No. 86.
Amendment moved—
Page 91, line 8, at end insert—
("Section 1 (companies to which Act applies)
In subsection (6), after the word "approved"there shall be inserted the words"for the purposes of Part II of the Companies Act 1966")
—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved to leave out Part II and to substitute:

PART II AMENDMENTS OF THE INDUSTRIAL ASSURANCE ACT 1923
Provision amended and subject Matter thereof
Amendment
Section 1 (industrial assurance business)
After subsection (1), there shall be inserted the following subsection—
'(1A) In this Act "industrial assurance company" means a body corporate which carries on industrial assurance business and "collecting society" means a society registered under the Friendly Societies Act 1896 which carries on such business, being a friendly society within the meaning of that Act'.
Provision amended and subject Matter thereof
Amendment
Section 7 (deposits by collecting societies)
In subsection (1), for the words from the beginning to the end of paragraph (b), there shall be substituted the following words:—
'Every collecting society shall be under obligation to deposit with the Accountant General of the Supreme Court the sum of £20,000 and to keep that sum so deposited while it carries on industrial assurance business, and the following provisions shall have effect with respect to deposits under this section, namely,—

(a) the provisions substituted b the Administration of Justice Act 1965 for sections 19(1) and 20(1) of the Insurance Companies Act 1958 shall apply for the purposes of this section subject to the modifications that for the references, in the provision so substituted for section 19(1), to section 2 of the Assurance Companies Act 1909 and paragraph 1 of Schedule 2 to the Insurance Companies Act 1958 there shall be substituted a reference to this section and that regulations under the provisions so substituted for section 20(1) shall be made by the Industrial Assurance Commissioner;

(b) a deposit under this section shall not be accepted except on a warrant of that Commissioner', and paragraph (f) shall be omitted."

The noble Lord said: This amended Part II of Schedule 4 preserves, with appropriate revision, the definition of "industrial assurance company" and "collecting society" in Section 1 of the Industrial Assurance Act 1923. The provision in Section 1(1)of the 1923 Act which now defines those terms is also the provision which restricts the persons who may carry on industrial assurance. That provision is being repealed (by Schedule 6, Part I) consequently on the embodying of the relevant restriction in Clause 44 and a new provision is therefore needed in Section 1 of the 1923 Act preserving the definitions. At the same time the definition of "industrial assurance company" is widened so as to tally with the class of companies in the new subsection (1A) of Clause 44 which may be authorised to do industrial assurance business.
The provision amending Section 7 of the 1923 Act is not a new provision. It is taken up from Part II of Schedule 4 to the Bill as presented. The reason for amending Section 7 is that this section defines the obligation of collecting societies to make deposits by reference to provisions of the Insurance Companies Act 1958 which are being repealed. The Amendment makes Section 7 independent of the repealed enactments, and preserves the present obligations of collecting societies in the matter of deposits and the Commissioner's power to make regulations respecting the varying or withdrawal of those deposits. I beg to move.
Amendment moved—
Page 92, leave out lines 2 to 26 and insert the said new Part II.—(Lord Winterbottom.)
On Question, Amendment agreed to.
Fourth Schedule, as amended, agreed to.
Fifth Schedule [Spent or obsolete enactments ceasing to have effect]:
THE LORD CHANCELLOR: I beg to move this Amendment standing in the name of my noble friend Lord Winter-bottom. The Amendment repeals various spent or obsolete provisions in the Industrial Assurance Act 1923. The reason for the reference to "with or without hard labour" is very obvious, on the face of it. If noble Lords want to know why any other particular section is spent, I will do my best to explain it.
Amendment moved—
Page 92 line 30, at end insert—

("13 & 14 Geo. 5. c. 8.

The Industrial Assurance Act 1923.

Section 4(4). In section 7, in sub-section (1), in paragraph (d), the words from the beginning to 'Act' and in paragraph (e) the words after the passing of this Act', and subsection (4).

In section 18, in subsection (1), the words ' made as at the thirty-first day of December, nineteen hundred and twenty-four, or any later date' and the proviso to paragraph (d), subsection (2), and in subsection (3) the words 'whether made before or after the passing of this Act' and the proviso.

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In section 24(3), the words 'after the expiration of five years from the passing of this Act'.

Section 24(5).

Section 30.

In section 40, the words with or without hard labour'.")

—(The Lord Chancellor.)

On Question, Amendment agreed to.
THE LORD CHANCELLOR: I beg to move the next Amendment standing in the name of my noble friend Lord Winter-bottom. This Amendment repeals various spent or obsolete provisions in the Industrial Assurance and Friendly Societies Act 1948. They are, in the main, provisions either deferring the operation of provisions of the Act until a certain period has expired or certain events have happened, and the period has long since passed or the event has long since happened.
Amendment moved—
Page 92, line 32, at end insert—

11 & 12 Geo. 6. c. 39.

The Industrial Assurance and Friendly Societies Act1948.

In section 2, in subsection (1), the words from "This subsection, and "onwards, and in subsection (3), the words "from the expiration of one year from the day appointed as aforesaid".

Section 5(3).

In section 6(1), in the proviso, paragraphs (a) and (b).

Section 10(4).

Section 11(4).

In section 12, subsection (1), in subsection (3), the words from the beginning to "Provided that" and subsection (4).

Section 17(2).

Section 19(1) to (4).

Sections 21 and 22.

Section 25(5).

Schedule 6.

—(The Lord Chancellor.)

On Question, Amendment agreed to.
THE LORD CHANCELLOR: The effect of this Amendment is to add Sections 3(3), 3(4) and 33(5) to the list of provisions in the Insurance Companies Act 1958 which are "spent or obsolete enactments" ceasing to have effect by virtue of Clause 86. Sections 3(3) and 3(4) were transitional provisions enacted in 1909 applying respectively to, first, mutual life insurance companies carrying

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on non-life business and established before August 9, 1870 (the date of enactment of the Life Assurance Companies Act, 1870) and, second, life insurance companies established before that date which might still have contracts entered into before that date. Section 33(5) was a transitional provision enacted in 1909 permitting any insurance company to continue to treat as life insurance business any non-life insurance business so treated under the provisions of any special pre-July 19, 1910, Act relating to that particular company. The Life Offices Association and the Industrial Life Offices Association have agreed that all these provisions are now spent and can be repealed. I beg to move.
Amendment moved—
Page 92, line 36, column 3, at end insert:—
("Section 3(3) and (4) Section 33(5).")
—(The Lord Chancellor.)
On Question, Amendment agreed to.
Schedule 5, as amended, agreed to.
Schedule 6 [Enactments repealed]:
LORD WINTERBOTTOM: I beg to move Amendment No. 91.
Amendment moved—
Page 93, line 2, at end insert:—
("PART (Repeals in the Industrial Assurance Act 1923)

REPEALS IN THE INDUSTRIAL ASSURANCE ACT 1923

Provision

Extent of Repeal

Time at which Repeal is to take Effect

Section 1.

In subsection (1), the words from the beginning to 'Provided that'

The passing of this Act.")

Section 39.

In subsection (4), the words from the beginning to 'three months'

—(Lord Winterbottom)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: I beg to move Amendment No. 92. The proviso to Section 5(1) of the Insurance Companies Act 1958 grants a concession to any mutual insurance company carrying on life assurance business
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or industrial assurance business where the profits are allocated to members wholly or mainly by abatements of premium, in that it permits such a company to make the abstract of the actuary's report (required by Section 5(1)) at intervals of five years, whereas other insurance companies carrying on those classes of business and allocating profits in a similar manner would in certain circumstances be obliged to make the abstract more frequently. It is considered, however, that there is no good reason why this particular mode of distribution of profits should be specially treated and that the proviso should accordingly be repealed. The Life Offices Association, the Industrial Life Offices Association and the Government Actuary's Department agree with this proposal.
Amendment moved—
Page 95, line 9, at end insert—

("Section 5.

In subsection (1), the proviso.

Section 8.

Subsection (5).")

—(The Lord Chancellor.)
LORD DRUMALBYN: Has this Amendment any practical effect? Section 5 says that every insurance company
"shall, once in every five years, or at such shorter intervals as may be prescribed by the deed of settlement of the company, or by its regulations or byelaws,"
cause a quinquennial investigation to take place. Has this really any practical effect?
THE LORD CHANCELLOR: I understand that in fact it has. There is no particular reason why this particular class should he treated differently.
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move this Amendment.
Amendment moved—
Page 95, line 22, column 2, leave out from ("except") to end of line 24 and insert ("as applied by the Industrial Assurance Act 1923 and except in relation to defaults in complying with requirements of the Act of 1958 occurring before the passing of this Act").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 95, line 33, column 2, leave out ("seven") and insert ("one").—(Lord Winterbottom.)
On Question, Amendment agreed to.
On Question, Whether Schedule 6, as amended, shall be agreed to?
LORD DRUMALBYN: May I ask two concluding questions?—I promise that they will be the last. Part II of this Schedule includes the repeal of Part I of Schedule 2 to the Insurance Companies Act 1958, which relates to mutual associations. We have just heard from the Lord Chancellor that there is no reason why mutual associations should be treated in any different way from anybody else. But they are different from anybody else, of course. There is an essential difference, and I wonder why that is now dispensed with. Also, paragraph 11 of Schedule 2 is to be left out. That paragraph says:
"Where, on the application of any insurance company, the Board of Trade are satisfied…that it carries on business wholly or mainly for the purpose of insuring a limited class of persons…"
and so on. This again is to deal with a special case. Is this provision to be regarded as spent? Is it no longer necessary? Will authorisation be required in each case by the Board of Trade? What is the reason for this also being dispensed with?
LORD WINTERBOTTOM: I am sorry that I cannot answer with certainty of accuracy the points made by the noble Lord, Lord Drumalbyn. With his permission I will write to him and give him the answer.
Remaining Schedule, as amended, agreed to.
House resumed: Bill reported with Amendments.

THE F 111 AIRCRAFT
4.46 p.m.
THE EARL OF KINNOULL THE EARL OF KINNOULL rose to ask Her Majesty's Government, first, whether they intend to reach a fixed contract price with the American Government for support costs for the British order of the F 111 Aircraft; and, secondly, whether they are fully satisfied with the new American escape system to be fitted to the
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aircraft in preference to the well-proved British ejector seat escape system. The noble Earl said: My Lords, it is perhaps almost out of keeping with the spirit of Christmas, and the obvious good will that is displayed on the countenances of those noble Lords sitting on the Government Front Bench, to raise a subject as serious and as important as the F 111 aircraft just before the House rises for Christmas. But I do so because in my humble opinion the second part to my Question raises an issue which involves the future safety of R.A.F. pilots, an issue which I sincerely hope the Government will reconsider for reasons which I will come to.
There have not been many debates in this House on the F 111 Aircraft in the past, for the very good reason that the Government virtually purchased the aircraft off the drawing-board, and since then there has been a rather natural silence while this aircraft continued its stages of development in America. I believe I am correct in saying that the last debate on this subject was held on May 16 this year when the noble Lord, Lord Shackleton, answered in some detail and, if I may say so, with great care, certain criticisms of the future operational performance and deployment of the aircraft. The noble Lord, I am sure, will be pleased to hear that I do not intend to cover the same ground again and would not, naturally, expect him to feel obliged to do the same.
The disadvantage of taking part in that three-man debate, if I may so call it, of last May was that neither the noble Lord. Lord St. Oswald, who I hope may support me to-day, nor myself had had the Privilege of having flown in the aircraft, having seen it in the flesh or even having seen a film of its flying capabilities. I do not think that on that occasion the noble Lord, Lord Shackleton, committed himself as to how far his own personal experience had gone in this field; but whatever the gaps were, he certainly showed a complete mastery of his brief. At that time he explained that the Government had negotiated with the American Government a maximum ceiling price of £2·1 million for the basic F 111 which could prove cheaper if the United States programme worked out at a lesser cost. In fact, I understand now that the Government are purchasing a version of the F 111 knowns as the F111C, and perhaps

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the noble Lord will explain later whether the basic ceiling price for this modified version has now been agreed with the American Government.
On that occasion the noble Lord went on to explain that the total programme costs for the entire 50 aircraft, which would include both the original cost of the aircraft and the subsequent support costs, had been estimated at£280 million over the next ten years—in other words, just over £5½ million per aircraft. This figure was to include spares which would be made available, he advised us, at the same price as will be charged to the American Air Force by the manufacturers. That, briefly, my Lords, was the position as stated by the noble Lord, Lord Shackleton, last May.
Within the last few weeks I have had the privilege of meeting the only British test pilot so far to have flown this aircraft, Wing-Commander Fletcher, who, as the House may know, has been on three or four sorties in the early prototype of the aircraft. I must say, in fairness, that the impression one formed from meeting him was that this was a remarkable aircraft which incorporated great technical advance. Perhaps one of the drawbacks to a pilot was that it is so computerised and so automatic that it leaves the pilot feeling almost redundant.
I have also had the good fortune in recent weeks to see an unclassified film of the F 111 which demonstrated clearly the extraordinary simplicity and flexibility in the design of the servicing of this aircraft's equipment. It appeared from the film—the noble Lord will correct me if I am wrong—that the engine and its equipment is divided into sections, which can be readily withdrawn from the aircraft and replaced in a matter of moments. Although one could not but help admire the system of servicing, one formed the firm conclusion, from watching the film, that the cost of spares and the method of replacing them would prove exceedingly heavy and I venture to say would come well above the Government's present estimate.
I come now to the specific questions I should like to put to the noble Lord this afternoon on the support cost of this aircraft. First, do the Government intend to encourage British firms to manufacture under licence electronic spares of this aircraft? I deliberately limit this question to electronic spares as I am advised
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that it is a field for which we are geared and in which we are competitive. I need hardly mention to your Lordships the benefits which would accrue if orders for these could be placed with British firms.
Secondly—and I base this question on information I have just received—would the noble Lord explain why it is that the F 111 project branch of the Ministry of Defence are considering at this moment placing an order of the probable value of 15 million dollars with an American firm for the supply of automatic test equipment for the R.A.F. version of this aircraft, when it is known that the British industry is quite capable of meeting the technical requirements for the aircraft and at a much lower cost? Would the noble Lord also explain why not a single British company has so far been invited to tender for this equipment? The noble Lord, Lord Shackleton, has a very high reputation in this House for answering as fully as he is allowed to, and I hope that on this occasion he will give as much information on this second question as he can.
THE MINISTER OF DEFENCE FOR THE ROYAL AIR FORCE (LORD SHACKLETON): My Lords, I am bound to say that this is wholly outside the terms of the Question on the Order Paper. With the best will in the world, if the noble Earl wants this sort of information he really ought to put down a Question that relates directly to it. This is a question of the supply of British equipment and I cannot see how it fits into his Question. I am sorry.
THE EARL OF KINNOULL: I am sorry, my Lords, if misinformed the noble Lord. My question was on the support cost of this aircraft and I considered that the question I have just put was covered by that point.
To turn to the second half of my Question, the House will be aware, I am sure, that among other revolutionary designs incorporated in this aircraft is a new system of escape known as the eject-able crew module. This system has been designed to allow the pilot, at the push of a button, to abandon the aircraft. The effect of this button will he to trigger off a number of small charges aroundthe cockpit, which in turn will cause the separation of the cockpit in its entirety from the body of the aircraft. From that

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moment the cockpit becomes a sealed container, with the pilot, co-pilot and all the instruments comfortably inside. It is then designed to float down gently to earth with the aid of an umbrella of parachutes.
I must admit that on the face of it the theory of this system has a number of advantages over the ejector seat. For instance, it is claimed that it will allow shirt-sleeve flying environment for the crews, with a lot more comfort, where the pilots will be free from all the paraphernalia normally associated with the ejector seat. Secondly, it has been suggested that the module will operate with much greater safety than an ejector seat at high altitudes and will have the advantage of acting as a survival shelter for the crew on land or sea. It is also claimed that it will give the pilots a better chance of survival when ejecting at a combination of high speeds and low altitudes. The tremendous amount of G-force built up on deceleration in such circumstances can, of course, severely rupture human organs and lead to the ultimate death of the pilots.
All these advantages are claimed over the ejector seat, but the problem of the true assessment of these claims remains frustrated at present, for whereas the ejector seat has a record of twenty years of practical and life-saving service, in which the lives of 1,420 pilots have been saved, the module, so far, has not got further than the development stage of being fired from a rocket-driven sledge and being dropped from a B 52 aircraft, neither of which, I suggest to your Lordships, can fairly represent all the conditions of a likely emergency.
It will not surprise the noble Lord to learn that the specification of this module has been studied in some detail by the British specialists in this field, and here, of course, I refer to the Martin Baker Aircraft Company, whose ejection seat is renowned throughout the world. In the light of their considerable experience, the conclusion that has been reached is that the present specification of the module, which calls for safe ejections at all the aircraft's speeds and altitudes, cannot possibly be perfected in the short time left before this aircraft is due to go into service with the Royal Air Force. I say "in the short time left" deliberately, because for a testing programme as delicate as
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that for an escape system, where accuracy and thoroughness may decide the life or death of many pilots, one year in development time is a very short period indeed. What is genuinely feared is that, unless the decision on the module is reconsidered now, the time will come by mid-1967 when the noble Lord's Department will be faced with the agonising problem of accepting the aircraft into service with only a partly proved escape equipment.
It may be of interest to the noble Lord to know that a recent analysis of statistics was shown to me of all the successful and unsuccessful ejections in a Martin-Baker seat over the last few years. This information is available to the noble Lord, of course, if he wishes it afterwards. The purpose of quoting this analysis is that many of these conclusions affect the module just as much as they affect the ejection seat.
The main conclusions were as follows. First, the most likely conditions to cause fatal ejections from aircraft are a combination of low altitude and high sink rate; secondly, abandonment rarely takes place in practice above an altitude of 20,000 feet; thirdly, the majority of ejections at low altitudes take place at indicated air speeds of around 200 knots. It also may he of interest to the noble Lord to know that the recovery rate in ejections from the Martin Baker seat in 1965 stood at 92 per cent., whereas the recovery rate from the best American seat available was only 76 per cent. It may also be of interest to the noble Lord to learn of some of the doubts that have been expressed about the capability of the module. The question has been posed: How, in practice, will the module perform in low altitudes when the aircraft is in a steep dive, and would it prove better or as good as the ejection seat? Secondly, can it be guaranteed that at high speeds and low altitudes the module will be able to separate successfully from the body of the aircraft? Thirdly, has it been established that the drastic effects of deceleration will not be felt inside the module upon ejection?
The purpose of my Question to-day is not to claim that in the long run the ejection seat will always be superior to the module but to remind the noble Lord that at the present time the ejection seat is far ahead of the module, in both

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practice and experience. The Martin Baker seat has been in operation since 1945 and has so far saved 1,420 pilots' lives: some of them have been saved three times by the seat, and others have been saved twice within the same week.
With this great record behind the seat, is it right to abandon it at this time for the sake of an untried module in a highly advanced aircraft? The Minister, in his reply, may say that the tests on the module are progressing satisfactorily and there is no need for alarm. If this is his answer, will the Minister be prepared to give this undertaking to-day: that none of these aircraft will come into service with the Royal Air Force until a number of live ejections from the module have taken place which clearly demonstrate and prove that its capabilities live up to its specification?
5.1 p.m.
LORD KINGS NORTON: My Lords, I should also like to comment on the escape system of the F 111 aircraft. For the Americans to be satisfied with it is not enough. They were presumably satisfied with the response to their specifications for escape systems in earlier American aircraft, but in fact their ejector seats have never approached the standards as set up by the seats designed by Sir James Martin, which have become our standards. Sir James, whom I know well, is a most extraordinary man. He is one of the great engineers of our time; one of those gifted people for whom nature's laws are second nature, and his designs are masterly. As the noble Earl, Lord Kinnoull, has said, they have saved the lives of over 1,400 men, and, incidentally, over 30 per cent. of those are Americans.
Two American engineers, Mr. Bradfield and Mr. Thommason, presented a paper at a conference at Houston, Texas, at the beginning of September, in which they said:
"In '56 Martin Baker Aircraft Company Limited completed the design of the first dual automatic ground level escape system. This system, even to-day, ten years later, maintains the highest success record of any system in use."
Mr. Bradfield and Mr. Thommason go on to quote figures to prove this point which are similar to those mentioned by the noble Earl, Lord Kinnoull. They say that the United States Navy record
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a success rate of 79 per cent. for American rocket assisted seats, as opposed to 90 per cent. for the standard Martin Baker seat. In other words, out of every 100 people ejected by other seats, twenty-one die, but with Martin Baker seats only ten. Sir James would say that current figures show an even greater disparity in his favour, because his latest rocket seats have rocket motors which improve upon the already stupendous Martin Baker performance.
I make these remarks because I believe that in Sir James and his organisation we have a tremendous facility for solving these ejector problems, and a tremendous asset which we should always use to the utmost. I should like to offer a suggestion to the noble Lord, the Minister, who will shortly speak. However satisfactory he may feel the American solution for escape from the F 111 aircraft is likely to be, it would surely be prudent, against the background which the noble Earl, Lord Kinnoull, and I have sketched, to have an insurance policy. I suggest, with respect, that he should arrange for a contract to be given to the Martin Baker Company to design their solution to the problem of escape from this aeroplane. If this were done, I would suggest further that it might be possible thereafter to test the American and the Martin Baker systems for the F 111 under the same conditions, and the system demonstrated to be superior should be adopted for our F 111s.
5.5 p.m.
LORD SHACKLETON: My Lords, we have, as always, had a persuasive and well-informed speech from the noble Earl, Lord Kinnoull, and I should like to echo his expression of goodwill, tempered, T must say, with some regret that, while I fully agree with his commendation of the Martin Baker ejection seat as an outstanding example of British initiative and design, I really cannot accept the substance of his case as regards the F 111. I should like to make it clear that this is in no way a reflection on the Martin Baker Company, and least of all on Sir James Martin, to whom so many flyers owe their lives and whose great achievement has been not so long ago recognised. I should like to make it clear, also, that there is no suggestion of any rejection of his particular achievement or the quality of his engineering.

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I wish first to put the matter in context. The new American escape module is not peculiar to the F 11ls that the R.A.F. are to have. It is, in fact, being developed for the many hundreds of F 111s which the United States Air Force are going to purchase. We had, therefore, to decide whether in this particular respect the F 111 did not meet our requirements. Apart from the implications in terms of cost and time of requiring ejection seats to be specially fitted to our small order of 50 aircraft—and I stress that we are talking about a relatively small order—the key factors to be considered were the module specification and the likelihood that the development programme would be successful. It is at this point that, perhaps with the advantage of greater knowledge, if not direct knowledge (and I am not sure that my own personal knowledge of the module or the aircraft would effectively replace it), the advice that I get from my expert advisers is to query whether this development programme would be successful. We are watching this very closely.
I would say to the noble Lord, Lord Kings Norton. that one would greatly respect the views of Sir James Martin. But I would suggest—although there may be those who on occasion think that the Air Staff do not always get things right—that this is a matter of such importance that it has been very closely watched, and we are monitoring the programme. It is going well, and a performance at least as satisfactory as that of any ejection system can be, according to my advice—and I have gone into this matter pretty deeply—is to be expected long before the Royal Air Force take delivery of their first F 111 s in December. 1968. In these circumstances, we see no reason to reconsider our decision to accept the escape system which the United States Air Force have specified. We are interested to see that this new concept should be developed.
Let me explain the two systems in more detail, because, as on so many of these matters, it is the technical detail that is decisive. When a pilot uses an ejection seat—and again I fully acknowledge the value of the latest prototypes of the Martin Baker Company—to escape from his aircraft in emergency, he is exposed
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immediately to the outside environment. This can, depending on the circumstances, be a very hostile environment indeed. In the worst case this could be at high speed, at high altitude, over a cold and possibly a stormy sea. He must therefore carry adequate clothing for protection against air blast and immersion in cold sea (I do not know whether the noble Earl has ever worn an immersion suit, but it is not the most comfortable thing), a restraint system to prevent his limbs flailing when he meets the air blast; an emergency oxygen supply to sustain him until he reaches a lower altitude; an elaborate helmet and oxygen mask assembly designed to withstand air blast; a life raft and survival equipment, and a personal locator beacon. All this has to be done on the individual.
The capsule, on the other hand, comprises the whole of the pressurised cockpit, and escape in this way allows an airman to remain in the same environment throughout the descent, with full protection against blast, and it is, furthermore, a lifeboat or shelter as well. It offers space in which emergency oxygen and other supplies can be stored without being attached to the person, thus simplifying any flying clothing and equipment which must be worn, thereby increasing crew comfort, and therefore reducing crew fatigue, which is important in view of the long hours that can be spent in these aircraft, even in normal operations.
THE EARL OF KINNOULL: My Lords, may I interrupt the noble Lord? I think he is describing the capsule. These are conditions where it lands satisfactorily, and is not damaged; but in adverse conditions possibly the capsule could be damaged.
LORD SHACKLETON: If the noble Earl will allow me to continue, there is a judgment of balance of risks and advantage in this, and I am putting the case as we see it in the Air Force Department. Where, of course, there are two crew members, as in the F 111, both leave the aircraft together, and this avoids problems of ejection sequence for which fully satisfactory solutions have still to be developed for the ejection seat system. In principle therefore—and I do not think any noble Lord will disagree with this—the capsule concept is a step forward from the ejection seat system, which becomes

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increasingly hazardous over the speed of 450 knots. Indeed, I would say that the ejection seat is approaching the end of its development potential. In the case of the F 111, the specification calls for safe ejection at all the aircraft's speeds and altitudes, including under-water escape from 30 ft. (which may or may not be of great importance) and the capsule is to provide a survival shelter for up to three days on land or at sea.
The noble Lord made play of the fact that the ejection seat has served us well for a number of years; and I fully agree. But there is some argument in favour of progress. There are safer ways of travelling around at the moment than in high-speed supersonic aircraft. In the last resort you can go by railway train, although the hour of arrival may be slightly uncertain, if I heard the noble Lord, Lord Boothby, aright on the B.B.C. the other night.
LORD BOOTHBY: My Lords, we are now approaching Christmas. Could the noble Lord be slightly less gloomy?
LORD SHACKLETON: I was endeavouring to lighten the atmosphere by referring to the noble Lord, Lord Boothby, which I thought was certain to raise some hilarity. But the noble Earl raised his Question as a serious one, and I think it is up to me to answer it seriously. Until the trial programme is completed about the middle of next year, on the present timetable, it will not be possible to give an absolutely final answer as to the realistic nature of that programme. At this stage my own description would have been "ambitious." I would remind the noble Earl that the equipment is being developed by the company (MacDonnell) who are responsible for the United States Mercury space capsule. I would also say that the development of the capsule has reached a stage where its performance has already been proven almost to the same limits as ejection seats, and this gives us some real grounds for confidence.
The noble Lord referred to the question of ejection at high speeds and high altitudes, and he said that these are rare. I should not have thought, however, that this was an argument against further progress, and if technological advance offers us an opportunity to provide an escape system that will operate successfully
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throughout the full spectrum of the aircraft's flight envelope, we should encourage its development. Here again, I would suggest to the noble Lord that these statistics which he has quoted, and which I freely acknowledge, are based almost, though perhaps not entirely, on peace-time operations, and they are no guide to what is needed against the risk of hostile encounters at high speed and altitude.
THE EARL OF KINNOULL: They are based on Vietnam, as well.
LORD SHACKLETON: To find supersonic aircraft operating in those conditions is very rare indeed; and even when they do it is a comparatively small number. I should have hoped that we were right to look ahead to improve techniques. Indeed, as long ago as 1962 the British Naval and Air Staff formulated a staff target for an escape capsule for advanced aircraft, and the Americans have now introduced this concept into the F 111. There are no grounds known to me why we should take the view either that they are wrong in principle to do so or that the development progress of the capsule is such that it will not give at least as good a performance as we could get from an ejection seat.
LORD ST. OSWALD: My Lords, I wonder whether I might ask a question. The noble Lord referred to performance at high speeds. I am sure there is some worry about the performance close to zero height and zero speed. Obviously, one does not want an ejection at zero height or zero speed, but at low speed and low altitude. Could the noble Lord say something more reassuring about that?
LORD SHACKLETON: I would say to the noble Lord, who used this curious jargon with which he was wrestling, and with which we all have to wrestle, that a zero-zero ejection is a definite possibity—in other words, at no speed and on the ground.
LORD ST. OSWALD: But it is a rare thing.
LORD SHACKLETON: I am not so sure, and I think one of the great difficulties we have had recently in relation to the Martin Baker seat is safety of ejection if possible on the ground, with the aircraft moving on an abortive takeoff,

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which in certain circumstances may well require ejection. We are confident that it will meet the zero-zero requirement. I am grateful to the noble Lord, because this is important. It is our view that it will meet all these vital low-level requirements and give an added advantage in the more extreme conditions of great height and supersonic flight, particularly in circumstances where an ejection may be required almost at a split second.
LORD BOOTHBY: Did the noble Lord say "ejection" or "injection"?
LORD SHACKLETON: If the noble Lord will continue to keep his merriment over Christmas, what I said was "ejection"; and if I did not, that is what I meant to say. The Americans have now introduced this concept and, as I say, we hope that we shall get as good a performance as we got from the present ejection seat in comparable circumstances, and better in others.
These are matters of great importance to the Royal Air Force, and the last thing I would do—and I stress this again—would be to discount the very real achievements of the ejection seat, which is a British development of quite outstanding value, both to this country and to the world. The capsule which is now being developed gives us a chance to move forward. I assure your Lordships—and one is always nervous about the possibility of being wrong in anything with regard to aircraft equipment—that we have looked into this matter most carefully, but for the reasons I have mentioned we do not consider there are any grounds for accepting that the R.A.F. F Ills should not have the escape features currently proposed in the design of the basic F 111 aircraft.
In regard to the question of consulting Sir James Martin, certainly the noble Lord has in fact indicated some of Sir James Martin's views and, speaking for myself, and indeed for the Air Force Department, we should be willing to listen to any observations he may care to make, but I can only repeat that we ourselves have a great deal of experience of ejection seats, and this is something to which we have devoted careful attention.
Let me now turn to the other part—
THE EARL OF KINNOULL: My Lords, before the noble Lord does that, could he perhaps mention the final point of my speech, whether in fact he would give an undertaking that a live ejection from this module would be made before it went into service with the Royal Air Force?
LORD SHACKLETON: My Lords, I believe that in his original remarks the noble Earl referred to "a number of live ejections". I do not think I can give an undertaking of this sort. I do not doubt that this is being tested fully and that there will be such live ejections, but clearly this is a matter on which we shall have to exercise the best judgment we can bring to bear.
LORD ST. OSWALD: My Lords, before the noble Lord passes to another matter, I should like to say that the reassurances he has given are welcome and, coming from him, impressive. There are, however, one or two questions which I though he might be answering in the course of his speech, and therefore I did not put down my name to speak. First, I understand that the apparatus is heavy; that is to say, it adds to the weight as well as to the expense of the aircraft itself, and I should have thought the weight must increase the problems of handling and range. I wonder whether this is so.
There is also the problem, which no doubt has been overcome, of the separation of the control connections—the wiring, the cables and so on. I am not intentionally springing this as a surprise on the noble Lord because I know how well informed on technical matters he is, but there are problems associated with spinning in the air which are not associated with an ejection seat; and also there is, I am told, a greater bang at high speeds than with the individual ejection seat. I am quite prepared to hear that these factors are, as the noble Lord said, balanced against other advantages, but I should like to know whether he can say something reassuring on those points.
LORD SHACKLETON: My Lords, I am gratified by the noble Lord's confidence in my ability to answer technical questions off the cuff. When he said a "greater bang", I presume he meant that the individual goes out with greater force and there is increased G as a result of it. There are certain technical difficulties,

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especially in the trans-sonic area, in an ejection with this capsule owing to the aerodynamic effects of the capsule. This is one of the problems that is in process of being overcome in the development stage. I do not know about the problem of spinning. I have not heard of this one, but I will let the noble Lord know. I should have thought that there were no insuperable difficulties in overcoming this.
LORD KINGS NORTON: My Lords, I just want to emphasise two points. First of all, I was not arguing against the capsule but in favour of an insurance policy. Secondly, most noble Lords have spoken as if this were a case of module versus ejector seat. Again, that was not in my mind. I should hope it would be possible to invite the Martin-Baker Company to design (if they think it is the best solution) a module, having in mind that with their relatively limited facilities but extremely high I.Q., they have in the past defeated the best efforts of the best American designers in this field, even though the latter have vast resources.
LORD SHACKLETON: My Lords, I fully take the noble Lord's point, and there is nothing we should have liked better. But I must stress two things. First, the module is an integral part of the aircraft to a greater extent than an ejection seat and, secondly, the cost really would be prohibitive. One of the difficulties with the F 111 purchase is that it is a comparatively small one and we have not therefore been able to get nearly as much British equipment into it because it would have added greatly to the cost. I mentioned in our previous debate that there are certain increases in cost as a result of certain alterations made to the aircraft, both to meet the British specification and to some extent to meet British suppliers. I would say to the noble Lord, Lord Kings Norton, that it is simply "not on". The cost of developing this would be enormous and at the moment it is being spread by the Americans over this huge number of F 111s.
I should now like to turn to the first part of the noble Earl's Question, and I was going to say that now that the noble Lord, Lord Boothby, has gone, I can make a slightly grimmer remark, but
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perhaps he is not attending at the moment. However, I think the noble Earl has pulled a slightly fast one by putting in this further question quite unrelated to the original Question, at two day's notice. I do not say this in an offensive way. I should have thought that if he wanted to deal with the second point it would have been better to deal with it as a separate question, but I will answer the point as best I can.
First of all, he said we bought this aircraft off the drawing-board. In fact, at the time we ordered it there were twelve flying, and I think this is a point worth stressing. Therefore I think he was a little unfair in saying we had just bought it off the drawing-board. The noble Earl also asked whether we would encourage British firms—this is all quite separate from his original question on the ejection seat—to manufacture electronic spares for our F Ills. I do not know whether he really thinks it is economic for them to set up separate production lines for British copies of United States spares for our small number of aircraft. I should have thought it was inherent in the whole policy that has been explained that it is better to draw spares from the large United States production at the same price and priority as the United States Air Force; but if he has in mind any particular item I shall be glad to look at it, and so, I am sure, would the Ministry of Aviation—or rather, it will be the Ministry of Technology.
The noble Lord asked a question about the automatic test equipment for the F 111 Avionics. This is another googly. I am not protesting because I rather like trying to play googlies. I can say that the question of whether suitable British equipment should be developed for this purpose is being looked at urgently at the present time by the Ministry of Aviation and the Ministry of Defence, and subject to the problems of time scale and cost we should naturally prefer to buy British equipment, but at this stage I cannot forecast what our position will be. At least I have gone some way towards meeting the noble Earl.
THE EARL OF K INNOULL: My Lords, while thanking the noble Lord for going as far as he has gone, I think it has been a surprise to many of the manufacturers that they have not even been

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given a specification for this equipment, let alone been approached.
LORD SHACKLETON: My Lords, I note what the noble Earl has said. If he wants to give me any details of what is involved in this I will certainly look into it, but we should wish in relation to time and cost to have British equipment.
The noble Earl asked a question on whether we intended to negotiate a fixed contract for support costs. A re-reading of the Official Record of our previous debate on May 12 would suggest to me that the noble Earl understands the position exceedingly well. Indeed, on that occasion he appeared to regard the matter as satisfactory. The noble Earl certainly did not query the arrangements which we have with the United States authority under which, through their Co-operative Logistic Systems, we can get spares at the same price as the United States Air Force do. Indeed this arrangement, as does the noble Earl's Question—though I am not sure whether he intended this—goes further than the supply of spare parts; it allows us to enjoy also the same benefits in respect of modification kits, repair and overhaul services and engineering support.
And now, after several months of further contemplation, perhaps rather as an afterthought, since it was only added to the Paper, the noble Lord has raised a question; I was not quite sure whether he wanted to change all that and go for a fixed price contract over this very disparate field of support. I am assuming he only wants information; I do not think he can seriously consider we want fixed contracts, because we have this very satisfactory arrangement. The noble Earl may have doubts and even a change of heart on this matter, but I can assure him that in this matter Her Majesty's Government have not changed their minds. To be able to get spares and, if we want them, these other items also for the F 111, as for the C 130 and the Phantom, at the same price and priority as the United States Air Force is, to my mind, a very good bargain indeed, and we have no intention of changing what is
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not only a financially sound but an essentially equitable arrangement between allies and bringing up any question of a fixed price contract.
THE EARL OF KINNOULL: The point I also raised in my speech was this question of the cost of modifications of what I believe is now known as F 111 C, and on May 12 the noble Lord said that he was going to agree upon a fixed price for those modifications. Can he advise us on this point?
LORD SHACKLETON: I really think that the noble Earl is—I hesitate to use the word—abusing the custom of the House, for this is wildly outside the Question on the Order Paper and I should prefer to leave it. If he wants this sort of information, may I beg him to put down Questions on the subjects on which he wants answers?

LONDON BRIDGE BILL
The Queen's consent signified, and Bill reported from the Select Committee, with Amendments.