Lords Sitting of 1 July 1968

Preamble
The House met at half past two of the clock: The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Portsmouth.

NORTH ATLANTIC FREE TRADE AREA
LORD MOYLE: 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 they have expertly examined the NAFTA proposals; and, if so, whether they will now publish their conclusions.]
THE MINISTER OF STATE FOR FOREIGN AFFAIRS (LORD CHALFONT): My Lords, as my right honourable friend the Prime Minister explained in another place on March 21, Her Majesty's Government studied the suggestion for a North Atlantic Free Trade Area intensively before announcing our decision to apply for entry into the European Economic Community on May 2, 1967.
LORD MOYLE: My Lords, while thanking my noble friend for that reply, may I ask him whether he does not think that it would he useful as well to publish the Government's findings upon this
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proposal, so that the people of this country may have a basis upon which to assess the relative merits of the North Atlantic Free Trade Area and the Common Market?
LORD CHALFONT: My Lords, I think it is a fallacy to suppose that there are any relative merits between these two suggestions; but indeed our considerations that resulted from our study were presented, in debates in this House and in another place, after our application to join the European Economic Community in May, 1967.

WESTMINSTER HALL ROOF TIMBERS
LORD TREFGARNE: 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 what progress has been made with the treatment of the roof timbers in Westminster Hall; when they expect the work to be completed, and what degree of protection they expect the treatment will offer.]
THE PARLIAMENTARY SECRETARY, MINISTRY OF PUBLIC BUILDING AND WORKS (LORD WINTERBOTTOM): My Lords, about half the work has been completed and we plan to finish the rest by the middle of 1970. We hope that the treatment will afford permanent protection against the ravages of the death watch beetle, but we shall have to wait five years before

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we can determine how far it has been successful.
LORD TREFGARNE: My Lords, I am grateful to the noble Lord for that informative reply.

THIRD LONDON AIRPORT INQUIRY
2.39 p.m.
LORD BALFOUR OF INCHRYE: 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 no commercial aviation pilot of suitable and recent experience was nominated as a member of the new Lord Airport inquiry; and whether Her Majesty's Government will now consider such an addition to the Committee membership.]
LORD BESWICK: My Lords, as I said in answer to a similar Question on June 27, the field of expertise covered by the membership of the Commission is already wide and it would be impossible to include representation of all aspects relevant to this matter. The Commission, of course, will be free to seek outside advice from whatever sources they wish and interested individuals and bodies, such as the British Airline Pilots Association, will have the opportunity to submit evidence.
LORD BALFOUR OF INCHRYE: My Lords, arising out of that reply, may I ask the Minister whether he appreciates that my Question is really very different from the one to which he referred, in that this Question refers to the most honourable and skilled body of commercial captains of aircraft who, after all, will be the constant and permanent users of the airport? Therefore, is it not logical that a member of that profession should be included in this Commission? Will the Government not be obstinate on this matter but reconsider it?
LORD BESWICK: My Lords, I quite agree the Question is different, but I am afraid the answer is the same. The noble Lord knows that I think a pilot point of view would be useful, but I am abso-
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lutely certain that, although they are not represented on the Commission, their point of view will be known and will be taken into account.
LORD WAKEFIELD OF KENDAL: My Lords, is it not important that an experienced pilot should be able to give evidence during the discussions that the Commission no doubt will have? That is the point. Surely a very widely experienced pilot must be able to make a most valuable contribution to the deliberations of this body.
LORD BESWICK: My Lords, there will be more discussion on this matter than there has ever been in the history of Commissions, and I am absolutely certain that there will be an opportunity for flying personnel, either individually or through their association, to make known their points of view. Setting up a Commission of this kind is a difficult matter if everyone is to be represented. I should have thought that the present size was large enough. As I said last week, although each of us might have shaped the Commission just a little differently I hope that now they have been appointed, we can let them get on with their work.

BAC 2–11 AIRCRAFT PROJECT AND AIR-BUS PROPOSALS
3.41 p.m.
THE EARL OF KINNOULL: 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 in view of the extensive sales orders of the Rolls Royce RB 211 engine in America and the current report on the lack of support for the European airbus, whether they will reconsider now their decision to abandon the BAC 2–11 project.]
LORD BESWICK: My Lords, the Government decided that they could not support the BAC 2–11 project because they were not satisfied that the market demand would justify the necessary R and D expenditure. The decision on the future of the air-bus has yet to be taken.
THE EARL OF KINNOULL: My Lords, I thank the noble Lord for his reply. Could he confirm or deny the

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discouraging reports—and I am sure we have all read about them in the Press—about the lack of support by the airline operators for the European air-bus concept, and could he say how soon a final decision as to the go-ahead for this project will be made?
LORD BESWICK: My Lords, the position remains that before a decision is taken to proceed with this project, there must be a commitment from the three sponsoring countries for a minimum order. I have seen this speculation in the Press, but the decision as to whether or not the project can go ahead will be taken this month by the three member Governments, Britain, France, and Germany, and of course they will be in full possession of all the information that the market researchers have been able to gather.
THE EARL OF KINNOULL: My Lords, if Rolls Royce had won their engine order with the Americans before a decision on the BAC 2–11 had been taken, could the noble Lord say what difference it would have made to the launching cost, of the BAC 2–11 project?
LORD BESWICK: My Lords, I agree that it is a that the RB 211 was not sold to Lockheed before a decision was taken on the BAC 2–11. But I understand that there will still be a cost for the development of the RB 211 for any new aircraft, the BAC 2–11 or another, something of the order of £9 or £10 million.
THE EARL OF KINNOULL: My Lords, finally, could the noble Lord say whether he feels that the Government should now encourage the British aircraft industry to design a British aircraft suitable for this magnificent RB 211 engine?
LORD BESWICK: My Lords, I am sure that we should all like to see this new British engine exploited in some British aircraft. If any new proposal were put forward by the manufacturers, it would certainly be most carefully considered.
LORD TREFGARNE: My Lords, is the noble Lord aware that there is widespread concern in the European airline
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industry over the increase in costs announced in another place recently in the European air-bus project, coupled with serious doubts about the basic concept of the European air-bus. Would he therefore see whether the Government could reassess the BAC 2–11 project in the light of producing this perhaps more viable alternative?
LORD BESWICK: My Lords, I think my answer to the last question probably answers that which has just been put by the noble Lord. There are doubts, and there are always doubts about any aircraft project. Whether they are sufficient to rule out proceeding with the A 300 is a matter which the three member Governments will decide later this month. I repeat that I should like to feel that the RB 211 would be utilised in some British projects.

BUSINESS
LORD BESWICK: My Lords, it is intended to adjourn the Committee stage of the Transport Bill for a short time at about 7 p.m. in order to take the three Third Readings on the Order Paper. I hope that this will be helpful to those who are working hard on the Committee stage of the Transport Bill. It may then be for the convenience of the House if we finally adjourn our proceedings this evening, taking into account the difficulties outside, at about 10 p.m. Dinner will be available this evening between 7 and 8.30 p.m.
LORD NUGENT OF GUILDFORD: My Lords, I should like to thank the noble Lord, Lord Beswick, for outlining the arrangements for to-day. Certainly on this side it will be welcome to have a short break at about 7 o'clock. Is the noble Lord able to give us any idea as to how long this other legislation will take and when we might resume the Committee stage of the Transport Bill?
LORD BESWICK: My Lords, I always find it difficult to say how long other noble Lords will speak on any matter, but I should have thought that it will take probably ten or fifteen minutes—not sufficiently long to have a meal, but it will be something of a break.

TRANSPORT BILL
2.47 p.m.
THE MINISTER OF STATE FOR COMMONWEALTH AFFAIRS (LORD SHEPHERD): My Lords, I beg to move that the House do again resolve itself into Committee on this Bill.
Moved, That the House do again resolve itself into Committee.—(Lord Shepherd.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD AILWYN in the Chair.]
Clause 24 [Establishment and general duties of Bus Company and Scottish Group]:
On Question, Whether Clause 24 shall stand part of the Bill?
LORD DRUMALBYN: I am sure the Committee would not wish to part with this clause, which opens up a new Part of the Bill, without some discussion. So far we have dealt with the operation of buses in Passenger Transport Areas. We now turn to the operation of buses primarily other than in transport areas, although agreements can be made between the Passenger Transport Authorities and the two new organisations, the National Bus Company and the Scottish Transport Group created by this clause. These bodies will be created simply by the transfer of other bodies which are already in public ownership.
This is, in a sense, merely an organisational clause, but there are certain differences. For example, the Transport Holding Company made profits. On the six Area Groups of the Tilling Association it made profits averaging £4 million a year between 1965 and 1967; and on the Scottish Bus Group the Transport Holding Company made an average of £3·2 million profit. These profits, according to the Transport Holding Company's report, were more than enough to pay interest due to the Minister on capital invested. Indeed, in these three years the Transport Holding Company was able to pay the Government, over and above the interest on its capital liabilities, an average of £1·7 million in taxation on profits and a figure of £3·9 million on revenue surplus, as well as
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retaining in its business an average of £3·6 million. The National Bus Company and the Scottish Transport Group do not make profits; their duty is only to break even. No doubt they will be subject to the instructions in the White Paper on the nationalised industries.
It is difficult to see why it was necessary to make these organisation changes—I suppose it is partly due to the Government's opposition to profits. Another point is that the Transport Holding Company is obliged, by Section 29(4) of the 1962 Act, to act:
"in accordance with such directions as may from time to time be given by the Minister."
Perhaps the noble Lord can help us on this point, but I cannot find any provision in the Bill for the Minister to give directions either to the National Bus Company or to the Scottish Transport Group. There are a number of particular powers (such as that contained in Clause 51) and many provisions in the Bill restricting the freedom of action of these two bodies without first obtaining the consent of the Minister. These restrictions run counter to the flexibility to which the Transport Holding Company has attributed its success. It says in its report:
"From the beginning, the Holding Company has worked through a system of subsidiary and associated companies, each individual company being separately responsible to the Holding Company for the actual operation of the business entrusted to it. The consequent freedom and flexibility throughout the organisation as a whole, the resulting accountability and discipline and the element of protection afforded against the more direct forms of abuse of public ownership have, in the Holding Company's view, been major factors in securing the success of the businesses concerned."
It is right that I should ask the Government for an assurance that this flexibility will continue under the new organisation. The conception of the National Bus Company is that it is to be a national as opposed to a local network. Perhaps I might refer to paragraph 9 of the White Paper on Public Transport and Traffic which says:
"A clear distinction must be drawn between the national transport network (designed to handle movement between cities) and the short-distance local movement of people which needs to be a local responsibility."
The means of achieving this distinction seem rather extravagant. Under Clause 18(1)(c) the Passenger Transport Executives are to make, or to propose, agreements with the National Bus Company,

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as well as with the private bus companies, for the provision of services within, to and from their area. Clause 50 gives powers to the National Bus Company and the Scottish Transport Group to enter into arrangements for the transfer of property rights and liabilities, and no doubt those powers would enable them to transfer part of their undertakings to the Passenger Transport Executives. But it is not clear that either can be compelled to do so.
Schedule 6 deals with provisions as to what are called "existing operators". Clause 28 provides for the transfer, on the appointed day, for the purposes of that clause, of the rights and liabilities in passenger bus companies from the Transport Holding Company to the National Bus Company and the Scottish Transport Group. Will the National Bus Company and the Scottish. Transport Group be regarded as "existing operators"? Will the Passenger Transport Executives have power to compel the National Bus Company and the Scottish Transport Group in that part of their undertakings? If so, will they be compensated, as the private operators are to be compensated?
Of the four proposed Passenger Transport Authorities this problem is most acute in the Tyneside area. In that area there are only two municipal undertakings, Newcastle and South Shields. The rest of the bus services are provided mainly by a Tillings subsidiary, United Automobile Services and British Electric Traction (Northern General) plus Gateshead and District Bus Company. All this shows that the setting up of a single bus company in England and Wales is unlikely to achieve anything. It also shows that the arrangements at present contemplated to set up four Passenger Transport Authorities have been, to say the least, imperfectly studied so far. Most of us will remember that when the railways were separate, a passenger could take a ticket to go from A to B and travel by any route he liked, returning by a different route, yet paying less for a return ticket than for two singles. This practice still prevails in many of the bus companies. All of that was lost in the railways. By and large there was not much, if any, great co-ordination between services. The amalgamation of the railways may have been a convenience for management, but it seems to have produced only disadvantages for passengers. The reasons for amalgamation were financial, and
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even these have not worked out as they might.
My last point is one of local and contingent interest, in that I am not certain whether it will arise. Why is it that if it were decided to have a Passenger Transport Authority in the Carlisle area at a later date, the Passenger Transport Executive would have no duty at all to cooperate with the subsidiaries of the Scottish Transport Group? Similarly, if there were a Passenger Transport Authority in the Dumfries area, a Passenger Transport Executive would not have a duty to co-operate with the National Bus Company. I ask the noble Lord to have a look at this before the next stage, because this situation might arise. It is right that we should have some further explanation as to the need for setting up these vast juggernauts.
2.57 p.m.
THE PARLIAMENTARY SECRETARY, MINISTRY OF PUBLIC BUILDING AND WORKS (LORD WINTERBOTTOM): The noble Lord, Lord Drumalbyn, began the debate, apparently on Clause 24, but one of his points raised subsequently, that relating to finance, dealt with Clause 27 while the point about the powers and methods of providing co-operation between the various interested bodies related to Clause 24. He has perhaps drawn the debate a little wide, but I will do my best to give a general answer. If he is dissatisfied, perhaps at least on the relevant clause he will get a greater amount of illumination.
LORD DRUMALBYN: We are talking about Clause 24 now.
LORD WINTERBOTTOM: I will do my best to bring into Clause 24 the wide-ranging points raised by the noble Lord. First, why the creation of a juggernaut? The noble Lord will agree that the situation at present is a little disorderly. Some bus services are being run by the Transport Holding Company, some in certain cases by the Railways Board, by local authorities, and there will be the public transport organisations set up by Part 11 of the Bill. All in all there is a generally untidy pattern. But this untidiness is not necessarily a bad thing.
I do not believe that because a thing seems perfectly orderly, it is therefore

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good. On the other hand, the measure of disorder that would exist after the Bill is passed would, unless we sorted out these various elements, be unacceptable. The proposed form of rationalisation will, after a period of transition, give the average member of the travelling public a better service, because it will be a more coherent service. I note in particular, in relation to this, the last point made by the noble Lord as to the situation existing in, shall we say, the border areas, and I or my noble friend will try to give the noble Lord a certain amount of information as to how this might work under the proposed new arrangements.
May I now turn to the question of finance? This is really dealt with under Clause 27, but I shall be very pleased to give the noble Lord a preliminary indication of Government policy on this matter now. It is true, in spite of the fact that these were publicly owned companies, that they were earning a substantial profit. I think this proves only that in normal circumstances nationalisation is no handicap to earning a normal return on capital. But the noble Lord has drawn the attention of your Lordships' Committee to a slight difference in wording, and in order to put the matter right I should like to let him know what is the Government's interpretation of this matter. The financial duty of the Bus Company will be similar to that of other nationalised industries, and also compatible with the recent White Paper on Nationalised Industries: A Review of the Economic and Financial Objectives (Cmnd. 3437). It is the Government's intention to enter into discussions with the National Bus Company as soon as it is established in order to settle targets of financial performance which take full account of all considerations and developments in the White Paper. The Company is expected to be a fully viable undertaking, providing for the interest on its capital loan by the Exchequer and for the renewal of its assets out of revenue. I hope the noble Lord feels that this gives it flexibility. In fact it is going to operate as a normal commercial undertaking, as the Tilling Company and others have operated in the past. The wording may be a little different, but the intentions are the same.
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The other question raised was, whether there was a clash between national and local intentions in the power to transfer parts of, shall we say, a national element of the bus services to a local element, and vice versa, and what powers of compulsion exist. This is covered by the general ruling set up under Clause 28 in this Part of the Bill, and also by the latter stages of Clause 24 itself—the noble Lord is quite right. There was a substantial discussion in another place on this particular point, where at first it was laid down that it was the duty of the National Bus Company to co-operate with other companies. But as a result of that discussion a similar reciprocal duty was imposed between the Railways Board, the National Bus Company and the London Board in order that services should be co-ordinated, and to enable information to be exchanged about alterations of services. I think it is true to say that co-ordination of services must be on a voluntary basis. The border area between a Passenger Transport Authority and the operating of the National Bus Company is a very detailed area of operation, and I think the noble Lord will agree that it is difficult to legislate for this. So all that the Bill has done is to lay down the duty of these two groups of organisations to co-operate in producing a rational border agreement between their two areas of operation. That is the intention of the Bill.
LORD DRUMALBYN: May I ask the noble Lord a question about what he has just said? I will not talk about the Scottish Transport Group at the moment, because no Passenger Transport Areas are yet determined for Scotland—or, rather, no decision to have Transport Areas in Scotland has been reached—but the National Bus Company is obviously going to have to run into the metropolitan areas of the Passenger Transport Areas, and it is obviously going to be a difficult matter to decide how far the National Bus Company is to be allowed to continue to operate the services it at present has. Does the noble Lord envisage that in an area such as Tyneside it may well be that the National Bus Company should continue to operate the services which it has at present, or does he think that in the long run the Passenger Transport Area will take over the running of virtually all the services in its own area which are on

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a local basis, or up to a range of, say, 30 miles outside? I think 30 miles is the definition of the "vicinity". I think it is important that we should know what the Government have in mind here.
I think it is also going to work out rather unfairly for local authorities if, in that case, it is necessary for the National Bus Company to be compensated for losing its services. The reason for this, of course, is that if you take an area such as Tyneside, with just its two local transport undertakings, these two county boroughs will lose their transport undertakings and yet, when it comes to the acquisition of any other transport undertakings, where good money has to be paid or further investment made, they will have to pay just as much as anybody else for the acquisition of other undertakings or extensions of the undertaking. This is a matter which local people consider is extremely unfair; and there is always the possibility that the whole form of the undertaking may be changed later on. That is quite possible. That being so, it seems that a better arrangement will have to be worked out to decide just how much those county boroughs or municipal boroughs which have passenger transport undertakings are losing at the present time. This should, so to speak, be fixed so that if at any lime the arrangements were changed they would not lose in the interim; that is to say, they would get back at least what they put in at the beginning.
I think there is a good deal more scope for studying these aspects than there appears to be in the Bill at the present time, and the whole question of the interplay of the National Bus Company and the Passenger Transport Areas is obviously going to need a great deal more study. One does not often complain that a Ministry has not sufficient powers, but I would doubt whether there are sufficient powers in the Bill to deal with this particular aspect of the matter.
LORD WINTERBOTTOM: The noble Lord has, I think, made an important point here, as in the case of Carlisle, in raising at this stage of the debate the difficulties which might arise in specific areas. The Bill, of course, is drawn in general terms, arid the detailed arrange-
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ments will have to be made as and when these Passenger Transport Authorities come into being. Tyneside P.T.A. is not here yet: it is only forecast in the White Paper. I think the difficulties foreseen by the noble Lord must be studied by the Ministry after this debate. It may well be—I do not say it will be, but it may well be—that when the Passenger Transport Executive comes into being in the Tyneside area the National Bus Company will continue to operate some services, but this will be a matter for the Tyneside Transport Executive to decide. It will not be for the Bus Company: it will be for the Transport Executive to decide in the light of their statutory duty to cooperate with the National Bus Company.
I think we should expect the Transport Executive and the Bus Company, in concert, to work together to present a rational plan for future bus services in which the National Bus Company will continue to cover part of the conurbation. Obviously, the National Bus Company might want to run buses from, say, Tyneside over the Pennines to the West of Britain and might start from a common bus station in the centre of some Tyneside town. But this is something that will have to be worked out by the bus company and the Transport Executive together. But the decision will be with the Transport Executive in the Tyneside area in the light of its statutory duty to co-operate. I hope that that is clear. I am afraid that I cannot make it any clearer.
Clause 24 agreed to.
Clause 25 [General powers of Bus Company]:
On Question, Whether Clause 25 shall stand part of the Bill?
3.12 p.m.
LORD DRUMALBYN: I should like to ask three questions about paragraph (f) of Clause 25 which is the power to carry on business as travel agents. First, do any of the road passenger transport subsidiaries of Tilling Associates Limited or British Electric Traction carry on business as travel agents at present? If so, I take it that this paragraph would be unnecessary since paragraph (j) of the same clause already says:
"With the consent of the Minister, to carry on any activities which the Company would

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not apart from this paragraph have power to carry on but which a subsidiary of the Company was carrying on immediately before it became such a subsidiary."
That would then be unnecessary. Moreover, if the National Bus Company ever acquired another road passenger company which ran a travel agency, whether as a subsidiary or as part of the business, the National Bus Company would then have power to continue to run it. It is difficult therefore to see why paragraph (f) is needed unless it is intended to acquire travel agencies or to set up new travel agencies.
If none of the road passenger transport subsidiaries at present carries on business as travel agents then, since the Transport Holding Company own Thomas Cook and Son it is quite unnecessary to include paragraph (f). Section 14(1)(b) of the Transport Act 1962, which is continued in this Act in Clause 47, empowers the Board:
"…to enter into agreements with the other Boards and with any subsidiary of any of the Boards or of the Holding Company, for the management, working and use by one party to the agreement of works, land or other property belonging to the other party, and with respect to the rendering of services and the pooling of receipts or expenses."
So the National Bus Company could make arrangements for the services of Thomas Cook and need not have their own travel agencies. I wonder why the Government feel it necessary to take this power.
LORD WINTERBOTTOM: I suppose this is part of the general argument that will be developed in the course of to-day about extending the commercial powers of individual units of the national transport system. I and my noble friends will argue that if these companies are to run as commercial undertakings, and to publish their accounts under the terms of the Companies Act, they should be given powers to use their assets, their purchasing power and their negotiation power in order to maximise their return on capital. At the moment, some of these bus companies operate their own booking services and, therefore, agencies.
It is the intention of the Government that this particular duty should be spelled out. The mere fact that the Transport Holding Company at the moment owns Thomas Cook, and that for the time
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being it will continue to own it, does not mean to say that it is not necessary for individual bus companies to set up their own travel agencies. It is part of the philosophy of making all these individual operating companies commercially responsible and for them to earn a proper return on their capital that these powers to set up business as travel agents or to carry on any other activity (which is detailed in paragraphs (f) and (g)) are included in the Bill. It is the intention that they should operate as normal commercial undertakings; if they think that a travel agency is necessary they will have one.
LORD BALFOUR OF INCHRYE: If the Government obtain this power for certain companies to operate travel agencies, do the Government intend to ensure that these powers, when used, are used in accordance with the professional code of conduct which travel agents are now hammering out and which are an essential safeguard for the public against dishonest or deceptive bookings? It is important that we should have some undertaking that the high standard which this profession is trying to impose on itself should be continued.
LORD WINTERBOTTOM: I should hope that the Government would support those individual firms in the travel agency business which are trying to raise their standards. It is unthinkable that the Government should set up in any of these nationalised companies a second-rate and dishonest service. Nevertheless, the noble Lord is right to bring the point to the attention of the Committee.
LORD NUGENT OF GUILDFORD: I listened with interest to the justification advanced by the noble Lord, Lord Winterbottom, for putting in the power in paragraph (f). I noted his remark that these companies ought to have the opportunity of maximising their return on capital. But, of course, the capital is provided by public funds, by the taxpayers, and therefore is, to some extent, provided by the people with whom the companies are going into competition. This is the objection that we continue to make. Does the noble Lord really think that these companies of the national transport system will want to open up new travel agencies? I

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accept that the ones that exist will probably want to carry on business.
We know from reading the Prices and Incomes Board Report that there are already too many travel agencies and that a good many are making a loss. It seems to me to be extremely unlikely that any of these people will want to, or should, open up new ones. This is the kind of objection that we have in so many places in this Bill. It takes such omnibus powers to do everything—including many things which I am sure no sensible person would want to do. It is a highly risky business. I question whether the noble Lord is being sensible in putting in here such wide powers to do things that it is most unlikely anybody would want to do.
LORD WINTERBOTTOM: I have great sympathy with the point the noble Lord has made. We hope that the various bus companies and subsidiary companies will exercise their normal commercial judgment and will not set up travel agencies just "for the hell of it." Nevertheless, I think that this massive Bill is intended to give the redesigned British public transport system the powers it requires to do those things which it may at an appropriate time consider necessary. I am reasonably certain that the amount of capital available to these companies will not be so large that they will he able to start on any "wild-cat" ventures in this field, particularly since the Thomas Cook organisation exists already within the framework of the general pattern. But I think the Committee are grateful to the noble Lord for his caveat. I am sure the bus companies will bear this in mind.
LORD ROBERTSON OF OAKRIDGE: May I intervene at this point? I think it is a pity to bring in the question of Thomas Cook and Son. Thomas Cook and Son is a great world-wide organisation, and I am sure that it sells a great many more tickets for travel by air than it sells for travel by rail or by road. It is not, as it were, an instrument ready-made for the help of bus companies.
Clause 25 agreed to.
Clause 26 [General powers of Scottish Group]:
3.20 p.m.
LORD DRUMALBYN LORD DRUMALBYN moved Amendment No. 100:
Page 42, line 17, leave out paragraph (f) and insert—
"(f) to enter into agreements with travel agents designed to promote traffic on the Board's passenger services;"
The noble Lord said: Having, as it were, reconnoitred the ground with the last Amendment, we come on to a somewhat similar, though by no means identical, Amendment. It relates to the Scottish Transport Group. The purpose of the Amendment is to leave out the power to carry on business as travel agents and to substitute a power:
"…to enter into agreements with travel agents designed to promote traffic on the Board's passenger services"
This Amendment differs in character from the previous one. For one thing, it was put forward in another place and was the subject there of a rather confused and lengthy discussion. Unfortunately, the Scottish Minister of State confused the issue by referring to Section l4(1)(b) of the Transport Act 1962, which has little to do with the case.
The Amendment would empower the Scottish Transport Group to enter into agreements with any other travel agents, and not merely with travel agencies that are subsidiaries of the Railways Board or the Transport Holding Company or some other nationalised board. The Minister pointed out that the Transport Holding Company happens to have a Scottish subsidiary which is a travel agency, Sanderson's Travel Agency, Ltd. He also pointed out that Section 14(1)(a) of the 1962 Act, as applied by Clause 47 of this Bill, would allow the Scottish Transport Group to do what is proposed in the Amendment. What he did not seem to understand was that the Scottish Transport Group would be able to enter into agreements with travel agents, designed to promote traffic on the Board's passenger services, only if they already had power to carry on the activities of travel agents themselves. Of course, they will not have that power if this Amendment is carried. I do not mean to suggest that they would be unable to enter into agreements with other travel agents; what they would not be able to do would be to take over subsidiaries and run travel agencies in that way.
It was also suggested in the debate that the Caledonian Steam Packet Company, which at present belongs to the railways but is to be transferred to the

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Scottish Transport Group, owns a number of small travel agencies. As I understand the Bill, if the Amendment were accepted, the Scottish Transport Group would have power under paragraph (m) of subsection (1) to continue to carry on these businesses. Equally, the Scottish Transport Group would have power, according to the Minister of State, to carry on Sanderson's Travel Agency under the terms of paragraph (m). What we want to know, therefore, is why the Government want this power when there is already power for the Group to carry on the existing travel agencies? Do they want the Scottish Transport Group to be able to acquire other travel agencies or to set up new ones, or is there some other explanation?
It may be that the clue is in Clause 53, which deals with the dissolution of the Transport Holding Company and and enables the Minister by order to transfer the remaining companies of the Transport Holding Company, apart from the companies referred to in Schedules 3 and 7, one of which is Thomas Cook and Son. The noble Lord, Lord Robertson of Oakridge, has expressed regret that Thomas Cook should be brought into this discussion at all. I am not certain that there is anything derogatory in bringing Thomas Cook into it, and it is true that Thomas Cook is a world-wide organisation. But that would not prevent the detaching of parts of it to particular organisations set up under this Bill. The noble Lord, Lord Robertson of Oakridge, suggested that it would not be appropriate that Thomas Cook should deal with the bookings of the National Bus Company. I do not know why not. An agency deals with every kind of booking. Perhaps it deals primarily with its own. For example, if the railways had an agency, it would deal primarily with railway bookings, but it would take every other kind of booking as well. In the same way, the National Bus Company would no doubt deal primarily with National Bus Company bookings, but would deal with others as well. The same, presumably, will occur with regard to those travel agencies which the Scottish Transport Group will already be taking over.
I should like to know whether the fact that this power is here indicates an in-
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tention on the part of the Government to assign part of Thomas Cook's business to the Scottish Transport Group. If this is the intention, I should like to make only two comments about it. First, if Thomas Cook is to remain in public ownership I should like to see its business in Scotland run by some Scottish organisation, although I should much prefer to see Thomas Cook disposed of entirely to private enterprise, now that it has been detached from the Transport Holding Company as a whole. At least the taxpayer would then get something back, and Thomas Cook might begin to make reasonable profits once more, instead of at the comparatively beggarly rate of £800,000 a year which it made last year.
The nub of this matter is that it seems wrong in principle that an organisation offering a specialist transport service, as the Scottish Transport Group will do, except in the Western Highlands and Islands, should enter into competition with travel agents who are selling the Scottish Transport Group's services. I am not suggesting that the Scottish Transport Group should divest itself of the existing services. I am suggesting that there is a danger point for any organisation which is itself running specialised services when it enters into competition with other bodies running specialised services. They are less likely to be successful than people concentrating on their own business, and it does not seem to be a proper use of Exchequer money if it is a question of taking over other travel agencies, or even setting up new travel agencies.
The noble Lord, Lord Winterbottom, talked about the best use of resources. We maintain that the best use of resources in respect of specialised agencies is for the agencies to run their specialised jobs themselves. In the case of bus companies, it is a good platonic principle that they should run buses and not get involved in all kinds of other extraneous services. Travel agencies would be an extraneous service for the Scottish Transport Group. It has its own specialised transport travel agencies which can cater for the services—a combination of bus, rail, sea and, possibly, even air travel—to the Islands and parts of Scotland. There is no reason why it should not develop these, and there is

21
full power to do that without having a provision in the Bill. Such a provision can be justified only if there is some intention to encourage the Scottish Transport Group to enter into competition with those other travel agencies part of whose business will be to help the business of the Scottish Transport Group, and it seems to me that it would be a bad thing were such competition to take place.
LORD BALFOUR OF INCH RYE: I very much hope that my noble friend will stand by this Amendment, because I think it is important. I sincerely hope that the Scottish Group will not have this power to enter into the business of travel agents, but will be restricted to co-operating with existing agencies.
My main reason for saying this is that I know of small towns in the counties of Sutherland and Caithness, and of one in particular in Ross and Cromarty, where the bus comes down the High Street and stops before a small general shop where people get in and out. This shop carries on the business of travel agents, as well as other miscellaneous activities. Under the Bill as proposed by the Government, the great and powerful Scottish Group can come along and put part of that poor little man's business out of existence, and thus increase the already heavy economic difficulties that traders have in certain parts of these counties. I think that this is an unnecessary power and a dangerous power. The Bill is not very popular in Scotland. This provision will make it far less popular. If the Government gave this concession it might ameliorate to some small degree the dangers to existing trading interests in these counties in Scotland which many people see inherent in this power.
3.33 p.m.
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR SCOTLAND (LORD HUGHES): I should be exceedingly disappointed if the noble Lord, Lord Drumalbyn sought to stand by this Amendment. If it were carried, it would be the reverse of helpful to the arrangements about which the noble Lord, Lord Balfour of Inchrye, has just spoken. The suggestion that it is dangerous to have this power, and the picture which the noble Lord has just painted, of the Scottish Transport Group
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having so much money to throw about that it would seek to dissipate it by setting up travel agencies in remote Highland villages and small Highland towns, really go far beyond any of the fanciful ideas which have yet been expressed on this Bill. It reminds me of the alleged old maid who is supposed to look under her bed every night to see if there is a man there—whether in fear or in hope has never been clarified. I do not know whether the suggestions put forward by noble Lords are put forward in fear or in hope.
The effect of this Amendment would be to remove the Scottish Group's power to act as travel agents and to substitute for it a power to enter into agreements with travel agents. It is very desirable that the Scottish Group should have the same power as any other transport operator to act as travel agents since this will help it to attract additional tourist traffic to its various bus and shipping services. Certain subsidiaries of the Group, as the noble Lord, Lord Drumalbyn, pointed out, already have this power. He referred to Sanderson's Travel Service, Limited and to MacBrayne's. It would be difficult to visualise MacBrayne's services functioning at all if they did not have this power. The noble Lord is not suggesting that this power should be taken away from subsidiaries, and the noble Lord. Lord Balfour of Inchrye, does not seem to have comprehended that the subsidiaries already have this power. All that is being suggested in this clause is that this power should be given to the Group as a whole.
The Opposition are constantly asking the Government to impose on nationalised undertakings the principle that they should work according to ordinary commercial principles. Therefore, surely it is reasonable that when an organisation of this kind is being set up it should not only have commercial liabilities imposed upon it but also enjoy commercial advantages. Subsidiaries of the Group will have offices at a number of places and it will be an additional service to the public to be able to book travellers on other operators' services. It is clearly desirable, for instance, that one subsidiary of the Group should be able to book travellers on the services of another subsidiary. If this Amendment were

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accepted, this would not be possible because Section 25(1)(a) of the Transport Act. 1962, which is applied to the Scottish Group by Clause 47(1)(b) of the Bill, gives the Group a duty to ensure that none of its subsidiaries engages in activities which the Group itself does not have the power to carry out.
We should have the ridiculous position that if someone went to MacBrayne's to ask them to make arrangements involving two separate services, although everybody would know that MacBrayne's was part of the Scottish Group MacBrayne's would have to say, "We are very sorry but we have power to deal only with the services which we ourselves are providing." With the very limited travel agency facilities which exist in the greater part of the Highlands, particularly over the bulk of MacBrayne's territory, such a situation would make absolute nonsense.
LORD DRUMALBYN: It may be that the noble Lord has not appreciated what the term "travel agency" connotes. In the old days of separate railway companies, when one took a ticket from one place to another involving travel over more than one line, the company from which one took a ticket acted as a travel agency. The noble Lord is now suggesting that in the same way there could not be similar arrangements between subsidiaries of the Scottish Group. Surely it would be possible to book a ticket from Glasgow to Lamlash even though there were no such power as this? Is the noble Lord suggesting that in booking such a ticket the Scottish Group would be acting as an agent?
LORD HUGHES: The advice which I am given is that if this Amendment were accepted by the Committee, it would not be possible for one subsidiary to arrange travel facilities except on its own undertaking because the Group would not have the power. And under Clause 47(1)(b) the Group could not pass this power on to its subsidiary. I detected from the noble Lord's question that he agrees with me in that to deprive the subsidiaries of the opportunity of arranging through-traffic, particularly in the Highlands, would be absolute nonsense.
LORD NUGENT OF GUILDFORD: Under paragraph (m) the Group will
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have power to carry on its existing activities, which include existing travel agencies, so that the Group in principle still has power to conduct the business of travel agents. What we are resisting is the power to develop them further.
LORD HUGHES: I would not deny that the Bill also gives the Scottish Transport Group power to develop these agencies further, and one way in which they would be developed further is to permit this cross-booking between one subsidiary and another. That I think is a desirable and very necessary function of its job, and to deprive the Group of it would be to withhold the sort of service which the people in Scotland are entitled to get. But, beyond that, I think the fears are groundless. I can see the point which noble Lords might be seeking to make, if one were to transfer the argument which the noble Lord, Lord Balfour of Inchrye, took of a small town with a shop doing a minuscule sideline business as a travel agent, and considered what might happen in a much larger centre of population where the Scottish Transport Group might consider the setting up of a new travel agency seeking to take business away from those who are already, perhaps, serving the area perfectly well.
But the general power which is given in this respect is a capacity power; it is merely being given the power to do this. The Scottish Group obviously will use this power where there is a good prospect of a satisfactory financial return. It will not do so if it is merely going to take away from established agencies business which they are handling perfectly satisfactorily. If I might give a case in point, there has been a reference to Thomas Cook & Son. There is a branch of Thomas Cook in my home town, but for twenty years any travel business I have done has been done with a particular private agency, and I did not feel under any obligation, Socialist or otherwise, to transfer my business to Thomas Cook's when I had been getting perfectly satisfactory service from another agent in the town.
The Scottish Transport Group will be well aware of the fact that it will earn the profits of an agent only if it sets up an agency or expands an existing one still further, where it is perfectly obvious that

25
there is a demand for such services which is not going to be met from elsewhere. The Group will have overall financial duties imposed on it, and will therefore be under no temptation to indulge in loss-making activities. Another point which was raised in another place was possible unfair competition between such a service provided by the Group and one provided in the ordinary way by private enterprise; and in this connection selective employment tax was mentioned. If I might repeat what was said in another place, my right honourable friend the former Minister of Transport has given an assurance that it is the Government's intention to achieve equal treatment between private undertakings and nationalised ones for the same type of activities.
Finally, I would point out that in the last resort the Secretary of State is given power to direct the Group to discontinue activity. This is provided for in Section 27(4) of the 1962 Act, as applied by Clause 52(3) of the Bill. This is not a sinister move to nationalise the travel agencies' service in Scotland; it is merely a method of enabling the Group to make the best use of the services which it is providing, and to enable it to use the services in one subsidiary to help to support the services of another. Only in a place where the Board can expect to increase the volume of their business by introducing a travel agency service, and where a travel agency service does not exist at the present time and where one is likely to be profitable in itself, would there be an expansion of services along these lines. The primary purpose of the Scottish Transport Group is to provide transport, and to do such incidental things as help it to provide that transport profitably. It will not do so if it embarks on the creation of a "travel agency empire" only for the purpose of creating losses.
LORD DRUMALBYN: We are not only concerned here with the avoidance of loss to the Exchequer; but also concerned with unnecessary loss to individual traders. I do not think that we can take this matter further to-day because of the question of definition. We should like to go further into the matter, and possibly I could have a talk with the noble Lord as to the actual scope of the meaning of the words "travel agency". If it were the case that it would be impossible for them to have a through booking unless the
26
powers to carry on business as travel agents were included in the powers of the Scottish Transport Group, then of course in the limited sense we should have to agree to the inclusion of those powers. But what we are concerned with is that the business of travel agents should not be taken away front them merely because, for reasons of the organisation of the bus services and other transport services in Scotland, it is thought right to have a single unified service. This is the point we have in mind.
I hope that my noble friends will agree with me, but, because of the technical aspect of this, I do not think we ought to press this matter to a Division to-day. But I think we should like to look at this again and we may revert to it on Report stage. We would hope to get a closer definition, or at least a full assurance from the Government that they do not intend to operate this power so as to take away the business from established travel agencies, or indeed to branch out into the travel agency business in its widest sense, including booking accommodation and so forth.
LORD HUGHES: I should be delighted to have such a talk with the noble Lord, Lord Drumalbyn, in due course because I am quite certain that, if we can work at this and other things in a way which perhaps is rot possible in Committee, we will find that the things that he don not wish the Government to undertake are causing him needless fears, and the things which the Government particularly wish to be able to do under this clause will be things to which he would not wish to take exception. If we, by getting round the table and discussing these matters, can clarify what I feel at the moment are really misconceptions, then I would suggest that this debate and the course which the noble Lord now proposes to take will have served a very useful purpose indeed.
LORD ROBERTSON OF OAKRIDGE: Before the noble Lord sits down, may I say that I think it would be a very good plan for this matter to be discussed between the two sides. I think there are one or two things to be remembered, particularly in regard to Thomas Cook & Son, which has been mentioned several times by the noble Lord, Lord Drumalbyn. It is as well, for example, to remember why

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Thomas Cook & Son is a nationalised undertaking: because it was acquired by the private railway companies, and this at a time when they were in great financial difficulties. Therefore, it is rather, as it were, a poor argument to say that these undertakings should do their own job and should not acquire a travel agency. I think it is rather a bad argument. But, on the whole, I think that the noble Lord, Lord Drumalbyn, has a point here, so long as it is carefully examined and worded in a way that will not cause difficulty for these undertakings.
LORD DRUMALBYN: In view of what the noble Lord has said, and what the noble Lord, Lord Robertson of Oakridge, has said, I beg leave to withdraw the Amendment at this stage.
Amendment, by leave, withdrawn.
Clause 26 agreed to.
Clause 27 agreed to.
Clause 28 [Transfer to Bus Company or Scottish Group of certain securities, rights and liabilities]:
On Question, Whether Clause 28 shall stand part of the Bill?
3.50 p.m.
LORD DRUMALBYN: I want to ask one question on this rather lengthy clause; namely, whether the present subsidiary arrangements for David Macbrayne are expected to continue under the new dispensation.
LORD HUGHES: It depends what the noble Lord means by "the present subsidiary arrangements". I certainly do not envisage that a subsidy as such will disappear over night. It does not necessarily follow that the subsidy will continue at any given level, but that it will continue to be an assisted service for at least some time into the future must be quite obvious.
LORD DRUMALBYN: If I might push the point a little further, this is a question which is of obvious interest to Scotland. The Outer Isles is a difficult area which is supported by the nation as a whole to the extent of about £600,000. If it were intended to whittle that down and the Scottish Transport Group were to be expected to find this subsidy out of its own resources by charging higher fares
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in other parts of Scotland in order to be able to maintain the service to the Outer Isles, I think we should at least know about it. In other words, if the intention of the Government is that the burden of the subsidy should be transferred from the Treasury on to the Scottish fare payers, then I think we should know about it.
LORD HUGHES: The noble Lord, Lord Drumalbyn, is not at any time given to overstatement, and when he says that the Western Isles is a difficult area, he certainly does not overstate the case. When he goes on to say that, if it were intended that the subsidy at present running at £600,000 should be transferred to the Scottish bus users or the general services of the Scottish Transport Group, then this should be known, I agree with him, and I can assure him that if that were to happen, he would certainly hear about it.
Clause 28 agreed to.
Schedule 7 agreed to.
Clause 29 agreed to.
Schedule 1 [The New Authorities]:
3.52 p.m.
LORD DONALDSON OF KINGS-BRIDGE LORD DONALDSON OF KINGS-BRIDGE moved Amendment No. 101:
Page 204, line 21, after ("in") insert ("overseas trade,").
The noble Lord said: This Amendment was put down by the noble Viscount, Lord Caldecote, but he has had to go abroad, and as I have an Amendment immediately following in somewhat similar form, he asked me if I would speak to this Amendment for him. This is not a very difficult task, because it is an entirely sensible, modest and self-explanatory Amendment which is helpful to me. The noble Viscount, as the noble Lord will know, is the Chairman of the Economic Development Committee for the Improvement of Exports, and it was in the course of discussion in this Committee that they came to the conclusion that this very large Bill of 156 clauses, which must be dealing with the way of getting goods out of and into this country, never mentions overseas trade and export at all. I have only the word of the noble Viscount, Lord Caldecote, for this, because I have not been through the Bill to check it.
The noble Viscount thought that probably the best place to get in some reference to overseas and the importance of exports was in paragraph 4 of Schedule 1, where the way in which the Minister or the Secretary of State is to choose the members of the new Authority is expounded. If it just said, "Choose the best men you can", it would have been difficult to say much. But certain categories have been laid down, and when you lay down categories the omissions become important; and I think the omission of experience in overseas trade is something which should be put right. This Amendment, therefore, suggests that in the fourth line it should be said that the people being appointed should have shown capacity in not only transport, industrial, commercial or financial matters, but also in overseas trade. I do not think that further words of mine can help this Amendment. It seems to me to be a clearly sensible one. I beg to move.
LORD WINTERBOTTOM: In the light of this country's present difficulties, one naturally has great sympathy with the Amendment tabled by the noble Viscount. But, on the other hand, like so much else in life, if you try to define a certain facility or duty too precisely you merely succeed in causing damage instead of preventing it. The actual formula in paragraph 4 is that the Minister or the Secretary of State shall choose people who have had
"wide experience of, and … have shown capacity in, transport, industrial, commercial or financial matters, applied science, administration or the organisation of workers".
These are fairly wide fields of experience. What the noble Viscount is trying to add to the Bill is an additional, rather narrower experience, lying somewhere between transport, commercial or financial matters. In fact all these three fields are covered in the Bill.
The trouble is that if we try to add to this broad list of experience which is demanded from future members of the new Authorities the rather limited qualification of experience in overseas trade, we may find that all sorts of other more limited groups will try to press to get representation on these new Authorities. But I can give the noble Lord who has spoken for the noble Viscount an assurance that this is a factor which must
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weigh with the Minister or the Secretary of State when making these appointments, because every man in a position of authority must be aware of the importance of the export industry. Where it is relevant, I am certain that this would he an additional factor of experience which will be taken into account in making the appointments. I hope that I have satisfied the noble Lord.
LORD NUGENT OF GUILDFORD: I should like to add a few words in the absence of my noble friend Lord Caldecote. I thought that the Amendment could not have been more effectively moved than it was by the noble Lord, Lord Donaldson. I am bound to say that I find it difficult to follow the argument of the noble Lord, Lord Winter-bottom, that to put in someone with experience of overseas trade would have a narrowing effect. After all, we in this country live on overseas trade. If we look at the other categories here—and I agree that they are all important—transport, industrial, commercial or financial matters, applied science, administration or organisation of workers, I should not say that overseas trade was narrower than any of those. Surely it spans almost everything. I really think that the noble Lord, Lord Donaldson, and my noble friend Lord Caldecote have a point here. It is a nuisance to put in yet one other category, no doubt, but if one of these people could be an expert in overseas trade, and therefore one who understands the link-up of domestic transport with outgoing transport, this would be a help. I wonder whether the noble Lord would be good enough to have a look at it. I think it would improve the Schedule.
LORD HANKEY: As one who has been mixed up with the export effort a good deal, I should like to support this Amendment strongly. We have suffered almost equally from delays in deliveries due to strikes in the motor car factories and delays due to communications trouble. I think it would be a great advantage that there should be somebody in the freight authority who really Hider-stands the need for pressing on with exports and has had experience in that matter.
LORD WAKEFIELD OF KENDAL: I hope that the Government will think again on this point. After all, again

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and again they have stressed the importance of exports and the overseas trade. It seems rather contradictory. Here is something which is designed to help overseas trade, to assist speeding goods to the ports, and, in fact, to further the very objective which the Government want to see achieved. It is really important that there should be somebody on the new Authorities who has real knowledge of overseas trade. There are many people who have experience of the necessary commercial and financial matters here at home, but just have not had the experience and knowledge of what has happened overseas. It is so essential, for example, to get goods properly packed, to the port in time, and things of that kind. If you have a person with overseas experience, who can give that knowledge and experience to his colleagues, surely he must be of value. Surely it must further the Government's object of extending and developing our overseas trade which is so important to this country.
LORD MITCHISON: I should like to add a word in support of the Amendment. I do not understand that the Amendment would oblige the Government to have a member specially versed in overseas trade but it would remind those who have to operate the Act (as it will then be) of the importance of it. I agree with what the noble Lord, Lord Wakefield of Kendal, has just said. I should have thought it was advisable as a reminder, and I understood that that was the reason why the Amendment was put forward. I have no doubt that it does not make much practical difference from a narrow point of view, because whoever was versed in overseas trade would certainly fall under one or other of the general words at present, but it is an indication of good intention—like the Scotsman, but perhaps I had better not quote that. At any rate, I am sure that it would do no harm and would be to the general advantage and an indication of the intention of the Government.
LORD BURTON: I also feel the Amendment can do no harm. I wonder whether it is necessary to tie the Ministers down at all.
LORD SILKIN: There are eight categories of persons already specified as
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categories from among whom not more than ten members should be appointed. I do not think it would make a ha'porth of difference if there were nine categories. I suggest that my noble friend should look at this point again.
LORD REDMAYNE: In my opinion the fault here lies in the original drafting of the Schedule. It seems to me always to be quite absurd to try to specify different categories of people who ought to be included in this or that authority. If one reads paragraph 4 it is clear that these particular categories apply to each of the new Authorities, which again makes the proposition a little ridiculous, because it cannot apply equally to two or three.
I realise that I am laying myself wide open on this, because I am quite sure I shall be told either that this paragraph was lifted from the previous Act, and was therefore the work of the Conservative Government, or, alternatively, that it was put into the Schedule as a result of pressure in another place. It seems to me better to redraft the Schedule and to take out paragraphs 4 and 5 in respect of these particular requirements, thereby adopting the sensible course of leaving it to Ministers to choose in the case of any particular Authority those who have the ability to fill the posts. As an ex-Patronage Secretary I must confess that from time to time I have suggested that certain individuals might be desirable for a particular appointment, but even then one is not so sinful as to make those recommendations without taking into account all the propositions which have been mentioned in this short debate.
LORD WINTERBOTTOM: I think the noble Lord, Lord Robertson, has answered the noble Lord, Lord Nugent of Guildford, on my behalf. If one makes the specification sufficiently broad one gets away from the problem of trying to foist on the appropriate Minister an individual with certain narrowly specialised qualifications. But while I cannot commit my honourable friend the Minister of Transport on this matter I will undertake, because of the strong view which has been expressed on this point, to bring it to his notice, and will try to give noble Lords some satisfaction at the Report stage of the Bill.
LORD DONALDSON OF KINGS-BRIDGE: I am sure the noble Viscount,

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Lord Caldecote, will feel that this Amendment has been properly aired and that we have had a sympathetic reply from the noble Lord, Lord Winterbottom. Therefore, I ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.5 p.m.
LORD DONALDSON OF KINGS-BRIDGE LORD DONALDSON OF KINGS-BRIDGE moved Amendment No. 101A:
Page 204, line 23, at end insert ("or who are representative of the consumer interest.")
The noble Lord said: My task here is made easier, and perhaps somewhat shorter, by the fact that we have covered in our last discussion most of the points in regard to this Amendment. Every Bill which comes before your Lordships' House has two aspects, one of which is invariably the consumer, and he is seldom mentioned. If there are to be categories at all, somebody representative of consumers should be thought worthy of sitting on management committees, and not only on consultative committees. Secondly, the consumer, above all, must have some say in how the final thing is organised.
The Consumer Council conducted some inquiries into consumer consultative machinery in the nationalised industries, and the result was an elegant book which is well worth reading, although I doubt whether many of your Lordships have read it. This consultative system is not really working at all satisfactorily and we feel strongly that the only way to get the consumer properly looked after is to get him a seat on management. My noble friend Lord Winterbottom has estopped himself to some extent from one argument against me, because his argument against the last Amendment was that it was a sub-category of categories already mentioned in the list of people. I challenge him to tell me under which category of these names the consumer comes. Of course the consumer never does come in, and I suggest with real sincerity that he should be mentioned in this Schedule. I beg to move.
LORD ST. HELENS: I wish to support this Amendment and in particular what the noble Lord has said about how seldom the consumer is mentioned in our debates. either in this House or in another place. Indeed, so far as our debates in Committee have been concerned, this
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is only the second time the consumer has been mentioned. The first occasion was by my noble friend Lord Merrivale. A great many of us sitting on the Back Benches, listening to the Committee stage of this Bill, have great misgivings, because in fact this Bill is a vast extension of bureaucracy. There is no argument about that. Time after time, the Minister gets up in this House and explains, with great charm, that, whatever may be in the Bill, in fact it is not the intention of the Minister to work that way. But we are not debating the intention of any current set of Ministers; we are debating something that is going to be the law of the country for years ahead, and the Government taking to themselves vast, bureacratic powers. We want to do what we can to see that at least the consumer is represented. It may well be that, as a result of the wise counsels given by my noble friend Lord Redmayne, the Government will scrap certain paragraphs in the Schedule and will re-write the Schedule. They would be well advised to do so. I would then beg of them that if they are going to re-write the Schedule the interests of the consumer should be mentioned.
LORD MITCHISON: I am afraid that I cannot support this Amendment. The reason is quite simple. At one tine the Co-operative Movement used to have a journal which was called the Producer, with which was incorporated the Consumer, We are all of us in a sense, consumers, and when one tries to find someone to represent the consumers one immediately gets into difficulties. Take freight, for instance. Who is the consumer "of freight, and who is going to represent the consumer of freight? I should have thought there were incredible difficulties in finding someone who would fill the bill completely, because it is not in the nature of things that such a person should exist.
I do not agree with what has been said about bureaucracy; I am sure noble Lords would hardly expect me to. But, really, to cure bureaucracy by adding to the number of representatives on a committee advising the Minister does not seem to me to be the shortest way of doing it. I think therefore the short answer is that this is a Bill about production, or transport, analogous to it, as it were, and it is not the kind of thing on

35
which the consumer would expect to be represented at the top. One has to look to see that the consumer has his opportunities at the place where it hits, and that is a good deal lower down than these general advisory bodies. I feel, therefore, this is impracticable, and, if I may say so with great respect to my noble friend, also slightly illogical.
LORD ST. HELENS: If I may say so to the noble Lord, I have listened to him making a great many speeches in both Houses, but I have seldom heard him making so undemocratic a pronouncement.
BARONESS ELLIOT OF HARWOOD: May I rise to support the mover of this Amendment and beg that the Minister will consider this very seriously indeed. I do not think anybody realises how little the user of our nationalised industries, transport or any others, the consumer, has ever heard of, or knows about, the committees (called Consultative Committees) which are supposed to represent him and to be putting his point of view in these industries. The noble Lord, Lord Donaldson, has in his hand a Report which the Council made when I was its chairman. We were horrified to find that in the case of transport, when it was suggested that the people could protest against certain iniquities or matters which were not well organised in connection with transport, only 4 per cent. of the people who were asked whether they had ever heard of the Consultative Committees, or of points of view being expressed by consumers, had ever heard of them at all; and nobody ever thought of writing about anything, unless it happened to be a rather energetic person who had some personal grievance he wanted to put right.
We are here dealing with a new Bill, an enormously long Bill, which is going completely to reorganise the whole transport services. I do not agree with the noble Lord, Lord Mitchison, that people are not concerned with freight. If any of your Lordships are producers of any kind, whether in agriculture or anything else, you will know we are deeply concerned about freight. If you travel on the railways, which I do frequently, you realise the incredible inconvenience caused when trains do not run or schedules are altered or times changed, as at the present
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moment. It think it is absolutely essential that in these categories of people, who are going to be part and parcel of the organisation which is going to run the new Authorities, there should be people who will speak up for the consumers of these industries. They would be far more efficiently run, because people would have the courage to get up and say what they thought and not be hampered by having particularly to speak up for any individual organisation, such as trade union or management or whatever it might be. They should be independent, freelance people using the railways, or whatever the service is. I hope very much that this opportunity will be taken to see that in this Bill, if in no other, at last the people who use the transport, who are on the receiving end, have a voice in how the organisation is being run.
LORD GEDDES OF EPSOM: I must indicate an interest because I serve on a nationalised Board. If the Minister will forgive me for replying to the question of the noble Lord, Lord Donaldson, he asked the Minister which categories represented the consumer. The answer is, all of them; all the categories indicated in the make-up of the Board represent the consumer. The consumer is the customer. This is the board of management. Any board of management that ignores the customer is not only hopelessly inefficient but could not possibly carry on its job.
When we talk of putting in a particular category of consumer, what do we mean? Do we mean customer, one particular customer, one sort of customer, when we are dealing with transport? Clearly the consumer is the customer, and I repeat that the customer is represented by every one of these categories because when they serve on the Board they are in fact the management. Noble Lords opposite know this as well as anyone. If management does not consider the consumer the consumer will go and management will be useless. So, in my submission, we do not need this Amendment.
BARONESS HORSBRUGH: Might I add one or two words, following on the noble Lord. He said that if management do not consider sufficiently the customer or consumer then they are in very great difficulties, or words to that effect. But surely that is why so many of our nationalised industries are in difficulties; that is the very reason, because

37
they do not consider the consumer. I quite see that this particular committee is to be a committee of management, but I think that what several of us would like to see in this Bill is that management and the other interested parties, right down to the consumer, the customer (call him what you like) is included. A great many consumers would then understand better the difficulties the management are up against, and they would therefore be able to help to explain the situation to fellow-consumers if they were given more information and taken into consultation right from the start.
LORD WINTERBOTTOM: I shall give to the noble Lord, Lord Donaldson, the same undertaking as that which I gave to the noble Viscount, Lord Caldecote, through his mouth. I think I can put that with quiet confidence because, as he knows, the Minister has already had these points of view brought to his attention, and I hope to have some sort of satisfactory answer to give to the noble Lord in due course. "Due course" in my mind refers to, to a certain degree, a discussion which doubtless will take place on Clause 55, which is the main clause dealing with consumers' interests in this Bill. Clause 55 in the case of freight and in the operation of ships provides that the scope of the Transport Users' Consultative Committees established by the 1962 Transport Act is to be extended to cover services and facilities provided by the National Freight Corporation and its subsidiaries and the transport services, excluding buses, provided by the Scottish Transport Group and its subsidiaries.
In the case of road passenger transport services, complaints and representations of users may be addressed to the traffic commissioners who are responsible for the licensing of passenger services under Part III of the Road Traffic Act 1960. That in point of fact does show the correctness of the noble Lord in deciding to put down an Amendment on the Schedule, because this particular element is omitted from the main descriptions in Clause 55. But I should like to say to the noble Lord that I would have thought that paragraph 5 of Schedule 1 covers the point. Paragraph 5 reads:
"In appointing the chairman and other members of any of the new authorities the
38
Minister or, as the case may be, the Secretary of State shall have regard to the desirability of having members who are familiar with the special requirements and circumstances of particular regions and areas served by the authority in question."
I would have said that that was saying, in a greater number of words, those who are representative of the consumer interests, and of the interests in a region or area. I feel, even if the reply of my right honourable friend the Minister is not altogether satisfactory, that nevertheless there are substantial safeguards for consumer interests in paragraph 5 of Schedule 1.
LORD DONALDSON OF KINGS-BRIDGE: I thank my noble friend for going so far to meet me. It seems to me that the main point has nor been granted; that is, that we should get the heel of the consumer into management. Quite frankly, we think that management would be a great deal better if it had consumers quite specifically represented. My noble friend Lord Geddes of Epson said that in a sense the consumer is simply the customer. This is so; but there are specialised customers, and our view is that management would manage better if this fact were more strongly represented. It is not done elsewhere. This is a new Bill, and provides an opportunity to do it. Rut in view of the support we have had from noble Ladies opposite, and the discussion and the kind words of the noble Lord who has replied, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.
4.21 p.m.
Clause 30 [Permit for certain bus services in lieu of road service licence]:
On Question, Whether Clause 30 shall stand part of the Bill?
LORD DRUMALBYN: This is a most interesting clause, which I think was not debated in another place. What it sets out to do is to fill the gap in rural bus services in a way of which we in this country have not had much experience, but of which in many other countries they have a good deal of experience. In those countries the gap has been filled in a similar way to this, greatly to the benefit of our motor car manufacturers

39
who have exported vehicles to meet this sort of need.
I am worried that perhaps this clause is too narrowly drawn. I should like to draw the attention of the noble Lord to subsection (2) which says:
"The traffic commissioners shall not grant a permit under the foregoing subsection unless they are satisfied that there are no other transport facilities available to meet the reasonable needs of the proposed route."
I remember a route in my previous constituency, Dumfriesshire, in which there was one service a week in each direction. Under this clause as drafted, so far as I can see, the transport commissioners could not grant a permit for a minibus on this route because there are already transport facilities available. I would ask the noble Lord to look at the drafting of this clause, because I do not think it is intended that there should be no transport facilities available to meet the reasonable—or unreasonable—needs of the proposed route. I think what is meant is that there are insufficient other transport facilities available to meet the reasonable needs of the proposed route. As it stands, it seems to me that the subsection is too narrowly drafted.
My other comment on this clause is that I am not sure what is the purpose of subsection (3)(c), or at least one part of it. This says:
"… the traffic commissioners may attach to any permit under that subsection such other conditions as they may think fit for securing that— ….
(c) passengers shall not be taken up or shall not be set down except at specified points"—
and then it goes on:
"or shall not be taken up or shall not be set down between specified points."
I hope that this will not be made as restrictive as that. Obviously, safety factors are involved here. Further, once a minibus gets into a large town into which it may be running there are considerations of picking up and setting down then. But to limit it to allowing the traffic commissioners to specify that passengers shall not be taken up and set down except at specified points, seems to me to be quite unduly restrictive on a minibus going through rural areas.
I would certainly accept the other part:
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"or shall not be taken up or shall not be set down between specified points."
This may well be right. This is a different consideration, and it would apply to areas where the road is dangerous or where it is in a built-up area, and all the rest of it. But it seems to me that there are these two points in regard to which the clause seems unduly restrictive.
LORD MITCHISON: On the noble Lord's first point, I venture to think that he has not given full effect to the language of the clause. He quoted the words:
"The traffic commissioners shall not grant a permit … unless they are satisfied that there are no other transport facilities available".
But the following words are:
"to meet the reasonable needs of the proposed route."
If the wording had been "there are no other transport facilities on the proposed route", then the instance he gave would be in point. But it is more than that. They have to be not only available on the proposed route, but available to meet the reasonable needs of people. Perhaps in the remoter parts of Dumfriesshire even a single bus a day would be hardly sufficient for that purpose.
LORD DRUMALBYN: May I simply say to the noble Lord that I think that this can be read in a different way as well, and this is why "insufficient" would seem in this case to be a much better word to use than "no".
BARONESS ELLIOT OF HARWOOD: I should like to support the words of the noble Lord, Lord Drumalbyn. One of the difficulties of a transport system is that in order to make it fit the requirements of the user, the consumer, it has to be fairly flexible. There is a good example of an extremely successful running of buses which the noble Lord, Lord Mitchison, will know well. It is the bus which runs from Glasgow, right down Loch Fyfe to Lochgilphead. I have used this bus often, and the number of stops which are allowed are, I think, nothing like the number of stops that are in fact, by use and accommodation, made through the services of the bus driver. Where these are the only methods of getting about, as in this part

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of Scotland, this makes the service remarkably good.
I think it would be a great pity it in our rural areas we were so tightly to restrict the services with rules and regulation that the services were not able to fit in with the needs of the rural communities who live nearby and are spread over rural routes. We want to make it possible for people to use the services, and so give them a much better chance of paying. This will be much more valuable from the point of view of the people who are running these services. It can be done. It is done successfully in many places. I hope that in this new Bill the matter will be left fairly flexible so that people can put on buses and they can be used in the best interests of the consumer of bus accommodation.
THE EARL OF CROMARTIE: I should like to support my noble friend Lord Drumalbyn, and the noble Baroness who has just spoken, from the point of view particularly of the West Highlands, where it is not possible to have specified points of picking up passengers and setting them down. Crofter communities are often placed well away from the road, and people walk along and expect to be picked up on the road. It is not practical to confine them to set stopping places. Years ago there was an occasion when it would have been a disaster. I stress that it is riot the case now, but at one time there was an old crofter lady who had an illicit still at a certain point on a road, and when the Excise man was not aboard the bus invariably stopped there.
4.30 p.m.
LORD WINTERBOTTOM: I am glad that the noble Lord, Lord Drumalbyn, welcomes this particular clause in principle. It is not only North of the Border where this provision will enable new and valuable services to be introduced. In Northamptonshire, there are no bus services in the part of that county where I live, but there is an excellent network of school buses running mornings and evenings. I have always wondered why it should not have been possible to include in these services individuals who are not school children but who want to go about that part of the country. This Bill gives us the power to do this, and I have every sympathy with what the noble Lord has
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said on subsection (2) of the Clause, and I will look into the point whether or not "no other transport facilities" in fact is so restrictive that if there is one bus service a week, this would kill the whole scheme. I do not believe that to be the case because the intention is that the facilities must be available to meet the "reasonable needs" of the proposed route. "Reasonable needs" is, I would have thought, surely more than one day a week. For that reason, however, while I am confident that the intention is sensible, I will make certain that the wording of subsection (2) is not, in fact, so restrictive that a single bus service once a week would kill the whole scheme.
As regards the point made on subsection (3)(c)—the taking up and putting down of passengers at specified points—this particular subsection is entirely permissive. The traffic commissioners can fix these putting down points or they need not; it is up to them to choose. If we think in terms of the part of the world in which I live, I can thank of a number of crossroads and schools where the buses stop anyway and where there would be natural picking up and putting down points. I am reasonably certain that, if the intention is that we should implement our local pattern of public transport by this means, then sensible things will be done by the traffic commissioners in defining the points where people can be picked up and put down. Again, if the position is contrary to what the noble Lord and I believe it to be, I will let the noble Lord know.
LORD MITCHISON: Before we leave this clause, may I suggest that the words "and sufficient" after "available" would remove any ambiguity?
LORD DRUMALBYN: I am grateful to the noble Lord for the assurances that have been given, but I would just ask the noble Lord to bear in mind that an operator would be liable to lose his licence if he did not conform to such conditions as are laid down here, and it would be very difficult indeed in rural areas to conform with the conditions that an operator should not stop and pick up a wayfarer who wanted to be picked up here or there, so I hope he will consider this.
Clause 30 agreed to.
Clause 31 [Abolition of special control over bus services provided by local authorities outside their areas]:
On Question, whether Clause 31 shall stand Part of the Bill.
LORD DRUMALBYN: This is a Clause which abolishes the special control over bus services provided by local authorities outside their areas. I would like to ask the noble Lord what is the reason for this change in the law. My view is that while passenger services continue to be regulated by the Traffic Commissioners, it does not seem unreasonable that a local authority that goes outside its own area should get authority to do so. There may be a good case for giving a local authority special privileges within their own area, but there does not seem to be any good reason for giving them special privileges outside their own area.
LORD WINTER BOTTOM: This is really part of the earlier argument. One assumes that the individuals who will be recasting the various traffic services will act in a sensible way, and that we will get a rationally integrated system of transport, some starting inside a local authority area and generated within a Passenger Transport Authority, and some which will link up with the services run by the National Bus Company. The intention of this clause is really to give the planners of our future bus network the flexibility that any sensible organisation might require. It is basically the substitution of the words "on any road inside or outside their district" for the words "on any road within their district". The licensing procedure will still apply to these services as a separate procedure, but these wider powers to enable public service vehicles to run outside the area of the local authority must, in fact, give an element of flexibility which, in the long run, will give the consumer better service.
Clause 31 agreed to.
Clause 32 [New bus grants]:
LORD NUGENT OF GUILDFORD LORD NUGENT OF GUILDFORD moved Amendment No. 102:
Page 50, line 18, leave out from ("make") to ("a") in line 19.
LORD DRUMALBYN: This clause deals with the new bus grants and the purpose of this Amendment is to make them more generally available and for
44
the clause not to be so very restrictive as it is. The clause, as it stands, enables the Minister to
"make in such cases as he thinks fit, a grant to any person operating public service vehicles in Great Britain towards approved capital expenditure incurred by that person in providing a new vehicle of a type approved for the purposes of this section by the Minister…"
This group of Amendments, 102, 103, and 104 would first of all leave out the words "in such cases as he thinks fit" so as to make it necessary for the Minister to make grants evenly available to everyone who wants them towards the cost of providing a new vehicle, and would also leave out the words "of a type approved for the purposes of this section by the Minister". The clause goes on:
"being a vehicle which is provided for use by that person wholiy or mainly as a stage carriage in Great Britain…".
Here again it is felt that this is unduly restrictive. The vehicle may be provided also as an express carriage and the mere fact that it is only occasionally provided as an express carriage would not, of course, exclude the vehicle from a grant as the clause is drafted, but we do not think that goes far enough. We think that if the manufacturers are to be able to have complete freedom in designing the best possible vehicles, the authorities should be free to experiment with different kinds of vehicles, otherwise it will depend so very much on the judgment of the Minister. The Minister may personally have very little experience of running buses at all, and it is not his advisers that are going to have this experience, it is the bus companies that are going to have this experience and they should have the greatest possible latitude in the choice of their buses.
The history of the railways is one indication of the danger of leaving this kind of decision in the hands of a very few people. I remember in my early days in Parliament pressing for the use of diesel locomotives; I was assured that as this country was built on coal with vast supplies of coal below it, we would never leave coal. This was the argument, and for a long time this was the general attitude in the Ministry and in the Railways Board: coal was the thing and engines must be steam engines. Then, all of a sudden, overnight, the whole thing changed to the total disruption of our railway system. We had breakdowns all over the country in the early days, and so

45
on. We could not even get the locomotives we wanted in this country. We had to import the designs, if not the locomotives, from outside, and this is what happens if you make the choice as narrow as is defined by this clause. Here the Minister is to be left the sole judge as to the cases in which he thinks fit a grant should be made, and it should only be for stage carriages. This series of Amendments would extend that not only to the stag:, carriages but also to the express carriages, and would make clear that it is only the capital expenditure which has to be approved and not the type of vehicle. I beg to move.
4.40 p.m.
LORD MITCHISON: I find these Amendments, particularly the first, rather remarkable. The Bill says that the Minister may "in such cases as he thinks fit" make a grant. He has to have Treasury approval, but the intention of the Amendment is to oblige him to make a grant. There was a similar clause in the Housing Acts providing for the purchase of houses in certain cases where it might be advantageous to have them handed over without a cash consideration at all. They were finally reduced to selling the houses for Is. That would be the effect of this Amendment, since it does not affect the amount of the grant which the Minister is to make, but simply advises him to make "a grant".
LORD DRUMALBYN: The noble Lord will bear in mind that passenger carrying vehicles used to be entitled to investment grants.
LORD MITCHISON: I dare say, but that is not this clause. This clause is intended by this Amendment to oblige the Minister, with the approval of the Treasury, to make a grant. The curious intention of the Amendment appears to be saved by not saying how much the grant is to be; and by leaving intact subsection (3) which allows him to impose any conditions which he wants to, including repayment. He might make a handsome grant of, let us say, half-a-crown on the terms that it was repaid the next day. I cannot quite accept the first Amendment as a serious proposal, and I am certain that the noble Lord, Lord Drumalbyn. will not wish to press it. He has said in terms that he wanted to take the discretion away from the
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Minister and make a grant obligatory. The Tory Party must give up this practice of trying to make it obligatory to hand over public money to private enterprise. It is usually wise to leave a certain amount of discretion with the elected Government of the day.
THE DUKE OF ATHOLL: I do not quite follow the noble Lord Lord Mitchison. This Amendment says that the Minister "may" make a grant, not that he shall make a grant. I should have thought one might have left it entirely to the discretion of the Minister, provided that the Treasury approves. Surely the words "in such cases as he thinks fit" are rather redundant.
LORD MITCHISON: I am inclined to agree with the noble Duke, but we were told that the object of the Amendment was to make a grant obligatory.
THE DUKE OF ATHOLL: But if one reads its wording one sees that it does not in fact do that. I support the second Amendment very strongly, and I hope that the noble Lord, Lord Winterbottom, will enlighthen me on one matter.
In the more remote and rural parts of Scotland there is a definite need for bus services, with buses holding not the usual thirty to forty people, but holding 12 or 15 people. Most of these services are almost bound to be uneconomic because the demand for them is fairly low, except during the three summer months June, July and August. A grant for the development of a suitable bus of this sort and for the manufacture of such buses would be a great help to the more remote parts of Scotland, Wales and no doubt South Western England. I hope that either the second of these Amendments will be accepted, or that we shall be told that a new type of Vehicle approved for the purposes of this clause by the Minister will not be restricted to the conventional type of bus.
LORD WINTERBOTTOM: I, too, may have misunderstood the noble Lord, Lord Drumalbyn. I did not think that he wanted to make this proposal obligatory on the Minister, but thought that he wanted the grants made under it to be evenly available and that there should be fair treatment of all people concerned. I should like to reassure him or this point. We all agree that the power of the Minister to pay a grant must clearly

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be permissive; the word "may" in line 18 makes it permissive. Of course, the Treasury must be concerned, and the position of Parliament in voting the necessary money must also be preserved. The wishes of the noble Lord, Lord Drumalbyn, are clearly understood by the Government. The terms on which the Minister will give grant are being discussed with the bus manufacturers' and operators' organisations and will of course be the same for all operators who qualify. There will be no question of admitting only claims from, for example, the nationalised bus undertakings. This covers the point of the grants being evenly available throughout the industry.
I should like to turn to Amendment 103, which relates to the approval of types of vehicle by the Minister. The noble Lord, Lord Drumalbyn, feared that this approval might be excessively restrictive, that it might freeze the pattern of design in the wrong place and at a wrong point of development. The case for standardisation in bus design has been fully explained in the White Paper, Public Transport and Traffic. It is one of the fundamental objects of the scheme as propounded in the Bill that it should encourage the purchase, for stage services, of standardised buses of high quality. Discussions with bus manufacturers and operators about the standards to be set are at an advanced stage.
The standards will provide for more than one type of bus, and there will be no question of an arbitrary restriction of standards which will deprive operators of suitable types of vehicle. As I read this part of the clause, the initiative at the end of the day must come from the Minister. He must approve the types which will be made standard. This will not be dreamed up out of his head or within his Department, but will be designed as a result of discussions with the manufacturers and operators. This is an attempt to bring some order into what at the moment is a rather chaotic situation. There has been a tendency for individual bus firms to let down their standards. Standardisation in vehicle engineering, indeed in all forms of engineering, would cut costs markedly. The object of the exercise is to get buses of a design which will enable us to use the available labour more productively.
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Amendment 104 is a proposal to extend the new bus grants scheme to cover express services. This runs counter to the Government's proposal. These express services include the longer-distance services, with minimum fares of 1s. or more, including holiday services and also public excursions and tours. The scheme in the White Paper and in the Bill has been deliberately restricted to stage services since the intention is to help the day-to-day short-distance bus services which are essential to the community and are in particular economic difficulty. Likewise, it is these services which vehicle standards need to be adjusted to permit of one-man operation on productivity grounds. This matter is stressed in recent reports by the National Board for Prices and Incomes. The fact is that these productivity considerations do not apply to the general run of express services. For this reason, the Government want to limit the grants to the stage services.
The definition of "wholly or mainly" in the clause will be interpreted administratively. Special cases, such as vehicles of fairly luxurious type which are used initially on express and excursion services for a year or so and then transferred to stage work, can be considered if their merits deserve it.
LORD NUGENT OF GUILDFORD: May I thank the noble Lord for dealing so fully with these three Amendments. To some extent, he has met the anxieties expressed by my noble friends and shared by myself. The first point with which the noble Lord, Lord Mitchison, dealt very skilfully and thoroughly referred, at any rate in substance, to the situation in which we have a bus industry which no longer enjoys the investment allowances which were common to all bus operators before at the rate of 30 per cent. Now this very limited grant system is to be introduced which will apply only to a specific type of bus of which the Minister will approve. We have a general doubt about the wisdom of such a limited approach to this field.
The noble Lord, Lord Winterbottom, said that the Government have deliberately excluded express services. I acknowledge straight away that the major problem with which we have to contend is the stage carriage service. This will be a continuing problem for the rest of our

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lives and until somebody has thought of something better. I agree that that is where the shoe pinches tightest. But I should have thought that there was a good deal of interlocking between the stage carriage service and the express service, especially in the more remote areas. My noble friend the Duke of Atholl referred to the problem in the Highlands. In those areas, the stage carriage service is often related to the express services. I think that it is unwise to concentrate the grant on one point only. While I would acknowledge that advantages are to be obtained from standardisation—in reducing manufacturing costs, by getting long manufacturing runs and probably with spares and maintenance, too—there are disadvantages.
The questions which I should like to ask the noble Lord and which I jotted down are these. Does he not feel any anxiety that this uniformity may inhibit progress and invention? The fact that the Minister is to consult a committee of manufacturers still will not prevent rigidity once the type has been settled. I feel great anxiety that this may inhibit progress and invention. In particular, may not uniformity handicap the development of new types for the export market, where our manufacturers are outstandingly good? How can we be sure that the Minister and his civil servants, even with a panel of manufacturers to help them, will be more omniscient and far-sighted in looking into the future than a range of individual manufacturers who have their own ideas, some of which are wrong, but some of which may be outstandingly right?
Is not the noble Lord taking the doctrine of centralisation of decision too far in this field? I understand his thought and I can see value in it, but does he not recognise that there are great dangers in it, too? Is he really sure that he has the right balance? This obviously is not the kind of Amendment which we should press. However, we are concerned to get the same result. We want a good, healthy, developing, inventive bus manufacturing industry producing buses as cheaply and effectively as possible. I question whether pitching the grants on one narrow field only will do.
LORD WINTER BOTTOM: The point made by the noble Lord must concern us all, and particularly the Ministry of
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Transport. Government Departments are seldom inventive. They may administer wisely, but, with the exception of my Ministry, of course, they very seldom invent anything. The concerns expressed by the noble Lord needed to be expressed. But I can assure him that there is every intention to consider experimental vehicles. Indeed, further on in the Bill there is provision for grants for the development of experimental types. I can give an undertaking that the Minister will always consider new types of buses if and when the industry puts them to him. However, our immediate problem is for more standardisation, and this we should like to carry through with the powers given in the Bill. I assure the noble Lord that his apprehensions will not be forgotten.
THE DUKE OF ATHOLL: Could the noble Lord answer my question about whether mini-buses would be considered?
LORD WINTERBOTTOM: I should have thought that the whole range of buses and all types of vehicles would be considered by the Minister in setting the standards required. Obviously, minibuses must fall within this category.
LORD DRUMALBYN: In view of what the noble Lord has said, for which I thank him, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.57 p.m.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved Amendment No. 105:
Page 50, line 25, leave out ("the appointed day") and insert ("such date, not being earlier than 1st September 1968, as the Minister may by order specify.").
The noble Lord said: With the leave of the House I will move Amendments Nos. 105 and 106 together, since Amendment No. 106 is consequential on Amendment No. 105. The purpose of these Amendments is to enable the Minister, if he so desires, to apply the new bus grant scheme to new buses which become E vailable for use by operators for stage 'work on or after September 1, 1968. Under the clause as it stands, which provides for this date to be fixed as an "appointed day" a date earlier than that of Royal Assent would not be possible. The White Paper Transport Policy indicated that that scheme would apply to buses delivered to

51
operators from the autumn of 1968. Discussions with bus manufacturers and operators about the scheme have reached an advanced stage, and the Amendments will ensure that there need be no artificial restriction on the selection of date for this purpose, assuming that the scheme as a whole is agreed in the near future. The Amendments have Treasury approval.
The Amendments will empower the Minister by order to fix any date for this purpose on or after September 1 this year, whether before or after Royal Assent. This order will not be subject to Parliamentary procedure. These Amendments relate only to the method of defining the vehicles eligible for the purpose of the scheme. Clause 32 itself, and the powers to pay grant under it, will not come into force until the day appointed under Clause 156, which will, of course, be after Royal Assent. There is therefore no question of grants actually being paid in advance of Royal Assent. I beg to move.
LORD NUGENT OF GUILDFORD: I thank the noble Lord for his explanation, and say that the Amendments re acceptable to us.
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move No. 106.
Amendment moved—
Page 51, line 18, leave out from beginning to second ("the") and insert ("date specified under").—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 32, as amended, agreed to.
Schedule 8 agreed to.
Clauses 33 and 34 agreed to.
Clause 35 [Provisions with respect to operation of public service vehicles]:
5.1 p.m.
LORD NUGENT OF GUILDFORD LORD NUGENT OF GUILDFORD moved Amendment No. 107:
Page 53, line 31, leave out ("consider any representations") and insert ("shall have power to consult if they think fit").
The noble Lord said: I beg to move Amendment No. 107, and it may be convenient to debate No. 107A with it. Clauses 35 and 36 relate to new arrange-
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ments for the licensing of public service vehicles, and they have a special importance for noble Lords here because they had very little debate in another place. These clauses first appeared in another place on the Report stage, so that the Commons had no opportunity to debate them on the Committee stage. I think, therefore, that they merit very close attention.
Perhaps I might just say a word for the benefit of noble Lords who are not entirely familiar with the complications of licensing. Public service vehicle licensing rests on the 1960 Act, Section 127, and it is in fact a very effective system. Whereas the licensing of freight vehicles is, in my judgment, defective (and here I am with the Government on the clauses, to which we shall come later, which are going to improve it), the licensing of public service vehicles is, I would say, effective. The system consists of two licences, the first of which is a road ser-vice licence which the traffic commissioner may grant to the operator to operate a public service vehicle. The second is the licence granted to the vehicle itself, and before granting it the traffic commissioner has to satisfy himself that the vehicle is in every way fit to carry passengers for public service. The vehicle's fitness is frequently and very effectively checked by Ministry officials to ensure that it conforms to the current Construction and Use Regulations, and any defects that may be discovered could result in the suspension of the licence and the vehicle being taken off the road; or, indeed, the licence could be revoked if the traffic commissioner thought necessary. I mention this because I want to make the point roundly that the existing system is a satisfactory one.
As I say, this clause first appeared on Report stage in another place, and it arose as a result of representations by Labour Back-Benchers who applied to the Minister to put this clause on the Statute Book. I make this point to noble Lords: that this Bill, which we have all recognised is a record Bill in size, is quite clearly not one in which the Government or the Minister has felt reluctant to include anything that the Minister or his officials thought would be necessary for transport. Therefore it is a pretty fair conclusion that this possibility must have been considered in the Ministry of

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Transport before the Bill was ever drafted and that the experts there, including the Minister, had come to the conclusion that no such clause as this or the next one was really needed. However, here it is.
When the public bus industry—that is, the Passenger Vehicle Operators' Association—were asked what they thought of this clause, and the next one, they reacted immediately with the reply that they considered that neither clause was necessary. They were very much opposed to the second one, and they did not think the first one was necessary. But within three weeks of receiving this letter the clause was on the Order Paper, and had very rapidly been passed by another place. We can all make a comment, I think, on this way of treating both the industry and Parliament: that something of very considerable importance, and affecting a great many people, should be put forward to go on the Statute Book in such a rushed and high fashion.
Turning to the merits of this clause, noble Lords will see that it gives certain categories of people mentioned in paragraph (b) the right to make representations which the traffic commissioner must consider when issuing a licence. The present position is that the traffic commissioner is fully authorised to consult with anybody he likes; and does so, if he considers it necessary. So it is quite unnecessary to put anything like this into the Bill. Why those who wanted this in the Bill wished A to be there it is not for me to say. The only point I make is that it is quite unnecessary to have it there at all. But what is necessary is that the traffic commissioner's judgment in dealing with licences should be as unfettered as possible. He should be completely free to consult whom he likes and then to use his own judgment as to how he will issue a licence if he thinks it necessary and if he thinks it is justified. This is the background to it.
The effect of our Amendment is marginal. It would leave the power to consult but it would reduce somewhat the cogency. Paragraph (b) now reads that the traffic commissioners
"shall consider any representations with respect to any of those matters made by any of the following persons,…"
The Amendment will make the paragraph read that the traffic commissioners
54
"shall have power to consult if they think fit with respect to any of those matters…"
The Amendment I am moving is a pretty marginal affair, but it reduces it a little. I may say that the industry thought that the right thing to do was to remove this clause altogether. I do not wish to suggest a course which would be offensive to the Government in a relatively small matter like this, and therefore I am moving an Amendment which would perhaps make for a compromise. I hope that noble Lords opposite will see that this is a quite semsible, practical thing to do, and I beg to move.
LORD MITCHISON: The noble Lord who moved this Amendment will remember that the mountains gave birth and they produced at the end only a rather small mouse. His mountains gave birth with great eloquence, but at the end I wonder whether there is really even a mouse. I am not quite clear what difference this Amendment is supposed to make; and I am rather afraid that if it is meant to omit anything it is omitting an obligation which noble Lords opposite, who were so intent on democracy and the interests of the consumer a short time ago, would not wish to see omitted.
All the clause does—and I quite agree that it is not a very weighty or important matter—is to oblige the traffic commissioners to consider certain representations. Why I feel it is not really very important is that they undoubtedly ought to do so anyhow, and almost certainly they would, but there is perhaps an advantage in setting out those bodies who have a specific right, which must not be overlooked, to a consideration of their representations. That is now going to be removed, and what is going to be put in its place is a power "to consult if they think fit" with those same bodies. It is only if they think fit. I should not have thought that this needs to be put in a Statute at all. If you oblige people to consult you may cause a good deal of inconvenience and delay. That is why people sometimes are reluctant to have provisions to that effect in a Statute. It seems to me unnecessary to remove a provision—which, whatever one may think of its importance or form, was intended for the protection of the public and the consumer in certain respects—and to substitute for it something which

55
adds nothing to what the traffic commissioners would do anyway. One has a good deal of sympathy with some of the "mountains" to which I listened with great attention. One feels that the "mouse" is rather a small one, possibly both non-existent and running the wrong way; and therefore undoubtedly an Irishman of a mouse.
LORD BALFOUR OF INCHRYE: Unlike the noble Lord, Lord Mitchison, I see a very considerable difference between the Bill as it stands and the Bill as it would be if this Amendment were accepted. Under the Bill as drafted it is obligatory for representations to be considered with respect to any matter set out. Under the Amendment it would be within the discretion of the authority to consider such representations. Representations are not always either relevant or accurate. Representations can very quickly lapse into accusations, particularly when we look at subsection (2)(a) which says:
"…the previous conduct of the person in question in relation to any trade or business in the course of which vehicles of any description are operated, being a trade or business—
(i) carried on by him or by a company of which he is or has been a director;"
That really means that any ex-employee who has a particular grievance or feels a particular grudge against his employer will have an absolute right to bring that forward to the authority to be considered. I think that is thoroughly wrong. We have often seen irrelevant and unfair accusations made when application is made for renewal of the licence of licensed premises. My fear is that if this very wide power is left in the Bill we shall see that sort of conduct repeated in this field. For that reason I hope the Government will give sympathetic consideration to the Amendment of my noble friend.
LORD ROBERTSON OF OAKRIDGE: I very much support this Amendment. I do so for rather personal reasons. I discovered fairly early in my dealings with my good friends in the trade unions that as soon as I had agreed to consider representations I had, in fact, agreed to concede representations. That is the meaning these words are given by many of our friends in the trade unions. I think those words contain an undesir-
56
able emphasis. I much prefer the Amendment.
LORD ST. HELENS: I should like very briefly to support my noble friend over this Amendment. I think my noble friend Lord Balfour of Inchrye and also the noble Lord, Lord Robertson, hit the nail on the head. It may seem rather a small matter but I consider that there is an immense difference between "to consider" and "power to consult". What the Amendment does is to return the initiative to the Commissioners. As it stands in the Bill now, making it obligatory to consider, the initiative is taken out of the Commissioners' hands. This I think is a wholly bad thing. I do not know whether my noble friend is going to press this to a Division or not, but if he does I shall be happy to support him.
LORD POPPLEWELL: Listening to the noble Lord, Lord Robertson, and remembering the position he occupied with distinction for such a very long time, one can appreciate the interpretation that might have been put by the trade unions on his agreement to consider representations. But on the other hand, from time to time many things arise in this service on which it is advisable that the trade unions or other associated bodies—not just the trade unions themselves—may desire to make representations. I think it is right that the Commissioners should have to consider those representations.
The terms of the Amendment are so very wide: "shall have power to consult if they think fit". The operative few words are, "If they think fit". If the Amendment were accepted and the Commissioners turned down a representation because they did not think fit to consider it, there would be created a situation which I do not think would be in the best interests of those working closely in association in this service. Undoubtedly, people with the skill of Lord Robertson and others with vast managerial experience can quickly evaluate representations. It is understandable if friendly relations obtain between management and trade unions that a promise by the management to consider a certain factor might be interpreted by the unions as an agreement to concede it. But surely skilled management can quickly remedy any such misapprehension; and will he able to do so without seeming unjust.

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I think it would be inadvisable to accept this Amendment.
VISCOUNT SIMON: The discussions in Committee may be a little "off beam", because, with great respect to the noble Lord, Lord Nugent, he introduced this Amendment by saying that it refers to circumstances when the Commissioners are granting a licence. In fact, it refers to circumstances when the Commissioners are considering suspending or cancelling a licence. I am not clear how any of these bodies know that the Commissioners are considering that matter. Indeed, until they know that they are considering the matter representations cannot be made. But if, as I assume, there is some notice given that the Commissioners are considering the matter, I should have thought it would be perfectly right that the bodies set out in the Bill should have the right to make representations and that the Commissioners should take those representations into account. With great respect, I do not think the noble Lord, Lord Balfour of Inchrye, was right in suggesting that any aggrieved person could make representations. That is not so.
LORD BALFOUR OF INCHRYE: He fulfils the requirements if he is a director or is running his own business.
VISCOUNT SIMON: I beg his Lord-ship's pardon. I do not think I have made my point correctly. The only people whose representations have to be taken are trade union officials, a chief officer of police or a county council or borough council. Individuals' representations are not to be taken into account. With the greatest respect, I think the point raised by the noble Lord is irrelevant.
LORD BALFOUR OF INCHRYE: Perhaps the noble Viscount would look at subsection (2)(a) on page 54.
VISCOUNT SIMON: Yes; but the only representations which are the subject of this Amendment are representations made under Clause (1)(b)—that is, representations by trade unions, chief officers of police or by a county or borough council; so I do not think that individual representations come into the picture. I certainly feel that there are no good grounds for this Amendment; and that it would be far better to leave the clause
58
as it is, and let the commissioners take into account representations made by these responsible people in cases where they are already considering the cancelling or revoking of a licence.
LORD WINTERBOTTOM: With respect to my noble friend, Lord Mitchison, I think that this is rather larger than a "mouse". We are discussing a quite important animal, but I think that the noble Lord, Lord Nugent of Gutldford, is reading too much into the intention behind Clause 35 as drafted. The noble Lord's Amendment would remove the obligation of the traffic commissioners, when considering whether a person is a fit person to hold a public service licence, to take into account any representations on the subject by the persons described in Clause (1)(b), and would substitute a permissive power for the traffic commissioners to consult these persons if they thought fit. In other words, the persons concerned, the unions, the operators' organisation, the police and the local authorities, would have no right of representation.
We believe that they should have the right of representation. The purpose of the clause is to provide statutorily for this right if the persons concerned wish to exercise it. The persons concerned are under no obligation to make representations, if they have no cause to do so, and the commissioners are under no duty to seek such representations if they are not made. In fact. under present procedures the commissioners always consider complaints from these sources, which are listed in this clause. So the hard fact of the situation is that the actual procedures a -e not being altered by this clause at all. All that is being done is to strengthen the existing procedure. The traffic commissioners, who have of course been consulted, welcome the clause as a whole and see no objection to the proposals made. I think this a very strong point in favour of the clause. As the noble Lord, Lord Nugent of Guildford, pointed out the system works reasonably well.
The noble Lord, Lord Balfour of Inchrye, has been answered in pact by my noble friend Lord Simon. It not individual trade unionists who can make complaints; it must be a trade union, and although an individual may be a

59
member of a trade union and his representative may put the case to the commissioner, it does not necessarily follow that there is a filter.
LORD BALFOUR OF INCHRYE: The point I want to make is that a disgruntled union member could call on his union to make his individual case, and it might be a case of revenge and unjustified.
LORD WINTERBOTTOM: The noble Lord, Lord Balfour of Inchrye, is quite correct; this is the sort of thing that happens in life, and it was pointed out by the noble Lord, Lord Robertson of Oakridge. But most trade union leaders and traffic commissioners are level-headed men, and I do not think that the risk is quite as great as the noble Lord makes out, although I admit that it exists. On balance, we believe that the advantages of the clause outweigh the disadvantages indicated by the Amendment. I hope that noble Lords will accept the explanation I have made and agree to the clause.
LORD NUGENT OF GUILDFORD: I thank the noble Lord, Lord Winterbottom, for answering the debate and dealing with my Amendment so sympathetically, but I am sorry that he does not feel that he should accept it. I am bound to say that I feel very unconvinced when he tells me that he and his noble friends and right honourable friends in the Government believe that this right for these various bodies should exist. I again make the point which I made before, that they did not think so until about a month ago and, Heaven knows!, they have had long enough to brood over this Bill and they have put everything else into it. The case for putting this provision in the clause is really very thin. I thought that the noble Lord, Lord Robertson of Oakridge, made a cogent point. These traffic commissioners act in a semi-judicial capacity, and I should have thought that the less right that various people have to oblige the commissioners to listen to them, the better. Let the commissioners use their own judgment and let them use their own freedom to consult anyone they like, which is what they do now.
The noble Lord said that the traffic commissioners welcomed the clause. It would be very difficult for them to do
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anything else as they are appointed by the Minister. What else does the noble Lord think they would do? I am not going to suggest to your Lordships that we should divide the Committee on this matter. The noble Lord, Lord Mitchison, who I so often find on my side, said that this was only a "mouse". The smaller the mouse, the more the noble Lord gives me my case, and the noble Lord, Lord Winterbottom, ought to accept the Amendment. But I realise that it is not quite so easy as that from the point of view of the noble Lord, Lord Winterbottom. This is not the kind of issue on which we should divide. I am clearly going to ask leave to withdraw my Amendment, but I would nevertheless again make the point to noble Lords on the Government Front Bench that they have, I think, been unwise. They have a system which is working extremely well, and now they propose to throw in a new element which will probably do more harm than good. I beg leave to withdraw the Amendment.
LORD WINTERBOTTOM: Before the Motion is put, may I say that I will see what I can do to help the noble Lord, Lord Nugent of Guildford, on his way, though I cannot make any promises.
Amendment, by leave, withdrawn.
Clause 35 agreed to.
Clause 36 [Power of local authority to run contract carriage]:
5.27 p.m.
LORD NUGENT OF GUILDFORD LORD NUGENT OF GUILDFORD moved Amendment No. 108:
Page 55, line 20, leave out ("and places outside").
The noble Lord said: This Amendment has rather more substance in it, and I am sorry to see that the noble Lord, Lord Mitchison, is about to leave the Chamber. I had hoped that in respect of this Amendment he would have felt that the "labour of the mountain" was justified and that something more than a mouse would emerge. Seriously, I hope that the noble Lord, Lord Mitchison, will not stay to listen to this debate unless it entirely suits his convenience.
Clause 36 is also a newcomer to the Bill. It arrived, as did Clause 35, about three or four weeks ago, on the Report stage, and therefore in another place they have had a chance to do no more than

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have a short debate on Report, either to accept or to reject it. Again I feel that this deserves our closest attention. The effect of Clause 36 is to give to local authorities who are running bus services the power to run what is called contract carriers in the trade, which means, to laymen like ourselves, coach trips and contract hire. But it gives this power to these local authorities to run contract carriage either inside or outside their local authority area; that is to say, to any part of the country, and presumably, if they like, to any part of Europe as well.
The effect of our Amendment would be to allow local authorities to run contract carriage within their own areas only, and not outside to the rest of the country. Again, the private sector of the passenger service vehicle industry, that is, the Passenger Vehicle Operators' Association, were asked for their opinion of the clause and they reacted strongly against it. They feel that it carries a serious danger to their livelihood. It is fair to make the point that these people running contract carriage services, these private firms, have had a difficult time. The Government have taken away their investment allowances, which were 30 per cent. grants for all new vehicles. They have put on the selective employment tax. And these people are having a difficult time to get a living out of their businesses. They see the entry of the local authority bus service into this field as a serious blow to their continuing to get their livelihood.
On the whole, experience has shown that private bus companies are more efficient in this field than public corporations who have tried it. Noble Lords opposite, with instinctive loyalty, say, "No", but for the benefit of the noble Lord, Lord Popplewell, who has a warm spot in his heart for London Transport, let me say that London Transport used to run a contract carriage service. They regularly lost money. So, eventually, they decided that the best thing to do, when they had contract carriage work to do, was to employ a private firm and take 10 per cent. That is what they do now, and they are doing better for themselves and everybody else in the process. This is very wise, but unfortunately this does not always happen. Occasionally a municipal bus corporation feel that, because private firms are making profit out of this business, it
62
would be a good thing if they extended their stage carriage service into this field. And having done this, they are making a loss, but will not give up because of the prestige factor.
I am not going to name names, unless your Lordships wish me to do so, but I have examples where this happens. Inevitably what happens is that municipal bus services quote cut rates in order to get contract carriage work, run at a loss to take business away from the private firms, and then the ratepayers have to make up the deficit. This is no good to anybody. It is no good to the ratepayers and no good to private business.
It is against this situation that my Amendment is directed. It really does not make sense to encourage local authorities to go into this field. Again I stress the point that obviously the Minister of Transport did not think it would make sense to do this because he did not put it in the Bill to start with but once again, as a result of cogent representations made to the Minister, it was put in. I urge your Lordships to agree that it is not a good thing to encourage municipal bus corporations to go into this business, and I hope that the Government will accept this Amendment. I beg to move.
LORD MITCHISON: This is not a case of the mountain producing a mouse. This argument itself is as old is the hills. It was produced the first time any municipality wanted to run its own transport service. All it comes down to is that private interests do not always like the competition of a public service. I think we could all agree about that. On this occasion, the elected Chamber has decided on this long-disputed and not unprecedented issue that the public would be better served by allowing municipalities to have contract vehicles even outside their own area. One could argue about this for a long time. I have no intention whatever of doing so, because all the arguments I should adduce, and all the arguments which would-be adduced from the Benches opposite, are bound to have been heard before on other issues.
We have just heard an eloquent plea from noble Lords opposite on behalf of the consumer. Apparently he never

63
had a chance; he was not properly represented on this, that or the other committee. Noble Lords opposite stand for the consumer, and with vigour. What about the consumer in this case? Is it to his advantage or disadvantage, not that there should be this or that service, but that local authorities and others who run public services should be allowed to extend these services by running contract vehicles outside their own areas?
I know perfectly well what a contract vehicle is and why it is run by the private side of the industry: because it pays them to do so. We are asked who would benefit if the ratepayer were called upon to subsidise the municipal service. In the majority of cases it is the other way round. It is the municipal service which assists the ratepayer. But the short answer to noble Lords opposite is that the man who will be benefited in this case is the consumer, whom in other cases the noble Lords were so anxious to protect such a short time ago.
5.36 p.m.
LORD WINTERBOTTOM: My noble friend has stated the doctrinal position on this clause very well. I think that we all agree with him that what the Bill is trying to achieve is a better service for transport users. The argument put forward is that two classes of people will suffer as a result of this clause. First, those who run passenger transport firms will suffer directly because of competition from local authorities running more extensive services; and, secondly, the ratepayer will suffer, if, out of folio de grandeur, the local authority decides to run, in competition with a private company, at a loss. While I accept that competition may well harm someone, if he is not particularly efficient, nevertheless, the powers proposed to be given to local authorities are fairly strictly circumscribed.
The local authorities are required to give the Minister not less than three months' notice of their intention to run contract carriages beyond their district, accompanied by a statement of the extent to which the authority has made, or proposes to make, co-ordination agreements with other operators of bus services within, to and from its district. These other operators might be the National
64
Bus Company, the Scottish Transport Group, a Passenger Transport Executive or any other bus operator, whether private or municipal, according to the circumstances. I always thought that the circumstances in which local authorities would in fact exercise the powers given them under this clause would be limited, particularly by the rather protracted procedure necessary for them to get the permissions required. If they made a case to the Minister, probably it would be a good thing and in the public interest that this power should be given to them.
The area of operation provided in the clause follows the definitions of the operating area for P.T.E's under Clauses 10(1)(i) and (iii)(a). There are no restrictions upon operations within the district or to and from the district. Operation wholly outside the district is limited to cases where it is connected with the authority's main activities. The hard fact is that few municipal operators have succeeded in getting general contract carriage powers in local legislation, and the general legislation—the Road Traffic Act 1930—expressly does not confer such powers. Many local authorities have powers to "run and service" vehicles within their district. The interpretation of this power as enabling them to run contract carriages was questioned in the Commons on Report, but to my knowledge it has never been challenged in the courts. Few local authorities have powers to go outside, even on a restricted basis. I think it is best left, within the controls which will be exercised by the Minister of Transport, to the local authorities to follow the provisions of this clause as they think fit.
LORD NUGENT OF GUILDFORD: The noble Lord made the best he could of a very bad job, and a very bad job it is. As this time he used the de minimis argument to me, I think he should have been supported by the noble Lord, Lord Mitchison. The "mouse" was coming from the Government Benches this time. If the noble Lord goes too far in that direction it will not give much comfort to his honourable friends in another place who are anxious to see this clause on the Statute Book.
Of course, there are powerful safeguards put into this Clause 36. The Minister knew jolly well that it ought not to be there at all. That is why it was not put into the Bill to start with. Of course,

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the Minister has done the best he can to make sure that local authority bus services do not apply for contract carriage if he can possibly avoid it, because he knows that they ought not to. But he has done it, it is already provided for, and now we are being asked to make it the law of the land by this Bill. I most urgently advise your Lordships not to do so. It is quite wrong, both in terms of the ratepayers' interests and in terms of the private firms. The general experience is that private firms operate better than public corporations in this field.
Let me say this to the noble Lord, Lord Mitchison. Certainly the private firms make a profit out of this. If they did not, they would go out of business. But it is not all that easy to make a profit out of contract carriage. This has been the general experience of the municipalities, including the London Transport Service, who have gone into it. It requires very good management and flexible operation, and much closer management than municipal corporations can usually manage.
LORD MITCHISON: Could I just ask the noble Lord one question? Suppose the facts were that it was to the advantage of the private firms, but to the disadvan-
tage of the consumer, on which side would the noble Lord be?
LORD NUGENT of GUILDFORD: I should be on the side of the consumer. The noble Lord perhaps has not studied this very closely. What has happened in two cases—and I can give the noble Lord details of them—where municipalities are running a contract carriage service, believed to be operating at a loss, is that they have often drawn off their drivers to run contract carriage work, and the result is that their stage carriage service suffers. So the consumer's interest does not necessarily benefit from this, and may very well suffer in quality, apart from the fact that the ratepayer has then to make up the deficit as well. This is not a case where the consumer's interest is at stake. It is a case where we have a field that is very much better left to private firms. It is for that reason, without taking any more time, that I would ask noble Lords to support my Amendment, and to prevent this clause in this very distorted form going on the Statute Book.
5.43 p.m.
On Question, Whether the said Amendment (No. 108) shall be agreed to?
Their Lordships divided: Contents 105; Not-Contents, 54.

CONTENTS

Aberdeen and Temair, M.

Craigmyle, L.

McCorquodale of Newton, L.

Abinger, L.

Cromartie, E.

Margadale, L.

Ailwyn, L.

Daventry, V.

Massereene and Ferrard, V.

Airedale, L.

De La Warr, E.

Merrivale, L.

Albemarle, E.

Denham, L. [Teller.

Milverton, L.

Aldington, L.

Dilhorne, V.

Monckton of Brenchley, V.

Amory, V.

Drumalbyn, L.

Monk Bretton, L.

Amulree, L.

Elliot of Harwood, Bs.

Morrison, L.

Arran, E.

Emmet of Amberley, Bs.

Mottistone, L.

Atholl, D.

Falkland, V.

Mowbray and Stourton, L.

Auckland, L.

Falmouth, V.

Newton, L.

Audley, Bs.

Ferrier, L.

Nugent of Guildford, L.

Balfour of Inchrye, L.

Foot, L.

Oakshott, L.

Barnard, L.

Forster of Harraby, L.

Ogmore, L.

Beauchamp, E.

Fortescue, E.

Penrhyn, L.

Beaumont of Whitley, L.

Glentanar, L.

Powis, E.

Belstead, L.

Goschen, V. [Teller.]

Rankeillour, L.

Blackford, L.

Greenway, L.

Rathcavan, L.

Bledisloe, V.

Grenfell, L.

Redesdale, L.

Boston, L.

Grimston of Westbury, L.

Redmayne, L.

Brentford, V.

Hawke, L.

Robertson of Oakridge, L.

Bridgeman, V.

Horsbrugh, Bs.

Rockley, L.

Brooke of Ystradfellte, Bs.

Howe, E.

St. Aldwyn, E.

Burnham, L.

Ilford, L.

St. Helens, L.

Burton, L.

Jellicoe, E.

St. Oswald, L.

Carrington, L.

Jessel, L.

Sandford, L.

Clwyd, L.

Kilmany, L.

Savile, L.

Colgrain, L.

Kinnoull, E.

Selkirk, E.

Cork and Orrery, E.

Latymer, L.

Sempill, Ly.

Cottesloe, L.

Lothian, M.

Somers, L.

Craigavon, V.

Lucas of Chilworth, L.

Strange of Knokin, Bs.

Strathclyde, L.

Thurlow, L.

Wakefield of Kendal, L.

Swinton, E.

Trefgarne, L.

Windlesham, L.

Templemore, L.

Tweedsmuir, L.

Wolverton, L.

Teviot, L.

Vivian, L.

Wrottesley, L.

NOT-CONTENTS

Addison, V.

Hall, V.

Raglan, L.

Balogh, L.

Hankey, L.

Rowley, L.

Beswick, L.

Henderson, L.

St. Davids, V.

Bowles, L.

Hill of Wivenhoe, L.

Samuel, V.

Brockway, L.

Hilton of Upton, L. [Teller.]

Serota, Bs.

Burden, L.

Hughes, L.

Shackleton, L.

Campbell of Eskan, L.

Kennet, L.

Shepherd, L.

Carron, L.

Kilbracken, L.

Simon, V.

Champion, L.

Latham, L.

Snow, L.

Collison, L.

Lindgren, L.

Stocks, Bs.

Crook, L.

McLeavy, L.

Stonham, L.

Douglass of Cleveland, L.

Maelor, L.

Strabolgi, L.

Faringdon, L.

Mitchison, L.

Summerskill, Bs.

Fiske, L.

Moyle, L.

Taylor of Mansfield, L.

Gaitskell, Bs.

Phillips, Bs. [Teller.]

Wells-Pestell, L.

Gardiner, L. (L. Chancellor.)

Plummer, Bs.

Williamson, L.

Geddes of Epsom, L.

Popplewell, L.

Winterbottom, L.

Granville of Eye, L.

Wootton of Abinger, Bs.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
LORD NUGENT OF GUILDFORD: This is a consequential Amendment. I beg to move.
Amendment moved—
Page 55, line 24, leave out from ("within") to ("their") in line 25.—(Lord Nugent of Guildford.)
LORD NUGENT OF GUILDFORD: This is a consequential Amendment. I beg to move.
Amendment moved—
Page 55, line 30, leave out ("cease") and insert ("continue").—(Lord Nugent of Guildford.)
LORD NUGENT OF GUILDFORD: This is a consequential Amendment. I beg to move.
Amendment moved—
Page 55, line 30, at end insert ("except insofar as they are affected by section 31 of this Act").—(Lord Nugent of Guilford.)
LORD NUGENT OF GUILDFORD: This is a consequential Amendment. I beg to move.
Amendment moved—
Page 55, line 41, leave out ("to and from"). —(Lord Nugent of Guildford.)
LORD NUGENT OF GUILDFORD: This also is a consequential Amendment. I beg to move.
Amendment moved—
Page 56, line 9, leave out ("to and from"). —(Lord Nugent of Guildford.)
Clause 36, as amended, agreed to.
Clause 37 agreed to.
LORD FOOT LORD FOOT moved Amendment No. 113: After Clause 37, to insert the following new clause:
Motor Vehicle Safety of Manufacture Council
".—(1) The Minister shall establish a Motor Vehicle Safety of Manufacture Council (hereafter in this part of the Act referred to as the 'Motor Safety Council') to regulate and control the quality and safety of all road vehicles manufactured (or produced from imported components) within Great Britain.
(2) The Motor Safety Council shall be comprised of not less than twenty persons each of whom shall be qualified engineers—

(a) five to be appointed by the Minister;

(b) five to be appointed by the President of the Board of Trade;

(c) five to be appointed by the motor manufacturing trade;

(d) five to be appointed by recognised consumer and motoring organisations.

(3) The function of the motor Safety Council shall be to—

(a) examine for safety and quality of construction all classes of vehicles manufactured after the appointed day;

69

(b) appoint inspectors one of whom shall be seconded to all corporate bodies, companies, partnerships or individuals trading as manufacturers or producers of motor vehicles of all descriptions;

(c) require all manufacturers of motor vehicles to submit to the Motor Safety Council full details and specifications of all vehicles manufactured or proposed to be manufactured by the said manufacturer on and after the appointed day.

(4) The Motor Safety Council shall be empowered to—

(a) require any manufacturer of a motor vehicle to satisfy the Motor Safety Council that the said vehicle is constructed and manufactured in such a manner that it is safe in all respects for use on public roads and highways and does not create any abnormal hazards by reason of its method of construction and/or production;

(b) require any motor vehicle to undergo any form of road test that may in the opinion of the Motor Council be necessary to establish that the said vehicle complies with the conditions of subsection (4)(a) of this section;

(c) its appointed inspectors to be given access to all factories, workshops, drawing offices of any motor vehicle manufacturer and access to all plans drawings specification stores containing spare parts or any other documents or places which in the opinion of the Motor Safety Council may be necessary to establish that all motor vehicles manufactured in Great Britain are manufactured to standards of maximum safety and quality.

(5) The Motor Safety Council shall be empowered with the consent of the Minister to—

(a) require any manufacturer of any motor vehicle to cease manufacturing that vehicle if it does not in the opinion of the Motor Safety Council comply with the standards of safety and quality required by the Motor Safety Council;

(b) require any manufacturer to re-possess any motor vehicle and to compensate the purchaser in full if such a vehicle does not in the opinion of the Motor Safety Council comply with the standards of safety and quality required by the Motor Safety Council;

(c) require any manufacturer of any motor vehicle to install in the said motor vehicle any approved safety device which in the opinion of the Motor Safety Council improves the standard or safety or quality of said vehicle.

(6) All motor vehicles manufactured in Great Britain as defined in subsection 3(a) of this section shall be sold with a safety certificate in a form to be prescribed by the Road Safety Council and all such vehicles shall have a metal plate attached to the vehicle stating that such a certificate has been issued.
(7) Any manufacturer failing to comply with the conditions of this section shall be subject on summary conviction to a fine not exceedinr, £20,000 or upon conviction on indictment to a term of imprisonment not exceeding five years.
(8) For the purposes of this section the Minister shall with the consent of the Treasury make available the sum of £1 million for the establishment of the Motor Safety Council and such annual payment to the Motor Safety Council as he may determine to be necessary for the proper discharge of their responsibilities as defined in this section."
The noble Lord said: This Amendment was tabled by the spokesman of my Party in another place, but I understand that it was not reached. It deals with the matter of safety in the manufacture and design of motor vehicles. I had thought at one time that this Amendment might be reached when we were dealing with the Bill last week. As it has turned out I am glad it was not reached then, because I had an experience on Thursday last which enables me to commend this clause to your Lordships with perhaps more fervour and enthusiasm than I might have done last week.
I was travelling in the outer lane of the M.4 at a speed not far short of the limit of 70 m.p.h. when I had the experience, which I hope has not befallen many of your Lordships, of having my windscreen shatter in front of my eyes. It is literally and in both senses a shattering experience. What happened in my case was that without any warning whatever or any knowledge of what caused it, the windscreen suddenly disintegrated although it did not collapse. The result of this happening is that in an instant you are confronted with an entirely opaque and impenetrable windscreen and can see nothing. I survived on this occasion on two accounts: first, because there was a high wind blowing and a small quantity of the crystals into which the windscreen disintegrated fell in, with the result that I had a peephole through which I could see. The second reason is that when you have belonged to my Party as long as I have you develop an acute sense of self-preservation. Anyway, I survived.
I took my car for another windscreen to be put in, and I was advised by the people who are expert in these matters that I could have put back either a windscreen similar to the one which had been destroyed, or I could pay a lot more money for a windscreen which would be less liable to that sort of accident. I was told that if I decided to have a windscreen of the original type put in no guarantee could be given to me at all. That enables me to commend this clause

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to your Lordships with some personal feeling.
The purpose of the clause is quite clearly set out in subsection (1), which states:
"The Minister shall establish a Motor Vehicle Safety of Manufacture Council … to regulate and control the quality and safety of all road vehicles manufactured (or produced from imported components) within Great Britain."
I need not trouble your Lordships with the rest of the clause in any detail because it merely sets out the composition of the Safety Council, its function and the powers which are to be given to it.
Of course, since the earliest Road Traffic Acts there has been a great mass of Statutes and regulations dealing with the maintenance of safety of vehicles on the roads. There are the very comprehensive Construction and Use Regulations under the Road Traffic Act dealing with this matter of maintaining standards of safety of vehicles on the roads, and in more recent years we have created a procedure for the inspection of vehicles and for their testing, and also for the prohibition of vehicles on the roads if they do not fulfill certain safety standards. But all those regulations are directed to the maintenance of the safety standards of a vehicle once it has been put on the road. It is a curious gap, it seems to me—I think I am right in saying that there is this gap—that there are no corresponding regulations or enactments dealing with the establishment of minimum standards of safety in the original design and manufacture of road vehicles.
The whole object of this clause is to set up an independent body which will lay down certain minimum standards in the manufacture and design of motor vehicles to be observed by all manufacturers of motor vehicles in this country.
The Clause goes on to require that motor manufacturers shall comply with those standards. I suggest that this very simply proposal has three advantages. The first is that an independent body will establish clear minimal standards which every manufacturer will be required to observe. Your Lordships may know that this question of what are the necessary safety factors in the manufacture of a vehicle has been the subject
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of great technological controversy, particularly in the United States of America. I suggest it is most important that we should establish clear standards so that every manufacturers knows what is required of him.
The second advantage from the motor manufacturer's point of view is that if everybody engaged in the manufacture of cars is required to comply with certain minimum standards it means that the less scrupulous manufacturer who at the present moment may not be paying so much attention to the safety of his products will no longer be able to steal a march on the more scrupulous manufacturer. The third advantage, I suggest, is that from the point of view of the consumer, the purchaser of the vehicle, he has really no standards by which to judge between one vehicle or another or to know whether one will be safer in operation than another. There is no possibility of making the test for himself. If he can be assured that every vehicle which goes on to the road from a British manufacturer complies with certain minimal basic safety standards, then the choice he has to make will be made very much easier.
I do not pretend to be an expert upon this matter: indeed I am not. It may well be that the Government will be able to tell me that there are provisions, whether by way of voluntary agreement or not, which cope with the situation. I hope the Government will be able to satisfy your Lordships that this is the case, but if that is the argument may we be told what the present provisions are which ensure that certain minimum safety standards are observed by all manufacturers in the manufacture of vehicles?
The second argument which I understand may be addressed to your Lordships is this: that it is desirable in these matters to try to reach international understanding on an agreed international standard. That may well be so, and that would be a cogent and powerful argument for not accepting this Amendment at this stage. But if that is the argument which is to be addressed to us, I would ask the Government to tell us how far these present negotiations have progressed towards the achievement of an international standard, and when we may expect to be in a position to put legislation on the Statute Book for this country which will meet the

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matters to which I have been referring. I beg to move.
LORD BALFOUR OF INCHRYE: I cannot resist detaining your Lordships for a few minutes on this, because while sympathising with Lord Foot's experience with his windscreen, if one reviews these two pages they seem to me, to use Mr. Quintin Hogg's words, "the biggest load of codswallop" that has even been put to your Lordships. What is to happen? Is this great industry to be put in a bureaucratic straitjacket? Not only public service vehicles, but all our cars are apparently to be subjected to this very curious process before they are delivered to us.
Incidentally, £1 million of your Lordships' money, and of my own, is to be spent on financing inspectors in every factory, who are not only to see that the processes of manufacture are kept up to but are apparently to vet every future design. One can well imagine how popular it would be with manufacturers who are bringing out new models on the secret list, in a highly competitive world, to have to submit their designs for the approval of the Minister. I think that if anything like this had been done in the early days of the development of aircraft, when the success of the aircraft industry was based on what was known as "a private venture", we should not have had any aircraft at the beginning of World War II. Really, the idea that we should have to submit every design of the future for the approval of the Safety Council, and that inspectors should lurk about in every factory, seems to me the height of absurdity. If this is an example of Liberal policy, I can, with respect, well understand their dismal failures at the polls.
LORD SOMERS: I sincerely hope the Government will not accept this Amendment, and I should like to explain why. I am as anxious as anybody in this Committee to see a higher standard of road safety and a reduction of road casualties, but I should like to quote the Director of Tests of the Institute of Advanced Motorists, who once said, "The safety of any car on the road is as great as that of the driver behind the wheel: no more, no less". That is very true. Regulations such as these have been introduced in the United States, but I have not heard
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so far that, as a result, there has been any startling reduction in road casualties in that country. I agree with my noble friend Lord Balfour that it is a great pity to put the design of cats under bureaucratic control. Incidentally, the noble Lord, Lord Foot, mentioned cars manufactured in Britain, but what about all the cars we import from other countries? Are they to be subjected to the same regulations? Apparently not, so far as I can see, according to the Amendment. It is manifestly absurd, and I sincerely hope the Government will reject it.
LORD WAKEFIELD OF KENDAL: For some 25 years I was chairman of the company which made, arid still makes, London's buses. I was also a director of the A.C.V. Group which recently amalgamated with the Leyland Group to form the largest heavy vehicle organisation in the world. I am no longer connected with that industry, but it is quite clear that the noble Lord who moved this Amendment just has no idea of the immense care and trouble which is taken by the motor manufacturing industry to ensure the safety of vehicles.
When a new design is made and the prototype is put on the road, first of all the various component parts are tested very thoroughly indeed over a long period of time, probably in the works of the manufacturer making the component part, and then the vehicle as a whole goes through a very trying and thorough testing time at the industry's research establishment. Every conceivable effort is made to ensure that vehicles made in this country are as safe as it is humanly possible 4o make them. Of course, improvements can and will be made, and research and effort is continually going forward to that end.
I must say that I just cannot see what possible help this provision is going to be to this great industry in our country, which not only makes such a wonderful contribution to the happiness and enjoyment and usefulness of our citizens, but helps our export trade. I cannot set that this further piece of legislation, costing taxpayers money, can add one iota of assistance, help or information in making vehicles any safer than they now are.
VISCOUNT BRENTFORD: I wonder if I might add a word to this argument.

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I think there are two things that really stand out. The first is the exceedingly deep sense of responsibility which is felt by the motor manufacturers themselves. They really do go out of their way to try to ensure that the vehicles which they produce, if properly used, are as reasonably safe as they can be. The second thing is that, from our experience in the motoring organisation of which I am Chairman, we have found that this matter of providing and putting safety into motor cars is a continuous process. We have given considerable support, both financial and by practical means, to the research body attached to the Birmingham Accident Hospital, which has arrived at quite a considerable number of conclusions through an examination of the many, many accidents, as regards both the personnel who come to the hospital and the vehicles involved. As a result, they have on a number of occasions been able to advise the motor manufacturing industry as to improvements which can be built into motor cars when they are being manufactured. In almost every case where it has been practical to do so, that advice has been accepted by the motor manufacturers and an increased degree of safety is produced in their cars.
I mention that to illustrate that it is most improbable that a committee of twenty people composed in the manner proposed in this Amendment would be able to be anything except an irritant to the motor manufacturing industry. I cannot believe that they could constructively assist the motor manufacturing industry in the production of safety at all, even if they ever get going. I was really intrigued by subsection (2)(d) of this Amendment. It deals with the composition of the Motor Safety Council. Paragraph (a) says that five members are to be appointed by the Minister. That is fair enough, and the Minister can go round, and, if he can, find five people with some degree of qualification or other who are prepared to sit on this Council. The President of the Board of Trade does the same. Exactly what he is seeking by way of qualifications in the members whom he is going to appoint I do not know.
Then five members are to be appointed by the "motor manufacturing trade". I am not certain what that trade is, or how on earth they are going to get together
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in order to select those five members whom they are to appoint. Finally, five members are to be appointed by "recognised consumer and motoring organisations". First of all, who is going to decide what consumer or motoring organisation is "recognised"; and secondly how on earth are those recognised organisations going to get together in order to select their five representatives? It really seems to me to be such a preposterous proposition that I trust your Lordships will not accept it.
6.14 p.m.
LORD CARRON: I do not think there is anyone here who would do other than agree with the noble Lord, Lord Foot, in his anxiety to establish greater safety on the roads; in fact, to eliminate dangers and hazards altogether. If I thought the Amendment would serve that purpose I would give it whole-hearted support. Having some little knowledge of the industry of car manufacture and design, quite frankly I must agree with the noble Lords who have said they could not see the value or the impact upon increasing road safety which would follow a proposition of this kind.
I would sympathise with the noble Lord, Lord Foot, on the point about the shattered windscreen, because, having had this experience myself, I know how frightening and dangerous in certain circumstances it can be. At the present time no method has been found of obviating this situation, although I can say that every effort is being made in order to try to ensure the technological processes which would prevent it. The windscreen is only one of the hundreds of components in motor cars, manufactured by component manufacturers as well as motor manufacturers, and in each case, because of some flaw which cannot be detected, they could have failure on the roads. Nevertheless, I want to say this. Not only the motor manufacturers themselves are concerned. I do not want to be unkind to them, but self-interest alone demands that they should manufacture as safely as possible because otherwise their cars will not be saleable. The fact that a particular motor car is dangerous is easily spread abroad and would act adversely to the interests of the manufacturer himself.
We also have certain research associations who are spending a lot of time and

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money, subscribed to by the manufacturers, trade unions and the Government, in order that all possible steps can be taken to ensure greater safety. I am sure noble Lords who know these research associations will join me in paying tribute to their work, and to the fact that manufacturers take very seriously the recommendations and reports from these bodies. Finally, I would refer to the point made by the noble Lord who spoke previously about the organisations that it is suggested would be appointed. May I suggest that in the manufacture of motor vehicles and in connection with the safety of the vehicles, even after the design is approved, after the manufacturers agree to all possible steps, the trade unions engaged on the manufacture can play some part in turning them out safely. I notice with some regret that the noble Lord did not see fit to include representatives of trade unions on a body of this kind.
LORD WINTERBOTTOM: Various arguments have been expressed against this Amendment from various parts of the Committee. The main objection is that the proposed new clause cuts right across existing Government policy in this field which is trying to achieve the same objective. The noble Lord may or may not have studied the Road Safety Act 1967. If he has not, I should like to point out that the proposals made in this draft clause are a straight alternative to the system of type approval for goods vehicles that have been brought in under that particular Act.
The position is that under the system of type approval for goods vehicles the responsibility for laying down vehicle standards and enforcing them will remain with the Minister. Before production is started on any type of goods vehicle manufacturers will submit specifications to Ministry engineers. A prototype will then be inspected again by Ministry engineers to ensure that it complies with the regulations. When an approval certificate is issued manufacturers will also be told what variations may be made to the "type approved vehicle" without further inspection. Quality control will be exercised by subsequent inspections of vehicles taken from the production line. So the sort of objective intended by the new clause is, so far as goods vehicles are
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concerned, covered by recent Government legislation.
Then we turn to public service vehicles. Powers for the Minister to type approve these vehicles already exist in the Road Traffic Act 1960, but are not used at present because public service vehicles are subject instead to individual inspection before being given a certificate of fitness—an even tighter regulation. This, of course, leaves only private cars, not really the subject of this Bill. Nevertheless, the Government are considering whether some form of approval along the lines of the type-testing of goods vehicles should be instituted, but they have not yet made up their minds. Such points as the meticulous care taken by munufacturers in testing vehicles and the danger to a company of getting a reputation of bad design, are factors which make the private motor car a surprisingly safe vehicle—as one noble Lord pointed out, safer than the driver in it.
This reason, coupled with the fact that the idea is really quite bureaucratic, coming from a Party which I believe is somewhat anti-bureaucratic in its philosophy and with the fact that it cuts across an already developing line of Government policy, makes me suggest to your Lordships that this clause should not be accepted.
LORD FOOT: Some sixth sense tells me that the Committee are not entirely with me upon this proposition, and I think I shall pursue what was my original intention, to withdraw the Amendment. But before I do so, I should like to thank the noble Lord for having given this matter of road safety serious consideration. I am glad to hear what he says about the steps that are already being taken with regard to goods vehicles and public service vehicles, and to know that the Government are actively considering similar precautions in regard to private cars. I am greatly obliged to the noble Lord for his reply, and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 38 [Composition of Railways Board and removal of requirement for regional boards]:
6.22 p.m.
LORD WOLVERTON LORD WOLVERTON moved Amendment No. 114:
Page 58, line 24, leave out subsection (4).
The noble Lord said: We have now reached the railway side of this Transport Bill. My object in moving this Amendment is this. On Second Reading I developed at quite considerable length an argument as to why it was unnecessary to take powers in this Bill to do away with the regional railway boards, and I had no answer at all. I asked Her Majesty's Government if they would tell the House why they proposed to take powers to do away with these, in my opinion, useful regional railway boards, and, as I said, I had no answer. Therefore, I put down this Amendment to delete this subsection so that we can have a proper debate on this matter, which I think is one of vital importance to this country. It is vitally important that we should have not only good management at the centre, in London, but that as far as possible we de-centralise railways into proper regional boards.
In the Act of 1962, as I reminded your Lordships, when the Conservative Government decided to do away with the Transport Commission and the Railway Executive and to set up in their place the Railways Board and these regional railways boards, we thought we were doing a good job to try to give some measure of decentralisation in a nationalized industry. In view of the important developments that have taken place recently in nationalism in Wales and in Scotland, and in other parts of the country—for instance, the north-east and the north-west want to run more of their own affairs—I think that before passing this clause the Committee should pay particular attention to whether we should do away with this regional organisation. It may not be perfect. I have heard of there being rows between the regional railway boards and the headquarters Board in London. But I think it has helped enormously to give some quicker answers to the points that have been raised, especially in Scotland and the north-east, which I think is run from York, rather than having everything channelled through London which is going to take much longer.
I have tried to do my homework and I have read Railway Policy (Command 3439). Certain clauses come down in favour of recommending the discontinuation of these regional railway boards, and
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that in their place there should be a manager or a general manager, but no regional board. The creation of a general manager with limited day-to-day powers, is not a situation which is going to work at all well. All big organisations and companies, of which I can think of a good number, have in recent years formed subsidiary companies for their main holding company, and have created operating companies in the eastern area, the western area, in Scotland and so on. So far as possible, they try to de-centralise their managements, and to see whether in those areas their organisation is paying or not.
Therefore, I am keen to try to keep some regional organisation. I hope that We shall get some explanation from Her Majesty's Government as to why they are going to take these powers. Presumably, if they take these powers they are going to use them. For these reasons, I beg to move the Amendment standing in my name, and would like to hear the Government's explanation.
THE DUKE OF ATHOLL: I should like to make one or two points in support of my noble friend Lord Wolverton. For the purposes of this argument I should like your Lordships to assume that British Railways are running normally at the moment. About four years ago the sleeping car service to Oban was removed, and British Railways have now made it impossible, even under the best of conditions, for anyone to arrive at Oban by railway before round about 12 noon. When this happened there were of course a number of complaints in the district. These were addressed to the Scottish Railway Board in Glasgow. A nice letter came back from Glasgow explaining why they had done this, and that in some way there were advantages in it. I find this entirely unconvincing but, still, we will leave that aside. But at least the people who live in and near Oban, and in Argyll, knew that they were being replied to from a Scottish person who had Scottish interests at heart.
At the moment I consider that this is most important, and I feel that it would be a great pity to do away with the Scottish Railways Board. I have no doubt that the same argument would apply to the appropriate Railways Board in Wales, the name of which I do not know. Further, I think that, on the whole, the Scottish Railways Board has done a good

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public relations job for British Rail in Scotland. We in the North fully realise that the railways are unlikely to be economic in the Highlands, and therefore we cannot expect such a good service as is provided on the inter-city lines in England and in the central belt of Scotland. But the Scottish Railways Board by its publicity seems to me to have made the best of a rather bad job. The trains are considerably faster than they were five years ago, and I think it is fair to say that they are considerably more punctual. I know that the noble Lord, Lord Hughes, who I imagine will reply, will say that this had nothing to do with the Scottish Board at all. This may well be true, but in Scotland they think that it has something to do with it, because they have a Scottish Board fighting for their interests against the great leviathan that lives in London.
There really is this feeling that if the Scottish Railways Board is done away with we shall he completely forgotten and neglected in Scotland; that we shall be given the oldest rolling stock that British Rail possesses—and let me assure you that that is very ancient in case some of your Lordships have not been in it recently—and that we shall be given diesel engines rejected by every other region as being not powerful enough for their other commuters travelling between London and Newcastle. So I hope the Scottish Board at any rate will be allowed to stay in existence.
When this clause is brought into effect by order of the Minister, I would ask the noble Lord whether it would be possible to bring into effect only part of subsection (4), that part which does away with the Railways Boards in England but keeps those in Wales and in Scotland. I understand that in the interests of efficiency there is probably a great deal to be said for getting rid of the Boards in England, but I think that in the interests, not of Scottish Nationalism but Scottish feeling, it would be desirable to keep at any rate the Scottish Railways Board.
6.32 p.m.
LORD ROBERTSON OF OAKRIDGE: I should like to remind your Lordships of the history of this matter. The railways were originally grouped into four groups and they corresponded roughly to a regional organisation, although there was no Scottish group. Then the rail-
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ways were nationalised, and the organisation was extremely centralised—there was not even a general manager in charge of each region—and instructions were sent from headquarters in London right down the line by engineer to engineer, by signalman to signalman. It was a very centralised organisation which proved to be quite catastrophic.
Then a new Act was passed in, r. think it was, 1952, in which there was mention of regional boards, but a certain amount of discretion was given to the new Board of the Commission as to what they should do about it. In fact, we set up regional boards, and they were staffed by what one might call "part-time" and "outside" members, by manufactures, by people who were interested in motoring organisations, in travel agency businesses, and so forth. I thought, at all events, that they did a certain amount of good, particularly in the way in which they represented the railways to the customer to a quite large extent. But then as the years passed by they became rather unpopular and a new Act was passed, I think it was 1961, in which it was laid down that the general manager of the region should be on the Board. In fact, it gradually came about that the general manager was made the chairman and the part-time members were thinned out and to-day they hardly exist.
I believe it is most important that this matter should be settled. The most important thing, if I may say sc with respect, is that the politicians should come out of this argument, because it has been bandied backwards and forwards between the Parties, and made, as it were, a Party political issue, and it should not be that. I think that the Bill, as drafted, is probably the best arrangement, in that, as I see it, the regional boards are to he exonerated from a share of joint responsibility in the success of the whole system. That does not seem to me to be unreasonable; that wording, I think, is about right.
What we have to achieve in the railways organisation is a central bod! that will keep its hand firmly on finances, design, equipment, research, development, and various other things, and that the operation of the railways should be decentralised down to the regions who should have a clear boss to whom people can go when they are disgruntled and to

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whom the noble Duke can go if he does not get the sleeper he feels he should have had. That is very important, but it is not necessary, for that purpose, to have a regional board partly responsible for the finances of the whole system.
LORD POPPLEWELL: I echo very much what the noble Lord, Lord Robertson of Oakridge, has had to say about these Regional Boards. There is very often a misconception as to the powers and duties which these Regional Boards really have. As the noble Lord, Lord Robertson of Oakridge, rightly points out, there has been a change from the original set-up of the Boards. I felt very sorry for many members who were appointed to these Regional Boards. Many of them had a very great interest in railway matters. Many of them served in the past as railway directors; many of them by the nature of their particular business were extremely interested, and they thought that because they were going to be appointed to the Regional Boards they would be able to play a big part in the development of a given region in which they were interested.
As was rightly pointed out by the noble Lord, Lord Robertson of Oakridge, they found that they could not do this, and in the main they were very much concerned with minor matters affecting the social development of the railways and nothing at all to do with the running of railways. In fact, the managers of the various regions, acting down from the centralised structure, were the people who were running the railways. It became very time-wasting to them when they had to prepare schemes for what they wanted in their respective regions, when, from a courtesy point of view, because that is all it turned out to be, they had to submit them to the Board, and the Board in effect could do little else but dot the i's and cross the t's. It was very rare indeed that they objected to anything, because it was an administrative matter and they knew nothing at all that the general manager put up to them. But this was extremely time-wasting from the point of view of a general manager and his top officials so far as running the railways was concerned.
Then the change took place and we now have the Regional Boards operating
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more as the regional centre of the operation and administrative structure. I think it goes without saying that we must have this type of structure in operation. Subsection (4) leaves, as it were, the description of the function of the Regional Boards more or less on the lines of the experience of operational management structure, and I think that is the right thing. It is as well to do away completely with the old idea of the Regional Boards getting people to come in on a part-time basis, because they were interested in railway matters and thought they were going to do a reasonably good job of work, but found in the main that their work was a complete waste of time. I think this is a good idea, and I echo what the noble Lord, Lord Robertson of Oakridge, has had to say about this. This matter has been knocked about for quite a long time, and it is as well to get it entirely outside the political sphere as regards the structure of the Railways Board's organisation.
LORD WINDLESHAM: From these Benches we should like to pay a tribute to the useful and diligent work which has been done over the years by the part-time and full-time members of the Regional Boards. The five Regional Boards are to go, but the regional managements remain. It was reported only a couple of weeks ago that the British Railways Board have begun their review of the organisation of the management structure of British Railways. They have brought in the McKinsey Company of management consultants to advise. It seems that the concept will be to have non-functional members of the main board, and then very powerful general managers in the regions who will have the responsibility for seeing that regional interests are properly considered.
I should like to add one final thought before the Minister replies. There is considerable substance in what the noble Duke has said, and none will be more susceptible to it than the noble Lord, Lord Hughes. I wonder if, without departing from the general trend of policy, which seems to me to be the right one for the Railways Board, there might be a case for looking at whether this new main Board, which will be quite small, might have one member with a special responsibility for Scotland and one member with a special responsibility for

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Wales. They would be members of the Board in their own right. This might go some way to meet the points made by the noble Duke and others.
LORD BURTON: Earlier this afternoon we had a good deal of support for the consumer and the customer. On this Amendment we have heard rather more about the management. Although this may well be aimed at the improvement of the management, I feel that what my noble friend the Duke of Atholl has said about how Scotland will feel is correct. Far be it from me to advise the Government on political strategy, but this is the sort of legislation which undoubtedly is encouraging Scottish nationalism. It would be a pity if something could not be done to keep some sort of body to look after the interests of Scotland, since undoubtedly they feel that British Railways is a colossus and that if one does away with their regional management it will become more unapproachable than ever.
LORD HUGHES: When the noble Lord, Lord Wolverton, spoke to his Amendment he pointed out, quite properly, that on Second Reading he had made a useful contribution to the debate on this point—he did not in fact say that in his own speech, but these are my comments on what he said. He was equally correct when he said that in my reply to the debate I made no reference to the point to which he had particularly directed your Lordships' attention. In my own defence let me say that it was not because of any lack of sympathy, as noble Lords opposite have surmised, that I did not refer to it, but that in a wide-ranging debate there must be some casualties and his point happened to be one of those which did not get a reply. However, I indicated on that occasion that some of the items to which he drew attention were ones which could more usefully be explored in succeeding stages of the debate on this Bill. The Amendment which the noble Lord, Lord Wolverton, has put forward to-day has amply justified itself in the discussion which we have had.
Sometimes when I know that the noble Duke is particularly interested in a subject and is going to speak on the matter, I tell him in advance what I am going to say. He therefore comes into the House able to make a fairly accurate
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prediction of the Government reply, as he has sometimes done. On this occasion I did not know he was ping to speak so I did not tell him whet I was going to say. On this occasion his prediction of the Government reply is totally wrong. I think he will be happy about it because I do not think he will find my reply unsatisfactory. l think that it will very much meet the point made by the noble Lord, Lord Roberts an. who said that it was time that the politicians took a back seat in this matter.
My right honourable friend the Minister of Transport has discussed this particular Amendment with the Chairman of British Railways Board, Sir Henry Johnson. Sir Henry has told the Minister that he attaches considerable importance to the recommendation made by the Joint Steering Group which Clause 38(4) is designed to meet, as he is anxious to have as much flexibility as possible when the Board come to propose a new scheme of organisation under Ch use 45. The Board are at present employing management consultants to assist them in reviewing the top structure of the Board, and Sir Henry would not wish to be tied to the continuation of statutory regional boards. This does not mean, however, that there will be any immediate change.
Sir Henry is convinced that, While the regions remain in more or less their present shape, it is of very real ad vantage to the Board to appoint a few top commercial or industrial people to assist them in the running of the region. For the time being at least Sir Henry would certainly intend to continue with the Regional Boards on a non-statutory basis; but, as the Joint Steering Group made clear in their report, there is obviously going to be need for increased centralisation in the planning of railway operations. Sir Henry would not wish to be tied to the indefinite continuation of the regions as they now stand. Changing circumstances may well make this structure less appropriate in the future. He has therefore told the Minister that in his view it is important, looking to the future, to have this flexibility and that the statutory requirements to appoint regional railway boards should be repealed.
Having regard to this desire for flexibility, I have no doubt that Sir Henry and my right honourable friend would be

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interested in the suggestion made by the noble Lord, Lord Windlesham, about the membership of the board. I certainly undertake to draw it to my right honourable friend's attention. I hope that the noble Lord will feel that his Amendment has served a very useful purpose and that he will now find it possible to withdraw it.
LORD HAWKE: I have listened with great interest to the arguments put forward, and to the Minister's reply, and I imagine that my noble friend probably was quite pleased with the reply. But whether one has local boards or an executive committee—one must have one of the two—it is most important to have some degree of financial devolution. The noble Lord, Lord Robertson, in his intervention gave the impression that finance must be firmly in the grip of the centre. Of course they must have a very good grip upon it; but what makes for complete frustration over the whole limbs of a great organisation is to have the grip at the centre so fast on finance that they cannot do anything without putting up schemes to the centre, which sometimes take a long time to get through. I feel certain that the organisation which a new general manager is likely to create will take into account matters of that nature. He may well realise that it would be valuable to have somebody with outside experience to assist and advise the regional general managers.
6.49 p.m.
LORD FERRIER: Before the noble Lord decides what to do about the Amendment, I should like to contribute my thoughts. If I had been a Scottish Nationalist—which I am not—I should not have been satisfied by the reply given by the noble Lord, Lord Hughes. Not being a Scottish Nationalist I am prepared to take it. and I am satisfied that the matter will be "chewed over". But I feel that it would he wrong for this debate to be studied without its being fully recognised that there is a feeling—not only in Scotland—among people like myself who have to deal with the railways fairly constantly, and who are in the neighbourhood of the Carlisle—Edinburgh line the fate of which is in the balance, that they would like to know that in the future there will be some body
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in Scotland with real power, a body to which the users can refer and which can be respected by them as being capable of dealing with the main Board so far away in London.
LORD BOOTHBY: I had not intended to intervene, and do so for only two minutes to support very strongly the remarks just made by my noble friend Lord Ferrier. I feel that the case of Scotland is of particular importance. I agree with my noble friend about Scottish Nationalism. I am not a Scottish Nationalist myself, although I am gradually in the process of becoming one—
SEVERAL NOBLE LORDS: Oh!
LORD BOOTHBY: —but only on a very limited scale. I think there should be a board or body of some kind in Scotland, with real power to exercise a very substantial measure of control over the administration and running of Scottish railways as such. My noble friend Lord Ferrier has just raised the question of the Carlisle-Edinburgh railroad, which I believe to be of vital importance for the whole of the Border country. It seems to me intolerable that the future of this line should be decided by a lot of Englishmen sitting in London. It has nothing to do with them, and they should delegate this matter to a responsible Scottish organisation with responsible Scottish power. Why my noble friend Lord Hughes does not agree with this I cannot imagine, because I know of no better Scotsman in the world than he is
LORD KILMANY: Mention of the Edinburgh—Galashiels—Carlisle railway line causes me to rise to my feet for just a minute, and I cannot do other than agree with both my noble friend Lord Boothby and my noble friend Lord Ferrier. I am not a Scottish Nationalist, but I have been convinced that it is almost impossible to command attention from an English audience when one is trying to argue the case for preserving that particular railway line. I appreciate that the noble Lord, Lord Hughes, has the interests of Scotland very much at heart, and I suppose he is himself satisfied that the assurance which has been given is worth having. But what is the assurance? How long is "for the time being at least" going to be? Afterwards, as I heard his words, I thought there was the implicit threat that the Regional

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Boards would be faded out. The only Regional Board I am interested in is the Scottish one; and the noble Duke argued the case in his opening speech.
With the greatest respect, I am not at all convinced by the arguments of the noble Lord, Lord Robertson of Oak-ridge, with all his experience, because I cast my mind back to a day more than ten years ago when I was Chairman of the Scottish Members in another place and we dealt with particular Scottish points. There was a Chairman of a Scottish Board in those days—I think he was Sir Ian Bolton. We thought fit to invite the Chairman of the Scottish Board to come and meet the Scottish Unionist Members of the other place, purely on the subject of Scottish railway transport. But what happened? The noble Lord, Lord Robertson, would not devolute his powers sufficiently to allow Sir Ian Bolton to come and meet us. He said, "No, I am not going to have regionalisation. If those Scottish Unionist M.P.s want to put their suggestions forward, it is no good doing it on a regional basis. It must all go through myself." It turned out, as your Lordships can readily imagine, that our meeting was a great success. The noble Lord, Lord Robertson, was entirely charming and had complete command of the subject, and I, for my part, could not be other than satisfied. But I urge the noble Lord, Lord Hughes, to look again at the assurance which he is giving us. Is it really cast iron?
LORD ROBERTSON OF OAKRIDGE: Perhaps it is not for nothing that I am called "Robertson".
LORD POPPLEWELL: Is it not correct that under this new structure there is to be a separate and distinct Scottish region? Under the old private-enterprise railways it was found that the most efficient method was for the railways to run the length and breadth of both countries. The old London and North-Eastern used to include part of the Scottish region, as also did the L.M.S., in a joint structure. If there is to be a separate Scottish region, that is something which even private enterprise did not think was necessary, so much of what we are talking about is really out of date.
LORD MITCHISON: I wonder whether I may ask my noble friend two questions. I am well aware that this is
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the point where the Sassenach gets his head bitten off, but under what he is now suggesting, what change will there be, if any, in the functions proposed for the Scottish Group? They seem to me to have very extensive powers—but perhaps I have misread the Bill. Secondly, what about the proviso in this subsection which, in effect, allows the schemes under Clause 7, the clause which provides specially for the relations between the Freight Corporation and, among other bodies, the Scottish Group, and for the transfer of property, rights and liabilities and so on between those two bodies?
With great respect, I should have thought there were provisions in the Bill which distinctly recognised the peculiar character of the Scottish transport problem. I speak with real diffidence, but I look at Scotland as 100 miles from the nearest railway station. That is the kind of thing that happens. I realise that one must be very careful, in a country which, very rightly, feels strongly differences of this kind, not to get them just swept into British legislation or British administration without due consideration of their particular means and functions.
So my two questions relate, first of all, to the Scottish Group and its powers; and, secondly, to the reservation with respect to a subsequent clause of the Bill which allows schemes to be made under Clause 7 as between the Freight Corporation and the Scottish Group, as Nell as other bodies. If I am asking questions that are too stupid for words, then I hope that my noble friend will not answer them at all. If they are not too stupid for words but are a trifle complicated, I hope that he will be able to let me have an answer later.
LORD BURTON: The noble Lord, Lord Mitchison, appears to imply that the Scottish Group have something to do with railways. They seem to have a great deal of other powers, including the right to carry on as travel agent; but have they anything to do with railways? I thought not.
LORD MITCHISON: If they have not, I shall be very glad to be told. I am usually a mass of humility, but when we find transfers of property and so on between the Scottish Group and the Freight Corporation, I have the idea that some freight is carried by rail and I

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thought they might have something to do with it. Then, again, Clause 7 seems to be fairly wide. That is what I am asking about. And I really am asking with diffidence.
LORD WOLVERTON: I am very much indebted to the Minister for his reply, and to all those noble Lords who have spoken. I should have thought it was quite clear that if powers are taken under subsection (4) to wind up the part-time Regional Boards, which are responsible for the management, there will be no part-time Regional Boards running railways, even in Scotland, unless the Chairman of the Railways Board in London decides not to use the powers. We have been told to-night that temporarily he is possibly not going to use them, but that he wants them in the Bill because ultimately, when he has ended his researches, he will probably take them. Then there will be left only a general manager. I am sure that he will be extremely good and do what he can for Scotland, Wales, the North East and so on. But that will not be the same as having the part-time Regional Boards. I do not wish to press the matter further to-night, but I hope the Minister will bear this very much in mind. We should have some form of regional organisation. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 38 agreed to.
LORD BOWLES: This might be a convenient time to move that the House do now resume.
House resumed.

SALE OF VENISON (SCOTLAND) (No. 2) BILL
7.1 p.m.
Read 3a, and passed.

GAS AND ELECTRICITY BILL
Read 3a, and passed.
FAMILY ALLOWANCES AND NATIONAL INSURANCE (No. 2) BILL
Read 3a, and passed.

TRANSPORT BILL
7.4 p.m.
House again in Committee.
Clause 39 [Grants for unremunerative passenger services]:
THE EARL OF KINNOULL: Earlier this afternoon I had a discussion with the noble Lord, Lord Bowles, who advised me that he had not been in a position to acquaint himself with a considered reply to Amendment No. 114A and Amendment No. 116A. I do not wish either to embarrass him or to waste the time of the Committee, and therefore I shall not move the Amendments. But I should say that I was a member of a delegation on May 9, some six weeks ago, which met Mr. Carmichael, Joint Parliamentary Secretary to the Ministry of Transport, at the Ministry, and left with him all the Amendments which are now in my name on the Order Paper. We received no reply until I rang the Ministry last Friday. They were good enough to return my Amendments, which I took to the Public Bills Office so that they were put down on the Order Paper. Therefore I find it a little surprising, and a little discourteous, that no brief is apparently available to the noble Lord, Lord Bowles.
LORD BOWLES: May I ask the noble Earl to move the Amendment, and then I shall have a chance to say something. That would be more convenient.
THE EARL OF KINNOULL: I am sorry. I thought that the noble Lord said earlier that he had no reply.
LORD BOWLES: I cannot reply to what the noble Lord has just said unless he moves the Amendment.
THE EARL OF KINNOULL THE EARL OF KINNOULL moved Amendment No. 114A:
Page 59, line 8, at end insert—
("Provided that if any station, line or section of line has previously been considered under the provisions of section 56 of the Act of 1962 (or any prior enactment) following a

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proposal by the Board for its closure or withdrawal of service, the Minister may, if he is satisfied that the station, line or section of line is still unrernunerative and that the provisions of subsection (1)(b) would appear to be relevant in the circumstances, and subject to the consent of the Treasury as specified above, direct that the provisions of this section shall apply to the station, line or section of line and undertake to make a grant in respect of such station, line or section of line.")
The noble Earl said: Very briefly, the purpose of this Amendment is to add to subsection (1) of the clause, which concerns grants made by the Ministry for unremunerative passenger services—
LORD BOWLES: May I interrupt the noble Lord? He made a fairly quiet accusation against my honourable friend the Joint Parliamentary Secretary, Mr. Carmichael. The noble Lord said that he was not going to move his Amendment. I asked him to do so just to enable me to tell him and the Committee what I have heard about the matter. Now that lie has moved it, I apologise to him, if apology is due. I made some inquiries about the matter, and I understand that there were conversations between the noble Lord and Mr. Carmichael. I understand that no Ministry officials can begin to draft notes for a reply to an Amendment unless it is on the Order Paper. I shall look into the matter for the noble Lord and let him know to-morrow, if I possibly can, the result of my inquiries.
THE EARL OF KINNOULL: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD BOWLES LORD BOWLES moved Amendment No. 115:
Page 60, line 19, at end add ("and
(c) in the case of each undertaking for the time being in force under subsection (1) and each service in respect of which grant is for the time being payable under subsection (4) of this section, the amount falling to be paid in respect of that year in pursuance of that undertaking or by way of such grant.")
The noble Lord said: The effect of this Amendment is to require the Railways Board to include in its Annual Reports a breakdown of the total amount of grants payable under this clause in the year in question. Paragraph (b) of subsection (5) of this clause already requires the Board to show in its Annual Reports the total amount of grants. In effect, therefore, the requirement on the Board under the proposed new paragraph (c)
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will be to break down the total figure it is required to provide under the existing paragraph (b).
This Amendment has been tabled in accordance with an undertaking given by the Minister of State in the course of discussion during Report in the House of Commons of Amendment No. 149, which sought to require the Railways Board to provide information at out the amount of grant paid in respect of each service which had been grant-aided for the first time during the year under review. The Minister of State pointed out that he had already given an undertaking in Standing Committee in the House of Commons that the amount of grant in each case would be announced at the time that grants were approved. He added that in any case it would probably be more sensible to give a breakdown of grants on a continuing basis in respect of every service and not only in respect of those grant-aided for the first time. But he undertook to consider the position further and on this undertaking that Amendment was negatived.
Although, therefore, as I have already explained, no additional information would be made public in consequence of this Amendment, there will be no difficulty about including such a breakdown in the Board's Annual Reports and this may in fact prove a convenience in some respects, in that information published item by item on different occasions will be available in one place. In these circumstances the Amendment has been tabled as a concession to the views expressed in the Commons stages of the Bill.
The drafting of this Amendment: might appear unnecessarily complicated at first sight. The effect, however, is simply to require the Railways Board to break down the information under paragraph (b) of subsection (5). The complexity is due to the need to be consistent with the concept of "undertakings" introduced in subsection (1) of the clause, and to embrace also the transitional grants in closure cases covered by subsection (4), which are not the subject of undertakings. There is also the need to make it clear that the figures to be given will be those of grant due to the Board in respect of a particular period, rather than of the actual cash which passed in that period. I beg to move.
LORD WINDLESHAM: This is the clause which concerns grants for unremunerative rail services which are kept open for social or economic reasons. We on this side of your Lordships' Committee accept the principle of grants for unremunerative lines, but we believe it is in the interests of the Railways Board and of the taxpayer that they should be very carefully scrutinised and kept down to the minimum. A sum of £55 million is envisaged for the first year, and at a later stage—on Report stage, perhaps—it would be interesting to have some information from the Government as to how this figure of £55 million for unremunerative lines has been arrived at, and also how it relates to the varying figures which are contained in the Report of the Joint Steering Group. I do not press those points now because I think that the noble Lord will want to look at them.
As the noble Lord, Lord Bowles, has said, this is a concession by the Government arising out of the Committee and Report stages in the House of Commons, and undertakings which were then given. It shows the value of the detailed discussions in another place on those clauses which were discussed before the guillotine came down. We welcome the new subsection, which will now mean that the amount of subsidy for each unremunerative service will be individually shown. We regard this as an improvement. It was one which was introduced by one of my friends in another place, and we welcome it.
On Question, Whether Clause 39, as amended, shall stand part of the Bill?
THE EARL OF KINNOULL: I wonder whether I may ask one question on Clause 39. It relates to these unremunerative lines. Before the list of lines is published, will there in fact be a public inquiry to allow passengers to request that their particular line should be put on this list? I am afraid I have not given the noble Lord notice of this question, but if he could look into it I should be very much obliged.
LORD BOWLES: I will look into the matter and write to the noble Earl.
Clause 39, as amended, agreed to.
Clause 40 [Grants pending elimination of surplus track and signalling equipment]:
LORD BOWLES: This Amendment is a concession. It implements an undertaking given by my right honourable friend the Parliamentary Secretary in another place. We accept that the Railways Board should indicate in their annual report the amount they receive in any year under this clause of the Bill as a matter of proper public interest, and the present Amendment ensures this. I beg to move.
Amendment moved—
Page 60, line 40, at end insert—
("(5) The report of the Railways Board under section 27(8) of the Act of 1962 for any year in respect of which a grant is made to the Board under this section shall include a statement of the amount of that grant.")—(Lord Bowles.)
LORD WINDLESHAM: Here again, this is a concession, and one which we welcome. We regard it as desirable that there should be as much publicity, as much information made available, as possible, and the fact that the reports of the British Railways Board will show this information in the future is, we think, an improvement. So here again we welcome this Amendment by the Government.
LORD BEAUMONT OF WHITLEY: We, too, welcome this concession. There are a number of similar concessions in the course of the Bill whereby the Government have agreed to offer more information on this kind of matter, and in order not to waste the time of your Lordships' Committee later I should like to say that we welcome this wherever it has happened. I think this and other Amendments like it provide notable improvements to the Bill.
Clause 40, as amended, agreed to.
Clause 41 [Financial provisions as to Boards and new authorities]:
7.16 p.m.
LORD WINDLESHAM LORD WINDLESHAM moved Amendment No. 117:
Page 61, line 7, leave out ("combined").
The noble Lord said: This group of Amendments falls into three sections, as we see it; Nos. 117 to 123, No. 124A on its own and No. 125A on its own. So,

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with the permission of your Lordships' Committee, perhaps it might be convenient if I spoke to Nos. 117 to 123.
Clause 41 concerns the financial duty of the existing Boards under the 1962 Act and the new authorities which are set up under this Bill—the National Freight Corporation, the National Bus Company and the Scottish Group. In subsection (2) of Clause 41 an obligation is placed on these Boards and Authorities to ensure that their revenue accounts at least break even. In this first set of Amendments, Nos. 117 to 123, we propose that this obligation should apply to each separate business of the Boards or the new authorities and to each separate subsidiary company. The aim of our Amendments is to ensure that individual activities are not involved in undesirable cross-subsidisation of a type which has been condemned by the Government in their own White Paper, The Nationalised Industries: A Review of Economic and Financial Objectives. The White Paper pointed out the risk of this sort of cross-subsidisation. and warned against the misallocation of resources that could result. We must remember that these Boards and authorities are going to have very considerable powers to engage in a wide range of activities.
I do not think we want to anticipate now the debate on Clause 48, but there is a need to identify the leads of various activities and to make information on these available for public scrutiny. We do not believe that subsidiaries should be developed by the Board or the authorities unless they can be profitably run. Otherwise there is a risk of wasting public funds; and secondly, and perhaps more likely, there is the question of dilution of management effort. If the small number of skilled managers who are available to work in senior positions in the Boards and authorities were concerned with the supervision of subsidiaries and separate businesses, we think that that would not be the best use of their time. Amendment No. 123 is more specifically on that point. I beg to move Amendment No. 117.
LORD BEAUMONT OF WHITLEY: We, too, regard this as an extremely important clause, and I think that on this matter we are at one with noble Lords on the Conservative Benches. We take this as having a considerable bearing on
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Clause 48, and we hope that there will be considerable concessions on this clause. The noble Lord, Lord Windlesham, has already mentioned the matter of paragraph 18 of the White Paper on the financing of nationalised industries, and its desire that there should not be cross-subsidisation and misallocation of resources. The Government may object, as indeed they did in another place, that it is a matter of great difficulty to, isolate individual businesses, and than these Amendments are too vague to implement. I do not think this is so. Any really efficient private company, no mater how big, so organises its financial affairs that it can tell whether it is making a profit or loss, not only on any particular subsidiary but on any particular s lop or business in that subsidiary. It may he that companies do not publish this in their accounts—I think that probably they should—but, even so, there is a much greater obligation on any kind of nationalised or public industry, whose shareholders are compulsory shareholders and have not chosen to take shares in it, to lead the way in making it quite clear what is paying and what is not.
There is one last point. I should like to ask the noble Lord, Lord Windlesham, a question on his Amendment No. 123. In another place, when his friends put this down, Mr. Heseltine said that he did not wish to pursue it and that it w as put down in error. He apologised to the Committee, and said it was not necessary because the provisions it seeks are already embodied in legislation. Has the noble Lord changed his mind about that or was Mr. Heseltine in error?
LORD WINDLESHAM: I do not think we should have moved that Amendment on its own. But since I have spoken to all of them generally I suggest that the general set of arguments apply to the full range of Amendments. I would not want to pursue that particular Amendment.
LORD BEAUMONT OF WHITLEY: If I may say so, the noble Lord's friend did exactly the same thing. He spoke to all of them and said he did not want to pursue this one because he thought it was already embodied in legislation.
LORD WINDLESHAM: It is possible, then, to proceed with the debate on the general principles.
LORD HUGHES: Having regard to the reception which the Liberal Amendment No. 113 received from the Conservative Benches and, for that matter from the Government Benches, the noble Lord, Lord Beaumont, shows commendable Christian virtue in turning the other cheek; although I am not quite certain that all the arguments that he advanced will commend themselves to noble Lords opposite.
As the noble Lord, Lord Windlesham, said, Amendments Nos. 117 to 123 are linked in seeking to achieve one purpose. The subsection in its present form imposes on each authority a duty to secure that, overall, their own revenues, combined with those of their subsidiaries, are not less than sufficient to meet all proper charges to revenue, taking one year with another. The Amendments would substitute for this a duty to secure that the revenue of "each separate business" of the authority and of each of its subsidiaries is not less than sufficient to meet the charges properly chargeable to revenue on each of these separate businesses, taking one year with another. Some degree of flexibility would, however, be imported by the addition of the provision in the last of the proposed Amendments in that the authority may direct that profits obtained in one business shall be used to offset losses made in another business. This, in fact, would seem to imply that the principle of cross-subsidisation should be permitted to continue in certain circumstances.
I must resist these Amendments for a variety of reasons. First, as the noble Lord, Lord Beaumont, predicted I might, I do so because the proposed duty is imprecise. It is not clear what "separate business" is intended to mean. In the case of B.R.B., for example, this could be interpreted as a requirement simply to distinguish between the railway activity as a whole, and the ancillary activities such as shipping, hotels, et cetera. Or it could be taken as implying that the Board are to distinguish rail passenger and freight services as separate businesses; or to go down to a fine degree of detail involving a separate financial duty in respect of activities such as the operation of car parks, where again there might be a distinction between parking and petrol
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sales under the new powers provided by Clause 48. The determination is bound to be a subjective view on whether or not the Board were complying with their duty.
The second reason that I cannot recommend these Amendments to the Committee is that the proposed duty would imply an unrealistic degree of precision in accounting. There would be no practical difficulty in giving an authority a separate financial duty in respect of each subsidiary. The ability to organise in this way implies a clearly distinguishable activity or set of activities, and the ability to produce precise meaningful and separate accounts. But where an authority itself engages in a number of activities of distinguishable classes or a subsidiary does likewise there is a problem about the allocation of joint costs, which the Amendments ignore. The allocation of joint costs to identifiable activities or "businesses" is to a large extent a matter of judgment rather than fact.
It is more than a matter of quantifying the respective use made of a joint asset (though this basis is difficult enough when one considers the fluctuations which may occur); regard must be had also to the differing ability of the various uses to contribute to the total cost. No enlightened commercial undertaking would dispute this. Account is taken of considerations of this kind by Section 17 of the Companies Act 1967 under which companies conducting business of two or more classes have to give information in the Director's report, but not the accounts, on the division of turnover and an option only on the approximate extent to which each class of business contributed to the profit or loss of the company. This is, in effect, a recognition that there is nothing absolute about such determinations. If the financial duty proposed is to be meaningful it must be related to something which is precise and ascertainable.
The proposed duty would be far too detailed and inflexible. This is another reason why I do not find them acceptable. There is probably little doubt that the movers of the Amendments do intend the duty to cause the authorities to go down to a very fine degree of detail in distinguishing activities as separate

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businesses; for example petrol sales at car parks. This is their way of trying to ensure that activities are engaged in only where they are remunerative, and that a basis is laid for fair competition. I must say that I subscribe to the objectives of fair competition and efficient operation, since there is no doubt that long-term cross-subsidisation is economically wasteful, and financially undesirable. But it is really going too far to suggest that large corporations such as these are must invariably adopt a narrow, compartmentalised approach to their business as these amendments imply. As in major commercial and industrial groups in the private sector, the broad and the long view must be taken. This should not be carried to the extent of ignoring the above criteria, but there must be some degree of flexibility.
To sum up, this series of amendments would seem to me to be an attempt to secure some further statutory assurance that the new manufacturing and trading powers will be conducted on strictly commercial lines and on a basis of "fair competition".
It would be fair to say that in Committee in the other place the Opposition said they wanted two things: first, information; they wanted to be able to see what was going on and they wanted that information to be published from time to time in a form that would make it possible for anyone concerned and, of course, Parliament, to examine all the activities of these organisations. The purpose of the Amendments then, in another place, was to ensure that the accounts when produced would be quite understandable and comprehensive. Secondly, I think the Opposition wanted to ensure that the individual activities referred to were not involved in—and I think the words used were—
"some hocus-pocus method of cross-subsidisation which is not discoverable by anyone contemplating an examination into those activities as covered by the accounts…"
The Minister was then my right honourable friend, Mrs. Castle. She gave an assurance which I most definitely repeat, that the new manufacturing powers will be operated on a commercial basis. Provision is already made in Clause 48(4) for the Minister's approval of proposals made by the undertakings for the exercise of these powers to be subject to any
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conditions which the Minister sees fit to impose, and for a direction to be given at any time that any of the activities concerned are to be discontinued. For these reasons the Amendments are, in the view of the Government, quite unworkable.
LORD BALFOUR OF INCHRYE: The arguments of the noble Lord, Lord Hughes, against long-term cross-subsidisation would be more convincing to me if the Government were not every year doing exactly what he says that we should not do by means of this Amendment. Every year a Service Minister brings forward what is known as "Monk's Resolution" which is viremont, which means that the surpluses of one Vote can be devoted to the deficiencies of another; that is to say the surplus on the Vote for works and buildings, the building of barracks or furniture, we will say for the Royal Air Force, may be used to meet deficiencies in the Pay Vote. Really the arguments of the noble Lord, Lord Hughes, fall to the ground when the Government themselves are equally guilty.
LORD HUGHES: My Lords, I think this is very much beside the point. We are talking about the commercial activities of British Railways and the transport undertakings generally. I am not at all certain that anyone on either side of the Committee would argue that the Defence Forces were run on a commercial basis.
LORD WINDLESHAM: The noble Lord, Lord Hughes, has talked about the difficulties of achieving precision in accounting, and we accept that. But accounts should show something of the nature of the business. If at all possible, they should give an indication of the progress of the different aspects of the business. I do not want to press this Amendment—I think that we should move on—but I feel with the noble Lord, Lord Beaumont of Whitley, that this is an extremely important matter 'which deserved to be aired again. It cannot be said too often that the accounts of the Railways Board must be scrutinised by the public at all times. Having said that, I beg leave to withdrawn the Amendment.
Amendment, by leave, withdrawn.
7.33 p.m.
LORD WINDLESHAM LORD WINDLESHAM moved Amendment No. 124A:
Page 61, line 10, at end insert—
("Provided that in the exercise of the powers given to it by sections 6, 13(1) and (2) and 14(1)(d) of the Act of 1962 and sections 45, 46 and 47 of this Act a Board or a new authority shall be under a duty to ensure so far as practicable that these businesses are conducted on a commercial basis.")
The noble Lord said: This Amendment follows on the previous Amendment. Clause 41(2) places on obligation on the Boards and the new authorities to break even. We believe that that is not enough and that it would be unwise just to settle for such a low target, bearing in mind the Government's stated aim that the railways should be run as a commercial organisation. In Amendment No. 124, which has now been removed from the Marshalled List, a figure of 10 per cent. profitability was stated. We have altered that because it may be that stating a figure is too rigid. It is extremely difficult to define what capital is employed, what are the capital assets in the railways, even now, let alone after the write off. Therefore the percentage return on capital could be a fairly meaningless concept and it may be that a figure of 10 per cent. or something of that sort would be too high at first. The wording of this Amendment seeks to make the same point in a more general way.
LORD HUGHES: I think it is correct to say that this Amendment has been put down in place of another which was withdrawn and which laid down that the undertaking should make a profit of not less than 10 per cent. I think it has been redrafted, probably in the light of discussions which took place in Committee on June 25 on a comparable Amendment to Clause 11 of the Bill. The Opposition then said that it was necessary to require the ancillary activities of Passenger Transport Executives to be conducted in fair competition with similar private enterprise activities and that the Boards should therefore have a higher profit target than was represented by the basic financial duty to break even.
My noble friend Lord Stonham pointed out that it was quite unacceptable to impose any statutory duty to earn any set level of return. This would have led to great difficulties in defining what was
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meant by profit or capital and would also have been unfair to the Boards and to the public in preventing useful services, such as left-luggage facilities, from being provided. It would also have made it impracticable for the Boards to develop new lines of business. I think the Opposition have clearly appreciated the force of these arguments and they now suggest a form of Amendment which to the Government is less objectionable and which, on the face of it, seems in principle to be a reasonable requirement to lay on the nationalised transport bodies. It is not, however, one which the Government can accept as it stands—the last three words are good, are they not, my Lords?
There are defects in the Amendment. In the first place, it is technically defective the homework has not been as well done as usual because it refers to Sections 45, 46 and 47 which would have been correct in the Bill some time ago, but it should now read Sections 48, 49 and 50. Secondly, it is defective in that it quotes a section which will be repealed by the Bill, Section 6 of the Transport Act 1962, dealing with hotel powers. I do not say this in criticism of the Opposition, because in the past I have been subjected to the same difficulty. These are merely points showing how difficult it is to single out a particular activity to which a separate financial duty would apply. The fact is that Clause 41 deals with the actual overall financial duty of each of the nationalised Boards in a most general way. The clause states that it is the duty of each Board to secure that its revenues, taken together with the revenues of the subsidiaries, "are not less than sufficient", and so on.
This general financial expression of duty of the Boards does not preclude them from earning any particular rate of return on the capital employed in their various activities or from behaving in a commercial way, in all cases where the ancilliary activities are of a kind which enable direct profits to be made, and the Government will expect the Boards to behave commercially in the sense intended by the Opposition. But the inclusion of a provision on the lines of the Amendment as a qualification of the general financial duties of the Board is unacceptable, since it would be an unnecessary refinement as

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regards the ancilliary activities and indeed would threw doubt on the proposition that the Boards in any case are generally expected to act on a commercial basis in the conduct of their main business.
The whole point of having a financial duty is to set a minimum below which a Board must not go, hearing in mind that all its capital is normally provided on a fixed interest basis, so that the charges on the capital have to be met before it can be said to be breaking even. In the private sector, however, dividends can be passed on equity capital without a company falling down on legal obligations. Moreover, as the Committee well knows, successive Governments have set higher levels of performance for the Boards through the requirement to meet financial objectives settled in accordance with the doctrines laid down in the White Papers dealing with the economic and financial objectives and obligations of the nationalised industries.
It is true that the Railways Board and Waterways Board have made losses in the past, but the provisions of the Bill will give them a new deal and at the same time take away the Government's power to pay them deficit grants. Thus they will have a new discipline forced on them and an added incentive to behave commercially. Nevertheless, the three words to which I directed attention earlier apply. The Government recognise the strength of feeling that there should be some statutory declaration about the need for the Boards to behave commercially in the conduct of their ancilliary activities, especially when they are in direct competition with private enterprise.
I would therefore say that, having regard to the views that have again been expressed, we are prepared to consider tabling a further Amendment to the Bill to meet the point underlying the present Amendment. This might be on the lines of amending the existing declaration in Clause 48(7) that the Boards should act as though they were engaged in a commercial enterprise in carrying out activities under that clause by extending it to cover all the new powers given by Clauses 48, 49 and 50 of the Bill. I must say frankly that we want a little more time to consider exactly what the form of the Amendment should be, and I hope that when it is tabled the Opposition will find
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that we have at least gone some way to meet the points which have been expressed in this Amendment.
LORD WINDLESHAM: When the noble Lord began to criticise the drafting with such care, I began to hope that he was going to make a concession on this point; and he has done so. I thank him for that encouraging reply, which we will study. It sounds to us a useful and worthwhile concession, and therefore I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.40 p.m.
LORD WINDLESHAM LORD WINDLESHAM moved Amendment No. 125A:
Page 61, line 15, at end insert—
("() Each of the authorities to whom this section applies shall ensure that its annual report includes a statement on the affairs of each separate business of the authority and of each of its subsidiaries.")
The noble Lord said: This is the last of our Amendments to Clause 41. Its aim is to place a duty on the Boards and the new authorities to include in their annual reports a statement of the state of affairs of the main subsidiaries and the separate businesses. The Government have said that it is their intention that the authorities should be run on commercial lines. This Amendment would result in what is, after all, normal business practice. It is usual to refer to the state of affairs of subsidiaries. Therefore, I hope that this provision may be included in the Bill. As with our previous Amendment, we have, I hope, learned and profited from the discussions in Committee last week. The noble Lord will have noticed that we have withdrawn the previous wording of Amendment No. 125 and inserted the wording which now appears in the Marshalled list. I beg to move.
LORD HUGHES: We do not think that this Amendment is necessary. The reports and accounts of nationalised bodies are always published together, and the Minister will make it clear to the Boards that he will require their reports to include appropriate information unless the accounts themselves do so. I want to repeat as a firm assurance that it is the intention to secure that the reports and accounts of nationalised undertakings are in line with good commercial practice and give comparable information to that

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normally published by large undertakings in the private sector. There is no intention on the part of my right honourable friend the Minister to hide what the authorities, or their subsidiaries, are doing. It is only because we consider that the Amendment is unnecessary that we do not accept it. We accept the reason behind the Amendment, and that is why I repeat, in definite terms, this assurance as to the way in which these undertakings must operate in these matters.
LORD WINDLESHAM: We accept that assurance, and I thank the noble Lord for stating it so clearly and definitely. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 41 shall stand part of the Bill?
LORD NUGENT OF GUILDFORD: I would like to say a word on subsection (6) which, rather surprisingly, has got slipped into the Bill. It provides an extra £30 million for London Transport. The Bill, which does almost everything, does not mention London Transport anywhere else. Suddenly, on Report stage in another place, subsection (6) appeared and there has been very little explanation why it is required and why it has suddenly been pushed into the Bill. The Government's explanation was that they had just discovered that the Minister's power to lend to London Transport Board might run out before the transfer to the Greater London Council had been finally settled. But only two months previously, the Minister had asked Parliament to increase the borrowing powers of London Transport to £270 million which he said would last until the middle of 1969.
Two comments I feel should be made about this method of managing our financial affairs. The first is that it is objectionable for the general taxpayer to be made to subsidise London Transport's current trading losses. It is impossible to justify asking the citizens of Manchester and other cities in the Kingdom to pay out of their taxes extra money in order to make Londoners' bus fares cheaper. May I say in passing that by this method of introducing this extra £30 million there are limited opportunities of finding out what the money is
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going to be used for and just how much is going to be used for current subsidy.
The second point I feel that should be made before we let the Government have this Clause is that, as an insight into the Government's financial management, it really is alarming. To them £30 million may not seem very much, but it seems a large sum to the taxpayers who have to pay. It is really astonishing that the Government should be unable to tell, to the tune of £30 million, what their financial position is. Anyway this subsection has been inserted into this vast Bill, which makes no reference at all to London Transport. When I read it last month, it reminded me of a local water undertaking's Bill at the end of the century into which the town clerk put the words:
"…and the marriage of the Town Clerk is hereby dissolved".
It is alleged that this slipped through Parliament without being spotted. Maybe the story is apocryphal.
In any event, this time the irrelevancy has been spotted. I think that the Government should be called to account for the two points I have made: how much is going on capital expenditure, which Government grants are supposed to cover, and how much on current subsidy? And what is the explanation for this extraordinary method of dealing with a very large sum of the nation's money?
LORD HUGHES: It is not a new thing for deficits of the London Transport Board to be financed in this way. I am not at all certain that when the noble Lord referred to the dissolution of the Town Clerk's marriage, he was not thinking that the Government might have attempted to slip in the dissolution of the Greater London Council! I do not think that that would have occurred to us, but if it had, we should probably not have managed to be as successful as the Town Clerk was alleged to have been.
There is nothing foolish or sinister about this. Negotiations for the transfer of an undertaking like this cannot be accomplished overnight. I have no doubt that the noble Lord is well aware that there was considerable hard bargaining and that in the passage of time losses mount up. It is as simple as that. We believe that the amount of money here

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provided is sufficient to enable the transfer to the G.L.C. of the undertaking to take place in a satisfactory fashion. Of course, if the noble Lord wishes to suggest that he should go to his friends on the G.L.C. and suggest to them that in the interest of the taxpayer they should settle on a basis more favourable to the Government, I have no doubt that we will look sympathetically at an Amendment of that kind, provided he can assure us that the transfer will still take place.
I am sorry that without notice I am unable to give a breakdown as between capital and revenue. But I hope that the noble Lord will accept that the insertion of this figure at the time when it was inserted was merely a recognition of the changes which had taken place in the interval.
LORD NUGENT OF GUILDFORD: I must congratulate the noble Lord, Lord Hughes, on making one of his usual first-class speeches, despite the obvious difficulty he must have had for material. I do make the point that there is obviously a substantial element of subsidy here. It is really unique. We do not do this for any other city in the country. This is why, and quite rightly, the Government have been making this settlement with the G.L.C. in order to transfer London Transport to them. Then it is up to them to decide how to do it, and whether the ratepayers should pay more or less to keep the service going. But I would remind the noble Lord that in combing through the proceedings in another place I discovered that the Government promised that there would be a statement on this by the end of last month. We really ought to have had it by today, and in that event I should not have had to ask the noble Lord these questions.
Clause 41 agreed to.
Clause 42 [Additional financial provisions as to Railways Board]:
7.52 p.m.
LORD NUGENT OF GUILDFORD LORD NUGENT OF GUILDFORD moved Amendment No. 126:
Page 62, line 9, at end insert—
("() Not later than 1st January 1970 the Board shall draw up and agree with the railway trades unions a new labour productivity agreement with appropriate provision for redundancy.")
The noble Lord said: I beg to move Amendment No. 126 on the Marshalled List, in the names of my noble friends and myself. I think this Amendment is self-explanatory. It is founded on responsible thought in this connection, and we move it in all seriousness. The effect of Clause 42, among other things, is to reduce the capital debt of British Railways to £300 million. This involves, if my arithemetic is correct, writing off a sum of no less than £1,317 million. This is a huge sum of money, probably something approximating the capital expenditure which the nation has provided for modernisation over the last dozen years.
I am not opposing this writing down of the capital. Indeed, we wrote down a substantial amount of capital in 1962, and I think this is the right way to deal with the structure of the railways. I cannot say, of course, whether £300 million is the right figure; it may well be. But certainly in industry capital is worth at the end of the day (I am sure all noble Lords agree with this) what it can earn. So I am entirely in favour of setting this at a realistic figure. But do not let us comfort ourselves with the thought that we are being asked to write off 19th century assets. We are not. We have done all that. Substantially, this is post-war capital that we are writing off. So it must be seen for what it is—a very large sacrifice which the British nation must make in order to put British Railways on a viable basis and give them a fresh start.
Our Amendment requires that British Railways should match this massive contribution from the nation by putting their own house in order with an effective manpower-productivity agreement. Put in simple terms, I want the British Railways Board to do a deal with the railway unions, the N.U.R., A.S.L.E.F. and T.S.S.A.: I want them to buy the rule book. And perhaps this present time is a significant moment to say this. Let me say, in passing, that I entirely support the Government's position in the present dispute. This is something which the Board must settle. I am sure that the Government are right to keep out of it, and I am sure that the noble Lord, Lord Robertson, who is here, would endorse that sentiment. I know that the Board have been trying for some time to negotiate a new labour-productivity agreement

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with the unions and the present work-to-rule action is of course the union's riposte to the Board's refusal to make a flat-rate increase. In my view, as I say, the Board are right to refuse a further increase without a new and more realistic productivity agreement. Past experience, unfortunately, confirms that they will never get the productivity agreement unless they insist on agreement before giving the rise.
The average railway wages grade is £21 10s. a week. So it is nearly £1 above the average of all industries and services. Therefore the hardship claim, which used to exist, is no longer there. This does without doubt bring us back to the fact that increases of wages there, as anywhere else, should be matched by increased productivity. The need in British Railways is very great. Wages amount to no less than 64 per cent. of total costs in the railways. This is an enormously high figure. Let me say that wages and salaries together amounted to £342 million, against the total revenue earned of £438 million, in 1967. These figures dramatically illustrate the urgency of a radical new deal to make labour more productive on our railways. One can illustrate the point. If wages were to rise another 10 per cent., and revenues were to fall another 10 per cent., the total revenues would hardly be enough to pay the total salaries and wages bill.
This excellent White Paper on Railway Policy was very guarded on the prospect of improvements in labour productivity. I would refer noble Lords to page 17, paragraphs (d) and (e), where they say in paragraph (d):
"Postulated improvements in locomotive and crew utilisation and in wagon working might prove slower and more difficult to realise."
Then, further, they say:
"It will prove difficult, even with special help, to reduce manpower at the rate implied in the forecast."
Yet it is evidently vital for the future of rail solvency, even on a reconstructed basis, to achieve just this. I presume that the consultants whom the Government employed were asked to investigate this problem, and have given advice on it. It would be most interesting to know what the advice was. I wonder whether noble Lords opposite will be able to
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tell us what is the present measure of railway manning; what can be done to improve the situation.
We are all familiar with the things that we see—the double manning in the loco cab, and so on—but we realise that this is only a small part of the picture. I make the point that when the nation is being asked to agree to write off this huge sum of £1,317 million we are entitled to ask on behalf of the shareholders —that is to say, the nation—what is happening about this; what is the measure of the problem of overmanning, and what is being done to cope with it. I expect I shall be given the answer that appears in the Railways Report of last year: that there had been a rundown since 1961 of 180,000 men, and 20,000 in 1967. Well that is good as far as it goes. But that is obviously only a beginning, and goes only part of the way.
I come now to the second part of my Amendment; that is, the provision for redundancy. In this connection I was interested to see the new clause proposed by the noble Lord, Lord Lindgren, which appears on the Marshalled List of Amendments with regard to redundancy. In my view, the British Railways Board cannot make a worth while new deal with the unions unless the Government give them a little elbow room to negotiate. I do not mean now at this minute: I set this over a period of 18 months to two years. You cannot expect to buy the rule book for nothing—nobody has ever done so. This time, I want to see British Railways make a deal which really clears away restrictive practices. But that cannot be done just on a straight wage negotiation; it must be something much bigger. This really would affect our railways for the 20th century role we want them to have.
There is, I would suggest, a reasonable precedent for this. In the Coal Industry Act 1967 there was provided a sum of £130 million in order to ease the rapid rundown of manpower in the mines over the following four years. I do not know what would be needed in regard to British Railways, but Clause 42 provides the large sum of £700 million for future borrowing. So they obviously have plenty in hand there. I know that it would be worth a considerable sum to the nation to get the railway manpower

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situation on a fully efficient level, and it would be a wonderful thing for them. It must be thoroughly bad for everybody to have the kind of overmanning that I believe exists at present. I do not know what reduction would be involved, but I am sure the Ministers must know. I do not want to embarrass them by pressing them to give an answer—indeed, I am sure that they will not give an answer.
I am not asking that this should be done now; the present wage dispute must be settled and the men must get back to work. But, looking ahead over the next 18 months, this is something that must be done. At the present time we just go on limping from one wage dispute to another. I wish that the noble Lord, Lord Robertson of Oakridge, were here. I do not know whether he would feel inclined to talk about it—possibly he could not. We all like the people on the railways, whether they are in the salaries or wages grades, and when we are modernising the capital structure I want to see the manpower structure modernised at the same time, and it is in that spirit I move this Amendment. I beg to move.
LORD CARRON: This is an interesting Amendment, and I agree with most of what the noble Lord, Lord Nugent, has just said; but I question whether this Amendment is the right way to do it. Productivity agreements, if they are bona fide, and if they fulfil the purpose for which they are intended, can produce the substantial results which have been referred to. I have experienced some which have produced results, to both management and work people, of a first-class order and in the process have improved efficiency out of all recognition.
The Amendment calls upon the Board by not later than January 1, 1970, to draw up an agreement with the railway trade unions. Having some small experience of negotiations I have learned that it takes two to make a bargain. If the Railways Board are conditioned by legislation to agree with the unions by January 1, 1970, I suggest that if I were the chief negotiator I would say "This is a superb encouragement to me", but I should not be quite sure that the results in efficiency, and the return to the Railways Board, would be what the noble Lord has in mind. In my opinion the people arranging these matters must be
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left with freedom of discussion and liberty to negotiate. I hope, with the noble Lord—and I assume everyone—that arrangements of this kind could be brought into being. Vast improvements could be made in British Railways, and in other undertakings in the United Kingdom, both public and private, if substantial productivity agreements were entered into. But it is the easiest thing in the world to enter into this Kind of agreement in which there is little to produce efficiency, and it can produce entirely the reverse result. I have seen this occur on many occasions.
While not disagreeing with the desire to bring into being a sensible and workable productivity agreement which would benefit the Railways Board, the work-people and the nation, I do not think that laying it down in those terms would necessarily achieve the object.
With regard to the latter part of the Amendment, I would fully agree that adequate and proper provision should be made for redundancy if such an agreement could be brought into being. If people are to be displaced I think it is our bounden responsibility that they should be provided for in the event of redundancy.
LORD BOWLES: I am grateful to my noble friend Lord Carron for his helpful speech. There is not much more I wish to say about this, except to point o at that the effect of the Amendment would be to require the Railways Board to draw up and agree with the railway unions a new labour productivity agreement by January 1, 1970.
I must resist this proposal because it is clearly unrealistic to impose a statutory requirement on two parties to reach an agreement by a particular date. What would happen if they could not reach agreement by that date? A statutory obligation on the British Railways Board would greatly weaken their negotiating position.
The second reason for resisting this proposal which I should like to put before this Committee is that British Railways already have an effective redundancy agreement with the unions and have achieved considerable increases in productivity in recent years. For example, as I am sure the noble Lord will know, the number of "traffic units", which means

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passenger miles combined with freight net ton miles, per employee, has risen by 28 per cent. during the period 1963 to 1967.
Far-reaching negotiations on pay and efficiency have followed the Prime Minister's meeting with the Railways Board and the unions in March, 1966. These talks have led to proposals from the British Railways Board for pay increases in return for greater productivity.
The effect of the financial re-structuring in the Bill is to remove the safety net of deficit financing with effect from January 1, 1969. The British Railways Board will be standing on their own feet, and will be faced with a tough financial remit. This gives them the strongest possible incentive to adopt an effective manpower policy, since, as the noble Lord said, about two-thirds of their total costs are related to manpower.
With regard to the question raised by the noble Lord about the Joint Steering Group, it was rather difficult on the spur of the moment to get all the information I wanted, but the Government do not want to become involved in any discussion about what the Joint Steering Group meant when they used the phrase "special help" in relation to redundancy costs. The Joint Steering Group did not look at this point in any detail and made no specific recommendation.
I take personal responsibility for suggesting that tonight we should not discuss in much detail this most unhappy rail situation. I had notes that I have ruled out and I am not using tonight, in the hope that no hard feelings might be raised by any unfortunate remark that might be made in this Committee.
I invite the Committee to resist this Amendment.
LORD NUGENT OF GUILDFORD: I thank the noble Lord, Lord Bowles, for his reply. Of course this is not the kind of Amendment that I intended to press in any event, but I thought in view of the importance of Clause 42 this was an occasion when a comment of this kind was apposite. In a moment I shall withdraw the Amendment.
The noble Lord, Lord Bowles, claimed that a good deal had already been done, but my comment would be that it is nothing like enough, and I believe we all
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know that. I think I have said enough to express my view, which I am sure would find a great deal of support throughout the country quite independently of any political view which we may hold. The railways belong to all of us; we want to see them succeeding and giving a good service. It is terribly demoralising to be constantly "in the red", and of course it is terrible to have a waste of manpower. I feel most strongly on this and I do not feel it in any sense of antagonism towards the railwaymen. I was fortunate in having something to do with them when I was in the Ministry of Transport and I like them very much, but I feel this is something which will need help from the Government. The Board alone will not be able to do it, and while I certainly take the point made by the noble Lord, Lord Carron, that one should not put a date on it, I put a date in my Amendment because I think the present state of affairs should not be allowed to go on for ever. Somebody has to try to do this one day, and I hope the Government may feel that in inviting us to write off this huge capital sum they have an obligation to try to crack this problem over the next year or two. It really is a major problem which desperately needs cracking. It is in that sense that I moved the Amendment and now ask leave to withdraw it.
Amendment, by leave, withdrawn.
On Question, Whether Clause 42 shall stand part of the Bill?
VISCOUNT SIMON: Before we agree that the clause stand part of the Bill, I would ask the noble Lord, Lord Bowles, two questions for elucidation. Unfortunately, I was unable to be in the House for the Second Reading of the Bill, but I read the OFFICIAL REPORT and I do not think these matters were dealt with in quite the manner in which I hoped. The noble Lord, Lord Nugent, has spoken of the very serious situation arising from the need to write off this enormous amount of capital. I want to ask the noble Lord whether he would agree that if £300 million is now assessed to be the realistic capital of the railways on which they can be expected to pay interest, does that not in fact mean that about two-thirds of the expenditure of the last 10 years has been an unsatisfactory investment, because the expenditure in that time has been something of the order of £1,000 million.

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My second question is this. I think I am right in saying that the Minister in another place, in the course of the discussions on this Bill, said that there would be no continuing subsidy to the Railways Board. But is it not a fact that in so far as the interest which has to be paid on the outstanding Transport Stock exceeds the interest which the Exchequer will receive on this £300 million, there is in fact a continuing subsidy to the railways?
LORD BOWLES: I am grateful to the noble Viscount, Lord Simon, for raising these two points. They are to me very technical indeed, and I wonder whether he would allow me to send him the answers in writing? The noble Viscount indicates his assent, and I am much obliged.
Loup HAWKE: I should like to make one point on this clause, which I have constantly made before in this House, and that is that if the nation writes off enormous sums of capital from the railways, on the other side of the book the railways should hand over surplus lands to the nation. They have a tremendous amount of surplus lands, and they are still not doing very much with them.
Clause 42 agreed to.
Clauses 43 and 44 agreed to.
Clause 45 [Duty of Freight Corporation and Railways Board to review organisation]:
8.15 p.m.
LORD WINDLESHAM LORD WINDLESHAM moved Amendment No. 127:
Page 66, line 4, after ("require") insert ("but at least once every three years").
The noble Lord said: Under Clause 45 the British Railways Board and the National Freight Corporation have a duty to review their organisation and report to the Minister. They must make their first report within a year, and subsequent reports as and when they are felt to be necessary or if they are called for by the Minister; and copies are to be laid before Parliament. All this is praiseworthy, so far as it goes, but we feel that a review of the organisation not less than once every three years would introduce some systematic regularity and would give continuity to what
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could otherwise become rather a dead letter.
Obviously, the first review of the organisation will be carried out, as it must be, but the future practice which is envisaged, that further reviews will be made only when they seem to be necessary or when the Minister specifically calls for them—which will probably be because something had gone wrong—is, we feel, leaving it rather too open. Therefore, the three-years period is suggested only in order to introduce some period of time. If it were felt that the period should be five years or ten years, we should welcome it. It is for those reasons that we have tabled the words on the Order Paper and I beg to move Amendment No. 127.
LORD HUGHES: This Amendment is identical to one which was negatived in another place last March, and I am afraid the way in which the noble Lord has moved it now indicates that he is suffering some of the same misapprehensions that Opposition Members felt in another place on that date about the purpose of these reviews. The reviews are intended to determine whether the direction of the Board's and the Corporation's activities is organised in the most efficient manner. The reviews are not intended to cover the efficiency of individual services, nor the internal management of individual units.
Subsection (1) gives the Board and the Corporation the duty of requiring them to carry out further reviews, as the noble Lord has said; and, as he also said, it gives the Minister the duty of requiring them to be carried out whenever this appears necessary. This might be in less than three years if a particular form of organisation proved unsatisfactory. We must bear in mind the diversion of effort which is involved particularly in the time of senior officers in undertaking a major review, and that a particular scheme of organisation will often take time to prove itself. So the reasonable thing—a thing which reasonable men would want to do —would be to give a promising form of organisation an undisturbed period of time to work itself out, and that might not be possible within a period of three years. The provision of this Bill is similar to that in respect of the British Steel Corporation in Section 4 of the

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Iron and Steel Act 1967, and no such limitation as this was made in that Act. I would go further and say that no such limitation as this was even suggested in relation to the activities of the British Steel Corporation. We feel that it is not sensible to fix a maximum interval for these reviews but that it is right they should take place either when the judgment of the Board or that of the Minister dictates that circumstances warrant a further study.
This does not mean that people do not need to know what is happening inside the railways, to some extent at any rate, because, after all, the annual reports of the Corporation and the Board are to be available and they will give a great deal of information—information similar to that which appeared to be sought in the debate in the Commons Standing Committee—and of course the information given in these annual reports can be debated. I would point out that the 1967 Report of the Railways Board was published on May 13, and that of the Transport Holding Company on June 11.
I invite the noble Lord, Lord Windlesham, to withdraw his Amendment, because the reviews which he seeks to have at such fixed intervals are not necessary for the purpose of seeking the sort of information which was debated in another place and which will be available, by and large, in the annual reports. It is desirable that so major an operation as a review of the kind contemplated in the clause should take place as and when required, whether it is at an interval of less than three years or of more than three years.
LORD WINDLESHAM: I did not use the argument that a regular review was needed every three years in order to produce information because I do not believe that is the point here. I think that what we were discussing earlier about the contents of the Annual Reports is much more relevant. I too had taken the point, although I may not have made it clear, that I do appreciate these are reviews of organisation and not just inquiries into some aspect of the operations of one of the Boards or the Authorities. But we come back really to what the noble Lord, Lord Nugent, was saying so persuasively on the last Amendment, that huge sums
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of public money, over £1,000 million, are being written off.
The noble Lord, Lord Robertson, told us that there had been too much chopping and changing and politicians should leave some of these things alone to try to get a really good organisation; and we wholeheartedly support that point of view. But why is this clause here at all? One can see the need for the initial review of the organisation, but why is the power put in the Bill? If this is just going to be used as and when it is thought necessary by the Board, they do not need this power. If a public authority wants to conduct an investigation to review the way in which it is organised it is perfectly free to do so. It does not need to take a special power.
I do think this is perhaps something that the noble Lord might look at, because he has introduced a number of arguments in reply which I had not actually raised. Leave out the three-year period; let us say a period of years, perhaps five, perhaps seven. Leave out the point about seeking further information, because I do not think that is really what lies behind this. It is just this: are the public going to be convinced that the Railways Board and the other authorities have their organisation set up in such a way that the public are going to get value for money? If the noble Lord can give us any sort of assurance on that, we will withdraw the Amendment. If not, I do not think we want to press it at the moment but we might want to come back to it at Report stage.
LORD HUGHES: It may well be that in looking at the merits or otherwise of the Amendments we have tended to concentrate too much on the period of three years. I do not know whether, if we substituted five, seven or ten years, it would necessarily make the Amendment any more acceptable. Certainly I would like to be certain in my own mind that I was not looking at the particular tree labelled "three years" and forgetting the rest of the wood. I will certainly undertake to have a look at this, and perhaps I could have a word with the noble Lord, Lord Windlesham, before the next stage.
LORD WINDLESHAM: I thank the noble Lord for that reply and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD WINDLESHAM LORD WINDLESHAM moved Amendment No. 128:
Page 66, line 12, at end insert ("and also representatives of the users of the services provided by the Board and the Corporation.")
The noble Lord said: It has already been pointed out that there is very little reference in the Bill to the interests of users or consumers. In the debate on Amendment No 101 moved by the noble Lord, Lord Donaldson of Kingsbridge, he explained his desire to see consumers represented, not just in a consultative capacity, which he felt was ineffective, but in some instances by representatives of consumers going on to the boards of the new Authorities. I do not know if there are any fine distinctions. It has been said there are great difficulties in defining consumers. I do not see any distinction between consumers and users; to me they are the same people. And I think that although Lord Donaldson represents organised consumer interests, and we are talking about people who use the services, we are fundamentally talking about the same people. The two noble Baronesses, Lady Elliot and Lady Horsbrugh, added their very knowledgeable and authoritative voices against the proposition that it is just too difficult to pin down and decide who is a consumer or who is not. They, together with the noble Lord, Lord Donaldson, have been concerned with representing consumer interests and explaining exactly who are the sort of people to represent those interests. I believe that if the people who recommend appointments to the boards were to sit down and think about the sort of person they should appoint, if they needed to have a representative of users, they would be able to do so.
When the noble Lord, Lord Winter-bottom, replied to the earlier debate on Amendment No. 101 he was able to hint, although rather guardedly, that the Government might be sympathetic to what might be called the consumer or user line of reasoning. The object of this Amendment is a rather narrower one. It is to ensure that before reaching conclusions in consequence of a review of organisation the Railways Board and the Freight Corporation should consult. In the Bill as it was originally drafted I think the clause ended there. But as a result of discussions in Standing Com
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mittee in another place the additional line was tacked on saying that there should be consultation with staff and trade union representatives. We believe if there is to be consultation, which seems worthwhile, with trade union representatives, there should also be consultation at the same time with representatives of the users. It is for these reasons we have tabled this Amendment. I beg to move.
LORD HAWKE: I think this is a very important Amendment. I do not regard it as a sort of balancing act, that if you consult trade unions on the one side you must consult somebody else on the other. But anybody who has had anything to do with railways will know that they tend to segregate themselves into a sort of dream world of their own and their object becomes to run trains with the utmost of perfection. In fact, I know two general managers whose spare-time hobby when they came home in the evening was to play with toy trains. The result is that the golden mean of a real railwayman tends to be to achieve the greatest perfection in the running of the trains quite regardless of whether he is providing the type of transport his customers really want. I think this calling in of the customers on this review is a very important operation in order to give the railways some light on what people think of them.
LORD HANKEY: I would like to add my word to what the noble Lord, Lord Hawke, has said. I believe it is extremely important that the transport service should be in touch with the people they have to serve and that the people they serve must be able to give very valuable opinions on the services when these periodical reviews take place. I earnestly hope, therefore, that the Government will see their way to accepting this Amendment.
LORD BEAUMONT OF WHITIEY: Unlike the noble Lord, Lord Hawke, I do think there is some point in even a balancing act. More and more we should get to the stage where, as often as possible, employer and consumer and employee should consult over a great number of things. In principle, I am entire y in favour of this Amendment. I wonder, however, as it has been said that this is about the first time we are really getting the consumer into this Bill, whether he should come in at this particular

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moment on what appears to be a very high level, a very technical internal review, or whether we ought not to concentrate more on seeing that he is consulted in some of the more general and consumer-oriented facets before we tackle this particular one.
LORD HUGHES: I hope that the last thing I would succeed in doing would be to persuade any of your Lordships that I was not concerned about looking after the interests of consumers, whether of railway services or anything else. As the noble Lord, Lord Beaumont, has suspected, this is not the place at which this should be done. I must say in advance to the noble Lord, Lord Windlesham, that having regard to the most friendly and conciliatory way he is putting all of his Amendments, I regret that I cannot be at all helpful on this one, simply because I think that the Amendment embodies totally the wrong thing to do. This would be the equivalent of inviting the customers of a large public company to be consulted as to how many directors there should be on the board, or how many divisions and what divisions should be directly responsible to the board, because the purpose of this review and the purpose of the consultation is, as the words imply, "so far as regards the direction thereof".
There is a reason for distinguishing between the consumer and the trade unionist in this case, because the trade unionist has a quite direct interest in the way in which the industry from which he is getting his livelihood is organised. It is because of the acceptance of the modern concept that more and more the workman should at least know, or have some idea of, what is going on in the organisation or reorganisation of the business in which he is employed, that this is imported into this particular clause.
Users as a class have the protection of the duty which the National Freight Corporation and the British Railways Board have imposed upon them to have due regard to efficiency, economy and safety in the provision of their services. Moreover, as has been said time and time again, the boards are under the financial duty of at least breaking even, and it must be obvious that unless they can satisfy their customers they will not be able to meet either their statutory finan-
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cial duty or their financial target. Detailed complaints by the user about either passenger or freight services will be able to be referred to the T.U.C.C.s, and Clause 45(4) provides for all reports under subsection (1) to be laid before Parliament. Thus, there is reasonably adequate safeguard of user interests in a more practical way than by arranging for the boards to consult them about organisational reviews.
After all, at the end of the day, what the customer is interested in is in the service or lack of service that he is getting from the railways, not who are the directors, nor who are on the Board, nor what their responsibilities are, nor who is responsible for looking after this division or that division. It is the results which come from these boards.
In the Bill the necessary opportunity is given for the consumer to be represented and to be in a position to make known his point of view in these matters. I most sincerely suggest to your Lordships that, to seek to give the consumer an interest in the way in which the board of directors is constituted, or how it purports to carry out its job, is a mistaken concept.
LORD WINDLESHAM: I think the noble Lord, Lord Hughes, following on what the noble Lord, Lord Beaumont, said, has a point in saying that perhaps this is not the best moment at which to pursue our argument on the safeguarding of user interests. Nevertheless, we feel that this is a matter which has been worth again drawing to the attention of the Government. It was discussed extensively in Committee in another place, and I think one of the reasons why it has continued to run is that the Minister, who was a junior Minister, speaking for the Government at that time is thought to have given some encouragement in a reply. I think, therefore, that some members of the Committee on subsequent stages thought that there might be a softening of attitude here. The noble Lord, Lord Hughes, has been extremely clear and frank in his reply. I do not think that this is the time to press the interests that we have of consumer and user, and I therefore beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 45 agreed to.
Clauses 46 and 47 agreed to.
Clause 48 [Manufacture, repair and supply]:
8.33 p.m.
LORD BESWICK: Before we move on, I wonder whether we might consider the situation so far as time is concerned. As I understand it, the convenience of the Committee would best be suited if we took the whole of the Amendments on Clause 48 together. At the beginning of to-day's Sitting, I said that in view of the transport situation outside it would not be convenient to go beyond 10 o'clock. I wonder whether the noble Lord, Lord Nugent, and other noble Lords opposite, can give some indication as to whether in their judgment we shall be able to complete the debate on Clause 48 in the time within which I undertook that we should do?
LORD NUGENT OF GUILDFORD: Parliamentary time is always unpredictable, but I should have thought that the answer was, Yes. Our Amendments are all linked together on a single point which really goes to the heart of the clause itself, and does in fact give the basis for a debate on the Question, That the clause stand part. I believe that a debate of that kind would suit noble Lords on the Liberal Benches as well. No doubt the Liberal Benches will make plain their view, but the view we took was that this clause was debated at great length in another place on a whole series of Amendments in regard to all kinds of industries that were interested. But in view of the limited time we have here, we felt the right thing to do was not to go into a long series of Amendments but simply to have one debate on the principle of the clause and to be satisfied with that. We felt that this would be for the convenience of the House. So we are quite willing to co-operate.
LORD BESWICK: I am obliged to the noble Lord. I hope that we can have the understanding that if, for reasons not immediately apparent, the debate appears to be going on much longer, nevertheless we should accept that 10 o'clock should be the time at which the House be resumed.
THE DEPUTY CHAIRMAN OF COMMITTEES: My difficulty is that I have to put Amendments Nos. 131 to
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139A inclusive, unless I am told that they will not be moved. Is it the case that the Amendments of the noble Lord will not be moved?
LORD NUGENT OF GUILDFORD: If I may, my Lord Chairman, I will move Amendment No. 131 and at the same time discuss all the other Amendments in the names of my noble friends and myself. Then, when that has been done, if the Government accept them all, of course we shall be delighted; but if they do not, then we may perhaps not pursue them and move to leave out the clause as a whole, which will be the correct procedure.
LORD BEAUMONT OF WHITLEY: We shall be quite happy to have a general debate on Amendment No. 131 and then, after the general debate, to decide whether or not we should seek to remove the clause.
8.38 p.m.
LORD NUGENT OF GUILDFORD LORD NUGENT OF GUILDFORD moved Amendment No. 131:
Page 68, line 24, after ("power") insert ("subject to the Minister's approval").
The noble Lord said: In the circumstances, I beg to move Amendment No. 131. I hope that it is convenient for your Lordships that we should proceed in the way suggested. I shall not spend much time in describing exactly what our Amendments do, but they would have the effect of requiring that an authority or a board mentioned in this Bill which was contemplating engaging in manufacturing or selling under Clause 48 would first have to establish that there is a lack of such capacity in private industry.
As I say, this really goes to the heart of the clause. This clause (it was Clause 45 in the original Bill and is now Clause 48) has aroused, as noble Lords opposite know, universal opposition throughout both industry and trade, because it allows these boards and authorities to go into manufacture or trade in almost anything they like. The qualifications of subsection (2)(a) are almost unlimited. This is in line with the words spoken by the Minister of Transport last autumn, in promising a major extension of public ownership. Clause 48 provides the power to do just that. I must make it quite plain to the noble Lord, Lord Shepherd,

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and his noble friends that we on these Benches are completely opposed to this.
First, we consider that it is unnecessary for these authorities in carrying out their main business of transport; and, secondly, we consider that for the national economy as a whole a further extension of state trading is dangerously weakening. At the present time, with the vulnerability of our economy, and when we are desperately concerned to pay our way, anything dangerously weakening is something we simply cannot afford to do.
Let me deal first with the trading needs of the boards and authorities. The present position rests on the 1962 Act, Section 13. This allows all boards and authorities to manufacture anything they like either for their own requirements or for any other board or subsidiary, but not to manufacture for sale to outside customers. I should be the first to recognise that there are marginal problems that arise, and in the interests of authorities and boards I should be willing to consider a carefully and very limited power to meet them. The sort of problems I have in mind are that there may be seasonable troughs of demand within an industry when there is spare capacity which could be sold outside; but I would make the caveat that this could be linked to faulty demand projection or faulty management.
But before power was taken to meet either of these problems, the most stringent inquiry would be needed to ensure that the spare capacity had not arisen simply through faulty management. After all, in private business if there is faulty management, and therefore surplus capacity, this suffers the penalty that it must be declared at a loss or carried unproductively. But there might be a small residual problem remaining to be catered for here in very circumscribed circumstances.
The third possibility is that spare capacity may arise of a chronic large-scale nature—for instance, as it is in the railways now—which can be dealt with only by a specific investigation to consider whether resources should be switched into some new development. That kind of investigation should be done with the authority of Parliament and, if there is to be such a switch, with the specific approval of Parliament. Here I think it
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is worth making a point which has been made before: that diversification confers no automatic salvation, and development into unfamiliar fields does not necessarily mean that profits will be made comparable with what the experts there are already making. You have only to look at the experiences in a field like Shorts, of Belfast, with their unhappy results, to see what may happen when diversification is wrongly made. There is a great tendency for everyone to think that the further fields look greener. There is a further point which has been made before here by the noble Lord, Lord Robertson of Oakridge: that British Railways, for instance, would be very reluctant to open up some new line of trade, in competition with their customers, for their main business of providing rail transport. The obvious result would be the maximum loss of good will.
However, I would make the general point to the noble Lord, Lord Shepherd, that if the Government were willing to remove Clause 48 and come back to a clause of a strictly limited nature, with effective safeguards to deal with the kind of marginal problems I have mentioned, I should be prepared to advise my noble friends to give such a clause a fair consideration on its merits. I acknowledge that the Government have made a small concession in subsection (7), but it falls very far short of the kind of provision I am thinking of. But our general position on these Benches is that, having accepted the existence of the previous nationalised industries, and indeed lived with them and helped them to develop over our thirteen years of Government, we want them to have every chance of trading success and to make the maximum contribution to the national economy.
This brings me to my second point. We consider that a further extension of state trading is weakening to the national economy. The post-war record of nationalised industries gives ground for this anxiety. The total investment by taxpayers is of the order of £12,000 million, and the record over these twenty odd years of written-off capital and revenue deficits amounts to over £3,000 million, against interest paid to the Exchequer of about £2,100 million, so that the accumulated net loss over the twenty years on this huge capital sum of £12,000 million

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of the taxpayers' money is £900 million. This is the reverse of a good investment for our people, and no-one would say that people generally feel that they have a service which is at a particularly low price or at a particularly high efficiency.
This is really not a record which justifies a further plunge in the same direction which the Government now imply or take the power for in Clause 48. A few months ago we debated the general problems of running the nationalised industries. In a very interesting and, I think, objective debate—and I certainly do not propose to traverse that broad and fascinating subject to-night—we observed the inherent difficulty of devising a financial discipline which would take the place of the consequence of making a loss and ultimate insolvency which is the spur for every private business. As every private business lives with the trading risk of the market and successfully trades at a profit or goes under, so each private business is bearing its share of the nation's trading risk. This is the basis of a healthy economy, but neither at the national level nor at industry level can anyone for long go on spending more than he earns. Sooner or later we are all bound to suffer, and indeed as a nation we are now going through this painful process following our default of last year.
The weakness of the nationalised industry sector in this context is that it is shielded from these ultimate disciplines by the Government of the day, whether it is the Party of noble Lords opposite or the Party to which I belong who are in Government. The Government of the day cannot let the industry go, they must make the taxpayer pay the losses as well as providing annual capital. Do not let us forget that we pay between us some £800 or £900 million a year in providing capital for the nationalised industries. We pay that out of our taxes and it amounts to just about the equivalent of the whole of the capital formation of private industry of the whole country. It is a very heavy burden for the economy to carry.
Here is a sector of the economy which, however good the performance of some of its members—and they are good—is continuously in danger of being a passenger in the national economy, carried on the back of the private sector. Whichever side of this Chamber we sit on, we have to face that we have not yet found
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effective safeguards against this danger. The record of the last 20 years shows I this. There may be cogent political, social or economic reasons for maintaining certain nationalised industries, cogent both to noble Lords opposite and to ourselves. But it really is self-evident that there are overwhelmingly cogent reasons for keeping the nationalised sector within strictly limited bounds, and in my opinion this Government has already been most unwise in the major nationalisation measures it has followed.
The private sector is the sector which makes our exports and bears the risks of the markets of the world. I am not one to plead for individual industrial interests. I am concerned here with the national economy. I am convinced that the private sector is the goose which lays the golden eggs on which the nation lives. It is in the interests of all that this should not be further diminished by a further increase in nationalised trading by Government action, and it is in that spirit that I beg to move the Amendment.
8.50 p.m.
LORD BEAUMONT OF WHITLEY: This is another clause on which we in our Party would appeal to the Committee very strongly, since it opens the way to a large degree of creeping, petty nationalisation. We are not opposed to nationalisation as such—we probably started it. But we think it should be applied only to very special situations and under very tight control. In dealing with controls, I associate myself with the remarks of the noble Lord, Lord Nugent. If the Government had given way rather more on Clause 41, we should be feeling a little happier about this. We feel that it is the questions of under-cutting, loss-making, cross-subsidisation and not very clear accounting that are the real dangers.
Unless anybody should suspect that this is just a bogy thought up on the Conservative and Liberal Benches, let me raise briefly a case which I have already quoted in your Lordships' House. This involved tree transplanting by the National Coal Board. I complained that the National Coal Board had transplanted trees for local authorities at what they called cost price, which ignored overheads and was in danger of putting out of business a great many private firms that had put a great deal of capital into this

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socially valuable business. The noble Lord, Lord Beswick, replying to the debate said—and I quote from Hansard of January 31, 1968, Volume 288, column 854:
"As another example of unfair competition, the noble Lord made complaint of the National Coal Board's tree-transplanting unit. I am sorry he raised this matter, because I must say that I thought this was an example of public-spiritedness on the part of the National Coal Board, and certainly what they have done has, I understand, met with the approval of the Civic Trust, who have encouraged local authorities to plant more trees. They are able to plant more because they are able to plant them more cheaply by using this machine which the National Coal Board has at its disposal; and as this means that the machine is being used more fully, the N.C.B. is able to spread its charges."
This was said in the middle of replying to a lengthy debate. I am not saying anything personal about Lord Beswick's reply, but I think that the reply is symptomatic of the kind of attitude which can apply to nationalised industries. Of course it is a good thing to transplant trees; of course it is a good thing, if people want it, to sell harmoniums on the banks of canals. And of course the National Coal Board can do the first more cheaply if they disregard the overheads; and of course the Waterways can do the second more cheaply if they disregard the overheads. Noble Lords on the Benches opposite want to see that this does not happen, but it is one of the things which tend to happen in this kind of situation.
I do not see any reason why a great number of these powers should not be let out to private enterprise. There are enormous advantages which public enterprise has, even if the tightest financial controls are applied, particularly when it is a question of garages, newspaper kiosks or sweet shops, or whatever it may happen to be, at places where passengers get on the trains or the boats, which are owned by the public. I do not see why the boards and authorities should have this particular advantage. As the noble Lord, Lord Nugent, said earlier in the debates on this Bill, it is simply committing further money and resources in a field where the financial disciplines which operate on private enterprise do not exist. We believe that this is sheer empire-building on behalf of the nationalised industries. We think that it ought to be resisted. We very much hope that the Government will give considerable con-
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cessions on this point, and we very much hope that they will do as Lord Nugent has suggested; that is, to take this clause away and come back with one on the rather narrower lines which he outlined.
LORD BALFOUR OF INCHRYE: My noble friend Lord Nugent of Guildford has deployed clearly and powerfully the viewpoint which we on this side of the Committee hold. He has made an offer which I hope Her Majesty's Government will consider. There is only one point that I should like to raise. I refer to the danger inherent in the phraseology of subsection (2)(a) which says:
"…to repair for outside persons, anything which the authority consider can advantageously be so manufactured…"
The word "advantageously", if it is not more closely defined, is full of dangers. An advantage can be an economic advantage; it could also be a social advantage.
As I foresee the matter, if a board is carrying out some activity in a difficult area with heavy unemployment, and is under heavy pressure to interpret the word "advantageously" in the social sense and irrespective of the economic results of its operations, it may feel entitled, and indeed obligated, to continue something which is uneconomic in itself and would certainly bring distress to others in the private sector who are engaged in the same type of operation. That is one particular danger I see. Had Her Majesty's Government come forward with other words instead of "advantageous"—for instance, "to commerical advantage"— I should have been somewhat happier in my mind. But I am extremely worried at the looseness of the words as at present put forward in the Bill.
LORD ST. HELENS: In the acceptance or rejection of this particular clause is a basic principle which demonstrates the deep cleavage between the two sides of the Committee. I can speak only for myself, but personally I do not wish to see the extension of the public ownership sector. I think that it is already too big; and already it imposes unfair competition against the private sector of commerce. Already to-day the private enterprise sector is dependent on the State for coal, electricity, gas, steel; and when this Bill becomes law it will be dependent also for its transport. Frankly,

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I think it is too much. We are, after all, "a nation of shopkeepers." If we wish to survive, we have to make a profit in the world overseas. If the Government are to introduce such a revolutionary innovation as is enshrined in this clause, they should either justify the case on economic grounds or require each undertaking, before branching into a new venture, to demonstrate to the Minister and to the public that it can manufacture more cheaply and to a higher standard than can the private supplier.
I do not believe that we on this side of the Committee are against reasonable powers. For instance, we believe that the railway workshops perform an admirable service to the country. But there is this difficulty. If the railway workshops are allowed to buy a very expensive piece of equipment and to use it for a different purpose, in order to compete with private enterprise, this becomes most unfair competition. Yet that is what the clause which we are debating would allow.
LORD SHEPHERD: Could the noble Lord tell me why it is unfair competition, if it is on a commercial basis?
9.0 p.m.
LORD ST. HELENS: Because the railway workshops use the taxpayers' money, which is yours and mine, to buy a piece of equipment for a specific job and then use it for a different job. That is wholly unfair and I should have thought any fair-minded person would have realised that.
We do not object to the ancillary and reasonable jobs that are done. For instance, the restaurant and catering services of British Railways are obviously necessary, and so are the ancillary and emergency facilities in the road transport sector. It is the trading powers beyond the ancillary and emergency facilities to which we object. If the Minister, as I am sure he will, makes light of this, I shall only say to him that I am not fussed about the immediate future. Indeed, as I said earlier, it is very easy to make light of a piece of legislation by saying, "Of course, the intentions of the Minister are not to use it in a drastic way". But we are legislating for 10 or 15 years ahead, and the present intentions of the Minister do not matter. What we have to worry about is how these powers are going to be used in the future.
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I suggest that your Lordships go down the High Street and try to pick out which shop will not be affected by the powers given under this clause to the nationalised industries and to their subsidiaries, which are most important because whatever powers are not directly given to the various Boards are given to the subsidiaries. Petrol, oil, spare parts, secondhand cars, all motor accessories, newspapers, books, stationery, whisky, gin, wine, minerals, tobacco, coal and other fuels, electrical appliances, television and wireless are all included within the powers given under this clause.
We do not believe that the present vague proposals in relation to accountancy will allay the fears of the private sector of industry. We want to know—and we are not going to be told—how much capital at current value is employed in each separate undertaking, and how much of the nation's resources is going to be employed in these nationalised industries, particularly under Clause 48. We also want to know the basis on which the capital value of land, property and other assets is going to be employed, because there is no indication of this in the Bill. Yet all this is desperately important, because until we have this knowledge it is quite impossible to make a judgment as to what is unfair and what is fair competition against private industry.
We want to have a vastly greater amount of information. We want to know the detailed accounts of the direct labour forces. This has hardly been mentioned at all and yet there are large direct labour forces employed. We want to know how these forces fit into the accounts of the nationalised industries. It is only through knowing these factors, particularly about the direct labour forces, that we and the country will be able to assess whether or not in any particular sphere there is wasteful competition.
In short, we believe that the railways should concentrate on running the railways. Goodness knows, they have enough on their plate at the moment. We believe that they should provide the necessary facilities for passenger and freight transport. It seems to me that we come down to an argument in which each side is saying, "Anything you can do, we can do better". We say, "Fair

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enough, but we believe this is not the moment to decide this most important issue". What we are saying to the Government is, "Prove it, or put it to the vote".
LORD POPPLEWELL: I agree wholeheartedly with the opening remarks of the last speaker, the noble Lord, Lord St. Helens, when he said that this clause represents the cleavage of opinions on both sides of the House. The rest of his speech indicated the difference between us. I was extremely interested to hear the noble Lord, Lord Nugent of Guildford, say, "We have lived with and helped to develop the nationalised transport industry". I think the noble Lord, Lord St. Helens, gave a complete answer to that, by the number of items which he, with his very vivid imagination, felt this clause would enable the Railways Board and the transport undertakings to produce. If that is the type of help and development that has been given to the nationalised transport undertakings in the past, one can understand the deficit of £12,000 million referred to by the noble Lord, Lord Nugent of Guildford.
That is the type of help that the Tory Party gave during the whole time they were in office. They changed what was a profitable undertaking paying all interest charges, meeting all working costs, and showing a profit up to 1953. I think the House will be getting a little tired of my repeating these figures, but I do not think I can repeat them too often because that type of help and development has turned a profit into the huge deficit to which the noble Lord, Lord Nugent, referred.
I was very impressed when at this late stage, after opposing all development of the nationalised transport industry, the noble Lord asked—is it really death-bed repentance?—for the clause to be taken back, and for a limited clause giving the Board and the Authorities some right to produce. Is this action sincere? Why did they not do this in the past? When the Opposition were in power for so long, why did they deliberately curtail the powers of the transport industry to develop? They closed down railway workshops galore and at the same time put railway work out to private enterprise, making railwaymen, who were pro
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ducing these goods at a fair economic price, redundant in the interests of private enterprise. This is the type of development that Lord Nugent referred to as taking place in these 13 years.
I was very interested, too, in the suggestion (I think from Lord Nugent and also Lord St. Helens) that there probably is a case for utilising the spare capacity in railway workshops. That does not quite tie up with what has been happening. Indeed, it does not tie up at all with what has been happening because, as I have said previously, railway workshops have been closed down. Those railway workshops which have been allowed to remain have seen spare capacity arise in their workshops and the work that they were doing has gone outside. Is this the type of development that we have to pay any attention to? It was suggested, I think it was by the noble Lord, Lord Balfour, that there was objection to the "advantageous" terms in this particular clause, and the noble Lord wanted to introduce the phrase "commercially advantageous". In the past, the railway workshops have been able to produce everything on a commercial basis, but have not been allowed so to do.
The noble Lord, Lord Balfour, of course, envisaged that in a time of difficulty it would be possible for railway workshops to be utilised with a view to helping towards the solution of the problem of unemployment that might arise in a given area. In other words, he thought that this nationalised undertaking should accept some social obligation. Here again, of course, this represents a complete difference between both Parties on this particular point. We look to private enterprise to accept some social obligation, but one knows very well the type of people involved and what has happened in times gone by. They are hard-headed businessmen, and when they embark upon any particular project the economic scrutiny that takes place with regard to feasibility goes very deep indeed and is very searching.
One knows the type of development that there was under the Tory Party. One remembers that they refused to allow the railways to produce their own diesel motive power unit, and the electric motive power unit is produced by outside firms. In the past the railways have always produced their own motive power unit—the

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steam locomotive. The railways provided the jigs, they carried out the experiments and they provided the prototype of the diesel locomotive, and then, under the auspices of the Conservative Party, that was handed out to private enterprise. It was the railways themselves which had conducted the research in these particular directions. It was the railways themselves which had produced the prototype for the electric locomotive. Yes, the railways themselves produced the prototype of the electric locomotive; and the old British Transport Commission, before it was changed, authorised development for electric traction, but that was delayed for many years. The prototype was in their workshops in the first instance, and then that again was handed out to private enterprise. This is the type of encouragement and development that we hear the noble Lord, Lord Nugent, talk about.
VISCOUNT BRIDGEMAN: May I interrupt the noble Lord for a moment? Is he suggesting that the electric equipment was designed in British Railways workshops?
LORD POPPLEWELL: What I am suggesting is that the prototype of the type of motive power unit required was largely developed there. "Fully developed" is not quite the right way of putting it; I accept the correction. The research—I think that is a better word—took place there. I stand corrected. The research that took place was done by the railways people. The development was handed over to private enterprise—and that is the whole background story of what took place.
The need for some strict financial discipline in publicly-owned undertakings was referred to particularly by Lord St. Helens and also by Lord Nugent. This is most interesting. The so-called strict financial discipline imposed by the Tory Party in their years of office led to the Railways Board having to go on the open market to borrow money at 6⅞ per cent. to pay interest on money already borrowed at 3½ per cent. This was the financial discipline of the Tory Party. These are not fairy tales; these are facts. All this talk of so-called financial discipline when it comes to publicly-owned undertakings is merely to cloak attempts to work the publicly-owned undertakings competitively and then to hand over any
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opportunity of making a profit to private enterprise. Here again we come back to where we started. This is the heart of the difference.
When the old British Transport Commission wanted to go into electrification to produce their own power, either through coal-fired or other generating stations, the influence of the Conservative Party was used to stop or to hold up for years any such development. In the interests of what? In the interests of oil—oil from the Far East; oil that put us to the double trouble, consequent on the blockade of Suez, first, of having to be transported the long way home and, second, of pinning our economy—as far as railways traction was concerned—on a material that we had to import. Common sense commercial prudence would have dictated that the Board be given the green light to use electric traction, to utilise their own resources and so to save the nation many millions of pounds on our balance of payments. This is the story. I sincerely hope that when my noble friend replies, he will not be beguiled into promising the noble Lord, Lord Nugent, to corn e back with a much more limited clause— although, as I have said, it indicates some sort of death-bed repentance on the other side that they are prepared at least to envisage some type of commercial viability in the limited number of railway shops that are now available. They do not envisage giving them full scope; but they now are prepared to go part of the way. Can we really put trust in this in view of what has been said? I think one must take the lessons of past history. History has taught us just how much reliance we can place in this direction.
One Amendment says that before any development should take place the consent of the Minister must be obtained. If this is put into the Bill we are back to where we were. I think that, generally one must leave it to the Board, and allow them to utilise their own commercial judgment instead of being subjected to the political control. This has been exercised in the past to the degree I have indicated. Now I think it should be left entirely to those who are appointed to run our transport industry. Of course these may be directives that require political judgments at the highest level, for example, in connection with economic circumstances. But these are the only kind of political directives that

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I should like to see imposed on the Board.
VISCOUNT MASSEREENE AND FERRARD: Is the noble Lord, Lord Popplewell, telling the Committee that the Swindon railway workshops could have made diesel traction engines cheaper than private enterprise? The Swindon workshops were not tooled up for that. There were shops in the country that were tooled up. If British Railways were going to make them themselves they would have had to have new factories.
LORD POPPLEWELL: I did not refer to the Swindon railway workshops. The Derby workshops provided the diesel prototype. I did not complete my story when I was referring to dieselisation and electrification and to pinning our transport economy on oil. The cost of a diesel motive power unit in 1963, according to the then Dr. Beeching, was £24,000 more than an electric locomotive of a similar horsepower. If we consider the capital needed for overhead lines and think of saving £24,000 on each motive power unit, that would have gone a long way to paying for the overhead lines.
VISCOUNT MASSEREENE AND FERRARD: We have written off £1,200 million of capital on the railways, and my opinion is that if they had made their own engines it would have been more like £2,000 million. To get back to the Amendment, which I strongly support, there are two great objections to Clause 48. The first is that this is the largest extension of nationalisation that this country has seen. It is an extension through many diverse activities and it is being brought in through this Bill in a rather underhanded way. Subsection (2)(a) gives authority to manufacture anything. Paragraph (b) gives authority to enter into the retail trade. It would even be possible to set up a hairdresser's shop and sell Brylcreem.
The authority appears to be unlimited. We all know that a large part of the present financial difficulties of the economy is due to Government expenditure. If the Government propose to embark on this extension of nationalisation, people abroad who have lent us £3,000 million, are not going to be very happy. It seems to me to be madness in the present state of the British
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economy. The Government appear to have a fetish about public ownership at any cost, irrespective of whether it may completely ruin the economy and destroy the standard of living of the people. As I have often said before in your Lordships' Chamber, I object to the Government's entering into the various aspects of private industry and doing so at the expense of the taxpayer.
What on earth is the point? I have said ad nauseam that the Government get the major part of the profit of private industry by taxation, without taking any risk—road taxation is an example. Why should they go into the garage business, the petrol business, the machine shop business or any other such form of activity? The noble Lord, Lord Balfour of Inchrye, referred to the word in subsection (2)(a), that the authority could do anything which might be done "advantageously". Why "advantageously"? The point is profitability. It may be advantageously no doubt to the authority, but the word I should like to see is "profitably"—with profit and efficiency. I cannot condemn this clause too strongly, because it is unfair competition. If nationalisation is to be extended so largely, it ought to be by a special Bill. I do not believe the public really understand what is happening about this clause. With these words I will sit down, but I must say that I deplore the whole procedure regarding this clause.
LORD SHEPHERD: I wonder whether I could intervene for a moment? Perhaps I may help to put the Committee out of their misery. I am not sure how far the last speech helped the case of the noble Lord, Lord Nugent of Guildford, who made a cogent and in some ways philosophical speech. I am bound to say that some of the other speeches have tended to take us into cloud cuckoo-land. Certainly the noble Viscount seems to have nationalisation as a permanent midnight dream—if the noble Viscount dreams.
In view of the lateness of the hour, I should like to bring the Committee back to a sense of reality. I do not think that there is any dispute, at least between the two Front Benches, about the fact that we have a mixed economy. I would agree with the noble Lord, Lord Nugent of Guildford, when he said that

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private industry is the key to our industrial future. However, I am sure he would agree that private industry depends and must continue to depend on the nationalised industries. It might well be that some of the nationalised industries have not done so well in terms of profit and loss account as some of us would have expected, but it is true that the major nationalised industries took over industries which were in a very bad way, and in a bad way throughout the world. But they are essential to our economy.
I am sure that the noble Lord, Lord Nugent of Guildford, would agree, having taken the greatest interest in the railways, that the railways can show a higher increase in productivity than perhaps any other industry in this country. It has seen a remarkable reduction in manpower, yet carries about the same amount of freight. I agree with the noble Lord that we need to see a greater increase in productivity but that takes time as we are dealing with human nature. I decry the noble Lord's "snide" remarks about the nationalised industries in general. I think he should consider what has been done in the coal industry, where we have seen a major change. Only a nationalised industry could have done this. I am sure that the Committee would commend all those who have been in command of the coal industry on what has been done in recent years.
I think that the noble Lord, Lord St. Helens, was right. This clause shows a fundamental cleavage between the two Parties. We fought about it in 1964, and I am prepared to read what we said in our 1964 Manifesto. I am prepared, also, to read the 1966 Manifesto, when we said we should seek to find a greater diversification among the nationalised industries so that they should have a greater share in the national activity. But could we no' now consider the situation that arose from Section 13 of the 1962 Act? That allows the authorities to manufacture for their own business or for that of any other nationalised transport undertaking; but they may not manufacture for outside customers. Just consider what I can only call the stupidity which arises because of that limitation. First of all, the Boards are unable to do many things that they are equipped to do and which it would be perfectly sen-
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sible to allow them to do. For example, they cannot manufacture replacement parts for equipment which they have previously disposed of. In other words, if they have. surplus equipment and they sell it—and nobody has said that they should not sell it—even though they manufacture the replacement part, they are not permitted to sell it to the person who bought the equipment front them. Surely, that is the height of stupidity.
They cannot refuel, wash or provide any services for any outside vehicle which calls at one of their establishments on business. That is not particularly efficient. They cannot supply food which they have processed in their own canteens to any other person's business. The Railways Board cannot enter new or expanding outside markets for containers. And we know that the British Railways Board is one of the leading manufacturers, one of the major developers, in this new exciting method of transport. At the moment, they can manufacture for themselves, but all that they know and all that they can do is not to be available for the nation as a whole. That is the present position.
Arising out of the Act which the noble Viscount, Lord Mills, took through this House, we have spent some £16 million in the British Railway workshops on extensive facilities for the production of a wide range of castings, stampings, pressings and machine components. I suggest that it would be unrealistic, having invested that large sum of money, that we should not use those assets to the maximum. Surely, this is the issue: that if we have invested public money (and I do not see any difference between public money that has arisen through the collection of taxes or by savings and the personal savings put into what is called the private sector; it is all capital; it is all savings that have arisen from the national activity) we should utilise it to the maximum. If we have these assets is it not right and sensible that we should use them to the full?
I would say the reverse. Would it not be utterly scandalous if we had assets standing by completely idle for weeks and months, with men who are skilled in a particular operation being put into the unemployment queue, merely because we have a statutory provision on State capital and the method in which that

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State capital can be used? I suspect that there are many more businessmen sitting on the Benches opposite than on this side, but I cannot believe that any noble Lords who are in business would accept the philosophy of what is being put to us this evening: that you have assets and do not use those assets to the full. I do not believe that that case stands up.
But I do accept the matter that exercises many noble Lords and the Conservative Party directly: that these assets of these very large organisations could be used to the detriment of some small private company. I do not deny that certain provisions in this Bill may have an effect on some small private organisation. But in terms of the national wellbeing and national development this happens from time to time. It was noble Lords opposite—and they take a great pride in this—who brought the Resale Price Maintenance Bill through your Lordships' House and through another place. It caused great difficulty within the political Party opposite. In fact, I believe that on one occasion in the Committee stage they had a majority of one, but here was an effort to bring about greater competition in the country and anyone who has any knowledge (shall we say?) of the small shop that sells confectionery and cigarettes knows the effect of the competitive strength of the bigger stores and the chain stores upon the small shopkeeper, which is most marked. But in terms of increased efficiency, is it to be said that noble Lords opposite were wrong to bring in resale price maintenance? I think noble Lords opposite were quite right in what they did; my only objection was that they did not do it many years earlier.
I accept that there must be some safeguards in this matter, and I would commend to the noble Viscount, Lord Massereene and Ferrard—I do not know whether he has read anything other than Clause 48 of the Bill—to read subsection (3), which says that an authority shall not engage in new activities unless they are satisfied that they can do so without detriment to their main duties. In other words, the authority cannot undertake any form of activity that is to the detriment of their main duties. Subsection (4) requires the authorities to submit to the Minister for approval from time to time proposals as to the manner in which
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activities are to be carried out under existing manufacturing powers authorised by Section 13 of the 1962 Act or under the new powers of Clause 48(2), for manufacture, repair and sale to outside customers.
Subsection (5) says that the Minister shall approve proposals, subject to modifications and conditions. In giving his approval the Minister may make modifications or conditions, and he may direct a discontinuance of activities. Subsection (5) also requires the Minister to publish proposals approved by him and to send these to the Confederation of British Industry and to the Trades Union Congress. In other words, proposals that have been approved will be made available to the C.B.I. and the T.U.C. and any other interested party, and if there is any suspicion of unfair trading, action can be taken. Subsection (7) requires that the authorities shall act as if they were a company engaged in a commercial enterprise when carrying on activities under the new powers of subsection (2). All those activities of the Boards in their new field, whatever it may be, must be carried on as commercial enterprises.
The main development on the passage of this Bill into an Act will be the railway workshops. Here that part of the Railways Board is to be set up as a separate company with separate accounts. It will be treated as any other public company, and therefore there will be no question of this company's being able to operate unfairly. Subsection (8) empowers the Minister to direct disclosure of information in annual reports. I think the noble Lord, Lord Nugent, and also the noble Lord, Lord Windlesham, would agree that the report and accounts of the public bodies make infinitely greater disclosures than the type of reports that I see in the financial Press or any of the accounts which I receive from those companies in which I am lucky enough to have some shares. A great deal of information is contained in these reports, and in the case of the railway workshops I have not the slightest shadow of doubt that the same amount of information will be made available.
Therefore, I hope the Committee will accept that we are not embarking here on a major nationalisation Act, because that is not so. We believe that the State organisations have assets, which from

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time to time are not fully used. We believe also that there are assets which could be developed. The organisations have new skills available. I think it would be wrong to deny this opportunity to any company that has knowledge, skills, and something to exploit from some development and research that it has done. This country can advance only if we develop these skills. Clearly the noble Lords opposite will say, "The private sector can do it"—but can we really afford to say that, if the State sector has something to offer, some skill or some new knowledge from research, it should not play its part, not only in terms of our industrial development but also particularly in the field of exports?
There is a balance. We want to see the development of the whole of our industry, a greater use of our assets, whether private or public. You cannot get this by putting some statutory and rigid curb either upon one sector or upon the other. On the other hand, we have sought to meet, and I believe we have met, most of the, fears that were expressed in the other place—at least the fears that could be met by the various provisions which are in the Bill and which ensure that the State industries should not have an unfair advantage and that they should operate commercially. I say to the noble Lord, Lord Nugent, that of all the Amendments before us there is one—Amendment 137, which was discussed in another place—where we certainly can meet the principle that lies behind it. This Amendment certainly would reduce some of the fears of the noble Lord, Lord Nugent, but it would need to be redrafted in terms of the clause as a whole. All the Amendments we have here, except Amendment 137, are too restrictive; they all seek an end which ultimately cannot help the national well being or the development of our State industries. I hope this House, for once, will cease to regard the State industries as being beyond the Pale. They are an essential part of our economy, and I wish to heaven we could get some support and some encouragement from noble Lords opposite.
VISCOUNT DE L'ISLE: Listening to the noble Lord I had the sense that I was back in the House twenty years ago and I woke up and found Lord Shepherd still speaking. By first of all Providence
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and, secondly, heredity, he is the second Lord Shepherd, and he speaks with the same facility as his revered father. 'There are some differences in the arguments he advances. I think there is less primitive faith in the power of nationalisation per se and perhaps a greater understanding of the problems facing the nationalised industries. But surely, trying to divorce it from too partisan a view on either side, this is to a certain extent a matter of accounting. We are not adopting in our arguments the same methods of accounting. I have had some experience of private industry.
It is always a bore to talk about one's experience. Perhaps in this House one is allowed to do so if one is not too long, and I see the noble Lord looking at the clock. There is always a tendency in industrial endeavours of all kinds to build up empires. It takes place in private enterprise and it takes place in nationalised industry.
In private industry, the profit and loss account, or a percipient manager, looks through the whole organisation and sees upon which part there is not a profit yield. Sometimes there are a great many concealed losses in these organisations. They are concealed because departmental managers, the chairmen of subsidiary companies, use exactly the same arguments the noble Lord has employed—we have got the assets and we must use them. It ignores how we got the assets, whether they were properly acquired, whether they might be sold with advantage. Sometimes, rather than use the asset it is better to sell it because that means that the rest of the assets can be more economically employed.
I have not the capacity, knowledge, or memory to quote, as the noble Lord, Lord Popplewell, did so fluently, the losses and gains of the nationalised industries. I think it is a matter of common knowledge among all Parties that they have not been singularly successful. I would advance one reason for that, and that is that the assets which they own have not been properly exploited. Before nationalised industries have a right to claim on the national finances. I think they should certainly prove that they would use what they have got more profitably.
I would join issue with the noble Lord on one point. There is a very great difference between capital subscribed

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individually and voluntarily to an enterprise, and capital provided by the State from the taxpayer. The reason is that those who get the compulsory capital are not usually those who have to find a profit on it, and the discipline, as the noble Lord, Lord Nugent has so amply pointed out, is not the same. I am afraid the subsections which the noble Lord has quoted in order to reassure us that all the people of good will and knowledge, from the Minister downwards, will see that the compulsorily levied capital will be properly and fully employed, do not reassure me. Without wishing to be partisan, I will support Lord Nugent in his Amendment, because I believe that in the national interest all our national assets should be used to the maximum, and I do not think this clause will produce that effect.
LORD NUGENT OF GUILDFORD: May I thank the noble Lord, Lord Shepherd, for answering the debate from his side of the Committee. I think this is his maiden speech on the Committee stage and he seems to be making a habit of coming in for Second Reading. We enjoyed his speech, and as my noble friend has just said, it must have been reminiscent of many in the past. May I say this to the noble Lord, Lord Shepherd, who, had a "crack" at my noble friends behind me, saying that they seemed to be in Cloud Cuckoo-land. I rather wondered whether he had heard his noble friend Lord Popplewell. If he did not, I suggest he reads his speech to-morrow and he will find it is a fairyland few other people live in.
The noble Lord in answering the debate dealt effectively with the problem of marginal production. There is a point there, and the 1962 Act probably did not completely solve it. But this Clause 48 goes miles beyond that and it is completely unacceptable. I would be willing to look at something on the lines I indicated to start with, but that is the absolute maximum, and the safeguards the noble Lord mentioned really are not effective. They are all in the hands of the Minister and their implementation depends on who the Minister is. If it is a Minister who wants a big extension of public ownership, as the previous Minister did, no doubt we shall get it.
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We feel this should not be done unless there is some very special reason.
The noble Lord referred to the Tory's belief in competition and R.P.M. This does not work both ways. Speaking of the rail workshops, this is what happens: there has not been an order to the one remaining firm of coach and loco builders, Metropolitan Cammell, Laird, since 1961. They have tendered regularly for both locos and for carriages, but in the whole of that time they have not had one single order from British Railways. This simply is not competition, and when noble Lords say that there ought to be free competition with the spare resources of the nationalised industries' subsidiaries in the outside world, it is not the competition that they themselves allow when private industry tries to compete back. The noble Lord is not on good ground there.
But to come to the final point with which my noble friend Lord De L'Isle dealt, I thought, so effectively, the question of financial discipline, this is the major problem of the nationalised industries. It is a problem for noble Lords opposite when they are governing and a problem for noble Lords on this side when they are governing. This is the particular problem for which we simply have no answer. But the answer that we have for the time being is, for heaven's sake! do not have any more nationalised industries until we do know the answer. We simply cannot afford to expand further in this respect. The noble Lord has really failed to answer that point. I gather from the noble Lord that he is not willing to accept our whole range of Amendments, which hang together, though I am glad to hear that there was one little bit that he liked. In the circumstances, I think the simplest thing to do is, by leave of the Committee, to withdraw my Amendments and then to move that we leave out Clause 48.
LORD BEAUMONT OF WHITLEY: To suit the convenience of the Committee we have put all our Amendments together in this debate. My noble friends and I have some Amendments. What I wish to say is that we also are not satisfied with the reply of the Government. We were pleased that they were prepared to accept Amendment No. 137, which I think I am right in saying was a Liberal

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Amendment in another place. But it does not go far enough, and we also intend not to persist in our Amendments on this clause and to vote with the Conservative Party.
Amendment, by leave, withdrawn.
Resolved in the negative, and Clause 48 disagreed to accordingly.
House resumed.
9.54 p.m.
On Question, Whether Clause 48 shall stand part of the Bill?
Their Lordships divided: Contents, 44; Not-Contents, 135.

CONTENTS

Addison, V.

Hankey, L.

Raglan, L.

Beswick, L.

Henderson, L.

Ritchie-Calder, L.

Blyton, L.

Hill of Wivenhoe, L.

Rowley, L.

Bowles, L.

Hilton of Upton, L. [Teller.]

St. Davids, V.

Brockway, L.

Hirshfield, L.

Samuel, V.

Caradon, L.

Hughes, L.

Serota, Bs.

Carron, L.

Iddesleigh, E.

Shackleton, L.

Chalfont, L.

Kennet, L.

Shepherd, L.

Champion, L.

Longford, E.

Sorensen, L.

Collison, L.

Maelor, L.

Strabolgi, L.

Crook, L.

Milner of Leeds, L.

Taylor of Mansfield, L.

Gardiner, L. (L. Chancellor.)

Peddie, L.

Walston, L.

Garnsworthy, L.

Phillips, Bs. [Teller.]

Wells-Pestell, L.

Hall, V.

Plummer, Bs.

Winterbottom, L.

Popplewell, L.

Wootton of Abinger, Bs.

NOT-CONTENTS

Aberdare, L.

Denham, L.

Mountevans, L.

Aberdeen and Temair, M.

Dilhorne, V.

Mowbray and Stourton, L.

Abinger, L.

Drumalbyn, L.

Newton, L.

Ailwyn, L.

Eccles, V.

Nugent of Guildford, L.

Albemarle, E.

Ellenborough, L.

Oakshott, L.

Alport, L.

Erroll of Hale, L.

Penrhyn, L.

Amherst of Hackney, L.

Falkland, V.

Poole, L.

Amory, V.

Falmouth, V.

Powis, E.

Atholl, D.

Ferrers, E.

Rankeillour, L.

Auckland, L.

Ferrier, L.

Rathcavan, L.

Audley, Bs.

Fisher, L.

Redesdale, L.

Balfour of Inchrye, L.

Foley, L.

Redmayne, L.

Barnard, L.

Fraser of Lonsdale, L.

Rockley, L.

Barnby, L.

Glentanar, L.

Rootes, L.

Beauchamp, E.

Goschen, V. [Teller.]

St. Aldwyn, E.

Beaumont of Whilley, L. [Teller.]

Gray, L.

St. Helens, L.

Greenway, L.

St. Oswald, L.

Belstead, L.

Grenfell, L.

Salisbury, M.

Bethell, L.

Grimston of Westbury, L.

Sandford, L.

Bledisloe, V.

Hanworth, V.

Sandys, L.

Bolton, L.

Hawke, L.

Savile, L.

Boston, L.

Horsbrugh, Bs.

Sempill, Ly.

Boyd of Merton, V.

Howe, E.

Simon, V.

Bradford, E.

Ilford, L.

Sinclair of Cleeve, L.

Bridgeman, V.

Inglewood, L.

Somerleyton, L.

Brooke of Cumnor, L.

Jessel, L.

Somers, L.

Brooke of Ystradfellte, Bs.

Killearn, L.

Stamp, L.

Buckton, L.

Kilmany, L.

Strange of Knokin, Bs.

Burnham, L.

Kinnoull, E.

Strathclyde, L.

Burton, L.

Latymer, L.

Stuart of Findhorn, V.

Carrington, L.

Lindsey and Abingdon, E.

Swinton, E.

Chelmer, L.

Lloyd, L.

Templemore, L.

Coleraine, L.

Lothian, M.

Terrington, L.

Colgrain, L.

Lucas of Chilworth, L.

Teviot, L.

Conesford, L.

McCorquodale of Newton, L.

Teynham, L.

Cork and Orrery, E.

Margadale, L.

Thurlow, L.

Cottesloe, L.

Massereene and Ferrard, V.

Trefgarne, L.

Craigavon, V.

Merrivale, L.

Verulam, E.

Craigmyle, L.

Mersey, V.

Vestey, L.

Cranbrook, E.

Mills, V.

Vivian, L.

Cromartie, E.

Milverton, L.

Wade, L.

Cullen of Ashbourne, L.

Molson, L.

Wakefield of Kendal, L.

Daventry, V.

Monckton of Brenchley, V.

Ward of Witley, V.

De La Warr, E.

Monk Bretton, L.

Watkinson, V.

De L'Isle, V.

Mottistone, L.

Windlesham, L.

Wolverton, L.