TRANSPORT BILL (Hansard, 25 June 1968)

HL Deb 25 June 1968 vol 293 cc1252-388 1252

§ 2.47 p.m.

§ THE MINISTER OF STATE, HOME OFFICE (LORD STONHAM)
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 Stonham.)

§ On Question, Motion agreed to.

§ House in Committee accordingly.

§ [The EARL OF LISTOWEL in the Chair.]

§ Schedule 5 [Passenger Transport Authorities and Executives]:

§ LORD DRUMALBYN moved Amendment No. 41: Page 213, line 40, leave out ("with the approval of the Minister").

1253

§ The noble Lord said: The point of this Amendment is simply that as the Bill stands the chairman of the Passenger Transport Authority can take office only if, first, he is elected by the members of the Authority and, secondly, his appointment receives the approval of the Minister. Yesterday the noble Lord was at considerable pains to stress that the Authority was a local authority body, and in that case it seems difficult to justify requiring that the chairman of the Passenger Transport Authority should need the approval of a Minister. I do not know whether the noble Lord will be able to quote other cases of local authority bodies where the chairman, who is normally elected, requires the approval of the Minister. If we put in this requirement it plainly reduces the independent status of the Authority. I should have thought this was something that ought to be reinforced rather than reduced. I do not know whether the noble Lord can give a precedent for this, but it seems to me that it would be a bad precedent to set, that a local body should require the approval of the Minister before it is allowed to have its own chairman, the chairman the body itself has chosen. I beg to move.

§ LORD STONHAM
I find this a quite extraordinary Amendment and even more extraordinary the speech of the noble Lord, Lord Drumalbyn, in moving it, because I, too, recall yesterday an Amendment in which he referred to this Authority as a weak local authority. I also recall that in another Amendment he was urging that the membership of this Authority should be so large that it could be described, as I thought, as a mass meeting. Now the noble Lord is suggesting that this allegedly weak local authority must nevertheless have complete power; that the Minister should be excluded from any power with regard to the appointment of its chairman. I also find it remarkable that in moving this Amendment the Conservative Party appears to be stealing the Liberals' clothing, because a precisely similar Amendment to this was moved by the Liberals and debated in another Place.
Originally in the early stages of preparation of this Bill it was proposed that the Minister should appoint the chairman. The Bill as it stands at present provides in effect that the Authority shall 1254 appoint the chairman with the Minister's approval. This change was made in response to representations by local authorities; and since this change to Ministerial approval was made the County Councils Association have approved this, though somewhat reluctantly, and the Association of Municipal Corporations has also approved it but have asked that the requirement should no longer apply if in due course the P T.A.s are merged back into large local authorities that would have the provision of passenger transport as one of their main functions. Probably the noble Lord is aware that my right honourable friend the then Minister of Transport, Mrs. Castle, said, "I readily accept that and give that assurance".
The present proposal is, in our view, of value, and it is helpful in the somewhat unique circumstances with which we are confronted. In the discussions on this Part of the Bill I have made it clear that we are concerned that action should be taken urgently with regard to Passenger Transport Authorities in four conurbations, and in effect this is what we are primarily concerned with on the point which this Amendment raises. Clearly, if the local authorities were unanimous in wanting to appoint a certain person, then the Minister would indeed have to have very strong reasons indeed, which of course he would explain to the local authorities, if he did not appoint that person.
We appreciate that not only is it crucial to the success of the whole concept of the P.T.A. that the chairman should be the very best man for the job (and this is why we think the Minister should have this right of approval, because it gives the Minister, as it were, a statutory locus in the discussions) but also we appreciate that the Minister could not and would not force his preference through against the wishes of the majority of the Authority. Indeed, if the Minister were foolish enough to attempt to do so, he could not expect that the chairman would he any use, or very much use, if he did not have the support of the majority of the Authority. So the point we are discussing here is that the power which we are asking should be retained in the Bill would not be likely to do more than offer the chance to persuade the Authority not to appoint the member having the 1255 highest possible factor of acceptability whether or not he was the best possible choice for the job of chairman.
The noble Lord, Lord Drumalbyn, with his very extensive knowledge of local government, will, I am sure, appreciate that it is essential, if we are to get the best possible man from among those, as it were, elected to represent these local authorities, comprising the P.T.A., that there should be this element of discretion, which really is discretionary advice, left to the Minister. In view of that explanation, I hope your Lordships will agree that this is a useful provision and that it should be retained in the Bill, and that the noble Lord will see fit to withdraw his Amendment.

§ LORD NUGENT OF GUILDFORD
May I first apologise for missing the opening words of the noble Lord's speech replying to my noble friend on this point. We regard this as an important point. I have listened with care to the noble Lord's explanation of how the Minister would proceed. I am bound to say that the further he went in explaining what considerations the Minister would have in his mind, when there was a strong wish expressed by the majority of the members of the P.T.A., the more I wondered why the Minister needed to take this power. I believe I am right in saying that the Minister has moved his position, or previously, her position, somewhat since this was originally conceived; that the Minister's original intention was to appoint the chairman and, as a result of very powerful representations from the A.M.C.; has now moved to the present position where the Minister wishes to approve the chairman; in other words is reserving to himself a power of veto. I am quite sure that the noble Lord, Lord Stonham, and his right honourable friend, recognise that there is great force in this point. He himself said that it is necessary that the chairman of the Authority should carry the support of the majority of the Authority. This is obvious, and if indeed the Minister tried to appoint somebody who was not the choice of the majority he or she would simply be regarded as a "stooge" and would be put in the weakest possible position for coping with the many difficult and onerous tasks the P.T.A. will undoubtedly have.
1256 My noble friend Lord Drumalbyn pointed out that there is no precedent for this because the P.T.A. is unique, and I feel this would be a very bad precedent. It is an impractical one. We most earnestly hope that the noble Lord will think again about this. I need not reiterate the line we emphasised yesterday, the absolute necessity of complete local government responsibility to make the P.T.A. a success and get effective public accountability. The chairman is the most important person of all.
The Minister has already gone some way in the direction of meeting the strong feelings of local authorities, and I hope that the Minister will go just that little extra distance and agree that it is far better that the elected members from the local authorities, or the appointed members, whichever it is, should choose the chairman themselves. In that way, you will get far the best P.T.A.

§ LORD STONHAM
Certainly, I will accept the invitation of the noble Lord to think again about this matter, but without any commitment. May I ask him also to think about it again and to imagine the position of eighty local authorities in the difficult task of deciding between themselves how twenty-five representatives on the P.T.A. shall represent all of them? That, in itself, is a task which will involve a good deal of negotiation and thought among the local authorities, and perhaps some friction. No doubt it will eventually be resolved. But then we come to the question as to who is to be the chairman and the local authorities' proposals for the job, and I can foresee a situation where deadlock can almost arise. A sort of local power politics as to who should be the chairman then appears; whereas our concern, and the concern of your Lordships and the Minister is which person among those twenty-five would make the best chairman of the Passenger Transport Authority and is likely to do the best job.
In such circumstances it would be of great value if the Minister had the statutory right to approve the chairman. It could resolve a situation of deadlock, and I think that once the chairman was appointed, once the local dams of political feeling, if you like, were burst open, the local authorities would then support the chairman in the knowledge that he 1257 was the right man for the job. That is our thinking in the matter. I should like to ask the noble Lord also to think along those lines before the Report stage.

§ LORD NUGENT OF GUILDFORD
I thank the noble Lord for his reasonable approach to this idea, and of course recognise the practical difficulties here and in the case that he so graphically described to us of 80 local authorities battling to get their man or lady as chairman, and all the possible frictions or conflicts that may occur. But the noble Lord must recognise that the Minister, in moving from his first position, that he was going to appoint the chairman, has recognised that this simply would not do and has now agreed that he will simply have the right of veto. So the noble Lord, Lord Stonham, has already accepted that, whatever pulling and pushing there may be between local authorities in deciding who it is they want as chairman, the Minister wishes only to reserve the power of veto in the case of somebody he does not like. So he has really gone nine-tenths of the way.
I recognise the possibility of deadlock. We all know how difficult these things can become. Is it not possible to meet both the noble Lord's point and our point, by giving the Minister reserve powers, so that if there were a deadlock then the Minister would appoint? Under his veto he would have to. This would be far more valuable than the power of veto which now exists in the Bill. Is it not reasonable to leave the appointment of the chairman to the normal process of choice, and to put in the Schedule a reserve power to the Minister whereby in the case of a deadlock he would then appoint?
For myself, I would certainly accept that as being a practical solution, and I think that local authorities would accept it as well. I think that almost invariably they would be able to agree on a choice and would, between them, elect the right person. But in the event of their not doing so, there is a reserve power to break the deadlock. I would certainly advise my noble friends to accept such a solution. May I ask the noble Lord, Lord Stonham, who seems to be in a most pleasantly receptive mood this afternoon, which I hope will continue as the day wears on, whether he would 1258 give some thought to this idea, with his advisers; and perhaps before the Report stage we could have a word about it to see whether it is possible to agree, and put down an Amendment to the Schedule in those terms.

§ LORD STONHAM
I think the noble Lord, Lord Nugent, has made a most useful and reasonable suggestion and certainly one that my right honourable friend the Minister and I shall be glad to look at. But he will appreciate that it would be a matter of careful drafting. You cannot just say, "Put in the Bill a stipulation that if there is deadlock we will do so-and-so". You must define the kind of circumstances in which the Minister's power will be used. It may well be that there is little between us, and certainly between now and the Report stage we will try to find a solution acceptable to everyone.

§ LORD DRUMALBYN
In view of the way in which the noble Lord has approached this problem, I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 3.7 p.m.

§ LORD DRUMALBYN moved Amendment No. 43:

§ Page 213, line 47, at end insert— (" .Subject to the provisions of paragraph 4 of this Schedule, each member of the Authority shall hold office for such period as may be fixed by the council by whom he is appointed and shall be eligible for reappointment.")

§ The noble Lord said: With this Amendment should go Amendment No. 44A, to leave out paragraph 4 at page 215. The point of this Amendment is simply that so far as local authority bodies are concerned, in the normal way it is for the appointing local authority body to fix the period of office for which a particular appointment is held in respect of anybody appointed to any joint authority. It is difficult to see why the same should not apply in this case.

§ This is really a probing Amendment to see what the Government have in mind. We think it would be regrettable if the Minister were to take upon himself the duty of fixing the periods of appointment and generally regulating the membership of the Passenger Transport Authority. In Part III, paragraph 4 is a matter which 1259 may be dealt with by order under Section 9(1). Paragraph 4 reads: The terms on which and period for which the members of the Authority are to hold office, and the vacation of office by those members. As I say, so far as the Authority is concerned, inasmuch as the appointments are made by all the different local authorities, either singly or jointly, within the Passenger Transport Area, it seems more appropriate for the local authorities themselves to regulate the period of the appointment for each person whom they choose to appoint.

§ Now the period would normally be three years, and this may be all that the Government intend to lay down in the Order, if indeed they intend to lay down anything about it at all. As I say, this is a probing Amendment, and the noble Lord will by now have appreciated our strong feeling that the Passenger Transport Authority should be left as independent as possible and should be in a position, so far as possible, to represent the local authorities which appoint it. I beg to move.

§ LORD STONHAM
I thank the noble Lord, Lord Drumalbyn, for his explanation and for indicating that this is a probing Amendment. I appreciate that Amendment No. 44A would be consequential on the Amendment which he is now moving, and that paragraph 4 would have to be deleted, but I should like first to see what the position would be if this Amendment were accepted. It would have the effect of enabling each of the councils in the constituent area to decide the terms on which their appointee shall serve on the Authority. But if, as we have already decided, there is not to be individual representation for councils of constituent areas, it will not in our view be possible for each council to decide how long members shall serve.

§ LORD DRUMALBYN
May I ask the noble Lord why not?—because some of the members are to be appointed jointly by certain councils and those councils could decide jointly, in the same way as they appoint jointly, how long the period should be.

§ LORD STONHAM
In that case the Amendment would have to read that some of the councils would decide how long their appointee should serve, but 1260 the Amendment says that each member of the authority shall hold office for such period as may be fixed by the council by whom he is appointed. In some cases one member will represent perhaps four councils. He cannot be appointed by them. I am not trying to be clever about this; I am trying to work through the matter with the noble Lord and with the Committee.

§ LORD DRUMALBYN
Would the noble Lord forgive me again? He will appreciate that this Amendment was drafted in conjunction with the previous Amendment which we did not press. That Amendment would have meant that each of the main authorities, the authorities covered by Clause 9, would appoint at least one member, so I quite agree that certainly this Amendment is now inappropriate. But, as I say, this is a probing Amendment and I quite appreciate that it is now not absolutely appropriate for the purpose intended to be served.

§ LORD STONHAM
I did not think it necessary to explain that, because it is a well-known fact that all Members of this Committee are so completely informed on this subject that it was totally unnecessary to explain this to them, or even to tell them, that my brief, which I am not consulting, was written before we had any idea of yesterday's events. Therefore, I am dealing with the situation as it is now, in which we decided, yesterday, that we were not going to have a member on the Authority from every constituent local authority. But the real crux of the matter is that, in our view, this Amendment is intrinsically undesirable because the really important thing, and this was implicit in what the noble Lord said, is that there should be continuity; continuity of appointments of members of the Authority.
If, under this Amendment, for example, on an appointed day a council appointed one of its members as its representative, he might have only a year or two years to go as a member of that Authority. He might lose his place, perhaps become ineligible for membership, or perhaps they would not want him on it any longer. In other words, no sooner had he played himself in and made himself useful as a member of the authority than he would no longer be eligible to be a member. We all agree that that is a quite undesirable situation and that the sensible thing 1261 to do is for this term of appointment not to be decided as is suggested in the Amendment, but to be decided by the Minister in accordance with the Schedule.
The noble Lord suggests that the Minister should make appointments for a definite period, say for three years. I have no doubt that the Minister will appoint for a definite period. The person would be subject to reappointment when the term ends. This is a sensible and logical thing to do, and it is almost common form, and it is all provided for, or can be done, within the Schedule as it now stands. It enables us also to take account of the consensus of opinion in an authority. Of course, we are not going to ignore that opinion. We will certainly take account of that consensus, and I give an assurance that we will consider what the noble Lord has said about the term of office, which must be a reasonable one. I think that what he has suggested may well prove such a term, but I cannot anticipate the precise term. However, I can give a categorical assurance that the local councils will be consulted before the terms of office of the Authority members are fixed in any Order that the Minister makes. So really we shall proceed by agreement and, at the same time, achieve the continuity which might not otherwise be achieved if we accepted this Amendment.

§ LORD DRUMALBYN
I appreciate the noble Lord's argument on the need for continuity here, and I presume from what he has said that this would require that the initial Authority would have different periods of appointment for different members so that a certain number, let us say perhaps eight, would retire each year. But as these are members of local authorities it will be quite impossible to fix terms with certainty because, as the noble Lord himself has said, if a member loses his seat on a local authority and if he is elected by virtue of being a member of a local authority, then under paragraph 4 here he is eligible for reappointment. May I draw the noble Lord's attention to this point: that I think he will have to look at those words, too, because those words then should read "eligible for reappointment for the remainder of his term"; otherwise you are going to get out of phase in the phasing of appointments over a period of years. But I think he 1262 has made a case for saying what the periods of appointment should be and how they are to be "rotated", if that is the right expression, and therefore I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD DRUMALBYN moved Amendment No. 44:

§ Page 214, line 40, at end insert: Provided that no member of the Executive shall be removed from office except by a resolution of the Authority passed by not less than two-thirds of the members present at a meeting of the Authority specially called for the purpose by a circular addressed to the members of the Authority not less than forty-eight hours or more than fourteen days before the meeting.

§ The noble Lord said: On this Amendment we are confronted by a real issue of principle. I should like to refer once again to paragraph 4 on page 215 of the Bill which refers to the terms on which and period for which the members of the Authority are to hold office, and the vacation of office by those members. The Executive is intended to be subject to local authority control in regard to its proposals for the organisation of its business, and in particular perhaps in regard to the deficit which it is allowed to incur and which will be a subject of a precept on the rates. It is also under a statutory duty in regard to precept. Paragraph 35 of page 39 of the annex to the White Paper Public Transport and Traffic says: The Executive will be under a statutory duty to earn sufficient income to meet its expenditure, and so cannot carry out any policy envisaging a trading loss unless the Authority agree to provide for the loss by means of a precept.

§ What happens if the Executive fail in that duty? What is the sanction, and who applies it? Plainly, the Executive must be held responsible if it incurs an unauthorised deficit. The Authority are in effect the shareholders and should have the shareholders' right to dismiss the Board. As I read the Bill, there is just the possibility that the Minister might deal with the matter of the vacation of office of the chairman and members of the Executive in the order. In other words, to put it bluntly, it could say in what circumstances they should be dismissed or sacked. We want to hear from the Minister in what circumstances the Executive can be dismissed, and by whom. We believe that the Authority should be 1263 the masters, and that if the Executive does not serve the Authority properly then the Authority should have the right to dispose of the chairman and the members of the Executive. This is the purpose of the Amendment. For want of a better precedent, the Amendment corresponds to the way in which a town clerk in Scotland can be dismissed. This seems to be a very fair and practical way of going about it. I beg to move.

§ LORD STONHAM
This Amendment would have the effect of making it impossible for the Authority to remove any member of the Executive unless a two-thirds majority of members of the Authority resolved on this at a special meeting called for this purpose. The Amendment would make it very much more difficult to achieve what the noble Lord has in mind, and on which I think we are agreed; that is to say, that the Authority must have the shareholders' right to dismiss the board. The Authority must be the boss. But the Authority is very much the boss in the Bill as it stands at present.
The provision for which the noble Lord asks in his Amendment is unprecedented in local government or in the nationalised industries. The Bill provides that a member of the Executive shall hold and vacate his office in accordance with the terms of his appointment by the Authority. He is appointed by the Authority, which means that the Authority is, and remains, the boss. The exact terms of the appointment will be a matter for negotiation between the Authority and the individuals whom they wish to appoint members of the Executive, including the Director-General. There is the parallel, but not exactiy similar, case of the joint water boards. The board (of local authority representatives) may remove their chief officers, and indeed any other officer at the Board's pleasure. It is effected by a simple majority at a properly constituted Board meeting, called at three clear days' notice and with the quorum present. So that there would be very little difficulty in that respect. There is that parallel in existence, although the relationship between the Authority and the Executive which is now proposed is different. Nevertheless, there is the same boss- 1264 employee relationship and the Authority can discharge members of a Board.
This matter will have to be considered and discussed with those who are likely to be concerned on both sides on the basis that we desire to leave the Authority as much discretion as possible in relation to appointments to the Executive. We have in mind that the potential applicants for posts on the Executive will want to be assured of a square deal. In other words, there would be a contract entered into by the Authority and by those whom they engage as members of the Executive. If the terms of that contract are infringed by the members of the Executive, then the Authority, which has power to hire, will have power to fire under the terms of the contract.
The noble Lord, Lord Drumalbyn and his noble friend Lord Nugent have had experience as Ministers, and they will appreciate that there is strong objection to writing into the Bill a provision of this kind. If the provision proposed in the Amendment were to be written into the Bill and were to become unsuitable in any way, it would mean that we should need legislation to alter it. It might be found to have hamstrung a particular Authority or to have handicapped the general purpose which we have in mind. We should then have to find Parliamentary time in order to introduce alternative legislation. Therefore, although I appreciate the noble Lord's fears and his reason for introducing the Amendment, I hope that I have been able to give him a complete answer and that he will feel that the Bill is much better left without the Amendment.

§ LORD DRUMALBYN
We have had an interesting discussion on this matter. It is important that we should know exactly how the thing stands. I began from the standpoint that the Government appear to want the Executive to be in a particular position and would want rather more security of tenure, so to speak, for the Director-General and Board of the Executive than would be normal with, for example, a board of a company. I took what seemed to be a reasonable parallel as showing rather more than the usual security of tenure. If the Minister, in the course of discussions with the local authorities, comes to the conclusion that rather more security of tenure is required 1265 rather than the ability to dispose of the board just by a simple vote, it follows that I should not object to that. But I should object if, as a result of the discussions, the right to dismiss the board were taken out of the hands of the Authority. That would be wrong. However, the purpose of putting down this Amendment has been served, and I beg leave to withdraw it.

§ Amendment, by leave, withdrawn.

§ 3.30 p.m.

§ LORD DRUMALBYN moved Amendment No. 44B: Page 215, line 24, leave out from ("by") to first ("of") in line 25 and insert ("the Executive").

§ The noble Lord said: The effect of this Amendment is simply to remove the words "the Authority" from paragraph 7, so that it will now read: The establishment by the Executive of committees and the composition of those committees, including the establishment of advisory committees consisting wholly or partly of persons who are not members of the Authority or Executive. The effect is to leave the Authority free to establish its own committees in its own way. We are dealing here, in Part III, with the matters which may be dealt with by order under Clause 9(1)—

§ LORD STONHAM
The noble Lord has just said that the purpose of the Amendment is to leave the Authority free to establish its own committees.

§ LORD DRUMALBYN
To leave the Passenger Transport Authority, but not the Executive, free to fix its own committees. If the noble Lord looks at the Amendment, I think he will see that that is the effect; certainly, it was intended to be. We think that that would be right. We do not think that the Minister need, or should, interfere with the way in which the Authority works. We think that the Executive is possibly a different matter and that he may wish to have the right, though he may not necessarily exercise it, to lay down what committees the Executive should have and what should be their composition. There is that clear distinction, Once again the Authority is a local authority body, and local authority bodies are normally left to determine what committees they should have, although, of course, they usually require the agreement of the 1266 Minister. But in this case I should have thought the procedure should be left as flexible as possible for the Authority, which should be left free to establish its own committees and to work out the best way of operating. I beg to move.

§ LORD STONHAM
I am grateful to the noble Lord for his explanation. I think this Amendment appeared on the Marshalled List only this morning, and he will appreciate that I have not yet had a full opportunity to consider it. I was puzzled by it before I heard the noble Lord's speech, but having heard it I think his feeling is misconceived. He made it clear that the intention of his Amendment was to prevent the Authority, as opposed to the Executive, from appointing committees, including advisory committees.

§ LORD DRUMALBYN
No, that is not the purpose of the Amendment. We are dealing here with matters which may be dealt with by order. The effect, therefore, would simply be that the order could not deal with the establishment of committees by the Authority. The Authority would be left to deal with those itself.

§ LORD STONHAM
In fact I was not so much interested in the intention of the Amendment as in its effect. And I am advised that its effect would be to achieve precisely what the noble Lord does not want it to achieve. As he is well aware, there will be occasions when the Passenger Transport Authority, following well-established local authority practice, will want to set up committees dealing with special policy matters. We appreciate that. It would be an essential function of the Authority that they could advise on particular subjects. My understanding of the position is that the Bill as drafted, without the noble Lord's Amendment, leaves the Authority free to appoint committees just as they wish. They have this power now. I shall look at the matter again, in the light of what the noble Lord has said, to see whether there is any fault in our reasoning, but so far as intentions are concerned there is really nothing between us. Certainly we want the Authority to have power to appoint committees to do their work and, so far as we understand our own Bill, they will have those powers under the Bill as now worded and they will not be interfered with.

1267

§ LORD DRUMALBYN
If I understand the noble Lord's argument aright, it is that unless provision is made in the Order the Authority will not be able to establish committees.

§ LORD STONHAM
That is right.

§ LORD DRUMALBYN
In that case, surely, Part III is couched in rather misleading terms, because it says merely: Matters which may be dealt with by order … It is obvious that, if the Authority and the Executive cannot have committees unless an order is made, the Bill should say that this is a matter which must be dealt with by order. This is unnecessarily misleading, and it is not just a matter of drafting. It is the heading of Part III which is misleading.

§ LORD ROBERTSON OF OAKRIDGE
I am afraid that I do not understand the purpose of the Amendment proposed by the noble Lord, Lord Drumalbyn. It seems to me that he is expressly asking that the Minister should not have authority to authorise, or not to authorise, committees formed by the Authority, but that he should have authority over their subordinate. That seems to be very curious. The Executive is the subordinate of the Authority, and why should the Minister be given authority over that?

§ LORD DRUMALBYN
I think the noble Lord has a very good point there. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD STONHAM moved Amendment No. 45: Page 215, line 30, leave out ("their chairman") and insert ("the chairman of the Authority or, as the case may be, the Director General of the Executive.").

§ The noble Lord said: This is little more than a drafting Amendment, designed to make it clear that the person to whom an Executive can delegate their function is the person appointed Director General, not someone they themselves may elect as their "chairman"—a term which of course has no significance under the Transport Bill. Paragraph 8 of Part III of Schedule 5, with which we are now dealing, was added at the Report stage in another place to enable a Passenger Transport Authority and a Passenger 1268 Transport Executive to delegate functions either to committees of their members or to their respective "leader". But the head man of the Executive will be appointed with the title "Director General" rather than "chairman", and though he may take the chair at meetings it is more appropriate that functions should be delegated to him under the statutory capacity to which he was appointed (which is what confers on him his powers as leader of the Executive), than under the title of a casual capacity which he may or may not assume.

§ There can be expected to be occasions on which it will be important for the Director General to have functions of the Executive delegated to him; for example, for the purpose of negotiating on their behalf with outside bodies, such as a trade union, a private operator or the Railways Board, or for the purpose of furnishing confidential information of a personal nature to the Minister in the event of allegations of misconduct by a member of the Executive. I hope that the Amendment makes it clear beyond doubt that the person to whom the Executive can delegate their functions is the Director General—the person appointed as their leader—and not just anyone they chose to elect to the chair at a meeting. I beg to move.

§ LORD NUGENT OF GUILDFORD
May I thank the noble Lord, Lord Stonham, for explaining this Amendment No. 45 to us? It seems to me perfectly acceptable. I take it that the magic words "as the case may be" are the equivalent of "respectively", so that the chairman and the Director General are not interchangeable. Subject to that very small qualification, I am happy to accept the Amendment.

§ On Question, Amendment agreed to.

§ Schedule 5, as amended, agreed to.

§ Clause 10 [General powers of Executive]:

§ 3.42 p.m.

§ LORD DRUMALBYN moved Amendment No. 45A: Page 15, line 2, after ("power") insert ("subject to the general approval of the Authority").

§ The noble Lord said: This Amendment seeks to introduce a general power of approval of the exercise of the powers 1269 of the Executive. The powers of the Executive, I realise, are set out here—they are, more or less, given general powers—and I realise also that in the normal way the exercise of those powers will be subject to the general approval of the Authority in that the plans of the Executive have to be approved. The purpose of the Amendment is simply to ensure that when any of those powers are intended to be exercised the general approval of the Authority shall be obtained before they are exercised. Once that general approval has been obtained, then it will be possible for the Executive to go on exercising those powers.

§ I appreciate that the purpose of having a clause like this is, in general, simply to define the powers for legal purposes. It is also to give a general indication as to what the Executive is intended to do, but it is mainly for legal purposes. It is rather like the Memorandum and Articles of Association of a company. At the same time we should like to make certain, by inserting these words, that the various powers are exercised only with the general approval of the Authority, in order to keep the Executive in its place—as the noble Lord, Lord Robertson, put it, subordinate to the Authority. I beg to move.

§ LORD BOWLES
At about a quarter to eight last night I was handed three manuscript Amendments to this Part of the Bill, and I now discover that there are 15 new Amendments to this Part, and these it was possible to get from the Printed Paper Office at only about half past eleven this morning. It is no wonder that my noble friend was unable to answer the noble Lord's Amendment No. 44B—because he had not had a chance to look at it. It does not give the Minister much chance; it certainly does not give noble Lords much chance of knowing which way to vote; and even the Ministry itself, apart from the Minister, finds itself at a disadvantage. So I hope that in the future, if it is at all possible, noble Lords will put down Amendments a little earlier. As a former Chairman of Standing Committees I always used to say that we should never be likely to call starred Amendments at the Committee stage of a Bill, and I think it would not be a bad practice if that kind of procedure obtained 1270 during the Committee stage in this House as well.
The noble Lord put his emphasis in this particular Amendment on the question of wanting the definition for legal purposes, but perhaps I should point out that the balance of power and responsibility between the Authority and the Executive has been very carefully arranged so as to give the Authority control over general policy and the Executive responsibility for the day-to-day working. Clause 10 gives the Executive enabling powers to do a number of things, and subjects some of them to the specific approval of the Authority. Moreover, the opening words, "Subject to the provisions of this Act", were included as a Government Amendment during the Commons Committee stage to indicate that the powers were not unlimited but would, for example, be subject to the specific approval of the Authority for the items listed in Clause 15. So the point about the general approval of the Authority being necessary, to which the noble Lord referred, so far as it fits in with the designed balance of responsibility aimed to produce the greatest efficiency and effectiveness, is already covered, and we therefore think that this Amendment is unnecessary. So far as it is meant to go any further, it is liable, in our opinion, to upset that balance, and I ask your Lordships to reject it.

§ LORD DRUMALBYN
I am grateful to the noble Lord for his explanation of this, and perhaps I owe an apology to your Lordships for having put these Amendments down rather late. Equally, I think your Lordships would like an apology for the fact that the Amendments were not available early this morning and that we had to wait for them until 11.30 o'clock. So far as I am concerned, I found that very inconvenient. All this is due, of course, to the immense length and complication of this Bill. So if the noble Lord will undertake that Bills will not be of this length and complication in the future, it may then be possible to give some indication that we shall not be forced to go on looking at the Bill and putting down Amendments up to the last moment.

§ LORD BOWLES
The noble Lord had plenty of time to put down the Amendments before.

1271

§ LORD DRUMALBYN
If I may say so, the noble Lord is being a little unnecessarily aggressive on this matter. It was quite unnecessary for him to plough on as he did. I would not have put these Amendments down at the last moment if I could have put them down earlier. We have all been working for a long time on this Bill, and these were Amendments which, for one reason or another, we did not manage to get settled until the last moment. I have given my apology to your Lordships and I hope the apology will be accepted.

LORD REA
Before the noble Lord goes on, may I intervene for one moment? I am not quite sure that I understand this. Is the Minister complaining that this Bill is being rather rushed—rushed by the Opposition?

§ LORD BOWLES
I thought the noble Lord would not understand. No, the Bill is not being rushed at all. It is the Amendments which are being put down to it after many weeks of consideration and after it had left the other place that are being rushed.

§ LORD WAKEFIELD OF KENDAL
Will the noble Lord not agree that after discussion on Committee stage points can emerge upon which it may be desirable for Amendments to be put down? After all, if you rush Committee stage after Committee stage day after day, the Government really cannot complain if Amendments are put down at the last moment.

§ LORD BOWLES
This Amendment was put down in the middle of the Committee stage of yesterday, which was the first day.

§ LORD NUGENT OF GUILDFORD
I feel that the noble Lord is being a little less than just to my noble friend Lord Drumalbyn and to my noble friends on this side. In fact, the timetable for this Bill in this House has been all too short. The Report and Third Reading in the other place finished just before Whitsun; the Bill was published then, just as we were going away for the ten-day Whit-sun Recess; we had the Second Reading as soon as we came back, and we then had about ten days in which to get our Amendments down. I would say that that sort of timetable for a Bill of this 1272 size is just about as short as human beings could possibly cope with. We ought to have weeks longer than that in order to get the enormous range of Amendments ready. My noble friend is right in saying that we have spent days and days—all the days that there were —in studying the Bill since the other place finished with it, in order to get our Amendments down. It has been a prodigious job. We have no Government Departments behind us. The noble Lord is being less than just.

§ LORD BOWLES
I apologise if it is thought that I have been less than just. I was merely asking, for the convenience of the Committee, that noble Lords should, if possible, put Amendments down earlier. I know that the noble Lord, Lord Drumalbyn, works harder than anybody I have ever come across and that the noble Lord, Lord Nugent, is not far behind. They are a great example to us all.

§ LORD DRUMALBYN
I am sorry if the noble Lord was inconvenienced. Nevertheless, he has given a good answer as to the conclusions at which the Government have arrived and I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 3.52 p.m.

§ LORD NUGENT OF GUILDFORD moved Amendment No. 46: Page 15, line 2, after ("carry") insert ("or arrange for the carriage of").

§ The noble Lord said: I beg to move Amendment No. 46 in the name of my noble friends and myself. With it goes Amendment No. 48. Both are Amendments to the beginning of Clause 10. The effect of these Amendments would be to allow the Passenger Transport Executive either itself to carry passengers in the buses it was operating or to arrange that they should be carried by some other carrier. We feel that this flexibility would be an improvement on the arrangements now in the Bill which require, as I understand it, that the Passenger Transport Executive, when it is set up, should take over the operation of all the existing bus companies and undertakings in its area. Perhaps I should give a word of explanation of the thoughts behind this Amendment which are different from those 1273 which activated our honourable friends in another place.

§ My noble friends and I feel that we have to accept, though with regret, the concept of the National Bus Company. I should say here just how much I regret that noble Lords opposite and their right honourable friends decided, with a very large sum of public money, to buy out the B.E.T. and to lose the outstanding competent management that went with that company. Nevertheless, this is what has happened. The Transport Holding Company now owns all the bus undertakings of B.E.T., and the basis of the National Bus Company has been formed. I think we should accept that situation and do the best we can to make this Bill as workable as we can in terms of that fact.

§ But, accepting that all that is now water under the bridge, we still think that the Passenger Transport Executive may prefer to leave in the hands of, say, a municipal corporation a bus undertaking that is working perfectly satisfactorily and is already integrating satisfactorily into the general transport arrangements of the area. We think the P.T.E. may wish to leave that undertaking in the hands of the present managers and in the hands of the local authority concerned. Therefore we want to reserve the option for the P.T.E. and the P.T.A. to decide for themselves whether they wish to bring them all into one ownership or to leave a part in one ownership and the rest in the National Bus Company. The purpose of the Amendment is to retain that flexibility so that the choice will remain with the P.T.E.

§ LORD BOWLES
I think the noble Lord is right in saying that Amendments Nos. 46 and 48 go together. The power in Clause 10(1)(i) enables an Executive to run road services within, to and from their area. The power provided by Clause 10(1)(ii) enables an Executive to carry passengers by any other form of land or water transport between places in that area or between such places and places surrounding that area. The effect of these Amendments to permit an Executive to "arrange for the carriage" of passengers as well as an Executive actually to "carry" them.
Powers to make arrangements to carry passengers by road, by any other form of land transport or by any form of water 1274 transport are contained in Clause 10(1)(xv). This enables the Executive to make arrangements with other bodies to carry on any activities which the Executive themselves can carry on. I submit therefore that the Amendment is unnecessary.

§ LORD ST. HELENS
I should like to add my voice in support of my noble friend. It was very cogently argued in the Commons that there is an urgent need for some authority to co-ordinate the passenger transport services. But we do not feel that it is necessary for that Authority to own and to operate the buses, taxis and so on. In most places, services already exist, and they will come under the general umbrella of co-ordination. Where they do not exist, surely it is more economical for the P.T.A. to provide the money to the other services than for them to buy up additional resources.
There is another point which has not yet been made here but which was made strongly in another place when this particular group of Amendments was discussed. Under the permissive authority given to the P.T.A.s, there will be immense national expenditure at a time when surely we should be cut tailing national expenditure. This is a time when we want economy in the nation and not the vast expenditure involved in buying up bus routes which in most cases are already operating satisfactorily.

§ LORD BOWLES
I wonder whether this is really going further than did the noble Lord, Lord Nugent. The noble Lord, Lord St. Helens, has referred to various debates in the other place. It was, I think, the view of the Opposition there to attack the "operating" role of Passenger Transport Executives. This has been a consistent line of the Opposition throughout the Commons' debates. Though noble Lords have not sought by Amendment to delete the operating, power, they may wish it to be used less fully than the Government intends.
If so, it can be said that it is the Government's view that, while P.T.E.s will have important planning and co-ordinating functions it will be quire impossible for them to provide a properly integrated and efficient system of public transport unless they can also operate transport themselves. So long as all the 1275 various operators in an area have different viewpoints and different financial objectives, it is not practicable to expect an Executive to be able to reach agreements with all of them to produce the network of services that are needed to meet the complex needs of the travelling public in large urban areas. As it is, an Executive will have to reach agreements about the services provided by the Railways Board, the National Bus Company and private operators. As the noble Lord, Lord Nugent, said, it would greatly add to their already difficult task if, for example, in Manchester they had also to reach agreements with perhaps ten or so different municipal undertakings, with fleets ranging from over 1,300 down to a dozen buses.
Passenger Transport Authorities and their Executives are not being set up only to co-ordinate and operate existing forms of transport; the Government's intention is that they should be the bodies which will plan, build and operate new rapid transit systems. Somebody must own these new undertakings and someone must operate them. These new systems may eventually serve large parts of Passenger Transport Areas. It is self-evident that they should belong to the Passenger Transport Authorities and be operated by them, just as the Underground services in London are operated by the London Transport Board. The wording of the Amendment may be defective to achieve the purpose which the Opposition have in mind (of that I am not quite certain), but in any case I do not feel that the Committee should accept the Amendment and I ask your Lordships to reject it.

§ 4.0 p.m.

§ LORD NUGENT OF GUILDFORD
May I thank the noble Lord, Lord Bowles, for his further explanation of the point, and particularly for dealing with the point raised by my noble friend Lord St. Helens. I am bound to say that my feelings are very much with my noble friend: that, basically, ownership is not necessary to achieve successful coordination. But the fact is that the purchase by the Transport Holding Company of the B.E.T. meant that the battle referred to by my noble friend, Lord St. Helens, was lost, and the very 1276 large sums of public money involved, some £40 million to £50 million, were, in my opinion, completely wasted at a time when we can ill afford to waste such huge sums. But as they have already been spent we may as well accept the position and make the best of it. That being so my noble friends on the Opposition Front Bench and I have bowed to the inevitable.
It is evident to me that no one will ever again put up large sums of money to enable public transport to be run by private enterprise. I do not in the least agree with the content of the Government White Paper or that this is an unsuitable activity for private enterprise. I only wish to goodness that private people would put up money to run these extremely difficult undertakings. But I am afraid that, with the buying out of B.E.T. it will never happen again and we have to make the best we can of a situation which has resulted in the loss of very able management and all the financial disciplines that went with it. I have conceded the case to the noble Lord, Lord Bowles, and I advise my noble friend, Lord St. Helens, to do the same. The battle was lost three months ago when Parliament decided on the Transport Holding Company Bill which gave them the extra £70 million to make the B.E.T. purchase and any others they needed.
I return to the Amendment and thank the noble Lord, Lord Bowles, for calling my attention to paragraph (xv) in Clause 10(1), the significance of which, I am bound to say, I had missed. I think that I have read the Bill pretty carefully, but there is a good deal of it, and it is not impossible to miss a piece. I am glad to see that that paragraph provides the flexibility that we feel there should be. This is an important point, and when the Executive goes into action I hope our words will be recalled. But it may very well find that it will do better by leaving some undertakings, especially the big municipal bus undertakings, in the hands of the present management, rather than taking over the ownership itself. So much depends on successful management as well as the co-ordinating aspect if we are to have the success that we hope will be achieved by the B.T.A. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

1277

§ LORD DRUMALBYN moved Amendment No. 47A: Page 15, line 3, leave out ("road") and insert ("stage carriage").

§ The noble Lord said: I must apologise to your Lordships for the fact that this is a late Amendment which is in substitution for the former Amendment No. 47. It does not make very much difference, but there is a difference in one essential point which is contained in Amendments Nos. 47A, 49 and 49A. We feel that not only should the main function of the Executive be defined clearly in the first paragraph of this clause, but that the functions should be limited to what the Executive ought to perform, what is expected of them. The more they branch off into all kinds of other functions the less likely they are to succeed in their main function, and if we want them to succeed (and if we are to have Passenger Transport Authorities and Passenger Transport Executives we shall want them to succeed) we ought not to allow the Executive to proliferate into all kinds of ventures which would be extraneous to their main functions.

§ The first Amendment would alter the first paragraph, which says: … the Executive for a designated area shall have power (i) to carry passengers by road within, to and from that area to the much more specific function, which is their main function under the Bill: to carry passengers by stage carriage, within to and from that area". That sets out straight away the main function of the Executive. Paragraph (ii) goes on: to carry passengers by any other form of land transport …". Then we have Amendments 49A and 50—

§ LORD BOWLES: Amendment No. 50 has gone, has it not? It is now No. 49A.

§ LORD DRUMALBYN
Yes it is Amendments Nos. 49 and 49A. Amendment 49 would make the paragraph read: to carry passengers by any form of land transport which of course includes stage carriages. That goes much wider. Amendment 49A would insert: other than by hire cars, taxis or vehicles exclusively hired for excursions. 1278 I might observe, in passing, that for sheer elegance of drafting it would perhaps be better not to say "carry passengers by road" and then to say "carry passengers by other form of land transport", because "road" itself is not a form of transport. I suggest that the word "other" should go out. The main point of this second group of Amendments is to exclude the power to venture into the operation of hire cars, taxis or vehicles exclusively hired for excursions.
It is difficult to see what the justification for such operations can possibly be. I am sure that your Lordships will agree that the Executive are more likely to succeed if they concentrate on their main function. It may be that from time to time they would have to make arrangements for the carriage of passengers by other forms of transport—in cases of breakdowns and so forth. That could be put right by a subsequent Amendment, but I am quite certain that it would be a grave mistake to allow this body to engage in the kinds of activities that this Amendment seeks to exclude—the operation of hire cars, taxis or vehicles exclusively hired for excursions. For one thing, the maintenance of these vehicles would not coincide with the maintenance of the vehicles they are mainly going to operate, that is to say, stage carriages, or even express carriages. I am certain that the more we can streamline and refine the activities of the Executive, the more likely they are to succeed. I beg to move.

§ LORD BOWLES
I think I understood the noble Lord, Lord Drumalbyn, to say that he is taking this Amendment No. 47A together with Amendments No. 49 and 49A. I was surprised when the noble Lord said he did not think this made much difference. To my mind, the difference is considerable when it is compared with the Amendment it replaces. It appeared to be a little more than a drafting Amendment with no practical effect, but now the revised Amendment would cut out express bus services, excursions and tours and hire car operations, which are clearly allowed under the present wording. We can expect that the Executives will want to run express services, equivalent to the Green Line services of London Transport, and that they will still want to run excursions 1279 and tours—for instance, trips to the seaside. The Government consider that Executives must have the power to provide services of the kind excluded by the Opposition Amendments in order to ensure that they can secure the provision of an efficient system of public passenger transport to meet the needs of the local travelling public. There may well be cases where the local need for public transport services can be better met by these means than by, say, stage or express services.
The noble Lord implied that the motive behind this is to allow competition which is unfair to private enterprise. It is unlikely that a Passenger Transport Executive will want to go into this business by uneconomically undercutting private firms. The Executive will have a statutory duty to break even year by year. The Passenger Transport Authority will be able to precept on the rates to make sure that the Executive breaks even, while still providing the services the community needs, even if they are in total uneconomic but it will be remembered that the Authority will be composed predominantly of local authority representatives and can be expected to want to keep precepting to the absolute minimum. The Authority is therefore likely to expect the Executive to make profits wherever it can do so, in order to cross-subsidise socially necessary but unprofitable public transport services. An Executive is not therefore likely to have any incentive to go in for uneconomic competition with private firms. Moreover, if it chooses to carry on business of this nature, Clause 16(2) provides that full details of such activities must be given in the Executive's published accounts, and if the charges appear to the Minister to be too low he will have powers under Clause 16(3) and (4) to direct the Executive to modify their conduct of this business or to discontinue it. This is a powerful safeguard against unfair competition by an Executive.
The next revised Amendment is rather more logical than the original one, in that it seeks to exclude hire cars, and so on, from land transport, instead of "any form of transport". This was probably the original intention of the Opposition. But it is just as objectionable as the 1280 Amendment it replaces, and, for the reasons I have just stated, I think that it should be rejected.

§ LORD NUGENT OF GUILDFORD
We regard this as an important Amendment, and the arguments which the noble Lord, Lord Bowles, has just put before us do not entirely convince me. When he explained the various safeguards and the unlikelihood of an Executive ever doing this, my reaction was: then why give them the power? There is no getting away from it that the small private hirers and owners of taxi businesses up and down the country are very disturbed about this provision. What is the point of it? These hirers, probably 10,000 of them—nobody has an exact record—are working very efficiently and economically, costing nothing to anybody. In 99 cases out of 100, if an Executive want to arrange any excursion or emergency service, they would be able without the slightest difficulty to find an existing firm whom they could use and who would be only too glad to work for them. In 9 cases out of 10, I believe, the Executives will not want to go into this kind of business. I think I am right in saying that London Transport do not want to do so now. They find it better to turn these things over to private operators.
But so long as this provision is on the Statute Book, it will be objectionable, because it means that the private operators in areas where Executives are set up are at risk of having to compete with the Executive, which has the obligation to do no more than break even. A man running his own business has to make his living, so he has to make some profit out of it. Furthermore, there is this power of the Executive to precept from the rates—rates which the private operators also have to pay. In these circumstances, noble Lords cannot be surprised if these people object. I am sure that no Executive, and certainly no Authority, with locally elected councillors on it, would do this. It would be most objectionable. If that is the case, why put it in the Bill? There is a strong case for taking this provision out of the Bill, and I hope that the noble Lord, Lord Bowles, who has been dealing with this point in a most reasonable way, will see the cogency of this and agree to accept our Amendment.

1281

§ LORD BOWLES
From the noble Lord's speech I was not quite certain whether he thought the Executives would do this or not. He made the point that if they lost, they would have power to precept on the local rates and that, as the Executive would have to break even, private enterprise would have to do a little better than that. So, in a sense, that might be unfair competition; but only to a very small extent. I will certainly have a word with my right honourable friend about this, but I hold out absolutely no hope. If the noble Lord was not convinced by my argument, I, equally, was not convinced by his. But I extend him the courtesy of saying that I will pass his remarks on to my right honourable friend the Minister of Transport.

§ LORD NUGENT OF GUILDFORD
I must be thankful for the small mercy of the noble Lord's willingness to pass this point back to his right honourable friend. I realise that it was discussed in another place, and rejected, but I still think that it is an important one and that your Lordships' House is a suitable place in which to debate it. I am willing to accept the noble Lord's undertaking at its face value. We have a brief space of a week between Committee and Report, and if the noble Lord would be good enough to discuss this point with his right honourable friend in the interval, to see whether there is any way in which it could be made acceptable, then we could return to it on Report. On that understanding, I beg leave to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ 4.19 p.m.

§ LORD DRUMALBYN moved Amendment No. 51: Page 15, line 13, leave out ("thirty") and insert ("ten").

§ The noble Lord said: The purpose of this Amendment is to reduce the area within which a Passenger Transport Executive can operate outside its own area from a radius of 30 miles to 10 miles. At an earlier stage of the Bill the word used in this connection was "vicinity". The Opposition objected to that word because it was too vague, and then the Government came up with 30 miles. They might be said to have stretched a point and made the 1282 "vicinity" 30 miles. That seems to me to be a quite big vicinity and a long way. After all, in terms of passenger transport, it is pretty well an hour's journey, and could be more.

§ The point here is that the Executive are given the power to operate within 30 miles of their own area. They will be making agreements with other be making agreements with other bodies—for example, the National Bus Company —which will be operating both outside the area and, by agreement with the Passenger Transport Executive, may be operating within the area as well. The Passenger Transport Executive will have the power to exclude anyone from their area, including the National Bus Company, from operating a bus service part of which is in their area. They will get that power once the third Order has been passed; that is, the Order referred to in Clause 19 of the Bill.

§ According to the White Paper, they will be expected to make an agreement with the National Bus Company—and this Order is unlikely to be made until they have made such an agreement with the National Bus Company. The point is that the Passenger Transport Executive are being given a unilateral right to operate outside their area up to 30 miles, whereas nobody else is going to be allowed to operate within their area without the consent of the Passenger Transport Authority. This seems to me, from the point of view of negotiation, to weight the scales too heavily in, their favour. I recognise that if the Bill were to limit the power to operate, say, only within the area, or only to within ten miles of the area, one consequence could be that the Minister might decide to extend a Passenger Transport Area rather further than otherwise he would do.

§ We were talking yesterday about the negotiations which the Minister is having with the local authorities in the proposed areas—the consultation that is going on unofficially—and I mentioned that each Authority has been provided with List A, those local authorities that are likely to be included in a Passenger Transport Area, and List B, those that may be included in the area. To give an example of this, I understand that Blythe is 15 miles from Newcastle, and this is a town which is on List B. It might or might not be included in the Tyneside area. Then, Southport is twenty miles from Liverpool, 1283 and might be included in the Merseyside area. This, too, is on List B. I should have thought that this was about the full extent of the radius that could possibly be regarded as the "vicinity".

§ It may be that 10 miles it too little. I should certainly think that 30 miles was too large. I hope, therefore, that the noble Lord will be prepared to reconsider this "area of the vicinity", or alternatively, at any rate, justify by arguments and examples why it would be necessary to consider the "vicinity" to be such a wide concept as to be in the radius of 30 miles. I beg to move.

§ LORD LEATHERLAND
I do not want to enter into an argument on semantics with the noble Lord, Lord Drumalbyn, but I think it can be legitimately argued that his interpretation of the word "vicinity" is not necessarily one which the supporters of the Bill would accept. It might well be said: "I am cruising about in the vicinity of the South Pole." Would the person saying that be denied the right to make a claim of that kind until the very moment when he had got within 10 miles of the South Pole? "Vicinity" is an elastic term and has to be considered in connection with local circumstances. I think the distance of 10 miles which the noble Lord is suggesting is far too restrictive.
I frequently find myself in the county town of Chelmsford. I find myself motoring past the Crompton Parkinson Electric factory, outside which there are a number of notice boards. There is one notice board where people line up for Braintree, another where they line up for Maldon, another where they line up for a place just this side of Colchester and so on. If this 10 miles limit were introduced, any such arrangement as that, made by well-meaning employers for the benefit of their workpeople, would have to go by the board.

§ LORD DRUMALBYN
Perhaps I may point out to the noble Lord that it is not 10 miles from any particular point; it is 10 miles from the periphery of the area.

§ LORD LEATHERLAND
Yes: and if the periphery of the area were Chelmsford, all these people would be out of bounds. It is a fact, is it not, that with our present trend in industrial develop- 1284 ment many large industries are setting up in a number of our towns. Is it not also a fact that many of the people are leaving the farms and villages in order to take employment in those towns? Is it not, therefore, the fact that the bus services must be enabled to incorporate a fairly wide range in order that the workpeople from the villages can make their way into the towns? I think 10 miles would be far too restrictive.
My mind goes back to the days when I used to live in Birmingham, long, long ago, when the Midland Red Bus Service, admittedly a private enterprise bus service, and an extremely efficient one, used to stretch out right into the Black Country with hardly any limits. If that is good under private enterprise, why should not a nationally organised bus service have similar facilities? I hope that my noble friend will not accept this Amendment, which would impose far too many restrictions on the organisations now to be set up.

§ LORD BOWLES
I am not quite sure that I follow or agree with my noble friend Lord Leatherland. The proposal, to start with, is that four conurbations, West Midlands, Tyneside, Merseyside and Manchester, should have P.T.As. The proposal in the Bill is that buses should be able to go no further than 30 miles from the edge of the area. This is the maximum, but the Minister need not make an order for it to be anything like as far away as that. But this does not apply to London or to Chelmsford. Therefore, with respect to my noble friend, so far as the Bill is concerned I do not think his argument applies.
Clause 10(1)(ii) empowers an Executive to carry passengers (and, by virtue of Clause 10(1)(xv) to arrange with others for carrying passengers) by means other than road transport not only within the Passenger Transport Area, but also between the Area and a "permitted distance" outside it. In the case of water transport the permitted distance may be specified in the order designating the Passenger Transport Area. In the case of land transport other than road transport—and I agree with much of what the noble Lord said—the permitted distance is 30 miles or such lesser distance as may be specified in the designation order.
The effect of these Amendments is to reduce the maximum permitted distance 1285 for land transport from 30 miles to 10 miles. This would apply to land transport services run by the Executive (except road services) and to any rail services for which an Executive to whom Clause 20 did not apply made payments to British Railways under Clause 10(1)(vi). As the noble Lord said, the Bill did not originally provide for a permitted distance, but merely referred to the "vicinity" of the Area. "Vicinity" is a matter of relativity. You would be within the vicinity of the moon when you were 10,000 miles way; you would not think that was a long way off or very close. "Vicinity" is obviously relative, and therefore the Government in the Committee stage took some notice of what the Opposition said in that connection, and deleted the word "vicinity", when it was suggested that the provision should be instead "20 miles outside the area".

§ LORD DRUMALBYN
Twenty?

§ LORD BOWLES
It is in the Opposition Amendment. I said "20" and I mean it. The Minister of State promised to consider this point, and the present wording of Clause 10(1)(ii) was introduced on Report as a result of his consideration.
The difficulty about defining the area over which any Executive can operate is that conditions and needs are likely to vary from one area to another. The noble Lord asked me to try to give some reason for fixing a maximum, and this is it. The needs vary from one area to another. It would obviously be absurd for an Executive to be able to run services only to the boundary of its area, wherever that might lie. For land transport a limit of 30 miles radius around an area would meet all foreseeable cases in the four areas so far proposed—around Manchester, in the West Midlands, Merseyside and Tyneside—though it might he too generous for some future areas. With a permitted distance of 30 miles it would, for example, be possible for an Executive to which Clause 20 did not apply to make arrangements with the Railways Board for services to overspill places located some distance from the main centre from which increasing numbers of people might in future wish to commute.
The distance of 30 miles is a maximum and the limit must therefore be drawn 1286 widely enough to allow latitude for future transport planning. But the Minister can—and would, if good reason were shown —designate a smaller limit for any particular P.T.A. However, the distance of 10 miles proposed by the Opposition might not even allow a Passenger Transport Executive for the West Midlands, for example (if Clause 20 were not applied to that area), to make arrangements with the Railways Board for services to such nearby places as Royal Leamington Spa, Stratford-upon-Avon, Droitwich and Stafford, all of which are places from which there could in future be substantial commuter traffic.
We cannot agree to reducing the 30 miles to 10 miles, but I rather felt that part of the noble Lord's speech was suggesting the possibility of a compromise. I do not put anything forward, but if, for instance, he felt like withdrawing this Amendment, I could consider with my right honourable friend whether perhaps a fifty-fifty compromise—20 miles—might meet the case put up by the noble Lord. May I hear what he has to say about this?

§ 4.33 p.m.

§ LORD DRUMALBYN
I am grateful to the noble Lord for his full explanation of this matter. I think, as I indicated, he quite correctly interpreted what I said on this. I was inclined to think that 10 miles was probably a little too mean or too restrictive, but thought that 30 was too much. I would certainly accept 20. But there is one point arising out of what he said, about which I should like to ask the noble Lord. This is due to the way in which these powers are drafted. He correctly pointed out that paragraphs (i) and (ii) deal with the actual power to carry passengers. Clause 15 deals with the power to enter into and carry out agreements, and paragraph (xv) relates the power to enter into agreements with the power to carry out particular activities. As I understand this paragraph, the Executive can enter into agreements only for the carrying out of things which itself has power to carry out. Therefore, of course, this adds a new dimension to it purely and simply because of the drafting.
I think it would be a pity—and I hope that this is not the intention—if the Executive were not in a position to enter into agreements, in particular, for 1287 example, with the National Bus Company to carry out activities for the carriage of passengers over quite wide areas. I am not quite certain how this will work out in practice. It might well be that the National Bus Company would be able to bring passengers from quite a distance into the area and then, once it got into the area, would be able to drop them, or pick them up, as the case might be, in different parts of the area. I think this would be essential. I am aware, of course, that once the third order has passed all restrictions regarding the picking up and dropping of passengers are automatically removed. But I think your Lordships will wish to know how this is going to work out in practice. That is to say, where the Executive does not carry passengers itself in its own transport, or through its subsidiaries to points outside its own area, but makes agreements with another body, whether the National Bus Company or a private operator, or anybody else, for the carriage of those passengers, it seems to me odd that where it does the second the same limitation of distance should apply. I hope I have made the point clear.
I think that quite different considerations apply here, simply because the Passenger Transport Authority is geared to run transport over a certain distance and will have transport of the kind to run over that distance; whereas, when it is making agreements with other bodies, it will be doing so with bodies whose routes may well be much longer and may have different kinds of transport, kinds of transport adapted to those longer routes. In those cases it would seem odd if the power of the Executive to make agreements for the carriage of passengers by other bodies were subject to the same limitation of mileage as the power to carry passengers on its own account. I hope I have made the point clear, but this arises out of what the noble Lord said in the course of his very lucid exposition. I do not ask him to go into it now; I merely ask him to consider it; and so far as his suggestion is concerned, I willingly accept it.

§ LORD BOWLES
May I make it quite clear, before the noble Lord seeks the permission of the Committee to withdraw, that I am not making a promise and that nothing is binding. But I will, if my Minister agrees, do something about 1288 the 20 miles on the Report stage. I cannot promise, however, and the noble Lord will understand my limitations in this position.

§ LORD ST. HELENS
Before my noble friend withdraws his Amendment, I wonder whether I might ask the Minister one question. A little while ago we were dealing with car hires and excursions, which are of course a form of carrying passengers. Does this mean that the authority would be limited to a range of 20 miles outside the perimeter of (shall we say?) mystery tours, or excursions by motor bus?

§ LORD POPPLEWELL
Before the noble Lord, Lord Drumalbyn, withdraws, would my noble friend Lord Bowles also take into account that there are contrary views to that expressed in the desire to reduce this mileage from 30 to 20, or 10? Of course, it is admitted by Lord Drumalbyn that probably 10 miles is far too low. I have in mind the Tyneside conurbation area in which this particular clause is likely to be effective. There is a new town being built there at Killingworth. I stand correction on mileage, but I think that is just outside the 20-mile limit.

§ LORD DRUMALBYN
It depends where the periphery is.

§ LORD POPPLEWELL
I know. There is also the question of Morpeth, and there is the question of the Ashingtons. This is, as Lord Drumalbyn has said, a most difficult question on which to arrive at a correct definition. Therefore I suggest to my noble friend Lord Bowles that he should not be too anxious to impress upon the Minister the question of reducing this mileage from 30 to 20 or 10, because when one defines a mileage, or anything in this particular direction, there is always the difficulty of those just outside the periphery. One remembers full well that for quite a long time Newcastle City buses, for instance, could not go outside Newcastle boundary although a good many of the inhabitants had gone outside the boundary to the new housing estates. This created a tremendous difficulty. Therefore probably in the discussions the 30-mile figure might be left as it is, with the general desire that this is a maximum mileage and that latitude might be allowed to work within this.
1289 As the noble Lord, Lord Drumalbyn, indicated, to define mileage accurately is a most difficult and arbitrary thing to do. I would sooner leave it to the good sense of both the Passenger Transport Authority and the Executive to deal with the needs of their area as they arise. They will be a far better judge, and it will be better than fixing a limit at the rather small mileage. Let us give them the latitude to provide the service for which we are setting them up.

§ LORD BOWLES
I think there must be some slight misunderstanding. The 30-miles limit we are talking of here does not apply to road transport at all. It applies to transport by means other than road transport, and therefore the noble Lord, Lord St. Helens, on his wonderful mystery tours, from which he no doubt gets great excitement, can go a great deal more than 20 miles because he is referring to road transport and not to other forms of transport. There will be no difficulty for the P.T.E., perhaps under arrangement with other bus operators, in providing services over longer distances. The P.T.A. in Tyneside could run buses from Newcastle to London. There seems to be a slight misunderstanding, but in fact the 20 or 30 miles applies only to transport on land other than road transport.

§ LORD DRUMALBYN
What other form is there?

§ LORD BOWLES
Hovercraft on a canal, for example.

LORD DRUNIALBYN
If that is so, we have been talking about a matter of rather less importance than we thought. In my view, this emphasises the need to look at the drafting of this particular clause again, because at this point it does not say "land transport other than road transport". I think quite a number of us have been misled by his.

§ LORD BOWLES
Clause 10(1)(ii) says: to carry passengers by any other form of land transport whereas the words in paragraph (1) are, "to carry passengers by road".

§ LORD DRUMALBYN
This is the difficulty with regard to the drafting. In one place it says "carry passengers 1290 by road", then it says "other form of land transport", and the next time it comes along it is just "land transport". Obviously, I am not the only person who has been misled. All those wit whom I have been working have taken this point. In my view it is a little "recondite" I think is the word, and in my view it should be a little more open.

§ LORD BOWLES
We will certainly look at it again.

§ LORD ST. HELENS
I am sorry to say that I have not the appropriate copy of Hansard with me, but I thought this case was clearly argued in another place and it was said that it did refer to road transport. If it does not, why does it say: to carry passengers by road within, to and from that area"? Surely that implies that they are to carry passengers outside the area as well.

§ LORD BOWLES
That is in Clause 10(1)(i), and not in paragraph (ii)

§ Amendment, by leave, withdrawn.

§ 4.46 p.m.

§ LORD NUGENT OF GUILDFORD moved Amendment No. 53: Page 16, line 25, after ("provide") insert (", or make available land or premises for the purpose of providing,").

§ The noble Lord said: It may be convenient for your Lordships to debate Amendment No. 54 together with this Amendment. The effect of Amendment No. 53 is to amend Clause 10(1)(x) which, as set out in the Bill, gives power to the Executive to provide facilities for the purchase and consumption of food and drink, places of refreshment, and other amenities. The effect of the Amendment would be that the Executive could either do that themselves or could make available land or premises for the purposes of such a provision. In other words, the Executive could, if they wished, let out part of their premises so that a private contractor could provide the services for them. This would seem to be a useful flexibility for the Executive to have.

§ Everyone knows that catering services are notoriously risky and difficult to make solvent, and that usually it is better to get the private caterer to do these things rather than the Authority. Therefore I am sure they would wish—and indeed would be wise—to get a private caterer to do 1291 the business for them on contract. Our Amendment would leave them the choice. It would not deprive them of the opportunity to provide the services if they so wished or if they could not get a private caterer to do it, but it would allow them the flexibility to use a private caterer on some sort of rental basis. This might be a convenience to them as well as a safeguard for the ratepayers against having to meet a loss if the Executive did their own catering and made a loss. I beg to move.

§ LORD BOWLES
Clause 10(1)(x) enables an Executive to provide refreshment rooms and so on for their passengers. The effect of these Amendments would be to permit an Executive to make available to other persons land or premises for the purpose of providing these amenities. The Government recognise that an Executive may not wish to arrange for other persons to provide them. But this is covered by, inter alia, Clause 10(1)(x)—which is an important paragraph—page 10, lines 13 to 25, and Clause 10(1)(xvi), page 17, lines 26 to 35, which empower an Executive, first, to enter into agreements for carrying on any activities which the Executive have power to carry on themselves, and, secondly, with the approval of the Authority and the consent of the Minister, to transfer any relevant part of their undertaking or property to arty person with whom they make an agreement of this kind.
It would be silly for the Minister and the Authority to have to approve every little transaction of this sort which the Executive may enter into, and it is the intention that the Minister will give blanket approval in advance to all transactions below a certain size, which will be determined as reasonable in consultation with each Authority and Executive. We hope that the Authorities will take a similar line towards their Executives.
Thus, since the land or premises which will be required for the provision of refreshment facilities are not likely to be of any great significance, the Executive will already have the power to do the things which the Amendments seek to provide for. And to the extent that really substantial property is involved it is preferable that the Authority and/or the Minister should be able to see and approve what is proposed. The Amend- 1292 ments are unnecessary to achieve the purpose that the Opposition wants, and I feel that the Government and the Opposition are both agreed upon the same thing in this respect.

§ LORD NUGENT OF GUILDFORD
I must thank the noble Lord for his entirely satisfactory answer. I see, after his explanation, that paragraphs (xv) and (xvi) do in fact give the flexibility that I should like to see there, and I beg leave to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ 4.52 p.m.

§ LORD NUGENT OF GUILDFORD moved Amendment No. 55: Page 16, line 30, leave out paragraph (xi).

§ The noble Lord said: I beg to move Amendment No. 55 which is an Amendment of some substance and importance. It refers to paragraph (xi) on page 16, and paragraph (xi), for the benefit of noble Lords who are not familiar with the intricacies of this Bill, gives the Executive power to provide a car park, to repair motor vehicles for any persons, and to sell to any persons petrol, oil and spare parts and accessories for motor vehicles, whether or not those persons are using the car park"; In other words, this paragraph gives the Executive power to trade in the garage business in every respect except in regard to the actual sale of cars. This power, I would suggest to noble Lords, is not necessary. It is giving a power that the Executive does not need, and there are great objections to extending the activities of the Executive into this trading field. Plenty of garages already exist; in fact, as noble Lords will know after reading the recent Prices and Incomes Board Report on the garage industry, if anything there are too many garages. Certainly there is no shortage; there are plenty of garages everywhere.

§ Another point which the Prices and Incomes Board observed was that most garages depend to a very considerable extent on the sale of cars in order to survive; this is apparently an essential element in order to make themselves solvent. This immediately implies that Clause 11 in the Bill would commit the Executive, if it undertook such trading—the setting up of a garage business—to the sale of cars. Otherwise it would almost certainly prove to be an unprofitable, loss-making business, and inevitably 1293 the P.T.E. would be left with a choice of two courses: one is, for the ratepayers to pay the losses, and the other is to ask that they be given power to sell cars as well. The objections to this would be even greater from the whole of the private enterprise industry, which already covers very fully the particular field of service we are talking about.

§ My noble friend and I have already made the point that the P.T.E. are going to have an extremely difficult job to do in operating the buses and co-ordinating bus services in the area where a P.T.A. is set up, and undoubtedly they are going to succeed or fail by the ability of the people on the Authority and on the Executive and on their capacity to concentrate on the main job in hand—that is operating the buses. The diversion of their interests into all kinds of subsidiaries, any one of which can cause frightful headaches at any time, would be a most unwise policy.

§ If I may say so in passing, we have the perfect prototype of the successful State industry to look at in the Dutch rail service, which has, as a matter of policy, got out of every one of its subsidiaries, and it is, so far as I know (unfortunately, we do not have the noble Lord, Lord Robertson, here to corroborate it) the only rail service in the world which is solvent. There may be some connection. They may have other advantages. But in the main it is not a good plan for these public authorities to go into a range of trading subsidiaries, and I make the point roundly that the garage industry throughout the country is very alarmed at this proposal in the Bill. They feel it is quite unnecessary and that to do this represents a serious threat of unfair competition, unfair because at the most the subsidiaries are only being asked to break even, whereas the existing garage business has to try to make a living. If the man is to stay there at all, he must make a profit. Secondly, if the Executive make a loss on a subsidiary of this kind they can precept on the rates, and the local traders, including the local garage men, will have to pay their "whack" towards it. There are great objections, and I can only hope that the noble Lord, Lord Bowles, who has been very reasonable to our Amend- 1294 ments up to date, will be equally receptive to this one. I beg to move

§ LORD SOMERS
I should like to support this Amendment strongly, because as a regular user of public transport I feel that there is no precedent for this kind of thing. The London Passenger Transport Board, for instance, have no such activities, and I am among those who wish that the London Passenger Transport Board could organise their services a little more efficiently sometimes. There is no doubt that the organisation of a big public transport service is an extremely difficult task. I feel that if the Executive are going to take on ill these subsidiary activities as well, the less efficiently will they carry out their main task, as I think my noble friend Lord Nugent pointed out earlier on.

§ LORD POPPLEWELL
I imagine that what the noble Lord has just said with regard to London Transport is correct, but they are not able to provide parking places and garages, or to sell petrol and suchlike. This has proved rather a deterrent to the encouragement of parking on the periphery of London, at the London bus stations and suchlike. That has come out clearly in the Committee on Nationalised Industries that investigated London Passenger Transport working. Those responsible for London Passenger Transport at that time indicated that had they had these facilities undoubtedly they would have been able to provide better parking arrangements that might have assisted in guiding the public to park their cars on the periphery and use public transport to go into towns. Therefore I would suggest to my noble friend Lord Bowles that he ought not even to consider accepting this Amendment, because it aims at curtailing the power of the transport Authorities to provide an adequate service.
We all know that with the development of traffic multi-storey car parks will have to be provided, and I think that to leave it to the goodwill of the transport Authorities to decide whether they will do so or otherwise is quite a good idea. The provision of these multi-storey car parks naturally takes place on very expensive land, and if it is possible to allow the bottom storey of this land to be used as garages, for the sale of petrol or for 1295 conducting repairs on an ordinary commercial basis, it will be a good step forward and ought to be encouraged.
The noble Lord, Lord Nugent, said that this would be unfair competition. I do not quite understand how this argument always comes out that it is unfair competition when a public authority is deciding to do something that is accepted commercially by private firms. As to accountability, the accounts of the various public authorities can be adjusted to satisfy noble Lords opposite and their colleagues in another place who are quite insistent that each section of publicly-owned undertakings shall be self-supporting and their accounts produced in the balance sheet so that we know exactly where we stand. What can be wrong in allowing public transport authorities to engage in this type of thing? It will greatly assist the services, and assist the authorities in having a viable institution. Therefore, I would suggest to my noble friend Lord Bowles that he ought to resist this Amendment.
Elsewhere in this Bill permission is given for a Passenger Transport Authority, if they so determine, to allow private enterprise to run these garages. They may run them themselves, or alternatively, as has been pointed out by my noble friend Lord Bowles, in another part of this particular clause they are given certain freedom of action to exercise their discretion. Therefore, I think it is common sense to allow this particular clause to remain in the Bill and leave it entirely to the P.T.A. to decide according to how they interpret the wishes and necessities of their particular area.

§ 5.2 p.m.

§ LORD ST. HELENS
The noble Lord, Lord Popplewell, spoke on the question of accountability. I know that I should be out of order if I followed him far into that question at this stage. But he will remember, if he has read Hansard from another place, that the Government did not there fall in with our request for the type of accountability that we wanted. We wanted stringent accountability, so that there should be out-and-out proof that there was no under-cutting of private enterprise. I can say no more than that because I should be completely 1296 out of order at this stage of the Bill. But I hope to come back to it later when we are dealing with the accountability clauses.
I and my noble friends will press this Amendment unless we get some reassurances from the Government because, so far as I can see, this subsection is nothing less than a complete blank cheque to the nationalised industry, in every way—through motor stores, petrol, oil and all the rest of it—to undercut private enterprise. I think it is an unfair way. There are men all over the country who, by their own thrift and hard work, through a lifetime, have built up a successful garage or a chain of garages. This clause is going to threaten them. I do not think they should be so threatened. I should be glad if the Minister would accept a later Amendment, to the effect that these facilities should be open only to a corporation's own vehicles. That might be better. But to have an absolute blank cheque like this is unacceptable, so far as I am concerned personally.

§ VISCOUNT BRIDGEMAN
I should like to look at this matter for one moment from another angle. It may or may not be unfair competition with private enterprise, but to my mind it is certainly most unwise competition from the management point of view. As I understand it, management qualities and management experience in regard to running public transport are quite different from those involved in running the enterprises included in the subsection which we think should be left out. To my mind, managements should stick to their own trade. The people who run garages should stick to that and should not try to run public transport; those who run public transport should stick to that and not try to run garages. If the public transport people start to run garages, sooner or later losses will be incurred because they do not know the trade so well as those experienced in it. Those losses will, in the end, fall upon the public. I put that forward as another reason why this Amendment should be supported.

§ 5.5 p.m.

§ LORD BOWLES
This is becoming almost a Party argument, and I am not at all surprised. Perhaps I might just remind the Committee that Clause 10(1) (xi) empowers an Executive to sell 1297 petrol and spare parts, and to provide car-servicing facilities at their car parks. The Amendment would prevent them from providing this service. The provision in the Bill is similar to the one in Clause 48(6)(a) which empowers the Boards and new Authorities to provide similar services at their car parks. Both provisions have been strongly opposed, not only in your Lordships' House but by the Motor Agents' Association and the Society of Motor Manufacturers and Traders, they both having been particularly active in promoting this opposition.
In the Commons' Committee, Mr. Heseltine argued that the P.T.E.s would offer subsidised and therefore unfair competition to the private sector. The noble Viscount, Lord Bridgeman, did not oppose the subsection on that ground. He opposed it on the ground of wisdom rather than of unfair competition. Mr. Heseltine went on to say that without commercial disciplines there could be wrong investment decisions. Thirdly, he said that the private sector provided scope for personal initiatives, incentives and responsibilities, whereas public ownership resulted in bureaucracy. He then said that services of this sort should therefore be put out to tender in order to obtain the best deal that the public sector can get out of private contractors.
Noble Lords must make up their minds whether the P.T.E. is going to make a profit or a loss, because this is rather important. In moving his Amendment, the noble Lord referred to the Prices and Incomes Board report on the garage industry, suggesting that there was little or no profit to be had from the sale of petrol and servicing without the sale of cars themselves. He then went on, I thought rather illogically, to say, "If you only sell petrol and do servicing you will make a loss." I have just read, and he also read, in the P.I.B. Report, that there would be little or no profit unless you sell cars.
There is, in fact, little risk of sub-sidised trading in competition with private firms, or of unsound investment decisions. The Executive will have a duty to break even year by year, and they can be expected to seek to make a profit on ancillary services of this kind wherever they can, in order to offset the inevitable losses on public transport ser- 1298 vices which are socially necessary but unremunerative. They can be expected to charge commercial rates for their services. In any event, Clause 16(4) provides powers for the Minister to intervene in any case where it may appear that an Executive is indulging in unfair competition with private enterprise. This should be a sufficient safeguard against unfair competition. The Tories love competition, except when it operates against them, when they do not like it at all. All our lives we have heard the old phrase that "dog doesn't eat dog". But amalgamations take place because competition is really nothing like as healthy or as desirable as noble Lords opposite, and the Tory Party, seem to think. Now they are getting rather nervous that they might be effectively competed against by bureaucracy. In this case this argument makes no sense at all.
Merely to provide that Executives should contract with private firms to establish service stations at car parks would not necessarily be to the best advantage of the Executive or the public; it would considerably restrict the Executive's freedom of action to provide facilities where they could be of most assistance to the use of the public transport system and could put an Executive very much in the hands of the garage trade. As car ownership grows, car parks, as my noble friend Lord Popplewell said, are becoming an increasingly essential adjunct to the public transport system. They enable commuters and shoppers to leave their cars outside congested town centres and make the last part of the journey by train or bus. It can be expected that Passenger Transport Executives (and the traffic manage ment authorities) will wish to encourage this by providing car parks under Clause 10(1)(x). A "park-and-ride" car park of this kind is obviously more attractive if the motorist can buy petrol or have his car serviced there while he is going about his business in the town centre. Commercial operators often provide these facilities in their car parks, let noble Lords not forget, and in the Commons Mr. Stainton at least accepted the logic of providing car parks linked with public transport and the consequent logic of selling petrol at them, though he drew the line there.
I advise the Committee to oppose the Amendment on two grounds. First, it 1299 would prevent Executives from pursuing activities ancillary to—but perhaps important to—their main task, from which they can, on the basis of fair competition, make a profit to offset losses on socially necessary services, bearing in mind that there are safeguards against unfair competition. Secondly, it would restrict the ability of the Authority and their Executive to carry out their general duty of contributing to the effective implementation of town planning and traffic and parking policies which can be improved by public transport services which through their…convenience attract persons to use those services… and I quote from Clause 9(3)(i). I am not surprised that there may be a further debate, and possibly a Division on this point, because it clearly divides the Parties. We do not understand why the Opposition are so keen on showing up, if they possibly can, and making fun of, a loss-making public enterprise. Of course, the Opposition are the protectors of private enterprise; and as this is their political point of view, it is understandable. But we believe in letting the best and most efficient organisation carry out the work that is necessary for the benefit of the public. On that criterion we believe that these car parks should be allowed to supply petrol, to service customers' cars, and to provide any other incidental work.

§ 5.13 p.m.

§ LORD ROBERTSON OF OAKRIDGE
I have been out of the Chamber for a few minutes, and I have come back apparently to a private Party political dogfight which I do not wish to join. However, I think some consideration should be given to this part of the clause. I remember very well that when I was with the British Transport Commission we had a garage outside, I think it was, York Station and we had to remove a petrol pump. We had to remove it to the great inconvenience of our customers, both rail passengers and those in the hotel, and it really was an unnecessary and a rather monstrous thing, it seemed to me, that we should have to do so. The Bill goes a great deal further than dealing with petrol pumps; it gives permission for repair of cars, and so on. I should not have thought that that was necessary, but that the garage should give the ordinary servicing which any car park gives to its customers 1300 seems to me a reasonable thing. It ought to be possible to find some words which would put the point in a proper way.

LORD HAWKE
Suppose we deleted this subsection from the Bill, would it then become impossible for the Authority to let out these particular facilities for other people to carry on? I am not quite clear. We provided them with authority to let out the facilities for the provision of food and drink and so on, and I should have thought that in this particular case it would probably be greatly to their advantage to let these spaces out, if they are going to have petrol pumps, to a man who knows how to run them, and to get an annual rental with no cost of labour to themselves.
At the moment, I take it that this will apply to almost all the main line parking stations in the commuter belts of this country, and one can say by and large that they are deficient. It is rare to find one where you are dead certain of being able to get in without a good deal of inconvenience. But I think that Lord Popplewell's tower parks are rather a dream-world, because they are immensely expensive, and I do not envisage any commuter paying 10s. to put his car in a tower park for the day. He will go on to his destination and trust to luck at the other end.
What it really boils down to is, these Executives, using more railway land for the provision of ordinary car parks, and my knowledge of commuters is that it does not worry them very much whether there is a petrol pump on the spot or not. The great thing is for them to have space, and that can be provided only by using up more railway land. I do not think that the very small profits they will get from petrol pumps—and you have to have a very big turnover to make a profit—is going to bring in any outside land at all because the outside land will be expensive land.

§ LORD BOWLES
As I understand it, anything that the Executive can do they can let out to other people to do privately. If you take away this power, they cannot, I think, enter into any contracts with private garages to do the work which is provided for the Executive to do in Clause 11.

§ LORD DRUMALBYN
I am sure the noble Lord is right in his interpretation, 1301 but this is merely as the Bill is now drafted. I think we recognise that if this power were taken away now there would be no power to make agreements, but of course that power, the power to make agreements with others to have activities carried out, could quite easily be put back by an Amendment. I do not think that your Lordships need be distracted, or led into a particular decision, or influenced into a decision by the fact that at the moment, as the things are, you either have car parks with services there or you do not have the services there at all. That, as I say, could easily be put right.
One is bound to have some sympathy with the view taken by the noble Lord, Lord Robertson of Oakridge, on this matter. It is always very awkward to have a facility removed that you have already available. However, I think we have to take a broad view of this matter as to what is the best course to adopt. The crux of this really is whether competition is on a fair basis. The noble Lord said that all this will be all right provided the competition is on a fair basis. But the fact is, of course, that even although the objective of the Executive may be to make some money out of the exercise of these activities in order to cross-subsidise their other functions, in the first place they do not really have to do that, they do not have to make a profit as private enterprise has to make a profit: and, in the second place, they will not really lose anything because they are in a better position to compete for that reason.
I think I am right in saying that no subsidiary will have to pay S.E.T. This will be a plain advantage to the Executive. But even if I am wrong about that, the fact is that in order to compete fairly they would have to be on a completely even basis. That would mean that they would have to make a profit to survive. But they are not on that basis since they do not have to make a profit. The Executive have only to break even. The other safeguards are only paper safeguards.
I agree with my noble friend Lord Bridgeman that they are less likely to make profits than private enterprise, for the very good reason that this is not their business; they are not in business for this purpose. There again, it is less advantageous and therefore less necessary to 1302 give them this power. I do not disagree that it would be of great advantage to have car parks, but it does not follow that if the Executive want facilities to be provided they should provide the facilities themselves. They quite easily can arrange for the facilities to be provided if an appropriate Amendment is made to the Bill, and we should not object to an appropriate Amendment. It may well be of convenience for somebody to leave a car at the car park, go to work, and come back at the end of the day to find that his car has been serviced and filled up with petrol. But we are saying that the carrying out of these activities is not the primary function of the Executive, that they are not likely to carry them out so efficiently as private enterprise, and that if they do so they will have an advantage over private enterprise because they do not have to make profits For these reasons, we feel that it is undesirable to let the Executive have these powers.

§ LORD NUGENT OF GUILDFORD
We have on both sides explored arguments with which we are not unfamiliar. I should like to thank the noble Lord, Lord Bowles, for exposing the arguments on his side, although he will not expect us to be in complete agreement with them. I immediately confirm what my noble friend Lord Drumalbyn said, that we realise that if your Lordships agree-to our Amendment being made, a farther Amendment would be necessary on Report stage. It would then enable the P.T.E. to use paragraphs (xv) and (xvi) so that they could make contracts with the garage industry to carry out services which we are now discussing.
There are two arguments on our side which lie behind the reasons why we cannot agree with the Government One was admirably stated by my noble friend Lord Bridgeman that, on the whole, management will do best if it sticks to its own business. Diversifying may bring more profits, but it may bring more losses. There is no automatic profit in diversification. Broadly, we take the view that a public authority will succeed best if, in the main, it sticks to its own business. The second argument concerns the much more controversial area of unfair competition which we foresee coming from a development of this kind where a public authority enters into the trade 1303 in this way. The noble Lord, Lord Bowles, charged the Tories with being the protectors of private enterprise. This is a charge which I am very happy to wear. Let us make no bones about it. Private enterprise earns this country its living. It makes the exports; it pays for the greater part of all that goes on in the country; indeed, the nation lives by it. And if we are to wear the mantle of the sole protectors of private enterprise, then we are happy to do so. But I hope that noble Lords opposite will recognise that private enterprise is the life-blood of the country. Therefore, it is the responsibility of all of us, wherever we may sit, to see that private enterprise thrives.
The noble Lord, Lord Popplewell, made an interesting intervention, particularly in regard to the arrangements in the G.L.C. into which I will not go at this juncture. He asked why it was that we on this side of the House seem to be sensitive about unfair competition from a public authority as against private enterprise. The answer is simply that private enterprise has to bear the taxes which finance the public authorities, and, furthermore, private enterprise must provide the finance if these public authorities make losses, which they all too often do make. For these reasons, we should be most cautious in loading more burdens on the shoulders of private enterprise by further developments in respect of public authorities entering into trading.
Although we have misgivings on certain aspects of this field of public transport, we accept that it is probably the only way to go about the matter and we feel that, with proper safeguards, it is the best thing to do. But we do not accept the need for, or indeed the soundness of, this new public authority deliberately going into the field of private trading—a field which is very fully covered. It is simply committing further money and resources with a liability to further taxes, in a field where the financial disciplines which operate on private enterprise do not exist for a public authority, and at a time when we are all conscious that we are still facing a financial crisis and seeking an answer to the question: can we pay our 1304 way as a nation? We look at the figures and we see that we are not paying our way. Yet noble Lords opposite are advocating a course which would take us further into a field where there are no financial disciplines at all. This is a basic difference between us. I hope that noble Lords opposite recognise that they are paying us a compliment which we do not deserve if they say that we are the sole protectors of private enterprise. They, too, must to some extent be on our side in this matter.

§ LORD BOWLES
Before the House perhaps divides, may I say that I did not say that the Tory Party were the sole supporters of private enterprise. I said that we support private enterprise when we think that it is most efficient for the nation, and public enterprise when we think that is most efficient. I am amazed that the noble Lord's whole case, following on the speech of the noble Lord, Lord Bridgeman, is that private enterprise is so worried by inefficient competition from the P.T.E's. in running garages and serving petrol.

§ LORD HANKEY
Before we settle this question categorically either for or against, may I cut across this ideological discussion to put in a word for the users? I have for many years been a commuter, and I have long found it highly inconvenient that no station car park can ever pump up tyres, dispense petrol, do the greasing, or any of the other things which are often necessary. I suggest that we might amend the clause so as to provide that instead of the phrase "to repair motor vehicles", we say "to provide facilities for the repair of motor vehicles for any persons and for the sale to any persons of petrol, oil and spare parts". That leaves it open to the transport authorities to do it themselves if they want to. But if they are wise—and I think they probably will be—they will go into cohorts with private industry, which would be the most sensible thing for them to do, and, without danger of loss to themselves, get somebody to instal a pump and make their own profit out of it. This would leave the matter open and common sense would prevail.

§ 5.30 p.m.

§ On Question, Whether the said Amendment (No. 55) shall be agreed to?

1305

Their Lordships divided: Contents, 127; Not-Contents, 63.

CONTENTS
Aberdeen and Temair, M.	Emmet of Amberley, Bs.	Morrison, L.
Airedale, L.	Erroll of Hale, L.	Mowbray and Stourton L.
Albermarle, E.	Exeter, M.	Newton, L.
Allerton, L.	Falkland, V.	Nugent of Guildford, L.
Amherst, E.	Ferrers, E.	Nunburnholme, L.
Asquith of Yarnbury, Bs.	Ferrier, L.	Oakshott, L.
Atholl, D.	Foley, L.	Pender, L.
Auckland, L.	Foot, L.	Perth, E.
Audley, Bs.	Forster of Harraby, L.	Polwarth, L.
Balerno, L.	Fortescue, E.	Rankeillour, L.
Bannerman of Kildonan, L.	Gage, V.	Rathcavan, L.
Barnard, L.	Glentanar, L.	Ravensdale, L.
Beaumont of Whitley, L.	Goschen, V. [Teller.]	Rea, L.
Belstead, L.	Greenway, L.	Redesdale, L.
Berkeley, Bs.	Grenfell, L.	Redmayne, L.
Bessborough, E.	Hanworth, V.	Rockley, L.
Bethell, L.	Hawke, L.	Ruthven of Freeland, Ly.
Birdwood, L.	Henley, L.	Sackville, L.
Bledisloe, V.	Hives, L.	St. Aldwyn, E. [Teller.]
Boston, L.	Horsbrugh, Bs.	St. Helens, L.
Boyd of Merton, V.	Howard of Glossop, L.	Sandford, L.
Bridgeman, V.	Iddesleigh, E.	Sandys, L.
Brooke of Cumnor, L.	Ilford, L.	Savile, L.
Brooke of Ystradfellte, Bs.	Inglewood, L.	Selkirk, E.
Buccleuch and Queensbury, D.	Ironside, L.	Sempill, Ly.
Burton, L.	Jellicoe, E.	Sinclair of Cleeve, L.
Byers, L.	Kilmany, L.	Somers, L.
Carrington, L.	Kilmarnock, L.	Stamp, L.
Clifford of Chudleigh, L.	Kinnoull, E.	Strange of Knokin, Bs.
Clitheroe, L.	Kirkwood, L.	Strathclyde, L.
Clwyd, L.	Lothian, M.	Swansea, L.
Colgrain, L.	Lovat, L.	Swinton, E.
Conesford, L.	MacAndrew, L.	Teviot, L.
Cork and Orrery, E.	McCorquodale of Newton, L.	Teynham, L.
Craigavon, V.	Margadale, L.	Thurlow, L.
Craigmyle, L.	Massereene and Ferrard, V.	Townshend, M.
Crathorne, L.	Merrivale, L.	Trefgarne, L.
Cromartie, E.	Mersey, V.	Tweedsmuir, L.
Daventry, V.	Milverton, L.	Verulam, E.
Denham, L.	Monk Bretton, L.	Vivian, L.
Dilhorne, V.	Monsell, V.	Wrottesley, L.
Drumalbyn, L.	Montagu of Beaulieu, L.	Wynford, L.
Elliot of Harwood, Bs.

NOT-CONTENTS
Addison, V.	Henderson, L.	Raglan, L.
Archibald, L.	Heycock, L.	Rhodes, L.
Beswick, L.	Hilton of Upton, L. [Teller.]	Robertson of Oakridge, L.
Blyton, L.	Hughes, L.	Rowley, L.
Bourne, L.	Kahn, L.	St. Davids, V.
Bowles, L.	Kennet, L.	Samuel, V.
Brockway, L.	Latham, L.	Serota, Bs. [Teller.]
Brown, L.	Leatherland, L.	Shackleton, L.
Buckinghamshire, E.	Lindgren, L.	Simon, V.
Burden, L.	Llewelyn-Davies of Hastoe, Bs.	Sorensen, L.
Chalfont, L.	Lloyd of Hampstead, L.	Stonehaven, V.
Champion, L.	Longford, E.	Stonham, L.
Chorley, L.	McLeavy, L.	Strabolgi, L.
Crook, L.	Maelor, L.	Summerskill, Bs.
Douglass of Cleveland, L.	Mitchison, L.	Taylor of Mansfield, L.
Gaitskell, Bs.	Moyle, L.	Walston, L.
Gardiner, L. (Lord Chancellor.)	Nathan, L.	Wells-Pestell, L.
Garnsworthy, L.	Noel-Buxton, L.	Williamson, L.
Geddes of Epsom, L.	Phillips, Bs.	Winterbottom, L.
Hall, V.	Plummer, Bs.	Wright of Ashton under Lyne, L.
Hankey, L.	Popplewell, L.	Wynne-Jones, L.
Resolved in the affirmative, and Amendment agreed to accordingly.
Clause 10 agreed to.

1307

§ Clause 11 [Financial duty of Executive]:

§ 5.40 p.m.

§ LORD DRUMALBYN moved Amendment No. 58:

§ Page 21, line 13, at end insert— ("Provided that in any exercise of the powers given to such executive by sub-paragraphs (v), (viii), (x), (xi), (xiv), (xxii), of subsection 1 of section 10 of this Act it shall be the duty of the executive to ensure so far as practicable that a profit of not less than 10 per cent. on the capital for the time being invested by the executive in the exercise of such powers is obtained each year.")

§ The noble Lord said: Perhaps I may be allowed to remove paragraph (xi) from the list set out in the Amendment, as we have just deleted it. Perhaps I may start by reminding your Lordships of the activities to which this Amendment would apply. Paragraph (v) deals with storage; paragraph (viii) deals with letting passenger vehicles out on hire; paragraph (x) deals with providing the facilities, including food and drink and car parks; paragraph (xi) we have just cut out; paragraph (xiv) deals with constructing and manufacturing, purchasing and repairing, and so on, for the purposes of the business; and paragraph (xxii) deals with developing land for use by other persons.

§ I do not think we need spend very long on this particular Amendment because these are all activities on which those with whom the Executive would be competing in offering these facilities would have to make a profit, and therefore it seems not unreasonable that "so far as practicable", as the Amendment says, a duty should be laid on the Executive to make 10 per cent. on the capital for the time being invested in any of these businesses. That would seem a modest proviso, and I would hope that, in any projects that are submitted by the Executive to the Authority, the Executive would be able to show that there was some likelihood of at least 10 per cent. being made on the capital for the time being employed. I do not think I need go into the arguments here because they are so similar to the arguments we were considering in the previous case. This is slightly different, of course, in that the activities which are mentioned here are often activities in which the Authority is already engaging. This is a kind of overspill of those activities, in 1308 that, for example, they are making available to the public storage that they are not using for other purposes.

§ So far as constructing and manufacturing are concerned, here again these are for the purposes of the business of the Executive and not for constructing or manufacturing for outside purposes. One would expect, of course, that they would so keep their accounts that they would be able to show that they were making at least 10 per cent.—and that, of course, would apply to all the activities. I would suggest to your Lordships that the whole basis of this Amendment is to ensure that competition is fair. When we were discussing the last Amendment the noble Lord, Lord Bowles, laid great stress on what he called the basis of fair competition. That is the purpose of this Amendment, and because the noble Lord laid so much stress on it I would think that the noble Lord, Lord Stonham, will be able to accept the Amendment. I beg to move.

§ LORD STONHAM
The noble Lord, Lord Drumalbyn, said that we need not spend long on this Amendment because there was a duty laid on the Executive to make a profit and it would be reasonable to suggest that this profit should be at least 10 per cent. He also mentioned that my noble friend had laid great stress on fair competition—and I would do nothing to weaken what was said on that. But, of course, it must also be fair to the Executive, whereas the noble Lord appears to be anxious only that it should be fair to anyone who is in competition with the Executive.
The point I want to make is that what is now demanded is a restriction on the activities of the Executive which in many cases is quite unfair and in some, indeed, is even absurd. We expect that in these ancillary activities the Executive will behave, as it were, commercially, and that they will want to make as much profit from them as they can. We can be quite clear and categorical about that. So there should not be any doubt about the fairness with which they will compete with those with whom they are in competition. But surely it is totally undesirable to tie their hands specifically in this way. Let me mention one or two examples of where it would be unwise. Some of the activities covered by the 1309 paragraphs mentioned by the noble Lord in moving the Amendment are so directly and necessarily related to the Executive's main business that they would need to carry them out whether or not they made a profit; and in some of these activities they would not be in competition with a private concern at all.
For example, paragraph (v) provides for the Executive to be able to store goods—in other words, luggage—which have been or are to be carried by the Executive. That means the provision of left-luggage offices. There would not be profit in that. Would the noble Lord suggest that there should not be left-luggage offices simply because they could not be run at a 10 per cent. profit? Also paragraph (xiv) permits the Executive to construct, manufacture, produce, purchase, maintain and repair anything required for the purposes of their business". That covers the maintenance and repair of their own buses, which again is not an activity where they should have to show a profit of 10 per cent.
Then, again, the Amendment does not include any definition of what is meant by "profit", although one would expect that it means profit remaining after making all the necessary charges. The Executives are not like a commercial company, in that all their capital is, so to speak, loan capital; they have no equity. Thus they already have as a prior charge the interest on the whole of their capital, whereas an ordinary commercial undertaking would have as a prior charge interest only on part of its capital, and normally a small part, and the profit would be struck before paying "interest", that is the dividends, on the equity part of the capital, which is likely to be much the main part. Therefore a requirement of earning 10 per cent. on this basis would be far more onerous on an Executive than it would be on an ordinary private undertaking. Surely there is no magic in this figure of 10 per cent. There is no reason to fix a minimum. Again it would mean cramping the commercial judgment of the Executive. In some cases 10 per cent. would be too low; in others too high. It is not possible to impose a rigid level right across the board.
Further to that the Executive is expected to provide a public service. They 1310 may wish to undertake some of these ancillary activities only to the extent that private enterprise has not felt it worth while to provide them for the travelling public. On the other hand, thy may, under paragraph (x), want to provide a car park at a station at unremunerative charges deliberately in order to induce people to leave their cars at that car park and commute to town, just as my noble friend mentioned on an earlier Amendment. In such circumstances one would wish to commend the Executive for enterprise and not to demand that they must either make a profit of 10 per cent. on it or not provide the service at all.
Further, the Amendment makes no allowance for lower profits while trade is building up, or for varying circumstances over periods of time—for example, for variations in interest rates and profitability. The fact is (though the noble Lord may not agree with this) that the fundamental reason for setting up these Passenger Transport Executives is not to make a profit; the obligation en them is to break even. They are to be established for, and with the emphasis on, the provision of a public transport service, and not with the objective of making a profit—although I agree that they must run their ancillary services as commercial undertakings so that they do show a profit, otherwise, overall, they will be in deficit.
I heard the noble Lord and his noble friend say that we are dealing with a nationalised industry. We are not dealing with a nationalised industry; we are dealing with a Public Transport Authority which is a local authority-controlled body with powers concerned only with local government and with the power to precept. He implied that in the light of objectives laid down for P.T.As and P.T.Es, we should apply the same procedure as that applied to a nationalised industry. I am sorry that I have disappointed the noble Lord in that he thought this Amendment could be disposed of quickly. We owed it to him to explain at some length why we feel that it would be quite wrong—and I hope that I have convinced him that it would indeed be wrong—to insert an absolutely rigid instruction that these bodies should make a profit, undefined, of not less titan 10 per cent. on all these ancillary enterprises when it might often be in the 1311 public interest that their first concern should be to provide a public service.

§ 5.55 p.m.

§ LORD NUGENT OF GUILDFORD
May I thank the noble Lord for explaining the Government's point of view with regard to our Amendment No. 58? May I say a word of further explanation of the view that we take with regard to this particular Amendment?—which really reflects to a considerable extent on the very wide powers in Clause 10 to which, with one exception, we felt we should agree, even though we feel a great deal of anxiety about some of them. Having accepted this very wide range of functions, we feel that it is necessary in the public interest to have some safeguards to make sure that public money is not used wastefully, on the one hand, and that there is not unfair competition, on the other.
The noble Lord made the point that this is not a nationalised industry; but the National Bus Company certainly is a nationalised industry. It is an accretion on to the Transport Holding Company's existing buses. By the time this scheme is completed nearly all the public passenger transport of the country will be under single ownership. While it is true that the actual direction and operation will be in the hands of different P.T.As and P.T.Es, this is, broadly speaking, a nationalised industry; the whole of this vast business becomes public property. This is why we are anxious to see that all the proper safeguards are present to make up for the disciplines of private enterprise which have been lost. Let me remind noble Lords that the B.E.T., when it was trading, always managed to turn in a profit on its bus undertakings. It was not a very big one, but it was a profit. I shall be more than content if in the future the bus operations are able to break even.
I recognise that circumstances are getting more difficult and that the strength of the management in these public authorities will not be anything like comparable to the strength and efficiency of B.E.T. This is why my right honourable friends and I felt such deep regret that noble Lords and their right honourable friends should have bought out B.E.T. However, that has 1312 been done, and we must put up with it. I make the point that we are concerned to see that the disciplines of the market remain, now that a loss made by any of these undertakings is not going to be as fatal to them as it would have been, to a large extent, when they were in private hands. We are very concerned to see that the discipline should be adequate.
This particularly applies with regard to the subsidiaries. The figure of 10 per cent. that we put in the Amendment is a fair one. I think it is less than some nationalised industries are asked to make though more than others. Perhaps the noble Lord has some other figure he would like to suggest. I agree that there could be some flexibility, for some subsidiaries will be more likely to make a profit than others; but in the main I am sure that these Executives will do much better by contracting out than by trading themselves. They will get a rent by letting part of their premises to private contractors; they will do far better in that way than by trying to trade themselves. But if they are trying to trade themselves, then they ought to submit, at least in part, to the disciplines to which private business is subject. This is the motive behind our Amendment. We feel that the noble Lord should at least have as much interest as we have in safeguarding public money and seeing that it is not wasted. If the Executives are required to make 10 per cent., which is less than private-enterprise undertakings would make—normally, they average about 15 per cent—this will ensure that they are not going into trading activities that are wasteful.
As noble Lords who are connected with the world of finance know, there is only a limited amount of capital resources available. When we see that in order to raise long-term loans firms like Rolls-Royce have to offer over 8 per cent. interest, we realise how short is capital in this country, capital needed for many vital purposes. Here, all we are trying to do is to safeguard the spending of public money and to make sure that it is not being diverted into wasteful activities. This is a sound investment, and we give the noble Lord the broad concept of his P.T.A. The noble Lord, Lord Bowles, was very accommodating to us, and reasonable, in listening to our Amendments, and in accepting in good 1313 faith that we are concerned to see that the P.T.A. set-up should succeed. I hope that after reading the report of yesterday's debates again, and perhaps looking again at the Amendments, the noble Lord will see that we are not concerned to wreck this concept but to strengthen it. This Amendment would strengthen it. It would undoubtedly deter the P.T.E. from going into trading activities which it would be wiser not to do but rather to get some private firm to do them under contract. This is the basis of our thought. I am sure that it is sound and in the public interest, and in the interest of the Government as well, and we must press this Amendment.

§ THE EARL OF SWINTON
May I put one point to the Minister, very shortly? If these safeguards, which I agree are absolutely vital, are introduced, as I sincerely trust that they will be, surely there would be nothing to stop the Minister himself from putting down an Amendment at a later stage to enable the Government to establish a cloakroom or a left-luggage office. I agree that that is not a competitive industry and no one else is going to establish it; but surely there would be nothing to stop the Minister making a proposal, which I feel sure the Committee would accept, that on such a purely non-competitive matter the authority would have it, and that would leave the essential safeguards intact. Surely that would be a very simple way out of the difficulty which the Minister, I must say I think with great exaggeration, has put to the Committee.

§ LORD MILNE
I am very surprised that the Committee debated earlier these various points about the objects of the Bill and what the Transport Executive could do. This clause seems to me the most important of the whole lot. Here we are giving a blank cheque to borrow money and to break even. To break even means making a loss for certain. Surely the most important thing is not to make 10 per cent.—the figure does not matter. The point of the exercise is that if they make a reasonable profit on these ancillary activities, this is something. But the noble Lord said, "if they break even". Why put in a figure if it is a matter of breaking even? If they make a reasonable profit on the thing, that is the point, but to take power to do something and perhaps lose money on it seems 1314 to me a very odd way of conducting activities.
In private enterprise in the articles of companies you take the widest power possible. We have been debating cutting down powers because of the feeling that everyone has that money is going to be lost. If there was a feeling that the money would not be lost, I do not think that there would be any objection to taking the widest powers on all sides.

§ LORD BANNERMAN OF KILDONAN
I feel that the noble Lord has emphasised a most important part of this clause: that the Government wish to have an element of public service in this matter. To put on a discipline of 10 per cent. or 5 per cent. would, in my opinion have the effect of diminishing the quality of the public service. We in the North put a percentage on what is virtually a nationalised service, the coast-wise traffic in the North-West, and I can assure the Committee that over the last 30 years the public service has deteriorated in an endeavour to keep to the discipline ceiling put on it originally of 5 per cent. on its capital.

§ LORD KAHN
I wonder whether I may express the hope that the noble Lord will reiterate and explain to the Committee, so far as it may be necessary, the argument he used in his previous speech that the Authority would incur, as part of its expenses which it has to meet and cover, interest on its capital; and that any additional profit would be over and above the interest charge on its capital?

§ 6.6 p.m.

§ LORD STONHAM
I am sorry if I did not make myself sufficiently clear when I first spoke, and it is obvious from the remarks of the noble Earl, Lord Swinton, that I did not. The Government's main objection to this Amendment is that it would impose on the P.T.E. a restriction which no private undertaking, Rolls-Royce or anyone else, would be so foolish as to impose on itself; because no private enterprise company would operate under this 10 per cent. rule which noble Lords opposite want to impose on the P.T.E. It would mean shutting down parts of the business which were essential to the whole.
In the case of the Transport Executive it would mean not starting many projects 1315 which would be of public importance and which would render a public service, because it might well not, or might certainly not, be sure of providing this 10 per cent. profit margin. The noble Lord, Lord Kahn, asked me to reiterate and explain the point I tried to make about equity capital and loan capital, and the fact that the Executive had to earn its interest. In a sense, the noble Lord, Lord Nugent of Guildford, emphasised this point when he said that Rolls-Royce had to pay 8½ per cent. to borrow money. If Rolls-Royce were declaring their tax profits, they would declare them before they paid interest on their debentures. It would be part of their profit. But in the case of a Transport Executive—

§ LORD NUGENT OF GUILDFORD
May I interrupt the noble Lord? Am I right in thinking he said they would declare profits for dividend before they paid the interest on the debentures?

§ LORD STONHAM
If you look at the returns from Rolls-Royce, you will see they indicate both their untaxed and their taxed profits, and then they show just how the profits are distributed and, of course, when they paid out the interest on the 8½ per cent. debentures, they would pay it less tax, so I am perfectly correct in what I said.

§ LORD NUGENT OF GUILDFORD
The point I was making was that they do not declare a dividend until they have paid their debenture interest.

§ LORD STONHAM
If I may say so, I think that here the noble Lord is splitting hairs. You cannot get away from the point that if you took a cafe as an example of private enterprise, it would not have any loan capital, the whole of the capital would be equity capital, and it would satisfy the noble Lord's conditions if it paid 10 per cent., as a private undertaking. If it did, it would be quite a healthy undertaking. If the Executive ran an undertaking of that kind, it would have to earn perhaps 8½ per cent. on its money. That 8½ per cent. would be part of its expenses, and then, according to this Amendment, there would be 10 per cent. on top of that. It is no good the noble Lord shaking his head, because he has not defined profit in the Amendment. We must assume that he means profit after all charges. The noble Lord, 1316 with his great experience of Government, should not put such an Amendment forward without explaining what profit and capital are. I have to put my own proper construction on this.

LORD NUNBURNHOLME
There has to be interest on the capital and amortisation. Can the Minister explain how he is going to meet the amortisation of the capital?

§ LORD STONHAM
I am getting an enormous amount of help in dealing with this Amendment. I have not mentioned the noble Lord, Lord Bannerman, but I am extremely grateful for his help, and what the noble Lord now asks for is another reinforcement to my argument. I would say to the noble Lord, Lord Drumalbyn, that these are some of the things which should have been explained when this Amendment was presented to your Lordships' House.

§ LORD STRATHCLYDE
The noble Lord, Lord Bannerman, said that when the condition of a profit of 5 per cent. was laid down for MacBrayne's services to the West coast, the service deteriorated. In these circumstances, why do the Government lay down that the electricity industry in Scotland has to make a profit of 9 per cent. on its net assets? Presumably to deteriorate the service? This is utter nonsense. The Board maintains an excellent and constantly improving service under that system.

§ LORD STONHAM
It is my experience that when one is making a good case, one is sure to be interrupted by diversions. I mention the noble Lord, Lord Bannerman, because he made an express plea against the rigidity and the regimentation demanded in this Amendment. Would the noble Lord really like me to try to answer his question about the Electricity Board? To come back to the noble Lord, Lord Nugent of Guildford, I do not know whether he means to press this to a Division but if so, I must ask your Lordships not to vote with the Opposition simply because this is an Opposition Amendment. We should be voting against all reasonable financial tenets. Noble Lords who want a public local authority to provide facilities for the public, when it comes to legislation, should not agree to Amendments which would virtually strangle the public authority in performing its functions.
1317 I repeat that this is not a nationalised industry. The noble Lord referred to the National Bus Company, which will be, of course, a nationalised industry but in this Amendment we are dealing with an instrument of local government, the powers of an Executive set up by an Authority comprised mostly of members of local authorities. The noble Lord says that we must have some safeguard when public money is being spent, maybe in competition with private enterprise. Of course, we must, but will not the local authority members of the Passenger Transport Authority be a safeguard? Are they not throughout the country one of the surest safeguards of the public interest and of the expenditure of public money? These members of local authorities will decide the policies which will give rise to the possibility of precept and they will have to approve any proposals of the Executive for setting up enterprises. They are aware of the consequences of unfair competition. All of them will be ratepayers. They will not permit anything which is stupid, absurd or unfair and they will, I hope, support measures for facilities designed to assist the public.
The noble Earl, Lord Swinton, said that if safeguards were introduced, the Minister could then bring in a proposal which would enable the P.T.E. to provide a left-luggage office. Surely this is not a serious contention. We are talking here about an Executive of expert members which will run and coordinate these undertakings. Surely we are not going to limit them so much that they will have to run to the Minister for authority or sanction for any minor projects they may put forward. We must create a sensible framework in which they can operate. I firmly believe that the suggestion made in this Amendment has not been substantiated. I think that it has been exposed as foolish in some cases, and in almost every way unnecessary and I hope that the noble Lord will withdraw the Amendment.

§ LORD BANNERMAN OF KILDONAN
May I speak of the wide analogy drawn by the noble Lord, Lord Strathclyde, between the Hydro-Electric Board's provision of electricity and the transport service of MacBrayne. The Hydro-Electric Board undoubtedly have done a great job in the North and West of Scotland, but 1318 the people who have received a service of electricity have found that the price has been raised considerably since they first got it. But what happened with MacBrayne is that the 5 per cent. made the MacBrayne's boats travel past communities that had been receiving service from these boats previously, with the result that these communities in many parts of the Highlands have died off for lack of continuing communications. That is particularly due to this disciplinary 5 per cent.

LORD KIRKWOOD
May I mike the comment that the conditions imposed in this Amendment are very harsh for any big organisation getting itself reorganised. May I suggest that "a profit of no less than 10 per cent." should be altered to "an adequate return". I feel that this would meet all parties.

§ LORD DRUMALBYN
I think that it would be as well if I summed up on one or two points. The noble Lord, Lord Stonham, is vastly over-stressing the point, even from his own point of view, when he says that this provision would strangle the Authority. For one thing this provision is not concerned with anything the Authority has to do. They are all activities in which the Authority need not engage at all, not one of them. Therefore, if it is going to engage in these activities and in competition with other industries, surely there should be a proper financial discipline.
The noble Lord makes great play with the phrase, "a profit of not less than 10 per cent.". But I think, with great respect to him, that everybody on this side is well aware of what this phrase is intended to convey, because we know very well the financial disciplines that are laid on nationalised industries. I am not concerned with whether this is a nationalised industry or not; that is another matter. We know what this means, and we know that broadly speaking, they have to show a surplus of 8½ per cent. on net assets, or 12 per cent. on gross assets, whereas normal private enterprise requires to show a surplus of 15 per cent. in order to survive. We are putting this modestly at 10 per cent. Everybody in the Committee knows that, and if this is inaccurate or does not express what we mean n the way the draftsman would like it to be expressed, we could pass this Amendment 1319 now and the draftsman could quite easily put it right.
We always have this argument as between the Opposition and the Government side. Whoever is in Opposition knows full well that they cannot make a perfect draft. What they have to do is to put an Amendment to the Committee and let the Committee decide on the sense of the Amendment. If it does not exactly coincide from the drafting point of view, then it is up to the Government to put it right.

§ LORD STONHAM
Does not the noble Lord agree that, if he knows what he means, it is for him to put it in the Amendment so that everybody knows what it means? This is a totally new doctrine: that noble Lords should put down any old Amendment, pass it by a majority of two to one, most noble Lords not having heard the argument, and then say to the Government: "If the Amendment is defective, you put it right."

§ LORD DRUMALBYN
I am quite certain that I could look up Hansards from the past and find example after example where this argument had been put up by noble Lords opposite when they were over here.

§ LORD HENDERSON
And rejected.

§ LORD DRUMALBYN
Of course, it would be rejected by the Party on the other side. But I am certain that we are all well apprised of what is intended here. I think we should reach a decision now, because we all know what we are after. What we are after, quite simply, is that we should set a financial discipline which will govern, "so far as practicable" (those are the words of the Amendment) the conduct of the Executive in engaging in activities in which they do not have to engage, but which they could get, if necessary, and which could be provided elsewhere. We maintain that unless the Executive are able to show that they can provide these services and make the same sort of profit on them as is made by others in providing such services, then they ought not to provide those services.

§ LORD KAHN
I wonder whether the noble Lord would deal with the argument that part of the cost of providing 1320 these services is the interest on the capital which has to be covered. When the noble Lord referred to an obligation to earn 8 per cent. in certain circumstances, it is not 8 per cent. on top of the interest on the capital; it is 8 per cent. without any interest.

§ LORD DRUMALBYN
What is required in nationalised industries is 12½ per cent. on the gross assets and 8½ per cent. on the net assets. I agree with the noble Lord. But I do not see how it alters the circumstances when you take into account what has to be earned by private enterprise in order that they can remain in business.

LORD HAWKE
Before my noble friend sits down, may I say that I am not happy about putting a figure in permanent legislation. Has he any example of this in any other legislation? Otherwise, it would seem to me more practical to put in something on the Report stage to the effect that the Executive shall, so far as practicable, maintain a commercial rate of return on the capital employed. To put in a fixed rate when you are legislating forever—and we have not the slightest idea what the value of money will be in ten years' time—would seem to be impracticable.

§ LORD STONHAM
I should like to add that, since it has been suggested that the Committee should carry this Amendment and that it should then be altered afterwards, I do not want any figure of profit in it at all. This is the rigidity that I have rejected about this proposal. A suggestion was made by the noble Lord, Lord Kirkwood, earlier, which was highly sensible, that it should be looked at to see whether it is necessary. The case has not been made out, and I think the noble Lord would be doing a disservice to the Committee and to his Party if he tried to steamroller this through.

THE DUKE OF ATHOLL
There is one other point that I should like my noble friend to explain in regard to subsection (1), sub-paragraph (v) of Clause 10, which says: to store within that area goods which have been or are to be carried by the Executive… I should have thought that this was essentially part of the Executive's function. If we are going to agree to Clause 10. it seems to me almost essential that 1321 the Executive should be enabled to store the goods which are carried until someone comes to collect them. I should have thought that to expect them to make 10 per cent. on this was being unreasonable, and I should be entirely unable to support my noble friend as long as paragraph (v) is one of those included in the Amendment.

§ LORD DRUMALBYN
After a considerable number of interruptions. I think I can resume what I was saying. I gathered from the noble Lord that he would be prepared to accept an Amendment provided that there was not a figure in it. But in any case I think it would probably now be the sense of the Committee that we should consider this and put down on the Report stage an Amendment which would not tie the Executive to a particular figure; to try to clarify as far as possible the concept of a profit that we have in mind, and indeed to cover the point made by my noble friend about paragraph (v). This would seem to be the sense of the Committee, and therefore I ask leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 6.28 p.m.

§ LORD DRUMALBYN moved Amendment No. 59:

§ Page 21, line 23, at end insert— ( ) If in any accounting period it appears to the Executive that a deficit is likely to occur through an unavoidable specific increase in costs which cannot be offset by an immediate increase in revenue, the Executive shall apply to the Authority for permission to incur a deficit not exceeding the amount of the specific increase in costs which it estimates will be incurred in the remainder of the accounting period.

§ The noble Lord said: This is an Amendment which is related to the possibility of deficits that may arise during the course of a year. As I understand it, the procedure that is to be adopted is that the deficits are to be settled, so to speak, before the start. A budget is going to be presented, a deficit is to be budgeted for, and that deficit will be met by a precept or requisition on the rates. If that is so, it is quite clear that in the course of the year the budget may be upset by, in particular, specific increases in cost, and this Amendment refers to "unavoidable specific increase in costs".

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§ The sort of case that one has in mind is an increase in labour costs, or it might be an increase in the tax on fuel, or even a strike which has imposed a specific increase in costs. But I have in mind rather the more specific increase in costs attributable to particular increases in the cost of supplies or the cost of labour. In that case, it would seem desirable that the Executive should bring the estimated specific increase in costs for the rest of the year to the immediate attention of the Authority, and that the Authority should decide what should be done for the remainder of the accounting period.

§ It is my view that in principle the Authority should take steps to see that that deficit does not occur. This Amendment says that the Executive shall apply to the Authority for permission to incur a deficit where it is not possible to cover an unavoidable specific increase in costs by an immediate increase in revenue. This could happen. Indeed, in the recent report of the Prices and Incomes Board on London Passenger Transport it is argued that in certain circumstances it might not be appropriate to raise, for example, charges for the remainder of the year to cover the cost of the specific increases in costs that have occurred. But there is no doubt whatsoever that this position should be brought to the attention of the Authority at the time and should not simply be brought to the attention of the Authority at tie end of the year with a request then for an increase in precept to meet the deficit, Where the increase in costs is specific, and where in order to cover that a specific deficit has to be incurred, of else charges have to be raised by a specific amount, it is the Authority that must take the responsibility then, at that time, for the decision. That is the point of the Amendment. I beg to move.

§ 6.32 p.m.

§ LORD STONHAM
The effect of this Amendment, as the noble Lord indicated, would be that if an Executive were suddenly faced with an increase in costs which could not be met by an immediate increase in revenue, such as through an increase in fares, and a deficit would thereby be unavoidably caused in the particular accounting period, then the Executive would be obliged to apply to the Authority for permission to incur that 1323 deficit. I think that this arises from a misconception, because if the circumstances envisaged by the noble Lord should arise—and they undoubtedly will occur to different Executives—the deficit would arise whether they go to the Authority or not. You cannot prevent the deficit from arising, because it will have occurred through some unforeseen circumstance, such as a strike or a demand for wages which had to be conceded. Therefore, the deficit will occur. They cannot go to the Authority and ask for permission to let it occur.
But if the Executive incur a loss for this or any other reason, and if that loss is more than could be offset by the accumulated profits of the undertaking from previous years, it will then be the duty of the Executive to aim at a sufficient profit in the next accounting period to cover that loss. That is how the arrangement would work. I really cannot understand the objective of the noble Lord in suggesting that they should go to the Authority for permission, presumably with the idea of making a future case for a precept. If that is what is in the noble Lord's mind, I suggest it would be wholly undesirable because it would relieve the Executive of a duty which they would otherwise have of making good that loss in a subsequent period. That would be quite unacceptable to the Government.
The Executive have to behave commercially, and if they have had an unexpected loss in one accounting period then they will have to try to make it good in another accounting period. We just could not contemplate legislating for a situation in which it would be possible for the Executive to carry permanent and possibly increasing losses without the duty being laid on them to try to make those losses good in one way or another. The other alternative is that this proposal could be regarded as a device for making the loss respectable. That again we should find unacceptable. I do not think the noble Lord has really thought out all the implications of this Amendment, and it seems to me that it would provide a situation which is totally contrary to what the noble Lord and his noble friends have been aiming at in all the Amendments we have discussed today. For that reason I hope he will withdraw it and think again about it.

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LORD NUNBURNHOLME
Before the noble Lord sits down, could he just define "accounting period"?—because if an accounting period is going on for six months, and it is at the beginning of the accounting period when this exceptional extra cost is incurred, the matter should be put right immediately, not at the end of the accounting period.

§ LORD STONHAM
I entirely agree. But the case put forward is the very proper one of an unavoidable deficit occurring which could not be made good in the accounting period in question. What I am arguing is that if it could be made good within the period then the case does not arise but if it could not be made good in the period then the Executive should not go automatically to the Authority and get permission, as it were, to incur a deficit which would occur anyway, but it should soldier on into the next year and try to make it good.

§ LORD DRUMALBYN
These are very difficult matters and we can certainly go on thinking about them, but may I in the meantime put one or two thoughts on the matter? The first is that this Amendment postulates, as I think the noble Lord said, an increase in costs which cannot be offset by an immediate increase in revenue. The noble Lord says that this deficit should be made up in the following year. That is all very fine, but we have such a body as the Prices and Incomes Board, and it may well be that the Prices and Incomes Board will strongly recommend against that being done. It could happen. What I am afraid of is that unless remedial action is taken in the year, the deficit will be allowed to grow from year to year and there will be nothing to stop it.
There may be very good reasons the following year why it is not possible to increase the charges and why, therefore, the Authority might have to agree, or might wish to agree, to an increase in the fares for the following year. It may very well be that they might have to agree to an increase in the fares. But if they do not do that, then there will be a continuing deficit. It was because of this possibility of a continuing deficit, despite the duty that is laid on the Executive in the Bill, that I have raised this 1325 matter. My view is that the situation should be dealt with at once. Either the charges or the precept should be increased. This kind of deficit-financing from year to year has occurred for established nationalised Boards, despite the duty that has been laid on them not to have deficits and to meet their charges, taking one year with another; and, unless this provision is made, this will occur in the case of these Executives, too.
I would invite the noble Lord to think of that on his side, too, because it is a most important matter. It has been proved quite clearly that the mere fact that a duty not to incur a deficit is laid upon a Board in an Act of Parliament does not in fact prevent a continuing deficit from arising; and that is what I am trying to prevent by this Amendment.

§ 6.40 p.m.

§ LORD STONHAM
I am afraid that I have to tell the noble Lord that he does not prevent it; he creates instead the possibility of a worse evil. In legislation we try to provide against contingencies, but one contingency we cannot provide against is when authorities do not comply with their obligations under legislation. The case postulated by the noble Lord is one of that kind.

LORD HAWKE
May I point out that if it is desired to insure against this particular contingency another equally likely contingency is not provided against, which is that revenue will decline and costs cannot be cut to match? But I am sure my noble friend is absolutely right in demanding that the matter should be settled straight away. The only discipline of these bodies is that ratepayers must ultimately produce the money. That is going to have a most salutary effect, and the quicker they have to face up to it, the quicker it will be put right.

§ LORD DRUMALBYN
I am grateful to my noble friend, and I am sure there are a number of other contingencies which could arise. I do not intend to press this Amendment to a Division but I think it is something which should be considered and which needs defining at some stage. I ask leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

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§ 6.42 p.m.

§ LORD DRUMALBYN moved Amendment No. 60:

§ Page 21, line 34, at end insert: ( ) An Executive who engages, either directly or through a subsidiary, in any activities authorised by section 10(1)(vii), (ix), (xiv), (xxi), (xxvii) or (xxviii) of this Act shall carry out those activities as if they were a company engaged in a commercial enterprise, or, as the case may be, shall exercise their control over that subsidiary so as to ensure that the subsidiary carry out those activities acts as a company so engaged.

§ The noble Lord said: This Amendment corresponds with Clause 48(7), and the duty that is laid down in this Amendment is laid upon the Boards and de new authorities in Clause 48. Noble Lords will see that it is to a different set of paragraphs that it is to apply. The Amendment refers to An Executive who engages, either directly or through a subsidiary "— in any act which is authorised by certain paragraphs in Clause 10(1). Paragraph (vii) deals with the provision of air services; paragraph (ix) deals with the activities previously carried on by a transferred undertaking; paragraph (xiv) deals with construction and manufacturing (that is the only one that comes in twice); paragraph (xxi) deals with the developing of land for the purposes of their business, and the next one deals with the developing of land for the purposes of other people. It seems to me that in this; case there is no reason at all why, if the Executive engage in any of these activities, they should not engage in them on the same basis as a commercial enterprise. This Amendment is to bring matters into line, so far as the Passenger Transport Executives are concerned, with the duty laid on the boards and the new Authorities under Clause 48. I beg to move.

§ LORD STONHAM
This Amendment is the same principle as that in Amendment No. 58, about which we had a long discussion. I say at once that it is less objectionable, in that it does not lay down any specific target, but the activities covered by the paragraphs listed are by no means all purely ancillary activities which anyone could expect an Executive invariably to carry out in the same way as a commercial company would. I am sorry the noble Duke, the Duke of Atholl, is not in the Chamber 1327 now because paragraph (vii), for example, provides for the making of arrangements with air operators, in which case it is by no means difficult to imagine circumstances in which the Executive might decide that it would be in the best interests of the travelling public in the area that an uneconomic service should be provided and subsidised by the Executive. That would be quite likely to meet with general approval in the area if the circumstances were right. The noble Lord is well aware that there are uneconomic air services in Scotland, and it is quite possible that if a suitable service were not available the Executive might consider it proper to suggest that such a service should be provided. That would not be carrying it out, in the terms of this Amendment, in a commercial way.
Paragraph (xiv) permits the Executive to construct, manufacture, produce, purchase, maintain and repair anything required for the purposes of their business. In certain circumstances it would be the ultimate wisdom for the Executive to do some of these things in an uneconomic way if they were required in support of uneconomic services that were needed for social reasons. That is another part of the job of an Executive which could not be called "commercial". Paragraph (xxi) enables the Executive to develop their land for the purpose of their business as they think fit. Again, they might need to set up a free car park to get people to leave their cars while they travel by public transport into town. That would be uneconomic but it would be wise and very much a part of the job of the Executive to relieve traffic congestion.
Paragraphs (xiv), (xxvii) and (xxviii), are perhaps purely ancillary, and if the noble Lord had confined his Amendment to those three paragraphs the Amendment itself might have been unobjectionable; but to pick out certain activities and label them as to be carried out "commercially" carries the dangerous implication that this consideration does not apply to other activities. I have spent most of the afternoon and evening trying to insist that it does, so for what I regard as the most valid reasons, which I hope the noble Lord will accept, this Amendment should be withdrawn.

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§ LORD DRUMALBYN
I do not see how it is at all likely that air services in connection with Passenger Transport Executives would be provided with a subsidy. It is true that air services are provided in the far North, as was said, for social reasons, and they require to be subsidised, but it is most unlikely that we shall see a Passenger Transport Authority in the far North of Scotland. I should find it surprising if a system which is now being invented to deal with the conurbations were applied to the braes. It would probably be desirable for us to try to work this Amendment in conjunction with the one with which we have just dealt, No. 58, and to put down an Amendment at Report stage that will meet what we have in mind. I do not think it would be worth while continuing with this particular Amendment at the present time. As the noble Lord suggested, we may have to look more carefully at particular activities to see whether they fit in with the concept of behaving as a commercial enterprise. So I do not propose to press this Amendment further at the present time, and I beg leave to withdraw it.

§ Amendment, by leave, withdrawn.

§ Clause 11 agreed to.

§ Clause 12 agreed to.

§ Clause 13 [Power for Authority to precept for Executive]:

§ 6.51 p.m.

§ LORD NUGENT OF GUILDFORD moved Amendment No. 61: Page 23, line 36, after "issue" insert "where a majority by number of the persons appointed by the councils of constituent areas so determine.

§ The noble Lord said: I beg to move Amendment No. 61. Clause 13 deals with the power of the Passenger Transport Authority to precept on the ratepayers for the Executive. In subsection (1) of Clause 13 the Bill says: …the Authority for a designated area may issue precepts to those councils of constituent areas who are rating authorities for the levying of rates by those rating authorities to produce such sums respectively as may be determined by the Authority… The effect of this Amendment would be to require that before the Authority for a designated area issues a precept there should be "a majority by number of the persons appointed by the councils of 1329 constituency areas" so resolving; in other words, that there should be a vote in the Passenger Transport Authority, and the local authority members who, if our ideas succeed, would be all the members, but if the noble Lord's ideas succeed will he only some of them, the majority should vote by a majority in favour of levying the precept. The noble Lord, Lord Stonham, reminded us in a debate on an earlier Amendment (I think it was No. 58) that the safeguard for the public funds incorporated in the P.T.A. is the presence of the local authority members, and that I entirely accept, because we have been stressing it throughout. The Amendment that I am now moving would ensure that no precept can be made except on the resolution of a majority of the local authority representatives on the Authority. I am sure that this is plain common sense. It certainly occurs in other Acts—I can think of at least one. I hope that the noble Lord will accept the Amendment. I beg to move.

§ LORD STONHAM
This Amendment raises a point which on an earlier Amendment I promised the noble Lord, Lord Drumalbyn, I would have a look at. It appears that I am having a look at it rather earlier than I anticipated. The intention underlying the Amendment—and it is one which of course needs very serious consideration—is that the decision to precept should be made by the representatives of the councils on whom the precept will fall. Because, as I have mentioned, county councils will appoint members to the Authorities, the Amendment would not precisely achieve that purpose, since county councils are not rating authorities, although no doubt they will have a substantial representation on at least some P.T.As. With regard to the Minister's appointees, be they one, two or three, in any P.T.A., I must point out that they will be full members of the Authority; they will not be responsible to the Minister, and will be appointed because of their special value to the Authority. Indeed, they may well have, and I should have thought it highly probable they would have, strong local affiliations. But they must in every way be full members of the Authority, taking full part in the Authority's collective responsibility.
Any decision to issue a precept may be the end product but it is not a decision 1330 which will be taken in isolation; it will be one link, possibly the final link, in a chain of policy decisions made by the Authority, including the Minister's appointed members, about such matters as major capital expenditure, substantial development or extension of services and facilities, agreements with the Railways Board for local passenger services alterations in the general level of fares and reducing or waiving fares for particular classes of passengers. All the members of the Authority should be involved in deciding these policies, and if the combined effect of these decisions is to make precepting necessary then it is right, in the Government's view, that the members appointed by the Minister should join in making this decision, as well as the decisions I have mentioned which inevitably lead towards it. Otherwise, they would become, as it were, second-class citizens in the Authority, and that I should have thought would have been most objectionable.
These people will be picked because of their knowledge, ability and standing, and their experience could be of great value to the Authority. It could seriously prejudice their willingness to serve on the P.T.A. if they were nevertheless told, "You will be able to take part only in certain decisions". It would also go against the fundamental principle which we accept in most bodies of this kind, that all members, once appointed, are equally part of and responsible to the Authority. I very much hope that the noble Lord will consider these arguments, because they are certainly powerful ones, and if the P.T.As. are to be as effective as they must be then I think the Government's view here is the right one, and the Amendment should not be proceeded with.

§ LORD NUGENT OF GUILDFORD
I thank the noble Lord for explaining to us the Government's viewpoint on this. I understand that he has already undertaken to my noble friend Lord Drumalbyn to look at this point generally, and I am hopeful that he will at least look at this again. There is quite an interesting conflict here. The noble Lord has cogently urged that, assuming that the Bill takes the form now before us, the Minister's representatives should not be deprived of the right to vote on the important issue of levying a precept 1331 because it might make them into second-class citizens, and that would go against (I think these were his words) their sense of fundamental responsibility to the Authority.
I agree that that is a point. But what the noble Lord, Lord Stonham, has to match that against is the sense of responsibility, which I feel is fundamental, of the Authority itself to the local people, to the local ratepayers, who are also the local travellers, the local users of the transport services, the local electors, to whom the local government representatives are ultimately responsible. As all of us who have taken part in local government know, local government electors are nowadays more and more conscious of their rate burden; more sensitive, and therefore critical of the councils who lay additional rate burdens on them. This, I feel, is far the most important principle here.
I am quite sure that these authorities are not going to be successful unless there is a clear chain of public accountability from the Authority—from the operating of the buses, through the Authority, back to the local ratepayers and the local travellers, the local electors. If we have that clear chain of public accountability, then I believe that it would be possible to avoid the great and calamitous dangers which have been demonstrated in the Massachusetts Bay Public Transport Authority. So, in weighing one set of considerations against the other—that is, the general sense of responsibility to the the Authority, on the one hand, and the sense of responsibility to the electors, on the other—I suggest that there must be only one answer: that the responsibility to the local electors must come first.
There is a respectable precedent, if I may help the noble Lord, in the case of the river authorities. This is the procedure in the river authorities. The Government appointed members do not vote in regard to the levy and precept. It seems to me that this is a sensible practice. So far as I know, they have never felt themselves to be second-class citizens. Indeed, I am a member myself, and I have never felt that I am a second-class citizen because I have been appointed by the Minister, either the present or any other Minister. I think the appointed members will recognise that this is the direct responsibility of the 1332 local government members and therefore it is they who should vote on it. I hope that the noble Lord, Lord Stonham, will say that he will look at this matter again. It is a good point. It has respectable precedents, and I am sure that it will make the P.T.A. stronger and healthier if he accepted it. He may not like it in its present form; he may need more time to think about it; but I hope that he will see that there is weight in the argument and will be willing to consider it again.

§ 7.2 p.m.

§ LORD ILFORD
I think the persons who are most likely to feel themselves to be second-class citizens will be the representatives of the local authorities when they find themselves outvoted by persons who do not represent anybody who has been democratically elected. It seems to me that this is a most serious departure from the usual practice. So far as I am aware, in local government it is the almost invariable practice that persons who represent the districts which have to raise money vote on questions of what sums shall be raised, and so on, and persons who represent districts which are going to benefit by the services are excluded from voting. That is not quite this case, but it is nearly this case, and I am quite sure that the representatives of the local authorities who find themselves outvoted will certainly feel themselves to be indeed second-rate citizens.

§ LORD STONHAM
I said earlier that I would ask my right honourable friend to look at this matter again, without commitment, and I will do so. I appreciate that there are powerful arguments, but they would, I think, arise largely from a limited area feeling—I hesitate to use the word "parochial". I submit to your Lordships that it is the job of the Authority to hold the balance between the travellers and the ratepayers, these being not necessarily the same people, as I think the noble Lord indicated. The independent Minister's nominees are not representatives, and are perhaps more likely to be able to hold this balance than are the local authority nominees. But, as I have said, I will study what has been said in this debate as in the earlier one.

§ LORD NUGENT OF GUILDFORD
I thank the noble Lord for expressing his 1333 willingness to study this Amendment with the earlier point made to him on a similar theme. I thought he showed some reluctance to concede the weight of it, but I hope that on further consideration he may well be persuaded by it. On that basis, I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 7.6 p.m.

§ LORD DRUMALBYN moved Amendment N0. 62: Page 24, line 24, after "amounts" insert ", if any,

§ The noble Lord said: This Amendment seeks to introduce the words "if any". Subsection (1) says: The authority shall from time to time by notice in writing to the Executive specify the amounts for which the Authority propose to issue precepts under this section in respect of expenditure incurred during any accounting period. The Amendment would seek to introduce the words "if any" after "amounts", so that it would read: The Authority shall from time to time by notice in writing to the Executive specify the amounts, if any, for which the Authority propose to issue precepts…

§ I have put down this Amendment because it seems to me that it should not be assumed that every Passenger Transport Authority will allow its Passenger Transport Executive to budget for a deficit for which a precept would have to be levied. Even in those areas covered by Clause 20, which is a clause which deals with railway passenger services, where the Executive may make payments to the Railways Board in relation to their services, it does not follow that if the Executive agree to make payments to the Railways Board a deficit may be incurred. It may well be that the Passenger Transport Authority will insist that the payments to the Railways Board shall be covered by cross-subsidisation from the road services. I do not know what other noble Lords think about the drafting of this particular subsection, but to me the plain but inescapable implication is that every Authority will from time to time incur deficits, and when they do so they have to specify by notice in writing the amounts which they propose should be levied as precepts. It seems to me that the matter should be put 1334 beyond doubt, assuming there is any doubt.

§ I hope the Government will agree with me that we should not assume in advance that every Passenger Transport Authority is going to have to levy precepts. I hope that it will be the case that some Executives will pay their way. If that is so, then it would be salutary and advisable to introduce these two little words. I beg to move.

§ LORD STONHAM
I am most grateful to the noble Lord for explaining his purpose so fully, because I had regarded this as being a purely drafting Amendment. He is perfectly right. There is no obligation on a P.T.A. to precept, and there is no such implication in the Bill. The Authority will specify an amount only when there is an amount to specify. Clause 13(1) does, I think, make it absolutely clear that the Authority may precept; that is, they are not obliged to precept. In fact, Clause 13, as I am sure the noble Lord will recognise, is an enabling provision. In the Government view there is no need to insert "if any" in any reference in the clause to the amount due under the precept. If we did insert the words "if any" in subsection (1) it would imply it should also be inserted wherever a reference to the precept is made, and we should have to insert it in all the other enabling provisions in the Bill, and in other Acts too. This is an enabling provision. It enables the Transport Authority to do this if they think it desirable, and no other change in the Bill is needed. All that the noble Lord wishes to achieve is in fact achieved already, and to insert the words he suggests would, in fact, do harm elsewhere.

§ LORD DRUMALBYN
This was, as the noble Lord appreciates, a probing Amendment, and I was anxious to know the attitude of the Government to precepts in general. I am glad to hear what the noble Lord had to say on this subject, but it is a little difficult for the layman, when he sees "the Authority shall" to interpret that to mean "may", which is rather contrary to what we are generally told. While that may be so, I willingly accept the assurance that these words are not necessary, and I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

1335

§ 7.12 p.m.

§ LORD DRUMALBYN moved Amendment No. 63: Page 24, line 27, leave out "either generally or".

§ The noble Lord said: These two Amendments, Nos. 63 and 64, come together, and once again they are both probing Amendments. There are two points here. The first is raised because I do not know what the Government have in mind. I am not clear what is meant by "a particular designated area". Is it really intended that the Government should restrict the total sum to be raised for a particular designated area within the area designated as the Passenger Transport Area? If that is not so, then what does "either generally or" mean here? I put down this Amendment to leave out these words to find out what the words meant. I should not have thought it was contemplated that some areas within the designated Passenger Transport Area should be favoured in the matter of precepts at the expense of others, and yet if I understand the drafting of the clause here this would appear to be precisely what is intended: that it would be possible to alleviate the precepts or put a ceiling to the precepts in certain areas—that is to say, certain parts of the Passenger Transport Area. I think the Committee will be glad to have an explanation of it, because it is not clear on the face of it.

§ The second point is that if precepts are to be restricted, then presumably fares would have to go up. This is if the words "either generally or" are left in. If the Minister, by order, restricts the aggregate amount for which the Authority may issue precepts, then it must mean that the fares will inevitably have to go up. Now it may be that there is an agreement between the Passenger Transport Executive and the Railways Board which might preclude an increase in fares on the railways, in which case a deficit on the railways should not be affected. It seemed to me that while it might well be that the Minister would make an Order in general limiting the total amount—and I take it that "aggregate amount" means the total amount in pounds, shillings and pence for which the Authority may issue a precept—and while that might well apply to the road passenger services, it would be difficult to say that the aggre- 1336 gate amount should apply to the rail services as well, which are separately negotiated. Perhaps the noble Lord will explain this. However, the point I am trying to make is that the rail services are the subject of an agreement between the Executive and an outside body, although they have, of course, to receive the consent of the Authority at the time. I hope that the noble Lord will be able to explain this point, and perhaps he would also explain why this is not expressed in terms of a rate poundage rather than an aggregate amount. I should have thought that it was more usual, in limiting expenditures which local authority bodies may spend, to express it in terms of a rate poundage rather than an aggregate amount. I beg to move.

§ LORD STONHAM
I understand the noble Lord thought we might include Amendments 63 and 64 in one discussion. It is on the same point, but I should be grateful if he would allow me to deal with them separately because I think the second one is really on the railways point. The other one is on the general point, if I may put it that way. On the first Amendment, therefore, No. 63, which I should like to deal with first, subsection (4) of Clause 13 empowers the Minister to make Orders restricting the size of the precepts, either generally or for a particular Area. This subsection was included expressly to allay the fears, which had been expressed by local authority associations in particular, that without some power of limitation demands by Passenger Transport Authorities on the rates could soar. There have, I understand, been other experiences that they have had in other fields—not in this one —which have been less than happy.
The effect of the Amendment—and I know it has only been tabled for discussion, for information, for probing if you like, and to get an explanation from the Government—would be to prevent the Minister from making an Order restricting the size of precepts generally, although he could still do so, as the noble Lord pointed out, for a particular Passenger Transport Area; that is, if the Amendment were accepted.
Frankly, we have not had this point raised previously. The emphasis has been on the need for more control rather than for any relaxation. I do not know 1337 whether the noble Lord fears that the Minister might set the ceiling too high. Is that in the noble Lord's mind? If he did, it would encourage some authorities to raise higher precepts than they might otherwise have done. Conversely, if the Minister set a low general limit, it could force authorities to keep fares high, or take a tough line with unremunerative rail passenger services. If you set it very low you force other consequences than if you set it quite high.
I hope I have indicated to the noble Lord, with respect to the first Amendment, that the provision he proposes to amend has been included at the request of the local authorities and is, as they see it, for their protection, so that it would be wrong to alter it. If assurances are needed, I can give a very firm assurance that local authorities will be consulted through the Association before any general order is made—indeed, this assurance has already been given to the Association of Municipal Corporations by the Ministry. I also give an assurance that the Minister would still use the particular power in an appropriate case, even if he also had the general power which the Bill at present provides.

§ LORD DRUMALBYN
When I first read this I thought that "the Authority" was to be interpreted as meaning authorities in general, and that the order would be applied generally to the country or to all Passenger Transport Authorities, whereas "a particular designated area" would mean the particular Transport Area. Is that correct, or is it the other way round in that one is dealing with a particular Transport Area and a particular designated area with it? I am not clear whether the general limitation applies to all areas or just to a given Transport Area.

§ LORD STONHAM
The word "generally" here means all Passenger Transport Areas. "A designated area" means in every case the whole of a particular Transport Area. There would be no limitation on one part of a particular P.T.A. as compared with another part. Is that now quite clear?

§ LORD DRUMALBYN
Yes.

§ LORD STONHAM
I now turn to deal with Amendment No. 64, in regard to 1338 the railways, which relates to the same issue but has a particular specialised significance. The effect of Amendment No. 64 would be to prevent the Minister from restricting the size of precepts, made to cover the costs of rail passenger services for which an Executive is required to make agreements with the Railways Board in P.T.A.s. This is where Clause 20 is applied by order—that is to say to areas where the Minister considers that railway passenger services have a particularly important contribution to make.
The Amendment appears to show a misunderstanding of the way in which an Executive will be expected to manage its finances. Clause 13(2)(a) provides that the sums precepted for will be towards any deficit…incurred on the revenue account or the combined revenue accounts of the Executive and any subsidiary of theirs". It means that the Executive will estimate its net profit or loss across the whose field of its operations, and the Authority may precept to cover any net deficit. It is accepted that cross-subsidisation is the means used throughout the public transport industry to meet, so far as possible, the costs of unremunerative services from the profits on more remunerative ones.
It could, for example, be sound common sense from a traffic management as well as from a public transport point of view for an Executive to subsidise a loss-making rail or ferry service, rather than to replace it by buses. But that particular service might be cross-subsidised, at least in part, by revenue from bus services generally. It is certainly not the intention that precepts on local authorities throughout the Area should be identified with particular rail service agreements. There may be the quite exceptional case where, for particular social or other reasons, an Authority want a service but, because it is so uneconomic and beyond the bounds of normal cross-subsidisation, the Executive are unwilling to provide it. Clause 15(3) provides that in such cases the Authority can direct the Executive to provide it, but in order to bring home to them the cost of what they are doing the Authority must provide a special precept to meet the cost unless the Executive release them from this obligation. It would be wrong to single out rail services for special treatment as regards precepting. Therefore, I oppose the Amendment because 1339 it undermines the principle of treating the services in an Area as a whole.
The noble Lord will acquit me in advance of wishing to move in any way against maintaining rail services. I have not changed my views about that, but here we are dealing with the Authority and their precepting as a whole. I recognise that as it stands the subsection enables the Minister to set a ceiling which would limit the extent to which an Authority could direct their Executive to make agreements for a grossly un-remunerative rail service which the Executive considered would cost too much in relation to the contribution which it would make to the public passenger transport needs of the Area. But this would not be singling out the rail services for social treatment, and it is right that the Minister should be able to put some limit on unjustifiable expenditure of transport resources including this type. But in any case the Minister—I give this assurance—certainly will consult before imposing precept limits under Clause 13(4). With this explanation I hope that the noble Lord will withdraw the Amendment.

§ LORD DRUMALBYN
I am grateful to the noble Lord for his patient exposition. I shall certainly study it before commenting to any extent. I should like to ask one question. What does "the aggregate amount" mean. Am I right in thinking that the aggregate amount would be expressed as a poundage rate? I do not see how otherwise it would make sense. The Minister could not by order generally restrict the aggregate amount unless it was a poundage rate if he was doing this generally for more than one Passenger Transport Area. I take it that this must be what is meant; otherwise it would mean that in a general order affecting all transport areas he would lay down a separate aggregate amount for each. I do not think the words could bear that meaning. I am surprised that they have not used a maximum rate poundage, rather than an aggregate amount. Perhaps the noble Lord would consider that point.

§ LORD STONHAM
The general order would apply to all Passenger Transport Areas, but for specific purposes there could be an order relating to the precept for the whole of one Passenger Transport 1340 Area. But that was not the noble Lord's question. He asked whether either or both would be expressed as a poundage rate. I will advise the noble Lord about this. My impression is that the answer must be, Yes; but I will confirm it.

§ LORD DRUMALBYN
I am glad to know that there will be maximum levels which can be imposed by the Minister, should this sort of matter get out of hand. I did not ask whether in this case the word "may" indicates an intention to be carried out from the start. The words are "the Minister may by order make". Often such words mean that the Minister intends to do so straight away. Do they mean here that the Minister will do so only if it appears to be necessary? It may be very difficult to determine an amount to start with, and I should have thought that the second alternative was probably what is intended here. I am glad to have that information and we on this side welcome it without any reservation.
I am also glad to have the information—which I do not think has been expressed before—regarding the aggregating of all the deficits, so that in an area where there are a great many local rail passenger services, and where for that reason the deficits may be high, it will be much less easy for the Passenger Transport Authority to incur deficits elsewhere. In fact, it is quite clear that the railway deficits may exceed the aggregate rate which is allowed, and therefore they may have to be subsidised from the rest of the service. I think we are all glad to learn that, because the general feeling that I have heard in the country is a fear that too much may be laid upon the rates as a result of this. We are glad to note that the Government are conscious of this danger, and are also glad to note the way in which they intend to meet it. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ Clause 13 agreed to.

§ Clause 14 [Accounts of Executive]:

§ 7.32 p.m.

§ LORD NUGENT OF GUILDFORD moved Amendment No. 67: Page 25, line 19, after ("business") insert ("and that of each of their subsidiaries").

1341

§ The noble Lord said: It may be for the convenience of the Committee to debate Amendment No. 68 at the same time as this Amendment. Clause 14 provides for the form and conditions in which the Executive for a designated area will be required to present its accounts. The effect of the Amendment would be that paragraph (a) of subsection (1), which now reads:

§ "The Executive for a designated area shall— (a) cause proper accounts and other records in relation to their business to be kept would read: (a) cause proper accounts and other records in relation to their business and that of each of their subsidiaries to be kept". Then there would be a similar Amendment made to the next paragraph.

§ The purpose of the Amendments is to ensure that the accounts and activities of the subsidiaries shall be published annually for everybody to see, to make sure that they are being conducted in a satisfactory way. I know that there are certain safeguards in Clause 16, the title of which says: Publication of annual report by Authority and Executive and prevention of improper conduct of subsidiary activities. But the best safeguard of all is the publication of the accounts of the subsidiaries. We have already traversed in some detail, and over a wide range, the proposition of how subsidiaries should be set up and what they should do. It is fair to say that on all sides there is a wish that Executives should have the scope to set up anything they need, but there is also an anxiety that they should set up subsidiaries on a sensible financial basis and should not become engaged in serious loss-making. As I said, the touchstone of this is to see what their annual accounts say. That is the sense of the Amendments, and I hope they will commend themselves to your Lordships. I beg to move.

§ LORD MITCHISON
I think that this Amendment goes too far. It is not the practice of companies with a number of subsidiaries to publish in their accounts the details of each subsidiary. I should have thought that what was sauce for the private goose was also sauce for the public gander, and that the point would be met by the safeguards to which the noble Lord referred in moving the 1342 Amendment, and also by the provision about auditing the accounts.

§ VISCOUNT MASSEREENE AND FERRARD
I should like to support this Amendment and to disagree with the noble Lord who has just spoken. The point is that in the Bill the Transport Executives are being given power to indulge in all these activities at the public expense, and if they make a loss the public will have to pay. Therefore, I should have thought it was extremely appropriate that subsidiaries should have to publish their accounts. I know that the Ministry of Agriculture runs certain farms whose accounts we can never get at, and we can never find out whether they are making a profit or a loss. The accounts are hidden in the vastness of the Department. If the subsidiaries have to publish their accounts, that will make the various Executives far more careful in keeping an eye on their subsidiaries, and in trying to ensure that they do not lose money. It is probably too much to hope that they will run at a profit, but we can at least hope that they will not make a loss.

§ LORD MILNE
I should have thought there were two points here. The accounts of the Executive and its subsidiaries are the first point, but whether or not they are shown separately is quite another question. Secondly, there is the point of the positions of the Minister, the Authority and the Executive. There was an Amendment down which was not moved, about the Authority for a designated area causing proper accounts to be kept. If the Executive do the accounting the Minister will then get the accounts, but there does not seem to be anything in this clause whereby an Authority will consolidate the accounts of the various Executives in its area. I should have thought that that was far more important from the Minister's point of view. Whether the subsidiaries are showing a profit or a loss is another point entirely.

§ LORD HIRSHFIELD
I do not see how an Executive could cause proper accounts and other records to be kept of its business, unless it automatically included the subsidiaries. So I should regard these two Amendments taken together as entirely superfluous.

§ LORD BOWLES
We are taking these two Amendments together, and perhaps 1343 that is just as well. The first Amendment seeks to oblige the Executive to see that proper accounts et cetera are kept for each of its subsidiaries as well as for itself. Clause 149, which is the interpretation clause, at page 197 of this Bill, provides that "subsidiary" shall have the same meaning as in the Transport Act 1962. Hence, under Section 92 of that Act, each subsidiary of an Executive will be a company subject to the provisions of the Companies Acts. These companies will therefore be statutorily bound to keep their accounts in accordance with the requirements of those Acts. Therefore, existing statutory provisions cover the position fully. So I would ask your Lordships to reject the first Amendment as being unnecessary.
Dealing with the second Amendment, as I have just said, the subsidiaries of each Executive will be subject to the provisions of the Companies Acts. In addition, however, it will be noted that Clause 14(1)(b) provides that the annual statement of accounts of the Executive shall be prepared in such form and shall contain such particulars as the Minister may direct. In preparing his directions it would be the Minister's intention to have regard to the need for appropriate information to be given about the business of the Executive. This would include the need to give a fair view of the position of the subsidiaries. Clause 14(1) is modelled on Section 24(1) of the Transport Act 1962, which imposes similar requirements on the nationalised Boards and the Transport Holding Company without singling out any specific activity, such as the subsidiaries, for attention. We therefore oppose this Amendment, too, and I ask your Lordships to reject it since its object can be secured, so far as it is necessary to do so, by the Minister's directions.

§ LORD DRUMALBYN
I should like to thank the noble Lord for his explanation here, which has clarified the matter quite a bit, but I wonder whether he would take a slightly different point of view if the words in the Amendment had been "wholly-owned subsidiary". It seems to me that it might perhaps be laying a rather excessive duty on the Executive to include a statement of accounts for each of the subsidiaries. 1344 I note what the noble Lord has said, and I am glad to hear that it would be the intention to publish the activities. I cannot remember the word he used —I think he said that reference would be made in the accounts to the state of each subsidiary. We do not think that is quite sufficient. We have had this kind of argument very often on legislation in the past. There has been some tendency to provide rather less in the way of accounts.
Noble Lords will probably remember that in the post-war period, when there was a lot of Government activity, the activities of the various companies set up by the Government were published in fair detail—not in full, of course, but there was a statement of accounts in relation to each in the form which the Minister prescribed. I also remember that when we were discussing the Highlands and Islands Bill we had a similar debate, and we were given much the same kind of assurance and told that there might be some cases where the company would be so small that it would hardly be worth while publishing the details about it. But we should like to make it plain that we expect that really informative details of substantial subsidiaries should be published so far as the Executives are concerned. We think that this is necessary, and we should like to press the Minister to make certain that this will be so.

§ LORD BOWLES
I am quite prepared to give the noble Lord the assurance for which he asks. At the moment I am not in a position to deal with the point about "wholly owned subsidiaries", as he has suggested, because I have not had time to take advice; but in the circumstances I will give the assurance that we will look into it all as he requests.

§ LORD NUGENT OF GUILDFORD
May I thank the noble Lord, Lord Bowles, for at any rate partially answering the point with which we are concerned here? As my noble friend Lord Drumalbyn has said, we are concerned to see that the activities of the subsidiaries are fully known and published to the public, and while we do not wish to put upon him an impossible burden we should like to have that assurance—and perhaps it can be given at a later stage of the Bill—so that we know just what sort of statement is going to be made about the subsidiaries.
1345 The noble Lord referred to the 1962 Act and to what that requires. I agree that we are asking for something more than the 1962 Act seeks in Section 25, but this Bill gives the P.T.A.s and the P.T.E.s, and particularly the P.T.E.s, much wider scope in trading powers than the 1962 Act ever considered. It is because of our anxiety on this account that we feel there is some obligation on the noble Lord to see that the statement which is made is really full enough to tell us just what is happening. But in the light of the noble Lord's undertaking—and, as I say, perhaps he would be prepared to say something rather fuller on the next stage of the Bill—I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ Clause 14 agreed to.

§ Clause 15 [Further functions of Authority]:

§ 7.48 p.m.

§ LORD DRUMALBYN moved Amendment No. 74: Page 26, line 12, at end insert ("and such estimates of income and expenditure shall be divided to show the income and costs of each separate service operated by the Executive or any subsidiary of the Executive").

§ The noble Lord said: This, again, is on the question of accounts. Clause 15 says: The Executive for a designated area shall submit to the Authority and obtain the Authority's approval of…all annual or other estimates of income and expenditure prepared by the Executive or any subsidiary of theirs;…". and then the Amendment would seek to add, and such estimates of income and expenditure shall be divided to show the income and costs of each separate service operated by the Executive or any subsidiary of the Executive". This would mean estimated income and costs, since we are here dealing with estimates.

§ We have put this Amendment down simply because it would seem that if the Authority are going to make intelligent decisions they must have pretty full information about the various services operated by the Executive or any subsidiary of the Executive. It may be said that the Executive, in submitting the estimates, will give sufficient informa- 1346 tion to allow the Authority to judge, especially in regard to any services that may be incurring deficits. I do not think that this could be taken for granted, and it would be better if we laid a duty on the Executive to provide this information. It has to be borne in mind that this information must be known to the Executive: otherwise they would not be in a position to comply with the Bill as it is now. Where there is a service which the Executive think cannot be run except at a disproportionate loss, the Executive can now go to the Authority and d say they are going to stop it unless the Authority say that they will meet the deficit—we are coming later to an Amendment on this point—by way of a precept. If the Executive are able to do that, then they must be in a position to do what we are asking in the Amendment; therefore it would be just as well to lay this obligation on the Executive in submitting their estimates and in seeking the Authority's approval of them. I beg to move.

§ LORD STONHAM
As the noble Lord, Lord Drumalbyn, has made clear, his Amendment would place a statutory obligation on the Executive to submit annually for the Authority's approval an estimate of income and expenditure which would show "each separate service" individually. I entirely agree with him. The Executive must have this information; otherwise they cannot carry out their functions. But I submit to the noble Lord that the way in which the estimates should be broken down is one of those domestic issues which are best left for the Authority and the Executive to settle between themselves. Surely, any self-respecting Authority—and these will be high-powered Authorities, select men and women—will be expected to want to have separately the details of each important part of the Executive's operations if they are going to consider them properly. One would not think it necessary to tell them so in legislation.
Most of your Lordships have had experience of some or other public body—hospitals, for example. I was chairman for six years of a hospital management group. Before that I had charge in a voluntary capacity of about 100 mental hospitals. I should not have been doing my job had I not demanded all this, information and had it not been supplied 1347 by the executive officers. This is common form. But I should somewhat have resented it if I had been told how to conduct my job. And I imagine that the Authority also would resent it; because, of course, they can refuse approval of estimates which do not give them the detailed break-down which they think is necessary. And the Authority are in a position to see that they do obtain the estimate.
The Government view, however, is that this is not a proper subject for legislation. It could only be done either in vague terms, as this Amendment does it, or else in precise terms, by spelling it out in great detail so as to cover all foreseeable combinations of circumstances. The noble Lord would agree that the latter would be impossible in practice; and I submit that his own very generalised, vague way of doing it is unhelpful and might be confusing. I could give many examples. I will give one. In the Amendment he uses the phrase: "each separate service". What does "service" mean? Does it mean an individual bus service or a group of bus services or does it mean bus services, coach services, and catering services, all combined?
There is also a danger in some of the Amendments of the Opposition. It is that the Authorities—and after all they will predominantly be supporters of the Conservative Party—may come back to Her Majesty's Opposition and say, "What sort of people do you think we are that we should require instructing and dragooning in this way, and that you should tell us our business? Do you think that you in Westminster know it all? We have been running affairs of this kind for years". I should not like the noble Lord, Lord Drumalbyn to have to deal with minor riots of this kind.
What he wants will certainly be done. Unless he begs me not to do so, I will gladly give an assurance that I will bring this debate to the notice of the Authorities when they are set up, so as to make sure that they know what he expects them to do.

§ LORD DRUMALBYN
I am grateful to the noble Lord for the way in which he has dealt with this matter. I 1348 think the noble Lord appreciates that he has given a much more satisfactory answer than was given in another place.

§ LORD STONHAM
That is not unusual.

§ LORD DRUMALBYN
We appreciate it, anyway, in this case. It is because of the nature of the debate that took place on rather a similar, if not identical, Amendment in another place that I raised the matter here. I very much welcome the assurance that the noble Lord has given. But he will also understand that we have here two statutory authorities which can get at loggerheads unless their respective duties are laid down fairly clearly. I take the point that the Authority have the whip hand; that they can always refuse to give their approval. But unless it is laid down in black and white, the Executive can very well say, "If Parliament had wanted this, it would have said so; and therefore you must be content with what we are prepared to give you." This is the kind of thing that can happen.
I agree that this Amendment is not perfect. I would not wish to press it; but I think the noble Lord might consider whether it is worthwhile laying this down in a little more detail than is done at present. This is essentially a matter of judgment. Having raised the matter, and having got so much better an answer—one which has made it clear that the kind of information we are asking for can and probably will be given by the Executive—we have achieved our objective, and therefore I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD DRUMALBYN moved Amendment No. 75: Page 26, line 22, at end insert ("and no such agreement shall be of any effect until the Authority has signified their approval of it to the Executive and the Railways Board.")

§ The noble Lord said: In this Amendment we are talking of the Executive for a designated area submitting to the Authority and obtaining the Authority's approval of any agreement proposed to be entered into by the Executive otherwise than under section 20(2)(b) of this Act with the Railways Board for the provision by the Board of any railway passenger services within, or to and from, that area; 1349 This Amendment would add: and no such agreement shall be of any effect until the Authority has signified their approval of it to the Executive and the Railways Board. The sole reason for putting down this Amendment is that as the Authority must approve any agreement it is as well that that approval should be signified direct to the Railways Board. It is true that any agreement made will not be invalidated purely because the Authority have not given their approval. But that seemed to me to be all the more reason why the Authority should make it known to both parties, to the Executive and to the Railways Board, that the agreement has received their approval. This is a small point but it could be one of the things that could arise.

§ 7.59 p.m.

§ LORD STONHAM
An Executive has the special duty to make agreements with the Railways Board to secure the maintenance of services when the Minister applies Clause 20 because he considers that rail services have a particularly important part to play. In other cases the Executive may enter into agreements with the Railways Board under Clause 10(1)(xv) and may make payments to the Board under Clause 10(1)(vi). Clause 20 provides that the Executive must obtain the Authority's approval for agreements of the first kind. Clause 15(1)(d) provides for similar approval to be obtained in the second case. The noble Lord's Amendment would apply only to Clause 15 cases and not to Clause 20 agreements. Before the noble Lord made his speech I was not clear precisely what he had in mind by this Amendment. In our discussions over the last Amendment he was kind enough to say that he had received more information than had been previously given. This may be because of the way he framed his question. On an earlier Amendment he said he had been able to get information that had never been given before. That was because the question had never been asked before, and it is a very good reason for the existence of your Lordships' House, because we do manage to deal with points not dealt with elsewhere, and perhaps we are able to put over points in a way in which they might not otherwise have emerged.
1350 If, as seems likely, the nobly Lord wishes to make sure that the Executive, and particularly the Railways Board, are notified of the Authority's approval, there would seem to be nothing harmful in the extra requirement he suggests. But it appears to cast doubt on the responsibility of or carefulness on the part of those concerned to pass on this information. Some time might elapse between the Authority's prior approval of the Executive's proposals and their approval of the actual agreement after it had been signed. I know that the noble Lord would agree that it would be absurd to have to hold up its effect for what would be a pure formality. If, on the other hand, the noble Lord had in mind the wider purpose—I do not think he had—of stopping the Executive from making agreements, wilfully or by neglect, without seeking the approval of the Authority—agreements which the Authority might not wish to approve —I can tell him that such circumstances are covered by Clause 15(1)(d) and Clause 15 subsection (6) taken together. Subsection (6) is specifically drafted to cover cases where the Executive have done things without getting the approval of the Authority when they ought to have done so. It is intended to protect third parties and to enable the Authority to redress matters so far as is practicable.
In either case it would be strange for the new requirement which the noble Lord now suggests in this Amendment not to apply to Clause 20 cases also Certainly we will consider what the noble Lord has said, but I do not think that he put a very strong case for the Executive, and particularly the Railways Board, being notified of the Authority's approval. But we can look at that part of it again. The present wording is possibly not entirely apt for the purpose he has in mind. I will look at it again but otherwise I do not think that there is any case to meet.

§ LORD MITCHISON
No doubt the noble Lord, Lord Drumalbyn, intends to withdraw his Amendment and accept the assurance he has been given. May I express the hope that my noble friend will not look at this matter too hard. It seems to be covered by subsection (6) aid it would be difficult to put in this Amendment without upsetting what is contem-plated by that subsection. I am taking 1351 about Clause 15(6), the clause we are discussing.
I cannot make out the object of some of these Amendments, although I have been listening with care to the debate. They are said to be designed to protect the public. I sometimes wonder whether they are merely to hinder the Authorities constituted under this measure.

§ LORD DRUMALBYN
I am sorry if I have conveyed that impression. Perhaps I have not explained my Amendments clearly. If I were to thank the noble Lord, I am certain it would come as a pleasant surprise. I am sure that the noble Lord is right in saying that if this Amendment were accepted, it would probably require an alteration to bring in Clause 20(2)(b) and it might require some alteration in subsection (6). But it seemed to me that subsection (6) was really designed to protect third parties and to enable the Authority to put right something which had gone wrong. The purpose of my Amendment is to prevent anything going wrong. I need not say any more than that. The noble Lord, Lord Stonham, has said that he will look at it, and I do not attach great importance to this although I thought it worth raising. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 8.6 p.m.

§ LORD DRUMALBYN moved Amendment No. 75A:

§ Page 26, line 22, at end insert— ("( ) any consent proposed to be given by the Executive under section 54(2) of this Act;")

§ The noble Lord said: This is not a particularly important point. If noble Lords will look at Clause 54(2) they will see that it deals with the consent of the Executive to the closure of a railway line. It seemed to me that before the Executive gave such consent it would be well if they obtained the approval of the Authority, if it was a line within their responsibility; that is to say, a line providing passenger transport services within the area of the Executive. There is nothing more to it than that. I beg to move.

§ LORD STONHAM
The purpose of this Amendment is quite clear; it is to require the Executive to obtain the approval of the Authority before consenting to the publication of a closure notice. 1352 There is some logic in this, since it is the clear intention of Clause 20 that the Authority should be in a position to have the final decision on which rail services need to be continued. Where the Executive have a continuing agreement with the Railways Board for the provision of a service and the Railways Board decide they want to close that service, the appropriate thing for them to do would be to seek to agree with the Executive to terminate the agreement rather than just to ask for consent to publish a notice of closure.
It is implicit in Clause 20 that the Executive would need to get the approval of the Authority—the "boss's" approval—before they agreed to terminate a continuing agreement. If it was a determinate agreement—for example, one that ended in 1973—the Railways Board would want to give notice a year in advance that when the agreement to maintain a service, or keep open a station, terminated they intended to close it. Having regard to the fact, therefore, that closure procedure takes 12 months or more, they would clearly want to start the machinery going about a year before the termination of the agreement.
The purpose of Clause 54(2) is to provide that in these circumstances the Railways Board must secure the approval of the Executive before they publish a notice of a proposed closure, so that the Executive may have the opportunity of saying something like this: "Although our agreement extends only to 1973, it has been our intention to negotiate with you for a continuance of the service beyond that date, and therefore we do not agree that you should publish notice of the closure."
There are two types of case which could arise. Although the noble Lord dealt with it quite briefly, this is a somewhat difficult matter and a not unimportant one. At least, I have always thought that the closure of a railway was important, as I am sure have the people concerned. Frankly, we have not had time to study the consequences of this Amendment and certainly we have had insufficient time to complete consultations with the various people concerned. So, while I cannot advise the Committee to accept the Amendment now, I can in a very real sense undertake to give further thought to the matter between now and Report.

1353

§ LORD DRUMALBYN
I have not had an opportunity of apologising to the noble Lord for the lateness of this Amendment and I am glad that he has not taken me to task too severely. I thank him for his explanation and for his undertaking to give this further consideration, and beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD DRUMALBYN moved Amendment No. 77:

§ Page 26, line 41, at end insert— ( ) It shall be the duty of the Executive to bring to the attention of the Authority any circumstance, including an impeding increase in the cost of supplies or labour, which is likely to cause a substantial deficit in the current or next accounting period.

§ The noble Lord said: This Amendment is similar to one moved before and we need not debate it because we have more or less covered the ground. I would imagine that the Executive would perform this duty but I think it is important that they should do so. I can see that the noble Lord may not be able to accept these words and I do not know if this is even the right place, but it might be well to put a requirement of this kind in the Bill. I beg to move.

§ LORD STONHAM
I agree that this is in the same family as the previous Amendment, but this one has implications of particular difficulty. The Executive is the directing arm of the Authority and therefore would carry out all sorts of negotiations. Naturally, an Authority will expect to be kept informed about the factors affecting the Executive's prospects of complying with their financial duty. But it might sometimes be a hindrance rather than a help to impose a statutory obligation on the Executive to make a formal report on a development as soon as they know of it. The Authority is a public body whose proceedings are likely to be reported to the public. The Executive, on the other hand, like any other commercial enterprise must be able to negotiate confidentially about such things as contracts for supplies, and wage agreements. A duty to bring the effects of the possible outcome of these negotiations to the notice of the Authority could be a serious embarrassment to the Executive in their negotiations and could hamper them in their management functions.
1354 Although the Executive would act sensibly, if they give information confidentially to the Authority there might still be an unwitting leak of information and it could be embarrassing to members of the Authority, in their other capacities, to be aware of the state of play in a particular negotiation in which they might be thought to have an interest. Therefore, though it seems to be an Amendment of the same family which the noble Lord is going to consider bringing forward next time, I think that he should exclude this one, because it has implications of particular difficulty with which we could not agree.

§ LORD DRUMALBYN
I am grateful to the noble Lord for having put this so clearly. In the light of what he has said I would like to examine this. In the meantime, I beg leave to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ 8.17 p.m.

§ LORD DRUMALBYN moved Amendment No. 78: Page 27, line 9, leave out from.("any") to end of line 10 and insert ("deficit attributable to that service.") The noble Lord said: This is a little more than a drafting Amendment. The effect of this Amendment is that where the Authority require the Executive to provide a particular passenger service which the Authority consider is needed and the Executive are unwilling to provide it, the Authority may give the Executive a direction to provide a service. Then, unless the Executive agree to the contrary in writing, the Authority can give the Executive a written undertaking to issue a precept under Section 13 of this Act to meet any cost incurred by the Executive in con-sequence of the direction. The words which I propose to move instead of these are any deficit attributable to that service. I am not clear what the cost incurred by the Executive in consequence of a direction is, and it seems to me that my Amendment is a clearer form of words. Moreover, the cost incurred by the Executive in consequence of a direction might be a good deal more than the deficit attributable to that service. It might include capital costs and things of that description. It seems to me that the 1355 words in the Amendment are the words to be used. This is precisely what is meant or, in my view, ought to be meant. I beg to move.

§ LORD MITCHISON
I should find this Amendment much more convincing if I had not just listened to the noble Lord putting forward an Amendment which was intended to oblige someone to divide up estimates of income and expenditure to show the income and costs of each separate service. I listened to my noble friend giving undertakings about this—that is his affair—but I had notions about overhead costs at the back of my mind at the time. Even if there is absolutely no difference between the language of the Bill and the language of the Amendment, the Amendment introduces a concept which I am bound to say is far more obscure to me than the original language of the Bill. I trust, therefore, that this effort at redrafting the Bill, if that is all it is, or this effort to introduce something else, will be made more clear by those putting it forward than it has been made so far. Perhaps I am phenomenally stupid about it, but other people have to read these Acts of Parliament, too, and they may not be so well acquainted with the language that appears appropriate to us.

§ LORD STONHAM
The last thing one would do would be to accuse my noble friend Lord Mitchison of being phenomenally stupid. Sometimes I think he is phenomenally amusing, but that is not the same thing. The noble Lord, Lord Drumalbyn, said that this was little more than a drafting Amendment. But what does he mean by "little more"—how much? I ask that because the Amendment would substitute "deficit attributable to that service" for "cost incurred by the Executive in consequence of the direction" as that for which an Authority are bound to issue a special precept if they require a particular and especially unremunerative service under Clause 15(3). This means that if the provision of that service did not result in an actual deficit on the Executive's revenue account, but only a reduced surplus, then no special precept would be needed. That is a very important difference. Clearly the Amendment would defeat the intentions of Clause 15(3).

1356

§ LORD DRUMALBYN
I am sorry to interrupt, but is that really so? This is the "deficit attributable to that service". It is not the overall service, but that particular service. Surely they can calculate out the deficit attributable to that service, even though there is an overall profit.

§ LORD STONHAM
If the noble Lord will study this again, I think he will find that my interpretation is right. I do not say this in any kind of superior sense, but merely as an example of the confidence that I have in the advice that I have been given. I should like the noble Lord to accept that, because I think the Amendment, if accepted, would defeat the intention of subsection (3) of Clause 15. The intention of that subsection is to put the financial responsibility squarely on the shoulders of the Authority if they want a particular service, perhaps for special and highly commendable social reasons, which the professional Executive considers too costly in relation to the contribution which the service would make to the transport needs of the area, and in relation to the normal basis of cross-subsidisation.
The Amendment would mean that so long as the cost of such a service, however intrinsically uneconomic it was, could be met from the profits on other services without the Executive's going into deficit overall, the Authority could demand that service without having to precept to meet its cost. In my experience of local authorities, it seems to me highly likely that this is precisely what they would do. The effect of that would be to encourage woolly thinking and lack of cost-consciousness in the Authority.
I apologise for constantly reminding noble Lords opposite that this is a commercial undertaking that we are setting up, and that we want commercial principles to be applied. I am constantly having to oppose noble Lords on Amendments which would do the exact opposite. If the Executive are expected to absorb the costs of these highly uneconomic services, they will have to make higher profits than would otherwise he necessary on other services. It could be contrary to the Executive's and the Authority's general duty to secure an efficient service, as they must do under Clause 9(1), with due regard to economy of operation. 1357 As I say, noble Lords opposite—and I agree with them in this—continually argue for an approach based on the proper use of economic criteria in determining the services to be provided. But this Amendment is completely inconsistent with that approach.
I do not know whether this was one of the Amendments debated in another place, but I suggest to the noble Lord that he should take this back and have a good look at this particular clause, and if he agrees with me that, I suggest, would be an end to the matter. He ought to be grateful to us for putting it as it is in the Bill.

§ LORD DRUMALBYN
What the noble Lord has explained is what he thinks my Amendment means. What he has not explained is what is in the Bill. This is what I was asking him. I really do not understand what is meant by "any cost". The noble Lord asked me earlier what "profit" meant. What does "any cost" mean? It is not "any cost out of the service", but "any cost incurred in consequence of the direction". That must be wrong. I ask the noble Lord to look at this again. Whether my Amendment is right or not (and it may well be defective in one way or another), I cannot believe that "any cost incurred by the Executive in consequence of the direction", irrespective of the receipts and all the rest of it, should be charged against the Executive. I am sure that that must be wrong. I hope the noble Lord will look at it again, even though he cannot accept my Amendment. But in view of what he has said about my Amendment, I suppose I had better withdraw it.

§ Amendment, by leave, withdrawn.

§ Clause 15 agreed to.

§ Clause 16 [Publication of annual report by Authority and Executive and prevention of improper conduct of subsidiary activities]:

§ 8.27 p.m.

§ LORD DRUMALBYN moved Amendment No. 79: Page 28, line 22, after "at" insert "including the proportion of total overhead expenses so allocated".

§ The noble Lord said: Clause 16 has already been referred to; it is the clause which provides safeguards for the preven- 1358 tion of improper conduct of subsidiary activities. The effect of my Amendment would be to add to subsection (2)(c), which says: the method by which any determination for the purposes of paragraphs (a) or (b) of this subsection was arrived at"— this is in regard to the report of any accounting period—the words, including the proportion of total overhead expenses so allocated". The purpose is quite simple. It is to make sure that in the report which is made of the activities of the Executive or of any subsidiary of the Executive, as subsection (2) says, it shall include an indication of the proportion of the total overhead expenses in the Executive itself which are reasonably attributable to overhead expenses in order to give a fair picture of how the subsidiary has in fact done.

§ This is a similar point to one which we have advanced from this side before. As noble Lords know, there is a good deal of anxiety about these trading subsidiaries. This Amendment has the support of a large section of industry, who need the assurance here that they are not going to be exposed to unfair competition. I beg to move the Amendment, and I hope the noble Lord can give us a satisfactory answer.

§ LORD MITCHISON
I rise merely to say that I fail completely to see how anyone could comply with subsection (b) without giving the information suggested in the Amendment. This seems to me to be another attempt, quite unnecessary in this instance, to tie the hands of a public authority on the pretext that it is for the public advantage.

§ LORD BOWLES
An identical Amendment was put down by the Opposition and debated in the Commons Committee on February 21. It was resisted by the Minister of State on the ground that, while there certainly must be art Allocation of overheads, once one starts to particularise items in the Bill, then all the other items of the account would need to be so particularised. Otherwise it could be held that this implies that they need not be included in the account. The Minister of State's answer is in the OFFICIAL REPORT, columns 936 and 937. But I give an assurance that it is the Government's intention that the 1359 proportions of overheads will be given where this is appropriate and meaningful; but we cannot accept the Amendment and I ask that it be rejected.

§ LORD NUGENT OF GUILDFORD
I do not think that I shall put the noble Lord to trouble. The answer he has given, that such information as can be given on the overheads will be given, meets the point. I accept in good faith that that information will be adequate to give the whole picture. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ Clause 16 agreed to.

§ Clause 17 [Transfer to Executive of local authority transport undertakings]:

§ LORD NUGENT OF GUILDFORD moved Amendment No. 80: Page 29, line 14, after "order" insert "being a date not earlier than six months from the date of the making of the order".

§ The noble Lord said: This is, I think, quite a simple point. It is to give a sufficient interval between the date of the making of the order and its coming into effect. I do not think it requires any explanation. It relates to the transfer to the Executive of the local authority bus undertakings where this is decided to be done. It is simply to give sufficient time to make the transfer in an orderly way. I beg to move.

§ LORD STONHAM
I apologise to noble Lords for my temporary absence. I misjudged the eloquence of my noble friend. I thought he would hold the fort sufficiently long to enable me to get there and back. This Amendment—and I understand the noble Lord proposed taking with it Amendments Nos. 81, 82, 85 and 88—deals with Clause 17(1), which provides that the Minister shall make an order transferring to the Executive for each Passenger Transport Authority all the transport interests of constituent councils which are carrying on transport undertakings at the date specified in the order, or, secondly, which were carrying on such undertakings on December 8, 1967, or, if the order is made for five years after that date, on the date five years prior to the making of that order. It also provides for the reversal of transactions placing liabilities on that 1360 undertaking or taking assets away from it which have taken place since the applicable date in the second provision of this subsection and which were not necessary for the purposes of the undertaking or were unreasonably imprudent. The effect of the five Amendments taken collectively would be to limit to six months the distance which one could look back in identifying the councils which were carrying on undertakings and to throw doubt on how far one could look back in reversing any unnecessary or imprudent transactions.
There is likely to be more than six months between the Minister's first circulating proposals for the designation of an area and the making of the transfer order, because of all the various actions that have to be taken between these two stages: consultation, making of a designation order, appointments to the Authority, appointments to the Executive, and so on. So councils which run transport undertakings would be able, if they wished, to frustrate the transfer of their undertaking to the Executive by selling it off, or perhaps by some other device; and some councils might he greatly tempted to do this, particularly as may often be the case, where the assets of the undertaking exceed the liabilities. Of course, we get the other kind.
But this would be completely contrary to the intention behind the setting up of Passenger Transport Authorities that all the municipal transport undertakings in a designated area should be transferred to the Executive and form the basis of the Executive's operations. In our view, it is essential that the Executive should own and operate these undertakings, and the Amendments would defeat that objective.
The Bill now before us limits retrospection to five years. Originally there was no limit on retrospection, and the five years' limitation was introduced by the Government at the Report stage in the Commons to meet the wishes of the Opposition. Of course, there was no debate on the Amendment making this change because of the guillotine. And apparently now, from what the noble Lord has indicated and from his Amendment, they regard five years as too long a period of retrospection. Nobody can imagine the likely position in five years, but it 1361 seemed to us a reasonable compromise between having no limit at all for retrospection and allowing a period of, say, two years, which might be short enough to give local authorities a chance to avoid or to frustrate the aims of the Bill.
I have used the word "retrospection" for convenience, but this of course is not retrospective legislation, since the earliest date to which one can look back in making the transfer is December 8, 1967, which is the date on which the Bill was introduced in another place. I submit to the Committee that this is surely the right date if we are to be fair to all. That is the date on which we made our intentions clearly known to everyone, and I think we must adhere to that date if we are not to have the general good frustrated.

§ LORD NUGENT OF GUILDFORD
I thank the noble Lord, Lord Stonham, for explaining why the Government would be unwilling to accept this Amendment and the related Amendments. May I apologise for the haste with which he had to return, and sympathise with his difficulty? I wonder whether, when he answers the points I am about to put to him, he will tell me which Amendments he is taking together, because to some extent my noble friend Lord Drumalbyn was in the same situation as he was, and will be relieved to hear which Amendments we are discussing with Amendment No. 80.
There is a point on which I should be glad to have further elucidation. The noble Lord, Lord Stonham, said very firmly that after an Order has been made and an area has been designated, it is the intention of the Government that all the municipal bus companies should be transferred to the P.T.E. I understood from a debate we had earlier that there is flexibility in Clause 10 to leave the choice with the P.T.E. as to whether or not they take into their own possession all the municipal bus undertakings in the area, or whether they might prefer to leave one or more with the existing local authority bus undertaking and simply to co-ordinate that particular municipal undertaking in their general plan. I hope the Minister of the day is not going to put pressure on P.T.A.s. and P.T.E.s. when the are set up. I feel that they should be left free to decide for them- 1362 selves. I take the general point made by the Minister about the necessity for the Bill to contain some safeguard in order to ensure that no local authority would frustrate the purposes of the Bill. This is common form in Bills of this kind.
It is rather a matter of degree, over which we might wish to take issue, but I should be grateful if the noble Lord would deal with the two points I have raised. I have no doubt that my noble friend Lord Drumalbyn would like to add a word to what I have said.

§ LORD STONHAM
With regard to the taking over of the municipal bus undertakings it is the intention of the Bill, and it is the intention of the Minister, that it is to be done with n the P.T.A. area. We regard this as the starting basis of the work of the Executive—and an essential basis. I am glad that the noble Lord accepts the main objective of this clause, which is to that the intentions of the Bill, when it becomes an Act, are not frustrated in a manner which might otherwise be possible, and that by implication the date selected is not only a reasonable one but the only possible one that could be accepted. With regard to the noble Lord's point about all of the undertakings being taken over, I can confirm that that is certainly our intention.

§ LORD NUGENT OF GUILDFORD
Would the noble Lord be kind enough to repeat the numbers of the Amendments which we are taking togethet with No. 80?

§ LORD STONHAM
I am doubly regretful about this, but such is the noble Lord's vast experience that I thought he would most certainly feel that Amendments Nos. 81, 82, 85 and 88 were all on the same point and could be discussed together.

§ LORD DRUMALBYN
It is quite easy to deal with these Amendments together but the points, if I may make them in order, are these: first, there is the Order to appoint the date, and the question is whether the transfer is to take place on that date or whether a period is to elapse before the actual transfer takes place. In other words, will the date appointed by the Order be the date on 1363 which the Order is published, or thereabouts, or will it be a later date? We thought a reasonable time to elapse would be, say, six months, and that was the point of the first Amendment—that is, six months from the date on which the Order is made.
The noble Lord has dealt with the next two Amendments, which are concerned with the identifying date, and we understand his point of view on this. We are a little surprised that he thinks local authorities will be likely, in the circumstances, to dispose of property in this way, but if he thinks there is a risk of that, I suppose he must take precautions against it. I do not know whether the noble Lord can deal with the point in Amendment No. 80, which is a rather different point from the others. He may have dealt with it already, and if so I apologise.

§ LORD STONHAM
The noble Lord asked whether the transfer would be immediate. The position will be that, first, the Minister will circulate his proposals for designation. These are proposals which of course must involve consultations, as provided for in the Bill. When, after consultation, he has formally designated an area he then assists in the appointment of the Authority and of the Executive. The actual transfer Order with regard to the undertaking cannot take place until all those stages have been effected. It is no good transferring property and undertakings until the Executive has been formed. We think that more than six months will elapse between the time that the Minister has circulated his proposals for designation and any question of the transfer of the property of the transport undertaking. At this stage I cannot say precisely what that interval will be. This is a matter which must be decided by the Minister, and of course he would be guided in large measure by the time taken for consultations and the other arrangements. There is no question, of course, of there being an immediate transfer the moment an area is designated. There will be proper notice and adequate arrangements so that it can be done in an orderly and proper fashion.

§ LORD DRUMALBYN
I am sorry, but this is not quite the point. We have 1364 the first Order, which is the Order designating the area and setting up the Authority. The Authority is then set up, it appoints its Executive, the Executive appoints its staff, it starts to study the problem, and then, once it has a certain amount of organisation in hand, I take it that the second Order will be made. What I am asking is whether there will be an interval between the making of the second Order and the transfer. An interval of six months was suggested here, and the later Amendment, of course, suggests a deferment of the actual transfer for a much longer period.
The grounds for the second Amendment are on rather a different point. It is not really necessary for the Executive to have everything transferred to them before they start to study the problem and, as we know, they have to study the problem with the Authority and, within twelve months from the establishment of the Authority, they then have to publish their statement of the financial state and the prospects, and so forth. Then later on, within two years of the establishment of the Executive, they must publish their prospects for the future. Our view was that at that stage, when the whole thing had been got into hand, it would be the appropriate time to make the transfer of the property; that in the meantime the thing would be bound to be ticking over to a certain extent while they were making their plans. We are dealing now with the second order, which is the date of the transfer of the property. The point of the first Amendment was to find out whether notice would be given of the date of the transfer and the order, or whether the order and the date of the transfer would coincide. That is the only point of the first Amendment, to try to explore that point. If the noble Lord cannot give us the information to-day, we should like to be able to see the programming for the future on a later occasion and as to the identifying date, I suppose we simply have to accept that.

§ 8.52 p.m.

§ LORD STONHAM
I think that I can give the noble Lord most of the information he wants. The date of the actual transfer would be after the making of the order and not coincidental with it, and the date—this is why I oppose the 1365 Amendment for six months—would be one decided by the Minister after consultation with the Executive, and with the municipalities who at present own and run the buses. Of course they must be brought into it, and there will be all sorts of practical business details to be settled first which will determine the actual date when the Executive, instead of the municipality, will run the buses. As the noble Lord has said, once the Executive are appointed they have to start getting in business, making arrangements and considering the problem. I am not talking about the plan; I am talking about the immediate future after their appointment.
But the municipalities also have to be brought into this, and there will be differences in the point of time between the making of the order and the transfer, depending on the circumstances obtaining within the P.T.A. area. Some may come more quickly; it might well happen that a period of less than six months after the making of the order would be more convenient both for the Executive and the municipalities. If we accepted an Amendment to make it not less than six months it would frustrate the possibility of an earlier transfer if it was convenient for all concerned that such an earlier transfer be made. I think that really covers the point. This sort of business has to proceed through consultation. It would be in the highest degree absurd if we were to attempt, or if the P.T.E. were to be allowed—not that it is likely—to proceed before the undertaking could be taken over in an orderly fashion and in a way that would ensure there was no disruption of any kind, either in the service provided or in the work of the staff. We do not want to have a fixed limit as to time.

§ LORD DRUMALBYN
I am grateful to the noble Lord for his explanation. This Amendment was a probing Amendment more than anything else. In view of the explanation he has been able to give and the way he thinks things will go, I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD DRUMALBYN moved Amendment No. 80A: Page 29, line 15, leave out from "on" to "an" in line 16

1366

§ The noble Lord said: This is a series of Amendments, and with the eave of the House may I suggest that it would be worth while discussing all the starred Amendments—80A, 82A, 84A, 84B, 84C and 84D. The Amendment I am moving is an Amendment put down for information, because it seems to be another question to which everyone may know the answer but it does not appear to have been put before. I am wondering what these bodies are—that is to say, a body which is carrying on an undertaking which either is at that date a road passenger transport, ferry or railway undertking or was on the identifying date… and any of the members of any such…body fall to be appointed by the council…

§ I do not know what those bodies are. I do not know whether they are publicly owned. I do not know whether they are likely to be compensated or whether they will just be taken over and their property transferred. It is very difficult to judge of these matters without that information, and I should be grateful if the noble Lord would supply it. I beg to move.

§ LORD STONHAM
I appreciate the noble Lord's reason for tabling these Amendments, and it is a matter which we all regret that some of these questions were not put before.

§ LORD DRUMALBYN
May I answer that particular point? I had been trying to get the information but had failed. I would not have put down these Amendments if I had got the information.

§ LORD STONHAM
At any rate, I am very glad to have the opportunity of conveying the information that has net been made available before. Clause 17 provides for the transfer to the Executive of the transport undertakings carried on by individual municipalities and also of the interests which the council may have in a transport undertaking carried on for example by a joint board such as the undertaking carried on by the Stalybridge, Hyde and Dunkinfield Joint Board, which comprises those local authorities and which it seems very likely will be included in the Passenger Transport Authority for Manchester and the surrounding districts.
1367 The effect of the first Amendment No. 84A, would be to omit such joint boards from transfer, which we should regard as quite undesirable, and the other Amendments are consequential upon it. I do not know whether, as I think may be the case, noble Lords would prefer a controlling type of Authority with the operation carried out by joint boards. If the Bill provided only for individual undertakings to be taken over but not joint boards, then of course it would encourage the formation of joint boards. That would in large measure frustrate the intentions of the Bill in setting up Passenger Transport Authorities as we envisaged them.
It is the Government's view that the Executive must own and operate all municipal assets and then decide how best they can be organised objectively. We feel that if this Amendment were accepted the arrangements would then be left to the play of local politics to decide who joins with whom. As I indicated in the discussion yesterday, we think that that would be quite disastrous. It is not the shadow of co-operation that we want in this matter but the actual substance of it—co-operation applied to the best and most efficient management organisation as we see it, and as viewed objectively, and not from purely single local authority considerations. Therefore, we think it would be quite wrong to exclude joint boards from our arrangements, and it is our firm intention to include them.

§ LORD DRUMALBYN
I am most grateful for the information, both on its positive side and on its negative side. I was aware that there were joint boards, but I was afraid that there might be some other form of body on which there sat members appointed by the council in their capacity, obviously, as members of a local council. From what the noble Lord has said, I gather that that is not so, that we are talking here purely about joint municipal boards. That being so obviously this is part of the pattern, and one would have to assent to that. We could not make an exception of joint bodies merely because they were "joint" if they were wholly local authority bodies. For that reason, I beg leave to withdraw this Amendment.

§ Amendment, by leave, withdrawn

1368

§ 9.2 p.m.

§ LORD DRUMALBYN moved Amendment No. 83: Page 29, line 25, after ("appointed") insert ("which shall not be before two years from the date of the establishment of the Authority.")

§ The noble Lord said. This is what one might call a dilatory Amendment, in the sense that it would not defer the original Order or prevent the Executive from being set up, but would merely defer for two years the time for the passing of ownership from the local authorities to the Executive in the case of local authority passenger transport undertakings. The reason for the Amendment is, that in the planning stage the Executive would have their hands full with planning without having to run services. The services could well tick over in the meantime, and it would be better to allow their ownership and day-to-day running to remain in the hands of the local authorities and other bodies concerned. The Executive would obviously have to maintain a general view of the whole thing, but it seems to me that the more sensible approach would be for the Executive to achieve the fullest possible acquaintanceship with the various bodies before starting to reorganise. It seemed to me that two years from the setting up of the Authority would be about the right time and that the first period of 12 months' study could take place, though I recognise that that provision might need some amendment in detail.

§ The period of two years from the setting up of the Authority to the actual transfer of the ownership of the local authority passenger transport undertakings would, I think, be quite convenient, and would probably enable a better job to be made of the ultimate reorganisation, once the Passenger Transport Authorities had been taken over by the Executive. I beg to move.

§ LORD STONHAM
As the noble Lord said, the effect of this Amendment would be to delay the transfer of local authority transport undertakings to the Executive until two years after the Authority had been appointed. In our view, this is far too leisurely a time scale. The ownership and operation of the municipal undertakings within its area is a crucial part of the functions 1369 of the Executive. I submit to the noble Lord that it is out of the question that we should postpone the transfer for two years. Indeed, if I did not know full well that the noble Lord was completely without guile, I should regard this as a device by the Opposition to postpone any transfers until after the next General Election. But, knowing the noble Lord, I know of course that such thoughts could not possibly come within his ken.
I must say to him that, in practice, the kind of time scale we have in mind, which we hope to achieve for the first four Passenger Transport Authorities, is that the Authority would be established in the spring of 1969, and that the Executive should be appointed within a month or so afterwards, even if on a temporary, acting basis. The appointment of the Executive, of course, falls to be made by the Authority, but we hope to do everything we can to assist them to act speedily. Then, if that is achieved, the transfer of the assets could well take place 12 months or so from now, in the middle, or a little after the middle, of the year.
That being the timetable we have in mind as from this moment, quite obviously we could not contemplate accepting an Amendment which would mean that the Executive could not even start until two years after the establishment of the Authority which we hope to see take effect in the spring of 1969. Here again, I expect I am giving the noble Lord information, but it is information that I gladly give because I think it fair that the Government's intentions should be made known as soon as possible.

§ LORD DRUMALBYN
I would not agree that the Executive could not start because it could obviously get into harness and plan what it was going to do as soon as it took over and operated, but I do not propose to press this Amendment. I am grateful to the noble Lord for the information, and I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD DRUMALBYN moved Amendment No. 84: Page 29, line 25, leave out ("Executive") and insert ("Authority").

§ The noble Lord said: This is an Amendment which we thought we ought to put down. To a large extent, of course, 1370 it covers the ground we discussed yesterday on the subject of the transfer of the assets. As the noble Lord will appreciate, we have not followed this through, and this is just to state the point of view that we think it would have been better if the assets had been handed to the Authority and that the Authority owned the assets and the Executive managed them. We should have thought this would be the right division. We would then have had something of the order of a joint authority undertaking which would have been able to own all the assets as and when they were taken. We felt bound to put this Amendment down. We thought this was the right place to put it. The noble Lord may wish to make some passing comment on it but we do not intend to press it. I beg to move.

§ LORD STONHAM
I think I ought to comment on this. It stems from the different conception the Opposition have, the conception, as it were, of joint local authority boards; whereas the conception in the Bill is of a Passenger Transport Authority composed of local authority representatives up to a minimum of six-sevenths of the total membership of the Authority, and an Executive appointed by them to conduct the business The Amendment is quite contrary to our conception. We see the Authority as the body which controls the general policy in such matters as major reorganisation, substantial capital expenditure, changes in the levels of fares and so on. The Executive is the professional managing and operating body in full charge of the day-to-day working of the undertaking. Obviously, and I hope the noble Lord will agree with this, if you accept that arrangement, then the Executive must own the assets so that they may have a full sense of responsibility for them, and so that they do not have to go back to the Authority whenever they have to take a minor decision, for example on disposals, acquisitions, modifications, and so on. I hope I have made that quite clear to the noble Lord.

§ LORD DRUMALBYN
I do not think that anybody running a business on behalf of somebody else would necessarily not have delegated to them powers to make the minor acquisitions the noble Lord has mentioned. On the other hand, given the noble Lord's conception of this and the attitude the Government has taken, 1371 we certainly do not want to pursue this any further and I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD DRUMALBYN moved Amendment No. 86: Page 30, line 38, leave out ("resumption") and insert ("assumption").

§ The noble Lord said: These are purely drafting Amendments and the noble Lord may think that they are a bit finicky. But the fact is that "resumption" means to take something back that you have had before. The Executive has never had this before, and therefore it seems to me that even though the goods were in the possession of the person from whom the main body of the goods have been taken, that is not a good reason for calling it "resumption". It is an "assumption" not a "resumption". I beg to move.

§ LORD STONHAM
I agree that these Amendments appear to be purely drafting Amendments, but nevertheless they are drafting Amendments which are apparently based on a misconception. It seems to me that the thought behind them is that the property rights and liabilities referred to in Clause 17 have never been the property of the Executive, but only the property of the municipal undertaking which is being transferred to the Executive and that it is, therefore, more correct to speak of assumption by the Executive rather than resumption, which might be said to carry the implication that the Executive have had possession of these property rights and liabilities at some time in the past. On the other hand, we think that "resumption" has a better flavour of bringing back into the fold assets which have been temporarily removed from it, whereas "assumption" has the flavour of the Executives pre-empting something which they have never had before and which there is a faint suggestion they have no real right to.
As the noble Lord said, this is only a matter of drafting, a matter of choice as to which word to use. This is our Bill, and we feel that to "resume" instead of to "assume" more clearly states what we have in mind. I know that if the noble Lord, Lord Airedale, was in the House he would not take this from me, but I hope that sweet reason will prevail and that the noble Lord, Lord Drumalbyn, 1372 will agree that if he were standing where I am standing he would be saying the same thing.

§ LORD DRUMALBYN
If I were standing where the noble Lord is standing, perhaps I would have prevented the word coming in in the first place. However, as it is there, I suppose it had better stay. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD DRUMALBYN moved Amendment No. 89: Page 31, line 11, leave out from (undertaking") to end of line 13.

§ The noble Lord said: The words which are dealt with in this Amendment were in the 1947 Act. They then applied to private enterprise undertakings which were being taken over. I do not know whether the noble Lord feels it necessary to include them here in relation to local authority undertakings. I should have thought there was no danger of an act of "unreasonable imprudence" in disposing of assets. And even if there were "unreasonable imprudences", this would be a decision of an Authority, and in any case would be a question of subjective judgment as to whether there was imprudence and, if there was, whether it was unreasonable. I beg to move.

§ LORD STONHAM
The effect of the noble Lord's Amendment would be to remove from the Minister the power taken in the Bill in respect of transactions which the Minister merely thought were unreasonably imprudent. In some cases the transport undertaking represents a valuable asset. Its transfer to the Passenger Transport Executive is, in our view, defensible on the grounds that it has been built up to its present value on the basis of fares paid by the travelling public. It has not been built up by the ratepayers because they are not necessarily the same body of people as the travelling public. The Executive will hold and operate the undertaking for the benefit of the travelling public.
If this philosophy is accepted, as I think it should be, it would be wrong to allow a council to saddle its undertaking before transfer with unreasonable liabilities or to transfer away from its undertaking some valuable part of its assets, thereby depriving, so to speak, the travelling public of the benefits which have 1373 been accumulated through the fares it has paid, and handing them over to the ratepayers who have, generally speaking, not so contributed. For example, where an undertaking has built up reserves against hard times the council owning the undertaking might transfer those reserves to its general rate fund and leave the undertaking with the liability of a sizeable bank overdraft. It is all very well to say that this would not happen, but it could happen, and the Bill is designed to prevent its happening.
Again, the undertaking might own some land which could possibly be developed as a depot and the council might transfer that from the ownership of the undertaking back to the general purposes of the council. It may be that it would be used for a youth club or something of the sort. That might be thought to be highly commendable and indeed a piece of good business, but we do not want it to happen.
In some cases, the first ground for objection, "…not reasonably necessary…", will clearly apply. In others, there could be reasonable doubt about this, but nevertheless, if the transaction was clearly "unreasonably imprudent", it ought to be possible to reverse it. For example, a council, realising that in 12 months' time it would be giving up its undertaking, might become, perhaps even for political reasons, completely careless and irresponsible in relation to its undertaking knowing that it was to be transferred away. Noble Lords may say that this is a far-fetched conception and that none of these councils, particularly now that so many are Conservative-controlled, would ever dream of doing anything like that. But we want to make quite sure. That is why these provisions are in the Bill and why the Government will fight to see that they stay in.

§ LORD DRUMALBYN
I must say that, apart from the last observation of the noble Lord, that, in effect, a council might become irresponsible in its management, everything that he said would have been covered by the words already in the Bill; that is, that the action was not reasonably necessary or expedient for the purposes of the undertaking". Because, clearly, the assets attached to the undertaking could not be transferred away to something else. That would not 1374 be "necessary or expedient". Therefore it is very difficult to see what is the need for these words. A man concerned with a private undertaking might just lock the door and go away, but that cannot happen with a public undertaking and I should have thought these words could have been dispensed with. Also, I should not have thought they were worth fighting very hard to maintain. Perhaps the noble Lord could just think about this and see whether they are really necessary, as it does not seem to me that they are. I beg leave to withdraw the Amendment.

§ LORD STONHAM
Before the noble Lord withdraws the Amendment, may I say—since a nod of the head is not recorded in Hansard—that I will look at it.

§ Amendment, by leave, withdrawn.

§ 9.21 p.m.

§ LORD DRUMALBYN moved Amendment No. 89A: Page 31, line 19, leave out ("otherwise") and insert ("arbitration (or, in Scotland, an arbiter)").

§ The noble Lord said: The White Paper said that any question of doubt would be settled by arbitration. The words "or otherwise" go very much wider than arbitration. A dispute could be settled by the Minister, for example. As an assurance was given on this point in the White Paper, I should have thought it should be fulfilled in the text of the Bill. I beg to move.

§ LORD STONHAM
The words "or otherwise" certainly permit the Minister to provide for arbitration, and tint will be provided for wherever it is appropriate, but the wording also permits disputes to be decided in other ways, without going through the full and sometimes lengthy procedure of formal arbitration. The Clause 17 transfers are likely to be complicated, although we hope that the bulk of them will be settled by agreement, and there may be a whole range of details which will require a different approach for different categories. For example, there might be matters which could be decided by someone with special knowledge or experience, or by the Minister himself. We do not want to preclude the possibility of settling matters in that way. We do not want to have to go to arbitration every time and we 1375 want to maintain flexibility. Without flexibility there could be the infinite possibilities for delay which we wish to avoid. For that reason I ask the noble Lord not to press his Amendment.

§ LORD DRUMALBYN
What the noble Lord has said may be the result of second thoughts. But paragraph 12 of the Annex to the White Paper says quite clearly: If there is any dispute about which assets and liabilities should he transferred, the matter will be settled by arbitration. I should have thought the circumstances likely to arise which the noble Lord has put forward were not strong enough to overcome that undertaking, and I ask him to have another look at this matter before the next stage of the Bill.

§ LORD STONHAM
I am afraid that I may have misled the noble Lord. There is no question that arbitration cannot still apply. The effect of the noble Lord's Amendment is to limit the settlement of a dispute to a court or to arbitration under the procedure laid down in the Arbitration Act 1950, and we think that it would be unduly restrictive for all such difficulties to be settled in this way. But the retention of the words in the Bill which the noble Lord wants to change does not in any way take away from what was promised in the White Paper. I will look at it again, but I do not think there is anything in the point at all.

§ LORD DRUMALBYN
The fact is that the words in the Bill would leave the options wide open. If what the noble Lord intends is some kind of arbitration, all I am asking for is that that should be specified in the Bill. A dispute could be settled in any way whatsoever unless, of course—and I do not know this—the word "settlement" is a term of art. If the word "settlement" is a term of art, then of course it might be otherwise. But I think we can leave this at the moment, and I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ Clause 17 agreed to.

§ Clauses 18 and 19 agreed to.

1376

§ Schedule 6 [Provisions as to Existing Operators and Services on Making of Order under S. 19(1)]:

§ 9.28 p.m.

§ LORD DRUMALBYN moved Amendment No. 92A: Page 220, line 46, after ("Act") insert (for a period of not less than five years").

§ The noble Lord said: Paragraph 14 says: An existing operator shall not be entitled to the grant by the Executive of a consent under this Schedule with respect to any existing service if the operator has entered into an agreement with the Executive with respect to that service under section 19(2) of this Act;… This Amendment would then add that the period for which he has entered into such an agreement would have to be "for a period of not less than five years".

§ The point about this Amendment is that it seems to me—and I am not sure if I am right about this—that in entering into an agreement the operator would lose his right to compensation, the right that he has under consent, on the revocation of that consent. If he is to lose that right, the quid pro quo should obviously be an agreement for a substantial length of time. It should not be just a short-term agreement if it is in fact going to deprive him of his right to compensation. That is the point of the Amendment. I hope I have explained it correctly. I beg to move.

§ LORD STONHAM
The consent for a continuation of an existing service is intended to be a temporary arrangement, in order both to enable the operator to continue that service and also to give him a firm base from which to negotiate an agreement with the Executive which is intended to cover the provision of services by that operator in the longer-term. The agreement will then supersede the consent. You have a temporary arrangement which is the consent and then, by joint negotiations between the operator and the Executive, you have an agreement. The purpose of paragraph (xiv), which the noble Lord wishes to amend, is to make that clear. Apparently, it was not quite clear.
The Amendment which he proposes would permit the consent to continue if 1377 the agreement were for a period of less than five years and, as the noble Lord has made clear, it is designed to protect the operator. But the agreement which follows the consent, the temporary arrangement, will be freely entered into by the operator; and if he chooses to reach an agreement for less than five years—which I think highly unlikely—it is up to him. But certainly it would not be appropriate to have the consent and an agreement operating side by side; because the agreement follows the temporary arrangement which arises from the consent. I hope that is clear to the noble Lord.

§ LORD DRUMALBYN
Just to complete the picture may I ask the noble Lord whether, once the agreement has been made, the right to compensation on the revocation of the consent is permanently lost? What happens on the termination of an agreement? If an agreement is made and terminated, then the man is put into exactly the same position as if the consent were revoked—except that it occurs later. For that reason he should also receive compensation on the termination of the agreement. That is certainly so if the agreement is short; if the agreement is longer perhaps different considerations arise. But, at any rate, there is the difficulty that once you pass from consent to agreement any possibility of compensation on the termination for any reason of the agreement is lost. Is that so?

§ LORD STONHAM
This is certainly not my understanding. It is a matter we shall have to look into. I should not like to give an authoritative statement; but I should have thought in equity that the kind of situation which the noble Lord envisages would be entirely wrong. It would be one that could not be supported. I will certainly look into it.

§ LORD DRUMALBYN
I am grateful to the noble Lord. I thought there was this distinction and I wanted to preserve the position. In view of the noble Lord's undertaking I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ Schedule 6 agreed to.

1378

§ Clause 20 [Special duty of certain Executives with respect to railway passenger services]:

§ 9.35 p.m.

§ LORD NUGENT OF GUILDFORD moved Amendment No. 93: Page 35, line 18, leave out subsection (1).

§ The noble Lord said: It may be for the convenience of the Committee if we were to discuss with this Amendment Amendments Nos. 94 and 95. Clause 20(1) provides that the Minister, where he considers that railway passenger services have a particularly important contribution to make to an efficient transport system in that area, may by order direct that this clause shall apply to that area. Frankly, we are doubtful whether it is a wise arrangement that the Minister should initiate the matter in this way. We take the view that it would be far better if the P.T.A. took its own initiative. After all, no one will know better than the P.T.A. what rail services they want to keep.

§ There is another aspect. Suppose the P.T.A. has to consider a rail service which British Railways wish to close down on economic grounds but the P.T.A. consider there are social benefit grounds for keeping it open. Suppose the P.T.A. take such a decision and make themselves responsible for the operating loss, which would have to fall on the local ratepayers by the precept. It would be a slightly dangerous situation for the P.T.A. because they would have no control over the operating loss of British Railways who would continue to operate the service. In our personal lives we would try to avoid a situation where we might find ourselves responsible for a loss made by someone else and over which we had no control. I would ask the noble Lord to take into account that the local authority, at any rate, would see the Minister as having a responsibility for the finances of the railways and therefore to some extent as an interested party. That being so, it would be all the more invidious for the Minister to take the initiative in this matter of designating circumstances where an order should be made and rail services taken over in this way.

§ These are thoughts on this matter. Naturally, I would not suggest that these 1379 Amendments, and the subsequent Amendments, are entirely satisfactory; but it seems to us that the concept of the P.T.A. making themselves responsible would be more satisfactory if the Authority were allowed to take the initiative. Then the consequences would result from their decision and there would be no invidious reflections on the Minister. I feel that there is substance in my suggestion. No doubt the Minister will tell me whether or not the Amendment would achieve precisely the thing we desire, but I feel this is a point of some importance, which should be dealt with.

§ 9.38 p.m.

§ LORD STONHAM
As the noble Lord has indicated, Clause 20 lays down in some detail a special procedure which is to be followed by the Executive and the Authority where the Minister considers that railway transport services have a particularly important contribution to make to the needs of an area. It is provided that the Minister shall apply this clause to such areas by Order. The effect of the Amendment would be to make the provisions of the clause apply to all P.T.A.s and not just to those where the railway services had a particularly important part to play. I can tell the noble Lord right away that it is the intention of the Minister to apply the provisions of Clause 20 to all four P.T.A.s which are to be set up initially—Merseyside, Greater Manchester, the West Midlands and Tyneside. Regarding the United Kingdom generally, we think we must adhere to the procedure set out, and deal with the P.T.A.s, once they are set up, according to particular circumstances.
The detailed procedure set out in Clause 20 is important for those areas where railway passenger services play a specially significant part in the public transport system of the area. It ensures that those services are properly surveyed and places squarely on the Executive and the Authority the responsibility of deciding which services need to be provided in the general interests of the area. They provide that the Executive may make payments in respect of the losses sustained by such services. But, perhaps most important of all, subsection (8) provides that the Minister may make grants to the Executive towards expenditure incurred in meeting the railway losses under 1380 Clause 20 agreements. In the White Paper it was stated that initially these grants will be 90 per cent., although they will be subsequently tapered away in the light of the developing circumstances in the area. This provision for grants cannot apply to all P.T.A.s irrespective of whether the railway services are of sufficient importance for Clause 20 to be applied to them or not.
This seems to boil down to a question of definition. Where the Minister considers that the railway services have a particularly important part to play, then he will expect the Executives to support them, and it is right that the Minister should have to help towards this support until there has been time for the Executive to be able to influence the general pattern of transport in the most economic way. But where the rail services are not of particular significance, Executives will have a more genuinely free choice as to whether they need to be maintained or not. In our view, it would tend against the public interest to bias the Executive in their choice by making the losses on the rail services the subject of ministerial subsidy while any equivalent bus services would need to be wholly financed by the Executive.
I hope that what I have said about the Minister's immediate intention, which is very important in this respect, will make it clear how important we regard this matter, and I hope that the noble Lord will agree that at this stage it would be wrong to agree to the discontinuance of this double standard and make the Minister responsible throughout the country in all circumstances.

§ LORD NUGENT OF GUILDFORD
I thank the noble Lord for explaining the intention here. His explanation is helpful and interesting. I did not know that the Minister intended to apply Clause 20 immediately to all four P.T.A.s as soon as the Bill is on the Statute Book and the P.T.A.s are designated. I wonder if the noble Lord would tell us whether the passenger rail services in these four areas are already in such a precarious economic situation that this immediate action has to be taken. The general impression that the noble Lord has conveyed is that the Minister is entirely taking the initiative in this matter. Indeed, he said that the 1381 Minister will expect the conurbations to accept the responsibility for these rail services and to support them—with, of course, the substantial grants that the Minister is going to make to start with. But although the 90 per cent. grant to start with is substantial and attractive, it is, as the noble Lord said, going to taper off fairly fast, and it may leave the local P.T.A.s with a substantial burden in the future.
I wonder whether this is quite the right balance on this rather difficult problem. It looks as if the P.A.T.s are being completely bulldozed into accepting these rail liabilities in these four initial Areas, with the Minister taking the initiative entirely himself. It would seem to me desirable that the P.T.A.s should take some initiative and should realise that these rail services are necessary for the local people. I feel a little uneasy about the approach here, and perhaps the noble Lord, Lord Stonham, could say a further word which would help us to understand why, in his opinion, the urgency is so great that it would warrant the Minister's taking this rapid action.

§ 9.47 p.m.

§ LORD STONHAM
In some respects my personal information is nearly four years old. The noble Lord may remember that until I became a Minister at the Home Office I was President of the National Council of Inland Transport, and indeed, was its founder. I had an intimate knowledge of the railway situation and of these four conurbations, and addressed many meetings in all of them. The local authorities were keenly interested and gave strong support; and the position then was that they would have been more than grateful for the Minister's help in this matter.
Unfortunately, conditions have not improved since that time, and all local rail services (and we are dealing here with local rail services) in all the four conurbations which we propose to designate as Passenger Transport Areas are losing money heavily. Therefore the Minister, who is aware of these facts, has decided that his help will be needed as a matter of urgency. I am sure that the local authorities, and certainly the commuters who live in the area, will be very glad that this speedy help is to be forthcoming for improving, and indeed in 1382 some cases for saving, services which are highly needed in the areas.

§ LORD NUGENT OF GUILDFORD
I must thank the noble Lord, Lord Stonham, for this further elucidation of the urgency and, while still expressing some anxiety about the situation in which the local authorities will find themselves as these grants taper off in the future, I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 9.50 p.m.

§ LORD DRUMALBYN
I understand that the line references in Amendments Nos. 96 and 97 as printed are wrong. No. 96 should refer to line 37 and the next one to line 39. Perhaps I may move a manuscript Amendment. No. 96 is really a drafting Amendment, and I do not think I need comment upon it. It is a fact, of course, that the Authority will have had to approve before any further action can be taken. Therefore, I think the correct formula is "have approved" and not "may approve". It is a very minor point.

§ Amendment moved— Page 35, line 37, leave out ("may approve") and insert ("have approved").—(Lord Drumalbyn.)

§ LORD STONHAM
I am sorry that the mistake about the lines was not spotted before, but it does not make any basic difference to either of these drafting Amendments because they are without any particular effect.

§ LORD DRUMALBYN
I am moving only the first one at the moment.

§ LORD STONHAM
The first Amendment would change the wording from: to enter into such agreements (with that Board) as the Authority may approve … so that it would refer to such agreements as the Authority have approved …". But for my high regard for the noble Lord I should have thought there was no reason for that Amendment except pedantry. The second Amendment would make the words: such railway passenger services as the Authority decide to be necessary — read as the Authority decide from time to time to be necessary".

1383

§ LORD DRUMALBYN
I am not moving that Amendment at the moment. I would rather defer that for the moment.

§ LORD STONHAM
I have dealt with the first one. It may have been the earlier mix-up that is responsible for my misapprehension, but I rather thought that the noble Lord mentioned the alterations to both Amendments, and I therefore thought he was going to deal with the two Amendments together. I will deal with the first one first. This one achieves nothing, and I hope it will not be persisted in.

§ LORD DRUMALBYN
If the noble Lord does not consider it necessary, I will not persist in it, but if I had happened to be right it would not have been pedantic to make the alteration.

§ LORD STONHAM
No.

§ LORD DRUMALBYN
I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD DRUMALBYN
Amendment No. 97 is not intended to be a drafting Amendment; it is intended to be an Amendment of substance. At any rate, it should be an Amendment of clarification and it is a probing Amendment. The purpose of the Amendment is to insert after the word "Authority" in line 39, on page 35, the words "from time to time"; so that paragraph (b) of subsection (2) would read: without prejudice to the general powers of the Executive under section 10 of this Act, to enter into such agreements with that Board as the Authority may approve for securing that the Board provide such railway passenger services as the Authority from time to time decide to be necessary …". The point about this Amendment is that the Authority will obviously have to make a decision in the initial stages in regard to all the railway passenger services in each of these Areas, as to whether the services are to be continued or not—I wonder whether I might have the noble Lord's attention because it is a little distracting to talk to him otherwise.
What is not clear is exactly what discretion the Minister is leaving in the hands of the local authority to start with; and secondly, what further discretion the Authority will have to discontinue the services later. As the clause is now 1384 drafted, it could be taken to read, and it appears to me to imply, that the Authority must decide once and for all whether or not the services are to continue. The Authorities certainly have to make an initial decision as to how much of the services, however particularly important the Minister may think the contribution they have to make to the area is, are to be retained by the railways in agreement with the Executive. Perhaps they retain a proportion. After that, it has to be decided from time to time whether these services are to be continued. This is the point I want to be quite clear about.
The noble Lord shook his head when I said that the Authority had to make up their mind once and for all. I take it from that that the agreement will be made on a fairly short-term basis with the Railways Board, so that there will be an opportunity for the Authority from time to time to decide whether the agreement should be renewed. Otherwise there is an agreement there, and that is that. This is important, and I think one should get it clear, because after ail, the Government are going to give a considerable subsidy—as the noble Lord said, starting at 90 per cent. of the cost and then diminishing. There is the danger that the Authority might take advantage of the early stages of the grant and then discontinue it later. But the purpose of the grant is to enable the services to be improved and so to attract more passengers on to those services. If that falls, whether or not there has been a grant, plainly the services should be discontinued, and it should be a matter for the Authority to judge whether or not the Executive is to be allowed to go on paying money to the Railways Board in respect of these services. This is the way I understand it, and I hope the Minister can confirm that this is so. It is a matter of considerable importance.
It seems to me that the first stage is a choice as to which of the services is to be retained; then there is an attempt to improve them and to attract more traffic back to them, and one has to see how that goes; but, as I understand it, the discretion of the Authority to continue or not to continue the services has to remain absolute. Is that so?—because this is the point of the words "from time to time". I understood from the noble 1385 Lord that these words were not really necessary and that the Authority could change its mind from time to time as to whether these services were required. If that is so it is not entirely clear from the drafting of the clause as it now stands. I should be grateful for the noble Lord's explanation of that. I beg to move.

§ Amendment moved— Page 35, line 39, afer ("Authority") insert ("from time to time").—(Lord Drumalbyn.)

§ LORD STONHAM
This Amendment would make the words such railway passenger services as the Authority decide to be necessary read as the Authority from time to time decide to be necessary". I confirm that the original wording does not bind the Authority to make one decision which shall thereafter be binding on it for all time. I also confirm my shake of the head, that the Authority will not have to make up its mind once and for all, for all time. The noble Lord asked what discretion the Authority would have to discontinue services later. They will have discretion to do this having regard to agreements they have entered into, the needs of the area, the particular circumstances of the needs for these railway services, their costs, and so on. Various considerations will enter into it and must affect their consideration in the future.
With regard to this particular Amendment and the words "from time to time" which the noble Lord wished to add, those words in fact add nothing to the powers that the Authority will now have. They can change their mind from time to time without having the words "from time to time" in the Bill. Whether or not the words are added, the Authority's subsequent decisions about these services must always be made against the knowledge that agreements will have been entered into as a result of the original decisions. For example, if the Executive have entered into an agreement with the railways to provide the services for seven years, and this may have involved certain capital or other expenditure, then the services—subject to any agreement with the railway that they could be suspended, which is always possible—would have to continue for the period of the agreement. It is exactly the same with any 1386 other undertaking. But at the end of the agreement, or indeed in practical terms it would be before the agreement was ended, they could come to another decision and give due notice to the railways in accordance with the terms of the agreement, and that is precisely provided for in the Bill as it now stands.

§ LORD DRUMALBYN
I am very grateful to the noble Lord for the explanation he has given. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD STONHAM
I beg to move Amendment No. 98. This is a drafting Amendment, required by the interposition during the Report stage in the Commons of subsection (3), to make it clear that the agreement referred to in subsection (4) of Clause 20 is an agreement made under that clause. It is purely drafting. I beg to move.

§ Amendment moved— Page 36, line 4, leave out ("such agreement") and insert ("agreement under this section").—(Lord Stonham.)

§ LORD DRUMALBYN moved Amendment No. 99:

§ Page 36, line 21, at end insert— Provided that any dispute in connection with the amount of any payment under subsection (4) of this section shall be referred to arbitration or in Scotland an arbiter appointed by the Lord President of the Court of Session.

§ The noble Lord said: This is an Amendment which the noble Lord may think is perhaps unnecessary, but it seemed to me that in view of the fact that the Minister would have a certain interest one way or the other—and I think one way—in the outcome of disputes in connection with the amount of any payment under subsection (4), that is, any payment by the Executive to the Railways Board in connection with the services, it would be better if that particular dispute were settled by arbitration rather than by the Minister. It is always undesirable, when the Minister appears to have a possibility of a bias one way rather than the other, that the Minister should decide it. I think probably he would prefer to have it settled by arbitration. This is a question really as to amounts of payments, and since the 1387 Minister is involved, from the point of view of any grant I think it would be better if he kept out of the settlement of the dispute. I beg to move.

§ LORD STONHAM
The effect of this Amendment would be that if there should be a dispute between the Executive and the Railways Board about payment which ought to be made in respect of an agreement, this dispute must be submitted to arbitration. The intention of Clause 20 is that the Executive shall review the railway passenger services in and around their area, and shall decide which they wish to see maintained and shall make agreements with the Railways Board, subject to the approval of the Authority, for the running of those services and for the payment by the Executive of any losses. Subsection (6) provides that if any dispute arises between the Executive and the Railways Board in connection with these agreements it shall be referred to the Minister, and the Minister can give such directions as he thinks fit. Since the agreements, specifically through subsection (4), can include provision for payment by the Executive, then clearly disputes about the amount of payment are intended to be referred for settlement to the Minister, which I think is right, because the Minister is well versed in these matters, since he himself will be making similar payments to the Railways Board in connection with services other than those in and around P.T.A. areas. In addition, the Minister will have interests in both parties and can be expected to hold the balance between them. Thus, provision for arbitration in the particular matter of the amount of the payments is, in our view, undesirable and unnecessary.
Therefore, I hope that the noble Lord will not spoil his excellent record to-day by persisting in the Amendment. But, as 1388 always, I should like to give him some satisfaction, and I can give an assurance that my right honourable friend would never use the power in subsection (6) to direct an Executive to make a payment it did not wish to make.

§ LORD DRUMALBYN
I am grateful to the noble Lord for his answer. I thought this was a rather disagreeable sort of Amendment on which to end the day, but he has dealt with it kindly and has given me an assurance with which I am quite content. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ Clause 20, as amended, agreed to.

§ Clauses 21 to 23 agreed to.

§ LORD STONHAM
I feel that we have done our stint to-day. We have got through about 24 per cent. of the Bill, and I think we might go home. I beg to move, therefore, that the House be resumed.

§ House resumed.