Lords Sitting of 7 March 1968

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Worcester.

CONSULTING ENGINEERS AND S.E.T.
3.6 p.m.
LORD MAIS: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will give serious consideration to relieving British consulting engineers from paying selective employment tax in respect of the members of their staffs employed in Great Britain on the design of overseas work.]
LORD BESWICK: My Lords, the Association of Consulting Engineers have made representations on this matter to the Chancellor of the Exchequer. He has replied that he will take these representations into account in framing his Budget proposals. As noble Lords will be aware, provision was made in the Finance Act 1967 for relief of the selective employment tax in respect of employees working overseas, subject to a qualifying period of 13 weeks.
LORD MAIS: My Lords, I thank the noble Lord for his Answer. I hope that when the matter is considered he will bear in mind—and I hope he is aware of the fact—that British consulting engineers in fact—
SEVERAL NOBLE LORDS: Question, question!
LORD MAIS: I did ask, my Lords, whether the noble Lord was aware that British consulting engineers are in fact at this moment engaged on £1,600 million worth of work overseas; and I would also hope that the noble Lord is aware that they are already competing in very difficult conditions against foreign consultants.
LORD BESWICK: Yes, my Lords, my right honourable friend is aware of the very valuable contribution which these consultants are making. There are certain difficulties, however, in differentiating between them and others who also make a valuable contribution to our export earnings. Nevertheless, as I have said, the Chancellor is taking all these considerations into account.
LORD HAWKE: My Lords, are Her Majesty's Government aware that there are many staff, particularly in the City of London, who are employed solely on administering overseas enterprises of Britain and thus producing foreign exchange?
LORD BESWICK: Yes, my Lords. That is one of the difficulties in this matter.

RAILWAYS: USE OF PRIVATE SIDINGS
THE EARL OF KINNOULL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government how many private sidings connected to the Railway Board's lines have been closed since 1962 and whether, in view of the increasing congestion on streets, they will encourage the Board to keep private sidings traffic on rail throughout the journey.]
THE PARLIAMENTARY SECRETARY, MINISTRY OF PUBLIC BUILDING AND WORKS (LORD WINTERBOTTOM): My Lords, the British Railways Board inform me that figures of private railway sidings closed between 1962 and 1967 are not available. I understand, however, that there were 5,894 private sidings in use in 1960 and that at the end of 1967 some 3,690 remained. Her Majesty's Government wish to make the maximum use of our railways as well as our roads by promoting the transfer of all suitable traffic from congested roads on to the railways. At the same time, the Railways Board are keen to encourage the use of private sidings to the greatest possible extent. On a tonnage basis, such sidings produce about 90 per cent. of the freight traffic carried by the railways. But there are inevitably some

1417
of them which become uneconomic from the railways' point of view as local circumstances change, and the Railways Board must have freedom to withdraw these facilities where the traffic is insufficient to justify their retention.
THE EARL OF KINNOULL: My Lords, while thanking the noble Lord for his long and informative Answer, may I ask him whether he would not agree that it is perhaps a little disappointing to say, on the one hand, that the Government are encouraging private sidings and, on the other, that British Railways have closed down over 3,000 in the last six years? Is the noble Lord aware that in France alone since the war over 3,000 sidings have been opened, and that in consequence three-quarters of their rail freight traffic never reaches the streets?
LORD WINTERBOTTOM: My Lords, I am confident that the British Railways Board take all these facts into acount when formulating policy, but where a private siding is causing the railways significant loss we must permit the Board to use commercial criteria in deciding whether to keep it open or not.
VISCOUNT ADDISON: My Lords, in view of the Minister's reply, will he encourage the Railways Board to replace some of the railway lines which they have pulled up, so that the goods now carried by road may revert to the railways?
LORD WINTERBOTTOM: That, I am afraid, my Lords, is another question.
THE EARL OF KINNOULL: My Lords, would the noble Lord agree that the financial criteria which the Railways Board sometimes use in these cases are often disputed?
LORD WINTERBOTTOM: My Lords, I am afraid that many decisions are disputed.

VANDALISM AT STONEHENGE
3.12 p.m.
LORD STRABOLGI: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what measures they are taking to protect Stonehenge against vandalism.]
LORD WINTERBOTTOM: My Lords, my right honourable friend has asked the principals of some fifty educational establishments to try to stop this senseless vandalism which could do irremediable damage to one of our finest monuments. He is also grateful for the collaboration of the police, who are regularly patrolling the area. In addition, he is considering further security measures.
LORD STRABOLGI: My Lords, while thanking my noble friend for his reply, I should like to ask the Government what action is being taken to trace those who were responsible for desecrating this unique monument by painting slogans on it last month.
LORD WINTERBOTTOM: My Lords, certain inquiries have been followed up, and certain papers are in front of the Director of Public Prosecutions. I am certain the House will not wish me to comment further on this matter at the moment.
LORD MOLSON: My Lords, will the Parliamentary Secretary bear in mind that this is a really unique monument and that, valuable as educational work in the schools may be, that really is not adequate for dealing with a menace of this kind? The harm that is done by vandalism is really irreparable. I hope that the noble Lord's Department will be prepared to look at the possibility of taking more stringent steps in order to avoid a repetition of this vandalism.
LORD WINTERBOTTOM: My Lords, I am certain that the House is in full sympathy with what the noble Lord, Lord Molson, has said. This is possibly our greatest historical monument, and in my Department we are conscious of the need to preserve and protect it. In my reply I said that my right honourable friend was considering further security measures. I think the House would agree that were I to reveal these measures now they might not prove successful.

PRICES OF PROPRIETARY DRUGS AND MEDICINES
THE LORD BISHOP OF WORCESTER: My Lords, I beg to ask the Question which stands in the name of my right reverend Brother the Bishop of Norwich.
[The Question was as follows:
To ask Her Majesty's Government whether any action has been taken, or is contemplated, to limit the rapid rise in prices charged for many proprietary drugs and medicines.]
THE MINISTER OF STATE, BOARD OF TRADE (LORD BROWN): My Lords, the prices of ethical proprietary drugs and medicines are subject to the Voluntary Price Regulation Scheme agreed between the Health Departments and the Association of British Pharmaceutical Industry. The Board of Trade has discussed prices of other proprietary medicines, namely, those sold to the public for self-medication, with the Proprietary Association of Great Britain and with individual manufacturers. The industry has been urged to restrain price increases in accordance with the criteria set out in Government statements on prices and incomes policy. Her Majesty's Government keep a close watch on price movements of proprietary drugs and medicines.
THE LORD BISHOP OF WORCESTER: My Lords, I thank the noble Lord.
LORD OGMORE: My Lords, while declaring an interest as a director of a research-based pharmaceutical company, may I ask the noble Lord whether it is not the fact that the price to the National Health Service of the leading branded prescriptions has been falling for years at the rate, approximately, of 4 per cent. per annum?
LORD BROWN: My Lords, I do not have the precise figures of the rate at which they have fallen. I think the noble Lord is referring to ethical drugs; and there have been reductions in the price of those. I have taken the question of the right reverend Prelate to refer to the other type of drugs.
LORD SEGAL: My Lords, is the noble Lord aware that, as revealed by the Sainsbury Committees, three large drug firms have admitted to profits of over
1420
50 per cent. and does he not agree that that is an instance of gross profiteering at the expense of the unfortunate taxpayer?
LORD BROWN: My Lords, I think that the question of individual profits of the drug firms is rather a different issue. I should be glad if the noble Lord were to put down a Question on that subject.
LORD SOMERS: My Lords, is it not a fact that proprietary drugs cannot be put down on National Health prescriptions and that therefore very many aged, chronic cases will suffer from the increase of prices?
LORD BROWN: The noble Lord is putting me in some difficulty. The Board of Trade is responsible for dealing with price-rises of proprietary drugs and another Ministry is responsible for dealing with ethical drugs. I am not sure whether the noble Lord's comments are true or not, but I will get an answer to him in writing.
LORD PARGITER: My Lords, would my noble friend not agree that the sale of proprietary drugs of this type very often depends on excessive advertising? Can he say whether any limitation could be placed on it?
LORD BROWN: My Lords, no doubt the advertising is substantial. I am not in a position to comment as to whether it is excessive or not.
LORD OGMORE: My Lords, will the noble Lord make it clear that, so far as ethical drugs are concerned—that is, drugs obtainable on prescription—manufacturers are not allowed to advertise except to the medical profession?
LORD BROWN: That is so, my Lords.
LORD SEGAL: My Lords, is my noble friend aware that up to 10 per cent. could be saved on the drug bill by some restriction of the sales promotion methods of many of the drug firms, and especially by restricting the number of interview representatives, whose activities are resented by a very large number of doctors?
LORD BROWN: My Lords, this series of questions is getting outside the terms of the original Question. I think we might let the matter rest here.

PEER'S NEWSPAPER ARTICLE AND PRIVILEGE
LORD BALFOUR OF INCHRYE: My Lords, I rise to put before your Lordships a matter—I do so with no pleasure; and I have naturally informed the noble Earl, Lord Arran, that I am going to raise this question—based on an article of which the noble Earl is the author which appeared in last night's issue of the Evening News. I can merely put this before your Lordships' House because, as your Lordships well know, we have no set of procedures, as in another place, for matters of privilege; and only this House can decide whether or not they wish to leave the matter alone or whether they wish to remit it to the Committee for Privileges.
The article in question, I submit, offends in two directions. If I may, I will read an extract. The noble Earl's article, after some gay remarks on how various noble Lords voted, contained the following sentence:
"For the hundred Peers who voted for the Government I have nothing but contempt."
That sentence, if it means anything, means that the noble Earl holds 109 of your Lordships in contempt. This is not restricted, nor is it qualified to their action in voting; it describes the noble Earl's judgment of the character and integrity of 109 Members of your Lordships' House.
Let me hasten to say that I escape from the ink blots of the noble Earl's pen in that, having listened to the whole of the Second Reading debate, I felt unable myself to vote. I hope I am not—and I am sure your Lordships are not—unduly sensitive. No-one at all minds political criticism. We have all been subject to criticism in your Lordships' House and in another place, and on platforms throughout the country. That is healthy and good, and all political controversy is to be praised. But surely this goes beyond reasonable and fair criticism and is personally offensive to 109 Members of your Lordships' House.
The second direction in which I submit the article offends is in the next sentence, which says:
"When it comes to the Socialists begging the Tory backwoodsman not to go home but to stay and vote for them, we no longer have
1422
an Upper House for which one can have the slightest respect."
This, I submit, is a general insult to your Lordships' House by one of its Members. We listen to and accept lots of rude things said about this House, but not said in those terms by one of its Members, whether inside or outside your Lordships' House. I must say that when I read the noble Earl's opinion 3f this House, I wondered why he graced our debates, feeling as he did.
It is for your Lordships to take a view and to take any action you may like, but I submit that this article has transgressed what is said in the Companion to Standing Orders, which on page 512 says:
"Each House is also the guardian of its dignity and may punish any insult to the House as a whole."
If ever anything insulted your Lordships' House as a whole it is to say:
"We no longer have an Upper Hot se for which one can have the slightest respect."
We all make mistakes. Nobody is more conscious of that than I myself. Looking back now over seventy years of life I know so well that. I have made many mistakes, and if the noble Earl Lord Arran, expresses regret for those words I for one would advise your Lordships to leave the matter alone. I conclude by saying this. I do not know whether there has been a breach of privilege. I do know that there has been a breach of taste.
THE EARL OF ARRAN: My Lords, I have little to say, except, first of all, to thank the noble Lord, Lord Balfour of Inchrye, for telling me, in his usual courteous fashion, that he was going to raise this matter, and then to say this. The things I wrote in the article to which the noble Lord refers were things which I believe. Had I spoken during the debate, I should have used exactly the same language as I used in the article itself. It still seems to me shameful that any country, and our own country in particular, should go back on its pledged word. Had I said these things during our debate, I wonder whether any noble Lord would have moved that I be no longer heard.
As your Lordships must surely know by now, I am an ardent admirer of the House of which I am fortunate enough to find myself a junior Member, and I

1423
try to play my small part. But it is the duty, as well as the privilege of the Queen's Peers—and let us not forget that we are the Queen's Peers—to express ourselves according to our principles. I have done exactly that. If in doing so I have been guilty of any insult against the traditions or dignity of the House as a whole, or against the feelings of any individual Peers, then I am most truly and deeply sorry. But I propose to continue saying and writing what I think about Governments and politicians inside or outside Parliament. That is my birthright. it is the birthright of every Englishman. I leave it to your Lordships to decide whether my apologies are or are not satisfactory.
LORD SALTOUN: My Lords, I think that it is a little over a quarter of a century ago since a similar Motion was made in this House, and at the end of the debate at that time the whole House felt that it had better be left alone. I think that the matter now has been quite sufficiently aired by the noble Lord, Lord Balfour of Inchrye, and that it would be better all round if we just allowed the matter to drop at this point.
LORD DOUGLASS OF CLEVELAND: My Lords, if it means that the noble Earl's apology is accepted, I would entirely concur.
THE LORD PRIVY SEAL (LORD SHACKLETON): My Lords, I should like to echo the remarks of the noble Lord, Lord Saltoun. I do not think that any of us has any knowledge of how we would deal with a privilege case, because we have no clearly formulated policy. In another place they have very strict rules and—though I must be careful not to be in contempt of another place—they contrive so far as possible not to discuss an alleged contempt until the Committee of Privileges has had a go at it. It would be open to the noble Lord, Lord Balfour of Inchrye, to put down a Motion. I do not think that it would be appropriate that I should even discuss whether there was a contempt or try to interpret the noble Earl's remarks, which we shall read to-morrow with interest. The matter having been aired, I hope that your Lordships will feel that it would best befit our dignity to let the matter drop. I do not think that any of us would wish to interpret the noble Earl's remarks as a
1424
threat. Indeed, I think I should not comment any further, except to say that I am sure that your Lordships, with customary good sense, will now feel inclined to let the matter go.
LORD CARRINGTON: My Lords, I wonder whether I may be allowed to support what the noble Lord the Leader of the House has said. I must apologise to the noble Earl, Lord Arran, if I reveal that I am not normally a reader of his output and therefore know only what the noble Lord, Lord Balfour of Inchrye. has read out. But for some time the noble Earl was a supporter who sat on these Benches behind me, though not a member of my Party, until he moved away and joined the Liberal Party—or perhaps the Liberal Party has joined him, I am really not quite sure which. But wherever he goes, all of us are 50 per cent. of the time full of admiration for him and for the other 50 per cent. exasperated, but all of the time full of affection for him. And perhaps we must take the rough with the smooth.
I do not know about the rest of your Lordships, but it seems to me, if I am not committing a breach of privilege myself, that we in this House are a good deal more sensible about our privileges and a good deal less sensitive than those in another place. And perhaps my noble friend Lord Balfour of Inchrye, having aired this matter, as he was perfectly entitled to do, will feel that justice has been done to the occasion, and that, at any rate, we have given the noble Earl material for vet another column.
LORD BYERS: My Lords, may I thank the noble Lord, Lord Carrington, very much for the admiration which he has expressed for my noble friend Lord Arran. I should like to say that I support the remarks made by the noble Lord the Leader of the House, and I hope that the House will accept his advice.
LORD BALFOUR OF INCHRYE: My Lords, may I, with the permission of the House, make two remarks? Of course, I am more than content to follow the course advocated by the noble Lord the Leader of the House. The noble Earl, Lord Arran, expressed his regrets if, intentionally or unintentionally, he had in any way insulted the House collectively. We all know that in life an apology is

1425
accepted in the spirit in which it is made, and therefore I am more than content to follow the wish of your Lordships to leave the matter as it is, with no regrets for having raised it and no ill-feelings following.

AIRDRIE COURT HOUSE COMMISSIONERS (DISSOLUTION) ORDER CONFIRMATION BILL
Read 3a, and passed.

FIREARMS BILL [H.L.]
THE LORD CHANCELLOR (LORD GARDINER): My Lords, I beg to move that this Bill be now read a second time. This is a Consolidation Bill, and if your Lordships give it a Second Reading it will go in due course to the Joint Committee on Consolidation Bills.
Moved that the Bill be now read 2a—(The Lord Chancellor.)
On Question, Bill read 2a, and referred to the Joint Committee on Consolidation Bills.

TEACHERS SUPERANNUATION (SCOTLAND) BILL
Read 3a, and passed.
NEW TOWNS (SCOTLAND) BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

COMMONWEALTH TELECOMMUNICATIONS BILL
House in Committee: Clauses agreed to.
House resumed: Bill reported without amendment; Report received.

NATIONAL LOANS BILL
Read 3a, and passed.

REVENUE (No. 2) BILL
3.34 p.m.
LORD BOWLES: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Lord Bowles.)
LORD DRUMALBYN: My Lords, I should like to raise a point at this stage of the Bill and to draw attention to Clause 2, in which the termination of export rebates is dealt with. At present they are not to be payable on goods exported after March 31, 1968, except where there is a contract of sale to supply them which was made before November 19, 1967, which is the date of devaluation, and also where the transactions would not result, putting it mildly, in any exchange profit to the exporter resulting from devaluation and cannot be altered to protect the exporter from adverse effects of devaluation.
In the Second Reading debate my noble friend Lord Dundee asked the noble Lord, Lord Bowles, this question:
"My Lords, do I understand the noble Lord to mean that if the law courts should decide that a certain tender or bid before November 19 was irrevocable in character and binding on the person who made it, and it was accepted by the purchaser after November 19, it would then follow that the exporter would receive the rebate?".
The noble Lord, Lord Bowles, said in reply:
"My Lords, I think that what would happen is that the exporter would take action against the Board of Trade, suing them for his rebate. If the court said he could have it, then he would have it."—[OFFICIAL REPORT, 27/2/68, col. 721.]
I am bound to say—and I would ask the noble Lord to explain this point—that I do not believe there is any possibility of such an action being brought or, if it were, that it could possibly succeed if it arose simply out of a tender or bid. The Bill itself, as drafted, seems to exclude any such possibility unless there is a signed contract. So I would ask the noble Lord whether he would be so kind as to make this matter perfectly clear. The exemption, as I understand it, extends only to contracts under subsections (2), (3) and (4) of that clause.
I recognise that it would not have been possible to continue to give export

1427
rebates in all cases where a tender alleged to be irrevocable was put in before devaluation and accepted after it, but it does not seem to me to follow that because it would be impossible to cover all cases there was no alternative to covering none. It is true that a firm which has put in an irrevocable tender is not always bound to sign the contract if it is awarded to it; but the practical consequences of refusing to do so may be very severe, even if there is no financial penalty involved, as there may be. A firm tendering to a foreign Government or public authority would never have a chance of winning a contract in that country again if it now withdrew because of the withdrawal of the export rebate.
In my submission, it would not be difficult to provide that sterling tenders which were made to a Government or public authority abroad, and which had been published by that Government or public authority along with other competing tenders, should be exempted from the withdrawal of the export rebate. I see no difficulty in that. I am not suggesting that there should be a discretionary power in the Board of Trade to accept or reject such applications—although the Board of Trade, let us note, is becoming more and more accustomed to making discretionary payments, whether on investment grants or on payments under the local employment Acts. At any rate I would say to the noble Lord, Lord Bowles, that such a discretion would be a far cry from Crichel Down, which the noble Lord prayed in aid. I agree with the noble Lord that the courts should be able to decide, but what is necessary is to draw the clause in such a way that the narrow band of really hard cases to which I refer should receive their payments, and receive them as of right.
I know it is not possible for your Lordships to amend the Bill in the sense that I should like. What I am asking is that the Government should introduce a short Bill to extend the exemptions to irrevocable tenders quoted in sterling and made to and published by Governments and public authorities before November 19. I need not expatiate on the enormous blow to morale where a company has been working hard to obtain a contract for months, or maybe years, when the
1428
contract has been ultimately won and signed, but not signed before November 19, and where there may be a continuing responsibility to produce and export the goods, very possibly at a loss, over a considerable period of time, running into tens or even hundreds of thousands of pounds. I do not think it is good enough for the Government to say, "Too bad. We never said the export rebates were irrevocable". This sort of "Stop-Go" is as bad as any. This is real default on the part of the Government, and none the less unworthy because it is a default not to foreigners but to our own people.
I am asking the noble Lord to say that the Government will look at this matter again, and meanwhile to clarify what he said on Second Reading. It does not make sense to say that, because it would not be administratively practicable, however right in principle, to extend the exemption to irrevocable tenders, therefore it should not be extended to any.
3.42 p.m.
LORD BOWLES: My Lords, I have given this matter a great deal of thought. The noble Lord was going to raise the matter on the Committee stage two days ago. I heard when I got up to speak that he was not going to do so. I do not know whether he has changed the ground on which he was going to speak then, but he did not raise the matter on Committee, when we could have had more than one speech each. Therefore, any questions I ask him he cannot really answer without permission of the House.
LORD DRUMALBYN: My Lords, may I reply to that, because one is in real difficulty in matters of this kind? This is a Supply clause, and it is generally considered not proper to attempt to amend on Committee. As I could not amend on Committee I did not think it worth while raising the matter on Committee; I thought it would be more appropriate to do it now.
LORD BOWLES: My Lords, the noble Lord knew it was a Supply Bill; he knew it on Tuesday perfectly well. He realised that he could not put down an Amendment, because his noble friend Lord Dundee said he could not; and that was made quite clear to the House last week.

1429
I was in this difficulty all the time, and I have been thinking about it a great deal. I am talking about whether it is possible in law to have an irrevocable bid, tender or offer. I was a lawyer many years ago, and they may have changed the law since I ceased to practise, but it seems to me to be a contradiction in terms. If I say to the noble Lord, "I will give you £10,000 for your house. Keep that offer open for me, please; it is irrecovable so far as I can possibly make it, until midday on Sunday", and the noble Lord says, "Yes, I will", but nothing is put in writing—if I make that offer off my own bat and say, "I promised by Sunday to carry this out or to complete my offer, if I do not revoke it then"—I still say then that I am sure in my own mind that I can revoke it the next hour. It is, as I say, a contradiction in terms. I have thought about it a great deal.
Furthermore, if, for instance, some of his right honourable friends in another place referred to a bond accompanying an irrevocable tender, offer or bid, I do not think that makes any difference at all. If I offer, or add to my so-called offer, a 10 per cent. deposit to him, or his solicitor, or to the estate agent, that does not make any difference to the fact he still cannot enforce it. It is not a contract, and I can still withdraw my offer and I can still withdraw my deposit. We all know that from experience. That is why all negotiations about house buying, land and so on, are made subject to contract.
There are other points relating to situations in which a man might find himself—for example on the Stock Exchange. It may be that a man instructs his broker to offer to buy certain stock at a certain price and the broker does that, and then the client changes his mind. It still probably is not a contract that can be enforced at law, and no doubt the broker who has dealt with his own jobber would feel he had been let down by his client; and possible Stock Exchange rules might be such that he would in effect have to go through with the deal. But I am trying to keep this matter as a matter of law.
The noble Lord just now referred to an English exporter who, if he withdrew an irrevocable tender, might suffer practical consequences of great seriousness. I understand that, and it is the kind of risk he has to take. But we have gone into
1430
this matter very carefully in the Board of Trade since my honourable and right honourable friends in another place said they would look into it. In fact, they tried very hard to look into it; they almost made an irrevocable offer to look into it. But they came to the conclusion that it was impossible in an Act of Parliament to put in words which would be stronger than a written contract of sale. An irrevocable bid, in my humble opinion, is something that cannot possibly exist.
The noble Lord asked whether we would look at the matter again, and asked if we could find some way, in a short Bill, of covering the point he has in mind. I, of course, would not refuse to make an offer of that kind. I will report this discussion to the President of the Board of Trade. I agree that, on the face of it, the business world would not expect suddenly to have a rebate withdrawn on a certain date because we have suddenly devalued or taken some such action. I understand how important the export rebate is in getting the contract at all, or even getting the offer considered. I appreciate all this, and I am sure that my right honourable friend the President of the Board of Trade does so, too.
The noble Lord may think it is a long way from Crichel Down. In his opinion it may be, but I do not think it is all that far. We have had the view expressed that public decisions relating to law should mainly be decided by the courts. If the noble Lord agrees that these bids are irrevocable, or if he, or his friends, can ever prove one before a court, he has nothing to worry about. This is the part in his speech I do not understand. If these offers or tenders are irrevocable in his sense, or the sense of his right honourable friends in the other place, then the court would hold so, too; and therefore I cannot understand why he takes that line. However, I promise the noble Lord that my right honourable friend the President of the Board of Trade will have his remarks referred to him, even if he does not care to read mine, and we shall see whether my right honourable friend can possibly see some way to meet the point of view raised by the noble Lord and his right honourable friends.
LORD DRUMALBYN: My Lords, with the leave of the House, may I say a word in reply to the noble Lord? I must say that during his speech, when

1431
he said that an irrevocable bid is something which cannot possibly exist, I was reminded of the child who looked at the camel and said, "I don't believe it!". These things are common, very common indeed, and they do exist. I was not speaking just from the legalistic point of view on this question. I am most grateful to him for his undertaking to look at the matter further. In those circumstances, I feel he has gone as far as can be expected at the present time, and I am much obliged to him.
3.48 p.m.
LORD WALSTON: My Lords, may I add a word in support of the noble Lord, Lord Drumalbyn? I am speaking in no way as a lawyer. I have never been a lawyer—even twenty years ago—but it seems to me that it is purely a matter of both common sense and common decency that where an individual or a firm has made a bid under certain apprehensions that certain conditions exist, and that bid is then within a short while accepted, even though the conditions have changed afterwards, it would be wrong for the firm to withdraw its bid. Even though it legally might be able to, it would not be the right sort of thing for it to do. It had given its bid in good faith, and it certainly would not be good business either for it, or for the country, to withdraw it, especially in the case of considerable export contracts we are all familiar with.
I cannot accept the fact that the Board of Trade is unable to frame legislation to cover this point. It is, after all, the duty of the officials serving the Government to do what the Government want, and they have the ability to do it. It must be for Her Majesty's Government to tell them what to do. If Her Majesty's Government come out straight and say, "We want some form of arrangement to be made to cover this point, because we think it a good point", I cannot believe it cannot be done. I hope that Her Majesty's Government will in fact say that, because I think most of us, whichever side of the House we sit on, feel that the point which has been raised is a very fair and a very important one.
On Question. Bill read 3a, and passed.

PUBLIC EXPENDITURE AND RECEIPTS BILL
3.50 p.m.
LORD BESWICK: My Lords, the main provisions of this Bill, the Second Reading of which I now move, are part of the effort to put Britain's economy on to a genuinely sound basis. If we are to pay our way and wipe out our indebtedness we need to export more. If we are to sell more abroad we need to cut back consumption at home. All this is common ground. We are all agreed about it. Disagreement sets in when we get down to hard cases and decide how the home consumption cuts are to be made.
The Prime Minister described our general strategy as meaning:
"a progressive and massive shift of resources from home consumption, public and private, to requirements of exports, import replacement, and productive investment".
This Bill will help to implement that strategy in respect of economies in home consumption. As I have said we all agree about the objective in general, but I have no doubt that this afternoon we shall have disagreement about its implementation in particular. It is reported that yesterday in another place the Opposition spokesman claimed that the proposed cuts in defence expenditure could not be justified on economic grounds. Some of my friends have said precisely the same sort of thing about the proposed cuts in home expenditure. The truth is that no cutback in consumption can be pleasant, and in our hearts we must all agree that, if we are honest about our support for the general objective, we should all of us have to accept the necessity for particular economies which we would rather avoid.
Having said that I must go on to add that Clause 1 of this Bill and Schedule 1 would in fact have been necessary quite apart from the considerations behind our other economies. I will explain why. When the higher rates of National Insurance benefit were introduced at the end of October last year they were accompanied by increases in the flat rate contributions. At the time when the legislation of last June authorising those increases was introduced, it was estimated that the proposed increased contributions would be sufficient to support the

1433
increased benefits until the early part of 1970. In fact there has been a continuing worsening in the financial position of the National Insurance Fund. It is now expected that in 1967–68 the Fund will show a deficit of £75 million; and if there were no increases in contributions, further deficits would follow in 1968–69 and 1969–70, and the balance available in the Fund might be insufficient to finance the demands upon it.
The reasons why the estimates made only eight or nine months ago have now been falsified are set out in the Report of the Government Actuary (Cmnd. 3532). Very briefly, they are:

(a) A continuing rise in the level of sickness claims, not allowed for in last year's calculations.

(b) An increase in the proportion of men retiring as soon as they reach the age of 65.

(c) People are on average living longer so that the mortality rate among pensioners has been lower than expected.

(d) Apart from the loss of contributions due directly to unemployment, there has been a fall in the total working population since 1966, and this has led to a shortfall in contribution income.

For these reasons an increase in the contribution rates becomes necessary. The Prime Minister announced on January 16 that there would be an increase of 6d. a week for employees and 6d. a week for employers. To increase both the contributions by about the same amount is in accordance with normal practice. The 6d. relates to an employed adult male over the age of 18, but, as Schedule 1 to the Bill indicates, there is a wide range of contribution rates. Again in accordance with normal practice it is proposed that the increase should be roughly proportional to the contributions paid by or for each class of contributor. There are certain adjustments to this, involving the rounding-off of halfpennies, to which I need not refer.
Subsection (2) of the same clause is designed to secure that the powers of the inspectors of the Ministry of Social Security for the purpose of enforcing contribution liability shall extend to premises or places where the inspector has reason
1434
to believe that an agency, or a business for the supply of labour, is being carried on; and it also imposes upon people operating an organisation for the supply of labour the obligations regarding the furnishing of information and production of documents to inspectors imposed on employers generally by the 1965 National Insurance Act. This provision will enable the Ministry to stop up what it is feared may be a growing loophole for the evasion of payment of contribution.
Subsection (3) of the clause deals with the case of the person who commits an offence by refusing to give information required under the 1965 Act. At present the penalty for such refusal is a fine of £10 on first conviction, and £50 on a second or subsequent conviction. Unhappily, the extent to which some people, by refusing to give the information required under the 1965 Act, might evade contribution payments is maybe so great that it would pay them to continue their offence even at the cost of paying the periodic fines. The purpose of this subsection is to increase the fine on second conviction to £10 a day for each day on which the offence is continued. It is believed that this deterrent will end evasion of proper contribution payments
Clause 2 and Schedule 2 provide for an increase in the National Health contribution of the employee of 6d. a week. In the debate of January 24 on the economic situation I ventured to confess that the reimposition of prescription charges seemed the least justifiable of all the cuts. I preferred a straightforward insurance policy and that would mean an increase in the Health Service charge sufficient to meet the cost of prescriptions. The Government decided that the necessary increase, of 1s. a week, on top of the increase in the National Insurance contribution, called for in Clause 1, would bear unreasonably hard of the poorer sections of the community. On the other hand, if all prescriptions were to be paid for when taken then again those least able to pay would be hit hardest. The proposals in Clause 2, and Schedule 2 are the result of a compromise.
Patients over 65, children up to the age of 15, expectant and nursing mothers and the chronic sick, will be exempt from prescription charges, and the cost of these exemptions, approximately £25 million

1435
in a full year, will be met by this 6d. increase in the National Health Service contribution of the employee. The increased rate of contribution will be introduced as from May 6 next. No date has been fixed for the reintroduction of prescription charges, but it is anticipated that the one will follow the other as soon as practicable.
Clause 3 of the Bill is concerned with the withdrawal of school milk from secondary schools. Here again I get absolutely no satisfaction in asking for this particular economy. I do claim, however, that the decision to make this change comes after the most careful consideration. We considered the possibility of providing free milk for some secondary school children, but not for all, on grounds of special need, but reluctantly concluded that this selection or segregation of certain secondary school children was not a feasible way out. Apart from obvious difficulties in selecting individual children on medical grounds, or because of nutritional condition, or on grounds of family finance, there was an overriding human difficulty. To have some children selected in this way while others in the class sat by and watched them drink the free milk would create embarrassment. Some sensitive children to my certain knowledge would rather not take it in this sort of situation.
One factor relevant to the decision in this clause is the way local education authorities have been co-operating with the Government to improve the take-up of free school meals. As a result of a survey published last summer, it was revealed that only about 50 per cent. of the children eligible for free school meals were receiving them. A campaign has now been mounted to draw the attention of parents to the availability of free school meals where the parental income falls below a certain level, and although it is too soon to be sure of the effects of this there is reason to believe that something like an additional 100,000 free meals have been served over the figure of last November. Moreover, from April of this year free meals will become automatically available to the fourth and subsequent children in families, irrespective of income. I hope that this will be accepted as evidence that the Government, in spite of the decision they
1436
have taken on secondary school milk, are not unmindful of their responsibilities for the health of the nation's children.
The next clause, Clause 4, is related to the economic policy, but only indirectly. It makes provision for the payment of compensation to those people who lose their employment, or otherwise suffer loss or diminution of emoluments, in consequence of the Government's decision to reduce civil defence preparations to a care-and-maintenance basis, and to disband the Civil Defence Corps and the Auxiliary Fire Service. The terms on which compensation will be paid will be set out in regulations, and it is intended to follow the general pattern adopted in other cases of statutory compensation—for example, the reorganisation of local government. The cost of compensation under this clause is particularly difficult to estimate, since it will turn very largely on the ease with which those concerned find alternative employment. Altogether, a total of from 2,000 to 2,500 people may be affected. We hope that the great majority will find other jobs either within the local authority field or elsewhere. But to the extent that they do suffer loss the regulations will provide help.
Clause 5 of the Bill does not derive directly from the announcement of January 16, but its aims are broadly in line with the objectives. Briefly, the position is as follows. Over the years a number of fees and charges for various Government services have been fixed by Statute. Where the original Act contains no power to vary such fees by order it has meant that they could be varied only by a further Act of Parliament. This would obviously be an extremely cumbersome way of proceeding if one wished to do no more than up-date a few minor charges and fees. For this reason a whole range of such charges is now completely out of line with the cost of the services to which they relate. In order to overcome this difficulty, it is proposed through this clause to take power to vary such fees and charges by an Order, which would be subject to the Negative Resolution procedure, made by the appropriate Minister. This clause of itself does not vary any charge at all. It is purely an enabling power. I would draw your Lordships attention to the limitation on that power imposed by

1437
subsection (1) of the clause, which provides that the fees may be amended so as to produce a net return
"corresponding more nearly with the cost of the matters for which they are payable".
That is to say, our aim here is not to impose a new tax, but merely to require people to pay a fair price for the services concerned. We are also taking power to abolish any fees where the yield from them is likely to be such that their collection is uneconomic.
Finally I come to Clause 6 of the Bill, which embodies a minor but useful reform of the procedure for considering applications in the Board of Trade for building grants in development areas. Under the Local Employment Act 1960 the Board cannot make building grants unless they have first consulted the Board of Trade Advisory Committee (B.O.T.A.C.). Clause 6 would relax this requirement and allow the Board discretion in this matter to consult the Committee as the Board thought fit. The Board of Trade consider that the present statutory requirement leads to a disproportionate amount of time and administrative resources being spent on a large number of small applications. Few of these have in fact been rejected by B.O.T.A.C., and the intention would be that applications relating to a building cost of £10,000 or less should not normally be referred to the Advisory Committee.
Clause 7 of the Bill is of a formal and technical character and I think there is nothing I need say on that.
My Lords, the provisions of this Bill are very varied, but they all contribute to the Government's overriding economic aim of ensuring that demands upon national resources for the purposes of home consumption are reduced to make way for that export-led growth without which all the opportunities of devaluation would be wasted. If, on the other hand, we accept these unpalatable measures, as part of a wider strategy, then I hope that the day will not be too far distant when we can once again concentrate on positive measures to improve and expand our social services. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Beswick.)
4.7 p.m.
LORD DRUMALBYN: My Lords, the whole House will be grateful to the noble Lord for dealing in detail with a rather curious type of Bill, because it is unusual to have a Bill of seven clauses six of which deal with separate subjects and the seventh dealing with the whole lot. This, of course, puts your Lordships into some difficulty in debating it, because on a Second Reading we are generally dealing only with a matter of principle, and here we really have principles within the main principle. Perhaps the House will forgive me if I follow the noble Lord's example and deal with the clauses one by one, because they are so different in character that it is difficult to dell with them otherwise.
The noble Lord started by saying that this is part of the effort to put Britain's economy on a sound basis, and so far as that goes, of course we welcome it, although one is bound to say when one looks at the second page of the Explanatory Memorandum, that it is a relatively small part. Seventeen million pounds is not a small sum of money, but in relation to the national expenditure as a whole and to the increase in the, Estimates, which is £560 million for the current year, it seems a relatively small amount.
LORD BESWICK: Did the noble Lord say £17 million?
LORD DRUMALBYN: Seventeen million pounds. The noble Lord will see, from the second page of the Memorandum, that if you deduct, as I suppose you have to deduct, the amounts that are being paid out, such as those involved in Clause 1, the total amount involved, according to the Explanatory Memorandum, is £16,780,000.
Turning to Clauses 1 and 2, the effect here, as the noble Lord said, is to increase the cost of the National Insurance stamp to unemployed and non-employed persons by 1s. for men and (perhaps I may go into a little more detail, because I think it is of interest to noble Lords) by 11d. for women, and to the employer by 6d. for men and 5d. for women. That is Clauses 1 and 2 together. This increase comes on top of an increase in contributions of 2s. for an employed man in 1965, and another 2s. last year, and will bring the total increase for an

1439
employed man since 1964 to 5s., an increase of 43 per cent. on the contribution which then applied. For women the increase since 1964 is from 9s. 8d. to 14s. Id., an increase of 4s. 5d.; that is, if my mathematics are correct, 45 per cent. The flat rate benefits for single persons have been increased over the same period from 67s. 6d. to 90s., an increase of 22s. 6d., so that the flat rate benefits have increased by 33⅓ per cent. Quite clearly, therefore, the contributions have, relatively, increased more than the benefits. The increase in contributions falls with considerable severity on the lowest paid workers. I am glad that the noble Baroness, Lady Phillips, is to reply, inasmuch as this increase falls particularly hardly on women whose average wage is so much lower than that of men.
When benefits were increased in 1963 by 10s., the contribution for employed men to the National Insurance Fund was raised by 11d. The reason for this—the noble Baroness will correct me if I am wrong—was largely to be found in the fact that the top of the bracket on which graduated contributions were charged was raised in that year, in 1963, from £15 to £18, whereas no similar change was made in 1965 and 1967. At the time when the increases were made in 1965 there was some justification for not raising the top of the bracket, because we were all given to understand that a new graduated scheme would be introduced quite soon. In 1967 it was reasonable to presume that the introduction of that scheme was still nearer. But I cannot help observing that over three years have passed since the 1964 Act, and the result of this dalliance is a much heavier burden on the lowest paid workers than it would have been if the flat rate, the top of the bracket, had been increased. Even if a Bill is introduced next Session—and perhaps the noble Baroness will be able to tell us whether the promised graduated pensions Bill is to be introduced next Session—it is unlikely to be brought into effect, I should have thought, until more than a year from now, possibly a year and half.
I would not dispute, and I do not suppose any noble Lord would dispute, that the National Insurance Fund should not be allowed, as the Government Actuary says, to fall so low as to be
1440
insufficient to finance the operations of the National Insurance scheme. I am sure this is right. As the noble Lord said, the increases in Clause 1 are made necessary, and they are not really in the same category as the other clauses of the Bill. We would all agree that a further increase in contributions is now necessary. The deficit is now running at £75 million a year as compared with an estimate last year for a virtual break-even in the current financial year, 1967–68, and a deficit of £17 million in 1968–69. The noble Lord quoted the reasons given by the Government Actuary, and if I may just draw the attention of the House to one common feature in them, it is that in every one of those reasons except the last one this is simply a continuance of a trend which already existed. He drew attention to the continuance of the trend in sickness benefits, which have been increasing in the past five years, and presumably the Government budgeted for the trend to continue; to a continuance of the trend towards earlier retirement; to a continuance towards longer life among pensioners; and lastly, a rise in unemployment, coupled with a fall in the total working population.
When we last had these rises considered by Parliament, Government policy was just about to change. I submit that the change in the Government policy was bound to lead, and was intended to lead, to a higher level of unemployment in the short term at least, and a fall in the total working population was predictable in the circumstances. It was not for the Government Actuary to foresee this; it was for the Government to foresee it. It is for the Government to say what the level of contributions should be. Of course, it may be said that at the time when the 1967 Act was being prepared nobody could have foreseen the complete volte face of the Government last July, least of all the Government themselves. It is clear that Clause 1 is really a monument to the incompetence and the maladministration of the Government. The increase in the contributions has nothing whatever to do with the effect of devaluation. It has to do with its cause, which is nothing more nor less than the inability of the Government to run the economy and to foresee the continuance of existing trends, intensified by their own actions.
LORD STRABOLGI: My Lords, may I interrupt the noble Lord to ask whether it would not also be fair to say that a lot of this is the result of 13 years of Conservative misrule?
LORD DRUMALBYN: My Lords, not at all. I have been trying to point out that, as the Actuary said, all this has arisen from continuance of trends that were known at the time, apart from the action which was taken—a sudden reversal of policy, when the Prime Minister said on one day that we were turning the corner, and three days later we were faced with the new Prices and Incomes Bill and a complete change of policy.
It is also relevant to say that of course people will retire earlier when unemployment is falling. When redundancies are inevitable, it is almost always the case that those who have reached, or are about to reach retiring age, are the first to suffer. What is remarkable about the Actuary's Report is that it was the Actuary who had to draw the attention of the Government to the precarious condition of the Fund. It was he who had to recommend an increase in contributions. But the responsibility lies squarely on the shoulders of the Government who, in my experience at any rate, fix the contributions and then ask the Actuary to comment on them.
Quite apart from the burden on employees, one should not, and one cannot, disregard the effect of the increase on employers and the self-employed so far as the costs of production are concerned. In my experience Government Departments are a little apt to pooh-pooh comparatively small increases of this kind, but they soon mount up, especially when they are weekly payments; and this is particularly important for the labour intensive industries and, above all, the service industries who are already so hard hit by S.E.T.
So much for the effect on employers and employees. So far as the third man in all this is concerned, the Chancellor of the Exchequer—because there are three parties to the National Insurance Fund; he of course acts on behalf of us all—the effect is an annual increase in expenditure of £13 million representing his share to the contributory National Insurance Fund, or 25 per cent., I think, of the flat rate contributions. So that the upshot of this particular clause is to
1442
place a greater burden on employers, on employees, on the self-employed, on the non-employed, on industry and on the Exchequer.
I turn to Clause 2. The purpose of this clause is to enable the Exchequer to obtain the full benefit of the increase in prescription charges. As the noble Lord said, that is £50 million. Without it, the Exchequer would get only £25 million. So those who have to pay the prescription charges for themselves will also have to pay through their higher National Health Service contribution on the National Health stamp the prescription charges of those who are to be exempted from them, or who are exempted for the time being from paying for their stamp.
This is an odd way of doing things. We have come so far from the idea of a mutual health insurance that it is difficult to justify increasing the flat rate contribution to the National Health Service. It is quite true that increases of 6d. have been made from the original 8½d.—which was the original charge in 1946, if I remember aright—on two occasions, and one increase of 10d. On precedent, I cannot find fault with this increase, were it not for the increase in the National Insurance contribution at the same time. I suppose we should be grateful that the Government have tempered the economic wind to the much fleeced working population, by knocking off a halfpenny in order to reach a round contribution of 40 coppers to the National Health Service contribution. This is what it now amounts to, 3s. 4d.
This is not the occasion to debate the exemptions which are to be provided for. I would only say that if it is possible to give exemptions in the case of the chronic sick in this context, which must involve defining what is meant by chronic sick, why was it not possible to define the chronic sick for the purposes of National Insurance benefits, so that they could have been given graduated benefits now available to the short-term sick? This is something which I raised at the time when the graduated sickness and unemployment legislation was going through, and I still think that it could and should have been done on that occasion. If you are going to be able to define chronic sick for this purpose, then you could have done it for that other purpose.

1443
I now turn to Clause 3. The repeal of the duty laid on local education authorities to provide free milk in secondary schools is justified by the Government on the ground that the proportion of pupils taking it is falling. The noble Lord gave a figure of 50 per cent. I think that in another place a figure of 58 per cent. was given for those now taking milk in secondary schools.
LORD BESWICK: My Lords, I think that the 50 per cent. related to the take-up of free school meals.
LORD DRUMALBYN: I beg the noble Lord's pardon. I think it was said in another place that the proportion of secondary school children taking free milk was falling, and had fallen from 60 to 58 per cent. It was also said in another place that it is not possible to justify the retention in secondary schools of free school milk on nutritional grounds alone. There has been some doubt as to official advice on this matter, but it was said that it cannot be justified on nutritional grounds alone. May I ask the noble Baroness whether this means that local education authorities can go on providing milk in secondary schools if they so choose? If so, must the pupils who take it pay the full cost of it, or can the local education authorities still charge part of the cost to their ratepayers if they wish? The noble Lord bound this matter up with free meals, and I am glad to hear that the publicity activities of the Government are succeeding in getting a greater uptake of free meals.
I also should like to ask what is meant by the proportions of pupils taking school milk. There have been allegations of considerable waste in milk, and that is why I ask the question. Does it mean that 58 per cent. of pupils actually drink their milk, or does it mean that the amount of milk delivered to schools is 58 per cent. of what might be delivered if the 100 per cent. all took it? What check has there been on wastage in school milk? I know from contacts with school teachers and others that it is thought that there is a good deal of wastage in this sphere.
Clause 4 deals with civil defence. We shall be having a debate on the Government's decision before long, so I need not say much about that now. It appears
1444
that the amount of compensation provided is rather small. The noble Lord said that there was great difficulty in estimating what would be required, and the amount which has been put down is £250,000. Relating that to the figure which he gave of 2,000 to 2,500 people who might be affected, this means an average of £100 to £125 each. I daresay that a fairly high proportion will not require compensation, but will those who receive compensation also be entitled to redundancy payments, and will those Civil Defence workers who are taken on by local authorities receive their redundancy payments in the same way as those who are taken on by a firm which takes over the firm for which they are working?
Clause 5 is the sort of clause which Governments long for the opportunity to introduce, and I readily welcome it. Little by little we shall find out what it means for the public. Most departments and local authorities concerned have been anxious about the fact that charges are so often insufficient to cover costs, and most of them will have made up their minds by now what they are going to ask for when the Bill becomes law. Surely it would have been possible for the Government to produce a White Paper to accompany the Bill, giving fuller information and indicating their intentions. I say this because one hears rumours that charges are likely to be increased very considerably. The noble Lord was good enough to point to the policy in this matter—and I welcome this—namely, that the charges should not be regarded as revenue-producing but should be kept sufficient to meet costs. We would not dissent from that and we are sure that it is the right policy.
They are certainly a mixed bag. I looked up one or two of the Acts, and I noted that the Explosives Act 1875 dealt with the licensing of small firework factories, and the next one dealt with increases in fees. It is remarkable—I suppose it is still the position—that one of the Acts which I looked up indicated that where a commissioner is appointed to hold an inquiry and costs are awarded against one party, it is not possible to charge the party against whom costs are awarded more than 5 guineas a day for the services of the commissioner. That has gone on now since 1923 and might well be changed, so we welcome that.

1445
Lastly, I come to the building grants in development areas. The Government are asking for power to pay building grants without reference to the Board of Trade Advisory Committee. They say that it will save £30,000 a year in administration. The danger, of course, is that the grants would then be paid without the same care in investigation as has been taken by the Board of Trade Advisory Committee and before it decided whether to recommend a grant. I know from my own experience in the Board of Trade how short are the Government of accountants to investigate applications. I appreciate that there have been great extensions of the development areas and that the burden on the B.O.T.A.C. must have been considerably increased, but Parliament is entitled to expect that Government money will not be "dished out" to ventures which are unlikely to prove economic. The consequence of this clause is likely to be, not so much to save money on administration, as to increase the numbers of building grants for dubious ventures. It is at least doubtful whether there will be a saving in the long run.
I should be grateful if the noble Baroness could deal with these points because, although the noble Lord said that most applications for building grants are allowed, it still remains true that they are all fully investigated at present. The House would not like to feel that the investigations were in any way reduced. This is a real rag-bag of a Bill, parts of which are designed to save expenditure to the Exchequer and parts of which will increase Treasury expenditure as the inevitable consequence of Government decisions and indecisions. The net financial effect, as I said, is a saving of under £17 million to the Treasury as against an increase in the Estimates for next year of over £560 million. The best that can be said about this Bill, as the late Sir Winston Churchill once said of a pudding, is that "it has no theme".
4.31 p.m.
LORD ILFORD: My Lords, this Bill is what is known in popular language as a "package deal". As has been pointed out, it consists of a number of miscellaneous financial provisions which are necessary to carry out the Govern-
1446
ment's programme of reduced expenditure. If the other aspects of the Government's programme of reduced expenditure had encountered as little opposition as this Bill looks likely to do, I am sure that the Government would have been very well satisfied.
There is one matter concealed in the verbiage of this Bill to which I should like to draw your Lordships' attention. It seems to me to be a matter which is so unjust that at a later stage your Lordships may be ready to amend it. As the noble Lord, Lord Beswick, has pointed out, the Bill contains provisions for the payment of compensation to persons who lose their employment, or who suffer some diminution in their emoluments, as a result of the Government's programme of placing the Civil Defence Service on a care-and-maintenance basis. Compensation will be paid by the local authorities, and the Bill provides that the local authorities shall be reimbursed by the Exchequer in respect of their expenditure in paying compensation to those persons who will be entitled.
The Minister is to make regulations defining, I suppose, the classes of persons to whom compensation will be paid and other matters, but the most important matter that he will have to include in the regulations is the extent to which the cost of the compensation will be borne by the Central Government. The regulations which the Minister will be required to make are to be made subject to the provisions of the Civil Defence Act 1948. That Act provides that regulations may provide for a reimbursement of sums which the local authorities, as civil defence authorities, have disbursed. The Act of 1948 further provides tint the regulations may require the Central Government to reimburse the local authorities to the extent of 100 per cent. of their expenditure, or to not more than three-quarters of their total expenditure.
One does not, of course, know the present intention of the Government whether the intention is to provide for full compensation—that is to say, for a full reimbursement of the sums expended in compensation—or whether the intention is to provide for only three-quarters of it. One gets a fair indication of what is intended in the Explanatory Memorandum to the Bill. If your Lordships

1447
will look at the note on Clause 4, at the bottom of the first page, you will see that it says:
"The payments by local authorities of compensation provided for in this Clause are estimated broadly at up to £¼ million, attracting 75 per cent. Exchequer grant."
That must mean that when we see the regulations we shall find that the local authorities are to be reimbursed only to the extent of three-quarters of their expenditure on compensation.
I submit to your Lordships that, if this is what is intended, it is rather difficult to justify a reimbursement of no more than three-quarters of the expenditure which the local authorities have incurred. One-quarter of the cost of securing this economy is going to fall upon the local rates. I think one is entitled to ask the Government whether their economy programme consists, so far as this item is concerned, of shifting on to the local authorities the cost of securing the economy which the Government will enjoy. It seems a strange form of economy that one-quarter of the cost of securing it is to be paid by somebody else.
At the present time the local authorities are themselves engaged in trying to carry out programmes of economy. They are endeavouring to reduce their expenditure in every department where that is possible. I submit that it is not right that the Government should expect the local authorities to pay one-quarter of the costs of securing this item of their economy programme. It is really a poor sort of economy if one is going to do it like that. I hope that the noble Baroness who is going to reply to this debate will be able to assure us that the Government will think again about this matter, and will ask themselves whether it is a fair and just settlement that one-quarter of the cost of securing this economy should fall on somebody else.
4.37 p.m.
LORD BURDEN: My Lords, the National and Local Government Officers' Association has raised with me one or two points in connection with Clause 4. However, I should at the outset declare an interest. I happen to be an honorary member of NALGO, but that is the extent of my interest. I should like an assurance—
LORD ILFORD: My Lords, I am sure the noble Lord will forgive me for a moment if I interrupt him to say that, if a personal explanation is necessary, I ought to have given a personal explanation on the same ground, that I also am an honorary member of NALGO.
LORD BURDEN: My Lords, I should like an assurance that NALGO will be taken into consultation on the draft compensation regulations to be made under the Bill. Secondly, it is pointed out that compensation is to be payable in the case of persons affected by the revocation or amendment of regulations made under Section 2 of the Civil Defence Act 1948. Understandably, there is no indication in the Bill of when this is likely to happen.
In the Home Office letter of February 12 to local authorities, it was pointed out that, in the meantime, dismissal of an officer would prejudice his entitlement to compensation. As may be expected, NALGO members are apprehensive about their position. Can information be given about the proposed timetable, when the regulations are drafted? Alternatively, perhaps the compensation regulations could be made to act retrospectively to meet the case of officers who might be dismissed before the revocation or amendment of the Civil Defence Act regulations.
This brings me to a further point. The regulations will apply only in the case of loss brought about by the revocation or amendment of Civil Defence Act regulations. Last summer, a number of members of NALGO employed in the Civil Defence Service lost their jobs, not because of such revocation or amendment of regulations but in consequence of a letter, CD1 1967, issued by the Home Office which called upon local authorities to economise on their civil defence expenditure. It was a broad hint to them—a very broad hint—to get rid of staff to reduce their expenditure. What was the result?
The overall picture was that urban and rural district councils severely cut down their expenditure on civil defence, leaving the county councils to do most of the work. NALGO members who lost their jobs in consequence of this change will not be covered by the new regulations. How are they to be dealt with? Surely they are entitled to the same treatment

1449
as those who will now lose their jobs in consequence of the revocation or amendment of statutory regulations. It is true that some of those who lost their jobs last summer were awarded redundancy payments, but in many cases compensation, if it were available, would exceed the amount of any redundancy payment and the officers would be entitled to the difference between the two sums if the compensation regulations could be made to act retrospectively.
I am sorry that I was not able to give the Minister previous notice of these points, but I myself received intimation in regard to them only this morning. Perhaps I may express the hope with which I began; namely, that NALGO will be consulted at all stages of the discussion in regard to the regulations, when I am sure that some of the points that I have made will be ironed out, I hope to the satisfaction of all concerned.
4.43 p.m.
LORD MILVERTON: My Lords, I do not wish to take up the time of the House in repeating what has already been said, but perhaps I may say how entirely I agree with the points made by the noble Lord, Lord Ilford. They covered all that I had intended to say; and, as he put the case to the Government so convincingly and so well, there is no need for anyone to repeat it. I feel the more assured in saying no more than this in that I am not at all sure that I should not be wasting not only the time of the House but also my own time, as I feel confident that the Government will take a sympathetic view of the plea which has been put before them. It represents views which I can assure the Government—they probably already know it—are widely held by a number of people.
LORD SOMERS: My Lords, before the noble Baroness replies, I wonder if I might ask whether the Government would consider making a more just relationship between the payments for National Insurance of the employed and the unemployed. I should perhaps declare an interest, because I happen to belong to the ranks of the unfortunate unemployed myself, at least for National Insurance purposes, though I am very far from unemployed in fact. I find for myself that the payment of 14s. 3d. per week for the
1450
privilege of being unemployed is quite as much as I want to pay; but there are many others who are in far worse circumstances than I am. There are those who are old and infirm, who perhaps have nobody to help them, who are living on very small incomes which they have no prospect of ever enlarging.
My Lords, is it fair that such people should have to pay such a sum as this? I do not think anybody would question the justice of support for the nation by those who are earning large salaries and are very well off, but I think that to ask so much from those who are in such an unfortunate position as these old and. as I say, often infirm people seems to me very far removed from justice. I hope that it will be possible for the Government to do something about this.
4.46 p.m.
BARONESS PHILLIPS: My Lords, I will endeavour to reply to all the points which have been raised by noble Lords, but, as the noble Lord, Lord Drumalbyn, has so rightly said, this Bill covers a tremendous number of subjects; so if I omit to give a reply during this Second Reading debate to all the questions raised it will not be with the intention of evading them, but simply because it has not been possible to provide a reply in the time. I can assure the noble Lord, Lord Somers, straightaway that, although the point he raised does not come within the context of the Bill we are discussing to-day, it will be taken back and looked at.
In reply to the noble Lord, Lord Word, I should like to give him an immediate reassurance on the question of the cost of compensation to redundant civil defence employees. His first point, I think, was: How much will the Exchequer bear? The reply to this is, 75 per cent. This is fair because, after all, the effect of the rundown in civil defence will be to reduce local authority expenditure by about £5 million, per annum. I should like to assure the noble Lord, Lord Burden, and also the noble Lord, Lord Ilford, that NALGO will be consulted on the question of the retrospective effect of compensation and the loss of employment to NALGO members; and although I cannot give the noble Lord, Lord Burden, a direct reply on every

1451
point he raised, I will see that this is done during the Committee stage.
It would probably be helpful to both noble Lords, as well as to the noble Lord. Lord Milverton, if I were to make some reference to the question of compensation regulations. These will be on the lines of those made for previous similar cases, and generally accepted by local authorities and their staff as reasonable. They will be based on what is known as the Crosby code. On the question of retrospection—and I am sure that this will reassure noble Lords—there is provision in subsection (4) of Clause 4 to apply compensation retrospectively where the Civil Defence Act regulations are revoked or amended before the passing of the Act or the making of the compensation regulations. The employee's redundancy must, however be attributable to the revocation or amendment of the Civil Defence regulations, as required under subsection (1). That, I think, was the point which the noble Lord, Lord Burden, raised particularly, and it will be looked at. The question whether any employee who ceases to be employed on civil defence work before the Civil Defence regulations are revoked or amended will have any claim to compensation, will depend on whether the cessation of employment is covered by the word "attributable". Each case would have to be considered in the light of the particular circumstances, but retrospection would ordinarily be acceptable if the redundancy occurred after the Prime Minister's statement of January 16, 1968, and the local authority employing the individual concerned stated that it was a redundancy attributable to the prospective revocation or amendment of Regulations which were subsequently revoked or amended.
On the question of the rate of grant, the local authorities' association have represented that the compensation payments which the authorities will make should be subject to 100 per cent. reimbursement. Most civil defence expenditure has been grant-aided at 75 per cent. and there seems no reason to depart from this level of grant, particularly since the local authorities share the benefits of the saving in expenditure which accompanies the reduction of civil defence activities. I hope, therefore, that both
1452
noble Lords will accept that any further discussion—
LORD BURDEN: My Lords, there is one point and it is the basis of the case that I put. Will discussions be entered into with NALGO to see whether the points that I raised can be settled satisfactorily?
BARONESS PHILLIPS: My Lords, I understand that all the matters I mentioned will be subject to consultation with NALGO; but I will check on this for the noble Lord and give him a reply later.
LORD BURDEN: My Lords, I am much obliged.
BARONESS PHILLIPS: The noble Lord, Lord Drumalbyn, I believe raised points on each clause of the Bill. If I do not deal with them in order, at least I hope that I shall cover them satisfactorily. The noble Lord referred to the saving of £16 million under the Bill as being small; and that is true. But these savings are part of an overall saving of £300 million in 1968–69 and over £400 million in 1969–70. The Bill simply deals with that part of the saving which requires legislation.
On the question of Clause 4, again we are back to the subject of compensation. The noble Lord said that £250,000 is a small sum. But it should be remembered that it is an annual amount and the total may be greater—for example, for employees who qualify for continuing payments. And to Lord Drumalbyn's further question on the same clause, as to whether the redundant employees will receive redundancy payment, the answer is, Yes; they will be entitled to do so. In answer to his question on Clause 5, he may like to know that discussions are in train with the local authorities on increasing fees for the registration of births, marriages and deaths. These and all increases will be subject to the Negative Resolution procedure.
The noble Lord raised a further question concerning the Government Actuary and suggested that the Government fixed the contributions and then asked the Actuary to comment on them. In fact, that is not strictly correct. The Actuary drew the Government's attention to the emerging deficit and advised what contribution would be necessary to meet that

1453
deficit. That is the normal and proper function of the Government Actuary in relation to the Government. The noble Lord, Lord Drumalbyn, also suggested that the trend had been there before and that, presumably, the Government should have noticed it and made the increases earlier. It is true that the trends were there; but we are dealing with the degree of increase. It was the sudden steepening of the trend which put the earlier calculations out.
I notice that the noble Lord suggested that people retired because of a shortage of work. May we not take the more hopeful view that people are retiring because they are more satisfied with the rate of retirement pension? At any rate, perhaps one reason is as good as another in the existing circumstances. I think it is heartening—to use the phrase used in another place—that "people are dying less frequently". There is no doubt that this is a very heartening trend.
On the subject of the supply of milk, the noble Lord, Lord Drumalbyn, mentioned the figure of 58 per cent. That is, in fact, the quantity of milk supplied to the pupils, but there is no reason to suppose that there is any great difference between the amount supplied, and the amount consumed. The question of wastage is constantly before the Department. The noble Lord said that he had talked with teachers and children about this problem. So, also, have I. From my own recollection, I would say that there is no wastage; it simply means that some children perhaps have more milk than they actually need. I suppose it may be described, technically, as wastage; but in fact no milk is ever put down the drain or thrown away. As my noble friend Lord Beswick has made the point about the decision to withdraw free school milk from secondary schoolchildren, I will not labour it further, but I think it is important to remind the House that this step was taken in relation to the investigation of the quantity of free meals which were being taken up. It is, of course, rather surprising to learn that a percentage of the free meals available was not taken up. But this is, happily, a situation which is now changing.
I think—perhaps I dare say I hope—that I have dealt with all the points raised by the noble Lord, Lord
1454
Drumalbyn. I would again remind your Lordships that it is probably unique to have a Bill presented which covers such a wide and varied number of subjects. I hope noble Lords will accept my assurance that during the Committee and subsequent stages I will let then have any further replies. With this rather inadequate little speech, I hope your Lordships will give the Bill a Second Reading.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

CIVIL EVIDENCE BILL [H.L.]
4.58 p.m.
Report of Amendments received.
Clause 2:
Admissibility of out-of-court statements as evidence of facts stated
2.—
(2) Where in any civil proceedings a party desiring to give a statement in evidence by virtue of this section has called or intends to call as a witness in the proceedings the person by whom the statement was math, the statement—

(a) shall not be given in evidence by virtue of this section on behalf of that party without the leave of the court; and

(b) without prejudice to paragraph (a) above, shall not be given in evidence by virtue of this section on behalf of that party before the conclusion of the examination-in-chief of the person by whom it was made,

(ii) in so far as the court allows the person by whom the statement was made to narrate it in the course of his examination-in-chief on the ground that to prevent him from doing so would adversely affect the intelligibility of his evidence.

VISCOUNT COLVILLE OF CULROSS moved,VISCOUNT COLVILLE OF CULROSS moved, in subsection (2), after the first "made", to insert:
"if that person is called in order to give evidence as to the matters contained in the statement".
The noble Viscount said: My Lords, in speaking to Amendment No. 1, I hope your Lordships will allow me also to deal with Amendments Nos. 2, 3 and 4 because the subject matter is really common to all of them. I must also apologise if it takes me a little time to explain these Amendments; but the subject matter is not a little complex and in order to make myself clear I shall have to do it

1455
by way of illustration. I want to take for my illustration a notional case concerning a car which was bought on hire-purchase. The plaintiff in the case is the hire-purchase company, and the defendant is the man who bought it.
In the first part of the illustration I simply want to draw attention to what will happen if it is wished by the plaintiff to prove that the defendant bought the car. The evidence consists of a statement which was made by a clerk in the plaintiff company, a written statement which is part of the record of his business, upon being told by the sales manager that he had sold the car to the defendant. The fact is that the car was sold, but it appears primarily in a statement made by somebody else, and it is therefore hearsay. This really comes under Clause 4 of the Bill, but perhaps this is the easy way to illustrate the matter. The plaintiff company wish to put this statement in evidence, so they serve a notice under Clause 8, upon which the defendant may do one of two things. He may either do nothing, in which case the statement is admissible as of right under the Bill as evidence of the fact that the car was sold, or he may serve a counter-notice requiring that the man who originally told the clerk that the car had been sold—that is, the sales manager—should be called to give evidence.
If he does that, again one of two things may happen. Either the plaintiff company may call the sales manager or they will say, in accordance with Clause 8(2)(b), that since the sales manager was dealing with the sales of cars every day over a long period of time and dealt with about 25 cars on the day concerned, and that day was three and a half years ago, he cannot reasonably be expected, having regard to the time that has elapsed since making the statement, to have any recollection as to the accuracy or otherwise of that statement. If that is established in interlocutory proceedings before the case comes on for trial, he need not be called and the statement is capable of being produced as of right under the Bill as evidence that the car had been sold.
Suppose that does not happen. Suppose the sales manager is called at the request of the defendant and he is asked about the sale of the car. He is an
1456
honest man and has told those who conduct the plaintiff's case that he remembers a little about it but not very much, and therefore the plaintiff has not used the provisions in Clause 8(2)(b) to keep him out of the case, but in examination-in-chief it becomes clear that he remembers very little about it and his testimony is somewhat more than shaken on cross-examination. As the Bill stands, the statement which was contemporary and which in other circumstances would have been admissable as of right, can only be put in after examination-in-chief at the earliest and then upon the discretion of the court. I think that in most cases where the plaintiff had called the sales manager and the hearsay statement was in fact a contemporary one and most unlikely to be inaccurate, the discretion of the court would usually be exercised in favour of letting the statement in, because having regard to Clause 6 of the Bill the court could put such weight on it as it thinks fit and it is not bound to be conclusive.
So far that is what the Bill says, and I am content. But take a further complication. Not only did the sales manager sell the car and tell the clerk who made the record, but subsequently the sales manager had to go and reclaim the car, and when he did so he found that it had no mudguards. The plaintiff also wishes to give in evidence that the car had no mudguards. This has nothing whatever to do with the other piece of evidence related to the sale of the car. Since it is desired to give the first piece of evidence in the court it is necessary to serve notice under Clause 8. If no counter-notice is served, or if the plaintiff company can rely on Clause 8(2)(b) so that for the purpose of that statement there is no necessity to call the sales manager, then ordinarily speaking that statement will be admissible as of right. But if the plaintiff company also wish to call the sales manager to give evidence of the fact, which he clearly remembers, that the car had no mudguards, then although the position is that while the plaintiff company, despite the absence of a counter-notice or the fact that the sales manager remembered nothing about it, could have put in that hearsay statement as evidence of right, they can no longer do so, because of the wording of Clauses 2 and 4.
Because of the pure chance that it was the same man who sold the car who subsequently found that it had no mudguards, the hearsay statement has been converted from one that can be admitted as of right into one admitted only by the discretion of the court, and then only after the examination-in-chief. How is the court going to exercise this discretion? No doubt it would say that had not the sales manager been called to deal with the mudguards, this statement could have been put in as of right and therefore it will exercise its discretion in favour of it being put in. But again there may be courts, and perhaps some judges, who would be stricter than others about the best evidence rule, and would say that if somebody knows something about a matter he should come and tell the court and that the court should not rely on any hearsay statement at all. Some courts may say that, notwithstanding the fact that the sales manager had not been called and this hearsay statement could come in as a right, nevertheless as the sales manager was present the court should hear what he has to say about it and not admit the hearsay statement at all. The plaintiff company would then be in the position in which they would have lost the only piece of evidence they could call as to the fact that the car was sold in the first place.
In these four Amendments I have attempted to deal with the matter in this way. If the sales manager is called to give evidence about the original sale of the car, then both Clauses 2 and 4 should stay as they are, with the same rule as is in them now; but if he is called incidentally to give evidence about something else, there should be rules of court which could, if necessary, make some differentiation from the strict rule in Clauses 2 and 4. The rules would possibly be complex. The complexity of the matter is such that I do not think that proper criteria could be put in the Bill itself, but this is just the sort of thing rules are for, and they can be changed if they seem to be wrong. I would suggest that, instead of tying the whole of this situation to the strict rule in the Bill, we ought to relax it a little so that in these circumstances a plantiff who wishes, perfectly properly, to rely on hearsay evidence, may not find, when the matter gets to court, that he does not know whether he
1458
will be able to put it in or, if he is unlucky about the view the court takes, that he will not be able to put it in.
This is a practical problem, which is not quite so obscure as it may sound to your Lordships as I have explained it. I should be grateful to the noble, and learned Lord the Lord Chancellor if he could tell me what solution he may have to this. Perhaps it is in the Bill already, or perhaps we need an Amendment. I apologise for not putting these Amendments down on Committee stage, but at that time I had not fully appreciated the difficulties that might arise. I beg to move Amendment No. 1.
Amendment moved—
Page 2, line 4, after ("made") insert ("if that person is called in order to give evidence as to the matters contained in the statement").—(Viscount Colville of Culross).
5.10 p.m.
THE LORD CHANCELLOR: My Lords, I agree with the noble Viscount that with this Amendment there should be discussed the three following Amendments. Their object, as I understand it, is to exclude the court's discretionary powers to admit or reject an out-of-court statement the maker of which is called, or proposed to be called, by the party seeking to adduce the statement in order to give evidence from the witness box, but only on matters not dealt with in the statement.
VISCOUNT COLVILLE OF CULROSS: My Lords, with respect, it is not to remove the court's discretion. It is to allow rules to be made which may produce a different exercise of the discretion in different circumstances. I have not gone so far as to suggest that the court should have no discretion. I am simply saying that the court should not have in the Bill a discretion every time.
THE LORD CHANCELLOR: It is saying that we will not have any discretion in the Bill; we may or may not let the courts have discretion by rules.
As drafted, the Bill makes the admissibility of such statements subject to the court's discretion. If the statement is not a "record", it is the calling of the maker which renders it admissible only at the discretion of the court. In the case of a record, the discretionary powers of the court arise only if the informant, as

1459
opposed to the recorder, is called (or proposed to be called), as a witness; in either case the statement cannot, unless the court otherwise directs, be put in before the conclusion of the maker's—or informant's, as the case may be—examination-in-chief. In any event, the admissibility of the statement is subject, under the Bill, to the notice and counter-notice procedure. The reasons for bringing in the court's discretion are set out in paragraphs 35 to 39 of the Law Reform Committee's Report, which make it clear that there was a division of opinion about this—and I will refer to that later. The Bill implements the majority recommendation that such statements should be admissible if the court in its discretion so allows, subject to the conditions referred to above.
The noble Viscount's proposals are based on the principle that, where the witness, or potential witness, is called to give evidence of some matter entirely divorced from the contents of the statement, there is no point in bringing in the court's discretion. In particular, the party concerned may either (i) have served, in respect of the statement, a notice which has provoked no counter-notice; or (ii) whether or not a counter-notice has been provoked, be in a position to show that the maker of the statement (or the informant in the case of a "record") cannot be expected to have any recollection of the matters stated. In the example of the car hire-purchase which the noble Viscount took, the position under Clause 4 is that the plaintiff can give notice of his intention to rely on the statement recorded by the clerk and (as long as he does not call the manager) can adduce it as of right if either (i) the defendant does not give a counter-notice, or (ii) the plaintiff can show that the manager cannot reasonably be expected to remember the details of the transaction. As I follow it, the noble Viscount argues that the plaintiff should not be prejudiced in adducing the statement merely because he wishes to call the manager to give direct evidence of the condition of the car.
At first sight, this seems an attractive argument, but I suggest that the noble Viscount's Amendments would lead to considerable difficulty, because, first, although there may be some cases where
1460
it is perfectly clear that the evidence the plaintiff wants the manager to give from the witness box has nothing to do with what is contained in the statement recorded by the clerk on the manager's information, this will not always be the case; the distinction is likely in many cases to be blurred. Secondly, it is probably anyhow difficult enough for the plaintiff to say, at the beginning of the trial, whether he intends to call the manager at all. To say that he intends to call the manager to give evidence of fact A but not of fact B may well be impossible. In the example the noble Viscount has taken the plaintiff may not know until the clerk has been cross-examined whether he needs to call the manager to say what the details of the transaction were, and it is almost certainly more convenient to all concerned for the plaintiff to prove the terms of the hiring before proving the subsequent condition of the goods on their return.
Moreover, the noble Viscount's Amendments are aimed at a difficulty which it is thought will not occur. Irrespective of the court's discretion, the manager will almost certainly be able to use his recorded statement to refresh his memory, and, if there is any real controversy about its accuracy, it will be put in evidence and, under Clause 3, become evidence of the facts stated. The manager will in most cases have had to use a note to refresh his memory about the condition of the goods on their return. Secondly, and more importantly. the court will, in its discretion, let the statement be put in at whatever is the most convenient moment, unless there is any good reason for refusing. The noble Viscount's Amendments are directed at a comparatively unusual case. The underlying assumption of the Bill is that, where the admissibility of a statement is made dependent on the discretion of the court, that discretion will be exercised sensibly. If that assumption were not well founded, the Bill would he unacceptable in toto.
The second Amendment is intended to leave it to rules of court to provide for the time at which a statement may be admitted in a case such as that to which the noble Viscount referred. It is not easy to see how this could work in practice. In some cases the natural order in which the plaintiff's story is told will require the statement to be put in before the maker

1461
or informant is called; and this is particularly likely to happen when the statement is contained in a written "record". In other cases, this will not be so. The circumstances are so various that the rules could do little more than leave it to the discretion of the court, which is what the Bill as drafted already does.
The second Amendment also enables rules to provide for "any discretion of the court subject to which" a statement is to be admitted if the maker is called to give evidence on some point other than that dealt with in the statement. The precise significance of these words is not readily apparent. If the noble Viscount's object is to make the statement admissible as of right (subject only to compliance with the notice and counter-notice procedure), it is inconsistent with this object to bring in any further discretionary powers of the court. If this is not his object, there seems no point in his Amendments, since the Bill already gives the court discretionary powers. I am myself always strongly in favour, as cases differ so much, where necessary, of leaving things to the discretion of the court. The majority view of the Committee was expressly in these terms. They said that they consider that, whether consistent or inconsistent with the witness's oral testimony, a previous statement made by him should be admissible at the judge's discretion, which could be exercised where circumstances justified his taking this course. They attach considerable importance to conferring on the judge a residual discretion to admit statements as evidence of the facts which they tend to establish; and they give various reasons why, for example, a statement by an eye-witness shortly after the event may be more accurate than his recollection at a trial some time afterwards.
My Lords, I confess to a prejudice in favour of the view of the majority of the Committee, because I do not believe in the law of evidence at all. In a sense (I am not going to say that I am disappointed with this Report, because it is a magnificent Report), the Report itself is very complicated. What is said in this House is on record, and I will go on record as saying that I am quite sure that within twenty years we shall have no law of evidence at all. Most legal systems do not—all those that follow the Napoleonic Code. A French judge
1462
is astounded to find what a rigmarole our law of evidence is. He listens to whatever is put before him, and attaches such weight to it as he thinks fit.
Our existing law of evidence really comes only from the time, not long ago, when no judge was ever allowed to decide questions of fact: he could decide only questions of law. Even when I was called to the Bar, nearly all the injury cases were done by juries in the county courts. You had your county court jury in the days of Martin O'Connor—as no doubt the noble Viscount, Lord Colville of Culross, will remember—and I think this is just a survival of a time when it was felt that juries might be misled by evidence which was not really reliable. Hence the hunt for the best evidence, no hearsay, and so forth. Therefore, if I have any choice, I naturally personally favour, on a point like this, which would hardly ever arise, leaving it to the judge's discretion, and not to omit that provision in the Bill and say, "Later on, if it is not too complicated, we might give him some discretion under the rules". It is for those reasons that I respectfully ask the House to reject the Amendment.
VISCOUNT COLVILLE OF CULROSS:
My Lords, I am much obliged to the noble and learned Lord for his explanation, but I have one thing to say about it—it may be because I misheard him, but it is also possible that the noble Lord has missed one point in the Bill. I cannot believe that to be so, but it seemed so to me from what he was saying. If he would accept for one moment that circumstances such as I describe could occur, then, as he rightly said, in the course of telling the story to the court it would certainly be sensible to introduce the matter of the sale of the car before the condition in which it was when it came back was dealt with. Under the Bill that cannot be done.
If the noble and learned Lord would be so good as to look at Clause 4(2), he will see that if the plaintiff is going to call the sales manager to deal with the question of the condition of the car, then the statement by the clerk about the sale of the car is certainly allowed to be put in at the court's discretion. But, under paragraph (b), it cannot be put in before the end of the examination-in chief of the sales manager. Now, he is

1463
going to be called to deal with the condition of the car. What the noble and learned Lord said was that the natural course of events is to have the hearsay statement by the clerk in beforehand. But, as I understand it, if you look at the word "and", between paragraphs (a) and (b), this is exactly what you cannot do with the Bill drafted as it is.
I am not asking for one moment that the House should accept that my Amendments are correct. Very few of my Amendments ever are, and I should not be surprised if the same were true on this occasion. But I believe that, if the noble and learned Lord is really the convert he has confessed himself to be, he must upon examination of this matter come to the conclusion that—perhaps in the rare circumstance—this Bill is too tightly drawn and that a further relaxation (how this is to be done I do not know) ought to be provided in it. Indeed, I have no idea what the case would be if the statement had already gone in and then the plaintiff called the sales manager, because that would break every axiom underlying, not only the Report of the Law Reform Committee but Clauses 2 and 4 of the Bill. I do not know what would happen in this situation, and I should have thought it essential that this matter should be considered a little more. I am sure that the noble and learned Lord, with his usual courtesy, will do that.
Perhaps he could also consider this. I am not altogether concerned with the question of what happens at the hearing. I have no doubt whatever that the courts will exercise their discretion in a sensible fashion; again, they always do. But there is the point about the preparation of the case. How does the plaintiff know what he is going to be able to do in the second circumstance, where there are the two points in evidence that had to be given? How does he know, when he gets to the door of the court, whether he will be able to prove the hearsay statement?
Perhaps the noble and learned Lord could consider this. Would it be possible for this matter, if it is clear enough at any rate, to be dealt with at an interlocutory stage outside the court and before the matter comes up for hearing? If the Master could exercise the discretion, at least in a clear case,
1464
then when it came to the hearing a great deal of time would be saved. The plaintiff would know where he was. And if, as the noble and learned Lord agreed, the situation would be that, if it were not for the manager being called to prove something else the hearsay statement could have gone in anyway, then in practice it will in fact go in anyway as all right; and what I am seeking to achieve will probably have been achieved. Perhaps the noble and learned Lord (I know that this is the Report stage, and I cannot invite him to speak again) would, if I withdraw the Amendment, look at those two points, because I still think that there may be something in them and that they are not altogether fanciful. If the noble and learned Lord would do that, I would certainly at this stage beg leave to withdraw this Amendment.
THE LORD CHANCELLOR: My Lords, if I may, with the leave of the House, speak again before the Amendment is withdrawn, may I say that I do not think the point is sound, because both subsection (2)(a) and subsection (2)(b) of Clause 4 expressly make the admission of the statement subject to the discretion of the court. But I will certainly consider the matter. I do not know whether it is proper for me to ask whether the noble and learned Lord, Lord Pearson, as Chairman of the Committee, would wish to assist the House on this matter at all.
LORD PEARSON: Yes, my Lords. I was much impressed with the extreme lucidity with which the noble Viscount was able to explain this rather intricate matter. I think I ought to say that what the Committee mainly had in mind in dealing with this matter was to preserve, so far as possible, the usual method by which evidence is given orally on any matter which is in dispute. The important thing was to prevent a witness from handing in his mere proof of evidence, instead of giving his evidence orally. It is very important, to operate the usual system of oral evidence, that the witness should give his evidence-in-chief without being able to read it out from some previously prepared document, which may have been well or ill prepared, fairly or unfairly prepared; and that is the main object of the special provisions, the special safeguards, for the case in which the maker of the statement is himself called to give evidence.

1465
I should not have thought that any serious difficulty is likely to arise in a case like this. If there is a written record of what happened, and some witness, who has himself either made the record or been responsible for it by giving the information on which it is based, is going to be called, I should not have thought that there was any substantial risk of that written record not being permitted to be given in evidence. It would be the most obvious case, I should have thought, for the exercise of judicial discretion in favour of that record being admitted. So I should not have thought there was great risk. On the other hand, if I may say so, I was impressed by one of the last observations which the noble Viscount made: that it is important for the party to know in advance of the trial whether or not he can rely on certain evidence. I think it might be advisable to consider whether there should be a power at the interlocutory stage for such a record to be admitted, that is to say, for an interlocutory decision that such a record can be admitted at the trial.
Also, I should like to say that I was impressed by what the noble Viscount said, that it is desirable to have these rather complicated matters settled, so far as possible, by rules of court, rather than by Act of Parliament. I think it might be right to give a little more consideration to that aspect of the matter. The obvious advantage of rules of court is that they are more of an experimental character than statutory provisions can be, and if it is found that they do not work in practice they are relatively easily altered. I think that, with a Bill of this kind, which has to be to a considerable extent of an intricate character, there is something to be said for considering that aspect of it.
May I say, in defence of this Bill, in so far as it is based on the Committee's proposals, that we are here dealing with a subject which has been developed partly in the ordinary Common Law manner, and partly also by Statute, over a period of two or three hundred years, and the existing state of the law has considerable complexity. And I do not see how in this Bill, which is seeking to alter it, one could have hoped to get anything very simple. But what matters is not simplicity in the form of the Bill itself, but simplicity in the ultimate operation of the provisions; that when the provi-
1466
sions are put into operation one does have a hope that they will work in a relatively simple manner. I should have thought there was something to be said for considering whether some provision should be made in the Bill for rules of court to be made; and perhaps they should go a little further than they do now.
Amendment, by leave, withdrawn.
Clause 5 [Admissibility of statements produced by computers used for put poses of any regular activities]:
5.31 p.m.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved, in subsection (1), to leave out paragraph (a). The noble and learned Lord said: My Lords, in moving this Amendment I invite your Lordships to consider at the same time Nos. 6, 7 and 8. These linked Amendments substitute, for the provision in the Bill whereby immaterial defects in a computer are to be disregarded for the purpose of ascertaining whether the computer was operating properly, a provision whereby it becomes a condition precedent to the admissibility of a computerised statement that throughout the material period the computer was operating properly or that, if it was not operating properly, any defect in its operation was not such as to affect the production of the document or the accuracy of its contents.
The Amendments are designed to meet points raised on Second Reading by the noble Viscount, Lord Colville of Culross. Your Lordships may remember that he criticised Clause 5 on the following two grounds. The first was subsection (1)(a) requiring the computer to have been operating properly at the time when the document was produced. This might be argued, not be the only relevant time, since the production of the document might follow some material part of the operation of the computer at a considerable interval, and what really mattered was whether the computer had been operating properly throughout the period during which the information from which the statement was derived had been processed. Particularly in a case in which, as was common practice, a computer l ad been used to "up-date" records, a defect occurring long before the eventual printout was produced might have affected the accuracy of a statement contained in that print-out.
Second, the noble Viscount argued that subsection (4)(d) enables an immaterial defect to be disregarded for the purpose of determining whether a computer was operating properly. In practice, he said, this would mean that the computer party would be the sole judge of whether a defect was immaterial, because he would simply certify that the computer was operating properly and his opponent would never even know that there had been any question of defective operation. He thought that the opponent ought to be informed of the defects, so that if, in the light of such expert knowledge as he might have, he thought they were not immaterial he could make use of that knowledge.
The Amendments meet the noble Viscount's first point entirely. The new paragraph inserted in Clause 5(2) makes it a condition of admissibility of the computerised statement that the computer was operating properly throughout the material period, or, if it was not operating properly, that any defect was not such as to affect the production of the document or the accuracy of its contents. Thus, the party seeking to put in the computerised statement will have to prove these facts, which he may do either by calling evidence of somebody responsible throughout the period for the operation of the computer or by putting in a certificate from such a person (or several such persons) under subsection (3). He will thus have to cover the operation of the computer over the whole of the relevant period.
The Amendments go most of the way to meet the noble Viscount's second point. They do not, however, go so far as to require the computer party to set out in terms every respect in which the computer was defective and which he contends was immaterial to the issue. To do this would be impracticable and could only lead to a waste of time and money. Moreover, even if the computer party could comply with such a requirement, in 99 cases out of 100 it would be of no real value to his opponent to learn that the computer had suffered from defects which he would almost certainly be incapable of understanding. In all such cases it would be desirable to require the computer party to state in his notice
1468
under Clause 8(2)(a) whether he is contending that (i) the computer operated properly throughout or (ii) although it was defective, the defects were immaterial. If that were done, the rules could also entitle the opponent to ask for particulars in the second case. In practice, however, such particulars would probably be useful only in the exceptional cases where the opponent is in a position to assess the importance of any defects of which particulars might be given.
I hope that the noble Viscount will feel that this Amendment and the following Amendments clearly meet his point. I beg to move.
Amendment moved—
Page 4, line 5, leave out paragraph (a).—(The Lord Chancellor.)
VISCOUNT COLVILLE OF CULROSS: My Lords, I am very grateful indeed for these Amendments, which certainly meet my point. In so far as the noble and learned Lord suggested that my second point had not been entirely met, I do not think I agree with him. I would certainly not suggest that one should be required to give in every case a complete history of all the troubles and tribulations (if there had been any) of the computer throughout the period, whether it was material or not. All I wish is to do very much what the noble and learned Lord has just said.
LORD CONESFORD: My Lords, in thanking both my noble friend and the noble and learned Lord the Lord Chancellor for the great consideration given to this clause and the possible dangers of computers, perhaps I might bring to the attention of the House (if your Lordships are not already acquainted with it) the fact that, although the possible dangers of computers have not, I think, been the subject of any case decided in our courts, they are the subject of an important case in fiction. The case was tried by Mr. Justice Squirrel in the year 1963. It is the case of Haddock v. The Generous Bank Limited and Others. It would be wrong for me to go into the details of the case, but among the parties, apart from the Bank, were the computer itself, the company from which it was hired and the Central Electricity Board. The facts were these. Mr. Haddock wished to buy a flat. The property company

1469
asked for a banker's reference. Mr. Haddock's bank referred this request to their computer, which issued the following three messages:
"Mr. Haddock's account is overdrawn in the sum of £51,000 7s. 3d. The market value of the securities he holds is £2 0s. 8½d. What is more, he owes the Inland Revenue £159,000 6s. 2d."
My Lords, all these statements were inaccurate. This was caused by the fact that the computer was consulted about the time of the mid-day meal and many people had turned on their electric cooking apparatus, with the result that the voltage fell below the safety level of the computer. The defences were ingenious. The bank said that they were not liable for the action of their servant, the computer, because it could not be their servant since they were unable to exercise any control over it. The company which supplied the computer said there was nothing wrong with the computer (which was true) and the Central Electricity Board—I need hardly say—had a statutory defence. In those circumstances, the court decided that if you brought a thing as dangerous as a computer on to your premises the stern doctrine of Rylands v. Fletcher must be held to apply, and the person who so brought the device on to his premises was under an absolute liability for the consequences.
There is one passage in the judgment which I wish to read to the House:
"As we have seen, the suggestion that these monsters are 'infallible' can hardly be sustained. Nor is it only such physical accidents as a reduction of voltage that weaken the claim. Given a mass of correct and relevant facts the machinery may produce the right answer to the questions put much sooner than the human mind, and the nature of that answer is uncontrollable by puny men. But given a mass of erroneous information its answers must be wrong, for it is not capable, like man, of distinguishing between the false and the true; yet it would still, within the limits of the facts available to it, be giving a correct, and, if the word be appropriate, an honest answer. It is proper then, to imagine what would follow if unscrupulous, ambitious, persons deliberately fed into a machine which had won the public confidence information which was untrue or twisted."
The wording of that judgment is not unworthy, I think, of a speech in this House, sitting in its judicial capacity; and against the dangers to which the judgment calls attention I believe that the learned draftsman and the noble and
1470
learned Lord the Lord Chancellor have done their best to guard us.
On Question, Amendment agreed to.
THE LORD CHANCELLOR: My Lords, this Amendment has been covered in the preceding argument. I beg to move.
Amendment moved—
Page 4, line 22, leave out ("and") and insert—
("( ) that throughout the material part of that period the computer was operating properly or, if not, that any respect in which it was not operating properly or was cut of operation during that part of that period was not such as to affect the production of the document or the accuracy of its consents; and").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: My Lords, the same observations apply to this Amendment. I beg to move.
Amendment moved—
Page 4, line 31, leave out from ("device") to end of line 33.—(The Lord Chancellor)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: My Lords, the same observations apply to this Amendment. I beg to move.
Amendment moved—
Page 5, line 14, leave out from ("equipment") to end of line 20.—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 8 [Rules of Court]:
THE LORD CHANCELLOR THE LORD CHANCELLOR moved, in subsection (2)(a), to leave out "recording or production of the statement" and insert:
"or recording of the statement or, in the case of a statement falling within section 5(1) of this Act, of any person who was in any manner so specified concerned as mentioned in section 6(3)(c) of this Act".
The noble and learned Lord said: My Lords, I beg to move the Amendment which stands in my name and to invite your Lordships to consider with it Amendment No. 10. They are linked Amendments which require rules of court made under Clause 8(2)(a) to provide that a "computer party" is to include in his notice particulars of any person who was (in such manner as may be specified by the rules) concerned with the

1471
supply of information to the computer or with the operation of the computer or any equipment by means of which the document containing the relevant statement was produced by the computer.
These Amendments meet a point made by the noble Viscount, Lord Colville of Culross, on Second Reading. He criticised Clause 8(2)(a) on the grounds that it referred, in the case of a computerised statement, only to persons connected with the production of the statement and thus excluded those concerned with the earlier stages, such as the supplying of information or the operation of the computer before the document was produced. This criticism I thought was well founded because of the narrow sense in which "production" is used in Clause 5. Accordingly the Amendments bring in those who were concerned with the earlier stages. They do this by attracting the formula used in Clause 6(3)(c), which requires the court, in estimating the weight to be attached to a computerised statement, to have regard to the question whether anybody concerned from the beginning to the end had any incentive to conceal or misrepresent the facts. The substantive Amendment is the Amendment to Clause 8(2)(a); the Amendment to Clause 8(2)(b) is consequential. I beg to move.
Amendment moved—
Page 7, line 43, leave out ("recording or production of the statement") and insert the said new words.—(The Lord Chancellor.)
VISCOUNT COLVILLE OF CULROSS: My Lords, I am grateful to the noble and learned Lord for these two Amendments. I hope he will allow me to comment that in fact it was not only on Second Reading that I dealt with this matter and also the matter covered by the previous group of Amendments; I had one of my ineffectual efforts to produce Amendments which would have these effects. I agree that these Amendments are much preferable. They entirely meet the point, and I am glad that the noble and learned Lord has moved them, or at any rate the first of them.
I would ask the noble and learned Lord whether he could say one other thing in a moment. There is no Amendment down, either in his name or in
1472
mine, to Clause 10 at this stage, but there is still an unresolved matter which the noble and learned Lord said he would look at—that of a peculiarly abstruse type of computer problem relating to the definition of visual and non-visual productions of computers. I hope he will say that this matter is still under consideration, because I believe that somewhere in the Bill and at some stage—it may be in another place—something may have to be done about it. But I am quite content if it is still being thought about with the necessary experts. I should be glad if the noble and learned Lord could say what has happened.
THE LORD CHANCELLOR: My Lords, if I have the permission of the House to speak again, may I say that that matter is still under consideration. The fact is that my computer expert has been overwhelmed with work and I have not been able to get the benefit of his advice, but we have the point still in mind.
On Question, Amendment agreed to.
THE LORD CHANCELLOR: My Lords, this Amendment is consequential on the preceding Amendment. I beg to move.
Amendment moved—
Page 8, line 10, leave out from ("connected") to ("and") in line 11 and insert ("or concerned as aforesaid").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 9:
Admissibility of certain hearsay evidence formerly admissible at common law
In this subsection "admission" includes any representation of fact, whether made in words or otherwise.
(3) In any civil proceedings a statement which, if this Part of this Act had not been passed, would by virtue of any rule of law mentioned in subsection (4) below have been admissible as evidence of any fact stated therein shall be admissible as evidence of that fact by virtue of this subsection in so far as that statement is not capable of being rendered admissible as evidence of that fact under section 2 or 4 of this Act.
(4) The rules of law referred to in subsection (3) above are the following, that is to say any rule of law—
5.48 p.m.
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved to omit from subsection (2), "In this subsection 'admission' includes any representation of fact, whether made in words or otherwise", and the whole of subsection (3). The noble Viscount said: My Lords, if it is possible, these two Amendments—I should again like to speak to both—raise a point of even greater difficulty than the first four I dealt with, but I may be able to explain it slightly more briefly. Clause 9 deals with a number of Common Law rules of evidence which constitute exceptions to the present hearsay rule. What the clause does in subsections (1) and (2) is to say that the rules listed in subsection (2) shall be preserved as they are now, and then it goes on, in subsections (3) and (4), to say that certain other Common Law exceptions to the hearsay rule shall be preserved as they are now except in so far as they are dealt with under Clause 2 or Clause 4.
This clause, like the rest of Part I of the Bill, is not drafted by the Committee itself, who did not produce a draft for their Thirteenth Report; but they dealt with the matter in paragraph 42, and, preceding that, paragraph 41. I have looked very hard indeed but have failed to find any distinction made by them in those paragraphs between the two sorts of Common Law rules dealt with in the two parts of Clause 9. Indeed, in paragraph 42, the first of the rules which they illustrate, admissions made by the parties to the suit or their agents in that behalf, appears in the list in subsection (2), so it is going to be admissible as of right in any event, as before. But the other three instances which they give appear for some reason in subsection (4), where they are going to be admissible henceforth only if they are not dealt with and to the extent that they are not dealt with by Clauses 2 and 4. I fail to understand the distinction, unless it be one of tidiness.
I think that this matter can best be illustrated, if I can only get this exceedingly difficult matter right, by reference to a pedigree case, which occurs in subsection (4). As I understand the rule in Common Law at the present moment, as evidence of the fact that your great-aunt was married you are allowed to
1474
call your mother to say that she was there at the time. You may also call your mother to say that it was the reputation in the family that great-aunt was married. You may also call somebody who is not a member of the family to say that it was the reputation in the neighbourhood where great-aunt lived that she was married. What you cannot do is to call somebody who is not a member of the family to say that he heard from somebody else or from great-aunt. that she was married.
These rules are immensely difficult, and I do not believe that anybody truly understands the full extent of them. There is a difficult case called Sheddon v. The Attorney General, which appears in the Law Journal, Probate Divorce and Admiralty Reports, volume 30, at page 217, and there is a most interesting passage, I think in the course of argument, by Sir Cresswell Cresswell, beginning at the bottom of the right hand column of page 231, and I hope that that says what I have told your Lordships.
My argument is this. Supposing that I wished to call my mother to say that she heard that her great-aunt was married and it was the general reputation in the family, this is not a case which is caught, as I understand it, by Clause 2, because it is not hearsay of any one given sat of facts, but it is a statement relating to common parlance in the neighbourhood or in the family which cannot be pinned down sufficiently to turn it into a statement which is covered by Clause 2. As I understand it, that situation will continue to be dealt with under the Common Law rule, and no notice and counter-notice procedure will have to be undertaken.
If, however, I wish to call my mother to say that she was at the wedding, or if I wish to produce a statement by my mother that she was at the wedding, then I can do that only in two ways: I can either call my mother, or I can show that she is dead, or that for some other reason under the counter-notice procedure in Clause 8(2)(b) she cannot come to give that evidence. The situation as to the stranger to the family is much the same, because I would still he able to call the stranger to the family to show that the reputation in the district where he lives was that great-aunt was married.
In some cases now we are to have the notice and counter-notice rule, and in some cases we are not. I think that in most of the cases where the notice and counter-notice rule will be applicable, certainly in pedigree matters, the person who made the statement will not in fact come, because the only circumstances in which the statement could be given are also circumstances which would operate the procedure whereby under Clause 8(2)(b) that person could not be called. The most notable, of course, is that the person is dead.
So therefore, although we have the whole rigmarole of Clauses 2 and 8 being involved in this matter we shall not get the witness before the court at all; and therefore, as I understand it, the only advantage of making a separate list in Clause 9(4) is that in some cases my opponent will have noticed that I am going to put in, or seek to put in before the court, a certain first-hand, secondhand or even third-hand hearsay matter relating to the pedigree, and he will therefore have an opportunity to call counteracting evidence because he knows about it.
In the cases where the evidence is most likely to be correct, such as a statement that my mother was at the marriage, or the statement of a member of the family who was at the marriage, which is more likely to be correct than a statement of a stranger as to the reputation, it would be in the first case only that my opponent will have notice. In the case of the more dubious type of evidence, perhaps that of reputation, there will be no notice and counter-notice procedure, and my opponent will have no notice to put him on his guard.
With the greatest respect to those who drafted this Bill, I should have thought that this was making it more complicated than is necessary. If the rules, such as they may be, which have governed these matters heretofore have not been criticised by the Law Reform Committee in their Thirteenth Report, as I believe is the case, then why not leave them alone? Why not leave the present rules on these matters to operate as they have done before, instead of complicating them by in some cases, and not in others, insisting upon the notice and counter-
1476
notice procedure whether in fact it results in anybody being brought to give evidence or not?
Therefore, I have sought to amalgamate the list of rules in subsection (4) with the list of rules in subsection (2). The result of that would be that all these rules would be governed by the existing rules of law, and not by the notice and counter-notice procedure which precedes them in this Bill. The second Amendment is purely consequential. I should be glad to hear what the noble and learned Lord has to say in support of what seems to me to be an illogical and probably a most tiresome distinction. I beg to move.
Amendment moved—
Page 10, leave out lines 12 to 22.—(Viscount Colville of Culross.)
5.58 p.m.
THE LORD CHANCELLOR: My Lords, the noble Viscount has the habit of raising most complex points on what is admittedly a complex Bill, and it will take me a little time, I think, to deal with this Amendment. The two Amendments, this and the following one, would make hearsay evidence which is admissible under any of the Common Law rules referred to in Clause 9 admissible under the Bill independently of the "procedural safeguards". As drafted, the Bill draws a distinction between evidence admissible (a) under the rules described in Clause 9(2) and (b) under those described in Clause 9(4): the former is admissible independently of the procedural safeguards; the latter is so admissible only to the extent that it is not covered by Clause 2, first-hand hearsay, or Clause 4, records.
Clause 9, save in so far as it covers admissions, is based on paragraph 42 of the Law Reform Committee's Report, which recommends the preservation of the Common Law rules under which second-hand hearsay is admissible. Such evidence would not be covered by Clause 2 nor, unless it constituted a "record", by Clause 4 and, without Clause 9, would be totally excluded by Clause 1. The policy underlying the Bill is that all the Common Law rules under which hearsay is admissible should be superseded by the Bill and subjected, where appropriate, to the procedural safeguards provided by the notice and counter-notice system.

1477
Those safeguards cannot be applied to the types of hearsay covered by Clause 9(2)(b), (c) or (d), because it would be impracticable to ascertain whether they were first-hand, second-hand or more remote hearsay and, in any event, the public nature of the documents in question makes the notice procedure inappropriate.
Clause 9(4), however, covers evidence of reputation, and such evidence, which can include first and second-hand hearsay, may be admissible to prove the existence of the reputed fact—such as a marriage, a genealogical issue in a pedigree case, or a public or general right. The existing Common Law is highly technical and, particularly in pedigree cases, obscure. The main rules are these. First, a witness may give direct evidence of reputation as to any of the matters covered by Clause 9(4); for example, the existence of a marriage. Secondly, the declaration of a deceased person as to such reputation can be proved, subject to the qualification which I will mention shortly, in pedigree cases. Thirdly, except in pedigree cases, no such declaration is admissible if it relates to a specific fact, as opposed to general repute, from which the reputed fact might be inferred. Fourthly, in a pedigree case, the declaration of a deceased person is admissible either as to general family repute or as to a specific fact, but only if the declarant was a member of the family.
Lord Colville's Amendments would preserve these rules as they stand, whereas the Bill as drafted, first, does away with the need to distinguish between members of the family and strangers when considering the admissibility of first-hand hearsay relating to a pedigree issue; secondly, does away with the distinction between pedigree and other cases relating to the admissibility of statements of specific facts as opposed to reputation; thirdly, renders all statements of fact which the maker could have given from the witness-box admissible subject to the notice and counter-notice procedure, thus letting in statements by persons who are still alive but who are either unavailable, or not the subject of a counter-notice, or in respect of whom the court exercises its residual discretion.
The noble Viscount's Amendments would not simplify the law: it would
1478
remain necessary for the party seeking to put in an out-of-court statement to take into account these Common Law distinctions for the purpose of deciding whether a notice was necessary. Under the Bill as drafted the party's task is simpler: he has only to resolve the question, "Am I calling "X" to speak of his own knowledge as to what the general reputation was, or am I calling him to prove either what "Y" told him of the general repute or what "Z" told him about a specific fact relevant to the reputed fact?" In the former case, no notice is necessary; in the latter, notice must be given.
As to the information of the marriage in the example which the noble Viscount took, I would respectfully suggest that the argument is not a sound one. If one takes a person who is going to say that when he was young the family reputation was that the marriage had taken place, the reason why his evidence of repute does not require a notice is that a notice could not do any good. It could not sufficiently identify either the original sources of the reputation or the occasion on which the relevant statements were made. But this is not true of the person who can say that when he was young another relative, now deceased, had told him that he had been present at the wedding, nor does the fact that that person is dead make a notice useless. It enables the opponent to ascertain before the trial whether that person was a reliable person or somebody who had contradicted himself on the matter so that his statement could be challenged by calling evidence under Clause 7.
As to the contention that the plaintiff could get round the notice by getting the last person referred to to tell his story to somebody else—which I rather gather the noble Viscount was suggesting—that, on the authorities, would seem to be wrong. The current law would not let him recount what the other person had told him, because a declaration as to a specific fact or as to general repute is admissible only if the declarant is dead. For those reasons, I would advise the House not to accept this Amendment.
VISCOUNT COLVILLE OF CULROSS: My Lords, I think it is very plain that this is not an easy matter. I should like carefully to study what the noble and learned Lord has said before I attempt to come to any conclusion upon this

1479
matter. I agree that he has set out a number of advantages, and indeed changes in law, which would ensue from making certain of the present rules into cases which are covered by Clauses 2 and 4. At the same time, he has not dealt with my point about actually getting the best evidence. In almost every case, if not in every case, the net result through the notice and counter-notice procedure will not be actually to produce a witness, but it will be merely to put the other side on notice. I think I am right in saying that he will be put on notice where the evidence is more likely to be right, and not put on notice where the evidence is a matter of reputation—which is therefore much more likely to be something which he would wish to produce evidence to challenge.
The other difficulty which may arise—I hope I am wrong about this—is that I do not believe it has ever before been settled, for the simple reason that it has never had to be, whether the evidence as to reputation is first-hand hearsay, or is second-hand, or indeed is not hearsay at all. If it is found to be first-hand hearsay—and I think that this will require judicial decision, because the Bill does not say one way or the other—then notice and counter-notice procedures will need to be given in those cases as well. The noble and learned Lord said he thought that it was not because the identity of the person from whom the news came and the time and place were not expressly specified. But it will be required to be decided, for sooner or later some party in some case will object to the production of this evidence on the grounds that it is, after all, first-hand hearsay and ought to have been subject to the notice and counter-notice procedure. I think that that is a case which, on the procedural point, will come before your Lordships in another capacity.
There is no question of my pressing the Amendment to-day, but I am not at the moment satisfied that the matter has been completely cleared up. I should like to go away and study what the noble Lord has said, read some more books, and have leave perhaps to deal with it again on Third Reading next week. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.

THEFT BILL [H.L.]
6.8 p.m.
LORD STONHAM: My Lords, in moving that the House do resolve itself into a Committee on the Bill, I wish to make a short statement about the position arising from the amendment made to the Bill at the Committee stage on Tuesday. Noble Lords will recall that the Committee carried, against the advice of the Government, an Amendment to leave out the word "permanently" in Clause 1(1) of the Bill. The effect of that Amendment was that, assuming dishonesty, it would be theft to appropriate property belonging to another with the intention of depriving him of it, even if the intention was to take the property only temporarily.
I made it clear when the Committee discussed that Amendment that the Government fully shared the view of the Criminal Law Revision Committee that it would be wrong to make mere temporary deprivation stealing except in the cases specially catered for by Clauses 11 and 12 of the Bill. I have carefully studied all that has been said, in this House and elsewhere, in favour of dropping the concept of permanent deprivation, but I have to tell the House that the Government remain of the view that the Amendment was wrong in principle. We believe that the criminal law should be extended only where there is a clear mischief with which it fails to deal, and which it is appropriate to deal with, by a criminal sanction. We do not think, and we cannot believe, that the House, on mature reflection, will think that the person who has taken something in some dishonest way but who intends to return it—and may indeed return it—should, whatever the circumstances, be equated with a thief and that we should set out to extend the law, as the amended Bill would now do, to make theft conduct of this kind which has never been criminal. I must therefore tell the House that the Government will feel bound, when the Bill comes to its Report stage, strongly to advise the House to reverse the Amendment which was made on Tuesday.
My Lords, I thought it right to give the Committee that information, in the interests of both sides. We have clauses and Amendments to them to consider—I refer to Clauses 6, 11, 12 and 15—on which

1481
the Committee might wish to take one view on the assumption that "permanently" was not in Clause 1, and another on the assumption that "permanently" would be restored to Clause 1. The House will have to take its own decision at the Report stage as to whether or not the word "permanently" should be restored, but I have made it clear that the Government will seek to restore it. I hope the House will agree that, without prejudging what will happen at a later stage, it will be in all our interests to have the debates which we should have had on later clauses as if the Amendment to Clause 1 had not been made.
Noble Lords who do not agree with Clauses 6, 11, 12 and 15 as they stand will then have the opportunity of explaining to the Government their criticisms of the clauses, and—although, of course, I can give no undertakings to accept Amendments, either in principle or in detail—the Government will be able to take account of those criticisms before the Report stage in considering whether any changes are desirable to the clauses, on the assumption that Clause 1 will be restored to its original form. If the Committee were simply to take the view that Clauses 6, 11 and 12 should be dropped from the Bill, consequentially on the amendment of Clause 1, and Clause 1 were then restored to its original form at the Report stage, we should, as it were, be "back to square one" on those clauses, and I cannot think that that would be to anyone's advantage.
I hope that noble Lords who voted for the Amendment on Tuesday will temper whatever satisfaction they may feel to the extent of agreeing that this is a reasonable approach to a difficult situation. We have all agreed that our mutual objective is to see that, at the end of the day, the Bill is as right as possible. I have no doubt that we shall best help to get it right if we conduct our further debates at the Committee stage in the way I have suggested. I beg to move that the House do again resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Stonham.)
VISCOUNT DILHORNE: My Lords, the noble Lord, Lord Stonham, has made, if I may say so, a rather tendentious statement. He has referred to the debate that
1482
we had last Tuesday and he has made certain observations with regard to that debate. I do not propose to take up time by going over that ground again, and by seeking to answer the arguments which he has advanced as to whether dishonest appropriation of property should be a criminal offence. It is quite clear that we can argue that when we get to the Report stage.
The noble Lord said that the Government have decided at this early stage that they intend to seek to put back the word "permanently". I am sorry to hear that the Government have so concluded so soon. I cannot help thinking that, when they hear the criticisms that are bound to be advanced to the later clauses to which he has referred, if the Government had anything like an open mind on this matter they might well come to the conclusion that the change which we made last Tuesday is beneficial, as indeed I believe it to be. It is not only in relation to Clauses 11 and 12 that there is an exception to the rule that there must be an intention permanently to deprive. The same exception occurs in Clause 15, 15, and also outside this particular measure in relation to vessels and boats. I remain of the opinion that it would be a considerable simplification, and an advance in the criminal law, to retain the change that we have made. I know that I am not alone in that opinion, and that there are many experienced in the criminal law who share it.
The statement which the noble Lord made kept on repeating what the Government have decided and what the Government are going to do about it. I am sure the noble Lord will recognise that in this particular field, although views may differ, it does not necessarily follow that the Government and the Home Office are best able and best equipped to pronounce upon these subjects.
Secondly, I ask the noble Lord to deal with this point. This is a Bill which was drafted by a distinguished Committee. It contains three clauses inserted by the Government. It is not strictly, in the ordinary sense of the word, a Government Bill. The Government have quite rightly introduced it, and sponsored it as coning from the Committee; but it is quite different from a Bill of the character, for instance, of the Transport Bill, which is a Government Bill in the ordinary sense.

1483
The noble Lord, Lord Stonham, at an earlier stage, hoped that Lords of Appeal and other distinguished lawyers would not only make their views known for the Government's consideration, but would seek to improve the Bill.
I should have thought that, although this is a Government-introduced Bill, it is one about which no Party politics can ever arise, and that we ought to approach it, as indeed I have done, on a completely non-Party basis. That means, I should have thought—and I hope the noble Lord can give an assurance about this—that this is really not the kind of Bill on which a Government should seek to make their views prevail, perhaps by keeping their supporters here till a late hour during the Committee stage to vote on Amendments which they may not have heard discussed. I hope the noble Lord will be able to say that he agrees that this is not a Government Bill, in the sense in which that term is usually used, and that this is a Bill on which all sections of the House can combine to try to make as good a Bill as possible.
The noble Lord has dealt with what should happen on further clauses. I certainly do not propose to move that those clauses should be left out until after there has been a full consideration of them, because the more they are examined the more I hope the noble Lord will see that the change made last Tuesday was a good change. But I shall seek to remove them from the Bill during the course of the Committee stage, and I think it only fair to tell the noble Lord that.
VISCOUNT COLVILLE OF CULROSS: My Lords, I do not want to prolong this discussion, except to make two points. First of all, we will listen, I have no doubt with the greatest interest, when the noble Lord, Lord Stonham, seeks on Report stage to reintroduce the word "permanently" into Clause 1. I think he will probably produce arguments which may be based upon the paragraph in the Criminal Law Revision Committee's Report; but I hope that he will be prepared to extend those arguments and spread them out a bit, and perhaps he will also be able to deal with the Canadian situation which was mentioned on Tuesday.
LORD STONHAM: And the Jamaican situation.
VISCOUNT COLVILLE OF CULROSS: I did not know whether or not that had, in fact, been implemented. But apart from that, I hope the noble Lord will take some comfort from the fact that I share the view of my noble and learned friend and, even if for the sake of consistency we have in the end at this stage to leave out Clauses 6, 11 and 12 and to do something, at any rate, with Clause 15, I hope that we shall discuss in Committee whether Amendments should be made to those clauses. Then if, subsequently, for the sake of consistency, they are left out, and then the House decides, on Report stage, to restore the word "permanently" in Clause 1, we shall at any rate have an opportunity of discussing the reinsertion of Clauses 6, 11 and 12 in what will perhaps by that time be an agreed form. Therefore, I support the noble Lord in the process that he suggests.
LORD STONHAM: Very briefly, my Lords, I am grateful to the noble Viscount, Lord Colville of Culross, for his support, and, having heard him, I do not think there is very much between us with regard to procedure; nor, indeed, between us and the noble and learned Viscount, Lord Dilhorne. My object is to secure discussion of these subsequent clauses on which Tuesday's Amendment has a major effect; that is all. I did not intend to make a tendentious statement, as the noble and learned Viscount described it. The first paragraph of my statement merely set out, as I thought, the effect of the noble and learned Viscount's Amendment; and that was my only intention.
I entirely agree that this is not a Government Bill in the sense that it is a Party political Bill. No one in his right mind would suggest that. Nor am I suggesting that, distinguished though the Committee is which produced this Bill, as the noble and learned Lord, Lord Wilberforce, said on Tuesday, we cannot discuss it, or that these things are immutable. I believe the noble and learned Viscount is already aware that later stages of the Bill will prove our willingness to consider suggestions. But with regard to the assurance for which he asked, I agree that it may not be the case that the Government and the Home Office are the

1485
best equipped bodies to deal with this Bill, but the Government and the Home Office have the responsibility, and someone must have the responsibility, of seeing this Bill through Parliament. In that sense we are responsible, and that is the responsibility that we will discharge.
But, my Lords, in case there should be any misunderstanding, may I repeat that during this Committee stage on no Amendment shall we have a closed mind. If it is impossible to accept what noble Lords say, we will say so. If it is impossible for them to agree with us and to withdraw their points, then I suggest that we defer a decision until the Report stage. It may well be that on Clauses 6, 11, 12 and 15 the arguments may be such as to cause us to agree with suggestions, if not in Committee then on Report; but what I now hope is that we can go forward and consider all that is in the Bill at present in the spirit that, together, we are going to get it right.
On Question, Motion agreed to.
House in Committee accordingly.
[The BARONESS WOOTTON OF ABINGER in the Chair.]
Clause 1:
Basic definition of theft
(2) It is immaterial that the appropriation is not made with a view to gain, or is not made for the thief's own benefit.
6.23 p.m.
VISCOUNT DILHORNE VISCOUNT DILHORNE moved to leave out subsection (2). The noble and learned Viscount said: I beg to move Amendment No. 2, to leave out subsection (2). This subsection must be read with Clause 33 of the Bill, which defines what is meant by "gain" as "gain … in money or money's worth …" I may have missed it, but I have failed to find anything in the body of the Committee's Report giving a reason for the inclusion of this subsection. The only reference I can find to this subsection is in Annex 2 to the Report, which contains the notes on the Draft Bill. This is what the note says:
"The subsection will prevent argument that it is not theft to take something which is useless to the taker or to take something with the intention of immediately destroying it."
1486
Usually, throughout these notes, there is a citation indicating the paragraph of the Report in which the matter is dealt with. There is no such citation hero, and that rather confirms my belief—I may have missed it, as I say—that nothing appears about this subsection in the body of the Report of the Committee.
This is going to be a very long Bill if we are going to include in it provisions just to prevent argument arising in the courts, and I think that the inclusion of this provision for this reason, to prevent argument, indicates a weakness that is apparent in other parts of the Bill as well. It should be a Bill, and we want to make it such, which clearly—and I should like to emphasise the word "clearly"—defines the ingredients of the offence to which it relates; and here, in Clause 1, we want a very clear definition of what is the meaning of "theft". But this clear definition has been blurred by attempting, in different parts of the Bill, to provide for particular cases without regard to fundamental principles, and by attempting, as in this subsection, to prevent argument in the courts.
I would ask the noble Lord, Lord Stonham, to answer one question. I should like him to say what was the date of the last reported case in which an argument on the lines of that which this subsection seeks to prevent was advanced in the courts. I think it must have been a very long time ago. It is now, I am sorry to say, over forty years since I was called to the Bar, and I cannot recollect a single case in which such an argument was advanced, although the motive with which the theft was committed may be material when considering sentence. Section 1 of the Larceny Act 1916 was intended to reproduce the Common Law, and no one could possibly argue with the slightest prospect of success that the purpose of the theft, the motive for it, was material in determining whether a theft had been committed. It simply was not open on the language age of that section of the Larceny Act 1916. The newest barrister, the newest admitted solicitor, will know that it is immaterial what the motive for the theft was, whether it was for gain or the thief's benefit; and if he does not know that, then he is unlikely to have passed his Bar exams or his solicitor's finals, for it is elementary.
Why, then, is it necessary now to put this provision in the Bill? There is nothing in the definition of "theft" in subsection (1), or in subsection (2), which is a partial definition, to suggest or imply that the motive of the accused is of any relevance in determining whether or not he is guilty of theft. I believe that this subsection is wholly unnecessary. There is no reasoning that I can find advanced in the Committee's Report for its insertion, and I am against inserting unnecessary provisions in a Bill. For that reason, I think it would improve this Bill to leave this provision out.
But I do not argue that it should be deleted solely on the ground that it is unnecessary. Its inclusion is, I think, positively dangerous, for it implies that sometimes the motive with which the accused has acted is material to the question whether he is guilty of theft. The subsection says only:
"It is immaterial that the appropriation is not made with a view to gain, or is not made for the thief's own benefit".
Does not the language of the subsection of itself clearly suggest that if the appropriation is made for gain, or is made for the thief's own benefit, then that is material in determining whether or not his conduct falls within the definition of theft? It would seem to me that that must be so. Under the existing law and under the Common Law, which Section 1 of the Larceny Act 1916 seeks to reproduce, it is not and was not the case that the motive, whether it be for gain, for anyone else's benefit or for the thief's benefit, was relevant.
So it seems to me that, in fact, the insertion of this subsection, far from preventing argument, will indeed give rise to very considerable argument; for it will be argued that Parliament would not have inserted this subsection if it did not regard motive in some cases as material to the question of whether or not conduct falls within the definition of theft. I have put my argument as shortly as I can. I think that every clause of the Bill—and perhaps every word of it—is of very considerable importance. I can see myself that this subsection really serves no useful purpose and, as I say, far from preventing argument, I think it will lead to very considerable argument in the courts, and I believe the Bill
1488
would be much better without it. I beg to move.
Amendment moved—
Page 1, line 10, leave out subsection (21.—(Viscount Dilhorne.)
6.33 p.m.
LORD STONHAM: The noble and learned Viscount in moving his Amendment said that we have already a clear definition of theft. In my view, this is an extension of the definition, an extension which he regards as unnecessary and indeed, in his own words, as positively dangerous. But at least as far as the first part is concerned, I believe he is wrong. He asked me to quote the date of the last case of this kind, and said that he had not known of one in his 40 years of experience at the Bar. His memory is not at fault. We cannot say when there was last a case to which this subsection is relevant. But the rarity of cases is no argument against including the subsection to make the Bill a comprehensive statement of the law of theft. All the time we are thinking of a criminal code of which the Theft Bill will form part.
The noble and learned Viscount is right in saying that in the body of the Report of the Criminal Law Revision Committee there is no reference to this particular matter. It was included in the annex because the Committee regarded this as detail which could be adequately covered in the Bill. On the point of whether the words are necessary, in our view they are essential in order to counter in advance arguments that it is not theft to take something which is useless to the taker, or to take something with the intention of immediately restoring it. The noble Viscount, Lord Colville of Culross, mentioning on Tuesday the theft of his car, said that his notes were in the car—he managed very well without them, if I may say so—and that they would be no good to him on the following day, even if the car were returned. That was the point that we were on in the first Amendment. But, with great respect, I would suggest that they were useless to the taker.
VISCOUNT COLVILLE OF CULROSS: Hear, hear! They were just legible.
LORD STONHAM: I have tried to read the noble Viscount's writing! But they were useful to the noble Viscount

1489
and of value to him, and indeed of value to this House. Therefore it is quite wrong, in our submission, to argue against the inclusion of these words when they would make a charge of theft stand against someone who took something that was of no value to the taker but which was of value—even if only of sentimental value—to the owner.
VISCOUNT DILHORNE: I do not quite follow the noble Lord's argument. Is he saying that if the article is of sentimental value to the owner, the charge of theft should not stand?
LORD STONHAM: I was arguing the other way. The subsection which the noble and learned Viscount wishes to delete reads as follows:
"It is immaterial that the appropriation is not made with a view to gain"—
that is, something of sentimental value to someone but of no other value—
"or is not made for the thief's own benefit."
These are the words which it is proposed to take out. I am giving instances of cases where in our view it ought to be theft if something of that kind is taken. If something has been taken which is useless to the taker, or even if it is taken in a spiteful way with the object of immediately destroying it, it still would have value to the owner, and we think it should be treated as theft.
There is, of course, a case for arguing that the words are not absolutely essential, otherwise the noble and learned Viscount would not have argued it. But we think they are of value in a Bill which is intended to form part of a criminal code. Certainly the Criminal Law Revision Committee regarded them as useful, and we do not think they should be omitted. I must confess that I had not fully considered the point about its inclusion being positively dangerous because of the implication that the thief's motive is material. I should like to consider that argument. I think I have made the case for retention of the words in the Bill as useful, but I will look at the other implication and I hope that the noble and learned Viscount will be satisfied with the explanation on this occasion.
VISCOUNT COLVILLE OF CULROSS: I am glad that the noble Lord, Lord Stonham, said that he would look at the converse of what is immaterial because I think it is possible that there may be
1490
difficulty here. The only thing I should like to say about this—and I am afraid that I am against the view put forward by my noble and learned friend—is that provided we can make perfectly certain that there is no positive danger in this subsection, I think it is possible, in view of the emphasis that is placed elsewhere in this Bill upon pecuniary gain and loss (although I do not agree with it as being right in every case) that there are cases where it will have to stay in the Bill. I think it may be meritorious to put in this subsection to draw a distinction between theft cases and those other offences where, at any rate, the Committee may come to the conclusion at the end that it is right to keep the pecuniary gain and loss point. I therefore have sympathy with the noble Lord, Lord Stonham, in seeking to retain this subsection.
LORD CONESFORD: I have no objection to the principle that is conveyed in this subsection but I was a little puzzled by the part of the argument of the noble Lord, Lord Stonham, that suggested that it was really necessary for the complete definition of theft. That proposition appears to me to involve the further proposition that, if this, subsection were deleted, the theft he has described would not be dishonest appropriation within subsection (1); and I find that rather alarming. I should have thought it would be covered; but, like my noble friend Lord Colville of Culross, I have no objection to the subsection.
VISCOUNT DILHORNE: I listened with the greatest care to what the noble Lord, Lord Stonham, said. I think it is right to say, is it not, that the Larceny Act 1916 was drafted by Mr. Justice Avory. And I think it is right to say, is it not, that Section 1 of that Act, which contains the definition of "larceny" which subsection (1) of this clause is intended to replace, contains no subsection similar to subsection (2). It was not considered necessary then, and I believe, subject to what I am going to say, that it is not in the least degree necessary now.
I asked the noble Lord whether he could turn to any reported case in which it had been argued that it was material, in considering a theft, whether or not it had been made with a view to gain or

1491
made for the thief's own benefit. The noble Lord cannot refer to a single case in which it has been argued that dishonestly to appropriate something that is useless or is to be destroyed is not theft. The fact that he cannot argue that indicates to my mind—and after all we have had this definition since at least 1916—that there is no likelihood of that argument being advanced in future. Subsections (1) and (2) of the clause define what is meant by theft. If we go on to suggest that certain motives are immaterial, that must imply that other motives are material. I should not object if the noble Lord put in a more general phrase to say that in determining whether or not conduct amounts to theft (I am not trying to draft while on my feet) the motive with which the accused has acted is immaterial, because that would cover all kinds of motive, and motive is immaterial.
I concede that if we keep these words anywhere else in the Bill—and we cannot say yet whether or not the relevant words will be retained; and I think that in most places they should come out—the requirement of proof that certain conduct is criminal depends on whether it is done with the view to financial gain or with a view to financial loss, and there is an argument for retaining in Clause 1 some words to make it clear that the question of motive is irrelevant in considering whether or not conduct constitutes theft. But subsection (2) does not go so far as that. It deals only with particular motives, and I think it has dangerous implications. I welcome what the noble Lord has said. I hope that he will give further consideration to both aspects in relation to this subsection, and that we shall see it in a definite form at a later stage of the Bill. In the light of what he said, I shall not seek to divide the Committee on this Amendment.
LORD STONHAM: I am most grateful for what the noble and learned Viscount has said, and I will consider his words. It may be that because the present law does not turn on appropriation but on taking, my advisers have not come up with a case. Certainly a search will be made. I think it could be argued that appropriation could imply a benefit to the appropriator. Nevertheless, we
1492
will have a careful look at this, and maybe by discussion before Report stage we shall arrive at something satisfactory to all concerned.
LORD SILKIN: This is not a question purely of appropriation, but of dishonest appropriation. Therefore I should have thought that some kind of elaboration would be desirable. It could be argued, though probably it has not been argued for at least 40 years, that certain types of appropriation are not dishonest. This is designed, it seems to me, to indicate that whether it is intended for gain or not, it is still a dishonest appropriation. It may be that the words are not as effective as they might be, and I am very glad that my noble friend is to look at this again.
VISCOUNT DILHORNE: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 1, as amended, agreed to.
Clause 2:
"Dishonestly"
2.—(1) A person's appropriation of property belonging to another is not to be regarded as dishonest—

(a) if he appropriates the property in the belief that he has in law the right to deprive the other of it, or that he would have the other's consent if the other knew of the appropriation and the circumstances of it; or

(b) (except where the property came to him as trustee or personal representative) if he appropriates the property in the belief that the person to whom the property belongs cannot be discovered by taking reasonable steps.

(2) A person's appropriation of property belonging to another may be dishonest notwithstanding that he pays for the property.
6.46 p.m.
VISCOUNT DILHORNE VISCOUNT DILHORNE moved, in subsection (1), to leave out paragraph (a), and insert:
"(a) unless he appropriates the property without claim of right made in good faith".
The noble Viscount said: There is a slight error in the printing of this Amendment. There should be an "a" between "without" and "claim". This subsection is dealt with in paragraph 39 of the Report in the following words:
"But we decided to include the partial definition in Clause 2 to preserve specifically two rules of the present law. The first is the

1493
rule mentioned above, that the claim of right made in good faith is inconsistent with theft. This rule is preserved in different language in paragraph (a) of Clause 2(1)."
That is all they say about it.
I entirely agree that the rule should be preserved, but why completely alter the language in which it is expressed? The Committee gave no reason for that. The Lord Chief Justice said on Tuesday that he believed—and I agree with him—that reform should not be done just for the sake of reform but only if we are satisfied that what we are putting in instead is better than what is already there. I am sure we all agree with that. So the question arises: is the language in the Bill better than that in which the law, which is familiar to nearly all of us, was expressed in 1916? The Committee do not say that it is expressed in better language and give no reason at all for the change. I feel that the change of language not only does not effect an improvement but is a change for the worse. I will indicate why I say that.
Under the law as it stands to-day and as the Committee want it to remain in future, if the accused says bona fide, "I believe I had a right to take this property," then it matters not whether in law he had a right to take that property; he will be acquitted. It has to be a bona fide belief of a claim of right. That is what the Committee want to continue to be part of the law. But now, under the new formula, will it not run like this? If the accused says, and believes when he says it, "I honestly thought I had the right to take this property", will he not be told, "That is not enough; did you believe in law that you had the right to take it?". If he is an honest man he will probably answer: When I took it I did not think anything about the law. I am not a lawyer. I thought that I had a right to take it, and I took it. "What is going to be the position then? If he gives that answer, can it really be said that he has come within the words of this provision, that
"he appropriates the property in the belief that he has in law the right to deprive the other of it"?
If I be right in thinking that under this wording his honest belief that he had a right to take it will not be sufficient unless he goes on to say that he believed he had a right in law to take it, that honest belief
1494
that he had a right to take it wi1l not suffice to secure his acquittal. I recognise that it was not the intention of the Committee to produce that result; and no one wants that result. But ii seems to me that the language used in this new expression of an old and familiar rule may well produce that result when the matter comes to be discussed in the courts. And when the matter comes to be discussed in the courts, the courts will not be able to refer to the Committee's Report and see what the Committee intended to do. That is one reason why I believe that the rule which the Committee wished to preserve should be preserved in the same language is that in which it has been expressed since 1916 and which is, I think, understood by all those who practise in the law and at the criminal Bar.
Clause 2(1)(a) goes further than to restate in different language the a le that a person who takes property with a claim of right made in good faith is not guilty of theft. It goes on to provide fiat his conduct shall not be regarded as dishonest if he appropriates the property in the belief
"that he would have the other's consent if the other knew of the appropriation and the circumstances of it".
I think I am right in saying that no such provision as these last words I have cited appears in the Larceny Act 1916. The Committee do not, in their Report, so far as I can see, give any reason for the inclusion of those words; and they are not unimportant.
I put to the noble Lord, Lord Stonham, another question (I am sorry to go on asking him questions, but I will try to give him time to get the answers to them): Is there a decision of the courts on this point, a reported case? I do not believe that there is, but there may be and I may not have found it. I would say to the noble Lord that I do not myself think it is necessary to include these words, unless there is a decision of the courts which indicates that, despite such a belief, the accused could be convicted of theft. I will put it in this way: in the absence of such a decision, I cannot believe that any court would regard a man as acting dishonestly if he appropriated property in the bona fide belief that the owner of it would consent to the appropriation if he knew of it. I cannot

1495
believe that without these words anyone would think that that was dishonest conduct. That being so, I feel that the inclusion of these words is really unnecessary unless there is a case to the contrary effect.
I do not like having words in a Bill which I think are unnecessary. And I think the inclusion of these words is again open (I may be wrong about this) to a little danger. I think that putting this in the forefront of the Bill may lead to this kind of defence being raised in a great many cases where the charge is the theft from someone whom the thief knew. That defence is not frequently run nowadays (and this is another aspect of it), and I feel that putting it in the very beginning of this Theft Bill may encourage people to run that defence in future when there is any theft from someone whom the thief knows.
Believing, as I do, that no court could possibly come to the conclusion that it would be dishonest to borrow property in circumstances in which the thief honestly and bona fide believed that if the owner knew of the circumstances he would consent to the borrowing, I cannot myself think that this is necessary. I have seen the noble Lord, Lord Stonham, receiving very rapid instructions. I do not know whether I have given him enough time, but I will not pursue the matter, because I hope I have said enough to get him to say that he will give serious consideration to this point between now and Report. I beg to move.
Amendment moved—
Page 1, line 18, leave out paragraph (a) and insert—
("(a) unless he appropriates the property without a claim of right made in good faith").—(Viscount Dilhorne.)
6.57 p.m.
THE LORD CHANCELLOR: May I deal with the two points which the noble and learned Viscount has raised on the first point as to a claim of right. A claim of right, of course, means a claim of right in law, and I do not understand why the noble and learned Viscount objects to the words "in law" in the alternative phraseology here put forth. A claim of right does not mean a religious right, a moral right; it means a right in law, and always has. Secondly, I would respectfully agree with him on the second point,
1496
that a judge would not seek to have anybody convicted who had taken something without somebody's consent but in the belief that he would have had the other person's consent if he had known of the appropriation and the circumstances of it. The noble and learned Viscount says: If that is the law, why do we want it expressed here? Here I must say that I admire very much the courage of the noble and learned Viscount in putting down 25 Amendments to this Bill. The Bill was drafted by 17 of the best-known judges and academic lawyers, all of them specially—
VISCOUNT DILHORNE: Is the noble and learned Lord addressing the Committee?
THE LORD CHANCELLOR: I thought there were slightly more here than there are. They spent nine years on this subject. They started in 1959 and took a long time considering whether it was possible to have a Bill which would amend the existing law so as to cure the well-known defects in this branch of the law. They went into it very exhaustively to decide, first, what kind of Bill it ought to be. Then they came to the conclusion that it was quite impossible to do that, and that they must scrub out the existing law and introduce a code in new words which would cover the whole of this field. They having done that, I should have thought it is a brave thing to say on 25 different Amendments: "I know better than they". They thought about every word. They had long arguments, and, indeed, it appears from the Report in most cases that they chose this word rather than that word.
One of the interesting Amendments—I am not undertaking on behalf of the Government to accept it, because it may or may not be the right place to do it in this Bill—and certainly a very important Amendment which has been put down by the noble and learned Lord, Lord Wilberforce, is Amendment No. 58, which says:
"The provisions of this Act"—
this is something new in English law, incidentally—
"shall be interpreted and applied according to the plain and natural meaning of the words used, read in the context of the Act as a whole, and given a fair, large and liberal construction".

1497
Then paragraph (b) states:
"It shall not be permissible in any proceedings upon this Act to refer to any decisions of any Courts prior to the passing of this Act other than decisions dealing in general terms with the interpretation of Statutes".
Then it says the very thing which the noble and learned Viscount said they could not do—and he would be right without this Amendment:
"Reference may be made, for the interpretation of this Act. to the NOTES ON DRAFT THEFT BILL contained in Annex 2 of Command 2977 but this commentary shall be for guidance only and shall have no binding force."
So this is a Bill the whole object of which is to be an entirely new self-contained code of this part of the law. And the suggestion is made that as this distinguished Committee say in their Report why they used one word rather than another, when a judge has to construe the Act it might be sensible that he should be able to look at this, which at the moment in law he is not allowed to do. We shall have to consider, when we come to the Amendment, whether or not that would be a wise thing to do. But here the Committee are clearly using perfectly ordinary English words:
"if he appropriates the property in the belief that he has in law the right to deprive the other of it, or that he would have the other's consent if the other knew of the appropriation and the circumstances of it …".
That, I suggest, is much more comprehensible to the ordinary person than this curious old legal phrase "a claim of right", which makes it sound as if there has to be a claim. One of the first things one has to explain to the jury is that there does not have to be a claim; the phrase does not mean what it appears to mean. Of course, all lawyers know what it means, because they are used to it; but it is not law in words which ordinary people ordinarily use. Therefore, I hope that, when we consider this matter on Report stage, the House will accept the words of the Criminal Law Revision Committee, rather than those now contemplated by the noble and learned Viscount. But, of course, we shall be quite ready to consider what he has said.
One of the difficulties, of course, about retaining this very old phraseology is that people want to go off to look at the old cases. Really, the object of
1498
this Bill, as I understand it, is to have, so far as possible, a complete code in words which people can understand, and which stand on their own. But we will certainly consider further what the noble and learned Viscount said.
VISCOUNT COLVILLE OF CULROSS: I do not want to take part in the merits of this discussion, but I want to say one thing to the noble and learned Lord the Lord Chancellor in relation to a point in his last speech. I think it must be understood that any of us who puts down Amendments to this Bill does so with a feeling that he is being presumptuous to question the Report of the Criminal Law Revision Committee. Who am I to say that they were wrong? I fully admit that I have not their experience, I have not their background, and I have not the benefit of the no doubt interminable discussions which took place on each of these matters. But what I wish Her Majesty's Government would realise is that a Report from the Criminal Law Revision Committee is not an Act of Parliament. It would be wholly wrong for this House, and, I venture to think, for another place too, although I must not comment upon that procedure, to take as Holy Writ the words of the Criminal Law Revision Committee.
I do not think that any noble Lord will have put down Amendments in this House in order to show that he knows better, or that he is cleverer, than those who wrote this Report and framed the draft Bill at the end. What we are doing, I venture to suggest, is testing out whether this is right; and in so doing we are doing our job as a House of Parliament. Indeed, if we did not do this job we should be falling short of the duty which is laid upon both Houses of Parliament.
There is one other matter. It is all very well on occasions for Her Majesty's Government and, with the greatest respect to him, the noble and learned Lord the Lord Chief Justice to say that this is a most valuable Report and the result of much labour. But it will be clearly discerned in the course of this Committee stage that a large number of Amendments are going to be moved which do not agree, and do not disagree, with anything that has been put in their Report by the Criminal Law Revision Committee. A great number of these Amendments will

1499
be upon topics that have not been explained at all in this Report. It is because they have not been explained at all in the Report, apart from our general duty as a House of Parliament, that I, for myself, feel it wholly justifiable that we should put down Amendments and discuss them. Particularly when that is done, I very much hope that the spokesmen for Her Majesty's Government will not continue to say, "It is in the Report, and therefore it must be right whether it is explained or not". Because every time they do so, I shall get up and make this same speech.
THE LORD CHANCELLOR: Nobody is suggesting that the House is not entitled to consider Amendments, and carry Amendments, and of course there are in the Bill some clauses which have been put in which were not in the draft Bill of the Committee at all. All I am suggesting is that, whereas in the ordinary way there ought to be a presumption that whatever is in a Government Bill is wrong, when we are dealing with a matter which has been considered by as distinguished a Committee as this there ought to be a presumption that what is in the Bill is right.
VISCOUNT DILHORNE: The noble and learned Lord the Lord Chancellor really cannot have it both ways. It is all very well for the noble Lord, Lord Stonham, to invite those who are practised in the law, Lords of Appeal, to attend at this late hour and give the benefit of their views and criticisms upon this matter, and then, when one puts down Amendments, which one feels to be important and worthy of consideration (I do not profess always to be right about this) for the noble and learned Lord the Lord Chancellor to get up and say that it must take a lot of courage to put down so many Amendments. I am grateful for the compliment, but at the same time noble Lords on the Government Benches cannot expect assistance in seeking to make this Bill a really good measure if that is the way in which suggestions put forward are to be treated.
The noble Lord refers to Amendments which are not at the moment the subject of consideration at all. If the noble and learned Lord the Lord Chancellor had
1500
been in another place it would not have been open to him to make a great speech about Amendment No. 58, or any of the other Amendments. I have confined my remarks to this particular Amendment. Then the noble and learned Lord the Lord Chancellor went on to say that in the Amendment I dealt with—referring to the notes in the Annex to clauses—I was wrong in what I said. With great respect to him, I was not. What I said was that there was not a single word in the body of this Report to explain why the language was changed.
VISCOUNT COLVILLE OF CULROSS: Hear, hear!
VISCOUNT DILHORNE: I read out the only passage in the Report that deals with it. I will not read it out again. When the noble and learned Lord the Lord Chancellor says that the Committee say why they used one word in preference to another, this is just what they have not done in relation to this change.
THE LORD CHANCELLOR: I did not say that. I said that in many places they had done it.
VISCOUNT DILHORNE: I do not dispute that in many places they have done this, but we are at the moment discussing one place where they have not. Of course I know perfectly well that when you speak of a "claim of right" you mean a claim of right in law. That is perfectly true. But it does not matter, so far as that offence is concerned. And this is equally true whether that claim of right is well founded or is ill-founded, so long as it is bona fide. I do not want to pursue this point, although I do not think it unimportant. But this is really a matter of language, because there is nothing between what the Criminal Law Revision Committee want to achieve on this and what I want to achieve.
But I do put this other point; and I ask the noble and learned Lord to look at it again. If the question is put, "Did you honestly believe that you had a right to take this property?"—which is the simplest way of putting it—and the man says "Yes", under the existing formula, if bona fide, that would suffice. I think there can be no doubt about that. But if it has to be said: "Did you honestly believe that in law you had a right to take

1501
this property?" that is a complete change of emphasis. I might add to the argument by saying that I think that is dangerous because it may lead to the interpretation that it is not just enough to say, "I thought I had a right to take it".
LORD AIREDALE: I should like to support entirely what has been said on this side of the Committee. I, too, have the greatest deference and regard towards the Criminal Law Revision Committee, and for that reason I have ventured to put down only three or four Amendments to this Bill. Were I an ex-Lord Chancellor I dare say I should have ventured to put down 25 Amendments.
What I cannot understand about paragraph (a) of subsection (1) of Clause 2, which this Amendment seeks to leave out, is that that paragraph contains two propositions, and the purpose of it is to say that they are not to be regarded as dishonest. Reading paragraph (a), if you went before any class of secondary schoolchildren and put these two propositions to them and said: "Have any of you any doubts whether this conduct would be honest or dishonest?", I do not believe any of those children would for a moment suggest that either of the propositions in paragraph (a) would amount to dishonesty. If that is right, I cannot see the point of solemnly stating in an Act of Parliament that these two things, which any intelligent child would accept at once as not amounting to dishonesty, are not to be regarded as dishonest. It seems to me that paragraph (a) is in any sense superfluous.
VISCOUNT DILHORNE: I understand that the noble Lord, Lord Stonham, said that the Government would look at this again with a view to meeting the points we have raised and would certainly consider them seriously.
LORD STONHAM: I agree, as long as the noble and learned Viscount understands that it is without an absolute commitment.
VISCOUNT DILHORNE: I am certainly not asking for a commitment upon it; it is just the way in which it is phrased. There is nothing between us as to what is wanted. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.15 p.m.
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved, in subsection (1)(a), after "in the belief that he has", to insert "on his own or another's behalf". The noble Viscount said: Continuing for one moment with the theme of what I said just now—and it is unfortunate that the noble and learned Lord has just left his place—I would say to the noble Lord, Lord Stonham, that despite what he said I cannot accept the onus which he placed upon those who propose Amendments to this Bill, that it is essential they should show that the wording suggested by the Criminal Law Revision Committee is wrong before there can be any assumption that it should be changed. I do not intend to take that course, and I hope the noble Lord, Lord Stonham, if he does not agree with the Amendment that I have put down (for reasons other than those of drafting, which I am sure will be good ones) will be so good as to defend positively the wording of the Bill as it stands and say that it is better than the Amendment I am suggesting.
This Amendment is a comparatively small point, but it is another one that the Committee has not specifically explained. The previous expression in the Larceny Act 1916, about which my noble and learned friend has just been speaking, does not require it to be said specifically that a claim of right made in good faith may be exercised on behalf of the person making the claim, or on behalf of somebody else, but the fact remains that at any rate in a case decided in 1962, namely, that of R v. Williams, it was held that a claim of right may be exercised on behalf of some other person and fall within the expression in the old Larceny Act. I have no reason to suppose that that is not so.
One then comes to look at paragraph (a) of subsection (1) of Clause 2, and we see that it says:
"if he appropriates the property in the belief that he has in law the right …"
Unless I am persuaded by the noble Lord, Lord Stonham, that this has been comprehensively considered by the Criminal Law Revision Committee, who have a very good reason to suppose that in what is meant to be a clear restatement of the law "he" means "on his own behalf or on behalf of anybody else", I would

1503
suggest that there would be merit in saying so clearly and explicity in the Bill, because if that is the present law—and I have no reason to suppose that the Government wish to change the law on this point—then I do not believe that the Bill as it stands on this point is a clear restatement of anything at all in this connection. I beg to move.
Amendment moved—
Page 1, line 18, at end insert ("on his own or another's behalf").—(Viscount Colville of Culross.)
LORD STONHAM: The insertion of the words proposed by the noble Viscount, Lord Colville of Culross, would make the subsection read:
"if he appropriates the property in the belief that he has on his own or another's behalf in law the right to deprive the other of it or that he would have the other's consent if the other knew of the appropriation and the circumstances of it".
I am not saying that the words of the Criminal Law Revision Committee are better than those proposed by the noble Viscount, but I say that in my view his words do not add anything to the meaning of the paragraph, because the words that he proposes to insert are already sufficiently implied by the phrase,
"in the belief that he has in law the right to deprive the other of it, or that he would have the other's consent…"
Under the clause as drafted, the action of a person who took property on behalf of someone else, on whose behalf he believed he had a legal right to take it, would not be theft. In our view, therefore, the Amendment is unnecessary, but certainly I will look at it again. If there is found to be a gap in the clause it will be considered, but my present view is that the words are not required.
VISCOUNT DILHORNE: I will just say this to the noble Lord, if I may, in support of my noble friend, who I think said that the decision in R v. Williams was in 1962. The Criminal Law Revision Committee have been sitting for a long time and whether they had passed this part of their Report before the decision in R v. Williams, I know not. There is no issue of principle between the noble Lord and my noble friend, but it was not until 1962 that we had this decision on the present language "without a claim of right made in good faith".
1504
Until that decision many people thought that was a claim of right made by the person who took it. Even though it be the case that the courts would interpret the words, "that he has in law the right" as meaning that he is exercising a right which he believes someone else has in law, I think that maybe there is some doubt. I would have thought that there was a case here for the insertion of words not necessarily the same words my noble friend has put down, to make it quite clear that the belief may extend to a belief that the person on whose behalf he is appropriating the property has the right to deprive the other of it. I think the noble Lord may be right in saying that it is in fact covered by these words, but I think it is desirable that it should be covered explicitly, particularly after the decision in Williams. It should not be left in doubt, and if I may quote something which appears very frequently in the case of the draft Bill, it will, I think, prevent argument if it is made explicit. At the moment it may be implicit; I am doubtful whether it is. I hope the noble Lord will look at it and insert words on Report to make it explicit.
VISCOUNT COLVILLE OF CULROSS: Will the noble Lord, Lord Stonham, allow me to say at this stage that I do not suppose that there is any elegance in any single one of my Amendments. If he does not like the wording of them, or the way they are expressed, he need not say so: I will assume it to be the case. I have tried to put down a matter of principle in each Amendment to which I am asking the noble Lord to address his mind. On this one, I am grateful to the noble Lord for saying that he will look at it again; but I believe he is a little misled if he supposes that the second half of paragraph (a) has anything to do with this. The situation, as I understand it, is this. "A" has something which "B" takes away. "A's" consent, or his deemed consent, simply does not enter into this at all. The point is whether "B" takes it, thinking that he has a right to do so for himself, or whether he does so thinking that he has a right to do it for his wife. It is if he does so for his wife that I am saying these words are necessary. It may be that in law it is his wife's property he is collecting, and the fact that the person who has it—"A" in

1505
my example—would or would not have given consent if he knew the circumstances really has nothing to do with this. I would ask the noble Lord, when he is thinking about it again, to concentrate on the words "in the belief that he has in law the right" and to leave out altogether the second part of that paragraph. Before I ask leave to withdraw the Amendment, I think that another noble Lord wishes to say something.
LORD WILBERFORCE: I only wanted to make one possible suggestion that the noble Lord might care to have in mind when considering this matter. I am not sure whether it is in the mind of the noble Viscount or not, but it might be the sort of case his Amendment would be required to cover, and, like him, I think it is relevant only to the first part of paragraph (a) and not to the second. It is the case of a company employee, the employee of a bank or someone like that, who takes property in the belief he has the right to take it on behalf of the company. It is not his right, it is the company's right, and he takes the property back, quite legitimately, in the belief that his employer, or whoever it is for whom he is acting, has a right to take it. I feel some doubt whether without some words such as have been suggested that case would be covered. I simply throw that into the discussion, parallel with the case of the wife to which the noble Viscount referred, as something which, one way or another, ought to be taken care of by these words.
LORD AIREDALE: If this paragraph is to be looked at again, since its contains two quite separate propositions and there has been confusion, is not there something to be said for separating them by (i) and (ii) so that it would read: "if he appropriates the property in the belief (i) that…" or "(ii) that…"? In that way you have two separate propositions which cannot be confused.
VISCOUNT COLVILLE OF CULROSS: The noble Lord, Lord Stonham, has a lot to think about on this. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.25 p.m.
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved, in subsection (1)(b), to leave out
1506
"reasonable steps" and to insert instead:
"such steps as he believes to be reasonable in the circumstances".
The noble Viscount said: I think I can deal with this Amendment without making too heavy weather of it. It is a problem which can become a trifle intricate. The second defence provided in subsection (1) of Clause 2, unless one takes Lord Airedale's point—at any rate the defence in paragraph (b)—says that a person's appropriation is not dishonest
"…if he appropriates the property in the belief that the person to whom the property belongs cannot be discovered by taking reasonable steps."
It must be immediately recognised that the last part of this phrase is taken word for word from the Larceny Act 1916. But it raises the question as to what "reasonable" means in this context. Is it reasonable in the minds of the jury as being exemplars of what the ordinary man in the street thinks, or is it reasonable in the subjective sense, that this is what the accused thought at the time when he appropriated the property? I do not believe that this is made wholly clear by the insertion of the words "in the belief" at the beginning of the whole phrase.
I should say further that, as I understand it, the existing law is that the test is subjective. The steps which ought to be or could be taken are those which the prisoner believes to be reasonable, and it is not the objective test of what the ordinary man in the street would think in those circumstances. And I look again at Archbold, paragraph 1502, in which reference is made to the case of Thurborn, which was approved later in the Court of Criminal Appeal. I: that is right, I believe that the matter should be put beyond doubt in this clause. And it is all the more important that it should be done if one looks for a moment at Clause 20, where (although I believe there are no Amendments down on this point) we find exactly the same proposition. In that case two terms are used: there is "reasonable" in paragraph (a) and there is "proper" in paragraph (b).
If one looks at what the Criminal Law Revision Committee had to say about blackmail—and this was a matter of much discussion on the Second Reading of this Bill—it really is, I suggest, very far from

1507
clear whether they thought that these matters in Clause 20 were to be governed by the subjective or the objective test. No doubt when we come to that clause the point can be discussed further, but at this stage I would ask the noble Lord, Lord Stonham, first: Is it the intention of the Government that it should be a subjective test or an objective test? And if, as I believe to be the case, it is the former, is he absolutely certain that no argument can arise from the way that this Bill is drawn in this particular respect—because again this could give rise to a large amount of litigation and appeals which, if only we were clear and explicit in the Bill, would be avoided. I therefore beg to move.
Amendment moved—
Page 2, line 2, leave out ("reasonable steps") and insert ("such steps as he believes to be reasonable in the circumstances").—(Viscount Colville of Culross.)
LORD STONHAM: I am grateful for the very careful explanation which the noble Viscount has given of his reasons for tabling this Amendment, because my reaction otherwise would have been merely to say that the new words add nothing to the meaning of the paragraph, since it is already implicit, in the words
"the belief that the person to whom the property belongs cannot be discovered by taking reasonable steps",
that they should be steps which he believes to be reasonable. The noble Viscount has made this clear by asking the direct question, Is the test of "reasonable" to be a subjective test, and the answer is a very firm, Yes; and we believe that this is embodied in the clause as it now stands.
The noble Viscount mentioned that it should be linked with a similar test in Clause 20. I will not enlarge upon that at the moment, except to say that I agree. But I do not think that the Amendment itself really raises a question of whether it should be a subjective test. Under Clause 2(1)(b) a person's appropriation of property belonging to another (except where the property came to him as a trustee or as a personal representative):
"is not to be regarded as dishonest… if he appropriates the property in the belief that the person to whom the property belongs cannot be discovered by taking reasonable steps."
1508
The test therefore is subjective, because the honest man believed that the owner could not be discovered by taking reasonable steps. Even if we made the change suggested by the noble Viscount, his subsection would still be subjective, as I believe he wants it to be, because it would still be governed by the word "belief". It would then read,
"if he appropriates the property in the belief that the person to whom the property belongs cannot be discovered by taking such steps as he believes to be reasonable in the circumstances."
I can only say again that I think I have answered the noble Viscount's question. We are satisfied that what he wants to achieve is achieved, and that the words which he proposes to insert in substitution for the words "reasonable steps" do not add anything to the meaning or clarify the matter in any way.
VISCOUNT DILHORNE: May I just say a word about this? I quite agree with the noble Lord, Lord Stonham, that as this sentence is preceded by the words "in the belief" the whole of what follows would appear to be the application of the subjective test. But I think it is not so much what is the content of the words "in the belief"; the difficulty I see here lies in the use of the word "reasonable" before "steps". Again this is a case where there is absolutely nothing between the noble Lord and my noble friend as to what they seek to achieve. But I must say that, if it be the case at the end of the day that all consideration of authorities bearing on these questions has to be ignored, then I can well understand that there may be argument on the question, independent of the belief, as to whether the test to apply in relation to the steps being reasonable is itself objective or subjective. Does the noble Lord follow me? It is rather a narrow point. It is quite true the man has to believe something. Has he to believe something which he considers are reasonable steps? Or, in determining whether or not there are reasonable steps which can be taken, is the test of that objective? This is different from what follows from the belief.
It is quite clear that the noble Lord wants, and I want, the test to be: "Does the man believe that the owner cannot be discovered by taking such steps as he thinks reasonable, whatever anyone else

1509
may think?" That is what we want. But I greatly doubt whether that appears as clearly as it should in the Bill as drawn. I am not going to suggest re-wording it. I say again that it would be an advantage if this matter could be looked at to make that clear beyond all doubt. I do not think it is at present.
LORD STONHAM: Of course it will be looked at in the light of what has been said. I should have thought that if the accused person acted in the belief that the person to whom the property belongs cannot be discovered by taking reasonable steps, the implication must be there that there are reasonable steps that could be taken. That seems to me to be implicit in the clause.
VISCOUNT DILHORNE: If the noble Lord says that, that there are reasonable steps that can be taken, then that immediately brings in the objective test as to whether or not there are in fact reasonable steps that can be taken. That is the point. It does not matter whether you and I would think that there were reasonable steps that could have been taken. That is not the point we want to secure. The question is whether the accused had a bona fide belief that steps which he considered reasonable would not have produced the person. That is just the difference, and I think that what the noble Lord said indicates that, while our objectives are the same, the language could be made more explicit.
LORD STONHAM: The assumption of the noble and learned Viscount is quite right. We depend on the belief of the person; it is what he thought. I think that the Criminal Law Revision Committee indicated in Clause 20 their view about the objective test, that the difficulty in applying the objective test would be quite insuperable; and it might be so here. But certainly I will look at the point again.
VISCOUNT COLVILLE OF CULROSS: In that case, I have much pleasure in asking leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.36 p.m.
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved to add to subsection (1)(b):
"and a person's obtaining of property shall, for the purposes of section 15 of this Act, be interpreted accordingly."
The noble Viscount said: This again relates to a matter of wording and clarification. Her Majesty's Government have said on several occasions already that it is essential that we should get this clear and right, and to that end, among other things, they have put in Clause 6, and propose to extend it in accordance with Amendment No. 15. The definition in subsection (2) of "dishonestly appropriates" is partly applicable also to the offences in Clause 15, and if one looks at paragraph 88 of the Report of the Criminal Law Revision Committee one will see that they intend this to be so. They say:
"In this respect also the offence will be in line with theft, because a belief in a legal right to deprive an owner of property is for the purpose of theft inconsistent with dishonesty and is specifically made a defence by the partial definition of 'dishonestly' in Clause 2(1)(a). (The partial definition in Clause 2(1) is not repeated in Clause 12(1)"—
that is Clause 15(1) in the Bill—
"It would be only partly applicable to the offence of criminal deception, and it seems unnecessary and undesirable to complicate the Bill by including a separate definition in Clause 12)"—
that is, Clause 15. The paragraph goes on:
"The fact that a claim of right will be a defence to a charge under Clause 15 is probably in accordance with the present law of obtaining by false pretences; for the existence of a claim of right to the property obtained is regarded as inconsistent with that of an ' intent to defraud' for the purpose of Section 32(1) of the 1916 Act."
There are two points here. First of all, as I understand the Criminal Law Revision Committee, the law at the moment is not clear on this subject If it were, I think that they would not have put the word "probably" in the passage that I have read. This is reinforced by the fact that, so far as I can discover, Archbold does not deal with this matter under "false pretences", although I may be wrong on that. If the law is not clear upon this point, then I would suggest to the noble Lord that it must stand to reason that if we intend that the law should be made clear, we ought to do something specific about it.
The second point is that although the Criminal Law Revision Committee said that the definition should only partly apply—and my Amendment probably is not effective to achieve that—it must be

1511
in line with the whole approach which the Government have adopted to this Bill to be explicit where one needs to be explicit. I do not believe that in this respect we are suitably clear about the availability of this defence under Clause 15. For those two reasons I earnestly ask the noble Lord, Lord Stonham, to have another look at this matter to see whether it ought not to be made perfectly plain that the proper part of this defence is also available in Clause 15. I beg to move.
Amendment moved—
Page 2, line 3, at end insert the said words.—(Viscount Colville of Culross.)
LORD STONHAM: I shall be grateful if I may briefly put our view on this Amendment, because, frankly, I am not yet clear precisely what the noble Viscount wants. I know that it is my fault, but if I tell the Committee how I see the position the noble Viscount can come in again. The noble Viscount made it clear that the effect of his Amendment would be to attract the provisions relating to the offence of criminal deception in Clause 15, subsection (1).
VISCOUNT COLVILLE OF CULROSS: No—to attract the defence which is provided under Clause 2 in the case of theft to be applicable also to the offence of criminal deception under Clause 15. I am not trying to attract the "offence", but to attract the "defence".
LORD STONHAM: The noble Viscount is trying to attract the same approach, the same form of words.
VISCOUNT COLVILLE OF CULROSS: Yes.
LORD STONHAM: We think that an addition of that kind to subsection (1), paragraph (b), of Clause 2 would not be appropriate. A person
"who by any deception dishonestly obtains property belonging to another"
must have practised the deception on someone to whom the property belongs, including any person having possession or control of or some proprietory right or interest in the property, and, by virtue of the definition of "belonging to another" in Clause 5(1)—which is applied to Clause 15 by Clause 33(1)—the pro-
1512
perty will "belong" to that person. The circumstances envisaged in Clause 2(1)(b),
"that the person to whom the properly belongs cannot be discovered"
can hardly arise. I do not know whether the noble Viscount has followed me.
VISCOUNT COLVILLE OF CULROSS: I am afraid not. I start off from the point that the Criminal Law Revision Committee said that this defence did apply to Clause 15. That is plain from paragraph 88. They said that they thought that it was probably the law now, and they further said that they had not drafted a partial definition of "dishonestly obtains" for the purposes of Clause 15 as they had done in the case of "dishonestly appropriates" for theft. Paragraph 88 said—and I did not propose to read it all out, but it is relevant to what the noble Lord says:
"…though the deception may be dishonest, the obtaining is not."
They were saying that, owing to the words "dishonestly obtains", a person who uses deception in order to obtain property to which he believes himself entitled will not be guilty, for though the deception may be dishonest the obtaining is not. Therefore, the two elements necessary in the offence, "dishonestly" and "obtaining", are not both fulfilled. Therefore it is implicit in this, and is plain from this subsection, that this defence is intended to be available in the case of Clause 15.
May I read the next sentence in the paragraph? It says:
"In this respect also the offence will be in line with theft, because a belief in a legal right to deprive an owner of property is for the purpose of theft inconsistent with dishonesty and is specifically made a defence by the partial definition of 'dishonestly' in clause 2(1)(a)."
There cannot be any doubt about what is intended here. This defence is meant to apply. I am not saying that I have done it the right way; I am not saying that it should go in Clause 2. I am simply raising for the consideration of the noble Lord whether we ought not properly to set this out clearly, instead of leaving it to be implied from the words "dishonestly obtained" in Clause 15. I am drawing attention to what the Report says, and I am saying that I think that the law is not clear at the moment and

1513
that we ought to make it clear in this Bill. That is all I am asking the noble Lord to consider.
LORD STONHAM: I have got it clear now, whereas I did not have it clear before, so my words were useful. We will have a look at it, as the noble Viscount asks.
LORD AIREDALE: As it is going to be looked at and as the noble Viscount said that he may not have done it in the correct way, may I suggest that the way to do it is not by means of a forward reference from Clause 2 to Clause 15, but by a reference back in Clause 15 to Clause 2. Nobody will act on Clause 15 without reading it. When they read it they will discover that there is a defence mentioned in Clause 2 which applies to Clause 15. But if you do it by a forward reference, somebody may read Clause 15 and not appreciate that, had they looked at Clause 2, they would have discovered a defence which applies to Clause 15.
VISCOUNT DILHORNE: May I support what the noble Lord, Lord Airedale, has said; I am inclined to agree that the reference back should be in Clause 15. May I add another point. My noble friend has read out part of paragraph 88. I hope the noble Lord will consider what is said in that paragraph and what is said about the case of Parker in the Committee's Report in paragraph 92. It will be most anomalous if what is not criminal conduct under paragraph 88, with this claim of right contained in it, still remains criminal conduct if the deception is effected by way of a forged instrument. If the noble Lord will look at paragraphs 88 and 92 he will see that there is an anomaly which ought to be ironed out before the Bill is passed, and it bears on the question of the cross reference.
LORD STONHAM: I am grateful for that suggestion. I am a little at variance with the noble Viscount because he quoted paragraph 88, which refers to the whole of subsection (1) paragraphs (a) and (b), whereas on his Amendment we are discussing only subsection (1) paragraph (b). Therefore, that created some difficulty in my mind.
VISCOUNT COLVILLE OF CULROSS: It depends how far out you set the Amend-
1514
ment in the Bill. I meant it to refer to the whole of subsection (1) of Clause 2. I am sorry if I misled the noble Lord in that way. It was certainly not my intention.
LORD STONHAM: We will look at it in the light of that explanation.
VISCOUNT COLVILLE OF CULROSS: I beg leave to withdraw the Amendment.
Amendment by leave withdrawn.
7.50 p.m.
VISCOUNT DILHORNE VISCOUNT DILHORNE moved to leave out subsection (2). The noble and learned Viscount said: This is again a case where I can find nothing in the Report dealing with this subsection, so I am not able to say for what reasons it was included. But in the notes on the draft Bill in Annex 2 there is the following passage, which is familiar:
"Without the subsection it might be argued that it would not be theft to take property and pay full value for it even if the taker knew that the owner was unwilling to sell."
I must say that I find it very difficult to conceive that there is any real likelihood of that being argued.
Here again we have a provision in the Bill not aimed at defining the offence, but at preventing what the draftsman thought to be a possible argument. He seeks to defeat that possible argument by stating what, with great respect to him, seems to me to be rather a statement of the obvious. Subsection (2) says:
"A person's appropriation of property belonging to another may be dishonest notwithstanding that he pays for the property."
Surely, of course it may. If there is a dishonest appropriation it will not cease to be a dishonest appropriation if the taker pays for the property. I should have thought that was so obvious that it did not require stating. If I am right about that, then this provision is unnecessary, and I feel it should be left out of the Bill.
I should perhaps point out that there is a discrepancy between the note in the Annex and the subsection in the Bill. The subsection says, "pays for the property", whereas the note says "pay full value for it". I do not know whether in this context the words "full value" have any significance. I should have

1515
thought that paying for it would mean paying full value in this context. But it is unfortunate, if at the end of the day we are going to be able to look at these notes for the purpose of guidance in reference to this Bill, that there should be this patent discrepancy between the language of the note and the language used in the Bill. It seems to me that this is a statement of the obvious, and as there is nothing in the body of the Report signed by the Committee dealing with it, I doubt myself whether it is necessary to include it. I beg to move.
Amendment moved—
Page 2, line 4, leave out subsection (2).—(Viscount Dilhorne.)
THE LORD CHANCELLOR: I do not gather, from what the noble and learned Viscount has said, that he thinks any real harm will be done by this subsection, but that he feels it is unnecessary as it states the existing law. The purpose of the subsection is to clarify the meaning of "dishonestly"; simply to make it plain that a person who takes property, for example when the owner is unwilling to sell, may be dishonest even if he puts down the money for the property. This would apply, for example, to taking a rare and coveted object or paying the full price for something which is earmarked for somebody else; for instance, if a person goes into a shop and asks to buy something and is told that it is for somebody else, and he takes it away putting down the money in spite of the shopkeeper's protest.
The suggestion that a payment would be made only if the owner accepted the money seems to be based on a narrow and technical construction of the clause. The meaning of "pays for the property" should surely be understood in this context as covering sending, leaving or putting down money against the owner's will and not as implying his acceptance of the money offered. The subsection is included only as a signpost to indicate that the person appropriating the property is not excused from committing theft merely by leaving or sending the money for the property. The owner may not wish to part with it. There is no reason why it should not be theft to take something which an owner is unwilling to sell. I do not think the noble and learned Viscount really takes any diff-
1516
erent view. I think he is saying that this is the law, and that therefore it is unnecessary to put it in.
I think that to some extent there are two views about a Bill of this kind. The noble and learned Viscount spoke of what the draftsman had or had not done, but the 17 members of this Committee themselves had draft after draft—and, after all, they were at it for seven years—carefully considering every single word and the effect which it was likely to have, because this is intended to be a complete code of this section of the law. That is not an easy code to make, because we all know that this branch of the law has caused a great many difficulties, and to take theft, robbery, blackmail, fraudulent conversion, larceny by a trick and so on, and to codify the whole thing must be an extremely difficult thing to do.
The difference of opinion seems to be simply this. If you are trying to codify completely this whole branch of the law, ought you. to leave things out because the present law on that point is not in doubt? I submit to the Committee that where as here you are trying, in new words, in modern words, to codify a whole section of the law, it is a good thing to make it complete, and that it ought not to be regarded as any answer to say, "Well, you need not put that in because everybody knows that is the law." Of course, we shall carefully consider what the noble and learned Viscount has said, and what any other members of the Committee may say.
LORD WILBERFORCE: I am grateful for the statement that has just been made by the noble and learned Lord, because it highlights the difficulty which I felt about this clause, which I think is not the same as that felt by the noble and learned Viscount. He said that the clause stated the obvious and should not be in the Bill. To me it was obscure, and I could not understand it and still am not satisfied that it would normally he understood, as relating to the case which it is apparently meant to cover. To me the word "pays" involves an acceptance as well as a handing over of money—that is, a hand to receive and a pocket into which it goes. If what is meant is leaving money for the property, then I feel that some other expression might have been found. To say that a

1517
man who goes into a shop, helps himself to a valuable picture and leaves £100 or £5 on the counter, can say, "I paid for it", does not correspond to reality. That is not payment. That is leaving money and is completely irrelevant to the whole transaction. Sending a postal order through the post is not payment for the property. It is something quite different until it is accepted.
So that if what is intended, and I think it is right, is to say that merely leaving money for the property does not prevent the taking from being dishonest, I personally would prefer to see some other expression used if one can be found. To that extent, and only to that extent, I support the noble and learned Viscount in asking for some reconsideration of this subsection.
VISCOUNT DILHORNE: I, too, have listened with interest to what the noble and learned Lord the Lord Chancellor has said. I hope that every time he speaks he will not remind us of the eminence of this Committee, which we take for granted, or the length of time they took over their deliberations, which we all recognise, or repeat the remarks about the complexity and difficulty of the task they were set.
VISCOUNT COLVILLE OF CULROSS: Or remind us how many members of the Committee there were.
VISCOUNT DILHORNE: Yes, that, too. We all know that, and we have a great respect for them. The noble and learned Lord must realise that it is our function and our duty to look at these things and to raise questions which we are not happy about, and doing so is no disrespect to the Committee. We found several times, I think, during the noble and learned Lord's absence, that there is no difference of view between the noble Lord, Lord Stonham, and those who sit on this side of the House as to what we want to achieve, but there have been doubts raised with some considerable substance as to the choice of language. I think that is all to the good. That is the only way in which we can seek to effect improvements to this Bill.
When I moved this Amendment I was not seeking to suggest that this was not a statement of the existing law—it is. I
1518
put my statement forward on the ground that it was also a statement of the obvious, and I think it is. I think even in codification it is not desirable usually to put in things which are really so obvious as to be unnecessary, because the mere fact that an obvious thing has been put into a Bill makes people wonder whether there really was not some ulterior motive for it. That is one reason why I am suggesting that what really is obvious —and I think this is—ought to be omitted from the Bill, because it has a counter-productive effect. The noble Lord may not agree with me about that, but certainly I think that the use of the word "pays" is wrong, and I support what my noble and learned friend has said about that. If the noble Lord is going to retain this subsection. I think some different word ought to be used—"sends" the money, or "gives" or "deposits" the money for the article would suffice, but "pays" does involve acceptance. Again, I entirely agree with the concept here, and as the noble Lord has said that he will look at it again I will, if the Committee will allow me to do so, ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Clause 3 [Appropriates]:
8.1 p.m.
On Question, Whether Clause 3 shall stand part of the Bill?
LORD WILBERFORCE: I did not put down an Amendment to this clause because there are limits to the number of linguistic changes one can suggest, but I find considerable cause for stumbling in the phrase "come by". I do not know where this has been brought from, or what it is intended to mean, other than to give a sort of popular look to the clause. It seems to refer to having possession, or something of that sort. Without making any suggestion this time, I would, in a friendly way, invite the noble Lord to consider whether it is altogether an appropriate expression. To me it is unattractive and not clear.
VISCOUNT DILHORNE: I should just like to say that I welcome this provision in Clause 3(1) if it means what I think it means, but I share my noble and

1519
learned friend's doubts as to the precise meaning to be given to the words "come by". In all the Bills I have read—and I have read a good many hundreds of them in my time—I cannot recollect Parliamentary counsel ever using this expression before. It is, I think, a novelty, and I hope this will not constitute a precedent. I should like to see it changed.
LORD STONHAM: We have not an Amendment down to consider it, but I will certainly consider what both the noble and learned Lord and the noble and learned Viscount have said.
Clause 3 agreed to.
LORD STONHAM: We have before us the entrancing prospect of a full day on Monday on the Committee stage of this Theft Bill, and I feel we might give ourselves a half-holiday to-night. I move that the House do now resume.
Moved, That the House do now resume.—(Lord Stonham.)
VISCOUNT DILHORNE: May I say how much I welcome that Motion, because the next Amendment, dealing with the fragrant subject of wild flowers, is bound to take a considerable time, and I think it would be much better to deal with it on Monday.
On Question, Motion agreed to, and House resumed accordingly.

RE-EMPLOYMENT OF PUBLIC SERVICE PENSIONERS
8.4 p.m.
LORD SWANSEA LORD SWANSEA rose to ask Her Majesty's Government whether they will make any change in the regulations concerning persons receiving pensions from public funds, to enable such persons to be re-employed in the public service without loss of pension. The noble Lord said: My Lords, I beg to ask Her Majesty's Government the Question standing in my name. The hour is getting rather late, and I will try, to the best of my ability, to be brief. This Question covers a very wide field—the whole field of the public services, including the Civil Service, local government, the medical and dental professions, teachers and others. It is too wide
1520
a field to cover fully in the time I propose to allow myself, so I shall confine myself principally to the medical and dental professions, because it seems to me that here, in these professions, is the greatest need for a change.
The general principle applying to abatement of pensions on re-employment in the public service is that the salary on re-employment should not exceed the average remuneration over the last three years before retirement. If the new salary plus pension exceeds the old salary, the pension is abated to that extent; and if the difference between the salaries exceeds the pension, the pension will disappear altogether. There has for a long time been great discontent about this among general dental and medical practitioners. With the acute shortage of doctors and dentists, it is surely illogical to discourage or prevent re-employment of them after pensionable age. Unlike salaried officers, the earnings of general practitioners are not at their highest during the last few years before retirement. Indeed, in many cases the salaries at that time are at their lowest point. In 1966 the Ministry of Health and the Treasury recognised the need for revision of the abatements for general practitioners, and the criterion for determining whether an abatement of pension was necessary was changed to the average net earnings over the best three consecutive earning years. Thereby, general dental and medical practitioners were placed on roughly the same footing as salaried officers.
Now there is one aspect of this matter which is a considerable source of grievance among doctors and particularly among dentists; that is, that the assessment of the earnings is done on a quarterly basis. This was regarded by the Departments as a concession, because in theory the limit should not be exceeded at any time. But if this were carried to absurdity the result would be that the abatement could be assessed on a monthly, weekly or even an hourly basis, which is truly absurd. It is particularly hard on dentists, as they are paid by a scale of fees, and the patient demand is liable to fluctuate for reasons beyond the dentist's control—according to the season, the weather, illness or various other reasons. So there may be a substantial variation in the net earnings as between one quarter and another. If the limit on earnings

1521
is exceeded in one quarter, the pension is abated, and no account is taken of earnings in the rest of the year, which may be well below the limit. This, I think, is manifestly unfair, and I think that either the earnings should be assessed on an annual basis or one quarter should be set off against another.
The question of abatement of pensions is particularly acute in the public health service, in psychiatry and in the tuberculosis service. The reason is that prior to the start of the National Health Service these were the only services which were pensionable. The result was that doctors in other branches of medicine who retired under the age limit had relatively few years of service that counted for pension, and thus receive only a small pension. As a result, they can earn a considerable amount before their pension is subject to abatement. In psychiatry, the public health and the tuberculosis services, which were pensionable before the National Health Service started, most retired doctors have completed the maximum period of pensionable service. This applies particularly to mental hospital staff, in whose case every year of service in excess of 20 counts double for the purposes of pension.
I have a particular interest in this last class, because my wife is a member of a hospital management committee which is concerned with a group mental hospital in Mid-Wales. In that part of the country there is a serious shortage of properly qualified personnel in that branch of medicine. The mental hospitals often wish to call upon retired doctors to help out at holiday time, or because there is illness among their staff, but there is very little incentive to retired doctors to do so. Unless a doctor can live at home he has to pay his board and lodging at or near the hospital where he is working; he has to pay travel expenses to and from home, and he is lucky if he is left after that with £7 or £8 a week in his pocket.
Most doctors feel that as they have paid for their pensions—in other words, as they are on a contributory basis—they have earned them; and because they have earned them, they should be allowed after retirement to take on what employment they like, without abatement of their pensions. Anyone who has the will, stamina or initiative to wish to work after retire-
1522
ment should not be subjected to heavy financial disincentives but should be encouraged to do so because of the national shortage of medical manpower which threatens the very survival of the National Health Service. Successive Governments have never ceased to urge the need for greater national production if our country is to maintain its position in the world. Like many other pens loners, retired doctors and dentists may still have the capacity to make a useful contribution to the common good, and I feel that in so doing they should not have to forfeit some or all of their pension. This is all wrong.
My Lords, I have confined myself to those professions for the sake of brevity, and also because I think that theirs is the case of greatest need. But these principles apply also to the Civil Service, local government, teachers and the rest. The Royal Commission on the Civil Service in 1953–55 dealt with these points; and the argument was put to them by the Staff Side of the Civil Service that the effect of any increase in pay on a number of re-employed staff was simply to reduce their already abated pension. In particular they pointed out that within the Civil Service there are three types of re-employed persons.
First, there is the disestablished officer who continues in his old grade. He does not receive any pension because his pay is above it, and he gets the benefit of any increases in salary scales. At the other extreme there is the officer who, up to his retirement, has held a fairly high grade and who after retirement just wants to take on the little odd job and takes re-employment in a considerably lower grade. In that case his pension plus his pay are together less than the pay of the post from which he retired. He also gets any increases which the grade attracts.
But the person who is most penalised is the one who drops only a grade or two and whose pay plus full amount of pension takes him to, or beyond, the previous pay of his job. This situation strikes me as being unfair, and I think it should be put right. In such cases the individual should receive any new rate of pay for that grade, and he should not suffer any further abatement of his I pension. It has been suggested that if

1523
changes were made in these rules a number of anomalies would arise between officers in different grades. That may be so; but I do not think they would be nearly so numerous or so serious as those which exist under the present arrangements.
My Lords, our public services are a great institution. They set the pattern for public services throughout the world—and particularly our National Health Service, which was a very great social step Forward. But especially where the National Health Service is concerned there is grave danger of collapse due to lack of manpower. It would be the greatest pity if this should happen through disincentives which are as absurd as they are illogical. I trust that I have been as brief as your Lordships hoped. I should have liked more time to enlarge on some of the points, as this is a very big subject; but as the hour is late I will leave it there and hope that the noble Lord who is to reply for the Government will give me some encouragement.
8.18 p.m.
LORD BOWLES: My Lords, I am sure we are all grateful to the noble Lord, Lord Swansea, for putting down this Question—more so because he was good enough to postpone it from last Thursday (or Friday morning) when although there would have been no pressure of time we should all have been too tired. It shows the interest he has in the subject that he should put down this Question, and I am glad to have the opportunity of dealing with this subject which, as he himself mentioned, is a general one.
May I remind the House that the present practice derives from the Superannuation Act 1834? Therefore it has stood the test of time and doubtless the scrutiny of many previous Administrations. Her Majesty's Government regard the principles upon which it is based as still valid and are not willing to propose changes. Although the practice is very long-standing, this does not mean necessarily that there is any reason for refusing to review it; but I hope that when noble Lords have considered what I have to say about the way in which the present arrangements work and the reasons for them, they will be convinced
1524
that there are insufficient grounds for making a change.
The arrangement is that the re-employed pensioner draws the full pay of the post in which he is re-employed. In addition, he gets so much of his pension as is needed to bring his total income, from his pay and pension combined, up to the level of the salary of the post from which he retired. Thus, in the normal case, when pay and pension combined are more than the pre-retirement salary, no re-employed pensioner suffers a drop in income; and, if the pay of the post-retirement job is more than this, the re-employed pensioner gets that amount in full. Furthermore, the re-employed pensioner will normally already have drawn in full that substantial proportion of his total pension benefits, about one quarter, that is represented by the lump sum payment which the noble Lord failed to mention. He also normally continues during his re-employment to add to his total pension entitlement, in respect both of his lump sum and his pension. In many cases too, that part of a pension that is actually being drawn may itself be increased under the Pensions (Increase) Acts. To recapitulate, therefore, the present arrangements are based on the principle that everyone gets the rate for the job when he is re-employed and draws his full pension to the extent that this will not give him more, when combined with his pay, than he had in his previous job.
To come now to the reason for this arrangement. I can well understand that many re-employed pensioners will take the view that, under the terms of their employment, they become entitled to a pension on reaching retiring age, whatever that might be—in the normal case 60 or 65—and that this pension should be paid at that age irrespective of whether they continue in work. This feeling will no doubt be stronger to the extent that the pensioner has himself in part contributed towards his pension. Moreover, if a public servant who has retired takes a job in private industry, he is fully entitled to draw his pension and the pay of that job. For all these reasons, therefore, it is very natural that some people should resent the present rule.
But, if I may say so, these attitudes, while very natural, fail to take account of

1525
the real purpose of a pension. This is simply to help maintain the pensioner when he leaves employment in the public services. Essentially, therefore, the payment of the pension is determined not by the retirement date specified in whatever scheme the pensioner may belong to but by the fact of retirement. Clearly, it is only right to say at what age public employees become entitled to a pension—in other words, the minimum age at which they can expect to leave their employment with a continuing income for their retirement. But, if those who reach pensionable age decide not to retire but to stay in public employment, then it seems to me that the public services should not be regarded as being bound to ignore this fact and to treat the person concerned as if he were no longer working for them. In this matter we surely have to compromise as between what the pensioner might regard as his rights and fairness as between him and the taxpayer or ratepayer who is paying his salary and all, or the greater part of, his pension.
The noble Lord asked me: Why should the income of the re-employed pensioner be limited to what he was earning when he formally retired, rather than to what he would now be able to earn in the same job? It is important to remember that no pensioner who is re-employed ever gets less than the proper rate for the job which he is doing. Let us look at two cases. First, imagine a man who retires and is subsequently re-employed in a similar job at the same salary level. He goes on drawing the full current rate of pay for the job, and he gets the benefit of any increases in the rate for the job as they come along. His pension is wholly abated, but he receives his lump sum on first retiring.
The second man retires from a job at the same level as the first, but is reemployed in a job with less responsibility and a lower rate of pay. He gets the full rate of pay for that job plus his lump sum, and in addition enough pension to bring his income up to the level it had reached at the time when he retired. This means that he is protected from any fall in income even though he is now doing a job which is less onerous or responsible. There is no good reason. however, why his income should increase in pace with increases in the pay of the
1526
job he held before retirement. The first man continues to carry the responsibilities of the more senior job and benefits from the pay increases; the second man takes a less arduous job, and therefore his income, although protected against a fall, does not keep pace with that of his colleague who continues to carry out the duties of the more senior and onerous job.
Finally, before I come to the more specialised points raised by the noble Lord, I think noble Lords will find that the practice which I have described compares favourably with that of employers outside the public sector, who do not commonly pay an employee any part of his pension so long as he continues in work. Generally speaking, such an employee receives only the rate for the job—but in fact it is far more usual for private employers to stop employing someone at all once he has reached pensionable age. In this respect again, therefore, I see no case for departing from our long established practice in a way which would not be justified by comparison with the general practice of employers outside the public sector.
The noble Lord concentrated the main part of his speech on the question of those people entitled to a pension before the National Health Service. He referred to the application of abatement by reference to quarterly earnings; but it would not necessarily be in the interest of a pensioner to apply the rules on an annual basis. A man's earnings may be at, or close to, his ceiling, when averaged over twelve months, but in a single quarter may fall well short of the ceiling. Quarterly assessment makes it possible to deal with this situation. As to the other points made by the noble Lord, they are, as he recognised, of general application, but I do not think they add up to a case for specially preferential treatment for National Health Service pensioners.
I hope that the noble Lord will feel that we have gone some way to wards clearing the air, because there is a good deal of misunderstanding about this. This practice has been in operation for 134 years, but we can look into these matters in the various reviews, such as the social security review, which are taking place at the present time, for

1527
example, on earnings related pensions and the like, on which, as the noble Lord knows, we hope to bring in a Bill in the lifetime of this Parliament. With these
1528
and my earlier remarks, I hope that the noble Lord will feel satisfied.
House adjourned at twenty-eight minutes past eight o'clock.