Lords Sitting of 14 May 1968

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of St. Albans.

EDINBURGH—NORTH BERWICK RAIL SERVICE
LORD KILMANY: 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 can give an assurance that the removal by British Railways of lengths of railway line at North Berwick station does not presage the closure of this line for passenger service between Edinburgh and North Berwick.]
THE PARLIAMENTARY SECRETARY, MINISTRY OF PUBLIC BUILDING AND WORKS (LORD WINTERBOTTOM): My Lords, the removal of the surplus tracks is one of several economy measures designed to reduce the deficit in operating the passenger train service between Edinburgh and North Berwick. It does not anticipate the decision which my right honourable friend the Minister of Transport is now considering on the Board's right to publish a proposal to withdraw this passenger service. Still less does it prejudge a decision on the closure proposal itself.
LORD KILMANY: My Lords, while thanking the noble Lord for that reply, which to a limited extent is reassuring, may I ask him whether he will bear in mind that the population all along the East Lothian coast is rapidly increasing; that many of these people travel to Edinburgh to work day by day, and that it would be the worst possible contribution to meeting the transport and parking problems of Edinburgh to allow this line to be closed down?
LORD WINTERBOTTOM: My Lords, I am certain that this is one of the many factors that will be taken into account
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when the Transport Users' Consultative Committee and other interests are consulted on this matter.
LORD SALTOUN: My Lords, may I ask Her Majesty's Government how the removal of an existing line of track makes an economy in the running of a line? I could not follow the noble Lord's Answer in that particular.
LORD WINTERBOTTOM: My Lords, it is really comparatively simple. Since the goods trains are no longer running it has been made possible for British Rail to run a large amount of traffic on a single track, thus saving maintenance on double tracks.
BARONESS HORSBRUGH: My Lords, will the noble Lord agree that, in stopping this particular passenger traffic between Edinburgh and North Berwick, all that is being done is to stop the traffic between Drem and North Berwick, quite a short distance, and that there are many passengers who travel by that route daily?
LORD WINTERBOTTOM: My Lords, the noble Baroness is correct. It is the commuter traffic which is the problem, and this particular aspect of the problem will be considered carefully by my right honourable friend.

FOSTER-PARENTS OF OVERSEAS STUDENTS' CHILDREN
BARONESS BROOKE OF YSTRADFELLTE: 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 are aware of the large number of married students from overseas who during their course of study place their children with foster-parents whom they have got in touch with by advertising and who would not be regarded by the local children's committee as suitable to have the care of foster-children; and what action they propose to remedy this disturbing situation.]
THE MINISTER OF STATE, HOME OFFICE (LORD STONHAM): My Lords, the Government have discussed with the

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local authority associations how to strengthen the powers of local authorities under the Children Act 1958, which provides for the protection of children placed privately with foster-parents. My right honourable friend hopes that it may be possible to introduce legislation for this purpose when Parliamentary time is available.
BARONESS BROOKE OF YSTRADFELLTE: My Lords, while thanking the Minister for his reply, I wonder whether the Government would take this situation even more seriously. Would they, for instance, consider suggesting to universities and technical colleges that they should find out what arrangements married students from overseas are making for the care of their children, before accepting them?
LORD STONHAM: My Lords, I assure the noble Baroness that we are taking this matter most seriously. I will certainly commend her suggestion to the attention of my right honourable friend. I would, however, mention that between 1961 and 1967 the number of foster-children under the care of local authorities, under the Children Act 1958,has risen from 7,000 to 10,000, and the increase is thought to be largely due to the increase in the number of children of overseas students who are in the care of foster-parents. The legislation which I foreshadowed would go much further than the noble Baroness's Question implied.
THE EARL OF IDDESLEIGH: My Lords, would it be open to Her Majesty's Government to consult with the British Council on this matter, since the British Council is in such a good position to give advice to these students?
LORD STONHAM: My Lords, that, too, is a valuable suggestion, which I will consider. Both suggestions have been made with the worthy object of giving more information to overseas students in order to help to ensure that their children are properly cared for, which is something with which we have complete sympathy. I will see that both suggestions are carefully considered.

IMMIGRATION AND PUBLIC OPINION POLL
2.40 p.m.
LORD ELTON: 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 the fact that a great majority of the electorate, reported by a national opinion poll on April 25 to amount to 93 per cent., desires a drastic reduction on further immigration into this country has caused them to reconsider their present policy in this respect; and, if not, what they consider to be the relevance of the wishes of the electorate in contemporary democracy.]
LORD STONHAM: My Lords, the public opinion poll to which the noble Lord refers does not reflect an awareness that immigration is now strictly controlled, and that, apart from dependants, the entry of new immigrants is related to the economic and social needs of the country.
LORD ELTON: My Lords, I must thank the noble Lord for that Answer, in spite of the fact that I think it turns a blind eye on certain practical possibilities. May I ask him whether he really thinks that if we had a Government capable of resolute and competent planning, and responsive to the wishes of the electorate, it would nevertheless still be impossible for us to run our buses and railways and hotels, as in many other countries they mysteriously manage to do, without a continuous stream of immigrants to help? Secondly, does he realise that the all too evident and, as I think, most dangerous decline in the respect of the public for politicians and Parliament must be due largely to the simple fact that the Government have so often done things which the public does not want, and not done things which it does want? Finally, can the noble Lord think of any moment in British history in which one can suppose that more than 90 per cent. of the electorate on a major issue wanted one policy and believed it to be practicable, while the Government persisted in another?
LORD STONHAM: My Lords, to answer the noble Lord's last question

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first, I think most noble Lords would agree that if the question to the readers of the newspaper to which he referred had asked, "Should aliens be granted more favourable conditions regarding entry of their dependants than British citizens", almost assuredly 93 per cent. of them would have said "No".
On the noble Lord's first point, whether we have a Government capable of carrying out plans, my reply is, certainly we have. However, this Government believe that the interests of contemporary democracy are best served by the Acts passed by a democratically elected Parliament and not by Gallup Poll. We must face, and I hope the noble Lord will face, this situation: that those who say we should stop immigration immediately are saying at the same time that we should deny ourselves of the small but valuable intake, fewer than 5,000 people, of people we need, who have special skills, and secondly that we should refuse entry to the wives and dependent children of immigrants now here who have a statutory right to come to this country. With regard to the last point, certainly all three political Parties and all leaders of responsible opinion in this country say that we should not deny that right.
LORD BLYTON: Is my noble friend aware that the great majority of coloured people in the hospitals and the railways were brought here in the 13 years of the previous Administration? And is he further aware that many others are grateful to the black doctors and the black nurses who administer to our sick needs when we need help? May I urge the Government to keep a balanced view of this problem and not to be led by the hysteria that occurred after a certain Conservative speech and was the cause of the figures that were given in the Gallup Poll.
LORD STONHAM: I can certainly assure my noble friend that we shall not be diverted from our purpose by the hysteria to which he referred. It is also true, as my noble friend said, that many of the dependants, perhaps the majority of them, are coming in now as a result of entries even before 1962. But that is not to lay any blame whatsoever on the Party opposite who were then in office. I hope we might begin to try to get this
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question out of Party political controversy and concentrate on the two issues which I have just put before your Lordships. The first is, are we to go back on our statutory word, approved by all Parties in this Parliament, and deny entry to wives and children of men who came over here on the understanding that they could later bring their families with them? When that question is faced, then we are really facing the question of stopping all immigration, and I do not think any right-minded person in this country would say that we must stop it entirely.
LORD ELTON: My Lords, would the noble Lord note that the question was not the stopping of immigration but reducing it, and it is perfectly possible to reduce immigration by reducing voucher holders, without doing anything to dependants.
LORD STONHAM: I am answering the noble Lord's original Question, which referred to a poll conducted by a newspaper which gave a 93 per cent. vote in favour of ending immigration.
LORD ELTON: No, my Lords.
LORD STONHAM: We are constantly watching this question of voucher holders, and at present no voucher is granted unless the person concerned, by reason of his or her skill, is badly needed in this country.
LORD BROOKE OF CUMNOR: My Lords, almost all of us want to keep a balanced view on this question, but is the Minister of State aware that there may be a via media between complete stoppage of all immigration, which I think is impossible, and leaving things exactly as they are now? Is the noble Lord aware that, considering the amount of unemployment in this country, some of us are doubtful whether we still need to issue as many as 5,000 vouchers a year? Is he further aware that many others are extremely doubtful whether we are right to continue to allow 14 and 15-year-old dependants to come into this country, bearing in mind that they will never pass through a British education and will be coming straight away as members of the working population?
LORD STONHAM: My Lords, the last point raised by the noble Lord is one he raised, I think, last week, and is a point of importance. As I am sure he is aware, we are keeping matters of this kind

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under constant consideration, and it is only quite recently, in the 1968 Act, that we made a number of further limitations on entry, bringing the minimum age of elderly dependants up to 65, allowing children to come in only if both parents, or the surviving parent, were here, and strictly limiting the discretion for the entry of dependants under 16. This is having a substantial effect and, as I told him last week, we certainly have these matters, including the point he last made, continuously under review.
LORD WIGG: My Lords, is the Minister of State aware that the logic of the remarks of the noble Lord, Lord Elton, that the Government have been engaged in something rather disgraceful in flying in the face of 93 per cent. of the population's wishes because they think it is right, might be a policy that could have been followed with advantage by previous Administrations if they, too, had had the guts to do what they believed right, regardless of political considerations? Is he aware that if they had done that, many of the difficulties which now face this country would now have been avoided?
LORD STONHAM: My Lords, I am aware of those considerations, but the only thing that can help us in our situation now is knowledge and understanding, and not slogans which are not backed by knowledge. The important thing is for us to agree, as the noble Lord, Lord Brooke of Cumnor, agreed, that to stop immigration is a virtual impossibility, and we must honour our moral and statutory obligations.
LORD BROCKWAY: My Lords, may I ask my noble friend whether it is not the case that as many people are emigrating from this country as are coming to this country; that any reduction of immigration to this country would affect people from Australia and from Canada as well as the immigrants from our ex-colonial territories, and whether the Government will in human terms maintain the civilised concept that, whatever our race or colour may be, we all belong to the human family?
LORD STONHAM: My Lords, it is true that all immigration restrictions apply irrespective of the country of origin. It is also true that we have to try to
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relate our capacity to absorb immigrants to our capacity to house them and to provide jobs, schools and so on. This is the great difficulty which we are trying to resolve.
LORD CONESFORD: My Lords, are the Government aware that it is possible to question their policy on immigration without being hysterical? If they want to get a maximum of assent among the population, is it not rather a pity to express even tentative agreement with those who describe those who differ from them on immigration as "hysterical"?
LORD STONHAM: My Lords, of course it is possible to question the Government's policy without hysteria, and noble Lords in this House do just that. Unfortunately, public comment to which so much attention has been drawn recently is almost entirely based on hysteria.
LORD RHODES: My Lords, did I gather from the reply given by the Minister in regard to the importance of the economic factors that if productivity increased in this country to such an extent that we should not need the immigration he would prevent it?
LORD STONHAM: My Lords, I am sorry, but something occurred which prevented my hearing the noble friend's question.
LORD RHODES: My Lords, do I gather from the Minister's previous answer that the factors relating to economic and social matters have a bearing on the action of the Government in their attitude towards immigration? If it is our hope that productivity will increase to such an extent that we do not need the immigrants, is he then prepared to take action?—because that is what he suggests.
LORD STONHAM: My Lords, the volume of immigration is governed through the voucher scheme by economic considerations. If the economic climate changed, it might involve a chance in the total number of vouchers issued, but I cannot at present foreshadow such a change.
LORD GRIMSTON OF WESTBURY: My Lords, could the noble Lord tell us what has happened in regard to the inquiry into allegations of a good deal of corruption at Heathrow, in which

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one officer was suspended in connection with immigration? Could he tell us how far this inquiry has got and when we shall be told of the results?
THE PAYMASTER GENERAL (LORD SHACKLETON): My Lords, I think that we have gone far enough on this Question. This last matter really is another question, and I hope that the House will agree to move on to the next business.

RHODESIA: SIR FREDERICK CRAWFORD'S PASSPORT
EARL JELLICOE: My Lords, on behalf of my noble friend Lord Carrington I beg leave to ask her Majesty's Government the Question of which I have given Private Notice—namely,
To ask her Majesty's Government whether they have any further statement to make on the confiscation of Sir Frederick Crawford's passport.
LORD BESWICK: My Lords, with the leave of the House, may I say that my noble friend Lord Shepherd will answer this Question in the form of a Statement at a convenient moment after four o'clock.
May I also take the opportunity of informing the House that dinner will be served between seven and eight-thirty this evening.

MILL LANE, KIRK ELLA, BURIAL GROUND BILL
Read 3a, and passed.
LOCAL AUTHORITIES' MUTUAL INVESTMENT TRUST BILL
Read 3a, and passed.

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

AGRICULTURE (MISCELLANEOUS PROVISIONS) BILL
2.57 p.m.
LORD BESWICK: My Lords, I have it in command from Her Majesty the Queen to acquaint the House that her Majesty, having been informed of the purport of the Agriculture (Miscellaneous Provisions) Bill, has consented to place her interest, so far as it is concerned on behalf of the Crown, at the disposal of Parliament for the purposes of the Bill. I beg to move that the Bill be now read a third time.
Moved, That the Bill be now read 3a. —(Lord Beswick.)
On Question, Bill read 3a, with the Amendments.
Clause 43 [Compensation in connection with compulsory acquisition etc. of agricultural holdings]:
LORD BESWICK: My Lords, when I moved the adoption of the new Clause 43 at a previous stage, I said that I would look at it again carefully to see whether in fact it achieved the objective which we set out to achieve. This Amendment is a refinement of the wording which, I believe, will improve the clause. The clause as presented on Report was adequate in its application to year-to-year tenants; but on further consideration we thought that it did not deal with fixed-term tenants quite as fairly as we had intended. Where such tenants hold under tenancies which contain break clauses permitting resumption by that landlord for specified non-agricultural purposes, the effect of sub-section (2)(b) would be to compensate the tenant as though his tenancy did in fact end at that point subject to twelve months' notice. This is not, however, the basis on which compensation has been calculated in the past; and the Amendment is intended to permit the tenant's interest to be valued on the basis of what a purchaser would pay in the open market. In this, it merely restores the previous position. My Lords, I beg to move.
Amendment moved—
Page 38, line 12, leave out paragraph (b) and insert—
("(b) the landlord disregarded any provision in the contract of tenancy or lease enabling him to resume possession of the holding or to determine the tenancy by notice before the date fixed for the expiration of

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its term or before the termination of the stipulated endurance of the lease; and")—(Lord Beswick.)
On Question, Amendment agreed to.
Schedule 4 [Supplementary provisions with respect to payments under s. 12(1) in Scotland]:
LORD BESWICK: My Lords, this is a purely drafting Amendment to correct a reference in paragraph 5 of Schedule 4, following an Amendment made to that paragraph in the last stage of the Bill. I beg to move.
Amendment moved—
Page 54, line 21, leave out ("(c)") and insert ("(d)")—(Lord Beswick.)
On Question, Amendment agreed to.
LORD BESWICK: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Beswick.)
LORD NUGENT OF GUILDFORD: My Lords, may I say a brief word before this Bill passes from us? I should first like to congratulate the noble Lord, Lord Beswick, on successfully handling the wide range of topics which come in this Bill. I believe that agriculture is not his usual subject and I should like to congratulate him on his mastery of the many technical points. With one exception, of course—that is, Part III—this is a useful Bill doing several constructive things which we all welcome, and we send it on its way to the Statute Book significantly improved in some respects.
Part I deals with something which is of great public concern—that is, animal welfare—on which we have had some debates of great interest. I believe that in the form in which it now goes on the Statute Book this Part will give satisfaction to noble Lords on all sides of the House and to many millions of people throughout the country. The present Government have, therefore, the credit of bringing to fruition a measure started by my former right honourable friend Mr. Christopher Soames, when he was Minister of Agriculture in the last Conservative Government. I am confident that, despite anxieties in some quarters, the Bill will give the necessary safeguards which all desire for the welfare of farm livestock kept in intensive circumstances, while at the same time catering for the practical necessities of farm working.
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I cannot let the Bill pass without a reference to the defect, which is Pant III. That is the part which ensures that in Scotland the succession of farm tenancies is now to be hereditary. It might seem to be a strange project of the Party opposite, which generally denies the validity of the hereditary principle. Although Part III has been somewhat improved by my noble friend the Duke of Atholl, it is entirely regrettable from the point of view of the farming industry that it appears at all. The existing tenant farming system, which covers about half the farms in this country, serves the industry well, and the majority of farmers in England, anyhow, recognise that and want to keep it. The change in the law made by Part III, which reduces the landlord's control over his land so drastically, is bound to reduce the incentive and attraction of land ownership in Scotland to vanishing point; so vanishing point will be slowly but inevitably reached over the course of the next two or three generations. Either landlords will take farms in hand on the rare occasions when this amended legislation will allow them, or they will progressively sell off their farms to the sitting tenant as convenience arises. Either way, tenant farming in Scotland will gradually disappear.
I sympathise with the Government's wish to do something popular in Scotland to stem the tide of Scottish nationalism, which indeed—I am not making a joke—presents a danger far beyond the Party conflict. Although I do not believe that this move by the Secretary of State for Scotland will have the slightest value, I do not suggest that he is without influence in this context, but I think he might well be more successful if he followed less closely the precepts of his great radical predecessor, Oliver Cromwell, when dealing with Scotland. In a record of agricultural legislation by this Government which is generally constructive and good, Part III sticks out as a most unfortunate blemish.
May I conclude with a brief comment on Part II, which provides additional compensation payment to tenant farmers who lose all or part of their land as a result of its acquisition for essential development? That is a provision which is generally welcomed on all sides. However, there are two small technical points

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of which the noble Lord, Lord Beswick, is aware, one of which arises out of the new clause to which the noble Lord has moved an Amendment this afternoon. Despite that Amendment which helps in some respects, there is still anxiety in farming quarters, as the noble Lord knows.
Very briefly, the purpose of the new clause was to prevent double compensation arising as a result of the recent decision in the case of Pettitt v. Ministry of Transport. That intention is obviously acceptable, but the application of the new clause has raised anxiety in the National Farmers' Union that in certain circumstances it would deprive tenants of compensation to which they should be entitled. Unfortunately, the appearance of the new clause at a late stage of the Bill has made it impossible for the technical discussions between Ministry officials and Farmers' Union officials to reach a conclusion. So in the circumstances I ask the noble Lord, Lord Beswick, to give an assurance that, if experience proves that the new clause has the effect of depriving some tenants of some compensation to which they were properly entitled, Her Majesty's Government will take early action with amending legislation.
The other small point which I should like to mention on Part II before the Bill passes from us is the farmers' anxiety about the basis of assessing the four years' rental compensation when only part of the farmholding has been taken. It is usually the case that only part is taken. The Farmers' Union are not confident that the Bill as drafted will allow compensation to be related to the reduced economic viability of the truncated holding in all circumstances. For example, where a holding of 100 acres has a slice of, say, 30 acres cut off by some essential development, the machinery and fixed equipment of buildings which was probably just right for the 100 acres may be too much when the acreage is reduced to 70. The general labour set-up may also be out of balance, and the 70 acres will therefore become marginally uneconomic. In such circumstances the compensation payable should obviously be more than just the straight payment of four years' rental on 30 acres, because the value of the remaining 70 acres will
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also have been reduced. I should be most grateful if the noble Lord, Lord Beswick, who is, I think, aware of this point, could give an assurance that the Bill as drafted has the necessary flexibility, which I believe he thinks it has, to provide for such circumstances and so set at rest the anxiety of the Farmers' Union. With those few comments I have much pleasure in supporting the passing of this Bill.
3.9 p.m.
LORD BESWICK: My Lords, I must first thank the noble Lord, Lord Nugent of Guildford, for his kindly references to my efforts on this Bill. After that preliminary courtesy the noble Lord went on to cover the ground which I think he will agree we covered in the very lengthy debates on Part III. I cannot hope to emulate either the style or the content of the contribution of my noble friend Lord Hughes, but he would probably not mind if I just explained my understanding of the situation so far as Part III is concerned. The principal objection advanced is that the provision of greater security for successors will make certain landlords more reluctant to let farms which fall vacant; that it will then be more difficult for new entrants to farming to secure a farm, and that in the last resort there will be increased emigration from Scotland of these young farmers. That is the criticism I understand to have come from the Benches opposite.
We cannot, of course, foresee with complete clarity what the effect of these provisions will be, but in all the discussions of the proposals I should not like us to lose sight of the fact that the Government were moved to introduce this part of the Bill to remedy what was clearly a source of great potential hardship to certain tenant farmers; and, whatever may be the effect on the electoral prospects of this Party in Scotland in the future, most people, I believe, accept that the provisions in Part III of the Bill are in the best interests of Scottish agriculture as a whole. But events will probably show whether this is so.
The noble Lord went on to ask me two particular points about Part II of the Bill, one of which was on the very vexed question of the apportionment of rent

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and the appropriate portion for compensation purposes. Clause 9 of the Bill provides that where the tenant is dispossessed of part of his holding the new payment shall be based on what is called the "appropriate portion" of the current rent, but that does not mean that the apportion will be a purely arithmetical one. That, I think, is where a good deal of the misapprehension and the anxiety arose. My right honourable friend said in another place that the Valuation Office would take into account differences between the value of different parts of a holding, and there is no reason to suppose that private valuers would not do likewise.
The National Farmers' Union, I understand, are concerned about a further point affecting the assessment of disturbance compensation under the 1948 Act. They would like the agricultural holdings legislation to provide for all such payments to be adjusted to take account also of any change in the value of the residual holding as a result of severance. That is a point which the noble Lord has made, and I must say that I think there is force in the arguments which he has put forward. Nevertheless, I do not believe that those arguments can be met by an amendment of this Bill. The Ministry of Agriculture, as the noble Lord himself knows, are at this moment engaged in a review of the agricultural holdings legislation; and I give him the assurance for which he asks, that the problems which are there will be considered as part of that review. I am asked to give the assurance that the N.F.U. and the C.L.A., as well as the professional bodies concerned, will be consulted to see if we cannot find a way to meet the difficulties. So I hope I can satisfy the noble Lord on that point.
Then there is the other point, about the assignment of tenancies. If the decision in the Pettitt case is upheld, Part II of the Bill would lead to the payment of double compensation in many cases; I do not believe there was any difference between us when we discussed this matter on the earlier stages of the Bill. The N.F.U. suggest that the clause goes beyond the agreed aim. In particular, they claim that payments in the nature of premiums frequently occur on the transfer of tenancies, and that Clause 43 takes away the compensation which was previously payable to cover this.
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That is not so. If the tenant has a right to assign, then the compensation payable will continue, as in the past, to reflect the value which the market would put on this. The value of a right of assignment will of course vary with the length of the unexpired term—one cannot assign a greater interest than one in fact has. For this reason, the right of assignment is really of significance only where the tenancy is for a term of years. It is quite conceivable that my explanation, given on the Committee stage, which referred to a right of assignment, was taken in that context to include a tenancy of one year only, when in fact, of course, it could apply only where the tenancy is for a term of years.
LORD NUGENT OF GUILDFORD: My Lords, may I briefly interrupt the noble Lord? I do not want to go too far into this rather technical matter, but the National Farmers' Union feel that this applies in the case of an annual tenancy as well.
LORD BESWICK: The N.F.U. say in broad terms that it applies, but when asked to provide an example of a case where it has applied they have so far failed to come up with one. All I can say here is that if experience shows that there are cases where there is an unfairness in the application of this particular provision, then, again, when the whole of these provisions are reviewed this point will certainly be borne in mind. Not only will it be borne in mind, but we shall hope to deal with any real problem which is shown to exist.
I think it would be wrong if I did not make some comment before we say "Good-bye" to this Bill. I am not quite sure that it will be a final "Goodbye". It is just conceivable that another place may have further thoughts about certain changes that have been made in this place. But I should like to take the opportunity first to pay my tribute—and I am sure everyone on both sides will join me in this—to the good humour, courtesy and patience shown by my noble friend Lord Hughes when he dealt with Part III. There were times when I had only to close my eyes to imagine coming down the Highland hills very hostile forces—and they seemed to toss over here everything but the caber. If a caber had come over, though, I am absolutely certain that my noble friend Lord Hughes

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would have caught it and would have returned it with the same imperturbable good humour that he showed throughout the debate.
My Lords, improvements have been made in the Bill. There were exchanges which were agreeable, as well as those which were heated; but I offer my thanks to the noble Lord, Lord Nugent, for the constructive and quiet way in which he offered his advice throughout our proceedings. More often than not, irrespective of any Party differences, that advice contained a good deal of very sound sense, and I was very much guided by what he said. I thank him for the attitude he adopted throughout the passage of the Bill. With that, my Lords, I hope that the House will be able to pass this Bill.
On Question, Bill passed, and returned to the Commons.

AIR CORPORATIONS BILL
3.18 p.m.
LORD BESWICK: My Lords, this is a simple but important Bill. Its purpose is to raise the British European Airways Corporation's borrowing powers. At present they relate primarily to borrowing on capital account, but this Bill confers a limited new power to borrow to finance a deficit on revenue account. May be, briefly, I can give the relevant figures. The 1962 Act set a limit of £110 million which could be increased to £125 million by an Affirmative Order in another place. It now looks as if that £125 million will be reached within the next few weeks. This, I might add, is a little longer period than was originally estimated. The money so far borrowed has been invested in a successful and expanding airline in one of the most important of our growth industries.
The House will not wish me to go into all the details of the present operating fleet, but 80 per cent. of investment to-day has been in aircraft. Of course, terminals, ground equipment, workshops and a widespread sales organisation have also taken money. More money is needed for the new aircraft now coming along. Deliveries have now started of the 15 Trident 2s, which will cater for B.E.A.'s longer haul services, and on which some
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£20 million is still outstanding. Deliveries of 18 BAC 1–11s will start this summer, and some £24 million is still needed to pay for those. Then there is the recently announced purchase of 26 Trident 3Bs, which will cost some £80 million. Finally, B.E.A. have now to think of the advance payments on the air-bus, which is expected to come into use in the mid-1970s.
These items go to make up B.E.A.'s present estimate of a capital outlay over the next five years of some £199 million. B.E.A. expect to be able to provide £86 million from their own resources, from depreciation, sales of aircraft, and so forth. This leaves an additional borrowing requirement of £113 million, which added to the £117 million already borrowed, gives a total of £230 million towards the overall limit of £240 million specified in Clause 1 of the Bill.
It is also the practice to set, for about half-way through these five-year spans, an intermediate borrowing limit which can be exceeded only after a draft Order approved by Resolution in another place. By about the end of 1970 B.E.A. are likely to spend on capital outlay about £126 million; of this they are likely to need to borrow some £83 million. Adding this £83 million to the £117 million already borrowed gives a figure of £200 million out of the £210 million intermediate limit specified in Clause 1(1). There is one important unknown in these estimates; that is, the precise scope of the measures which the Government will bring forward in due course to implement the undertaking of 1966 in connection with B.E.A.'s re-equipment programme. At that time, on August 2, 1966, in fact, it was stated that the Government
"would take steps to ensure that B.E.A. is able to operate as a fully commercial undertaking with the fleet it acquires".
Just how one construes this undertaking in money terms is still a matter under negotiation. The ultimate agreement, which ought not to be much longer delayed, could alter somewhat the basis of the figures in this Bill, but only to the extent that the period of time which the new borrowing limits would cover would differ somewhat from those at present envisaged.
Clause 1(2) of the Bill confers on B.E.A. a fresh power to borrow to finance a deficit on revenue account. Since they

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became fully independent financially in 1955–56 B.E.A. have achieved an overall net profit in nine of the eleven years up to and including 1966–67. It is not yet possible to say exactly what the 196768 results will be. Some reports suggest a loss of about £3 million, after paying all interest charges, but my information is that the picture may not be quite so bad as that. However, some substantial loss unfortunately seems to be inevitable. B.E.A. also claim that unsettled economic conditions are likely to make a loss inevitable for 1968–69. In addition to these economic factors influencing their business, there will be inevitably initial net losses from the introduction of the BAC 1–11 and the Trident 3B. Clause 1(2) of the Bill is a holding operation which will enable B.E.A. to borrow to finance such deficits as may accrue up to the end of their 1969–70 financial year, provided such deficits do not in total exceed £10 million. This sum, plus the use of B.E.A.'s accumulated reserves, is estimated to be fully adequate to hold the posititon until about March 1970.
My Lords, this Bill does not attempt to deal with the whole position of B.E.A., still less with the future of civil aviation. It will be necessary to introduce before March, 1970, more comprehensive legislation to implement that 1966 pledge. Meanwhile, I hope the House will agree to the Second Reading of this Bill as being essential to give B.E.A. access to the resources they will need to maintain and to improve upon their position as the sixth largest carrier of air passengers in the world and the largest intra-European airline. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Beswick.)
3.25 p.m.
THE EARL OF KINNOULL: My Lords, I am sure that the House should congratulate the noble Lord, Lord Beswick, on introducing this short Air Corporations Bill with such brevity and lucidity. Despite the fact that it is only a one-clause Money Bill it raises, I suggest, important issues—not only of the £115 million involved, but of the future of B.E.A. and its place among the world's civil airlines. It also gives the House and those who are interested in civil aviation a far too rare opportunity to discuss these issues and to seek further information from the Government.
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As described by the noble Lord, the Bill has two main purposes: first, to provide B.E.A. with further borrowing powers and, secondly, to grant them overdraft facilities on their revenue account. No one, I think, would deny B.E.A. the opportunity of maintaining and bettering its present hard-earned position as the sixth largest airline in the world; nor of carrying over 7½ million passengers a year; nor of handling over 22 per cent. of the entire traffic market coming from Western Europe. And with all this fine record, they have an even finer record of safety.
In order to maintain this high position B.E.A. require to equip, and re-equip themselves continually, with the latest and best of British aircraft. But many of us, I think, are uncertain—and I hope that the noble Lord, Lord Beswick, may enlighten us on this at the end of the Second Reading—as to exactly what is meant by these borrowing powers. For, as I understand it, B.E.A. are not just given these borrowing powers and told, "Now get on with it, re-equip yourselves". They are told that they may now borrow up to a further £115 million; that they may pay 7 per cent. interest on this money; but that before any aircraft are purchased they must first seek Government approval. In other words, it is not a question of letting management manage, as the Government preach so often in the case of the Railways Board and their investments; it is a question of letting management manage but of first letting the Government take the big decisions on re-equipment.
It is natural then to ask: Are the Government the best judges of what equipment is best for B.E.A.? We know that a Select Committee in another place examined in some detail the relationship between the Government and the Corporation and produced a Report last October. But I would suggest to the Government that even with this guidance it seems a pretty untidy state of affairs if in future every time a B.E.A. proposal to purchase aircraft is rejected by the Government a compensation payment has to be negotiated with the Corporation in order to keep faith with the pledge of ensuring that B.E.A. can operate as a fully commercial undertaking. I am not saying that this pledge is wrong; I am not saying that to buy British

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aircraft is wrong; and of course, I am not casting any doubt on the wisdom of the Select Committee. But I am suggesting to the noble Lord, Lord Beswick, that the role of the Government vis-a-vis the Corporation should be further re-examined and clarified.
My Lords, turning to the capital requirements of B.E.A., one finds by examination of Clause 1(1) of the Bill—and the noble Lord, Lord Beswick, mentioned this—that we are speaking in terms of a requirement of £199 million over the next five years. Details of this were given in another place of 15 Trident 2s, 18 BAC 1–11s and 26 Trident 3Bs. We are told the total amount of this investment comes to £124 million and therefore there is a balance, if my arithmetic is correct, of £75 million. This is a very large sum, and I am wondering whether the noble Lord can give us a further breakdown of the figure and tell us whether it includes the cost of converting the Vanguards into freight carriers.
Clause 1(2) deals with the borrowing powers granted to B.E.A. in respect of future revenue deficits which may occur. I suggest it is a little ominous to learn that the B.E.A. 1967–68 accounts may show a loss of around £3 million. Over the past ten years B.E.A. have had a very good trading record, as the noble Lord, Lord Balfour of Inchrye, well knows. Despite losses in 1962 and 1963 they have built up a very useful revenue reserve of over £6 million. It is therefore rather a drastic turn of the tables for the 1967/68 accounts to show this possible loss of £3 million. I think that it would be of interest if the noble Lord, Lord Beswick, would tell us whether other European air lines have suffered a passenger traffic recession in this last year and what the general percentage increase in passenger traffic has been throughout Western Europe. I should also like to ask the Government what action B.E.A. are taking to try to increase the proportion of their revenue earnings from passengers coming into Britain, as against those going out, bearing in mind that the British passengers make up (I think it is) two-thirds of the revenue in B.E.A.'s accounts.
There is another factor that I should like to bring to the notice of the noble
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Lord, Lord Beswick. It is the relevant factor of the annual interest charge that B.E.A. have to suffer. I think I am correct in saying that the present annual interest charge is approximately £4·8 million a year, and with the purchase of BAC 1–11s and the Trident 2s, this will come to over £7 million within the next two years. While, of course, this makes good commercial sense, one wonders why B.E.A. should suffer this while B.O.A.C. have an entirely different concept of their financial arrangements. Under the Air Corporations Act 1965 they were allowed to write off their loans and now have a system of equity sharing with the Government. I should be grateful if the noble Lord, Lord Beswick, could tell us later whether it is intended in the near future to allow B.E.A. interest payments to fall in line with the procedure of B.O.A.C.
The noble Lord, Lord Beswick, has already mentioned the question of the compensation payments to which B.E.A. are entitled, as a result of the Government decision over the BAC 2–11 against the Trident 3B, but as it was stated in another place on April 4 that negotiations were drawing to a close, I should like to ask the noble Lord in whose court the ball is now. Are the Board of Trade waiting for B.E.A. to advise them that they agree the terms, or are B.E.A. waiting for the Board of Trade?
After the events of last week one is very conscious of not wishing to abuse the procedures of the House, but there are many aspects about B.E.A. and civil aviation generally which I believe warrant a much fuller debate than the Second Reading of this Bill offers. I very much hope that in his dual capacity as spokesman for aviation in this House and business manager, the noble Lord, Lord Beswick, will allow a day to be set aside in the reasonably near future for a debate on civil aviation. There are many aspects waiting to be discussed, such as the noise certification for aircraft, the Air Safety Review report, questions about the amalgamation of the Corporations (on which I think that the noble Lord, Lord Balfour of Inchrye, wishes to touch to-day) and, of course, the question of the national airport policy.
On this last question I should like to ask the noble Lord, Lord Beswick,

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whether there is any more news about a Government announcement on the terms of reference for a third London airport. My Lords, I appreciate that many of these aspects would fall within the scope of the Edwards Committee, and it is for this reason that I would suggest to the noble Lord, Lord Beswick, that we should be allowed a day to debate civil aviation. I believe it is right that the views of Members of your Lordships' House should be put on record before, rather than after, the Edwards Committee draft their Final Report.
There is a final aspect that I should like to draw to the attention of the noble Lord, Lord Beswick. It concerns the much-disputed increase in the landing fees at London Airport. As the noble Lord well knows, this will cost B.E.A. a further £200,000 a year. I have carefully read the debate on this matter in another place, and while one cannot dispute that raising the landing fees will earn the country more foreign currency, what caused great concern was the way in which the announcement was made. The honourable Member for Woking, in another place, recalled that Mr. Masefield, when speaking to the Select Committee on Nationalised Industries about landing fees, said:
"If we wanted to alter them we would go to the Board of Trade. I think that we would then go to the Prices and Incomes Board."
In fact, as the noble Lord, Lord Beswick, will know, the question was not referred to the Prices and Incomes Board.
What I suggest to him was even more discourteous was that no prior consultation took place, either between the airlines and the Board of Trade or between the British Airports Authority and the airlines. I should like to ask the Government again to-day whether they consider that such consultations with the airlines are or are not necessary, and whether, in the event of landing fees being raised again by the British Airports Authority, they are prepared to state that prior consultation with airline authorities will in future be held?
My Lords, I will end these remarks by saying that I believe that B.E.A. will be well served in future, as it has been in the past, by British aircraft, and I hope very much that with these new aircraft that B.E.A. are able to purchase, and will be able to purchase under the
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terms of this Bill, they will retain the place they have fought so hard to secure among the international airlines.
3.38 p.m.
LORD BALFOUR OF INCHRYE: My Lords, I am sure that the noble Lord, Lord Beswick, who moved the Second Reading of this Bill with efficiency and brevity, will not dispute that the Bill raises important public issues for Parliament and for the taxpayer. With borrowing up to £240 million in a period of five years I think we may well ask two questions. First, is this a wise investment? Secondly, is it the end of the borrowing needs for the Corporation? The answer to the second question is, "No", and I think the answer to the first is, "Yes, it is a wise investment."
On the second question, aviation is essentially a growth industry for this country and, I should think, for the rest of the world. One can already foresee the need for expenditure on aircraft, ground equipment and airports going well beyond what your Lordships are being asked to assent to to-day. I do not believe that we need to be alarmed at all at the prospect of further borrowings, provided that they are lent to an efficient, well-managed organisation.
That brings me again to my first question: is this a wise investment? This money will largely re-equip B.E.A. with BAC 1–11 and Trident 2 aircraft. My regret is that the promised financial compensation to enable the corporation to run efficiently, because they were not allowed their first or their second choice of aircraft but had to take the third, is not settled yet and incorporated in the Bill so that your Lordships would know what was the amount in question. My regret is twofold. First, we should know the liability and not just have an unknown figure for the future. Secondly, my information is that the matter remaining unsettled prevents a commercial enterprise like the Corporation from being able to present its order for Trident 3. There is a sort of game of battledore and shuttlecock going on within Government Departments, and the sooner the matter is settled the sooner the order can be placed, and the sooner that is done the better the prospects for British civil aviation. I hope that the Minister can give us something a little more definite than the words he used in his speech,

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that he hoped there would not be long delay. I would urge him to satisfy the House with some closer information on this point. Do the Government expect B.E.A. to order in the dark, before they know the figures of financial compensation?—because if the B.E.A. are to be run as a commercial entity, it would be wrong to expect them to do that.
I am no longer on the board of B.E.A., but I served for ten years on the board. I think that broadly speaking B.E.A. are an efficient organisation. The Corporation are conscious of their imperfections, and it is always a good start for any organisation not to be complacent and self-satisfied. The carriage of 7½ million passengers a year is bound to raise great complexities and imperfections which are felt by many passengers, and perhaps noble Lords have had complaints when they have travelled by B.E.A.
One of the difficulties I see is the manner in which air passengers are to be treated. If people travel by train, they buy their tickets and go on to the platform, without expecting to see the station-master or any official, get on the train and are taken from one point to another. If people travel by steamship they are met by somebody in gold braid, who escorts them and generally looks after them until they get their cabins. Is air travel to be on the lines of the railways, at the cheapest possible fare with the minimum of personal attention, or on steamship lines. The problem for the Corporation is that many people expect to travel on steamship lines and pay the low railway fares.
I should like to say a word on the most important aspect of the work of both B.E.A. and B.O.A.C.—namely, safety. This is very relevant in view of what has appeared in the Press to-day about air safety. I took my pilot's certificate, I regret to say, in 1915, and safety to my mind has always been the essential. I would forgive much commercial inefficiency if I knew that safety was the paramount aim of an airline. And safety depends not only on the aircrew but on everyone, from the management to the shop floor. One of the finest recollections of my happy years on the Board of B.E.A. is of that feeling of responsibility for safety which runs right through the whole Corporation.
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It is interesting to think that as your Lordships sit here and for 24 hours of the day and night for 365 days in the year, Christmas and holidays included, there are never fewer than two B.E.A. aircraft in the air, usually more, and that in a single day B.E.A. aircraft do 2,000 landings in Europe. To me these are forcible and visible proofs of this desire for safety, of which the Corporation is rightly proud. I say nothing about the independent lines; most of them, like British United and Eagle, have just as good safety records. But I must say that those who fly by B.E.A. and B.O.A.C. are served with the maximum safety that our British airlines can produce.
In another place many points were raised on Second Reading—Scottish questions, the British Airline Pilots Association, labour relations, the licensing system—in fact there was a "regular day out" on issues affecting civil aviation, but I assure your Lordships that I am going to resist any temptation lying along those paths. There is one point I should like to touch on, a question which is disturbing to everyone in both Corporations, right down from management to shop floor. That is the question of whether there should be an amalgamation between the two Corporations so as to have one great nationalised Corporation or whether we should continue with two separate organisations. No doubt the Edwards Committee will be reporting on this point and will bring forward forceful and convincing answers to the various questions involved before we can think of an amalgamation.
May I put this thought into your Lordships' minds. The two Corporations sell different products. One sells long-distance travel and the other short-haul travel. They tap different markets; therefore their sales approach must be different. Then the equipment which is suitable for long-range travel is not the economic optimum for short-range, and, conversely, what is suitable for short-range is not really suitable for optimum economy in the long-range. Therefore, their aircraft are different and their bases must be different. B.E.A. have aircraft coming in at all hours of the day and night, which have to be serviced to go out again in a matter of a few hours. The aircraft comes in from Stockholm and must be

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ready three hours later to go to Edinburgh or Glasgow. B.A.O.C. aircraft make voyages over a great part of the world and then come back for appropriate, but longer, overhauls. Therefore, the maintenance base is different. The pilots are different. Some pilots are trained for long distance, and others for short distance. The experience they get is different, and the application of basic training must be different.
The main economy which I can see from a single Corporation is one board of directors. But I think it would be a very big board, which would then have to divide itself into two, one to look after the short hauls and the other to look after the long hauls. We should then be back very much where we are at the moment. There is no particular merit in size qua size: because something is big, it does not necessarily mean that it is efficient or desirable. I believe that these points must be answered clearly to the satisfaction of your Lordships and of another place by the Edwards Committee before any legislation is thought of to make one single Corporation. I conclude by saying that I am glad the Government have introduced this Bill. I believe that it will be one further step towards the advancement of civil aviation, the new growth industry of the 20th century.
3.52 p.m.
LORD TREFGARNE: My Lords, in rising to approve the Second Reading of this Bill, it seems to me appropriate to consider briefly the purposes to which B.E.A. have in the past put the money that has been lent to them or paid to them by Parliament, and perhaps also to consider the purposes to which they are now proposing to put these additional funds that we are making available.
The first turbine aircraft ordered by B.E.A. (and it may be appropriate to start our thinking then) was the Viscount. As a result of B.E.A.'s order the Viscount was perhaps the most successful, at least hitherto, of our British commercial aeroplane ventures. And as the Dart engine which powered the Viscount was itself developed, the Viscount was stretched in size, and ultimately, I think, 450 aeroplanes were sold, including some to China and to Poland.
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At that time, and subsequently in the late 'fifties, a B.E.A. order was really considered essential for any manufacturer proceeding with a short or medium haul aircraft: project, and there was thus a tendency for the manufacturer to submit to B.E.A. pressure to modify his project to meet B.E.A.'s precise requirements. As a result of this, many sound aeroplanes—and, indeed, aeroplanes that have remained sound under B.E.A. management—were modified to B.E.A.'s requirements, which in many cases are peculiar to B.E.A., and as a result these aeroplanes did not achieve the worldwide sales that might otherwise have been expected. Examples of this are the Comet 4B, a special variant of the Comet 4, which I think only one other carrier bought.
The Vanguard, again a magnificent aeroplane, was bought by only one carrier other than B.E.A. The Argosy was bought by one civil carrier, and although the R.A.F. had a number of those aeroplanes they were somewhat different from the B.E.A. aeroplanes. But perhaps most important of all was the Trident. The Trident 1A, 1B and 1C, the three first variants of that aeroplane, were all substantially modified to B.E.A. requirements and, as a result, no other carrier bought that aeroplane, although the Trident 1E, which is substantially different from the others, has been bought, I think, by three other carriers.
So the past record has not been of such great service to the British aircraft manufacturing industry, and indirectly, therefore, to the nation as a whole, as we might perhaps have wished. Could we not in the future hope that B.E.A. will be able to temper their own desire for a perfect aeroplane by the requirements of the air transport industry of the world at large, so that aeroplanes, which may indeed need a B.E.A. order to be produced, will at least have a wider sales market around the world? I have omitted the VC 10 from these brief remarks, because, of course, that aeroplane is in no way applicable to B.E.A.'s operation; and the peculiar circumstances applying to B.O.A.C.'s operation, which the noble Lord, Lord Balfour of Inchrye, has mentioned, really produce a separate set of circumstances and make it impossible to consider the aeroplanes under the same heading.

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Looking to the future, B.E.A. have ordered, and will shortly receive, their first BAC 1–11 500 series aircraft, and in due course their Trident 3s. The BAC 1–11 500 was tailored quite closely to B.E.A.'s requirements. Although there seems to be a possibility of other sales there—I believe that one British independent carrier has so far placed a small order—it seems unlikely that the Trident 3B will achieve any sale success other than with B.E.A. Perhaps the point of most immediate concern in B.E.A.'s re-equipment plans is the proposal for the acquisition of the Anglo-European A300 air-bus. I wonder whether the noble Lord, Lord Beswick, when he replies could tell us the latest position on this aeroplane. We were told originally that the three national airlines involved, without whose order the project would not proceed—namely, B.E.A., Air France and Lufthansa—were to commit themselves to the basic design of this aeroplane by May 1. But nothing was heard on May 1, nor has it been heard since, and many rumours are rife. I hope that the noble Lord will be able to clarify the position.
If I may now dwell for a moment on this proposed aeroplane, it is, as most noble Lords may know, a twin-engined aircraft, and some of us wonder how wise that policy is. An aeroplane of this nature, with two underwing mounted engines instead of the conventional three or four engines, which on take-off loses power from one of its engines loses, of course, 50 per cent. of its available power; and in certain circumstances, the asymmetric control problems, as they are called—in other words, the pilot's ability to keep the aeroplane straight—resulting from the power being produced on only one side of the aeroplane, are very substantial. Indeed, this was one of the problems, successfully overcome, that confronted the pilot of the B.O.A.C. 707 that recently made an emergency landing at London Airport and from which most of the passengers were mercifully saved. But a similar accident to that occuring to this proposed A.300 airbus would, I am certain, not have such a satisfactory outcome.
This design defect, as many people believe it to be, is fundamental and is not to be simply rectified by increasing the power of the existing engines or other simple solution like that. It is necessary to
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consider a more fundamental solution; for example, mounting engines near the tail, or, alternatively—this is the solution that has been adopted by the Lockheed Company with their 10–11 project—mounting a third engine in the tail but leaving the two other engines under-slung on the wings. I hope, therefore, that if the decision to proceed with the A.300 air-bus is to be delayed, the opportunity will be taken to reconsider and I hope change this design philosophy. I would add only in closing my thanks to the noble Earl, Lord Kinnoull, for raising many interesting points on the financing of B.E.A. and supporting the Second Reading of this Bill.
LORD GRANVILLE OF EYE: My Lords, as my noble friend Lord Beswick said when he introduced this Bill, it is a narrow Bill, in a sense, and it is for the purpose of increasing the borrowing powers of B.E.A. to this rather large amount. Therefore we are precluded today from discussing the wider aspects of Government policy on civil aviation. I would re-echo the plea made by the noble Earl, Lord Kinnoull, that there should be an opportunity in the future for full discussion on civil aviation policy. I was also interested to hear the noble Lord, Lord Balfour of Inchrye, refer to the two reports which have appeared in the Press recently on the all-important question of safety and also the possibility of a merger between B.O.A.C. and B.E.A.
There are arguments on both sides, as Lord Balfour knows, on whether to merge B.E.A. and B.O.A.C. B.E.A. have, in my view, the plum routes, the dense traffic routes, the paying routes; and I imagine that in comparison with B.O.A.C. it is much easier for them to make a profit than for B.O.A.C. to do so on the long overseas routes. I was interested to hear my noble friend give some estimates of the likely profit B.E.A. may make in the future. But I think that in the long run we shall have to face this question of the amalgamation of B.O.A.C. and B.E.A. In fact, there is one noble Lord in this House who, I remember, in another place in all civil aviation debates constantly said that in the end we should have world airlines and not simply the question of national prestige embodied in the flying of national airlines. Airlines use the same airports; they use the

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same planes or buy the same planes; they have the same trade; they have the same meteorological information and service which is available. To-day I.A.T.A. has complete control of traffic and fares, and I believe that in the long run we shall see, if not world airlines, at any rate the amalgamation of B.O.A.C. and B.E.A., I believe to the benefit of civil aviation in this country.
As other noble Lords have already done, I would emphasise the safety factor. The important factor in making airlines successful and profitable and in making them pay is to get people to use them; and the most important factor in the mind of the public who are not in civil aviation to-day is the safety factor. I hope that in the ordering of planes, with the new power B.E.A. will have, we shall continue, as at the present time, always to give the highest priority to the safety factor in civil aviation.
From time to time we are regaled in the Press with differences of opinion between the Chairman of B.E.A. and the Minister with regard to the planes they are going to purchase for future use. I gather from my noble friend that the bulk of money available to be borrowed, up to £215 million on capital revenue account, will probably be used for the purchase of aeroplanes. I should like to ask this question. In the event of a dispute between the Chairman of B.E.A. and the Government as to which aeroplane is to be ordered, who has the final say? Is it the Minister of Technology? As the noble Lord asked in his speech, does the long-term interest of the British aircraft industry have some relevance in this matter, or are the views of the users of these aircraft, after discussion has taken place, really the deciding factor? I think that if my noble friend can tell us something about this it will clear up some misunderstanding.
This is extremely big money and the independent airlines cannot get this money; it can be made available only to Government Corporations. In view of yesterday's report on the safety factor which related to the independent airlines, I hope that the Government will give consideration to the possibility of money being made available under the Industrial Expansion Bill, because this safety factor should not be subject to the
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pros and cons of cut prices and profit-making in order to enable people to go to the free market in the City to get the capital for running airlines and expanding them. I hope, therefore, that when my noble friend replies he will be able to tell us something about the policy the Government have in mind and who in fact has the final say in the buying of these aeroplanes for use by B.E.A.
4.8 p.m.
LORD BESWICK: My Lords, I think I can agree with one thing completely. The noble Earl, Lord Kinnoull, and the noble Lords, Lord Balfour of Inchyre, Lord Trefgarne and Lord Granville of Eye, all asked whether I would agree in another capacity to provide time for a further debate on aviation matters. I am happy to say two things. First, I hope that it will be possible to have such a debate in the future; and secondly, I hope that this afternoon we can fairly speedily go on to discuss some of the other business on the Order Paper.
The noble Earl, Lord Kinnoull, asked me whether I could say anything about the progress made on the terms of reference for the inquiry into the third London Airport. I do not believe that, strictly speaking, we can say that this comes within the terms of this Bill, but I hope that a statement about the terms of reference will not be much longer delayed. I hope that it will be a matter of days rather than weeks, and I am sure that we are all looking forward to that.
I was asked by the noble Earl, Lord Kinnoull, about the difference or distinction between the Corporation's borrowing powers and the Government's authorisation of expenditure. This is an interesting question, as he says, and one on which there has been in the past some confusion. More recently, in fact in their Report last year, the Select Committee on Nationalised Industries did a good deal to clarify the position. The Select Committee emphasised that the borrowing limit which is the subject of this Bill is a limitation on the Government's power to lend; it is not an authorisation to B.E.A. to spend. The Corporation's forward plans are a guide in making provision for borrowing needs, but when plans are being made there may or may not be specific commitments on individual items. Within

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the borrowing limits the major investment proposals of B.E.A. require Government approval. I hope that this goes far to answer the question put to me by my noble friend Lord Granville of Eye.
My noble friend also wanted to know who made the final decision about the purchase of these aircraft. The final decision really depends on which part of the decision is concerned—in fact, there are three final decisions. B.E.A. finally decide what they want to buy, but it would be for the Board of Trade finally to decide what investment plans they proposed to approve, and the legislation provides that they should give their final approval. On the other hand, if research and development expenditure were involved on a particular aircraft, then the final decision about whether a sum of money should be allocated for such development—for example, on an aircraft such as the BAC 2–11 which the B.E.A. may want to purchase—would, I suppose, lie with the Ministry of Technology. But in all these matters consultation, negotiation and discussion would mean, I hope, a compromise which would be in the best interests of the Corporation and of the nation as a whole; and that is the sort of process through which we are now going in relation to the present re-equipment programme of B.E.A.
As the noble Lord, Lord Trefgarne, and also the noble Earl, Lord Kinnoull, said, there has been some criticism; and this point was also made by the noble Lord, Lord Balfour of Inchrye, with regard to the delay in securing Government authorisation to re-equip. But I think that the Select Committee effectively disposed of this general criticism, and although we have a current problem with the Trident 3B it is true to say, looking at the situation generally, that progress has been made in codifying, both for B.E.A. and B.O.A.C., the information that will be required for their annual investment forecast and investment proposals, so that in future the two Corporations will be able to follow the same pattern in their internal discussions and projects. In other words, I hope that it will now be possible to save both time and effort in the formulation of forward plans and the securing of Government approval.
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There is, of course, a quite separate issue in this matter of aid to assist the phasing of deliveries of the BAC 1–11 500s and the Trident 3B. That is a matter on which questions were put to me by the noble Lords, Lord Balfour and Lord Trefgarne, and also the noble Earl, Lord Kinnoull. I think we shall all agree that both these aircraft will prove to be a fine addition to the B.E.A. fleet, but they will not be phased in at the time B.E.A. would have wished. The gap in this phasing will not permit the most economic use of the B.E.A. fleet resources as a whole. We have to face this fact, and it is to this factor that the Government's pledge to enable B.E.A. to function as a fully commercial undertaking, with the fleet it acquires, actually relates.
I was asked where this issue now rests. As the noble Earl put it, in whose court does the ball lie? The noble Lord, Lord Balfour, spoke about the game of badminton that was going on, but one cannot decide the amount of aid until one knows precisely the number of Trident 3Bs which the Corporation propose to order. On the other hand, the Corporation would say that they cannot decide about the number of aircraft they intend to order until they know some more detail about the aid. To that extent the ball is in two courts at the same time, but I can say that the Corporation have put forward certain proposals to the Government. Those proposals are being considered very urgently and I hope—I cannot go further than this—that very soon a decision will be forthcoming.
LORD BALFOUR OF INCHRYE: My Lords, may I ask whether the Minister would agree that it would be unreasonable to expect the Corporation to place an order until this particular position is resolved?
LORD BESWICK: Yes, my Lords; but until they place an order it is not unreasonable to say that we cannot decide how much it is proposed to pay.
LORD BALFOUR OF INCHRYE: It is a case of the chicken or the egg.
LORD BESWICK: This is a complex issue, and this is one reason why this matter has gone on for so long.
THE EARL OF KINNOULL: My Lords, would the noble Lord also agree that this is most unsatisfactory for Hawker Siddeley to find that no firm order has yet been placed?
LORD BESWICK: It is in one way, my Lords; on the other hand, I am absolutely assured that there is no delay in the development of the aircraft, and although the final order has not been placed it will not set back the date on which the aircraft will be delivered.
I was asked by the noble Earl about the impact on other airlines of the recession in air traffic development. I can say that there has been a recession, not only in this country but in the remainder of Europe. In fact the figure given to me is that whereas in the summers of the preceding five years we have had an average annual growth of 12 per cent., last year it was only 4 per cent. (that is in European traffic as a whole), so it is not only B.E.A. that is affected. The noble Earl put some rather detailed questions to me about the breakdown of the cost of re-equipping. I can read it out if he would like me to, but the information is so detailed that I think it would be better if I dealt with it separately.
He also asked me about the possibility of financing B.E.A. in the future on an equity basis, or, as current jargon goes, on the basis of Exchequer dividend capital, rather than by fixed-interest loans. One can see the advantage of being able in a difficult year to pass over the payment of interest without incurring the apparent stigma of a deficit. On the other hand, it can be said that neither deficit financing nor the passing of an interest on a equity holding removes the necessity for dealing with an operating loss, and the need for increased efficiency, essential economies and a vigorous sales expansion remains; and this is accepted by the Corporation. I would only add this comment to the noble Earl, Lord Kinnoull: that the possibility of extending the experiment now being carried out with B.O.A.C. is not ruled out.
The noble Lord, Lord Balfour, and the noble Earl, Lord Kinnoull, raised the question of a possible merger between B.O.A.C. and B.E.A. I was interested to hear what Lord Balfour said, from his
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considerable experience in these matters. As he rightly said, this is a matter with which the inquiry now being conducted by Sir Ronald Edwards will have to deal. Sir Ronald Edwards will or will not make, according to his own judgment, a recommendation in this matter. Obviously, I can say nothing on behalf of the Government at this stage.
On this point about a possible merger, I would venture to indulge in three personal observations, one of which was stimulated by the noble Viscount, Lord Boyd of Merton. First, I regret the fact that over so many years there has always been this speculation about the possibility of a merger between the Corporations. I cannot think that it has made for increased stability in either Corporation. Secondly, it is also a matter of some regret to me that over the years, when one has contemplated the possibility of one Corporation, no one name has ever leapt to mind as being the leader of such a unified Corporation. This strikes me as being one of the most astonishing things in the field of our civil aviation.
In the earlier days I took the view that whether we had one or two Corporations—or indeed three, as at the beginning—what we needed for a start was to have a variation of ideas and method; and organisational skills, so that we could give an opportunity for some technique, some expertise, to prove itself. One would have hoped that from within the corporation there would emerge one individual whom one would regard as being a natural leader for the future. One can of course think of individuals. The names of Sir Miles Thomas or Lord Douglas of Kirtleside come to mind; they came from outside the industry. But so far there has been no one leader emerging from within. I draw no moral from this; I simply think it is rather strange and somewhat unfortunate. It is relevant to the point raised by the noble Lord, Lord Balfour of Inchrye.
Thirdly, I would say this to him. Without in any way trying to influence whatever Sir Ronald Edwards may say, I do not think the choice is necessarily between one Corporation and two. I believe there are sophisticated possibilities of achieving a unified strategy, even if executive responsibility is still divided between different bodies.

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I was asked about the rather controversial question of the increased landing charges at Heathrow Airport. The Chairman of the British Airports Authority, I think we all agree, has set a very high standard indeed, in all the enterprises with which he has been associated, of a policy of full information and of joint consultation. In this particular matter I think it might be claimed that he fell below the very high standard which he himself had set, but there were special circumstances in this case which I think most people would agree absolve him from any blame. After all, we do not de-value every year. The Authority were faced with a very special problem. The Chairman wished to maintain the earnings of foreign currency, and this the Authority have done. All I say here is that the recent changes do not in any way set back any airline, including B.E.A., to a worse position than they were in before devaluation or before the increase in landing charges. I will not go into the detail of this now, because I know that the House wants to go on to other business, but I am prepared to prove that point, if I am pressed upon it.
THE EARL OF KINNOULL: My Lords, would not the noble Lord agree that it will cost B.E.A. £200,000 a year?
LORD BESWICK: My Lords, what I said was that no airline, including B.E.A., has been set back because of the increase in landing charges or because of devaluation. The fact is, as the noble Earl knows, that although the landing charges have been increased because of devaluation, the airline's earnings—their foreign currency earnings—have been increased; the fares have in fact been increased by the amount of devaluation, and it could be claimed that they are now financially better off as a result of the two changes. In the case of the domestic services the domestic fares have not been increased; but neither have the domestic landing charges.
I was asked by the noble Lord, Lord Balfour, about safety standards, and I entirely agree with him that safety is of paramount importance in this business of air transport. At this very moment the President of the Board of Trade is dealing with this matter, following the
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publication of the Air Safety Review. Most noble Lords will wish to study the facts and findings of that Review. They are very complicated. I think it is very dangerous to try to over-simplify any of these matters. Only one thing I think does emerge, and that is that the safety standard of B.E.A., the Corporation whose affairs we are now dealing with, will bear comparison with any other airline in the world.
I was asked a question about the future of the European airbus. I am sorry that I cannot satisfy the noble Lord, Lord Trefgarne, on this point. He, himself, made some very interesting suggestions about possible modifications of the airbus. and if any of those is accepted the time when the airbus will be flying will be set back very far indeed. I think he was only indicating some of the problems that exist in this matter. All I would say is that the airlines, including B.E.A., cannot be expected to commit themselves until they have had a detailed specification and a firm indication of price, and time to study both. These matters are now the subject of consultation and consideration. I hope that there will be a decision in the summer. With that, I hope that I have said sufficient to persuade your Lordships to give this Bill a Second Reading.
LORD LINDGREN: My Lord, I hesitated to interrupt my noble friend's train of thought in the course of his excellent reply, but on the question of whether there should be one or two Corporations would he not agree that on the technical operation there is considerable difference between short haul and long haul, which makes it almost essential that there should be two Corporations?
LORD BESWICK: My Lords, nothing that I have said, my noble friend will agree, in any way disproves what he has said. I should hope that the eventual structure would reflect the technical facts to which he has referred but also that consideration would be given to the needs of some overall planning of our British civil aviation effort.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

RHODESIA: SIR FREDERICK CRAWFORD'S PASSPORT
4.27 p.m.
THE MINISTER OF STATE FOR COMMONWEALTH AFFAIRS (LORD SHEPHERD): My Lords, with permission, I would now reply to the Private Notice Question which was asked earlier in the afternoon. Last Thursday the Leader of the Opposition asked whether I would make a further statement in regard to Sir Frederick Crawford. I could give no firm undertaking at that stage, but I now think it would be right for me to acquaint the House of the events of the past few days.
As I told the House, Sir Frederick Crawford would be received at the Commonwealth Office if he so wished, and it was subsequently arranged for him to see a senior official last Friday. Having considered what Sir Frederick said on that occasion my right honourable friend the Commonwealth Secretary thought it best to see him personally. The meeting took place to-day. In the course of the meeting my right honourable friend sought certain assurances from Sir Frederick, namely, that he regards the Governor, Sir Humphrey Gibbs, as the Queens' true and lawful representative in Rhodesia, and not Mr. Dupont, who claims to hold that position; that he does not accept the illegal declaration of independence as valid nor Mr. Ian Smith and the other members of the régime as lawfully holding offices which they have assumed; and that he will in future do nothing, particularly in respect of various posts which he holds in the public life—and I stress public life—of Rhodesia, which would give the impression that he regards or accepts Mr. Dupont or Mr. Smith and his colleagues as being entitled to the marks of recognition and respect which are customarily paid to lawfully constituted authorities, which, in Rhodesia, means the Governor. Had these assurances been given then I am sure that his passport could have been returned to him.
Sir Frederick told my right honourable friend that his initial reaction was that he could not give these assurances. The Commonwealth Secretary asked him to take time to consider this. The Commonwealth Secretary has now heard from Sir Frederick that he cannot give the
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assurances asked for. There are no doubt many people in Rhodesia who are anxious to avoid becoming involved in the grave political problems of the country in which they are living, but, as my right honourable friend has explained in another place, Sir Frederick's whole course of action since the illegal declaration of independence has been such as to throw the whole weight of his influence on the side of the illegal régime. Sir Frederick told my right honourable friend that he wished to remain neutral in the present Rhodesian situation. I do not myself believe this is the right posture for a man in his position to adopt, but in any case I cannot accept that he has in fact remained neutral. He has given positive support to the members of the régime. The only way he can cancel that out is by giving the undertakings the Commonwealth Secretary asked for. My right honourable friend tried to draft these in a way that would make it as easy as possible to regain the position of detachment which Sir Frederick professes to wish to occupy.
I really do not think that a simple affirmation of basic loyalties should present so much difficulty. This was not a political declaration, still less a request for support for the present British Government. Sir Frederick has claimed that his loyalty lies to the Queen. In Rhodesia to-day that statement can be made good in one way and in one way only, namely, by a simple demonstration of respect and support for Her Majesty's lawful and undoubted representative, Sir Humphrey Gibbs—coupled with the avoidance of demonstrations of respect and recognition for the usurping régime. In these circumstances my right honourable friend the Commonwealth Secretary sees no grounds to change his decision regarding the withdrawal of Sir Frederick Crawford's passport.
LORD CARRINGTON: My Lords, I am most grateful to the noble Lord, Lord Shepherd, for making this Statement at this hour. I realise that there has been some inconvenience, since it must necessarily be a paraphrase, at any rate, of some of the Commonwealth Secretary's speech. I do not think that I should like to comment this afternoon on what has been said by the Commonwealth Secretary about Sir Frederick Crawford and on what he himself has said. I think one

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wants to study that most carefully before one makes any comment about it. I suppose there is some doubt about what impression would be given if Sir Frederick Crawford, for example, shook hands with Mr. Dupont at the Bulawayo Trade Fair, and that sort of thing, which no doubt has had to be taken into consideration by Sir Frederick Crawford.
But I would ask the noble Lord whether he could amplify the phrase he used, which I think was something to the effect that Sir Frederick has thrown the whole weight of his influence on the side of the illegal régime. I imagine that this was amplified in the speech of the Commonwealth Secretary, and if the noble Lord could do so I should be grateful. On the broader issue, I would ask the noble Lord what is the object of withdrawing the passport of Sir Frederick Crawford? I understand that there have been some others that have been withdrawn. What is the purpose of it? Surely pin-pricks of this sort are likely only to exasperate the Rhodesians and people who hold British passports and live in Rhodesia; and it will not do any good. It is the sort of action which only annoys people.
There are some of us, at any rate on this side of the House, who view with some misgivings the sort of administrative action which has led to this Statement and the debate in another place. There seems to be an increasing tendency towards administrative action of this kind. Here was a man who had no redress for what had happened. He could not do anything about the removal of his passport from him. Had he not been a distinguished public servant probably nobody would have known that it had been removed from him; it was the accident of his position that made it known. I understand, however, that there are other people who have had their passports removed. Have they been asked by the Commonwealth Secretary whether they will give the same undertakings? Are they going to have their passports given back if they will? These are the kind of questions to which this sort of administration gives rise. I must say that it fills me, and I think most noble Lords on this side, with a great deal of misgiving.
LORD SHEPHERD: My Lords, if the noble Lord, Lord Byers, would permit me, I think it would be as well if I were to answer the noble Lord, Lord Carrington, first. I appreciate his desire carefully to consider what I have just said and what my right honourable friend has said in another place. In view of the reaction of noble Lords opposite and others last Thursday, I am bound to say that when they sprang immediately to attack the Government with words such as "mean and despicable action", they might have reserved their judgment until some information could be made available to them, either by Her Majesty's Government or by Sir Frederick. It is not merely a question of shaking hands with Mr. Smith or Mr. Dupont.
I gather that the noble Lord, Lord Carrington, would like some of the reasons which have been given by my right honourable friend in another place, and perhaps therefore I could use his words. In the course of his speech he said this:
"Since I.D.I. Sir Frederick has refrained from signing the Government Housebook on occasions such as the Queen's birthday, when thousands of Rhodesians have made a practice of demonstrating their loyalty through the Governor, but not Sir Frederick Crawford. As a former Colonial Governor, Sir Frederick has had his own book and is well aware of the significance of this gesture. Sir Frederick no longer calls the Governor 'His Excellency', but reserves this title to Mr. Dupont. He has been active in promoting social and charitable occasions, innocuous and sometimes worthy in themselves, but used to promote the positions of Mr. Dupont and Mr. Smith, who are regularly invited by Sir Frederick Crawford as guests of honour or to act as patrons.
"His behaviour as the President of the Bulawayo Trade Fair is only a particular example of a course of conduct which has certainly had the appearance of giving active support to the régime, the test which the House accepted in 1966 as giving grounds for the withdrawal of passports. The House ought to understand that since I.D.I. it has been made the object of the Trade Fair to turn it into a propaganda weapon against the policy of sanctions. Sir Frederick Crawford, who must have known what he was doing, lent himself to this policy. Its literature, presumably issued with the President's authority, says that with the advent of independence Rhodesia has become the greatest market potential in Africa.
"A significant step in the development of the Fair for propaganda purposes against sanctions was when, in 1966, after I.D.I., Sir Frederick invited Mr. Smith to open the Fair, in circumstances when the Governor had shortly

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before dismissed Mr. Smith from the Premiership. This invitation was a politically significant act. This is clearly demonstrated by the fact that the Governor thought it necessary to resign his vice-Presidency of the Fair.
"In welcoming Mr. Smith to the Fair, Sir Frederick Crawford boasted that the burdens placed upon Rhodesia from abroad had not only failed but had enabled Rhodesia to enter new markets not hitherto thought of. In 1967, a year later, apparently unaffected by the Governor's resignation, it was Mr. Dupont whom Sir Frederick chose to invite to open the Fair and whom he formally welcomed. This May, immediately before coming to Britain, Sir Frederick Crawford was to be observed busily taking the Duponts, that is Mr. and Mrs. Dupont, and introducing Mr. Dupont to guests as 'His Excellency'.
"To put it as charitably as I can, Sir Frederick apparently feels that the pressures on him in Rhodesia to conform with an illegal régime are too great to be resisted. Others have found it possible to do so. But surely they do not compel Sir Frederick to attend a reception here in London last November in honour, if that is the right word, of the second anniversary of the illegal declaration of independence. As he must have expected, his attendance was publicised in Rhodesia, and once again his eminence in the life of Rhodesia gave his action an importance which would not attach to the attendance of others, even perhaps of right honourable Gentlemen opposite"—
those are throw-away words of my right honourable friend in another place. But this and other matters clearly show that Sir Frederick Crawford has thrown his full weight, his public position, behind the illegal régime in Salisbury. That is the reason why it was decided to take away from him his passport.
The noble Lord, Lord Carrington, speaks of pinpricks. There are many people in Rhodesia, white and coloured, who are to-day giving support to the Governor. The noble Lord himself said—I well remember his words—on the first debate on Rhodesia after I.D.I., that whatever we do we should give them comfort and support. These people need to be supported in the line that they take in Rhodesia. Sir Frederick, by his activities, has given comfort to the illegal régime and brought dismay to those who support the Governor. Therefore it is right and proper that we should, by our acts, support those who stand for right and justice in Rhodesia.
LORD CARRINGTON: My Lords, may I ask the noble Lord if he would answer my question, whether the other people who have had their passports
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taken away will receive the same treatment as Sir Frederick Crawford?
LORD SHEPHERD: My Lords, Sir Frederick Crawford has received perhaps special treatment because of the activities of the Opposition in another place, by emotion and sentiment. We have looked into this and, as the noble Lord will remember, I said last Thursday that in the last 12 months four passports have been taken away. If any of those people feel aggrieved, feel that we have taken a wrong action, I will give the noble Lord the assurance that if they will make their case in the same way as Sir Frederick has been given the opportunity of doing, we will consider it.
LORD BYERS: My Lords, the views on Rhodesia which are held on these Benches are ell known, and if the activities which the noble Lord has described are correct, I would not seek to defend them. But beyond that there is a great question of human rights. What concerns us, and worries us very much indeed, is that a Government and civil servants should be allowed to decide after the event that an offence has been committed, when there is no description available to the public as to what constitutes an offence. I would plead with the Government that until we have a proper procedure, until people know what is and what is not legal, what is expected and what is not expected, no action should be taken against any individual at all.
LORD SHEPHERD: My Lords, first of all, decisions of this nature are not taken by civil servants; they are taken by Her Majesty's Ministers, and they are answerable in Parliament, as I am answerable to-day. I have done my research, and it is clear that the right honourable gentleman, Mr. Macleod, when he was Colonial Secretary, used the time-honoured phrase that it is not the practice of Governments to give their reasons for actions of this kind. But as I said to the noble Lord last Thursday, he is raising a wider issue, not merely in terms of Rhodesia but a wider issue in respect to passports and the withdrawal of them. Certainly we have considered it, but the noble Lord must be aware that if such an inquiry was possible it would have to be of the strictest confidence, because clearly there are occasions when you

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cannot possibly divulge the source of your information.
LORD BYERS: That is the refuge which every Government takes when a matter of human principle and human freedom is at stake.
LORD SHEPHERD: The noble Lord will see what I have said. In the case of Sir Frederick Crawford, we provided an opportunity. He was not able to take it. If the noble Lord wishes to raise the wider issue in this matter, then I will be prepared to discuss it. Certainly I would see that my colleagues in the Government considered it, but there are considerable difficulties involved which all previous Governments have acknowledged, perhaps regretfully.
VISCOUNT BOYD OF MERTON: My Lords, may I ask the noble Lord, whether, even in the cloistered calm of Westminster, he realises the extraordinarily difficult position in which honourable people are finding themselves in Rhodesia to-day?
LORD SHEPHERD: Yes, my Lords.
VISCOUNT BOYD OF MERTON: My Lords, they are difficulties which lead legally appointed judges to take up a certain line, as noble Lords know full well. May I also ask the noble Lord one or two very brief questions, because I was the Secretary of State to whom for over five years Sir Frederick was responsible, first as Deputy Governor and then as Governor. In the interests of Sir Frederick's reputation, and for the record, may I ask the noble Lord whether he realises that few Governors did more for African advancement in their territories and to encourage them to be able to stand on their own feet? May I also ask the noble Lord whether he realises that since Sir Frederick ceased to be a Governor and joined a Corporation—and before, in the lives of these Corporations—both Anglo-American and Selection Trust have done an immense amount of work to help racial harmony, and, as I know very well, in the face of bitter opposition from white trade unions have insisted on African technical education and advancement. Is it not a tragedy that a representative of a firm like this should be treated in an arbitrary way, and will it not lead still further to depress the liberal people in
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Central Africa whose numbers have, in recent months, been so tragically and, I think, unnecessarily eroded largely by the actions of Her Majesty's Government?
LORD SHEPHERD: My Lords, I agree with the noble Lord in giving credit to those in Rhodesia for taking a particular line, a difficult line in many cases: the judges and some servicemen, who have carried out their duties but have never in any way raised the question of where their loyalty lay. It is true of Sir Frederick that he has given great service to two colonies. He is a respected figure. That is all the more reason why his actions at this present moment are of such special significance in Rhodesia.
My Lords, I agree with the noble Lord that this is a tragedy. I wish it could have been avoided. I think it could have been avoided if Sir Frederick had realised that the assurances for which we asked were nothing special, but that they would have removed some of the impressions that he created, deliberately or otherwise, in Rhodesia. He could have returned to the position he claims he would wish to be in, that of neutrality. It is a tragedy, but none the less it is a fact, and I think we have to recognise it.
LORD ROWLEY: My Lords, would not my noble friend agree that, in view of the commitment of this country peacefully to secure a constitutional settlement of the Rhodesian problem, and of our constant refusal to use force, it is not the more important that if necessary firm action should be taken even in respect of a distinguished ex-Colonial Governor, if there is a charge which can be sustained of aiding and abetting the illegal régime in Rhodesia?
LORD SHEPHERD: My Lords, there has been a consistent policy, and a policy I think the House will recognise as one that has been adopted by all three Parties in this House and in another place, that Rhodesia must, by one way or another, be brought back to constitutional rule. We have rejected the use of force and, therefore, there are only certain ways available to us. It is regrettable that we should have to do it. We have not closed the door, and I still hope that there will be a public opinion in Rhodesia at some date which will make it possible for Rhodesia to return to constitutional rule, and for us then to be able to discuss how

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that country can develop, and where all the peoples of that country can live in peace and harmony.
4.47 p.m.
VISCOUNT DILHORNE: My Lords, last Thursday the noble Lord referred to Sir Frederick's having "given comfort to" the illegal régime. To-day he has (and I am grateful to him) elaborated upon that, and I think he will not deny that, in substance, Sir Frederick has been accused of disloyal or, perhaps, treasonable activities. What some people—and I am one—object to is that the Government should be the sole judge of those matters and should pass an arbitrary sentence. May I ask the noble Lord this question? If that conduct is as he has said, have the Law Officers been consulted to see whether any offence has been committed?—because if charges of that kind are to be brought, the proper place for investigation, where a proper defence can be made, is in the courts of this country. And if the Law Officers have not been consulted, would the noble Lord undertake to consult them with regard to the matter?—because I believe that what many people object to is the fact that there should be condemnation without trial, and a sentence which is unrelated to a proper sentence for disloyalty—if indeed it exists.
May I also ask the noble Lord to answer the question (he has not yet done so) which was put by my noble friend Lord Carrington: what purpose is the withdrawal of the passport intended to serve? Is it intended to prevent people from leaving this country, or is it intended to make it difficult only for them to enter other countries? It cannot stop them entering other countries if other countries are willing to receive them.
LORD SHEPHERD: My Lords, this is clearly a matter to which no doubt Law Officers have from time to time given consideration. Perhaps the noble and learned Viscount himself gave it consideration in 1960 when the Colonial Secretary of the time withdrew the passports of two Kenyan Africans, one of whom has since been a Cabinet Minister in Kenya and is now the Leader of the Opposition. It was in reference to that occasion that I used the words of Mr. Macleod, that it was not the practice to give this information. This has been the
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policy in regard to this matter throughout. As I said to the noble Lord, Lord Byers, if there were a case for this to be looked at in its wider aspects, then I certainly would be ready to discuss it with Lord Byers, or any other noble Lord. I did not say that Sir Frederick had committed treason. I said that he had given comfort to the illegal régime in Rhodesia. I have set out facts this afternoon which, I think, show beyond a peradventure that he has given comfort to the illegal régime.
May I say to the noble and learned Viscount that in terms of sanctions and the withdrawal of this particular passport, of course it is to make life difficult in Rhodesia. We have never hidden the fact. That is the purpose of sanctions, which I believe the noble Viscount himself has supported in this House on previous debates on Rhodesia.
VISCOUNT DILHORNE: My Lords, as the noble Lord has attacked me, may I reply to him? I was not seeking to attack him or to make Party points. But there is a point of real substance here. When the noble Lord seeks to distinguish between treason and giving aid and comfort to an illegal régime, to most people that last formula means treason. I used the word disloyalty. Let us forget about earlier years; I do not remember what advice I gave all those years ago. But since that time we have passed certain Acts, and I asked the noble Lord whether the Law Officers had been consulted about this, on the facts which the noble Lord had mentioned; and, if not, whether they could be consulted. I submit to the noble Lord that it is much better, when charges of disloyalty of any kind are made, if conduct is contrary to our law, that the matter should be investigated in the courts.
LORD SHEPHERD: My Lords, I said—and I repeat it and will not change it—that our complaint of Sir Frederick was that he had given comfort. This is a decision which clearly is within the competence of the Commonwealth Secretary. I do not know whether these is a court of law to which this matter could be taken; the noble Viscount will know more about this than I. But in the wider context I repeat my offer to the noble Lord, Lord Byers.
LORD BYERS: My Lords, is the noble Lord aware that, while one does not

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challenge this in any way, there is a vital matter of principle here? The noble Lord has read out all these very damaging activities, all of which may be true; and which I would not defend; but they ought to be proved in a court of law so that people know that it has been through a legal procedure. What we have here is a clash of opinion between the Government and Sir Frederick as to whether he was neutral or whether he was giving support.
LORD SHEPHERD: My Lords, I see the point which the noble Lord is making. I gave these reasons because I was asked to do so. We are giving these reasons in another place, exceptionally, because of the circumstances of a Motion of Censure, and the Government are entitled to defend themselves. I think that, regretfully, Sir Frederick has made our case by an unwillingness—a refusal—to give an undertaking, and an undertaking which most of us in this place would not find difficult to give.
BARONESS GAITSKELL: My Lords, would not the Minister agree that this very strong defence of Sir Frederick Crawford by noble Lords opposite implies a tacit acceptance of I.D.I. in Rhodesia, and that this is a very serious thing in the whole problem of Rhodesia in the world to-day?
LORD ALPORT: My Lords, while it is possible that those people who have remained loyal in Rhodesia during the last two and a half years will believe that the withdrawal of the passport from Sir Frederick Crawford was well merited, I should like to ask the Minister to answer the question put to him by my noble friend Lord Carrington; namely, what is the purpose of this particular action on the withdrawal of passports? Where is it going to lead the Government, and are they prepared to follow it through to its logical conclusion? Surely the logical conclusion can only be that the question put to Sir Frederick Crawford must now be put to every Rhodesian who wishes to come to this country using a British passport. If that is the case, and if the object of the exercise is that men and women in Rhodesia should stand up and be counted, would it not be fairer, not to pick on individuals at random, however
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distinguished or undistinguished they may be, but to give a full warning of a time limit of, say, three months so that Rhodesians concerned who value their British passport can choose. They can answer in the affirmative the question put to Sir Frederick Crawford, and have their passports confirmed, and those who do not answer in the affirmative will have made their declaration that they are supporting the illegal régime. In this way there will be no discrimination between individuals, and the Government's policy, for what it is worth, will be carried through to its logical conclusion.
LORD SHEPHERD: My Lords, I have tried to explain the policy of sanctions and also the policy which was announced in 1966 in regard to passports, particularly in regard to those who have given support to the illegal régime in Rhodesia. This policy is known in Rhodesia. One gets many inquiries in the course of a year as to whether "So-and-so" is likely to have difficulty. This policy is known. I would say to the noble Lord, Lord Alport, that there are many Rhodesians who have already shown by their acts where their loyalties lie, and I do not think they need to be given three months in which to declare them.
LORD BROCKWAY: My Lords, while I endorse what the noble Viscount, Lord Boyd, has said about the administration of Sir Frederick in his later years in Uganda, and about his encouragement of skilled opportunities for Africans in Lusaka, I would ask my noble friend if he is aware that the questions which have been put to Sir Frederick have shown quiet clearly that he has no loyalty to the Government of this country, or to the representative of the Crown in Rhodesia, and that therefore in this particular case the action which the Government have taken is justified? But I would also ask my noble friend, in support of what the noble Lord, Lord Byers, has said, whether he does not regard this issue as showing the need for a reconsideration of the whole question of how passports are refused. Are not passports an inherent right of British citizens? And, just as Commonwealth immigrants now are to be allowed to appeal against a rejection of their plea to enter this country, ought not any British citizen to have the right to make

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an appeal beyond a decision of the Government when a passport is refused?
LORD SHEPHERD: My Lords, this Statement and the discussion upon it are taking a long time, and we are getting slightly repetitious. My noble friend will remember that I gave him an assurance in regard to the last part of his question. I stressed the difficulty, but I said that we should be prepared to look at it. We recognise the concern which is felt in this matter, but there are considerable difficulties. If they can be overcome, well and good.
LORD CONESFORD: My Lords, may I ask this question of the Minister? I appreciate that the noble Lord is doing his best in very difficult circumstances.
LORD SHACKLETON: He is doing very well.
LORD CONESFORD: I am not saying that in a depreciatory way; everybody appreciates that he is trying to tell us all he can. I am speaking from memory, but I think that when U.D.I. was originally declared Her Majesty's Government in this country said that their object was not to cause chaos in Rhodesia, and they appealed to Rhodesian civil servants to carry on with their work. Any Rhodesian civil servant who carried on with his work is ipso facto probably having to show some signs of respect to all these officials. He has certainly given comfort to the Rhodesian régime by carrying on. That Rhodesian régime is the sole de facto government of Rhodesia. Am I to understand, therefore, that any of those civil servants who visits this country runs the risk of having his passport taken away?
LORD SHEPHERD: My Lords, as the noble Lord, Lord Conesford, will know, there are many thousands of civil servants who have carried on their duties in the administration of the Civil Service of Rhodesia. Many of them have carried on as the British Government suggested they should carry on in 1965. Many of them come to this country for leave and, as the noble Lord will remember, I said that last year only four passports were taken away. Therefore I do not think there is any implication that because you continue to serve in the administration in Rhodesia you are open to the course
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of action taken in the case of Sir Frederick Crawford. Sir Frederick Crawford has not just carried out a duty; he has given his wholehearted support to the régime, and it is that which we seek to control.
I wonder whether, because there is much other business and we shall shortly be debating Rhodesia on an Order which may well have considerable association with what we have been discussing this afternoon, we could now leave this in matter and deal with it when the Order is before the House.
LORD COLERAINE: My Lords, can the noble Lord say when the Order will be before the House?
LORD SHEPHERD: My Lords, I cannot say that, because the Security Council has not yet dealt with the resolutions before it.
LORD COLERAINE: My Lords, should I be wrong if I suggested to the noble Lord that this business about Sir Frederick Crawford is primarily directed to strengthening Lord Caradon's hard at the United Nations and to persuading other Governments to take the same arbitrary action that this Government have taken?
LORD SHEPHERD: My Lords, this decision in regard to Sir Frederick Crawford was taken in June of last year. It has nothing in the least to do with the present situation.
LORD COLERAINE: My Lords, if the decision was taken in June of last year, and Sir Frederick Crawford attended a party in honour of the second anniversary of Rhodesia's independence in November of last year, why was his passport not impounded in November of last year?
LORD SHEPHERD: My Lords, I understand that he may have slipped through the immigration authorities without their being aware that he had arrived.
LORD GRIMSTON OF WESTBURY: My Lords—
LORD SHACKLETON: My Lords, it is customary, as my noble friend said, to give way when the Leader of the House gets up to help the House. I am very sorry, but I rather get the impression, from

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nods and messages I have had, that your Lordships would like to get on with the business. I can only appeal.
LORD GRIMSTON OF WESTBURY: My Lords, I think I am entitled to ask one question. The noble Lord was very long in his reply. Would he be good enough to read the first letter in The Times to-day from Mrs. Elspeth Huxley, who brings out the point that the Government's attitude to this legality question is both pompous and hypocritical, which is a view shared by many people? I merely ask him to give that letter his attention and to answer the question at the foot of it. Will she have her passport taken away for writing the letter?
LORD SHEPHERD: My Lords, I do not know why the noble Lord should waste the time of the House, because he had already asked me to read that letter before we came into the Chamber and I said that I would.

HEALTH SERVICES AND PUBLIC HEALTH BILL
5.5 p.m.
BARONESS PHILLIPS: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Baroness Phillips.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD DOUGLAS OF BARLOCH in the Chair.]
Clause 1 [Accommodation and treatment, at hospitals providing hospital and specialist services, of persons as private resident patients]:
LORD BROCK LORD BROCK moved, in subsection (6), after "him" to insert "on medical grounds". The noble Lord said: Clause 1 of the Bill is essentially concerned with the provision of hospital facilities for fee-paying or private patients. The very presence of this clause in the Bill automatically acknowledges that such accommodation is needed and is acceptable.
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Patients are willing to pay heavy hospital expenses for private accommodation—an average of £50 or £60 a week for the room alone—for various reasons. They may wish to secure the services of a certain physician or surgeon of their own choice, although that is not always so. They may wish to arrange their stay in hospital for a certain time to suit business or personal convenience, although that is not always so. The most common and important reason is that they wish to secure certain extra comforts and amenities of privacy, better meals, more liberal visiting times, et cetera. The provision of these often rather modest extra amenities for private patients is more costly to the National Health Service than the average run of patient care. Consequently, extra charges are necessary.
Subsection (6) provides that the special accommodation for paying patients may be available for non-paying patients; that is, to patients purely under the National Health Service. That is, of course, a wise and wholly desirable provision, because if the accommodation is available and is needed by a non-paying patient then he should not be deprived of it on the grounds of cost alone. But his need for admission to such accommodation should be based only on grounds of medical necessity; and that the clause omits to state. As the Bill now stands, it would be possible for someone to obtain valuable preferential treatment because of influence, patronage or privilege to a degree quite unjustifiable. Indeed, a patient occupying special accommodation in that way might even be blocking the admission of a National Health Service patient who needed the special accommodation on urgent medical grounds.
If the omission of those words is an oversight, then they should be added. I presume that their omission is not deliberate; if so, there will be an even greater need for their inclusion. I submit that the addition of these three words will do no harm to anyone. It will protect the funds of the National Health Service against abuse, and it will protect those who need the accommodation on genuine medical grounds. I assure your Lordships that the term "on medical grounds" is, and would be, interpreted

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and implemented in a sympathetic, realistic and liberal way. It will cause hardship to none. It will prevent abuse and undesirable privilege. I beg to move.
Amendment moved—
Page 2, line 41, after ("him") insert ("on medical grounds").—(Lord Brock.)
BARONESS PHILLIPS: The Government are happy to accept this Amendment. Subsection (6) of Clause 1 in fact reproduces the substance of the proviso to Section 5(1) of the 1946 Act, which safeguards the position of non-paying patients who urgently need accommodation on medical grounds and for whom no suitable accommodation is available other than that authorised for private patients. That proviso included the words "on medical grounds" which the Amendment seeks to insert in subsection (6), and although I am advised that these words are strictly superfluous in the context of the subsection because admission to the accommodation would be considered only on medical grounds and not on such personal grounds as the patient's desire for an operation so as to be able, for example, to travel abroad, the Government are content to accept them as placing the matter beyond doubt that the more urgent need must arise on medical grounds.
On Question, Amendment agreed to.
Clause 1, as amended, agreed to.
Clauses 2 to 4 agreed to.
Clause 5 [Power of the Minister to designate certain hospitals in England and Wales as university hospitals]:
On Question, Whether Clause 5 shall stand part of the Bill?
5.10 p.m.
LORD COTTIESLOE: I spoke on Clause 5 in the debate on Second Reading, and I do not wish to go over the same ground again at any great length. I was grateful to the noble Baroness, Lady Phillips, on that occasion for repeating the assurance which the Minister gave in another place, that he has no intention—"no present intention", I think, were his actual words—of making use of the enabling powers which this clause gives him to effect any sweeping changes in the administration of the hospitals. I was grateful to her also for setting me right on one point on which
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I was mistaken. It is clear that if the Minister makes an order under this clause, that order has to be referred to Parliament before it can become effective.
But the clause has caused so much concern, and justifiable concern, among the Metropolitan teaching hospitals, more particularly in the light of the Report of the Royal Commission on Medical Education, which recommends sweeping changes—changes which would abolish the boards of governors of teaching hospitals and bring the administration of those hospitals within the framework of the Regional Hospital Boards—that I feel I must ask the noble Baroness to repeat the Minister's assurance once more, to do something to allay nose misgivings.
The Report of the Royal Commission is imaginative and far-reaching. Indeed, their recommendations appear to reach out far beyond their terms of reference. The composition of the Commission included such a weight of intellect and experience that one is bound to respect their conclusions, even if one disagrees with some of them. But they are curiously dogmatic. In a document of more than 400 pages they do not find space to give reasons to support some of their most sweeping and controversial assertions. The fact is, I think, that their approach is perhaps too much coloured by their view of what arrangements might be ideal if nothing were already in existence and if we were starting with a clean slate, and too little by what already works well and by what is practicable. The Principal of the University of London, as he says in his annual report which was issued the other day, was told when giving evidence before the Commission that he was "the apostle of the practicable". That was not, I think, intended as a compliment; and that remark, it seems to me, embodies the weakness of the Commission's Report.
The question whether the boards of governors of teaching hospitals should be swept away and replaced by some different form of administration within the framework of the Regional Hospital Boards is essentially a pragmatic one. I know that the noble Baroness, Lady Summerskill, does not approve of these boards of governors, and regards them as undemocratic. But they are, of course,

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appointed by the Minister, just as the Regional Boards are appointed by the Minister; and so far as being "democratic" is concerned, there is not a halfpenny to choose between them. The question is not whether the boards of governors are democratic: nor, indeed, whether some different arrangement might be more convenient to the civil servants in the Ministry, who of course would prefer to have everything, however various and diverse, stamped into a uniform pattern. The question—and it is the only question that matters—is whether the boards of governors do their work well; whether the Regional Boards would do it any better. It is like the question we were discussing yesterday of the City aldermen: do they do the job well, and would some other arrangement secure a better administration of justice?
No one, so far as I know—and I have myself served as chairman both of a Regional Board and of a board of governors—has put forward any good ground for thinking that such a change would result in the teaching hospitals, at any rate those in London (I cannot speak for the Provinces), being better administered. It might very well have precisely the opposite effect. In view of the widespread concern—a very natural and proper concern—that is felt on this matter, I hope that the noble Baroness will be able to repeat the Minister's assurance that he has no intention of making sweeping changes in the administration of the hospitals.
VISCOUNT ADDISON: I am moved to rise to my feet only by the speech of the noble Lord. I was away when the Second Reading debate took place, and therefore perhaps I should not speak, but I have been a member of a board of governors and I am at the moment the chairman of a Regional Board. I think the point here that needs to be ventilated (and I am sure the noble Baroness will think of it) is that the Regional Boards are in fact the planning authorities, and as such are responsible for planning the Service in the area of their region. In that area there are, of course, a number of teaching hospitals. In each of the London Regional Board areas there are a number. It seems to me that unless some coordinating authority exists, chaos may well result from the fact that there are two or
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three different kinds of authority trying to deal with the same problem.
I think that the Todd Report was fairly explicit on this point, and I thought very wise. I have nothing against boards of governors—I served on one, and I think they do their work very well—but my own view is that they will be in difficulties, in view of the future and of the Todd Report. I think the fact that the Regional Board is the planning authority really provides the answer to the noble Lord's point, although I am sure that it will be very sympathetically looked at by the Minister.
BARONESS SUMMERSKILL: I do not want to repeat the speech I made on Second Reading—it is quite clear that the noble Lord fully understood what I meant last time, so I will not repeat it—but what astonishes me in the contribution he has now made is that he tells the Committee there is widespread concern since we met last week. Some of us are very much in touch with the medical world, and, so far as I know, there is absolutely no evidence of any widespread concern. I am utterly astonished that the noble Lord should even suggest this to the Minister here—and, knowing the Minister very well, I am quite sure she will not be intimidated by this "widespread concern" to which he refers. I take entirely the other point of view: in my opinion, far from there being widespread concern, this new suggestion has been welcomed generally, and I hope the Minister will tell that to her right honourable friend.
5.19 p.m.
BARONESS LLEWELYN-DAVIES OF HASTOE: It is a very difficult thing to contradict my noble friend who has just sat down—indeed, a rather dangerous thing—but I must do so if she says there is no concern. I am afraid that this is just not so. Indeed, the fact that although there are no Amendments down to this clause people wish to speak about it is, I think, evidence of this concern. We have all welcomed this Bill. We welcome the experiment set out in this clause, of setting up university hospitals, but we must remember that my right honourable friend the Minister has said in another place that he will consider the whole question of the Todd Report. The Todd Report is a magnificent, weighty, fascinating document, very deeply considered

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and rather boldly speculative in much of its thinking, and I think it is not in any way disloyal to the principles of the Bill to ask for reassurance about some points which arise under this clause. There is no doubt, if only because of the very eminence of the noble Lord the Chairman and the Members of the Committee that there is to be a good deal of reconsideration about the position of the teaching hospitals since the Bill was drafted. I think that we can, in no hostile but rather more an inquiring spirit, ask for some reassurance from my noble friend when she comes to reply.
In her very lucid winding-up speech on Second Reading my noble friend said that she expected that there would be a lot of talk about Clause 5 and the Minister's intentions because of its far-reaching recommendations about the abolition of the boards of governors of the teaching hospitals and its suggestions for the regrouping of London teaching hospitals. We who work in the London teaching hospitals would be less than human—indeed, we should be failing in our duty—if we did not ask for deep thought to be given to them when they are being considered. If you take paragraph 500 of the Report, which is really what this is all about, you will see that, as well as recommending the abolition of the teaching hospitals' boards of governors, they recommended also that the regional boards should be modified so as to give greater expression to the views of the universities. I think we are entitled to ask that when this is being considered we should not be given one half of the Todd recommendations without the other half. We should like a reassurance about that.
There are various detailed points that one could raise, all of which, we hope, are going to be given to us in the Green Paper which is so eagerly awaited—indeed, so often is it referred to in debate in this House that one really begins to think that one is "waiting for Greeno!". In that respect we are particularly interested in the fact that the university hospitals, as set up under this clause, differ greatly from the arrangements outlined by the Todd Report in Appendix 16. I should like to have clarification, if not to-night then later in the Green Paper, about which is going to apply, if there is to be reconsideration of the teaching hospitals' position.
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I do not want to delay the business of the Committee, but I should like to say this to my right honourable friend the Minister and to the noble Baroness. We welcome this Bill; we welcome the experiment in university hospitals. We do not wish to tie the hands of the Minister, and we think he ought to have powers to experiment with the structure of hospital administration. But we should be lacking in our duty if we did not ask that if there is to be reconsideration of the, de-designation of the teaching hospitals, there should be consulted not only Parliament, not only the universities, not only the regional boards, but the boards of governors of the teaching hospitals.
LADY RUTHVEN OF FREELAND: I want to say a few words in support of my noble friend Lord Cottesloe and the noble Baroness, Lady Llewelyn-Davies, in what they have said about Clause 5. We all realise that the Minister has powers to de-designate any hospital in the country. We hope that, as the noble Baroness has said, these powers which we are agreeing to-day will not be used without consultation, not only with the universities but with the boards of governors. I speak from two sides of the picture. I am a member of a Regional Board and of the board of a postgraduate hospital and of an undergraduate teaching hospital. I know that, as my noble friend Lord Cottesloe said, there is a great deal of worry in the minds of the board governors and the house governors of all these hospitals. We hope very much that the noble Baroness who is to reply will repeal the assurance which she gave us briefly on Second Reading: that these hospitals will not be just brushed on one side and only the universities consulted, but that members of the boards of governors—who, after all, are chosen by the Minister—will be consulted before anything very definite takes place.
LORD PLATT: As a member of the Royal Commission on Medical Education I did not come here this afternoon expecting that there would be a debate on it. If I may say so, I do not think that this is the right time for such a debate, and therefore I do not want to take it any further. The kind of reassurance I should like from the Government is not that they are not going to do this or that, but that they will not take these decisions

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until the Todd Report has been fully discussed—which I hope will be at an early date. I think that if the noble Lord, Lord Cottesloe, reads it once again—and I feel sure that he has already read it more than once—he will find the answer to a good many of his questions. I think I should ask noble Lords to note that there is a difference between a medical school and teaching hospital. This is very important. They might also bear in mind that the Royal Commission had to consider the future and not just the present, and also that we are reaching a stage when every teaching hospital in London is going to have a cardiac transplantation if some kind of co-ordinating mechanism is not instituted sooner or later.
BARONESS PHILLIPS: I should like first to express my thanks to the noble Lord, Lord Platt, for so neatly putting the point that we are not this afternoon debating the Report of the Royal Commission. It is important to remember that we are discussing Clause 5. I can give a solemn assurance to the noble Lord, Lord Cottesloe, to the noble Viscount, Lord Addison, to the noble Baroness, Lady Llewelyn-Davies, to the noble Lady, Lady Ruthven of Freeland, and to my noble friend Lady Summerskill, that any points raised will be fully considered by my right honourable friend. I appreciate that noble Lords, with their great wealth of experience and knowledge, want to have reassurance. I am happy to repeat what I said on Second Reading. The Minister gave an assurance in the Commons, when he introduced the Bill, that it is not his present intention to use the powers given by Clause 5 to make sweeping changes in the administration of the existing teaching hospitals controlled by boards of governors, and a further assurance that the recommendations of the Royal Commission about the future of the existing teaching hospitals are being examined by the Government in common with the Commission's other recommendations.
Perhaps I should remind the noble Baroness, Lady Llewelyn-Davies, that in fact the Bill was drafted before the Report of the Royal Commission was published. No decision on the general question of the future administration of teaching hospitals has been reached, and there
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is no indication of what the decision might be. I can only reassure all noble Lords that the Green Paper which will deal with the whole structure of National Health Service is awaited, and, so far as I can gather its publication is imminent. I hope that with those assurances, the Committee will accept this clause.
Clause 5 agreed to.
Clauses 6 to 12 agreed to.
Clause 13 [Domestic help and laundry facilities]:
5.30 p.m.
BARONESS BROOKE OF YSTRADFELLTE BARONESS BROOKE OF YSTRADFELLTE moved, in subsection (1), to leave out "domestic" and insert "home". The noble Baroness said: This and the following Amendment, to leave out "domestic" and insert "home" in lines 16 and 24, may seem trivial at first sight, but actually there is much more to it than may appear. I understand that reference to "domestic help" is heartily disliked by the workers in the service. They feel that it harks back to the old drudgery that existed before electric vacuum cleaners, constant hot water, drip-dry materials, washing machines and washing-up machines became the order of the day. Now it is only the housewife and mother who does the domestic work, and the home help, recruited and employed by the local authority, comes to their assistance if the circumstances brought about by age, illness, having a baby or having several children at home merits that help.
The home help service as we know it is a popular one for those at the receiving end, and it is also recognised as a worthwhile occupation. The only drawback lies in the shortage in the numbers of women and of men to fill the ranks, and if this service is now to become a mandatory one, the scope for expanding it is bound to be limited by the realities of the situation. We shall need more home helps rather than fewer, and why on earth it is thought necessary to make recruiting for the service more difficult by changing the statutory description from a warm and friendly one into an opprobrious one, universally disliked, is more than I can understand. "A rose by any other name would smell as sweet." But these "roses" do not wish to become "domestic helps". I hope that the Minister will appreciate the point, and I shall

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be interested to hear what he has to say. I beg to move.
Amendment moved—
Page 12, line 16 leave out ("domestic") and insert ("home").—(Baroness Brooke of Ystradfellte.)
BARONESS SEROTA: I can assure the noble Baroness, Lady Brooke of Ystradfellte, that there is nothing between us on this question of the name. Indeed, like the noble Baroness and others who, either directly or indirectly, know the work of the home help service, we would wish to recognise in every way we can the very broad nature of the help that they give in the running of the home, whether it be by assisting the mother in the care of her young children or assisting the elderly to remain in the community and thus, on some occasions, avoiding the need for hospital care and its consequent cost in terms of human happiness, quite apart from finance. I warmly agree with her belief that the term "domestic", which is a carry-over from the National Health Service Act 1946, is completely out of date. I should like, on behalf of the Government and, I am sure, of all noble Lords in the Committee, to pay a very warm tribute to the work of the home help service, not forgetting the home help organisers, who in my view have a most intricate administrative task to undertake in recruiting suitable staff and particularly in placing them in the homes where they can best and most suitably be of help. By accepting the Amendment I hope that we shall encourage those working in the service and encourage more people to join them and so help make up the numbers that we know we shall need in the future as our population ages.
BARONESS BROOKE OF YSTRADFELLTE: I could not be more pleased that the noble Baroness, Lady Serota, was called upon by the Government to reply to this Amendment. That is no derogation of the noble Baroness, Lady Phillips, for whom I have a great admiration. But the noble Baroness, Lady Serota, and I have worked together on hospital management committees in the past, and I have always had a very healthy regard for her commonsense practicability. This is exactly what I should have expected, that she would persuade the Government, or use some means un-
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known to me to cause the Government to accept the Amendment. I am very grateful that she has done so.
As I think this is the first time that the noble Baroness has replied to an Amendment in the Committee stage of a Bill in your Lordships' House, may I say that we look forward to further utterances from her. I hardly dare to hope that I shall get yet another Amendment accepted this afternoon, though you never know, but may I say how much we welcome the fact that she will be heard from time to time from the Goverment Front Bench.
On Question, Amendment agreed to.
LORD NEWTON: I beg to move Amendment No. 3.
Amendment moved—
Page 12, line 24, leave out ("domestic") and insert ("home").—(Lord Newton.)
On Question, Amendment agreed to.
Clause 13, as amended, agreed to.
Clause 14 agreed to.
Clause 15 [Provision of advice, &c., for purposes of family planning in Scotland]:
On Question, Whether Clause 15 shall stand part of the Bill?
LORD FERRIER: I should like to say a word about Clause 15. I gave notice that I intended to do so. On the occasion of the Second Reading debate, the noble Baroness, Lady Phillips, said that she would answer a point that I raised about the Family Planning Association. I have received her letter and acknowledged it, and I look forward to an opportunity of discussing it with her or with the noble Lord, Lord Hughes, at a later date. For the record, I would say that I am not altogether happy that Clause 15 goes as far as it might over the question of the work of the National Health authorities and of the Family Planning Association. It may well be that in view of the importance of this aspect of National Health work, the time may not be far off when the Family Planning Association may have to be merged with the National Health Service, whether in Scotland or in England—I refer only to Scotland. I believe that this may well come about and perhaps the matter may be looked into, although it does not call for any further remarks from me on Clause 15.
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR SCOTLAND (LORD HUGHES): I am not certain whether the noble Lord, Lord Ferrier, expects any reply from me on the point he has raised. All I can say is that the clause as it stands applies to Scotland the provisions made applicable in England and Wales. It may well be that the noble Lord is right and that they should extend further, but he would not disagree that in matters of this kind we in Scotland are inclined to go rather cautiously; and if the English decided last year that this was a matter on which they ought not to rush in, it is certainly no occasion for us to be unduly precipitate.
Clause 15 agreed to.
Clauses 16 to 24 agreed to.
Clause 25:
Definition of "services of the Crown" for purposes of provisions of Patents Act 1949.
25. For the purposes of sections 32, 46, 47 and 48 of the Patents Act 1949:
(a) "the services of the Crown" shall be deemed to include any sale or supply of a patented invention for the purpose of providing services under Part IV of the National Health Service Act 1946 or Part IV of the National Health Service (Scotland) Act 1947 and
LORD NEWTON LORD NEWTON moved, at the beginning of the clause, to insert:
"(1) Subject to the following provisions of this section,".
The noble Lord said: I am very conscious that the first three Amendments moved this afternoon have all been accepted by the Government. I am sure that is due to the reasonableness of the noble Lord, Lord Brock, and my noble friend Lady Brooke. May I be permitted to congratulate the noble Baroness, Lady Serota, on her maiden appearance at the Despatch Box, and on her good fortune in being able to accept the first Amendment with which she has had to deal. I am quite certain that is very auspicious for the future of the noble Baroness. Although I cannot hope to emulate the sweet reasonableness of the noble Lord, Lord Brock, and my noble friend Lady Brooke, I hope that I shall be as successful as they have been in getting Amendments accepted.
Amendment No. 4 is a paving Amendment for Amendment No. 6, and Amendment No. 11 is consequential on Amendment No. 6. It may, therefore, be convenient if I discuss those three Amendments together, although I am moving only Amendment No. 4. I would also ask the Committee's permission to discuss at the same time Amendment No. 5, because in effect it proposes an alternative to what is proposed in the other three Amendments. If one of the two alternatives were acceptable to your Lordships and to the Government, I would not move the other one.
My noble friends and I, as I think was apparent on Second Reading, take strong objection to Clause 25 as it stands—for three reasons. The first is the manner in which the clause got into the Bill in the first instance. Clause 25 empowers the Government to make and use patented drugs and medicines for certain services of the Crown—namely, the general and medical pharmaceutical services—without the consent of the patent owners. This proposal may not represent any change of principle in the patent system or patent law, but that is not to say that it is a small matter. Indeed, I think that many people would consider it a fairly big matter. Yet the clause got into the Bill only at the eleventh hour in another place. It was, in fact, the last Amendment to be moved at the end of the Report stage and even then it was not moved by a Minister but by a private Member.
The Minister of Health's excuse for not putting his own clause into the original Bill, so that it could be fully discussed at all stages, was that he and his officials had been too busy considering other recommendations of the Report of the Commission headed by the noble Lord, Lord Sainsbury, into the relationship between the pharmaceutical industry and the National Health Service. That, if I may say so, is just about the feeblest excuse that I have heard for not putting a clause into a Bill at the beginning.
The Minister then went on to advise another place to accept the new clause, which in fact the House did, although he thought that it went too far and its scope was too wide. He gave a broad hint that he would seek to amend the clause in this House. That hint was confirmed by the noble Baroness, Lady Phillips,

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in moving the Second Reading here, and she has now on the Marshalled List an Amendment in her name to take out the whole of Clause 25 and to substitute an entirely new one. I do not think that Parliament should be treated in this cavalier fashion—in what some might regard as an airy fashion. I do not think that a Minister of the Crown, such as the Minister of Health, should encourage the sending up to your Lordships' House of a clause which he knows and admits to be unsatisfactory.
Our second objection to this clause is that there had been no consultation with the industry. The clause had its origin in recommendation No. 11 of the Sainsbury Report. I hope that the noble Lord will permit me to refer to his Report in the normal way. I am given to understand that after the publication of the Sainsbury Report the Minister gave an assurance to the industry that the recommendations would be discussed in detail before any conclusions were reached. Of course, there were discussions about the recommendations, but not, I am told, about recommendation No. 11, or about the subject matter of Clause 25. So it would seem to me, at any rate, that a promise to the industry has been broken, and I do not consider that this House should be a party to a broken promise of that kind, as it would be if we left this clause in the Bill as it stands at the moment.
Our third objection is that we consider that the Minister should have waited for the report of the Banks Committee on the patent system and patent law. The Minister's reason for jumping the gun, so he told another place, was that he agreed with the Sainsbury Committee that there was no need to wait for Banks; but—if I am wrong about this no doubt the noble Lord, Lord Sainsbury, will correct me—the Sainsbury Report did not say anything of the sort. It is my recollection that they expressed no opinion on this point of whether or not the recommendation should be referred to the Banks Committee.
LORD SAINSBURY: My Lords, I think it would be more accurate to say that we did not consider this recommendation of extending the Crown use to be in the same class as any of the other changes in the patent law concerning
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pharmaceutics. We did think in the case of possible other changes that it would be better to wait on the Report to which the noble Lord has referred. In the case of this extension of Crown use, we thought that action could be taken before that other Report was received.
LORD NEWTON: My Lords, I am grateful to the noble Lord for giving us that explanation, but nevertheless I think he would still agree with me that in his Report no mention was made of the view of the Committee as to whether or not this recommendation should be referred to the Banks Committee. Those of us, including a large number of people outside this House, who have not had the benefit of the personal explanation which the noble Lord has just given to us would say that in logic and common sense—not always the same thing, by any manner of means—the only conclusion to be drawn from the Report itself is that the Committee had no particular view one way or the other. This is not a matter of any great importance. Nevertheless, it seems to me and to others more knowledgeable than I with whom I have discussed the matter that it is incenceivable that the Banks Committee will not report on the question of the use of patents for the purposes of the Crown. I know that they have much evidence on the subject. Therefore, to jump the gun in this manner, as the Minister has done, appears to me to be an insult to Mr. Banks and his Committee, all the more so because I cannot see that there is any urgency about this matter at all.
For those three reasons my noble friends and I had to consider whether we would invite your Lordships to remove the clause in toto from the Bill or whether we should seek to amend it. I suppose that in logic and consistency we should have opted for the former course, and indeed that was our original plan, but, in the event, we came down on the side of the second course, to seek to amend the clause, largely because it is apparent that the Government are determined to go ahead in this unnecessarily precipitous way. Furthermore (and here I must emphasise that I am speaking only for myself), I agree with the sentence in Recommendation 11 of the Sainsbury Report, which says:
"Since the negotiation of prices may sometimes fail to result in agreement, a procedure

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must be available to which Ministers may have recourse".
On the other hand, I most emphatically do not agree with the procedure as proposed in Clause 25.
Amendment No. 4, as I have said, is a paving Amendment for Amendment No. 6. I apologise for the inordinate length of Amendment No. 6, but I think I can explain it quite briefly. Its purpose is to mitigate the arbitrariness of the Crown user provisions of Section 46 of the Patents Act 1949, but only in the context of the exercise by the Minister of the extended powers which he seeks to take under Clause 25. The Amendment achieves this purpose by making the exercise of those extended powers subject to the making and confirmation of an Order by the Minister of Health, and by providing that such an Order, first, may be made only if certain conditions apply and after the Minister has consulted any interested organisations; secondly, may be confirmed only after the Minister has given notice of the making of the Order and an opportunity has been given for objections to the Order to be made; thirdly, may be made only after an inquiry by a person specially appointed for the purpose, whose report must be considered by the Minister; and fourthly, may, after confirmation by the Minister, be suspended or annulled by the court on certain specified grounds if its validity is questioned, within six weeks' notice of the confirmation, by any person aggrieved. The purpose of the consequential Amendment, No. 11, is to secure that an Order made under Clause 25, which will have been exposed to statutory inquiry procedure and to the possibility of suspension or annulment by the court, should not be subject to the further hazard of annulment by Parliament.
I turn now to Amendment No. 5. This is an alternative method of mitigation—and it is, incidentally, the alternative which I prefer. It has the effect of bringing the services under Part IV of the National Health Service Act within the definition of "services of the Crown" for the purpose of Section 32(3) of the Patents Act 1949. Subsection (3) of Section 32 of that Act is quite short, and I will read it. It says:
"Without prejudice to the provisions of subsection (1) of this section, a patent may be
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revoked by the court on the petition of a Government department, if the court is satisfied that the patentee has without reasonable cause failed to comply with the request of the department to make, use or exercise the patented invention for the services of the Crown upon reasonable terms."
It seems to me that the proposal in Amendment No. 5 is eminently reasonable and just, because it ensures that in any dispute between the industry and the Government, at the end of the day the Government, being one of the parties, shall not be judge in its own court. What could be simpler, fairer or more just than that? I realise that on occasions, if this procedure were used, there might be a delay before a dispute could be brought before the court, but I think that that delay would have to be accepted. It may be true, as was said by a noble Lord in this House last week (I think it was the noble Lord, Lord Sherfield) that often a quick decision is better than the right decision. However true that may be, never can a quick decision be better than a just decision.
All of the Amendments to which I have been speaking are probing Amendments, designed to elicit the views of the Government, their reactions and their intentions. I do not suppose that any of them are acceptable to the Government as drafted, but I hope that the noble Baroness, Lady Phillips, will be able to say that the Government accept the principle of one or other of my alternatives, and that at a later stage in the proceedings on this Bill she will move Amendments designed to give effect to the principle of one or other of them. I beg to move.
Amendment moved—
Page 20, line 5, at beginning insert—
("(1) Subject to the following provisions of this section.").—(Lord Newton.)
5.56 p.m.
LORD OGMORE: As your Lordships will have seen, I have an Amendment to exclude this clause altogether, and I think this is by far the better course to take. If the noble Lord, Lord Newton, is not satisfied with the assurance that he gets from the noble Baroness, Lady Phillips, I shall certainly move that Amendment in the hope that your Lordships will support me in the Division Lobby. At the moment, however, we are dealing with three Amendments, and

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I thought I would just say a word or two on them, without prejudice, as it were, to anything that I may have to say on the issue of whether the clause should be part of the Bill at all.
Taking these three Amendments, I think the second Amendment, No. 5, is a much better Amendment than the other two, which are in fact one Amendment. The point about it is that it would require the Government to expose, not only to the patentee but to the public and Parliament, why they needed to exercise the power without the judicial scrutiny which is inherent in Section 32(3): in other words, the Government would have to "come clean" and tell everybody why they were going to take this power, and why they were going to take away from the patentee the right he had been given by the Crown when he got his licence.
It is rather interesting to note that when this matter was originally debated in another place in 1949 (it came, of course, under the Patents Bill 1949, and was debated on June 29, 1949) the then Solicitor General, among other things, said:
"The provision in Clause 14"—
and Clause 14 is now Section 32(3):
"enables a Government department to buy them at a reasonable price. The honourable Member complained of that. We think it right that the State should be on the same footing as any ordinary member of the public, and should be able to purchase as members of the public at a reasonable price. The honourable Member asked if there was any way of testing or disputing the price at which the State sought to buy an article. There is. The effect of Clause 14 is that application can be made to the court to revoke a patent if a patentee will not supply an article on reasonable terms. It will be for the court to determine what in a particular case are the terms upon which an article should be supplied."
The whole purpose of that subsection was to enable the court to determine what should be a reasonable price, and not for the Government to take the article concerned and use it without any agreement or any recourse to the court for that particular purpose.
We must remember that in this regard Section 46 of the Patents Act 1949 actually referred to matters relating to defence. That was its whole purpose. It was not dealing with pharmaceutical products and things of that kind, but matters relating to defence. And
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for a considerable time the Government have had power under other Statutes to take articles relating to defence; that is to say, bombs or parts of guns or parts of aircraft, and so on. They have had power to do that because for obvious reasons it might be necessary. If there is a national emergency, if a war is looming up, it is sometimes important to take quick action, for the Government to be able to use a patent and then to have the question of compensation argued out later in court. That is a perfectly reasonable proposition. It was never intended, until Mr. Enoch Powell exercised a power which in my view he did not have, that this particular provision should be applied to such things as pharmaceutical products. For those reasons, I think that this is a far better Amendment than the other one, and I hope that if your Lordships are going to amend this particular clause you will do so in that particular way.
I may say that amending the patent law in this fashion has caused a great deal of concern, not only to the pharmaceutical industry but also in commerce as a whole and among those dealing particularly with patents. They feel that this is driving a coach and horses or a bus through the patent law, and in fact it makes a complete nonsense if we do what the Government wish us to do in this particular instance. That is all I have to say on this particular Amendment, and, as I say, I hope that if your Lordships feel flat it is necessary to have one of these Amendments you will choose Amendment No, 5.
6.2 p.m.
LORD SAINSBURY: I hope that I shall be permitted by the Committee to explain a little further why the Committee of which I was the Chairman made a recommendation, No. 11, which the revised Clause 25 seeks to carry out but, before doing so, I would emphasise that I am fully aware of the fears of the pharmaceutical industry regarding Section 46 of the Patents Act 1949. If I may quote our Report, we stated:
"We are aware of the feeling that the use of Section 46 has aroused in certain sectors of the industry, but we do not think that the industry's legitimate interests would be prejudiced if this section were used judiciously only as a procedure of resort following total dead-lock after full negotiations".
Since the publication of our Report I have had no reason to depart from that

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view; nor do I have any reason to believe that present or future Ministers will use this power in an unreasonable manner. In fact, if an improved and strengthened voluntary price regulation scheme on the lines proposed in our Report is introduced, total deadlock between the health departments and firms in the pharmaceutical industry would be even less likely than at present.
As has been said, the effect of the amendment of Clause 25 is to bring the general medical and pharmaceutical services within the services of the Crown for the purpose of Section 46 of the Patents Act, 1949. This, in my opinion, is an entirely desirable step. There is a certain lack of logic in the original decision to bring the hospital services into this category and exclude the general medical and pharmaceutical services. Both are vital parts of our National Health Service; both are provided under the same legislation, and in my view there is little, if any, justification to treat them differently in this respect. Furthermore, the general medical and pharmaceutical services account for a major part of the total expenditure on medicines. In 1965–66 of a total bill of nearly £174 million only £25 million, or about 15 per cent., was accounted for by the hospital services, which means that without this Amendment the powers conferred on the Minister by Section 46 would not be available in respect of the largest and most important part of the National Health Service.
It is no secret that under successive Governments the health departments sometimes found it difficult to arrive at voluntary price agreements that they considered to be fair to the taxpayer as well as to the firm concerned. That, in my view, and in the view of the Committee of which I have the honour to be Chairman, shows that the Departments' bargaining powers need to be strengthened. May I remind your Lordships of something that the spokesmen for the industries very often conveniently forget: that normal competitive conditions do not exist for ethical pharmaceuticals prescribed under the National Health Service because the general practitioner prescribes what he thinks is best for the patient without very much thought for the price. The patient consumes and the taxpayer
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through the Health Department pays. Thus, while the Health Department foot the bill, they have no choice of the product they pay for. I believe it is very important to provide greater protection for the taxpayer in this field where there is no normal price competition, and that the fears of the industry are grossly exaggerated, and therefore I support most warmly and strongly Amendment No. 7.
6.9 p.m.
LORD FERRIER: I need not declare an interest again. I did so on Second Reading and your Lordships are aware that, although I have no connection in an executive capacity with the pharmaceutical industry now, I was concerned with it in 1961, when the then Minister of Health used Section 46 of the Patents Act to seize pharmaceutical patents. Of course, this being the case, I appreciate the difficulty of the noble Lord, Lord Newton, in aligning himself (shall we say?) with the noble Lord, Lord Ogmore, with whom I align myself in saying that Clause 25, either as it stands or as amended in the manner proposed by the noble Baroness, should not be in the Bill at all.
With due respect to what the noble Lord, Lord Sainsbury, has just said, I would remind your Lordships of what the noble Lord, Lord Newton, said: that there was an undertaking that legislation arising out of the Sainsbury Committee's Report, or anything thereunder, would be discussed with the industry before it was put on the Table. In this case, due to the circumstances described by the noble Lord, Lord Newton, that is not what took place here. It has been said that the Banks Committee need not worry themselves about this, but the fact is that the Chartered Institute of Patent Agents, in their memorandum of evidence to the Banks Committee, drew marked attention to this problem of Section 46, and I think it is inevitable that the Banks Committee are bound to pronounce upon it. In one part of their evidence the Chartered Institute of Patent Agents say that the use of Section 46 to cover the importation of patented articles from abroad (which is what this really amounts to) is in their view contrary to the philosophy of the patents system.
That being the case, I find myself in considerable difficulty because, as I have

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said, I should like to align myself with the noble Lord, Lord Ogmore, and to oppose Clause 25 out and out; but the noble Lord, Lord Newton, has put before us two alternative Amendments, and the noble Lord, Lord Sainsbury, I gather, has supported the second one.
LORD SAINSBURY: No, that is not so.
LORD FERRIER: Then the noble Lord is supporting No. 7, which is that of the noble Baroness, Lady Phillips. As we are now discussing Amendments 4, 5 and 6, it will be interesting to see how the Government are going to react to the proposals of the noble Lord, Lord Newton. If they accept Amendment No. 5 I should like to refer to that again; if they accept neither, then I know where I am.
To my mind, it is quite important, not only from the point of view of the pharmaceutical industry—even under Amendment No. 7—but for industry as a whole, that this proposal is in fact a departure from the usual practice in regard to patents; and, as I said on Second Reading, if this is going to be accepted in the case of the pharmaceutical industry, where will it stop? With great respect, it is all very well for the noble Lord, Lord Sainsbury, to say that this power will not be used unreasonably. The only real protection against injustice which might arise in the future is to provide that there is some measure of arbitration. For that reason I say again that I await with interest the reaction of the noble Baroness to the proposals put forward by the noble Lord, Lord Newton.
LORD SAINSBURY: I wondered whether the noble Lord was implying that the former Minister of Health was unjustified in using Section 46 for the Hospital Services?
LORD FERRIER: Yes indeed. If the noble Lord is asking me that question, I would say that I believe it was wrong then and I believe it is wrong now; and in my view it was the most extraordinary development.
The company involved fought the case to the House of Lords, and, by a majority (this was the Judgment to which the noble Lord, Lord Sainsbury referred), the House of Lords found against the company. The decision was a narrow
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thing and, whatever was the fact in law, the Judges who took part in the proceedings were anxious about the whole principle of the law, which they administered, I am sure, correctly. That being the case, I think it is quite understandable that the industry—whoever is running it now—should be full of anxiety. Indeed, I think it is proper for industry as a whole—not only the pharmaceutical industry—to be full of anxiety on this intricate problem.
For that reason, I feel inclined to await the speech of the noble Baroness and to see what developments there are before I commit myself as to whether I support the noble Lord, Lord Ogmore, or perhaps raise the matter again at a later stage.
LORD SEGAL: I have tried to follow carefully the arguments adduced on both sides of the Committee on these particular Amendments, but the reason I rise now is to emphasise that it is not only a matter between the pharmaceutical industry and the Government; there is involved also a far more important third party than either of these; namely, the interests of the patient and especially, I would stress, in a time of medical emergency. On this side of the Committee we may be concerned about the Government having to pay unnecessarily large sums to the pharmaceutical industry for the use of a proprietary medicine on a large scale. What I am much more concerned about is the possibility of the saving of human life on a large scale if, for example, at any time there should come again to this country an epidemic similar to that of the Spanish 'flu, with a relatively high rate of mortality. I feel that it would be quite wrong for the Government in a state of medical emergency on a national scale, to embark on discussions with the pharmaceutical industry about whether the use of a specific life-saving drug can be acquired by the Government at short notice.
Therefore, although I have listened carefully to the arguments from all parts of Committee—and I must say that I have a great deal of sympathy where the principle of justice towards the pharmaceutical industry is involved—yet on balance I feel strongly inclined to put the interests of the patient first and to arm the Government with enabling powers for them to use, in the case of a severe

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national emergency, where a specific drug is available under patent.
LORD OGMORE: Before the noble Lord sits down may I ask him whether he is aware that under Section 49 of the Patents Act the power to which he refers is already available? In fact, in a case of emergency—and "emergency" is defined very widely and covers such a case—the Government can deal with the product that it wants in the way suggested by the noble Lord.
LORD SEGAL: The noble Lord in his previous remarks referred to the state of emergency and the interests of national defence. It may be a matter of dispute to define what is a case of emergency, but I feel it is quite sufficient for the Minister to acknowledge that where human life is involved there is no need to declare a state of emergency; that he should be armed with these powers to have access, by one means or another, to some form of specific drug which in his knowledge could be of enormous lifesaving potentiality.
LORD OGMORE: I did not make myself clear. The emergency I was talking about was under Section 46, which was originally a section where the Crown could take over in time of war or threat of war warlike material; that is the point. But Section 49 is much wider, and in case of emergency they can take over, under Section 49, a wide range of materials which would cover the case that the noble Lord has in mind. That is why I say they do not need under Section 46 the power the noble Lord suggests, because they have it already under Section 49.
LORD SEGAL: I am grateful to the noble Lord for endeavouring to make the position clear; nevertheless I feel it ought to be specifically stated in this Act that certain circumstances may arise where the Minister is justified in not having recourse to the full procedure and discussions with the pharmaceutical industry. Although I place this in rather a minor key, all of us can recall an instance, in 1961 I think it was, when a Conservative Minister of Health—whatever views we may hold about his pronouncements on other subjects, I think we all have to agree that he is a man
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of absolute integrity with, if I may say, so, a very fine record as Minister of Health—had to take certain decisions over and above consultations with the pharmaceutical industry. I feel very strongly that these powers should not only be retained but actually embodied in the Act.
LORD COLERAINE: I must first of all declare my own interest in the subject matter of this clause. I am, and have been for more than twenty years, on the board of a pharmaceutical company—may I say at once a British pharmaceutical company, not an American one—but I hope that that experience, though it may have given me a little more knowledge of the general context of the clause, will not have unduly prejudiced my view. I have a prejudice against any Government taking arbitrary action which results in the confiscation of property, and if the Government take over a patent, whether it is done through the agency of Mr. Enoch Powell or whether it is done through the agency of the present Minister of Health, it is, in my judgment, committing an act of theft, unless it goes through the procedures which attach, for example, to the taking of land and other forms of property.
But I think there is another issue here, equally important though in a different key, and that is the question of the cost of pharmaceutical research and how that is going to be paid for. I think it is evident to your Lordships, and certainly it is evident to the noble Lord, Lord Sainsbury, that unless pharmaceutical companies can recover the cost of research, which is enormously expensive, there is not going to be research, or there is going to be inadequate research.
LORD SAINSBURY: May I interrupt the noble Lord? If you study the voluntary price agreements you will find that full allowance is made for firms who do research. I have some figures. British companies spent £7 million in 1965—which were the last figures available at the time the Report was written—but nearly 80 per cent. of the £7 million was accounted for by four British firms. Therefore they are entitled, obviously, to consideration for the amount of money they spent in research. But some firms in the industry claim expenditure on research which the Ministry of Health

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may not consider is justified. There is every provision, and always has been under the voluntary price agreements, for consideration of research expenditure. It is wrong to suggest, as the industry does so frequently, that every firm in the industry spends money on research, or spends money on worthwhile research, which is a different thing.
LORD NEWTON: As the mover of these Amendments, with the possible exception of the noble Baroness I probably know more what they are about than most noble Lords. It seems to me that we are getting a little far away from these Amendments and talking about things which might be better discussed on the question whether the clause shall stand part.
LORD COLERAINE: If it would be more convenient to develop that line of argument on the question that the clause stand part, I will do so certainly, and I will leave it for the moment. But there are some arguments I think I can put, because my noble friend Lord Newton put them and presumably they are appropriate to his Amendments. The noble Lord, Lord Newton, was arguing that these matters should have been left to the Banks Committee which is making a study of patent law. The noble Lord, Lord Sainsbury, countered that by saying that other aspects of the problem, he quite agreed, should go to the Banks Committee, but this particular aspect neither he nor his Committee thought should go there. With the greatest respect to the noble Lord, Lord Sainsbury, I doubt whether he or his Committee are the best judges of that, because this question of patent law affects far more that the National Health Service, affects far more than the pharmaceutical industry; it affects industry as a whole. It might affect the whole question of our balance of payments, and I really do not think the Minister is justified in basing his case on this very much wider issue of patent law on the recommendation or the absence of recommendation of the Sainsbury Commission.
The noble Lord, Lord Segal, who is so knowledgeable and always so fair minded, said that his main interest was that of the patient, and I suppose that ultimately that is the main interest of each one of us. But is he quite sure
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that the interest of the patient is going to be served if this clause stands in the Bill? Because if it stands in the Bill it might well be that research effort subsides and that when this great emergency comes, this re-emergence of something like the Spanish 'flu of 1918, a drug that might have been there to deal with it might not be there at all. I would ask him to consider whether, even in the interests of the patient, he is right in supporting this clause. Of the three Amendments which we are now discussing, the two of my noble friend Lord Newton and that of Lord Ogmore, I personally think that Lord Ogmore's is the best, simply because it would mean that the whole question would be deferred until the Banks Committee had had a chance of considering it. But, in default of that, I would certainly support either of the Amendments moved by my noble friend.
6.30 p.m.
LORD HAWKE: I have no interest to declare, but I would say that, from general common sense, it is reasonable to assume that the Minister should have powers to take these private patents if he thinks that he is being "taken for a ride". But he should not have the power himself to fix the price. That goes outside any form of human justice, and I am surprised that the noble Lord, Lord Sainsbury, who is a prominent business-man should advocate such an idea. He is one of the principal grocers in England. Supposing he had the power in the interests of his customers to dictate the price of bacon to the producers. Would that be considered fair? It would be greatly to the benefit of his customers, but think what the producers of bacon would have to say. They would assume that they were being "done down." His words were "total deadlock after full negotiations." How can there be anything other than total deadlock if one side knows that the other side is able to fix the price? That is the point. I cannot see why the Government cannot accept some arrangement by which an outside party can fix the price, yet the Minister has the power.
LORD FERRIER: I would take the hint of the noble Lord, Lord Newton, that possibly we may be going wide of the first two Amendments; but particularly after what the noble Lord, Lord Coleraine, said, I feel justified in saying

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one or two words about what the noble Lords, Lord Segal and Lord Sainsbury, have said. The noble Lord, Lord Segal, implied that the pharmaceutical industry has withheld a drug on occasion pending the settlement of the price.
LORD SEGAL: If I may say so, there is no question, either implied or intended, of the pharmaceutical industry ever having withheld a drug. Possibly, contingencies may arise where the amount of the supply of a drug is not available, where the cost of the drug might be unduly excessive, where the emergency may be acute, where I think the Minister should be armed with certain powers without recourse to the long-drawn-out delaying processes of discussion with the other parties concerned.
LORD FERRIER: I am glad that the noble Lord has made this clear. As he said, there is no question (and I have never known there to be one) of the industry withholding any drug pending settlement of a price. It is conceivable, I suppose, that due to lack of research—which was a point made by the noble Lord, Lord Coleraine—and if facilities and resources for research are curtailed, it may be that a drug does not find its way on the market at all. I feel justified, as the noble Lord, Lord Segal, referred to an epidemic, to tell your Lordships of a story of the time of the Pfizer trouble. It was a Pfizer drug over which the Minister of Health used for the first time his powers under Section 46 of the Patents Act. That enables me to speak of Lord Sainsbury's figures about research. I think I am right in saying that probably Pfizer's spend more in research than the whole of the British industry put together. It was not possible to fix a price with them which they regarded as fair. The Minister of Health thought their price was too high, and for that reason he seized the patent.
But I have a vivid recollection of a Television News broadcast at the time of this upset. There was a polio epidemic. I was looking at the Television News, and there were some mothers and children waiting for further supplies of a much-needed vaccine for preventive work in this acute epidemic. Up drove a van, and everybody cheered. It was a Pfizer
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van. My mind went back to Kipling's lines
"It's Tommy this, and Tommy that;
and Chuck him out, the brute'!
But it's 'Thank you Mr. Atkins',
when the guns begin to shoot."
I think there is some apt angle about that in this particular case. As there may be further opportunities to contribute if the noble Lord moves his Amendment, that is all I wish to say on the Amendments.
6.35 p.m.
BARONESS PHILLIPS: Perhaps it would be helpful if I explained briefly the method by which I had hoped to deal with these Amendments. I am bound to say that that has been somewhat upset by the wide-ranging debate. Nevertheless, I feel that Lord Ogmore would not wish, as it were, to deploy any of his arguments at this point and therefore I will confine myself to the points that have been raised in connection with the Amendments moved by the noble Lord, Lord Newton.
In the first place, I should like to take up the noble Lord's point about the introduction of the clause at a late stage in another place without adequate consultation. I would tell the noble Lord that we should have preferred it if this matter could have been dealt with at a rather later stage in our discussions with the industry, but the timetable was such that the decision had to be taken at the Report stage on whether a Back Bench Amendment should be accepted. We decided that the advantage was in favour of recommending acceptance. In reaching this decision, Her Majesty's Government had regard to the known views of the Association of the British Pharmaceutical Industry and of the Confederation of British Industry, and also had regard to the prospects of finding an equally suitable legislative opportunity within the reasonably near future and to the possibility of loss to the Exchequer if the power was not taken.
I would stress to the noble Lord that we attach great importance to consultations with the industry and with other interests on the recommendations of Lord Sainsbury's Committee. But we clearly cannot undertake to accept their view on every issue, and this is one issue on which Her Majesty's Government have felt it

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right to differ. I am not certain that this will satisfy the noble Lord, but I hope it will go some way towards explaining the Government's action. The noble Lord, Lord Newton, also suggested that there had been no discussion with the industry of Section 46, and that the industry's views perhaps had not been solicited. Section 46 was in fact one of the subjects discussed between the Ministry of Health and representatives of the Association of British Pharmaceutical Industry. At a meeting in December, when a number of the recommendations of Lord Sainsbury's Committee were initially discussed, the Association's representatives outlined the objections that the Association saw to the recommendations on Section 46, which views were notified to the Minister.
The Association's objections have been expounded in detail in a Memorandum of Evidence to Lord Sainsbury's Committee, copies of which were made available to the Ministry of Health. The possibility of resisting a Back Bench Amendment to the Health Services and Public Health Bill was mentioned, and it was agreed that the Association should prepare a paper ready for consideration by the Minister if this arose. But this paper was not, in the event, submitted until the Amendment was put down, and it was therefore not received until just before the Report stage in another place. It did not, however, add to the known views of the Association, and the Minister decided that the balance of argument was in favour of accepting the Amendment. I hope that the noble Lord, Lord Newton—
LORD NEWTON: I wonder whether I could ask the noble Baroness to clarify what she is saying. I appreciate that the Department and the Minister have known the views of the industry for some time on the use of Section 46. I also happen to know that written views were submitted just before the Report stage in another place. But my objection to the way that this clause had been handled was that there had not been discussions. Discussions are not the same as the receipt of views, are they? I think I am right in saying, as I said in moving my Amendment, that after the publication of the Sainsbury Report assurance was given that the recommendations would be discussed.
BARONESS PHILLIPS: I take the noble Lord's point. I can, of course, look into his final point and either confirm it or deny it, as he will appreciate. But I hope that he will accept that this is probably not unusual in the process of a Bill of this kind. It has been suggested, I think, by several noble Lords that the decision to extend Section 46 to the services provided under Part IV of the National Health Service Act should not have been taken in advance of the general review by the Banks Committee of the patent system and patent law. I think the noble Lord, Lord Sainsbury, replied to this point, but I would remind noble Lords that Lord Sainsbury's Committee considered it appropriate to deal with this problem separately from the broader patent issues—which they recommended should be referred to the Banks Committee—and clearly envisaged that action on it might be taken in advance of this wider review.
At least one noble Lord has suggested that Section 46 offends the rules of natural justice and arbitrarily takes away some part of the patentee's monopoly rights. I would remind noble Lords that the use of Section 46 is not arbitrary, in that terms for the use of the patent are determined either by agreement or by the court. The court can ensure that the patentee gets a fair reward for his invention, and in practice Section 46 is likely to be used only if the difference in price between the drugs from licensed and unlicensed sources is very great.
LORD NEWTON: Surely reference to the court is after the patent has been broken. It is about the terms of compensation. There is no reference to the court about whether or not the Government should break the patent.
BARONESS PHILLIPS: I will have to get the reply for the noble Lord on that point.
LORD NEWTON: It is very important it is the whole point.
BARONESS PHILLIPS: I appreciate that. I think the noble Lord will understand if I return to this in the discussion on my own Amendment. The application of Section 46 has not, in Fact, resulted in serious encroachment on the patent rights of a pharmaceutical firm. That again has been referred to by the noble Lord, Lord Sainsbury, since the

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section has been used only very sparingly. It has been argued that there can be no guarantee that Governments will continue to act reasonably. But Governments—and I said this on Second Reading—have always had an interest in a strong pharmaceutical industry and will be strongly inhibited from using the sanction in a way which is damaging to the industry. Moreover, because of the practical difficulties, Section 46 is unlikely to be used except in circumstances envisaged by the Committee of Inquiry.
Now if I may turn to the Amendments, may I take first Amendments Nos. 4 and 6 which, of course, are different in substance to Amendment No. 5, as the noble Lord, Lord Newton, mentioned. In the view of the Government it is necessary to have an effective procedure of resort which can be put into operation without delay to secure alternative supplies if there is deadlock in negotiation with the patentee or his registered licensee. Otherwise, public money would be paid, perhaps for a very long period, which the Ministers concerned could not possibly justify to Parliament as being reasonable. It was the considered view of Lord Sainsbury's Committee, after a very careful and detailed inquiry into the circumstances of the industry, that in some cases excessive prices were being paid, in their view amounting to an excess of several millions of pounds over a three-year period. This is not the occasion to discuss in detail the size of this excess; it may be argued that it is not very large against the other expenditure on drugs during the same period at around £270 million at manufacturers' prices, but the amounts of money involved are not such that anyone who is concerned with the limitation of public expenditure can simply shrug them off.
An attempt has been made in the Amendment to limit the opportunities for delay—for example, by setting time limits for appeal to the courts—but there can be little doubt that the procedure envisaged in the Amendment would lead to very substantial delay, as can often be the case with compulsory purchase orders. In particular, the extremely broad criteria of subsection (3) of the Amendment would almost certainly result in prolonged legal proceedings under sub-
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section (9). Some indication of what might be expected is provided by the cases involving drugs under Section 41 of the Patents Act 1949. Even though, in the industry's view, this section is biased against the patentee and in favour of the applicant, only five out of thirty-two cases since 1960 have reached a final decision and proceedings have lasted from three to five years. Can one expect any less delay under the procedure proposed in this Amendment, where the onus would be on the Departments to satisfy very broadly drawn and indeed speculative conditions? It might well be impossible to satisfy the court that the requirement in subsection 3(d) had been met, without first having taken proceedings and tested in practice what delay would be involved.
The objection of delay would not be conclusive if the procedure were appropriate and necessary, but, in our view, it is not. The procedure suggested is analogous to that used in cases of compulsory acquisition of land, but this is not, in our view, an appropriate analogy. Land is a very different kind of property from a patent, which basically confers on the owner the right to sue for infringement. The owner of land that is compulsorily acquired loses all interests in it, whereas the patentee retains the rights conferred by the patent, notwithstanding the authorisation under Section 46. Although the patentee cannot take legal action for infringement against the Government Department or persons authorised by them, he has the alternative legal remedy in that if negotiations with the Department break down he can apply to the courts to determine the terms for the use of the invention. That is quite different from the compulsory acquisition situation, and it is significant that although the suggestion for an analogous authorisation procedure was put to Lord Sainsbury's Committee they made no recommendation for it in their Report.
To turn to the issues under which the Amendment would be referred to an inspector and would ultimately be determined by the courts, the first two paragraphs, (a) and (b) of subsection (3), both involve assessment of the balance of public interest and are fairly and squarely the kind of issue which must, in our view, be determined by Ministers responsible to Parliament. An independent assessor

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appointed by the Minister would be in no better position to reach a sound judgment than would Ministers themselves, nor would these be issues which it would be appropriate to refer to the court (even in planning and compulsory acquisition cases, the decision on questions of public interest rests with Ministers, and appeal to the courts is on matters of law and procedure). The right course in these circumstances is that envisaged by Lord Sainsbury's Committee, that use of this section in relation to Part IV of the National Health Service should be reported to the House and, if necessary, justified to the House.
The third condition imposed by the Amendment is that the patentee should have failed to comply with a request by the Minister to make, use or exercise the invention on reasonable terms. The Government do not propose to use Section 46 in relation to Part IV—the family practitioner—services except as a procedure of last resort, when the patentee or his licensee has, in fact, refused to make patented drugs available on reasonable terms, but we see no need for a separate statutory procedure to determine disputes over what constitutes reasonable terms, since the interests of the patentee are, in our view, adequately safeguarded by Section 48. We note that subsection 7 of the Amendment enables the Minister to disregard objections which relate exclusively to matters which can be dealt with by the courts under Section 48 on a reference as to terms for use of the invention. We have assumed that it is probably intended to obviate the need for a hearing, but would not seem to have any effect on issues of validity—for example, under subsection (3)(c)—which would seem a fruitful subject for further legal proceedings.
In any event precisely what the courts would take into account under Section 48 in relation to a patented drug is not certain, since no such disputes have, in fact, been referred to them. It seems clear, however, that the Departments would have to make a payment in lieu of royalty which, in the opinion of the court, gave the patentee a fair reward for his research and other work involved in the development and introduction of the patented article. The payment might well not compensate for the profit that would have been earned on the manufacture of the
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article, but the Departments would, of course, be paying to the alternative suppliers the costs of manufacture and a reasonable profit in respect of those costs. What is fair and reasonable in relation to manufacture would in effect be determined on a competitive basis; the competitor may well not have the patentee's costs of research and innovation, but these are taken care of in additional payments which Departments are required to make to the patentee/licensee. If drugs have to be obtained from unlicensed sources, the Health Departments would have to bear in mind the possibility of difficulties and additional costs in assuring adequate control of quality and effective distribution arrangements. The question of using Section 46 will arise only where the difference in price between drugs from licensed and unlicensed sources is very great and the patentee is not prepared to supply to the Health Service on reasonable terms.
In regard to the fourth condition, I have already referred to the practical difficulty of determining whether this condition is satisfied before an order can be made, except by using Section 40, obtaining a decision and finding out in practice what delays would be involved. Moreover, Section 40 is concerned with a different situation, that of endorsement of the patent, conferring a general right to use the patent, or else granting the right to a particular licensee. It involves permanent encroachment on the patent rights and is a more drastic remedy than Section 46, which is a much more flexible and selective instrument. Authorisation under the latter may be given for a limited period, giving the patentee the opportunity to reconsider his position and offer his product at more reasonable prices. We should think it quite unreasonable to delay the use of Section 46 while the suitability of Section 40 was debated. If there are grounds for endorsement of a patent under Section 40, there is all the more reason for using Section 46 in the interim, in order to safeguard the Exchequer interest.
Finally, the procedure envisaged by the Amendment is, in our view, unnecessary. There is no reason to fear that Section 46 will be used other than in the way Lord Sainsbury's Committee envisaged—judiciously and as a procedure of last resort; and if it is so used there is no reason to fear that it will damage the

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industry's legitimate interests. Past experience of the use of Section 46 in relation to the hospital service gives no grounds whatsoever for anxiety; the section has in fact been used very sparingly and there has been none of the serious encroachment on patent rights that some feared. This is amply confirmed by a study of the financial information collected by Lord Sainsbury's Committee for the period 1961 to 1965, the very period during which Section 46 was being used. The Government see no need for the elaborate procedure described in the Amendment put down by noble Lords opposite.
In relation to Amendment No. 5, this would nullify the main object of Clause 25—
LORD NEWTON: I wonder whether the noble Baroness could be slightly less speedy in her delivery, since it would be very helpful to all.
BARONESS PHILLIPS: I am sorry if in an attempt not to be too lengthy I am moving too rapidly. I apologise to the Committee. Amendment No. 5 would nullify the main object of Clause 25, which is to extend the Crown use provisions of Section 46 of the Patents Act 1949 to the supply of drugs under Part IV of the National Health Service. The clause as it stands is in line with the conclusion of the Committee under the chairmanship of Lord Sainsbury that there must be some procedure to which the Health Departments could resort if negotiations on prices of pharmaceutical products failed, and that Section 46 was a selective instrument, the use of which afforded a clear and credible action of resort by the Departments following unsatisfactory negotiations. As I have said, the Committee gave it as their considered view that if the Minister should need a procedure of resort he would be justified in again using Section 46 and in making the adjustment needed to ensure that the powers contained in that section covered the general medical and pharmaceutical services. The Amendment in my name will make a number of drafting Amendments to this clause and will limit it expressly to drugs—this being the category of inventions for which the procedure is in fact needed. But, apart from this, it would not make any fundamental change.
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The Amendment to line 5 would exclude Section 46 and the related Sections 47 and 48 and would limit the effect of the clause to Section 32(3) of the Patents Act 1949. The only effect of the amended clause would then be that refusal to supply a patented invention on reasonable terms for services under Part IV of the National Health Service Acts would be a ground on which the Health Departments could apply to the courts for revocation of the patent. This is in no sense an adequate alternative to application of Section 46. Revocation is the most extreme sanction that can be invoked against the patentee, more severe than compulsory licensing, under Sections 37 and 40, and infinitely more serious in its effects than Section 46. Before taking this extreme step, it seems likely that the court would require a very high degree of unreasonableness. Save in an extreme case, the outcome would be uncertain and proceedings would in any event be protracted.
It is right that Section 32(3) should be available if a particularly blatant case arose, but in such a case Section 46 should also be available to avoid loss to the Exchequer before the case is decided. Where Section 46 is used, Section 48(2) empowers the Department to invoke Section 32(3) in the course of proceedings in reference to any dispute as to Crown use. This will be the right course to take in an extreme case, but there may be other cases where a firm insists on prices that are unreasonable but not unreasonable to the same degree. In such a case, proceedings under Section 32 might well not be justified, but it would still be right to use the more limited powers of Section 46. I must advise your Lordships to reject this Amendment.
LORD HAWKE: Before the noble Baroness sits down, does she reject the idea of any outside party fixing the price?
BARONESS PHILLIPS: I think that the answer to that question must be, "Yes".
LORD NEWTON: I am very sorry to hear that. Possibly on another occasion the noble Baroness will amplify what she has just said in answer to my noble friend Lord Hawke. We have had a long and discursive debate on my Amendments, and I must confess that my head is in somewhat of a whirl. The noble Baroness rightly gave us an extremely

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complicated explanation as to why she and the Government did not like my first series of Amendments and a shorter explanation as to why she did not like Amendment No. 5. I shall have to read very carefully to-morrow the explanations she has given before my noble friends and I can decide what we ought or ought not to do later. Therefore, I shall not press any of these Amendments this evening. I say this without prejudice to going further, if we think it proper to do so, later on. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.59 p.m.
BARONESS PHILLIPS BARONESS PHILLIPS moved, to leave out Clause 25 and to insert the following new clause:
Extension of power of user by Crown of patented invention to user for certain services provided under Part IV of 1946 Act and 1947 Act
"25. The powers exercisable in relation to a patented invention under section 46 of the Patents Act 1949 by a government department or a person authorised by a government department shall include power to make, use, exercise and vend the invention for the production or supply of drugs and medicines required for the provision of pharmaceutical services under Part IV of the 1946 Act or Part IV of the 1947 Act, general medical services thereunder or general dental services thereunder, and any reference in that section or in sections 47 or 48 of the Patents Act 1949 to the services of the Crown shall be construed accordingly."
The noble Baroness said: I must apologise to the Committee if in moving this Amendment I appear to cover some of the ground that we have already covered, but on one occasion I realised the lack of wisdom in curtailing my remarks on a section of debate.
LORD OGMORE: Before the noble Baroness develops her case, I should like to ask about the procedure in regard to my Amendment to omit Clause 25. The noble Lady and I both want to leave out Clause 25. She wants to insert a new clause. I object as much to her new clause as I did to the original one—and in some ways even more. I am wondering whether it would be advisable to consider both Amendments together, with the understanding that I object to the old and the new—in other words, new wine is no better in old bottles. But at the moment I should like some guidance as to what is happening.
LORD HAWKE: Would it not be better if the noble Lord, Lord Ogmore, were allowed to move his Amendment first, because the way would then be clear? If he manages to leave out Clause 25, the way will then be clear either for the noble Baroness to insert something in its place or for us to reject it, and then there will be a blank in the Bill instead of Clause 25.
LORD NEWTON: We are all offering advice to the Committee. May I offer mine, which is that the noble Baroness should now be allowed to move her Amendment No. 7? If she does that, certainly my noble friends and myself will not hold it against her if she does not repeat what she has just said.
THE DEPUTY CHAIRMAN OA COMMITTEES (LORD AILWYN): I think the Amendment of the noble Lord. Lord Ogmore, can very well be moved after the noble Baroness, Lady Phillips, has moved her Amendment. I can put the Question, Whether Clause 25 shall stand part of the Bill, and then call on the noble Lord, Lord Ogmore, to speak to it if that is agreeable.
BARONESS PHILLIPS: I will do my best to accept the invitation which has been given to me. Nevertheless, the main objects of the clause must obviously be outlined. The existing clause in the Bill is intended to apply the previsions relating to the Crown use of patents, contained in Sections 32, 46, 47 and 48 of the Patents Act, 1949, for the purposes of the services provided under Part IV of the National Health Service Act, 1946. The principal provision is contained in Section 46 which enables any Government Department and any person authorised by a Government Department to make, use and exercise any patented invention for the services of the Crown. The conditions specified in the section include a requirement that terms for the use of the invention shall be agreed between the Government Department and the patentee or in case of a dispute be determined by the Court. The existing clause is directed primarily at the supply of drugs and is intended to follow up the conclusions and recommendations of the Committee of Inquiry into the relationship of the pharmaceutical industry with the National Health Service under the chairmanship of the noble Lord,

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Lord Sainsbury. The Committee concluded that there must be some procedure to which the Ministry could resort if negotiations on prices of pharmaceutical products failed, and that Section 46 was a selective instrument the use of which afforded a clear and credible action of resort by the Ministry following unsatisfactory negotiations.
The main object of the Government Amendment is to restrict the application of Clause 25 to drugs and medicines. It thus goes rather further than I suggested on Second Reading in that it excludes appliances. We think, after consideration, that this is the right line to draw, since it is with drugs and medicines that Lord Sainsbury's Committee were primarily, if not exclusively, concerned, and it is only in relation to drugs and medicines that there is any prospect of having to apply the Crown use provisions of Section 46 of the Patents Act to the services provided under Part IV of the National Health Service Acts. This limitation has been welcomed by the Confederation of British Industry and will, I believe, be welcome to the House. Drugs and medicines are supplied primarily as part of the pharmaceutical services provided under Part IV of the National Health Service Acts and the comparable Scottish Act, but they are also on occasion provided as part of general medical services and less frequently under the general dental services. It seems right to cover all the circumstances in which drugs and medicines are provided under the National Health Service.
There is one point which I should make in reference to the need for patent protection to reward innovation. In the discussion on Second Reading, several noble Lords placed great emphasis on the value of the industry's contribution to the great therapeutic advances of recent decades. They stressed the importance of maintaining and increasing the industry's research effort, both in the interests of the health of our own people and for the benefit it brings to our thriving export trade in pharmaceuticals. All this is fully accepted: it was freely acknowledged by Lord Sainsbury's Committee and is well recognised by the Government. Emphasis was also placed on the risks involved in pharmaceutical research; both the risk that expensive research will prove abortive
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and the risk that the products that emerge from this research will be superseded before the firm obtains a return on its investment. Precise assessment of these risks is difficult; as Lord Sainsbury's Committee pointed out, it is necessary to look not merely at the risks of failure in the process of developing a particular drug, but at the risks involved in a substantial and diversified research programme.
None of this is in question in the provisions of the Patents Act relating to Crown use, nor in the extension of those provisions to the family practitioner services of the National Health Service. It has always been a principle of our patent law, from the Statute of Monopolies onwards, that patents were granted by the Crown and should not be used against the interests of the Crown. The provisions for Crown use of patents did not originate in the 1949 Act, nor have they been limited either in law or in practice to use for defence purposes, as I believe one noble Lord suggested this afternoon. The main changes that have been made in the law over the last century have been in the direction of strengthening the provision for ensuring that the terms on which the Crown used the patent were fair to the patentee. At the same time, however, during this period the scope of Crown services has changed and the responsibility of Ministers of the Crown has increased enormously. The interests of the Crown extend well beyond traditional fields, in which defence naturally predominated.
One of the main issues before your Lordships' House in the case of Pfizer v. Ministry of Health was whether the hospital service should be regarded as a service of the Crown. Their decision was that it should be so regarded and that the Ministry of Health had properly used Section 46 of the Patents Act to obtain patented drugs. We have no doubt that that decision was right as a matter of public policy, as well as one of law (on which I would not presume to comment). The Crown interest is now surely as great in vital matters of health as in matters of defence or the carriage of Her Majesty's mail. We recognise that it is always possible that this House may take a different view in a future case, but we have no reason to expect them to do so or to propose any change in the law as it affects the hospital service.

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We hope that present discussions with the industry will result in arrangements which will ensure a fair return for the manufacturer, while safeguarding the Ministers' duty to see that proper value is obtained in return for the expenditure of public money. The Amendment would provide a procedure related directly to the recommendations of Lord Sainsbury's Committee, to which there could be resort if negotiations on prices of pharmaceutical products failed. We share the Committee's hope that the revised arrangements for regulating prices will greatly reduce the chance of use having to be made of the powers contained in the Amendment, but it is none the less important that these powers should be available if the Health Departments are to deal effectively with such cases as may occur, where excessive prices are being charged and the firm is not prepared to make appropriate reductions. I beg to move.
Amendment moved—
Leave out Clause 25 and insert the said new clause.—(Baroness Phillips.)
LORD NEWTON: Once again we have had a very complicated explanation and I am afraid that my mental equipment is not really up to understanding what the noble Baroness has said until I have had a chance to read it to-morrow. But I suspect that this new edition of Clause 25 is a slight improvement on the old Clause 25, and therefore, that being so, I suppose the Committee would be right to accept it. At any rate, I am not going to suggest that it seeks to reject it, but, again, I reserve my position as to what I may think it right to do later.
On Question, Amendment agreed to.
7.9 p.m.
On Question, Whether Clause 25, as amended, shall stand part of the Bill?
LORD OGMORE: I do not propose at this late hour to detain your Lordships for any length of time, but owing to the way in which our business is conducted—and properly conducted—I have not really been able to make my case, because when I made my previous intervention I was discussing the Amendments of the noble Lord, Lord Newton, and I have not made my case against either the old Clause 25 or the new one. I am not going into the matter at any length, because a number of noble Lords spoke, as it were, to this innovation of
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the noble Baroness when they were discussing the Amendments of the noble Lord, Lord Newton.
Therefore may I first of all say that the Minister accepted this Clause 25 in another place because of what he said were "the vagaries of the Parliamentary timetable". He did not define what those vagaries were, but the noble Baroness, Lady Phillips, said something of that kind to-night. We still do not know what they were, or why there was any difference in the case of this Bill as compared with any other Bill, but presumably the Government wanted to get the business through, and they thought it better to accept a bad clause and one which they have already had to amend rather than hold the Bill up in another place. That does not seem to me to be a proper method of drafting, or a proper method of bringing legislation before Parliament, but that is what happened, and this is what the phrase, "the vagaries of the Parliamentary timetable" actually means.
Secondly, as the noble Lord, Lord Newton, has said, there has been a breach of faith here. The Minister definitely promised the industry that he would discuss the Sainsbury recommendations—and Clause 25 in fact carries out No. 11 of those recommendations—and that in the light of those discussions he would take decisions. Rather, let me put it in this way. He said that before a decision was taken on any question under the Sainsbury Report he would have discussions with the industry. He has not done so. Also as the noble Lord, Lord Newton, said, it is highly desirable, in the case of a subject like patent law, which affects the whole of British industry, that no legislation should take place before the Banks Committee has reported. In fact it is highly desirable that it should not appear in a Bill like this at all, as we have seen to-night. The difficulty we are in to-night is that we are on the Committee stage of a Bill dealing with matters relating to private beds in hospitals, and that sort of thing, when suddenly a matter relating to patents comes in.
We have had no help from the Board of Trade; we have had no help from the great industrialists, as to what effect the patents will have; and we have had no legal opinion on this question from

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the Law Officers, from the Lord Chancellor or from anybody else. We are simply asked to pass a matter of this kind, which may have immense repercussions on British industry, at a late hour after a very scrappy debate. We must remember that it was not discussed at all in another place on Second Reading or on the Committee stage, and that it had only a very short, scrappy debate on the Report stage. It was moved by a Back Bencher and accepted by the Minister with the most lukewarm speech I have ever read in my life. He discussed the arguments for and against, and he came down every time on the side of the arguments against this clause. Then, in the end, because of "the vagaries of the Parliamentary timetable", he accepted it. Again I think this is not the way to treat Parliament.
This provision is having a grave effect on the pharmaceutical industry, and I believe it will have a considerable effect, when they get to know about it, on other industries. The reason, of course, is that if this goes through there will be a big stick on prices. The voluntary price-fixing system, as the noble Lord, Lord Sainsbury, knows very well, has worked, and it has worked quite well, but the Government want a more compulsory scheme, and discussions are now taking place with the industry to substitute for the previous voluntary price-fixing scheme a new scheme. Then, in the middle of these discussions the Government bring in this clause, which as I say holds a big stick over the head of the industry. The Government did not wait to see whether the discussions with the industry would break down; they have not waited for the discussions to continue and be finalised. They have simply brought in this big stick in the middle of the discussions—and a more hamhanded way, if you want to help the industry, I do not know.
Then there is the effect on inventors. It is a fact that although the British are the most inventive people in the world—there is no question about that—for some extraordinary reason (and I do not think, after what is happening now, it is so extraordinary) they have never been able to make the best use of their inventions. For some reason the British have always been bad at dealing with inven-
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tions from the development stage to the production stage. In fact our inventors have very often had to go to foreign countries, particularly America—and in the field of aircraft Dr. Barnes Wallis is a very good example of this—to get their inventions developed. Inventors are not going to be encouraged by this provision, and once more it seems that they will feel that inventive people, people of genius, brainy people, are being discouraged. And is that not the fact all the way through our system in Britain to-day? We are discouraging imaginative people, brainy people, people of invention, people of genius.
This bad practice will be continued in other countries, and is already being copied. Other countries listen to what we say, see what we do and then copy us. Other Commonwealth countries are already taking this action, following us, not only in pharmaceuticals but in other things, such as publishing. Other countries will say, "If the British think it right to have the power to seize these patent rights we will do the same"; and they are doing it. This is not a hypothetical case. When I spoke on Second Reading I put it as a hypothetical case, but I have discovered since that it is already being done in Commonwealth countries.
The noble Baroness has intimated that in the case of need we could buy from abroad, and this in fact is what Mr. Enoch Powell did. He bought through brokers from Italy, where there is no patent law. But that was a very unfortunate experience, and I should like to know what it actually cost the British. If you go through brokers and take goods, as he did, from foreign countries, there is no guarantee as to quality and no guarantee as to consistency. If you go through a well-established company operating in this country, it is their responsibility to maintain not only the quality but the consistency, and that is not the case if you buy through brokers. No similar powers have been contained in various international law models; and the compensation under Section 46 will be completely inadequate, because under Section 46 only the manufacturing profit can be taken into account, and there is no allowance for the royalty—thus again cheating the inventors.

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Under Section 48 of the Patents Act there is no prior investigation or authorisation. The Minister was incorrect when he stated on Report stage that Section 48 provides a safeguard against the arbitrary and unreasonable exercise of powers under Section 46. Section 48 merely establishes a procedure whereby disputes arising after the powers have been exercised— that is to say, after the patents have been seized—can be referred to the courts. In this new clause introduced by the Minister to-day, it is restricted to the pharmaceutical industry, but it is extended to include the word "vend". This word was not in Section 46 of the Patents Act 1949, and it was commented upon in the Pfizer case by various of the noble and learned Lords who gave judgment. So there is a difference, in my view. The noble Baroness said to-day that it is a restrictive clause. It is restrictive so far as it restricts it to the pharmaceutical industry, but it is not restrictive so far as the use of the clause is concerned, because now it means, or may mean, that the Minister could actually sell, vend—not use himself, not use for the National Health Service, but be able, as I see it, actually to sell outside. This is surely going in for State trading on a very big scale, and is a very dangerous provision.
It seems to me, if I may sum up, that there are two different systems which we in this country can adopt, and we have to face the fact. I mean, of course, so far as the pharmaceutical industry in relation to the National Health Service is concerned. Either we have State ownership and control, or we have private enterprise, subject to accountability, to supervision and to a certain element of control by the State. We recognise that the State, so far as the National Health Service is concerned, is customer as well as supervisor. Nobody suggests that there should be a free-for-all. What we in Parliament have to decide is: Which system do we go for? It is a fact that the State-owned industries in the Communist countries have not had in the pharmaceutical field anything like the success of the privately-owned companies working, as they do here, with the universities and the medical schools.
The Sainsbury Committee did not recommend nationalisation. In Paragraph 259 of their Report they said:
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"Since we do not consider nationalisation to be appropriate for this industry, it follows that we accept that the industry should remain in the hands of private enterprise."
I am sure that the vast majority of the public would agree with that. If that is so—and the Sainsbury Committee recommended it—then it seems that we must follow the thought to its logical conclusion; namely, that trust and friendly co-operation between the industry and the Ministry of Health is the way to progress, and that treating the industry churlishly—as I think the Minister has done, perhaps unintentionally, but that is the feeling of certain parts of the industry—and now wanting to wield the big stick over it is not the way to obtain that friendly co-operation and trust. In the Report stage, up to the acceptance of this clause, the Minister was of the same opinion. He said that he had done better by not using the "Enoch Powell method" than if he had done so; and that there-fore he did not want to use the big stick at that time. I ask the Committee to reject this clause and to rid the Bill, and the relationship between the Minister and the industry, of this incubus.
In view of what has been said in the debate to-day I should like to add these footnotes on the nature of the pharmaceutical industry. I will not speak at any length, but I think we ought to get the facts right. The net output of the industry in 1966 was estimated at £233 million. Therefore it is a very big industry. The export figure last year, 1967, was £80 million. If the industry's output is broken down to percentages, we reach the following figures: 39 per cent. to the National Health Service; 27 per cent. to export; 17 per cent. to household pharmaceutical goods, such as one buys in the chemists' shops; and 17 per cent. to veterinary and other purposes. So of the total output we are now dealing with 39 per cent. In view of what the Sainsbury Committee said about the amount of research in the industry, I can say that this year's estimate on research was £14 million. As I told the House on Second Reading, the company of which I am a director spends 10·6 per cent. of its total turnover in research—and this I think is an average example.
There is an excellent return for national resources from this industry. There are very little raw materials in

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bulk. The Sainsbury Committee Report said in Paragraph 317:
"The pharmaceutical industry may be an industry which Britain should foster. It relies primarily on highly trained technical and scientific manpower and its raw material requirements are small in relation to the value of the products."
I think that the Sainsbury Report touched on an extremely important factor when it said that it is not a question—as in the case of coal or steel—of sending large bulk shipments abroad where the profit was small. In this instance the raw materials are very small and the goods are the product of the brains of the men and women who work in the industry. A very small amount of pharmaceutical goods may be very costly and may bring in a very good return to British industry. Those are the facts of the case. I would ask the Committee to reject this new clause because it is unnecessary and because it does not yield the sort of incentive that this very important industry needs at this point. Furthermore, it is a latent threat, as I see it, to British industry as a whole.
7.26 p.m.
LORD AUCKLAND: I have listened to all the proceedings this afternoon, and although I am not myself financially concerned with the pharmaceutical industry I am an associate director of a small firm of business consultants who carry out communications training with the industry, and over the years I have gained a certain amount of knowledge of its work. At this late hour I shall be brief, but I should like to say that I remain wholly unconvinced that this matter needs to be brought within the ambit of a Health Services and Public Health Bill. We shall soon have the Medicines Bill before this House. In another place the Minister gave curiously unconvincing reasons why, if this provision is needed at all, it could not be brought within the ambit of the Medicines Bill. After all, we are discussing pharmaceutical products. I feel that this clause is nothing short of cavalier treatment of the pharmaceutical industry. Such consultations as there have been seem to have been curiously lax. I have been in communication with the industry, and that is the way all sections of it, quite rightly, feel.
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I posed this question on Second Reading, and I put it to the noble Baroness to consider between now and the Report stage. What happens if there is another thalidomide tragedy or something similar, if this measure goes through and the Government have the patent? Who takes the blame?—because presumably, under the present system, if a privately controlled drug company is faced with a tragedy of this kind under the present system they take the blame. If Clause 25 is enacted, will the situation be different? At this hour, one can only register a protest; but I hope the Government will listen to the arguments which the noble Lord, Lord Ogmore, has put forward and will respond to the very reasonable view of this industry which has a record second to none in our home and export field.
LORD FERRIER: I have little to add to what has been said, particularly as the matter has been discussed over and over again, but I should like to support the remarks of the noble Lord, Lord Ogmore. At the same time, let me remind the Committee that this Bill, which the noble Lord, Lord Newton, on Second Reading described as a "ragbag of a Bill", first came up at twenty minutes to seven o'clock in the evening for its Second Reading debate. Therefore it did not have the kind of full debate that its importance would justify.
I am prepared to go into the Lobby with Lord Ogmore; but I rather hope that he may hold his fire until another occasion. For one thing, there has been no patents expert to speak to us this evening—and there might have been. Had there been one I have no doubt he would have said what his Institute said in their submission to the Banks Committee, referring to this question of the Pfizer case:
"It is our view that, having regard to the enormous scope, actual and potential, of public sector activities, it is essential—if the private sector is to continue to feel fully the intended incentive effects of the patent system—that the powers of Government Departments to encroach upon private patent rights should be strictly circumscribed."
I omitted to inform your Lordshps that I hold a patent of my own. It has nothing to do with pharmaceutical matters, but it is interesting. What made me think of it was what was said by the noble Lord, Lord Ogmore: that if you are going to

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take people's patents you are going to stop incentive and drive the inventive abroad. You will encourage the manufacturer who is producing a complex item to import it and not to make it in this country, so that he can be absolutely sure that he does not have any of his property taken away from him. In that way, of course, the problem we are discussing affects the question of the balance of payments.
Regarding what I said earlier about Mr. Enoch Powell, when he was Minister of Health, I should like to make clear that there is no doubt that he is a man of great principle. What happened the other day was not the first time that the exercise of his principles has produced what was near-disaster. I think it important to remember that, because I can cap what was said by the noble Lord, Lord Ogmore. Those imports from Italy, though there is absolutely no question of their quality (I think it fair to say that both the Health Departments and the importers would see to that), were, I think I am right in saying, based on a stolen formula. That was why the price came cheaper than what the original inventors had to charge. Further, I think I am right in saying that the original inventors obtained a criminal conviction against the seller of the formula on which the drug was made which was imported into this country. Of course a profit was made by the importers, but there was no royalty to be paid on the invention.
That is all I have to say, except that it follows from what I have said that I support what was said by the noble Lord, Lord Hawke. Manifestly, supplies to a State as a customer must be under some sort of control: every reasonable person will agree with that. But I believe it only reasonable to add that control should be in accordance with the time-long principles of British justice operated through an independent agency, whatever it may be.
LORD HAWKE: I have made my point, and my noble friend has made it once again for me. The noble Baroness, Lady Phillips, read a very long brief which at times it was a little difficult to follow. There was one theme running through it which I thought quite false: that it was possible the public purse might suffer damage because it would be impossible to get these drugs at a
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reasonable and fixed price unless the price was arranged in advance. I suggest that that is complete nonsense. If there were some system of arbitration it would be perfectly possible for the National Health Service to buy drugs at a price to be fixed by the arbitrators, if a price cannot be agreed. I would offer one little piece of advice to the noble Lady, if I may. I believe that a generation has grown up in Whitehall that knows not Winston, but I suggest that she says to her Department, "Pray give me the arguments for and against on one sheet of notepaper."
7.35 p.m.
BARONESS PHILLIPS: I thank the noble Lord, Lord Hawke, for that advice. I thought that a long Amendment of the kind which the noble Lord submitted merited a full discussion of each subsection, and that is what I attempted to do. I am sorry if my speech was very lengthy. I seem unable to please noble Lords to-night. First I go too fast, and then I speak too long. For this I apologise. I should like to stress what I said earlier, in reply to the criticism that this clause was introduced at a late stage in the Commons without consultation. The Minister attaches great importance to consultations with the industry and other interests, particularly on the recommendations of Lord Sainsbury's Committee. I would also reiterate what I said on Second Reading: that it is in the interests of the Ministry of Health to have a strong pharmaceutical industry and not in any way to inhibit either research or production. I think that noble Lords who have spoken have perhaps read more into this clause than was intended, If I may repeat it, the clause is there because, in the view of the Government, it is necessary to have an effective procedure of resort which can be put into operation without delay to secure alternative supplies if there is a deadlock in negotiations with a patentee or his registered licensee.
The other point I should like to make, for the benefit of the noble Lord, Lord Ogmore, relates to the word "vend". Both the clause as it stands and the amending clause make it possible, as the noble Lord pointed out, to authorise the sale of an invention for the purposes specified, though the Amendment follows the pattern of Section 106

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of the Patents Act and uses the term "vend". This is necessary because suppliers of drugs for the pharmaceutical service may involve sale from the manufacturer or importer to the distributor and from one of these to the chemist, doctor or dentist. That is why the word "vend" is included.
I hope that your Lordships will accept the statement of the Minister that this clause was accepted and included in order to have an effective procedure of resort which would be put into operation only if there was deadlock. This was re-emphasised by the noble Lord, Lord Sainsbury, when referring to the recommendations of his Committee, and I hope, therefore, that the noble Lord, Lord Ogmore, will not feel it necessary to press this matter to a Division.
LORD OGMORE: In view of what the noble Baroness has now said about this very extensive use of the word "vend", would it not have been better if she had given the information to the Committee in her original speech, instead of doing it in reply to me? If I had not raised this point, the Committee would never have been in possession of this very important information. It was not in the original Clause 25 and it is a substantial difference. The noble Baroness told the Committee that what difference there was was for the benefit of the industry, which clearly is not correct.
Clause 25, as amended, agreed to.
Clauses 26 to 30 agreed to.
7.40 p.m.
BARONESS PHILLIPS BARONESS PHILLIPS moved, after Clause 30, to insert the following new Clause:
Certificates for exemption from prescription charges
".—(1) Regulations made under section 38(3) of the 1946 Act (which authorises regulations providing for the making and recovery of charges in respect of pharmaceutical services) and regulations made under section 1(1) of the National Health Service Act 1952 (which authorises regulations providing for the making and recovery of charges in respect of the supply, as part of hospital and specialist services under Part II of the 1946 Act, of drugs, medicines and appliances) may each provide for the grant, on payment of such sums as may be so prescribed, of certificates conferring on the persons to whom the certificates
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are granted exemption from charges otherwise exigible under the regulations in respect of drugs, medicines and appliances supplied during such period as may be so prescribed; and different sums may be so prescribed in relation to different periods.
(2) This section shall have effect in Scotland as if, for the references therein to section 38(3) and Part II of the 1946 Act, there were substituted references respectively to section 40(3) and Part II of the 1947 Act."
The noble Baroness said: This new clause would give the Minister of Health and the Secretary of State for Scotland power to make regulations providing for the issue to persons who pay the prescribed sum certificates entitling the holder to exemption from the payment of prescription charges for drugs, medicines and appliances during a prescribed period. The need for this Amendment arises from the decision by the Government, which was announced by the Prime Minister on January 16, to reintroduce charges for National Health Service prescriptions at the rate of 2s. 6d. per item and to make arrangements for wide categories of patients to be exempted from the charges. The categories to which the Prime Minister referred were persons over 64, children under 15, expectant and nursing mothers and the chronic sick. Since then it has been decided that the categories entitled to exemption should also include most persons, and their dependants, receiving a supplementary pension or allowance from the Ministry of Social Security, or assessed as needing help to pay the charge, and war pensioners in respect of their accepted disablements.
Of these categories, the most difficult to exempt is the chronic sick, where finding a satisfactory definition presents both practical and theoretical problems. On the one hand, the Minister of Health has wished to do everything possible to help a class of patient who, because of the number of prescriptions they are liable to need, are clearly at risk of suffering hardship if they have to pay prescription charges. On the other hand, he has necessarily had regard to the understandable reluctance of the medical profession to accept responsibility for exercising discretion in the identification of those who are to be regarded as chronically sick for this purpose. It must be borne in mind that the help of doctors is essential in defining the chronic sick for the purpose of exempting them from charges.

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As a result of lengthy discussions with representatives of the medical profession, it was decided that the best course would be to try, with the profession's help, to define objectively categories in which are to be found patients who are certain to need continuous medication for long periods and which admit of no discretion as to identification of individuals.
On this basis, it was decided that the persons entitled to exemption should be those suffering from permanent fistula; endocrine disorders for which specific substitution therapy is essential—for example, diabetes; epilepsy, requiring continuous anti-convulsive therapy; and those suffering from a continuous physical disability which prevents the patient from leaving his residence except with the help of another person. The object of this definition is to secure that those covered by it will in fact need constant medication and thereby to remove the need for doctors to exercise individual discretion and reduce to an absolute minimum the danger of disputes between doctors and patients which might harm the doctor-patient relationship. It has not been possible to find other conditions where all sufferers need constant medication. These arrangements, together with all the other proposals for exemption, which will cover some 20 million people in England and Wales, will, the Government are sure, go a very long way towards ensuring that the reintroduction of prescription charges will not cause hardship. In particular it should be stressed that the exemption of all people aged 65 and over will automatically benefit a substantial proportion of sufferers from long-term illnesses.
There is, however, one class of patient which will not benefit—people between 15 and 64 not receiving Ministry of Social Security pensions or allowances who, though not suffering from any of the conditions listed above, nevertheless require unusually numerous prescriptions. Examples are patients who suffer from prolonged bronchitis in the winter and arthritics whose condition calls for regular medication. These diseases cannot be included in the list of exemptions because they embrace a very wide range of conditions, varying according to the severity and stage of development in each individual case; therefore discrimination between individuals would require invidious discretionary judgments. Where, however, such patients do need regular
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medication, the Government wish to help them if it can be done. It is therefore proposed that arrangements should be made enabling any patient to obtain an exemption certificate which would be valid for a fixed period on payment of a suitable fee. Such people will thus be relieved of the excess burden which their special need for medication would otherwise impose. At the same time, the problems of defining chronic sickness will not be added to. The powers under which charges can be levied for prescriptions are contained in Section 38(3) of the National Health Service Act, 1946 and Section 1(1) of the National Health Service Act, 1952. They are not wide enough to allow exemption certificates to be made available on payment and it is for that reason that it has been necessary for the Government to move this new clause.
The new clause will allow regulations to be made in respect of patients who obtain their drugs, medicines and appliances from chemists or from dispensing doctors, and also in respect of hospital out-patients. It applies to Scotland as well as to England and Wales. It is not possible at present to forecast precisely the nature of the regulations which would be made under the new powers. The Minister of Health has tentatively in mind, however, that the cost of the exemption certificates might represent the cost of something like two prescriptions per month. Certificates valid for perhaps two different periods, which would be a matter of months, and therefore costing different amounts, might be available. None of this has been finally settled, however, and no firm information can be given at present. I beg to move.
Amendment moved—
After Clause 30, insert the said new clause.—(Baroness Phillips.)
LORD NEWTON: May I ask the noble Baroness whether she can explain rather more clearly why there was to be payment at all for these certificates? Why cannot they be free?
BARONESS PHILLIPS: Because this particular group may well be those who require medication over a period but are not in fact in the exempted categories of chronic sick or in other categories of exemption.
LORD NEWTON: Is it only that category to which the noble Baroness has referred who will have to pay, and only the chronic sick who will get their certificates free?
BARONESS PHILLIPS: As I understand it, yes.
LORD NEWTON: I am obliged to the noble Baroness. Subject to that point, on which I am afraid I was not clear, I think that this Amendment is satisfactory and acceptable. I am glad to hear that at long last the Government have reached agreement with the medical profession on who ought to be exempted and how they are to be identified. I do not think that this is the moment to have a long discussion on the question of prescription charges; perhaps we may get an opportunity on another occasion. For a long time I have felt that prescription charges were necessary. I thought it was a great mistake when they were abolished in 1965 and I said so at the time. I am glad that the Government have been wise enough to have a change of heart.
On Question, Amendment agreed to.
Clause 31 [Power of the Minister to make services available and, in certain circumstances, to provide them otherwise than for purposes of hospital and specialist services]:
31. The Minister may allow persons to make use (on such terms, including terms as to the payment of charges, as he thinks fit) of any services the provision of which is involved in the provision of hospital and specialist services; and he may, in the case of services the provision of which is so involved, provide them to an extent greater than that necessitated by the provision of hospital and specialist services if he thinks it expedient so to do in order to allow persons to make use of them.
LORD SANDFORD LORD SANDFORD moved to add to the clause:
"Provided that the use of such services shall only be permitted

(a) in the case of aged persons or persons suffering from an illness (as defined by section 79 of the 1946 Act) or

(b) in the case of any persons, body or organisation whether public or private, to enable such persons, body or organisation to provide such services for aged persons or for persons suffering from any such illness as aforesaid."

The noble Lord said: I beg to move the Amendment standing in my name
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and in those of my noble friends. When the Minister introduced this Bill into another place he said that it was of limited purpose and did not introduce any sweeping changes, but in a number of clauses, in order to achieve their objects, the Minister has taken very sweeping powers. Under pressure from my honourable friends in another place, he has curtailed these powers by Amendments which he himself tabled and he accepted a number of Amendments moved by my honourable friends. But a number of clauses remain, of which this is the most notable, in which the Minister is asking for far larger powers than he needs for the objective which he says lies behind the clause.
In Committee stage in another place the Minister, or it may have been his Parliamentary Secretary, said on Clause 31 that he needed powers in order that hospitals should be able to assist local authorities in such services as the provision of meals-on-wheels, laundering linen from old people's homes, supplying sterile articles and so on. If that is so, I hope that the noble Baroness will be able to say that this Amendment is acceptable, because it does no more than confine the powers for which the Minister is asking to those powers which are needed to achieve the purposes which he himself set out in explaining the clause in another place. I beg to move.
Amendment moved—
Page 24, line 4, at end insert the said proviso.—(Lord Sandford.)
BARONESS PHILLIPS: The noble Lord will remember that in moving the Second Reading of the Bill I explained that this clause gives explicit statutory authority to the existing practice of hospital authorities in selling surplus services. I am sorry that I have to advise the Committee to reject the Amendment. It appears that the noble Lord who moved it probably does not realise that the effect would be more restrictive than is intended. Under the Amendment, surplus services could be made available, apart from the aged, only for persons suffering from an illness as defined in Section 79 of the 1946 Act. This definition is as follows:
"Illness includes mental disorder within the meaning of the Mental Health Act 1959 and any injury or disability requiring medical or dental treatment or nursing".

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This definition does not cover maternity cases, since pregnancy is not an illness, so that under the Amendment as drafted surplus services could not be made available to private maternity homes. The Amendment would also exclude other persons and institutions; for example, children's homes or homes for the handicapped not requiring medical treatment or nursing. Moreover, since the power would be restricted to persons suffering from an illness it would exclude its use for preventive purposes.
But in the Government's view it is undesirable to define by legislation the type of person or body to whom surplus services might be made available under the clause. There seems no reason in logic why the power should be used only in the health and welfare services. A hospital authority might, for example, have spare capacity on its computer. There seems no reason why it should not sell this capacity to whomsoever can make use of it. If surplus services exist, it is in the interests of the taxpayer that they should be disposed of without imposing restrictions that might prevent this.
I repeat to the noble Lord the assurance I gave earlier, that there is no present intention to extend the present arrangement for disposing of surplus services. Of their nature, these services, generally speaking, will be of the kind that they can most appropriately be taken up by bodies in the health and welfare and also in other public fields. There is certainly no intention to use this clause to enable hospital authorities deliberately to launch out into commercial activities. Indeed, it seems most unlikely that hospital authorities will ever be so generously funded as to enable them to meet all their own requirements and also to devote capital to the deliberate creation of surplus services for the purpose of embarking on commercial ventures. I hope, therefore, that the noble Lord will see fit to withdraw the Amendment.
LORD SANDFORD: I am sure the Committee is grateful to the noble Baroness for that further assurance, and I accept that this particular Amendment may be defective in the various ways that she describes. But I had hoped, and to some extent I still hope, that at a later stage it may be possible, either for the
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Government, or in default of that my noble friends and myself, to frame another Amendment which still allows the Minister to do the things that he wants to do, but curtails his powers to those that are actually necessary and have some reference to the hospital service. At the moment, there is nothing to prevent him and the hospitals launching into competition with local laundries, setting up a public restaurant and a host of other services for which I think Parliament ought not to confer power on the Minister if it is not absolutely essential. I still feel that it is possible to draft an Amendment to this clause giving the Minister the power that lie wants, and no more. Having said that, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 31 agreed to.
Clauses 32 to 39 agreed to.
Clause 40 [Accommodation for persons displaced in course of development for purposes of the Acts relating to the national health service or to mental health]:
LORD HUGHES: I will not detain your Lordships long on this Amendment. It is purely formal and arises from the New Towns (Scotland) Act 1968 having come into operation on April 1. I beg to move.
Amendment moved—
Page 30, line 17, leave out ("the New Towns Act 1946") and insert ("the New Towns (Scotland) Act 1968").—(Lord Hughes.)
On Question, Amendment agreed to.
Clause 40, as amended, agreed to.
Clauses 41 to 43 agreed to.
Clause 44 [Extension of power, under the National Assistance Act 1948, of local authority to provide accommodation elsewhere than in premises managed by them or another such authority]:
7.56 p.m.
BARONESS BROOKE OF YSTRADFELLTE BARONESS BROOKE OF YSTRADFELLTE moved, in the proposed new subsection (1) of Section 26 of the National Assistance Act 1948, in sub-paragraph (a)(ii), to leave out "and" and insert: "(iii) for boarding out; and". The noble Baroness said: I rise

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to move Amendment No. 12, standing in my name and those of my noble friends. I wish to add a third sub-paragraph to paragraph (a), "for boarding out". In this instance, boarding out relates to private family homes. In the clause the Minister has chosen to insert an express power for local authorities to make arrangements regarding owners of private old people's homes, but he does not confer any express power to make boarding out arrangements for private family homes.
In another place, the Parliamentary Secretary, in referring to such a proposal, said that it was not proposed to take powers in respect of old people in this way because the matching up of a landlady and an old person was usually a very tricky one. Well, it has been most successfully carried out in Exeter, where married couples were found who welcomed an old person as a lodger; and in the Portsmouth Corporation Act 1957 powers were taken to enable the Corporation to make arrangements for boarding out those persons who, by reason of age, infirmity or any other circumstances were in need of care and attention which was not otherwise available to them.
There must be hundreds of old people who would welcome being boarded out in a private family instead of having to be persuaded to go to a communal home, just as there must be hundreds of private family homes which would welcome the presence of just such an old person. Given the right accommodation and the right personalities, this could be a very happy arrangement. Old people are often very happy in a home, whether old men or old women, and they can do much to lighten the work of a busy mother by amusing the children, doing shopping, mending and gardening, and a warmth of attachment can develop which is of benefit to both sides. Actually, the scope for the use of such a proposal is not likely to be extensive, but where it can be carried out with a hope of success, surely everything should he done to make it viable. I hope that the Minister will be able to help us on this point. I beg to move.
Amendment moved—
Page 32, line 24, leave out ("and") and insert—("(iii) for boarding out; and").—(Baroness Brooke of Ystradfellte.)
BARONESS SEROTA: After the overwhelming generosity with which I was received at an earlier stage of the Committee, which is always so encouraging in your Lordships' House, I hope that I shall not appear to be ungrateful when I say that, while the purpose of this Amendment is wholly acceptable and indeed laudable in the way in which it was moved by the noble Baroness, there are certain objections to it, and in fact I would submit that it is largely unnecessary. The promotion of welfare under this clause certainly includes making arrangements for the boarding out, the supervision of the welfare of those boarded out, and giving them any assistance that they may need in the particular situation.
As noble Lords, especially those with experience in the Children's Service, like Lord Brooke of Cumnor, know only too well, boarding out really involves two main operations. The first is the one which I think requires the greatest skill: the selection of families, matching them with suitable elderly and handicapped people, helping the family and the newcomer to settle down together, and supervising the welfare of the latter and the family who are supporting him. The second is the question of payment for board and lodging.
The first of these operations will be fully covered by the arrangements for the welfare of the elderly which local authorities will be able to make, with the Minister's approval, under Clause 45. Indeed, my right honourable friend, and many of us, hope that there will be extensive developments of the kind which the noble Baroness mentioned earlier in Exeter and Portsmouth, where schemes of the kind she has in mind have been pioneered. The second operation—that of financing the boarding out of elderly people—is covered by the power given to the Supplementary Benefits Commission in Part II of Schedule 2 to the Ministry of Social Security Act 1966, paragraph 17 of which reads:
"Persons paying for board and lodging
Requirements of persons paying inclusive charge for board and lodging.
17. Such amount as may be appropriate, not being less than the amount which would be applicable under paragraphs 9 to 12 of this Schedule".
That is the standard requirement. Therefore, the local authorities and the Supplementary Benefits Commission use the same basis for calculating resources—the first in relation to liability for charges, the second in relation to requirements—so that the financial position of anyone assisted under the Amendment or under the clause would in general be the same. Thus, this Bill, taken together with the existing legislation already, without the Amendment moved by the noble Baroness, makes possible arrangements for boarding out and payment of any necessary charges, and to this extent the Amendment is unnecessary.
The additional power conferred by the Amendment would extend only to the method of payment for board and lodging; that is, it would enable a local authority itself to meet the charge made to a boarder and to recover what the boarder could afford to pay; and this, I would submit, is possibly the crux of the argument for the future. If experience shows that this kind of arrangement is desirable, then opportunity can be taken later on to legislate accordingly. But it will involve, as the noble Baroness, with her experience of local government, is I am sure aware, this difficult, delicate question of relationship between the powers of local authorities to make payments, to give financial assistance, and those that are normally covered by national arrangements of the kind made by the Supplementary Benefits Commission. At the present time, of course, although we have heard references to very interesting and worthwhile experiments, our experience of the boarding out of elderly and handicapped people is very limited indeed, and my right honourable friend feels that it would be premature at this stage to confer the power, at least until further experience has been gained of boarding out on the basis I have already explained and as already covered by the Bill.
I hope that in the light of this explanation the noble Baroness will feel able to withdraw her Amendment. I can only assure her once again that Her Majesty's Government are most anxious, through the powers given in this clause and the one that follows, Clause 45, that local authorities should use to the fullest extent anything which makes the lives of the old people in our society happier, healthier and longer.
BARONESS BROOKE OF YSTRADFELLTE: I am most grateful to the Minister for having given us such a clear and sympathetic answer to the point I raised in my Amendment. I would go just one stage further and suggest that perhaps she would be good enough to ensure that if these powers are available the attention of local authorities is drawn to them, so that the powers to which she has referred, including those in Clause 45, are used to the full. If she will be kind enough to give me that assurance, I will then ask leave to withdraw the Amendment.
BARONESS SEROTA: I am sure that my right honourable friend will take note of the discussions in this Committee on this particular Amendment and will consider them further in his discussions with the appropriate local authority organisations.
Amendment, by leave, withdrawn.
Clause 44 agreed to.
Clauses 45 to 58 agreed to.
Clause 59 [Amendment of Nurseries and Child-Minders Regulations Act 1948]:
8.6 p.m.
LORD SANDFORD LORD SANDFORD moved, after subsection (2), to insert as a new subsection:
"() In section 1(1)(b), after the word 'homes' there shall be inserted the words 'on a regular basis'. In this Part of this Act, the expression 'on a regular basis' shall have the following meaning assigned to it: 'more than once a week or more than 50 times a year'."
The noble Lord said: I beg leave to move Amendment No. 13 standing in my name and the names of my noble friends. As the Committee will be aware, Clause 59 deals with the very difficult problem of child-minding and nurseries for children below school age. There is in this connection undoubtedly a great deal of abuse and a very considerable problem. It is a problem on which I think the latest comprehensive report was prepared by Dr. Yudkin, whose recent tragic death we all very much regret. This clause is an attempt, but I think to some extent a misguided attempt, to deal with some of the problems that arise.
As I said on Second Reading, basically the problem is that on the one hand the economy of the country requires a large number of married women to go out to work, but, on the other, they cannot go out to work unless somebody looks after their children who are not at school. The provision for care of children below school age is totally inadequate. The legislation and the regulations for dealing with this provision are very easily evaded, and here we have in Clause 59 an attempt to put this matter right. But in my view, and in the view of my noble friends, the attempt is misguided in that it is an attempt to tighten up legislation, to increase the penalties; and this, I feel, is the very last way to set about this problem. As I say, one of the problems is that such regulations and legislation are very easily evaded. The police, the Children's Service, health visitors and all others who are concerned with this matter find it extremely difficult to enforce existing legislation as it is, and I do not believe that this tightening up of the legislation will make it any easier.
I am therefore proposing in my Amendment to do something which relaxes the legislation; that is to say, it reduces the number of occasions on which the restrictions and the regulations will bite, and I think it will make the situation easier for the people who are trying to introduce some sort of order into what is a very chaotic situation. But I would stress that I do not think this is a problem which can be dealt with by legislation: it is a problem we cannot legislate our way out of. The only solution is to make better provision for these young children, more imaginative provision, and to put more money into it and give it a higher priority. I do not believe that the proposed method of tackling the problem will be very successful, and my Amendment is designed to make these provisions slightly less unsatisfactory. I beg to move.
Amendment moved—
Page 39, line 5, at end insert the said subsection.—(Lord Sandford.)
BARONESS PHILLIPS: As the noble Lord has stated, this is indeed a difficult problem, and I, in common with other Members of your Lordships' House, have seen it from the angle of dealing with the child-minders, the unregistered ones in
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particular, when they come before the bench. Also, in my own social work I have seen the many difficulties with which the mother of the pre-school child has to contend. The Government are not unsympathetic to the intentions behind the Amendment, but feel obliged to oppose it because of the great difficulties it would pose for the local authorities in dealing with those child-minders who most of all need supervision and who seek to evade it. As the noble Lord will know, one of the problems regarding the 1948 Act as it stands lies in the obstacles facing authorities in securing evidence to show that the Act is being contravened, even where they have good reason for believing that this is happening. We are aware that there are childminders who should be registered but are not; and almost by definition these are the people whose low, sometimes deplorable, standards place the health and welfare of the children at the greatest risk.
Under the 1948 Act in its original form two conditions that have to be satisfied before registration can be required are that the number of children exceeds two, and that they come from more than one household. As the noble Lord has said, it can be difficult to deal with this kind of child-minder, and many local authorities have found this. The fact is that child-minders with very low standards go to great lengths to avoid supervision by the local health authority. They may well claim, for example, that the third and fourth children who are present each time the health visitor calls just happen to be paying a short visit at the time. This is the reason why Clause 59(3) removes the two conditions to which I have referred.
Her Majesty's Government appreciate that in theory this could bring within the scope of the local authority's powers of supervision child-minding arrangements of a casual nature which a mother might make to enable her to go out shopping, for example. But it is easy to overestimate the effects of this. The 1948 Act, as amended by this Bill, will not apply to arrangements for which there is no payment, or to arrangements made with a relative. And even where a mother does reward a neighbour or a friend for looking after her child occasionally, it is hardly conceivable that a local

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health authority would feel it necessary to attempt to impose conditions. As your Lordships will know, all local health authority staff are in short supply, and they will necessarily concentrate their time and energy on those minders who most need their attention. Thus the advantage which the noble Lord sees in it would be a slight one.
On the other hand, the disadvantages would be great. Even in the present circumstances it is often not easy for the local health authority to establish how long children are in a child-minder's home, particularly where, as so often happens in these cases, the entrance to the minder's home is a door shared with a number of other tenants. The authority's difficulties would be immeasurably greater if they were also required to establish that the children were there on a particular number of days per week and per year, and without such evidence a successful prosecution for failure to register would be virtually impossible. For this reason, and in the interests of the children who need the greatest protection, I am afraid that I must ask the Committee to reject the Amendment.
8.16 p.m.
LORD SANDFORD: I am sorry that this particular way of trying to help to deal with this problem does not seem to be acceptable to Her Majesty's Government. My honourable friends in another place tried to assist by suggesting that the period of time regarded as "substantial" should be increased from two and a half to four hours. I am still left with the feeling that this clause, which amends the child-minding regulations, will put into the criminal class a whole further batch of people who will, quite inadvertently, offend against the law that is now being more tightly drawn. I do not think anything in the clause will make it easier to enforce legislation which is already practically unenforceable, and I believe the law will be brought into disrepute. Having said that, I beg leave to withdraw this Amendment, and I shall perhaps return to it at a later stage in another form.
Amendment, by leave, withdrawn.
Clause 59 agreed to.
Clauses 60 to 63 agreed to.
Clause 64 [Financial and other assistance by local authorities to certain voluntary organisations]:
LORD HUGHES: We could hardly conclude with a more simple Amendment. The only purpose it serves is to bring the wording at this point into line with the wording used elsewhere in the Bill. I beg to move.
Amendment moved—
Page 47, line 17, leave out ("inserted") and insert ("substituted").—(Lord Hughes.)
LORD NEWTON: May I congratulate the noble Lord on managing to end the proceedings on the Committee stage with a charming apology.
On Question, Amendment agreed to.
Clause 64, as amended, agreed to.
Remaining clauses and Schedules agreed to.
House resumed: Bill reported, with Amendments.