HEALTH SERVICES AND PUBLIC HEALTH BILL

HL Deb 14 May 1968 vol 292 cc255-322

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 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. 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 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 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, 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 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 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.

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 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 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 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 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- 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 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, 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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- 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 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 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 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.

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 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 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, 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 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.

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 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 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- 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.

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: 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 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.

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 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 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 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 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 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. 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 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 moved to add to the clause: Provided that the use of such services shall only be permitted

1. (a) in the case of aged persons or persons suffering from an illness (as defined by section 79 of the 1946 Act) or
2. (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 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". 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 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 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 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 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 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 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.