Lords Sitting of 13 November 1969

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

NATIONAL HEALTH HOSPITALS AND AGENCY NURSES
LORD AMULREE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what number of agency nurses are employed by and what is the cost to the National Health Service.]
THE MINISTER OF STATE, DEPARTMENT OF HEALTH AND SOCIAL SECURITY (BARONESS SEROTA): My Lords, the number of agency nurses in post in National Health Service hospitals in England and Wales at March 31, 1969, was 1,814; this represents a whole-time equivalent of 1,801.
BARONESS BROOKE OF YSTRADFELLTE: My Lords, may I ask the Minister what is the Government's present policy towards the employment of agency nurses in hospitals which are clearly understaffed in their nursing establishment? Arising out of that, could the noble Baroness tell us whether the Government approve of student nurses' being taken out of study blocks to plug the nursing gap because of understaffing?
BARONESS SEROTA: My Lords, in answer to the first question which the noble Baroness put to me, I may say that the Department's policy has always been quite clear: National Health Service hospitals should be staffed by directly employed nurses and midwives on Whitley rates of pay and conditions of service. The second question, I suggest, is not relevant to the subject we have under discussion.
LORD AMULREE: My Lords, may I ask the Minister whether she could give
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me a reply to the second part of my Question which concerned the cost to the National Health Service of employing these 1,000-odd nurses?
BARONESS SEROTA: My Lords, I apologise. The payments to nurses' agencies totalled approximately £1,050,000 in 1968–69.
BARONESS SUMMERSKILL: My Lords, may I ask my noble friend when this expensive policy is going to end? is she aware that these very expensive agency nurses have to be employed because young women are refusing to enter the nursing profession owing to the poor conditions? Can she say when the Government are going to adopt an entirely different attitude towards these girls?
BARONESS SEROTA: My Lords, I would remind my noble friend that the amount spent on the salaries of agency nurses represents 0·5 per cent. of the total salary bill of the nursing staff in the National Health Service. With regard to the second point, in our debate yesterday I made a statement to the House about the current situation regarding negotiations on nurses' pay claims.

VIETNAM WAR AND THE GENEVA CONFERENCE
3.8 p.m.
LORD BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will propose to the Soviet Government through the Secretary of State for Foreign and Commonwealth Affairs, as Co-Chairman, the reconvening of the Geneva Conference with a view to establishing peaceful conditions in Vietnam, Laos and Cambodia.]
THE LORD PRIVY SEAL (LORD SHACKLETON): My Lords, the parties to the conflict in Vietnam and the Soviet Co-Chairman are all well aware that we are ready to act in any way that might help to end the war in Vietnam and assist the situation in the neighbouring countries. Should those directly involved desire it and the Soviet Co-Chairman be agreeable, we would of course be prepared to take any action in our capacity

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as Co-Chairman that seemed desirable or feasible.
LORD BROCKWAY: My Lords, while welcoming that reply, so far as it goes, may I ask my noble friend this question? When was it that the British Government made their last approach to the Soviet Government in this matter? I know that they have made many. Is it not the case that there was a very favourable response in 1965, broken down only by the distorted Tonkin Gulf episode? In view of the fact that the parties now accept the Geneva Agreement, is it not now possible to take steps to try to re-convene the Geneva Conference?
LORD SHACKLETON: My Lords, the Soviet Government are well aware of the attitude of Her Majesty's Government and this has been made clear on a number of occasions. The particular point to which the noble Lord is directing his argument is surely related to what is the best way of stopping the killing in Vietnam. It is the view of Her Majesty's Government—and I have no reason to suppose that the Soviet Government dissent from this—that now that talks are directly going on between the combatants it would be better that they should in fact negotiate and bring this war to an end. Although, as I have made clear, we should be willing to do anything that would help, in our view a further intervention of this kind at the moment would not necessarily contribute anything.
LORD BROCKWAY: My Lords, repeating my appreciation, may I ask the noble Lord to consider these points: whether the Paris talks are not breaking down on the one point of the reciprocal withdrawal of the American troops and the Hanoi troops; whether the thirteen points of the National Liberation Front and the eight points of President Nixon do not establish ground for agreement except for that one issue; and whether President Nixon might not be saved from his present dilemma if the responsibility for a settlement were placed on other Governments as well as the Americans?
LORD SHACKLETON: My Lords, I feel that this is very much a matter of opinion. I do not want to go back into past history—on which the noble Lord is much better informed than I. We are not now concerned with digging over the
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past; and I know that he did not do that. Everybody knows the position of Her Majesty's Government and, I hope, of all peace-loving people in the matter. I believe that the most important thing is that the direct negotiations should succeed. It is our view that an initiative of the kind the noble Lord is now proposing is not likely to contribute to what is the important thing, the end of the killing. But we remain ready at any time to do anything in our capacity as Co-Chairman that seems desirable.

TRUNK ROAD SCHEMES AND LOCAL CONSULTATION
3.12 p.m.
LORD INGLEWOOD: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government why the Minister of Transport is imposing a code of secrecy and forbidding his agents to have any discussions with local and private interests—in some cases even with planning authorities—when surveys in connection with work on or improvements to trunk roads are being carried out on his behalf until such time as he is ready to publish a draft order.]
THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR DEFENCE, R.A.F. (LORD WINTER-BOTTOM): My Lords, I think the noble Lord has misunderstood the position. My right honourable friend the Minister of Transport invariably consults local authorities about trunk road schemes early in their preparation, and in many cases he uses local authorities as his agents. There may also be exploratory discussions with other interests likely to be affected. In limiting consultation at the early stages while proposals are still being formulated, my right honourable friend has in mind that he must be fair to everyone who may be affected by any alternatives and that he must also avoid causing unnecessary blight. His proposals are, however, published in draft, so that all concerned have equal and ample opportunity to make their views known; and there is, from that time, a statutory remedy for blight. My right honourable friend does not make his

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final decision until he has fully considered all the objections and representations made to him about the draft scheme.
LORD INGLEWOOD: My Lords, is the noble Lord aware that if I did misunderstand the situation I based my Question on his letter to me of October 24, in which he said that under the new procedure interested persons would not be informed of all that was in the Minister's mind until his proposals were ready to be put in the form of draft Statutory Orders, which seems rather late in the day? Would he not agree that while over-secrecy generally in Government administration defeats its own purpose, it is particularly unfortunate just at the time when Mr. Skeffington is going round the country urging a greater and earlier participation by the public in all forms of planning.
LORD WINTERBOTTOM: My Lords, what is happening is that surveys of alternative routes are being made, and the fact that surveyors are turning up with striped poles does not mean necessarily that the line of the road is going where they are surveying. That is one of the reasons why it is the policy of my right honourable friend that secrecy is maintained during the period of the survey, so that nobody gets any false ideas about what is happening and whether his land is likely to be blighted or not, and everybody is treated equally. But when the draft is laid it is at that point that public consultation starts. The Minister at that point consults the local public directly when he publishes his proposals in draft. He is at that point obliged to consider objections, which means that he is definitely not committed at that stage to his published proposals.
LORD BROOKE OF CUMNOR: My Lords, in these circumstances would it not be well for the Minister to make this policy of his widely known, because there is disturbance locally when people with striped poles are going about and nobody quite knows what is happening and suspicion becomes rife? I should have thought a public statement at that time would quell at any rate some of these doubts and fears.
THE EARL OF CROMARTIE: My Lords, in view of the fact that a friend of mine woke up the other day and found a house burnt down—the future of
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this house was under active discussion—would he draw the attention of the Secretary of State for Scotland to the necessity of close contact among all Government Departments, county councils and private individuals?
LORD WINTERBOTTOM: My Lords, may I first reply to the noble Lord, Lord Brooke of Cumnor? I think that what he says is of importance. I believe that among professionals this situation is in fact pretty widely known. The divisional road engineer in this particular case wrote to the surveyor of the Cumberland County Council before all this started, so the county surveyor was informed of the policy. I agree with the noble Earl that a little co-ordination among the various bodies concerned would be helpful.
LORD CARRINGTON: My Lords, does the answer of the noble Lord mean that surveyors, with poles or without poles, will he going over the farms and property of farmers and landowners without getting permission?
LORD WINTERBOTTOM: No, my Lords, not without getting permission. They may even discuss with the land-owner the situation on his particular part of the land. But what is entailed in terms of planning will be kept secret until such time as the Minister lays the order.
LORD SOMERS: My Lords, would the noble Lord make quite clear how far local government authorities can go in making alterations or new experiments without leave from the Ministry of Transport? Is the noble Lord aware of a certain action recently carried out by Banstead Urban District Council, which could well be quite lethal, at a very dangerous crossroads where a roundabout could be easily constructed, and where no warning whatsoever was given of the alteration?
LORD WINTERBOTTOM: My Lords, I will bring the noble Lord's point to the attention of my right honourable friend.
BARONESS WOOTTON OF ABINGER: My Lords, reverting to the original Question of the noble Lord, Lord Inglewood, may I ask whether my noble friend does not agree that if secrecy is observed until

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the moment when the Minister has laid draft proposals, it means that alternatives are not presented to the public? That can hardly be called participation at an early stage, in the sense of the Skeffington report.
LORD WINTERBOTTOM: My Lords, may I say to the noble Baroness that the Skeffington report has not yet been accepted. Its recommendations are being considered. The report was careful to suggest that methods different from its general planning proposals may be appropriate for dealing with, for example, trunk road schemes. I would refer my noble friend to paragraph 221 of the report.
LORD BYERS: My Lords, does that mean that the Government do not accept the idea of participation by the public in decision making?
LORD WINTERBOTTOM: Of course not, my Lords. All it means is that they are considering Mr. Skeffington's recommendations.

DEPUTY CHAIRMEN OF COMMITTEES
LORD SHACKLETON: My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That the Lord Merthyr, the Lord Ailwyn, the Lord Airedale, the Lord Douglas of Barloch, the Lord Strang, the Lord Grenfell, the Baroness Wootton of Abinger, the Lord Jessel, the Lord Champion, the Lord St. Helens, the Viscount Dilhorne, the Lord Royle and the Baroness Emmet of Amberley be appointed the panel of Lords to act as Deputy Chairmen of Committees for this Session.—(Lord Shackleton.)
On Question, Motion agreed to.

PUBLICATION OF PARLIAMENTARY PROCEEDINGS
LORD SHACKLETON: My Lords, I beg to move the second Motion standing in my name on the Order Paper. In
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moving this Motion, I would only say that this continues the process, started on November 4, of reappointing the Select Committees.
Moved, That a Select Committee of three Lords be appointed to join with a Committee of the Commons as a Joint Committee to consider and report whether any, and if so what, changes in the law of defamation and of Parliamentary Privilege are desirable in relation to the publication of the proceedings in Parliament:
That the Lords following be named of the Committee:—

E. Selkirk

L. Donovan

L. Stow Hill.

That two be the quorum:
That such Committee have power to agree with the Committee of the House of Commons in the appointment of a Chairman:
That leave be given to the Joint Committee to hear parties interested by themselves, their Counsel, agents and witnesses, so far as the Committee think fit:
That the memoranda received by the Joint Committee on the Publication of Proceedings in Parliament in the last session be referred to the Committee:
That the evidence taken before the Joint Committee be printed, but no copies be delivered out except to members of the Committee and to such other persons as the Committee shall think fit, until further order:
That the Joint Committee have leave to report from time to time.
On Question, Motion agreed to: Ordered, That a message he sent to the Commons to acquaint them therewith and to desire them to appoint an equal number of their Members to be joined with the said Lords.

GLASGOW CORPORATION ORDER CONFIRMATION BILL
Read 3a, and passed.

RESTRICTION OF MERGER ORDER 1969
3.22 p.m.
TEIE MINISTER OF STATE, MINISTRY OF TECHNOLOGY (LORD DELACOURT-SMITH)rose to move that the Restriction of Merger Order 1969 be approved. The noble Lord said: My Lords, this Order was made on August 6 this year and laid before Parliament on August 11. Its purpose is to give effect to the Report submitted by the Monopolies Commission under Section 6 of the Monopolies and Mergers Act 1965 on the merger proposed between the Rank Organisation, Limited, and De La Rue, Limited. The Commission concluded that the proposed merger would operate against the public interest and recommended that it should not be permitted.
The then President of the Board of Trade announced his acceptance of the Report on June 2. I should perhaps explain that it has been the practice of the Board of Trade, in cases where the Monopolies Commission have recommended that a merger would be against the public interest, to invite the chairman of the company or companies concerned to undertake not to proceed with the merger. On this occasion the chairman of the Rank Organisation, as he was quite entitled to do, declined to undertake that the Organisation would not renew their former bid for De La Rue or take any other action to place the Organisation in the position of controlling the De La Rue Company. The President of the Board of Trade then concluded that in order to remove all uncertainty about the position, and to give full effect to the conclusion of the Commission, he had no alternative but to lay the present Order before Parliament.
This is the first use of the powers given by the Monopolies and Mergers Act 1965 to prevent a merger which the Commission have recommended should be prohibited. In the nature of things, it is directed specifically to actions by the Rank Organisation. In your Lordships' House the Special Orders Committee decided that it was a hybrid Order and accordingly allowed a period during which the Organisation might petition. No Petition has in fact been received.
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The Order has a twofold application. In the first place, it relies on the power to prohibit the doing of anything which will or may result in any bodies corporate becoming interconnected or coming under common control. In the second place, it relies on the power to declare it to be unlawful to make or to carry out agreements or arrangements —in this specific case, any agreement or arrangement by the Rank Organisation for the acquisition of any stock or shares in the De La Rue Company. Such a provision is necessary to remove all uncertainty and doubts affecting the De La Rue position, because the extent to which the ownership of the shares of one company by another constitutes effective "control" is not defined. It is not defined in legislation and it could vary according to circumstances. To safeguard the position of third parties and avoid legal complications, it has been specifically provided in the Order that this provision is not to apply in such a way as to prevent the carrying out of any legally enforceable agreement which was made before the date of the operation of the Order.
The arguments which led the Commission to conclude that the proposed merger would be against the public interest are fully set out in the Report which was presented before Parliament on June 9. Having received submissions from both companies and having had the benefit of hearing their representatives, the Commission concluded that the merger would bring with it a real and serious risk of damage to the efficiency of the De La Rue business through its effect upon the management personnel and consequently upon overseas trade commitments.
Some criticism has been advanced of the Report to the effect that it perhaps placed an undue reliance upon management factors, which could easily be tested, and particularly on the expressed intention of certain key staff of the De La. Rue company to leave that company in the event of the merger's taking place. I would refer your Lordships to those sections of the Report which explain why in this case such factors were of particular importance. It was because of the need to maintain personal confidence and personal contacts in certain important and

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specialised aspects of the De La Rue business. I should like to make it quite clear that it should not be inferred from the Commission's reaction in this case or from the Government's acceptance of their Report that statements of the intention by managers to quit in the case of contested merger bids would usually be regarded as a reason for prohibiting a merger.
The Report did not exclude the possibility that if other things were left unchanged the market orientation of the Rank Organisation might lead in certain cases to a more efficient marketing of De La Rue products in the long term. It concluded that there was a serious risk that the efficiency and trading volume of De La Rue would be affected by a merger and that this had particular implications for the public interest, inasmuch as several of its operations are in fields where it is the leading company, or one of the leading companies, which overseas competitors.
The then President of the Board of Trade was satisfied that the Commission had satisfactorily carried out their function of investigating the proposed merger and that their conclusions were sufficiently warranted by the evidence and the arguments provided in the Report. The decision to make this Order was a necessary consequence of this fact, once it became clear that the Rank Organisation Limited would not voluntarily agree not to proceed with the merger. I beg to move that the Restriction of Merger Order 1969 be approved.
Moved, That the Restriction of Merger Order 1969 be approved.—(Lord Delacourt-Smith.)
3.30 p.m.
LORD DRUMALBYN: My Lords, first of all, I should like to welcome the noble Lord to his first legislative speech, as opposed to his speech on the Address to the Throne, and I would congratulate him on the fair and balanced way in which he presented the case for this Order. In passing, may I say that we have one advantage in this House, in that we can see from the Order Paper at once whether the Government are asking your Lordships' House to accept or reject their own Motion on the Order Paper.
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In moving the acceptance of this Order the noble Lord has raised several issues, and I should like to deal with some of them. The Special Orders Committee reported that there was no precedent for this kind of Order; this is the first Order of its kind that has been made, and for that reason alone, perhaps, it is worth our while to consider what are the issues raised. If I may raise one issue at once, the noble Lord said that the Board of Trade had no alternative but to bring in the Order, in view of the fact that Ranks themselves were not prepared to accede to the terms of the recommendations of the Commission. Of course, the Board of Trade had an alternative course: they could have agreed with Ranks and not with the Commission. I think it is important that we should get these things right as we go along. In a case like this, I feel it is important that the Government should not move an Order unless the case is proved absolutely beyond doubt, because in effect what they are doing is placing an injunction upon a particular firm to prevent them from doing something that legally, apart from the Order, they could perfectly well do.
The findings of the Monopolies Commission are not—and I should think could not be—based on facts in the nature of the case here. They are certainly not based on the records of the two companies, which are in remarkable contrast. They are both highly reputable companies which have an overseas trade. On the one hand there is the Rank Organisation, which in the 35 years of its existence has built up its capital employed to £180 million, and its annual turnover to £200 million, and has increased its return on capital from 13½ per cent. to 23 per cent. in five years to 1968, admittedly largely on the spectacular success of marketing Xerox at home and abroad. On the other hand, there is De La Rue, which has existed for 150 years, and according to the Commission had capital employed of £28 million in 1968, and earned a return on capital of 9·4 per cent. in 1967 and 13·1 per cent. in 1968. Each of the two companies contains some divisions that have been more successful than others. The findings of the Monopolies Commission are based on their collective appraisal, and therefore not on the facts but on future estimates and assessments given to them by the parties.

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The Act requires the Monopolies Commission to consider whether a merger, or a proposed merger, referred to them by the Board of Trade operates, or may be expected to operate, against the public interest. The Commission must make up their minds one way or the other. They are not allowed to say: "Sorry, we just do not know"; and yet that may be the case when you are peering into the future. It is not enough for the Board of Trade to say: "We do not know the answer. Let us ask the Monopolies Commission", unless at the same time, I should have thought, the law allowed the Monopolies Commission to say: "Sorry, we do not know the answer, either." I think that is something that the Government must consider.
Where the proposed merger would place the resulting combine in a position of market dominance, or would enhance an already existing position of market dominance, we shall all agree, I think, that a reference should be made. In such a case whether the proposed merger was between two companies operating in the same field, or between two companies standing in the relationship of supplier and customer the area of competition would be reduced, and in consequence there would be risks of restriction of supply and of higher prices. There could also in some cases be a loss of efficiency due to the absence or the reduction of competition. These risks are inherent in monopoly, whether in the private or the public sector.
Similarly, where a foreign-based company is seeking to take over a home-based company, most of us would agree that the Board of Trade should consider the merger if it was over £5 million in assets, as the Monopolies and Mergers Act 1965 prescribes; and, if necessary, the Board of Trade should refer it to the Monopolies Commission. When I say "the Board of Trade", I am, of course, a little out of date, because it is now MINTEC; but I am looking at it from the position that existed at the time when the Order was made. Such acquisitions are not necessarily undesirable in themselves, but there is a risk that particular acquisitions, or too many such acquisitions, could threaten national economic independence.
In all these cases I suggest that there is a clear criteria, and it is perhaps not
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too much to say that that being so the onus of proving beyond doubt that the acquisition is not likely to operate against the public lies with the acquiring company. But in the case now before us there is no such clear criteria. This is a classic case of a merger between conglomerates; that is, two companies, each with widely varying interests, none of which appears to overlap or to conflict. The question of monopoly power therefore does not arise. What does arise is the question that we have often discussed in the past; namely, the size of a conglomerate and the possible effect on efficiency, and particularly on the balance of payments, where one or both of the companies are exporting or trading overseas.
It would seem, therefore, that this proposed merger was referred, as much as anything else, to the Monopolies Commission as a test case. I would ask the noble Lord this question. Would it not have been better if the Board of Trade had referred mergers between conglomerates as a separate issue? The Monopolies Commission have in fact considered the issue on its reference, and have attached some general observations on mergers as an Annex to their Report: indeed, I am tempted to say that the Annex seems to be the most permanently valuable part of the Report. In their conclusions to the Annex they say this conglomerate mergers:
"Their likely or prospective effects on efficiency are in the nature of the case less easy to identify and demonstrate"—
They mean, of course, less easy than in other sorts of mergers—
"but they are none the less important to assess."
Then one has to ask: who should assess them, and where should the burden of proof lie? In the absence of any clear criteria, I suggest that in contradistinction to what are known as vertical and horizontal mergers—those to which I have referred before—the burden of proof should lie with the company to be acquired as to who should assess them. The choices seem to be, first, for the Board of Trade (that is again MINTEC of course) to decide without reference to the Monopolies Commission; secondly, for the Board of Trade to decide after reference to the Monopolies Commission; thirdly, for some other body to be set up to deal with them; and fourthly, to

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leave it to the market and the shareholders.
I must say that this Report, in my view, is not a very good precedent for consulting the Monopolies Commission on that kind of issue. But the noble Lord has made it clear in his speech that some special kinds of issue arise under this particular case. There are two reasons for my saying this, the first of which is that the reference takes so long. The Board of Trade referred the case to the Monopolies Commission on January 28. The Act requires the Monopolies Commission to report within three months, but allows the Board of Trade to grant an extension of time if it thinks it is necessary. If my calculations are right, the Monopolies Commission took three and a half months to send out this Report on May 15 and the Board of Trade announced its agreement with the conclusions of the Commission in just under a fortnight. I do not think that that was at all an excessive time; I think the Board of Trade dealt with it with commendable promptness. The noble Lord made a pardonable mistake as to the time when a document was laid before Parliament, because as it so happens there was a strike on at that time and the document came before Parliament on June 16, and not June 9.
The general point I am making here is that by mid-June the merger was really stone cold. In other words, the effect of a reference—and I think this must be recognised—of an opposed take-over is almost certainly to kill the merger stone dead, whether or not it is regarded as not being contrary to the public interest. This is very important to recognise. The subsequent examination of the body or bodies is a mere academic formality. It is the act of the Board of Trade, or MINTEC, in referring the case to the Monopolies Commission that really puts an end to the matter right away because of the time that it takes. During the passage of the Monopolies and Mergers Act through this House I argued that there should be whole-time members of the Monopolies Commission who could immediately consider the reference of a proposed merger and report in a matter of days, not weeks or months. The noble Lord, Lord Shepherd, took the point, but I gather
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that nothing has been done. One must bear in mind that as soon as a company is threatened with acquisition it must immediately start looking at itself, if only to be abe to present to its shareholders its case for opposing the merger, if it decides to oppose it. It would be quite wrong to assume, therefore, that there is any practical difficulty in a quick inquiry, provided that those conducting it can devote their entire time to it.
The second reason I give is that the estimates on which the Monopolies Commission based their appraisal have already been shown to be defective. This is not something for which one can blame the Monopolies Commission in any way, because they had to rely upon the terms that were given to them. In their Report, the Monopolies Commission, talking of De La Rue, said:
"The estimates for 1968–69 and the forecast for 1969–70 foreshadow further substantial improvements both in turnover and profits in relation to capital employed."
In the past week we have had an announcement of the revision of the estimate of profits for De La Rue, and apparently they now think that the estimate is going to be about one-third less than the estimate put forward earlier. I think it is a matter of over £1 million less in profit.
My Lords, if this estimate has proved far out, how much further out is the estimate as to the key personnel who would have left De La Rue had the merger gone through? The noble Lord recognised this difficulty, but it is crucial to the whole case. If "key personnel" includes the board itself, no doubt the board would have stood or fallen together if the merger had been left to the market, although one cannot be sure. The board had every right to fight for the continued independence of the company, and for their own survival. Indeed, they were fully entitled to use as a weapon the ballot they held among their personnel. They showed considerable astuteness in this, but I should have thought it was a tactic that could work only once, and I think that the noble Lord, in rather guarded terms, said this. He said that there were special considerations because of the position of De La Rue with regard to bank-note manufacturing, and the special relationships of the company with other Governments, and so on. I should have thought that

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the Commission here overestimated the likely change in those relationships. Surely, De La Rue International, Limited, would have continued, whether as a subsidiary of Rank or of De La Rue.
Can we really accept at its face value a ballot of this kind? Surely we should have some regard to psychology. May I put this to noble Lords opposite, because I think they will see the point here? Supposing Marplan or Gallup were now to run a poll, and the question was: "If the Labour Government wins the next Election, will you go abroad; will you emigrate?". Would noble Lords opposite accept the answer to that as a fair expression of intention? No! of course they would not. I want to bring home to noble Lords opposite that it must be very rare indeed for employees to rejoice when their company is taken over, especially if it is a company of long-standing repute—unless, that is, the take-over is a salvage operation. Mergers are not welcomed by employees, whether the merger is opposed or negotiated by their board. Such a ballot is an expression of feeling; it is not, and cannot be, an expression of firm intention. To take such a ballot at its face value is really to cast a slur on the key personnel themselves; on their confidence in their own capacity and adaptability to meet the challenge of serving in a larger and more aggressive organisation. Yet it is clear that the Monopolies Commission attached great weight to this. In paragraph 98 they said this:
"Of much greater importance in our view is the likely reaction of the De La Rue management, as individuals, to being taken over by Rank. We are satisfied that the merger would have serious adverse effects on the present, and in our view efficient, management of De La Rue in the sense that there is near certainty … that several key persons would leave and others, if they remained, would suffer loss of morale".
This thought is picked up by, and twice stressed in, the Monopolies Commission's conclusions, once in referring to the real risk of loss of efficiency, and the second time in expressing the view that Rank, (and I quote) had:
"underestimated the difficulties with which it would be faced and the risks it would run".
It will be a sorry day for Britain if business in this country is to be discouraged from running risks, and from
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making its own assessment of the risks it runs.
I do not suggest that your Lordships should reject this Order. I think the Order is now the only way for everybody concerned to get out of an impossible situation. The last thing that Rank want, I imagine (I have not consulted them), is that their second offer made ten months ago should now be accepted, because of the rise in the value of Rank's "A" shares, and the fall in the value of De La Rue's shares since then. Rank's "A" shares have risen from 86s. 6d. on the day of the second offer of January 9, to 112s. 6d. this week, while De La Rue's have fallen from 49s. 6d. before the first offer (of course they went up to 66s.-odd after that) to 36s. 3d. to-day. De La Rue's shares are now less than half, 44·2 per cent., of the current value of Rank's second offer. If anyone should say, "Does not that show the wisdom of the Board of Trade in holding up the merger?" I would answer, "Certainly not". Nobody can tell what would have happened to the shares if the merger had taken place early in the year. For all anyone knows, Rank's "A" shares might have stood still higher, on the basis of the future rather than the present earnings, and of the benefits to accrue from the merger.
The points I want to emphasise, my Lords, are these. First, if there are to be references on proposed mergers, especially opposed conglomerate mergers, they must be done quickly. Secondly, there must be clear criteria. Thirdly, I suggest tentatively that the burden of proof that the merger is likely to operate against the public interest in the case of a conglomerate merger, as distinct from vertical and horizontal mergers, should be placed firmly on the company to be acquired. I would also say that it is absurd that a perpetual ban should be placed on any one company, and one company only, acquiring shares in another, and I hope that a further Order revoking this Order will be laid as soon as possible.
Finally, I must point out how difficult it is, as this Report shows, for a mixed outside body of efficiency experts, academics, businessmen and others—however wise they are—to look behind the assessments of future events and trends that are placed before them. And I would conclude by saying: when in doubt

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let the market decide. There is more wisdom in the market than even MINTEC can compress into the four walls of one room.
LORD ROYLE: My Lords, before the noble Lord sits down, I wonder whether he would answer this question. Does he not feel that the Government's case for the Order is strengthened, and his own case weakened, by virtue of the fact that the parties in the case had the opportunity of appeal for a period of 14 days after it was considered by the Special Orders Committee—and surely everything he said this afternoon could have been considered in such a Committee. But no appeal came, in spite of the fact that the Special Orders Committee took special steps to see that the parties knew of their right of appeal.
LORD DRUMALBYN: No, my Lords, I would not accept that at all. The points that I have been making have been quite different. I have pointed out that the whole thing was stone cold, and there is not much point in making a petition against something which is stone cold.
LORD ROYLE: Warm it up!
3.51 p.m.
LORD DOUGLASS OF CLEVELAND: My Lords, might I speak before the noble Lord replies? I do so with some diffidence, because I had not realised that this matter was coming up. I think I should declare my interest as a part-time member of the Monopolies Commission. I was very interested in the comments that were made on this Order by the noble Lord on the opposite Benches. So often there is a desire for speed in the business world to-day, when speed itself could damage the issues that one has in mind. I was not on the group that dealt with this matter, so I can speak quite objectively; I was not part and parcel of the actual decision.
It was in fact a conglomerate; and the noble Lord has suggested that conglomerates should be a separate issue. I do not see how that could be, because conglomerates, by their very nature, are a mixed bag. It is not easy to make decisions when you have a specific instance to argue and you can move along a direct field without the distractions of moving from one field to another. To imagine that you could get consideration
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in a satisfactory manner over a very wide field of conglomerates very speedily is, I think, to hope for the moon.
Let us look at the type of men on the Commission. They are men from business, long experienced in business; accountants who are expert in judging the accounts of the various companies; professors who have all the training in the academic field. They sit together examining what these companies have done and what they are likely to do. Trade unionists are there; and I am bound to say that we, as trade unionists, are very much interested in what is going to happen to men—and I do not care whether they be workmen, employers, managing directors, or who they may be. Any suggestion that one should ignore the De La Rue contention that many of these men would leave would be one that would lead at the end of the day to complete frustration. I submit that one cannot merge two big companies like this with the prospect of the main men in the management of one of them threatening to leave, with all the experience and expertise they have, and hope for something successful to come out of the quarrel. I do not think you can take conglomerates as a separate issue; I think you must take each one specifically and examine it very carefully; and that is not going to be done in a matter of days.
Do we want the matter dealt with judicially with a full-time Commission? A full-time Commission, in my opinion, would consist mainly of legal minds, because of analysing the legalities of the particular situation. One might as well put it before a judge straight away. But from the Monopolies Commission one gets the expertise of men from different fields of life bringing all their wisdom and experience to bear on the situation. For what? To see that the consumer is not milked by a monopoly that is against the public interest. I contend that we could not have a better set-up for that particular purpose. Then consideration has to be given to what is going to happen to the men. Inevitably in mergers there is rationalisation, which means redundancy. I do not think it is possible to decide how much redundancy there will be, and what is going to be done about that redundancy, inside three or four days.
LORD DRUMALBYN: My Lords, may I interrupt to say, first of all, that, so far as I can remember the Report, the Commission did not consider what was going to happen to the men. Indeed, I should doubt whether it was relevant in this case, because it was a conglomerate with no conflicting interests, and the whole idea was that the businesses should go on more or less as before, to be reorganised and improved if possible. This was the conception.
LORD DOUGLASS OF CLEVELAND: My Lords, it is some time since I read the Report, too, but I was using the noble Lord's own argument that it was wrong to consider the opinion of certain of the De La Rue employees. I was not arguing on the Report; I was arguing on the noble Lord's particular statement on this point. When we are dealing with these mergers we have, as I say, in the public interest not to ignore the men; and I do not care whether they are managing directors, chairmen or the ordinary men who are running the company. I do not want to carry this matter further. I should like to do some further reading of the Report and have a long argument about it, but the noble Lord says he is not opposing the Motion; he is only expressing an opinion. So I thought that I ought at least to express some opinions as to what has to be done in respect of these mergers which are undoubtedly coming and will become more and more pertinent to the economic life of this country.
Having said that, I would say that there is a trend in America now for graduates to refuse to go into big companies. They are scared at the very size of the companies, because as a result of the education they have been given they do not believe there are men about who can manage these big companies, and that their very size is going to beget inefficiency. In America at the present time graduates are seeking employment with small firms rather than with big firms. This is a tendency which will require a good deal of examination; and to set up a judge to decide what will happen—or judges if you like: a small group of men—I do not think will solve that problem.
The last statement the noble Lord made, that there is more wisdom in the market, I think is very much open to
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challenge. The market would have a merger in order to create a monopoly because it is good for the people who run that company; they would have bigger profits as a consequence. That is what the market does. Because the market does that, we have set up the Monopolies Commission, and I think it is accepted by both sides of this House that the Commission is necessary. To suggest that the market has more wisdom than the people who are thinking these things out is a complete mistake and misses the reason for the Monopolies Commission itself.
I hope that this Order will go through. It may be, as has been said, that at some time there will have to be reconsideration. I should never object to that, because nobody can tell with certainty what the future holds for any of these companies, either separately or combined. One can only make an estimate. What a Government do with their taxes and interest rates after that estimate can throw the whole scheme haywire. So on this point I should not disagree if in the future it were felt there should be further consideration. Let the further consideration be given. I hope it will be done by a group of businessmen, academics and trade unionists who are prepared to sit for a month or two and consider it, rather than rush a decision which at the end of the day would be fatal.
3.59 p.m.
LORD DELACOURT-SMITH: My Lords, with your Lordships' leave, I should like to comment upon some of the points which have been raised by the noble Lord, Lord Drumalbyn. I think that a full consideration of some of them would justify a very long debate and would take us far afield. The noble Lord was of course right in saying that this is the first Order of its kind, and I am sure he understood in fact the context in which I said that the President of the Board of Trade had no alternative but to lay this Order—no alternative once he had decided to accept the Report of the Commission and had found that it was not possible to secure an assurance by an undertaking being given by the Chairman of the Company concerned.
I do not think I would wish to comment at any length upon the relative records of the past history of the two

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companies. This is of course dealt with at some length in the Report of the Commission. But as the noble Lord said, this was a question of looking at two conglomerates. The noble Lord really raised the question of whether the judgment of the Commission in these circumstances and on this issue was one that the then President of the Board of Trade should have accepted. The function of the Commission (made up, as my noble friend Lord Douglass of Cleveland has emphasised, of men of a variety of experience and background and viewpoint) is, in the case put before them, to reach a balanced judgment on the evidence which they can assemble. It is clearly difficult for those other than members of the Commission to reach an independent view and to do over again the work of the Commission, especially on such intangible issues as management quality, compatibility of management teams, the likely reactions of individuals and groups of individuals to a change of management—unless, of course, they have in fact had the facility for doing the whole operation which the Commission themselves have done; seen the people, heard the evidence, examined the facts and the figures. The Board of Trade did not consider that it was required to form such an independent judgment and to repeat the work of the Commission. It was satisfied that the Monopolies Commission had applied themselves properly to the issues which were at stake, and I am sure the noble Lord would agree that it would be inappropriate for us in this debate to try again to go over the ground which the Commission covered in their examination of this matter.
The noble Lord, Lord Drumalbyn, has made the point that events which have taken place since the examination by the Commission have to some extent falsified the expectations which were put forward, in good faith, at the time. But I must emphasise that the Monopolies Commission reached a conclusion in the light and on an assessment of all the facts and arguments that were put before them; and their conclusion was that the effect of the proposed merger would, overall, be harmful to the public interest. The reactions of the management, and no doubt other particular arguments and facts that were set before the Commis-
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sion, were elements in this consideration, and the conclusion was reached, I would again stress, in the light of the particular circumstances of the case with which the Report was concerned—the character of the companies concerned and the significance of the areas of business in which they operated, with their special expert trade position. I emphasise again—and I hope the noble Lord will not read anything more into my words than I express—that we do not view this case as establishing any general precedent; and in the future, as in the past, it will be necessary to examine any particular merger upon its merits. Indeed, this very necessity to examine the merits of individual cases is the justification for having a procedure such as the Statute has laid down and has applied in this case.
The noble Lord made the point that the two firms concerned were conglomerates and, if I understood him aright, expressed the thought that it might have been better to invite the Commission to make a Report on the issue of conglomerates. Of course, as he pointed out, the Commission included in this Report an annex with some observations on mergers, in the course of which they made some observations particularly on the question of conglomerates. The noble Lord praised this annex—indeed, I think he said it was probably the most valuable part of the Report. Since the publication of this Report the Board of Trade has issued a booklet in which is set out a guide to Board of Trade practice in respect to mergers. That booklet was published at the end of July and in it is reproduced the material from this Report which is headed, "General Observations on Mergers".
Perhaps it would be proper to say a word or two about the position of conglomerates, since the noble Lord has referred to this point. This is not, after all, a new form of industrial organisation. Many of our largest companies are highly diversified. But there has been a degree of public disquiet, and this degree of public disquiet, both in this country and elsewhere, was fairly marked at the time this reference took place. This disquiet about conglomerate mergers does not arise from the belief that there is something inherently wrong in principle in this particular form of structure. I think it would be fair to say that it arose

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rather from the rapidity with which highly complex organisations can be created in circumstances where perhaps insufficient consideration is given to the problems, including management problems, to be met in their subsequent operation. It was the rapid growth of a number of conglomerates in the United States of America which particularly suggested to some people that there were ways in which the quick appreciation of the reported earnings of conglomerates could tend to mislead the market about the underlying strength of the new structure.
The reference of this particular proposed merger, and of course of the proposed merger between Unilever and Allied Breweries, took place at this time, and I think one could claim that the Commission's Report was valuable in clarifying some of the issues arising in these connections, and in suggesting the further financial information which would be of assistance to all concerned in making their judgments. The conclusion of the Commission was, in essence, that while dangers certainly exist and should be closely watched, both by the Government and by the stock market, these dangers should not at present predispose us against conglomerates in principle, or against the creation of organisations of substantial value. I think that defines the present attitude of the Government. It is an attitude of promoting the examination of cases on their merits, and it is our intention to continue with this policy of examining merger proposals, case by case, in the light of the circumstances.
Perhaps I may conclude by making a brief reference to Lord Drumalbyn's observations at the end of his speech about taking the market as the guide to what is right and desirable in these cases. I do not think we dissent from the view that, generally speaking, it is the market that makes judgments about the prospect of industrial firms and about their combinations with each other. The great majority of mergers have always been decided by the views of the stock market upon them, and so far as we can see that will continue to be the case in the great majority of examples. But there surely are occasions, and there are respects, too, in which the market can give a misleading picture. There are even cases in which the judgment that is
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formed—as again my noble friend Lord Douglass of Cleveland, suggested—is concerned not so much with the efficiency or the prospects in the long-term of the merged firm as with the value of the consideration here and now. I am sure that examples of this will present themselves to the mind of the noble Lord. As we all know, relative share values are mercurial things. If they were less mercurial and more predictable many of us might be much more prosperous than we are. A case in which this is illustrated (and perhaps this bears upon the relative share movements which were quoted by the noble Lord) is that of the proposal which was current at the same time, to merge Unilever and Allied Breweries. This would have been possible in the state of the market in the autumn of last year, but by the summer it was ruled out by the changes which had taken place in share values.
Finally, a merger may proceed and be countenanced by the market for reasons that have not very much to do with efficiency—desire for institutional growth, defensive actions to forestall possible bids, the "go-go" kind of financial leadership, and so forth. I am not suggesting for one moment that such motives or considerations are illegitimate. The interests of the shareholders may justify them. But where large public corporations are involved, and where considerations of the public interest may arise, the Government cannot avoid the responsibility, in some cases at any rate, of promoting an examination of the efficiency features and of the plans of those involved, even if the only apparent result is delay which may enable those concerned to reflect again. I hope that, in the light of the comments I have sought to make your Lordships will be prepared to approve the Order.
On Question, Motion agreed to.

RADIOLOGICAL PROTECTION BILL [H.L.]
4.12 p.m.
BARONESS SEROTA: My Lords, I beg to move that this Bill be read a second time. The object of this straightforward Bill is to transfer to a statutory Board the present functions of three existing bodies: the Radioactive Substances

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Advisory Committee, appointed under the Radioactive Substances Act 1948; the Radiological Protection Service, run by the Medical Research Council; and that part of the Central Health and Safety Branch of the United Kingdom Atomic Energy Authority which deals with radiological protection.
In the last twenty years we have seen the gradual establishment of atomic energy as a means of providing power and the increasingly widespread use of radioactive substances and of radiation in medicine, industry and commerce. The properties of these substances and of radiation produced by machines are of great benefit to mankind, as we know so well, but, as with other scientific and technical development, there are unfortunately accompanying hazards. It has been necessary to build substantially on the knowledge acquired in earlier years for protecting people from dangers associated with the use of X-rays and from substances like radium, until now there is virtually, I think one can say, a new branch of knowledge and activity generally described by the term radiological protection.
In 1948, at the beginning of the British effort in atomic energy, and the spread of the utilisation of the properties of radiation outside medicine, Parliament passed the Radioactive Substances Act. This was a general enabling Act, as noble Lords may remember, to allow certain Ministers to make regulations for the protection of people against hazards from radioactive substances and ionising radiations. Under the provisions of that Act, the Ministers were required, after appropriate consultation, to appoint an advisory committee whose duty was to advise Ministers on the regulations they were proposing to make under the Act. This Advisory Committee, the Radioactive Substances Advisory Committee has a present membership of 16 under the distinguished chairmanship of Sir Brian Windeyer, now Vice Chancellor of London University, having recently retired from the Professorship of Therapeutic Radiology of that University and from being Director of the Meyerstein Institute of Radiotherapy at The Middlesex Hospital, roles which those of your Lordships who know him professionally will agree with me he has filled with such
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success. The Secretary of State for Education and Science is the Minister responsible for appointing the Committee, and the Director of the Radiological Protection Service acts as its technical secretary.
In the field of radiological protection there are several Government Departments who have powers to make regulations and these Departments have their own technical staff to cover their special interests. The purpose of this Bill, however, is to achieve in the proposed new statutory Board and its staff a single national point of authoritative reference and a body which can provide the necessary technical services, both to Government Departments and to others. The Bill provides for a Committee to advise the Board. The Committee would comprise a much wider membership than the Board itself and would enable scientific, medical, employer and trade union representatives, together with representatives from Government Departments with responsibilities for radiological protection, to be associated with the work of the Board. The Committee's function would be to advise the Board and the Board would be expected to consult it on certain matters which I shall explain in a moment.
This arrangements will, we believe, enable the Board to be kept small enough for effective management and yet enable its opinions to be informed by a wide spread of all the interests concerned. Consultation between Board and Committee will be particularly important where the Board is advising Government Departments on technical matters, for example, on regulations applied to those whose work or whose products involve radiation hazards.
I now should like to say a word about the two existing groups of experts we propose to combine in order to form the Board's staff. The first is the Radiological Protection Service which was set up in 1953 under the management of the Medical Research Council on behalf of three sponsors—itself, the Department of Health and Social Security (as it is now) and the Scottish Home and Health Department. The cost of its operations is shared between these three bodies according to the requirements of research, that is, the Council, and services, that is,

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the two Departments. The headquarters of the Service are at Sutton in Surrey in the grounds of the Royal Marsden Hospital. Research is also undertaken there and a radiological protection service provided from that point for the whole of the South-East. There are also regional centres, as many noble Lords are only too well aware, in Birmingham, Manchester, Leeds and Glasgow. Your Lordships will wish to know that the number of posts in the Radiological Protection Service at present is 225.
The Atomic Energy Authority, as the House will know, was established in 1954 by the Atomic Energy Authority Act of that year. The Authority is organised into a number of Groups which have various establishments and works. Each of these establishments and works is in the charge of a management which has its health and safety departments covering both radiation and other potential hazards. In 1959, the Atomic Energy Authority decided (after the Fleck Committee Report following the Windscale incident) to create a central Health and safety Branch, whose function is to advise the Board of the Authority in respect of its health and safety policy, to disseminate that policy and to assist in its application, to co-ordinate certain research work, and to co-ordinate the Authority's views in respect of international discussions relating to health and safety matters. The Branch also co-ordinates views on radiation protection matters expressed on behalf of the United Kingdom when requested to do so by the Ministry of Technology who have responsibility for our relationship in technical matters with organisations like the International Atomic Energy Agency and the European Nuclear Energy Agency. Here again, in view of the changes which will involve the staff I thought the House would like to know that the total number of posts involved in the transfer in this case is about 40.
The Medical Research Council and the Atomic Energy Authority, as a consequence of the provisions of this Bill, will therefore be transferring what amounts to a substantial proportion of their radiological protection staff to the proposed Board. Indeed, senior members of both groups of staff to be transferred are, I think, widely recognised as being among the leaders of world opinion in
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their particular fields of specialty. Both the Council and the Atomic Energy Authority will contribute to the cost of the Board and will expect to be able to make demands on it for advice and services. The Board, of course, will be expected to meet these demands. The Health Ministers have agreed, subject to Parliament passing this Bill, to appoint nominees of both bodies to the Board.
I am sure your Lordships will agree that the members of the present Radioactive Substances Advisory Committee and its panels have done well, and I should like to take this opportunity, which I am sure other noble Lords will welcome, of thanking all those concerned for the valuable services they have given; but we believe that the arrangements which the present Bill will bring about will represent a considerable improvement. The Committee's functions will be transferred to the new statutory Board, supported by its own expert staff drawn from the Radiological Protection Service and the Atomic Energy Authority, and informed through its own Advisory Committee by the same range of independent expert and representational opinion as exists on the present statutory committee.
My Lords, as I indicated at the outset, the intention of this Bill is straightforward and I hope completely non-controversial, and I do not think the House would wish me to explain the detailed drafting of its seven clauses and two schedules at this stage of our consideration of its contents. An Advisory Group of administrators and experts has already been set up to study the arrangements which will need to be made for the future, and its work will, I am sure, be of great value to the new Board. The scientists and administrators concerned are, I believe, looking forward to this amalgamation of the sources of advice and to the formation of the Board. I should like to assure your Lordships at this stage that the conditions of service of the staff involved in these changes will not be in any way adversely affected by the proposals. I should also perhaps make it clear that the Board will be expected to set up appropriate machinery for consulting with its staff on matters of concern to them. This is a normal feature of public bodies to-day, and the new Board will have, and I am sure will wish to have, its own consultative machinery.

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We believe that this Bill will improve the co-ordination of our arrangements for radiological protection, give better support to Government Departments, both directly and by means of research, and enable our views to be authoritatively heard in international gatherings. That is the object of the Bill, and I hope, therefore, that your Lordships will give unanimous approval. I beg to move.
Moved, That the Bill be now read 2a. —(Baroness Serota.)
4.24 p.m.
THE EARL OF BESSBOROUGH: My Lords, as usual we are most grateful to the noble Baroness for explaining this Bill to us so clearly. She always does this very well, and it is appreciated on both sides of the House. I think it makes a good deal of sense to bring together the services of the Medical Research Council and the Atomic Energy Authority in dealing with radiation hazards and the health and safety problems involved. The Bill is certainly not controversial in a Party political sense, it fortunately does not appear to cost any money, and I believe there is going to be no overall increase in manpower. In fact, I hope that economies may result. I think, therefore, that we on this side of the House should support the Bill.
There are, however, just a few points I should like to make and questions I should ask. One is that it seems to me that to a certain extent this Bill involves an erosion into the Haldane principle under which research of this kind, research conducted by the Research Councils such as the M.R.C., and even the Atomic Energy Authority, have operated in the past. I think that on both sides of the House we still pay more than lip service to the principle that the Research Councils should be free to follow up those lines of investigation which they consider would be useful or rewarding, without interference from executive Departments. It is because of our respect for the Haldane principle that the Research Councils are administered by the Department of Education and Science and not by the executive Departments which might be considered to have the most direct interest in their work; that is to say, the Ministry of Health and Social Services, in so far as the Medical Research Council is concerned, and the
788
Ministry of Agriculture in respect of the Agricultural Research Council. I realise that the Haldane principle cannot be accepted completely uncritically, and we could have an interesting debate on the whole subject of academic freedom. It can be very costly to let certain lines of research drag on too long without results. I accept, therefore, that there must be exceptions to the general rule of executive Departments not interfering with certain research work—that is to say, especially fundamental as opposed to applied, or, as the Americans call it, mission-oriented research.
In the case of these radiological protection services I should not like to think that the Health Ministers concerned who are referred to in Clause 1(4) of the Bill would be solely (and I repeat the word "solely") responsible for directing the work of the services concerned. I am therefore glad to see, both in connection with Clause 1(6) and (7), and indeed in Clause 2, that the Secretary of State for Social Services can confirm a new function of the Board only in consultation with the Atomic Energy Authority and the Medical Research Council, and that Ministers in executive Departments will not give any direction to the Board except after consultation with these bodies. This is probably quite a good sort of middle road to take. However, I should like to ask the Minister where the Department of Education and Science and the Ministry of Technology now come into all this. They are not, in fact, mentioned in the Bill. After all, as I say, the Research Councils are looked after by the D.E.S., and the Atomic Energy Authority comes within the purview of the Ministry of Technology. Will the D.E.S. and MINTEC—or "MAXTEC" as we now call it (it is certainly by no means a "MINTEC")—no longer be concerned with these services? Will they be solely the responsibility of the Health Ministers? I should be grateful if the noble Baroness would elucidate this point.
When many Departments are involved there can be serious delays in decision making. Could the Minister also assure us that in a general way the Government still agree that the Haldane principle regarding the independence of the Councils should continue to be honoured? I gather that the M.R.C. are reasonably happy about all this, and that in so far as fundamental research

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is concerned they will continue to be the body responsible for conducting it. I understand also that they will be strongly represented on the new Radiation Protection Board which is, I gather, only taking over operational research directly connected with these particularly technical services. I hope I am right about this.
My Lords, I think we should all welcome the new Chairman. This is a most distinguished appointment. We welcome him, and we shall also welcome the other members of the Board and of the Advisory Committee. It sounded to me, from what the noble Baroness said, that this was an admirable composition, but I shall be interested to know when she will be able to announce the full list of names. I understand that, apart from Windscale—and perhaps even Windscale was not so very serious an accident—there have so far not been any serious accidents involving radiation; but I appreciate that great precautions must be taken and that there must always be a fire brigade available to deal with possible mishaps. The obvious advantage of pooling the resources of the M.R.C. and the A.E.A. in this way is that they can share their different types of expertise. For example, the Atomic Energy Authority obviously has a greater knowledge of the hazards of working nuclear piles, whereas the Radiological Protection Service of the M.R.C. is very familiar with hazards in the use of the isotopes now employed so widely in industry.
There is one other question which I might ask the Minister, as it may be in some of our minds. Can she say whether any of the different techniques or types of monitoring which we use in this country are being used to protect the astronauts, who we hope may still be taking off for the moon to-morrow? I gather that a study of the problems of radiation may be one of the principal objects of this second manned lunar landing and that there are risks involved here. Believe it or not, my Lords, the Americans are actually transporting a plutonium reactor to the moon as a power plant. It is always interesting for your Lordships to know when British techniques or inventions are used by our American friends. We know that a development of the British Bacon fuel cell powers the Apollo spacecraft, and
790
also that the water-cooled undergarments of the astronauts were originally designed by the Royal Aircraft Establishment at Farnborough, so I wondered whether, in the case of protection against radiation, we could perhaps also claim to have helped the Americans in these truly astonishing and exciting exploits. I know that from our own United Kingdom scientific satellites we are obtaining information concerned with radiation from sun flares, the timing of which seems unpredictable but which present very serious hazards.
Then, too, one has only to read reports of the likely subjects for discussion at the United States/Soviet talks in Helsinki next week to become increasingly alarmed by the prospects of nuclear war in the event of multi-independent re-entry vehicles being used, which with their H-bombs would not only obliterate the United States and the Soviet Union but would also cover the whole of the rest of the world with dangerous doses of radioactive fall-out. The mind boggles as to how our present radiological protection services would cope with that situation, and I wonder whether the Government have any views on the subject. Will these protection services to which the Bill refers be used in these well-nigh unthinkable circumstances, or are there other contingency plans involving other services?
Finally, my Lords, to end on an equally sombre note, I gather that certain degrees of radiation can cause sterility and, certainly, genetic damage affecting future generations. How long, I wonder, will it be before all your Lordships become sterile or have their heredity genes seriously affected. Clearly, this may relieve the Government of the necessity of reforming the House. As I said, all in all, I think we should welcome this practical Bill, and I hope it will result in the radiation protection services being even more effective and efficient than I believe they have been in the past. I should like to join with the noble Baroness in thanking all those who are concerned with them for the admirable job which they have done.
4.34 p.m.
LORD GEDDES OF EPSOM: My Lords, I intervene at this point with the agreement of the noble Lord, Lord Amulree, and I shall be very brief. I have only one point to raise, as a result of the

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statement made by the noble Baroness at the end of her remarks. I want to deal in particular with the position of the staff who are likely to be transferred as a result of the passage of this Bill. As I understood the noble Baroness, she said that the position of the staffs would not be worsened as a result of the passage of the Bill. That ought to be sufficient assurance, but the difficulty is that worsening can be a matter of judgment and of consideration, and I am not sure that the assurance is quite satisfactory to the staff concerned. The noble Baroness will be aware that the staff side of the Atomic Energy Authority were given a precise reassurance on this point at a meeting of the committee on March 7, and the assurance was that the Authority's conditions of service should apply to the whole of the Board's staff. That is not quite the same as the statement now made by the noble Baroness.
I wonder whether it is possible for her to outline the difference between what she has said to-day and the statement which I have just repeated, because it seems to me that paragraph 13(2)(a) of Schedule 1 to the Bill is not very helpful in this connection. As I understand it, it gives complete authority to the Board,
"to pay to their officers and other persons employed by them such remuneration and allowances as the Board may determine with the approval of the Secretary of State".
That is not really a built-in assurance so far as the staff are concerned, and it certainly does not appear to me, nor, I should think, to your Lordships, to be the same as the positive assurance that the Authority's conditions of service should apply to the whole of the Board's staff. I should therefore be very grateful to the noble Baroness if she could say whether there is any difference. I hope there is no difference, and that she can say that her assurance today is in strict conformity with the assurance given to the staff side on March 7.
4.37 p.m.
LORD AMULREE: My Lords, I want to say only one very brief word in welcoming this Bill, in which I have a personal interest. I certainly do not want to follow what the noble Earl has said about the dangers of radiation, because I entirely agree with him, and anything that I could say would be
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merely repeating what he has already said a great deal better than I could.
I am pleased to see this service grow, because in the year 1948 I was one of the members—if I was not an executive member I was certainly an advisory member—of the original committee which was set up under the Radioactive Substances Act. I am very pleased indeed to see that the service which we began is now growing and spreading in such a big way, and I wish this new body every luck and success in the future. I welcome the Bill.
4.38 p.m.
LORD RITCHIE-CALDER: My Lords, with your Lordships' permission, I want to intervene merely to reassure the noble Earl, Lord Bessborough, that radiation is a great leveller. It does not apply only to hereditary Peers and any sterilisation will be very widespread. I am speaking not as a former Vice-Chairman of the Campaign for Nuclear Disarmament. to which all the implications of the noble Earl's grim remarks would apply, but as someone who has been pretty closely connected with this subject over the last twenty years at various levels. I want to pay a very great tribute to the people who have been active in the research and in the safety precautions which have been laid down. I was also responsible for a long series of inquiries—or, as they say in America, I was the moderator of them—which were carried out at the University of Chicago into the question of radiation hazard in peaceful industry.
One of the things which impressed us over the years was the manifest truth that, largely as a result of the apocalyptic cataclysmic explosion of the bomb in Hiroshima, Nagasaki and so on, the atomic energy industry to-day is beyond all question second to none, the safest industry in the world. This is because all the precautions were built in in advance, which was largely due to the foresight, and so on, of the bodies which are now going to be integrated, I think to great advantage. It is the safest industry in the world because the precautions are built in. I only wish this were true of a great many other industries. If we were starting the other industries all over again, I think we would be less at hazard from pollution, and so forth, and indeed from dangers

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to industrial workers, than we are to-day. Therefore, it is very important for Britain; and I endorse the hope of the noble Earl, Lord Bessborough, that what has been true for the last twenty years will continue to be true.
The influence of British experts in this field has had a tremendous effect on international determinations in regard to all these safeguards—and not just at the academic level, I may say. The practical applications, through the International Atomic Energy Agency, through the International Labour Organisation, through the Food and Agriculture Organisation and through the World Health Organisation, have been very substantial; and this is something which needs very careful safeguards. The last discussion I had in the United States, at the University of Chicago just a few months ago, on the question of radiation hazards in the peaceful uses of atomic energy was in a way rather disquieting. That is what I want to emphasise to your Lordships. Because of the enormous precautions which have been taken, and the fact that we have had only the incident at Windscale—which, I agree with the noble Earl, fortunately did not get out of hand, though it might have done—there has been over the last twenty years a growing suggestion that the safeguards which exist in industry and in the uses of atomic energy are excessive. I have no doubt at all, my Lords, that they are excessive; and I hope that we keep them that way. Because the feeling I had, when I protested about this idea that we could reduce the standards, was that I seemed to be regarded as the man with the red flag in front of the motor car.
It is true that there is an inclination, partly because of the reassurances which we have had and partly because of our vigilance, our safeguards, that we can now begin to loosen up—and in point of fact you can make more profits that way. But there is one thing on which I can assure your Lordships you cannot afford to make profits, and that is the hazards of atomic energy. It is not merely the industrial workers who are at risk; not merely the people who are in immediate contact with these things. The ultimate truth is that if this breaks away at all then the whole of the environment is affected, and the population itself is at risk. It is
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important in this regard to realise just what are the standards that we are trying to establish. They are not merely standards which apply to the individual, in terms of what might be his misfortune; as the noble Earl has suggested, this is in fact a question of the genetic effects and of hazards to future generations.
This means, my Lords, that in all our attitudes to this question we must preserve a continuing vigilance. I have had my own misgivings over the years, I may say. Fortunately, in my relationship with this subject the danger has not shown itself effective; but there was always a risk in the diversity of interests involved, in the departments involved and in many cases the conflicts of interests involved. I remember that during the great debates and arguments—ferocious arguments—which we had about risks of "fall-out", and so on, officially we were consistently told that there was no real risk, that the "fall-out" was minimal. The proof of the fact that it was not minimal was the test ban which stopped it all. But in these discussions the suggestion made by many of our official spokesmen was that our arguments were being used as political arguments. They were not political arguments; and one of the most comforting things to come out of this long debate over the last twenty years was when, finally, we had the test ban and it was recognised that the atmospheric hazards amounted to just what we had always argued they amounted to.
We had a conference in Geneva in which we as the experts (Britain took the lead) said, when we came to discuss maximum permissible dosage—what industrial workers could tolerate, what people in industry might tolerate—that so far as the general public was concerned there was no maximum permissible dosage. Therefore, you could not stop and say, if something broke away, if there were another incident like the Windscale incident, that you would wait and see whether it reached such-and-such a dosage. You have to take an absolute stand and say, "Beyond the background radiation, there is no tolerable increase, and everything you do—and I hope everything the new organisation will do—must be directed to getting that back to zero as quickly as possible."
4.46 p.m.
LORD CHORLEY: My Lords, I should like to say just a very few words in this discussion. This is obviously a very good Bill. I do not want to say anything about the merits of the Bill itself, but, as I think I heard my noble friend Lord Geddes of Epsom pointing out as I came in—unfortunately, owing to an earlier engagement I could not be here to hear the noble Baroness open this discussion—it involves some rather complicated points in connection with the transfer of the men who have been working in the Atomic Energy Authority, and for other organisations, to the new organisation. Owing to the speed with which this matter has been pushed on at the last moment, these matters have not been properly tied up. They are complicated, and I do not want to attempt to take up your Lordships' time by explaining them in detail. I have sent the particulars, which were furnished to me by the Institute of Professional Civil Servants, who look after the interests of the men in question, to the noble Baroness.
It seems to me obvious, as an impartial student of this business, that, either in the shape of very clear assurances from the Government or in the form of something being written into the Bill itself, the interests of these men must be protected. As I say, I have sent full particulars to the noble Baroness. There are three points involved here, and I hope the noble Baroness will be able to give the House clear assurances on them, because otherwise, when we come to the Committee stage, we shall have to try to get these matters written into the Bill. That is all I wanted to say.
4.48 p.m.
BARONESS SEROTA: My Lords, may I thank those noble Lords who have spoken for the general welcome they have given to this Bill? The only sombre note struck, perhaps, was by the noble Earl, Lord Bessborough. I must say, speaking as one who has always been in favour of the reform of your Lordships' House and of the abolition of the hereditary principle, that I nevertheless find his suggestion a somewhat drastic way of achieving this reform. May I, on a slightly more serious note, answer the first point he made to us—one which I think must be seen as a major point of
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principle; namely, whether we should not in this Bill be departing too far from the Haldane principle. Our concern, my Lords, was merely to concentrate and strengthen the present arrangements for providing advice and services, but at the same time we are equally anxious, of course, that such advice should be, and moreover be seen to be, completely independent and unbiased by administrative considerations. Health Ministers have a considerable interest in the effects of ionizing radiations in terms of their effect on the health of the population, but they have no specific regulatory functions as other Ministers have in this field. We therefore think it is reasonable that the new organisation, a major part of whose functions will after all be to provide technical services, should be under the ægis of Health Ministers.
They will have general powers of direction in regard to the new Board. These, of course, will not be—in fact, are not to be—exercised without due consultation, and it is certainly not the intention (I hope this will reassure the noble Earl) that such directions, if given, should prejudice the scientific judgment or advice of the Board. He also raised the question of the relationships of the Department of Education and Science and the Ministry of Technology to the future organisation which the Bill will establish. In terms of consultative machinery this matter we regard as covered by the normal processes of consultation as between Ministers. We believe that the arrangements will work well, with the Health Minister standing in a somewhat detached and independent position consulting with the Ministers responsible for the other Departments. I am grateful to the noble Earl for assuring us that the M.R.C., who as the noble Lord, Lord Amulree, knows have a close concern with this field, are content with the arrangements that are suggested here.
THE EARL OF BESSBOROUGH: My Lords, may I interrupt at this point? May we take it that the Vote, in so far as the financial support of the Board is concerned, will come entirely through the Secretary of State for Social Services and not either through MINTEC or D.E.S.
BARONESS SEROTA: My Lords, I will write to the noble Earl on this point, for it is a tricky one. But I think I am right in saying that D.E.S. still makes

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a Parliamentary grant; and so, I believe, does MINTEC. But I should like to be precise. A number of Departments are involved, as ever, in these matters and financial arrangements are extremely complex. But I will write to the noble Earl, and to any other noble Lord who would like a specific statement on this point.
The noble Earl also asked when we should be announcing the names of the Board. The answer is: as soon as the Bill has passed through its stages. I think the timing will be just right. The noble Earl spoke about the development of British expertise over this great and important field, and asked whether British equipment and expertise was being used to protect the American astronauts. I do not know the answer to that question —perhaps some other noble Lords do. However, I will certainly find out, and I will let the noble Earl know.
The noble Lord, Lord Geddes of Epsom, and, more recently, the noble Lord, Lord Chorley, asked me about conditions in terms of service for the transferred staff. In my opening statement on the Second Reading of the Bill I gave an assurance that no staff would be adversely affected by transfer. I must confess that as I listened to Lord Geddes of Epsom I realise that, from his point of view and from that of the staff, that was rather an over-careful Ministerial approach. I should like to assure all noble Lords, and through them the staff, that it is intended that the Atomic Energy Authority's terms and conditions of service will be applied to the Board's staff. I hope that that assurance will satisfy those noble Lords who concern themselves with this matter.
We all listened with great interest, as ever, to my noble friend Lord Ritchie-Calder, one of the world's greatest experts on this subject. I think that, with all our various views about the development of this whole area of scientific endeavour we shall share with him the hope that the British rôle, and the knowledge of all our experts in this field, will continue to be used to develop even further the safeguards against the dangers of radiation hazards. May I conclude by thanking again all noble Lords who have taken part in this debate. I look forward to the Commitee stage of the Bill where we can, if necessary, explore the clauses in further detail.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

TRUSTEE INVESTMENTS (NATIONAL DEBT COMMISSIONERS) AMENDMENT BILL [H.L.]
5.5 p.m.
LORD MITCHISON: My Lords, this must be one of the shortest Bills ever to be presented to this House. It is also a very simple Bill, and I think I am entitled to say that it has some very obvious merits. But it is not acceptable to everybody. I raised this subject once in another place, in the form of an Amendment to the Trustee Investments Act 1961, and once here on an Unstarred Question on May 6, 1968. As a result of that Unstarred Question I have some idea of what the Government's attitude may be. This is the purport of the Bill. The Trustee Investments Act was introduced by a Tory Government because it was felt that the law about trustees was too stringent as regards our choice of investments. Both Parties are equally responsible for what has happened. Before that, the National Insurance Act 1946 had provided that there should be two funds: a National Insurance Fund into which all the contributions would go and out of which benefits and so on would be paid, and a National Insurance (Reserve) Fund which was to stand behind that but equally was to be financed out of money that had its origin in contributions to the National Insurance Fund. This was soon after the War, when I think we all had rather a higher opinion than perhaps we have now of the safety of gilt-edged securities as a means of investment. The other clauses have been re-enacted in the recent Act on the same subject and in the same form.
The result of these two measures was that as regards the National Insurance Funds the hands of the National Debt Commissioners—to whom I will refer in a moment—were tied tightly. They could invest only in savings banks securities —that is to say, in effect, in Government stock, and not even in municipal stock. The hands of the private trustee were free to a certain extent—but only to a certain extent—and, subject always to the original instrument of trust, he was allowed to invest in a variety of things that I

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need not go into but with which many of us will be acquainted because we have had to work the thing. There were securities which required approval, and other securities which could have half the fund, and so on. The net result is that the two funds were tightly restricted and the private trustee at the same time had his hands partially free.
A certain Member of the Government —I do not think I will repeat the name—took part with me in Committee on the 1961 Bill. The last time I raised this subject I said some things that I think went too far. I have since been thinking about it, and I have come to the conclusion that Members of either House of Parliament are, of course, entitled to change their minds; and if they do change their minds over anything they cannot be both consistent and honest. That particular Member chose to be honest and inconsistent. I think he was right, and I do not think I ought to tax him with his inconsistency. With that exception I am not going to mention a soul in this case.
But I am going to say some rather critical things about the Treasury. I want to make it perfectly clear that I am talking about the Treasury as an institution. None of the various successive Ministers has done what I think he ought to have done, and the civil servants concerned have of course done their duty properly. There is therefore, so far as I can see, no Party point whatever in this matter, and there is certainly no personal one. The whole point is: ought the National Debt Commissioners, or ought they not, to have the powers of investment of a private trustee? If this Bill were passed they would be given those powers. There has been a little discussion about a drafting point but it is only a drafting point. I think I am right, but it does not matter, at this stage at any rate.
Taking the Bill as that and with that effect, I ask, why does anybody oppose it? It seems at first sight to be horse sense and one sees no reason why anyone should oppose it. It does not oblige anybody to use these powers in the least. The question whether they should be used at all, and if so when, how and to what extent, is all left completely at large and at the discretion of the National Debt Commissioners. My Lords, let us just deal with that slightly absurd body. The
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National Debt Commissioners operate under an Act of 1818. They were constituted earlier, but by that Act any three of them are allowed to do the business of the Commissioners as a whole, and the operative three—there is no doubt or denial about this—are the Chancellor of the Exchequer and the Governor and the Deputy Governor of the Bank. If your Lordships can distinguish them you are doing something which those who write our Statutes succeeded in doing, but that seems to me to have no reality whatsoever; and therefore I regard the National Debt Commissioners as identical with the Treasury.
They have an office in the City and they share it with the Public Works Loan Commissioners. When you try to find out who they are, there is an extraordinary silence in all the ordinary books of evidence. They have this peculiarity: that if the Lord Chief Justice, for instance, who is one of them, wanted to resign, so far as I can see he could not do so except by ceasing to be Lord Chief Justice or getting an Act passed to remove him. They last met in 1860 under the chairmanship of Mr. Gladstone. I can imagine —but I am not going to take up the time of the House in discussing it—the kind of thing that Mr. Gladstone may have said to them. They had been set up to reduce the National Debt and obviously they had failed to do so; and I should think that Mr. Gladstone used some quite strong language about them and then went away and saved a few more candle-ends himself. There it was, at any rate, and there they are; one of the absurdities of the British Constitution—which contains quite a lot.
I have given your Lordships the early history. The next thing, and this I think is very nearly all I need mention by way of history, is this. It has recently transpired in connection with other proceedings —which are the subject of a Bill in the other House and therefore I cannot go into them—that about 1957 the Treasury was thinking of doing something, not about this particular Bill but about a point remarkably like it. This happened, too, at the same time as the Radcliffe Committee on the management of the monetary system. The Radcliffe Committee asked the Treasury witnesses some questions—rather awkward questions but very few of them. I referred to them when this matter was under discussion in May,

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1968, and I shall not do so again. I think that the position was fairly summarised by my noble friend Lord Beswick who, I understand, is going to reply. What the Treasury witnesses did, he said, was to put up two sets of considerations which the Treasury ought to take in mind in investing these funds. One was the interest of the contributors and the other was the general national interest.
I am a little critical of that statement and I will return to it in a moment. But we are dealing with very large sums of money—£1,100 million or £1,200 million, invested in securities which are now worth between £800 million and £900 million. The loss of them—a paper loss, I agree, until they are realised—is a matter of £350 million. My Lords, £80 million has actually been lost by realisations. All this is the result, not of any stupidity of the Treasury—I would not have the impertinence to suggest that; it is the result, as I see it, of the two clauses, in the 1946 Act and now in more recent legislation, which obliges them to buy gilt-edged securities. They put the short-dated ones, quite naturally and properly, into the Insurance Fund, which is much smaller, and they keep the long-dated ones in the National Insurance (Reserve) Fund. It does seem a staggering amount of irredeemable and long-dated securities, and it is not altogether surprising that more than one-third of it has disappeared in the course of years. My noble friend will no doubt correct me if I am wrong, but I am not sure that the detail of these figures matters. The point is that what has happened is what nowadays one can be pretty certain will happen if you tie up a lot of money in long-dated gilt-edged securities; they depreciate a lot. I think I mentioned £80 million, but if I did not I say it now; a figure of £80 million is given as actual losses on realisation. They have kept many of the more difficult groups of securities on which there are far larger paper losses.
My Lords, I find this rather a staggering figure and I find the whole business extremely puzzling. The last time this matter was discussed my noble friend did two things which, if I had answered him —I was not then going to take up the time of the House—I should rather have objected to. I hope that he will not do them again. The first point is this. There
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really is a point in giving powers in a case like this without trying to tell people whether or when to use them. The point is a simple one. I am sure that I know much less about it than the Treasury do and it is much better to leave it to them to judge. Why do they object to being given powers without any obligation about using them? My Lords, I am afraid I can guess the answer. When a Government Department takes this line, even if it be the Treasury, it is because powers will carry responsibilities; and these powers would carry responsibilities, there is no doubt about it. The Treasury would have to think about it, whether or not in fact they ought to keep this amount of contributors' money in this form and where are they going to stop.
I do not know what is going to happen to the gilt-edged market and I am sure that they do not either. We are told that it is to prop up the gilt-edged market and the national finances. All I can say is that the gilt-edged market has been dropping steadily and it is far lower now than it was when the clauses were introduced in 1946 when the Government of the day could borrow at 3 per cent. Now the Government have to pay 9 per cent. to borrow and I cannot tell if it is going to stop or not. But to tie the hands of the Department seems to me to be quite wrong. Then it is said that they want to do this to support the gilt-edged market. My Lords, there is another point about that, and this is the one that really troubles me; I do not know whether it troubles my noble friend or not. I think it is immoral to get contributions on what Minister after Minister has said was a contributory scheme and then, when you come to invest them, to do so in such a way that you rank the general management of the monetary system with the benefit to contributors. If I wanted anything out of the National Insurance Fund I should regard it as rather a poor excuse if I could not have it because at the moment it was engaged in propping up Consols. I cannot think that that is right.
This moral dilemma has led me into the most awful difficulties. I got into the Treasury the other day—I had never been there in my life—and I went down a long corridor with a lot of doors. There was no indication as to what was behind the doors and I wondered which of the

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rooms contained the Consolidated Fund. I had forgotten to bring a wheelbarrow; obviously I would have needed one— "pinching" on a small scale would probably have had no effect, except that I might have got into a lunatic asylum or prison; but if it were done on a large enough scale a case could be made out for it. What has been happening here, so far as I know, is that the Treasury—and I am referring to the institution and not to any particular people—is misappropriating contributions in order to try to prop up the national monetary position, and it is making an awful mess of it. I should like my noble friend to explain to me what difference it would have made if they had invested this money in some other way. I need not go into details because I am not here to advertise stockbrokers. But it puzzles me.
What would happen? This Fund is rarely used because it has a sizeable National Insurance Fund in front of it in constant use, and if there was such a mess of the finances of National Insurance that there had to be Parliamentary intervention, the Minister would explain. He may or may not ask to draw on the Reserve funds, but he is just as fully entitled to get Parliamentary sanction to draw on the Consolidated Fund.
After this fiction about the wheelbarrow, I came to the conclusion that there were grave doubts about the existence of the Consolidated Fund; that there probably was not such a thing— it was a book entry somewhere or other. But if this had been a book entry not so much money would have been lost. I do not quite see what purpose this Fund is serving. I must not go on any further because it is beyond the scope of what I am putting forward as a Bill, and I must try not to be a crashing bore, as one can be on a thing of this kind. If there is the Consolidated Fund behind us, as there must be, is this not exactly like the case which the Public Accounts Committee had before them a month or two ago, in which one Tory Member (no names, no pack drill) at the end of the day said that there was no use in having that fund—he was talking about an insolvency fund—when the Consolidated Fund was there all the time. That may be a solution; I do not know. But
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I feel strongly that to misappropriate contributors' money in the way it is being misappropriated here is morally wrong. I know that my noble friend Lord Beswick will not agree, but I feel no doubt about it myself.
This is a case in which Parliament ought to intervene. One cannot do much with a Private Member's Bill, but this is one form of intervention. There may be a better one. We cannot go on like this, holding these securities on a falling market, because we are obliged to do so by a Statute passed over twenty years ago at the end of the War. We cannot go on holding them and nothing else. It is too silly for words.
I would recall one other thing to your Lordships' attention. The Treasury began thinking about this matter in 1957. They have taken about 12 years to make up their minds. They stoutly assert that they have been thinking about it all the time. I made some inquiries. The longest period of gestation of any living creature is that of the elephant, which takes 19 to 21 months. That is nothing to the Treasury. I tried to find out about dinosaurs because I thought that there was some resemblance between dinosaurs and the Treasury. Unfortunately, we do not know enough about dinosaurs; but such evidence as there is shows that the dinosaur's period of gestation is comparatively short. They are probably beaten by the elephant; they are certainly beaten by the Treasury.
I understand that the Treasury got so far as to draft a Bill. I do not know what they did with it, but they have it somewhere. Their answer, given in evidence before the Public Accounts Committee, is that they never got a Government to take it up. I daresay that is true; it is the sort of idiotic thing that does happen. But it is idiotic and it has its human repercussions. When we come to consider what benefits are to be given or contributions to be levied, the existence of this Fund has a certain importance. I should like to see some action taken to avoid its being misused in the way I think it is being misused at present. I hope I have kept my moving of this Bill short. I have tried to. It is certainly a frightfully dry subject, but I have been living with it for a long time

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and thinking about it, and I still think that the present state of affairs is wrong. I beg to move.
Moved, That the Bill be now read 2a. —(Lord Mitchison.)
5.17 p.m.
VISCOUNT ADDISON: My Lords, my noble friend Lord Mitchison has put forward his argument with his eyes twinkling and made us all laugh, but all the same he deployed his argument in favour of the Bill in a very logical way. My noble friend put forward a plea for what seems to me to be an almost unanswerable case. It is the permissive character of this Bill which appeals to me and which I find so effective, and in our permissive age perhaps this might not be so inappropriate. The Bill places no compulsion upon the National Debt Commissioners or upon the Treasury or their advisers. It merely provides the opportunity, at present denied to them, for the same freedom of action as others have. In other words, if the Bill becomes an Act, it will allow them to employ their common sense.
Looking back at almost 35 years in the City, until retiring at the end of last month, I think the thing that helped me most in offering advice to trustees and other investors was the advent of the 1961 Trustee Investments Act, and credit must be given to the Conservative Government at that time for finding time to allow for its passage through Parliament. I will always associate that Act with an old friend of mine and of my father, the late Lord Nathan. He had great wisdom in these matters and the Act was very much his baby. It began as a permissive Act. There was no compulsion, but it enabled one to use one's judgment and experience and made it possible to recover lost capital values for many trustees and investors.
It is argued, as my noble friend Lord Mitchison has said, that if one gave the National Debt Commissioners these powers there would be no support for the gilt-edged market. But I do not think there is very much in this proposition. In the first place, I doubt whether any noble Lord would disagree with me when I say that I think the gilt-edged market has already reached a pretty base level; and secondly, it is not by any means always a good time to go into the equity market.
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There are many opportunities for profitable excursions into the gilt-edged market, especially since the Chancellor of the Exchequer, in his infinite wisdom, had the foresight to remove the inhibiting and long-term capital gains tax from the field of gilt-edged investments in the last Budget, thus freeing the market and restoring a degree of activity not seen since the introduction of this unpopular form of taxation by a Conservative Chancellor of the Exchequer some few years ago. If the present Chancellor of the Exchequer is looking for suggestions, I would invite him to remove the short-term gains tax from the gilt-edged market, too. That would indeed have a dramatic effect upon values.
It is worth remembering that in 1934, when I began work in the City, 3½ per cent. War Loan stood at 109, and 2½per cent Consols stood at about 94. So the late Mr. Dalton should not get all the blame for failure to maintain a cheap money policy. What I am trying to say is that the advisers to the Trustees should use their judgment in applying the Act, bearing in mind the timing and prospects of their transactions. It is not a question of creeping nationalisation, though this may be a fear in some quarters. The State has many equity holdings already. It holds 50 per cent. of the British Petroleum Company, to say nothing of the shipbuilding investments, for which everybody is profoundly grateful. I hope that the Government will not block this Bill. It deserves a better fate than that, in my opinion. It will do no harm, and might do more good than even my noble friend Lord Mitchison expects.
5.22 p.m.
VISCOUNT ECCLES: My Lords, I had not even seen Lord Mitchison's Bill until I came into your Lordships' House to-day and took it out of the pigeon hole in the Prince's Chamber. It immediately interested me very much, and listening to the speeches of the noble Lord is always a pleasure. I do not think it is for me to try to expound how the Government keep their accounts of these various funds; it is very complicated, and some of the funds are not quite as solid as the noble Lord might imagine; they are more likely to be in two dimensions on a sheet of paper. But I think

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I can safely leave that point to the noble Lord, Lord Beswick.
What interests me is the moral point raised by the noble Lord. If there is a moral point here, I think it goes much further back. The real point is that we ought to strive harder than we are doing to keep prices stable. The result of the long frittering away of the value of our money is that all classes of people are beginning to lose confidence in money as a store of value. In my view, this is very serious. I was surprised the other day when my noble friend Lord Amory, in making an excellent speech in the debate on the gracious Speech, said that there were three objects of Government —first, the balance of payments; secondly, full employment; and thirdly, stable prices—and that nobody had been able to get all three together. But he thought that if he had to give priority to one object it would be the balance of payments. It appears to me that if prices were kept stable we would not have to worry about the balance of payments, and that keeping prices stable is the priority object of a civilised economic policy.
I think it is very serious when the Government themselves are encouraging people to lose confidence in their own paper—in national gilt-edged securities—and to go over into ordinary shares. The noble Lord, Lord Mitchison, said that in the evidence tendered to the Radcliffe Commission by the Treasury they said that when they invested these funds one of the considerations was that their policy should be in the national interest. To knock your own market in the national interest—which would be the effect of diverting funds invested in Government securities into ordinary shares—is a very doubtful proposition. My own view is that the continuing fall in Government securities is something that we ought to worry about much more than we do. Naturally, there is no cure for this except confidence that prices will remain more stable than they have done in the past. That is the way to protect the contributor. It is not only the contributor to the insurance fund that we have to protect, but all people who in some way or other make provision for themselves, their families and their future in money terms. Even if you take out an insurance policy and insure your life for a certain sum
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of money you make a contract, and when that money comes to be paid, whether you are still alive or not, it may buy much less, and what you thought was security is not security.
I think this is the fundamental problem. Whether it is to be put into a class of moral problems or not I leave to your Lordships to decide, but it is something to which we should pay attention. We ought not to encourage people to feel that the only way of preserving their stake in the country is to have something that will go up when money goes down. Therefore, I am not in favour of this Bill on fundamental grounds. I think it could be shown to be not quite as useful as the noble Lord thinks it would be if the noble Lord who is to reply gave a short survey of how the Government keep their accounts.
5.27 p.m.
LORD LEATHERLAND: My Lords, I rise merely to indicate that the view on this side of the House is not necessarily that of my noble friends Lord Mitchison and Lord Addison. There is another point of view, and I should like to express it, although I fear that most of the wind has been taken out of my sails by the noble Viscount, Lord Eccles. This is really a non-Panty question, because Governments of both complexions have been investing insurance money in this manner for many years past. My noble friend Lord Mitchison said that this is the third time that he has raised the question. I hope that it will be third time unlucky, as it was unlucky on the first and second occasions.
My noble friend has given us an interesting historical review of national finance and national debt finance. I wish that he had told us exactly what Gladstone did say in 1860, because many of us have been waiting for years to know what it was. But we are not concerned with Gladstone. We are concerned with the conditions that exist to-day, with the fluctuating and sometimes unsound monetary policies as they exist all over the world. Naturally, equity investment has some attractions. For a number of years I had executive responsibility of investing for a big county council; and I am to-day the treasurer of a university, where I similarly have responsibility for investment. Under the latitude that has been allowed by the Trustee Act 1961, one puts

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a fair amount of one's money into equities. But one must not be blindfold and one must realise that equities have a habit of going down as well as going up, as we have seen over the last six to eight months.
I think the basic question here is whether we should use this Government money—because it is Government money, although it has been contributed by the people under legislation which requires them to do so—to give support to the gilt-edged market whenever it is felt that this is necessary; and the Government would be lacking in their duty if they did not make use of the funds in their possession to give that support. I know it can be argued that the gilt-edged market should be able to support itself if the national economy is on a sufficiently sound basis. But at the moment, and for some years past, we have had fluctuating monetary conditions throughout the whole world. It is not surprising if the gilt-edged market is probably not able to sustain itself without outside help. If the insurance fund were found to be suffering very severely because of the way in which this money was invested, it would be upon the Exchequer to make a supplementary grant to that fund. It might be a pity if it were found to be needed in that way, but to make a grant of that kind would not be so serious a matter as would be the withdrawal of the support which remains ready to come to the aid of the gilt-edged market.
LORD DRUMALBYN: My Lords, I wonder whether I may ask the noble Lord, Lord Beswick, one question before he speaks. It concerns a matter with which I hope he will deal—indeed I feel certain that he will deal with it. I should like to know about something which both noble Lords on the other side have mentioned. As I understand it, there are in the National Insurance (Reserve) Fund two sides: first, funds which were taken over from the old Fund, and, secondly, funds which represented the Government's contributions, the Government's counterpart largely, in the early stages of the National Insurance Fund. This has some real importance. If I remember correctly, it was not a question of the contribution of National Insurance contributors being taken and put into this Reserve Fund, because that went into the National Insurance Fund.
810
It was the necessity, a statutory necessity, at the time for the Government to make contributions to the Fund. The contributions they were to make to the Fund were calculated on a much higher rate of unemployment than actually proved to be the case after the war. So one had this surplus arising. I am asking this question purely because I do not think it right that this can really be said to have arisen from the contributions of the National Insurance contributors. It was always Government money that was paid into this Fund, because it was their statutory duty to pay it into the Fund.
5.33 p.m.
LORD BESWICK: My Lords, my noble friend Lord Mitchison, has introduced his Bill (as we all thought he would) in a most attractive and very good-humoured way. We have had a quite fascinating discussion, and a discussion on this topic of money cannot fail to be fascinating. Looking around the Chamber, seeing the expression on some of the faces of the noble Lords, as they discussed the prospects for the gilt-edged and equity market, was quite an interesting exercise.
The purpose of the Bill, aside from some of the wider discussions we have had— and I shall not be expected to pursue all that has been said—is to give the National Debt Commissioners the powers to invest which are conferred by Sections 1 to 6 of the Trustee Investments Act. This goes a good deal beyond the scope of what I understood my noble friend originally suggested in relation to the National Insurance (Reserve) Fund. The Bill we are now considering would seem to cover the whole powers of the Commissioners, and to extend, for example, to the investment of savings bank funds. Even assuming that the objectives of my noble friend were acceptable, it is open to very considerable doubt whether modification of the Trustee Investments Act is the correct way to achieve what he sets out to do. The Trustee Investments Act, as my noble friend Lord Addison will agree (and I should like to join with him in the tribute he paid to the late Lord Nathan), is basically designed to ensure the proper management of funds by the least skilled of trustees. It would not seem to be appropriate to use this Act in connection with the

811
National Debt Commission, the active members of which (and despite the difficulty which my noble friend Lord Mitchison has, as he goes down the corridors of the Treasury) are the Chancellor of the Exchequer, the Governor of the Bank of England and the Deputy Governor of the Bank of England. I would hardly have said that these were the least skilled of trustees.
Moreover, although the largest funds for which the Commissioners are responsible are the Insurance Funds and the deposits of the Ordinary Departments of the National Savings Banks and the Trustee Savings Bank, there are in addition several smaller funds which would be affected. All have their investment policy carefully defined, either by statute or by regulation. If amendment was required to any one, or even all, of these funds, it should be done in a much more specific way than by this Bill. I am submitting that it would be inadvisable to allow this Bill to get on to the Statute Book because its form—quite apart from any other argument—is quite clearly unsuitable for its purpose. But I realise that my noble friend would wish the purpose of the Bill to be considered, even though the Bill itself was unacceptable.
My Lords, I answered a good many of my noble friend's misconceptions when we had a discussion on May 6, 1968, and I do not want to go over all the ground again. But I must re-emphasise the point that those contributing to the pensions and other insurance schemes have not suffered at all by reason of the funds being invested in gilts. I quite understand my noble friend's concern about pensions, pensioners and pension funds. Of course their interests must be protected. But public sector funds are quite different in purpose and character from private sector pension and insurance funds. The fact that the National Insurance Funds have been invested in gilt-edged securities makes no difference, one way or other, to the level of pensions or other benefits. The level of these, as my noble friend Lord Leatherland said, is determined by the Government of the day in the light of considerations quite different from the income earned by any investments. A Government will recommend, and Parliament will approve, or otherwise, a proposed level of benefit,
812
determined in the light of the needs of the pensioners, and other beneficiaries, and related to the state of the economy generally. It has no relation whatsoever to whatever income they may receive from this Fund. It is wrong, therefore, to say that the Insurance Funds contributors have in any way lost money by virtue of the investment of surpluses in Government securities.
It could be argued that the existence of the Funds merely reflects the way in which past surpluses of income over expenditure in one part of the public sector have been accounted for, and the investment of the Funds in gilt-edged is little more than one of several possible accounting devices. As the noble Lord, Lord Drumalbyn, said, when they wound up the old scheme what was in the surplus at that time was put into this Fund. Subsequently, any money coming into the so-called Insurance Fund is little more than money passing through a current account. There is no real Fund in this at all; indeed, is is a misnomer to use the word "Fund": and I think the noble Viscount, Lord Eccles, will agree with this. It is very much a two-dimensional matter.
There are two other points that I would submit for consideration, and they have been touched on by both the noble Viscount, Lord Eccles, and my noble friend Lord Leatherland. The funds under the control of the National Debt Commissioners are of such a size that it is impossible to consider their investment policy without taking into account the Government's economic and financial policy generally. The National Insurance Funds, as my noble friend said, together comprise some £1,650 million of assets but the Savings Banks funds are considerably more than that, and amount to something like £3,000 million. Obviously, we have to consider what would be the effect of a move by which the Government sold some of its holdings in gilt-edged and invested them in equities. The immediate effect would be that the price of gilts would fall and equity prices would rise. The Government would still have to borrow, and the money lost by the sale of stock in the public sector funds would have to be found from elsewhere in the market. This would further depress the price of gilts and the Government would have to

813
sell even more debt in order to raise the same amount of money. At the same time, large purchases of equities by the Commissioners would put large sums of purchasing power into the hands of the private sector and have serious repercussions on the control of money supply. If that were done, then other Government action would be needed: tighter controls on credit or the sale of further long-term debt to the private sector.
It can be seen, therefore, that my noble friend is getting into very deep waters indeed. Incidentally, even if we took his own criteria about benefiting this hypothetical, as one might almost call it, insurance fund, it is not certain that their interests would have been protected had action been taken in the last year or so to invest in equities. Supposing 20 per cent.—and I think my noble friend Lord Addison, with his great experience, would suggest that probably if you are going to have a fund, 20 per cent. in equities as against 8 per cent. in gilts is not an unreasonable proportion—had been invested in equities a year ago. The Financial Times 500 Share Index at that time was about 176; it has now declined by some 19 per cent. If the sums had been invested at the end of January when the Index was about 194, the decline since then would have been even greater, 26 per cent.
VISCOUNT ADDISON: My Lords, will the noble Lord forgive me for intervening for one moment. I also pointed out that the advisers to the trustees would be using their common sense and justice.
LORD BESWICK: My Lords, I shall come on to that point later. What my noble friend is saying is that if there was a power he would not expect them to have used it in recent circumstances. I quite accept that. But I am pointing out that if my noble friend is talking about the loss to the Insurance Fund contributors, this loss would certainly have taken place if any movement had occurred in the last year from gilts into equities. The market value of the Fund would indeed have been 4 per cent. lower now than it was a year ago if only 20 per cent. of the gilt-edged holdings had been switched into equities. Clearly, over this recent year my noble friend
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would not appear as the untarnished champion of the Insurance Fund contributor.
But he says—and my noble friend Lord Addison says again—that they are only asking for powers; not making it obligatory to invest 20 per cent. or any other proportion, but only seeking permission. This is the point. But it would be reasonable to expect that if permission were given it would be used. If there was any expectation of any movement at all into gilts at the present time, if the Government appeared to be making this decision now to give power, then the effect would be very serious indeed on the gilt-edged market.
My Lords, in any other debate, and not in the context of this Bill, I would not disagree with my noble friends about the value to the nation as a whole of the Government's moving into equities. I am in favour of this. I have always wanted us to increase our collective stake in the national asset. I want the British people as a whole to share in the economic growth. If there is to be any depreciation of money, then the more that ownership of goods is widely shared, the better for social justice. But I agree with the noble Viscount, Lord Eccles, that we shall never get social justice if we lose confidence in money. It would be quite wrong here to do anything that would undermine the general acceptance of the value of Government securities.
If we want to move into equities, if we want to increase the national holding of industrial shares, then it is conceivable that there are other effective ways of applying such a policy. For example, there is the Industrial Reorganisation Corporation and the use of measures under the Industrial Expansion Act. But I cannot advise that the Bill which is now before us is the right way to seek what basically I think my noble friend is after; and I cannot advise the House to accept it. On the other hand, although it is a small Bill, it is an important matter and I think it would be wrong to have a decision or a Division taken by a House which possibly was not quite so representative as the importance of the subject demands. I would not, therefore, try to contest my noble friend if he wished to press this matter.
5.46 p.m.
LORD MITCHISON: My Lords, may I reply quite shortly? I said in the debate in May that there were always three stages in persuading the Treasury about anything. The first was that you raised the subject, and they said you had done it quite well. The second was that you raised it and they said there was something in what you said, but not much. And the third was that they brought it in themselves and said how bright it was of them to have thought of it. I earnestly hope that the friendly words at the end of my noble friend's speech were an indication of some possibility of that process being completed at a later date.
As to the arguments, I would say only one thing. I listened very carefully to all of them, and not quite all but most of them were directed to the wisdom or not of buying equities. I did not venture to express any opinion about that at all. I merely said that the very expert people—the Chancellor of the Exchequer, the Governor and the Deputy Governor of the Bank—ought to be given the opportunity to do so if they wanted to. It is not true that the population of the country and the contributors to the National Insurance Fund are the same people. One has only to count them. There are about 55 million people in the country, and the people on whose behalf contributions are paid number about 22 million, and that figure includes the women who come in on their husbands' rights. There it is; they are not the same. Therefore, to that extent I think that the procedure is unfair.
I do not want to press that kind of point now, but I would just quote from what my noble friend said on the last occasion, to show the kind of mistake he fell into. With great respect to him, I think he did so to some extent to-day. He said:
"It is impossible to differentiate between the members of the public whose money the Fund is and the nation, since the nation is made up precisely of those same members of the public".—[OFFICIAL REPORT; 6/5/68, col. 1316.]
It is not, my Lords. There are about twice as many in the nation.
816
May I answer the noble Lord, Lord Drumalbyn. I am not going to answer him in detail, but I think he will find the answer in Section 84 of the 1965 Act. The fact is that the only source, so far as I know, from which the Reserve Fund is fed is the National Insurance Fund itself; that is to say, it is made up of contributions, including of course some Government contributions. I quite accept that. Lastly may I say this—
LORD BESWICK: My Lords, I am sorry, but may I intervene because I did not answer the point? The Reserve Fund is not now made up from contributions. It was the surplus which at that point of time happened to be existing on the old schemes when they were wound up.
LORD MITCHISON: My Lords, I think the short answer is in subsection (5) of the section I quoted, and I will read it:
"There may be transferred from time to time from the National Insurance Fund to the National Insurance Reserve Fund such assets as the Minister"—
that is the Minister of Health and Social Security—
"with the approval of the Treasury. may determine".
There is no dispute about that. After all, it is quite clear. I ought to have made it clearer than I did—I do not think I actually said it and I should have done; and I should like to take this as an instance—that some of the other funds may raise other questions; and I should not object to that. But the object of this Bill is the really not very wicked one of trying to stop the Treasury from going on doing something which I think is both wrong and silly. If they go on doing it I do not know where they will stop; and as for ruining the gilt-edged market, I just do not believe it. This amount of money will not make any difference. It is a question of dealing with it carefully and the extent to which we do it. But those are all questions that I would not venture to answer. Finally, may I thank your Lordships most warmly and sincerely for listening to a subject that is rather dull.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

CALDERDALE WATER BILL [H.L.]
5.51 p.m.
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): My Lords, in moving the Third Reading of this Bill, I should like to remind your Lordships briefly about its procedural history. This Bill, which was opposed by five petitioners, was introduced into this House in the last Session of Parliament and was debated on Second Reading on February 25. On that occasion the House approved an Instruction to the Committee that was to consider the Bill. That Instruction directed the Committee to give special consideration to two matters: the need for additional supplies of water, and the availability of alternative sources. The Select Committee sat for 12 days and visited the site of the proposed reservoir. They made a Special Report which has been available to the House since July 21, in which they advised the House that the Bill should be allowed to proceed. My Lords, I think that is all I need to say by way of explaining the procedural history of the Bill since it was introduced into this House. I beg to move.
Moved, That the Bill be now read 3a.—(The Earl of Listowel.)
5.53 p.m.
LORD HAWKE: My Lords, it was suggested to me, who had the honourable but somewhat invidious task of being the Chairman of that Select Committee, which consisted of the noble Earl, Lord Baldwin of Bewdley, the noble Lords, Lord Clwyd, Lord Foot, Lord Granville-West, myself, Lord Rankeillour and the noble Earl, Lord Shannon, ably helped by Mr. Mitchell, the Clerk of the Committee, that I should say a few words to fill in any gaps, if there arc any, in the Report we wrote. The Bill arises as a result of the existing and expected increase in short-fall in water supplies of the Calder group of water supplies—Calderdale, Wakefield, Mid-Calder and Huddersfield. The figures of shortage were agreed upon by the Promoters and the Petitioners alike. It was also agreed that pending the arrival of large bulk supplies into the West Riding, expected in the 1980s, adequate relief could be found only from the Calder Valley catchment where the Hebden
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water and the Calder water are the only streams which are not being fully exploited at present. So in fact the only difference between the two sides was one of method: how to get the water.
The Committee sat for 12 days and heard evidence ably given by water engineers, landscape experts, geologists and, of course, amenity lovers. I think the Report we wrote gives a fair résumé of the arguments, and I assume all of your Lordships have read it. The Promoters' scheme appeared to be much more workmanlike and credible than the alternatives put forward by the Petitioners. The latter carried several important areas of doubt which could not be resolved except in practice: for instance, how strict or how lax would the river authority be in their duty to improve the condition of the rivers in their charge when they came to fix the minimum flow figures; how strong would be the opposition to the flooding of the farms in the Culden Valley; what would be the extra delay involved? I think all the members of the Committee accepted that the Promoters' scheme was the superior: the question at issue was whether the amenity factor was such as to make it imperative to accept that the Petitioners' scheme, or some unnamed scheme, must be preferred in spite of the probable extra delay and probable lower yield of water. That is where there was a division of opinion in the Committee.
On Tuesday, June 24—luckily a fine day—five of us visited the scene. One of the ultimate majority and one of the ultimate minority were not able to come on that day. The wooded part of the valley reminded me of some of the Cornish valleys around Bodmin Moor, and the moorland part resembled the steep-sided coombes one finds in the West Country. The wooded part is almost unique in that part of the world, but the moorland part must have many counterparts in the Pennine Chain. I should have liked to walk from bottom to top of the valley but was told that there was no time as the going was rough and slow. So three of us started half-way up the wooded part and two walked back the easier path from the top, at Blake Dean, to join us. We had noted parking places for coaches at the bottom of the valley. We had previously seen i he confluence of the Hebden Water and the Calder River

819
and had seen that the volume of the Hebden was not very impressive.
On our walk we passed the gauge on the Hebden Water and noticed that the flow was about double the minimum flow, and this made one wonder how far the river authority would go if they were pressed to allow in the Hebden a flow less than they had agreed for the Promoters' scheme. One must remember that the yield of the alternative scheme depended on a lowering of this minimum. The path beside the stream was very rough; it was no path for Mum and the picnic basket. I was on the look-out for signs of human activity, and so long as the path was in the woods I saw no litter at all, and hardly a footprint. Indeed I should be surprised if there was much through traffic at all. When we left the trees the path was good and we found more signs of life in the shape of cigarette cartons, et cetera. At the top of the valley we found two coach loads of children from a school playing where the feeding moorland streams enter the moorland valley. There is just room for two coaches there, and it is a good picnic spot used by schools. The general conclusion one got was that there was good picnicking at the bottom and the top of the valley but the rest was not very accessible to family parties. But of course it is a nice walk for the energetic.
Then we had to consider the effect of the Promoters' scheme on these amenities. The picnickers who park at the bottom of the valley would not be affected at all. Secondly, the long-range walkers, instead of debouching from the trees into a moorland valley would be faced by a terraced 1 in 3 slope, covered by trees, and at the top would follow the footpath going either side of the new man-made lake, about 300 yards wide, on which at certain times of the year they might see sailing and boating but no bathing or power boats. They would then go on to join the Pennine Way, as they do at present. The only people to lose would be those who picnic at the top end of the moorland valley called Blake Dean. Most of us thought that if the local authority chose to provide parking space, then the foot of the dam would provide a very pleasant alternative to this latter place, improved as it might be by certain suggestions in design put
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forward by one of the Committee and nicknamed the "Shannon Basin". In fact, the foot of the dam might be less draughty than Blake Dean. The lake will attract people for sailing and in this way satisfy a public want. There appears to be no limit these days to the amount of water which can be used for pleasure purposes. I do not believe that the lake will be very obtrusive. One will either have to get close to it or go above it, further up into the hills, to see it at all.
The schemes of the Petitioners are described at some length in the Report. They propose to use the same water as the Promoters, but in a different way, and the consequent shortfall would be made up by tapping the Rochdale Canal and lowering the minimum flow in Hebden Water. Both of these, it seemed to the majority if not all of the Committee, were rather doubtful propositions. An essential of the alternative scheme is a dam across the Culden Valley which would drown important farmland and buildings, and presumably would be opposed by farmers, with all the delay that that implies.
All in all, my Lords, after an exhaustive hearing, the majority of your Lordships' Committee thought the Promoters' scheme so much more to be preferred as to overcome the amenity case, You cannot have water storage without altering the landscape; and in this case you would, in effect, be exchanging half-a-mile of moorland valley, wooded at one end, for a lake which will give much pleasure to many young people. Moreover, you will be doing this without destroying anybody's home or livelihood. There is one weekend cottage, I believe. involved; no farms; just a little bit of pasture and some rough grazing. You will be leaving intact what has come to be known as the Hardcastle Crags—in other words, the wooded valley before it turns West to thin out into the moorland valley—and I do not think the people who use this main part of the valley will be prejudiced in the least. After full consideration, the majority of the Committee thought that the Promoters' scheme should proceed.
6.4 p.m.
LORD FOOT: My Lords, as the noble Lord, Lord Hawke, has indicated, the decision reached by the Select Committee in considering this matter was not a

821
unanimous decision. There was a minority view, and as one of the minority I trust that it will be thought proper and permissible for me to indicate briefly to the House why I felt unable, reluctantly, to agree with the remainder of my colleagues, all except one. This was a very difficult inquiry, at least for me; this was my first experience of sitting upon such a Select Committee. As the noble Lord has said, we had a hearing which extended over some 12 days and in which we had to consider matters of great detail, of technical detail and technical difficulty. I am bound to say that I found the task we had been set a difficult one to carry through.
But our task was made easier, I thought, by reason of the Instruction that we had received from this House on Second Reading, because there were implicit in that Instruction the three matters to which the House wanted us to direct our attention. The first thing we were to consider was the high amenity value of the existing valley. The second thing we were asked to do was to consider whether the case that there was a need for additional supplies of water had been made out. The third thing we were asked to do was to consider whether there might be some viable and practical alternative to the proposal contained in the Bill. Perhaps I may deal with those three questions in order.
On the question of amenity, it is of course always an almost insoluble conundrum to try to weigh the considerations of amenity against other considerations, such as public need for water, the cost of obtaining it, and the rest. It is an equation in which the symbols are different on each side of the equation. This matter of how much importance is attached to preserving a particular piece of the countryside is necessarily primarily a matter of subjective judgment. We have heard from the noble Lord, Lord Hawke, what impression this place made upon him. I suppose that in this matter of the amenity value of a piece of countryside our judgment is a matter of prejudice and predilection, and it is unlikely that anybody is going to be very much shifted by argument, however persuasive it may be.
But one of the things that was urged upon us by some of the Petitioners against this Bill on this question of amenity was that it is not entirely a subjective matter;
822
there is an objective test which can be applied. The objective test is to look at the identity of the opponents and the quality and the nature of the opposition which the scheme has attracted. And I am bound to say that I found on this occasion that the opposition which had been brought to bear was indeed formidable. It consisted, first of all, of the noble Lord, Lord Savile, in whose family this area of land has been vested for many generations, and it was perfectly evident that Lord Savile had not come to petition against this Bill from any private interest of his own but simply because he was gravely concerned about what he thought would be the damage done to the public interest if this valley were sacrificed.
Then we had what I might properly describe as the passionate opposition of the National Trust, who are now the owners of a substantial part of the area affected. We also had the opposition of the Hardcastle Crags Preservation Committee, a committee of local residents which had been set up some years before with the express object of trying to preserve this valley inviolate against reservoirs and things of that kind. Then we had the opposition of the Council for the Preservation of Rural England, and, finally—and this I think was significant—the opposition of the Hebden Rural District Council. In my experience it is not always the case that when these questions of amenity are being considered those raising them get the support of the local authority, who may be looking over their shoulders and thinking about rateable values and matters of that kind.
Those were the Petitions, my Lords. But behind them, buttressing the opposition to this Bill, there was a veritable host of other organisations—amenity organisations, open-air organisations, recreational organisations—which came forward in support of the opposition to this scheme. It seemed to me that it was properly urged upon us by the Petitioners that in considering this amenity question, and what importance we ought to attach to the preservation of this valley, we ought to have due regard to the weight of the opposition which it had in fact attracted. I was left in no doubt that this proposal was regarded with the gravest possible concern by those people who knew the place best, and those people who lived in and around it.

823
If I may turn from that to the second question, the question of need, as the noble Lord, Lord Hawke, has said there was substantial agreement among all members of the Committee, and indeed between the Promoters and the Petitioners, that the need had been made out. There was some difference of opinion as to the extent of the need, when the need might become effective, and things of that kind, but nevertheless there was agreement that there was a need. But I think it is important to recognise exactly what the nature of the need was, because it was conceded by all parties that this scheme is a short-term scheme. This reservoir, and the supply of water that it will give, is a short-term scheme intended only to meet the need, or the possible need, of the Calderdale group of undertakings between 1974 and 1981, or possibly 1982, and it was agreed by all parties that once the year 1982 had been reached this scheme would be inadequate and further supplies from some other source would inevitably be required. That being so, and this scheme being only what might perhaps be described, and was described, as a "stop gap" scheme to fill a short period of time, the onus resting upon the Promoters to satisfy us that there was no reasonable alternative to the—I will not say the destruction of this valley, but the complete alteration of this valley involved in this scheme, it seemed to me that the burden upon the Promoters of satisfying us that that was the case was all the heavier.
That brings me to the third question which we were invited to consider, and that was the question of whether there was indeed any viable, practicable alternative to that which was contained in the Bill. A whole variety of different possibilities, different alternatives, were put up by the Petitioners who canvassed before us, but I think it will be agreed —and indeed this is contained in the Report—that as the argument proceeded, and as the hearing went on, the concentration of everybody was really directed upon a scheme which I think is described in the Report as Scheme No. 4. This was the front runner; this was the candidate which, if any alternative was going to prevail, was obviously most likely to succeed.
824
But there were two curious and very unsatisfactory circumstances attendant upon this particular scheme. The first was that this scheme, this alternative, only emerged in the course of the hearing before the Committee. Before the Committee started sitting, this alternative scheme which, as I say, became the front runner, had never been heard of. The second curious and unsatisfactory circumstance attending this scheme was that in one particular and crucial matter we were left without the essential information upon which we could come to any certain conclusion.
If I may, I should like to explain to the House how those two difficulties arose. One of the original alternatives, or schemes, which was put up by the Petitioners, consisted of a proposal to build a reservoir and dam in the neighbouring valley, the Calder Valley; to establish an extraction point some way down the river, and then to extract the water supply from the extraction point at a place called Midgehole by taking advantage of the water coming directly through the aqueducts from the existing reservoir and the new reservoir, supplemented by the water coming down the river to the extraction point. But when that proposal was put forward—it had been discussed by the experts on both sides long before the hearing before the Committee—to the surprise of the Petitioners (and indeed, if I may say so, to my surprise) the expert witnesses for the Promoters came up with a quite new objection to this scheme which had never been heard of before. The objection, in the main, was that this scheme, because it involved using river water and reservoir water, would involve difficulties of treatment, and would involve perhaps an expensive process of treatment because, to my surprise —I knew before that oil does not mix with water—I found that water does not mix with water. But apparently that is the case. So when this objection was made, the Petitioners who had put up the proposal conceded that there was some merit in this objection, and they went away and on the following day came back to the Committee with the new amended proposal. What they proposed to do was to pump the water back which had come down the river; that is, pump it back at the extraction point into the reservoirs so that it would then come down

825
having a uniform quality which would eliminate the need of any treatment works at or near the extraction point. And so the proposal which, as I say, became the main candidate as the alternative to the Bill's proposal, was a scheme which had only been evolved overnight, and to which no one had had the opportunity of giving any careful analysis or consideration.
I can only say that I regard that—I do not think anybody is to blame for it—as an extraordinarily unsatisfactory state of affairs, bearing in mind that our Committee had been precisely instructed by this House to consider with every care the alternatives to the Bill's proposal; and in fact the best candidate as an alternative turned out to be a scheme which had never received any detailed analysis for consideration at all.
LORD HAWKE: My Lords, if I may I should like to interrupt the noble Lord to say that I think it is only fair to point out that the Committee looked at this scheme in its best possible light. There was no question that they may not have had time to discover in great detail what snags were attached to it. They considered it in the light of what the Petitioners were able to claim for it.
LORD FOOT: My Lords, I am much obliged, and I entirely agree with the noble Lord. I am not suggesting that the Committee were deficient in their duties—I hope we were not. What I am saying is that here we were presented, as the best possible alternative, with a scheme which was, as it was described in the proceedings, the brainwave of the engineer on behalf of the Petitioners, thought up by him overnight, and I think the noble Lord will agree that that was the case.
This brings me to the second difficulty with which we were confronted; that is to say, we were without an essential piece of information. I should like to explain to the House how that arose. I hope I am not going on too long, but I think these are matters of importance. The Report itself necessarily gives only the view of the majority, and it is important for many interests that my dissenting view should be laid before the House. The second difficulty arose in this way. Under this amenity scheme the Petitioners contended that they would be able to
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extract at the extraction point at Midge-hole a minimum supply of water of 5·8 million gallons a day, which they considered would be sufficient to meet the stop-gap requirement between the years 1974 and 1981.
It was not, I think, seriously argued by the Promoters that if 5·8 million gallons a day could be extracted at the extraction point then that would not fill the bill. The argument which the Promoters used against this proposal was that if you extracted 5·8 million gallons a day from the extraction point, it would not allow a sufficiency of water to flow below the extraction point to meet the needs of the health of the river, of the riparian owners and of the industrial users below. On the other hand, the Petitioners contended that it would indeed leave a sufficient flow and the argument came down to this. The Petitioners were saying, "All that is needed by way of minimum flow below the extraction point is 5½ million gallons a day", while the Promoters said. "No, that will not do. You must have a minimum flow below the extraction point of no less than 6½ million gallons a day." The essence of the matter was that if the Promoters were right in saying that 6½ million gallons a day was the minimum acceptable flow below extraction point, then that would leave the Petitioners' scheme short of 1 million gallons a day up at the extraction point. The whole issue came down to this: Were the Promoters right or were the Petitioners right?
When you are considering what is an acceptable minimum flow in a river, who is it who has to decide the matter? It is a matter which falls for decision by the river authority, subject to an appeal to the Minister. It is for the river authority to decide, when they are asked to grant a licence for extraction, what minimum acceptable flow must be maintained below the point of extraction. The extraordinary situation, as your Lordships may think, with which we were confronted was this. We could not get any answer as to what the river authority would be prepared to agree to, and the reason why we could not get any answer was because the river authority could not answer a hypothetical question of that kind. The river authority can only make a pronouncement as to what they will regard as a minimum acceptable flow when a positive proposition and

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scheme is put to them. Then they have to go through certain statutory procedures of consulting with the various interests concerned before they can say what minimum flow is acceptable to them. Therefore, it was quite impossible to ask any question of the river authority's engineer as to what the river authority might be prepared to agree to, because he was in no position to bind his authority in advance. I hope that I have not overstated the matter.
LORD HAWKE: My Lords, I think the noble Lord is slightly overstating the matter. I think the figure in our Report was 6·2 million and not 6·5 million, and I think he should say that the river authority had already agreed to give a licence to the Promoters' scheme for a 6·2 million minimum as set out in our Report. So that to reduce the figure below that was the hypothetical question.
THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET): My Lords, I wonder whether the noble Lord would be so good as to yield for a moment. The discussion is enthralling, and I know that the House is following it with deep interest, but it is perhaps worth while reminding the House that the details of what was said before the Committee are available in the Records of their proceedings.
LORD FOOT: My Lords, I am much obliged for that intervention. It so happens that I have in front of me one of the Records of the proceedings, which I am afraid confirms that I am right, and that the noble Lord, Lord Hawke, is wrong in saying that the figure which the Promoters said was the minimum figure was 6·2 million. It was not 6·2 million; it was 6·5 million. I was about to quote from the relevant page of the document, because I wanted to quote to the House what was said by counsel for the Promoters about this difficulty in which we found ourselves, of not being able to get any reply from the river authority about the minimum flow. What he said was this:
"It must seem from where your Lordships are sitting to be unsatisfactory in the extreme that a witness was called from the river authority and that neither side felt able to ask him questions on this critical point. I concede that that must be, I apprehend, extremely frustrating and very unsatisfactory."
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That is what the counsel for the Promoters said, and I am bound to say that I think it was a perfectly accurate statement about the wholly unsatisfactory situation in which we found ourselves.
LORD NUNBURNHOLME: My Lords, may I ask my noble friend how much lift there was to raise the water from the extraction point to the reservoir? If it was 200 ft. it would cost 7d. per thousand gallons, and if it was 300 ft. it would cost about 1s. 6d.
LORD FOOT: My Lords, I am not capable of entering into a technical discussion of that kind, but I assure my noble friend that this scheme involving pumping back into the reservoir was not in the main attacked by the Promoters upon any question of cost.
LORD NUNBURNHOLME: So my noble friend does not know how high it was?
LORD FOOT: No, my Lords. I am afraid I do not know.
LORD HAWKE: My Lords, I think I can supply the figures. The level at which the pumping would be done was in the neighbourhood of 400 ft., and the reservoirs were something of the order of 1,150 ft.
LORD FOOT: My Lords, if I may interrupt this private conversation between my noble friend and the noble Lord, Lord Hawke, may I say that at the end of the day, having given consideration to all these points, I asked myself this question. We were under this Special Instruction from the House to inquire into these alternatives, and a heavy onus rested, as I thought, upon the Promoters to satisfy us that there was no viable alternative. I therefore asked myself: Have the Promoters discharged that burden of proof which rests upon them? I came to the conclusion that they had not done so, for two reasons. One reason was that I thought there had been no sufficient —indeed, scarcely any—examination of what appeared to be the best alternative; and the second reason was that we were able to obtain no authoritative answer about what the river authority would accept by way of minimum flow.
My Lords, I hope that I have not offered these comments in any negative or critical spirit. As I understand it, this

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Bill will now go to the other place. As I understand it, it is likely to be petitioned against in the other place, and it will then come before a Committee of that House. Is it too much to hope that when it does come before the other place there will then be an opportunity for proper answers to be given to the two questions to which I have sought to draw attention? Surely it ought not to be beyond the procedural powers of these Houses to get some satisfactory answer as to what minimum flow would be acceptable to the river authority. It would surely be a sad and ironic comment upon the procedures of these Houses if this valley, the splendour and natural beauty of which is not really in dispute, were to be sacrificed irretrievably to meet only the short-term need and on the basis of a guess which may be wrong and on the basis of a conjecture which may be entirely unfounded.
My Lords, it had been my intention to go on to make one or two general comments upon the procedures under which this matter is being resolved, but I am sure that I have occupied the time of the House too long to engage upon that now. I would have expressed the hope that these difficult matters, and the disadvantages under which we suffer because of this lack of information, and because there has been no full opportunity to examine the alternative scheme, can be put right in the other place, so that we do not take the risk of losing this valley upon a false premise.
6.32 p.m.
LORD CONESFORD: My Lords, before the Minister rises I think it is appropriate that a few words should be said on behalf of the National Trust, which is so greatly concerned with this Bill. This House is always grateful to those of our number who serve on these Committees, and I am sure we are much indebted for the speech which we have heard from my noble friend Lord Hawke and for the extremely valuable speech which we have just heard from the noble Lord, Lord Foot. Lord Foot has stated so admirably the main points that I desire to be considered before such a measure as this Bill is passed into law that I can, I think, be very brief. We have two facts to encourage us to be brief: first, that on this occasion there is, of course, no question that the Bill will be read a third time in this House
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this afternoon. No one disputes that. Secondly, it will go to another place and come before another Committee for searching examination.
My Lords, I served on the Executive Committee of the National Trust for over thirty years, and some of the property with which this Bill is concerned was given to the National Trust during that period. The National Trust naturally wants the splendid beauty of this valley to be permanently preserved. That is its object in the proceedings, and in pursuing that object it is serving not only its present and future members but everybody concerned with amenities in this country and elsewhere. The extent and nature of that beauty were so well expressed in the full debate that took place on Second Reading, on February 25 of this year, in the speeches of my noble friend Lord St. Oswald and others, that I shall not trouble the House on that subject again.
With all the main points put by the noble Lord, Lord Foot, I think that the National Trust is in complete agreement. On the only question that arose between the noble Lord, Lord Foot, and my noble friend Lord Hawke, I think I can point to something that is agreed between them, because it appears in the Special Report itself. That is that, in turning down what became the main alternative proposal, as the noble Lord, Lord Foot, has explained, the Committee admittedly acted by way of surmise. I do not say that that was their fault, but it is admitted on page 7 of the Report itself. I need not bother to read whole passages, but the matter is not in dispute.
The main alternative, which would have saved this lovely valley in the opinion of the National Trust, was turned down because the Committee made a particular guess in answer to the question that was put before them, namely, whether the river authority would allow a particular flow or not.
If this lovely valley is going to be treated as this Bill proposes, which will involve the destruction of great beauty in the opinion of the various authorities and local authorities mentioned by the noble Lord, Lord Foot—if that is to be its fate—I hope that at least that fate will be suffered on the basis of knowledge and not on the basis of a guess, and I

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hope that the resources of another place and its Committee will be sufficient to obtain this information somehow, so that if we must suffer this destruction then at least its necessity will have been proved and not depend on a guess. This Bill must have a Third Reading to-night, but the case for the most stringent examination in another place is, I submit, overwhelming. I think it would have been overwhelming on the basis of what was said on the last occasion and in the Special Report which is before us, but it has been made absolutely conclusive by the speech of the noble Lord, Lord Foot, with which I should like to associate myself.
LORD ILFORD: My Lords, before my noble friend sits down, I wonder whether he would be good enough to answer me this question. Was what has been called Scheme No. 4, which was the scheme eventually rejected because certain information was not forthcoming from the river authority, a scheme which was put forward by the National Trust and the other amenity societies?
LORD CONESFORD: My Lords, on the nature of that I am quite prepared to accept the account which was given by the noble Lord, Lord Foot. I cannot expand what he said, which I thought was a fair description on the basis of such knowledge as I have.
6.40 p.m.
LORD CHORLEY: My Lords, I should like to say a few words about this Inquiry. I do not want to repeat what I said in my speech on the Second Reading in February to which the noble Lord, Lord Conesford, has referred, but I should like, as one of the Vice-Chairmen of the National Trust, and also as Vice-President of the Council for the Preservation of Rural England, to thank him for what he said. The noble Lord, Lord Foot, properly pointed out that there were three elements in the Instruction which was given to the Select Committee, the first of which is the high amenity value of this valley. It does seem to me, however, after reading this Special Report more than once, and very carefully, that this Report on behalf of the majority— and one must remember that it was a majority of the Committee
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—really pays insufficient attention to the first of these points, the high amenity value of this particular valley.
It is clear, I think, as your Lordships will agree if you will look at it, that this is the last and most beautiful unspoilt valley in the eastern part of the Pennine Range in Yorkshire. It is described in the Special Report as "a local beauty spot". Those are the words that are used. But it is not a local beauty spot; it is one of the most important pieces of cenic beauty in the whole of England, and the fact that the Bill was petitioned against by the National Trust and also by the Council for the Protection (as it now is) of Rural England underlines its national importance. Speaker after speaker in the debate that we had in February underlined this; and there can be no question about it. If one reads this Report, one sees that witness after witness before the Select Committee (Lord Foot or Lord Hawke will correct me if I am wrong) emphasised the unity of this valley. Its beauty depended on the contrast, of the beautiful woods and slopes with the moorland above and the great crags raising themselves above it.
Yet this Select Committee divided into two and said that it was not really a unity at all, but two sections. This was contradictory to the evidence that they had heard. It does not seem to me that they attached sufficient importance to the outstanding scenic beauty of this place. That being so, it is easy to see how the minds of the majority worked. They balanced the Promoters' scheme against the scheme which was, apparently, to some extent thought up at the last moment by the Petitioners. No doubt the Promoters' scheme is the better of the two schemes. But in the scale of the balance surely the outstanding scenic beauty of the Hardcastle Crags, the woods and the moors ought to have been put in and would have brought the balance down with a bump. That, it seems to me, is the mistake that was made by the majority of this Committee.
The noble Lords, Lord Conesford and Lord Foot, pointed out that this matter will have to be looked at again in another place. I hope that when that is done the real importance of this piece of wonderful scenery will have proper attention attached to it.
6.44 p.m.
LORD KENNET: My Lords, I think the House will wish me to say little. I join in thanking the noble Lord, Lord Hawke, and Members of his Committee for the work that they put in on this difficult Bill. We have heard a vivid account from the whole Committee of what the valley looks like, and a lucid and forceful account from a Member of the minority at or near his "maximum acceptable flow" of the reasons the minority had for dissenting from the majority. The Bill will now go to another place where, as several speakers have said, it will be re-examined. The only other point that I should like to make, because I am not sure whether the noble Lord, Lord Hawke, heard it while it was being made, is about what my noble friend Lord Chorley has just said. in the Committee Report it is not the valley, as such, which is described as a "local beauty spot", but the Hardcastle Crags. The Report goes on
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to note that the reservoir will not be visible from Hardcastle Crags.
THE EARL OF LISTOWEL: My Lords, I would only say, as I have a right of reply, that I am grateful to all noble Lords who have taken part in this debate for the welcome interest they have shown in the Bill, which indeed raises many issues of public importance, all of which have been touched upon in the course of the speeches to which we have listened, I should like also to associate myself with the noble Lord, Lord Kennet, in thanking the noble Lord, Lord Hawke, Chairman of the Committee, the noble Lord, Lord Foot, and the noble Earl, Lord Baldwin of Bewdley, and all other Members of the Committee for their willingness to shoulder the very heavy burden of work imposed by membership of this Committee. I hope that your Lordships will now be prepared to give the Bill a Third Reading.
On Question, Bill read 3a, and passed, and sent to the Commons.