Lords Sitting of 12 June 1972

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

SMOKING ON INTERNATIONAL FLIGHTS
BARONESS BURTON OF COVENTRY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the British Airways Board has investigated the possibility, on international flights, of designating certain sections in planes as non-smoking sections and, if not, whether they will instruct the Board to do so in view of the considerable discomfort caused to many passengers.
EARL FERRERS: My Lords, I understand that the British Airways Board have not investigated this possibility, and the Government do not propose to direct them to do so.
BARONESS BURTON OF COVENTRY: My Lords, while not thanking the noble Earl for that unhelpful reply, I wonder whether I might ask him why the Government do not propose to ask the British Airways Board to look into this matter. Is he aware that non-smokers are considered both on rail and on buses, and on the Underground; and is there the slightest reason why they should not be considered on air transport?
EARL FERRERS: No, my Lords; in fact, this is a matter for the commercial judgment of both B.O.A.C. and B.E.A. B.O.A.C. have set aside about a quarter of their seats for this purpose.
BARONESS BURTON OF COVENTRY: My Lords, might I ask the noble Earl whether he would be prepared to have the matter pursued with B.E.A.? Is he aware that B.E.A. have not done any-
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thing about this, and that it would be helpful if they too would look into this matter of discomfort to many of their passengers?
EARL FERRERS: My Lords, I am sure that what the noble Baroness says has a great deal of force behind it, but this is a matter of commercial judgment for B.E.A. and not one in which Her Majesty's Government believe they should direct the British Airways Board.
LORD SHINWELL: My Lords, although I certainly have no objection to what the noble Baroness suggests, and should welcome provision on passenger aircraft so that those who are non-smokers should not be in any way interfered with, may we have some arrangements also so that those who do smoke do not have their accommodation taken up by those who do not smoke?
EARL FERRERS: My Lords, I am quite certain that B.E.A. will take the noble Lord's point into account just as much as they will that of the noble Baroness.
BARONESS SUMMERSKILL: My Lords, may I ask whether it is commercially profitable, apart altogether from reasons of health, to insist that all passengers should breath polluted air?
EARL FERRERS: My Lords, I do not think the Government believe that it is their duty to impose a requirement such as this upon the British Airways Board. In the Government's judgment it is correct that this kind of operational decision should be a matter for both B.E.A. and B.O.A.C. Of course, the Government would welcome any moves which any airlines may make in this respect, but it is quite a different matter to direct them to take the action which the noble Baroness requires.
LORD THOMAS: My Lords, is the noble Earl aware that at least on a B.O.A.C. flight on Friday night from Chicago to London passengers were asked whether they would like to sit in a non-smoking or a smoking section, to the great comfort of both non-smokers and smokers?
EARL FERRERS: My Lords, I am grateful to my noble friend. That is I think what I said, and it is a reflection of what B.O.A.C. does in general.

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My Lords, should not the comfort of passengers who are paying for their flight be taken into account as well as commercial viability; and is it unreasonable to ask—and not on grounds of health—that people who really dislike the smell of the smoke, which becomes very offensive on a long journey, should have account taken of their desires?
EARL FERRERS: Yes, my Lords; I think that what the noble Baroness says has a great deal to it. All I would assure her is that we believe it would be wrong to impose on B.E.A. and B.O.A.C. a requirement which does not bear upon either their British or their foreign counterparts. If it is commercially desirable—and the point which the noble Baroness has made would suggest that it is—I should think that B.E.A. will undertake to do this.

GENEVA CONFERENCE ON THE RULES OF WAR
2.41 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 what were the conclusions of the Geneva Conference on the rules of war.
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (BARONESS TWEEDSMUIR OF BELHELVIE): My Lords, the Conference of Experts on Humanitarian Law applicable in Armed Conflicts, organised by the International Committee of the Red Cross, achieved a measure of agreement on provisions of two draft Protocols. These are to supplement the 1949 Geneva Conventions for the protection of war victims, and will be considered by Govments at a Plenipotentiary Diplomatic Conference probably in 1974.
LORD BROCKWAY: My Lords, while thanking the noble Baroness for her reply, may I ask her whether she would agree, first, that in view of the great technical advances, or regressions, in war methods it is desirable that there should be a readjustment of the war Conventions of 1949? May I ask her for
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the British Government's attitude on two particular questions? The first is the proposal to distinguish between military targets, on the one hand, and civilians and installations necessary for civilian life, on the other; and the second is the extension of the rules of war to undeclared wars, such as that in Vietnam, and to internal wars.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the answer to the first part of the noble Lord's question is, Yes, I do agree with the noble Lord. With regard to the second part of the question, it is difficult to secure agreement on proposals for a prohibition on indiscriminate weapons in this draft Protocol. We feel that this kind of matter really should be considered in ordinary arms control negotiations. Furthermore the West has to have the nuclear power as a deterrent. I hope that answers the noble Lord's question satisfactorily.
LORD BROCKWAY: My Lords, may I ask the noble Baroness whether the decisions reached in this Conference can be made available to Members of both Houses so that we may study them before the final meeting of Government representatives in October, 1973?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I will certainly study that question.

DUTY-FREE CIGARETTES AND HEALTH WARNING
2.44 p.m.
LORD VIVIAN: 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 it would not be advisable to have the customary health warning printed on all duty-free cigarettes.
THE MINISTER OF STATE, DEPARTMENT OF HEALTH AND SOCIAL SECURITY (LORD ABERDARE): My Lords, duty-free cigarettes are packaged for export with the intention that they will be purchased or taken abroad and for this reason do not carry the warning notice. It is not possible to identify at the packaging stage the small proportion of these cigarettes which eventually find their way

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back into the United Kingdom. The warning notice is, however, printed on the packets of duty-free cigarettes which are supplied to the Royal Navy.
LORD VIVIAN: My Lords, while thanking my noble friend the Minister for that Answer, may I ask him whether he feels that it would be a good thing if this country were to take a lead by printing the warning on all duty-free cigarettes, since the smoking of cigarettes—and I speak as an inveterate smoker—has become a world health problem?
LORD ABERDARE: My Lords, I am not quite certain whether I understand my noble friend aright. Does he mean that every cigarette which is exported should carry this warning? I do not think it would be proper for Her Majesty's Government to draw the attention of people in other countries to what our views may be.
BARONESS SUMMERSKILL: My Lords, that is an extraordinary answer. Can the noble Lord tell me why the health of those smoking duty-free cigarettes is of less importance than the health of those smoking non-duty-free cigarettes, whether they are abroad or at home, or in the Army or the Air Force?
LORD ABERDARE: My Lords, it is not a question of the duty-free cigarettes. Those are the few which find their way back into this country. Although we should like to see the warning printed on the packets it is simply a matter that it would be administratively difficult to sort out those which were for export and those which come back into the United Kingdom. In general, I do not think it would be right for all cigarettes sent abroad from this country to bear a warning issued by the Government of this country regardless of the fact that they were to be purchased by people in other countries.
BARONESS SUMMERSKILL: My Lords, may I ask the noble Lord whether he does not realise that the objective is to protect the person who is smoking them, irrespective of what country he is in?
LORD ABERDARE: There is that point of view, my Lords; but I just think that Her Majesty's Government are responsible to the people of this country.
LORD SEGAL: My Lords, since the Government command only limited support in this country, can the noble Lord say how far a Government warning is likely to be heeded? Would it not be far more effective if this warning were issued by the Department of Health and Social Security?
LORD ABERDARE: My Lords, I could not possibly agree with the first part of the noble Lord's supplementary question, and he has rather broadened the issue. I do not think that is a subject that we should discuss at the moment.
LORD SEGAL: My Lords, quite seriously, could not the noble Lord be good enough to answer the second part of my question?
LORD ABERDARE: My Lords, it is another question entirely, but I think it is much better that there should be a Government health warning.
LORD SHINWELL: My Lords, will the noble Lord say what has been the effect of the health warning on the cigarettes provided for the Royal Navy?
LORD ABERDARE: My Lords, my noble friend the Secretary of State for Defence has taken his responsibilities in the matter most seriously and has been educating members of the Royal Navy to the dangers of smoking.
BARONESS SUMMERSKILL: Hear, hear! That is excellent, my Lords.
LORD AIREDALE: My Lords, can the noble Lord not think of some other perquisite for the Royal Navy which is rather more health promoting than cheap cigarettes?
LORD ABERDARE: My Lords, I will certainly convey that suggestion to my noble friend.
LORD ILFORD: My Lords, is it not the case that these warnings against the consumption of cigarettes prove completely ineffective and fail to check in any substantial degree the consumption of cigarettes? And would it not be better for Her Majesty's Government to withdraw from this campaign before they become totally ridiculous?
LORD ABERDARE: My Lords, that is another matter. We are now getting

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into a debate on the effectiveness of the Government health warning. I will only say that my right honourable friend is reviewing the whole operation of the voluntary scheme and in due course he will be making a statement.

TALKS GIBRALTAR: ANGLO-SPANISH
2.48 p.m.
LORD MERRIVALE: 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 make a Statement regarding the forthcoming Anglo-Spanish Ministerial talks in London; and whether the Gibraltar Government will be consulted before the commencement of these talks.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, my right honourable friend the Foreign and Commonwealth Secretary announced in another place on March 6 that he has invited the Spanish Foreign Minister to pay an official visit to London in July. One purpose of this visit will be to continue thinking together about Gibraltar, which my right honourable friend began during his visit to Madrid in February. Political leaders in Gibraltar are naturally consulted.
LORD MERRIVALE: My Lords, while thanking the noble Baroness for that Answer, may I ask her this supplementary question? As all the elected members of the Assembly in Gibraltar were consulted last month, would my noble friend agree with me that the elected members as well as every Gibraltarian were and are unanimous in their desire for direct representation from Gibraltar at these talks? Second, as the whole future of the people of Gibraltar may well be involved will my noble friend seriously look into this proposal?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I will certainly convey the opinion of my noble friend to my right honourable friend. In fact, the leaders of both the main Gibraltar political Parties have publicly welcomed the fact that we are now thinking together
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with the Spanish Government about Gibraltar, and they welcome this particular visit. My noble friend will I am sure have noticed that an election is to be held on June 23.
LORD SHEPHERD: My Lords, while it is perfectly right for the Spanish Foreign Minister and Sir Alec Douglas-Home to think together, may I ask the noble Baroness whether there is any question at all about the Preamble to the Constitution of Gibraltar?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I am glad that the noble Lord has given me the chance to confirm categorically that we stand by the Gibraltar Constitution Order in Council of 1969.
LORD MERRIVALE: My Lords, while welcoming what my noble friend said, may I ask her whether she agrees that it is up to the Spaniards to woo and win over the Gibraltarians as well as propose at these talks a more sensible modus vivendi between Spain and Gibraltar, before there is any question of a change of relationship between Gibraltar, this country and Spain?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I quite agree that the lifting of the Spanish restrictions against Gibraltar would very much help any talks on this subject.

BUSINESS
LORD DENHAM: My Lords, with the leave of the House my noble friend Lord Limerick will be making a Statement at a convenient moment after half past three o'clock on the conclusion of UNCTAD III.

SOUND BROADCASTING BILL
2.53 p.m.
THE MINISTER OF STATE, HOME OFFICE (VISCOUNT COLVILLE OF CULROSS): My Lords, I beg to move that this Bill he now read a third time.
Moved, That the Bill be now read 3a—(Viscount Colville of Culross.)
On Question, Bill read 3a.
VISCOUNT COLVILLE OF CULROSS: My Lords, I beg to move that this Bill do now pass.
THE LORD CHANCELLOR (LORD HAILSHAM OF SAINT MARYLEBONE): My Lords, I think there is an Amendment down. I was about to call it.
BARONESS PHILLIPS BARONESS PHILLIPS moved the following Amendment:
After Clause 10, insert the following new clause:
Condition as to programme contracts for purposes of local sound broadcasting
". Notwithstanding anything in this Act the Authority shall not enter into any contract for the provision of local sound radio until the Minister has presented to Parliament firm proposals on the character of the services and the areas of transmission of the station proposed."
The noble Baroness said: My Lords, the speed with which the Minister appeared to be anxious to pass the Bill seems to bear out the announcement on television one evening last week, in a trailer to a particular documentary, that "We are soon to have commercial sound broadcasting in this country." It therefore seems that whatever we attempt to do, the matter has aleady been decided and that we are to have commercial sound broadcasting. Nevertheless, even at this stage, we put in a plea for time to be taken to think a little more about this matter.
The particular film to which I am referring showed clips of what happens in other countries which have the "blessing" of commercial sound broadcasting. We were shown a gentleman in his car in which there seemed to be constant noise and chatter which, when added to the already profound cacophony of sound through which most people drive, represented the addition of one more trial in this over-pressurised life in which we live.
We have tried throughout the stages of this Bill to have some Amendments made which would ensure that the Minister, when presenting the facts about this matter to Parliament, would be compelled to show the criteria on which programme contractors received their contracts and for these issues to be heard in public. We now come to a request on a much more minor point and I feel that the Minister may, in his enthusiasm to see the Bill on the Statute Book, be prepared to accept it, We are here asking that before contracts are given the Minister shall present to Parliament some idea of the character
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of the services that the programme contractors will provide.
I have again consulted some people in Australia who have had the advantage, if that is the word to use, of commercial sound broadcasting. I particularly asked them whether advertisements were interspersed at intervals throughout the programmes and I was told that while this is sometimes the procedure, the method of having concentrated times for advertisements is also used. In other words, instead of having one minute advertisements interspersed at 15 minute intervals, there is a concentration of advertisements for perhaps five minutes. One can imagine the horror of this. One can also visualise the Minister saying that this will not happen in this country. But we do not know that it will not happen here. We do not know the character of the services that will be provided. We do not even know the areas of transmission, although there have been leaks and certain stations have been mentioned in this House.
I emphasise that once this Bill becomes an Act any Question asked in this House will probably receive the reply that the matter is not the concern of the Minister but of the newly created Authority. I urge your Lordships to give us the opportunity, by accepting this Amendment, of seeing that before the Bill becomes a reality, some of these minor provisions are made public knowledge. My Lords, I beg to move.
LORD BERNSTEIN: My Lords, I support the Amendment. I am glad to see the noble Viscount, Lord Colville of Culross, in his place today. On Second Reading, when asked to give some information about how the Bill would operate, he kept referring to the fact that the noble Lord, Lord Aylestone, would be able to deal with such matters as the question of the quality of commercial sound broadcasting and other issues which had frequently been raised.
In our last deliberations on Second Reading I made a mistake for which I apologise. I said I understood that Lord Aylestone's term of office would expire in October. The noble Viscount, Lord Colville of Cuirass, did not mention that fact. It was my mistake. I gather that his term of office, for some reason of overlapping, is to go on till June. But although we have been told

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that Lord Aylestone will protect us from our fears and doubts, it is questionable whether he will be in office when commercial sound broadcasting starts.
Time and again in Committee in the other place more information was sought. The then Minister was unable to give any answers. Even when his supporters pleaded with him for more information they were not given any. I therefore hope that this Amendment will prove acceptable because it would allow, among others, those in the other place who are keen on knowing the areas of transmissions and the character of the services to be satisfied. A number of Amendments were proposed in Committee on the Bill. It is interesting and rather surprising to note that 86 Life Peers supported the Amendments and 349 Hereditary Peers voted against them. I support the Amendment.
VISCOUNT COLVILLE OF CULROSS: My Lords, I suspect that there is a certain amount of double counting in that calculation. I apologise to noble Lords opposite if I was thought to jump the gun once, if not twice. I thought I detected a certain marked reluctance on the part of noble Lords opposite to move the Amendment—
BARONESS PHILLIPS: Not at all.
3.2 p.m.
VISCOUNT COLVILLE OF CULROSS: In which case I am proved entirely wrong. I will deal first with the point made by the noble Lord, Lord Bernstein, about his noble friend Lord Aylestone. I think it is not an unacceptable debating habit in this House to address other noble Lords who are sitting on the Benches even if they are, as that noble Lord was in that previous discussion, muzzled by the Addison Rules. I do not somehow think that if the noble Lord, Lord Aylestone, sets out to undertake the setting up of local sound broadcasting under this Bill and there comes in the course of events to be a new Chairman, there will be such a total lack of continuity that policy began will not be continued. It was legitimate to refer to the Chairman of the I.T.A. as he sat and listened to this debate, because I feel that he would have been influenced and guided by what noble Lords said. That is all I have to say about that matter,
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and I should have thought the House would have welcomed it.
My Lords, I am afraid that I have not seen the noble Baroness's film and, therefore, I find it difficult to comment on a visual film talking about sound broadcasting. I find the whole concept a little trying. I do not think the question of car radios depends entirely upon the implementation of this Bill. I have heard a few car radios in my time and they seem to do quite nicely on the existing material. They cannot, after all, be tuned in to more than one station at a time.
BARONESSS PHILLIPS: My Lords, may I interrupt the Minister? I think he will agree with me that the statistics which have been produced to support a station of this kind are based on the assumption that a great deal of listening takes place on car radios. That is in all the factual research that has been done.
VISCOUNT COLVILLE OF CULROSS: My Lords, I think a great deal of listening takes place on car radios now and probably the answer is that some people will switch their stations. I do not think this is central to the Amendment now before the House. I should like to look at what the Amendment says in a little detail because the noble Baroness moved it very persuasively and I know that it relates back to previous discussions. Although I was not here on the Report stage, I hasten to say that I have read the OFFICIAL REPORT. There are a number of difficulties about this Amendment and the first one (the noble Baroness herself adverted to it) is that it is not, under the present constitutional arrangements for any broadcasting, the Minister who makes the prime approach to Parliament. The noble Baroness said that one tended to be told that it was either for the B.B.C. or the I.T.A. to make the decisions. It would be therefore a constitutional curiosity if the Minister was required under this Bill to present to Parliament the draft of the detailed methods of implementation which had been prepared by the I.B.A. It would not fit at all comfortably into the pattern of legislation we have, or with the rest of the Bill. I will come back to how Parliament can deal with it in a minute.
I am afraid that I find also a certain difficulty with the proposal to put the phrase "character of the services" into a Statute and give its words the force of

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law. I do know what the noble Baroness means; it is perfectly plain that she is talking about the sort of things like the amount of advertising time and the type of programme that a station shall put out. But I suggest to her again that there are practical difficulties about this. If the noble Lord, Lord Bernstein, with all his knowledge of Independent Television, were to cast his mind back over the years and consider the time when his station first went into the business of independent television, I wonder whether at that stage he would have been able to say exactly what the character of his programmes were going to be, with the idea not only that it would be valid at the time he made the statement about character but that it would continue to be valid over the whole period of the licence he was seeking or which, indeed, he might have been given?
Similarly, when the contracts came to be renewed (or in some cases not to be renewed but applications were invited towards the end of the 1960s) I wonder again whether the applicants, or those who succeeded, would have been able to make a valid long-term forecast of the sort of character of the service they were proposing to put out. They might have been able to do so but then what would have happened? I have a nasty suspicion that the statement about the character of the services would then have ossified the whole of the development of that station for the next period of time. It would have been terribly difficult for the programme contractor, having once put down a categoric assurance of the type of service that he was going to put out, to say to his producers and his directors, "Go ahead and experiment; find new types of programme; go into new fields, innovate and produce other kinds of novelties", because all the time nagging at the back of his mind would be the statement that he had made of the character, and in this case the character that had been presented to Parliament, and. impliedly in the noble Baroness's Amendment, approved by Parliament. I believe that would be extremely bad and very petrifying to the whole structure and growth of the medium as we see it.
There is also a technical difficulty about the area of transmission. I quite see that the noble Baroness is complaining—and, of course, this has been current
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throughout the course of the debates on this Bill—that nobody knows exactly what the area covered by the transmissions will be. But that is not surprising, because the sites for the aerials have not been decided yet, and you cannot possibly tell what the area will be until you have the site for the aerial and decided what are the particular geographical features that go with it. There will be, of course, a stage at which the I.B.A. will be inviting applicants for the various licences and at that stage I see no reason to suppose that they will not pin down pretty accurately what the area for transmission will be. It will be a matter that the applicants will want to have in mind as well as everybody else, because it will give them some idea of the revenue, the number of homes covered and various factors about the viability of the station. At that stage it will be made public because it will form part no doubt of the material on which the applications are sought and there will always be room for question and comment at that time. I would expect it to be raised in either House by any noble Lord or Lady or honourable Member who wished to do so.
But for the general question that underlies the noble Baroness's Amendment, probably the best recourse really is the opportunity that the annual reports will give for debate and indeed any other Question or Motion that is put down from to time. I suspect it is perfectly true, as the noble Baroness said, that if one says, "I do not think, and I ask the Government to agree, that that programme should have been put out last Thursday night", she will be given the answer that that is a matter for the I.B.A. and not for the Government. But if one wishes to raise a broad question about the character of local broadcasting in general, or if one wants to raise any other broad question about the standard of broadcasting or of any other more general feature of it in Britain, I should not have thought that Parliament was an inappropriate forum or that there would have been anything but an extremely interesting and well-informed debate upon it. That is really the proper check to give. We have in addition, of course, the fact that the applications will be public, a matter which was much discussed again on Report, and I think there will be a good deal of background

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on which to go. I suspect, therefore and hope that the House will agree, that we have some practical and one constitutional snag in this Amendment. In fact, the checks and balances will be there for noble Lords to exploit, and I do not think that they will be fobbed off with the sort of answer that the noble Baroness feared. I would advise the House, therefore, that this is not really an Amendment which I can suggest should be accepted for the kind of reasons that I have given, and I hope that I have said something to comfort the noble Baroness and persuade her to withdraw it.
3.12 p.m.
LORD SHEPHERD: My Lords, my noble friend, Baroness Phillips, in moving this Amendment was not in any way subject to reluctance. She does know the rules of this House and seeks to conform to them. It is, of course, impossible to move an Amendment until it has been called, either by the noble Lord who sits on the Woolsack or by the Chairman or Deputy Chairman of Committees. The noble Viscount needs to be a little careful. The noble Viscount then spoke about the Amendment and questioned the use of the words, the character of the services". The word, "character" is the very word that I took out of Clause 10 of this Bill where it talks about "the character of the local sound broadcasts". We are using the word, "services" here in place of "local sound broadcasts" because we felt that, since we were using that term one line above, there was no point in having repetition. Therefore, there is no variance at all in this Amendment from what is to be found in Clause 10, about which the noble Viscount himself spoke in Committee.
The area of transmissions is a very important issue. I do not know yet whether the noble Lord, Lord Orr-Ewing is satisfied about what we are going to get in commercial sound radio. Are we going to get genuine local radio stations, as was originally promised, or have we moved to regional sound commercial broadcasts? The noble Viscount shakes his head I am glad. But there were undoubtedly substantiated rumours at the very beginning, before even the White Paper had been issued, that the Minister of the time had been thinking
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that even with local sound broadcasts there ought to be a national network of regional commercial radio. The noble Lord, Lord Denham, went some way to meet me in terms of London. He said I was exaggerating when I said transmissions could touch Dover and Guildford, perhaps Harlow, Basildon and other areas. I do not know whether the noble Viscount can confirm that it is the intention of the Government that the London stations should be directed to provide a service for the community of the Greater London authority—in other words, the area of London as we understand it—and that it is certainly not the intention that these broadcasts should go out to places like Guildford. The noble Viscount nods his head; so I have his confirmation. It is to be hoped that if there are to be local broadcasts, towns like Guildford and Dover should have an opportunity of having their own service if they so wish.
VISCOUNT COLVILLE OF CULROSS: My Lords, I do not want the noble Lord to read too much into a nod. I do not think one can guarantee that there will never be the possibility of the London station being picked up in Guildford. I do not think it is the idea that it should cover Guildford, but there may be exceptional conditions, possibly, when it does get as far as that. Therefore one cannot be absolutely 100 per cent. certain that it will never occur; but it is not the intention.
LORD SHEPHERD: My Lords, I understand the noble Viscount's fear of taking a nod. I think somewhere in the earlier part of the Bill the words "ordinary service" are used. Could the noble Viscount confirm that it is not the intention of the Government that the London service should beam its transmissions to places outside the G.L.C. area? We recognise that, from time to time, due to atmospheric conditions this service may be heard further afield; but will he confirm that it is not the intention that these stations should go outside what is the known London area?
VISCOUNT COLVILLE OF CULROSS: That is right—Clause 2(3).
LORD SHEPHERD: Then we are to that extent in agreement. The difficulty, as we on this side of the House see it, is that these local stations may not be

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economic; they may not be all that profitable. What worries us is that if this is the case many small local newspapers are going to be permanently damaged as a consequence of loss of advertising revenue, and these stations being so unprofitable they will not be in a position to help the newspaper. Therefore the whole question of the public media, the transmission of local news, is clearly jeopardised.
We on this side of the House, I suppose instinctively, are opposed to the disposing of a scarce national asset to a few for the sole purpose of profit. We do not like it. But to deal with that is not the purpose of this Amendment. It is that Parliament by 1976 will need to look at television and radio as a whole, whether it is the State service of the B.B.C. or the commercial service through the I.T.A. or the I.B.A. We believe that there must be a Commission to look into this matter and to report to Parliament in order that Parliament may make up its mind about new legislation, and it is wrong that we should have the position pre-empted by this Bill. I must say—the noble Viscount must agree here—that there is no clamour to-day for these commercial sound radio stations, no clamour whatsoever. The Bill is preempting the position, because the Commission are bound to take a view when they look at this matter. Certainly they will not be able to judge whether the service does any good or any harm, because the stations will have been in operation at most for two years and in most cases in distant localities maybe for only a question of months. We feel that this is wrong. We do not think the Government have their priorities right. We on this side are opposed to this Bill, but if the Government wish to go ahead with it I think Parliament is entitled to know what sort of service is going to be provided, because the noble Viscount himself said in Committee on numerous occasions that the Government are leaving it to the I.B.A. What finally comes out of this Bill will be the decision of the Independent Broadcasting Authority. This is something on which Parliament should have a view before it agrees to it, and therefore I hope my noble friend will press this Amendment to a Division.
3.19 p.m.
LORD ORR-EWING: My Lords, I hope my noble friend will resist this Amendment. The House knows from my earlier speeches that I am not a great enthusiast for this Bill, but it would be made worse if, in my noble friends words, the pattern of local broadcasting were ossified in the manner this Amendment suggests. I do not know whether the noble Baroness, in introducing this Amendment, was referring to a T.V. film she had seen on B.B.C., because, if so, she must understand that the B.B.C. are understandably apprehensive about competition for their broadcasting monopoly. I think the noble Baroness indicates that it was an I.T.A. programme. One has read recently that the B.B.C. have felt it necessary to make an announcement to their staff that if they apply for jobs with the local broadcasting stations they must instantly resign their appointment with the B.B.C., which suggests to me that they are apprehensive of the competition which may arise.
I wonder whether the Opposition have considered what would have happened if these particular limitations had been written into the B.B.C. sound licence. We should have ossified the Home, Light and Third programmes as originally suggested. I do not think that would have been a good thing. I think the B.B.C. has been right to modify the programmes to Programmes 1, 2, 3 and 4. I think the pattern of broadcasting will change over the next few years, and therefore it would be wrong to set out in writing the exact character of the programmes these stations are to broadcast and to make it firm and frozen, because that would mean that it would not be adapted, as tastes change, to the needs of the customers they are endeavouring to entertain.
I can visualise, too, that if it had been put down in the B.B.C.'s licence we should have had something like "No knocking of Concorde". This might well have been put in the licence. Every programme I see now on the B.B.C., whether or not it is the news, says that Concorde has been grounded somewhere, as happened this morning. On television programmes the anti-Concorde lobby is always very much more vociferous and numerous than the pro-Concorde lobby. If conditions are going to be put down I should put, "Don't knock potential

553
British exports". That might well have gone into a licence some years ago.
I do not like the idea that one clearly and exactly defines the area which one is seeking to cover, partly because it will be a different area day and night, partly because it will be a different area according to the atmospheric conditions, and partly because there will be a change in population as other sound broadcasting stations come in. It may be that the I.B.A. would wish to suggest to a station that it should beam its aerials in a different way in order to cover, say, a developing town or a satellite town which previously was not in existence. For all these reasons I should not wish to see this Amendment made. I do not believe the Bill to be a very good one, but I consider it would be made worse if the Government accepted this Amendment.
LORD SHINWELL: My Lords, hitherto I have failed to take part in the debate on this Bill. I apologise for my intervention, which will be very brief. Its purpose is to have sonic clarification in what appears to be the main objection raised by the noble Viscount speaking on behalf of the Government. As I understand his case, it runs something like this. If the Executive decide to introduce legislation, as a result of which a service is transferred or handed over to an outside body or corporation, there is no reason why clear indication should be furnished as to the character of its operations after the legislation has been passed and implemented. This is where I should like to have some clarification. Can the noble Viscount, by leave of the House—I understand that would be the proper course—tell us of any other legislation that has been passed where an industry or a service of any sort, through the medium of legislation for which a Government have been responsible, has been transferred or handed over to an outside corporation or body without there being an indication, almost with the utmost detail, of the character of the service to be provided? I can furnish two instances which are uppermost in my mind because I was responsible for piloting through in another place legislation which subsequently came to this House. It was concerned with the coal mining industry and also with electricity supplies. In both instances the Bill which was presented
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in another place and which subsequently came to this House gave a clear indication, almost in detail, of what the character of the service was to be. Will the noble Viscount be kind enough to indicate what other kind of legislation has been passed where there was no indication or provision of detail as to the character of the service to be provided?
VISCOUNT COLVILLE OF CULROSS: My Lords, with your Lordships' leave, I can only do the best I can out of my own head. I do not think that the legislation which nationalised the railways said anything about inter-city trains or advance passenger trains.
LORD SHINWELL: I think the noble Viscount is wrong. If he looks at the Transport Act which relates to the nationalisation of railways he will find not only an enormous amount of detail as to the service to be provided in relation to fares, schedules and everything of that sort, but also that the general character of the service is implicitly stated in the legislation.
VISCOUNT COLVILLE OF CULROSS: I do not think the legislation mentions closing down a very large number of branch lines, either.
BARONESS PHILLIPS: I am very interested that Lord Orr-Ewing and also the Minister attempted to reply to the word I used—character. It is in the Act itself—or, rather, the Bill. It is obviously going to be an Act—"over our dead bodies", as one might say. The Bill specifically uses the phrase:
"the character of the local sound broadcasts.…"
This is in relation to anybody who requests this piece of information. This is what I take it to be—the description of being made public that the noble Viscount referred to in Clause 10. Should I want to know this then I have the right to ask. It is not really my idea of something being made public, but I take the point that it can be public to me if I should make this request. Here we have the very words:
"the character of the local sound broadcasts.…"
There must be a way of determining this. We now have the suggestion that this

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would cause the matter to be too inflexible. No one is asking for a specification that pop music will be played at x hours and that there will be sound broadcasting of Parliament at another hour. This is not what we are asking.
It is not unreasonable to hand over such a great measure of power. This is what communications are all about. Communications are power. One is handing over a measure of communication to a group of contractors. There has been some play during the discussion on the Bill with the point that nobody is going to make a lot of money out of commercial radio, the suggestion being, therefore, that the contractors will be rather dedicated souls who seek to serve the community. It is interesting to me that so many people—if we can believe
the stories—are anxious to get in on this. I am delighted to know there are so many dedicated people in the communications industry. Nevertheless, this being so, surely these would be the kind of people who would not hesitate to reveal the character of the local broadcasting they wish us to enjoy. I did not actually see this programme, which is coming on this week; this was a trailer. It looked so frightening that I am only sorry that it was not shown last week. Perhaps it would have influenced some of your Lordships. I have no intention of withdrawing this Amendment.
3.27 p.m.
On Question, Whether the said Amendment shall be agreed to?
Their Lordships divided, Contents 49; Not-Contents, 108.

CONTENTS

Archibald, L.

Garnsworthy, L.

Royle, L.

Arwyn, L.

Granville-West, L.

Sainsbury, L.

Avebury, L.

Hale, L.

Samuel, V.

Bacon, Bs.

Henderson, L.

Segal, L.

Bernstein, L.

Hoy, L.

Shackleton, L.

Beswick, L.

Hughes, L.

Shepherd, L.

Blackett, L.

Hurcomb, L.

Shinwell, L.

Brockway, L.

Leatherland, L.

Slater, L.

Buckinghamshire, E.

Llewelyn-Davies of Hastoe, Bs. [Teller.]

Snow, L.

Champion, L.

Summerskill, Bs.

Chorley, L.

McLeavy, L.

Taylor of Mansfield, L.

Diamond, L.

Moyle, L.

Watkins, L.

Donaldson of Kingsbridge, L.

Nunburnholme, L.

Wells-Pestell, L.

Douglass of Cleveland, L.

Phillips, Bs. [Teller.]

Williamson, L.

Faringdon, L.

Platt, L.

Wright of Ashton under Lyne, L.

Foot, L.

Popplewell, L.

Gardiner, L.

Rathcreedan, L.

Wynne-Jones, L.

NOT-CONTENTS

Aberdare, L.

Derwent, L.

Hylton-Foster, Bs.

Ailwyn, L.

Digby, L.

Ilford, L.

Alexander of Tunis, E.

Drumalbyn, L.

Ironside, L.

Allerton, L.

Effingham, E.

Killearn, L.

Amory, V.

Ellenborough, L.

Kilmarnock, L.

Balfour, E.

Elles, Bs.

Latymer, L.

Balfour of Inchrye, L.

Elliot of Harwood, Bs.

Lauderdale, E.

Barnby, L.

Emmet of Amberley, Bs.

Limerick, E.

Belhaven and Stenton, L.

Ferrers, E.

Long, V.

Belstead, L.

Fisher, L.

Lothian, M.

Blackford, L.

Fraser of Lonsdale, L.

Loudoun, C.

Bledisloe, V.

Gainford, L.

Lucas of Chilworth, L.

Brock, L.

Geddes, L.

MacAndrew, L.

Burton, L.

Goschen, V.

Macleod of Borve, Bs.

Caccia, L.

Gowrie, E.

Mancroft, L.

Camoys, L.

Greenway, L.

Mar, E.

Clwyd, L.

Grenfell, L.

Margadale, L.

Coleraine, L.

Grimston of Westbury, L.

Massereene and Ferrard, V.

Colgrain, L.

Hailes, L.

Colville of Culross, V.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Merrivale, L.

Cowley, E.

Milverton, L.

Craigavon, V.

Harvey of Prestbury, L.

Monck, V.

Cromartie, E.

Harvey of Tasburgh, L.

Monk Bretton, L.

Daventry, V.

Hatherton, L.

Morrison, L.

de Clifford, L.

Hawke, L.

Mottistone, L.

Denham, L. [Teller.]

Howard of Glossop, L.

Mountevans, L.

Mowbray and Stourton, L. [Teller.]

Redesdale, L.

Sudeley, L.

Reigate, L.

Swaythling, L.

Napier and Ettrick, L.

Rothes, E.

Teviot, L.

Nelson of Stafford, L.

Ruthven of Freeland, Ly.

Thomas, L.

Northchurch, Bs.

Sandford, L.

Trefgarne, L.

Oakshott, L.

Selkirk, E.

Tweedsmuir, L.

Orr-Ewing, L.

Sempill, Ly.

Tweedsmuir of Belhelvie, Bs

Penrhyn, L.

Somers, L.

Vivian, L.

Rathcavan, L.

Stonehaven, V.

Wolverton, L.

Reay, L.

Strathclyde, L.

Wrottesley, L.

Redcliffe-Maud, L.

Strathcona and Mount Royal, L.

Young, Bs.

Resolved in the negative, and Amendment disagreed to accordingly.

VISCOUNT COLVILLE OF CULROSS: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.— (Viscount Colville of Culross.)
On Question, Bill passed.

TRADE DESCRIPTIONS BILL
3.36 p.m.
BARONESS ELLIOT OF HARWOOD: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Baroness Elliot of Harwood.)
On Question, Bill read 3a, with the Amendments.
THE LORD CHANCELLOR: My Lords, there are two Amendments down. I call the first one, but in doing so I should point out that the form in which I have now received it is slightly different from the form which many noble Lords may have. As now on my Marshalled List it reads:
"Clause 1, Page 1, leave out from beginning of line 16 to word ('indication') in line 17."
BARONESS PHILLIPS BARONESS PHILLIPS moved Amendment No. 1:
Page 1, leave out from beginning of line 16 to word ("indication") in line 17.
The noble Baroness said: My Lords, I should first like to explain to your Lordships that I stand before you in sackcloth and ashes, as you were first of all given an Amendment which contained a clerical error—I cannot say a printed error—and the attempt to put that right may have made it a little more difficult for your Lordships to follow what we mean. I shall do my best to explain. I apologise for the fact that you have had two Amendments put before you. Your
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Lordships will recall that this Bill was amended at the last stage so that goods which have a United Kingdom name or mark, or what is likely to be taken for a United Kingdom name or mark, must be accompanied by an indication of the country of origin or by the word "imported". This Amendment seeks to leave out the words which give an option. In other words, the goods would have to be accompanied by an indication of the country of origin.
Your Lordships will probably agree—indeed, I sensed that a good number of your Lordships on all sides of the House were with me when we last discussed this matter—that the word "imported" does not really give any very clear indication of the origin of goods which will be subject to this very small Bill. Indeed, goods imported from the other side of the world can be very different from goods which have only crossed the Channel. This is particularly noticeable in the case of textiles. During the last weekend, I have been checking up in the large stores and I found—as I already knew—that a great number of textiles appear to be British goods. Indeed, they bear no indication at all so that one has no guide. But the customer particularly wants to know a little more about the origin. The customer wants the country of origin named and does not want the word "imported" merely to be used. I have in mind the point made by the noble Lord, Lord Macpherson of Drumochter, when he pleaded for his industry and I think his plea must have been heard by the Minister because the Amendment was introduced subsequently.
The second part of this Amendment would still leave the Secretary of State the opportunity to deal with this type of goods because in subsection (5) the Secretary of State is given very wide powers. Although on the one hand we are told that the goods must be accompanied by an indication of the country

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of origin or the word "imported" we see subsequently that the Secretary of State can disregard this if he wishes or can say that something else must be inserted. So all I am doing here is taking out a mandatory provision and transferring it to the later subsection so that the Secretary of State, if he wishes, can still meet the case of the food industry which, so far as I can discover, must be the only industry that wants this word "imported".
As I have previously said, I am inundated with letters not only from customers and consumers but from manufacturers of all kinds who do not want to see enacted this rather casual piece of legislation which is so wide that it is practically meaningless. Nevertheless I appreciate that the Minister will need the powers to deal with certain classified groups, so in an attempt to meet this point the second part of the Amendment would transfer to subsection (5) a further right of the Minister to use the word "imported" rather than country of origin should he feel that it is desirable to do so.
BARONESS GAITSKELL: My Lords, I should like to support my noble friend in this Amendment. I have not previously taken part in this debate, but I thought that it was a very bad thing that the name of the country should not be put on the can or the textile or whatever it is. To do so would seem to me to be a thoroughly good thing and it is a great pity that only the word "imported" should be put on anything coming into this country. Let us take the opposite case. Should we like British goods in America or anywhere else to have the word "imported" instead of "British" on them? Surely it would be a bad thing and we should be offended if British goods had the word "imported" put upon them. We trade, and we are proud of our textiles and our machinery and we would want the word "British" on them. Before I close I want to apologise if I have rushed in before the noble Baroness. Lady Elliot.
LORD GEDDES: Just over 10 years ago there was a Committee on Consumer Protection set up by the President of the Board of Trade under Sir Joseph Molony as he now is. I had the honour to serve on that Committee and one question on which we spent a considerable amount of
560
time was: should imported goods carry the name of the country of origin? The noble Baroness who spoke just now indicated that we all hate to be called "foreigners" when we cross the Channel. But we have to remember that we are foreigners and that in the United States British goods are "imported". I do not think that we need to wave the Union Jack when we send goods to the United States. The Molony Committee examined this point with great care and came to the conclusion that it was no protection for the consumer to be told that his goods came from Ruritania. So long as he knew they were imported, that was sufficient for him. The Committee said clearly that all that was necessary was to have "imported" or "foreign", and not the country of origin.
LORD LEATHERLAND: My Lords, I am generally in favour of this Bill, but I want to ask a simple question. There are people who are connected with the textile trade and the clothing making-up trade (I am connected with neither), and they are in the habit of buying large quantities of cloth in the roll from Asiatic countries. This cloth is brought here, put under the sewing machines and transformed into frocks, dresses, blouses and all kinds of other garments with which I am not personally familiar. What is to be the position of a garment of that kind sold in this country when the making-up has been performed in this country but the weaving of the basic cloth and the spinning of the yarn which went into the cloth have been carried out in a country 10,000 miles away? The second question is a more simple one. I understand that we shall still have Cheddar cheese from countries 12,000 or 3,000 miles away. Presumably this cheese will still have to be labelled "Australian Cheddar" or "Canadian Cheddar" to distinguish it from the genuine article which I believe comes from Somerset?
3.46 p.m.
BARONESS BURTON OF COVENTRY:
My Lords, I seek some information which I sought on the Report stage. I wonder whether, when the noble Earl, Lord Limerick, comes to speak, he will be able to give me information with regard to the Amendment which has been spoken to by my noble friend Lady Phillips. The Government and the Department of Trade and Industry have

561
brought this Amendment upon themselves. I am sorry that it has devolved upon the shoulders of the noble Earl because I do not think that it was his fault. When this Bill originated in another place as a Private Member's Bill the Government decided to support it.
I hope that I am not paraphrasing unfairly when I say that the noble Earl told us on the Report stage that as this was a Private Member's Bill the Government had not paid it the attention they would have paid it if it had been one of their own. I think that is what he said. He did not say this, but shall I say that he gave it support inadvertently? "Inadvertently" is my word and not his. It seemed to me that, that having been done in the first place, which I suggest was not good, it still held good while the Bill went through its stages in another place. Up to the Committee stage the Government had still not given the Bill the attention which it has subsequently merited. I think that I am correct in saying that during the Committee stage in another place the Under-Secretary, Mr. Peter Emery, turned down an Amendment which sought to use the word "imported". That is factual, but I am paraphrasing when I say that he turned it down because he did not think it gave the customer sufficient indication of the country of origin. We then move on and we find the poor unfortunate Lord Limerick (I hope that he does not mind me calling him that) being landed with an Amendment which is exactly the opposite to that which was put down in another place. It puts forward what Mr. Emery turned down. That is fact and it is in the past.
What I am concerned with is this. I have tried to find out which industries and which people agree with this Amendment, and I have not been successful. I can only find quoted in the paper the canned food manufacturers; I cannot find anybody else. It seems to me that if it is only one industry which is objecting to this a way could have been found to give it exemption if it was able to prove its case. All I am asking the noble Earl to tell us is which industries have spoken so strongly as to persuade the Government to change their mind or, alternatively, whether they have changed their mind merely because one industry has put in an objection.
LORD HAWKE: My Lords, I have always been in favour of marking goods with the country of origin where it is practical. The noble Lord, Lord Leatherland, has just pointed out a weakness in that doctrine, because there are a lot of raw textiles imported into this country which are turned into all sorts of things; and the same remark applies to a certain amount of food canned in this country which is imported in exactly the same way. But when I am buying food I definitely like to see where it has come from. I bought a tin of corned beef this morning and I had a choice between Australian and some packed in Liverpool. I chose the Australian. They should otherwise, I suppose, both have been labelled "Imported" When I buy jam, I always want to know the country of origin, because I choose jam and marmalade from countries which do not have a great chemical trade and whose climate is not really suitable for the growth of turnips. I find that the South Africans produce the finest marmalade in the world; and the Bulgarians and the Poles produce the best jam from strawberries, and so on, as the noble Lord, Lord Sainsbury, well knows, although I do not think he stocks any of it. But it has certain difficulties, as I can see, and I should think that this Amendment gets over them by leaving it optional whether the Minister gives permission or does not give permission for the country of origin to be marked.
BARONESS ELLIOT OF HARWOOD: My Lords, this debate has now been held three times in your Lordships' House. I think it is almost unique for the same subject to be discussed three times. This point was mentioned on Second Reading; it was discussed at great length on the Committee stage; and it was again discussed on Report stage. There have been two Divisions, both of which have been en Amendments in almost exactly the same words as the Amendment which the noble Baroness has put down to-day. Now we are at it again. I remain firmly of the opinion that the view which was expressed by the noble Earl, Lord Limerick, and which has been supported by the Government, is the right one. I do not want to bore your Lordships by making exactly the same speech all over again as that which I made on two previous occasions on exactly the same point; and the noble Earl, Lord

563
Limerick, can answer the points made by the noble Baroness, Lady Burton.
I have had many letters, just as the noble Baroness has, about this subject, supporting the view which I take, which is that those goods coming into this country which can be (this is the word I used before) masqueraded for British when they are not British must be marked with the word "Imported". There is nothing to stop them from having the country of origin marked as well. The noble Lord, Lord Hawke, is quite right: if he wants to buy tinned beef and is offered one which says "Australia" and another which says "Argentine", if he prefers the Australian he buys the Australian; if he the prefers Argentinian he can buy the Argentinian. That can still go on under this Bill; there is absolutely nothing to prevent it at all. But what we are saying is that it is very complicated and inconvenient for a number of imports to come into this country if they must all be marked with the country of origin. It is exceedingly difficult in some cases, and it is not necessary, always provided that this business of masquerading is covered, as it is in the first clause of the Bill.
I therefore suggest to your Lordships that there is really no necessity to stress this point again, asking that the name of the country should be on every can, every tin, every bit of cloth—everything that comes into this country. In fact, as I said on Report stage, it is another way to make it more difficult to trade. What we want to do, especially when we get into the Common Market, is to trade as liberally, as freely and as generously as we possibly can for the benefit of ourselves as well as for the benefit of the people who are going to buy our goods. The noble Baroness, Lady Gaitskell, spoke about British goods being sold overseas as imported. If they are the best goods and people are buying them in the United States of America, nine times out of ten they will probably have a British mark: but if they did not have a British mark, if they were still the best goods and if they were sold, I should be perfectly happy. So long as they are sold, so lone as we employ our people in this country, so long as the standard we export is a high one and is a credit to this country, it does not worry me very much whether the Union Jack is stamped on them or not. What is important is that the goods
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should be of a high quality and that people should want to buy them—and they certainly do. But to say that every single thing that comes into this country has to have the country of origin marked on it is complicating the matter enormously for a number of different industries, and I think it would be a great mistake.
BARONESS PHILLIPS: My Lords, I am sorry to interrupt the noble Baroness but I think that on a previous stage of this Bill she said this. In this argument I have never said that every article should be marked with its country of origin. We debated that matter on a completely separate Amendment. We are now dealing, with the narrow point which she herself has made in relation to goods which purport to have a British mark. This Amendment is not asking for the marking of all goods: it is only asking for the marking of these goods. It is important that she should know what I am talking about. It is not the same thing as she is talking about.
BARONESS ELLIOT OF HARWOOD:
My Lords, I apologise if I am misinterpreting what the noble Baroness said, but in the debate which we had there was a great mix-up in people's minds about this question of whether goods should have the name of the country they came from. I pointed out at the time that the Bill affected only those goods that could be mistaken for goods made in this country. I said that that is what the mark of origin was for. I still take that point. I thought the noble Baroness was making the point (I may be wrong, and I apologise if I am)—and a lot of people want this—that under this Bill the country of origin should be marked. That is not in this Bill, and never could be; and I should not be in favour of it in any case. I think it would be a mistake to alter the words of the Bill. They do not exclude people from putting on the country of origin if they wish to, but they do not make it necessary. The noble Lord, Lord Geddes, reminds us that the Molony Report, which was brought out a long time ago, did not recommend that there should be this marking. That reinforces my view. I think it would be a great mistake to alter the words, which have been carefully considered three times now, and I beg your Lordships to support the Bill and to vote against the Amendment.
LORD BARNBY: My Lords, the noble Baroness who has just sat down is certainly categorical enough in her opposition to the Amendment. The distinction in this case as against the discussions at earlier stages is the difference between what is permissive and what is mandatory. To be consistent, I must find myself in sympathy with the Amendment; that is, that there should be an indication of the country of origin, not merely the word "Imported". We have had that discussed at great length at earlier stages, and it is very hard to see why it is still unacceptable. But this is a Private Member's Bill, sponsored by Lady Elliot, and we must wait and see what the Minister has to say in regard to getting over the reasonings which Lady Phillips has put forward.
On the remarks made by Lord Geddes, of course his argument was impressive. But again we come up against the problem of the different categories of merchandise to which this provision applies, and how discriminatory it inevitably is to cover some and not others. In fact, it needs to be discriminatory. In reasoning out the proposals, one can easily see the difficulties in the case of one class of merchandise as against another. But on the point that Lord Geddes made, speaking with great authority and knowledge on this subject, I suspect that others than the lady Members of this House who are purchasers of goods would feel that there was a distinction when they saw that a dress, attractive in appearance, was imported, as against a mark that it had been made in Yugoslavia or in Paris, because there is an attraction, I understand, among ladies for apparel made in Paris.
LORD GEORGE-BROWN: My Lords, would the noble Lord forgive me? Does he consider that the ladies would think the same if it were marked "Made in Hong Kong" or "Made in Taiwan"?
LORD BARNBY: My Lords, with respect, I did not quite understand the question. Does the noble Lord want to know the difference between Taiwan and Yugoslavia?
LORD GEORGE-BROWN: My Lords, let us treat it seriously. This involves hundreds of thousands of jobs in this country. If a lady sees a dress marked "Made in Taiwan" or "Made in
566
Hong Kong", would she feel the same about it as the noble Lord thinks she would feel if it were marked, "Made in Paris"?
LORD BARNBY: My Lords, I very much respect the line taken by the noble Lord, Lord George-Brown, because it is in conformity with many of the arguments put forward in the earlier stage of the Bill. I agree that this matter has wide implications in regard to employment in this country. That is why those of us who feel strongly about this are very concerned. I myself shall listen with interest to what the Minister has to say.
LORD GEORGE-BROWN: My Lords, will the noble Lord answer my question?
LORD STRABOLGI: He is on our side.
LORD GEORGE-BROWN: He is on our side? It is hard to understand.
4.2 p.m.
LORD SAINSBURY: My Lords, unfortunately I was abroad when the Report stage of this Bill was passing through your Lordships' House. I have had the opportunity this morning to study the OFFICIAL REPORT and I am still in favour of the Amendment. It seems to me that throughout all stages of this Bill, as my noble friend Lady Phillips has said, people have been talking as though this marking applied to all imported goods or to a large number of imported goods. It is brought into question only if the product can be mistaken for one that is manufactured or processed in the United Kingdom. Since the Molony Report was published, I think some ten years ago, more and more people concerned with the interests of the consumer have said that the consumer needs more information. If we are consistent surely more information means accurate information; and when there is a possibility of mistaking the goods for United Kingdom goods then I believe that in the interests of the consumer he should know the country of origin.
It is not, as it was described earlier, chauvinistic to hold this view; it is extending the consumer freedom of choice. If certain consumers for whatever reason, wish to discriminate against goods from a particular country in my opinion it is their right as individuals so

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to do. Therefore I support this Amendment. As has been said already, I believe that difficult cases—cases involving real and not imaginary difficulties—can be dealt with under the clause that gives the Minister the necessary power to relax the marking requirements. I do not insist that consistency is always a virtue, because on this side of the House on occasions we should like to see those on the Government Benches change their minds. But I think that in this case their inconsistency is wrong and I strongly support the Amendment.
LORD DONALDSON OF KINGSBRIDGE: My Lords, when my noble friend says that we have been discussing the wrong item, of course he is right. The noble Baroness, Lady Elliot of Harwood, says that we have been talking about this for three stages of the Bill. She exaggerates. What we have been discussing is something which has nothing to do with the case: which is whether all imported goods should bear the mark of origin. This Amendment was put forward by my noble friend Lady Phillips and was defeated and has never been referred to again by her. But by everybody else it is the only thing that has been discussed. It seems to me that there is a case for asking the noble and learned Lord who sits on the 'Woolsack to exercise his rights as Chairman, but I gather that he has none. But only a Chairman could keep this debate on the subject which is meant to be discussed. The noble Lord, Lord Geddes, spoke with great authority, but not on the subject; and this applies to most of the other speakers.
The position is quite clear and simple. There came to this House a Bill of a very limited kind which suggested that goods that were masquerading under a United Kingdom mark—and we shall come back to that—should have to indicate their country of origin. The Government produced an Amendment saying that for these goods it would be enough to say that they were "imported". Like others, I have asked for any single instance where there is a problem about this. No full explanation has been given. The noble Earl was good enough to write me a letter and to apologise for misunderstanding me; and I am not demanding a further apology. The only case given was that of somebody who cans
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fruit in the Caribbean under a United Kingdom registration mark. It is suggested that if they run out of Caribbean fruit they might need to put in some fruit from, say, Finland. My Lords, if they do that, they can change the printing; it is not expensive. As I say, nobody has given any kind of example to show that it is necessary to make this alteration.
Personally, I think that my noble friend's Amendment is exactly right. It puts on the Government the onus of showing cause why the ordinary rule of indicating the country of origin should not apply. If there is a good reason, the Government would be able to do what is necessary under the second Amendment. I think that before going any further we must be given some reason for this change. So far, we have been given none whatever. Can we have a clear reason why it is difficult for somebody who is registered in the United Kingdom and who is importing goods from some other country to change the printing on the cans or on the packing to say where the goods come from? I cannot understand this. For the moment I think the onus is on the Government to give some reason.
VISCOUNT MASSEREENE AND FERRARD: My Lords, this Amendment raises a storm in a tea cup. Let us take the case of Japan. Japan is importing sewing machines in two parts into Eire. In Eire, they simply put a bolt in them, stick a shamrock on—and the machines come to this country under Commonwealth preference. I should have thought that the word "imported" was a perfectly sufficient description; because any foreign importers can buy for re-export to the Commonwealth and they can hide their identity.
LORD DONALDSON OF KINGSBRIDGE: My Lords, to come under this Bill the goods must have a United Kingdom mark. None of the examples quoted by the noble Viscount would have a United Kingdom mark.
4.10 p.m.
LORD GEORGE-BROWN: My Lords, may I say that I think this brings out the problem. We are trying to protect our own people's position in this matter. If the Bill goes through in the form in which it is drafted you can bring goods

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in through other areas, with some small print which has to be read very carefully, saying "imported". But, with respect, we are not really talking so much about canned goods as about textiles and made-up textiles. My noble friend Lord Leatherland talked about grey cloth which comes in, but now mostly what is coming in is made-up garments; and there is a lot of difference in putting in small print somewhere the word "imported" and actually having to say that the article was made up in Taiwan—that is why I interrupted the noble Lord, I gather inconveniently for my noble friend. It ought to be said that hundreds—well, maybe not hundreds, but tens of thousands of people's jobs here depend on this being known and said. I simply do not understand why we should pass a Bill in which we are unwilling to say it. I do not know why my noble friend Lord Sainsbury is not willing to say it, let us say it. Lord Sainsbury's firm—
LORD SAINSBURY. My Lords, may I interrupt my noble friend?
LORD GEORGE-BROWN: In a second or two, yes.
LORD SAINSBURY: My Lords, the noble Lord is misquoting me. I understood my noble friend to say that I was against putting the country of origin and preferred "imported". I have been speaking previously in the opposite.
LORD GEORGE-BROWN: My Lords, I beg the noble Lord's pardon—
LORD STRABOLGI: He is on our side, they are all on our side.
LORD GEORGE-BROWN: My Lords, may I tell the noble and learned Lord the Lord Chancellor that one of the things I get most offended about is when noble friends of mine keep telling me who is on "our side" because sometimes I wonder what is in fact "our side"; and some speeches that I read at weekends make me bother very much about what is "our side". I should be a bit surprised if it does not also bother my noble friend Lord Shackleton. I just try to decide who seems to be going for the point that I want to be going for. If I misunderstood my noble friend Lord Sainsbury, I apologise. It is very easy to do in this Chamber where the acoustics are not so great. If he, like me, thinks that the
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country of origin should be imprinted on everything, that is O.K. Then indeed he is on my side. The only side I know, may I tell my noble friend Lord Shackleton, is "my side". "Our side" is a very odd, peculiar kind of side at the moment. But I thought that the noble Lord was saying that he did not want too much printed on cans.
I confess my interest. I am employed by a very large textile and chemical outfit in this country, a very good one. We employ many many thousands of people in Lancashire and elsewhere and we are being put at enormous risk, not by our Colonies; not by poor people to whom we owe a special obligation, but by all kinds of people all over the world who are getting their goods here—I repeat, for the benefit of my noble friend Lord Leatherland not grey cloth as we know it in the trade, not rolls of cloth, but made-up garments. We get them here with just small print at the bottom which says "imported" and lots of British people are suffering as a result.
I support this Amendment because I think it would make it a little more obvious that these garments arc made up elsewhere; are made up where labour is cheap; are made up where certain obligations are not observed as they are here. And I think anything like that which would help would be a good thing. We are not arguing about the Common Market: the problem does not arise there. When we join the Common Market we shall find that we shall have to change many of the things we currently do, so that it is nonsense to introduce the Common Market. What we are dealing with are areas elsewhere where they do not observe the rules that we feel that we have to observe. I cannot see any reason at all why we should not imprint the name of the place where an article is made. How many this would discourage from buying it I do not know; but far better to do it than to invent all these fantastic arguments for not doing it. If it is Taiwan, Hong Kong, or Portugal let us say so. It may deter a few, but, for heaven's sake! do give a number of people in this country, in Lancashire and Yorkshire and elsewhere, the encouragement of knowing that we are trying to let other people know that these things are being made where ordinary normal rules, as we understand them, do not apply.

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I find it exceedingly hard to understand why this House, and especially why the noble Baroness, Lady Elliot of Harwood, should not accept that this is a very sensible thing to do. I go so far as to say that I do not believe that any noble Lord or noble Baroness would oppose this Amendment unless they were trying to find some reason for encouraging people to buy from outside, and until we are in the Common Market where they observe all the rules indeed better than we do, that is O.K. I do not mind them being marked, I do not mind our saying "Germany", "France", "Italy"—anywhere you like. But I do not see any reason why people who are buying vests and shirts and blouses and suits should not be told that they are made up in places where British capital encourages them to be made up, but where rules that we observe do not apply. I simply do not understand why anybody, Conservative, Labour of Liberal, should oppose this. I should have thought this is one of the strongest Amendments one could possibly support.
LORD STRABOLGI: I want to say a few words before the noble Earl, Lord Limerick, replies. I do not want to add much to the very powerful speech from my noble friend, Lord George-Brown. I may, however, say to him that when we said "our side" we meant the side of all noble Lords in all parts of the House who have opposed the way that the Government have attempted to weaken the Bill ever since it came to us from the other place. This is entirely a non-Party affair. It has never been approached in a Party way at all. We have had support from all sides of the House and there have been sincere efforts to try to get the Bill back on to the right lines. My only reason for intervening at this stage is to say that I hope that we are going to have more explanations from the Government than we have had so far. The noble Baroness, Lady Elliot, said that this matter has been referred to at various stages and that the same kind of speeches had been made. They have. It has been necessary to make them because we have never had a full answer from the Government. The Government have never told us why they cannot meet certain very genuine objections from certain sides of the trade, such as the canned food industry and so on, by bringing in orders,
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and why they wish to change the whole conception of the Bill. It is for that reason that I am asking the noble Earl, Lord Limerick, when he comes to reply at this late stage in the Bill, to tell us exactly why the Government have changed their minds in June to completely contrary arguments to those which they were using last April.
LORD SOMERS: My Lords, I do not know whether it is in order for me to speak at this point, but I should like to raise one point which I do not think has been touched on very much. Many people bear, reasonably or unreasonably, very strong prejudices against certain countries. I remember that after the First World War my parents sternly refused to buy anything that was marked "Made in Germany". I dare say one will find to-day people who, reasonably or unreasonably, would refuse to buy anything that was marked "Made in South Africa". The public deserve a little consideration in knowing where the items they are buying come from, so that they can discriminate if they so wish.
THE EARL OF LIMERICK: My Lords, as my noble friend, Lady Elliot, has pointed out, we have already twice considered the principles underlying this Amendment, and I do not think the House will wish to hear for a third time the whole argument which leads me to oppose it. There can be little that is new to say and I fear it is unlikely that the noble Baroness, Lady Phillips, and I are going to agree on this question. I welcome this Amendment for one reason, and one reason only. It gives me an opportunity to reply to two specific points put to me at the Report stage by Lady Burton, and repeated this afternoon, which I could not then answer as I had already spoken. They are directly relevant to our decision this afternoon.
LORD SHACKLETON: My Lords, may I interrupt the noble Earl, Lord Limerick? Why did he say that he could not have answered? He can speak under our rules, and the House will bear with him. He is not restricted under Standing Orders. Still we welcome him now.
4.24 p.m.
THE EARL OF LIMERICK: My Lords, I must accept that viewpoint from the noble Lord, the Leader of the Opposition, and I hope it will be borne in mind that I am relatively new to your

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Lordships' House. The first point to which I am addressing myself concerned the difference of my approach from that of my Ministerial colleagues in another place, and it is of course a fair point to raise. My honourable friend Mr. Peter Emery expressed the view that marking with the country of origin, as opposed to a blanket term like "Foreign", would be preferred by the general public. That was said at Committee stage on Friday, April 14. The date is important because my colleague and I both came to Ministerial office for the first time on Monday, April 10, just four days earlier. Those who have held Ministerial positions—and there are many in your Lordships' House—will hardly forget their first four days. In those days there are other things to consider as well as Private Members' Bills.
Serious problems were brought to my notice shortly thereafter, both by direct trade representations and in this House on Second Reading. The consideration of this Bill falls within my own departmental responsibility and the decision, taken after careful thought, to introduce the Amendment permitting the word "Imported" as an alternative marking, carried at Committee stage on May 16, was mine. Naturally I talked with my honourable friend Mr. Emery about it, and in the light of the problems he fully appreciated what I was doing. If Ministers cannot have second thoughts when presented with new evidence, especially on a Private Member's measure, when there is virtually no opportunity to discuss principles with interested parties before it is debated in Parliament, then really I do not know why we bother to take Bills in measured stages through the two Houses. We might as well vote according to our prejudices on first introduction and without debate at all. In my own case these were not even second thoughts; they were first thoughts at the time that I first considered the Bill. Since that stage I have taken carefully into account the arguments of noble Lords and Baronesses with wide experience in this field—Lord Sainsbury, Lord Donaldson and Lady Burton—and I can make clear that these points have been considered, in sticking to the line which I am taking this afternoon.
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I was secondly asked by the noble Baroness, Lady Burton, who it was that wanted the change which my Amendment brought about. I received representations from food manufacturers generally, concerning frozen and prepacked foods as well as the canning of fruit and fish; also from the chemical industry who are concerned about bulk imports which are broken down before sale. It has been twice stated this afternoon that the only example given related to foodstuffs. I would draw the attention of the House to column 1327 of the OFFICIAL REPORT of the Committee stage of the debate in which I particularly referred to the chemical trade.
Having given the information asked for, I feel entitled to point out that those who have made the representations are not asking for changes. They are asking for no change, or alternatively the least onerous change from the law of 1968 which quite deliberatedly—let me remind you once more—did away with origin marking. It is this Bill which brings about the change, in the shape of the marking requirement that we are discussing. The protesters are quite reasonably asking that, in providing its limited protection against misrepresentation, an aim which none of them disputes, the Bill should not simultaneously impose unreasonable problems for them as traders. This is the point that I took.
May I just say that the noble Lord, Lord George-Brown, not once nor twice, but thrice, referred to the word "imported" appearing in small print. This may be a small point, but the Bill does refer to a conspicuous indication of origin.
LORD GEORGE-BROWN: The Bill does?
THE EARL OF LIMERICK: Yes.
LORD GEORGE-BROWN: I am sorry. The Bill does, but how big will the print be on the garment?
THE EARL OF LIMERICK: It has to be comparable with the mark which it seeks to counter. This Bill, make no mistake, my Lords, will make life more difficult for some traders. We must therefore be wary of arguments really concerned with industrial protection, which are thinly disguised as consumer

575
protection. Consumer protection is the proper purpose of this Bill, but it should be accompanied by the minimum difficulty for traders consonant with the achievement of its aim of preventing misrepresentation.
I would repeat that the Bill before us is concerned solely with what should be clone to prevent consumers from being misled into thinking that imported goods are British because they bear a United Kingdom name or mark on sale: nothing more, nothing less. With this important but limited objective in mind, a clear indication that such goods are imported meets the case. If in certain circumstances there is a demand for more consumer protection, in the form of labelling goods with information about their country of origin, or their characteristics, or washing instructions, or anything else, this is something which my Department is always ready to consider and for which statutory powers have been provided by the Trade Descriptions Act 1968. If representatives of consumer interests consider that origin marking is desirable on textiles or any other goods then it would be quite wrong to rely on this Bill to provide it. The right way is to ask for an origin marking order under Section 8 of the existing 1968 Act, which would then apply to all imported goods concerned, and not only to this limited class of goods which bear a United Kingdom name or mark when offered for sale. Let the approach be made at the front door under Section 8 and not slipped in by this small side door, in a way so general as to cause avoidable difficulties yet so limited in the goods to which it applies as to fail to provide the protection sought.
This whole argument is an exercise of judgment. Here we are weighing two imponderables—the desire of some consumers to know the precise country of origin, against the difficulty for some traders in complying with precise origin marking and the effect which it may have directly or indirectly on our international trade. The law could start from the presumption that precise marking is obligatory unless a case is made for excusal (a view which was rejected in passing the 1968 Act), or it could start from the presumption that a general indication of the import of the affected
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goods will suffice unless a case is made for precise marking under Section 8. That is what the argument is all about. My own preference for the second presumption is clear.
Let us finally examine what the position would be in relation to certain classes of trade which have worried me all along, if this Amendment were carried—although I sincerely hope that the House will remain of the same mind as on two previous occasions by rejecting it. I shall detain your Lordships with only two examples. There could be a situation in a drug factory or a chemical packaging plant where an emergency switch of source of supply has to be made and time does not allow precisely marked packaging to be obtained for the substitution. It would be no problem, however, for the firm to hold an emergency supply of packets or sacks marked simply "Imported".
Then there are the small shopkeepers who will have goods on their shelves six months after this Bill becomes law, goods which perhaps have already been there for some time and which they know or suspect to be imported. They probably do not know the exact country of origin and may by then have lost track of who supplied the goods. It is impossible to contemplate exempting orders in every such case, even if the Secretary of State could properly make them. Nor are such cases always covered by the defences in Section 2, the relevant one of which would not be available if the goods are of a nature which could only be produced outside the United Kingdom—say, the products of tropical countries. Are we, for no compelling purpose, to legislate so that these shopkeepers may be breaking the law with no statutory defence? Why should they not be brought within the law by means of a little sticker reading "Imported"?
If your Lordships ask me how many letters I have had directly from small shopkeepers, I reply that I have had none. That is just why I am worried. How many shopkeepers will have read and pondered this Bill? I am worried because those most affected by this type of legislation are often very slow to realise its implications, and it becomes all the more our duty in Parliament to reflect on their problems before, not after, they are faced with legal provisions which

577
they may be hard pressed to comply with and which the inspectors may have grave difficulties in seeking to enforce. This is not the way to keep the law in high regard. I have no hesitation in asking the House to reaffirm its already twice-taken view by rejecting this Amendment.
4.35 p.m.
LORD SHACKLETON: My Lords, I am sorry to say that I have seldom—and I say this with respect to the noble Earl—heard a more ludicrous explanation from a Minister in defence of a case which clearly has not satisfied the House. I fully accept—and I do not say this in a patronising way—that the noble Earl is new to the procedure of the House: he certainly could have spoken the other day. As I understand it, the reason why the Government changed their mind was that the noble Earl was suddenly appointed a Minister, and at that point the Board of Trade started to think about this Bill. This is the impression that the noble Earl has given to the House. I cannot believe that the present Government really work as incompetently as that. The noble Earl and other noble Lords will know that there is a proper procedure in this matter. As I understood it, the noble Baroness, Lady Elliot of Harwood, had already received the blessing of the Department. I can scarcely believe that the sponsors of the Bill in another place went ahead regardless of whether the Government were likely to support it or not. In any case, I am revealing no secret when I say that Private Bill legislation comes under the scrutiny of Government as much as Public Bill legislation. Sometimes I admit that there is a bit of a rush. This Bill had a Second Reading and there was a lot of publicity about it. In suggesting that the Department had no opportunity to consider it—I hesitate to say that is not true—I can only say that the noble Earl must have been misinformed or there must have been an extraordinary failure. I cannot believe that this Bill had not received the general blessing of the Department.
The noble Baroness, Lady Elliot, suggested that it was wrong that we should argue this a third time, or a second time, according to how one looks at it. But the original Amendment that introduced "Imported" has been the subject of
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growing concern in the Press and in certain sections of industry. On the last occasion the noble Viscount, Lord Hanworth, moved an Amendment which we all freely admit was defective. It is quite true that the noble Earl. Lord Limerick, objected to that Amendment not simply on the ground that it was defective, but on principle. None the less, noble Lords in this House on occasion dislike voting for defective Amendments, and it may be that the four votes by which it was lost might have gone the other way. In any case, this Amendment is different. I want to stress this, because it does not exclude the use of the word "Imported"; it merely means that the Government when they have received representations, which they consider seriously, can make an order—and they have great powers under this Bill to make orders—to substitute 'he word "Imported".
If I may deal with Lord Geddes's point, he referred to the Molony Report and mentioned that they came down against insisting on marking with country of origin. He has relied on Section 8 of the Trade Descriptions Act 1968. But no orders, as I understand it, have been made under that section. What we are seeking to do is to transfer the responsibility for making orders for exclusions. It will still be possible to mark "Imported", but the Government, when they receive (he representations, will have to make up their mind. Here again, I am bound to say that the noble Earl, Lord Limerick, has not answered my noble friend Lady Burton of Coventry. All he has said is that he has had certain representations from certain industries. We do not know the details. We have had a peculiar example: that this might embarrass shop-keepers who already have goods on their shelves. But it is quite possible by amendment to provide protection for this event.
I realise that it is always difficult to get Private Bill legislation through, and I do not want to handicap the noble Baroness in this matter. I think we have reached a point when, if this was going to be the last stage of the Bill, there would be a strong case for moving that the debate be adjourned, so that the Government could give further consideration to this matter. However, I think the best

579
thing we can do is to adopt this Amendment, let it go back to the Commons, where it will have to go, anyway. Meanwhile, the Government will have a little more time to think the matter out. If when they get to the Commons the Government do not like the particular Amendment which most noble Lords in the House have supported, they will be able to substitute another one. I think this is a moderate Amendment. It is a permissive Amendment. It will still be possible to use the word "Imported", but it will not be done automatically. I hope therefore that your Lordships at this stage will vote for my noble friend's Amendment.
BARONESS PHILLIPS: My Lords, I will not detain your Lordships long, particularly following my noble Leader; but I should like to say to the noble Lord, Lord Geddes, that certain recommendations of Molony were followed in the Trade Descriptions Act. I think he will agree that when the original decision was taken in the Committee it was certainly assumed that marking orders under Section 8 would be used. I do not think it was ever decided that it could be left in a vacuum. Referring to the small shopkeeper, for whom, like the Minister, I have a great feeling—and I have worked quite closely with small shopkeepers—this is a sad story that he has told us. I should have thought that Clause 2 provided a defence. The complaint is that in fact they did not know about this particular point. As my noble friend says, if this were not so it would be simple enough to deal with it. I am surprised to hear the suggestion that we are now going to have immediate legislation. It is said that as soon as something goes through both Houses of Parliament people are to be dealt with immediately under this particular type of legislation. This is rather new to me.
The noble Baroness, Lady Elliot, has said several times, together with several other of your Lordships, that we have debated this matter three times. If I may say so, this is not the fault of the Opposition; it is because the Government have introduced in the middle of the proceedings on this Bill an Amendment
which would effect a major change. I think this is unusual—indeed from my search of the records it seems to be a most unusual procedure. If the noble Baroness is happy to have her Bill chopped about, I must say that several noble Lords on this side, and indeed on the other side, of your Lordships' House are not so happy about it. I do not want to refer to "our side" and "the other side" because the feeling seems to be on all sides, so far as I can discover. To take a simple example of this point as to the country of origin, the other day I saw a can—I believe it contained potatoes—which bore the lovely name, "Farmhouse". To my simple mind this implies an English farmhouse and not one in Iceland. But if it merely says "imported", I have then not the slightest idea whether what is referred to is a farmhouse in the wilds of Africa or one in the middle of Ireland—and as a house-wife I must tell your Lordships that there is a difference.
Only this morning I heard somebody asking about a dress in a large store. She wanted to know what material the dress was made of. Now this was an expensive dress and she should not have had to ask such a question. She was told what the material was and she then asked: "Does it come from another country, and where are the washing instructions?". I must point out that customers want this sort of information. But in addition may I say that the brush manufacturers want it; the ceramic manufacturers want it; the steel makers want it; the textile manufacturers want it; and the shirtmakers also want it. I would say that they are as important as the other two groups of manufacturers that have been mentioned. This very simple Amendment will not bring about the major change that some of us would like to see, but it will put the Bill back into the sensible realm in which it first started.
4.44 p.m.
On Question, Whether the said Amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 103; Not-Contents, 59.

CONTENTS

Ailwyn, L.

Amory, V.

Arwyn, L.

Airedale, L.

Amulree, L.

Avebury, L.

Alport, L.

Archibald, L.

Bacon, Bs.

Balfour of Inchrye, L.

Gaitskell, Bs.

Moyle, L.

Barnby, L.

Gardiner, L.

Nunburnholme, L.

Beaumont of Whitley, L.

Garnsworthy, L.

Peddie, L.

Bernstein, L.

George-Brown, L.

Phillips, Bs.

Beswick, L.

Granville-West, L.

Platt, L.

Blackett, L.

Grimston of Westbury, L.

Popplewell, L.

Blackford, L.

Hale, L.

Rathcreedan, L.

Blyton, L.

Hanworth, V.

Rea, L.

Brock, L.

Hawke, L.

Reay, L.

Brockway, L.

Henderson, L.

Royle, L.

Buckinghamshire, E.

Henley, L.

Sainsbury, L.

Burton, L.

Heycock, L.

Samuel, V.

Burton of Coventry, Bs.

Howard of Glossop, L.

Serota, Bs.

Byers, L.

Hoy, L.

Shackleton, L.

Camoys, L.

Hughes, L.

Shepherd, L.

Champion, L.

Hylton-Foster, Bs.

Shinwell, L.

Chorley, L.

Jessel, L.

Slater, L.

Clwyd, L.

Latymer, L.

Snow, L.

Coleraine, L.

Leatherland, L.

Somers, L. [Teller.]

Craigmyle, L.

Lee of Asheridge, Bs.

Southwark, Bp.

Cromartie, E.

Llewelvn-Davies of Hastoe, Bs. [Teller.]

Stonehaven, V.

Crook, L.

Strabolgi, L.

de Clifford, L.

Lloyd of Hampstead, L.

Summerskill, Bs.

Diamond, L.

Loudoun, C.

Swaythling, L.

Donaldson of Kingsbridge, L.

Lovat, L.

Tanlaw, L.

Douglas of Barloch, L.

McLeavy, L.

Taylor of Mansfield, L.

Douglass of Cleveland, L.

Maelor, L.

Watkins, L.

Exeter, Bp.

Mar, E.

Wells-Pestell, L.

Faringdon, L.

Massereene and Ferrard, V.

Williamson, L.

Fiske, L.

Meston, L.

Wright of Ashton under Lyne, L.

Fletcher, L.

Milverton, L.

Foot, L.

Monckton of Brenchley, V.

Wynne-Jones, L.

NOT-CONTENTS

Aberdare, L.

Gainford, L.

Mowbray and Stourfon, L.

Alexander of Tunis, E

Geddes, L.

Napier and Ettrick, L.

Balerno, L.

Goschen, V.

Northchurch, Bs.

Balfour, E. [Teller.]

Green way, L.

Penrhyn, L.

Belstead, L.

Grenfell, L

Reigate, L.

Bledisloe, V.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Robbins, L.

Caccia, L.

Ruthven of Freeland, Ly.

Colgrain, L.

Harvey of Prestbury, L.

Selkirk, E.

Colville of Culross, V.

Hatherton, L.

Sempill, Ly

Craigavon, V.

Ilford, L.

Sherfield, L.

Daventry, V.

Killearn, L.

Strathclyde, L.

Denham, L.

Lauderdale, E.

Strathcona and Mount Royal, L.

Digby, L.

Limerick, E.

Drumalbyn, L.

Long, V.

Sudeley, L.

Elles, Bs.

Lothian, M.

Tweedsmuir, L.

Elliot of Harwood, Bs. [Teller.]

Macleod of Borve, Bs.

Tweedsmuir of Belhelvie, Bs.

Macpherson of Drumochter, L.

Vivian, L.

Emmet of Amberley, Bs.

Mancroft, L.

Windlesham, L.

Ferrers, E.

Margadale, L.

Wolverton, L.

Fisher, L.

Monck, V.

Young, Bs.

Fraser of Lonsdale, L.

Mountevens, L.

On Question, Motion agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
THE LORD CHANCELLOR: My Lords, I understand that my noble friend is now to make the Statement which was announced earlier. I was told that the House did not wish the next Amendment to be called until after the Statement.
LORD SHACKLETON: My Lords, since now we have carried this Amendment, I imagine that it would be for the
582
convenience of the House to move the next Amendment formally and finish this stage of the Bill.
THE LORD CHANCELLOR: My Lords, if that is the wish of the House. I do not know what my noble friend feels about that.
LORD ABERDARE: My Lords, I think that what the noble Lord the Leader of the Opposition has said has great reason, if the Amendment can be taken formally.
BARONESS PHILLIPS: My Lords, I beg to move Amendment No. 2.
Amendment moved—
Page 2, line 20, at end insert—
("( ) Without prejudice to the generality of the last preceding subsection, any such directions given as aforesaid may provide, that the word 'imported' may be substituted for the indication of origin referred to in paragraph (a) of subsection (2) of this section").—(Baroness Phillips.)
THE EARL OF LIMERICK: My Lords, I am grateful for the generous spirit in which the noble Baroness now seeks to return, permissively, what the House has just removed from the Bill. She has made it clear in moving that, now that Clause 1(2) no longer permits the use of the word "imported" as a general alternative to the actual country of origin, she nevertheless wishes the Secretary of State to be able to allow the use of that word in cases where he is satisfied that to relax the provisions of the Bill in that way would not materially impair the interests of persons to whom the goods in question are supplied.
I appreciate the motives of the noble Baroness and would not wish to seem in any way ungrateful, but I am bound to add that I consider the Amendment to be unnecessary. If I may explain, Clause 1(5), as we amended it on Report, provides (on page 2, lines 13–17) that the Secretary of State may give directions for excluding or relaxing the provisions of subsection (2) in relation to goods of any description or goods supplied under any designation, either generally or subject to such conditions as may be specified in the direction. I am advised that this provision will now, as it stands (although this would not for somewhat technical reasons have been the case before we accepted the first Amendment a few minutes ago), enable the Secretary of State to give a direction relaxing the provisions of Clause 1(2) in relation to goods of a particular description, or goods supplied under any designation, by requiring any United Kingdom name or mark applied to them to be accompanied by the word "imported". The Amendment is therefore unnecessary in the new circumstances of this afternoon, since the power which it seeks to confer now already exists. Further, it would not help with the other problems which worry me and about which I have spoken earlier this afternoon.
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I hope that the noble Baroness will accept my view that the Amendment therefore might reasonably be withdrawn.
BARONESS PHILLIPS: My Lords, in view of the Minister's Statement, and on his categorical assurance that it is not necessary, I will withdraw my Amendment. I should like to correct one small error that the Minister made. He said that the Government accepted the Amendment. If I may say so, it was the House that accepted the Amendment. With those few words, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
BARONESS ELLIOT OF HARWOOD: My Lords, I beg to move that the Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Baroness Elliot of Harwood.)
On Question, Bill read 3a, with the Amendments, and passed, and returned to the Commons.

UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT
4.57 p.m.
THE EARL OF LIMERICK: My Lords, with the permission of the House, I should like to repeat in the form of a Statement an Answer given in another place by my right honourable friend the Minister for Trade:
"The Third United Nations Conference on Trade and Development met in Santiago, Chile, from April 13 to May 21, 1972. It reached agreement on a number of guidelines that will be important in future work in other international organisations as well as in UNCTAD.
"In my opening statement for the United Kingdom I made an assessment of what could be realistically expected from the Conference. Our delegation put all their efforts into promoting agreement where this was possible. I believe that this constructive and realistic role was the most valuable one possible in the circumstances of this Conference. In the event the assessment which I presented was proved to be largely accurate.
"The most important expectations for the Conference were on monetary

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matters. Agreement was reached that the International Monetary Fund be invited to ensure the effective participation of the developing countries in international monetary reform by the establishment of a Special Committee of Governors. The Fund, as part of its consideration of monetary reform, is also to pursue its consideration of the possibility of a link between Special Drawing Rights and development aid.
"In the field of trade it was agreed that all developing countries should be enabled to participate fully and effectively in the multilateral trade negotiations expected to start in GATT next year, and that the UNCTAD and the GATT should co-ordinate their activities in assisting the developing countries to prepare for these negotiations.
"In many instances, notably over the development of the generalised preferences scheme and over special measures for the benefit of the least de-developed among the developing countries, the Conference set guidelines for the future work of its permanent organisation. We shall continue there the active and constructive role which we played in the Conference.
"Details of these and all the matters dealt with by the Conference will be published in a White Paper as soon as is practicable this summer."
My Lords, that is the end of the Statement.
LORD SHEPHERD: My Lords, the House will be grateful to the noble Earl for repeating this Statement. I presume that it is being made as a consequence of the interest that this House has shown in UNCTAD. I can only presume that is the reason because, if I may say so, this is a pretty pathetic Statement. I cannot imagine that a Government would have voluntarily sought not only to impose themselves upon the time of this House but to make a Statement that seems to have so little relation to what actually happened at the Conference if we were to take the sense of the leading articles of The Times newspaper, the Manchester Guardian and other periodicals that have taken an interest in this matter. I see that the Minister referred to his own role. I gather that he made a speech
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and I think was there a few days. I see that The Times refers to his speech as a "flat" speech. In other leading articles it was said that Her Majesty's Government had no proposals to make to the Conference at all. The noble Earl might like to tell us what proposals Her Majesty's Government did make at the UNCTAD Conference.
Would not the noble Earl agree that the general sense of that Conference was that it was a near-failure? Did not the leading article of The Times refer to the "present selfishness", and to "future terrorism"? Did it not also draw attention to the fact that the Conference was able to agree unanimously on only one resolution, namely, on tourism, which I should not have thought would present a great deal of difficulty? Was it also a fact that the Conference basically failed, mainly because of the attitude of the United States, and, I suspect, the Government of the United Kingdom, to make any real advance in the field of trade and monetary reform? Will not the noble Earl agree that these developing countries continually have less share of world trade and fall every year more and more into debt? Can the noble Earl really be satisfied with the position? Can he really be satisfied with the role of Her Majesty's Government at this Conference? Furthermore, can the noble Earl give us an assurance that at the next Conference, whether it is UNCTAD IV or another conference to be called in order to give assistance to the developing countries, this present Government, if unfortunately they should be in office, will at least try to repair some of the damage they did at Santiago?
LORD TANLAW: My Lords, while following the noble Lord, Lord Shepherd, in thanking the Minister for repeating his Statement, I should like to add that the Government's efforts and sincerity of purpose at UNCTAD III are clearly recognised on these Benches, though in terms of realistic assistance to the Third World we must conclude that it has been as limited as the Statement implies. Our first reaction is to ask the Minister whether he believes that a meeting such as UNCTAD is the right vehicle for organising such assistance where the political differences in the aid-giving or aid-receiving are over-emphasised by all parties, to the detriment of those whom it

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is intended to help, the under-privileged. Would the Minister therefore consider a less public and more practical approach to aid giving in order that it may be more successful than UNCTAD III obviously was this time?
5.13 p.m.
THE EARL OF LIMERICK: My Lords, I am sorry that the noble Lord, Lord Shepherd, takes such a negative view of what was achieved, and particularly of the role of the United Kingdom delegation played in UNCTAD III. Our delegation played a very full role. It participated in all the committees and the working groups set up by the Conference, and particularly in the smaller contact and drafting groups which were attempting to reach agreement between the developed and developing countries on draft resolutions. Our voting record on these resolutions that were not agreed unanimously is very similar to that of the other major developed countries, and it is not true that we had the least liberal voting record of the Conference. Except on two important issues—official aid and insurance—our voting position was shared by most other developed countries. In some cases developed countries had a less positive position than did we.
The noble Lord referred also to the question of trade. As is well known, it was not possible to accept a series of principles which the developing countries wished to guide the forthcoming GATT negotiations, but the agreed resolution represents an important step forward in recognising their interests. GATT is now asked to devise rules which will enable all developing countries to participate in the negotiations. It was agreed that the UNCTAD Secretariat should assist the developing countries in their preparations. It is, however, for GATT to decide the arrangements for the negotiations.
The noble Lord, Lord Tanlaw, mentioned the work that can and should go on outside UNCTAD. This point, of course, is extremely clear, and it has always been the view of Her Majesty's Government that too much can easily be expected of these UNCTAD meetings that take place once every four years. We believe that progress is made as often, and perhaps more readily, outside these
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Conferences, and it is indeed our view that these should be treated with great seriousness.
LORD ROBBINS: My Lords, I am afraid that what I am going to say may make me very unpopular, but may I express the view that some of us, at least, who wish the developing countries well are apprehensive lest the demand that the issue of Special Drawing Rights be made the vehicle of aid to developing countries should upset future arrangements for a rational monetary organisation of the world. I myself believe this to be an ignis fatuus and one which in the end would only lead to more inflation.
THE EARL OF LIMERICK: My Lords, on the question of international monetary reform, our delegation played a conspicuous part in securing unanimous agreement on this resolution. The proposed special Committee of Governors of the International Monetary Fund will include nine representatives of developing countries. The Government approached the question of a link between Special Drawing Rights and development aid with sympathy, but we are not prepared to come to a conclusion on this, one way or the other, until a full study has been completed by the International Monetary Fund. The danger to which the noble Lord drew attention is I think very much in mind here.
LORD SHEPHERD: My Lords, the noble Earl keeps referring to the Government's conspicuous efforts at the Conference. Could he now answer one of the questions I put to him? What specific proposals did Her Majesty's Government make at Santiago?
THE EARL OF LIMERICK: My Lords, none of these resolutions was promoted by Her Majesty's Government as a new initative, but what I referred to as a conspicuous part was the part we played in securing unanimous acceptance of the monetary resolution.

PARLIAMENTARY AND OTHER PENSIONS BILL
Brought from the Commons; read 1a, and to be printed.
NATIONAL HEALTH SERVICE (FAMILY PLANNING) AMENDMENT BILL
Read 3a, with the Amendments, and passed, and returned to the Commons.

HOUSING FINANCE BILL
5.8 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN): My Lords, I beg to move that the House do again resolve itself into Committee on this Bill.
Moved, That the House do again resolve itself into Committee.—(Lord Drumalbyn.)
House in Committee accordingly.
[The LORD GRENFELL in the Chair.]
Clause 4 [The rising costs subsidy, and associated rate fund contribution]:
LORD DIAMOND LORD DIAMOND moved Amendment No. 36:
Page 7, line 24, leave out ("60") and insert ("66⅔").
The noble Lord said: We return to our duties refreshed and even hopeful of getting some sensible explanations out of the Government as to why they are continuing with this Bill. But perhaps before coming to that I ought to deal with the Amendment on Clause 4, reminding your Lordships that Clause 4 is the clause which provides for the rising costs subsidy—a most important subsidy. In fact, it is the main subsidy. If one thinks of it in terms of the subsidies which are provided for housing, as opposed to the subsidies provided for rent rebates and rent allowances and for the contribution which otherwise would be made by the S.B.C.—the Supplementary Benefits Commission—this is overwhelmingly the most important of the subsidies. In fact from the figures which the noble Lord was good enough to give me and which I welcome and for which I am grateful, and which I take the first opportunity of publicising because I am sure figures of this kind ought to be enjoyed by the whole Committee and not just by one member—the figures which the noble Lord gave me on behalf of the Government for the year 1976–77 show a tentative
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estimate (we understand quite well that it is a tentative estimate but tentative estimates are far better than no estimates at all) of a rising cost subsidy of £75 million for that year, an operational deficit subsidy of £15 million and a slum clearance subsidy of between £15 million and £30 million, and the other subsidies making a total of between £320 million and £385 million are the subsidies to which I have referred—the social service subsidies as opposed to the housing subsidies. The position is that we are dealing with the rising costs subsidy, which provides about three-quarters of the building subsidies under the new structure of subsidies provided for in this Bill.
Having established therefore that it is a most important subsidy one turns now more particularly to the Amendment, which relates to the calculation of the subsidy. On page 7 of the Bill the calculation of the subsidy is set out. It starts with the figure of 90 per cent. of the qualifying amount. I will deal with the qualifying amount a little later; but let us deal with the percentages first. That starts by providing a central Government subsidy of 90 per cent. in 1972–73 reducing to 75 per cent. in 1975–76 and continuing at that rate to 1981–82. After that, that is to say in 10 years' time, the Government propose under subsection (5) to take power by order to substitute such other percentage for 75 per cent. as may be specified in the order, that other percentage not being less than 60 per cent. So the Government are saying that with regard to this, which is by far the most important house building subsidy, they propose to say here and now that from 10 years hence it will be right to take power to reduce the percentage of 75 per cent. to 60 per cent. That is a miserable point of view. There is no need for the Government to contemplate doing that at this stage. There is no need, indeed, to contemplate taking powers in the Bill now for what they want to do in 1982, for two reasons. The first reason is a political one that it is a little too early in the day to refer to, namely, that the Government will not be there; the second is a much more relevant one, that there is bound to be further legislation between now and then in which further provision could be made, because of course in five years' time, seven years' time, 10 years' time—whenever the Bill comes forward—the Government of the

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day will have a knowledge of the facts at the time and we shall not be looking forward over 10 years, as the Government are attempting to do now. So in my view the whole thing is far-fetched. It is reprehensible that the Government should be taking power to reduce the contribution to 60 per cent.
But that is not the total story. This is merely the percentage which one applies to the relevant amount (called the "qualifying amount"); but if one refers back to subsection (3) which describes the qualifying amount, we have already passed that subsection—but not yet the whole clause—which provides that the Government may alter the formula by which the qualifying amount is computed, so that the qualifying amount can be reduced to anything that the Government want to reduce it to. So that one has a reducing percentage of a vanishing sum. I do not think I am overstating the matter when I say that after 1981–82 the position cannot be held to be encouraging to local authorities.
As the Government well know, local authorities take the view that this provision ought not to be there. I take the view that that provision ought not to be there. In fact having already accepted, as we were compelled to accept—it was not willingly; we were compelled to accept—this variation of the qualifying amount down to zero there was no need to make any further provision in relation to the percentage. Already the answer would be a reducing sum without doing anything further about it at all, if the Government so desire. So this is a double reduction, a double penalty, and it proposes a figure of 60 per cent.
Therefore I think it would be right to leave the figure of 75 per cent. unaltered for all the reasons I have given, and particularly because it is pure conceit on the part of any Government to claim at this point of time that they can foresee what they will want to do after 1982; and the only argument, namely, that of saving legislative time by having premature provision in a Bill, does not apply. Therefore I should like to see the figure remain at 75 per cent. However, that is not the proposal in the Amendment—not because I would not like to see 75 per cent. but because I have come to the conclusion that, notwithstanding that the arguments put: forward from this side of
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the Committee are always, by merit, the persuasive ones, somehow or other at the end of the day they are not the arguments which carry. There must be some kind of procedure which intervenes between the making of the arguments and the altering of the Bill which militates against the persuasiveness.
In view of the circumstances in which we find ourselves placed in this House, I am bound to go virtually on my knees and tell the Government that the local authorities have asked and I now repeat their request because they have not succeeded in obtaining their request. Their request has been that the figure should stay at 75 per cent. The logic of the argument is that it should be 75 per cent. I think it should be 75 per cent. I put forward the arguments for 75 per cent. But as the Government are proposing in the Bill to reduce 75 per cent. to 60 per cent. will they at all events give us a crumb and alter the figure from 60 per cent. to 66⅔ per cent., being simply an alteration of the qualifying proportion which was three-quarters and is now suggested as two-thirds?
That is only a power; it is not a compulsion. It is only putting a lower limit on the exercise of that power in a period later than 10 years' time. I should have thought that the combined request of the local authorities, the A.M.C., the Opposition and, I would hope, many more, including noble Lords opposite who have been asked to support the views of the A.M.C., would have persuaded the Government to listen to this appeal and give us this Amendment. I beg to move.
5.20 p.m.
LORD AVEBURY: I support whole-heartedly the remarks of the noble Lord, Lord Diamond, and endorse his plea for the Government to think again on this issue and accept the Amendment, even if they cannot go as far as deleting the provision altogether, remembering that this Part of the Bill seems undesirable to noble Lords on this side of the Committee, I believe to many noble Lords on the Benches opposite and, as the noble Lord, Lord Diamond, said, to the local authority associations. It is not as though the Secretary of State will not have perfectly adequate powers apart from those mentioned by the noble Lord,

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Lord Diamond. For example, in subsection (3), with which we have already dealt, he has adequate power to alter the qualifying amount. If the qualifying amount is left as it is in the Bill, the Minister could alter the reckonable expenditure under subsection (11), to which we shall come, for under that provision he
"may from time to time determine"—
any sum
"as being reasonable and appropriate having regard to all the circumstances."
He can take that action in regard to what constitutes "reckonable expenditure" for the purposes of the calculation. Thus, the Minister has two powers; not only the one that the noble Lord, Lord Diamond mentioned—of being able to alter the qualifying amount—but also in relation to what shall be treated as reckonable expenditure.
All that we are told in this connection is what we read in the OFFICIAL REPORT of the Committee proceedings in another place. There, the Minister said that consultations were proceeding with the local authority associations as to what should constitute reckonable expenditure. Although Mr. Amery himself said—this is reported in col. 349—that it was not practicable to leave at large the question what expenditure it was reasonable to debit from the Housing Revenue Account, two columns later he said that consultations had begun with the local authority associations. How can we leave the matter in thin air when Mr. Amery himself says that this is un-undesirable and when the percentage figures given in the table may be applied to an amount which could vary enormously one way or the other, depending on how the Government treat the calculation of reckonable expenditure and whether or not at a future date they exercise the powers under subsection (3) to which the noble Lord, Lord Diamond, referred? I was extremely interested in the figures the noble Lord gave. I had not heard before that the rising costs subsidy was likely to amount to £75 million in 1975–76.
LORD DIAMOND: In 1976–77.
LORD AVEBURY: I am obliged to the noble Lord for correcting me. That sum compares with the figure given by Mr.
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Amery of £55 million for 1975–76, which means that the rising costs subsidy will increase at a steep rate up to the middle of this decade. It might help if I were to give the figures in years. In 1972–73, the figure is £10 million; in 1973–74, £20 million; in 1974–75, £40 million; in 1975–76, £55 million; and in 1976–77, £75 million. Thus, contrary to the expectations of Mr. Amery in the other place, the rising costs subsidy does not look like levelling off. I wonder whether the noble Lord who will reply will do a bit more crystal ball gazing in this connection. I promise that we will not hold him to his estimates, though they may help the Committee. I promise him that we will not look back to these proceedings in 1980 and point to the errors he may have made. In any event, the noble Lord will probably not be answering then, even if his Party is still in power. It would be valuable to the Committee if further figures could be given.
Let us assume, for the sake of argument, that the rising costs subsidy continues to increase at the rate of £15 million a year, a not unreasonable assumption and less than the average increase if the overall figures are worked out between 1972 and 1977. On that basis the rising costs subsidy in 1982–83, when this power comes into effect, will be £150 million. That would be the 75 per cent. figure allowing for a £15 million increase annually. Noble Lords will see that the figure on which this calculation is made—of 100 over 75, giving £150 million—works out conveniently at a reckonable expenditure in that year of £200 million. I hope that the Minister has followed me so far. If this power is exercised and immediately the Minister of the day deduces the amount to 60 per cent., then the payment of rising costs subsidy in that year would be £120 million. Local authorities having had £135 million in 1981–82 and having expected to get £150 million in 1982–83, will in fact be knocked back to £130 million, thus losing £30 million which they would otherwise have expected to receive if this subsidy had been continued in its present form.
The Minister may say that the rising costs subsidy will not reach anything like £150 million in that year. If so, I hope he will correct me. On the other hand, if my calculations are correct, then this will be a very serious matter indeed for

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local authorities because they will suddenly have to find £30 million from other sources. I can envisage those other sources. The money would certainly come out of the pockets of the tenants if noble Lords opposite and their friends are in power at that date. I should like to know how this clause can be reconciled with paragraph 62 of the White Paper which says:
"In areas of housing stress the most powerful instrument for the promotion of new building will be the proposed new rising costs subsidy."
If that is to be the case, then an abrupt reduction of £30 million would be intolerable.
Ministers have said that they expect to clear the bulk of unfit houses by the end of this decade. Unfortunately, Ministers have been saying that since the war, whichever Government have been in office. We cannot risk the sort of catastrophe that would occur if their predictions did not come about and we still have areas of housing stress in 1981–82. If that were to happen, we should still want to use the rising costs subsidy in the way the Minister said, as the most powerful instrument for the promotion of new building. I am not talking just about Greater London, although I was disturbed to note that Mr. Amery said in Committee in another place that most of the money allocated under this heading would probably be for authorities in Greater London. He said that it was difficult to foresee what would happen in areas such as Liverpool and Sheffield.
I do not believe that we shall cure the housing problems of our cities, in addition to Greater London, within the period between now and 1981–82. Since this uncertainty exists, uncertainty which Ministers have agreed remains—they have agreed there is uncertainty about the calculations, about the rate of new house building and about the time it will take to get rid of the slums—why not leave things as they are and come forward with fresh legislation towards the end of the decade? It is inconceivable that we shall go for 10 years without having another Bill dealing with housing subsidies. We are starting off here with a brand new, untried system. Can the Minister say that this scheme of things can be left unchanged for 10 years, irrespective of what happens? Of course not. There
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will be plenty of opportunities between now and 1982 to amend this measure and alter the provisions of Clause 4. The Government would lose nothing by accepting the Amendment.
5.30 p.m.
LORD DRUMALBYN: To listen to the noble Lord, Lord Avebury, one would suppose that this was a mandatory provision requiring the Secretary of State to reduce the proportion to 60 per cent. in ten years' time. In fact, of course, it is not: it is a permissive power. The proportion may be reduced in ten years' time to 60 per cent. on the amount of rising costs subsidy by reference to the base year. But at the same time, of course, it is also an assurance that it cannot be reduced lower than 60 per cent.
The noble Lord will also have noticed that under Clause 16 the alterations can be made in respect of particular authorities or a particular class of authorities. It says that an order shall
"apply to any description of local authorities or new town corporations specified in the order, or to a specified local authority or new town corporation."
So it is a minimum percentage below which the Secretary of State cannot go in regard to any particular authority or any class of authority or indeed the authorities as a whole. What is important to recognise also—and this may be an answer to some of the projections of the noble Lord so far into the future; I am sure he will excuse me from projecting more than five years, but we do not think it is proper to do so—is that this provision only bites on the rising costs subsidies which arise in 1982–83 or later years. It does not bite on the elements from the previous years. Therefore there cannot be a reduction in the elements which would otherwise be payable in the years 1982–83 but which arose in the years before 1982–83. It is very important that this should be recognised.
It is very difficult to foresee what the situation will be in ten years' time, as the noble Lord, Lord Avebtury, himself recognised, and indeed as the noble Lord, Lord Diamond, very much recognised because he doubted whether it was at all proper to put a figure in for a time so far ahead. It is very difficult to do that, but it is worth recognising that it might well be equitable ten years from now to

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reduce the percentage of the qualifying amount which was met by subsidy for those authorities with few outstanding housing problems, and to increase the percentage for those authorities with serious outstanding housing problems. It is in order to give reasonable flexibility that the scope for reducing the percentage should not be too small in comparison with the scope for increasing it. The normal percentage is fixed at 75 per cent. and the maximum up to which presumably it could be raised by order is 90 per cent. although in theory it could be raised to 100 per cent., but I would think it unlikely that it would be raised higher than 90 per cent. As 75 per cent. is midway between 60 per cent. and 90 per cent., 60 per cent. seems to be the appropriate floor if 90 per cent. is the appropriate ceiling.
I would simply mention that this question will arise on two other occasions—the rent rebate subsidy, and again Oil the rent allowance subsidy—and exactly the same Amendment has been put down in each case. I hope that the noble Lords will be inclined to accept the suggestion that I have made because it seems to me that this is desirable for the two reasons that I have given—that it provides a balance on either side and that it does give the necessary flexibility to make reductions in some cases and possibly to make increases in others.
One has to visualise that over the next few years we shall be gradually approaching a position where fair rents are charged all round and it is in that way that the Housing Revenue Account income is gradually going to increase; the subsidies are conceived as deficit subsidies and it is quite impossible to foresee ten years ahead what the position will be. All we can do is to give this assurance that in any case there will not be a reduction below 60 per cent. in the rising costs subsidy after that period for any authority and it seems to me that that really is what this is about. It is desirable to have the flexibility, bearing in mind that this is for the expenditure that will be taking place at that time in 1982–83 and not the expenditure that has gone before, where the amount of the subsidy will have already been fixed. It seems to me that this is a sensible step to provide a balance for the future—and it is admittedly a distant future, for ten years
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is a long time in circumstances such as these.
LORD AVEBURY: The noble Lord seems to be approaching the end. May I ask him to deal with one point before he sits down? I agree that ten years is a long time and I did ask him whether he anticipated that this scheme of housing subsidies as set out in the Bill we are considering to-day is going to last unchanged for the next ten years, or whether he does not think it is highly improbable there will not have to be fresh legislation at some point during that period. Will the noble Lord therefore say why lie does not think it would be appropriate, bearing in mind the basic unpredictability of these things, to introduce this percentage on some other occasion when the opportunity has been taken to amend the subsidies in any case?
LORD DRUMALBYN: The trouble is that that is not the Amendment we have before us. The Amendment is to increase this rate from 60 per cent. which is the minimum rate proposed in the Bill, to a lowest minimum of 66⅔ per cent.
LORD AVEBURY: If the noble Lord objects for that reason, he is welcome to restore the 75 per cent. and leave it as it was.
LORD DIAMOND: The noble Lord is on a very weak point there because the previous Amendment, the one we have just passed, was to leave out subsection (5). So if the noble Lord is making the point that the way of giving effect to the greatest weight of argument is to leave out subsection (5), he is quite right; but he did not let us do it. What are we to do once subsection (5) has been required to be within the clause and not outside the clause? The only way we can move is the way we are moving.
I was very glad to hear the noble Lord say—and I took down his words; I hope I have got them accurately—it is quite impossible to see ten years ahead what the position will be. At all events we start off on some philosophical basis of agreement there. May I invite the noble Lord to turn his attention to answering the question which the noble Lord, Lord Avebury, made in his very helpful and persuasive speech, which the noble Lord did not feel like answering? Would he like to look at page 167 of the Bill in

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his hands where he will see a schedule of the housing subsidies Acts which are being varied. If he will look at the middle of page 167 he can refresh his memory as to the number of times per annum or per decade housing subsidy Bills or Bills in which subsidy elements could be incorporated in the Bill conic before your Lordships' House. There was the Housing Subsidies Act 1956, the Housing Act 1957, the Housing (Financial Provisions) Act 1958, the Housing Act 1961, the Housing Act 1964, the Housing Subsidies Act 1967 and the Housing Act 1969. The noble Lord, as a reasonable man, will recognise that it is a million to one that there will be another Housing Act between now and 1981–82 into which could be accommodated properly any provision the Government then want to make in the light of the knowledge of the then facts, without attempting the impossible task—indeed we are agreed it is an impossible task—of, to use the noble Lord's own words, seeing ten years ahead. So that is the first point, that there is no need for this provision at all at this time.
The noble Lord went on to say that there are two reasons why we should be persuaded to withdraw the Amendment, and he gave us two good reasons for pressing this Amendment to a Division, which I am proposing to my noble friends—and the Liberal Party if they are so inclined. The first reason he gave was that this cannot affect the earlier elements, that it affects only new payments on which the subsidy is then calculated. That is, of course, true so far as it goes. But what does subsection (6) say—unless the noble Lord is going to accept my Amendment to remove subsection (6)? It says:
"(a) rising costs subsidy, so far as based on any of the years 1972–73 to 1976–77"—
that is those five years—
"shall not be payable for the year 1982–83 or any subsequent year."
So of course it is the new expenditure which counts, and the noble Lord's argument that the total subsidy is at that time a combination of the new subsidy he is seeking power to reduce and the old subsidy on a higher rate, so that if you mix the two together you are not going to get such a vast reduction, is a totally invalid argument. So far as those years
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are concerned, the subsidy will have ceased.
Subsection (6) goes on:
"(b) rising costs subsidy, so far as based on the year 1977–78 or on any subsequent year, shall not be payable for more than five years …".
So after 1982–83 the subsidies on the first of those years stops. So the following subsection, which phases out the subsidy over a period of years, gradually phases out the subsidy in time, is a complete answer to the noble Lord's point that one must not merely look at what we are looking at, namely, the impact of his proposal on new subsidies, but also at the effect on old subsidies as well. I repeat, so far as the old subsidies is concerned, most of them will by then have gone.
That brings me to his other argument—it is not a very substantial one, so I hope he will forgive me if I do not devote a great deal of time to it; namely, that 75 per cent. happens to be conveniently midway between 60 per cent. and 90 per cent. That is true. I do not know why he did not fix his lower figure at 50 per cent. because he could then have said the 75 per cent. would be midway between 50 per cent. and 100 per cent., and the argument would have been just as weighty. But if he looks at how the percentages have moved, he will see that they do not move in those amounts each year; they move in gradual steps. If the Government in 1982–83 are going to reduce the amount of percentage, they would not reduce it in one fell swoop from 75 per cent. to 60 per cent., even if they are determined to go on on this disastrous path, but continue the reduction in force for five years—90 per cent. to 85 per cent., to 80 per cent., to 75 per cent. and then of course to 70 per cent. He does not take power to do that specifically. He refers to the figure of 60 per cent. It is not impossible for the Minister to do that. I agree, but the argument that you need the figure of 60 per cent. in order to provide a floor which is equidistant from the point that we are considering as is the ceiling, is, I think, a slight argument and is contradicted by the rates, which are 5 per cent. per annum.
So I come back to the main argument, which was the main argument of the noble Lord, Lord Avebury, that there

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is no need to contemplate this at this stage; there will be plenty of opportunity if the Government want to do it. This is the most important subsidy affecting local authorities; it is, on such evidence as one has, of growing importance. The amount proposed would be a crippling blow, a blow possibly of some £30 million, which is at the moment the combined contemplated amount of the two other housing subsidies contemplated for 1976–77. That gives an idea of the measure of it. It would be a crippling blow on local authorities for this to be done, and there is no need to contemplate it at all at this point. So I am totally dissatisfied with the noble Lord's reply and will seek to divide the House on this very important Amendment.
LORD DRUMALBYN: I think the noble Lord is perhaps exaggerating the problems that will arise here. He says that many changes take place. This has been so, and that is precisely why an effort is being made in this particular Bill to devise a system which can last, and we hope that this will last. Of course, we are not saying that it is never going to be changed; there are plenty of powers in the Bill for variation, and it has been said by my right honourable friend in another place that a review will take place in about ten years' time to examine the working of housing finance as a whole. Obviously the figure we are discussing is not an absolute figure. One cannot say that it is an absolutely right figure for ever and ever. If the noble Lord wants me to look at this figure again, I shall gladly do so. I am obviously not in a position to accept this particular proposal of his to-day; he knows how these things work. But the purpose is to give what is both a warning and an assurance for the future, so that people will know that a change downwards may occur after 1982–83, by which time the subsidies will be running for five years only instead of for ten years, for any particular year. It will be a warning that a change may occur, and an assurance that it will not go below a certain figure.
As the noble Lord says, ten years is a long way off, but it is clearly desirable, in my view, contrary to what the noble Lord, Lord Avebury, says, that there should be a figure there, and 60
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per cent. does not seem to be a bad figure. But I am quite prepared to look at the figure again in the light of what the noble Lord has said. I would say to the noble Lord, Lord Avebury, that he ought to bear in mind that over the whole of this period the various authorities that will be in need of this kind of subsidy will be changing, depending on the number of houses that they have to build in order to meet housing need, and that will give rise to widely varying requirements from authority to authority throughout the country. As I said, some may have a need for a higher subsidy in view of the state of their Housing Revenue Account. Others may not need it, and indeed may not need as much assistance as the 75 per cent. they will be having for the previous five years. It was not without reasonable justification, in my view, that 60 per cent. was put into the Bill. It may not be the right figure and we are quite prepared to look at it again, though I must say without any assurance that we shall be able to change it.
LORD ROBBINS: I appreciate that this argument is about percentages, but percentages can apply to price levels of 100 per cent. or 1,000 per cent. or 10,000 per cent. I wonder whether the noble Lord would enlighten me as to what assumptions were made regarding the movement in the value of money in the next ten years when this Bill was being thought out in the first instance?
LORD DRUMALBYN: Perhaps I could reply to the noble Lord. As I said, one of the objects of this Bill is to get away from the flat level of subsidy that had to be altered from time to time, and, because these are percentages known in advance, it does not matter what the movement in the value of money may be in future in relation to the Bill. I am grateful to the noble Lord for pointing this out, although we hope that as a result of the co-operation of everyone in this country we shall be able to moderate the rate at which money has been losing its value.
LORD GARNSWORTHY: In the light of what the Minister has just said in reply to the noble Lord, Lord Robbins, and in the light of what his noble friend Lord Sandford had to say last week, I wonder whether he could explain what is

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meant in the Explanatory Memorandum by the heading "Financial Effects of the Bill", where these words are used:
"… to remain at about the estimated level of such charges for 1971–72 (£350 million), at current prices, until 1975–76 and may be reduced thereafter".
LORD DRUMALBYN: We have had a long discussion on this point, and I would have thought the Committee would not wish us to go over that again. It seems to me that what transpired in the discussion with the noble Lord, Lord Diamond, was that it meant exactly what it said.
LORD GARNSWORTHY: I am raising the matter in view of what the noble Lord, Lord Sandford, said so specifically last Thursday night, when he attempted to present an entirely different picture.
BARONESS GAITSKELL: I wish to intervene with only a couple of sentences. I regard this kind of legislation, with percentages of this kind, as interference legislation. To presume to have percentages of what is going to happen 10 years hence, to look so far ahead and put a precise percentage, comes back to what Lord Robbins has asked for, which is simply unnecessary and only causes trouble to people who are trying to improve this Bill.
LORD AVEBURY: Before the noble Lord, Lord Diamond, intervenes I should like to clear up what I think is a misunderstanding between the noble Lord, Lord Drurnalbyn, and myself. When I say that I do not want this figure to appear I mean that, having had the 75 per cent. for five years, the local authorities should continue to enjoy that rate of support unless Parliament should otherwise determine. I am sorry if I did not make that absolutely clear in my intervention to the noble Lord, but, as I have already pointed out to him, we are likely to have many opportunities for amending this Bill between now and 1982. The noble Lord is being very disingenuous when he says the Government have decided to undertake a comprehensive review of the system after 10 years of operation. If he likes we will have a little bet on this. I will give him £100 to £1 that between now and 1982 this Bill, after it has become law, is amended. If he would like to put some money on that I am prepared to offer him generous odds.
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As the noble Lord, Lord Diamond, pointed out, when one looks at the Schedule one finds that fresh Acts have to be brought forward every two or three years. What I said to him was this. When one is embarking on a totally new and untried system, obviously it is more likely that it will have to be amended than if one is merely tinkering with something which has existed for many years. My point was a valid one. If the noble Lord does not like the figure of 66⅔ per cent. he ought to strike out this provision altogether and continue the 75 per cent., which local authorities will have enjoyed at that time for a continuous period of five years, into the indefinite future unless Parliament should otherwise decide in the intervening years.
LORD DRUMALBYN: That is precisely what the Bill does. Clause 16 gives the Secretary of State power, with the concurrence of the Treasury, to make an order by Statutory Instrument subject to annulment. This is not the kind of thing one could amend in great detail. If one is simply altering a figure it seems to me eminently appropriate that it should be done in this way. It cannot be said that it will not give Parliament an opportunity to look at it in the light of the circumstances of the time.
LORD AVEBURY: I am sorry to say this, but the noble Lord is again being disingenuous because he knows perfectly well that we cannot amend orders, whereas we can amend legislation. If, when the time comes, we do not think the percentage decided by the, Minister is correct we shall only have the opportunity of saying "No" and not of suggesting some alternative.
LORD DRUMALBYN: I entirely agree with that, but I should like to take up another point the noble Lord made. This is a difficult concept for noble Lords—for any of us, including myself sometimes—to realise, because it is so different from what has gone before. What we are legislating for here is a percentage payment of a deficit. If there is no deficit—if by that time the Housing Revenue Accounts are in balance—then there is no deficit and no subsidy. It is where they are in deficit that the subsidy will be payable, and it is on this particular subsidy that there will be the greatest variations because of the wide variation of need for

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housing in different parts of the country. The mere fact that there is a need for more building will not necessarily mean that there will be a deficit. That is the kind of thing that will have to be looked at.
LORD DIAMOND: I notice the noble Lord did not take up the bet—£100 to £1. It is smaller odds than the one I suggested of a million to one. Mine was rather an oratorical comment. I was much too cautious to attach the word 44 "pounds" to it.
May I join with the noble Lord, Lord Avebury, in suggesting that there is no conclusion we can draw but that there will be another Bill? This is a totally new proposal, and it is common sense to assume that in the working out of it there will need to be some structural alterations of the kind which one cannot incorporate in a statutory order. The Committee has any number of examples before it. I can think of provisions of the Finance Bill, where we set up a new tax each year, to last for ever. But the following year we find it needs adjustment in relation to experience. There is hardly a provision in the Finance Acts which does not have to be altered year by year. The noble Lord, who had such great experience of the Treasury, will confirm what I am saying. We can assume that there will be another Bill, into which a proposal of this kind could conveniently he incorporated, and therefore that there is no need for this provision, but as the Bill includes it we have to deal with it as best as we can.
Before going on to the noble Lord's suggestion, which was a welcome one, I would say to the noble Lord, Lord Robbins, that I hope he will find it convenient to come on several future occasions when we are discussing other clauses in this Bill. It was like manna from Heaven to hear what he had to say. As the noble Lord, Lord Drumalbyn, indicated, I spent a long time trying to get the Government to say, notwithstanding the Financial Memorandum to the Bill, which refers to the cost remaining about the estimated level of such charges at current prices, what it would be at constant prices. But, alas, I have had no answer so far and that means that at least two sections of the Committee—the first importantly represented by the noble
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Lord, Lord Robbins, and the second by myself and my colleagues—have had no answer to the request that we should be told what the figure is at constant prices, or within what bracket at constant prices it is. But, in my view, it is a figure of such size as to make nonsense of the claim that the level of subsidies is being maintained. But we shall come back to that many times.
In the meantime, I want to deal with the very generous suggestion which the noble Lord made—he said that I understand these processes, and indeed I understand them very well—that I should withdraw the Amendment and that he should take the suggestion away and think about it without commitment. He meant by that, if I may just fill in the gaps, nothing more than that there will be an opportunity at a later stage of the Bill when he will be able to tell us what conclusion he has reached. If I may suggest it to my noble friends, and I hope to the noble Lord, Lord Avebury, and his noble friends, that is the most we could reasonably ask the noble Lord to do in present circumstances. So if I have understood his remarks correctly, I am happy to beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.2 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 37:
Page 7, line 26, leave out subsection (6).
The noble Lord said: Subsection (6) provides that the subsidy—and I have no need to repeat what an important subsidy it is, and how it is of far greater importance than any other housing subsidy—should be withdrawn in the manner described in paragraphs (a) and (b). It will be phased out according to those periods if subsection (6) remains in the Bill. The purpose of this Amendment is to suggest that reconsideration should be given to withdrawing it, mainly because the period suggested is broadly one of five years, once the provision gets going, because the best information one has is that those authorities which are, in the main, likely to be affected by this subsidy regard 10 years as the appropriate—though not necessarily the minimum—period. They feel that the figures will work out in that way.
The most important of the authorities is the G.L.C., which has worked out its

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figures with great care. I have them in front of me, worked out and forwarded by Mr. Wilson, the Solicitor and Parliamentary Officer. Therefore, the figures come with the full authority of the Greater London Council. Its calculation, by way of example, is that if you had a building to accommodate three persons and you paid £3,000 for the land and £6,500 for the building, making a total of £9,500, your probable outgoings in land charges would be £760—that is, a 60-year funding period at 8 per cent. interest—and in management and maintenance would be £80, making a total of £840. Assuming a fair rent of £8 a week making £416 per annum, you would be left with an initial deficit of £424 per annum. If you assume an inflation rate of a modest 5 per cent. per annum—it is a curious reflection on our affairs that I should have to refer to 5 per cent. as modest, but I think it is reasonable to use that adjective at the present time—it would take about 20 years before the development moved into an annual financial surplus.
LORD ROBBINS: Is the noble Lord assuming simple or compound interest?
LORD DIAMOND: This is a reducing amount, so it would be equivalent to compound. The subsidy provision is for a fixed amount, and the view of the G.L.C. is that it should continue to be payable for 10 years in relation to the deficit on any base year. By "base year" the G.L.C. means the starting year or the year in which the expenditure is incurred. That is its view, carefully calculated and put forward with full authority. I do not know whether the Government have any other figures to justify their proposal for withdrawing the most important housing subsidy twice as fast as that. I think all I need do is to leave the Government with those figures and listen to their explanation. I beg to move.
LORD SANDFORD: The noble Lord, Lord Diamond, is perfectly right to continue to stress the importance of this subsidy, because it is the one on which authorities with severe housing stress will rely. I do not quarrel with that at all. But I would ask noble Lords not to be unduly disturbed or dismayed or put off by the apparently negative sense in which subsection (6) is worded. What it means
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is that the rising costs subsidy, in the form in which we have been discussing it and as it is set out in subsection (4), may well need to be drawn to a conclusion on the dates set out, in order that a fresh and more suitable form of the rising costs subsidy can be brought forward and adopted for those authorities which, in 10 years' time, are still labouring under a severe housing problem.
The position, as set out in subsection (6), is this. Under paragraph (b), the Government agree to a minimum period of five years for this subsidy in all circumstances. They have already agreed in certain circumstances, under paragraph (a), to a period of 10 years in the case of elements of the rising costs subsidy based on 1972–73. Under subsection (7), the Government are willing to contemplate a period of 10 years or even longer in all cases. But all of this is subject to the review which everybody regards as necessary in a period as long as 10 years.
I should like to make a general point, carrying on the point which my noble friend made on Amendment No. 36. In this Bill we are not adding on a fresh subsidy. We are not enacting another Bill in the same series as those to which the noble Lord drew our attention, which are all enumerated in the Schedule. We are not piling a fresh subsidy on to the 60 subsidies which are already in the Schedule to the Bill. What we are doing here is undertaking a very radical reform of the whole system of housing and of financing housing, incorporating nine subsidies only and building into this system a flexibility which will enable the Secretary of State of the time to respond, flexibly and effectively, to a change in circumstances, rather than just adding a new subsidy on top of all the other old subsidies. Recognising that circumstances will change—and they will change very considerably in 10 years—and admitting that we cannot at this point tell by how much, in what direction, to what extent, I submit that it is sensible to make provision for the Secretary of State to define in due course precisely the form of subsidy, the percentages, the date and all the detailed provisions and directions which as noble Lords opposite have so rightly said, we cannot possibly do at this stage.
What we are doing is establishing the framework in which the Secretary of State

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can exercise that discretion. Subsection (6) is the one in which we set out the dates beyond which we think it would not be sensible to continue rising costs subsidies in the precise form set out here. But for those housing authorities which still have to mount and increase their housing programmes we envisage that not less but more subsidy will be available. Most of this subsidy for many authorities, and all of it for some, will in any case have been phased out by the operation of the Bill as we have it before us. But it may be necessary to invoke Clause 16 and exercise more selection and discretion as to which kind of authorities should continue to receive the rising costs subsidy; whether for those authorities the prescribed scale is adequate and whether for other authorities the rising costs subsidy as set out here should be brought to an end. This is the kind of flexibility which this subsection, together with subsections (3) and (7), introduces. There is no question of cutting off all these subsidies dead, just when this system is beginning to overate well, and certainly no question of cutting them off for those authorities which have major housing programmes ahead of them.
LORD LEATHERLAND: If the words which the noble Lord, Lord Sandford, has used had been incorporated in the Bill perhaps we should not feel as suspicious as we do at the moment. In subsection (6) the Bill states specifically that this rising costs subsidy shall end in 1982–83. If the subsection went on to say:
"and shall then be replaced by a new subsidy which will either be more generous or less generous …"
then the situation would be understandable and we should be—
LORD SANDFORD: May I interrupt the noble Lord? That is exactly what subsection (7) does.
LORD DIAMOND: The noble Lord, Lord Leatherland, is dead right. Let him carry on.
LORD LEATHERLAND: I think so. The vagueness of subsection (7) would mystify a lawyer, never mind an ordinary Member of this House. When one looks at the table in subsection (4) to which my noble friend Lord Diamond was
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referring earlier, one sees that something is envisaged for the years subsequent to 1982–83. The table refers to:
"1982–83 and subsequent years: 75 per cent., or such other percentage as may be substituted…"
If this Bill is to be the "bible" for rent regulation in future years then it ought not to say in subsection (6) that the subsidy ends in 1982–83 without proceeding to explain what will happen in subsequent years. Is there to be a new subsidy at the end of that period or is there not? Is the new subsidy at the end of that period to apply to all councils or only to certain councils? The Bill ought to go into a fuller explanation of the situation than it does.
6.14 p.m.
LORD AVEBURY: The problem with this subsection is much the same as the one we were discussing in relation to the figure in the previous Amendment. In spite of all the files to which the noble Lord, Lord Sandford, has referred in subsection (7) and in Clause 16 it is possible under this provision for local authorities suddenly to suffer a drop in their income from the rising costs subsidy in the years after 1982–83. If the Minister decides not to exercise his discretion either under the next subsection or under the other clause, then all the rising costs subsidies which are based on the years 1972–73 to 1976–77 will suddenly disappear from the calculations, and the councils will face a very stark drop in income which, as I said in relation to the last clause, may increase the burden on their tenants. It is no good the noble Lord, Lord Sandford, standing up and saying, "We might not apply it to all authorities. We have power to limit it to certain classes of authorities or to particular authorities, so we are not going to be nasty to all authorities but only to some." This is a most unsatisfactory situation in which to leave local authorities. They will be completely in the dark as to how these powers may be exercised and will not know whether they will suffer enormous drops in income. I do not agree with the noble Lord when he keeps talking about the need for flexibility.
I do not propose to repeat what has been said about the likelihood of further legislation, but I think we can carry this flexibility argument too far. We need

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only to look ahead to 1977 or 1978. This is as far as the Minister can make calculations. During the course of the proceedings on this Bill he has continually said that there is no point in continuing it any further because of the uncertainties; that any estimates which he might be able to give the Committee for the years after this would be absolutely valueless. If that is so, let him not make provision for a deduction such as is envisaged in subsection (6) for any authority or class of authorities, but let him leave the authorities with the rising costs subsidies of which they are then in possession unless Parliament brings along fresh legislation. I hope that the Minister will be just as forthcoming as he was in relation to the previous argument and say that, after listening to the splendid arguments from this side of the Committee, he will take back the subsection and introduce a better one on Report stage.
LORD DIAMOND: I am very grateful to the Minister for what he has said and, like the noble Lord, Lord Avebury, I have every hope that he will proceed by logical steps from what he last said and take the subsection away and look at it again. Inasmuch as the whole purpose of this most important subsidy is to meet the difficulties of local authorities building new property until such time as the rents provide for the costs, then the right period for which to provide is the period which those with experience tell us it takes in order to move from a position of deficit to a position of balance. A most important local authority Las told us that that period is 10 years. When I moved the Amendment I said, "I am told that it is 10 years. I should be very glad to listen to any figures or any evidence the Minister can give to show that it is not 10 years". The noble Lord was conveniently silent on that score.
May I take it that he agrees with the important evidence that I have that the right period for this provision, according to the philosophy of the Government in providing the subsidy, is one of 10 years? We move from that to ask, "Why, then, is there a provision in the Bill which at first glance such people as read the Bill with scant knowledge like myself or like the Solicitor and Parliamentary Officer of the Greater London Council
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are driven into the mistaken conclusion that the purpose of the Bill is to reduce the period from 10 years to five?" I cannot think why we should reach that conclusion, except that that is what the Bill says in the plainest of languages.
But the Minister goes on to say, "Ah! but you must not judge Conservative Bills by what they say" That may be so: we are rapidly being driven to that conclusion. But I think the traditions of Parliament are that, broadly, a Bill should say what it means, and this Bill says in subsection (6) that the subsidies are to be phased out in the first five years over the period laid down and from then are to last for five years and not for ten. But (and I am not leaving out a jot of the noble Lord's speech, because it was a welcome speech) the noble Lord. Lord Sandford, went on to say, "But in subsection (7) we can vary that, alter it, or make it less restrictive by an order in, broadly, whatever way we want to." That is very nice to know, but I am bound to say to the noble Lord that if you see in a Statute that the period of a subsidy is reduced from ten years to five years, and that in ten years, eleven years, twelve or thirteen years a Government may come forward and vary that, you are a wise person to assume that, other things being equal, the subsidy period is going to reduce from ten years to five years.
That is what I have assumed; that is what the Greater London Council has assumed, and that is why we are saying to the noble Lord that if, as apparently is the case, we are all agreed on the three main steps of this argument—(a) this is the most important subsidy for local authorities which are affected in this way; (b) the uncontroverted evidence is that it is required for ten years to serve its purpose, and (c) the Bill takes power in subsection (7) to introduce a state of affairs in which it could be paid for ten years—then for heaven's sake! let subsection (6) coincide with that. Please take away subsection (6), which says that the period is to be reduced from ten years to five years, and bring it back saying what it means, namely, that it is going to continue at ten years unless in due course a Government decide to alter it and have it the other way round. Let subsection (6) say that the subsidy will continue for ten years, and let subsection (7) say, as indeed the part of the Bill

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we have just discussed said, that if in ten years' time the Government think ten years is too long then they will come along and alter it.
But, in the meantime, all those local authorities who have enormous responsibilities and have to work out their budget years ahead, and who cannot rely, who would not dream of relying and whom the noble Lord would not ask to rely, on what a Minister has said in Parliament about the meaning to be attached to a particular clause or what a Government might or might not do in ten years' time, will know where they are. They would be in a position to know that ten years is the figure agreed on all sides and that ten years is the figure provided in the Bill.
I therefore hope that the noble Lord is going to say that, as all the steps in the argument are agreed between us and as the Bill, unhappily and uniquely, is upside down—and I will not make too much comment about that at this stage, because I am hoping the Minister is going to be helpful—he will take this part of the Bill away, put it the right way up and bring it back again at a later stage. If he would say that, then we would have achieved our objective of improving the Bill.
BARONESS GAITSKELL: I was very interested in what the Minister said on the previous Amendment, when he remarked that a certain clause was both a warning and an assurance. I find it very difficult to understand this Bill, I must confess. I am for this Amendment on this subsection (6), because I find in it a warning but absolutely no assurance.
6.25 p.m.
LORD SANDFORD: I should have thought the assurance given in, for instance, subsection 6(a) was worth a considerable amount. It is an assurance that if a housing authority qualifies for rising costs subsidy of £X thousand in 1972–73 and that has not been eliminated by a surplus occurring on its housing revenue account, it can count on receiving that subsidy for ten years. I should have thought that that assurance was worth a very great deal. A local authority which attracts rising costs subsidy of £Y thousand a year later knows that unless it moves into surplus on its housing revenue account it can count on that subsidy for nine years, and so on.
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Subsection (6)(b) operates in a similar way for a shorter period. It starts at a later date and operates over a shorter period. But it seems to me that those assurances, given in this Bill at this moment of time, are as much as it is reasonable to give, with human frailties being what they are and our incapacity to prophesy precisely ten years ahead. They are backed up by the assurance in subsection (7) that if the Secretary of State sees right to do so he may make those restrictions and those limitations on that very considerable assurance that much greater. I do not really see, my Lords, how it can be expected that any Government can give assurances firmer than that or further ahead than that.
As I said, I do not ask the Committee to judge the intentions of the Government by a superficial reading of subsection (6). The noble Lord, Lord Diamond, knows perfectly well that when intentions are drafted in legislative form they sometimes take on a superficial appearance very different from their actual one. I think I have explained very clearly what the intentions are here. It could not conceivably be in the interests of any Secretary of State deliberately to reduce and take away subsidies which a housing authority, still dealing with massive housing problems in ten years' time, desperately needed. Local authorities and central Government may well be at odds from time to time about ways and means, but they are not at odds on objectives, aims and ends to that extent. The Secretary of State and local authorities have a common objective in dealing with severe, serious and massive housing problems with the greatest expedition, and their interests will come together in this way at this point. I honestly do not think that it is possible to extend the assurance which is there already, namely, that a local authority which attracts rising costs subsidy in 1972–73 will be sure of continuing it and receiving it for ten years unaltered unless its housing revenue account moves into surplus.
LORD DIAMOND: My Lords, I am very glad that the noble Lord said what he did in that last half sentence—"unless the housing revenue account moves into surplus"—because I am bound to remind him and to remind your Lordships that the previous statement, that the whole of the subsidy would be payable for ten

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years, or in the following year for nine years, or in the subsequently following year for eight years, is only partly accurate. It is now an accurate statement as amended in the way the noble Lord finally amended it, because the Bill provides that if you are getting into a stage where the housing revenue account is in surplus, or would be partly in surplus if the whole of that subsidy were paid, then the whole of that subsidy is not paid. Therein lies all the protection which the Government need, because the Government know that if they provide it for ten years continuously under the present structure they would not be giving one penny to a local authority whose circumstances were happily such that they did not need the whole of the subsidy, because it has a built-in protection, as he recognised, against that happening.
He also knows that where there is a likelihood of it moving into surplus not only is it the case that the Government do not contribute more than they need to for the housing revenue account to be in balance but if, for example, the figures are 75 per cent. and 25 per cent. the Government do not even pay the whole of the reduced amount which is necessary for the housing revenue account to be in balance: they pay 75 per cent. of it and the local authority pays 25 per cent. of it. So there is the complete safeguard
for the Government if it had accepted the Greater London Council's view or our view or the completely uncontroverted view that 10 years is the appropriate period. So I do not know where we are on the Government's intentions.
I was sorry that the noble Lord made this great attack on the draftsmen and I must rush to their defence. Any Government Minister who says that the draftsmen cannot draft the intentions of the Government is making a most libellous statement and I must rush to their defence. But one has to deal with the Bill as one finds it and while the intentions of the Government, as interpreted by a Minister, are interesting to us and we are grateful for them, to put it precisely they are totally irrelevant. We are concerned with what the Bill says and the Bill says that after a period this subsidy—which needs to be for 10 years, which could never be paid to a local authority which did not need it because there is a protection built in the Bill against it—this needed major subsidy shall be cut oft after five years. This is what the Bill says and this is what we strongly object to. I must therefore seek to divide the Committee on it.
6.33 p.m.
On Question, Whether the said Amendment (No.37) shall be agreed to?
Their Lordships divided: Contents, 50; Not-Contents, 83.

CONTENTS

Archibald, L.

Gladwyn, L.

Platt, L.

Avebury, L.

Granville-West, L.

Popplewell, L.

Bacon, Bs.

Greenwood of Rossendale, L.

Serota, Bs.

Beswick, L.

Hale, L.

Shepherd, L.

Blyton, L.

Henderson, L.

Shinwell, L.

Brockway, L.

Heycock, L.

Slater, L.

Buckinghamshire, E.

Hoy, L.

Southwark, Bp.

Burntwood, L.

Hughes, L.

Strabolgi, L. [Teller.]

Champion, L.

Leatherland, L.

Summerskill, Bs.

Crook, L.

Lee of Asheridge, Bs.

Taylor of Mansfield, L.

Delacourt-Smith, L.

Llewelyn-Davies of Hastoe, Bs.

Walston, L.

Diamond, L.

Watkins, L.

Energlyn, L.

Lloyd of Hampstead, L.

Wells-Pestell, L.

Evans of Hungershall, L.

McLeavy, L.

White, Bs.

Fiske, L.

Maelor, L.

Wright of Ashton under Lyne, L.

Gaitskell, Bs.

Morris of Kenwood, L.

Garnsworthy, L.

Phillips, Bs. [Teller.]

Wynne-Jones, L.

George-Brown, L.

NOT-CONTENTS

Aberdare, L.

Balfour, E.

Brentford, V.

Ailwyn, L.

Balfour of Inchrye, L.

Brougham and Vaux, L.

Alexander of Tunis, E.

Belhaven and Stenton, L.

Burton, L.

Allerton, L.

Belstead, L.

Colville of Culross, V.

Amory, V.

Berkeley, Bs.

Cork and Orrery, E.

Auckland, L.

Birdwood, L.

Cowley, E.

Balerno, L.

Boothby, L.

Craigavon, V.

Crathorne, L.

Hawke, L.

Napier and Ettrick, L.

Cromartie, E.

Hood, V.

Northchurch, Bs.

Daventry, V.

Hylton, L.

Nugent of Guildford, L.

de Clifford, L.

Hylton-Foster, Bs.

Oakshott, L.

Denham, L. [Teller.]

Killearn, L.

Pender, L.

Derwent, L.

Latymer, L.

Penrhyn, L.

Digby, L.

Lauderdale, E.

Peterborough, Bp.

Drumalbyn, L.

Long, V.

Rankeillour, L.

Elles, Bs.

Lothian, M.

Reigate, L.

Elliot of Harwood, Bs.

Loudoun, C.

Ruthven of Freeland, Ly.

Emmet of Amberley, Bs.

Lovat, L.

Sandford, L.

Ferrers, E.

Macleod of Borve, Bs.

Selkirk, E.

Fisher, L.

Macpherson of Drumochter, L.

Sempill, Ly.

Fraser of Lonsdale, L.

Massereene and Ferrard, L.

Somers, L.

Goschen, V.

Merrivale, L.

Stonehaven, V.

Gowrie, E.

Milverton, L.

Strathclyde, L.

Greenway, L.

Monck, V.

Sudeley, L.

Grenfell, L.

Monckton of Brenchley, V.

Vivian, L.

Grimston of Westbury, L.

Monk Bretton, L.

Wimllesham, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Mowbray and Stourton, L. [Teller.]

Wolverton, L.

Young, Bs.

On Question, Motion agreed to.

6.41 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 39:
Page 8, line 9, leave out from ("1972–73)") to end of line 23 and insert ("means the expenditure which is reasonably debited to the Authority's housing revenue account and shall include all expenditure which the Authority incurs in maintenance repairs, improvement and management of the dwellings within the account and reasonable appropriations to a reserve fund for the purpose of meeting expenditure on repairs maintenance and improvement where such expenditure is unlikely to be on an annual recurring basis ")
The noble Lord said: This, again, is a major Amendment which we are about to discuss and it refers to—
LORD SANDFORD: I wonder whether I may interrupt the noble Lord for one moment? I suggest that it might be convenient to take Amendments Nos. 39, 40, 41 and 42 together.
LORD DIAMOND: I am always anxious to accommodate the noble Lord but, frankly, it would not be convenient, for several reasons. Amendments Nos. 40 and 41 we might conveniently take together, but No. 39 rather stands by itself; and, of course, there would be no need for Amendments Nos. 40 and 41 if, as I hope, Amendment 39 is accepted.
So far as Amendment No. 39 is concerned, we are still on the main subsidy which we have to bear in mind the whole time. As it seems to me, three things in particular are wrong and the Amendment I am moving seeks to put them right.
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First, there is the known difficulty which we touched on the other night—we have no need to go over that part of it again—relating to the yardstick. The situation which emerged from that debate—I hope I have it correct—was that so far as expenditure incurred up to 10 per cent. over the yardstick is concerned, that will rank for subsidy; but so far as expenditure incurred in excess of the 10 per cent. over the yardstick is concerned, it will not rank for subsidy. The question that arises is, how that excess, the excess over 10 per cent., is to be treated, both the excess which arises on expenditure incurred before the Bill becomes an Act and also expenditure which arises subsequently. I make that distinction because it is open to anybody to say that so far as concerns expenditure which arises subsequently, anyone knows when they are putting pen to paper to incur the expenditure that this is the fate with which it will meet; whereas with expenditure incurred beforehand, if one is proposing to alter the treatment one has to be careful one does not offend against the principles of retrospective legislation. So I have to refer to the two parts of it.
The essential point I want to make, which really covers both parts, is this: where you have built at a cost in excess of the yardstick—for instance, where a local authority has thought it right to build at 120 per cent. of the yardstick instead of a maximum of 110 per cent.—it has been in order to provide appropriate amenities or standards of living which the authority, at all events, thought appropriate. What we are now moving into is a system of so-called fair rents under which there will be a method of

619
fixing the rent having regard to the standards of the building and the amenities provided. We are moving into a system of subsidies which will have regard to the Housing Revenue Account, and on the right hand side of that account, if I remember my accountancy—on the receipts side, at all events—will be credited the revenue accruing from the rent.
The rent of what? I will divide it into three parts. There will be the credit of the rent for 100 per cent.; there will be the credit of the rent of 10 per cent., both of those being the amount covered by the subsidy, and there will be the rent attributable to the last 10 per cent. which is in excess of the yardstick plus tolerance; the yardstick and the tolerance being 110 per cent. So the first point I am making is that we are moving into a system under which rents will be fixed which will be based on the amenities provided by the total expenditure of 120 per cent., and the total of those rents will be taken to the credit of the Housing Revenue Account. No deduction will be made for those rents in respect of that part of the rent which is attributable to the excess. I am sorry to have to go into the technical accounting details but I am moving on the simple principle which appeals to all of your Lordships that you must compare like with like.
What we have on one side of the account, therefore, is the total revenue attributable to the total expenditure on these particular dwellings. What we have on the other side of the account, alas! is only part of the expenditure; and the proposal in the Bill is that you should compare part of the expenditure with the total of the revenue, and that the subsidy should be based between the difference of those two figures. If you want to compare the whole of the revenue with the whole of the expenditure, that is a fair way of doing it. If you want to compare a given proportion of the expenditure with a similar proportion of the revenue, that is a fair way of doing it. But what cannot be a fair way of doing it is the proposal in the Bill, as I understand it, that, for calculating subsidy, you compare the whole of the income and a part of the expenditure.
Any one of your Lordships responsible for large businesses which publish
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accounts every year will know that if you went to the market, for example, on the basis of a set of accounts in which you invited the public to subscribe on the basis that the accounts show the whole of the revenue but only part of the expenditure, you would before long find yourselves guests of Her Majesty. What I am saying is, of course, what applies to individual noble Lords. That, alas! is not what applies to Ministers. Ministers can come here and propose, without any risk of going to gaol, that we should base our accounts for subsidy purposes in a way that would not be permitted by the Stock Exchange, or by company law or the criminal law, for the purpose of raising money, paying dividends or anything of that kind. So we must recognise that there is some slight fallacy in the Government's thinking which needs to be put right. That is the first point I want to make about this proposed treatment which stems from the subsection that I seek to alter.
Another major defect is that certain expenditure incurred by a local authority in running its housing revenue account will certainly be subject to some argument about how it should be apportioned—for instance: some expenditure in relation to supervision, in relation to management, in relation to certain repairs; indirect expenditure on the whole. There could be an argument about how that should be apportioned and what part of it should be charged to the housing revenue account. But where it is directly incurred it is, in my view, properly apportioned. Therefore there should be no lack of clarity in saying that in the Bill.
The Bill provides at page 8, line 9, a definition—which would be acceptable to the Minister, I suppose, but to nobody else—of what is reckonable expenditure; namely, expenditure which is debited to the Housing Revenue Account and on the basis of which subsidy is calculated. The Bill states that that expenditure means,
"so much of the expenditure debited to the authority's Housing Revenue Account as the Secretary of State may from time to time determine as being reasonable and appropriate having regard to all the circumstances."
I repeat, that is a definition which may be acceptable to the Secretary of State; he will know that whatever he says is right. But that is no way of convincing the world that this is the proper way of

621
doing it. It is a totally inadequate, authoritarian, description and we must have clarity in the Bill. What the Amendment proposes is to leave out this vague phrase which could mean anything or nothing; which says that the Secretary of State shall determine what is expenditure and what is not for these purposes. We should have instead clarity in the form of the words I have proposed that "reckonable expenditure":
"means the expenditure which is reasonably debited to the authority's housing revenue account and shall include all expenditure which the authority incurs in maintenance repairs, improvement and management of the dwellings within the account and reasonable appropriations to a reserve fund for the purpose of meeting expenditure on repairs …".
So the second point I am making as to the reason for this Amendment is that the definition of what is allowable expenditure is totally inadequate and vague.
The third reason why I move this Amendment is that, quite apart from the accountancy point which I have been discussing, there is a point of substance; namely, the question of the standard at which the properties shall be maintained. That, I should have thought, is one of the few things that we should leave to local authorities to decide. They are responsible for the houses in their area. This is one of the very few responsibilities left to them. If the Government have their way we shall be removing power after power from any number of local authorities. We shall be making it impossible for there to be any worthwhile local authority candidate coming forward to do a job of work, because with a very large number of authorities there will be no job of work worth doing.
The great problem at present is drawing the balance so that there will be enough for a local authority to do to attract people of ability to come and do it. All those things will be happening unless we continue at all events to allow local authorities to do their natural task of looking after their own local authority houses. One of the important parts of that task is maintaining properties and setting their own standard of what should be the level of maintenance and repair expenditure. As the Bill stands, that is totally at large. The Secretary of State can say what he likes from time to time. He can alter his mind each year, or even, so far as I know, between years; but
622
certainly it depends entirely upon what the Secretary of State may from time to time determine. This is no way for a local authority to be able to exercise responsibility; to exercise its discretion in a responsible way. One must have in the Bill a clear provision that local authorities shall be able to decide for themselves what is a reasonable level of maintenance of their own properties.
The Amendment goes on to provide:
"… shall include all expenditure which the Authority incurs in maintenance repairs, improvement and management of the dwellings within the account and reasonable appropriations to a reserve fund for the purpose of meeting expenditure on repairs maintenance and improvement where such expenditure is unlikely to be on an annual recurring basis".
We all know that there are various major items of repair which do not arise year by year in any house. A local authority, like any one of us in respect of our own house, has to incur this expenditure from time to time. How should a local authority provide for that? In the same way as any reasonable businessman provides for it: not by just charging each year the expenditure that arises in each year, otherwise he will have a terribly wobbly line of expenditure—up one year; down for another four; a peak again in the fifth year and so on. In order to level out those peaks and have a reasonable plateau of expediture one would have to provide, as the Amendment says:
"… reasonable appropriations to a reserve fund for the purpose of meeting expenditure … where such expenditure is unlikely to be on an annual recurring basis."
I hope that I have satisfied your Lordships that the Amendment is sweet reason and nothing else. Its proposals are no doubt in line with the Government's own thinking. I should be astonished if the Government said that they have any objection to those proposals. What the Government have unfortunately omitted to do is to state that they have no objection to those proposals. The Government prefer to legislate by saying, "The Secretary of State shall get up in the morning and do what he feels like doing then and there." I am not sure that that is the reliable way of legislating. Certainly so far as I am concerned it would not be reliable on all mornings; some mornings would be better than others. Therefore I do not think it is right that we should merely

623
have to leave it to a Secretary of State from time to time to determine what he thinks fit. It is totally inadequate, horribly authoritarian, frightening to the local authorities and, I am quite sure, unrelated to what will actually happen. Therefore it is only sensible that we should remove that rather silly phrase from the Bill and put in what is likely to happen. I suggest that my Amendment provides a very good framework for a sensible relationship between the Government and the local authority in this respect and I therefore beg to move.
THE EARL OF BALFOUR: Purely on a point of information, this Amendment seems to me to be unnecessary because the points are covered in Schedule 1, Part I, paragraph 3(1)(c), at page 111.
6.59 p.m.
LORD SANDFORD: I am grateful to the noble Lord, Lord Diamond, for moving this Amendment because it gives me an opportunity to elucidate the matters about which he has been talking. It is important for all concerned to be able to forecast accurately the reckonable expenditure between one year and the next because it is the difference between the two which qualifies the authority for rising costs subsidy and we are all agreed that that is a very important subsidy. It is not practicable for this to be done in respect of the first two years in which this Bill will operate, and for that reason all the expenditure debited to an authority's housing revenue account which exceeds the expenditure so debited for 1971–72 will qualify with only two exceptions. One is in the case of expenditure incurred in connection with what are known as patched houses, which is therefore excluded for 1971–72 because it will not appear in 1972–73. There is another adjustment to allow for the fact that under this Bill the housing repairs account is also abolished, and therefore expenditure on that account debited to the housing repairs account for 1971–72 will count towards reckonable expenditure instead of the repairs and maintenance contributions for that year debited to the Housing Revenue Account. That deals with the first year.
As for the subsequent years, the items which will or will not count are currently the matter of negotiations between the
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Secretary of State and the local authority associations. In conducting these consultations and arriving at the end of them with the determination mentioned in subsection (12), the Secretary of State is not exercising any different or more extensive powers than he already has; but they do need to be exercised with care and circumspection, and after consultations, because of the effect they will have in future on the calculations that we have been talking about. Therefore it is important that I should set out the use which the Secretary of State proposes to make of these powers. I think it would help the Committee if I do so at some length.
LORD DIAMOND: I am sure the noble Lord is absolutely right in saying that it will be helpful to the Committee if he makes those observations and makes them at some length. I only rise to inquire whether he thinks this is the right opportunity to do that, or whether he would prefer to postpone such an important statement for a short time.
LORD SANDFORD: There is a good deal of force in what the noble Lord has said, and with the agreement of the Committee, I beg to move that the House do now resume.
House resumed.

ROYAL ASSENT
7.2 p.m.
Tim LORD CHANCELLOR: My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that Her Majesty has signified Her Royal Assent to the following Acts:

Harbours, Piers and Ferries (Scotland) Act,

Civil Evidence Act,

Sound Broadcasting Act,

Oxfordshire and District Water Board Act,

Solihull Corporation Act,

Reigate Congregational Church Act,

Whitley Bay Pier (Extension of Time) Act,

Congregational Chapel and Trust Property Deptford Act.

SALMON AND FRESHWATER FISHERIES BILL
VISCOUNT DILHORNE: My Lords, I beg to move that this Report be now received.
Moved, That the Report be now received.—(Viscount Dilhorne.)
Schedule 1 [Provisions with respect to licences]:
VISCOUNT DILHORNE: My Lords, I beg to move Amendment No. 1. This is merely a redrafting provision. It does not alter the effect of it at all, except that I think it makes it easier to understand what in fact this paragraph does.
Amendment moved—
Page 13, line 41, leave out paragraph 9 and insert—
("9. A person shall be treated for the purposes of section 6(4) above as the duly authorised servant or agent of the holder of a licence to use an instrument of any description only in the following cases—

(a) in an area in which there is in force an order under section 7 above limiting the number of licences for fishing with instruments of that description, if his name and address are entered on the licence in accordance with the following provisions of this Schedule and he is not the holder of another licence to use an instrument of that description in that area;

(b) in any other area, if his name and address are so entered or when using the instrument to which the licence relates he is accompanied by the licensee; or

(c) in the case of any area, if the river authority directs that owing to special circumstances he is to be so treated.")—(Viscount Dilhorne.)

VISCOUNT DILHORNE: My Lords, I beg to move Amendment No. 2. I cannot represent that this is an important Amendment. Its only effect is to change the language of the Bill, which was, "if that be the case" to "if it be the case". I beg to move.
Amendment moved—
Page 14, line 44, after ("fixed" insert ("and, if it he the case, approved by the Minister").—(Viscount Dilhorne.)
LORD HOY: My Lords, we do not take any objection to the Amendment, or even to its contents. In its ultimate effect we regard the "Contents" or "Not-
626
Contents" as being even more important.
VISCOUNT DILHORNE: My Lords, this is a drafting Amendment. I beg to move.
Amendment moved—
Page 14, line 45, after ("duties") insert ("fixed and approved").—(Viscount Dilhorne.)

APPROPRIATION (NORTHERN IRELAND) ORDER 1972
7.7 p.m.
THE MINISTER OF STATE FOR NORTHERN IRELAND (LORD WINDLESIIAM)THE MINISTER OF STATE FOR NORTHERN IRELAND (LORD WINDLESIIAM) rose to move, That the Appropriation (Northern Ireland) Order 1972, be approved. The noble Lord said: My Lords, I beg to move the first of the three Orders standing in my name on the Order Paper. This Order arises from financial business in the Northern Ireland Parliament before it was prorogued. Since it is a measure concerning the issue of monies out of the Consolidated Fund of Northern Ireland and their appropriation for specified services in the Province, I shall give only a brief explanation. I think that this would be in accordance with your Lordships usual practice when financial measures of this kind are presented.
The Consolidated Fund Act (Northern Ireland) 1972, which was an Act of the Northern Ireland Parliament, authorised the issue from the Northern Ireland Consolidated Fund of sums which had been voted for an Excess Vote in respect of 1970–71; for Spring Supplementaries in respect of 1971–72; and for a Vote on Account in respect of 1972–73. In the ordinary course of events this Act would have been followed later in the Session by an Appropriation Act which appropriated these sums to individual services and authorised appropriations in aid for certain Votes. It is normal practice, at Westminster as well as in the Northern Ireland Parliament, that supply should be appropriate in the same Session in which it was granted. On this occasion, however, the Session of the Northern Ireland Parliament was brought to an end by prorogation. This had the result of throwing doubt on the authority for issues which had already taken place under the

627
Consolidated Fund Act, and of further issues from April 1 without which it would have been impossible for Northern Ireland departments to function. The problem was discussed with the Northern Ireland Comptroller and Auditor General who agreed, on receiving an assurance that early action would be taken to appropriate the sums granted in the Consolidated Fund Act, that he would continue to authorise issues up to the limits laid down in that Act. Consequently, this Order was made under the procedure provided in the Northern Ireland (Temporary Provisions) Act which allows urgent Orders to come into force immediately. Such Orders require the approval of both Houses of Parliament within 40 days. I beg to move.
Moved, That the Appropriation (Northern Ireland) Order 1972, be approved.—(Lord Windlesham.)
7.9 p.m.
LORD BESWICK: My Lords, we are grateful to the noble Lord, Lord Windlesham, for his explanation of this Order. We recognise the special circumstances that surround this whole situation, and of course we accept the consequences of what we voted on in the Northern Ireland (Temporary Provisions) Act. However, may I ask the noble Lord whether what we are voting for now enables the Government to raise the money for the Corporation about which the noble Lord will be speaking shortly on a subsequent Order? Is the £50 million for the Finance Corporation being approved by this Order? And how does the noble Lord visualise in the immediate future the control of the expenditure of this money being exercised? What sort of progress is being made in the consideration of this problem, which I recognise to be a very difficult one? Will the noble Lord be able to say whether anything will be reported to either of the Houses of Parliament at Westminster, as to the allocation and the spending of the money which it is proposed to authorise in this way?
LORD WINDLESHAM: My Lords, as I understand it, this Order concerns only the appropriation of money which has been already granted by Parliament. The grant was made under the Consolidated Fund Act which was passed by the Northern Ireland Parliament in the normal way. That Parliament was then
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prorogued before there was an opportunity for the grant to be appropriated to specified services. This Order covers the second part of that process.
LORD BESWICK: Yes, my Lords—may I just interrupt at that point? The same is said of the Order that we are shortly coming to, the Order establishing the Northern Ireland Finance Corporation. This had also been virtually approved by the Northern Ireland Parliament prior to its being prorogued. Therefore my question remains.
LORD WINDLESHAM: My Lords, I do not think the analogy is quite exact. Perhaps I should continue my reply—we must not let this become a Committee stage discussion. The Finance Corporation which we shall be discussing later this evening was the subject of a Bill which was still before the Stormont Parliament. It had reached its penultimate stage and had not reached the Statute Book. Here we have an Act which is on the Statute Book. It was already law, and what is now being done is to appropriate sums to specific services. That is the purpose of this Order.
As to the control of expenditure, the Comptroller and Auditor-General will be reporting in the usual way and I shall have something to say on this point when we discuss the third Order. His Reports will be available to Members of your Lordships' House and to Members of another place. In order to provide more information about the complex financial arrangements in Northern Ireland, your Lordships may be aware that the Secretary of State, together with the Chief Secretary of the Treasury, published a White Paper earlier this month, Cmnd. 4998, titled Northern Ireland Financial Arrangements and Legislation. This is a United Kingdom White Paper and it provides a good deal of information which will be of interest to Members of your Lordships' House and also for Members of another place.
LORD BESWICK: My Lords, I am sorry, but I must ask the noble Lord just to clear my mind a little more, if possible. The noble Lord said that the Comptroller and Auditor-General will be reporting. Does he mean the Comptroller and Auditor-General of Northern Ireland? And, if so, are we now to understand that this gentleman is reporting directly to the

629
United Kingdom Parliament in Westminster from now on?
LORD WINDLESHAM: My Lords, the position is that the Comptroller and Auditor-General for Northern Ireland reports annually and his Reports normally would be made available to the House of Commons at Stormont. That Parliament at Stormont has been prorogued. But the Reports referred to are published Reports, and the Secretary of Slate is anxious that Members of another place and of your Lordships' House should have this information. He has therefore arranged for the Reports by the Comptroller and Auditor-General for Northern Ireland to be made available in the Libraries of both Houses at Westminster. They will not be debated automatically, but if in the course of debates on Northern Ireland Members wish to refer to them, they will have an opportunity of doing so.

EXPLOSIVES (NORTHERN IRELAND) ORDER 1972
7.16 p.m.
LORD WINDLESHAM LORD WINDLESHAM rose to move, That the Explosives (Northern Ireland) Order 1972, be approved. The noble Lord said: My Lords, this Order, and the Regulations made under it, are aimed at limiting the availability of explosives. Bombs, indiscriminately used by terrorists in Northern Ireland have caused much loss of life, most of the personal injuries, and practically all the damage to property which have occurred during the present campaign of violence. Until recently, gelignite has been the basic explosive material used in the manufacture of I.R.A. bombs, but with the stringent controls now in force in Northern Ireland, backed up by the continuing constraint by the Army against persons bringing supplies of gelignite from the Republic of Ireland, there has been an increasing tendency over the past few months for the Provisionals to use alternative substances which, though not themselves explosives in the usual sense of the word, can unfortunately be converted into effective and very damaging explosives.
The two most commonly used substances are ammonium nitrate and sodium
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chlorate. Both have proper lawful applications: ammonium nitrate is normally used as a fertiliser, and sodium chlorate as a weedkiller. The explosive characteristics of these substances, however, are now being put to use by the I.R.A., and it is estimated that of the 20,000 lb. of explosives used by the terrorists in Northern Ireland so far this year more than two thirds consisted of one or other of them.
The Order which your Lordships are asked to approve gives my right honourable friend, the Secretary of State for Northern Ireland, power to make Regulations to control these and other substances. It is necessary to make this Order because whilst Section 3 of the Explosives Act (Northern Ireland) 1970 enables Regulations to be made for the control of explosives the definition of the word "explosives" for the purposes of this Act is that set out in the Explosives Act 1875 and relates only to any substance
"used or manufactured with a view to produce a practical effect by explosion".
This definition clearly does not include ammonium nitrate, sodium chlorate and certain other substances which, while not manufactured with a view to produce a practical effect by explosion, are capable of producing such an effect, either by themselves or when used in combination with other substances.
The Order extends the power to make Regulations to cover the control of
"any substance (including any liquid, article or thing) which is capable of being used, whether by itself or in combination with anything else, as an explosive, and which appears to the Minister of Home Affairs likely to be so used for unlawful purposes".
I should explain at this point that because of the urgency of the need to meet this new threat to life and property in Northern Ireland, your Lordships are being asked to approve the Order on the basis of the urgent procedure which is contained in paragraph 4(1) of the Schedule of the Northern Ireland (Temporary Provisions) Act. The Order was in fact made on May 11 and was laid before the House on May 12. It was also forecast in a Statement made by my right honourable friend the Secretary of State in another place, and repeated in this House by my noble friend the Minister of State at the Home Office. Regulations have already been made under the Order for the control of

631
ammonium nitrate mixtures and sodium chlorate, and these came into effect on June 1, 1972. From this date it was unlawful in Northern Ireland to manufacture, sell, purchase or acquire either substance as defined in the Regulations, except under a licence issued by the Ministry of Home Affairs. However, since there are stocks of the two substances already in the hands of farmers and other purchasers it was considered reasonable to allow time for these stocks to be used or withdrawn. Accordingly it will only be after June 30 of this year that it will be an offence for any person without a licence to have in his possession or under his control or to use the two substances mentioned.
My Lords, I am afraid it is necessary to accept that some measure of inconvenience will be caused to hitherto legitimate users of these substances by the controls which have now been imposed. Unfortunately this is inevitable if attacks on life and property are to be prevented or curtailed. From discussions which have been held in Northern Ireland between the Ministry of Home Affairs, the Ministry of Agriculture and the trade interests involved, I am advised that suitable alternatives are being made available to the legitimate user, and that the agricultural and horticultural industries should not suffer undue or lasting hardship as a result of these measures. I beg to move.
Moved, That the Explosives (Northern Ireland) Order 1972, be approved.—(Lord Windlesham.)
LORD BESWICK: My Lords, I indicated on May 11 when the noble Lord's friend made the statement relating to this Order, we should be very happy to cooperate and support it. I only hope that it will prove that with this definition there will be a more effective control of these substances. I should like to think that there will be an improvement in the situation resulting from this more effective control. I am bound to say that I am not all that optimistic; nevertheless, we accept the need for the Order and support it.

NORTHERN IRELAND FINANCE CORPORATION (NORTHERN IRELAND) ORDER 1972
7.27 p.m.
LORD WINDLESHAM LORD WINDLESHAM rose to move, That the Northern Ireland Finance Corporation (Northern Ireland) Order 1972, be approved. The noble Lord said: My Lords, I beg to move the third of the Orders standing in my name on the Order Paper. This Order, again made under procedure contained in the Northern Ireland (Temporary Provisions) Act, has its origins in the recommendations of the Joint Review Body on Economic and Social Development in Northern Ireland. This body, under the chairmanship of Sir Alec Cairncross, was set up jointly by the Northern Ireland and United Kingdom Governments in June last year, and proposed the establishment of a Northern Ireland Finance Corporation. The Review Body's analysis of the economic situation in Ulster indicated that while business had withstood much of the stresses of economic recession and the civil disturbances, nevertheless the situation was likely to deteriorate, unless remedial measures were taken. This phenonomen they ascribed to the effects on liquidity of the extra burdens imposed by the disturbances—additional security and insurance costs, disruption of production, difficulty in securing orders, and so on—and also to contraction in the flow of new incoming investment. They concluded that the cumulative effect of unrest justified the treatment of the Northern Ireland economy as a special case.
A Bill to establish the Corporation and give it powers had passed all stages in the Northern Ireland House of Commons and was awaiting a Third Reading in the Senate when Parliament was prorogued. The Bill reflected closely the Review Body's recommendations and the effect of the Order now before your Lordships is, with one exception, the same as the Bill. I believe that most of your Lordships will agree on the importance, as part of the general objective of restoring peace in Northern Ireland, of promoting industrial and economic development as rapidly as can be achieved in the present circumstances. The Finance Corporation should help in this aim; it will be, equipped to assist firms which have liquidity problems but which, in the Corporation's view,

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have prospects of solvency in the longer term, and have a useful contribution to make to the economy. It will also be in a position to supplement the efforts of the Northern Ireland Ministry of Commerce to stimulate new investment.
The House will see from Article 4, which gives the Corporation functions and is a key provision, that financial assistance can be given in the forms recommended by the Review Body—loans, guarantees and share participation. Grant assistance will remain with the Northern Ireland Ministry of Commerce. The members of the Corporation, chaired by Mr. Charles Villiers, include representatives of the city, industry and the trade unions and Northern Ireland Government Departments. There will be a small executive group responsible to the Board and together they should bring to the Northern Ireland economy a special expertise. It is an important aspect of the concept of the Corporation that it will be able to combine speed of decision with a quality of judgment which will be essential in evaluating the contribution which firms seeking assistance are likely to make to development. The Review Body stressed the importance of management and Article 4 requires the Corporation to satisfy itself about the management of firms applying for assistance and enables it to take action if it is not so satisfied. The Article makes similar provision in regard to company organisation. Here min the Corporation should be equipped to bring a new strength to the economic life of Northern Ireland.
The Order at paragraph 9 of Article 4 gives the Corporation wide powers to assist virtually any sector of the economy where employment is provided. We expect—as did the Review Body—that in practice most of its assistance will go to manufacturing concerns but it is not intended to limit the Corporation's freedom of action if it decided that companies in other sectors met the criteria of the legislation. The Corporation will be working in close co-operation with the Ministry of Commerce in formulating schemes both to assist existing undertakings, and to encourage the establishment of new concerns. I have mentioned that the Order departs from the Bill which was being considered in Stormont at the time of Prorogation. This is on Article 9 which, unlike the earlier Bill, requires
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the Northern Ireland Comptroller and Auditor-General to carry out a secondary audit of the Corporation's accounts after the normal commercial audit has taken place. We have taken the view that on balance, it would be preferable for the Order to reflect the principle, recently expressed by my right honourable friend, the Secretary of State for Trade and Industry, in another place, that there should be appropriate public accountability for any new body to promote industrial development which has substantial sums of public money available to it.
Before closing—this is an important Order—perhaps I may draw your Lordships attention to two further provisions. First it will be seen that under Article 8 a total of £50 million is made available to the Corporation. This is a substantial sum but the Corporation will have a large job to do and it would be a mistake not to provide it with substantial backing. Secondly, I should mention that Article 12 provides for the cessation of the Corporation's powers of financial assistance at March 31, 1975 but also for the possibility of their prolongation by affirmative order. On this I would only say that it will obviously be necessary, before the expiry of the initial period up to March 31, 1975, to form a view on whether the Corporation is likely to have a continuing role to play and whether in its present form, it is still equipped to play it. If circumstances dictate the Corporation's continuance, possibly in an altered form and perhaps with somewhat different functions, we can then come forward with the necessary legislation at that time. I hope that the House will share the Government's view that this is an important measure and one which is likely to make a valuable contribution to the economy of Northern Ireland. I beg to move.
Moved, That the Northern Ireland Finance Corporation (Northern Ireland) Order 1972, be approved.—(Lord Windlesham.)
7.30 p.m.
LORD BESWICK: My Lords, I think we should all agree with the noble Lord, Lord Windlesham, that this is an important measure and in anything approaching normal circumstances one could see that this Corporation could indeed be a most

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fruitful organisation for the future wellbeing of Northern Ireland. What the outturn will be in the present situation is of course less clear. But one has to return to this question of public accountability. Although the noble Lord was very kind and patient in answering (or, shall I say? trying to answer) the questions which I posed to him on the earlier Appropriation Order, I still am far from clear how this thing is going to work out so far as our Parliamentary system in Whitehall is concerned. The noble Lord called our attention to the fact that the Corporation will have at its disposal £50 million. May I ask him, in the first place, on which Vote will this £50 million appear?
Secondly, the noble Lord says that the money will be advanced on the recommendation of the Ministry of Finance. But what exactly is happening now so far as the Ministry of Finance is concerned? Is this functioning as a Ministry? To whom is it answerable? How exactly is the relationship now as between the Ministry of Finance and the Secretary of State? Are we to assume that where there is a reference to the Ministry of Finance it will in practice now be the Secretary of State? The noble Lord also says there will be an audit of the Comptroller and Auditor-General; and earlier he was good enough to say to me that the reports of the Comptroller and Auditor-General will be available in the Library of this House. But this is a little (shall I say?) slap-happy as a means of public accountability, simply to have a report in the Library of the House. Has any procedure been considered as yet? Has any progress been made towards the agreement of a procedure under which reports of this kind can have the proper scrutiny which they need to have? How are we going to ensure that the money spent is in fact being spent to the best advantage?
There is a further point I would ask about the Corporation. The noble Lord rightly pointed out that in the present situation in Northern Ireland a number of firms will have liquidity and other problems associated with the emergency situation. If this Corporation is to advance monies in that kind of situation, and for that sort of purpose, then the possibility of the Corporation's proving a commercially viable organisation is
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remote. Is it the intention of Her Majesty's Government, therefore, that the Corporation should not be in any sense a commercially viable organisation? Is it going to be a sort of ambulance organisation for a transitional period, for the present emergency period? What kind of criteria will be applied to the outturn of the Corporation? In the ordinary way the kind of organisation we have spoken about, for this country certainly, would be expected to pay its way, to prove itself economically a self-supporting organisation. There could he no chance of that, presumably, in Northern Ireland at the present time so far as this Corporation is concerned. What therefore is to be the test? What sort of guidelines will the Corporation have to work to, and who will lay down these guidelines at the present time?
I recognize—and I say this straightaway to the noble Lord—that we are dealing with a very difficult and a very serious emergency situation there. One does not wish to be over-critical. But, at the same time, we owe it to the taxpayers of this country to ensure that if money is raised it is being spent to the best possible advantage; and I think we are entitled to further information as to the sort of control, the machinery of control, that will be exercised in this case.
7.35 p.m.
LORD WADE: My Lords, I should like to thank the noble Lord, Lord Windlesham, for explaining the nature of this Order and of the two earlier Orders, and the procedure that has been followed. I certainly hope that this Finance Corporation will prove to be of value to the economy of Northern Ireland. I am asking only one quite short point with regard to the procedure that is being followed; I think it is slightly linked with the point about accountability which has been raised by the noble Lord, Lord Beswick. Is the noble Lord, Lord Windlesham, in a position to say whether we are following a precedent in the case of these Orders, or in fact in approving these Orders are we being asked to follow some new precedent arising out of the exceptional circumstances in Northern Ireland?
7.36 p.m.
THE EARL OF LONGFORD: My Lords, I should like to raise a point which is certainly not inconsistent

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with what has been said by the noble Lord, my acting Leader, but comes at it from a rather different angle. Before doing so, however, may I express my own heartfelt admiration for what the noble Lord and his Ministerial colleagues and others are doing on the spot in Northern Ireland. I am glad to have the opportunity of saying that much, at least. Anybody who knows the economic situation at all in Northern Ireland (and I am sure that the noble Lord knows it very well now) knows that unemployment is extremely severe in certain areas and, one must say, among certain elements in the community. I should like to ask the noble Lord what is really a quite simple Question. In making this money available from this country are he and his colleagues going to do their best to see that the funds are used to promote the maximum employment?—because that means taking fairly strong measures not to follow merely what might be called commercial principles, but social principles. He knows the situation very well. I expect I have mentioned once before in this House that on one particular housing estate, the Ballymurphy Estate, when I was last looking into it the unemployment figure was 46 per cent. As a result of this kind of finance, is the unemployment in Ballymurphy—if one takes that area simply as an example—going to be very much affected? I do not want to tread on matters too delicate, but perhaps when the noble Lord replies he would say a word on that aspect of the matter.
7.38 p.m.
LORD WINDLESHAM: My Lords, I hope I can reply to most of the points that have been raised. If I do not cover all of them, I will go through Hansard and pick up any outstanding questions. The noble Lord, Lord Beswick, asked on what Vote would the £50 million appear. I understand that the Finance Corporation will be funded out of borrowing from, the Northern Ireland Consolidated Fund, which in turn is likely to borrow from the National Loans Fund. The noble Lord also asked whether the Ministry of Finance is still functioning and what procedures had been evolved for controlling its activities. I can assure him that the Ministry is indeed still functioning. It is in business and functioning extremely efficiently, although
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inevitably under some strain and pressure because of the unusual circumstances of the Northern Ireland economy at the present time. The Permanent Secretary to the Ministry of Finance, Sir David Holden, is also the head of the Northern Ireland Civil Service. As such he is one of the Secretary of State's principal advisers at Stormont Castle. We are therefore in regular and close touch with him. The Secretary of State has also asked the Parliamentary Secretary, Mr. David Howell, to take particular responsibility for matters concerning finance and commerce. He is therefore in close touch on a regular basis with the Ministry of Finance. I hope the noble Lord will follow what I am saying. He will understand that in circumstances like this the relationships which I have described between Ministers and officials can sometimes be a great deal more important than what is written down in some official document.
LORD BESWICK: My Lords, I assume that the last few words were addressed to my noble friend Lord Hoy and not to myself. The noble Lord said that the Ministry of Finance was functioning, but part of the function of a Minister is to report to Parliament and normally he does or does not do certain things because he has the support and the agreement and approval of Parliament, but in this particular case as the Stormont is prorogued the Minister of Finance cannot, as I see it, function as far as this aspect of his responsibility is concerned. The question I asked, therefore, was whether he goes to the Secretary of State. The noble Lord has indicated that personal relationships are good and I can well imagine that terrific personal sacrifices are being made and that the machinery is working because of personal relationships, but I think it is necessary to try to sort out the constitutional side of the problem. The question I asked was not answered by the noble Lord—to whom does the Minister go for approval of what he is doing under this Order?
7.43 p.m.
LORD WINDLESHAM: My Lords, I understand that there is to be a debate later tonight in another place on exactly this point. Noble Lords who have shown some interest in this matter have not

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referred to the White Paper which has been published. I referred earlier to the title—Northern Ireland: Financial Arrangements and Legislation. This spells out present arrangements in some detail. In another place when the Appropriation Order is considered tonight there is likely to be a fairly full debate covering such matters as financial accountability and control.
As I remarked earlier the Consolidated Fund Bill, coming at the beginning of the financial year, had already gone on to the Statute Book at Stormont. We shall have to see what happens next year. If the Parliament of Northern Ireland is still prorogued at that time alternative arrangements will have to be made to bring before the Parliament at Westminster a Budget estimated Statement. This will set out expenditure for the coming year comparable with the estimated expenditure referred to in paragraph 17 of the White Paper of £418 million for the current year. At the moment we are in a situation where, as I have explained, public funds have already been granted.
Then there are some difficulties on the constitutional side. There was some concern on the first of these Orders concerning the reports of the Comptroller and Auditor-General. The noble Lord, Lord Beswick, has hinted again in his remarks on this Order that, although he finds it useful to know that copies of reports will be available to both Houses of Parliament at Westminster, he still thinks perhaps this is a little too informal. In preparing myself for this debate I asked whether or not it could be argued that there should be an obligation that the report of the Comptroller and Auditor-General for Northern Ireland should be laid before the Westminster Parliament. But I am told by the lawyers that this is not possible for the following reasons. It would not be appropriate to include in an Order of this kind a provision requiring a report to be laid before the Parliament of the United Kingdom because, speaking generally. Her Majesty's powers under Section 1(3) of the Northern Ireland (Temporary Provisions) Act 1972 are no greater than those of the Parliament of Northern Ireland, and that Parliament has no power to impose rights and duties in relation to the Parliament of the United Kingdom.
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I mention this to show that there are constitutional arguments which are relevant here as well as the ones which I happen to think are more important, such as the information made available; the relationships between members of another place and Ministers, and noble Lords opposite—indeed noble Lords on all Benches in this House and the Government. As I have explained, there is a debate later on tonight in another place on this exact subject.
The noble Lord, Lord Wade, asked me whether there had been any precedents for the procedure now being followed concerning what would have been legislation before the Parliament of Northern Ireland and which is now brought before both your Lordships and members of another place by way of Orders in Council. The noble Earl, Lord Longford, is something of an expert on these things and he might know from memory. I think there was a precedent concerning the Government of India at one time, but I should like to check on that.
I should like to thank the noble Earl, Lord Longford, for his kind words. He is always generous in his tributes. The aspect of unemployment is absolutely crucial. As I mentioned, the origins of this particular order setting up the Finance Corporation are in the report of the Review Body headed by Sir Alec Cairncross, which also included Mr. Charles Villiers. He is now Chairman of the Northern Ireland Finance Corporation. What lay behind this report was that firms which at other times would have been in excellent shape now find themselves facing appalling liquidity problems. Orders that in other circumstances would have been forthcoming are postponed.
The solution to the problems of unemployment in Northern Ireland is a complex one. It must lie partly in the conservation of the economic fabric in the present difficult circumstances; and, combined with this, the attempt to simulate as much investment as possible, both by expansion of established concerns and by the attraction of new industry. The Finance Corporation will have an important part to play in this. But there are many other measures which will have a great impact—the additional aid to Harland and Wolff, for example. This

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was outside the Finance Corporation and was a direct grant from the Ministry of Commerce. Aid on this scale not only maintains existing employment, but adds a considerable number of jobs in the shipyards at Belfast. The additional aid to I.C.L. at Castlereagh will enable a factory to keep going when otherwise it would have been necessary to have declared people redundant.
THE EARL OF LONGFORD: My Lords, the particular question which I sought to put to the noble Lord and which has not so far been answered is whether he has got power to make sure that the investment goes to the precise areas where the unemployment is greatest?
LORD WINDLESHAM: My Lords, we must not tie the hands of the Finance Corporation. As I have said, there is a range of other measures as well as this one. It would be a misapprehension if I left the House thinking that the activities of the Finance Corporation are all that we are doing to try to combat unemployment in Northern Ireland. Nothing could be further from the truth. There is a wide range of measures many of which have a function both in preventing those who are in employment from losing their employment if companies close down; and in expanding employment, particularly in some of the areas to which the noble Lord referred. But on this Order I think the noble Earl will agree that it would be wrong to tie the hands of the Finance Corporation.
The noble Lord, Lord Beswick, asked about the criteria under which the Corporation will operate. These are spelled out in Article 4 on page 2 of the Order:
The Corporation may, for the purpose of assisting the economy of Northern Ireland—

(a) assist any undertaking in Northern Ireland if, in the opinion of the Corporation, the undertaking might otherwise be forced to reduce its business activities or to close down, with adverse repercussions on that economy;

(b) assist and encourage undertakings established in Northern Ireland to expand or undertake new investment in Northern Ireland;

(c) assist and encourage undertakings to become established in Northern Ireland.

LORD SLATER: My Lords, the noble Lord said that it would be wrong to tie
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the hands of the new Corporation. He also referred to the sum of £50 million. Do I take it that this Finance Corporation for Northern Ireland will operate on a similar basis to the Corporation which we have in this country relating to development areas? Will it operate not basically in one sector but over the whole of Northern Ireland? As we now have a Secretary of State for Northern Ireland, may I ask the noble Lord to say what part he will play in this operation? We must remember that a local government set-up still exists in Northern Ireland. Will this be brought into the system in which the new Finance Corporation will work?
LORD WINDLESHAM: My Lords, I must not stray out of order in discussing this Order. I am entitled to speak only at the beginning, as the mover of the Motion, and once at the end in reply to points raised in the course of the debate. I am not permitted to speak a third time, but I will, with the leave of the House, comment briefly on the points raised by the noble Lord, Lord Slater. These were new points which perhaps should have been raised during the course of the debate when I could have dealt with them at the same time as the others.
The noble Lord, Lord Slater, asked whether Northern Ireland is comparable with a development area. In some ways it is. All of Northern Ireland can in some ways be regarded as a development area, except that for a number of reasons economic conditions are even more extreme in Northern Ireland than they are in what were formerly described as "development areas". Thus, the Northern Ireland Finance Corporation is concerned to inject public funds on a selective basis into a range of undertakings in Northern Ireland.
The noble Lord also asked about the relationship between the Finance Corporation and the Secretary of State. The Corporation will have the same sort of independence from Government as the Industrial Reorganisation Corporation had in the United Kingdom. That is, it must publish a report on its activities; its accounts will be audited not only by normal commercial auditors, but by the Comptroller and Auditor-General for Northern Ireland as well. The noble Lord

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Will see, therefore, that it will be accountable in that way and in the ways I mentioned when answering the noble Lord, Lord Beswick.
LORD BESWICK: My Lords, without wishing to burden the noble Lord unduly, may I question him further about the criteria or guidelines? He properly referred me to paragraph 4. What sort of criteria will be applied so far as the outturn is concerned? Under paragraph 4(a) the Corporation may
"assist any undertaking in Northern Ireland if, in the opinion of the Corporation, the undertaking might otherwise be forced to reduce its business activities or to close down…"
If that is given first priority, the outturn will, in commercial terms, be rather poor. Is the Corporation expected to operate as a commercial concern, or is it looked upon simply as an ambulance measure?
LORD WINDLESHAM: My Lords, measures of this sort tend to be both. It is helpful if any finance corporation can operate in the most commercial way possible, as was the case with the I.R.C. At the same time, there are in Northern Ireland very pressing considerations of unemployment. I have no doubt that the chairman and directors of the Northern Ireland Finance Corporation will have the first of these criteria very much in the front of their minds. At the same time, they will want to consider the possibilities of expansion and new businesses coming in.
The Finance Corporation has met on two occasions, is recruiting staff and is beginning to review situations as a matter of urgency. Those of your Lordships who know Mr. Villiers and the extent of his commitments in the City of London and elsewhere will agree that it is a notable public service that a man of his experience should take on the chairmanship. What I hope will go back to the public-spirited members of the Board, and the executives working with them, is that while there is some concern about accountability, they have our full support in their important and valuable work.
[The sitting was suspended at eight minutes before eight o'clock and resumed at eight o'clock.]

HOUSING FINANCE BILL
8.0 p.m.
House again in Committee.
THE DEPUTY CHAIRMAN OF COMMITTEES (VISCOUNT HOOD): We are on Amendment No. 39.
LORD SANDFORD: I was explaining the content of the consultations which the Secretary of State was now engaged in with the local authority associations in order that he may determine this important business of what should and what should not count for reckonable expenditure, so that when the expenditure for one year was compared with the next the right amount of rising costs subsidy should be attracted. I was setting out the content of these consultations. The power is not going to be used to control in any way the policies of a local authority in the arrangements which they make in regard to loans pooling. Moreover, loan charges on housing costs arising out of expenditure to which the housing cost yardstick procedures introduced in 1967 did not apply, will all count as reckonable expenditure.
Now that I have mentioned the housing cost yardstick for the first time, I should like to take this opportunity, the first that has arisen, to correct an impression which I think I must have left with the Committee, which is a wrong impression, about this housing cost yardstick. I was asked at an earlier stage in this consideration how the tolerance applied. The 10 per cent. tolerance is taken into account when it comes to the control of capital investment, but I think I made the point that it was also taken into account in reckonable expenditure under this particular subsidy. In that I was incorrect and I apologise to the Committee. The expenses up to the yardstick count in reckonable expenditure but not beyond, not even the tolerance. The tolerance is allowed when it comes to the control of capital investment. I am glad of the opportunity to make this point clear and I apologise to the Committee for having got it wrongly the first time.
Loan charges arising out of housing expenditure in excess of the yardstick under the Housing Subsidies Act 1967 therefore will not count as reckonable expenditure. In the case of housing

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schemes approved by the Secretary of State after the Bill comes into force, broadly speaking costs in excess of the yardstick, or tender, whichever is the less, will not count for rising costs subsidy for the local authorities who are entitled to that subsidy. But for authorities who are not entitled to the rising costs subsidy, the yardstick will be primarily advisory, in that it will not set a cost limit for the purposes of reckonable expenditure. These are the things on which consultations are now being held with the local authority associations. In addition, consultations have begun with the local authority associations on how reasonable limits might be set for reckon-able expenditure on repairs, maintenance and management, and the intention is to devise arrangements which are fair and easy to administer, and to take account of the need for local authorities to keep their dwellings in a good state of repair and to manage them properly and humanely. As far as possible these arrangements will take account of the fact that expenditure on repairs and maintence may fluctuate from year to year. This is a point on which the noble Lord spent a moment or two. The actual expenditure will be reckonable for rising costs subsidy for 1972–73. Expenditure on improvements which is not met by a Government or rate fund contribution will count as reckonable expenditure also. I hope that has elucidated the nature of the consultations which are now going on in order that these calculations should be based on agreed factors.
The point I should like to make in answer to the main burden of the noble Lord's Amendment is that hitherto the Secretary of State has exercised his own discretion in all these matters without any obligation to consult, though he has. In this Bill he is under a statutory obligation to consult, and to that extent we have moved in the direction in which the noble Lord is asking in his Amendment that we should move. My submission to the Committee is that we have moved far enough.
LORD DIAMOND: I am grateful to the noble Lord, and particularly grateful for his having made clear what was previously not quite clear or, to the extent that it was clear, was not quite correct, particularly as he has taken the opportunity
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to make the matter clear at a time when the weight of the argument in my favour is doubled or trebled. Whereas before we had been talking about an excess over and above 110 per cent. of the yardstick, we are now talking about anything above the yardstick, be it an expenditure which was incurred earlier or an expenditure which is incurred now. I recognise and am grateful that the Bill states that there is a compulsion on Ministers to consult—it is far better that the Minister should be under a statutory compulsion to consult rather than that he should merely consult without such statutory compulsion, because even if there were no difference in the fact of consultation there is a difference in the entitlement to consultation and it makes people feel differently about it—nevertheless, I am bound to say that the unfairness in the calculation is now all the greater. The noble Lord, no doubt through an oversight, omitted to deal with my major argument there, so I must return to it and ask him whether I am not right in saying, and particularly in underlining, as the facts have now been made clear, that there is an imbalance or an unfairness in the way in which the subsidy is calculated, namely, that "reckonable expenditure" means that expenditure on providing a house so far as it is not in excess of the yardstick and "revenue" means that revenue which is derived from the house, be it in respect of the house or in respect of the additional amenities provided by expenditure incurred in excess of the yardstick. In my view you cannot have such an imbalance.
If the noble Lord and the Government want to say that the reckonable expenditure incurred shall include only expenditure up to the level of the yardstick—and as he and I know there are vast numbers of houses built in excess of the yardstick, and rents are going to be fixed in relation to the standard of amenity and convenience provided by the total expenditure—I do not know how he can attempt to maintain that you should ignore total expenditure, or if you do include total expenditure you should not ignore part of the income. It cannot be right to have it in its present situation. The noble Lord knows that the local authorities are, quite properly. hot under the collar about this.

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What the noble Lord is saying is that where you have a yardstick of £100, and a tolerance of £10, making £110, and you have total cost incurred of an extra £5, making £115, then the expenditure taken into account in arriving at the subsidy is £100, and the income taken into account is the rent to be fixed as fair, having regard to all the additional convenience and amenity provided by the extra £15. That is as the Bill stands at the moment, as I understand it; indeed, unless the noble Lord contradicts me, as I assert it. It is perfectly clear in the Bill. Plainly that is totally unjust, and there is an added insult to injury in that those authorities which have already incurred this expenditure and cannot possibly avoid the annual interest charges will find that their interest charges are out of gear with their expenditure and that they are not going to get the right subsidy. So I am bound to come back to this point and say that the noble Lord must think about this again. The rest of the position is perfectly clear, but this stands out like a sore thumb as totally unfair. I invite him to tell me whether I am right in my assertion that the calculation of the subsidy is totally unfair, and whether in those circumstances he ought not to take it away and think again.
LORD SANDFORD: Certainly I am glad to give that assurance, but I did make it clear that, apart from the first year of the operation of this Act, when any expenditure debited to the authority's housing revenue account will qualify for the calculation of the rising costs subsidy, with the two exceptions I mentioned in the case of patched houses and the housing repairs account, all the other factors, such as the one which I recognised as important, are among those being discussed at the present time with the local authority associations, to make sure that the basis is fair, appropriate and reasonable for the future. This is just the sort of thing that is under discussion, and if at a later stage I can say anything more which will help to elucidate these matters and to reassure the noble Lord, I will certainly do so.
LORD DIAMOND: Well, I have heard undertakings given with reserve, with greater reserve or with the greatest reserve; and the undertaking I have just
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listened to beats the lot. I am not in a position to do other than say to the noble Lord that I am very grateful to him, but I hope he will realise this is a matter of very serious content and gives rise to very considerable anxiety. What the noble Lord is telling me is that the Bill provides, in that part of it which I seek to omit, for the Secretary of State to decide, and that the Secretary of State is at the moment carrying on certain consultations, as I am aware, before reaching his decision, and that therefore this matter is open for decision. But the noble Lord, unfortunately, earlier on went beyond that and said that the Secretary of State had decided that any expenditure over and above the yardstick would not count as reckonable expenditure.
LORD SANDFORD: I made that point in correcting an impression which I was wrong in giving to the Committee on the current position. This year all expenditure debited to the housing revenue account will be taken into account (it is in subsection (10)) because it is not practicable to make any other arrangements.
LORD DIAMOND: I understand. I thought the noble Lord meant by the current position under the current law before the new law.
LORD SANDFORD: And that, too.
LORD DIAMOND: I gather he is saying that that is the position under the existing law, and that if this Bill should, unfortunately, become an Act, that will be the position under it for that first year. But that does not deal with the future position, and I gather he is now saying that the Secretary of State is not committed to what line he will take and that negotiations are continuing. In those circumstances, I will say to the noble Lord that I am grateful for the statement that if he has anything more to say he will say it. I can give him an equal assurance that I will give him ample opportunity to say it. We shall therefore come back to the Bill at some time when negotiations have gone further, I hope before reaching Report stage, and it will be possible for him to say something more reassuring. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.16 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 40:
Page 8, line 11, leave out ("determine") and insert ("shall agree with the authority").
The noble Lord said: I beg to move Amendment No. 40, and hope it will be convenient to take with it No. 41. As we are now, unfortunately, stuck with these clauses, we have to deal with them the best way we can and we have to improve them if at all possible. On page 8, line 11, it refers to the reckon-able expenditure being
"so much of the expenditure debited to the authority's Housing Revenue Account as the Secretary of State may from time to time determine…"
I am aware of the fact that determination cannot take place until there has been discussion and consultation, and for that I am grateful. But "determine" is even so, in my view, not the right word because the Secretary of State is the person who is doing the paying. If we could all determine purely out of our own minds how much we would pay it would be very simple the answer in all cases would be nothing. So you must have some more objective method of deciding what is the proper amount to be paid as between central and local government, and the word "determine", in my view, is too authoritarian and fits in with the rest of the Bill, which has a very inflexible structure and authoritarian atmosphere about it all told.
I am hoping that the Government are still inclined to believe in the merits of democracy and in the merits of arguing the case and putting your point of view, and if you cannot agree, doing what the Government keep on suggesting employees and employers should do when they cannot agree, namely, go to some outside authority and not to attempt to decide it themselves. So instead of determine", I think it is better to say "shall agree with the authority". That puts both on the same footing and leaves it to argument instead of power. If the arguments are not seen to favour one side or the other of the middle line, and if both sides cannot agree where the weight of argument is, then the suggestion is that, failing agreement, it is determined by arbitration. It is far better for this to be seen to be a judicial process than for it to be left to the will or the wish of
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the Secretary of State. I hope the Government will feel this is a reasonable Amendment and one which will give considerable balance to the Bill and considerable reassurance to the local authorities.
I have had a lot of correspondence from local authorities and local authority associations. Every one of the communications is riddled with anxiety about what the Government may do. They say, "We fear the Government will do this" or "We fear the Government will do that." One is very familiar with this, and the Government have a responsibility to remove that sense of fear. The Government's proposals have been drafted in such a way that local authorities have naturally taken fright. If the Bill is drawn in such a way that the worst is provided for in legislative form, and then there is a provision that a Minister or a Secretary of State may lighten it by changing his mind in ten years' time, that does not remove the sense of anxiety. Here is another case where, by inserting words similar to those in this Amendment, the Government could give considerable reassurance to local authorities. They ought to do this if they want the working of this Bill to be at all satisfactory. I hope they will look kindly on the Amendment, which I now move.
LORD SANDFORD: It is understandable that local authorities and housing authorities may have a number of anxieties about this legislation, because it is making such a radical change in the whole system. But it is in order to meet this anxiety that this subsection is in the Bill. It imparts determinations which the Secretary of State has hitherto undertaken without any statutory obligation to consult at all. To that extent it is designed as a reassurance. It is not correct, as the noble Lord has said, that these determinations relate to what is being paid by the Secretary of State. If that were so there might be some force in what he has said. This particular determination relates solely to the question of what expenditure incurred by the local authority should be debited by the local authority on the Housing Revenue Account.
This is not a matter which lends itself to arbitration. There is no judgment of merits between two difficult and opposing

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issues. It is purely a factual consideration of which particular items of expenditure incurred by the local authority ought to be debited on that authority's housing revenue account. I submit to the Committee that this is a matter on which hitherto the Secretary of State has been able to make up his own mind without any fuss or bother, but which in future will be settled only after consultation with the local authorities. The whole object of the subsection is to give the reassurance which I fully agree local authorities very much require with the introduction of such a radical measure as this.
BARONESS GAITSKELL: The Minister talked about radical reform in relation to this clause, which in my opinion is a very good example of innovation but not of reform.
LORD DIAMOND: I am grateful to the noble Lord, Lord Sandford, who has the capacity to illustrate in one sentence what I have failed to illustrate in many sentences. However, I must return to the task. The noble Lord has said that under the current legislation the Secretary of State has these various powers. That may be so, but that is in relation to a much simpler and well-established form of providing subsidy. The main subsidy is the interest subsidy. Once the figure of interest has been agreed—and there is provision for the fullest consultation before it is agreed—the rest follows automatically. With respect, here is a totally new complex of subsidies, each of which may have effect for a number of years, have effect at varying percentages, be phased out over different periods and take various priorities over one another in relation to the balance on the Housing Revenue Account.
Anyone who has attempted to understand Schedule 1 will agree that it is a very complex situation. Moreover, with respect, the noble Lord is not absolutely right in saying that there is nothing which requires argument. There is a great deal. That is what we were discussing on a previous Amendment. All those charges which are normally known as overhead expenses or indirect expenses—which are not exclusively and directly related to the matters in the Housing Revenue Account—will have to be apportioned, and arguments may arise about the apportionment, about the level of main-
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tenance, about the annual charges for maintenance where this is in excess of expenditure incurred and is building up or seems to be building up the reserve.
All these matters give rise to anxiety and question marks, and it is not good enough merely to say there is some provision for consultation. I recognise that there is, but at the end of the day there is a conclusion to be arrived at and a decision to be made, and I do not think it is right that the Secretary of State should have the sole authority to make that decision. He will listen to what has been said and then make his decision. Just imagine that the noble Lord, Lord Drumalbyn, was the Secretary of State. He would sit at his desk. He would listen kindly to all the representations made. He would smile. He would say he was sure there was a lot in what had been said. In short, he would treat them exactly as he treats me, and at the end of the day he would say, "Nothing doing!" This is a prospect which cannot enthuse the local authorities. I was hoping that the Minister would have melted a little and admitted the validity of having an objective and judicial approach to deciding issues which are new and very important, relating to the most important subsidy in the whole of this new subsidy structure; but apparently I have failed to satisfy him. At this stage all I can do is to read carefully what he has said and perhaps think of some method whereby we can go half way or a third of the way at a later stage with another Amendment. In the meantime, I do not think I should serve any useful purpose by pursuing the argument. Accordingly, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD GARNSWORTHY: The noble Lord, Lord Sandford, wanted to include Amendment No. 42 with the earlier Amendments since he thought they covered much the same ground. I have listened carefully to what he had to say. Amendment No. 42 was put down as a probing Amendment. I doubt whether the noble Lord will say that he has anything to add to what he has already told the Committee. Since we on this side have no wish to waste time we shall await to-morrow's Hansard to read what he had to say. In the meantime, I do not wish to move Amendment No. 42.
8.30 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 43:
Page 8, line 28, leave out subsection (14).
The noble Lord said: Subsection (14) refers to Part III of Schedule 1 and provides that:
"The provisions of this section as to the circumstances in which any subsidy or rate fund contribution is to be paid or made, and as to the amount of the subsidy or contribution, have effect subject to Part III of Schedule 1…"
We shall come later on to Part III of Schedule 1, and I hope that we manage to come to it at an early time of the day when damp towels are available in large quantities, because there are few Schedules which are more difficult to follow than Schedule 1. But I need refer only to Part III of Schedule 1 at the present time. That provides a table which is in a curious, though intelligible, form. The items in the table are listed as A, B, C, D and E, and there is an order mentioned later covering the way in which the subsidies there described are phased out. The only circumstances with which I am concerned under which a subsidy will be phased out are where that is done because the Housing Revenue Account is in balance; in short, where, on the definition of the Government, a local authority does not need a subsidy or the whole of the subsidy. I hope that your Lordships are with me so far.
I have now to explain why I want to delete from the clause the reference to the Schedule. What I want to delete is the reference to the phasing out. I wish, first of all, to ask the Government for their justification of this order, and if they have no justification for it I want to suggest a different order. My reason is that certain subsidies are phased out ahead of others. If all subsidies were at 100 per cent., it would not matter in the slightest which was phased out first, but, in their wisdom and in their meanness, the Government have decided to phase out first the subsidies under which they, the Government, pay a lot, and to phase out, secondly, the subsidies under which they pay a little. The position therefore is simply this. If a local authority is nearing the point where it does not need a subsidy or the whole of it, and needs, let us say, only £1 million—that £1 million being less than the total subsidy which would otherwise be provided—
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then, if that sum were to be provided under the rising costs subsidy, three-quarters of it would be provided by the Government and one-quarter would be provided by the local authority from the rate fund. But if that same £1 million were required under the operational deficit subsidy where the proportion is 50/50, £500,000 would come from the Government compared with £750,000 under the rising costs subsidy.
Which, therefore, do the Government phase out first when there is only £1 million required from one or the other? The Government think about the matter very carefully. The Secretary of State consults and he decides, very objectively and very judicially, that he would prefer to pay out one-half rather than three-quarters. It is very odd indeed. Therefore, the Bill provides that the subsidy to be phased out first is the rising costs subsidy, ahead of the operational deficit subsidy. In one case the ratepayers provide half and the Government provide half, but in the other case the Government provide three-quarters and the ratepayers provide only one-quarter. There is a vast difference for the ratepayers between providing £250,000 and providing £500,000.
That being the case, as every one of your Lordships who has enjoyed Schedule 1 as bedtime reading has already discovered, there is a need for the Government to explain why they have, on objective grounds, not on mean grounds—I do not think they need to explain that as one can understand it; it is totally in line with the principle of the Bill under which they seek to save money at the cost of the tenant for the benefit of the taxpayer, and we would not ask them about it if the explanation were merely one of meanness in consonance with their general approach—decided to phase out the rising costs subsidy in this way. It is, in the first place. to ascertain what the reason is that I am moving this Amendment. I beg to move.
BARONESS YOUNG: This Amendment is somewhat similar in character to an Amendment which was put down when we last met. Subsection (14) is concerned with the circumstances under which the rising costs subsidy is to be paid. I think it would be more helpful to the Committee if I dealt in detail with Schedule 1 when we came to that part

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of the Bill, rather than attempt to deal with it now. But perhaps I may make clear that the reason why the Government feel unable to accept that subsection (14) should be deleted is that it would mean that the rising costs subsidy, like the transition subsidy and the operational deficit subsidy, which are all paid to local authorities who have deficits in their Housing Revenue Accounts in particular circumstances, would be paid regardless of whether those accounts were in surplus or in deficit. Therefore the particular circumstances would not be prescribed as they are at present. It is for that reason that the subsection should remain in the clause.
There is one matter which I can clear up in regard to the point at which subsidy will be withdrawn. My understanding is that the first subsidy to be withdrawn would be the operational deficit subsidy and not the other subsidies which are of particular concern in the first year to authorities with the greatest housing need.
LORD DIAMOND: There is no need for me to say how delighted I am always to hear from the noble Baroness. This is for two reasons. First, it is a great pleasure to hear from her and, secondly, one always knows that one has a good Amendment. If one has an Amendment which the Government cannot answer they put up the noble Baroness, knowing my great and well developed sense of chivalry. I am bound to say to the noble Baroness that although I followed everything she said to the very end I was a little foxed when she said that the operational deficit subsidy was the first one to be phased out.
Although I do not want to dwell on Schedule 1 at any great length now, because, as she properly said, we shall have to dwell on it at considerable length if and when we get there, paragraph 12(2) is perfectly clear. It says:
"The order in which amounts are reduced to give effect to sub-paragraph (1) above shall be the order of the heads in the Table, so that the amounts within head A are reduced to zero before any reduction of any amount within any of the later heads, and so on."
If one looks at head A, pursuing our well-known habit of head-hunting, one finds that head A is the transition subsidy. If one has regard to the words "and so on" one looks next at B and one sees that B is the rising costs subsidy
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and C is the operational deficit subsidy. I am bound to say that I thought that I was reading the Bill aright when I suggested that the rising costs subsidy, which was expensive to the Government, would be phased out ahead of the operational deficit subsidy which is less expensive. I do not know if the noble Baroness's advice has been based on the same part of the same Schedule from which I am reading.
BARONESS YOUNG: We all recognise that the order of the Table is very important to local authorities, particularly those which will receive more than one of the subsidies, but I can confirm that the operational deficit subsidy will be eliminated first in 1972–73, but third in the years after 1972–73.
LORD DIAMOND: What the noble Baroness is saying is that apart from 1972–73, the first year which is a special one and in which the subsidy has to be dealt with specially and uniquely under many of the other provisions of the Bill, what I am saying is right. But let us assume that we have got beyond the first year. In those circumstances the noble Baroness and I are in agreement that the operational deficit subsidy will not be phased out first but will be phased out third, and what will be phased out second, which I think it is reasonable to suggest comes slightly ahead of third, will be the rising costs subsidy. So we are back to the point I was making: that apart from the year 1972–73, which is the first year and which has to be dealt with uniquely under many provisions of the Bill, the Government prefer to phase out first an expensive subsidy ahead of another one which is less expensive. When I say "expensive" I mean the one that requires the Government to provide a higher proportion—namely, 75 per cent. rather than a lower proportion—namely, 50 per cent. I am bound to say to the noble Baroness: "Why is that?"
THE DEPUTY CHAIRMAN OF COMMITTEES: The Question is that Amendment No. 43 be agreed to.
LORD DIAMOND: We are discussing Amendment No. 43 and I am pressing the Government to justify what is so far totally unjustified. If the noble Baroness or the noble Lord, Lord Drumalbyn, says for some reason that it is not convenient to deal with this point now I shall

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understand. If, on the other hand, I am going too quickly, which is my general fault, and I am invited to go more slowly, so that the noble Baroness can refresh her memory—or possibly be briefed—I am prepared to do that. But I should like to know why, for no reason whatsoever, the Government should choose to pay a local authority, for example, one-quarter of a million pounds instead of half a million pounds. This is a simple point, and I think the Committee should be told on what basis the Government justify this.
BARONESS YOUNG: I wonder whether the noble Lord, Lord Diamond, would accept that it would be convenient to discuss this point when we are dealing with the Schedule. Perhaps he would prefer to take the Amendments which he has on the Marshalled List to the Schedule now, rather than leave them until later.
LORD DIAMOND: I accept the implied suggestion of the noble Baroness that it would be convenient to deal with the Schedule when one gets there, but it is also unavoidable if a draftsman puts in a clause that the provisions of the clause have effect subject to Part III of the Schedule one must at that point of time look at Part III of the Schedule and see what it means and see how it relates to the clause. This is a very familiar problem. What the noble Baroness is saying is that it is obviously inconvenient for the Government to deal with this question now and that the Government require a longer time to think of an answer to the very solid point which I am making. I understand that and I have no wish to embarrass the Government. I know that we shall have an opportunity to discuss this matter again, but we shall be in difficulties when we come to the Schedule because we shall already have passed the part of the clause which refers to the Schedule. Nevertheless in the circumstances I ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.48 p.m.
On Question, Whether Clause 4 shall stand part of the Bill?
LORD DIAMOND: It is necessary to say a word or two on the Question, That Clause 4 stand part of the Bill. This
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is a complicated Bill and provides for a totally new structure of subsidies for housing authorities. Housing authorities are very anxious to know how it will work. The Government have been extremely courteous and have supplied me with a number of figures which, provided they are accompanied by two full pages of notes, and provided one is a chartered accountant, one can follow and for that I am very grateful. But it is necessary that local authorities should also be given some insight into the Bill and some knowledge of how it is going to work, especially as municipal treasurers and others will have to prepare their accounts and plan their budgets. At the present time they are finding very great difficulty in doing so. I imagine that in due course the Government will prepare guides, booklets and pamphlets explaining the way through this mass of legislation. At the moment these are lacking and it would be of considerable convenience to all concerned that it should be put on record what these various subsidies mean and how the Government intend to calculate and apply them. The most convenient way to do this is on the Question, Whether the Clause shall stand part? We are in the difficulty that under our procedure—and very sensibly so—Amendments are always discussed before the principles of a clause, and it is not until one gets to the Question, Whether the Clause shall stand part? that there is any opportunity to describe the principles. But I still think they ought to be described, and therefore I have risen to my feet on the Question being put in regard to this clause, because it is, I repeat, overwhelmingly the most important subsidy in the new structure of subsidies upon which local authorities will depend for their ability to build houses and provide accommodation for their citizens. This is the most important one by far, and therefore it is right, I think, that people should know how it works.
While I am on my feet, may I say that there are several major criticisms that one has of the clause. It is vague in the extreme, because, as the noble Lord has already admitted, discussions are going on and therefore there is nothing in the Bill saying how those discussions will materialise. The Bill therefore does not provide directly for an indication as to how the figures can be calculated.

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The amount of provision is totally inadequate in many respects. We have had these discussions throughout Amendments of the Bill—the reducing percentage on a reducing amount, and then a provision to reduce that even further. Many of these provisions are objected to, both by the association of local authorities and by such important authorities as the G.L.C., in very strong terms, and there is inadequate opportunity for those authorities to discuss and agree provisions with the Government and to have those decisions incorporated in the Bill so that the local authorities know where they are.
I want to repeat—because there may be some misunderstanding about this—that the argument here the whole time is between central Government and local authority. It is not between Conservative and Labour philosophies. It is nothing to do with Parties at all; and I am very sorry indeed that the assistance which I hoped for from the other side of the Committee has been totally un forthcoming. I do not know whether noble Lords opposite think that all local authorities are peopled exclusively by Labour councillors, but they are not. I do not know what the proportion is at the moment. I do not care; we are not concerned with that. It will be a varying proportion. Some authorities will be Labour controlled, some will be Conservative or Liberal controlled, or whatever it is. What we are all concerned with, I should have thought—but I have been sadly disappointed—is seeing a fair relationship between central Government and local authority; and this is 75 per cent. of the money that local authorities are going to need, be they Labour or be they Tory local authorities, in order to provide roofs over the heads of their citizens. So I am saying I regret extremely that the weight of the argument has been left to this side of the Committee alone. One cannot help that.
I do not know whether or not any of the noble Lords opposite who are present have been supplied with the same information as that with which I have been supplied, quite properly and sensibly. I am only sorry that it is necessary for me to say this, but I wanted to remove what I thought might be a misunderstanding about the Party aspect, because the whole of the weight of the argument has come from the Liberal and Labour Benches.
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However, this is a most important part of the subsidy structure of the new arrangements of the Government, and I think it would be right that the Government should therefore put on record through Hansard how they think this clause should work, and what its benefits are.
LORD WOLVERTON: I think a few words from these Back-Benches are probably appropriate at this moment. The noble Lord, Lord Diamond, has just said that this clause is one of the most important clauses in the whole Bill. This is the first time that a rising costs subsidy has been given, and many local authorities to which I have talked are very grateful for this clause. It will help those authorities which have very large housing lists to try to build houses for the future, which is so urgent a need. In this era of inflation, many local authorities have said that, with the present subsidies, the more houses they build the more they get into debt. Noble Lords know well how the Housing Revenue Account has to be kept in balance year by year, and if it is not in balance the rents have to go up. Many local authorities have taken the view that it is not fair to their tenants to keep on putting the rents up for the building of new houses. So I think this clause will have a very good effect towards helping local authorities to build houses in the future. Rising costs through inflation will be met to a great extent by this clause.
BARONESS GAITSKELL: I am struggling to understand this Bill. I am struggling even to understand all the contributions that have been made. I find that Mr. Aughton's account of what is happening—he is the Borough Treasurer of Hemel Hempstead—is, in a way, to me the most lucid. I do not know whether I am allowed to quote a very short extract of his summing-up, but he says:
"As the Housing Revenue Account rent income rises, the account will begin to come into surplus in most places, and, first, rising costs subsidy, with its associated rate fund contribution, will cease; then, operational deficit subsidy and contributions and, next, the subsidy and rate fund contributions which cover the cost of rent rebates. We shall then have returned to our present state, inasmuch as rent rebates will again be borne by the Housing Revenue Account."
I do not know what that adds up to, but it seems to me a long way from what this

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Bill and this particular clause wish to achieve.
LORD SANDFORD: I am glad to have an opportunity to recapitulate what we have been saying on this important clause. This subsidy, more than almost any other subsidy, is the one that helps us to concentrate the help represented by the subsidy system on the places that need it, in order that they can continue, maintain and increase their house-building programme. There are other subsidies which concentrate help upon the people who most need it: this is the one that concentrates it upon the places that most need it. The rising costs subsidy is based upon the increase in reckonable expenditure over the previous year. We have been discussing the consultations in which the Secretary of State is now engaged with the local authority associations as to which of those sums debited to the Housing Revenue Account should count in the calculation of reckonable expenditure, and noble Lords have rightly recognised that this is an important matter. Although it is no more than an extension of matters which the Secretary of State has been able to determine hitherto on his own account, now, because they have greater significance (although they relate to much the same things) he must consult the local authority associations, and that is what he is doing. The subsidy arrived at by this calculation is a proportion of that qualifying amount and it is received initially at the rate of 90 per cent., not dropping to 75 per cent. until 1975. So the immediate impact and assistance is very considerable.
The other big issue we have been discussing is the need for a review and the provision for a review; and the point I would want to re-emphasise in that connection is that we are not now simply introducing another subsidy to be added to the 60 existing subsidies but are intro-clueing a radical reform and with it sufficient flexibility, scope for adjustment and opportunity for review, to ensure that the framework as a whole continues to serve many years ahead and that there is sufficient scope for adjustment to provide for all the varying circumstances which can arise, at least as far as ten years ahead. Nobody can foresee what the circumstances will he, but we believe we
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have introduced sufficient flexibility to contend with them when they arise.
The need for these is to enable us further to refine and further to extend the basic principle behind this Bill which is to concentrate the help that is represented by all these subsidies (but by this particular subsidy in respect of places that still need to build large numbers of houses) and to continue to refine and to extend this principle so as further to concentrate this help upon particular authorities as time goes by and as the majority of authorities move to a position where they are not as much in need of help as they now are while certain authorities continue to remain in need of assistance. It is in order that we should be able to concentrate our assistance still more on them that this clause is drawn in the terms in which it is. It is because a great deal of this still lies in the future that the precision for which the noble Lord is asking is not yet in the Bill. I submit that the framework is there in sufficient precision for us to be able to understand how it is to work and for the Secretary of State and the local authorities in the future to adapt it to circumstances as they change.
LORD DIAMOND: We are grateful to the noble Lord for that explanation but I should like to explain why we regard this clause as very unsatisfactory. I must do that because we are not saying that subsidies are not welcome, and if the Government want one structure of subsidies instead of another then we must look at it sympathetically and try to understand it. In spite of what the noble Lord has said about matters still being under consideration, the fixed statutory provisions in this clause all work one way. They define the qualifying amount with care and with the exclusion of certain items, some of which I have already indicated as being totally unfair. They then take power to reduce the qualifying amount by altering the formula: they provide that the subsidy, which starts at 90 per cent., is reduced year by year to 75 per cent.; they provide that the subsidy should be reduced further in the future, if necessary, if so decided, down to a lowest level of 60 per cent. And so far as the provisions which we have been discussing, which are related to the Schedule, are concerned, they provide wherever there is an opportunity for the

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Government to pay less and the authority to pay more they seize upon that opportunity by the method by which they provide for the phasing out of the subsidies. They refuse to listen to requests which I am making for providing some judicial method of settling disputes between central Government and local authorities, and they have not moved at all so far as the main complaints of bodies like the A.M.G. and the G.L.C. are concerned. So, although we must make our position quite clear when we vote against a provision
Resolved in the affirmative, and Clause 4 agreed to accordingly.
Clause 5 [The operational deficit subsidy, and associated rate fund contribution]:
9.14 p.m.
LORD GARNSWORTHY LORD GARNSWORTHY moved Amendment No. 44:
Page 9, line 3, leave out ("whichever is the smaller") and insert ("one").
The noble Lord said: With the Committee's leave I will at the same time speak to Amendments Nos. 45, 46 and
of a subsidy (and vote against it at this stage when things are not final) we must say that the shape of it, and of that part of it which is finalised, is so unsatisfactory for the local authorities that we must vote against the Question, That this clause shall stand part of the Bill.
9.5 p.m.
On Question, Whether Clause 4 shall stand part of the Bill?
Their Lordships divided: Contents, 58; Not-Contents, 35.

CONTENTS

Aberdare, L.

Drumalbyn, L.

Monckton of Brenchley, V.

Ailwyn, L.

Elles, Bs.

Monk Bretton, L.

Allerton, L.

Elliot of Harwood, Bs.

Mowbray and Stourton, L. [Teller.]

Balerno, L.

Emmet of Amberley, Bs.

Balfour, E.

Ferrers, E.

Northchurch, Bs.

Barnby, L.

Fisher, L.

Orr-Ewing, L.

Belhaven and Stenton, L.

Fraser of Lonsdale, L.

Rankeillour, L.

Belstead, L.

Gowrie, E.

Reading, M.

Berkeley, Bs.

Grenfell, L.

Reay, L.

Brabazon of Tara, L.

Grimston of Westbury, L.

Redesdale, L.

Buckton, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Reigate, L.

Colville of Culross, V.

Ruthven of Freeland, Ly.

Cottesloe, L.

Hawke, L.

Saint Oswald, L.

Cowley, E.

Hylton, L.

Sandford, L.

Craigavon, V.

Latymer, L.

Sempill, Ly.

Crathorne, L.

Limerick, E.

Terrington, L.

Cromartie, E.

Lothian, M.

Vivian, L.

Daventry, V.

Massereene and Ferrard, V.

Windlesham, L.

Denham, L. [Teller.]

Milverton, L.

Wolverton, L.

Derwent, L.

Molson, L.

Young, Bs.

NOT-CONTENTS

Bacon, Bs.

Hale, L.

Simon, V.

Balogh, L.

Heycock, L.

Stow Hill, L.

Beswick, L.

Hoy, L.

Taylor of Mansfield, L.

Blyton, L.

Hughes, L.

Wade, L

Brock way, L.

Llewelyn-Davies of Hastoe, Bs. [Teller.]

Walston, L.

Champion, L.

Watkins, L.

Delacourt-Smith, L.

Maelor, L.

Wells-Pestell, L.

Diamond, L.

Milner of Leeds, L.

White, Bs.

Energlyn, L.

Morris of Kenwood, L.

Wright of Ashton under Lyne, L.

Evans of Hungershall, L.

Phillips, Bs. [Teller.]

Gaitskell, Bs.

Popplewell, L.

Wynne-Jones, L.

Garnsworthy, L.

Serota, Bs

Greenwood of Rossendale, L.

Shepherd, L.

47. Clause 5 deals with the operational deficit subsidy and the associated rate fund contribution. This subsidy is equal to half of the smaller of the contributions made by a local authority out of the general rate fund to the Housing Revenue Account for the years 1970–71 and 1971–72. I hope that puts it fairly, even though I have attempted to put it concisely. The Amendment seeks to secure that the subsidy for the first year shall be equal to the higher of the two contributions if the higher contribution comes in the second year, the year 1971–72;

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clearly the entitlement as the subsidy itself is bound up with rent increases.
The Government appear to take the view that it would not be right to pay subsidy equal to half the increase in the deficit of a local authority's Housing Revenue Account if the authority could reasonably have avoided the increase, supposing such an increase occurred in 1971–72. They have made it plain that they have calculated on higher rents to prevent such an increase in the deficits. This Bill is not yet an Act and cannot be for some weeks yet. I and my colleagues find this clause—and we are not alone because the feeling is widespread throughout the country—coercive, since it deals with a year that is half gone and in 1970 when local authorities were preparing their budgets they had no crystal ball to guide them, or they might have been the better able to protect their tenants and their ratepayers. Some local authorities have had regard, when considering the rents they have charged, to wage levels in their areas. Some have seen housing as a social service.
I do not know that masses of figures are very helpful, particularly at this time of night, it one, such as myself, endeavours to use them. I am filled with growing admiration for my noble friend Lord Diamond and his ability to cope with them. I think the Committee is greatly indebted to him because he is showing a tremendous understanding of the Bill, and most of us find it very difficult because of its incoherence. I doubt whether the total amount of difference as between 1970–71 and 1971–72 would be very high. Maybe the Government have some figures which show that there is a significant sum involved overall. In any case, if the Government have their way for the year 1971–72, rents will go up£26 for the 12 months since it is a case of "Impose 50p as from last April or £1 as from this coming October", with perhaps—and only perhaps—some exceptions. So I really do not see how local authorities can fix the books at this stage to ensure a higher deficit in 1971–72 than in 1970–71. If a higher deficit does occur, the probability, almost the certainty, is that it will be general. In any case it seems to me that subsection (5) of Schedule 1, provides a very good reason
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for accepting this Amendment. It is certainly a good reason for moving it.
May I, at this stage, invite the Government to tell us whether they have any observations to make on the front page article of yesterday's Sunday Telegraph? If the noble Lord can tell us what the Government's intentions may be it will be extremely useful. I think it is perhaps not only the members of this Committee who would be interested to learn what the Government's intentions are. I certainly hope we shall not be told that there is no truth in the report in yesterdays Sunday Telegraph because it would give a very great deal of relief to large numbers of people, to many local authorities, if the Government said "Yes, there is truth in it and we do not intend to coerce local authorities in the way this present Bill does; indeed, we shall put off for a year the operation of this demand that rents be increased by£1 as from October."
At the moment we do not know what the effect of Clause 63(4) will be. We do not know how many authorities will be involved as a result of the consideration that is being given to it. We have raised the matter before, but it would be helpful at this stage if the Government could give us some idea of what the thinking of the Secretary of State is. It was of course extremely interesting that it was Birmingham that came forward at Election time and said: "We do not need the 50p increase to bring our rents up to a fair rent level". There are many authorities throughout the country who feel that they have as good a case as Birmingham. It would be interesting to this Committee and encouraging to local authorities throughout the country if we could hear that the Secretary of State is viewing sympathetically the case that was put to him by Birmingham.
Like so much of this Bill—indeed, it seems to me all of it—too little firm information is available as we go through it. Again and again there is too much guesswork, too many estimates, and the scales seem to be weighted every time against, first, the tenant, and then the local authority. This subsidy which we are now considering is only a 50 per cent. subsidy. The total amount of money is, I gather, a comparatively small sum—£25million in 1972–73, dropping away, I fancy, to some £15 million in 1975–76.

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With the powers that the Secretary of State will possess under Schedule 1(5), there is no valid reason why this Amendment should not be acceptable. I beg to move.
BARONESS YOUNG: The operational deficit subsidy is payable in two circumstances, and in the particular Amendment that has just been moved we are concerned with the circumstances in which a local authority made a rate fund contribution to the Housing Revenue Account for the years 1970–71 and 1971–72. The Amendment proposes that the subsidy should be based on the larger contribution from the rate fund rather than on the smaller, as is the circumstance described in the Bill. I think it would be helpful to consider, first, the circumstances in which the operational deficit subsidy would be paid in this particular case.
If we take the case of an authority which made a smaller rate fund contribution in 1971–72 than it did in 1970–71, it is true that it has a deficit in the second year; but it follows that it is a smaller deficit than it had in the first year, and it is therefore reasonable to assume that its financial position is somewhat better. In this case it seems to be both reasonable and fair that the operational deficit subsidy, which would be 50 per cent. of the rate fund contribution, should be paid on the lesser amount, that is, for 1971–72, rather than the larger amount which was for the preceding year. If, on the other hand, the authority made a larger contribution in 1971–72 than it did in the preceding year, 1970–71, its financial position is clearly more difficult, because the authority has an increasing deficit which it is meeting by a rate fund contribution. Under the proposals in the Bill the authority could have been expected in these circumstances to meet a proportion of its increased deficit by putting up rents to meet a part of the deficit. If, however, the deficit on the Housing Revenue Account was very large then the authority could not have been expected reasonably to increase its rents to meet all of this cost.
The operational deficit subsidy would be payable on two counts: it would be payable, first of all, on the smaller rate fund contribution for the year 1970–71, and the authority would get a 50 per cent. operational deficit subsidy on that year.
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But if it qualified it would also get a subsidy on the second count, and in order to keep the record quite straight I should explain that it would receive a 50 per cent. operational deficit subsidy, as defined in subsection (5)—that is, based on the excess of the authority's reckonable expenditure for 1971–72 per Housing Revenue Account dwelling as at the end of that year, over the authority's reckon-able expenditure for 1970–71 per Housing Revenue Account dwelling as at the end of the year, but disregarding the first £15 per Housing Revenue Account dwelling for the part of the excess multiplied by the number of Housing Revenue Account dwellings on March 31, 1972.
If I could perhaps put that in words which to me are somewhat simpler to understand, it really is the difference between the authority's reckonable expenditure of 1971–72 and 1970–71; and we disregard the first £15 of expenditure on every house, the number being determined as the number at March 31, 1972. So that if the authority qualifies for an operational deficit subsidy because its expenditure from the general rate fund for 1971–72 is greater than it was in 1970-fund contribution for 1970–71, which is 1970–71, its financial position is clearly the lower amount, and it might qualify for something under the other part of the operational deficit subsidy. I should make it clear as a general principle that if it were not for the operational deficit subsidy this amount would have been paid by the ratepayers of the local authority. On the other point raised by the noble Lord, Lord Garnsworthy, I do not feel it would be proper for me to comment on a newspaper report.
LORD GARNSWORTHY: If I may just take up the last point made by the noble Baroness, I am quite sure that the Government are going to have to comment on it to somebody before they are very much older, because the issue is of such great importance that I do not think they will be able to ride away with it as easily as all that. I should have thought that the acceptance of my Amendment would have made it perfectly clear that local authorities were going to get 50 per cent. of whichever was the larger figure. The noble Baroness as I understood her, said that they will, if there is a larger deficit in 1971–72 than in 1970–71.
BARONESS YOUNG: I am extremely sorry if I did not make myself clear. I did not say that. I said that in the circumstances in which an authority made a larger rate fund contribution for 1971–72 than for 1970–71 the authority would get 50 per cent. of the rate fund contribution for the smaller of the two years, which is 1970–71. I went on to say that it might qualify for a further operational deficit subsidy, as defined in subsection (5).
LORD GARNSWORTHY: I thank the noble Baroness for what she has said. We shall examine in Hansard what has been said so that we are sure we have understood the position correctly. I accept what she said in good faith, because I am quite certain that she would not speak otherwise; and in the circumstances I wish to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.30 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 48:
Page 9, line 13, leave out from ("contributions)") to end of line 16.
The noble Lord said: I beg to move Amendment No. 48 because I do not know what the words I am seeking to have left out mean. I am sure that they have some meaning and that the noble Lord or Baroness who is in charge will be able to tell us what it is. If I may take the next step and make the improbable assumption that the words have some meaning and some purpose, may I ask why the Secretary of State is given these very absolute powers? The clause says that
"…the Secretary of State may give directions as to the manner in which a sum so credited is to be taken into account for the purposes of this section."
This Amendment is both probing and criticising, but mainly probing.
LORD SANDFORD: I am grateful to the noble Lord for making it clear that this is in the nature of a probing Amendment. If the point that my noble friend has been making in answer to previous Amendments is taken then in order to secure fairness as between authorities, it is important to provide that certain authorities, less scrupulous perhaps than others, should not so manipulate their accounts as to make the smaller of the
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two deficits which we have been talking about artificially large and bring it up towards the level of the larger figure, thus increasing their entitlement to the operational deficit. It is possible to do this by manipulating the accounts in a variety of ways. I can give an example of this to the noble Lord if he so wishes; but as he has indicated that this is only a probing Amendment I will assume that he may be satisfied with that explanation. This wording is to ensure that any such adjustment between the general rate fund and, or payment from the general rate fund into, the Housing Revenue Account, represents a bona fide transaction and not an artificial one.
LORD DIAMOND: I am grateful for that explanation. I am bound to say that I found it impossible to imagine that the words meant no more than that. They obviously had some meaning, but I did not know what was in the mind of the Government. If the words mean that then I recognise that there is a solid purpose to be served and the Exchequer must be properly protected. In those circumstances, the power that the Secretary of State takes would be appropriate. I dare say that others, like myself, found difficulty in imagining that those words were intended to cover that situation. I am not going to press this matter, but I would ask the noble Lord to give further thought to see whether words that more directly specified what is in the mind of the Government could be used. I know that one cannot refer to the precise terms which the noble Lord used: they were perhaps a little over-precise. In the Treasury we used to talk about "massaging" the figures—we thought that was a rather more elegant term. I understand the situation and, having made the point which I am sure the noble Lord will be good enough to take on board, I seek your Lordships' approval to with draw the Amendment.
Amendment, by leave, withdrawn.
LORD DIAMOND LORD DIAMOND moved Amendment No. 49:
Page 9, line 14, after ("may") insert ("after consultation with the authority").
The noble Lord said: Page 9, line 14, is in fact within the words we have just been considering, and I think it is right that if there is to be a fairly arbitrary decision of this kind it ought to be taken

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after consulting the authority concerned. I imagine it could not be taken without consulting the authority concerned. But I come back to a point I have made many times: that if the Bill is drawn, as indeed it undoubtedly is, so as to give local authorities anxieties that they are going to be overridden and not fully consulted, then it is necessary to keep putting in quite often the fact that by statutory requirement they are going to be consulted. I imagine that the difference between us here is not the fact they are going to be consulted, but whether the statutory provision for that ought to be made. I think it ought to be, and that is why I beg to move the Amendment.
LORD SANDFORD: I can confirm that in the great majority of cases the Secretary of State would in practice consult the particular authority concerned before giving a direction. But it is not very easy to give precise statutory recognition of that fact because it is conceivable—indeed, more than conceivable; it is quite on the cards—that directions might have to be given of a general nature. It would be appropriate in the first instance to have consultations with the local authority associations or particular groups of local authorities and, that having been done, it would perhaps be impracticable, if it affected all local authorities, or inexpedient if it concerned a large number, to consult each particular one before applying a direction which resulted from general consultations. As the noble Lord recognised, the Exchequer needs to be protected from time to time from unscrupulous manipulation or "massaging" of accounts, and in some extreme cases I think the noble Lord would agree that even consultation might not be appropriate.
LORD GARNSWORTHY: It is a little difficult to follow the noble Lord, Lord Sandford, on this one. The Amendment is such a simple one: to insert "after consultation with the authority". If this were introducing something that was quite new it would be a different matter. Consultation in no way commits the Secretary of State to take any particular line of action; it commits him to consultation only. It is this kind of attitude on the part of the Government that causes us to say they are inflexible; they are unbending they are unreasonable. My noble friend is trying to be helpful and
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going out of his way, it seems to me, to give the Government an opportunity to re-establish themselves to some extent with local authorities throughout the country. I beg them to think again and not to close their minds and refuse to accept this Amendment. This, surely, is no great matter of principle. My noble friend has served local authorities extremely well in the discussions we have had on this Bill up to date. It would be to the Government's credit if they gave some indication that they were prepared to think favourably with regard to the point he is making.
LORD SANDFORD: I am certainly prepared to do that, and I do not want to import into this more inflexibility, or indeed any inflexibility at all. It is not a matter of principle, it is a matter of practical detail. In practice, when the Secretary of State is dealing with an individual local authority on a point that is particular to that local authority he will of course in practice always consult them. But in this sphere, as in a number of others we have dealt with hitherto, and in others we shall be dealing with, it may well be that the direction that emerges does so in the form of, say, a circular as a result of consultation, not with all the individual local authorities severally but with the local authority associations on their behalf. If that consultation has been complete and adequate and satisfactory it is really needlessly laborious, and a tremendous duplication of effort, to consult with each local authority separately in addition. This is just a matter of practical detail.
I fully take the point that the noble Lord is urging on us: that it is desirable to have consultations. I confirm that it is the practice of the Secretary of State to do that, and it is his intention to do it in the future, in respect of individual local authorities when he is dealing with individual local authorities, or with their associations when he is arriving at a general direction. But, for the reasons which I have set out and tried to elaborate, it is difficult to see how it can be set out in statutory form, although I am certainly willing to look at this in order to see how it can be done. I do not think that it can be done by accepting this particular Amendment.
LORD DIAMOND: I accept straight away that the particular point which the

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noble Lord wants to meet cannot be achieved by means of this Amendment. Nevertheless, I think the Amendment has served its purpose in making it clear that there is no difference between the two sides as to what is likely to happen in practice. The only problem is not to overload a busy Secretary of State with words in a Statute which are more than necessary. I am grateful to the noble Lord for saying that he will look at it again. We do not wish to divide on this Amendment and I will certainly withdraw it. But I shall be grateful if, in the course of looking at it again, the noble Lord will look at his own drafting in subsection (12) of the previous clause, and in particular at the reference to consulting
"with any housing authority with whom consultation appears to him to be desirable."
I think one could limit the kind of consultation that is to take place in a way which would still leave a statutory expression of the desire to consult which would be helpful. In the knowledge that the noble Lord will be good enough to give thought to these matters I seek permission to withdraw this Amendment.
Amendment, by leave, withdrawn.
9.42 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 50:
Page 9, line 17, leave out ("are") and insert ("is").
The noble Lord said: As may be imagined, this is a drafting Amendment. I hesitate to interfere in the drafting, and I recognise that "authority" is a word which can equally attract the singular or the plural of the verb; but I think it gets a little clumsy when one has to say "a local authority are entitled". I am not saying that it is wrong; I am saying that it is clumsy. Albeit when normally a Bill uses the plural for a word like "authority", and this can be justified on the grounds of consistency, I still think it is a little clumsy, and therefore merely for the sake of giving the Government the opportunity of considering it, I beg to move.
LORD SANDFORD: I am grateful for that invitation. I will certainly look into it but I think the convention is that on the whole we keep to the plural. I notice that we have done so at line 35 without
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attracting the censure of the Opposition, so I prefer not to accept this off the cuff, as it were. However I will undertake to look into it.
LORD DIAMOND: I am grateful to the noble Lord for undertaking to look at it again and I hasten to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD DIAMOND LORD DIAMOND moved Amendment No. 51:
Page 9, line 21, leave out ("50") and insert ("75").
The noble Lord said: Perhaps it would be convenient to discuss Amendment No. 52 at the same time because it is complementary to No. 51. The point can be expressed in a very few words. The figure proposed in the Bill is 50 per cent. It is the smallest of all the percentages. I cannot see where the Government have justified the use of such a small percentage, and I invite them to do so. I beg to move.
BARONESS YOUNG: I always seem to be the one to discuss percentages when dealing with Amendments to measures of this kind. On this particular percentage I understand that consultations took place between my right honourable friend in another place and the local authority associations and it was felt that the percentage here was both fair and reasonable. It is, of course, in this particular case, when the operational deficit subsidy is being paid to a rate fund contribution, that the circumstances in local authorities vary very much indeed. Some may have had a policy of building a number of houses and having relatively high rents, and still having a rate fund subsidy. Others may have had relatively low rents and low costs, yet again having a rate fund subsidy. One can only say that in these circumstances it is a just distribution to have half the cost paid by the Government when previously the whole of the cost was borne by the ratepayers of the local authority.
LORD DIAMOND: I recognise that the whole cost was previously borne in that way, but here we are dealing with a totally different structure of subsidies. This is the difficulty of trying to compare subsidies and rates under the proposed structure with the different structure under the current legislation. I was

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interested to hear what the noble Baroness said about the discussions with local authorities, and I gather that they are not unduly disturbed about the figure of 50 per cent. It is true that I have not been asked to make representations on this issue by local authorities—unless I have missed something in the volumes that have been put before me to read. It seemed to me that the Government should have an opportunity to justify this figure. I will think about what the noble Baroness said, and I assure her that she need not be hesitant about her capacity to understand percentages. It is nice to see someone on the Government Front Bench who is capable in this respect. In the circumstances, I ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD DIAMOND LORD DIAMOND moved Amendment No. 53:
Page 9, line 27, leave out ("either as respects all such years, or").
The noble Lord said: I move this Amendment in order to find out what special heavy meaning these words have that I have been unable to understand. It seems to me that if these words are left out, nothing vital is omitted from the Bill. The Clause will still mean exactly the same as it means with the words. I doubt whether words would be put in in such an otiose fashion, and therefore there must be some reason for them. I invite the Government to give that reason. I beg to move.
LORD SANDFORD: We are here in the rather sophisticated realm of Parliamentary drafting and I will therefore stick closely to what my advisers tell me, which is that the effect of this Amendment would be to make it impossible for the Secretary of State to make an order to provide for operational deficit subsidy to be payable after 1981–82 for an indefinite period, subject to the provisions for reducing or eliminating it under subsection (8). It is undesirable to deprive the Secretary of State of the possibility of so helping local authorities which need this help, and therefore I recommend the Committee to keep these words in the Bill, if such is their effect.
LORD DIAMOND: The noble Lord says that "if such is their effect" he thinks they ought to stay in the Bill. If
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such is their effect, I agree, they ought to stay in the Bill. The only question is whether such is their effect. From what the noble Lord is saying neither he nor I dare offer any serious comment on that. I am bound to say that I thought that would be the answer, but the ordinary layman's reading of the other words "as respects such number of years" ought to include all such years. It is not for us to enter these fields, however, and I seek leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
9.52 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 54:
Page 9, line 43, leave out ("£15") and insert ("£6·50").
The noble Lord said: Perhaps we could discuss with this Amendment the following Amendment which has the same point. This goes to the heart of the calculation of the operational deficit subsidy which this clause is all about. So far we have been considering the two methods by which two subsidies might arise. But under this subsection it is provided that there should be an omission of the first £15. I am sure I have got that right, in view of what the noble Baroness said earlier: that is to say, if the deficit is in excess of £15 the excess only is the part that counts, not the £15: so that one loses £15 for every single case. That is a substantial sum and one wants to know what is the justification of it.
My recollection is that in another place it was justified as having reference to the amount which the local authority ought to bear themselves—meaning the amount by which the local authority ought to increase rents—and that a small cost of this small amount ought to be carried out of increased rents and only the balance carried on the subsidy—or at all events counting for subsidy, which is at the rate of 50 per cent. I have now got the reference, it is at column 387 of Hansard of another place. The Under-Secretary of State, Mr. Channon, said:
" The figure of £15 was chosen because some modest amount of expenditure attributable in this way could he met by rent increases and over a certain amount it would obviously be unreasonable for the local authority to meet it."
So a figure of £15 is chosen, being 7s. 6d. per week rounded down to £15. The figure I have chosen is 2s. 6d. per week.

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It seemed to me that 2s. 6d. per week is a figure that would fit in with that criterion and that 7s. 6d. a week is much too large a figure to be met by rent increases in this way. The figure is 2s. 6d. if you are to have this kind of provision, and if you are to have a deduction, and therefore I am suggesting a figure of £6·50p which I think is still something of the order of 2s. 6d. per week. I beg to move.
BARONESS YOUNG: The Amendment really is, why is the figure £15 and not £6·50p. The noble Lord, Lord Diamond, is quite right in saying that the £15 is based on the amount by which a local authority could have put up its rents in the year 1971–72. It arises because it was the figure allowed under the Rent Increases Act 1969, whereby a local housing authority could put up the rents of its houses by up to 7s. 6d. a week. If this figure is multiplied by 52 it works out at £19·50p a year. That figure itself has not been used because it is reasonable to suppose that a housing authority would have allowed a sum for rent rebate, or some other reason such as that, and it is therefore rounded down to £15 per house. This is the threshold to achieve the qualifying amount for the operational deficit subsidy, and that is the reason why it is calculated that way. The Government feel that is a fair way of making this calculation.
LORD DIAMOND: The noble Baroness has been very helpful, but she has not explained why, where a local authority did not exercise its power to increase the rent by 7s. 6d. a week because for some reason it was not appropriate to do so (I do not mean in relation to an individual who might have been entitled to rent rebate; I am referring to a local authority which did not put up its rents in this way), it should be treated as if it ought to have put up its rents. That is the part I do not fully follow, and it was for that reason I thought it would be far better to assume that local authorities could carry a small amount but 7s. 6d. is indeed a very substantial amount, and they ought not to be assumed to have done so.
BARONESS YOUNG: I think the answer to that lies in the circumstances in which the operational deficit subsidy is paid. Whatever the circumstances, the
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local authority would get 50 per cent. of the rate fund contribution for whichever was the smaller year, either 1970–71 or 1971–72. When we discussed this point on the previous Amendment I made it clear that a local authority could have put up its rents, even if it did not, and if it made a very large loss in the second year, 1971–72, such that even if it had put up its rents it would still have had to make a rate fund contribution, it was eligible for operational deficit subsidy under two headings; it would get it for the contribution it made in the first year and on the formula in the second year. The point about the formula is that it provides for something the local authority could have done, and if it did not it could still get some of the subsidy.
LORD DIAMOND: The noble Baroness is always very helpful and she has made it perfectly clear, as I am afraid I suspected, that this is in fact a penal clause. It is saying to a local authority which could have put up its rents by 7s. 6d. but did not, "We do not care what the reasons were why you did not. It does not matter to us at all what the circumstances were. You had the power to do so. You were allowed to go up to that maximum. If you had done so, the deficit would have been smaller. If the deficit had been smaller the Government would now be called upon to pay a smaller contribution by way of subsidy. Therefore we are going to assume that the circumstances were such that you should have put up the rents by 7s. 6d.". But I do not know whether the circumstances were such. My predilection is to believe that the circumstances were such that the local authority did in every case exactly what it did do.
My assumption is that local authorities are made up of intelligent men and women knowing the circumstances locally and acting sensibly and responsibly accordingly. I am certainly not going to take the view that where I do not know why the local authority did not put up its rents by 7s. 6d. the local authority was wrong and should be penalised, and the local citizens should be so penalised in the form of lower subsidy. I do not like this at all. There is no justification for the 7s. 6d. in these circumstances. There is no justification for penalising local authorities for the mere reason that they did not put up their

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tenants' rents. Unless the noble Baroness has anything more to say about it, I think we shall have to show our views on this particular Amendment. I invite her to say more if she is inclined to do so.
10.5 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 56:
Page 9, line 45, after ("dwellings") insert ("as").
The noble Lord said: The normal expression—indeed, the expression one finds a few lines further on—is, "the number of dwellings as at the end of the year". It is repeated twice in subsection (5)(a). But in line 45 the term used is, "the number of the said dwellings at the end of the year". I am perfectly content whichever is the form of words used, but I think that the Bill should be consistent. If there is some hidden special reason for the distinction, perhaps the Government will be good enough to tell us what it is. I beg to move.
LORD SANDFORD: I think the noble Lord is on an extremely good point here. I should like to wish him sweet dreams and I offer him the nightcap of accepting this Amendment.
House resumed.
10.0 p.m.
On Question, Whether the said Amendment (No. 54) shall be agreed to?
Their Lordships divided: Contents, 21; Not-Contents, 52.

CONTENTS

Balogh, L.

Foot, L.

Shepherd, L.

Beswick, L.

Garnsworthy, L. [Teller.]

Simon, V.

Blyton, L.

Hoy, L.

Stow, Hill, L.

Brockway, L.

Hughes, L.

Walston, L.

Champion, L.

Milner of Leeds, L. [Teller.]

Wells-Pestell, L.

Delacourt-Smith, L.

Morris of Kenwood, L.

White, Bs.

Diamond, L.

Phillips, Bs.

Wynne-Jones, L.

NOT-CONTENTS

Aberdare, L.

Elles, Bs.

Mowbray and Stourton L. [Teller.]

Allerton, L.

Elliot of Harwood, Bs.

Balerno, L.

Emmet of Amberley, Bs.

Northchurch, Bs.

Balfour, E.

Ferrers, E.

Oakshott, L.

Belhaven and Stenton, L.

Fisher, L.

Orr-Ewing, L.

Belstead, L.

Gowrie, E.

Rankeillour, L.

Berkeley, Bs.

Grimston of Westbury, L.

Reading, M.

Brabaon of Tara, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Reay, L.

Buckton, L.

Redesdale. L.

Colville of Culross, V.

Hawke, L.

Reigate, L.

Cottesloe, L.

Hylton, L.

Ruthven of Freeland, Ly.

Craigavon, V.

Latymer, L.

Saint Oswald, L.

Crathorne, L.

Limerick, E.

Sandford, L.

Cromartie, E.

Lothian, M.

Selkirk, E.

Daventry, V.

Massereene and Ferrard, V.

Sempill, Ly.

Denham, L. [Teller.]

Milverton, L.

Terrington, L.

Derwent, L.

Molson, L.

Vivian, L.

Drumalbyn. L.

Monckton of Brenchley, V.

Young, Bs.

On Question, Amendment agreed to.