Lords Sitting of 12 April 1973

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

EASTER ACT 1928
LORD MERTHYR: 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 upon what date it is intended to bring into force the Easter Act 1928.
THE MINISTER OF STATE, HOME OFFICE (VISCOUNT COLVILLE OF CULROSS): My Lords, this still depends on when agreement can be reached between the major Christian denominations. My right honourable friend the Home Secretary has been using his best endeavours to this end. In August last year he again wrote to the British Council of Churches, and to the Roman Catholic Hierarchy in England and Wales, expressing the hope that they would continue to support the efforts being made to resolve the matter. He will take whatever other initiatives are open to him to keep it before the attention of the Churches.
LORD MERTHYR: My Lords, is the noble Viscount aware that many people think that it is really indefensible for Her Majesty's Government to prevent the operation of an Act of Parliament for 45 years?—an Act which has been passed by both Houses without a Division and with the support of the principal Churches in this country.
VISCOUNT COLVILLE OF CULROSS: My Lords, I do not know that it is very easy to defend, but the fact remains that ever since this matter has been discussed we have always said that we would not act without the agreement of the Churches. This agreement has been sought widely and frequently, but it is not yet forthcoming to the extent that we would think that we should at the
764
moment be able to act on the religious side of this matter.
LORD MERTHYR: My Lords, is the noble Viscount aware that there is not a word in the Act which says that Her Majesty's Government must obtain the agreement of the Churches, but only that,
"regard shall be had to any opinion officially expressed by any Church or other Christian body"?—
and no more.
VISCOUNT COLVILLE OF CULROSS: My Lords, I am aware of the fact, but, as my noble friend Lord Windlesham said when this Question was asked just over a year ago, one has to remember that Easter is the major Christian Festival and, although the Act may put it in that way, when you are talking about the date of the major Christian Festival I do not think the Government could be expected to disregard the views of the Churches or not to take them into account. When one is talking about a secular holiday it may be a different matter, but when it comes to the major Christian Festival I do not think the wording of the Act lets us out of taking account of the view of the Churches.
THE LORD BISHOP OF CHESTER: My Lords, is the noble Viscount aware that 111 of the member Churches of the World Council of Churches have indicated their desire for a fixed Easter, and that at the Vatican Council the Roman Catholic Church showed that it was in favour of a fixed Easter so long as agreement could be reached? In view of the fact that there is a meeting of the British Council of Churches and Roman Catholic Joint Working Party in a few weeks' time could he convey to the British Council of Churches and to the Roman Catholics the sense of urgency that there is in this House that this impasse which has existed for 45 years should now be broken?
VISCOUNT COLVILLE OF CULROSS: My Lords, I was aware of it, and the right reverend Prelate was good enough to remind me of the fact further by letter. My right honourable friend in his letter of last autumn spoke about "impasse" and about the urgency felt in this House. The right reverend Prelate has said that the Churches, including the Roman Catholic Church, are agreed on this, but as I understand the position—and it is

765
no different from the position last year—the Roman Catholic Church still take the view that they would not wish to proceed in this matter without the agreement of the Orthodox Churches. I am afraid that, so far, this has not been able to be achieved.
LORD SHEPHERD: My Lords, can the noble Viscount say what is the size of the support of the Greek Orthodox Church in this country? This is a point which I think should be borne in mind when taking what is the undoubted view of the majority of Churches in this country.
VISCOUNT COLVILLE or CULROSS: My Lords, I do not think the point of view that the Vatican have taken is confined to the size of the Greek Orthodox Church, or indeed the Russian Orthodox Church, in this country. They take account of the Orthodox Churches as a whole throughout the world, and it is with those Churches as a whole that they wish to seek agreement: and I believe they are trying to seek it.
THE EARL OF DUNDEE: My Lords, in view of what the right reverend Prelate said in his supplementary question, is it not the case that the obstacle to getting the agreement of the Orthodox Church is that there is no communication between the Orthodox Church in Russia and the Orthodox Church in Greece? Since the Roman Church have said that they would not like to do it without the agreement of the Orthodox Church, but as all the other Churches agree, would it not be possible for everybody else except the Orthodox Church to get together and make an arrangement now, and see whether the Roman Catholic Church would not then change their mind, since the Roman Catholic Church has said by a hugh majority that it is in favour of a fixed Easter only it does not like to go on without the Orthodox Church?
VISCOUNT COLVILLE OF CULROSS: My Lords, for all I know, it may be right that there is no direct communication between the Russian and the Greek Orthodox Churches. This is not directly a matter for Her Majesty's Government. They nearly had a Synod last year, but alas! it did not come off. I should have thought that there were channels of communication which may be other than
766
direct and which might be more profitably pursued. But while the situation remains that the Vatican wishes to carry with it the agreement of the Orthodox Churches—and that, I understand, is still its situation—I do not think that we can say that everybody is agreed and that we should now go ahead. We do not have the unqualified agreement of all the Churches concerned.
LORD SHACKLETON: My Lords, if this is a matter of concern to the secular side of life, would the noble Viscount consider whether—without referring the matter to the United Nations—the Government might at least discuss this with our colleagues in the European Community? Since it is a matter of such importance, surely this is an appropriate subject for the noble Lord, Lord Rothschild, to consider. As this matter will affect Governments far into the future if it is not settled, if we cannot have a fixed day for Easter could we have a fixed day for Lord Merthyr's Question every year?
LORD HAWKE: My Lords, does not the argument about the Orthodox Church fall to the ground as their Easter is different from ours, anyway?
VISCOUNT COLVILLE OF CULROSS: My Lords, the difficulty about fixing a day for Lord Merthyr's Question is that it might come in the Easter Recess.
BARONESS STOCKS: My Lords, does it matter two hoots what other Churches do? Is it not rather pleasant to have Easter at varying seasons of the year?
VISCOUNT COLVILLE OF CULROSS: That, my Lords, depends upon whether or not you are a parent.
LORD BURNTWOOD: My Lords, may I ask the noble Viscount whether he is saying he is, or has been, in correspondence with the Ecumenical Patriarch? If not, would not that be a good idea?
VISCOUNT COLVILLE OF CULROSS: My Lords, my right honourable friend has not written to either of the Orthodox Patriarchs. We have taken this question up through the British Council of Churches and also directly with the Roman Catholic authorities, but I am bound to say that we have not written to either of the Patriarchs.
THE LORD BISHOP OF CHESTER: My Lords, will the noble Viscount remember that I reminded him in the second part of my question that there is to be an important meeting between the British Council of Churches and the Roman Catholic Church in a few weeks' time? Could he therefore ask that this matter be considered at that meeting?
VISCOUNT COLVILLE OF CULROSS: My Lords, I am grateful to be reminded of that fact—I am sorry if I did not answer the right reverend Prelate—but whether it is for Her Majesty's Government to ask that this should be considered, or whether it is for the Churches to deal with this, I know not. If it is for us to do so then I am sure we would deal with the matter. It may be more appropriate for the Churches to do it at their own motion.
LORD BALERNO: My Lords, is my noble friend aware that on Monday last the British Council of Churches discussed this matter? The feeling was that it would be unlikely that they would get agreement with the Eastern Churches and therefore concentration should be made on getting the agreement of the Western Churches alone.
VISCOUNT COLVILLE OF CULROSS: My Lords, I am sure that is correct; I was not aware that it happened last Monday. But the fact still remains that the Roman Catholic Church, the Vatican, has so far said it does not wish to move on the question until it has the agreement of the Orthodox Churches. We can only ask for persuasion to be used, either to reach that agreement or to abandon the point of view.
EARL WALDEGRAVE EARL WALDEGRAVE My Lords, is the noble Viscount suggesting that, as there is no chance of getting agreement, and there has not been since 1928, this Bill had better be repealed? Is it desirable to have on the Statute Book Acts of Parliament which nobody intends to implement?
VISCOUNT COLVILLE OF CULROSS: My Lords, it appears to me that there is a great deal of pressure to implement it. This is the reason for the successive Questions. I should have thought it would be contrary to the spirit of the House to seek now to repeal this Act: we should try to get it implemented.

E.E.C.'s SALE OF BUTTER TO RUSSIA
3.18 p.m.
LORD BESWICK: 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 to what extent they have supported the proposal to sell E.E.C. surplus butter to the U.S.S.R.
EARL FERRERS: My Lords, we abstained in the voting of the Management Committee which advises the Commission.
LORD BESWICK: My Lords, is the noble Earl aware that when I put this Question down one week ago I fully expected the Answer to be that Her Majesty's Government had not approved the deal? Is he now confirming that not only did we not oppose it but we did not even consider it important enough to be considered by the Council of Ministers? If that is so, how does he reconcile this with all the pledges which were given during the passage of the E.E.C. Bill about Parliamentary control in this country?
EARL FERRERS: My Lords, as my right honourable friend the Prime Minister made clear in another place, this is a major part of a surplus stock which was built up before we became a member of the Community and which was purchased by the then Six members of the Community. We did not think that we were entitled to stand in the way of this disposal.
LORD BESWICK: My Lords, if Her Majesty's Government think this is nothing to do with this country, why did we agree to pay 8¾ per cent. of the cost, which amounts to £110 million?
EARL FERRERS: My Lords, I did not say it was nothing to do with this country. The problem there is what has been described as a "mountain of butter", and it is in the interests of the Community, of which we are members, that this "mountain" should be dispersed.
LORD BESWICK: My Lords, if the difficulty is in disposing of the "mountain

769
of butter", would it not be much more simple to return to the principle of a deficiency payment and make the butter available for the housewives of this country? Would the noble Earl confirm that many housewives in this country would be willing to buy more butter if they could afford it?
EARL FERRERS: My Lords, we have accepted the principle of a Common Agricultural Policy. We recognise that there are strengths in this and also weaknesses. This is clearly one of the weaknesses. It is our intention to use our influence to make sure that these weaknesses do not occur in the future.
LORD PEDDIE: My Lords, referring to this "mountain of butter", may I ask the noble Earl what proportion of the mountain that has been exported to Russia constitutes the total production of butter in the E.E.C.? Secondly, may I ask whether or not, following this surplus, there will be a planned contraction in the production of butter in the E.E.C., and if there be any consequential shortages will that involve an increase in future prices?
EARL FERRERS: My Lords, I can tell the noble Lord, Lord Peddie, that this is about 200,000 tons of butter and there are 275,000 tons of butter in intervention by the E.E.C. I cannot tell him the proportion of the total production of the E.E.C. I would assure the noble Lord that it has been the intention of my right honourable friend—and indeed he has been doing this for the last few days—to urge that there should be a reduction in the intervention price of butter.
LORD JANNER: My Lords, before the matter is disposed of, and if the Russians are to get this butter, will the noble Earl point out that some of this butter should be given to the very many prisoners in Russia who are being held at present on starvation rations, so that at least we shall not be responsible for depriving them of some kind of subsistence?
EARL FERRERS: My Lords, this is a direct commercial sale, and what Russia does with the butter that she purchases is of course up to that country.
THE EARL OF SELKIRK: My Lords, can the noble Earl say whether any representation has been made by New Zealand and whether butter is being sold to any other places which are normally to be regarded as New Zealand export markets?
EARL FERRERS: My Lords, I am not aware of any representations being made from New Zealand. To my knowledge, this is the only sale of butter of this type which has taken place.
LORD SHINWELL: My Lords, may I ask the noble Earl, if this important transaction was known to the Government before we decided to enter the Common Market—before the accession date—why it was never mentioned in the course of our debates? What was the reason for the concealment?
EARL FERRERS: My Lords, the forthcoming sale was not known before we joined the European Economic Community and the butter has accumulated since last September.
LORD HARVEY OF PRESTBURY: My Lords, can my noble friend give an assurance that neither Russia nor any other Iron Curtain country will re-export this butter to anywhere in Europe, or elsewhere?
EARL FERRERS: My Lords, I can give my noble friend the assurance that it is a condition of the sale that the butter shall not leave Russia.
LORD BESWICK: My Lords, as it is a condition of sale that this particular butter should not be re-exported, can the noble Earl give an equally firm assurance that the receipt of this enormous quantity of butter by Russia will not release other stores from the Iron Curtain countries which may well compete with New Zealand in other markets?
EARL FERRERS: My Lords, I cannot give the noble Lord any assurance as to what the effect of this butter will be, either inside or outside Russia. It is a direct commercial sale that is about to take place.
LORD NUGENT OF GUILDFORD: My Lords, can my noble friend say whether there is any prospect that this sale may give the Russians a taste for butter instead of guns?
EARL FERRERS: My Lords, that is a possibility, and I am sure it would be a very welcome one.
LORD HANKEY: My Lords, as butter nonsenses of this sort occur with pretty unfailing regularity every five years, and really constitute a world problem, and as the same thing applies with eggs, though at a different period, will the Government institute an inquiry through O.E.C.D. to see whether some economic solution cannot be found consistent with each member's agricultural policy?
EARL FERRERS: My Lords, of course this matter is of major concern and it is proposed under the European Economic Community that the intervention price for butter should be decreased. We are anxious to see that the intervention price for butter should be decreased and that the price of skimmed milk, which is also affected, should be held steady. This is a matter of great concern. Nobody in the European Economic Community wishes to see surpluses and we are anxious to use our influence to ensure that these surpluses do not come about in the future. That is precisely what my right honourable friend has been doing during these few days in Luxembourg.
LORD HOY: My Lords, may I ask the noble Earl how he proposes to restrict the output of butter and, at the same time, as from May I to increase the price by £42 a ton?
EARL FERRERS: My Lords, what is desired to be done is to stimulate the demand for butter, and that is done by decreasing the intervention price. With regard to the second question asked by the noble Lord, Lord Hoy, the intervention price for butter may go up on May I in this country as part of the six transitional steps, but this has yet to be decided.
LORD CONESFORD: My Lords, has it not occurred to any Continental economist that a good use for butter is to eat it, rather than to produce it for sale at a loss?
EARL FERRERS: My Lords, I have no doubt that it has, and that is the reason why we wish to see the demand for butter on the Continent stimulated by lowering the intervention price. That is
772
what my right honourable friend has been urging.
LORD NUNBURNHOLME: My Lords, may I ask for what length of time this 200,000 tons of butter could be kept in store and, as a supplementary to that question, may I ask that after it had been stored for a certain length of time it should be destroyed?
EARL FERRERS: My Lords, I cannot tell the noble Lord, Lord Nunburnholme, how long it can be kept in store, but I can tell him that if in fact this butter had been kept in store for very much longer it would have resulted in an even larger loss to the Community as a whole than has happened as the result of the sale.

RHODESIA: DETENTION OF MR. NIESEWAND
3.27 p.m.
BARONESS LLEWELYN-DAVIES OF HASTOE: 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 have yet received a reply to their representations to the Rhodesian régime about the secret trial and continued detention of Mr. Peter Niesewand.
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (BARONESS TWEEDSMUIR OF BELIIELVIE): Yes, my Lords. The Rhodesian authorities said they are taking note of the representations made by my right honourable friend the Foreign and Commonwealth Secretary about Mr. Niesewand, but that the matter is still sub judice.
BARONESS LLEWELYN-DAVIES OF HASTOE: My Lords, while thanking the noble Baroness for that Answer, and completely understanding her difficulties in dealing with so harsh and devious a man as Mr. Smith, may we ask the Government to continue to press the matter about the detention order?—because I hope the noble Baroness is aware that under that order Mr. Niesewand is detained in solitary confinement, and has been since February 18. May we also ask the Government to press for the release of the very many Africans

773
who are also detained under this order, such as Mrs. Chinamanu and others?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I am sure the noble Baroness will be aware that Her Majesty's Government have pressed for the release of certain Africans who are detained, and that my right honourable friend pressed for the lifting of the detention order against Mr. Niesewand. If that were done, I understand that it would then be possible to release him to this country.
LORD BYERS: My Lords, while supporting everything that the noble Baroness, Lady Llewelyn-Davies of Hastoe, has said, can the noble Baroness, Lady Tweedsmuir of Belhelvie, explain how any matter can be sub judice in a country which has abandoned justice in favour of politics?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, as the noble Lord knows well, we do not accept either the illegal régime or the system of justice under the illegal régime. However, he will also appreciate, as I am sure the House will, that we have great difficulty in enforcing our authority within Rhodesia.
BARONESS LLEWELYN-DAVIES OF HASTOE: My Lords, following on that, may I ask the noble Baroness if she knows whether there is any truth in the reports in the Daily Telegraph and elsewhere to-day that there are members of the Rhodesian régime who are pressing Mr. Smith to remove the detention order and to release Mr. Niesewand, and, if so, can Her Majesty's Government put pressure on that point, too?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, we have no accurate information that there are individuals within Rhodesia who are pressing this particular point. I understand that the appeal against conviction and sentence is to be heard on the 27th of this month, but it is still within the power of the régime to lift the detention order.
LORD GRIMSTON OF WESTBURY: My Lords, in order to preserve a fair judgment in this matter is my noble friend aware that Rhodesia is virtually at war, having regard to the infiltration of
774
guerrillas and the murdering of both black and white people by guerrillas, and that in those circumstances it is hardly surprising that Rhodesia adopts measures which we ourselves adopted in two World Wars in order to preserve the integrity of the State? Can the noble Baroness remember whether during the First or Second World Wars there were any secret trials in this country in camera in the interests of the preservation of security?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I could not recall at a moment's notice trials in the First or Second World Wars; but I can say that Her Majesty's Government made absolutely clear that they deplore the fact that the Rhodesian authorities have held the entire proceedings in camera and have allowed no details of the charges to be made known. That is not the practice in this country. Our practice is to make known the charges and to hold as much as possible of the proceedings in open court. Furthermore, verdicts and sentences in these cases are always pronounced publicly.
LORD FRASER OF LONSDALE: My Lords, can the noble Baroness say whether trials in Northern Ireland are held in secret, or sometimes in secret?
BARONESS TWEEDSMUIR BELHELVIE: My Lords, my noble friend may not have heard that I said that in these cases our practice is to make known the charges and to hold as much as possible of the proceedings in open court, but that in any case the verdicts and sentences in these cases are always pronounced publicly.
LORD JANNER: My Lords, in view of the serious gravity of this particular matter, and in view of its international implications as other countries are adopting similar methods, will Her Majesty's Government seek some help from the Commission on Human Rights and by some other international action, so that this man may receive a just hearing?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, we think that what is important here is speed. The world-wide condemnation of the complete secrecy of this trial and of the charges must surely have had some impact upon the Rhodesian authorities.
BARONESS LLEWELYN-DAVIES OF HASTOE: My Lords, to clear the record and in answer to her noble friend Lord Grimston of Westbury, would the noble Baroness make it absolutely clear that not even the Rhodesian authorities have ever suggested that Mr. Niesewand had anything to do with terrorists, except reporting on some of the incursions over the border?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, as I understand it, Mr. Niesewand was tried in camera on March 19 and 20 for contravening Section 3(a)(ii) of the 1970 Rhodesian Official Secrets Act. That Act makes it an offence for a person, for any purpose prejudicial to the safety or interests of Rhodesia, to obtain, collect, publish or communicate to any other person, information which is calculated to be, or which might be, useful directly or indirectly to an enemy.
LORD BARNBY: My Lords, while agreeing with the concern expressed and having paid particular attention to the replies of the noble Baroness, may I ask her whether, since Rhodesia is in a state of war, she could confirm—and I think she omitted to reply to my noble friend Lord Grimston of Westbury—that in similar cases of war, frequently, for security reasons, we detain individuals for considerable periods without trial? Could the noble Baroness further say whether we have ever intervened in the decisions of the courts in cases of sentences under review?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I did not reply to the question as to what trials had taken place in the First and Second World Wars, for the very good reason that I did not know. But normal practice is to make known the charges and, I repeat again, to hold as much as possible of the proceedings in open court, and for verdicts and sentences in these cases to be always pronounced publicly. What my right honourable friend has protested against is that everything was in camera, including the charges.
LORD BROCKWAY: My Lords, while appreciating the replies which the noble Baroness has given, may I ask her whether
776
there is any information on whether Mr. Niesewand will be kept in solitary confinement until the appeal is heard? And, have Her Majesty's Government made a protest against that possibility? May I ask her further (she has indicated that the British Government have made reference to the African prisoners) whether Her Majesty's Government would emphasise very strongly that while we are all deeply concerned about this case, we are equally (and perhaps even more so because of the time) concerned about Africans who have been kept in detention for eight years without any trial?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, in answer to the last part of the noble Lord's question, I indicated earlier that we certainly did make formal protests about certain Africans who have been detained, at the time of their detention. On the first part of the noble Lord's question, we have asked the Rhodesian authorities to consider lifting the detention order on Mr. Niesewand and allowing him to leave the country. I understand that if they are willing for Mr. Niesewand to leave, and if he is ready to do so, it will be possible for the Rhodesian authorities to revoke the detention order and to suspend or to remit the sentence.
BARONESS LLEWELYN-DAVIES OF HASTOE: My Lords, may I ask one final question? As the Rhodesian régime this time appears to be aware of world opinion in a way that it never has been before, may we ask Her Majesty's Government to express to them that it is impossible to conclude a settlement with a Government which flouts basic human rights in this way?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, it is very apparent that it makes it infinitely more difficult to achieve a settlement.

MONOPOLIES COMMISSION REPORT ON TRANQUILLISERS
EARL ST. ALDWYN: My Lords, with the leave of the House my noble friend Lord Limerick will be making a Statement on the Monopolies Commission Report on Tranquillisers at a convenient moment after 3.30 p.m.

MATRIMONIAL CAUSES BILL [H.L.]
3.37 p.m.
THE LORD CHANCELLOR (LORD HAILSHAM OF SAINT MARYLEBONE): My Lords, I beg to move that the Order of Re-commitment be discharged. I understand that no Amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript Amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move. Perhaps I ought to remind the House that this is a consolidation Bill and seeks to give effect to the recommendations of the Law Commission in their Report laid before Parliament last December. The Joint Committee have looked at this Bill and I understand that I should draw attention to one slightly unusual point to which they drew the attention of the House but recommended that the House should accept it. This is in Clause 21 whereby the draftsman has applied two new definitions—financial provisions orders and property adjustment orders—to two different sets of orders which may be made under the provisions of the Bill. To quote the Joint Select Committee, this is simply a drafting point designed to make the Bill more perspicuous and in the opinion of the Committee it achieves that result. I therefore beg to move, pursuant to Standing Order No. 45(2), that the Order of Re-commitment be discharged.
Moved, That the Order of Re-commitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

INDEPENDENT BROADCASTING AUTHORITY BILL [H.L.]
3.39 p.m.
THE LORD CHANCELLOR: My Lords, here again I beg to move that the Order of Re-commitment be discharged. I understand that no Amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript Amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move. Your Lordships will remember that this is a pure consolidation Bill. The Joint Committee on Consolidation Bills made certain Amendments which they considered
778
necessary to improve the form of the Bill and to bring it into conformity with existing law. They considered that, as amended, the Bill is a pure consolidation Bill and represents existing law, and that therefore in its present form there is no point to which the attention of Parliament should be drawn. I therefore beg to move, pursuant to Standing Order No. 45(2), that the Order of Re-commitment be discharged.
Moved, That the Order of Re-commitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

ADMINISTRATION OF JUSTICE BILL [H.L.]
3.40 p.m.
THE LORD CHANCELLOR: My Lords, I beg to move that the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(The Lord Chancellor.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[References are to Bill 74 as first printed for the Commons]
[No. 1]
After Clause 6, insert the following new clause:
Extension of power to refer proceedings or questions arising in proceedings in county courts to arbitration or for inquiry and report.
"—(1) In section 92 of the County Courts Act 1959 (which enables the judge, but not the registrar, of the court to refer proceedings to arbitration with the consent of the parties) there shall be made the following amend-ments—

(a) for subsection (1) there shall be substituted the following—

"(1) A county court may, in such cases as may be prescribed, order any proceedings to be referred to arbitration (whether with or without other matters within the jurisdiction of the court in dispute between the panes) to such person or persons (including the judge or registrar) and in such manner and on such terms as the court thinks just and reasonable."; and

(b) in subsection (2), for the word "judge" there shall be substituted the word "court".

(2) In section 93 of that Act (which enables the judge to refer proceedings or questions arising in proceedings for inquiry and report)

779
there shall be made the following amendments—

(a) in subsection (1), at the end, there shall be inserted the words "and, in such cases as may be prescribed by and subject to county court rules, the registrar may refer to a referee for inquiry and report any question arising in any proceedings."; and

(b) in subsection (2), after the word "judge", there shall be inserted the words "or, as the case may be, the registrar"."

THE LORD CHANCELLOR: My Lords, this is a more substantial matter but I shall endeavour to take it as concisely as I can, and may I say in advance that in respect of all the Commons Amendments, as they are called, I propose to move, That this House doth agree with the Commons in the said Amendment. At the moment I rise to move, in relation to the first of the Commons Amendments, the new clause after Clause 6, page 6, line 6.
The Commons have sent back this Bill to the House in a substantially longer form than that in which we sent it down to them, and it would be possible for me—indeed if we were starting this matter de novo I think it would be my duty—to deal with these Amendments at rather considerable length. But they have been fully debated in the Commons and they are acceptable to the Government; indeed, they are in the main Government Amendments. I do not believe, therefore, that the House would wish me to be quite as lengthy in my remarks as I would otherwise be. The Amendments deal with a number of totally distinct subjects, and therefore I must explain them separately, or at least three of them I must explain separately.
This one has to do with county court procedure and arbitration in relation to it. Your Lordships will be aware that ever since the last report of the Consumer Council, of happy memory, there has been discussion in the Press and elsewhere about what have been called consumer claims courts or small claims courts. Either before the publication or immediately after the publication of that report I was very much concerned that the county courts, which have always been small claims courts in this country, should bring their procedure up to date, with a view to helping in particular not merely the small claimant or the small defendant but the litigant in person. For that reason I introduced, or I initiated, some
780
two years ago a review of the procedure with that end in mind. I made certain suggestions of my own which in the main have been embodied in what I have ventured to call the New Procedure in the county courts; this centres round a new institution called the pre-trial review—not much improved when a very influential newspaper referred to it as "the free trial review"!
I think this has proved a great success, although it is still necessary to advertise its advantages so that people may take full advantage of it. Broadly speaking, it enables the registrar at a preliminary appointment to ascertain the real point at issue in the case and so dispose of it, either summarily or by some more convenient procedure than taking it at full length with trial and witnesses. It saves time and money, and it assists in particular the litigant in person, but also, I suppose, the legally represented, to present his case so that the real point at issue is disposed of and not a number of points which turn out in the result not to be contentious. I think it really is important that we should give this New Procedure a chance.
In the meantime, this Bill came before the other place, where they discussed the matter at length. Quite clearly, to my mind, the original proposal for a new set of courts was unacceptable. It really cannot be contemplated, in the present state of manpower and of business, that a new set of courts, each with presumably separate court accommodation, court staff, judges and various other impedimenta, should be set up in parallel with the existing courts. This would not be a rational course of action at all. Nor as a matter of policy could I restrict access to the Queen's courts to particular classes of litigants, which was one of the proposals made. It seems to me that constitutionally this is wholly unacceptable. The Queen's courts are open to those who desire to make use of them.
But clearly there is a demand for some kind of procedure whereby small claims of one sort or another, but particularly consumer claims if they can be accurately defined, should be dealt with expeditiously and as cheaply as possible, bearing in mind, which I think some people forget, that the Queen's courts cannot afford to produce second-class justice in any class of claim; they must produce

781
a reasonably reliable result, subject to human fallibility, in all classes of claim. Sometimes you find, perhaps not seldom, and particularly in cases involving the quality of goods and services, that the problem which is brought to light in a small claim is just as difficult, and, to the parties at least, just as important, as a claim involving a very much bigger sum of money, which is a factor I must take into account.
The outcome of this is this Amendment. I am sorry to be taking a little time on this, but I think the House should understand what I am trying to do. There are two clauses at the moment in the County Courts Act providing for arbitration and providing for reference, as it is called, for inquiry and report. The latter is in some ways what many people understand by arbitration, although technically it is not an arbitration because the court retains seisin of the matter. But supposing you have a dispute in which the quality of goods or services is in question, it is often cheaper and more effective to refer the matter to an expert. This is familiar in the City of London. Many of the true arbitrations which take place on the Baltic, or in many other of the great commercial associations, are in effect references to an expert to determine the quality of the goods which are in question or the quality of the service which has been rendered. This remains open in the county courts, although it is not often resorted to.
The purpose of the second part of the Amendment is to amend Section 93 of the existing County Courts Act in order to render this part of the ordinary procedure of the county court in small claims available at the decision of the registrar as well as of the judge, who alone now can make such an order. I do not know in practice how far it will prove effective, but I hope it will. At any rate, it is something that I am trying to do in order to meet what is a legitimate demand, although some of the particular proposals supporting the demand are not necessarily acceptable in themselves. The earlier part of the Amendment is about true arbitration. This again enables the registrar, instead of only the judge—either the judge or the registrar—to refer a dispute to arbitration, and it removes from the clause the necessity for both parties to consent to such reference. The
782
latter part, I think, is open to contention, and I should like at a slightly later point in my remarks to explain how I envisage it happening, because of course if matters are referred without the consent of both parties to a third party for decision, as distinct from inquiry and report, the party whose consent has been withheld is in effect being prevented from full access to Her Majesty's courts.
A question of principle in fact arises here which the House should be aware of. Both these main lines of Amendment are provided for in the Commons Amendment by a regulatory power; it is an enabling Amendment, and the body which is entrusted with the power to prescribe the New Procedure is the county court rule committee, whose rules I allow or disallow, but it is the ordinary rule-making body for the county courts. This was absolutely necessary if, in the time available, we were going to take advantage of this legislative opportunity to do what another place evidently wished us to do. We could not work out in time the full details of the scheme. We therefore have to have a regulation-making power. I have no doubt whatever that the right body is that which is proposed; namely, the county court rule committee, and this House and, indeed, the other place will have some control over what happens because county court rules are subject to, I think, Negative procedure; at any rate they are done by Statutory Instrument and signed, among others, by the Lord Chancellor and therefore there is responsibility to Parliament.
As regards the point which I thought it right to mention a moment ago, I envisage that in the first place the reference, when it takes place without the consent of one or both of the parties, would be to the registrar or to the judge himself. This enables a much less formal procedure to be adopted at the hearing. It also effectively limits the extent to which appeal is possible since the ordinary Arbitration Act limitations would apply, and appeal would be from the registrar to the judge on motion to set aside the award, and from the judge I think it could only be on motion to set aside the award. At any rate, it provides for a limited appeal. If both parties wanted reference to be made to another person, for instance to one of the panels of lawyers who are setting up various experimental arbitration panels

783
in different cities, this would be perfectly acceptable to me and I envisage that provision should be made for it by the rule committee, although I do not envisage that this should be capable of being done, at least in the first instance, without the consent of both parties.
There is only one other thing which I ought to mention. I myself do not favour, although it may be that the rule committee after considering the matter will—I try to take other people's advice about these things—isolating consumer claims as such. It is very difficult to define them to begin with; they can arise in all sorts and kinds of ways, and I do not think they differ, in principle at any rate, from many other claims of a similar sort. For instance, a small motor accident in which there is only damage to the two vehicles is, I should have thought, ideal for this kind of treatment and could not be called a consumer claim as such. I therefore envisage some kind of small claims procedure rather than a consumer claims procedure. I am afraid that this is a little vague. In a perfect world it would have been very much better to introduce a Bill for this purpose rather than an Amendment in an Administration of Justice Bill. I have tried to compromise between my duty to place before the House what is intended and the rational possibilities within the time scale within which I have to operate. With that explanation, I beg to move, That this House doth agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
3.54 p.m.
LORD JANNER: My Lords, may I say at once that one of the points made by the noble and learned Lord the Lord Chancellor is something which I think we ought always to keep in mind when we are dealing with questions of judicial proceedings of whatever kind. The noble and learned Lord the Lord Chancellor said that the smaller cases frequently involve equal difficulty, both from the point of view of law and from the point of view of the facts. With many of the cases which are tried in the High Court, I think this is frequently overlooked. I am sure that many of my noble friends
784
who are solicitors will agree that involvement in these cases of points causes considerable anxiety on the part of lawyers, solicitors and barristers, equally with matters in which very large sums of money are concerned, and I am very glad indeed that particular note has been taken of this fact by doing all that is possible to remove difficulties that occur in the treatment of these smaller cases. The average layman does not realise that when a person comes into a solicitor's office the thing that matters to him is his case, however trivial it may seem looked at from the point of view of larger cases. The person who has a grievance, or has suffered an injury or some damage, no matter how small—and, incidentally, this applies in regard to magistrates' courts as well—feels that his case, even if it is only perhaps a parking meter case or something of that sort, is as important to him as a case of a very serious nature is to any other litigant involved in the matter. We should be grateful to the noble and learned Lord the Lord Chancellor for accepting the Amendment and also for his concern to keep a careful watch on the situation in the future.
LORD STOW HILL: My Lords, may I add one word. Speaking for myself, I should very much like to welcome this new clause, and as the noble and learned Lord almost apologetically said that he doubted whether he should explain the matter in great detail, may I say to him that I think his explanation was a most valuable one and I am very glad that he explained the purpose in full because it is of great importance. It is a clause, as the noble and learned Lord explained, the broad objective of which is to make it possible for small claims to be dealt with on a basis which does not involve too much expense, too much time, too much strain on existing manpower; and I should have thought it would be extremely useful in that context. May I respectfully say that, so far as I am concerned, I am very glad indeed that the noble and learned Lord did not draw a distinction between consumer claims and other small claims. I should have thought that the clause has application, broadly speaking, to the type of small claim which over and over again those who have been round the county courts hear, which take a great deal of time, and which certainly, as my noble friend

785
Lord Janner said, matter a great deal to those who go to make a claim or to resist it. This new forum—for that is really what it is—although it is not a new separate sort of court, will prove of great utility in the doing of justice.
As the noble and learned Lord indicated, he weighed in his mind very carefully the need not to preclude the right of any subject of the Queen to approach the Queen's courts and, if I may respectfully say so, I think he has got the balance absolutely right. What subsection (1) of the new clause does is to enable the registrar to do what, in effect, the judge of the county court could already do under existing legislation. With regard to subsection (2) as the noble and learned Lord pointed out, it is a reference for inquiry and report which is in question—not a final decision. The noble and learned Lord said that one must see how this new procedure works out. I feel very confident that it will work out to the great advantage of very large numbers of our citizens over the coming years. It is a very useful innovation in our existing procedure, and I very much hope that your Lordships will support this new clause.
LORD CHORLEY: My Lords, as an old practitioner in the county courts, sometimes crossing swords with the noble and learned Lord who has just resumed his seat, I should like to add a word of support. We often used to ask the registrar when the list of the court was full, as it so frequently was in central London, at any rate, to deal with our cases. At that time—and I am sure the situation is just the same now—the registrars were a highly competent set of men, certainly in the London area, and when they agreed to deal with a case they did it splendidly. So I feel that this innovation, which the noble and learned Lord described, of possibly bringing in the registrar a good deal more than in the past, is all to the good.
I have heard through acquaintances something about the pre-trial arrangements and I agree, from what I have heard, that this has been a very useful innovation and has saved a great deal of time. The amount of time which one used to waste going to county courts where the list was so full that one had no chance of being heard, at the time
786
I am talking about, was really stupendous. Often one had to go three times before one got on. This pre-trial system seems to have obviated that problem, so far as I can make out from friends of mine who have been occupied with it, and it is all part of a distinct improvement. This Amendment is part of the same process and is very much to be supported.
THE LORD CHANCELLOR: My Lords, I should just like to thank the noble Lords who have spoken of their personal experience, and say that I am grateful to them for the support which they have given. I do not want to prolong my remarks. I think it is fair to say that, although the noble Lord, Lord Chorley, is quite right in saying that, in his days and mine, the registrars were a very competent body of men, they are even more competent to-day.
On Question, Motion agreed to.

TRANQUILLISERS: MONOPOLIES COMMISSION REPORT
4.4 p.m.
THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF TRADE AND INDUSTRY (THE EARL OF LIMERICK): My Lords, with the leave of the House, I should like to repeat a Statement which is being made in another place by my right honourable friend the Minister for Trade and Consumer Affairs about the Monopolies Commission Report on the supply of chlordiazepoxide and diazepam. The Statement is as follows:
"This Report which is being published to-day deals with the supply of certain patented tranquillisers sold mainly under the brand names Librium and Valium. They are prescribed principally for the relief of neuroses and emotional problems and are taken regularly or intermittently by more than 1 million people. The current annual cost to the National Health Service is approximately £8 million. They are manufactured by Roche Products Ltd., a United Kingdom company linked with the Swiss company F. Hoffman-La Roche and Co. AG. and its associates, by whom the active ingredients, chlordiazepoxide, and diazepam, are supplied.

787
"On September 14, 1971, the Monopolies Commission was asked to investigate the supply of these goods and I received their Report on February 27, 1973. The Government accept this Report and I shall later describe the steps we are taking to implement its recommendations.
"The Commission concluded that since Roche Products is responsible for the supply of about 99 per cent. of the reference goods, monopoly conditions prevail; and that the determination of the level of prices results from and is designed to preserve these conditions, and operates, and may be expected to operate, against the public interest. The Commission conducted an exhaustive investigation of the prices which have been charged for the goods in the light of all the relevant factors. These included the cost of production, promotional expenditure and, in particular, the transfer price of the active ingredients from associates abroad and the contributions towards group research and overheads made by the United Kingdom company. They reached the clear conclusion that United Kingdom prices for some years have been manifestly too high and that the Roche group has accordingly obtained from the sale of the drugs in this country profits far in excess of what is justifiable.
"The Commission's main recommendations are that the price of Librium should be reduced to not more than 40 per cent. of the 1970 price and the price of Valium to not more than 25 per cent. of the 1970 price, with corresponding reductions for certain other less widely used drugs covered by the reference. The price on average of the various forms of Valium is now about one-half of the 1970 price. The Commission also consider that there should be negotiations with the Roche group for the repayment of large sums to the Department of Health and Social Security by way of remedy for the excessive prices already charged.
"I must also inform the House that, as the Report indicates, the task of the Monopolies Commission was complicated by the refusal of the Roche group to supply certain information about its costs and sales.
788
"The House will wish to know what action the Government are taking. In view of the serious situation disclosed by the Monopolies Commission, I have to-day made an Order under the Monopolies and Mergers Act 1965 reducing the prices of Librium, Valium and the other Roche products concerned to the levels recommended by the Monopolies Commission. This is being laid before both Houses to-day and will come into force on April 23. My right honourable friend the Secretary of State for Social Services will also be entering into negotiations with the Company about past transactions."
My Lords, that is the end of the Statement.
BARONESS PHILLIPS: My Lords, I should like to thank the Minister for repeating the Statement, and to congratulate the Government wholeheartedly on taking immediate action. This is a complete vindication of my noble friend Lady Summerskill, who has on many occasions raised this very point in this House. I am sure that to-day she will be delighted to hear confirmed the words which she has used so many times. On a purely philosophical point, it is a little frightening that we have produced a society in which one million people have enough emotional problems and neuroses to need tranquillisers; but since that is the case they must obviously be supplied within the National Health Service.
Since this company has been responsible for supplying 99 per cent. of the goods, it seems to me all the more extraordinary that the prices charged were based not only on the cost of production—which we accept—but on promotional expenditure. I wonder what promotional expenditure is necessary if you are directly supplying nearly all of your goods to a State enterprise. This is not a detergent which is being sold on the open market, but a commodity which the State needed. It would be interesting to know how the company justified any promotional expenditure in this particular context. I am not surprised, incidentally, that they did refuse to supply certain information. I think the facts speak for themselves.
My Lords, the recommendation of the Commission that the price should be

789
reduced—and I notice that your Lordships gasped at this—to 40 per cent. of the 1970 prices and to 25 per cent. of the 1971 prices in the other case, indicates very dearly the nature of the markup. It highlights the contrast between, on the one hand, drugs being supplied within a community service by companies making profit, and on the other hand the State service itself being based on an entirely different concept. I hope that in due time the State will recognise the inherent danger of the system and see that the supply of drugs and medicines comes within the same kind of legislation as the hospitals and other branches of the service.
LORD WADE: My Lords, I should like to join in thanking the noble Lord for repeating this Statement. The questions that I would have asked have already been asked by the noble Baroness. I will not take up the time of the House by repeating them.
THE EARL OF LIMERICK: My Lords, I am obliged to the noble Baroness, Lady Phillips, and the noble Lord, Lord Wade, for the welcome they have given to the Statement. It is a reflection that this is something that affects more than 1 million people in this country. The noble Baroness raised a question of promotional expenditure. As I understand it, the bulk of the prescriptions are those which are put out by general practitioners, who often prescribe under brand names, rightly or wrongly, so that the promotion is directed at these general practitioners to cause them to write these names into their prescriptions. As to the supply of drugs by private companies, this is a matter which has been looked at from time to time, and the conclusion has always been that the service provided by these companies and the way in which they are able to plough back funds into research has well served the development of drugs. I make here only a general point, and quite clearly we must have reservations in this particular case.
BARONESS SUMMERSKILL: My Lords, before I ask the noble Earl a question, may I thank my noble friend, Lady Phillips, for that nice tribute to me? May I ask the noble Earl whether he is aware—and I am sure he is—that some of us have been agitating for many years for a change to take place?
790
Although we have now exposed what I consider is only the tip of the iceberg, could I know how much further the Government are going to go? When the noble Earl talks about promotional expenditure, is he aware that the pharmaceutical industry entertain the medical profession all over the country to lunches and dinners in order to promote their goods? Is he aware that doctors homes are deluged with advertisements in the shape of glossy pamphlets and drugs? Is he aware that in the other place I used to take to the Dispatch Box boxes of drugs which had been sent through the post to our family, which sometimes almost covered the top of the Dispatch Box, in order to try to impress upon the Minister the appalling waste of public money. Is he aware that in the paper yesterday one doctor said he had found 30,000 tablets in one woman's home? She had told him, "I am quite innocent. Every time I go to see my doctor, he gives me about four dozen, and what am I to do with them? I do not like to be rude to him, and they collect over the years". My Lords, is the noble Earl aware that this costs the National Health Service millions of pounds on proprietary drugs which are far from being of any therapeutic value, are often quite unnecessary, and indeed do the patient a disservice?
THE EARL OF LIMERICK: My Lords, I was not previously aware of the lunches and dinners to which the noble Baroness, Lady Summerskill, has referred. I was well aware of the deluges of literature because I have a number of friends who are G.P.s and they talk to me about it. The point here is that the voluntary price and restriction system works very well in general and, as evidence of this, one could point to the fact that in each of the years 1971 and 1972 the increases in the prices of medicine sold to the National Health Service amounted to about one half of 1 per cent. of the total sale, and this in a time of rapid cost inflation. During the same period, the return on capital to the companies manufacturing these drugs was declining, and studies carried out for the National Economic Development Office indicated that the prices of medicines in the United Kingdom are, in general, lower than in comparable markets. So, generally, I think the system has proved successful. In this case it

791
broke down because the information was not made available. Hench the Government did not hesitate to act in laying this Order.
LORD HOY: My Lords, may I ask the noble Earl, Lord Limerick, how much the Government intend to try to recover, because, according to the figures that the noble Earl has given, it would appear that there has been an over-payment in the region of £20 million. Will he please remember that on a previous occasion, at the request of the Public Accounts Committee in another place, a British firm were made to repay many millions because the Committee had reached the conclusion that the firm had been overpaid. Is it the intention of the Government in this case to recover that sum as between 25 per cent. of the present cost and 40 per cent. of the present cost, which I make, very quickly, to be somewhere in the region of £20 million? Is that the sum they are aiming at?
THE EARL OF LIMERICK: My Lords, I should not like to comment on that figure except to say that it seems to me very much on the high side. I do not think it would be profitable at this moment to speculate about the precise figure when my right honourable friend, the Secretary of State in the Department of Health and Social Services, is about to enter into his negotiations. But it is clear that these negotiations are going to be taken very seriously. It is also clear that substantial sums must be involved.

ADMINISTRATION OF JUSTICE BILL [H.L.]
4.17 p.m.
Consideration of Commons Amendments resumed.
[No. 2]

COMMONS AMENDMENT
After Clause 8, insert the following new clause:
Judicial pensions (increase of widow's and children's pensions)
".—(1) The annual amount of the widow's pension that may be granted under or by virtue of the Administration of Justice (Pensions) Act 1950 wholly or partly in respect of relevant service after the passing of this Act, and the annual amount of the children's pension that may be so granted, shall be increased in accordance with this section; and where
792
the widow's pension or children's pension (if any) that may be granted in respect of a person's relevant service is so increased, there shall be made towards the cost of the liability therefor such contributions (in lieu of or in addition to that required by section 8 of the Act of 1950) as may be prescribed, in the form either of a reduction or further reduction of the lump sum pension benefit payable in respect of that service or of deductions from the salaries so payable or partly in one of those forms and partly in the other.
(2) In the case of pensions attributable wholly to relevant service after the passing of this Act,—

(a) the annual amount of a widow's pension may be one-half of the annual amount of the personal pension of the deceased; and

(b) subject to section 7(4) of the Act of 1950 (which makes provision for the case of a widow remarrying), the annual amount of a children's pension, while there is only one person for whose benefit it can enure, may amount—

(i) where the deceased was a man who left a widow and she is still alive, to one-quarter of the annual amount of the personal pension; and

(ii) in any other case, to one-third of the annual amount of the personal pension;

and while there are two or more persons for whose benefit it can enure, may amount to twice the figure given by whichever is applicable of subparagraphs (i) and (ii) above.
In section 7(4) of the Act of 1950 the reference to subsection (2) of that section shall include paragraph (b)(ii) of this subsection.
(3) Subject to subsection (4) below, in the case of pensions payable partly in respect of relevant service after the passing of this Act but not attributable wholly to that service, the annual value of the widow's pension or children's pension that may be granted shall be determined by reference to the proportions which the relevant service before and after that time bear to the whole of the relevant service, and shall be the amount obtained by adding—

(a) the part proportionate to the service before that time of the annual amount of the pension that might have been granted if this section had not been passed; and

(b) the part proportionate to the service after that time of the annual amount of the pension that might have been granted if this section had always had effect.

(4) In relation to persons serving at the passing of this Act provision may be made by regulations whereby, subject to any prescribed conditions, an election may be made by or with respect to a person—

(a) that subsection (2) above shall apply to him as if the whole of his relevant service were service after the passing of this Act, and subsection (3) shall not apply;

(b) that subsections (1) to (3) above shall not apply to him, and the Act of 1950 shall apply as if this section had not been passed;

793

(c) in the case of a person who elected under section 11(1) or (2) of the Act of 1950 for his eligibility for pension not to satisfy the conditions for the grant of a widow's or children's pension, that the election under that section shall be revoked.

(5) Where a person's relevant service is partly before and partly after the passing of this Act, then for the purposes of this section any widow's or children's pension payable in respect of that service is to be regarded as attributable wholly to the service after that time if the service before that time does not add to the annual rate of the personal pension, and for purposes of subsection (3) there shall he left out of account so much (if any) of the service before that time as does not add to the annual amount of the personal pension.
(6) Regulations made for purposes of this section may make provision for consequential or incidental matters, including provision excluding or modifying the operation of any enactments passed before this Act; and in particular any regulations providing for contributions by deduction from salary may make consequential provisions as to sections 10 and 11 of the Act of 1950 and any other enactment referring or relating to lump sums payable under that Act.
(7) Regulations for purposes of this section may be made, with the concurrence of the Minister for the Civil Service, by the Lord Chancellor or, in relation to pensions for service in offices existing only in Scotland, by the Secretary of State; and the power to make regulations for purposes of this section shall he exercisable by statutory instrument, which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(8) The foregoing provisions of this section shall have effect in relation to the enactments mentioned in the Schedule (Increase of certain widow's and children's pensions in Northern Ireland) to this Act as they have effect in relation to the Act of 1950, but subject to the adaptations provided for by that Schedule; and provision corresponding to that which is made by subsections (1) and (3) above, or which may be made by regulations under this section for purposes of those subsections may, in relation to the pension benefits of any resident magistrate or county court registrar included in Schedule 5 to the Superannuation (Northern Ireland) Order 1972 (Persons remaining subject to the Superannuation Acts (Northern Ireland) 1967 and 1969), be made by order of the Ministry of Finance for Northern Ireland.
For the purposes of section 6 of the Government of Ireland Act 1920 this subsection shall be deemed to have been passed before the appointed day within the meaning of that section.
(9) In this section—

(a) "the Act of 1950" means the Administration of Justice (Pensions) Act 1950;

(b) "prescribed" means prescribed by regulations made for purposes of this section."

THE LORD CHANCELLOR: My Lords, if we may resume this now dif-
794
ferent subject which I was engaged upon when the Statement was made, I now rise to move that this House doth agree with the Commons in the said second Amendment.
My Lords, as your Lordships will see from the list of Amendments, this is a very formidable undertaking, and like all questions relating to pensions it is both extremely complicated and rather esoteric. I will, therefore, try to simplify the problem in order that the House may understand what we are about. If I do over-simplify, I can see a number of my noble and learned friends on the Cross Benches who will keep me more or less on the strait and narrow path. But I do not want to detain the House longer than is absolutely necessary for the purpose of explaining what this Amendment is really about. I now proceed to do so.
My Lords, your Lordships will remember that on Second Reading my noble and learned friend Lord Wilberforce raised the question of judges' pensions. He said this was a matter of some urgency and was causing some anxiety among the judges. On Second Reading, in reply, I made what I believe I described, perhaps rather colloquially, as "encouraging poises". I also told my noble and learned friend that there was in process a total review of judges' pensions. The Government at that stage were disposed to await the result of that general review before acting in the matter.
Inquiries disclosed the fact that it was obviously impossible to use this legislative opportunity to introduce a total reform of judges' pensions; it was much too wide a subject. When you see what a small subject is contained in this very long Amendment, I think your Lordships will agree that that must necessarily be so. But what the inquiry really disclosed was that judges were concerned about their widows' and children's pensions, under the prevailing schemes for which—which are governed by the Act of 1950—they were relatively less well placed than the Civil Service whose widows' and children's pensisons were governed by the Superannuation Act, 1972. Perhaps at this stage I ought to warn your Lordships—because I had forgotten to do so—that I have an interest in this matter because I fancy my own pension may be

795
affected by what I am going to say. However, I do not think it has affected my judgment in the matter, and I do not think it will cost the public anything, for the reasons which I shall give.
The basic difference between the civil servant's widow's pension under the Act of 1972—and I am not going to talk separately about children because their pensions will be determined on a rather complicated formula and really derive in origin from the level of the widow's pension, and therefore they are not really a separate subject, unless I am asked to deal with the details of it—and the judge's widow's pension was that when a judge died his widow got a third of the judge's retirement pension whereas when the civil servant died his widow got a half of the civil servant's retirement pension; and the whole object of this very long Amendment really can be put down in a single sentence or two by saying that we are trying to put the judges' widows' pensions and the derivative children's pensions on the same level in relation to the judges' retirement pensions as civil servants' widows' and children's pensions are in relation to the civil servants' retirement pensions. In other words, we are lifting it from a third to a half. As one gets nothing for nothing in this world, the price to be paid is that you pay a bigger contribution, either out of the lump sum which you get on retirement or out of your salary while you are in service; so that it will not cost the public money, or not any substantial sum of money. That is the basis of what we are trying to do, and that is the object of the scheme.
Now quite obviously there will be transitional provisions. Do the judges want the scheme? I shall proceed to deal with this question. In the first place, I should like to say that owing to the time factor we have not been able to consult the judges personally, or through their various trade union-like organisations, as much as we should have liked. We have told them what we had in mind—we were of course aware of their general feeling on this subect—and we have had a number of letters in appreciation of what we are proposing, but there has not been the fullest consultation because there was not time if we were to make use of this legislative oppor-
796
tunity; and that was really what my noble and learned friend Lord Wilberforce was asking me to do on Second Reading. Broadly speaking, we are giving those judges who are now in service an option. Those who will be in service, of course, will take service on the new terms, which will then be known, but those in service will be given an option. They can contract out of this business altogether if they do not like it. In other words, nobody need have his position altered at all unless he wants it. That is the first option.
Secondly, he can contract into the new business straight away, but then he will have to pay an extra contribution over and above what he would pay if he were coming into the scheme for the first time as a new judge. Thirdly, he can take the table d'hôte; and the table d'hôte interim arrangement is set out in subsection (3) of the new clause. That, broadly speaking, means that while in service he will pay a little more and his widow will get a little more, but there is a formula set down by which this halfway house, if it is a halfway house—this part-way house—is arrived at, and your Lordships will see that in subsection (3) of the Amendment. Basically speaking, all pensions schemes, despite the great length of this Amendment, are, as I say, both complicated and esoteric, and for that reason the scheme has to be an enabling scheme, to enable it to be formulated in detail and to be brought into effect by regulations. But this, I think, is the situation which I should like to disclose to noble Lords so that they can form their judgment upon that which we have proposed. I shall naturally be particularly interested to know (as it was done in a sense at his instance) what my noble and learned friend Lord Wilberforce thinks; but it is the best we can do in the time, and I hope it will be acceptable both to the House and to the judicial profession.
I should have added that there is a fourth option of a particularly esoteric kind. A judge who opted out of the scheme of 1950 is given a peculiar option of his own. I believe that in the entire Judiciary there are either one or two such persons, but they are provided for separately as the last option; I think in subsection (4). I hope that with that explanation I can move that this House

797
doth agree with the Amendment. I shall, of course, try to answer any of the complicated questions which quite certainly do arise on any form of pensions scheme. My Lords, I beg to move that this House doth agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
4.27 p.m.
LORD WILBERFORCE: My Lords, I hope that I may take up just a few moments of your Lordships' time in order to thank the noble and learned Lord on the Woolsack for the trouble he has taken over this Amendment. As he himself told your Lordships, when the Bill was before this House on its introduction I ventured to raise this matter of the pensions of judges' widows, and I had then to be satisfied with what the noble and learned Lord himself described as "encouraging noises". Since then the encouraging noises have been transmuted into this new Clause 8, some two and a half pages of vintage Treasury drafting, and I really am most sincerely grateful to the noble and learned Lord and to the officers of his Department for having worked this out so completely in a comparatively short time. I know it must have involved a great deal of work, and I think we ought all to be grateful and appreciative for the trouble that they have taken.
My Lords, I have done my best to go through this Amendment and to compare these provisions as best I can with the Civil Service provisions. As the noble and learned Lord has said, they are very complicated, but I have had a good deal of assistance from the noble and learned Lord's Department and I have looked at the Civil Service booklet which tells one what one may expect by way of regulation; and though it is impossible to cover every possible detail—the case of judges in Northern Ireland, the case of women judges and their husbands and children, and all the various options and variations that there may be—I for my part am quite satisfied that within the existing framework this is the very best that can be done, and that it represents a genuine and helpful step towards bringing the pensions of the widows and dependants of judges into line with those
798
of the public service generally—and that, of course, is the objective.
My Lords, I hope it will not be thought ungracious on my part—and perhaps the noble and learned Lord may even agree with me—if I say that while one welcomes this advance and the detailed thought that has gone into it, one would welcome still more the arrival of the time when one can dispense with these very complicated provisions (the numerous options which have to be offered to people, and all the provisions about contributions, clawbacks and so on) which are necessary in this world and which even to educated people such as civil servants, who are far more expert in these matters than judges can ever hope to be, have to be explained in an elaborate booklet of some 33 pages.
One may then be able to move from this system to one more simple and more direct which would recognise a principle which is not a very difficult principle and not a very elaborate principle; namely, that the widows of persons in the public service should automatically be entitled to one-half the pension previously payable to their husbands. I am always amazed that those who fight for women's rights have so long accepted the position where the widows of public servants have been treated in this country in a markedly inferior way to those in comparable situations in Europe, America, Australia and everywhere.
There is a simple objective which we are moving towards slowly and through all these elaborate clauses which one day one might hope could be accepted without qualification as an automatic right. However, that is the dawn of a future yet to come. Meanwhile, I repeat that this represents a valuable step and I am grateful to the noble and learned Lord for having taken it. Doubtless when it is worked out with regulations, as it has to be (and we do not know yet exactly what the figures are going to be) this will represent a good step and will bring the pension of judges pretty well into line with the pensions of those in the public service. That is obviously a good thing and it was the objective of my intervention at an earlier stage of the Bill. I am happy to support this particular Amendment.
On Question, Motion agreed to.

COMMONS AMENDMENT

  COMMONS AMENDMENT
  [No. 3]
  After Clause 11, insert the following new clause:
  Pensions of resident magistrates in Northern Ireland
  ".—(1) In the Resident Magistrates' Pension Act (Northern Ireland) 1960 the definition of "retiring salary" in section 22(1) shall be amended by omitting the word "average" and by substituting for the words "during the three years immediately preceding the date of his retirement" the words "immediately before his retirement".
  (2) This section shall not affect any pension or other benefit payable to or in respect of a person who retired or died before the coming into force of this section.
  (3) For the purposes of section 6 of the Government of Ireland Act 1920 this section shall be deemed to have been passed before the appointed day within the meaning of that section."
  THE LORD CHANCELLOR: My Lords, I rise to move that this House doth agree with the Commons in their Amendment No. 3. This is a Northern Irish Amendment and I am afraid that I must rely fairly closely on my note material to explain what it is about. It inserts a new clause which alters the definition of the expression retiring salary "in a Northern Ireland Act called the Resident Magistrates' Pension Act (Northern Ireland) 1960. As your Lordships know, the old system of resident magistrates, immortalised by the work of Violet Martin and Edith Somerville continues in the province of Ulster, or what remains of it. Until now, the pensions of resident magistrates in Northern Ireland have been based on a retiring salary which is defined as meaning the average of the last three years of service. This new clause changes the definition to provide that the expression shall mean the salary which was in payment immediately prior to retirement. I am told that this is obviously more beneficial for a resident magistrate because salary increases in his last three years of office make the figures arrived at by the average of the last three years a good deal lower than the amount he is receiving at the point of retirement.
  The new clause brings the position of resident magistrates in this respect into line with that of stipendiary magistrates in England and Wales whose pensions since 1960 have been based on salary in payment immediately before retire-
  800
  meat. The provision will not apply to existing pensions by virtue of subsection (2) of the new clause. Subsection (3) of the new clause is a common form of provision in Westminster legislation which extends to Northern Ireland and preserves Stormont's power to amend the clause if Stormont should cease to be suspended and is subject to the general limitations on its legislative power.
  Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  [No. 4]
  After Clause 13, insert the following new clause:
  Payment of interpreters in criminal cases (England and Wales)
  .—(1) Where in any criminal proceedings an interpreter is required because of a defendant's lack of English, the expenses properly incurred on his employment shall be ordered by the court to be paid out of central funds; and—

  (a) where there is laid before a justice of the peace for any area an information charging with an offence a person who because of his lack of English would require an interpreter on his trial, but the information is not proceeded with, then, if he has incurred expenses on the employment of an interpreter for the proceedings on the information, he may apply to a magistrates' court for that area and the court shall order the payment out of central funds of the expenses properly so incurred by him; and

  (b) where such a person is committed for trial but is not ultimately tried, then if he has incurred expenses on the employment of an interpreter for the proceedings in the Crown Court, he may apply to the Crown Court and the court shall order the payment out of central funds of the expenses properly so incurred by him.

  (2) In this section "criminal proceedings" means any proceedings in which a court has power under the Costs in Criminal Cases Act 1973 to make an order for payment of costs out of central funds or would have power to do so if any reference in that Act to an indictable offence were a reference to any offence; and sections 13 to 17 of that Act (which relate to the procedure for implementing orders under the Act and other supplemental matters) shall apply in relation to this section as they apply in relation to that Act, except that—

  (a) in section 15 (costs ordered by magistrates' court to be paid out of central funds) subsection (1) shall apply as if the reference in paragraph (a) to an indictable offence included any offence, and shall also apply where an order is made by a magistrates' court under subsection (1)(a) above; and

  (b) section 16(2) (payment of costs ordered to be paid out of central funds and by

  801
  accused or prosecutor) shall not apply so as to require a defendant to reimburse any costs paid out of central funds by virtue of this section.

  (3) In this section "court" includes the House of Lords, and "defendant" means the person (whether convicted or not) who is alleged to be guilty of an offence."
  THE LORD CHANCELLOR: My Lords, I rise to move, That this House doth agree with the Commons in their Amendment No. 4, with which is to be associated Amendments Nos. 5, 12 and 13. This, again, is a Government Amendment. It was introduced in Committee in another place and is intended to improve the existing arrangements for the provision of interpreters in all criminal proceedings. It extends both to summary and indictable trials and it allows the court either itself to assign an interpreter or to accept an interpreter supplied by one of the parties and to pay him from central Government funds. As in all English sentences, it is the last part of what I have just said that really is the most important part; because obviously it is contrary to any kind of natural justice that a person should have to sustain a criminal trial unless he can hear and understand the proceedings in a language with which he is familiar. It is equally impossible to examine or to cross-examine a witness who is not adequately familiar with English without providing an interpreter for the evidence of that witness. In our adversarial system, this has always been generally recognised, as I hope are all the requirements of natural justice. But in our adversarial system the witnesses had to be paid by one or other of the parties. It therefore forms part of the costs which either are or are not dealt with in an order for costs made by the court at the end of the trial.
  When you come to think of it, this is an injustice to a potential defendant; and indeed in a private prosecution it might be so to a private prosecutor because the court might make no order or the person concerned might be unable to "raise the wind" for the necessary interpreter at the time he was wanted. Incidentally, it put us in peril of breach of the European Convention of Human Rights of 1950 and this Amendment will avoid that possibility by eliminating the chance that a convicted defendant might
  802
  be ordered to pay all the costs including the interpreter's fees and expenses. The new clause, which is Amendment No. 5, makes similar provisison for Northern Ireland and Amendments Nos. 12 and 13 contain two consequential minor drafting amendments. There is no provision for Scotland in this Bill because none is needed. Scottish law is already adequate on the point.
  Moved, That this House doth agree with the Commons in the said Amendent.—(The Lord Chancellor.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  [No. 5]
  After Clause 13, insert the following new clause:
  Payment of interpreters in criminal cases (Northern Ireland)
  ".—(1) In the Costs in Criminal Cases Act (Northern Ireland) 1968, after section 5 thereof, there shall be inserted the following section—
  "Frees of required interpreter.
  5A. Notwithstanding anything to the contrary contained in this Act, where in any criminal proceedings an interpreter is required because of a defendant's lack of English, the expenses properly incurred on his employment shall, in accordance with rules made pursuant to section 7, be defrayed by the Ministry.".
  (2) Where in any of the following proceedings, that is to say—

  (a) any proceedings on an appeal to the Court of Criminal Appeal in Northern Ireland, or preliminary or incidental to such an appeal;

  (b) any proceedings before a divisional court of the Queen's Bench Division of the High Court of Justice in Northern Ireland in a criminal cause or matter;

  (c) any proceedings on appeal to the House of Lords from a decision in proceedings within (a) or (b) above or an application for leave to appeal from such a decision;

  an interpreter is required because of a defendant's lack of English, the expenses properly incurred on his employment shall be defrayed by the Ministry of Home Affairs for Northern Ireland, up to an amount allowed by the court or (in the case of proceedings in that House) by the House of Lords.
  In this subsection "defendant" means the person (whether convicted or not) who is alleged to be guilty of an offence.
  (3) For the purposes of section 6 of the Government of Ireland Act 1920 this section shall, so far as it relates to matters within the powers of the Parliament of Northern Ireland, be deemed to have been passed before the appointed day within the meaning of that section."
  THE LORD CHANCELLOR: I beg to move that this House doth agree with the Commons in their Amendment No. 5.
  Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  [No. 6]
  Clause 15, page 11, line 19, at beginning insert:
  "The following provisions shall have effect with respect to the coming into force of this Act:
  (a)"
  4.39 p.m.
  THE LORD CHANCELLOR: My Lords, I rise to move that this House doth agree with the Commons in their Amendment No. 6, with which is associated Amendments Nos. 7, 8, 9 and 10. They are all Government Amendments and all relate to the date of commencement of various provisions of the Bill. If I may enumerate their effects they are these. Clause 6 and Schedule 2, which relate to the jurisdiction of the county courts, are consequential on the revaluation of property for rating which came into effect on April 1. Those clauses will come into operation on Royal Assent. The change in the wording of the Bill is necessary because the Bill has not received the Royal Assent before April 1.
  The two new clauses, Amendments Nos. 4 and 5, which we have just dealt with, will come into operation a month after the Royal Assent. The new clause which is contained in Amendments Nos. 2 and 14 relating to the pensions of widows and children of the Judiciary will come into operation on a date to be appointed by Statutory Instrument. The new clause will require regulations to be made, as I told the House, before it can become effective, and I am afraid that inevitably these will be complex. It is not possible to say exactly when they will be made. However, the new clause will apply to any judge in office after the Royal Assent, and so the pension position of any person in office at that time will not be prejudiced by his retirement or death between Royal Assent and the coming into operation of the new clause. Not only is that a humanitarian
  804
  provision but also it is intended to prevent people from hanging on in order to get a higher rate of pension. My Lords, I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  [Nos. 7 to 10.]
  Clause 15, page 11, line 23, beginning insert "(b)"
  Clause 15, page 11,leave out from beginning to "shall" in line 24 and insert "sections 7, (Payment of interpreters in criminal cases (England and Wales)) and (Payment of interpreters in criminal cases (Northern Ireland))"
  Clause 15, page 11,line 26, at end insert—"(c) section (Judicial pensions (increase of widow's and children's pensions)) shall come into force on such day as may be appointed by order of the Lord Chancellor and the Secretary of State made by statutory instrument."
  Clause 15, page 11,line 27, at end insert "(a)"
  THE LORD CHANCELLOR: My Lords, if the House will allow me, I will move formally en bloc, as I have already explained them, Amendments Nos. 7. 8, 9 and 10.
  Moved, That this House doth agree with the Commons in the said Amendments.—(The Lord Chancellor.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  [No. 11.]
  Clause 16, page 13, line 6, after "10" insert "and (Judicial pensions (increase of widow's and children's pensions))".
  THE LORD CHANCELLOR: My Lords, Amendment No. 1 is consequential on the new clause on judicial pensions. It extends the clause to Scotland and Northern Ireland in so far as it applies to judicial offices in those two countries. I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  [Nos. 12 and 13.]
  Clause 16, page 13. line 10, leave out "section 7" and insert ("sections 7, (Payment of

  805
  interpreters in criminal cases (Northern Ireland)) and (Pensions of resident magistrates in Northern Ireland)"
  Clause 16, page 13.line 11, leave out "section 7" and insert "those sections'.
  THE LORD CHANCELLOR: My Lords, I have already explained Amendments Nos. 12 and 13. If I may, I beg to move them together.
  Moved, That this House doth agree with the Commons in the said Amendments.—(The Lord Chancellor.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  [No. 14]
  After Schedule 2, insert the following new Schedule:
  "INCREASE OF CERTAIN WIDOW'S AND CHILDREN'S PENSIONS IN NORTHERN IRELAND
  1. The enactments in relation to which section 9 of this Act has effect by virtue of section 9(8) are—

  (a) Part XIII of the County Courts Act (Northern Ireland) 1959 (relating to county court judges and clerks of the Crown and peace), in relation to which the references in section 9 of this Act to section 7(4), section 8 and section 11 (or sections 10 and 11) of the Act of 1950 shall be replaced, respectively, by references to section 126(4) of the County Courts Act (Northern Ireland) 1959, section 127 of that Act and section 13 of the Judicial Pensions Act (Northern Ireland) 1951;

  (b) the Resident Magistrates' Pensions Act (Northern Ireland) 1960, in relation to which—

  (i) subsection (4)(c) of section 9 of this Act and the reference in subsection (6) to sections 10 and 11 of the Act of 1950 shall not apply; and

  (ii) the references in section 9 to section 7(4) and section 8 of the Act of 1950 shall be replaced, respectively, by references to section 8(4) and section 9 of the Resident Magistrates' Pensions Act (Northern Ireland) 1960;

  (c) Part II of the Judicial Pensions Act (Northern Ireland) 1951 (relating, by virtue of later enactments, to the National Insurance Commissioners, the President of the Industrial Court and the President of the Industrial Tribunals), in relation to which—

  (i) subsection (4)(c) of section 9 of this Act and the reference in subsection (6) to sections 10 and 11 of the Act of 1950 shall not apply; and

  (ii) the references in section 9 in section 7(4) and section 8 of the Act of 1950 shall be replaced respectively, by references to section 10(4) and section 11 of the Judicial Pensions Act (Northern Ireland) 1951.

  2. In relation to the provisions to which section 9 of this Act applies by virtue of paragraph 1(a) or of paragraph 1(b) above references in section 9 to relevant service shall have effect as references to service within the meaning of those provisions.
  3. In relation to any of the provisions to which section 9 of this Act applies by virtue of paragraph 1 above, the expression "enactment" in section 9(6) shall mean enactment of the Parliament of Northern Ireland or amendable by Act of that Parliament; and section 9(7) shall not apply, but regulations for purposes of section 9 may be made with the consent of the Ministry of Finance for Northern Ireland by the Ministry of Home Affairs for Northern Ireland or, in relation to the Judicial Pensions Act (Northern Ireland) 1951, the Ministry of Health and Social Services for Northern Ireland, and shall be subject to negative resolution within the meaning of section 41(6) of the Interpretation Act (Northern Ireland) 1954 as if they were a statutory instrument within the meaning of that Act."
  4.46 p.m.
  THE LORD CHANCELLOR: My Lords, this is a new Schedule designed to modify the new clause on the increase of widows' and children's pensions in its application to certain judicial officers in Northern Ireland. These are county court judges, clerks of the Crown and peace, certain resident magistrates, National Insurance commissioners, the President of the Industrial Court and the President of the Industrial Tribunals. This, I think, is consequential on what we have decided, although details have to be spelt out at considerable length. I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  [No. 15]
  Schedule 4, page 23, line 41, column 3, leave out "and subsection 8".
  THE LORD CHANCELLOR: My Lords, this is a drafting Amendment to the repeal Schedule. The Amendment saves subsection (8) of Section 15 of the Justices of the Peace Act 1949. That subsection preserves rules of court made under the powers repealed by the 1949 Act, which contains in Section 15 a general power to make rules of procedure for magistrates' courts. It was originally proposed to repeal subsection (8) as obsolete, but it was subsequently realised that it supports some seven sets of rules made before 1949: one example is the

  807
  Moneylenders (Summary Jurisdiction) Rules 1927. I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  [No. 16]
  Schedule 4, page 25, line 54, at end insert—

  9 & 10 Eliz. 2. c. 3.

  The Administration of Justice (Judges and Pensions) Act 1960.

  Section 2."

  THE LORD CHANCELLOR: My Lords, the effect of Section 2 of the Administration of Justice (Judges and Pensions) Act 1960 is now contained in paragraph 2(2) to Schedule 1 of the Bill. The section and the paragraph both provide that the pension of a stipendiary magistrate shall be calculated on his salary immediately before his retirement instead of on the average of the salary he received during his last three years. It is therefore appropriate to repeal Section 2 of the 1960 Act. This was inadvertently omitted from Schedule 4 and this Amendment rectifies that omission. I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
  On Question, Motion agreed to.

INSURANCE COMPANIES BILL [H.L.]
4.46 p.m.
THE EARL OF LIMERICK: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3ª. —(The Earl of Limerick.)
On Question, Bill read 3ª.
Clause 2 [No authorisation for insurance company under control etc. of unfit persons]:
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 1:
Page 3, line 1, after ("(4)") insert ("Subject to subsection (5A) below,").
The noble Earl said: My Lords, I think it would be convenient to take
808
Amendments Nos. 1, 2, 22 and 25 together. Their purpose is to rectify an omission resulting from the redefinition in Clause 2 of a person whose fitness is to be considered when an application is made for authorisation. Section 64 of the 1967 Act refers to an officer of the company, which would include a person immediately responsible for the conduct of the insurance business carried on in the United Kingdom of a company incorporated overseas. In the tighter definition to Clause 2 we lost this person. These Amendments make it clear that he is to be treated as if he were a chief executive, or if he is a director as a managing director, for our purposes. This will be the case whether such a chief executive acts under the immediate authority of a director or some other person in the company's head office, such as an overseas or regional manager. As a consequence of that new definition the managers who act under the immediate authority of the United Kingdom managing director or chief executive will also come under consideration as such, whereas without the Amendment they would not have done. The Amendments do not extend the class of people beyond those already covered by the 1967 Act. I beg to move.
THE EARL OF SELKIRK: My Lords, I wonder whether I may ask this question. It is about the meaning of subsection (2) which we are now extending in a manner which has been explained by the noble Earl. There is no reference to an insurance company except in subsection (2)(b). I understand that the managing director of a company which is not an insurance company will none the less be regarded as a controller if, as described in subsection (2)(a), it is an insurance company, whereas a chief executive will not be responsible if he is in a company which is not an insurance company even though, in point of fact, the subsidiary company is an insurance company. The reason I ask that question is that in paragraph (a) there is no reference to insurance at all and in paragraph (b) there is. It therefore supposes that the word "company" in paragraph (a) need not necessarily refer to an insurance company. It is perhaps not as clear a drafting as it might be, but in view of the extension to overseas companies, which might well be rather complicated,

809
I think that it would be just as well to be quite clear whether you are referring exclusively to insurance companies or whether you are referring to a parent company which has an insurance company as a subsidiary. If the noble Earl can clear that point—possibly an Amendment might be required in future—I think it would be desirable.
THE LORD CHANCELLOR: My Lords, this point is of course wholly out of order on the subject of Amendments proposed at Third Reading. If the House will permit me, out of order as it may be, I think the answer is that in paragraph (a) the company referred to exhypothesi has not yet been authorised.
This is not so in paragraph (b). But I will get my noble friend to write to the noble Earl if I am wrong in my first impression.
On Question, Amendment agreed to.
THE EARL OF LIMERICK: My Lords, Amendment No. 2 has already been explained to your Lordships. I beg to move.
Amendment moved—
Page 3, line 16, at end insert—
("(5A) In relation to a company incorporated outside Great Britain—

(a) the reference in paragraph (a) of subsection (2) above to a managing director of the company includes a reference to a person who is a managing director of that company in respect of so much of its insurance business as is carried on within Great Britain; and

(b) the reference in paragraph (b) of that subsection to a chief executive of the company includes a reference to a person employed by the company who, either alone or jointly with one or more other persons, is responsible (whether or not under the immediate authority of the directors) for the conduct of the whole of the insurance business carried on by the company within Great Britain but, if he is responsible also for the conduct of insurance business carried on by it elsewhere, only if there is no other person subordinate to him who is responsible for the conduct of the whole of the insurance business carried on by it within Great Britain.")—(The Earl of Limerick.)

On Question, Amendment agreed to.
4.52 p.m.
LORD ALDINGTON LORD ALDINGTON moved Amendment No. 3:
Page 3, line 16, at end insert—
("( ) Any incorporated company to which subsection (1) is applied by the Secretary of
810
State may ask the Secretary of State to receive written or oral representations on its behalf by a Director or by the Controller, and where such representations are requested the Secretary of State shall give the company and the Controller an opportunity of satisfying him that he is mistaken and that the Controller is a fit and proper person to be associated with the company.")
The noble Lord said: My Lords, it occurs to me that we might save ourselves time and have a more useful discussion if, in addition to Amendment No, 3, we cover the points relating to Amendment No. 18 and those relating to Amendment No. 20 at the same time, because I think each Amendment is part of a fairly wide subject upon which we have all waxed quite eloquent on two or three other occasions. I apologise to my noble and learned friend on the Woolsack if I appear to be harassing or being unduly repetitive in what I am saying. What I have tried to do here is to take to heart the words which he used on the Report stage: and I have read carefully several times columns 873 to 876 of our debate on March 22.
As I see it, my Lords, the Government take the position that companies and persons already within the industry, and so far as persons are concerned as controllers and so on already working in the industry, they are entitled to have the grounds of objection to the person explained to them if the Secretary of State is going to use one or other of the powers in this Bill on the ground that the controller is not a fit and proper person: and they have so amended later clauses of the Bill to provide for that. What we are concerned with here in Clause 2 is not only the case of a person who is not in the industry, but of a company, too, that is not in the industry and what we are concerned with in Clause 33 and my noble friend's Amendment No. 17, is the case of a person not yet a controller working for a company which is an authorised company. In both those cases my noble and learned friend the Lord Chancellor tells us that it would not be right or consistent with practice under the Gaming Act, and in many other parts of our life, to require that the Secretary of State should give the ground on which he is about to decide, or in this case has decided, that a person is not a fit and proper person to have that office in the insurance industry.
At the same time as my noble and learned friend said that it would not be right to give the grounds, he quoted to us from a judgment of the noble and learned Lord, Lord Denning, in a Gaming Act case in which I understand my noble and learned friend on the Woolsack was a participant before he was Lord Chancellor.
THE LORD CHANCELLOR: My Lords, as counsel, not as a litigant!
LORD ALDINGTON: My Lords, I accept that from my noble and learned friend. The relevant words in Lord Denning's judgment are these:
"They must give the applicant an opportunity of satisfying them of the matters (specified in the particular case), but I do not think they need quote chapter and verse against him as if they were dismissing him from an office or depriving him of his property. They are simply enquiring into his capability and diligence, and having regard to his character, reputation and financial standing",
and so on. If one accepts that, then one asks oneself: If that is the law, should one, or should one not, put it in a Bill like this? Naturally, one has considered that carefully, and it seems to me that there is a case here for making the position quite clear in this Bill. For one thing has impressed itself upon me, at any rate, and that is that most of your Lordships were not aware that the law was exactly in that form. Indeed, if I may say so to my noble friend on the Government Front Bench, we had reached the Report stage before the Government deployed this as their case. If we are not aware of the law being that, it would seem to me that people working in the insurance industry, or wishing to work in the insurance industry, would likewise not be aware of what the law is.
It is for that reason that I thought it right to put down this Amendment to Clause 2, and another Amendment to the new clause that my noble friend Lord Limerick will be moving later on. I have to admit that in order to be consistent I should have put an Amendment down, but through error have not done so, to the existing Clause 33. The words that I have suggested to your Lordships have to be different in each of the clauses because of the make-up of those clauses. There is nothing said in Clause 2 about making representations, whereas in Lord
812
Limerick's new clause and in Clause 33 I think there is. So I have made it clear that the company (because it is the company to which this clause refers)
"may ask the Secretary of State to receive written or oral representations on its behalf by a Director or by the Controller, and where such representations are requested the Secretary of State shall give the company and the Controller an opportunity of satisfying him that he is mistaken and that the Controller is a fit and proper person to be associated with the company."
I think there is a difference between just providing that someone may make written or oral representations and, on the other hand, going beyond that and requiring that the Secretary of State shall provide an opportunity for the controller or the company to satisfy him that he is mistaken. As I understand it, both the words in Lord Denning's judgment and these words really would require the Secretary of State to make inquiries of the person concerned, which would give the person concerned a chance of answering the charge. Clearly that is likely to be done in an indirect way. Many of your Lordships may have had in one or other of your occupations the task of asking people, as it were, to explain themselves without either wishing to, or being allowed to, disclose the source of the information which has been made available. I certainly have had to do that in my past life. I would guess that this is what the Master of the Rolls meant when he said that they must give the applicant an opportunity of satisfying them en the particular point; that is, I have assumed, the point that would have led the authority to make the decision that the person or persons concerned were not suitable for entering that particular vocation.
That is my explanation. I have had in mind, too, the importance which your Lordships have attached, both in this clause and other clauses of the Bill, to making it clear that your Lordship's House was going to insist that reasonable natural justice was applied by any Government to persons applying to the controller, either under this clause, or under later clauses. It would seem wise for your Lordships' House not to let the Bill go to another place without making it clear that we attach importance to the natural justice requirements about which we have spoken at much length and with great eloquence. I beg to move.

813
with the noble Lord that it would be for the convenience of the House if in this debate we dealt with Amendments Nos. 3, 18 and 20, so that Amendments Nos. 18 and 20 can be dealt with formally at a later stage. We have discussed this matter at considerable length at each stage of the Bill. Therefore I need only be brief. From discussions it would appear that there are three schools of thought on this issue of a fit and proper person. There is the school of thought that takes the view that the matter should be left entirely with the Secretary of State, that he should say "yea" or "nay" and that is the end of the matter. Secondly, there is the school of thought which believes the person not accepted as fit and proper should have the right of appeal. It believes that following a right of appeal there will be a judicial decision rather than an administrative one. It might be a decision taken after a hearing before a single judge.
There is a third school of thought which believes that the individual, if aggrieved, should have the right of stating his case to somebody who is independent of the Secretary of State and the Civil Service, and that that independent body should make its recommendations to the Secretary of State, but that the decision in the end should be an administrative decision and not a judicial decision; and that the Secretary of State should, after considering the advice given to him, make his final decision. That is what this Amendment is all about. It represents the middle school of thought. It proposes that the body that should hear the representations of the aggrieved persons should be an advisory committee appointed by the Secretary of State, and not more than three of the members of the committee should be drawn from the insurance industry.
All I need say in addition is that the Minister has warned us on more than one occasion that any remedy to this position must fit certain criteria, and he has laid down the criteria which it must fit. He says, first, that any solution must give adequate protection for confidentiality. I submit that this Amendment gives complete protection for confidentiality because the Minister can convey just what he likes to his advisory committee; it is entirely
814
up to him. He is not obliged to convey anything to them if he does not so wish.
The second criteria laid down by the Minister was that the burden of proof must not put the supervisory authority in such a position that it could not give adequate protection to the policy holder. That could have happened if the decision was to be a judicial one, or if the matter was to be placed before a tribunal which, in the end, would probably have a procedure and a burden of proof very similar to that of a court. In the case of an advisory committee that does not arise; the committee would merely hear the representations of the aggrieved person and, having heard them, would presumably question him and would give its advice to the Secretary of State before he took his final decision.
Thirdly, the Minister advised us that any solution of this problem must not cause delay. I submit that to allow the aggrieved person to submit his representations in writing, orally, or both, to an advisory committee would not cause any undue delay. Finally, I submit that it would have a greater appearance of justice being done if it were submitted to an advisory committee which consisted neither of the Executive nor the Civil Service which backs them up. The advisory committee, although appointed by the Secretary of State, would be completely independent of his Department and it would tend to give a greater sense of natural justice being done than the matter being heard merely by a civil servant appointed by the Secretary of State. My Lords, in due course I will move Amendment No. 20.
5.7 p.m.
THE EARL OF LIMERICK: My Lords, it may be for the convenience of the House if I intervene at this stage not in any way to curtail the debate, but to explain how an application for authorisation is dealt with in practice. I should like to thank my noble friend and the noble Lord, Lord Jacques, for the way in which they moved their Amendments and considered points raised in our previous debates. There will be a similar procedure—with some improvements which we already have in mind—applied to the approval of change of control in due course under Clause 33.

815
Companies applying for authorisation are required to complete a form which, among other things, demands details of the commercial experience and technical qualifications of the people who will occupy key positions. The person also gives personal particulars to minimise the risk of wrong identification, and a statement is required of any convictions or bankruptcies. Two directors and the manager or company secretary are required to sign a certificate that all this information is, to the best of their knowledge and belief, true and correct. We propose in future to require a personal affirmation from the individuals covered by the definitions in Clause 2, and a similar affirmation will be required under Clause 33.
The application form is a fairly substantial affair; it is like a driving licence, if I could so described it, though considerably more so, as is appropriate to the serious business of insurance. It contains 27 questions of which only two refer to the personal details of those to be associated with the company. The remaining questions, apart from the obvious technicalities, relate substantially to capitalisation and availability of funds, business plans and re-insurance arrangements—in fact to those matters which have been considered under Sections 62, 63 and 64 of the 1967 Act before a decision is taken on the totality of the information as to whether the Secretary of State can properly issue an authorisation under Section 61.
The effect of Clause 2 of this Bill is to vary the classes of people to whom those two Questions out of 27 relate. In arriving at the decision they will have taken into account any special features of the business plan put forward by the applicants; an unorthodox approach put forward by highly experienced people, backed by generous capitalisation, will be more readily acceptable than if it were a proposal from persons about whom nothing adverse was known, but whose record does not inspire the same confidence in their technical competence, or whose resources are relatively modest.
The information provided by applicants is carefully checked from appropriate sources. The applicants would be invited to clarify any obscurities which emerged at this stage, and this would
816
inevitably give them some indication of the points which are troubling the Department. It is very rare indeed for an application to reach the decision stage without some correspondence on a number of points of detail. If there are obscurities, or even major problems, which we think could be overcome the Department normally calls the applicants to a meeting and explains its worries or seeks further information. At such meetings we are not backward in suggesting possible ways in which technical problems might be overcome. If the application is then rejected there is nothing to prevent the applicants from putting forward further information or making a revised application which takes account of the evident misgivings of the Department about one aspect or another of the project, including doubts about the competence of the key personnel in that particular context. Indeed, it must evidently be the right of the applicants to do this. It certainly happens at the moment, and it happens sometimes on our advice, and equal consideration is given to further approaches of this kind. It is by no means unknown for a devised application to succeed.
But let us suppose that the Department still rejects the application. The applicants can then make further representations to them at official level or to Ministers. If one of them suspects that there is some incident in his past career which could at least be open to question he can give as full an explanation as he wishes of the circumstances surrounding the incident. The procedure therefore allows many opportunities for the applicants to see that any misunderstandings can be cleared up and to make representations. But suppose further that, even after all this, one of them still believes that he has suffered unfairness. He can then take the matter up with his Member of Parliament, who will doubtless, as is the way of Members of Parliament, probe the matter with Ministers in a thorough and effective way—if necessary, raising it on the Floor of a House of Parliament. If dissatisfied, the Member can put the matter to the Parliamentary Commissioner for Administration, who can decide to review the whole administrative procedure, including the part played by Ministers. Ultimately, the decision and the responsibility lie with the Secretary of State, but if the P.C.A. were unhappy

817
about what had happened he might well ask for a review of the case. Such a request would be treated as a matter of the highest importance and would lead to a reconsideration of what had been done, a reconsideration carried out with the utmost care and attention and paying particular regard to the farm of the criticism. I hope I have shown that applications are never treated lightly or capriciously, but rather with' all the seriousness which is appropriate in discharging the heavy duty of controlling entry into the insurance industry. The words that were quoted from the judgment of Lord Denning are that they must give the applicants—in this case we—"an opportunity of satisfying them"—or us— "on the matter in question". In that procedure there are many opportunities.
I now turn briefly to the Amendments and I would say at once that both my right honourable friend Sir Geoffrey Howe and I have a good deal of sympathy with the purpose behind the Amendments. Our minds are by no means closed to the possibility of improving this very troublesome area of the Bill, but for reasons which I shall briefly state it seems that there are great difficulties in accepting the Amendments which we are discussing. Amendment No. 3, which was tabled by my noble friend Lord Aldington, is unnecessary in that it states what I have explained to be an existing right; namely, the inherent right of an applicant to explain his application or to make a new application, differing in form. The real difficulty with his Amendment is that by confining the right to Clause 2 of the Bill the net effect might be to leave the applicant worse off by curtailing the presumption that such a right extends equally to other matters, such as capitalisation, business plan and reinsurance arrangements, which also stand to be considered before an overall judgment is made on the issuing or withholding of an authorisation under Section 61 of the 1967 Act. It is clearly undesirable to introduce such doubts, just as it would be undesirable to clutter the Bill with an unnecessary provision. With regard to Amendment No. 18, there is a separate difficulty in that the suggested procedure either repeats or conflicts—at least in point of time—with the procedure for making representations which is to be found in subsection (3)(b) of Amendment No. 17.
818
The Amendment tabled by the noble Lord, Lord Jacques, proposes an advisory committee, and I appreciate the trouble that he went to in order to meet the points that were raised on this at an earlier stage of the Bill. We have of course considered this carefully in the drafting of the Bill and have had occasion to reconsider it more than once since its introduction in this House. But we have failed to find a satisfactory solution and I think this Amendment likewise has difficulties which make it very difficult to accept. For instance, as the noble Lord himself pointed out the advisory committee has no specified powers, no procedure is indicated and there is no right for its members to receive relevant material. I appreciate that it is not essential to spell out all these matters in a Statute, but I think the problem is that any attempt to define them more closely, as to how they work in practice, would lead us right back to the much-discussed practical difficulties which have prevented us thus far 'ram adopting such a mechanism.
As the Bill now stands, except for a redefinition of those persons with whom our supervisory rule is concerned, and the necessary addition of the vetting of the persons proposing to become controllers of established companies, the whole of this area would remain as it has been since 1967. Granted the failures of insurance companies and the anxieties which stimulated the introduction of this Bill, it would, I believe, be an indefensible proposition that we should take any material steps back from procedures, the desirability of which has been established by experience in dealing with applications made in the last six years. The primary purpose of this Bill is consumer protection—in this case the protection of the policy holder. It is also concerned to protect the great name of our industry, and the most effective safeguard must be that its management is in the hands of individuals of integrity and competence. My right honourable friend Sir Geoffrey Howe will be looking again carefully at any points raised in this debate before this Bill is considered in another place, but I do not believe that we could be said to be improving the Bill by accepting any of the Amendments which we are now considering.
VISCOUNT DE L'ISLE: My Lords, to my regret I was unable to be in your

819
Lordships' House for the Report stage as I was abroad, but I have read the debate with great care and I hope I may be allowed shortly to intervene at this stage. I am sure we are all grateful to the noble Earl, Lord Limerick, for his careful and painstaking enunciation of the methods used by his Department of vetting (if I may so call it) applications for the authorisation of insurance companies and I presume for the alteration of control. We are legislating and I think we have a right to expect a very careful system of administration, but that is not the same as legislation. Having read the debates may I say that I am persuaded by the arguments advanced by noble Lords in pursuit of the purpose of giving a person who is considered to be not a fit and proper person some right of redress or appeal. In particular, I was impressed by the arguments adduced by the noble and learned Lord, Lord Stow Hill, who argued with great moderation and very great persuasion. I know the Government hold that it would be wrong to resile from the Act of 1967. I am not persuaded that Parliament should not have a "second think", and I am the more persuaded because of the contents of our debates on this subject. I am sure there is now a much greater awareness in this House of what the 1967 Act means and we are more aware of the edifice which is being built upon that foundation.
If one reads the 1967 Act, particularly Clauses 61, 64, 68 and 82, one sees that although strictly, as the noble and learned Lord the Lord Chancellor said, we are maintaining the status quo, there is no doubt that the position of a controller—or a director, where the word is appropriate—is highlighted to a degree which is not apparent in the earlier Act. It so happens, as I have discovered since I took part in the Committee stage of this Bill, that as a director of a company which acquired a large insurance company I must have had my name before the Board of Trade, or whatever the equivalent is now. I had no idea of the peril I was running at the time. It is a fact—and perhaps my situation might explain it—that in dealing with the acquisition of insurance companies by other businesses we are not dealing with young barristers or aspirant barristers or
820
professionals of any kind; we are often dealing with men of experience in business and with a reputation. The noble Earl, Lord Limerick, is endeavouring to persuade us that no harm could possibly come to them owing to the careful administration by his Department—the care taken to test all these applications and the personal antecedents of the directors or controllers concerned.
I do not know whether he is retracting a little from the speech he made on the Committee stage, but certainly that speech filled me with despondency. I do not think that we should have informers in our system. If we have them, then at least there should be a body which can consider whether the information is genuine and not motivated by the slightest concept of malice. A man who may have a bankruptcy, or even a conviction, early in his career should not necessarily have that conviction or that bankruptcy hanging about his neck for ever, and if he has, he ought at least to be able to appeal to some impartial body to demonstrate that he is no longer not a fit and proper person.
May I argue from my own experience of business over a considerable period? Let us take the case of a refugee from Germany just before the War. Some of us will remember the number who flocked into London, desperate for a living, ingenious very often, and at their wits' end. It is conceivable that some people who may now be well established in business could in those early days have been bankrupted or even convicted; yet they have made for themselves a wholesome, satisfactory career in the business life of this country. It is because there are people like that that Parliament wishes to be assured that what goes on behind closed doors is in no way prejudicial to the individual. I must tell your Lordships, therefore, that I am not persuaded by the Government's arguments. I believe that the protection of liberty is a constant struggle. It is not just one great bang but is a constant attention to vigilance, a constant attention to detail, a constant awareness that liberty can easily leak out by administrative methods or by the lack of vigilance on the part of Parliament. I should not like this House to legislate in the sense that the Government have asked us to do.
THE EARL OF SELKIRK: My Lords, I am grateful, as are others, for the assistance which the noble Earl, Lord Limerick, has always readily given in explaining and helping on any points which may have arisen on this matter. The noble Earl having described the many opportunities which entrants to the insurance industry have of making representation, I cannot understand why he should so firmly resist their incorporation in the Statute. I do not understand these arguments. We have no say as to the administration of Departments. Departments are run according to the methods which those temporarily in charge of them think wise, and they may be changed at any time. If these opportunities exist, there is absolutely no reason why they should not be incorporated somewhere or other in the Statute. I dislike intensely the noble Earl's reference to Parliamentary representation. Of all the subjects in the world, to make an appeal to Parliament on a matter like this is wholly wrong. It is a last resort but it is treating the subject in a completely false way and it would not be fair for a judgment of this kind which may well be taken partly on political grounds. It is a most undesirable thing to do. For that reason too, the Parliamentary Commissioner is the very last resort to which recourse might conceivably be made.
I support strongly what the noble Lord, Lord Jacques, has said regarding the idea of somebody who is independent—confidential, if you like—who can say whether something has gone wholly wrong. Why should there be such anxiety about this matter? One of the things that occurs is the question of identity. That is one of the most difficult things to establish: men of the same name and possibly of the same career. The big difference between this Bill and the 1967 Act is that the 1967 Act—I think I am right—deals exclusively with entrants to the profession. It did not deal with people changing office who were already in the profession and it did not deal with those occupying posts in the insurance profession. May I, with respect, say to the noble and learned Lord the Lord Chancellor, that when he said that Clause 2 applied only to authorising companies, that is not true. The definition of "controller" runs through the Bill from the
822
beginning to the end. It applies to all the definitions which take place the whole way through.
If the objection to the Amendment we are presently discussing is merely that it could extend to other considerations and authorisations instead of purely personnel, I should not be surprised if my noble friend were prepared to alter the Amendment to cover simply the personnel element, so that there was proper representation on that score. This Bill has been well received in all particulars except for the fact that there is a degree of what we have heard before—of hearing cases in camera. I do not want to compare this to other cases elsewhere, but there is no judgment, no appeal, and this may affect a man's whole life. It may be even more important than other things that can happen.
I had great pleasure in reading the speech of the noble and learned Lord the Lord Chancellor to the Pilgrims in New York. It was one of those colourful speeches that he makes about the great traditions we have inherited both on this side and on the other side of the Atlantic: literature, law, religion and freedom. And what was the essence of it? Freedom under the law. We all believe in that. That was the essence of the story which the noble and learned Lord the Lord Chancellor, told the people of New York we regarded as important. I do not think that any country in the world will learn the great principles of the law or freedom from this Bill. It will not go forth as one of the great traditions on how insurance industries should be conducted. I hope that the Government will think again on this matter. I personally prefer the Amendment of the noble Lord, Lord Jacques. It is a good Amendment and goes a long way towards meeting all the points which the noble Earl, Lord Limerick, has repeated in this House, which I know he is worried about and which I know he has given much consideration to. I cannot see that this Amendment will in any way reduce the power of the Secretary of State. It does not reduce it. All it does is to obtain an outside opinion. I hope that the Government will think very seriously before leaving these Amendments out.
LORD HAWKE: My Lords, I do not agree altogether with my noble friends on the right who seem to regard it as a

823
man's essential privilege and right to open up and do insurance business in this country at his will. I regard the privilege of being allowed to conduct insurance business in this country as a great one, open only to people of the most unblemished character. For that reason I do not agree with some of the things that they have said. Nevertheless, I should have thought that the Amendment of my noble friend Lord Aldington was a fairly harmless one to incorporate in the Bill, because it is probably the sort of thing that would happen in any case. I would not support the idea of an outside body which was being argued by the noble Lord, Lord Jacques, because the idea of passing the buck to an advisory committee in the case of protecting the public is wrong. It is the Minister's job and he has got to make a decision, and I do not like his sheltering behind an advisory committee. I do not mind the Minister receiving representations from anybody who thinks he ought to be allowed to set up, and either accept those representations or turn them down. But I would not go further than that.
THE LORD CHANCELLOR: My Lords, I am afraid we have threshed out this argument very fully on, now, a sequence of different occasions. I very much doubt whether there is anything new to be said on my side about it. But I must, I think, especially since my noble friend Lord Limerick is, theoretically at any rate, muzzled in respect of a second speech, comment a little on the speeches which have been made. Of course, we are all concerned with human liberty under the law, and for reasons which I will try to indicate I rather doubt whether my speech to the Pilgrims adds greater light to this particular controversy. It is rather like the case when my noble friend Lord Aldington at an earlier stage was a little sensitive when I suggested that the effect of his then Amendments would be to diminish the protection of the public from the potential crook. He said he was as keen as I was to prevent that from happening, and of course I accept the good intentions of all concerned in that respect. The question is what the effect of the legislation which we are proposing is likely to be, and not what our intentions presently are. It is from that point of view that we
824
have to consider the desirability or otherwise of the Amendments.
We have passed the Third Reading stage, and we are now considering Amendments on Third Reading, which is a privilege which this House has kept for itself, contrary to the procedure of another place. I think it always has peen the case that we keep ourselves rather narrowly to the particular Amendments which are proposed on Third Reading rather than endeavouring to open them up. My noble friend Lord Limerick has given the most ample assurance to both the noble Lord, Lord Jacques, and my noble friends that our right honourable friend Sir Geoffrey Howe will consider very carefully what has been said in these debates. I think that should have persuaded all noble Lords, whether or not they agree in their entirety with the comments of my noble friends, or those of them who were critical of the Government policy, that the particular Amendments are open to quite serious objections. I would, therefore, think that my noble friend Lord Aldington would be fully justified, whatever his convictions might be, in seeking leave to withdraw, if he would be good enough to do so, the Amendment standing in his name, which is the only one presently under consideration precisely in order that effect may be given to the assurance of my right honourable friend Sir Geoffrey Howe, given through my noble friend Lord Limerick.
I must say just this. A great deal has been spoken about natural justice and liberty under the law, but we must be a little more precise and a little careful about what natural justice prescribes and what liberty under the law really means. I endeavoured in my last speech, from which my noble friend Lord Aldington quoted very politely at the Report stage of this Bill, to quote from a judgment of the Master of the Rolls, which was not altogether welcome to me at the time it was delivered, for reasons which I think I need not explain, as to what the law is in relation to matters of this kind. The judgment of the Master of the Rolls in the Benaim case was in fact a rather sophisticated interpretation, and there was a good deal of back history to it. I would remind the House what the back history was, because it is very germane to the speeches of my noble friend Lord De L'Isle and my noble friend Lord Selkirk.

825
In order to ascertain what natural justice demands, you have first of all got to ask yourself whether the problem which is under discussion is a quasi-judicial function or an administrative function. These phrases are now no longer popular with the Judiciary, as appears from the Master of the Rolls' judgment from which I quoted, but they are none the less essentially alive when one discusses the constitutional issues involved. When something is quasi-judicial in function it is essentially a matter with which Parliament as such wishes third parties, independent in character, to be the judges, whether the formal professional Judiciary is involved or whether some special tribunal or committee is chosen instead. To those matters, the essential of natural justice is that there is a quasi-judicial proceeding in which both sides are heard, and that is what natural justice requires in that class of case. Sometimes questions of policy intervene, in which case a tribunal is normally selected. Sometimes questions of disputed fact or law are the sole questions to be contested, in which case something more like a formal law suit takes place.
So the Master of the Rolls was saying, in his rather more sophisticated language from which I quoted, where administrative problems are involved almost exactly the opposite criteria apply. In that case, liberty under the law and natural justice demand that an administrative decision, taken on grounds of policy, is the ultimate determinative factor. In that case, in order to preserve liberty, you require not a court but a Minister responsible to Parliament. And I must say to my noble friend Lord Selkirk that I think he has wholly misapprehended the constitutional position in that case. It is Parliament which is responsible for the liberty of the individual in matters of policy. It is an independent tribunal of some kind that is responsible for the liberty of the individual where the matter is quasi-judicial in character. And you destroy the liberty of the individual it you depart from this clearly defined distinction and this clearly defined principle.
In the present case the contention of the Government throughout has been that it is the good name of the insurance industry, which is in the main unblemished in the world, one of our great invisible exports, which is ultimately the
826
question of contention between us. The good name of our great insurance institutions is unblemished. Unfortunately, as I have discovered during the course of forty years' experience at the Bar, there are unfortunate people, elderly clergymen, widows, young people, who can ill afford to lose and who do not know the difference between one of the well-known and established insurance institutions and some fly-by-night company; do not know the difference between a reputable member of the Stock Exchange and some bucket shop in a back street in the City, and it is those people whom you must protect.
On my side of the House I think we could agree, although approaching the matter from almost a totally opposite angle from the Party opposite, how we need to look at this matter. The Party opposite has usually started from the proposition that they distrust the capitalist system and need Government intervention in order to prevent its evils. I start from precisely the opposite direction. I trust the capitalist system and want to get the best out of it I possibly can, which involves a certain amount of Government intervention in order to prevent misuse. I do not see necessarily that our destination need be different because the stations from which we take our point of departure are not the same, and in this particular case I feel absolutely convinced that my right honourable friend is right in claiming that this is a question of administration and not a question of a quasi-judicial dispute and that he therefore is acting in the absolutely, consisted tradition of our Constitution and the law in pressing the view upon Parliament which he has done, fortified as he is by the fact that a different Government of an opposite political complexion in 1967 came to precisely the same conclusion.
I do not want to be too disputatious in dealing with my noble friend Lord De L'Isle and my noble friend Lord Selkirk in particular, because I start, I think, from the same premises as they do even if I do not always accept the same conclusions. What I would urge upon them is that they should be prepared to confide in the assurances given by my noble friend on behalf of my right honourable friend who is ultimately in charge of policy here and be prepared, at this stage at any rate, to part with this Bill in the

827
conviction that he will do his best to meet what legitimate points are made in so far as he can.
As regards the two particular Amendments, I do not think it can be said too plainly that that which my noble friend Lord Aldington put forward—which is the only one actually under discussion although I quite agree that the debate has properly referred to Amendment No. 20 in this connection—spells out in relation to one of a number of factors, but only one of a number of factors, that the applicant has a right which he would have whether or not the Amendment was passed; namely, the right to renew his application with fresh representation. It therefore in fact adds nothing to the protection which the applicant has. What is does (and this was a point which I thought my noble friend made with consummate effect) is to cast doubt upon the similar right which equally certainly exists in relation to other factors.
For instance, in the application form the kind of business proposed to be carried on is one of the dominant factors in determining the result of the application. That, again, is a matter upon which the applicant has a right to renew his representation, if he is turned down the first time, and to satisfy the Secretary of State the second time. If this Amendment were carried I cannot but think that the courts would be inclined to apply the principle of expressio unius est exclusio alterius and leave the applicant in a worse position than he was before. If it is desirable to insert something of this kind I doubt whether it would be particularly desirable to insert this, so that there are absolutely honourable reasons, without departing in any way from what he has said, that my honourable friend could possibly agree not to press that Amendment.
With regard to the Amendment proposed by the noble Lord, Lord Jacques, there are many advantages in an advisory committee if and in so far as it could be argued that this was a quasi-judicial and not a political decision. But quite clearly his Amendment as it stands takes away from Parliament the ultimate responsibility for it if and in so far as it is an administrative decision. Let us consider for a moment if a Mr. Savundra—
828
and assuming that Lord Jacques's Amendment were accepted—goes before the Secretary of State who turns him down perhaps relying, contrary to my noble friend Lord De L'Isle, on reputation from Ceylon from where Mr. Savundra came. It then goes to the advisory committee. The advisory committee, with not the same information before it, accepts Mr. Savundra's application, or recommends that Mr. Savundra's application be accepted. That is all it can do if the Amendment is taken literally because it is only advisory in its function. But let us assume that the Secretary of State, hearing perhaps questions in the Commons, and wondering whether he was right in turning Mr. Savundra down, accepts him. Now where does Parliament stand and where does the Secretary of State stand, or his successor, if five years later Mr. Savundra turns out to be a criminal and loses £1 million of the policy holders' money? He can say with perfect strength of mind, "I thought this man was probably a crook, but I was advised by this independent body, not responsible to Parliament, to let him through, so I let him through, and £1 million has gone away from the fatherless children and widows who trusted him because of the advisory committee, not responsible to Parliament."
If it turned out not to be an advisory committee but, as my noble friend Lord De L'Isle suggested, some form of actual independent tribunal, where would Parliament be with the judgment of its executive officer responsible to itself overridden by the independent body with £1 million lost to the children and widows? These are, I suggest, serious considerations. It is not altogether good enough for my noble friend Lord De L'Isle to talk about the refugees from Nazi Germany. What we might have to deal with of course is refugees. We have them now, but should they be encouraged to enter into insurance as their first option when they come here, and if they do enter in should they not enter into the insurance industry at a grade rather lower than that of managing director or controller, so that they can prove in that capacity either their competence or their incompetence? I would seriously suggest to my noble friends that there is a strong case on the other side, but all I am asking them to do is to trust my right

829
honourable friend to take very careful note of what they have said and to leave these matters in that confidence to full discussion in another place.
LORD ALDINGTON: My Lords, I think I am entitled as the mover to speak again. If that is right I am a little uncomfortable and I will explain to your Lordships why I shall, in part at least and in good heart try to follow the advice given by the noble and learned Lord the Lord Chancellor, but I shall do it only after having explained to your Lordships my understanding of what I am doing and after dealing with some of the—if I may say so with respect—blocks which the noble and learned Lord the Lord Chancellor has put upon my Amendment.
The procedure we are in is a little difficult because, as I am the mover, I think I am the only one of your Lordships with the right to reply to the noble and learned Lord but I think I ought to confine myself to the Amendment in front of us and not to the Amendment moved by the noble Lord, Lord Jacques. I hope he will have the opportunity to reply when the time comes to move that Amendment and not now so if I may I will confine my remarks to Amendment No. 3. In the course of his remarks the noble and learned Lord the Lord Chancellor indicated that there were strong objections to the actual form of my Amendment. I have not yet heard one objection to the form of the Amendment. He went on later to support and strengthen the argument put forward by my noble friend Lord Limerick that if we put these words into Clause 2 we might, by implication, be weakening the applicant's right on other things. But that is an abominable argument. This clause refers to one thing and one thing only, and that is a man's personal fitness and properness to be associated with an insurance company. I ask your Lordships how in Heaven's name I can put down an Amendment to this clause which covers those things to which my noble friend has referred. He is quite right in saying that in applying for authorisation the applicant will have to satisfy the Department on all kinds of points and that is under the procedure for authorisation which is laid down not in this Bill but in the original Section 61. This Bill refers solely to the fit and proper criterion, as I understand it.
THE LORD CHANCELLOR: My Lords, I am sure that my noble friend does not wish to make a false point, but he is in fact not understanding it. This clause refers to an application under Section 61 of the principal Act. It is true that the criterion set down in this clause confines itself in subsection (1) to the fit and proper criterion of the controlling person. But once an application is made under the principal section, and this clause relates back to the principal section, it raises all the other criteria, too.
LORD ALDINGTON: My Lords, my noble and learned friend has now explained this point. No doubt if in another place they were to accept an Amendment such as I have now proposed, they could add a further clause to the Bill to deal with the procedure for authorisations. But to accuse me of having put down a wrong Amendment to Clause 2 because it does not cover all the things which Clause 2 does not cover, seems to me not quite usual for a Lord Chancellor and, if I may say so, a little unfair.
The second point I want to make is this, because we must understand ourselves when we say that we shall withdraw the Amendment in the hope that later the point will be satisfied. As I understood my noble friend on the Front Bench, he said that the procedure which he announced to us fits exactly with the form of words in the Amendment, and, because it fits exactly, the form of words in the Amendment is unnecessary. As some of my noble friends have indicated, that is an argument which can be accepted or not accepted. It is an argument which many of us have used when sitting on Front Benches, and it is also an argument which many of us have resisted when not sitting on Front Benches. I think it is slightly illogical to attack an Amendment which seeks to give someone a legal right, which right he has by custom but not by law at present. Another Administration might alter things and I think it is your Lordships' wish that they should not alter things, and the best way of ensuring that they do not do so is to put something in a Statute. So I hope I am right in thinking that, if I now withdraw the Amendment, the right honourable gentleman Sir Geoffrey Howe will not, as it were, be taken to have decided that forms

831
of words which are consistent with present procedure will not, in any case, be inserted into the Bill. I hope he will remain free to adopt this or a similar form of words, if he decides that that is a good thing.
Finally, my noble friend, having told us that the form of words here proposed is not acceptable to him because it merely repeats exactly what is done, then accused me of wishing to take a step backwards. I do not understand that proposition, and I hope that the Government will not be against the idea in this Amendment on the ground that it is a step backwards, because it most certainly is not. It is trying to introduce an amount of certainty into the law which is manifestly not there now, from the point of view of the understanding of the ordinary man. That was my purpose in moving the Amendment, that was the purpose which I emphasised to your Lordships, and I hope I am right in thinking that the Government will be reconsidering the matter, without having made up their minds against me on any of those points. If I am so right—and I see the nod from my noble friend—then I shall beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 5 [Periodic statements by company with prescribed class of business]:
5.55 p.m.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 4:
Page 5, line 34, leave out from first ("of") to end of line 35 and insert ("statements under section 7 of the Act of 1958 which are deposited under section 8 of that Act.")
The noble Earl said: My Lords, this technical Amendment is necessary because, as a result of Clause 4(1) and (4), not all the documents deposited under Section 8 of the Act of 1958 will now be signed by the same persons. The effect is that the statements to be made, more frequently than annually, under Clause 5 will be required to be signed by at least two directors and the chief executive, but not by the auditor. My Lords, I beg to move.
On Question, Amendment agreed to.
Clause 10 [Investment by company with long term business in associated companies]:
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 5:
Page 9, line 17, after ("company") insert ("out of the insurance company's long term funds")
The noble Earl said: My Lords, I think it will be convenient to consider together Amendments Nos. 5, 6 and 7. They rectify an omission in the clause by making clear that the restriction imposed on investment in associated companies is concerned only with investments made from the long-term funds. In moving this simple Amendment, I should recall that some imperfection in the definition of "associated companies" was recognised in our debate at the Report stage. The fact that there is no Amendment down on this point is, however, not an oversight. A Government Amendment was prepared and discussed with the British Insurance Association and the Life Offices Association, but the general feeling was that rather more time is needed to arrive at an agreed decision which achieves what we want without unnecessary inhibitions. I can say that there is no disagreement of principle on this question. It is merely a matter of agreement in detail, and it is envisaged that a suitable Amendment will be brought forward in another place. My Lords, I beg to move.
On Question, Amendment agreed to.
THE EARL OF LIMERICK: My Lords, I beg to move Amendment No. 6, which I discussed with Amendment No. 5.
Amendment moved—
Page 9, line 42, after ("company") insert ("out of its long term funds")—(The Earl of Limerick.)
On Question, Amendment agreed to.
THE EARL OF LIMERICK: My Lords, I beg to move Amendment No. 7, which I discussed with No. 5.
Amendment moved—
Page 9, line 45, at end insert ("in a case where the right to receive the money would constitute a long term asset of the insurance company")—(The Earl of Limerick.)
On Question, Amendment agreed to.
Clause 12 [Grounds on which powers are exercisable]:
6.0 p.m.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 8:
Page 11, line 21, leave out paragraph (f).
The noble Earl said: My Lords, I think it will be convenient to consider together Amendments Nos. 8, 11, 14 and 16. There is some presumption on the Marshalled List that Amendment No. 11 stands in the name of my noble friend Lord Aldington, but it is in fact my Amendment. Whatever else we may disagree about, we are in agreement on that point and I should like to take that Amendment in this group.
LORD ALDINGTON: The paternity is good.
THE EARL OF LIMERICK: My Lords, the purpose of these Amendments is to modify, in the light of our previous discussions, the Secretary of State's powers to impose precautionary requirements upon a company which has been newly authorised or one which has come under new control. The key Amendment is No. 11, which recasts subsection (4). As a consequence, subsection (1)(f) can be dispensed with and this is done by Amendment No. 8. Amendment No. 14 is, in turn, consequential upon leaving out subsection (1)(f).
The main Amendment places a maximum limit of ten years upon the operation of requirements imposed in the circumstance specified, instead of leaving the period indefinite. This meets a point which was originally raised by the noble Lord, Lord Jacques. It also introduces 'flexibility by permitting such precautionary requirements to be imposed or tightened up at any time during the first five of those ten years, so that the Department will not feel bound to impose them in the most stringent form at the outset, when the development of the company's affairs—for example, the rate of expansion—cannot be foreseen, as might otherwise be thought prudent. A new company may thus be given the benefit of a reasonable doubt. Any additional requirements so imposed will operate at most for the balance of the ten-year period. Amendment No. 16 makes clear
834
that any variation after the first five years may only be by way of relaxation.
A further minor change is the inclusion of the power under Clause 18 to require actuarial valuations of any long-term business carried on by the company more frequently than the maximum permitted interval of three years as one which may be exercised in these circumstances. A more important variation is that the powers to impose specified forms of requirement may be exercised on the ground of a change of control only in the sense of Clause 2(2)(c), that is to say that they may not now be exercised simply because there has been a change of managing director or chief executive. This meets the point raised by my noble friend Lord Aldington. I beg to move.
LORD ALDINGTON: We should thank my noble friend for this Amendment which we began pressing for some six weeks ago and which has at last arrived. It makes me hope, with reference to the Amendments we have just discussed, that in about six weeks we shall see down similar Amendments that we have been pressing for, and I shall have two more occasions later on to thank my noble friend for adopting the proposals put forward from both sides of the House but strenuously resisted by him on two previous occasions. This is a great improvement and I am very glad to thank him for it.
LORD JACQUES: I should like to join in the thanks, but I will reserve them until Third Reading.
On Question, Amendment agreed to.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 9:
Page 11, line 44, leave out ("that section") and insert ("those subsections")
The noble Earl said: My Lords, Amendment No. 9 is consequential upon the Amendment made on Report whereby this subsection was made to refer to subsections (2) and (4) instead of to the whole of Clause 20 as it now is. I think that several noble Lords may have realised that in line 40 the number of that clause has been omitted in error. A correction will be made in the next print without the necessity of a formal Amendment. I beg to move Amendment No. 9.
On Question, Amendment agreed to.
6.4 p.m.
LORD ALDINGTON LORD ALDINGTON moved Amendment No. 10:
Page 11, line 47, at end insert—
("Provided that at any time not less than two weeks after the specified books and papers have been produced by the company to the Secretary of State or a person authorised by him the company may request that the said books and papers be returned and if so requested the Secretary of State shall cause them to be returned and the powers conferred on him by subsections (2) to (4) of section 20 shall cease to be exercisable under this section for a period of not less than one year but may continue to be exercisable on any of the grounds set out in subsection (1) above.")
The noble Lord said: My Lords, I rise to move Amendment No. 10. This is to be a further discussion of a point which has been discussed and debated on at least two previous occasions, relating to the power of inspection which is now in Clause 20, subsections (2) to (4), where the powers in those subsections may be used by the Secretary of State, not because he has suspicions about a particular company, but because he considers the exercise of that power to be desirable in the general interests of persons who are or may become policy holders. In other words, he is given the power under this subsection to inspect any or all insurance companies without suspecting them of anything wrong. He told us that he needed that power principally because he wanted it to be understood in the industry that the entry of an inspector into an insurance office did not mean that the company was a bad company just about to go broke. But I think it would as to be true—in the way that Governments are—that they see some advantage in having the power in this form in case they have suspicions that a company is not a good company, but that suspicion is not strong enough to enable them to invoke the aid of Clause 12(1)(a), (b), (c) or (d). That, I think, is why they want this subsection.
But, my Lords, if I am right in saying that as it is at present drawn any Secretary of State who so wished could subject any company to the full rigours of a full inspection, perhaps on the American type, costing an enormous amount of money, involving enormous numbers of men, and lasting for a great many months, I think I am also right in thinking that the present Administration would not propose to use the powers that way. If
836
they do not propose to use the powers that way, they are not sensible in asking for, and we would not be sensible in giving, powers as wide as that.
On the last occasion when we discussed this matter I sought to limit the inspection by defining a purpose. This was found not acceptable to some of your Lordships, and also not acceptable to the Government. After further discussions with various people concerned, I now propose that we should try to limit the duration of the inspection under this subsection. That is what these words propose to do. I should make it plain that it does not affect any inspection which is brought about by reason of the conditions in Clause 12(1)(a), (b), (c) or (d). My proviso refers only to inspections brought about because of the circumstances in subsection (3). Your Lordships will see that what I propose is that there should be a limited period, defined in my Amendment as two weeks from the date when the books and papers become available; and after the expiration of those two weeks if, and only if, the company being inspected so requests, the inspection must stop and cannot be resumed for a year, unless, of course, there is a reason under Clause 12(1)(a), (b), (c) or (d).
I have tried to suggest a period during which the inspection of books would bring to light one or other of those reasons if, in fact, they exist. I have also provided that the period of two weeks does not operate automatically, but only if the company being inspected so requests. That would seem to me a reasonable limitation of this otherwise unbounded power of inspecting companies, acting legitimately, carrying on a legitimate business, acting in a legitimate way, and not known or suspected to be offending in any way against any part of the law or to be conducting their business in an incompetent way which might result in insolvency or threatening the policy holder interests. If, of course, the company is doing any of those things, that will come to light in the course of the inspection.
Now, why do I object to this power of wide inspection? I object to it because of the cost, because of the waste of the time of management and staff, and because of the general distortion of the relationship between Government, on the one hand, and commerce and industry,

837
on the other. As the noble and learned Lord the Lord Chancellor was reminding us, there is a difference in approach between this side of the House and the other side about private industry, but I think most of us would agree that the real safeguard, the best safeguard, that companies will act competently, morally and legally is provided by the terms of the Companies Act and the structure created underneath it, the key element of which is the responsibility of the directors to the shareholders and to the law, and the responsibility of the management to the directors. Anything which weakens this distinct responsibility can weaken the basic safeguard. Of course there have to be exceptions, and of course public considerations may from time to time force Parliament to override those more general considerations which I have just mentioned. But it has been tradition here—and when either Party has been in power these traditions have been carried on—that wide powers will not be granted to Governments in this sphere of relationship between Government and private industry or private commerce. I believe that to be of cardinal importance, and it is for that reason that I have wearied your Lordships with various attempts to improve this subsection by confining it to what is really necessary.
I have little doubt, because this is the way things go these days—and they have gone that way in many other days, too—that the Government Bench will find some reason why this Amendment is not appropriate. I think we have learned to know that you have to go on three or four times before you get it right; but I hope that the House will support my general purpose. I believe that the insurance industry supports the general purpose. My noble friend annoyed me somewhat last time by saying that the British Insurance Association took his view and were opposed to my view. I must tell him that this is not so, as I understand it. I must tell him that the principle on which I am commending this Amendment to the House is not opposed by the insurance industry, whether they be chairmen or members of the British Insurance Association.
May I add one other thing? There have been occasions in this House when some of your Lordships have thought it right to advocate a general inspection
838
of insurance companies. One of my noble friends—I think it was the noble Earl, Lord Onslow—said that it was his view that it would be a good thing to have inspection widely spread, and he indicated that it might be the view of insurance brokers generally. I do not know why it should be the view of insurance brokers generally, and I do not really know why, if the insurance industry generally has to be inspected, insurance brokers generally should not be inspected, too. I should have thought they would have found that what was sauce for the goose was also sauce for the gander. I do not think that, as a nation, we are generally in favour of wide and detailed inspection such as happens in the United States. The inspections to which they subject their insurance companies in the United States are massive. If any of your Lordships has seen their inspection reports, you will know that they are reports compiled in thick volumes which may cost the company as much as three-quarters of a million dollars to obtain—and they come out roughly three years after the year to which they refer. Unhappily, we have just read in the newspapers of an American insurance company, I think called the Equity Fund Insurance Company, stopping business (I will be careful in the use of my words) and being accused of a major fraud—and all this within a system of inspections and controls much more rigorous than those we have here. A massive inspection scheme does not give as good a safeguard as the system we have here of limited powers by the Government supporting boards of directors and management acting within the Companies Act. With those considerations in mind, I beg to move the Amendment on the Order Paper.
6.14 p.m.
THE EARL OF LIMERICK: My Lords, my noble friend Lord Aldington has once again put a prima facie eminently reasonable proposition in this Amendment. In fact, however, I must suggest to him, with the utmost respect, that in the wording of his Amendment he starts from a false premise and goes on to propound an undesirable solution. It would of course be extremely inconvenient—and I am the first one to agree—for any insurance company if some of its current records were removed from its offices for

839
even as long as a fortnight in order that they could be studied at leisure by an inspector, whether the occasion for that inspection was some immediate cause for suspicion of the company's health or what my noble friend has referred to in the past as camouflage but what I prefer to call random inspection. It would be equally inconvenient if the Department exercised the alternative option under Clause 20(2) to require the company to produce specified books and papers at the Department's offices. Retention of these records for any length of time would not only inconvenience the company but might well cause delays in the settlement of policyholders' claims.
Happily, we do not allow that inconvenience to arise. In principle it is held that a power to require production of documents does not extend to their removal from the company's possession otherwise than in the exceptional circumstances envisaged in Section 110 of the 1967 Act, where it has been necessary to obtain a search warrant to ensure the protection of the documents from interference. What happens in practice is that the inspector identifies those documents, or parts of documents, which call for closer study, and asks the company either to provide copies, using their own facilities, or to allow him to borrow them in order that the Department may make copies. Wherever possible this is done overnight so as to minimise inconvenience. Consequently, the first part of the Amendment would achieve nothing because the Secretary of State would not be likely to retain any books or papers relating to a company's daily business for more than a few hours. My noble friend was worried about the rigours of a full inspection, which is the phrase he used. In practice—and I think he recognises this—our inspections are much more likely to last a few days, or even a few hours; that is, random inspections. But the effect of the first part of the Amendment would be to stop those inspections.
The second part of the Amendment raises more complex questions. While admitting the principle of random inspections, it seeks to establish that no company should be subject to further inspection within a twelve-month period unless there is an adequate case to
840
support the intervention on grounds under Clause 12(1), which of course cannot be undertaken lightly. There must be grounds going well beyond mere suspicion, even though it would be in the interests of all that suspicion should be cleared up as quickly as possible. Then, consider the range of companies—approaching 800 of them—which we have to supervise. My noble friend has the honour to preside over a company which must fall into what one might term the top ten—and may all our inspections of that company be random ones! Opinions would vary from month to month as to which companies comprise the bottom ten; but between these two extremes there is a very wide spectrum of companies of different size, different degrees of financial strength, undertaking different types of risk and deploying different standards of competence which it is extremely difficult at any given time to place with any certainty in the league table. So an inspection which starts as a random one may disclose disquieting features.
Many of your Lordships will have read in the past few days—and my noble friend has already referred to it—some very startling things about an American insurance company, Equity Finding, of which it seems likely that we shall continue to hear for years. I understand that the first hint of trouble was discovered in the course of a random inspection. May we never have a similar case here! But it points to a strong justification of the principle of random inspection. The Amendment would not prevent random inspection though it would curtail it. But I do not want to be alarmist and I shall use a less dramatic illustration. Having noted, in passing, that the directors of insurance companies in New York must supply copies of their finger prints to the insurance department, we stand astonished at our moderation.
Suppose that a random inspection reveals some relatively minor incompetence or lack of control in an otherwise sound company, possibly in a large company, and remedial measures are agreed upon. It would be unreasonable that inspectors could not call again—perhaps an hour would be sufficient to check a particular miatter—before a year had elapsed. Yet if the matter was sufficiently

841
serious that grounds had to be justified under Clause 12(1), in the absence of a right to a second visit a few weeks later the effect of the Amendment would be to advertise suspicions, perhaps quite unnecessarily, by the fact of a second call within a year. My noble friend Lord Aldington and I have had more than one discussion on this subject. I think we respect each other's points of view; but for the reasons I have given I cannot accept this Amendment as it stands. I hope that on consideration he will feel able to withdraw it and not to press it to a formal disagreement.
THE EARL OF SELKIRK: My Lords, before my noble friend sits down, may I ask whether he contends that Clause 20 does not authorise him to take possession of the books and papers of any company? Secondly, is it his case that he intends on no occasion to remove them from company premises?
THE EARL OF LIMERICK: My Lords, the answer to the second question is, No. 1 think I made it clear that they would be removed in cases where further investigation is required, but for a minimum period, such as is required for the taking of copies of documents of which further study is required. The answer to the first question is also No. I think it is clear that Clause 20(2) may require the production of books or papers in such places as the Secretary of State may specify. But I did not think that was a point at issue in this debate.
LORD ALDINGTON: My Lords, I think have a right of reply. I shall try not to weary your Lordships for more than a moment. My noble friend is absolutely infuriating. He has masses of people working for him to knock down every conceivable attempt that man can make to try to make sense of this Bill. Eventually we do get their support. We are just coming to one or two Amendments where they have seen the light after knocking them down as roughly as was just done. I could hope that these great men would get busy and try to see a way to limit this power to what is wanted. It is clear that my noble friend does not want the massive power of inspection, continuing for month after month, that is allowed by the present wording of subsection (3) of Clause 20. Equally it is clear that the kind of short
842
random inspection which is allowed for in my proviso would give him all that he does want. Although he quoted the case of the Equity Fund Insurance Company against me, I think it is a very good example of how my clause would work to help him, because it allows him, immediately he finds something wrong, to bring the whole panoply of Clause 12(1) into action. May I hope—and I do not want to press this to a formal disagreement—that my right honourable friends and my honourable friends in another place will force his colleagues to do the work that ought to have been done in the past months and try to legislate on this important power so that the Secretary of State has the power that he wants and not the wider power that he does not want. Having expressed that hope, after this third attempt to improve subsection (3), may I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
THE EARL OF LIMERICK: My Lords we discussed this Amendment with Amendment No. 8. I beg to move.
Amendment moved—
Page 12, line 1, leave out subsection (4) and insert—
("(4) Any power conferred on the Secretary of State by sections 14 to 18, 20(1) or 21 below shall also be exercisable, whether or not any of the grounds specified in subsections (1) to (3) above exists, in relation to—

(a) any company, society or body with respect to which the Secretary of State has issued an authorisation under section 61 of the Act of 1967;

(b) any insurance company to which the Act of 1958 applies in the case of which a person has become a controller within the meaning of section 2(2)(c) above,

if that power is exercised before the expiration of the period of five years beginning with the date on which the authorisation was issued or that person became such a controller, as the case may be; but no requirement imposed by virtue of this subsection shall continue in force after the expiration of the period of ten years beginning with that date.").—(The Earl of Limerick.)
THE EARL OF SELKIRK THE EARL OF SELKIRK moved, as an Amendment to the Amendment, Amendment No. 12:
Line 2, leave out from ("exercisable") to ("in") in line 4.
The noble Earl said: My Lords, subsections in Clause 4 give the power on any grounds that the Secretary of State

843
thinks fit for the first five years of certain companies to carry out the powers given in subsections (14) to (18) or (21). I move the deletion of the words referred to in my Amendment because they are not necessary. The Amendment in no way alters the meaning of the clause by taking these words out; and that is quite an adequate reason for taking anything out. There are other grounds. First, the wording is slightly absurd. If you see the application of the words here on the Amendment to the ground shown in various places in Clause 12, you will see that whether or not it is desirable to protect the policy holders of the company, the Secretary of State may take action; or to take it again, whether or not you consider the exercise of that power to be desirable in the general interest of these persons, he may take action. This is rather absurd.
But it is worse than that because the third reason is that it gives the Secretary of State power to use subsections (14) to (18) et cetera when it is not in the interest of the policy holders and not desirable for protecting the policy holders. That power is not needed. It is not in the interest of the policy holders and should not be included in the powers of the Secretary of State. It can be argued that Secretaries of State are reasonable people and would not do stupid things. That I hope is correct. In that case we should not be so foolish as to give them powers which it is clearly not desirable for them to use. I ask that these words be removed, first because they are not necessary; second because they read rather absurdly, and third because they give the Secretary of State powers he does not need and which it would be better not to use. I beg to move.
THE EARL OF LIMERICK: My Lords, I do not believe that this is a point on which we should be in dispute. I think it arises from a misunderstanding of the effect of the clause. The words which the Amendment seeks to remove are there purely for the avoidance of doubt. Their removal might, and I believe would, alter the meaning of the clause. The power to impose precautionary requirements upon the issue of a new authorisation already exists under Section 65 of the 1967 Act and the Government Amendment extends this to the
844
situation in which there has been a change of control. If the Amendment proposed by my noble friend had any practical effect it would seem to be to remove the power to impose any precautionary requirements in the circumstances where they might most be needed, because the Department is dealing with unproven projects and perhaps unproven persons.
I cannot believe this is his intention. If it were, the inevitable consequences must be a much greater reluctance on the Department's part to issue new authorisations or to approve changes of control. That would be a most undesirable change. I hope that I have made the point clear and that my noble friend may agree with me.
THE EARL OF SELKIRK: My Lords, I regret to say I do not think that the noble Earl has made the point clear and I do not agree with what he has said, but I do not force the point. I do not think it important except for this, and I ask him to look at it again. Those words are quite unnecessary because the meaning is absolutely clear. He said it was for the avoidance of doubt that they shall be exercisable in relation to the two companies if their power is exercised before the expiration of five years. That is abundantly clear; there can be no dubiety about it whatsoever. He is saying here specifically that these powers may be used when it is not desirable in the interest of policy holders, and those words should not be there. If the noble Earl cared to say "at the full discretion of the Secretary of State" I would take no exception. I do not think that I am differing with him in principle, but the drafting here is quite wrong.
THE EARL OF LIMERICK: My Lords, I should like to look at that point with care and, if on consideration it seems that an Amendment is needed, I shall not hesitate to recommend that to my right honourable friend at a later stage.
THE EARL OF SELKIRK: My Lords, I thank the noble Earl and I beg leave to withdraw the Amendment.
Amendment to the Amendment, by leave, withdrawn.
On Question, Amendment agreed to.
6.32 p.m.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 13:
Page 12, line 13, leave out ("sufficiently") and insert ("appropriately").
The noble Earl said: My Lords, this Amendment meets the criticism that the word "sufficiently" raised some presumption that the use of the residual powers in Clause 21 was intended to be, or could be, more lethal than the imposition of a total restriction under Clause 13, about which my noble friend Lord Aldington and my noble and learned friend the Lord Chancellor have had some debate. The substitution of "appropriately" makes clear, I hope, that it is the suitability to a particular circumstance, the requirement under Clause 21, rather than its severity which is the criterion. I should point out in passing that we should not exclude the concurrent use of the Clause 13 objection, which could relate to the whole or a part only of the business, to some other kind of requirement under Clause 21. It has to be borne in mind that while the restriction protects potential policy holders, by preventing them from becoming policy holders, it does not necessarily give existing policy holders the protection they may need while the remaining period of their policy is being run off, and any unsettled claims are being dealt with.
LORD ALDINGTON: My Lords, I have a feeling that my noble friend has just said something rather important which alters what the noble and learned Lord the Lord Chancellor said earlier in the proceedings about the importance of Clause 21. I should like to have time to consider the effect of what he has said. As to the Amendment itself, I welcome it, not only because of the improvement in the Bill here but also because it is one more sign that what was said to be wrong yesterday becomes right to-day or to-morrow; and so I go forward with the full hope that the Bill will be further improved, and other Amendments which have been so sternly turned down will eventually find acceptability—so long as they are moved by my noble friends on the Government Front Bench.
On Question, Amendment agreed to.
THE EARL OF LIMERICK: My Lords, this Amendment was discussed
846
with Amendment No. 8. I beg to move Amendment No. 14.
Amendment moved—
Page 12, line 16, leave out ("(f)") and insert ("(e)").—(The Earl of Limerick.)
On Question, Amendment agreed to.
Clause 23 [Notice of proposed exercise of powers on ground of unfitness of director or manager]:
THE EARL OF SELKIRK THE EARL OF SELKIRK moved Amendment No. 15:
Page 18, line 24, leave out ("or manager").
The noble Earl said: My Lords, at the end of Clause 23 there suddenly appear the words "or manager". I am not clear whether this is a misdrafting or whether there is some explanation which makes the words necessary. May I explain shortly why this is. Clause 22 deals with controllers to which it is necessary or desirable to apply the lethal powers of Section 13. Clause 23 deals with what I call the non-executive directors, and it specifically excludes
"not being a controller of the company or a manager of the company";
then it gives the procedure to be adopted, which can be used in any clause from Clause 13 to Clause 21, for the purpose of getting rid of a non-executive director. Then suddenly there appear the words
"be a director or manager of the company."
So far as I can see, the whole of Clause 23 does not apply to managers, and if it does in what way does it apply? Should the word "manager" come in in the first subsection and refer to persons who are directors or managers but not controllers, or should it possibly come in Clause 22 and say that you should include controllers or managers? As it stands, I do not understand what it means. It does mean, if we are to carry it through, that such protection as exists in respect of controllers under Clause 22 and in respect of non-executive directors under Clause 23 is wholly inapplicable to managers; and if that is so I cannot understand why. If that is to be the policy of the Government I should like to hear an explanation.
THE EARL OF LIMERICK: My Lords, I hope that I may be able to explain this briefly. The distinction we are drawing, and this derives from Clause 2, is between

847
a mere director (that is, not being a managing director or a manager) on the one hand, and a managing director or a chief executive on the other, who fall into the class of controllers as defined. I think that if my noble friend Lord Selkirk will look at Clause 23(1) in lines 25 and 26 on page 17, he will find that it is made clear that we are talking about the person whose fitness is in question as a director not being controller; that is, not a managing director of the company or a manager of the company. So clearly these are the classes of people we are taking together, and this is consistent throughout the Bill. I could offer a fuller explanation of the effect of the Amendment—which I think would be undesirable—but I should not like to weary the House with it. But if it is the wish of my noble friend, I could offer it later on.
THE EARL OF SELKIRK: My Lords, may I say that I accept what the noble Earl said. It is a different interpretation and I do not think that the drafting is very clear. I took the words "or manager" to apply to controllers and I understand that they should apply to directors. In that case I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 24 [Rescission, variation and publication of requirements]:
THE EARL OF LIMERICK: My Lords, we discussed this Amendment with Amendment No. 8, I beg to move Amendment No. 16.
Amendment moved—
Page 18, line 30, at end insert—
("( ) No requirement imposed by virtue of subsection (4) of section 12 above shall be varied after the expiration of the period of five years mentioned in that subsection except in a manner which relaxes that requirement.") —(The Earl of Limerick.)
On Question, Amendment agreed to.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 17:
After Clause 32, insert the following new clause:
Approval of proposed managing director or chief executive of insurance company
".—(1) No insurance company to which the Act of 1958 applies shall appoint a person as managing director or chief executive of the company unless—
848

(a) the company has served on the Secretary of State a written notice stating that it proposes to appoint that person to that position and containing such particulars as may be prescribed; and

(b) either the Secretary of State has, before the expiration of the period of three months beginning with the date of service of that notice, notified the company in writing that there is no objection to that person being appointed to that position or that period has elapsed without the Secretary of State having served on the company a written notice of objection.

(2) A noticed served by a company under subsection (1)(a) above shall contain a statement signed by the person proposed to be appointed that it is served with his knowledge and consent.
(3) The Secretary of State may serve a notice of objection under subsection (1) above on the ground that it appears to him that the person proposed to be appointed is not a fit and proper person to be appointed to the position in question, but before serving such a notice the Secretary of State shall serve on the company and on that person a preliminary written notice stating—

(a) that the Secretary of State is considering the service on the company of a notice of objection on that ground; and

(b) that the company and that person may, within the period of one month from the date of service of the preliminary notice, make written representations to the Secretary of State and, if the company or that person so requests, oral representations to an officer of the Department of Trade and Industry appointed for the purpose by the Secretary of State.

(4) The Secretary of State shall not be obliged to disclose to the company or to the person proposed to be appointed any particulars of the ground on which he is considering the service on the company of a notice of objection.
(5) Where representations are made in accordance with this section the Secretary of State shall take them into consideration before serving the notice of objection.
(6) Section 22(5) above shall apply also to a notice served under this section by the Secretary of State."
The noble Earl said: My Lords, I think it would be convenient if with this Amendment we discussed Amendments Nos. 19, 23, 24 and 27. These Amendments meet the wish of my noble friend Lord Aldington that the company's primary responsibility for the selection of a suitable managing director or chief executive should be recognised, and also the means by which it is brought about in practice. The procedure for prior approval is not altered so far as the controller in the sense of Clause 2(2)(c) is concerned. This remains in Clause 33. In the case of the managing director or chief executive,

849
the new clause transfers the duty of application to the company subject to its being made with the knowledge and consent of the candidate. Any preliminary notice of objection is to be given both to the company and also to the candidate. Thus the candidate will no longer have the opportunity, which the clause previously gave to him, to dispel the Department's doubts before the company is made aware of them.
On the other hand, this reflects the practicality of the appointment and it 'nay reasonably be maintained that the company are entitled to know at once if cause for doubt exists, so that they may make their own further inquiries. They might conclude when these inquiries had been made that they should not proceed with the appointment; they would withdraw the application, and look for a more satisfactory candidate without further delay. Meanwhile, of course, the candidate could seek to convince either or both the company or the Department that their doubts are groundless. In certain circumstances he might well enlist the help of the company to persuade the Department. The Amendment therefore draws a reasonable balance between right and duty, and I hope it will commend itself to the House.
LORD ALDINGTON LORD ALDINGTON had given Notice of his intention to move Amendment No. 18 as an Amendment to the Amendment:
Subsection (5), at end insert (" and shall ensure that he gives the company and the person proposed to be appointed an opportunity of satisfying him on the matters relevant to his notice of objection.")
The noble Lord said: My Lords, perhaps I may speak to this Amendment without moving it. First of all, I should like to say that I welcome my noble friend's change of mind on this important matter, and I welcome this new clause. Earlier on this afternoon we referred to the Amendment to Clause 2, and this Amendment No. 18 is a similar Amendment to this new clause. In commenting on it in our earlier debate, my noble friend indicated that there was a general objection to it, but that the principal detailed objection was that if there were further references to "representations" in this clause there would be confusion with subsection (3). I really cannot accept that, and I hope I may take it that he will look again at that objection. It cannot be sensible to say that adding words that deal
850
with representations to subsection (5), which is solely concerned with
"Where representations are made in accordance with this section",
makes subsection (5) any more confusing with subsection (3) than it was before. If it is found desirable eventually to have this idea incorporated in the Bill, I hope that the rather slim reason given against my draft will not prejudice reconsideration of the matter. With that explanation, I do not propose to move this Amendment to the Amendment.
LORD HAWKE: My Lords, with regard to Amendment No. 17, I do not much like this period of three months. I think it puts an unconscionable burden on some unfortunate person whose fate is hanging in the balance that he has to sit around for three months before be knows whether the Secretary of State will allow him to be appointed. I hope that in the next stages of the Bill this point may be looked into. I do not think it is necessary to have three months to look up the antecedents of a person who wishes to control an insurance company.
On Question, Amendment agreed to.
Clause 33 [Documents deposited with Secretary of State]:
6.45 p.m.
THE EARL OF LIMERICK: My Lords, Amendment No. 19, was discussed with Amendment No. 17. I now beg to move Amendment No. 19.
Amendment moved—
Page 27, line 7, after ("applies") insert ("otherwise than by virtue of an appointment in relation to which section (Approval of proposed managing director or chief executive of insurance company) above has effect").—(The Earl of Limerick.)
On Question, Amendment agreed to.
LORD JACQUES LORD JACQUES moved Amendment No. 20:
After Clause 33 insert the following new clause:
Advisory Committees
".—(1) The Secretary of State shall appoint an Advisory Committee to whom any person aggrieved by a decision of the Secretary of State under section 2 or 33 of this Act shall have the right to submit written and oral statements.
(2) The Advisory Committee shall consist of five persons, not more than three of whom

851
shall be actively concerned in the insurance industry.
(3) The Committee shall make recommendations to the Secretary of State arising out of the submissions referred to in subsection (1) and thereafter the Secretary of State shall communicate his final decision to the aggrieved person."
The noble Lord said: My Lords, I am pleased to see the noble and learned Lord back on the Woolsack, because I wish to reply to his comments on this Amendment. I have never heard him go round in circles before in the way that he has on this occassion. Let us look at the Amendment. It calls for the appointment by the Secretary of State of an advisory committee—and I emphasise the word "advisory". The function of the advisory committee is such that, if there is a person who is not accepted by the Secretary of State as a fit and proper person, and he is aggrieved, he shall have the opportunity of making submissions to the advisory committee. The advisory committee, in turn, will make recommendations to the Secretary of State. But the Secretary of State will take into account all factors, come to his own conclusions and then make his final decision known. At one stage the noble and learned Lord said that the appointment of an advisory committee was designed to take this matter right out of the hands of Parliament. Then, at a later stage, he said that the advisory committee might make a recommendation to the Secretary of State which was a little different from the information that he received from elsewhere, but the Secretary of State might be concerned with what noise might be created in Parliament if he ignored the advisory committee. If the matter had already been taken out of the hands of Parliament by the appointment of an advisory committee, why does the Secretary of State need to be concerned about what is said in Parliament? This is no argument to the Amendment, and I invite the noble and learned Lord to give a real reply to it. I beg to move.
THE LORD CHANCELLOR: My Lords, I will respond to the noble Lord's invitation, because he has shown by what he has said that I utterly failed to make myself intelligible to him when I spoke first, and whether the fault be his or mine, it is evident that a second attempt is incumbent upon me. What I think the noble Lord has failed to appreciate
852
is that I was not simply replying to his Amendment. I was replying to a series of speeches by my three noble friends two gangways from me, and one of those speeches at least, that of my noble friend Lord De L'Isle, certainly was not content with an advisory committee. What he wanted was an appeal body. I dealt, in the alternative, with two successive possibilities. One was that my noble friend's suggestion was taken, and that the appeal body was set up, which would take the matter entirely from the Secretary of State and therefore from Parliament to whom the Secretary of State is responsible; and the other was that the noble Lord's Amendment was accepted in its present form. I pointed out that there were objections to that: that it was a half-way house; it was neither the one thing nor the other—neither an appeal body nor a body with any ascertainable functions which could protect the individual. I think we all agreed when we discussed the matter that we were grateful to the noble Lord for the extent to which he had taken into account the difficulties with which the Government are faced. But what he has come up with is a suggestion that a committee which is not allowed to know some, at any rate, of the relevant facts, and perhaps the decisive ones, should give advice to the Secretary of State, which he is not bound to take, and should then be discharged from its obligation.
My Lords, what I fail to see about the Amendment in its present form is how it fails to fall between three quite different stools. It can serve no useful purpose to protect the individual if it does not consider the same set of facts as those which are before the Secretary of State; it cannot protect him if its functions are purely advisory and not appellate. On the other hand, if it was given the relevant, and perhaps decisive, material before the Secretary of State, it would breach the principle of confidentiality to which the noble Lord referred in his original speech. If, on the other hand, it was made appellate it would destroy the functions of Parliament. Therefore, my conclusion—and I am sorry that I did not make it plain—was that the noble Lord's suggestion was a compromise between inconsistent principles. What one has to do in relation to anything affecting the rights of an individual

853
is make up one's mind whether the particular process which may operate contrary to the interests of the individual is an administrative function or a quasi-judicial one. If it is a quasi-judicial one then the set of arguments put forward by my noble friend Lord De L'Isle is obviously the right set of arguments; if it is an administrative one, it is probable that the arguments put forward by my noble friend Lord Limerick are the right arguments and they should prevail. What is not possible is to combine the two by an uneasy compromise.
I am not in any way going back on what I said in reply to the debate on Amendment No. 3. My right honourable friend Sir Geoffrey Howe will take all these arguments into account. If there be a way through the maze, if there be a compromise which is acceptable to all, he will seek to find it after debate in another place, or perhaps before debate. I must apologise to the noble Load that by the time I was turning to the particular suggestions that he was making I was conscious of the fact that I had detained the House too long, and I may have telescoped my argument a little. If I misled anybody—and I certainly did not mislead myself—I can only apologise.
THE EARL OF SELKIRK: My Lords, my noble and learned friend the Lord Chancellor said something I found surprising. He said that the appointment of private capital insurance company directors is an administrative matter. This seems to me an extraordinary extension of anything that I have ever thought of. This is an entirely new line; it means, in effect, that insurance companies, so to speak, come within the administration of the Department. I would not have thought the Department care for that. If the Department makes a mistake, surely it is liable financially for the mistake.
THE LORD CHANCELLOR: My Lords, I hope that my noble friend will forgive me interrupting. I never said that the appointment of such an official was an administrative act. I said the conclusion formed by the Secretary of State about an application under Section 61 of the principal Act could be regarded as either administrative or as quasi-judicial. If it was regarded as quasi-judicial the set of arguments put forward
854
by my noble friend Lord De L'Isle would be applicable. But, on the other hand, if my noble friend Lord Limerick was right in regarding that as administrative, then his arguments were properly applicable, not what the noble Earl has imputed to me.
THE EARL OF SELKIRK: My Lords, the noble and learned Lord has said this is an administrative decision of the Department. That is what I understand him to say, and that is what seems to flow from that decision. They take administrative responsibility and, accordingly, they may have to meet the financial consequences. That is all I am saying. I have no doubt that the Amendment of the noble Lord, Lord Jacques, is a compromise. To say that it is lacking in principle seems strange in a Bill which seems wholly lacking in principle from beginning to end. However, the Government are reluctant to give way and I do not propose to press this matter further, except to say that Lord Jacques has a most ingenious Amendment in which he has some elements of an outside opinion; it may not be wholly effective, but I regard it as of some value.
VISCOUNT DE L'ISLE: My Lords, I thank my noble and learned friend the Lord Chancellor for paying attention to my speech, which is always gratifying. I am not sure that noble Lords who have apprehensions about the content of the Bill in respect of what we are now discussing will find their fears quieted by what my noble and learned friend has said. I should hate to think that in insurance, or any other field of business, the decision of the Secretary of State affecting the fortunes, careers and reputations of individuals established in business, or wishing to be established in business, was an administrative matter. That would be an unfortunate precedent. I should not like to accept that as going out from this House. We have now reached a stage in our affairs where a Minister of the Crown can decide the fortunes of an individual merely by administrative acts and without any reference to a third body.
If this matter were to be taken to a Division I should support the Amendment of the noble Lord, Lord Jacques. I would prefer to have a body of that sort rather than no body at all. If the noble Lord does not press his Amendment I hope that the Government will

855
think carefully, because what we are dealing with to-day in this House is not merely the Insurance Companies Bill; we are creating important precedents, possibly for the future, possibly for another Government. We must distinguish carefully between administrative powers and the judicial powers, which ought to reside outside the Government, to deal with people's lives and fortunes.
LORD ALDINGTON: My Lords, may I try to make what I hope will be two helpful observations? I was attracted by this proposal, and although some of your Lordships thought two earlier Amendments of mine were alternatives to this Amendment, those Amendments were drafted to fit in with this one. I think this point has some merit to it. May I suggest to my noble and learned friend the Lord Chancellor, and your Lordships, that there may be something to be learned from the way in which security is dealt with by the Government in so far as security considerations affect appointments of persons, or the fitness of persons for appointments.
When I first read the proposal of the advisory committee it seemed to me that it had some similarity with what was a practice several years ago—whether it is a practice now, I do not know. Where the Secretary of State has to make up his mind whether somebody is a fit and proper person to be appointed for some purpose—whether because of security considerations or because of fitness and properness for the insurance industry—it would help to have some advisers or wise men to which the matter could be referred. This procedure seems to me to be helpful.
I understand the arguments of my noble and learned friend about the difference between administrative decisions and quasi-judicial decisions. The word "administrative", when taken out of context, raises in people's minds matters which I am sure my noble and learned friend does not wish to be in people's minds. It is not necessary to decide whether this is administrative in that sense or quasi-judicial. There are grounds for saying that any Secretary of State would be helped in difficult cases like these if he had advisers to whom he might be able to refer a doubtful case. That was done
856
in security matters and I do not see why it should not be done in insurance matters.
LORD JACQUES: My Lords, I thank the noble and learned Lord for his assurance that the idea contained in this Amendment will receive further consideration. Because of that, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
6.59 p.m.
LORD JACQUES LORD JACQUES moved Amendment No. 21:
After Clause 43 insert the following new clause:
Standard forms for certain policies
"Regulations may be made after consultation prescribing such standard forms of policy as the Secretary of State may consider convenient."
The noble Lord said: My Lords, the idea behind this Amendment was argued at length during the moving of a more detailed Amendment on the Committee stage and I do not need to put forward all the arguments again. This is a purely enabling Amendment to enable the Minister to consult with the insurance industry with a view to forming a number of standard policies for such things as household risks and motor risks. These policies should be in addition to any other policies which the companies may wish to issue. It is not proposed that there should be a standard premium. Each company would fix its own premium.
There are really two purposes behind the idea. First, it would be hoped that a standard policy would minimise the amount of small print, and that would mean that fewer people would find themselves not covered because they had not read the small print or because they had read it and did not understand it. Secondly, we would hope that standard policies would encourage competition in premiums in addition to competition in services. Simplification is not new in consumer protection. We have already to simplify on a considerable scale for the benefit of the consumer. For example, many goods can only be sold in units of certain weight so that the consumer can make comparison between one package and another and therefore can make an assessment of what she is going to get for the price that she pays. Comparisons between insurance policies are much more

857
subtle and it would be helpful to the consumer if, in addition to any other policies they might have, there was a standard policy for different risks throughout the insurance industry.
At the Committee Stage the Minister expressed considerable sympathy with the idea of experiment in standard policies. We feel that he should show that he really means business by accepting this enabling clause. He may feel that he can achieve his objective on a voluntary basis. If so, well and good, but if he is armed with the powers of making regulations he is then more likely to achieve the objective on a voluntary basis. I beg to move.
THE EARL OF LIMERICK: My Lords, when we discussed the progress which could be made towards the introduction of standard policies my noble friend Lord Colville of Culross indicated the complexities which might arise, even in a comparatively simple case, in setting out the conditions of a policy. He also suggested that the points then made by the noble Lord, Lord Jacques, should be met by consultations with the industry without the need for anything in this Bill or for any regulations. Since then I have had some discussions with the noble Lord, Lord Jacques, and have indicated what is going on in this field, and I think I should refer to it now.
Since our previous consideration in Committee we have had some further discussions with the industry. They are of course aware that some criticisms have been levelled at them in recent years, and they themselves have been looking in the direction of simplicity and voluntary standardisation, because this is the road to economy and to ease of marketing. Standard forms already exist in several classes of insurance business; for example, marine business, where the forms and clauses are produced jointly by Lloyds underwriters and the Institute of London Underwriters. So far as personal insurance is concerned, Lloyds Non-Marine Association have produced standardised policy forms of comprehensive insurance for private houses; variable items are relegated to a schedule and increasing use is being made of the standard form of policy, drafted to provide the widest coverage and from which inapplicable sections can be deleted. Less progress has
858
perhaps been made in relation to motor business, but motor policy forms follow a fairly basic pattern and the ways are not generally difficult for the motorist to comprehend.
If a standard form had to be made available in addition to the individual forms of policy it would be bound to have more limited coverage of risk. Since any differences in premium between the standard coverage and the wider coverage of any particular insurance would in all probability be small, most policy holders would probably elect to purchase the more comprehensive type of coverage and the chances are, therefore, that there would be little or no demand for the standard policies. But I do not think we should let matters rest entirely, and I am proposing to pursue discussions with the industry and to give what assistance can be given from our Department towards further simplication and standardisation, where this seems both relevant and appropriate.
I am not convinced of the need for legislation and I am advised that the Amendment would be rather undesirably vague. For instance, it does not specify with whom the consultations should take place. But I will review the progress of the consultations during the further passage of the Bill now in another place so that a provision can be introduced if, after all, it appears to be desirable; but on this matter I should not like to be thought to be giving any undertaking. I hope with that explanation I may ask whether the noble Lord will be content to let the matter rest.
LORD JACQUES: My Lords, I thank the noble Lord for that assurance and on the basis of it I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 48 [Interpretation]:
7.6 p.m.
THE EARL OF LIMERICK: My Lords, this Amendment was discussed with Amendment No. 1. I beg to move Amendment No. 22.
Amendment moved—
Page 36, line 15, after ("(4)") insert (", (5A)"). —(The Earl of Limerick. )
On Question, Amendment agreed to.
Clause 50 [Short title, citation and commencement]:
THE EARL OF LIMERICK: My Lords, this Amendment was discussed with Amendment No. 17. I beg to move Amendment No. 23.
Amendment moved—
Page 37, line 4, after ("Sections") insert ("(Approval of proposed managing director or chief executive of insurance company),"). —(The Earl of Limerick.)
On Question, Amendment agreed to.
THE EARL OF LIMERICK: My Lords, this Amendment was also discussed with Amendment No. 17. I beg to move Amendment No. 24.
Amendment moved—
Page 37, line 6, at end insert ("(Approval of proposed managing director or chief executive of insurance company),"). —(The Earl of Limerick.)
On Question, Amendment agreed to.
Schedule 3 [Application to Northern Ireland]:
THE EARL OF LIMERICK: My Lords, this Amendment was discussed with Amendment No. 1. I beg to move Amendment No. 25.
Amendment moved—
Page 42, line 8, leave out ("subsection (3)") and insert ("subsections (3) and (5A)").— (The Earl of Limerick.)
On Question, Amendment agreed to.
7.8 p.m.
THE EARL OF LIMERICK: My Lords, I think it might be convenient, if it is in order, that we should move the Amendments numbered 26, 27, 28, 29 and 30 en bloc. Amendment No. 27 has already been referred to in connection with Amendment No. 17. These Amendments relate to Northern Ireland legislation. They correct and modify references in the light of Amendments made to the Bill. I beg to move.
Amendments moved—
Page 42, leave out line 22 and insert ("and for "7" and "8" there shall be substituted respectively "18" and "19"").
Page 44, line 48, leave out ("section") and insert ("sections (Approval of proposed managing director or chief executive of insurance company) (3)(b ) and").
Page 45, line 16, leave out ("Section 42") and insert ("Sections 39, 42 and 44").
Page 45,line 48, leave out second ("and").
Page 45,line 49, at end insert (";subsection (8) shall be omitted; and in subsection (9) for "38" and "1889" there shall be respectively substituted "28" and "(Northern Ireland) 1954"."). —(The Earl of Limerick.)
On Question, Amendments agreed to.
Clause 50 [Short title, citation and commencement]:
THE EARL OF LIMERICK: My Lords, I beg to move the Privilege Amendment.
Privilege Amendment moved—
Page 37, line 9, at end insert—
("(7) Nothing in this Act shall impose any charge on the people or on public funds, or vary the amount or incidence of or otherwise alter any such charge in any manner, or affect the assessment, levying, administration or application of any money raised by any such charge."). —(The Earl of Limerick.)
On Question, Privilege Amendment agreed to.
7.9 p.m.
THE EARL OF LIMERICK: My Lords, I beg to move that this Bill do now pass. In doing so I should like to refer with appreciation to the constructive part that many Members of this House have played in our debates throughout the four stages of the Bill. We started with a general welcome, which I confess became a little less warm in certain quarters in respect of a very few questions. We have had debates which entirely transcend Party, and over many questions we have been able to alter the Bill to meet points put to the Government.
In opening the Second Reading debate I said—if I may quote very briefly—
"there exists among our membership a very wide experience in many areas of the great insurance industry. We have the capacity to make a major contribution to the discussion of this important question, and I have no doubt that this is just what your Lordships will do."—[OFFICIAL REPORT; 8/2/73, col. 1155]
As a result of our proceedings since then, I am a somewhat wiser man, but I do not think that I would change a single word of what I said on Second Reading. I am grateful to all those who have contributed to our discussions. My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.— (The Earl of Limerick.)
7.10 p.m.
LORD JACQUES: My Lords, on the Second Reading debate we welcomed this Bill as a measure on consumer protection. We said at that time that we would conscientiously try to improve it and we hoped that we should have the co-operation of the Government Front Bench. We have had that co-operation in very large measure and we are grateful for the tolerance of the Minister in dealing with the points we raised. We believe that as a result of this joint effort this is a better Bill than it was when it first came to this House.
LORD ALDINGTON: My Lords, may I express my own thanks to the noble Earl, Lord Limerick, for the way in which he has piloted the Bill and stood up against buffetings from a number of places. Perhaps I might also express my thanks to, and admiration of, the noble Lord, Lord Jacques, and the noble Lord, Lord Diamond (who is away to-day) for the way in which they have looked at the Bill and, not infrequently, helped my noble friends and myself in our aims to improve it. I hope it is now common ground that every Member of your Lordships' House who has spoken in the debate was as keen as any other to protect the policy holder. We may have differed on how best to do it, but, with the possible exception of one Member of your Lordships' House who is not here, my friend if I may say so (although I am not allowed to say so politically), the noble Lord, Lord Brown, it is generally agreed, I think, that we were trying, any one as hard as the other, to improve the protection to the policy holder. I happen to think that the basic protection for the consumer and the policy holder lies in the strength of the board and the management of any company and I feel that the law must help that but not hinder it. That has been the main difference we have had throughout, but I welcome the changes that have been made in the Bill and I welcome the experience that we have had in the last two Sessions or so while we have watched the Government change their minds. I look forward to reading the debates in another place when we shall see the ideas that we have put forward accepted as wonderful ideas even though to-day they may have struck some of your Lordships as not wholly agreeable.
On Question, Bill passed, and sent to the Commons.

NATURE CONSERVANCY COUNCIL BILL [H.L.]
7.13 p.m.
THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (LORD SANDFORD): My Lords, I beg to move that this Bill be now read a second time. This very morning there was a memorial service to the late Lord Howick, who was for the last 10 years the Chairman of the Nature Conservancy, and this is an occasion when we particularly miss his presence and his contribution to our discussions. I am sure that your Lordships will want me to begin the debate by expressing our appreciation of his many achievements in the Nature Conservancy.
While our noble friend was the Chairman of the Nature Conservancy there were relatively few periods when the question of their organisation was not under active discussion or review. When the Conservancy began life in 1949 it was set up as an independent body. It was a comprehensive body with functions that embraced both conservation and research. Ministerial responsibility for the Conservancy lay with the Lord President of the Council. In the early 1960s, the Conservancy's future was considered in the context of the review of the whole organisation of civil science. A Committee on Research into Natural Resources—ithe Slater Committee—was appointed by the Advisory Council on Scientific Policy in 1961. That Committee recommended a new council for research on natural resources and the environment. It also recommended, though not unanimously, a division of the work of the Nature Conservancy with the research work being transferred to the proposed Research Council. The precise way in which the Conservancy work was to have been handled did not come within the Committee's purview.
The Advisory Council on Scientific Policy and the Trend Committee of Inquiry into the Organisation of Civil Science in 1963 also recommended that a new natural resources research council should be established. Both of those bodies thought that the whole of the work

863
of the Nature Conservancy should be embraced within the new Research Council. Following this, ministerial responsibility for science passed from the Lord President of the Council to the Secretary of State for Education and Science—that was in 1964. In 1965, the Science and Technology Act provided for the establishment of the Natural Environment Research Council and for that body to take over the activities of the Nature Conservancy. Since 1965 the Nature Conservancy has been a committee of NERC. The Conservancy's functions remained, in essence, the same as they had always been, continuing to embrace both conservation and research.
This placing of a formerly independent body within and under another independent body led to stresses which proved difficult to resolve within that framework, and in July, 1971, a majority of the Nature Conservancy Committee passed a resolution seeking the re-establishment of the Conservancy as an independent body with its own direct access to a Minister. I should add that the late Lord Howick's view was that the Conservancy should remain within NERC. At the end of 1971 an internal factual inquiry was set up by NERC—the Lucas Committee—to report on the work of the Conservancy and its relationship with NERC. The view of this Committee, which was endorsed by NERC, was that the conservation and research functions of the Conservancy should not be separated and should remain within NERC.
So the Government were faced with a number of conflicting views. It had been strongly argued that the Nature Conservancy should remain with NERC; it had been argued that it should become independent again; and it had been argued that it should not be divided. What was clear was that no solution could be found to satisfy all these views and there were two factors in the situation which had not been present when the organisation of the Conservancy had been examined in the early 1960s. One was the principle of the customer/ contractor relationship for research which had been proposed by Lord Rothschild and which had been endorsed by the Government in their Green Paper on a Framework for Government Research
864
and Development, in 1971. The other factor, and of particular significance, was the creation of the Department of the Environment in November, 1970. The wide range of responsibility in one Department both requires us and enables us to adopt and to take a total approach to the environment to ensure that priorities are regularly reviewed and that problems which interact are not treated in isolation from each other. We already have responsibilities within the Department on conservation over a wide variety of fields. But the Natural Environment Research Council is also required to adopt a comprehensive approach and is concerned with research in a wide range of earth sciences and ecology and we did not think that it would be right to divorce research in relation to nature conservation from them.
It was against that entirely new background that the Government decided that the conservation functions of the Nature Conservancy should be exercised under the ægis of the Department of the Environment where it could be related to other aspects of conservation, and that the research capability of the Conservancy should remain with NERC where it could be related to other aspects of environmental research. That decision was announced in a White Paper on the Framework of Government Research and Development, in July, 1972.
Concern has been expressed in some quarters about the effect of this split between the conservation and the research sides of the Conservancy. I can assure noble Lords that we have given, and will continue to give, very careful consideration to the way in which this decision should be implemented, because, of course, this issue is a crucial one. Mr. Heaton, formerly Deputy Secretary both in the Department of the Environment and in the Department of Education and Science was appointed to advise both Departments on the practical arrangements which were needed, and we have had the benefit of his views. We have now set out, in consultation papers which have been sent to NERC, the Conservancy and the staff interests, the Government's proposals on the detailed arrangements for implementing the decision. We shall consider very carefully the comments made to us on the papers and in your Lordships' House. The

865
initial reaction from all sides so far has been encouraging, and we shall know more before we reach the Committee stage of the Bill.
While it would not be appropriate to discuss all the details on this particular occasion, there are several features I would mention, as they demonstrate the Government's resolve, and the practicability of our resolve, to establish an effective Council with a proper relationship with NERC. While the new Council will not have its own research capability, it must, of course, have an appropriate scientific competence. This will be needed at the operational level for the management of the nature reserves and for performing the important advisory function in relation to local planning authorities and others. The Council will also need to be able to assess what research it should commission. When it is set up we expect that the Council will have about 100 scientific posts, and we propose that there should be a new post of chief scientist, assisted by a supporting team of modest size. Although the Council will not have its own research capability we are confident that it will be able to attract the right kind of scientists.
The Conservancy's stations and properties will be divided between the new Council and NERC in the light of the particular functions carried on in them. Thus, for example, the nature reserves themselves will pass to the new Council, and the research stations, such as Merle-wood, Monks Wood, Banchory and Bangor will remain with NERC. Where there is a dual interest, careful arrangement will be needed to ensure proper co-ordination and sharing of facilities. One of the consultation papers which have been already issued concentrates on the relationship between the two bodies, both at headquarters level and at the operational level. Further study is needed of the actual arrangements which should be made. But we have proposed that at the headquarters level there should be representation of the Council and of NERC on each other's governing bodies, and that there should be links at officer level. Among the proposals that have been made for ensuring a proper working relationship at the operational level is one that there should be formal arrangements for consultation between the Coun-
866
cil's regional staff and research workers from NERC institutes.
The only restriction on the use of nature reserves by research staff would be where proposed research would damage the scientific value of a reserve. At the present time, research in relation to nature conservation represents about a third of the research which is undertaken by NERC on terrestrial ecology. Most of the research which the Council commission will be from NERC and this will in itself foster a close working relationship between the two bodies. I have mentioned some of the features of our detailed proposals because these illustrate the Government's determination to establish a good system within which work on nature conservation can continue to develop in a close and effective relationship with associated research.
I turn briefly to the present Bill. I should explain that it is concerned solely with the implementation of the decision which I have announced, to establish the new Council. It makes no changes in existing legislation other than those which are consequential on the setting up of the new body. The functions of the Council are set out in Clause 1. The Council will be concerned with the establishment, maintenance and management of nature reserves in Great Britain, the provision of advice and the dissemination of knowledge about nature conservation and the commissioning and support of research. These functions are in effect the same as those of the present Conservancy, except that the Council itself will not have a function of carrying out research. But I should make it clear that, while the Council itself will not be doing research, it will be able to carry out surveying and monitoring which is appropriate to its functions; and that is covered in subsection (4) of Clause 1.
The other functions which the Council will have are those which are already contained in a variety of enactments concerned with nature conservation. Under these enactments at present these functions are placed on NERC, though in practice they have been discharged by the Nature Conservancy. These cover such matters as powers relating to nature reserves, the notification of areas of special scientific interest and the protection of birds. Details of the enactments

867
under which the Council will have these functions are set out in Schedule 1. The power which was originally given to the Nature Conservancy in 1949 by the National Parks Act of that year to enable them to acquire land compulsorily for a nature reserve will pass to the Council. Clause 1 also deals with the appointment of members, enables directions to be given to the Council, and provides for the Council to commence to discharge its functions from a date to be appointed by Order. The appointments will in practice be made by my right honourable friend the Secretary of State for the Environment in consultation with other Ministers concerned.
The Council will be able, under Clause 2, to appoint such advisory committees as it thinks fit. But it will be obliged to have separate committees for Scotland and for Wales. By not continuing the present requirement on the Conservancy to have an advisory committee for England, the Bill gives the Council greater flexibility in deciding how to organise its affairs, and it may wish to have more than one committee for England. That is a matter to which we can return, if necessary. I am sure that there will be a general welcome for the brand new power which is given to the Council by Clause 3, to pay grants, and I should explain that the "persons" to whom grants may be paid embrace bodies, including local authorities, and the voluntary bodies, such as the county naturalist trusts. This will enable the Council to pay grants towards the same type of project that it can carry on. There have been powers for several years now under the Countryside Act for grants towards the cost of informal countryside recreation projects, and we thought it right to have comparable provisions for nature conservation projects.
The financing of the Council itself will be by grant-in-aid from the Department of the Environment, under Clause 4. At this stage it is too early to say what level of resources we shall be able to make available to the Council, but I can assure your Lordships that when we come to consider the Council's proposals for its programme of work and its order of priorities we shall have well in mind the important place which nature conserva
868
tion has within the context of environmental policies generally. Other provisions in the Bill are concerned largely with constitutional, staffing and procedural matters and we shall be able to look at those more closely at a later stage. I should make it clear that the Council will have an independent voice. We intend to continue, and if necessary to improve, the present arrangements for consultations with the Conservancy. In this way the Council's views will be taken fully into account in considering various issues which arise and in reconciling any conflicting interests. The Council will be free to express its views on issues affecting nature conservation, even where those views might differ from those of the Government. My Lords, I look forward with great interest to hearing the views of your Lordships on this Bill, and, if I can, after the debate, to answering any queries and points which your Lordships may wish to raise. I beg to move.
Moved, That the Bill be now read 2ª. —(Lord Sandford.)
7.30 p.m.
LORD KENNET: My Lords, we on this side of the House are inclined to find this a rather sorry measure. It is difficult to be enthusiastic about the reform proposed here, but equally we think it would be wrong to oppose it outright because the Nature Conservancy has been shifted around a good deal since it was set up and the time has come for it to settle down somewhere, even if not in the best possible way, and to grow some roots and get on with the job; and if the Government think this is the best way we do not think it would be responsible to seek to upset the broad lines of their settlement. The Nature Conservancy as it was originally set up in 1949 was a very interesting hybrid between the land owning functions, the conservation functions and the research functions. As a free-standing body carrying out these three roles it was unusual and rather successful. Then in 1965, as the noble Lord, Lord Sandford, has reminded the House, the Labour Government put it under the Natural Environment Research Council which was only then being set up and I think it is fair to assume that it was more in the first flush of enthusiasm for a new research council that we gave it as much

869
as we could to do to get it away to a good start, rather than from an entirely unhampered consideration of the best interests of the Nature Conservancy itself. There have been difficulties—the motions mentioned by the noble Lord, Lord Sandford, from the commissioners themselves; there was the purge of commissioners and general unhappiness and ructions and upheavals, and there comes before us this new proposal.
It is not very logical. The judgment of Solomon himself becomes a wonder of logic compared with the arguments contained in one of the papers which the noble Lord, Lord Sandford, was good enough to send me. I refer to the Joint Paper by the two Departments of Education and Science and of the Environment, of last July, where at paragraph 5 is set out the argument with quite extraordinary clarity. It says:
"It has been strongly argued that the Nature Conservancy should remain with the NERC, that it should become independent again and that it should not be divided. These conflicting aspirations"—
it says, with blinding insight—
"cannot all be fully met."
Indeed, my Lords, this is so and the course that has been taken is the most advisable one, clearly, since those who believe that the Nature Conservancy should remain with the NERC will see it removed; those who believe that it should become independent again will not see it become independent again, and those who believe that it should not be divided will see it divided. Thus all factions are fully disappointed and the Nature Conservancy can start again with a clean slate.
I saw in the Press a day or two ago something about a body called the National Ecological Institute. I wonder whether the noble Lord, Lord Sandford, could tell us a little about this in winding up. The impression I got was that this was going to be simply the research establishment which is left with NERC after the division of the Conservancy. Is this so, and if so, is there any precedent for calling three or four or five separate research establishments a National something-or-other institute? Does NERC itself control any other national institutes? I am not saying it is wrong, but the grandiosity of the title
870
is somewhat startling. Perhaps we can be told more about it.
If we turn to another document which the noble Lord has been good enough to make available, the great "Bill of Divorcement" itself, in other words the Consultation Document, we find in it all those rough edges which one would expect from such a rough division. We find that the Government have not been able to decide what is to happen to the library. That matter has been left over; a Working Party is to be set up to decide whether it should stay with the Research Council or go to the New Nature Conservancy Council. We find that the Government have not been able to decide what is to happen to the international work. The Department of the Environment is to review that matter and decide later, presumably after the Bill goes through. We find the most ingenious solution to the question of premises. Some will go one way and some will go another, but there remain a certain number of premises which the Government have not been able to decide what to do about and they will therefore have to be shared, but that will be quite all right because a distinctive style will be adopted in separate rooms within a single building so that the Consultancy Council room will have a blue armchair and a whisky decanter and the Research Council room will have a red armchair and a gin bottle, so everybody will know exactly where they are without looking at the notice on the door.
We also find in the consultation document a great many joint bodies—cross postings, common memberships. I get the impression that after this division the two sides will spend half their lives consulting each other and sitting on joint bodies which, in a certain ghostly way, will perpetuate the marriage which we are hereby dissolving. However, having said all that, I repeat that we think it is time to allow the Nature Conservancy to settle down in its new form. I would end with a plea to the Government to treat them handsomely. It is a pity in a way that they are not going to be allowed to do any research themselves in house, but, even if they are not, we hope that the Government will give them plenty of money to contract out of research according to sound Rothschild principles whether with NERC or elsewhere. That I think will be the measure

871
of the Government's good intention towards the unit they are creating. In conclusion, I would join with the noble Lord, Lord Sandford, in the sadness he expressed at Me death of the noble Lord, Lord Howick, and his not being able to be with us to-day; and, last of all, to wish both parts of the former Nature Conservancy prosperity in their new separate life.
7.37 p.m.
THE EARL OF CRANBROOK: My Lords, in general I welcome the objectives of this Bill in so far as it separates the Conservancy from NERC, and as the noble Lord, Lord Kennet, has said, gives us the opportunity to get the Conservancy settled instead of being pushed about—I almost used a stronger word—as it has been for a very long time. I do not want to repeat the historical account which the noble Lord, Lord Sandford, gave, but one cannot help looking back to the days when the Conservancy was first founded just after the war and the tremendous enthusiasm with which all those of us who were keen on the conservation of our countryside and the preservation of the animals and plants who live there and their proper study received that appointment, that Royal Charter, and how much we hoped from it, and how indeed we were not disappointed. The Conservancy had a very comparable combination of research and field workers which immediately attracted the enthusiasm and support and trust of those of us who lived in the country and saw the day-to-day work of the field officers, dealing as they did with very much the same sort of people as the agricultural service had when set up at the beginning of the war, which again was a science based service with trained scientists, many of them acting as field officers in agriculture. Again, we trusted them because they were science based and had research closely connected to them.
It is a sorry history really that the noble Lord, Lord Sandford, outlined, of continuing chopping and changing by Governments of the day, of the Conservancy and of various committees. In the 1960s we had committees—I cannot remember how many—discussing civil science, and the Conservancy among them. Some people suggested that the research work should go to one of the science councils,
872
but that, very fortunately, was seen to be wrong and the Conservancy was placed by the Government of the noble Lords opposite into the N.E.R.C. I must confess that I was a little touched by the slight signs of a white sheet which the noble Lord opposite started to put on, realising, I think, as most of us have since then, that the N.E.R.C. was so big and so amorphous, dealing with everything from Antarctic research and the research vessel "Discovery" to the culture of algae and protozoa, that it gave those responsible for it an almost impossible task. It is that impossible task which brings about the position with which we are faced to-day.
LORD KENNET: My Lords, the white sheet was for candour, really; not for penitence.
THE EARL OF CRANBROOK: My Lords, there were various discussions—and I was involved in them, because I was for a short time, until quite recently, a member of the Conservancy—about its future and whether or not it should continue with the N.E.R.C. I do not think it entered the head of anybody in the discussions and representations that any Government could think it reasonable to separate research from the regional staff and the field officers. The noble Lord, Lord Sandford, referred to the Lucas Committee, which was expressly set up to investigate the relationship between the Conservancy and the N.E.R.C., and, in passing, he said that that Committee recommended that research and the rest should not be separated.
The exact words which the Committee used are so much better than anything that I could produce, that I venture to quote them to your Lordships. This is an extract from the Report:
"We were also most impressed with the conviction held throughout the Nature Conservancy that research and conservation were inseparable. Those of us who had had doubts were won over by the facts and the opinions that we received. The scientific backgrounds of conservation officers made them welcome specialist help from research workers, and the latter gained a practical orientation from the regional officers and could see their research being put to useful purpose."
The Committee went on to say in their recommendation:
"Effective conservation in the present state of knowledge of the management of plant and animal communities demands increased

873
knowledge, so that conservation and research functions should be closely associated and these two Nature Conservancy functions should not be in different organisations."
That is the opinion of an independent committee of scientists set up to advise; it is the opinion of the Nature Conservancy itself; and it is the opinion of everybody I know who is sincerely and knowledgeably concerned about the future of nature conservation in this country.
This Bill—and any similar Bill that has to deal with conservation—is intended to provide the best machinery for the conservation and study of the countryside, giving advice to people who need it. The only clear reason for this decision, which the noble Lord set out just now, was the fact that the customer/contractor principle has now been established and everything must be related to that. This is far too big a problem to be tied to some shibboleth of that sort. The whole experience of the Conservancy, whenever the relationships between research and field work have been considered, has come down on the side of keeping them together. If the Government want to make a change the burden of proof lies with them and, to my mind, they have not yet discharged that burden. The only real reason is the customer/contractor principle, which is supposed to govern the whole of civil science to-day, but I do not think it can govern the management of our nature reserves and of our countryside. So I hope that the Government will very seriously consider not a minor amendment to this Bill, but the major one of going back to the principle of keeping conservation and research together. I propose putting down an Amendment to that effect, and I hope that the Government will give it serious consideration and be ready to accept it.
The Minister has been kind enough to send me the paper to which the noble Lord, Lord Kennet, referred, about the allocation between the N.E.R.C. and the Conservancy which is still under discussion. I must confess that I was a little disturbed by that, primarily because I do not approve of the fundamental basis upon which the people were asked to work, but also because, almost inevitably, once having taken a decision which tends to go one way, the consequential deci-
874
sions tend to go the same way without a proper investigation of the problems involved. This is neither a Second Reading point nor a Committee stage point; it is really an administrative problem which we must leave to the Minister and to the Department concerned.
On the other hand, I feel that the Biological Records Centre, which obtains and records information about the distribution of wild life generally, is one of those bodies which those of us who are working on problems of this sort in our own parts of the world—and there are many in innumerable societies, and the like—associate most strongly with the Conservancy. So I am quite sure that we should all feel that the Government had reached the entirely wrong decision if they followed the advice which was given in that paper, that it should remain with the NERC and not go with the Conservancy. This is one of those administrative difficulties which Departments are always up against. They have to make a decision of this sort, and it is impossible to discuss it with all the people in the field. But I suggest that if they discuss some of these problems with representatives of the conservation movement generally, we shall get a Bill which will establish the Nature Conservancy on a proper basis and, I hope, for the next generation at least, instead of being altered every ten years or so.
7.50 p.m.
LORD CRAIGTON: My Lords, I congratulate the Government and the Minister for bringing in this Bill. With a few exceptions and a few doubts, some of which I will raise in a moment, this measure has been welcomed by the majority of those voluntary bodies, both large and small, throughout Great Britain who are interested in the aspects of conservation that will be affected by this Bill. I welcome particularly the provision in Clause 3(1) enabling the new National Nature Conservancy Council to make grants for nature conservation purposes. This will be of enormous help in promoting local authority, voluntary bodies and private landowner activity in this field.
The first, and perhaps the most important, is the need to provide the new Council with resources adequate to the functions which this Bill defines. These functions are of growing importance to the nation. As pressures on land and

875
wild life increase, nature reserves are becoming increasingly valuable, both for conservation, research, education and the enjoyment of nature. As a result of a comprehensive review of areas of natural interest recently undertaken by the Nature Conservancy, we can now prepare a programme for a really comprehensive series of nature reserves whilst there is still time. The acquisition of more reserves would be a splendid investment for the nation. I hope that special financial resources will be made available for this over the next few years, but of course reserves need proper maintenance and management. The new Council will need adequate funds and manpower at various levels to cope with both existing and prospective management commitments.
Talking about reserves, we cannot minimise the contribution made by the voluntary conservation movement. There are 750 nature reserves now safeguarded by county conservation trusts alone. The voluntary movement has always worked in close partnership with the Nature Conservancy and looks forward to an equally close relationship with the new Council. Even more demanding perhaps—certainly in the longer term—is the provision of advice and the dissemination of knowledge about nature conservation. Already the advice and services of the Nature Conservancy are in heavy demand from local authorities, from voluntary bodies and from private landowners and users. With the restructuring of local government and the growth of popular interest and concern, this demand will grow. It is essential that it should be adequately met by the new Council because their role in influencing land use and management may be even more important for conservation than what they do themselves.
My Lords, the noble Lord, Lord Kennet, mentioned the Natural Environment Research Council—a new name. I am concerned because I read in The Times on Tuesday, October 10, that the National Environment Research Council is proposing to set up an Institute of Terrestrial Ecology to provide among other sources:
"A research and advisory service in conservation and wild life management to other organisations, such as Government Departments, local authorities and planning bodies."
876
I sincerely hope that this is incorrect, for if NERC do this they will seriously undermine the authority of the new N.C.C. as the principal advisory body, and this would destroy the goodwill which has been engendered by this Bill.
I now come to the obviously difficult dividing line between N.E.R.C. and the new Council on the question of research. I know that this has been a matter of which the Government are fully aware. The nature reserves, the advisory and education functions, all need research. Since this will no longer be carried out within the new Council, except, presumably, for straightforward monitoring and survey which the N.C.C. must be able to do itself, they will have to commission research, mainly, it is assumed, from the NERC—that is, from the research stations at present within the Nature Conservancy. The importance of liaison between the NERC and the N.C.C. has been sufficiently emphasised, and the Government seem to be well aware of its importance. However, the new N.C.C. will have initially, according to the Government White Paper, only about £300,000 to spend on commissioned research, whereas the Nature Conservancy now spend over £1 million a year. Only a proportion of this—I am advised it is not more than 20 per cent.—is spent on basic research; the rest is all necessary for application to management and advisory functions. Whilst the NERC, it is to be hoped, will continue to do some of the applied research—for example, on toxic chemicals—from its own resources, it is earnestly to be hoped that the Government will provide the Nature Conservancy Council with a more generous amount than is now proposed for the commissioned research necessary for the proper fulfilment of its own functions.
So the functions given to the N.C.C. will require adequate financial resources and staff, from estate workers and wardens to regional and headquarters scientists and administrators. In consequence of the separation from the N.E.R.C., the new Council will need a strong scientific (including the commissioning of research) competence of its own if it is to discharge management and advisory functions credibly and effectively, and if it is to be

877
a satisfactory customer for commissioned research from the N.E.R.C. and elsewhere. I was glad to have the assurances given me by my noble friend. It will also be necessary to build up its own establishments, finance and administration complement, since many of these functions have been discharged by the N.E.R.C. which took over some of the staff in these fields after it assumed overall responsibility in 1965.
To me, the most worrying part of this Bill, which I am sure will be put right, concerns the arrangement for England. The establishment of the new Council seems to be adequate and satisfactory, with the exception of the strange omission of the provision in Clause 2(2) for a committee for England. I hope it will be possible to secure an amendment to this clause to put England on exactly the same basis in this respect as Scotland and Wales. There will be no difficulty for the N.C.C. in being obliged to have a committee for England. It could still appoint provincial committees or sub-committees if it wished. Indeed, I believe there would still be an important, if more limited, rôle than at present for an England committee. There are, I am sure, policy issues concerning external relationships, deployment of resources, et cetera, which must be considered in an all-England context—just as much as they will be considered for Scotland and Wales. I should be interested to know the views of the Nature Conservancy on this question.
On a minor but very important point, it is to be hoped that this new Bill will permit the new Council to deal with one conservation aspect which had been almost ignored by the present organisation: I refer to nearly 3,000 S.S.S.I.s (sites of Special Scientific Interest) in this country, of which only two or three have been the subject of a Section 15 agreement under the Countryside Act 1968 or have received through the N.E.R.C. any refund of the owner's costs in protecting and managing the site. Since 1968, when the Bill was passed, we have been constantly losing irreplaceable natural resources, and this must surely now stop. I hope also that the new Nature Conservancy Council will be able to play a more important part in implementing wild life protection measures, because the time seems to me to have come now for a more comprehend-
878
sive approach to nature conservation and wild life.
Finally, my Lords, may I say, as the noble Lord has already said, that the Nature Conservancy has suffered several years of difficulty and uncertainty. While many people deplore the split now being made between research and conservation, the early introduction of this Bill is much to be welcomed. The important thing now is to launch the new Council with all possible speed, and to enable it to set about its task with adequate resources and a clearly defined mandate. The Nature Conservancy staff in both research and conservation branches deserve the most sympathetic treatment when the division in the present organisation is made, and I hope (and I am sure it will be so) that wherever possible they will be given an option to serve either with the N.E.R.C. or the N.C.C.
I conclude with a mention of Lord Howick. I regret so much his untimely death; and this has added to our uncertainties. It is to be hoped that the Government will appoint a new chairman as quickly as possible. It is also important that the senior officer posts of the new Council should be filled at the earliest possible moment, so that firm plans for the structure of the new organisations can be made.
8.1 p.m.
LORD MARGADALE: My Lords, I should first of all like to associate myself very much indeed with the words of the noble Lord, Lord Sandford, in regard to the late chairman of the Nature Conservancy, the late Lord Howick. I knew him very well, and as one who served for two terms on the Nature Conservancy I know what a wonderful job he did in putting together what the scientists told us and what the laymen probably did not know from a technical point of view but knew more practically on the ground. No one could have done that job better. He was never happier than when he was studying wild birds and beasts and vegetation on the high hills.
My only excuse for saying a word or two in this debate is that, as I have said, I served on the Nature Conservancy for two periods. When the first Nature Conservancy came into being, the Royal Charter laid down that it should have not

879
more than 18 and not less than 12 members. In those days I was in another place, and there was always one Member of Parliament from each side of the House serving on the Nature Conservancy. I do not think we talked too much—I hope not—but I do think that we were able to provide a little practical information on the political side, from both sides of the House, in helping to get into legislation what was practical and necessary from material put forward by the Nature Conservancy; and I hope that the Government will consider returning to that set-up.
Having listened to the speakers so far this evening, I do not want to take up more than a moment or two's time. I should like to support what the noble Lord, Lord Craigton, said, in that it seems odd that there is no conservancy council for England provided for in the Bill. I should have thought that if there were, and then a main one, it would work on a more general and fairer basis for better production by way of conservancy as a whole. Again, I support and agree very much indeed with what has been said by the noble Earl, Lord Cranbrook, who has also been on the Nature Conservancy, about the complete divorce of research from the practical people who are doing the conserving. I believe it will make it much more difficult for it to be a smooth-running concern. I appreciate that the Government of the day have a difficult task in deciding exactly where the dividing line shall be, but unless there are included at any rate some research people who are practical people and who can help those on the ground in the nature conservancy areas, it will prove much more difficult to work; and I was glad to hear the noble Earl, Lord Cranbrook, say that he proposed to put down Amendments on that basis.
8.4 p.m.
LORD DAVIES OF LEEK: My Lords, I apologise for not having my name down on the list of speakers—I shall take only one minute—but as one who had the privilege to represent, in the English section, the Manifold Valley and the Dove-dale area for about 26 years, one of the things that I think enhances the idea that there should be a particular committee for England as such is that at holiday
880
periods, in glorious country like that, flora and fauna are sometimes swept away by pedestrians and cars; hedgerows and plants are damaged; and even the geological formation in the limestone caves can be destroyed by vandalism. Consequently, I should like to support all the speakers who put that view forward. In view of the fact that I did not put my name down, that is the only constructive point I should like to make to-night in passing, but I shall watch the Committee stage.
8.5 p.m.
LORD SANDFORD: My Lords, I am immensely grateful for the views, suggestions and opinions which noble Lords have put forward in this short debate and which we can now consider as we work out the details of implementing this legislation. I think we knew all along that we could never find a solution—and I was quite frank about this in my opening remarks—that would please everyone, but whatever reservations those who have spoken and others concerned may have about it, we are all agreed (and this was the line that the noble Lord, Lord Kennet, took right from the beginning) that she Conservancy must be given a chance to settle and to put down roots, and that is one of the main intentions behind this Bill. It is true that there had been a preponderance of view that the conservation and the research functions should stay together, but we are confident that the fears which have been expressed, notably by my noble friend Lord Cranbrook and my noble friend Lord Margadale, on the effects of the Government's decision to split the Conservancy can be allayed, and I look forward to the opportunity my noble friend's Amendment will provide at the Committee stage to do just exactly that.
If I may say so, what these fears do not fully take into account are the ways in which the necessary links between the two will be maintained. I would say, in answer to my noble friend Lord Margadale, that we envisage anything but a complete divorce between these two sides. What we shall be striving to do in a whole range of practical and administrative ways, into the detail of which I shall go, is to see that there is a close and effective working relationship between the two parts. But the other factor, I think, is that it is important not

881
to underestimate the benefits which will accrue from bringing nature conservation and all the work that goes with it under the ægis of the Department of the Environment, and accordingly into touch with all the other kinds of conservation for which we are responsible; and I would certainly say to my noble friend Lord Cranbrook that the customer/contractor principle is not by any means the only reason for the changes which we are now discussing.
Fears were expressed about a committee for England, and I would hasten to say that the mere omission from the Bill of a reference to one does not mean that there should not be a committee for England. We have quite an open mind about it. By not putting it into the Bill, what we are seeking to do is to provide the maximum scope for the Council itself to make whatever they consider to be the best arrangements for England. They may come to the conclusion that just a simple committee for England is right. On the other hand, they may find that two committees, or some sort of regional structure for England, would be appropriate, perhaps to correspond with the regional offices of the Department of the Environment. I am just hazarding a guess right off the cuff. That is the only reason for the omission, not any positive decision there should not be an English committee. We can return to that subject at Committee stage. We are well aware of the importance, stressed by my noble friend Lord Craigton, of appointing the chairman and director of the new Council. An announcement about that will be made as soon as possible.
I was asked several questions about the retention in the NERC of various aspects of research and how they will be organised in the future. I agree that at first blush the Institute of Terrestrial Ecology sounds a grand title, if not a little presumptuous. But it will exist in the NERC together with the Institute of Tree Biology, the National Institute of Oceanography and the Institute of Geological Sciences. Put beside those august bodies it does not seem altogether inappropriate. In the context of this Bill, it is accurate to think of it as what is left of the old Nature Conservancy when the new Nature Conservancy Council is taken out. There is no disrespect to those concerned in it to describe them in that
882
way in this context. I should like to respond to the remarks of my noble friend Lord Craigton in his comment on the account which appeared for the first time in The Times of April 10. I am sorry to say that the science correspondent there has got it wrong.
LORD KENNET: Thank heavens!
LORD SANDFORD: My Lords, this is really based on a misunderstanding. The function of the Institute of Terrestrial Ecology is to undertake research commissioned by Government Departments, the Nature Conservancy Council and other bodies. The giving of advice about nature conservancy and wild life will be the function of the Nature Conservancy Council. I hope that gets that point clear.
LORD KENNET: My Lords, could the noble Lord make it clear whether the word "terrestrial" is used here in apposition to the word "astronomical" or "spatial" or whether on the other hand, it is in apposition to the word "aerial" or "aqueous"? Is it soil ecology or is it of the whole globe?
LORD SANDFORD: My Lords, the noble Lord will see from the catalogue that I have given that it exists side by side with the National Institute of Oceanography and the Institute of Geological Sciences. It cannot claim a complete monopoly even of the solid stuff.
Another achievement of this particular solution is the bringing of the Nature Conservancy Council more directly into touch with Departments, and my own Department in particular, and avoiding the appearance of remoteness which was one of the criticisms made by the Select Committee on Science and Technology. I would say in conclusion that in the last few years there has been an increasing awareness of the importance of conservation, and we stressed it only yesterday in a different context. Public opinion rightly looks to the Government to ensure that the whole field of conservation—and conservation for instance of natural resources, one of the most sensitive areas—is accorded a proper place in national policies and priorities for the environment. We now have a Department of the Environment which must have regard to conservancy in a whole variety of fields as an integral part of

883
its responsibility. This would seem to be a conclusive argument for finding a place for nature conservation within the context of environmental policies generally.
Equally, research into terrestrial ecology, to use the phrase they have themselves chosen, is an important element of the research which is needed into the whole field of natural environment. It is right that this should remain as an integral part of the Natural Environment Research Council by the same argument as is applied for the movement of the N.C.C. within the ægis of my own Department. This poses the problem of ensuring that there is a close, effective relationship and not a divorce between the conservation and the research side. I welcome the concern that my noble friends feel that we should spell this out, and I can assure everybody that this is a feasible proposition. We are satisfied that it can be achieved and have placed particular emphasis in our proposals on the detailed arrangements that will be needed. But there are practical problems such as those mentioned in the debate and we must address ourselves to them.
Since the Government decision was announced both NERC and the Conservancy have been concerned to ensure that effective arrangements are made to implement the decision. Both the NERC and the Conservancy are confident that that can be done. I am sure that the proposals which have been formulated will ensure a proper relationship in which the objectives for which we are all striving can flourish. For those reasons I commend this Bill to your Lordships.
On Question, Bill read 2ª, and committed to a Committee of the Whole House.

CINEMATOGRAPH FILMS (COLLECTION OF LEVY) (AMENDMENTS (No. 3) REGULATIONS 1973
BARONESS YOUNG BARONESS YOUNG rose to move, That the Draft Cinematograph Films (Collection of Levy) (Amendment No. 3) Regulations 1973, laid before the House on March 27, be approved. The noble Baroness said: My Lords, I beg to move that the Cinematograph Films (Collection of Levy) (Amendment No. 3) Regulations
884
1973, be approved. Under the Cinematograph Films Act 1957, exhibitors of cinematograph films pay a levy, based on the price of admission to the cinema, into the British Film Fund. The proceeds of that levy are distributed, with minor exceptions, entirely to makers of British films. Both the collection and the distribution of the levy are governed by Regulations, which the Department of Trade and Industry are required by the Act to make after consulting the Cinematograph Films Council. The Regulations require, the prior approval of Parliament by Resolutions of each House.
The amending Regulations now before your Lordships are entirely consequential on the application of V.A.T. to the price of admission to cinemas. The existing Regulations which determine the amount of levy are geared to the full price of admission, and if the price of admission is raised because of V.A.T., the amount of levy payable will increase proportionately. The levy payable therefore needs to be adjusted. The Government and all sides of the industry are in agreement about this, as is the Cinematograph Films Council, which has made a recommendation on the lines of the Amendment now before your Lordships.
The amount payable by the exhibitor as levy is one-ninth of that portion of the admission price which exceeds 7½,p. Thus, on typical admission price, before V.A.T., of 40p, levy payable was 3·61p, leaving the exhibitor with 36·39p. If the exhibitor raises his price by the full 10 per cent., making the seat price 44p, he can retain his net price of 36·39p only if levy remains assessed on the price exclusive of V.A.T. In fact the exhibitor would have to raise his admission price by between 11 and 11½ per cent. in order to retain his original net price, if V.A.T. were to be included in the computation of the levy payment. I am glad to be able to report that exhibitors have not raised prices in this way, doubtless because they have every confidence that these Amendments will be approved. They will ensure that the amount payable by the exhibitor as levy will not be altered because of V.A.T.
Cinemas with partcularly low weekly takings—not more than £500, subject to some marginal adjustments for cinemas with seasonal takings which vary—are already exempt from payment of the levy.
The takings of these cinemas may be expected to rise because of the addition of V.A.T., unless it should happen that the number of admissions drops for the same reason. Any such increase in takings will, of course, be of no benefit to the exhibitor; all of it will be payable as V.A.T. But it could have the effect of bringing some cinemas, at present in the exempt category, just above the figure quoted for maximum weekly takings. The Regulations therefore provide for V.A.T. to be excluded for purposes of calculating the amount of these weekly takings.
The Regulations will come into effect the day after they are made and will apply in the first place to the current levy period which ends next Saturday, April 14. Levy periods last for four weeks, so the revised arrangements will cover the period already passed since V.A.T. was introduced on April 1, and the complicated computations which otherwise would have been necessary will be avoided. For these reasons these measures have been brought before your Lordships at rather short notice. I recommend that your Lordships approve the Regulations.
Moved, That the Draft Cinematograph Films (Collection of Levy) (Amendment No. 3) Regulations 1973, laid before the House on March 27, be approved. —(Baroness Young.)
8.21 p.m.
LORD STRABOLGI: My Lords, I am sure that we are all grateful to the noble Baroness for explaining the purpose of these Regulations. I welcome this Amendment to the previous Regulations to enable V.A.T. to be excluded from the Eady Levy payments. In other words, this is an Order designed to allow value added tax to be calculated on the admission price minus the Eady Levy. As the noble Baroness has said, this concession is supported by all parts of the industry. Certainly it has our support from this side of the House. But we are not so happy about the effect of V.A.T. on cinema admissions generally as this tax will tend to raise prices. Although most exhibitors increased their overall admission prices by 10 per cent. recently it is unlikely that they will be able to absorb the tax out of their own profit margins, and no doubt it will have to be passed on to the consumer. Increased admission prices also will result
886
in further falls in admissions. Many cinemas, particularly the smaller houses, are already operating on very slender profit margins, and some of these may have to go out of business if admissions decline further.
My Lords, during 1972 there was a decline of over 20 million admissions. Even with increased seat prices the gross takings were well below the 1971 total. I am glad to say that a great deal has been done by the industry to modernise cinemas and convert many of the larger ones to smaller "twins" or even to "triplets", as they are called, and to improve facilities generally. But the industry is facing difficulties, and any further curtailment of profit margins will jeopardise this modernisation programme. Indeed, many cinemas have to rely heavily on sales of confectionery, and the industry would have been placed in a most invidious position if these sales, which are not part of catering, had not been zero-rated. This last minute concession is sensible and logical, and we welcome it. But the fact that such a concession is so vital is a grim and salutary reminder of present trends in the industry.
I hope that the Government will consider very carefully whether all cinema admission prices should not be zero-rated in the same way as books and newspapers. I believe that opinion in Europe has been tending towards this rather more civilised view following the UNESCO agreement in Florence which links films with books as deserving preferential treatment. It is surely not logical to differentiate between one kind of communication and another. Moreover, at present no other E.E.C. country except Holland has a V.A.T. rate as high as 10 per cent. on the film distribution side. I hope that the noble Baroness and her colleagues will take note of that. The British Film Production Fund, or Eady Levy, as it is known, was originally a voluntary levy which the industry agreed to on the understanding that the very onerous entertainment duty would be reduced and eventually abolished, which it was. The Levy was made compulsory in 1957, with the agreement of the industry, but now the entertainment duty has been clamped oil again in the form of V.A.T. So while welcoming this Order to exempt the levy from V.A.T., I must beg the Government to look more widely across the whole

887
exhibition field and to consider the eventual zero-rating of cinema admission prices as well.
8.25 p.m.
BARONESS YOUNG: My Lords, I should like to thank the noble Lord, Lord Strabolgi, for the welcome which he gave to this Order. I think it has been widely supported by the industry. I am very glad also for the welcome that he gave to the zero-rating on the sale of confectionery in cinemas. These are two major matters of interest to the cinema industry and we feel that this concession will be of great help to them in both respects. I feel that to have a general discussion on the whole subject of value added tax is to go somewhat wide of the Motion before us. My understanding of the position is that value added tax is an across-the-board tax on all matters, with certain named exceptions in respect of food, children's clothing, books, periodicals and newspapers.
I have listened with great attention to the points that the noble Lord made about the cinema industry, and to his concern that value added tax should be put on the price of cinema seats and the possible effect that this could have on the industry. I will certainly take note of what he has said. In the future I should have thought this is a matter that the cinema industry—which I know has already had discussions with my honourable friend in another place—might raise when the whole question of taxes will again be reviewed next year for the Budget.
On Question, Motion agreed to.

EDUCATION BILL [H.L.]
8.26 p.m.
THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF EDUCATION AND SCIENCE (LORD BELSTEAD): I beg to move that the Commons Amendment be now considered.
Moved, That the Commons Amendment be now considered. —(Lord Belstead.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[References are to Bill 47 as first printed for the Commons]
Page 8, line 16, leave out "(6)" and insert "(5)"
LORD BELSTEAD: My Lords, I beg to move that this House doth agree with the Commons in their Amendment. This is an Amendment to correct what was purely an error of drafting.
Moved, That this House doth agree with the Commons in the said Amendment. —(Lord Belstead.)
On Question, Motion agreed to.