Lords Sitting of 30 April 1974

Preamble
Reassembling after the Easter Recess, the House met at half past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Birmingham.
The Lord Heytesbury—Sat first in Parliament after the death of his father.
Several Lords—Took the Oath.

AVIATION FUEL: RESTRICTIONS ON USE
LORD TREFGARNE: 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 when they expect to be able to lift the restrictions on the use of aviation fuels, both gasolene and kerosene.
THE MINISTER OF STATE, DEPARTMENT OF ENERGY (LORD BALOGH): My Lords, restrictions on deliveries of aviation kerosene used by jet aircraft were suspended on March 21. Voluntary restrictions on the use of aviation fuel operated by the light aviation industry were terminated on April 9. My right honourable friend the
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Secretary of State for Energy is urgently considering whether to maintain restrictions on deliveries of aviation gasolene, which is used largely by private fliers and air taxi operators flying piston-engined aircraft.
LORD TREFGARNE: My Lords, I am greatly obliged to the noble Lord for that reply. While he and his right honourable friend are considering the relaxation of these restrictions, will he please bear in mind that the recent vast increase in price has effected a rationing system of its own? In these circumstances, is it not now possible to lift these remaining restrictions?
LORD BALOGH: My Lords, my right honourable friend is bearing these considerations well in mind. I hope that we shall be able to report progress.

E.E.C.: DEMOCRATIC CONTROL
2.42 p.m.
LORD O'HAGAN: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what plans they have to increase democratic control over the E.E.C.
THE PARLIAMENTARY UNDER-SECRETARY OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD GORONWY-ROBERTS): My Lords, the need for greater democratic control over Community institutions will be

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examined in the context of renegotiation policy as a whole and will subsequently be considered in the light of the results obtained. In the meantime, this House has already passed a Motion to appoint a Select Committee to consider Community Proposals, and in another place preparations are well advanced to implement the main recommendations of the Select Committee on European Community Secondary Legislation.
LORD O'HAGAN: My Lords, will the noble Lord accept that the Select Committees on European legislation of this House and the other place are another matter and are different from democratic control at the European level? Will be also accept that at that level there is no time for delay? If the Government are not going to come forward with their own proposals in this field, bearing in mind what happened to King Charles, will they look favourably on proposals coming forward from others, either in this House or in another place?
LORD GORONWY-ROBERTS: My Lords, I am sure that the noble Lord will agree with me that the measures now being taken to ensure that both Houses have proper supervision of proposals emanating from the Community are wise and democratic precautions to take. On the noble Lord's second point, I entirely agree that, as renegotiation proceeds, we as a Government shall actively consider the question he has raised; that is to say, the democratic control of whatever system appertains in the Community as it emerges from our discussions with them.
THE EARL OF LAUDERDALE: My Lords, in the Government's review of the democratic procedures to which the noble Lord has just alluded, can be say whether any consideration will be given, at last, to the proposition that Members sent from either House of Parliament to Strasbourg should be elected by their respective Houses and not simply appointed through the Whips Offices?
LORD GORONWY-ROBERTS: My Lords, that is clearly another question for future consideration.
BARONESS GAITSKELL: My Lords, in supporting the noble Earl, Lord Lauderdale, on this point, does not the Minister think that until we have elected
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members to the European Parliament the man in the street will never understand democracy in the E.E.C. at all?
LORD GORONWY-ROBERTS: My Lords, that is certainly a point which in due course will commend itself to the attention of all. The question of the shape and nature of any democratic body which will supervise, or indeed control, the workings of the Community must, in our view, await the completion of our current renegotiations.
LORD ROBBINS: My Lords, from the replies that the noble Lord has given, is one to understand that some disposition towards democratic control on the part of the other partners in the E.E.C. might induce some predisposition in favour of continued membership of that Community?
LORD GORONWY-ROBERTS: My Lords, so far as I follow the noble Lord's suggestion, I can say that we are of been before the Council of Ministers. In that way we are considering the proposals now on the table for improving procedures in the European Assembly, but only contingently on our succeeding in our renegotiations with our partners in the E.E.C. course quite properly studying package proposals which have for some months
THE EARL OF LAUDERDALE: My Lords, contingently on that decision, could not the noble Lord give us a clear answer "yes" or "no" on the proposition that representatives of Parliament being sent to Strasbourg should be elected and not nominated?
LORD GORONWY-ROBERTS: My Lords, clearly that is a matter for consideration and debate. It is conceivable that representation could be direct or indirect. We are not at the moment in a position to give an answer "yes" or "no" to that proposition.
THE EARL OF LAUDERDALE: My Lords, is the Minister saying that this matter will be considered sympathetically?
LORD GORONWY-ROBERTS: My Lords, I am saying that it will be considered fully.
LORD HAILSHAM OF SAINT MARYLEBONE: My Lords is it not

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the case that the Minister is saying absolutely nothing at all?
LORD SLATER: My Lords, are we to take it from the supplementary questions that have been asked in regard to this particular Question on the Order Paper that the E.E.C. is a democratic organisation at the present moment of time? As it was set up under Professor Halstein, are we to assume that it is a democratic organisation? Is that what noble Lords really believe is the E.E.C.?
LORD GORONWY-ROBERTS: My Lords, I imagine that that is a question for the noble Lords to whom it was addressed and not for me.
LORD HALE: My Lords, if we are going to talk about democracy, would it not be better to stop talking about a European Parliament which does not exist, and never has existed? It is a consultative assembly. Consultative assemblies can do useful work; but whether it is worth while having European elections for a consultative assembly which can take no decisions but merely make recommendations which can be wholly ignored, is material to the whole question of democracy.
LORD GORONWY-ROBERTS: My Lords, my noble friend has shown in his question that this is a matter for considerable and careful discussion. Views on what the constitution and powers of such an assembly should be would vary greatly, and it is not by way of instant question and answer that I would hope to be of any assistance to your Lordships' House in this matter.
LORD LEATHERLAND: My Lords, may I ask my noble friend whether he is aware that at the last meeting of the European Assembly, which we are discussing, according to the Press reports one delegate from this country, a Member of this noble House, referred to another delegate from this country, another Member of this noble House, as a "twit"? Does he not think that some control ought to be exercised there?
LORD GORONWY-ROBERTS: My Lords, I should think that that would be a matter for the Speaker of that Assembly rather than for me.

NORTH SEA OIL: PLATFORM SITES
2.48 p.m.
LORD BARNBY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are able to make a Statement on progress of sites for "Platform" construction on the coast of Cromarty.
THE MINISTER OF STATE, SCOTTISH OFFICE (LORD HUGHES): My Lords, planning permission has been given for four oil production platform construction sites on the coast of the Cromarty Firth. So far one of them, at Nigg Bay, is in operation.
LORD BARNBY: My Lords, it is well known that the Minister is fully aware of the importance of speed, from a national point of view, in the granting of these licences. Can the noble Lord indicate whether any other application is pending for which all of the procedural permits have been given, so that it therefore lies entirely with the Minister to give a decision? If there is another such application, is he in a position to give any indication as to whether an early reply may be expected from the Minister?
LORD HUGHES: My Lords, I think that the noble Lord may be referring to the Kishorn site. It is not the case that all the procedures have been completed. My right honourable friend the Secretary of State received an application from Ross and Cromarty County Council only on March 29. A number of objections have been lodged, and these will have to be the subject of consideration by my right honourable friend the Secretary of State.
THE EARL OF DUNDEE: My Lords, may I ask the noble Lord whether he has seen the letter in the Press this morning from Mr. Gordon Campbell, the late Secretary of State for Scotland, reminding us of a Parliamentary Statement last January? The Statement warned that if one of the deep water sites not in the Cromarty area but in the Loch Carron area is not obtained by July of this year,

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then the special concrete platforms required to produce the maximum flow of oil to Scotland will not be ready by 1977 or 1978. Can the noble Lord say whether, if the Drumbuie site should be disallowed, there will still be time to get planning permission, after hearing the objections to any of the other Loch Canon sites, before the end of this summer?
LORD HUGHES: My Lords, I have not seen the letter to which the noble Earl has referred, but I shall take an early opportunity of reading it. At present there are three planning applications for sites on the West coast of the county in the Loch Carron area. Two overlapping applications for a site at Drumbuie have been the subject of a public local inquiry, the report of which is awaited, and the local planning authority have applied to the Secretary of State for Scotland for a direction under Article 8 of the General Development Order to enable it to grant planning permission for the site of Kishorn, to which I referred previously in answer to the noble Lord, Lord Barnby. As I said, this request is under consideration but we have not yet received the report from the Reporter of the Drumbuie Inquiry and it would be improper for me to make any comment on it at this stage.
VISCOUNT THURSO: My Lords, can the noble Lord say whether each of the four sites in the Cromarty Firth, to which he has referred, is allocated to a different firm? If so, are any allocated to firms which are also applying for sites in other parts of the coast of Scotland?
LORD HUGHES: My Lords, I am sorry, but I am not in a position to answer that question. However, I will find out and communicate the information to the noble Earl. I would point out that the granting of planning permission in response to an application is not always followed by action on the site.
THE EARL OF LAUDERDALE: My Lords, can the noble Lord say whether the Scottish Office has yet completed the preparation of a list which a year ago we understood would be provided of all sites on the North and West Coast and the Islands of Scotland suitable for the construction of gravity concrete structures?
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Has that list been completed and made available?
LORD HUGHES: No, my Lords, but clearance has been given to nine platform production sites. Only four of these are in use at present, the one at Nigg Bay, to which I have already referred, Ardersier, Methil and Ardyne Point. In the case of Ardyne Point, work was not started until nine months after the then Secretary of State's decision.
THE EARL OF LAUDERDALE:: My Lords, further to that reply, for which I am grateful, would not the Minister agree that in the interests of getting oil ashore it is urgent that those firms interested in building gravity structures should be able to make a selection of available sites? Would be look into this point? About a year ago, the Scottish Office gave us all to understand that it was to prepare a complete list of geographically suitable sites without any commitment in terms of planning limitations.
LORD HUGHES: My Lords, I will bring the remarks of the noble Earl to the notice of my right honourable friend.
THE EARL OF DUNDEE:: My Lords, would the noble Lord agree that none of the nine approved sites in Scotland which he has mentioned have deep enough water for the special concrete platforms, some of which will be required to secure the necessary flow of oil in a few years' time?
LORD HUGHES: My Lords, that is possible, but they were obviously suitable for the purposes of those who applied.
LORD BARNBY: My Lords, may I ask whether the Minister, recognising the delicacy of certain aspects of this question, but arising out of his reply to my noble friend Lord Dundee, might find himself in a position to indicate whether it is to be understood that the overriding of environmental considerations would require special legislation to avoid the delay which may result in one whole year being lost? Will be ensure that there is no delay on the decisions which the Minister may give regarding applications before him?
LORD HUGHES: My Lords, there is no one particular set of circumstances which can be "overriding", but it would be wrong to ignore any particular one.

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Environment is one of the matters that has to be taken into consideration, but my right honourable friend the Secretary of State will make, and his predecessor has made, decisions in the light of all the circumstances in trying to arrive at a conclusion which is in the best interests of the country.

E.E.C.: MEMBER STATES' NATIONALS AND CATERING JOBS
2.57 p.m.
LORD AMULREE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether persons from countries belonging to the E.E.C. are given priority over persons from other European countries in applying for jobs in the hotel and club industry.
LORD HUGHES: My Lords, E.E.C. legislation provides for the free movement of Community workers between Member States. Workers from non-E.E.C. countries require work permits for employment in the hotel and catering industry in Great Britain, and these are restricted so far as men are concerned to 5,000 a year.
LORD AMULREE: My Lords, I thank the noble Lord for his reply. In view of the shortage of people to take up this employment, may I ask whether it is possible to increase the number of non-E.E.C. people coming to this country?
LORD HUGHES: My Lords, as I have said, there is no restriction on the numbers coming from E.E.C. countries. I might indicate that the number who came during the past year was 1,600. That figure does not take account of those who intend to stay for less than six months, whose numbers I do not know; nor does it take acount of those coming from the Irish Republic. We have no reason to believe that the numbers are inadequate and the Community nationals, other than the Irish, generally come here of their own accord. In fact, only 2 per cent. of the 1,600 use the official employment services.
LORD DERWENT: My Lords, can the Minister say why, as in so many other
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matters, no restrictions are placed on women?
LORD HUGHES: My Lords, perhaps the women's liberation movement has made greater progress than it realises.
LORD BYERS: My Lords, can the Minister indicate to the House how many applications were refused? I believe he said that 5,000 are being allowed in, but can be indicate how many are knocking at the door?
LORD HUGHES: Not without notice, my Lords.
LORD MERRIVALE: My Lords, in the future interests of our well-served, well-fed hotels, will Her Majesty's Government consider encouraging the attraction to this country of Italian waiters and French chefs?
LORD HUGHES: My Lords, I can think of no better encouragement than allowing them in without let or hindrance.
LORD HYLTON: My Lords, is the noble Lord aware that, particularly in London, there is a great boom in the building of hotels, but that little thought appears to have been given to where the people working in those hotels are to live?
LORD HUGHES: My Lords, with respect I think that question runs a little wide of the original Question.
LORD SEGAL: My Lords, would it not be in the best interests of our hotel and catering industry if the suitability of a given person for a given job were the overriding consideration, rather than his country of origin?
LORD HUGHES: My Lords, as regards the permits for non-E.E.C. people, I assume that that is one of the considerations. One of the points about the regulations of the Community is that we are not allowed to take these factors into consideration.

CROUCH HARBOUR BILL [H.L.]
Read 2a, and committed to a Select Committee.

CONTROL OF POLLUTION BILL [H.L.]
3.0 p.m.
LORD SHEPHERD: My Lords, I beg leave to introduce a Bill to make further provision with respect to waste disposal, water pollution, noise, atmospheric pollution and public health; and for purposes connected with the matters aforesaid.
My Lords, I am sure that the House will recognise the Bill which I seek to introduce this afternoon as the Protection of the Environment Bill which we considered quite exhaustively in the last Parliament. Since the opening of Parliament I have been under some pressure to reintroduce the Bill. The only problem has been one of Parliamentary time: whether the Bill could be fitted into the current timetable of another place. I have already had some discussions through the usual channels about the programme for the Bill, and I also wrote yesterday to, I hope, all noble Lords who took part in the debates on the Bill in the last Parliament, to seek their views on whether it would be possible to expedite the Bill in your Lordships' House so that it might stand a good chance of reaching the Statute Book before the Summer Recess. The programme I have in mind is that we should have the Second Reading of the Bill on Tuesday next, May 7, followed by two Committee days on May 14 and May 16, with a view to completing the Bill in the last week before the Whitsun Recess.
My Lords, I realise that this is a very tight timetable and that it may involve fairly late sittings on those days on which we take the Bill; but the Bill was very thoroughly considered in the last Parliament and many of the changes incorporated in the present Bill have been made to meet points of criticism raised by noble Lords during the last Committee stage. I have already received favourable reaction from a number of Peers to whom I have written and I hope that this proposed course of action will commend itself in general to the House. I realise that with the best will in the world it may not be possible in the end to achieve this progress in this House. My attitude therefore is "let us give it a try", since this is a Bill which I think most of us agree is very important and
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one that we should try to get on to the Statute Book at the earliest possible moment. Naturally I will make myself fully available to any Member of your Lordships' House who may wish to raise any point concerning the Bill in order not only to improve it but to expedite its passage through the House. I beg to move that the Bill be now read a first time.
Moved, That the Bill be now read 1a. —(Lord Shepherd.)
LORD WINDLESHAM: My Lords, I should like to thank the noble Lord for that statement and also for securing the re-introduction of this very important Bill. We know the Bill and we want it. We knew it as the Protection of the Environment Bill. In the intervening period since the Dissolution it has undergone a change of name. But
"What's in a name; that which we call a rose by any other name would smell as sweet!"
We have not got the noble Baroness, our "Juliet", the Government Chief Whip, on the Government Front Bench, and while I did not think that I should ever regard the noble Lord, Lord Shepherd, as a "Romeo", I think I do so in this context.
My Lords, as the noble Lord has said, there has been consultation through the usual channels about the timetable he has proposed. It is a very tight one; but, as the noble Lord has said, the Bill had reached its Report stage before the Dissolution of Parliament and had had, I believe, eight days in Committee. There is therefore no doubt that this Bill has already been dealt with very thoroughly. It is good to hear from the noble Lord the Leader of the House that some of the changes incorporated in the version that he introduced today result from points of criticism raised in the earlier proceedings. This is a non-Party measure. It is designed to protect the environment and to control pollution, and as such it is welcomed.
LORD BYERS: My Lords, it is important, I think, that we should have the Bill in its new form printed as soon as possible. Can the noble Lord the Leader of the House give some indication of when it will be available?
LORD SHEPHERD: My Lords, I have no control over the printers but I hope that, having introduced the Bill, it will

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be available to-morrow. If any noble Lord who may not get a copy tomorrow wishes it, I will try to find out whether I can let him see a restricted copy.
On Question, Bill read 1a, and to be printed.

NATIONAL INSURANCE BILL
Brought from the Commons on Thursday April 11, and printed (pursuant to Standing Order No. 48); read 1a.

HOUSE OF LORDS OFFICES
3.5 p.m.
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL)THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL) rose to move that the First Report from the Select Committee be agreed to.
The Committee's Report was as follows:
1. APPOINTMENT OF SUB-COMMITTEES
The following members of the Committee were appointed to the Sub-Committees:
(a) Administration Committee

E. Listowel

E. St. Aldwyn

V. Hood

L. Amulree

L. Champion

B. Hylton-Foster

B. Llewelyn-Davies of Hastoe

L. Nugent of Guildford

With the Clerk of the Parliaments.
With power to co-opt further Lords.
(b) Library Sub-Committee

L. Amulree

L. Champion

L. Davies of Leek

B. Emmet of Amberley

L. Maybray-King

L. Wilberforce

With the Clerk of the Parliaments.
With power to co-opt further Lords and to appoint their own Chairman.
(c) Refreshment Sub-Committee

E. St. Aldwyn

L. Amulree

B. Gaitskell

B. Hylton-Foster

B. Llewelyn-Davies of Hastoe

L. Nugent of Guildford

L. Strang

With the Clerk of the Parliaments.
With power to co-opt further Lords and to appoint their own Chairman.
(d) Sub-Committee on the Parliament Office

V. Hood

L. Champion

L. Mancroft

With the Clerk of the Parliaments.
With power to co-opt further Lords and to appoint their own Chairman.
(e) Finance Committee

E. Listowel

E. St. Aldwyn

V. Hood

B. Llewelyn-Davies of Hastoe

L. Amulree

L. Champion

L. Nugent of Guildford

With the Clerk of the Parliaments.
With power to co-opt further Lords.
(f) Works of Art Sub-Committee

V. Hood

M. Cholmondeley

L. Amulree

With the Clerk of the Parliaments.
With power to co-opt further Lords and to appoint their own Chairman.
2. DEPUTY CHAIRMAN OF COMMITTEES
The Committee authorised a salaried post of Deputy Chairman of Committees.
3. YEOMAN USHER OF THE BLACK ROD
The Committee were informed of the retirement of Colonel Charles Lorne Sayers, C.B.E., and of the appointment on a permanent basis of Group Captain R. M. B. Duke-Woolley, D.S.O., D.F.C., as Yeoman Usher of the Black Rod and Deputy Serjeant at Arms.
The Committee authorised the salary scale for the post which would now become Established and the cost of providing Court Dress.
4. PARLIAMENT OFFICE
The Committee were informed of a rearrangement of certain duties within the Parliament Office.
The Committee authorised the appointment of additional posts of Assistant Clerk in the Judicial Office and of Personal Secretary for the Head of Establishments, and a revised salary on a personal basis for the Registry Clerk.
5. REVISED SCALES OF PAY
The Committee confirmed the application authorised by the Chairman of Committees and the Clerk of the Parliaments, of the following Estacode circulars:—

(a) EC/153: dated 5th December 1973—Pay of Administration Group (Middle and Higher grades)

(b) EC/176: dated 11th January 1974—Pay of Administration Group (Clerical grades) and related departmental grades

(c) EC/180: dated 14th January 1974—Pay of Personal Secretary and Senior Personal Secretary grades.

(d) EC/186: dated 31st January 1974—Pay of General Service grades linked to Administration Group (Middle and Higher grades)

(e) EC/188: dated 6th February—Non-Industrial Cleaners

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(f) EC/193: dated 11th February 1974—Messenger Paper Keeper and Office Keeper Classes: Revised scales of pay

(g) EC/195: dated 13th February 1974—Pay of Security Officer class

(h) EC/209: dated 6th February 1974—General Pay Increase

giving revised rates of pay to applicable officers and staff of the House of Lords.
6. DEPARTMENT OF GENTLEMAN USHER OF THE BLACK ROD AND SERJEANT AT ARMS
The Committee sanctioned the re-grading of two secretarial posts in the Serjeant at Arms Office and authorised the rates of pay for these posts.
7. HANSARD REPORTING STAFF
The Clerk of the Parliaments informed the Committee of the following arrangement of the Editorial staff on the retirement of Mr. W. M. Stuart, the Editor of Debates, on 1st May 1974:—
Mr. C. W. H. Blogg to be Editor in the place of Mr. W. M. Stuart.
Mr. C. R. Stanton to be Assistant Editor in the place of Mr. C. W. H. Blogg.
Mr. P. M Eglinton to be Sub-Editor in the place of Mr. C. R. Stanton.
The Committee instructed the Clerk of the Parliaments to convey to Mr. Stuart their warm appreciation of his long and valuable service.
8. ATTENDANTS

(i) The Clerk of the Parliaments informed the Committee of an application by the Civil Service Union to be granted representative capacity for the House of Lords Attendant staff.

(ii) The Committee authorised the appointment of an additional attendant.

9. ESTIMATES
The Committee were informed of the presentation of a Supplementary Estimate for 1973–74 and of a revised Estimate for 1974–75.
10. EXPENSES OF SELECT COMMITTEES
The Committee approved a revised scale of subsistence allowances payable to specialist advisers, research assistants and witnesses.
11. SUPERANNUATION
The Committee confirmed the payment, authorised by the Chairman of Committees and the Clerk of the Parliaments, of the following superannuation awards:

(a) Short Service payment to Colonel Charles Lorne Sayers, C.B.E., Yeoman Usher of the Black Rod and Deputy Serjeant at Arms, who retired with effect from 16th November 1973.

(b) Revised pension and lump sum to Mr. Sidney Charles Ireland, O.B.E., who retired after re-employed service as Sub-Editor of Debates on 1st January 1974.

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(c) Pension and lump sum to Mr. Frederick Paice, B.E.M., Reporter, who retired on 14th January 1974.

(d) Pension and lump sum to Mr. Arthur Haynes, Reporter, who retired on 1st March 1974.

(e) Pension and lump sum to Mr. James Hope Ledger, Doorkeeper, who retired on 21st March 1974.

(f) Pension and lump sum to Mrs. Alice Maud Carroll, Housemaid, who retired on 10th March 1974.

The Committee also sanctioned the payment of:
(g) A Preserved Pension and lump sum to Mr. Richard Edward Peters, Reporter, who resigned on 30th November 1973.
(h) A pension and lump sum to Mr. Wilfred Morley Stuart, Editor of Debates, who retires on 1st May 1974.
THE EARL OF LISTOWEL: My Lords, I beg to move that this Report be agreed to.
Moved, That the First Report from the Select Committee be agreed to.—(The Earl of Listowel.)
LORD SHEPHERD: My Lords, I am sure that your Lordships would not like this Motion to be passed without taking particular note of one item, which records the retirement of one of our longest serving and most loyal servants, Mr. Stuart. Mr. Stuart first joined the reporting staff in 1946 and became Assistant Editor of Debates in 1947 under the editorship of his old friend and colleague, Mr. Ireland, who retired as Editor at the beginning of 1967. Mr. Stuart succeeded him and Mr. Ireland then became one of his Sub-Editors. I think it is fair to say that Mr. Stuart has been Editor of Hansard during some of the most difficult years of all. I am sure your Lordships can recall the marathon sittings on the Industrial Relations Bill and the European Communities Bill, to mention but two. In recent Sessions the House has sat longer and on more days than it ever used to and, in addition to all this, it was during Mr. Stuart's editorship that we first started experiments with the mechanical recording of your Lordships' debates. I think that we owe Mr. Stuart and his staff all our thanks for the most efficient manner in which they have continued to produce Hansard. We wish Mr. Stuart well in his retirement and I hope that he will return to visit us from time to time. We also wish his successor, Mr. Blogg, every success in his new appointment.
LORD WINDLESHAM: My Lords, on behalf of noble Lords on this side of the House I should like warmly to endorse what the noble Lord the Leader of the House has just said in that very well deserved tribute to Mr. Stuart. As we have heard, Mr. Stuart has served this House over a very long period with dedication and with a distinguished display of those exceptional skills that are needed to produce an accurate and verbatim record in such a very short space of time. We all wish him well in his retirement and we should like him to know that he carries with him the good wishes and gratitude of the House.
LORD BYERS: My Lords, from these Benches we should like to endorse what has been said by the two noble Lords. We wish Mr. Stuart a very happy retirement and we appreciate not only what he has done but what the staff under him have done. We realise how dependent we in politics are, in this House and in another place, on the reporting staff and on the editors.
On Question, Motion agreed to.

CONSUMER CREDIT BILL [H.L.]
LORD SHEPHERD: My Lords I beg to move the Motion standing in my name on the Order Paper.
Moved, That it be an Instruction to the Committee of the Whole House to whom the Consumer Credit Bill has been committed that they consider the Bill in the following order, vizt.:

Clauses 1 to 163,

Schedule 1,

Clauses 164 to 183,

Schedule 2,

Clauses 184 to 187,

Schedules 3 to 5,

Clause 188.

—(Lord Shepherd.)
On Question, Motion agreed to.

INSURANCE COMPANIES BILL [H.L.]
THE LORD CHANCELLOR (LORD ELWYN-JONES): My Lords, I beg to move that this Bill be now read a second time. It is a purely Consolidation Bill. It consolidates nearly the whole of the Insurance Companies Act 1958 and the relevant provisions in the Companies Act
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1967 and the Insurance Companies (Amendment) Act 1973. The Bill will be referred to the Joint Committee in the usual way.
Moved, That the Bill be now read 2a. —(The Lord Chancellor.)
On Question, Bill read 2a, and referred to the Joint Committee on Consolidation Bills.

SOLICITORS (AMENDMENT) BILL [H.L.]
3.10 p.m.
THE LORD CHANCELLOR: My Lords, I beg to move that this Bill be now read a second time. It has become something of a hardy perennial in your Lordships' House. Two previous versions of the Bill introduced on behalf of the Law Society were welcomed and passed by this House. The third version, introduced by the last Administration, was read a second time in another place. Its further passage was interrupted by the recent Dissolution. This Bill is, in substance, the same as that introduced by the previous Administration but it contains important changes to which I will refer in a moment. I believe that the changes improve the Bill, and I hope that once again the Bill will commend itself to the House.
My Lords, in the circumstances I do not propose to traverse at length ground which is already familiar to you, but I think it right to stress the particular importance of certain of the Bill's provisions. Foremost of these are provisions in Clauses 6 and 9. These remove the statutory maximum on the practising certificate fee payable by solicitors and on the annual contribution paid by them to the Compensation Fund. The fee has for some years stood at the maximum of £20 and the contribution at the maximum of £10. So long as these existing limits on the fee and contribution cannot be exceeded, the interests of the public may well be jeopardised.
The House will be familiar with the many services which the Law Society provides, directly and indirectly, to the public: directly, in making grants out of the Compensation Fund, in examining and certifying bills of costs, in dealing with all manner of questions and complaints about solicitors and in helping to ensure

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that the client is professionally advised; indirectly, in providing for the education and training for the profession, in making proposals for law reform and in enforcing and improving professional standards of conduct. In all these ways the Law Society's services benefit the public. Of course, the Society provides many services to the profession itself, and it is only right to recognise that the practising certificate fee is not wholly used directly for the public benefit and plays no part in financing the important services performed by the Law Society in the administration of legal aid. But if the revenue needed for the Society's services is not increased in the near future those services will be seriously affected, and it is not only the profession but the public itself which would suffer.
My Lords, I also commend Clause 8, Schedule 1 and Clause 10, which greatly strengthen the protection given to that, happily small, section of the public which suffers from the conduct of the occasional dishonest or defaulting solicitor. Clause 8 and Schedule 1 extend the Society's powers to take over and reorganise the practices of solicitors who, for some reason or another, cannot be relied upon to continue to handle clients' affairs; and Clause 10 confers wide powers upon the Society and the Master of the Rolls to regulate the insurance of solicitors against claims for professional negligence and other civil claims, and to ensure that in the interests of the public and of the profession solicitors are, so far as possible, adequately protected by insurance. Where the solicitor has caused loss by fraud or dishonesty, no insurance policy will cover him. But that kind of situation is covered by the Compensation Fund and by the provisions of Clause 9, and grants can be made from the Compensation Fund by the Society. Clauses 8, 9 and 10 together will, therefore, provide a sound protective system for the benefit of the lay client.
My Lords, in highlighting these few clauses I do not seek to minimise the value and importance of many other provisions of the Bill, to which the House has on previous occasions given its approval. I propose now to turn to those clauses which have not previously been before the House. Clause 2 contains provisions which will permit a scheme for the training of solicitors after
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their admission to the roll. It is likely that this will involve a vocational course, post-admission training under the supervision of a solicitor, and restrictions on practice during the period of post-admission training. The scheme could supplement or even replace the present system of service under articles. The Law Society proposed such a scheme in their evidence to the Ormrod Committee on Legal Education, and the Report of that Committee recommended its adoption.
The relative merits of a scheme of vocational training as against the existing system of service under articles are discussed in the Ormrod Report and are at present the subject of consultation within the profession itself, and I shall not deal with them here. The clause is an enabling one. I think it right that the Society should be given the opportunity to introduce something on the lines of this scheme, which would be made by way of regulations requiring my approval and that of the Lord Chief Justice and the Master of the Rolls.
My Lords, I come now to the important innovating Clauses 7 and 11, which are concerned with the machinery for dealing with complaints against solicitors. These clauses, which complement each other, both introduce lay membership into the complaints system. While Clause 11 introduces a lay element into the "adjudicatory" stage, Clause 7 introduces it at the investigatory stage as well. It is an important change.
Let me say at once that I do not question the integrity and thoroughness with which the Society handle the thousands of complaints which they receive every year; and I hope I may be forgiven for pointing out that a complaint is not the same as a justified complaint. But it is right to recognise, as the Law Society itself does, that there is some dissatisfaction with a system in which solicitors' conduct is investigated solely by solicitors and judged solely by solicitors. The previous Government announced in another place some positive proposals for introducing a lay element at the stage at which a complaint is investigated. This Government are in broad agreement with those proposals but we think it preferable that they should be given statutory recognition, and this is done by Clause 7.

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Clause 7 enables me to appoint one or more non-lawyers, called "lay-observers". Their task will be to examine allegations by members of the public concerning the Law Society's treatment of complaints against solicitors. The purpose of the clause is to ensure that the Law Society's decisions can be examined by an authorised person independent both of the legal profession and of the complainant. The observer's independence of the Law Society and of the complainant will be assured by the fact that the power to appoint him will be mine, and his remuneration will come from public funds. The clause also enables me to give general directions about the lay observer's functions.
I think three matters are of particular importance in this context. First, the observer's task is to decide not the merits of the complaint against the solicitor, but the merits of the Law Society's treatment of it, and to ensure that justice is seen to be done and that the Society does not act as judge in its own cause. Secondly, I believe that a lay observer should be free to make recommendations to the Law Society; for example, that it should reconsider certain aspects of a case or obtain further information. Thirdly, I am minded to direct that the observer should make an annual report to me of his activities, and that this report should be published. I believe that the Law Society itself and the Government are at one in thinking that this clause will do much to create confidence in the machinery for dealing with complaints. Noble Lords will notice that the power of appointment in the Bill is discretionary, but I can give the House the assurance that I propose to launch what I hope will be an interesting and valuable initiative in lay participation.
My Lords, while Clause 7 concerns investigation of complaints, Clause 11 concerns their adjudication. This is done by the disciplinary committee which is an independent statutory tribunal appointed by the Master of the Rolls. Clause 11 recognises the fact and renames this body the "Solicitors Disciplinary Tribunal". But the real importance of this clause is in the provisions which alter the tribunal's composition, notably by the introduction of lay members.
The clause in its present form was introduced by the previous Government
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and has the full approval of the Law Society itself. Matters of professional conduct, of clients' accounts and so on, are in my view primarily for the profession to regulate and to decide, but I think it will be of great value to have the fresh approach of a layman on the tribunal which adjudicates on these questions. The solicitor members will form the majority—and I believe that that is sensible and right—but I am sure that the layman's presence will be a valuable and stimulating influence and a further reassurance to the public, particularly those who accept George Bernard Shaw's view that every profession is but a conspiracy against the laity. It is of course possible that sometimes the lay member may influence his solicitor colleagues towards leniency in a given case. The clause also extends the solicitor membership to include solicitors of ten years' standing: they need no longer be members or former members of the Law Society's Council.
The Bill does not apply to Scotland, but I have been asked by my right honourable friend the Secretary of State for Scotland to mention that when a suitable legislative opportunity arises he proposes to introduce arrangements similar to those which I have just outlined to your Lordships for lay participation in the consideration of complaints against solicitors in Scotland. This will be done by widening the membership of the statutory Solicitors Discipline (Scotland) Committee to include non-lawyers and to provide that a quorum of the Committee must include a lay member. The Lord President of the Court of Session has indicated his willingness to make these lay appointments. In addition, it is intended to appoint a complaints commissioner, who will also be a non-lawyer, to receive and consider complaints from any members of the public who may be dissatisfied with the way in which the Law Society of Scotland has dealt with their complaints. This appointment the Lord President is also willing to make. The cost of the new arrangements will be a charge on public funds. These proposals for Scotland have been framed following discussions with the Law Society of Scotland and they have the Society's full backing and approval.
My Lords, Clause 13 of the Bill puts it beyond doubt that the Law Society

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may disclose to the Director of Public Prosecutions information which they have obtained under their statutory powers to investigate a solicitor's accounts. The clause is a revised version of one which your Lordships have seen before. It is changed in one significant respect: it enables the relevant information to be passed to the Director for use in investigating the possible commission of an offence by the solicitor, not merely for use in connection with prosecution which the Director already contemplates. I believe that in its new form the clause confers additional protection to the public by removing any inhibitions which the Law Society may have in passing on information which might bring a criminal to justice.
My Lords, this Bill is in many respects complex. The draftsman had the formidable task of operating on legislation which derives very largely from the 19th century. It is not necessarily the worse for that, but it certainly adds to the complexity. In paving the way for the consolidation which I hope will follow hard on the heels of this Bill, he has found it necessary to rearrange and clarify many obscure provisions. This work will, I am sure, be of benefit when it comes to fruition in the Consolidation Bill in due course. My Lords, I beg to move.
Moved, That the Bill be now read 2a.—(The Lord Chancellor.)
3.25 p.m.
LORD HAILSHAM OF SAINT MARYLEBONE: My Lords, I do not propose to take up the time of the House discussing this Bill at any length because the noble and learned Lord who has now taken up the task which I demitted some months ago has explained the Bill very fully to the House, and because he began by saying that it is virtually the same Bill as the Master of the Rolls introduced twice before and I once. The noble and learned Lord on the Woolsack referred to it for that reason as a hardy perennial. Botanically, I should hardly think he was correct. It is more like a half hardy annual, but I hope it will now finally blossom and seed and that it will produce in the next generation a consolidated Bill in which the highly complicated law as it affects the solicitors'
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profession is finally reduced to a single and intelligible code. I wish the noble and learned Lord, in the task which I left behind for him to complete, better luck than I had in getting it on the Statute Book.
My Lords, I do not think the changes are of very great importance. I have forgotten the exact detail of where we had got to by the time the General Election took place, but my recollection is that I should have done exactly the same as the noble and learned Lord has done. The only difference that I can detect is that whereas I thought it was not particularly necessary or useful to introduce lay observers as part of the Bill but promised to do so by means of a scheme, the noble and learned Lord has put it in the Bill. I have nothing against that. Both the provisions, I am sorry to say, as regards the lay observers at the investigatory stage and at the adjudicatory stage I think are very largely cosmetic in their effect and in their value. Not that I am against cosmetics for those who like to use them, but the fact is that if the solicitors' profession were, to borrow a quotation from George Bernard Shaw which has already been made, "a conspiracy against the laity" then a couple of lay observers appointed by the Lord Chancellor would not defeat the conspiracy. But if it makes people happier to have it that way, by all means let us have it that way. The fact is that solicitors in that respect have nothing to hide and the presence of the laity on the two stages of the investigation will only go to demonstrate the fact that there is nothing to hide.
My Lords, looking back on the history of this Bill, I note that, apart from a number of essential but highly technical clauses which have been explained to the House more than once and which I shall not go into again, by far the most important innovation from the point of view of the general public is not in the machinery for investigating complaints but in the provision which provides for compulsory insurance against negligence.
There is a very great confusion on the part of the public as to what complaints against solicitors really involve. After very nearly four years as Lord Chancellor, I think I know what they involve. Many of them are either trivial or unfounded but the only ones which really go unsatisfied by the machinery are the very difficult

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cases of professional negligence. Complaints about solicitors from the public as a whole, when they reach the Lord Chancellor either directly or through Members of the House of Commons or this House, are mostly, so far as they are not illfounded, complaints about negligence. Alleged negligence is not a matter for the disciplinary machinery of any profession. This is a matter for the ordinary courts of laws and the remedy for negligence is damages, not striking a solicitor off the roll, warning him or fining him. The remedy for negligence, whether a doctor, a solicitor or a member of any other profession is involved, is damages; and those can be awarded only by a court and not by a disciplinary tribunal.
The great provision which I hope this Bill will introduce, and which was proposed when the Bill was introduced last as a Government Bill, is a scheme—and I hope that the noble and learned Lord will tell us within what time-scale it is likely to be available to the public—by which solicitors are in effect insured against negligence so that if there is an award of damages against them the client who has lost money by reason of professional negligence can be fully compensated. All the best solicitors' firms now insure against negligence despite the doubt, which I think is probably well founded, as to whether barristers can be made liable for negligence. My own professional chambers at the Bar are insured with a reputable concern against that possibility and I think that all professional people should insure in this way. The fact that this Bill will make it universal provides an important additional safeguard for the public.
The rest of the Bill is purely technical. Although much of it is necessary, for the reasons which I explained when speaking from another part of this Chamber, I do not think that there is much throbbing human interest about any of it. However, I congratulate the noble and learned Lord and, in so far as I can, I shall help him to get the Bill through—mainly by holding my peace!
3.32 p.m.
LORD DENNING: My Lords, I should like to thank the noble and learned Lord the Lord Chancellor for giving this Bill such immediate priority. I only hope, without wishing the Government too long
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a life, that at least they will remain long enough to see this Bill through to fruition. There is not much more that needs to be said upon the Bill, but I should like to mention just one small point concerning the computerisation of the roll of solicitors. When the Master of the Rolls started keeping it one hundred years ago it was in a long parchment roll with all the names inscribed upon it. Latterly the names have been kept in a big bound book, all in copper-plate handwriting, and it has been difficult to keep the 25,000 to 30,000 names in order, with all the interleaving that has to be done. Now, instead of being the Master of the Rolls, I am to be the "Keeper of the Computer". There is to a computer somewhere and a button has to be pressed somewhere in the Law Society. This will retrieve a page for a particular solicitor immediately it is required.
That perhaps is a small matter, but there is another matter which I think is of vital importance and very urgent: the increase in the practising fee payable by a solicitor on a practising certificate. It is on this fee that the existence and work of the Law Society depend. It has been limited for some years now. It is under my control, as Master of the Rolls, with the concurrence of the Lord Chancellor, and it has been limited to £20. But in these days of inflation that seemed to be far too small. We have not been able to keep pace with inflation in this, as in other matters. In this Bill that limit is to be removed I hope we shall be able to keep a check on it so that it is not too much; but it is vital that the fee should be increased so that the Society should be able to do all its important work concerning the discipline, education, training and the like of solicitors.
May I pass now to the particular point with which, as Master of the Rolls, I am concerned; that is, the discipline of solicitors. Hitherto we have had what is called the Discipline Committee, which the Master of the Rolls appoints from among the Council of the Law Society. People have thought the Discipline Committee was just a sub-committee of the Law Society itself, with the solicitors simply supporting one another. That was a misconception: the Committee has always been independent of the Law Society itself. To make that perfectly

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clear, the new provision is that it should be called the Solicitors Disciplinary Tribunal. But, further than that, there has been a feeling that in some way the solicitors, sitting in judgment on themselves, were inclined to favour their own profession. That again was a misconception. I have appeared before them and considered many of their cases. They are perhaps stricter than any others in attending to the discipline of solicitors, but as there has perhaps been some feeling that they have not been strict enough, this proposal, whereby there should be lay members of the tribunal, will, I hope, help to remove any fear of that. Indeed the lay member—incidentally, like the others, to be appointed by the Master of the Rolls—will be able to play his part and perhaps bring some common sense (though there is plenty there already) to bear on their deliberations. In addition, I shall be able to appoint such members from all ranks of solicitors instead of from the 50 or 60 members of the Council.
Then there is the innovation of the lay observer. As Master of the Rolls, I get a large number of complaints by individuals to the effect that the solicitor has not done this or that. Very often it is said, "I put this before the Law Society and still can get no satisfaction." This Bill provides machinery for the lay observer, independent of the Society, to be appointed by the Lord Chancellor, who can look into complaints where it is felt that the Society have not looked into them properly. That again, I hope, will give rise to more public confidence.
May I now touch on the point made by my noble and learned friend Lord Hailsham. So far as the general public is concerned, the anxiety often is not so much about dishonesty and matters of that kind with which the Discipline Committee deal, but with the negligence of a solicitor, which is not a matter of discipline at all. These cases, I am sorry to say, have increased mainly because the profession has been overworked and understaffed. Let me give your Lordships an illustration of a large group of cases which we have had in the last few years since a recent decision. They concern cases where a person has been injured or killed in a personal injury case or an accident. Lawyers are instructed,
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but unfortunately either the negotiations last for a long time or, because they are overworked, the case drags on. Three years may go by and they issue a writ; another year is taken to serve it. Then it may go to sleep. We have had many a case where people have been injured or killed in accidents and there is all this delay on the part of solicitors. We have struck out those actions; we have dismissed them for want of prosecution. You may think that that is unfair to the injured person, but in all those cases we say that we feel bound to strike them out in justice to the defendants. The injured plaintiff has his remedy against the solicitor who has been guilty of inexcusable and inordinate delay. It is those cases in which one wants to see the individuals compensated; and there are many cases of that kind. Most solicitors, I am glad to say, are insured; but some are not.
Therefore I welcome provisions of this Bill, whereby insurance will be provided for all against claims for civil negligence of such a kind or others such as I have described. The actual scheme has not been settled, but the Law Society will arrange things, as my noble and learned friend has said, in quite a short time, though there should be cover for the public not only for dishonesty but also for negligence.
I should like to mention two small matters. There is the question of occasions when the Law Society, in the course of investigating accounts, finds matters which suggest a criminal offence by a solicitor. Hitherto, there has been question as to whether these matters can be reported to the Director of Public Prosecutions because of the privilege which exists between a solicitor and his client. The Bill enables the Law Society to make a report whereby these cases can be taken up.
There is one other small matter. Hitherto, we have had to have special applications for people to be installed as commissioners of oaths. When solicitors were appointed there had to be a procedure, certificate, fees and so on. Under the Bill every solicitor will automatically be a commissioner for oaths without having to go through those procedures. That is only a small part of the range of matters dealt with by the Bill. I hope that the House will give it a Second

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Reading and will help it through as speedily as may be.
3.42 p.m.
LORD JANNER: My Lords, perhaps I ought to make the House aware of my personal interest in this matter, in that I happen to be a solicitor and one who believes that the profession, in view of the enormous trust which is placed in it and the vast volume of funds which pass through its hands, has really not only justified its existence but, in spite of some past defaulters, has rendered a service to the community which I feel that the public may not fully appreciate. I hope that the House will forgive me for putting it in that way, but I think very few people understand what happens in a solicitor's office. There persons expose their innermost thoughts to the solicitor and place in his hands funds the aggregate of which is so great that I doubt whether it can be calculated. Probably the solicitors' profession is entrusted with greater funds than any other organisation. In the circumstances, I hope the House will agree that the Law Society has for very many years given remarkable service to the community by keeping a very careful watch to ensure that the confidence of the public in the profession shall be maintained and that the profession shall render a service which I suggest is not only of value but is respected throughout the country.
I need hardly say that, having heard the noble and learned Lord the Lord Chancellor, his learned immediate predecessor and the Master of the Rolls, so fully agreeing on a measure, I doubt whether I or anybody else would have the audacity to attempt to disagree; certainly on this occasion, in a humble way, I add my few words of commendation to those expressed by them. There is one exception I wish to make, and I know that the noble and learned Lord, Lord Denning, will forgive me for doing so. I disagreed with him in his hope that the life of this Government will last just sufficiently long, and I gathered no longer, to enable the Bill to be passed. I hope, on the contrary, that we shall make our endeavour in quite another way and that we shall, as a Government, have a very long and healthy existence, and that the Bill will go through at the commencement of that existence to show that
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this is a reasonable Government and one which understands what is necessary for the country.
I think it important that people should know that the Law Society originally made these proposals. This is a measure which comes from the Law Society itself and, if it is carefully studied, it will be seen that it leans over backwards to protect the public. Apart from some items which have been introduced in the course of the discussions, the Law Society is suggesting greater discipline for solicitors, stronger controls, and reforms so that the keeping of strict accounts should be ensured as far as possible—that is to an even greater extent than previously, because they have been quite exacting in the past—and it even introduces new measures relating to compensation for clients when solicitors have been negligent.
As a practising solicitor, I know that it is not very easy, nor is it always possible, for those practising the profession to keep as close a watch as they should on what is happening in an office; it may be that a clerk will overlook a date, with the result that damage is sustained by the client. I doubt whether in the vast majority of cases alleging negligence the solicitors concerned were themselves aware that matter was being neglected in their office. Of course they want to protect their clients: none of them wants any client to suffer damage in consequence of neglect which has taken place in the office. However, in a busy office it is easy for some matters to be overlooked, and I would ask the public to understand that there is involved an enormous amount of detailed work, some of which, if it is not done, involves the possibility of a solicitor being called upon to pay damages.
So the Law Society has from time to time sought legislation which, one might say from the point of view of the practising solicitor, places on him greater hardship or more onerous duties than before. In the main that is the type of legislation which has been asked for by the Law Society. Sometimes lawyers are not very happy that they are called upon to do more by their own Society than they think necessary for the purpose of protecting the client. Be that as it may, the Society regards its duty to be one not only to the solicitor himself but to the

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public. I want to say this because so often the layman accuses the profession, not knowing that the accusation is unfounded.
Some of us who have been Members of the other place know how people used to go to the Society. A person felt that he lost his case because the lawyer had been negligent. If a person wins he does not mind, but if he believes he has a good case and loses—and, sometimes, even if he does not believe it—he blames the lawyer. He says that the lawyer has been negligent or has not done the right thing. A large number of people have submitted their complaints to the Law Society, and a practising lawyer like myself realises at once that most of the complaints are not really justifiable. The Law Society did its best, and I believe still does its best, to investigate all these cases. A part of this Bill was not in the original Bill.
Clauses Nos. 7 and 11 are welcomed by the Law Society. I personally do not think that they will have much effect, and the noble and learned Lord, Lord Hailsham of Saint Marylebone, took the same view. Their only possible effect is to make people feel that lay people who have joined the tribunals have really done a good job. But I doubt very much whether people who are disgruntled, and whom the new tribunal finds are not entitled to be disgruntled, will be over-happy about them. However, the public as a whole will understand the situation. I think that this is a good thing in order to assuage any anxieties on the part of the public.
My Lords, I do not want to detain the House any longer. We have had this kind of Bill before us in somewhat different forms and now the terms have been varied but not to a great extent. There was an unjustifiable obstruction which was easily brought into effect in our Parliament because of our democratic views. This can delay important legislation. A lot of this legislation is imminently necessary and should have been brought in when the first Bill was introduced. But of course we have some people who have the happy knack of knowing how to obstruct to gain their point. They effectively obstructed the Bill, and have got something important out of it—Clauses Nos. 7 and 11—and I hope they
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will now be perfectly satisfied. In my view, and in the view of the majority of the profession and, I hope, of laymen, this is a good Bill and it should be brought to fruition at an early stage.
3.54 p.m.
THE LORD CHANCELLOR: My Lords, I am grateful to the three noble Lords who have spoken in support of this Bill. I am grateful, if I may say so, to the Master of the Rolls for his somewhat qualified wishes of longevity to the present Government. It is reassuring that the Bill in its present form has the support of a former Lord Chancellor, the Master of the Rolls and of a distinguished solicitor who has been in practice for so many years. I am particularly pleased with the welcome that has been given to the introduction of the lay element in the investigating and adjudicatory work of the Law Society and the Disciplinary Committee. To describe it as merely cosmetic is doing less than justice to a provision which many articulate members of the public certainly asked for. Many who have had difficulties with the Law Society have demanded this, and this is a provision which certainly has been asked for very eloquently in another place, I hope and believe that the contribution of the layman in these proceedings will add something to the public confidence in the provisions that are available for the protection of the public, which depends to a very large degree upon the integrity and competence of solicitors and barristers in regard to critical experiences and moments in their affairs and lives. With regard to the actual functions of the lay observer, it is misleading to suggest that he will be reexamining and looking into the complaint itself upon which the Law Society will have conducted its investigation. Rather his task is to be the watchdog over the way in which the Law Society has done the job. It is not contemplated that he should take over the Society's functions of investigation. Subject to that, as I say, I am glad that the proposal has survived the critical examination that it has received.
So far as the important insurance provisions of the Bill are concerned, I agree with the noble and learned Lord, Lord Hailsham of Saint Marylebone, that this is the most important aspect of protection of the public as to whether, when things

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go wrong, they can hope for monetary protection and some safeguard which will make up for their losses. The Law Society have not given any indication to me as to when they can introduce compulsory insurance. They certainly are hoping to be able to produce a master plan to cover the field generally. I know that they appreciate the importance of the matter, as indeed I do, and I will certainly communicate the views that have been expressed in the House of the importance of speed if and when this Bill takes its course through Parliament.
There has been a reference to the provisions in the Bill for computerisation, and I was delighted to hear the Master of the Rolls describing himself now as the Master of Computers which will transfer the association of his title from the bakery to the engineering business, if I may say so. The clause itself has no mischief or danger in it. It is obviously a sensible means of keeping the rolls and I am glad that it has been accepted. I will certainly see that we will do our utmost as a Government to hasten the course of the Bill through Parliament, though I can give no undertakings from this place of control over what may happen in another place.
On Question, Bill read 2a, and committed to a Committee of the whole House.

CONSUMER CREDIT BILL [H.L.]
3.58 p.m.
LORD SHEPHERD: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(Lord Shepherd.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
Clause 1 [General functions of Director]:
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 1:
Page 2, line 11, at end insert—
"(3) The Director shall appoint a deputy with the style of Credit Commissioner whose function it shall be, subject to the overall authority of the Director, to exercise day-to-day the duties laid upon the Director by this
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Act, and all references in this Act to the Director shall be construed accordingly."
The noble Earl said: On Second Reading, the noble Lord, Lord Shepherd, pointed out that this Bill commanded all-Party support, and that was borne out by our debate on April 9. He also offered assistance, in or out of the House, in dealing with the Bill's complex provisions. My colleagues and I are most grateful for the help that we have received, and look forward to more help in the future as we progress through the Bill. It is a complex measure. The number of Amendments in the name of the noble Lord, Lord Shepherd himself, shows that even the Government regard the Bill as it stands as something less than totally perfect. Our Amendments from this Bench have the same purpose—that is, the improvement in the clarification of a good Bill; and it is in that spirit that we shall move them.
This first Amendment goes to the heart of one of the essential features of the Bill—that is, in whom is the authority vested to exercise the very considerable powers which it confers—powers notably to admit and to exclude would-be credit givers from the business of giving credit and in substantial ways to confer exemptions from its provisions or to prescribe conditions under which the businesses of the credit givers are conducted. It would indeed be a good augury for our Committee if Government were to accept this first Amendment, for which I believe there is a good case. But my main purpose is to elicit more information about how the Director General will approach this very substantial new task, and Lord Shepherd may take it that I am most unlikely to press the Amendment this afternoon.
There are, as I see it, three strands to this debate. The first is the question of the public identification of an individual and a function. The Crowther Committee attached considerable importance to the establishment of a separate office of a Credit Commissioner. That is a debate which I do not propose to revive, but I think it is therefore all the more important that we should have a named official whose title identifies him specifically with consumer credit, and "Director General of Fair Trading" will not do this to the great majority of those concerned with giving—particularly the great majority of those taking credit. This is

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the more important because I understand that the Director will in some sense be acting as Crowther recommended: as a Credit Ombudsman to watch credit developments and to take steps such as the revocation of licences if practices injurious to the interests of consumers are identified. Obviously those aggrieved must know to whom to take their grievance; and to whom better than a very senior official styled the "Credit Commissioner"?
The second strand of the argument is the time which will need to be devoted to his task by the official concerned, under whatever style he may be operating. Crowther wanted a full-timer and this was reflected in the Bill introduced last winter. It is well known that the credit industry feel that the function will be a full-time one. I think it is also notable that one of the substantial criticisms of Part I of the old Bill, made perhaps most strongly by the present Minister of State, Mr. Alan Williams, and by others, was the possibility then envisaged that one day the function might be something less than a full-time function. As we now have it, the function is given to the Director General of Fair Trading, who I think we all agree already had a very full-time job before the question of his taking on this new one arose. So it is evident that he will properly and inevitably delegate the great bulk of the work. I was glad to learn from the noble Lord, Lord Jacques, in the Second Reading debate of the intention to appoint an officer of senior rank to take charge of the consumer credit branch of the Director's office, and also that recruitment would be open to experts in industry as well as to others—for example, lawyers or civil servants who had appropriate qualifications. Indeed, this practice, as the noble Lord pointed out, follows that adopted by the Director General for the recruitment of senior staff on consumer affairs. That of course is welcome, and it also seems to me to dispose of any difficulty there might be in identifying such an individual once discovered publicly as the Credit Commissioner, as this Amendment seeks to do.
The third strand in the argument is that of possible conflict of interest. In the Second Reading debate I suggested that there might be occasions when the Director had duties in relation both to
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consumers, as borrowers, and to lenders, in the fair trading category, which might lead to some conflict, and that in such a case each party should have a public champion. I recall that I was then chided by the noble Baroness, Lady Seear, who foresaw an unequal contest between the Director and one of his deputies, but I then saw it differently and I still see it differently. The Director is now to have four deputies and he can oversee their debates rather in the capacity of a neutral referee in a tournament between any two of them. There is no-one in whose ability to fulfil this role one could feel greater confidence than the present Director, Mr. John Methven, so what I have said is in no way an implied criticism of how he might conduct his function.
For the three reasons I have given I believe that the Amendment would help the Bill. But even if I am finally persuaded that it would not help the Bill, I am convinced that it would be helpful at this stage to have more information for the House, and those who will be affected by the provisions of the Bill, on how the Director will approach his duties. I beg to move.
4.8 p.m.
LORD SHEPHERD: I am very grateful to the noble Earl for the way in which he has moved this Amendment. As he has said, not only is this a complex Bill but it is a very complex industry that we are considering. The noble Earl referred to the large number of Amendments that were down in my name on behalf of Her Majesty's Government. I take it it is fair to say that most of those Amendments stem from continuing discussions that the Department is having with the many organisations involved in the credit industry, and I am quite sure that, even at this stage, it is right that we should continue to meet and discuss and, where we can, iron out any difficulties which those who are concerned in the industry foresee in the Bill.
I should very much like to accept the Amendment, but I am quite sure that the noble Earl does not expect me to do so. I should like to accept it because at the end of the day there is nothing between the noble Earl and the Government in this matter. We recognise that we are dealing with a very complex industry, and one that will need to have full confidence in the Director General or whatever

37
organisation is set up. Equally, it must have the confidence of the general consumer. If the noble Earl will refer to the debates in another place, he will see that my honourable friend the Minister of State set out some of the reasons why we felt that the previous Administration were wrong in having a separate organisation for consumer credit. I think it is open to question whether the Crowther Committee might well have recommended something similar to what is in the present Bill if, when they were considering this matter, they had had knowledge of what the previous Administration intended to do in the setting up of the fair trading organisation.
I would say this to the noble Earl. I believe that this grouping of responsibilities under one Director General will be in the interests not only of the consumer but of the industry itself. First of all, they will be able to share many of the joint services. They will be able to use similar offices—and I am sure that that is a great advantage—rather than setting up separate offices in the regions. I also believe that this bigger organisation will allow flexibility among the staff; and that, in itself, will give promotional opportunities a greater scope. This is, of course, very important because unless there are promotional opportunities one is not likely to get the calibre of staff, not only which the consumer credit organisation here requires but which the other part under the fair trading office requires. So I think, without developing the point, that there are many advantages in going along the road suggested in the Bill. The question is: Should there be a deputy for consumer credit? I think there are dangers inherent in this. There is then a question—is there not?—as to who has ultimate responsibility: whether it is the Credit Commissioner, referred to in the Amendment, or whether it is the Director General. I should hope the Committee would take the view that there ought to be one man, and one man alone that is, the Director General—who car-carries the full responsibility of the organisation.
As my noble friend Lord Jacques said in the Second Reading debate, what is intended is that there shall be set up within the fair trading organisation one specific department for consumer credit; it will have a Director, and he—as I am sure the Committee will accept—will be a
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man of the greatest possible calibre. He will have the responsibility to report directly to the Director General. But I should have thought in such an organisation that the Director of that division would himself, as the Amendment suggests, have the full responsibility for the day-to-day conduct of the division, but of course be answerable to the Director General. I accept the noble Earl's point about identity, about the need to be able to identify the person, on the part of the consumer organisation, of consumers and also of those who practise within the industry; but I should have thought that the name of the Director would quickly be well-known. So I hope the noble Earl will feel that the Director General is fully aware of what he has said about the need for identity, particularly about the conflict of interest; and that what we have in mind, and what I know the Director General himself has in mind, will be met.
I do not wish to do what occasionally happens; that is, to criticise the Amendment in regard to what it would do. I would only repeat one point which I made earlier. I believe that if the Amendment were accepted and put into the Bill it would create considerable doubt within the industry as to who is responsible for the day-to-day conduct—whether it is the Director General or the Director of the division. I do not think there is anything between the noble Earl and the Government. I should expect, and hope, that all the noble Earl's intentions will be fully met within the context of the Bill as it is now before the Committee. I hope that these few words of mine will satisfy the noble Earl that there is nothing between us and that the Director General is fully aware of the needs of the consuming public and also of the industry; and I hope that the noble Earl will feel able to withdraw his Amendment.
THE EARL OF LIMERICK:: I am naturally grateful to the noble Lord, Lord Shepherd, for his explanation. He did me the compliment of addressing the first half of his remarks to an argument which I had not raised, which is the principle of whether the two offices should be separated. In fact, I went out of my way to say that I did not wish to raise that point. As to the answer to my would not be unfair to paraphrase what

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three strands of argument, I think it he is saying as that my Amendment is not so much wrong-headed as unnecessary.
LORD SHEPHERD: Yes.
THE EARL OF LIMERICK:: On the first and second points, I do not think he fully convinced me about the fact that if we are to attach importance to identity there is something to be said for having a man who is labelled, and thus identified, if he is to be a full-time deputy. The noble Lord turned my third point on me rather neatly by pointing out that there could be confusion about the ultimate responsibility, which could be a situation worse than the one we seek to avoid. I pay due regard to his arguments and, as I said earlier, I would not wish to press this Amendment. I should like to consider what he has said and perhaps reflect further on it and discuss it with one or two of my colleagues. So, without prejudice to the possibility that in some form we might return to this at a later stage, I now seek leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clause 2 [Powers of Secretary of State]:
LORD WELLS-PESTELL LORD WELLS-PESTELL moved Amendment No. 2:
Page 2, line 36, leave out from ("subsection") to ("shall") in line 37 and insert ("(1) (a) shall be made by statutory instrument and").
The noble Lord said: As this is a drafting Amendment, perhaps your Lordships will feel that I can take it rather briefly. Subsection (6), as amended, will relate only to orders made under subsection (1)(a) conferring additional functions on the Director. Subsection 6, as amended, will read as follows:
"An order under subsection (1)(a) shall be made by statutory instrument and shall be of no effect unless a draft of the order has been laid before and approved by each House of Parliament."
It is unnecessary to cover in subsection (6) orders made under subsection (1)(b) regulating the carrying out by the Director of his functions under the Bill, because the making of such orders is already governed by Clause 178(1), which makes
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order-making powers under the Bill exercisable by Statutory Instrument subject to Negative Resolution. As I say, this is a drafting Amendment which I hope your Lordships will feel able to accept. I beg to move.
On Question, Amendment agreed to.
Clause 2, as amended, agree to.
Clauses 3 to 7 agreed to.
Clause 8 [Consumer credit agreements]:
4.19 p.m.
LORD JACQUES LORD JACQUES moved Amendment No. 3:
Page 3, line 39, leave out from ("(1)") to end of line 42 and insert—
"A personal credit agreement is an agreement between an individual ("the debtor") and any other person ("the creditor") by which the creditor provides the debtor with credit of any amount.
(1A) A consumer credit agreement is a personal credit agreement by which the creditor provides the debtor with credit not exceeding £5,000."
The noble Lord said: In general, the Bill applies to credit agreements where the debtor is an individual and the credit does not exceed £5,000. At present these two qualifications are lumped together in Clause 8. The Amendment, however, separates them. It calls a credit agreement where the debtor is an individual a "personal credit agreement", and then calls a personal credit agreement where the credit does not exceed £5,000 a "consumer credit agreement". This distinction is desirable because certain provisions of the Bill apply only to "consumer credit agreements" (as now defined), whereas others logically and properly apply to the wider category of "personal credit agreements", for example Clauses 10 and 11.
This Amendment does not alter the scope of the Bill. It simply seeks to achieve clarification throughout the Bill. I beg to move.
On Question, Amendment agreed to.
4.20 p.m.
On Question, Whether Clause 8, as amended, shall stand part of the Bill?
LORD ABERDARE: I wish to raise some small points for clarification in regard to this clause. They all relate to instances where one or other of the parties

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to the agreement might be domiciled outside this country. I should like to know what is the position in such cases. The Bill speaks especially of triangular arrangements, where there are creditor, debtor and supplier. It seems to me quite possible that in certain cases the creditor and the debtor might well be domiciled in this country but the supplier of the goods might be a foreign firm. Certainly as we on this side of the Committee would like to see, as the European Economic Community develops, the supplier may be a member of the European Economic Community. Therefore I wonder how the Bill applies in cases where one or other party to the regulated agreement is located overseas.
The second small point that I should like clarified concerns the position should one or other of the parties be located in the Channel Islands, in the Isle of Man or in Southern Ireland. It may be that with the responsibilities laid on a finance house by the Bill such an institution might find it possible to operate more freely without the control of the Bill if it were located in the Channel Islands or in the Isle of Man or Southern Ireland. I wonder what would be the application of the Bill in that case?
The third point on which I should be grateful for the help of the noble Lord is whether the Bill may have any effect on the financing of international trade where a trader from overseas who was not a body corporate seeks credit from a United Kingdom financial institution, in a form which would be regulated by the Act if the transaction were a domestic one.
I hope the noble Lord may be able to help me on these points. If they are too detailed I am quite ready to hear from him later.
LORD JACQUES: I thank the noble Lord for raising that interesting series of questions. They would have had to be raised at some time before the Bill leaves this House. The Department has given thought to the position of cross-border transactions in the light of an interesting memorandum it has received from the Finance Houses Association. It is necessary to take into account not only the necessity not to interfere with genuine cross-border agreements but also to make sure that it is not possible to evade the protection given by the Bill by such cross-border
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agreements. Furthermore, the position in the light of the movement of the E.E.C. has to be taken into account, including the position of the United Kingdom in the E.E.C. The Department may wish to discuss these matters with the interested parties within the next few days, and it is expected that appropriate Amendments will be introduced at the Report stage of this Bill.
LORD ABERDARE: I am extremely grateful to the noble Lord for that answer.
THE EARL OF LIMERICK:: I also have a point to raise. I apologise that I was not able to give notice of it since it arose at a very late stage, but I will put it in the most helpful way I can and I 'hope to get a quick and reassuring answer. It concerns the reference in Clause 8(1) to the credit not exceeding £5,000, which immediately introduces an ambiguity. I hope to hear that the ambiguity will be removed by forthcoming amendments to Clause 10 and subsequent clauses.
I have in mind two cases: the first is that of a credit with an agreed limit which exceeds the figure of £5,000—shall we say £10,000—on which the availment is only £3,000. How would this be affected? Does it fall within the scope of the Bill or outside it? The second case is that of a loan which is repayable by instalments, taking again the figure of £10,000 repayable by sums of £1,000 a year. Naturally, there comes a time when the availment on this credit falls below £5,000. How then would that be affected as regards the scope of the Bill?
I hope to be told that this will all be dealt with in our subsequent discussion on Clause 10.
LORD JACQUES: I can assure the noble Earl that these matters will be covered when we debate Clause 10.
Clause 8, as amended, agreed to.
Clause 9 [Meaning of credit.]:
On Question, Whether Clause 9 shall stand part of the Bill?
LORD ABERDARE: I should like to raise a point in regard to subsection (1), which reads:

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"In this Act 'credit' includes a cash loan, and any other form of financial accommodation."
The phrase "any other form of financial accommodation" seems to be very wide and imprecise. I think that where the Bill imposes considerable obligations on lenders who enter into regulated agreements they should know which agreements are and which are not covered by the Bill.
I have two specific points to put to the noble Lord with which, as he has seen the memorandum of the Finance Houses Association, he will be familiar. One concerns a line of credit. Is this, or is it not, a form of "financial accommodation"? Clearly the individual drawings against a line of credit are within the scope of the Bill, but the question I should like to put to the noble Lord is whether the line of credit itself is a form of "financial accommodation" even if it is never used. The other point in connection with a line of credit is that it is sometimes subject to the payment of a commitment fee, and if the line of credit is subject to the provisions of the Bill that will include the requirement to disclose the effective annual rate of interest; but the lender would then be asked to do the impossible by having to express the commitment fee as a percentage of drawings before it was known what drawings were going to be made against the line of credit. How can the lender state what is the effective annual rate of interest if there are no drawings?
I should also like to ask about the letter of intent: there are occasions when a customer places an order, knowing that delivery of the goods will not be for some time ahead, and before placing the order he wants to ensure that the credit will be available at the time of delivery. In that case, the credit granter issues a letter of intent indicating that the credit will be available at the delivery date. The precise terms may depend on conditions prevailing at the delivery date, and no agreement will be signed until that point arrives. Certainly, I would imagine the agreement itself would be a form of financial accommodation, but what I really want to ask is whether the letter of intent is also a form of financial accommodation under this Section 9?
LORD JACQUES: The term "financial accommodation" has been used quite deliberately to cover any form of credit that might be invented in the future, and which might otherwise not be within the scope of the Bill. In the earlier years of this century, hire purchase was invented as a way round other legislation. We wish to avoid this position happening again. We have looked at the points made and do not think any particular difficulty presents itself. However, we will consider whether some narrower term could be used which would not detract from the protection in the Bill.
The objections raised, we think, can be overcome by the flexible use of the regulations. I am grateful to the noble Lord for the interesting points he has raised on line of credit and letter of intent. In view of the complexities involved. I would prefer that any answer I gave should be accurate. Therefore, I would prefer to write to the noble Lord explaining just what the position would be.
Clause 9 agreed to.
Clause 10.—[Running account credit and fixed-sum credit.]:
LORD JACQUES: This Amendment is a parallel Amendment to Amendment No. 3. I beg to move.
Amendment moved—
Page 4, line 17, leave out ("consumer") and insert ("personal")—(Lord Jacques.)
On Question, Amendment agreed to.
LORD JACQUES: My Lords, I beg to move Amendment No. 5.
Amendment moved—
Page 4, line 25, leave out ("consumer") and insert ("personal")—(Lord Jacques.)
On Question, Amendment agreed to.
4.32 p.m.
LORD JACQUES LORD JACQUES moved Amendment No. 5A:
Page 4, line 28, leave out subsection (2) and insert—
"(2) In relation to running-account credit, "credit limit" means, as respects any period, the maximum debit balance which under the credit agreement, is allowed to stand on the account during that period disregarding any term of the agreement allowing that maximum to be exceeded merely temporarily."
The noble Lord said: The effect of this Amendment which has been drafted to deal with the criticisms of the bankers,

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is that "credit limit" shall mean the basic credit limit agreed, and shall not mean any higher credit limit which may be temporarily allowed by the agreement. Thus, if an overdraft agreement fixes £4,500 as the basic credit limit but allows the debtor to exceed the limit by £600 or £700 from time to time, the agreement will be a regulated one even though it does in fact allow the debtor to take credit in excess of £5,000. The same rule applies in relation to the £30 agreement for small agreements. I beg to move.
THE EARL OF LIMERICK:: I find myself in some difficulty here. My understanding was that Amendment 5A was intended to bring about the same result, or so it appeared, as Amendment No. 6 standing in the name of my noble friend, Lord Aberdare, and myself. If that is the case, I would find it hard to debate this Amendment without referring to Amendment No. 6 which follows. I think this is a course that might be convenient to the House, and we should proceed in that way. I therefore find it unnecessary to make the case in principle for this Amendment, because evidently it has been accepted by the Government in tabling Amendment 5A. However, I do note certain substantial differences between these two Amendments, and it is to these that I should like to address myself principally.
This is the first of a series of Amendments which deals with banks. It is, I think, a subject on which, judging by the Marshalled List, we are likely to spend more time than on any other. The intention of Amendment No. 6 was the avoidance of doubt. It seems to me that Amendment No. 6 does avoid doubt, but I am by no means clear that Amendment 5A is equally successful. I am no lawyer and have not studied Amendment 5A or had the benefit of the advice of anyone who has studied it through lawyer's spectacles, but my main concern about Amendment 5A is that the disregarding, the saving which it permits, relates to "any term of the agreement allowing that maximum to be exceeded merely temporarily". To me as a layman, this would imply that one could only disregard a temporary excess if the original agreement constituting the loan so provided. It would seem to me that the conversation with one's bank manager would have to go something
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like this: "All right, we are agreed that your overdraft limit shall be £2,000. By the way, I am going to have to agree that this £2,000 should be temporarily, for an unspecified time and by an unspecified amount, suffered to rise beyond that figure in order to take it out of Clause 10 and the other control of a regulated agreement" This is a different concept.
It may be I shall be told that the intention is that the agreement should apply to a new agreement constituted by a bank manager, suffering the amount to become overdrawn beyond the agreed limit. But if that is so, it does not seem to me in conformity with the way most people would read this Amendment. We are dealing with the very real problem of an overdraft which perhaps is knocking on its limit, a cheque is presented at five minutes to three, and the bank manager has the unenviable task of deciding immediately (and that means within banking hours in this context) whether to honour the cheque and thereby allow the overdraft limit to be exceeded, or to dishonour it, with all sorts of consequences. Decisions have to be made quickly and in conditions when generally it is not possible to get on the telephone to the borrower to find out that it was all a misunderstanding, or that there is a cheque in the post which has not been received, or something. If we are really saying this constitutes a new agreement each time, we are getting into the same sort of difficulty which we were seeking to avoid in Amendment No. 6, which would have been successful to that end, or so it seems to me. So I am in some difficulty because I am not fully clear, from what the noble Lord, Lord Jacques, said, that he was trying to meet this point with his Amendment. If that were so, the matter becomes a technical one. If I have raised a point which cannot be answered immediately, perhaps we should look at it again with technical advice between now and the next stage.
4.39 p.m.
LORD SEEBOHM: Now that we are in the jungle of banking amendments, I should like to say as an interested and professional banker, that we warmly welcome this Bill and hope it will be enacted. The Amendments we have put forward have not been such as to make more easy the life of bankers, but they will ensure

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the customers of the bank, who are consumers in the context of the Bill, can in fact maintain to a reasonable extent the easy and comprehensive manner in which they have been able to borrow money in the past. I should like to take the opportunity also of saying how grateful we are for the attention that has been given to this Bill by the noble Lord, Lord Shepherd. He has devoted a great deal of time and thought to it. We are grateful for his sympathetic approach and for the fact that he has agreed with a great number of suggestions we have made. I think I might finally say on this particular aspect that two of the Amendments down in the noble Lord's name are in fact much better than those we have put forward ourselves. So we are very grateful to the noble Lord, Lord Shepherd, for all the efforts he has put in on our behalf.
I believe that the noble Lord, Lord Shepherd, is moving towards us in attempting to meet our requirements on this particular Amendment, but, as the noble Earl, Lord Limerick, has said, it does not get us out of the difficulty. Before I join in pressing for our Amendment, I wonder whether we could have some firm assurance that this dialogue will be taken a little further so that we could, either by altering the words in Lord Shepherd's Amendment or by adopting part of ours, get some agreement which would make the Bill satisfactory in this respect.
VISCOUNT AMORY: I want only to emphasise the point my noble friend Lord Limerick made about this excess. It seems to me that this needs to be cleared up. In Lord Shepherd's Amendment the words used are:
"disregarding any term of the agreement allowing that maximum to be exceeded …".
The Amendment of my noble friend Lord Aberdare says:
"… disregarding payments which are allowed by the creditor …".
It seems to me that the temporary unintended excess that might come about as a result of a credit not being paid in when it was expected would be an excess that would be better covered by the wording in my noble friend's Amendment than the wording in the Amendment moved by Lord Shepherd, because that sort of excess can hardly be said to be a term of the agreement.
LORD JACQUES: I think it would be wise for us to look closely at the Amendment we are now considering. It says:
"(2) In relation to running-account credit, 'credit limit' means, as respects any period, the maximum debit balance which, under the credit agreement, is allowed to stand on the account during that period, disregarding any term of the agreement allowing that maximum to be exceeded merely temporarily."
If there is no term, then that part of the Amendment clearly does not apply, and you can therefore finish at "period". Obviously, if there is no "term of the agreement" then there is none to be disregarded. I would also point out that the issue is also covered in my noble friend's Amendment to Clause 81, No. 73A which says:
"Where, in relation to running-account credit, the creditor at any time agrees to allow the credit limit to be exceeded, but intends the excess to be merely temporary, Part V (except section 56) shall not apply to that agreement (as modified by subsection (2))."
If the noble Lord is not happy with the Amendment as it is, I think I can make two promises to him. First, we will write to him, if necessary to try to clear up any doubts he has; and, secondly, if the Amendment is deficient in the way he thinks it is, we will get together with him with a view to getting rid of that deficiency at the Report stage.
LORD SEEBOHM: May I make one comment on that? In the bank, when you are sitting there, as I have done, handing out credit, you get possibly anything up to one hundred cheques a day for which there is no agreement because you have not arranged an overdraft. These are excesses on the account, and you have to make up your mind whether or not to pay them. Then it may be that another cheque comes in the next day, and you have to make up your mind for a second time. This is the sort of situation, where you have queries every day, which I think is not covered by Lord Shepherd's Amendment.
LORD JACQUES: If I may have the leave of the Committee, may I reply to this point? Immediately the banker accepts the cheque which causes the overdraft there is in fact an agreement: by accepting the cheque he has entered into an agreement immediately. He has agreed to allow an overdraft; and for the excess of a further cheque he accepts a further limit, and so on. This is in fact an agreement in law.
THE EARL OF LIMERICK:: I was hoping to have my doubts removed in order for there to be clarity, but I confess that as the discussion has gone on I found myself moving the other way. If one accepted the last proposition put forward by the noble Lord, Lord Jacques, it would mean that if by accident a bank clerk accepted a cheque that he should not have accepted all sorts of legal consequences might ensue. There may or may not be an antecedently negotiated agreement; it may be something that nobody had in contemplation.
But, more fundamentally, I was puzzled by his explanation of this disregarding point. If, as he says, there is no term to be disregarded, it seems to me we are right back in the difficulty which the Amendment sought to avoid, because there is just nothing to consider here. But if there is an agreement in this specific term, perhaps with a figure on it surely this itself constitutes an agreement and we are not talking about a once-for-all temporary excess.
Furthermore—and here I think I am echoing the point made by Lord Seebohm—I cannot see what the position would be if a man who had conducted his account regularly and was always in credit, went, through some oversight (it might be a credit coming in late or some-body omitting to make a credit which he had been anticipating), for the first time in his life into overdraft. You would have a situation in which the banker would very properly realise that there was nothing intentional and would honour the cheque, thereby creating an agreement, with all these conditions attached to it, as a result of this temporary excess. Is this really what we intend? If, as I suspect, it is not, would the situation not be better served by words more nearly approximating to those in Amendment No. 6? We are in some difficulty here. I would not wish to press the matter beyond that. Approaching it in the spirit in which we are approaching this Bill, I should be very happy to rely on the assurance given from the Front Bench opposite: that it will be looked at to decide whether the suggested difficulty is a genuine one. No doubt the Government will come forward with a further Amendment at the next stage of the Bill.
VISCOUNT AMORY: Also, is there not the case where the excess may carry the overdraft over £5,000, which we have discussed before—marginally, temporarily over the £5,000? I should have thought that was another factor to be considered in this problem.
LORD JACQUES: That, of course, is the main issue so far as this Amendment is concerned—the temporary excess over £5,000. I would confirm the assurance given and say that we will endeavour to write to the noble Earl to give due time for consideration before we reach the Report stage, so that we can have consultations. We can tell noble Lords opposite what we are going to do at Report stage, and they will be free to take alternative action if need be.
THE EARL OF LIMERICK:: I am very happy to accept that assurance. Perhaps I might gently remind the noble Lord that it looks as if time may be a little short between this stage and the next, so it would be appreciated if such correspondence or consultation could take place very promptly.
LORD SHEPHERD: I will give an assurance on behalf of the Government that the noble Earl will have a letter posted to-morrow night.
On Question, Amendment agreed to.
4.50 p.m.
LORD ABERDARE LORD ABERDARE moved Amendment No. 7:
Page 5, line 4, leave out lines 3 to 7.
The noble Lord said: This Amendment would delete sub-paragraph (iii) of subsection (3)(b). At the moment it reads as follows:
"… running-account credit shall be taken not to exceed the amount specified in that subsection ('the specified amount') if—
(iii) it is probable having regard to the terms of the agreement and any other relevant considerations, that the debit balance will not at any time rise above the specified amount."
I wonder how a person who is granting credit can possibly know what the probability is as to whether the debit balance will not at any time rise above the specified amount. I can understand that in certain cases it is quite reasonable that a judgment of probability could be made. Where a shopkeeper has a certain stock which does not exceed the £5,000 limit, then of course he will only be able to stock up to that amount, and therefore

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the probability is there to be seen, but there are other situations which are much more obscure.
The noble Lord, Lord Jacques, has already mentioned the memorandum from the Finance Houses Association in which they give two practical examples of where difficulties would arise, and I hope that I have no need to go into those in any great detail. To summarise the two cases, one is the case of a person who has a credit limit in excess of £5,000, subject to annual review. Being in excess of £5,000 he is not covered by the Bill. But at the end of the year when the review takes place it may well be that he has not drawn more than the £5,000, and therefore the credit granter might be expected to say that it is probable that his debit balance will not at any time rise above the £5,000. On the other hand he, the borrower, maintains that he needs to keep this larger sum available, and in those circumstances who is to judge what the probability is?
The second case that I quoted, also to do with a motor dealer, was where the borrower had two sources of credit open to him, both with limits in excess of £5,000 and therefore without the provisions of the Bill. The borrower will draw on those credits according to which of them offers him the better terms. At any one time a borrowing on one or other of the granters' credits may not exceed the £5,000 limit, and this will depend on the different terms offered by different credit granters. Again, how is the credit granter to judge, according to this subsection, whether or not it is probable that the debit balance will not at any time rise above the specified amount? It seems to me to lay a difficult burden on the credit granter.
Later, when we come to Clause 15, the case of the variable term leasing agreements, I understand that in that case it is the terms prevailing at the outset that determine whether or not a transaction is within the scope of the Bill. I would suggest to the Government that in this case, too, it would be much simpler to make the same rule, that it is the initial agreement that should determine whether or not a particular grant of credit falls within the scope of the Bill. The concept of this clause of probability seems to me to be quite inappropriate in a Bill which
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lays obligations and penalties on a person granting credit. I beg to move.
4.55 p.m.
LORD JACQUES: It would be much too dangerous to use the original agreement as the basis, and have the decision based upon that. One reason is the illustration which the noble Lord himself used, that of a trader seeking credit to keep his shop stocked. His stock is roughly £1,000, and is never likely to exceed it. In order to get outside the terms of the Bill, an agreement is made on the basis of £6,000, so that if you are going to have decisions based upon an agreement which may be seeking deliberately to avoid the Bill then you are going to open the door quite wide, and in what I think is an objectionable way.
The original Bill included all running-account agreements where the debtor could draw less than £5,000, even though the credit limit was above this. This meant that practically all running-account agreements were included. We have made strenuous attempts to meet all the points of criticism. The new definition lets out much that was included in the previous Bill. The price of the new definition is this small grey area which can be minimised by the creditor. To go any further would run an unacceptable risk of evasion. If creditors are in doubt they can always place themselves in the clear by playing safe and creating an agreement, as within the Bill. Creditors will have to learn to be more precise in the terms which they offer.
LORD ABERDARE: I am grateful to the noble Lord. I understand his point about the possibility of evasion. I think it is a good point, but I still think that he has not quite answered my questions as to how the creditor works out this probability. He speaks of the creditor being more precise, but the point of my examples was that the creditor was being precise; he was trying to meet the needs of the borrower. The borrower told him that he wanted £6,000 worth of credit and could show that he might well need £6,000 worth of credit. But in the first example that I gave, in fact after the the first year he had not used that amount of credit; he had only required £2,000 or £3,000 worth. The creditor has been perfectly precise, and so has the borrower, but it is a matter of probabilities. Is it fair to lay on the creditor the requirement

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that he has to make a judgment of this sort when, if he makes the wrong judgment, he is liable to all sorts of penalties under the Bill? I wonder whether the noble Lord would look at that again.
LORD JACQUES: The creditor does not need to make any judgment. All he has to do is to lend in accordance with the Bill.
LORD ABERDARE: It depends on whether or not the agreement to lend is a regulated agreement under the Bill as to whether the probability is that the amount he lends is under £5,000. That is the point.
LORD JACQUES: I would have no doubt; I would play safe. I think that every businessman in this House would play safe. If there is an agreement to loan up to £6,000. it does not end there. There are lots of discussions. The creditor can come to his own conclusions as to whether the amount is likely to exceed £5,000. In the end he has to use his judgment in such a way that he plays for safety. If it were a stocking agreement where there was some doubt as to whether the total credit would be taken even though it was £6,000, I should have no hesitation in playing safe and make the agreement in accordance with the terms of the Bill. Unless we did that we should be in great difficulties. It is not an offence if a credit agreement is wrongly created out-side the Bill if the creditor does his best to avoid this and bases his judgment upon information given to him. I believe that this is to be found in Clause 164.
LORD ABERDARE: If that is the case, I am happy to beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 10, as amended, agreed to.
Clause 11 (Restricted-use credit and unrestricted-use credit):
LORD JACQUES: Amendment No. 8 is parallel and arises out of Amendment No. 3. I beg to move.
Amendment moved—
Page 5, line 8, leave out ("consumer") and insert ("personal").—(Lord Jacques.)
On Question, Amendment agreed to.
LORD JACQUES LORD JACQUES moved Amendment No. 9:
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Page 5, line 11, after ("them") insert ("whether forming part of that agreement or not").
The noble Lord said: This is a rather technical drafting Amendment. It removes any doubt whether a credit sale or conditional sale agreement where the loan and the purchase are combined in one agreement is a debtor-creditor-supplier agreement as is a separate loan agreement. Therefore it is purely for clarification. I beg to move.
On Question, Amendment agreed to.
5.1 p.m.
VISCOUNT AMORY VISCOUNT AMORY moved Amendment No. 9A:
Page 5, line 19, after ("chooses") insert ("(i)").
The noble Viscount said: I confess that I find everything in the Bill extremely complicated and a number of Amendments associated with my name are designed to obtain greater clarification on a number of points. The noble Lord, Lord Jacques, charmingly said that the Amendment he was moving was of a technical nature. I find every one of them of a profoundly technical nature.
I should like to associate myself very much with what my noble friend Lord Seebohm has said about the trouble that the noble Lord, Lord Shepherd, and the noble Lord, Lord Jacques, have taken to meet the concern expressed on Second Reading about some of the provisions and the effect they would be likely to have on the quality of service rendered by the banks. Indeed both noble Lords have taken great pains in this matter and it was very kind of them to assist those of us who have expressed some concern about these proposals in their willingness to meet our wishes. There is no question that the gap between the views expressed by some of us on Second Reading has been greatly narrowed by the provisions now included in some of these new Amendments. The object of some of our Amendments is to see whether we can be satisfied that the gap has been substantially eliminated, and where it has not we shall say that we are not happy yet.
Perhaps the Committee will agree that I should speak to Amendments Nos. 9A and 9B together because they cover the same ground. Again their object concerns the avoidance of doubt. It seems

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that it could be held that subsection (1)(b) and (c) of Clause 11 would bring all overdrafts into the category of restricted use of credit, whereas the nature of an ordinary overdraft is the very opposite of that definition.
I suppose all drawings on overdraft would be either to finance transactions between debtors and suppliers or to re-finance existing indebtedness. A cheque could be held to constitute restricted use of credit, if for example it were used to settle a monthly account supplier and the exemption given under Clause 11 subsection (2) does not seem to be sufficient. It is quite certain that the Ministers do not intend the effect that I have mentioned, but I should be grateful to know whether they would accept the Amendment I propose in order to provide greater clarification or suggest some other way in which the matter could be made more clear than it seems to be under the Bill as it stands. I beg to move.
LORD JACQUES: Agreements for loans, whether overdraft or in any other form, will only come within the definition of debtor-creditor-supplier agreements under Clause 13 if they are the subject of pre-existing arrangements between creditor and supplier. The only circumstance in which they could be so would be if a cheque guarantee card made a pre-existing relationship. We have put down Amendment 107B to Clause 182 to make it clear that they do not create a pre-existing relationship. Thus there is no reason for these Amendments.
VISCOUNT AMORY: I am glad to hear that the Amendments are not necessary, and I will certainly think over what the noble Lord, Lord Jacques, has said. I will look at Clause 182 on the assumption and in the hope that I shall feel happy when I have done so. I will not press the Amendment at this stage.
LORD JACQUES: May I mention again that what needs to be looked at is Amendment 107B?
Amendment, by leave, withdrawn.
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 10:
Page 5, line 24, leave out ("consumer") and insert ("personal").
The noble Lord said: I suspect that this is a consequential Amendment to
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Amendments Nos. 4 and 5 previously moved. I beg to move.
On Question, Amendment agreed to.
Clause 11, as amended, agreed to.
Clause 12 agreed to.
Clause 13 [Debtor-creditor-supplier agreements]:
5.9 p.m.
VISCOUNT AMORY VISCOUNT AMORY moved Amendment No. 10A:
Page 6, line S, at end insert ("provided that for the purposes of this Act tender to a supplier of a cheque shall not, if the debtor also produces evidence that the cheque will be paid on presentation, constituted a debtor-creditor-supplier agreement")
The noble Viscount said: Here again I hope that I am merely asking for greater clarification. This Amendment concerns the cheque guarantee card guaranteeing that a cheque up to £30 will be met on presentation. This type of card is in no way similar to the credit card and it is submitted that the cheque guarantee card does not in itself constitute a means of obtaining credit. In this case the means of obtaining credit is the cheque and not the card which is not the credit instrument.
The purpose of the Amendment is to make sure that the cheque card as against the credit card is excluded from the debtor-creditor-supplier agreement. This affects Clause 75(2) which imposes on the issuer a liability for the consequences of misrepresentation or breach of contract which is obviously inappropriate in this case. Therefore it seems that unless the Amendment I am speaking to, or one to Clause 75, is adopted, the banks would be compelled very reluctantly to withdraw the use of cheque cards which I think would be a pity and would be regretted by a large number of customers.
LORD SHEPHERD: I am happy to advise the noble Viscount that his Amendment is not necessary. It was never the intention that cheque cards should be subject to the Bill or that the issuer should have joint liability with the supplier under Clause 75. These cards do not do much more than provide a general guarantee that certain cheques will be paid. They are not the subject of specific arrangements between a creditor and any supplier. Originally, we did not consider cheque cards would

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be subject to the Bill as drafted; but it has subsequently become apparent from literature supplied by the banks that cheque cards might be held to be subject to the Bill. The Government have accordingly put down Amendment 107B to Clause 182 which makes it clear that cheque guarantee cards are excluded from the provisions of Clause 75. With that advice I hope the noble Viscount will agree that his Amendment is no longer necessary.
VISCOUNT AMORY: All this is very soothing. I am afraid the noble Lord will lull me into a false sense of security. But if, on the contrary, I find that I am not satisfied, then my indignation will break out on some other occasion. Subject to what the noble Lord has said, I beg leave to withdraw my Amendment.
LORD SHEPHERD: All that I can say to the noble Viscount is that if he has any wrath, it will be as nothing to the wrath I will bestow on the person who gave me the advice that I gave to the noble Viscount.
Amendment, by leave, withdrawn.
Clause 13 agreed to.
Clause 14 [Credit-token arrangements]:
LORD SEEBOHM: I am not sure whether this matter is covered by the previous discussion. But, as it stands, Clause 14 requires to be amended in the way indicated in the Amendment put forward by me and others. I beg to move Amendment 10B.
Amendment moved—
Page 6, line 32, at end insert ("unless the object is usable only to enable a person to obtain cash from a cash dispensing machine.")—(Lord Seebohm.)
LORD JACQUES: We have sympathy with the purpose of this Amendment, but we should like a little more time to study the circumstances which have been raised. If the noble Lord will be good enough to withdraw this Amendment, we give the assurance that we will submit an appropriate Amendment at Report stage.
LORD SEEBOHM: I thank the noble Lord. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD SEEBOHM: Amendment 10C raises again the matter of the check card
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referred to in Clauses 13 and 75. If that has been settled, perhaps this Amendment, too, should be withdrawn.
THE DEPUTY CHAIRMAN OF COMMITTEES: Does the noble Lord wish to move this Amendment?
LORD SEEBOHM: Yes, I wish to move the Amendment.
Amendment moved—
Page 6, line 32, at end insert—
"(5) For the purposes of this Act production to a supplier by a person of evidence that the cheque which he is tendering will be paid on presentation shall not constitute that evidence a credit token."—(Lord Seebohm.)
LORD JACQUES: We are sympathetic to this Amendment, but we should like a little more time for study and consultation. We hope to overcome the problem in one way or another, not necessarily by an Amendment to this clause.
LORD SEEBOHM: I thank the noble Lord and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 14 agreed to.
Clause 15 [Consumer hire agreements]:
LORD JACQUES LORD JACQUES moved Amendment No. 11:
Page 6, line 33, leave out from ("agreement") to ("which") in line 35 and insert "made by a person with an individual (the "hirer") for the bailment or (in Scotland) the hiring of goods to the hirer, being an agreement".
The noble Lord said: This also is a drafting Amendment. The people who hire out are not necessarily the owners. Very often they are, in effect, wholesale hirers; and after hiring in bulk a large number of articles they themselves then hire them out, one at a time. This Amendment is designed to prevent the term "owner" being used for the person who hires out. Consequently, it is a purely drafting Amendment and does not in any way increase the scope of the Bill. I beg to move.
On Question, Amendment agreed to.
5.18 p.m.
LORD ABERDARE LORD ABERDARE moved Amendment No. 12:
Page 6, line 42, at end insert—
"(3) This section shall not apply to a bailment or hiring where all the following conditions are satisfied, namely, that—

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(a) the cash price of the goods exceeds £5,000;

(b) the goods are selected by the lessee;

(c) the lessor is not an associate of the supplier;

(d) the goods are to be used in the business of the lessee."

The noble Lord said: I beg to move Amendment No. 12. Clause 15 defines which hire agreements are to be regulated under the Bill but it sweeps together without distinction two different forms of hiring: leasing, which is a commercial form of hiring; and rental, which is the normal consumer rental agreement with which most of us are familiar. We all understand and support the Bill where it attempts to cover rental agreements and to give the protection of its provisions to consumer rental agreements. There is no quarrel about that object. But we consider that leasing is quite a different matter, that the Bill should discriminate here and that leasing should not in most cases come under the provisions of the Bill. It is used by industry and commerce and it is not a facility used by consumers in general.
To my knowledge there have been no complaints about leasing in the industrial and commercial field, nor have there been any abuses which require remedying; but, unfortunately, because the Bill defines a consumer as being anybody who is not a corporate body it also covers the cases of sole traders and partnerships. Therefore, commercial leases taken out with sole traders and partnerships will be subject to the Bill. In our view, this may well discriminate against them so that what is intended to be a consumer protection measure will, in fact, interfere with the commercial life of the country in the case of these leases. The requirements imposed by the Bill (which are, I repeat, wholly appropriate in consumer rental cases) will mean that sole traders and partnerships obtain leasing facilities less readily than do their corporate competitors. So what we have tried to do in this Amendment is to distinguish between the two things: to leave the normal consumer rental agreement within the Bill, and to exclude the commercial leasing agreement.
There are several differences between the two, but we have tried to distinguish them by applying the following test. The essential element in leasing is customer choice. The intending lessee first chooses
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the goods and then chooses the supplier of the goods. It is only after that choice is made that he approaches the lessor, and the lessor does not buy the goods until invited to do so. The lessor is not an associate of the supplier, and holds himself out as providing a financial service for leasing goods generally, whereas in renting the goods are selected by the customer from the stock already owned by the rental company, which holds itself out as renting the particular class of goods in which it specialises and which it offers on a standard tariff. There is a clear distinction here between the consumer rental agreement and the commercial leasing agreement. It is in the belief that this distinction should be made and that the commercial leasing agreement which is a very valuable form of agreement and which at the moment reacts to the disfavour of the sole trader and the partnership vis-à-vis the corporate body, should be excluded, that this Amendment has been drafted. I am not at all sure about the actual wording of the Amendment, but I hope that its object is clear. I beg to move.
5.22 p.m.
LORD JACQUES: I find this one of the least attractive Amendments in the Marshalled List. Nothing like it was in the original Bill, and nothing like it was suggested at any time when the original Bill was under consideration in another place. I am quite sure that had anything like this Amendment been suggested at that time it would have been resisted by the previous Administration for exactly the same reasons as it is resisted by this Administration. I think it is time we looked at some of the general philosophy underlying the Bill. Everybody, of course, says, "This Bill is necessary; changes are needed. But those changes are needed for somebody else; not for us. Our circumstances are just a little different, and either we should be exempt from the Bill or the Bill should be amended in a little way so that it does not affect us in all respects." Everybody wants change, but only for somebody else. What causes a Bill to be complicated perhaps more than anything else are the endeavours that are made to meet these people who want change only for some-body else and not for themselves. Every time you try to meet the point of view put forward by a sectional interest then

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you add complication to the Bill. But, of course, there are many cases where it is worth while adding the complication because the representations which have been received are entirely justified, and the alteration which is being made is worthwhile. I am going to submit that this Amendment highly complicates, that it is not justified and that is not worth while.
First, that it highly complicates there can be no doubt. As the Bill stands at the moment, the hirer knows exactly where he stands. If he has to pay not more than £5,000 in total hire charges then the agreement comes within the Bill: there is no doubt about that; whereas if the charges are in excess of £5,000 it is outside the Bill. That is simple, and he will have no difficulty in understanding it But this Amendment would greatly complicate it. It would not be a question only of whether the total was more or less than £5,000: he would also have to consider whether the cash price of the goods exceeded £5,000 and whether the goods were selected by the lessee; and he would have to ensure that the lessor was not an associate of the supplier and that the goods were to be used in the business of the lessee. How far can you complicate a Bill with one Amendment? This Amendment really would complicate the Bill, and without justification and without making a great deal of difference.
It makes very little difference because as the Bill stands the test is whether the total amount of hire money that is paid is £5,000 or not. Here we have it introduced whether the cash price exceeds £5,000. Clearly there is not going to be a great deal of difference between the cash price exceeding £5,000 and the hire charges exceeding £5,000 I submit that this is relatively small. Secondly, it is not worth while for several reasons. Let us take the question of documentation. It is the common practice in commercial leasing for there to be formal agreements, so the Bill is not introducing anything really new in the documentation which it requires. All it means is that, in so far as the smaller hirers are concerned, the lessor will have to be a little more careful in framing the agreement.
In considering the representations made by the commercial lessors, it seemed to us to be abundantly clear that there
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was only one province in the Bill where they could be greatly inconvenienced, and that was by Clause 101. Clause 101 gives the hirer the right to terminate the agreement. We have met the representations of the commercial lessors in this respect. As a result of their representations, provision has been made for all commercial leases where the hirer has a free choice of goods to be excluded from the clause. I submit that we have gone a very long way to meet the representations of the commercial lessors, and that we should not complicate the Bill by accepting this Amendment to give them a little more.
LORD ABERDARE: I must say that I do not find that answer at all satisfactory. I began not finding myself in agreement with the noble Lord when he said that he did not like this Amendment because, first of all, it was not in the original Bill and, secondly, because it was not considered in the Commons Committee. That seems to me to be totally irrelevant, if I may say so. This is the House of Lords considering this Bill in Committee, and what has gone on before is entirely irrelevant. But I think there is a real difficulty here which the noble Lord has perhaps not quite grasped. These commercial leases are something quite different. The Bill exists to defend the consumer; it is the Consumer Credit Bill. As I said when introducing the Amendment, we naturally want to do all we can to see that consumer rental agreements are covered. All we have tried to do is to meet this other point, where the transaction is a purely commercial one, against which there has been no complaint and where the Bill has dragged this in by its coat-tails, although properly speaking I do not think there is any need for this particular leasing agreement to be covered by the Bill. We were seeking to make a sensible exclusion of a practice which is a commercial practice and a useful one but which, if put in the Bill, would discriminate between the corporate body and the partnership and the sole trader and make commercial life in that respect more difficult, and unnecessarily so.
The noble Lord says that my Amendment complicates the matter, and it may well be not the right way to deal with this point. It may indeed be a too complicated way to do it. He said at one point, talking about complication, that

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there was very little difference between the cash price and the £5,000 of total payments in the Bill. I do not think he is right. There can be a very considerable difference between the cash price of the goods and the total payments amounting to £5,000. Perhaps we have not made the correct distinction, but I would ask the noble Lord to look with a little more sympathy on the case that has been put by me—I hope adequately—for these commercial leasing agreements. I know that the Government have helped in one way in a later clause. I respect that and I am very grateful. But I hope that the noble Lord will look a little more carefully at this matter, and if he does so I shall readily withdraw the Amendment at this stage.
LORD JACQUES: With the leave of the Committee I should like to speak again. I should like us all to be quite clear as to the position here. It was the last Administration that made up their mind that not only consumers but also small traders should be protected by this Bill, and it was the last Administration that brought within the province of this Bill the question of commercial leasing up to a total hiring cost of £5,000. The present Administration have accepted what the previous Administration put in the Bill, except that they have given a concession to the commercial lessors. In other words, we have gone further to meet the position of commercial lessors than did the previous Administration. We are not prepared to go any further.
LORD ABERDARE: I do not find that at all helpful and I will reserve my right to return to this point at a later date. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, whether Clause 15, as amended, shall stand part of the Bill?
LORD HAWKE: I do not pretend to know a great deal about this very complicated Bill, but at first sight this clause impinges upon an interest which I declare, which is in a linen hire business. I should like to know whether a linen hire agreement, millions of which are in existence, by which protective clothing is provided on a hire basis for the majority of working men in this country, is covered by this Bill, and whether it will
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become a consumer hire agreement. If so, there will be complications because, in many cases, an agreement is between the hirer and the individual workman. In other cases, an agreement is between the hirer and the firm which employs the workman. That can be a large contract whereas the other contract is for a matter of a few shillings a week. I make this point on the Question, whether Clause 15 shall stand part of the Bill?, in the hope that the noble Lord can tell me whether that type of linen hire agreement is covered by the Bill and will become a regulated hire agreement.
LORD SHEPHERD: Perhaps the noble Lord will refer to Clause 15(1)(b) —though I am not quite sure whether that is the right reference. I am assured, however, that the leasing arrangements to which the noble Lord referred are excluded from the provisions of this Bill. I will advise the noble Lord by letter where this aspect is to be found in the Bill.
LORD HAWKE: I thank the noble Lord very much. I have searched the Bill but cannot find it.
LORD SHEPHERD: I am advised that the correct reference is Clause 15(1)(b). Clause 15(1) reads:
"A consumer hire agreement is an agreement for the bailment or (in Scotland) the hiring of goods made between an individual ("the hirer") and their owner … which—
under paragraph (b)—
"is capable of subsisting for more than three months".
Therefore, the leasing arrangements to which the noble Lord referred has clearly excluded by that provision.
LORD BARNBY: Much of the resistance of the noble Lord, Lord Jacques, to the Amendment proposed by my noble friend is based on the amount of £5,000. Is this an appropriate moment to ask whether he has any observations to make on the fact that, since inflation is increasing at the rate of 10 per cent. per annum—I am not making any specific reference to this or any previous Administration—it would appear that at the end of five years £5,000 would be worth £2,500 and, therefore, the basis of the Government's resistance would be stultified? Does the I noble Lord find this an appropriate

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moment to consider the effect of this legislation on the amounts that will be statutorily imposed?
LORD SHEPHERD: If the noble Lord refers to one of the earlier clauses regarding the power of the Secretary of State, he will see that the powers for change, if change became necessary, are within the Bill. I hope that we shall not have to consider any change of this sort in the near future. The noble Lord will be aware that under the original provisions the figure was £2,000, and it has been decided to raise the sum to £5,000 because that is more attuned to the present time.
LORD ABERDARE: Before we leave this clause, may I put one more point to the noble Lord opposite? Some leasing agreements have variable terms. For example, rentals sometimes vary according to changes in interest rates, or, in the case of leased cars, according to the mileage covered. The point that concerns me about a variable term agreement is that an agreement which was originally within the £5,000 limit may go outside it as the terms change; or, vice versa, an agreement which was outside the Bill may come within its terms. I believe it is correct to say that the test of whether or not an agreement comes within the terms of the Bill is based on the terms prevailing at the outset. If that is so the position is satisfactory, but it is not clear from the present wording of the clause. I do not know if the noble Lord can confirm whether that is the position under the clause, or whether it will be made clear by regulation or in some other way.
LORD JACQUES: I think the test is that if an agreement has hire charges of less than £5,000, it comes within the Bill. I see the worry on the noble Lord's face, but it is probably a mirror of my own. I will certainly undertake to look at this matter, and if the noble Lord would like me to do so I will consult him or exchange letters to see whether we can deal with his concern.
Clause 15, as amended, agreed to.
Clause 16 [Exempt agreements]:
On Question, whether Clause 16 shall stand part of the Bill?
LORD ABERDARE: May I make one small point? Subsection (4) provides that the Secretary of State may by order
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exempt agreements where the number of instalments does not exceed the number specified in the order. The content of an order is of importance, in view of the wide definition of "credit" in Clause 9(1). Will there be a different number specified for different types of agreement—hire purchase agreements, credit sale agreements, instalment loans and so on—or will they all be covered by the one number of instalments? I ask this question in the interests of certainty, because until an order is made the granters of credit will not know which agreements are to be regulated.
LORD JACQUES: No decision has yet been taken on the contents of the orders and regulations, but there will be the fullest consultation about these with the interested parties. The order-making power in relation to Clause 16 (4) is wide enough to allow a different number of instalments to be specified for different kinds of transactions but, subject to consultation, it is the intention that transactions serving the same purpose—for example, hire-purchase, conditional sale and credit sale—will certainly be included in one category.
Clause 16 agreed to.
Clause 17 agreed to.
Clause 18 [Multiple agreements]:
LORD SEEBOHM LORD SEEBOHM moved Amendment No. 12A:
Page 9, line 35, at end insert—
"(6) For the purposes of this Act it shall not constitute a multiple agreement if a creditor allows payment (i) in excess of the credit limit on running account or (ii) where there is no credit limit."
The noble Lord said: I beg to move this Amendment, which again concerns excesses and the multiple agreements caused by them. I think that it will be appreciated that without this Amendment each cheque paid in excess of the limit will constitute a new regulated agreement. This is a possible application in the banking system, where payments in and out are continuously made into a trading bank account. For instance, it may well be that 12 cheques are drawn, coming in one after another, taking the account into excess. Each cheque will make a separate agreement, paid, and when amounts are paid in later on to which cheque, if any, are those credits to be allocated? It seems to me this is a situation which needs to be altered.
LORD JACQUES: I am pleased to be able to advise the noble Lord that his Amendment is no longer necessary. We have met the point by two Amendments. One of them (Amendment 5A) has been dealt with and there is a later Amendment, which is Amendment 73A. These two Amendments together cover the point; but if there is any doubt in the mind of the noble Lord we shall be very happy to discuss the position with him after he has had the opportunity of considering the two Amendments referred to.
LORD SEEBOHM: I am grateful to the noble Lord and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clauses 18 to 21 agreed to.
Clause 22 [Personal and group licences]:
LORD WELLS-PESTELL LORD WELLS-PESTELL moved Amendment No. 13:
Page 11, line 12, leave out ("personal") and insert ("standard").
The noble Lord said: The purpose of this Amendment is to remove possible confusion and misunderstanding. Noble Lords will see that the word "personal" appears on a number of occasions—18, to be precise—spread over a number of clauses. With your Lordships' permission, I should like to give the reason for the change from the word "personal" to the word "standard". If the Amendment is accepted, perhaps your Lordships will allow me at later stages merely to move Amendments formally without going over the ground again.
The word "personal" carries the connotation that the agreement is with a debtor who is an individual and not a corporate body. However, "personal" (when used in the term "personal licence" in this and other clauses) means a licence which is personal to the licensee to whom it is issued. As the licensee may well be a corporate body, the term "personal licence" seems rather in-appropriate in view of the terminology of the Bill. The Amendment provides for the term "standard licence" to replace the term "personal licence" and, if I may be permitted to say so, I think this is a very considerable improvement. The meaning of the term "personal licence"
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has not been clear to everybody, and the term "standard licence" points more clearly the distinction between the licences issued to ordinary traders and the group licences which the Director will have power to issue when it appears to him to be in the public interest to do so. I beg to move.
On Question, Amendment agreed to.
5.46 p.m.
LORD AIREDALE LORD AIREDALE moved Amendment No. 14:
Page 11, line 13, after ("person") insert ("including a body corporate").
The noble Lord said: I regret that a, little of the force of my argument here has been swept away by the last Amendment. Nevertheless, I think it is still worth while. Lawyers of course, know that the word "personal" includes a body corporate and indeed many laymen also know this; but there must be a good many who do not. In this particular context I think there is room for confusion because we have two paragraphs together, contrasting what is now to be called the "standard licence" with the "group licence". On reading the Bill for the first time, it would surely appear to be all too easy to suppose that the group licence is a licence which applies to a body corporate—a body corporate being a group of persons. That is not the case. A body corporate can hold a standard licence under the earlier paragraph, and in order to make this clear at first sight I would have thought it is worth while adding the words "including a body corporate" in that paragraph relating to the standard licence after the word "personal". I think this may do away with initial confusion in the minds of some people when reading these words for the first time. I beg to move.
LORD JACQUES: The noble Lord is fully aware that the Interpretation Act of 1889 provides that in that Act and in every subsequent Act the expression "person", unless the contrary intention appears, includes any body corporate or unincorporate. No contrary intention has been shown in the Bill, and therefore the Amendment is not necessary. I would say to the noble Lord that it is not only lawyers who know that "person" includes a corporate body but businessmen are also very fully aware of this. If we had to word the Bill so that all consumers

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would understand it, I think it would put an impossible burden upon the draftsmen. I think this Amendment would be somewhat unusual because of the Interpertation Act and would, I think, by those referring to it at some later stage, be looked upon as a mistake by the draftsman.
LORD AIREDALE: I was aware of that part of the Interpretation Act of which the Minister has just reminded us. I am also aware that ever since the noble Lord and learned Lord, Lord Gardiner, became Lord Chancellor we have striven to make the statutes more easily understandable not only by lawyers but by ordinary people; and I venture to think that most ordinary people are not as familiar with the Interpretation Act as the Minister is and as even I am. However, I accept that, strictly speaking, the Amendment is unnecessary and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.50 p.m.
LORD ABERDARE LORD ABERDARE moved Amendment No. 15:
Page 11, line 15, after ("period") insert ("not being less than 5 years,").
The noble Lord said: This Amendment returns to the point raised on Second Reading by my noble friend Lord Limerick about the length of time for which a licence, once issued, should run before it must be renewed. The Bill says that a personal licence will be issued by the Director for a prescribed period and, in reply to my noble friend on Second Reading, the noble Lord, Lord Jacques, mentioned a possible period of three years, but said that it had not been firmly fixed.
The only point of this Amendment is to suggest that five years may be appropriate. It seems to me that there is no sense in causing a lot of paperwork and extra clerical work by too frequent a renewal of licences, and that there are advantages in letting a licence run for as long as possible, or at least a reasonable length of time, before it has to be renewed. I say this only because it is quite clear from the Bill that the Director General of Fair Trading already has adequate powers to vary licences under Clause 31, or to revoke them, under Clause 32. So all the powers are there in the event of a licence-holder doing
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something of which the Director General does not approve, for him to alter or revoke the licence. In fact, one could almost say that the licences might run for ever, subject to those powers of alteration or revocation. However, there is normally a period of time for such a licence, and the only point of the Amendment is to suggest that it should be five years rather than three.
LORD JACQUES: I think I should remind the House that certain credit traders at the moment already require licences. Pawnbrokers have licences for one year; moneylenders have licences for one year. The Crowther Committee, who recommended that licences should be required by all who give credit, proposed a period of three years, and I have no doubt that that is where the period of three years mentioned on Second Reading came from. My point, arising out of the Amendment, is that it would be unwise to specify a minimum period in the Bill. There are considerations on both sides: many changes could take place within five years—for instance new forms of credit might develop and quick action might be needed—and it might be that some licences might not be renewed. Consequently, there is a case against five years, but there is also a case in its favour. A five-year period would reduce the administrative work, and if I were the Director General I should be in favour of five years. I think there is a case on both sides, but I feel that we should be ill-advised to tie down the Secretary of State, whose right it is to decide. He decides, not the Director General.
Another reason why there should not be a minimum is that circumstances might arise in which it was necessary in some cases to issue licences for very short periods—for instance, because a business was to be reconstructed. We hope therefore that it may be left to the good sense of the Secretary of State to weigh up the pros and cons at the time when they should be weighed up. For instance, we might start with what would be a standard period of, say, three years but, after experience, go to five years. As the Bill stands, that kind of change could be made. We could not have that flexibility if we set out a minimum period in the Bill. It might also be that there would be different licence periods for

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different kinds of credit and that, while it might be justified because kinds of credit are different could also be justified in that it might simplify the administrative work by staggering it. I think there is a very strong case for not fixing a minimum period, and certainly not one of five years. Flexibility should be left so that the Secretary of State can determine whether there should be one or more fixed terms and whether, if we started with three years, we should not at a later stage have five years.
LORD ABERDARE: I am grateful to the noble Lord, who has helped us a lot by going into more detail on this clause. I accept that it would not be wise to put the period into the Bill, but I think that it is helpful to know that the Secretary of State has in mind the use of these powers in a flexible way at the time when they need to be exercised. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD WELLS-PESTELL: I beg to move Amendment No. 16.
Amendment moved—
Page 11, line 25, leave out ("personal") and insert ("standard").—(Lord Wells Pestell.)
On Question, Amendment agreed to.
5.58 p.m.
LORD AIREDALE LORD AIREDALE moved Amendment No. 17:
Page 11, line 29, leave out ("if, and").
The noble Lord said: I was told by the Minister just now how important it was not to have unnecessary words. I suggest therefore that, "if, and only if" means, "only if". There is no end to adding emphasis if one wants to: one could say "if, and only if and in no other circumstances whatsoever", but it all boils down to, "only if". I beg to move.
LORD JACQUES: The existing text is intended to emphasise that the Director General may issue a group licence "if, and only if", doing so is in the public interest. That is to say, we want to strengthen the Director General's hand if he wishes to refuse a group licence. If we do not strengthen it literally, we hope that we do psychologically. However, the deletion of "if and" would not
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weaken the requirement unduly and if the Committee would prefer a more prosaic wording the Government are willing to accept the Amendment, though they would prefer that the Bill should remain as it is.
LORD AIREDALE: We are in Committee and I shall not divide the House. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD JACQUES: I beg to move Amendment No. 18.
Amendment moved—
Page 11, line 32, leave out ("personal") and insert ("standard").—(Lord Jacques.)
On Question, Amendment agreed to.
LORD JACQUES: I beg to move Amendment No. 19 for which the same explanation applies.
Amendment moved—
Page 11, line 37, leave out ("personal") and insert ("standard").—(Lord Jacques.)
On Question, Amendment agreed to.
Clause 22, as amended, agreed to.
Clause 23 [Authorisation of specific activities]:
6.0 p.m.
LORD JACQUES LORD JACQUES moved Amendment No. 20:
Page 12, line 7, leave out from ("licence") to ("covers") in line 9.
The noble Lord said: This clause refers not only to credit and hire business but also, by the application of Clause 144, to ancillary credit businesses. These Amendments improve the drafting in relation to the application of this clause to ancillary credit businesses. For example, by deleting
"held by a person carrying on in a consumer credit business or consumer hire business"
in subsection (3), the Amendment removes any doubt as to whether the provision applies, as it does, to licences issued to credit-brokers. I beg to move.
On Question, Amendment agreed to.
LORD AIREDALE LORD AIREDALE moved Amendment No. 21:
Page 12, line 8, leave out ("covers") and insert ("permits").
The noble Lord said: It seems to me the word "permits" is more appropriate in this context than "covers". It is

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more accurate to say that a licence permits something than to say it covers something. I beg to move.
LORD JACQUES: The choice of the words appropriate in a particular context is a matter over which there may be differing views. There are two essentials. First, the word should not be ambiguous; secondly, it should be consistent. We consider the word "covers" expresses the intention clearly and therefore is not ambiguous. Furthermore, we point out that it is also consistent because "covers" is used in subsections (1) and (2), and if this Amendment were accepted only one of the conditions that I have laid down would be satisfied. While it would not be ambiguous it would fail to be consistent. The Committee would wish us to be not merely unambiguous but also consistent.
LORD AIREDALE: I agree that this is a two-sided argument, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD JACQUES: Amendment No. 22 is similar to Amendment No. 20. I beg leave to move the Amendment.
Amendment moved—
Page 12, line 13, leave out from beginning to ("which") in line 14.—(Lord Jacques.)
On Question, Amendment agreed to.
LORD AIREDALE LORD AIREDALE moved Amendment No. 22A:
Page 12, line 14, leave out from ("of") to ("require") in line 15 and insert ("a licensee").
The noble Lord said: Although on the Marshalled List this Amendment is down to be moved by the noble Lord, Lord Aberdare, it is in fact my Amendment. There has been a misprint, probably because my signature was not decipherable. I am still trying to cut unnecessary words out of the Bill. We have the expression "a person carrying on the business", which so far as I can see is identical with a licensee. If one can use two words instead of six, that is a saving. I beg to move.
LORD JACQUES: Any regulations which might be made would apply not only to those already having a licence, but to those who might at some future date wish to carry on business and engage in the activities in question, and would therefore need to get a licence. The
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present wording expresses the intention more clearly by leaving no doubt on this score.
LORD AIREDALE: I must think about that. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD JACQUES: Amendment No. 23 is exactly the same as No. 22. I beg to move.
Amendment moved—
Page 12, line 15, leave out ("the") and insert ("a")—(Lord Jacques.)
On Question, Amendment agreed to.
Clause 23, as amended, agreed to.
Clause 24 [Control of name of business]:
6.6 p.m.
LORD JACQUES: This is a matter of drafting. I beg to move Amendment No. 24.
Amendment moved—
Page 12, line 17, leave out ("personnel") and insert ("standard")—(Lord Jacques.)
On Question, Amendment agreed to.
Clause 24, as amended, agreed to.
Clause 25 [Licensee to be a fit person]:
LORD JACQUES: I beg to move Amendment No. 25 which is entirely drafting.
Amendment moved—
Page 12, line 20, leave out ("personal") and insert ("standard")—(Lord Jacques.)
On Question, Amendment agreed to.
LORD AIREDALE LORD AIREDALE moved Amendment No. 26:
Page 12, line 20, leave out ("not").
The noble Lord said: Perhaps we may discuss Amendments Nos. 26 and 27 together because it is only when they are taken together that they make sense. This will amount to a very small amendment in terms of words, but an important principle is involved. Subsection (1) of Clause 25 is only enabling, and is not mandatory upon the Director. Yet all that the Director is considering under this clause is the credentials of the person who applies for the licence.
The question I want to ask is this: If the Director is not required to issue a licence to a person whose credentials

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have satisfied him, what criterion is he to adopt, and on what grounds is he to refuse a licence to a person even when he is satisfied with that person's credentials? The only circumstance I can think of is the kind that arises in the minds of the licensing justices, who have to consider not only whether this person is suitable to become a publican, or to run a betting shop, but whether there are enough pubs or betting shops in the locality already, and is it necessary to have another one. I hope it is not the intention to face the Director with that kind of jurisdiction, because the Director will lack the important qualification which the licensing justices have of having real knowledge of the circumstances. I do not think you can expect the Director to have the degree of local knowledge which licensing justices have. I should have thought that in those circumstances it was only right to make it mandatory upon the Director to issue the licence provided he is satisfied with the applicant's credentials. As I say, I can think of no criterion which would seem to me to justify the Director in refusing a licence to a person when he is satisfied with the credentials. I seek therefore to make this clause mandatory and not merely enabling on the Director. I beg to move.
VISCOUNT AMORY: I thought in listening to the noble Lord, Lord Airedale, that his was a very sensible suggestion. I hope the noble Lord will consider it carefully or tell us specifically why he does not find it acceptable. The positive way of putting the matter appeals to me personally.
LORD JACQUES: It is intended that any applicant who satisfies the Director that he is a fit person to engage in the activities in question and that the name under which he applies to be licensed is not misleading or otherwise undesirable, will receive a licence. However, given that one of the main purposes of the Bill is to ensure that only "fit persons" should receive licences it was thought appropriate to emphasise that the Director should not grant a licence unless he was satisfied. Having said that, it seems unlikely that there is any practical difference in effect between the present and the amended text. If the Committee supports
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the Amendment the Government are quite willing to accept it.
LORD AIREDALE: I am very pleased to hear those last words. I cannot begin to agree that there is no practical difference between something mandatory and something merely permissive or enabling. I think that this is a very important principle and I very much hope that the Amendment will be agreed to.
On Question, Amendment agreed to.
LORD AIREDALE: I beg to move Amendment No. 27.
Amendment moved—
Page 12, line 21, leave out ("unless") and insert ("if").—(Lord Airedale.)
On Question, Amendment agreed to.
LORD JACQUES: Amendment No. 28 is a drafting Amendment.
Amendment moved—
Page 12, line 27, leave out ("personal") and insert ("standard").—(Lord Jacques.)
On Question, Amendment agreed to.
Clause 25, as amended, agreed to.
Clauses 26 to 28 agreed to.
Clause 29 [Renewal]:
LORD JACQUES: I beg to move Amendment No. 29. This is a drafting Amendment.
Amendment moved—
Page 13, line 38, leave out ("personal") and insert ("standard").—(Lord Jacques.)
On Question, Amendment agreed to.
Clause 29, as amended, agreed to.
Clause 30 [Variation by request]:
6.15 p.m.
LORD JACQUES: I beg to move Amendment No. 30. This is a drafting Amendment.
Amendment moved—
Page 14, line 22, leave out ("personal") and insert ("standard").—(Lord Jacques.)
On Question, Amendment agreed to.
Clause 30, as amended, agreed to.
Clause 31 [Compulsory variation]:
LORD AIREDALE LORD AIREDALE moved Amendment No. 31:
Page 15, line 4, leave out from ("that") to ("the") in line 8.
The noble Lord said: Perhaps we may discuss Amendment No. 33 with this one

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because the point is exactly the same. I am still trying to cut out unnecessary words from the Bill. The message of this subsection is that if the Director is of opinion that the licence should be varied "he shall proceed, as follows". There are four lines which go into the hypothetical question of what the Director would have been minded to do if the licence had expired at that time. That seems to me to be quite unnecessary. It does not make the slightest difference to the situation. Under the clause the fact will remain in either case that if the Director is of the opinion that the licence should be varied "he shall proceed, as follows". I beg therefore in this Amendment to leave out those four and a half lines of totally unnecessary words about a hypothetical situation.
LORD JACOUES: The intention is that the Director should, in exercising his powers to vary, revoke or suspend licences, have regard to exactly the same criteria as those which govern his determination on application for the grant or renewal of licences. This is achieved by the words in the brackets and we would not like them to be taken away.
LORD AIREDALE: All I can say is that the words proposed to be left out do not do any harm if they are left in, but I still think that they are quite unnecessary. However, having had some success a short time ago, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD JACQUES: I beg to move Amendment No. 32. This is a drafting Amendment.
Amendment moved—
Page 15, line 10, leave out ("personal") and insert ("standard").—(Lord Jacques.)
On Question, Amendment agreed to.
Clause 31, as amended, agreed to.
Clause 32 [Suspension and revocation]:
LORD JACQUES: I beg to move Amendment No. 34. This is another drafting Amendment.
Amendment moved—
Page 16, line 3, leave out ("personal") and insert ("standard").—(Lord Jacques.)
On Question, Amendment agreed to.
Clause 32, as amended, agreed to.
Clauses 33 and 34 agreed to.
Clause 35 [The register]:
LORD AIREDALE LORD AIREDALE moved Amendment No. 35:
Page 18, line 15, at end insert—
"( ) The Director shall provide free of charge a copy, certified by him to be correct, of any relevant entry in the register, accompanied by a copy of section 36(1) and section 39(3) of this Act, to any person capable of committing an offence under the said section 39(3)".
The noble Lord said: If we may look forward for a moment to the next clause, Clause 36, we find that the duty of keeping the Director's register up to date is largely passed on to the shoulders of the licensee. If we may glimpse shortly at Clause 39(3), we find that if the licensee fails in that duty he commits a criminal offence. Under this clause we have to consider how the licensee knows what the Director's register contains in respect of him, and what he has to keep up to date on pain of committing a criminal offence. We observe that if he wishes to find what is the entry in the register that applies to him he has to pay a fee. I should have thought it was wrong in principle that anybody should have to pay a fee in order to be in a position to avoid committing a criminal offence. I have therefore thought it right to put down this Amendment, which absolves the licensee—not other people, of course, but the licensee himself—from having to pay a fee to obtain a certified copy of his own entry in the Director's register.
I thought it only right that at the same time he should be supplied by the Director with not only a certified copy of the entry but also a copy of Section 36 of the Act (as it will be), which reminds him that it is his duty to ensure that the register is kept up to date in respect of his own entry. More important still, a copy should at the same time be supplied to him of Clause 39(3), which reminds him that if he fails to ensure that the register is kept accurate in respect of his entry he commits a criminal offence. I want him to be free from having to pay a fee to save himself from committing a criminal offence. I beg to move.
LORD JACQUES: We consider that the present position in the Bill is wholly

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satisfactory, in that the information in the register is obtained from the licensees. It is up to the licensees as reasonable businessmen to keep a file of their correspondence and all the information which they supply Ito the Director General. If they fail they still have a way out, but they have to pay. It is quite right that if they fail to keep proper records, proper filing, and have to rely upon the public service for information which they should have in their own files, they should pay for it. That is the present position in the Bill and we hope it will remain like that.
However, in any case we could not accept this Amendment, for several reasons. First, it is not clear on the face of it whether the Director General has to supply all these copies automatically or only when a request is made. If it were automatic, it would throw upon the Director General quite impossible requirements, because he would have to send documents to people and would have no knowledge that they existed at all; changes would have taken place of which he would have no knowledge. Furthermore, this Amendment refers to sending copies of Clause 36(1). Subsections (2) and (4) of Clause 36 equally apply. We think the Amendment is therefore unwise, but even if it were wise we could not accept it in its present form.
LORD AIREDALE: I can see the force in some of the points that have been advanced in opposition to this Amendment. But will the Minister consider it if we return to this matter at the next stage with an Amendment in the following form: that every time a licence is issued it shall be accompanied by one free copy of the entry in the register, a copy of the provision which reminds the licensee that he must ensure that the matter is up to date, and a copy of the provision which says that if he fails to do that he then commits a criminal offence or is liable to commit a criminal offence? That will involve the Director only in sending out these supplementary papers with each licence, and that will not be a Herculean task for the Director. My main point is of course that these papers must be sent free of charge in the case of the licensee. If I put down an amended Amendment on those lines at
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the next stage, will the Minister consider it sympathetically?
THE EARL OF LIMERICK:: Before the noble Lord replies, might I say that it is so unusual to find the noble Lord seeking to put words into a Bill instead of taking them out. I think that this suggestion is worthy of serious consideration, the object being, as it must be, to prevent non-compliance with the law. It seems that it would be no great or arduous task to have printed forms which could be sent out with the licence, containing the information to which the noble Lord, Lord Airedale, has referred. I very much hope that the noble Lord will be able to tell us that he is able to think about a proposal on these lines.
LORD JACQUES: I do not think I can decline to say that we will consider it.
LORD AIREDALE: With that undertaking, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 35 agreed to.
Clause 36 [Duty to notify changes]:
6.28 p.m.
LORD JACQUES: Amendment No. 36 is a drafting Amendment, which I beg to move.
Amendment moved—
Page 18, line 17, leave out ("personal") and insert ("standard").—(Lord Jacques.)
On Question, Amendment agreed to.
LORD JACQUES: Amendment No. 37 is another drafting Amendment, which I beg leave to move.
Amendment moved—
Page 18, line 24, leave out ("personal") and insert ("standard").—(Lord Jacques.)
On Question, Amendment agreed to.
LORD ABERDARE LORD ABERDARE moved Amendment No. 38:
Page 18, line 38, leave out ("14") and insert ("21").
The noble Lord said: I beg to move Amendment No. 38 and to speak also to Amendment No. 40 which covers the same point. It struck me that under subsections (1) and (2) of this clause the licensee has to inform the Director within 21 days of any change in officers, of any change in its control if it is a body corporate,

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and of any change in the membership of a partnership. But subsections (3) and (4) allow only a 14-day period within which a body corporate which controls a licensed body corporate has to notify that there has been a change in its officers, or that a person becomes or ceases to be in control of a licensed body corporate. I merely wanted to inquire of the noble Lord why there was this differentiation—why certain people had 21 days to make a notification while others had only 14 days. I beg to move.
LORD JACQUES: As the Bill stands the licensee has 21 days in which to notify the Director General of changes. When the licensee is controlled by, say, a parent company and there is change the controller, the parent company, has 14 days in which to inform the licensee, leaving the licensee the balance of 7 days to inform the Director General. Therefore, if we accepted this Amendment it would leave no time for the licensee to get his information off to the Director General. We think that the total period of 21 days which is allowed in the present text of the Bill should be ample for the purpose.
LORD ABERDARE: I accept that explanation and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD JACQUES: Amendment No. 39 is a drafting Amendment. I beg to move.
Amendment moved—
Page 18, line 40, leave out ("personal") and insert ("standard").—(Lord Jacques.)
On Question, Amendment agreed to.
6.31 p.m.
LORD AIREDALE LORD AIREDALE moved Amendment No. 41:
Page 18, line 42, leave out subsection (4).
The noble Lord said: I tabled this Amendment because I cannot see how there can be any need for this subsection, which appears to say that after a person becomes or ceases to be the controller of a body corporate he must give the body corporate notice of the fact. I should have thought the body corporate in all cases would know. Perhaps I shall be told that this is to cover cases of mysterious take-overs, or something of that kind, but as it stands I simply cannot think of any reason for subsection
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(4), which I therefore beg leave to remove from the Bill. I beg to move.
LORD JACQUES: Clause 36(2)(b) requires a body corporate, which is a licensee under a personal licence and which becomes aware that a person has become or ceased to be its controller or the controller of another body corporate which is its controller, to give the Director notice of the change. It is essential that the Director should have this information because it must not be possible for a person who could not obtain a licence to evade the licensing requirement by exercising control over a licensee. Sometimes, however, companies do not learn until after a lengthy delay about a change in control. To ensure that licensees are told when such changes occur the Bill makes controllers responsible for doing so. The original Bill required the controller to notify the Commissioner direct. We now think it preferable that the controller should inform the licensee so that the latter can notify changes in control as well as other changes to the Director.
LORD AIREDALE: This will not be the first time that something that looks rather odd is, nevertheless, apparently necessary. Therefore I beg to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD JACQUES: I beg to move Amendment No. 42, which is a drafting Amendment.
Amendment moved—
Page 19, line 1, leave out ("personal") and insert ("standard").—(Lord Jacques.)
On Question, Amendment agreed to.
Clause 36, as amended, agreed to.
LORD JACQUES: I beg to move that the House do now resume.
Moved accordingly and, on Question, Motion agreed to.
House resumed.

NATIONAL INSURANCE BILL
6.34 p.m.
LORD WELLS-PESTELL: My Lords, I beg to move that this Bill be now read a second time. The main purpose of the Bill is, I hope, perfectly clear. It fulfils a pledge given before the Election that the standard rates of pension would be

83
increased to levels of £10 for single persons and £16 for married couples. Thereafter they will be increased annually in proportion to increases in national average earnings. The Government consider that a substantial improvement in the living standards of pensioners is an essential condition to securing greater social justice. Despite the difficult economic situation I feel sure we would all agree that pensioners have an overwhelming claim for priority treatment.
As your Lordships will know, the Bill provides for an increase of 29 per cent. in the single person's standard rate of pension. This is the biggest increase since the national insurance scheme started over 25 years ago. The increase will be payable from the week beginning July 22, less than 10 months after the present level was introduced. Despite our measures to control prices it is inevitable that some will continue to rise, but not to an extent that could prevent pensioners getting a substantial boost in their spending power. Some measure of the real improvement provided for pensioners can be taken from the fact that prices increased by just over 6 per cent. between last October, when pensions were last increased, and March of this year.
I have spoken of pensions but I can assure your Lordships that these include not only retirement pensions but also invalidity and widows' pensions. All long term beneficiaries, including the old, the chronic sick, the disabled and widows will get corresponding increases in benefits. Short term benefits, sickness benefit, unemployment benefit and the maternity allowance are also to be increased. The rate of increase here is 17 per cent. which after 10 months should be more than sufficient to maintain their purchasing power.
It will perhaps help noble Lords if I run briefly through some of the main provisions of the Bill. Clause 1 with Schedule 1 provides for increases in national insurance pensions and benefits. The standard weekly rate of fiat rate retirement, invalidity and widows' pensions will be increased by £2·25, from £7·75 to £10·00, for a single person and by £3·50, from £12·50 to £16·00, for a married couple. The weekly rate for the children of these long term beneficiaries
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will go up by £1·10 from £3·80, apart from family allowances where these are payable, to £4·90. Thus a widowed mother with two dependent children will have her benefit increased from £14·45 to £18·90, apart from family allowances.
An invalidity pensioner whose incapacity began before the age of 35 and who therefore gets invalidity allowance at the top rate will have his income increased by £2·70, from £9·35 to £12·05 per week. If he has a dependent wife and three children his benefit will go up from £23·60 to £30·85. Attendance allowance will be increased by £1·80, from £6·20 to £8·00, where attendance is required both by day and by night, and by £1·20, from £4·15 to £5·35, where attendance is required by day or by night. The standard weekly rates of flat-rate unemployment benefit and sickness benefit will be increased by £1·25, from £7·35 to £8·60, for a single person and by £2 from £11·90 to £13·90, for a married couple. Dependancy increases for children payable with the short-term benefits will also be increased, so that a man entitled to unemployment benefit with increases in respect of a dependant wife and three children will have his flat-rate benefit increased by £3·20; that is, from £16·90 to £20·10. Such a man might be entitles to additional earnings related supplement. With your Lordships' permission, I should like to leave for a moment Clause 2 and Schedule 2.
Clause 3, with Schedule 3, provides for increases in benefits under the Industrial Injuries Scheme which correspond to the increases in benefits under the National Insurance Scheme. Injury benefit will go up from £10·10 to £11·35 for a single person, and from £14·65 to £16·65 for a married couple, with additional increases for children. Disablement pension for a 100 per cent. assessment will be increased from £12·80 to £16·40.
Before I leave the subject of benefits, I should mention that there will be parallel increases in supplementary benefit rates. Your Lordships will know that these will be dealt with by Resolution, subject to the Affirmative Resolution procedure, and so they are not included in this Bill. These increases will ensure that those most in need of help will get the full benefit of the proposed increases dealt with in this Bill. My right honourable friend the Secretary of State for the

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Environment is taking steps to ensure that existing rent and rate rebates are not affected by the increase in pensions and other benefits. My right honourable friend the Chancellor of the Exchequer, is increasing age exemption relief so that persons to whom that relief is available will not have their pension increase clawed back through taxation. We have already discussed in this House the increases in war pensions which will be provided for by means of Instruments under the Royal Prerogative. The whole package of improvements proposed by the Government in the various pensions and benefits will cost about £1,250 million in 1975–76. Of this, about £1,120 million will fall on the National Insurance and Industrial Injuries Funds.
My Lords, Clause 2 and Schedule 2, together with Clause 3(3), deal with contributions towards this substantial cost, The weekly limit up to which graduated contributions are paid by both employers and employees will be raised from £54 to £62, and the rate of contribution will be increased by one-half of one per cent. Adult employees will pay 9p less a week in flat-rate contributions, but the employer's share will go up by 44p per week in respect of a man, 38p in respect of a woman, 29p in respect of a boy and 25p in respect of a girl. The aim of the Government is to protect the lower-paid wage earners from any additional contribution burden, and the cost of the improvements will be concentrated on employers and on higher-paid employees.
The combined effect of the changes in flat-rate and graduated contributions will mean on the one hand that male employees earning less than £27 a week will not have their contributions increased, and that those earning less than £20 a week will have their contributions reduced by at least 3p a week. On the other hand, employees earning £62 a week or more will have to pay an extra 57p per week. Self-employed and non-employed persons pay only fiat-rate contributions, and these will be increased. Self-employed men will pay an extra 42p per week, and self-employed women an extra 34p a week. The changes in contribution rates will come into force on August 5 this year.
Clause 4 provides a relaxation of the earnings rule for retirement pensioners.
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I know that noble Lords will welcome this move. The earnings rule applies to men aged from 65 to 69, and to women from the age of 60 to 64. The clause provides that it will not operate until earnings reach £13, instead of the £9·50 at present. This change will cost, in round figures, something like £8 million. The effect will be that the £10 rate of pension for a single person will not be extinguished until earnings reach £25 a week, instead of £19·25 as at present. The clause also makes the corresponding change in the earnings rule for wives of pensioners.
The rule which applies to the personal earnings of retirement pensioners reduces benefit by 5p for each 10p earned in the £4 band above the level at which the rule starts to operate. The noble Lord, Lord Reigate, has played an important part in the past in establishing this band (I think I am right in saying this), and I hope he feels that, while perhaps the Government have not been able to go far enough, by bringing in the wives, as I shall say in a moment or two they are helping the position still further besides raising the earnings limit. The clause extends the corresponding band in the rule which applies to the earnings of dependent wives resident with retirement pensioners, invalidity pensioners, and industrial injury disablement pensioners with unemployability supplement, and it is increased from £2 to £4. This in itself will cost about £1 million a year, but it brings the two rules into line. The cost of the changes proposed in Clause 4 will be, as I have already said, about £9 million.
My Lords, Clause 5 amends Section 39 of the Social Security Act 1973, so that the annual review of long-term benefits—that is, those paid to the elderly, the chronic sick, the disabled and widows—will have regard to the general level of earnings rather than the general level of prices, unless at a particular review the latter would be to the advantage of the beneficiaries. The clause also provides that the next review of benefits shall come into force not later than the end of July, 1975. There is a requirement for my right honourable friend the Secretary of State at the time of her review to consider the desirability of introducing legislation requiring reviews more frequently than annually and for her to lay

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before each House of Parliament a report of her conclusions in this respect. I think at this stage it is only fair to say that this requirement arose from an Amendment put down by the Opposition in another place which was accepted by the Government.
Clause 6 provides some minor and technical Amendments to social security legislation. I hope it will be your Lordships' wish that I do not deal with this clause at any great length, except to say that subsection (1) enables statutory backing to be given for various adjudicating bodies to correct accidental errors and to set aside their decisions in certain circumstances. Subsection (2) relates to the regulation-making powers of the joint authorities for Great Britain and Northern Ireland, where there has in the past been sonic occasional confusion as to the proper body for making particular regulations. Subsection (4) removes a doubt about the statutory authority for conferring certain discretionary powers on the Occupational Pensions Board by Statutory Instrument, and subsection (5), together with Schedule 4 to the Bill, provides for certain amendments of a minor nature to existing legislation to facilitate the ultimate highly desirable consolidation of all the legislation dealing with the basic scheme of social security.
I want to bring my opening remarks to a close, and in doing so say that this is a Bill from which 11½ million people will benefit. It provides pensioners and other long-term beneficiaries with a substantial boost in their incomes, and gives them the assurance of a statutory undertaking that in future their standards will be linked with those of the rest of the community. As regards further developments, my right honourable friend the Secretary of State has promised in another place to make an early statement on the interim position after April, 1975. My right honourable friend has also undertaken that a White Paper on the Government's longer term pensions proposals will be published as soon as possible. I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Lord Wells-Pesiell)
6.53 p.m.
LORD ABERDARE: My Lords, I am sure the whole House will be grateful to the noble Lord, Lord Wells-Pestell, for having introduced the Bill at its Second Reading very clearly and concisely and also, in view of its complicated nature, very quickly, although he did not have the advantage of the usual machinery for informing him how long he had been speaking.
I can assure him that from these Benches certainly we would not wish to oppose a Bill that raises National Insurance benefits, and in particular increases benefits for the pensioner and for the chronically sick. In the previous Government, I had the privilege on more than one occasion of introducing similar up-rating Bills. They were always warmly welcomed in general by the then Opposition, and I am happy to warmly welcome this Bill from my seat on this side. We certainly take particular pride in our accomplishments in the social services during the period of our last Government, and especially for the fact that despite the rate of inflation we kept faith with the pensioners; we saw to it, by the annual reviews which we introduced for the first time, that pensioners did not suffer. In fact, as the figures show, the increases in pensions during the period 1970 to 1974 more than kept pace with increases in prices, and indeed exceeded increases in average earnings during that same period.
Of course, these increases, welcome as they are, have to be paid for, and this inevitably means increased contributions. We cannot escape that inevitable consequence. But I think we have to recognise that increased contributions have a further inflationary effect. Where they fall on the worker, this leads to demands for increases in wages to make good his loss. Where they fall on the employer, this leads to increases in prices, the only way in which industry can recoup its costs. The Government's first priority must surely be to contain inflation. I am sure that all pensioners would very much rather see a stabilisation in prices than constantly rising prices and constantly increased pensions to keep pace with those increased prices.
This Bill must be seen in the context of long-term plans for National Insurance. Our plans were based on the Social Security Act 1973 and gave a large part

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to play to private occupational schemes. Since that Act was passed, a great deal of activity has been going on to stimulate industry and commerce to establish their own schemes specially devised to meet their own particular needs. No one has been more active and more helpful in this campaign than the noble Lord, Lord Byers. He has taken a leading part and has organised meetings all over the country to stimulate interest in occupational schemes, and we are very grateful to him.
But now we face the fact that the present Government are committed, as I understand it, to replacing that Act of 1973, and no one knows where they stand. This is surely to get the worst of all worlds. Progress is impeded in developing the present proposals, yet no new proposals have been announced. The noble Lord said that the Government were going to make an announcement soon as to where they stand and what they propose to do. I can only urge on the noble Lord the need for speed in this matter. The present uncertainty is bad for everybody. If the noble Lord can give any idea of how soon we may expect an announcement of the Government's intentions this would be of enormous help.
Like the noble Lord, I am sure that my noble friend Lord Reigate will be happy to see Clause 4. He has certainly played a very leading part in the move to get rid of, or at least loosen, the earnings rule. There is, as I learned very vividly, deep antipathy on all sides of the House to the earnings rule, and any relaxation is certainly to be welcomed. I do not think anybody likes having an earnings rule at all. But Governments of all sorts, when they are faced with the cost of abolishing the rule altogether, have to ask themselves what are their priorities. It is a tantalising choice, and a difficult decision that no Government have yet seen fit to take.
We have no quarrel with this Bill. Where we are critical of the Government's actions in the social field is in their undiscriminating use of scarce resources. It is all very well being against means testing in principle. Who is not, in fact? But in practice, how else is it possible to help those who most need help without paying out huge sums to those who do not? But subsidies on food, freezing all rents,
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removing prescription charges, making contraceptives free, add up to a large sum of money indeed. If that money is available—and it has been made available only by swingeing tax increases in the Budget—then we say that it could have been put to much more effective use in a more selective way. I only hope that when the time comes there will be something left for the one-parent families, for example, which the Finer Report is considering, and for the disabled when we come to the October review that the Government are committed to making. Those are our general criticisms so far as this Bill is concerned, but we support its Second Reading.
7.1 p.m.
LORD AMULREE: My Lords, I too should like to thank the noble Lord, Lord Wells-Pestell, for the way he made this extremely complicated Bill understandable to people like myself who know very little about figures, and therefore need to be brought along very gently. This is a Bill which nobody would deny is a step in the right direction from the pension point of view. One has to look at the long-term future, and to what was really going back to 1942, the Beveridge principle about pensions: that they should provide a universal coverage for basic requirements without any supplementary grant. I think that that is not a practical policy to-day, because it would be too expensive and too inflationary with the money required from extra contributions, as the noble Lord, Lord Aberdare, said.
This is where the work of my noble friend Lord Byers, to which the noble Lord, Lord Aberdare, referred, will be an enormous help. If we could get more occupational pensions going on a big scale, and if they could be transferable, that would go a long way to provide the pensioners with something that would relieve them of the need to apply for supplementary benefit, for which I believe about a third of our pensioners need to apply now because, even with the present increases the pensions are only about 19 or 20 per cent. of the average earnings in the country. I think I am right in saying that, compared with other countries, the pensions in this country are on the low side. I am not quite sure about this, but I think they are the lowest

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of the countries in the European Economic Community.
When we come to the earnings rule, nobody will be anything but delighted to find that there has been some relaxation of that. Your Lordships were in favour of this when we talked about it some time ago, and I am pleased to see that this has now been brought about. If the earnings rule were to be abolished entirely it would be extremely expensive—something in the neighbourhood of £8 million. Supposing the earnings rule were to be kept to the present figures, or supposing it were to be increased, does the noble Lord know what amount of money would be recovered from it for the Treasury by means of income tax? It has always seemed to me that we have to balance this earnings rule with what may be recovered from it in due course in taxation.
LORD WELLS-PESTELL: My Lords, if the noble Lord will allow me to intervene at this stage, may I say that I think I am right when I say that if we abolished the earnings rule so far as husbands are concerned, it would cost us something like £160 million a year. If I am wrong, I will write to the noble Lord and put it right.
LORD AMULREE: My Lords, I thank the noble Lord for what he has said, If he is going to reply to me, would he give me some idea of what proportion of that total might be recovered from income tax paid by people who are earning more than they are at the present time? In the long run one would like to see pensions linked quite firmly with the average earnings of the country. I know that some people on my side of the House have talked about something like 50 per cent. of the earnings for the married, and 33 per cent. for the single. That is something to which we can look forward one day, but I would not dream of suggesting it at the present time.
One of the things I should like to see one day is an end to the need for concessions to pensioners. I know that it is nice for pensioners to be able to ride free on buses and pay less to go into exhibitions, and that sort of thing, but in my young days that was called "pauperisation" and was not looked upon as being a good thing and I do not
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think it really is very good at the present time. I was pleased to learn from the noble Lord that the increase in pensions, and so on, will not be followed by taking away any of the privileges, such as rent rebates, that the pensioners have now. I am very pleased that there is to be no question of that.
There are two further points that I should like to mention before I sit down. In what I am about to say, I may be wrong, in which case the noble Lord will forgive me. He will remember that some time ago there were a certain number of elderly folk who did not come into the insurance scheme when it was first brought in in 1945: I think that they were too old at the time. About three or four years ago they were given a pension of their own. I wonder whether these people (there cannot be many of them left now) could not come into the full pension scheme at the present time. I am sorry that I did not give the noble Lord notice of this second question, but supposing a girl, say an unmarried daughter, is looking after her parents because they cannot be left alone, could she be regarded as being an employed person from the point of view of the insurance stamp rather than a self-employed person? I think that it would make a certain amount of financial difference to her. Apart from those two points, I am pleased to support this Bill. We shall do the best we can to see that it gets on to the Statute Book.
7.9 p.m.
LORD REIGATE: My Lords, this is certainly an important Bill, and I must apologise to your Lordships if, in speaking on this occasion, I repeat some remarks that I have made on other occasions before. Alas! I can only say that, on the whole, my repetitions are usually vain repetitions. Like other noble Lords, I welcome the contents of the Bill, although when it comes to the question of footing the bill for it I think one can have the beginnings of doubts, particularly as regards the swingeing increase in the employer's contribution. There is something to be said for an employment tax but, as I am going on to say, there are one or two places where the shoe is going to pinch in a very hard way.
Of course, I also realise that this increase in the employer's contribution is going to bring the social security system

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of this country more into line with the other countries in the European Economic Community. I have no doubt that this may indeed have prompted the Government in this particular action. None the less, I think that we have to accept that it is bound to represent a heavy burden on industry. The places where I think the shoe is going to pinch most severely, and to which I think we must give consideration, are first the very small employers, mostly small craft industries, who need every encouragement that this country can give to them. It is going to be a heavy burden for them. Secondly, I would single out charities, who in many cases are already hard hit by V.A.T. The third category is the majority of self-employed, and I will revert to them later. Many self-employed are in the high salary bracket, but the majority of self-employed are still towards the lower end of earnings, and it is going to be very hard on them.
Apart from that I wish, to the surprise of your Lordships, to say a few words about the earnings rule. I am grateful for the generous compliments paid by my noble friend Lord Aberdare and by the noble Lord, Lord Wells-Pestell, to the almost too many speeches I have made on this subject during the last 19 years. Of course I note with pleasure the further relaxation that has been made. Traditionally, the wholly exempted band is fixed at about 30 per cent. of the average male earnings and I believe—my figures are not necessarily accurate—that at the moment it will be at about 32 per cent, of average earnings. I shall be grateful if between now and Committee stage the noble Lord, Lord Wells-Pestell, will confirm or correct my figures. But the fact is that when the earnings limit band is fixed it is not automatically raised whenever benefits are raised. The question which I should like to ask the noble Lord is: Will the exemption band of the earnings rule be automatically reviewed under Clause 5? If he could answer me "Yes", it might save my moving an Amendment when we get to the Committee stage, because it is important that we should not allow the exemption band to fall behind any increases that there may be.
I should like to draw attention to another anomaly in the present earnings rule. The exemption limit fixed on the
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average of men's earnings is a higher proportion than that of women's average earnings because women usually earn less than men, and they get more exemption from the earnings rule. This is a curious case of discrimination in favour of women. I realise the difficulties in dealing with this anomaly, but it is a matter which might be worthwhile referring to the National Insurance Advisory Committee for its consideration and report before the next review, if that review also includes, as I think it should, the question of the earnings rule limit.
On the general subject of the earnings rule, it is quite amusing to read the report of the Committee stage proceedings in another place and see the roles reversed. The Secretary of State and her Ministers are using arguments identical to those of her predecessor in resisting total abolition of the earnings rule. It is, they always say, a question of priorities. I think that they are right and I support the Government in not totally abolishing it to-day, as I supported my own Government when they did the same. I have always seen the difficulty, if not the impossibility, of the total abolition of the earnings rule in one go. It would be to confuse totally one's sense of priorities in these matters. That is as far as the National Insurance scheme goes, but we should take note of the fact that the reserve pension scheme does not include any earnings rule.
The right policy is obviously to continue to relax the earnings rule, but at the same time the Government—this applies equally to both Parties—ought to evolve a policy towards the ultimate elimination of the earnings rule. Therefore, I think that one should continue to relax the earnings rule but, at the same time, make a substantial increase each time there is a review of the exemptions limit. I should like to ask the Government to commit themselves to saying that at the next review they will consider raising the exemption band to whatever is the equivalent of 40 per cent. of average earnings at that time. I have quoted these figures on the presumption that they are correct, but I invite the noble Lord to correct me if I am wrong. I presume that this could be done under the existing legislation.
My last point is linked with the earnings rule. The corollary to the earnings

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rule has always been the increments to the retirement pension which can be earned by those remaining in employment. Why is there no increase in the increments on this occasion to match the progress in pensions? When was the last increase? So far as my memory goes, it was in 1971 and this is the second increase in pensions since then. I think that increments should be doubled at once and it would not be a very expensive step forward. Certainly that should be done for the self-employed who are hard hit. I should like to point out to the noble Lord that a self-employed man who stays on at work from 65 to 70 will now be paying substantially more in contributions during the five years that he remains on at work than he will draw in increments during the five years after he receives his pension as of right at the age of 70. It is fairly obvious that he has a dwindling expectation of life.
I know that the Departmental answer when one raises the question of increments is always the same. Of course, they say that increments are not actuarially calculated. That may be so but, in my view, they ought to be. At least, there ought to be some semblance of equity for a small number of pensioners who need to be treated as justly as any other class in the community. I quote the Secretary of State who said in the Standing Committee on the Social Security Bill in another place on February 27, 1973:
"The increments for the deferment of the time of retirement are a very bad deal for the pensioner, and I rest my case on that,"
We all appreciate the urgency of the Bill and the reasons why it has to proceed through Parliament so quickly. However, I hope that that will not preclude very full and adequate discussion on Committee stage. With those words I wish the Bill well.
7.18 p.m.
LORD WELLS-PESTELL: My Lords, with great sincerity I should like to thank those who have taken part for the value of their contributions. I thought it was particularly generous of the noble Lord, Lord Aberdare, if he does not mind my saying so, for giving such a welcome to the Bill. Perhaps few people in your Lordships' House know more about this
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subject than he, and I am in a position to say how much he is admired in the Department of which he was once Minister of State. I should have thought that this is always a difficult problem because if, from a responsibility point of view, one wants to do what is considered to be reasonably right for people who are elderly, disabled or in some way are in need of financial help, one wants to do it at the highest possible level, and this can only be done if we impose what may well be regarded by some people as a serious burden on those who are able to work. I quite see the noble Lord's point of view and argument and can only repeat what I said the other day, that on this question of means testing, there is a basic difference in the philosophy of his side and the side that I represent. Although I think that perhaps there are occasions when this could be done, at the present moment, with things as they are, the only thing we can do is to impose what are perhaps burdens (burdens which some people may consider to be unreasonable) on those members of the community who, rightly or wrongly, we think can afford to meet those demands and at the same time try to lessen the anxiety for others at the lower end in the community by providing so far as one is able a stabilisation of prices and food subsidies.
The noble Lord raised the question of the 1973 Act which is to be replaced and asked whether I knew when my right honourable friend would be likely to make a statement on this matter. I can say that I expect a statement to be made within the next few days. The difficulties are far greater than many of your Lordships' I think realise. As you know, the Social Security Act comes into operation on April 6 next year and, as the noble Lord rightly said, preparations for its introduction are already far advanced—particularly for the collection of earnings related contributions from employers and employees which is part of the Government's long-term plans.
But the fact remains that the Act has a number of defects. In particular, it leaves millions of pensioners dependent on means-tested supplementary benefits. This is a situation which is likely to continue for a good many years, and in addition I think the noble Lord will agree that there is a certain amount of inferior

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treatment for women. The Act will ultimately be replaced. We are working towards this in our long-term plans for a just and comprehensive system of social security. This will take time and we have run into certain difficulties. I am hoping that by next week a Statement will be made, because I think we are all agreed that it is important, in view of the time, that one should be made without further delay. I will draw the attention of my right honourable friend to what the noble Lord said, because I think it is important that the feeling should be known.
LORD BOYD-CARPENTER: My Lords, will the Statement, when it is made—and I am not asking that the noble Lord should anticipate it—make clear to those responsible for occupational pension schemes whether it would be wise and prudent to go ahead with plans for the expansion of those schemes or whether it would be advisable to freeze all activities until a further statement is made?
LORD WELLS-PESTELL: My Lords, although I am not in any way associated with the discussions going on now, my understanding of the situation is that this will be taken into account and that something may be said on this matter.
My Lords, the noble Lord, Lord Amulree, asked about the amount of taxation to be recouped if the earnings rule were to be abolished. I do not think that he will expect me at this stage to give an accurate answer "off the cuff", but I believe the amount would be in the region of £40 million a year. If I am able to get a little nearer to the actual amount, I shall be only too pleased to let him know. The noble Lord also asked about the classification for National Insurance purposes of an unmarried daughter who looks after her disabled parents. This matter will be one of several which are to be looked at in connection with our review of provisions for the disabled on which, as he knows, a Report is to be made at the end of October this year.
LORD AMULREE: My Lords, I was not so much referring to people who are disabled "within the meaning of the Act", as it were. I merely meant the elderly who could not be left alone and who wanted someone about the place to take care of them.
LORD WELLS-PESTELL: My Lords, I think what the noble Lord is saying is that it is a situation in which there is obviously a need for somebody to look after them. This aspect would probably be covered in any review that will take place on this matter. In reply to what the noble Lord said in relation to the E.E.C., I think that while some of our benefits do not approximate to the level in some E.E.C. countries, we have, perhaps, a much more comprehensive system of pensions, invalidity pensions and disabled pensions, than in many, if any, of the European countries. I agree that the level of payment may not be as great as in some of those countries.
My Lords, the noble Lord, Lord Reigate, raised a number of matters. If he does not mind, I should like to read Hansard tomorrow to note the actual points he has raised. Obviously, in each of our reviews, we shall be looking at the earnings question and the level of the earnings rule will be considered in the context of the annual review although, obviously, movements must be at the discretion of my right honourable friend. I think it is one of the things which will be looked at almost automatically when there is a review. We must face the fact that it is going to be very costly to do away with the earnings rule. Its cost is such that it is bound to have a bearing on the amount of money available for pensions in other directions. It is something we may have to keep—
LORD REIGATE: My Lords, I was trying to be helpful to the Government. I said that I supported them in thinking it could not be abolished straightaway and that there will always be this difficulty of priorities. In the Bill we are now considering, regardless of priorities they have chosen to increase exemption limits at the cost to other things.
LORD WELLS-PESTELL: My Lords, this is perfectly true; but, on the other hand, one must bear in mind that any Government would want to encourage people on reaching retirement age to take advantage of the retirement period as far as possible. If, as some people want, the earnings rule is relaxed very considerably, I think this would be a cost we could not bear at this particular time.

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The noble Lord asked about the relationship between the earnings limit at the present moment—that is, between £9·50 and the proposed £13 a week—and the average earnings. It is true to say the new limit will represent slightly more than 30 per cent. of average earnings. The noble Lord suggested 32 per cent. I think I would accept that. This is a problem as to what is the best thing to do. What we have tried to do in the National Insurance Bill, and we have to a large extent succeeded, is to exercise discretion in spending the available money—if "available" is the right word, for it is a very large sum.
I agree that there are many things that we should like to do, not least among them, perhaps, being improvements in the field of death benefits, and so on. But I think that what we must do is to provide the best possible system for people who are in need at the present moment in the hope that in the future we shall be able to overtake some of the things we are not doing now.
On Question, Bill read 2a, and committed to a Committee of the Whole House.