Lords Sitting of 7 August 1975

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

UNEMPLOYMENT AND RETRAINING
Baroness MACLEOD of BORVE: 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 how many retraining centres there are, where they are, and how many unemployed people can be trained during any given period.
The MINISTER of STATE, SCOTTISH OFFICE (Lord Hughes): My Lords, I am informed by the Manpower Services Commission that there are at present 55 training centres, known as skill centres. In 1974, 17,117 people were trained and this figure will increase as more skill centres come into operation. Training is not limited to unemployed people, but all trainees must be prepared to leave their jobs before commencing training. With permission, I will arrange for the location of the skill centres to be circulated in the Official Report.
Following are the locations referred to:
Scotland:

Bellshill

Dumbarton

Dunfermline

Dundee

Edinburgh

Hillington

Irvine

Port Glasgow

Queenslie

North East:

Billingham

Darlington

Durham

Felling

Hull

Killingworth

Leeds

Middlesbrough

Wakefield

North West

Blackburn

Hindley

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Liverpool

Manchester (Denton)

Manchester (Trafford Park)

Maryport

Runcorn

St. Helens

Midlands:

Birmingham

Coventry

Dudley

Kirkby in Ashfield

Leicester

Long Eaton

Sheffield

Stoke-on-Trent

Wales and West:

Bristol

Cardiff

Gloucester

Llanelli

Plymouth

Port Talbot

West Gwent

Wrexham

South East:

Basildon

Letchworth

Medway

Norwich

Portsmouth

Slough

Southampton

West-Sussex

London:

Enfield

Perivale

Poplar

Twickenham

Waddon

Baroness MACLEOD of BORVE: My Lords, I thank the noble Lord for that Answer. Can he tell me whether there is any age limit for these retraining schemes and in the centres?
Lord HUGHES: Obviously, my Lords, no age limit is laid down, but presumably there could be cases where individual circumstances would have to be taken into account.
Lord POPPLEWELL: My Lords, could my noble friend give the House the assurance that men are being retrained in skills for jobs that will be available to them when seeking further employment?
Lord HUGHES: Yes, my Lords, the courses at skill centres are mainly for craft operations such as the construction trade, engineering production, engineering servicing, electrical and electronic trades and plant and automotive trades. The courses are highly intensive and last for periods varying from six to 12 months, according to the trade. In each case, the syllabus is agreed with both sides of the industry concerned.
Baroness GAITSKELL: My Lords, could the Minister say whether it is true that we are still lagging far behind other countries of the European Community in this respect?
Lord HUGHES: I am sorry, my Lords; I am not aware of how far these other countries may or may not be ahead of us. But, certainly, we are making a very determined effort to get this on to a proper basis.
Lord LEATHERLAND: My Lords, is my noble friend quite sure that it is proper to train men for the construction trades when there are already a number of unemployed in that industry and when, if Government economies are brought into effect, there will be far less money to be spent on roadmaking and similar projects? Further, is my noble friend aware that at the moment there is also unemployment in the motor manufacturing trade, and that if the Ryder Report is carried into effect there will be further attacks made on the so-called over-manning in the motor industry?
Lord HUGHES: My Lords, both those points are very relevant at this time. It is not part of the Government's programme to plan for permanent reductions in these industries. So far as the construction industry is concerned—of which I can claim to have some experience—even in times of high unemployment there are shortages within certain trades, and we have all had the experience of jobs being held up because of the inability to provide tradesmen of a particular kind. It may well be that this sort of scheme could facilitate changing between one trade and another within the construction industry
Lord POPPLEWELL: My Lords, could my noble friend say whether any record is kept of men so trained having obtained jobs after the fulfilment of their qualifying period?
Lord HUGHES: My Lords, one of the disadvantages of being spokesman in this House for a Department of which one is not a Minister, is that if one does not get a brief giving the answer one cannot call on one's own knowledge. This question falls into that category; I have no knowledge. However, I will arrange for my noble friend to receive a written answer on this point.
Baroness MACLEOD of BORVE: My Lords, while I have every sympathy with the noble Lord, especially today, may I ask whether it is the policy of Her Majesty's Government to retrain people who are willing to work elsewhere, or whether they would prefer to see those people receiving social security in their original areas of employment?
Lord HUGHES: My Lords, obviously it is the Government's policy to train people who are willing to work. People go on to these courses entirely voluntarily, so there should be no particular difficulty on that aspect. Incidentally, I do not know why the noble Baroness should feel a need to sympathise with me today. As may be said later, it may be a matter of congratulation.
Lord BRUCE of DONINGTON: My Lords, will my noble friend say whether the Government have any facilities in mind for the retraining of those people whose principal function is to make money, into actually earning it?
Lord HUGHES: My Lords. I wonder whether my noble friend would be kind enough to repeat his supplementary question, so that I may ponder on it a little further?
Lord BRUCE of DONINGTON: My Lords, I asked my noble friend whether Her Majesty's Government are considering any facilities for the retraining of those people whose principal function in life is to make money, in order that they may earn it?
Lord HUGHES: My Lords, I am afraid, having heard the question a second time, that I am not in any better position to answer it.

ANGOLA AND BRITISH CITIZENS
11.11 a.m.
Baroness ELLES: 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 measures they have taken and are taking for the protection of the persons and property of British citizens in Angola.
The PARLIAMENTARY UNDER-SECRETARY OF STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, as my right honourable friend has said in another place, it has been agreed that the United States Government will protect Her Majesty's Government's interests in Angola through their Consul in Luanda. It will remain open to Her Majesty's Government to make direct representations to the Portuguese authorities, through our Ambassador in Lisbon, about the welfare of British citizens and property in Angola.
Baroness ELLES: My Lords, while thanking the noble Lord for giving that information, which is something we have not previously heard about Angola in this House, may I ask the Minister whether he could give any estimate as to how many British subjects are likely, or believed, to be still in Angola, and particularly in Cabinda in view of the new situation which has developed there? May I further ask the noble Lord whether he can tell us if any other citizens from Western Europe were withdrawn at the same time as ours, or are they still there?
Lord GORONWY-ROBERTS: My Lords, the number of Consulates in Luanda was 11 three States, including this country, have temporarily withdrawn theirs. As to the number of British nationals in the country, it is a large country and it is difficult to be precise, but three weeks ago there were about 100 in Luanda. When we offered facilities for evacuation on 27th July there were found to be 38; the rest had made their own arrangements, previous to our offer to leave the country, in their own way. Of that 38, I find that only eight have now remained of their choice in the capital. Thirty have been evacuated. In the rest of the country, about another 100 remained mainly in the South, which is a relatively quiet part of the country. Many have since left, so that that 100 should be reduced to perhaps fewer than half by now. As to the position in Cabinda, there are very few indeed—10, I believe—for whom contingency arrangements for evacuation, if and when they decide they should leave, have been made.
Lord BROCKWAY: My Lords, in view of the delays in the flights of evacuees because of the shortage of fuel,
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can the Minister say whether any steps have been taken to remedy that position?
Lord GORONWY-ROBERTS: My Lords, I am not aware that there have been any serious delays, certainly not disastrous ones, in evacuating those who wished to leave. We are of course continually watching this point. The United States Government and the French have indicated to us that they are ready to assist in every possible way in evacuating any further British nationals who wish to leave that country. I take note once more of my noble friend's point, but I think I can assure the House that any delays that may have occurred are no longer effective.
Baroness ELLES: My Lords, will the noble Lord please confirm that it was on Foreign and Commonwealth Office instructions that our representative left Angola, because there have been conflicting reports on this point which seemed to act unfairly against the individual concerned? Also, can he clarify—I was not sure from his Answer—whether all those who are living outside Luanda were given the opportunity to return at the same time as those living in Luanda?
Lord GORONWY-ROBERTS: My Lords, it was a decision of Her Majesty's Government, of course, that our Consulate should be evacuated, we hope temporarily. As to the offer to British nationals to take advantage of the Royal Air Force uplift, this was most effective in Luanda where there is the greatest concentration of British nationals. The knowledge was imparted as effectively as possible in the Southern part of the country, where already a great many had made their own arrangements. The offer of evacuation was made generally, but naturally it was more effective in the capital. It is a large country and it is difficult to get in touch with everybody, even in a small body which is dispersed over such a large area. I should add that there is a warden system in the hinterland whereby dispersed British nationals are kept in touch with the facts of the situation and with facilities for evacuation, if they so desire.
Baroness ELLES: My Lords, from the Minister's reply it would appear that those who were outside Luanda, first, might not have received any warning message and,

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secondly, almost certainly would not have had time to reach Luanda to take advantage of the evacuation offered to them. Is this the correct interpretation, or am I wrong?
Lord GORONWY-ROBERTS: My Lords, I have no evidence at all that this is so.

MERIDEN CO-OPERATIVE PROTOTYPE: STATEMENT
Lord BRUCE of DONINGTON: 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 their attention has been drawn to a public statement by Mr. Hugh Palin, a Director of Norton Villiers Triumph Limited, concerning alleged prototype defects in the products of the Meriden Co-operative, and whether they will forthwith ensure the termination of the Meriden Co-operative's marketing contract with Norton Villiers Triumph Limited and the institution of fresh marketing arrangements.
Lord WINTERBOTTOM: My Lords, I am aware that a director of Norton Villiers Triumph Limited is reported to have mentioned publicly certain problems in the design of prototype machines produced by the Meriden Motorcycle Cooperative. I understand that representatives of the two firms are holding amicable discussions on this matter, with a view to resolving as soon as possible any such problems as exist. The product sale agreement between the two firms was negotiated by them on a normal commercial basis and remains a matter for them.
Lord BRUCE of DONINGTON: My Lords, while thanking my noble friend for his reply, may I ask whether he is aware that it is quite normal commercial practice and experience for defects to appear in prototypes and for consultations to take place between those who market the product and those who produce it? Is he also aware that what is quite unprecedented is for confidential memoranda having a bearing on these matters to be made public? Is he aware that it is quite clear that the directors of
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Norton Villiers Triumph Limited have used this memorandum for political purposes as part of a carefully orchestrated campaign against the Meriden Co-operative? Moreover, is he aware that there are some people, including responsible newspaper editors, who are prepared to pursue a vendetta against the Meriden Co-operative at the expense of this country's exports?
Lord WINTERBOTTOM: My Lords, I am not aware of any of these facts. What I am aware of is the fact that a meeting took place between the management of NVT and the leaders of the Co-operative yesterday and, as reported in this morning's Guardian, it was said that after yesterday's meeting leaders of the Co-operative said that these reports had been grossly exaggerated.
Lord HARMAR-NICHOLLS: My Lords, does the noble Lord, Lord Winterbottom, deplore, as I do, the use of their Lordships' Order Paper for expressing Party political pique in these terms? if it is that this director has said things he ought not to have done, it ought to be answered in the proper way; but to suggest that an agreement, properly entered into, for marketing an important industry should be dispensed with in this flamboyant way is not in the interests of the industry, and I do not think it is in keeping with the real traditions of this House.
Lord WINTERBOTTOM: My Lords, I do not think that the noble Lord is interpreting their Lordships' practices correctly.
Lord BRUCE of DONINGTON: My Lords, is my noble friend aware that if there has been any flamboyance in this matter it has been in the Press reports which I hold in my hand and which I can produce for the House if necessary, and which are quite monstrous in their effect?
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, is it not the real test that Questions should be used for eliciting from the Government information for which the Government are responsible, and not for any other purpose?
Lord PANNELL: My Lords, is not the reaction from the other side of the House surprising, bearing in mind the

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long time they took yesterday on the Industry Bill discussing the safeguarding of confidential information and how far it should be broadcast? But apparently they are prepared—
Several Noble Lords: Question!
Lord PANNELL: Are they prepared to acquiesce in the general idea that there should be a general dissemination of information for political ends?
Lord HAILSHAM of SAINT MARYLEBONE: Next Question!

DISCLOSURE OF INFORMATION
11.20 a.m.
Lord CAMPBELL of CROY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make arrangements for reimbursing a company for any expense reasonably incurred in compulsorily assembling and furnishing information when that information is not normally so assembled or needed in that form by the company.
Lord MELCHETT: No, my Lords.
Lord CAMPBELL of CROY: My Lords, I am disappointed. Is the noble Lord aware that when I put this point in relation to the disclosure of information provisions in the Industry Bill, the Government's reply was that it should not be considered in isolation from the requirements of other legislation for the compulsory supply of information. Therefore, are not the Government now considering this subject as a whole?
Lord MELCHETT: My Lords, I am not fully aware that that was the reply given to the noble Lord when this matter was discussed in Committee. The Government then said, first, that it would be quite unfair that the companies which failed in their duty to provide information voluntarily, and against whom the compulsory powers had therefore to be used, should be reimbursed for any expense that they incurred, when those companies which fulfilled their social duty voluntarily were not to be reimbursed.
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Secondly, it was said by the Government at Committee stage—and this is still the Government's view—that normally this information would be available to properly run companies. Therefore, very little, if any, expense would be incurred in providing it.
Baroness GAITSKELL: My Lords, is it not reasonable and to the advantage of the community that companies should be expected to furnish free the information which is needed for good industrial relations?
Lord MELCHETT: Yes, my Lords.
Lord WYNNE-JONES: My Lords, would Her Majesty's Government consider reimbursing the ordinary citizen for the trouble taken in filling up an income tax return?
Lord CAMPBELL of CROY: My Lords, are the Government aware that this Question does not relate to the production on a voluntary basis by many companies of information over a very wide range, nor to questions of industrial relations, as the noble Baroness has suggested? When the Government ask companies for information for the purpose of the national economy, wherever possible they will provide it. But there can be occasions during the course of their ordinary operations when companies will never have to assemble such information. It is these cases, which will not be frequent, which are the basis of this Question.
Lord MELCHETT: My Lords, I am aware of that. I am also aware of the numerous precedents created both by this side of the House and by noble Lords opposite, under which companies have to provide information for the Government and no expenses are reimbursed.
Viscount ST. DAVIDS: My Lords, is the noble Lord aware that Front Bench speakers on the Government side frequently answer questions with the reply that a particular answer is not available because it would be far too expensive to collect the details?

ROYAL ASSENT
11.23 a.m.
THE LORD CHANCELLOR (LORD ELWYN-JONES): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Lotteries Act 1975,

Criminal Jurisdiction Act 1975,

Social Security Pensions Act 1975,

Child Benefit Act 1975,

Northern Ireland (Emergency Provisions) (Amendment) Act 1975,

McDermott Scotland Order Confirmation Act 1975,

Lerwick Harbour (Miscellaneous Provisions) Order Confirmation Act 1975,

Greater Glasgow Passenger Transport Order Confirmation Act 1975,

Greater London Council (Money) Act 1975,

Milford Haven Conservancy Act 1975,

British Railways (No. 2) Act 1975,

Greater London Council (General Powers) Act 1975,

London Transport Act 1975.

PALACE OF WESTMINSTER: SECURITY
The CHAIRMAN OF COMMITTEES (The Earl of Listowel): My Lords, with the leave of the House, I should like to make a Statement on security. Mr. Speaker has just made a similar Statement in another place.
On 25th July 1974, the noble Lord the Leader of the House informed the House that, at the request of the Government, and with the agreement of the Lord Chancellor and Mr. Speaker, the Commissioner of Police of the Metropolis had arranged for a security review of the Palace of Westminster to be carried out by the Deputy Commissioner of the Metropolitan Police, now Sir James Starritt. The report is now in my hands, having been passed to me by the Lord Chancellor, and the House will wish me to express its gratitude to Sir James Starritt for his thorough and comprehensive examination.
When announcing the setting up of the review, the Leader of the House said that he hoped decisions on it might be
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taken with the highest degree of coordination between the two Houses. I have been considering, in consultation with the Leader of the House and with the authorities of the House of Commons, how in these circumstances the report might best be considered. Those whom I have consulted are in general agreement, that the most effective way would be to set up a small committee consisting of four Members of each House, those from this House being chosen probably from among the Members of the Administration Sub-Committee. The Committee would be an informal one, similar to the Committee in another place which is studying the Compton Report on Staffing of the House of Commons, and not a Joint Select Committee set up by Resolution of both Houses. It will report jointly to Mr. Speaker and to me. So far as this House is concerned, it will then be for me, in consultation with the Leader of the House, to consider what further action should be taken: in particular, whether the report, which is at present graded Secret, should be laid on the Table of the House.
My Lords, that concludes the Statement.

PEERS' EXPENSES
11.27 a.m.
Baroness LLEWELYN-DAVIES of HASTOE Baroness LLEWELYN-DAVIES of HASTOE rose to move, That this House approves the following proposals—

(1) That, with effect from 13th June 1975, the present arrangements for payments to members of this House in respect of their expenses should not make any exception, as respects entitlements to recover such payments, for the Chairman of Committees or members of this House who are for the time being salaried under the Ministerial and Other Salaries Act 1975 and are not for the time being members of the Cabinet; and

(2) That the entitlement to recover such payments should be limited to £700 per annum in respect of the Chairman of Committees and each such salaried member.

The noble Baroness said: My Lords, on behalf of my noble friend the Leader I of the House, Lord Shepherd, I beg to

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move the Motion standing in his name on the Order Paper.
This Motion results from a Resolution agreed in another place last night which has the effect of freeing Ministers and Office Holders in this House, other than Cabinet Ministers, from the bar on claiming Peers' expenses. When the Peers' expenses allowance was introduced in 1957, on a Resolution of another place, Ministers and Office Holders were excepted and this House agreed with that proposal. Another place has now removed the exception and I ask your Lordships to give your approval likewise.
This proposal is, of course, complementary to those recently approved in respect of the emoluments of Commons Ministers. Lords Ministers have not received any comparable increase, because they are not entitled to subsistence payments on the lines of the additional costs allowance payments to their non-Cabinet colleagues in the Commons, nor have they received any increase in pay to match the £700 pay increase of those Ministers' Parliamentary salary.
The Government have, therefore, proposed that non-Cabinet Ministers and Office holders in the Lords should now be able to draw the Peers' expenses allowance. This payment, which for such Peers' will be generally liable to tax, is restricted to an annual maximum of £700, and will therefore not exceed the increase in Parliamentary salary received by non-Cabinet Ministers in the Commons. The Lord Chancellor and the Lord Privy Seal will not be entitled to draw the allowance, as their Cabinet colleagues have received no increase in Parliamentary remuneration.
As this proposal is part and parcel of the changes now being introduced for Ministers in the Commons with effect from 13th June 1975, the same effective date will apply in this House. Like the recent increase in the Peers' expenses allowance, it is an interim arrangement pending the time when decisions can be taken and implemented on Ministers' salaries on the basis of the Top Salaries Review Body inquiry now under way. My Lords, I beg to move.
Moved, That this House approves the following proposals—

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(1)That, with effect from 13th June 1975, the present arrangements for payments to members of this House in respect of their expenses should not make any exception, as respects entitlement to recover such payments, for the Chairman of Committees or members of this House who are for the time being salaried under the Ministerial and Other Salaries Act 1975 and are not for the time being members of the Cabinet and

(2)That the entitlement to recover such payments should be limited to £700 per annum in respect of the Chairman of Committees and each such salaried member.—(Baroness Davies of Hastoe.)

Earl ST. ALDWYN: My Lords, as one of those who benefit by this measure, I should like to thank the noble Lord the Leader of the House and, in particular, the Government Chief Whip, for all they have done to achieve this result. It has
always seemed to me to be grossly unfair that junior Ministers in this House and Office holders generally should not have any expenses allowance. They have done the House a great service in getting so far as they have. Perhaps one day they may get even further.
On Question, Motion agreed to.

EMPLOYMENT PROTECTION BILL
11.30 a.m.
Lord HUGHES: My Lords, I beg to move that this Bill be now read a second time. The Employment Protection Bill constitutes the second stage of the Government's programme of industrial relations legislation, which we embarked upon when we introduced the Trade Union and Labour Relations legislation in 1974. The two main objectives of the Employment Protection Bill are to strengthen collective bargaining on the one hand, and to give new statutory rights to individual employees, particularly new rights affecting job security, on the other.
The Bill has been criticised in another place and by employers, on the grounds that it will add to industrial costs at a time of economic difficulty. The Government have carefully considered this aspect of the proposals, and we have come to the conclusion that industry is taking an unnecessarily pessimistic view of the extra

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burdens likely to be involved in the new legislation. In fact, it gives statutory backing to the reasonable standards of modern industrial relations practice which many employers are observing already. The Government estimate that, if all the provisions of the Bill had been in force last year, the additional annual cost to employers would have been in the region of £100 million to £120 million, which works out at about 10p a week per employee—a fairly modest sum in relation to the total wage bill of industry.
Having said this, I should like to make it clear that the Government are well aware that the extra costs will not necessarily fall evenly on all employers. The incidence of short-time working and layoffs, for instance, will vary as between industries, and the composition of his workforce will obviously affect an employer's liability under the maternity clauses. We accept that some employers will need time to adjust to the new legislation, and this is one of the reasons why we do not intend to bring all the provisions into force immediately. Your Lordships will doubtless be aware that the Bill enables different items to be brought into effect at different dates. As my Government colleagues have made clear in another place, the timing of the introduction of the measures will be carried out with full regard to the cost implications.
It has also been said that the legislation will bear particularly heavily on small firms and that such businesses should be exempt from all or part of the Bill. While the Government do not in any way underestimate the difficulties of small firms, we do not believe that a small firm's exemption offers an acceptable solution. To adopt such a course would exclude a sifinificant proportion of the employed workforce in the country from the important rights and protections offered by the Bill. Therefore, this course must clearly be rejected on grounds of equity. It also goes against the whole trend of social legislation both here and in other advanced countries. I should now like to comment briefly on the separate Parts of the Bill in turn.
Part I of the Bill deals with machinery for promoting the improvement of industrial relations, the main feature of which is the Advisory, Conciliation and Arbitration
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Service, which was set up last year under the Secretary of State's general powers and which is now to be put on to a statutory basis. The Bill sets out the general duty of the ACAS to promote the improvement of industrial relations (in particular, by encouraging the extension of collective bargaining, and the reform of collective bargaining machinery where necessary) and enables the Service to exercise the functions of conciliation, the provisions of voluntary arbitration, advice, investigation and the issue of Codes of Practice in furtherance of its general duty.
The Bill also provides for the establishment of a new Central Arbitration Committee that will take over the functions of the Industrial Arbitration Board and will have important new functions under the Bill. The Committee will be quite independent of Government (as was its predecessors) and also of the Service. I should like to take this opportunity to pay tribute to the very valuable work done by the Industrial Court and the Industrial Arbitration Board over the year since it was established under the Industrial Courts Act 1919. Finally, there is to be a Certification Officer appointed by the Secretary of State as an independent statutory officer with important duties regarding the listing of trade unions and employers' associations and the certification, where appropriate, of the independence of trade unions.
The Bill provides for questions of trade union recognition to be referred by independent trade unions to the Service for examination and report after due inquiry. The Service is required to do all it can to secure settlement of such an issue by agreement and to ascertain the opinions of the workers concerned. In most cases these provisions for impartial third party intervention will provide the information and assistance necessary to resolve these often difficult issues; but if necessary there are further provisions that can be used where an employer fails to comply with a recommendation that he should recognise a trade union, whereby the terms and conditions of employment of the employees concerned at least are safeguarded, by the making of an enforceable award by the Central Arbitration Committee.
Part I of the Bill also requires employers to disclose to representatives of recognised independent trade unions

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information needed for collective bargaining purposes. These provisions complement those in the Industry Bill, and will help to pave the way for the extension of industrial democracy to which this Government are committed.
Part II of the Bill deals with the rights of individual workers. Clauses 22 to 28 extend to all employees a measure of protection against fluctuations in earnings during periods of lay-off or short time by laying down statutory minimum standards for guarantee payments. An employee would be entitled to a guarantee payment based on his normal daily earnings, subject to a maximum of £6 a day, for up to five days in each relevant, calendar quarter. There is provision for all or any of these limits to be altered by order. Clause 29 to 33 of the Bill provide that if a worker is suspended on medical grounds under the provisions listed in Schedule 2, and his employer does not provide him with suitable alternative work, he is to get guaranteed pay for up to six months while he is suspended.
The maternity provisions in Clauses 35 to 44 provide for the maintenance of an employee's earnings when she is first absent from work to have a baby: they also make it easier for an employee who has been absent to return to work. Employees will be entitled to six weeks' paid maternity leave if they have worked continuously for two years for the employer. The employer will not be required to pay full pay during that period: he will pay what amounts, in effect, to the difference between State maternity allowance and full pay. A woman will also have the right to return to work in the job in which she was previously employed, for up to six months after confinement.
The employee, when she starts her maternity leave, will have to notify her employer that she intends to return to work, in order to establish her reinstatement right. This is designed to make it easier for the employer to make arrangements for reinstatement. The employer will also be protected against a complaint of unfair dismissal if he dismisses a temporary replacement, when the employee returns.
Clauses 45 to 48 re-enact in substance the basic rights to belong to an independent
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union and to take part in its activities, without risk of reprisals by an employer, which were contained in the Industrial Relations Act. It was not possible to enact revised provisions in the Trade Union and Labour Relations Act last year, but we promised to do so in this second stage of our industrial relations legislation. Clauses 49 and 50 require an employer not only to tolerate participation in union affairs, but also to allow reasonable time off work for the performance of trade union officials' duties and for participation in the activities of recognised unions. Clause 51, which provides for employees who are magistrates or members of certain public bodies to be allowed reasonable time off to perform their public duties, is also new and should facilitate greater participation in local community affairs by work people. The clauses dealing with insolvency give the great majority of employees whose employers become insolvent the right to be paid arrears of pay and similar debts from the Redundancy Fund.
My Lords, this Bill substantially improves the remedies available to the individual employee for unfair dismissal. As present industrial tribunals very rarely recommend reinstatement or re-engagement. The Bill increases the obligation on a tribunal to consider making an order for reinstatement or re-engagement and details the main factors which the tribunal must take into account in deciding whether to make such an order. It also provides for an award of substantial additional compensation if an employer fails to comply with a tribunal order where it was practicable for him to do so.
Besides these general improvements, the Bill introduces a special procedure for complaints of unfair dismissal where the employee alleges that his dismissal was due to membership of, or activities in, an independent trade union. The Department's strike statistics suggest that this kind of dismissal can give rise to protracted industrial disputes with consequent loss of production. If the statutory unfair dismissal provisions are to offer a real alternative to industrial action in this type of case, there must be provision for the employee to apply quickly to the tribunal for temporary reinstatement or re-engagement in another job, or for his contract of employment to

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be kept in being until his complaint of unfair dismissal has been settled, or determined by the tribunal. Clauses 69 to 71 of the Bill therefore set out the procedure for employees who wish to apply for any of these kinds of interim relief.
My Lords, the Employment Appeal Tribunal is to be a new specialist body with High Court status to hear appeals from industrial tribunals on questions of law, and appeals from the decisions of the Certification Officer on questions of fact or law. Its constitution is to mirror that of industrial tribunals, but with a judge as legally qualified chairman, and side members drawn equally from employers' and workers' representatives. Decisions of the new Tribunal will be subject to further appeal on points of law to the Court of Appeal, in Scotland to the Court of Session, and to your Lordships' House. Part III includes provisions for the reform of the wages council system, the extension of the powers of agricultural wages boards and the extension of the present arrangements for settling claims about terms and conditions of employment.
These clauses aim at widening the powers of wages councils and stimulating progress towards voluntary collective bargaining in those industries, covering nearly 31 million workers, where statutory controls of wages and conditions of employment are still necessary. Wages councils will be able to regulate terms and conditions—for example, pensions—as well as remuneration and holidays. They will have powers to make their own orders regulating the remuneration, holidays, and any other terms and conditions of employment in the industries which they represent, and nominated trade unions and employers' associations will be free to appoint their own members, although the Secretary of State will continue to specify the number of such members. The Bill also empowers the Secretary of State to convert a wages council to a statutory joint industrial council where there has been some advance towards collective bargaining.
My Lords, Clause 89 and Schedule 11 include provisions dealing with the extension of terms and conditions of employment. These provisions constitute an important element in the Government's measures to help the low paid and extend collective bargaining. They include provision
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for claims to be made to the ACAS where an employer has workers employed on terms and conditions less favourable than the general level observed for comparable workers by other employers in the same industry, in the same district, and whose circumstances are similar. This provision, which applies in the absence of a relevant collective agreement, is essentially a generalisation of existing rights conferred under the Fair Wages Resolution, which already covers the large number of workers whose employers take on Government contracts. Claims which are otherwise unresolved will be referred to the Central Arbitration Committee for adjudication.
My Lords, Part IV of the Bill deals with the question of the handling of redundancies. These clauses will require employers generally to do what good employers do already—consult with unions about proposed redundancies. The clauses provide that employers must consult representatives of recognised independent trade unions about all proposed redundancies and provide them with all relevant information. Consultations must begin at least three months in advance of redundancies which involve 100 or more employees in the same establishment over a period of three months, and at least two months in advance of redundancies which involve 10 or more workers
in the same establishment over a period of one month.
Employers must also give similar periods of notice to the Secretary of State for Employment. This advance notification will give the manpower services time to organise redeployment or retraining while enabling the Government to take further steps for avoiding or minimising the effects of the redundancy. I would add that, if there are special circumstances which make it impracticable for an employer to comply with these requirements, his duty is limited to taking whatever steps are "reasonably practicable" in those circumstances.
Part V contains a number of miscellaneous and supplementary provisions. In particular, the Bill amends Section 5 of the Employment and Training Act 1973 to enlarge the powers of the Secretary of State to secure a temporary continuation of employment for workpeople who might otherwise be dismissed through redundancy. The powers are provided

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for an initial period of 18 months, subject to renewal thereafter for 12-month periods by Affirmative Resolution of both Houses. We attach great importance to this amendment, for it is the means whereby the temporary employment subsidy can be provided. As the Secretary of State for Employment announced during the Report stage of this Bill, the subsidy will be available to all firms in the private sector of industry and commerce in the assisted areas planning a redundancy of 50 or more workers. The subsidy of £10 per week for each redundancy deferred will be paid for a period of three months, extendable by one further period of 3 months. This scheme is one of the measures being introduced to help alleviate the unhappy effects of high unemployment in the worst-hit areas.
Perhaps I might conclude my remarks by referring once again to the broad themes and implications of the Bill as a whole. As I suggested at the beginning of my speech, much of the new legislation would do little more than bring labour relations law into line with good employer practice already being followed both in this country and in many other parts of the developed world. I think also we should beware of assuming that employers will be forced into an impossible situation by a mass of onerous legislation on matters best left to the processes of collective bargaining. On a number of aspects, for instance the maternity provisions, we are legislating for the first time about matters which have for some time been the subject of legislation elsewhere. In this respect as in others, the Bill represents a belated catching-up operation on the standards already prevailing in most of the EEC.
My Lords, the Bill will help to narrow some of the traditional disparities in basic rights and conditions of employment that have persisted between manual and non-manual employees. On guarantee payments, for instance, we are merely proposing to extend to employees in general a modest provision which most white-collar employees have for long been able to take for granted. It is time that we addressed ourselves to the inequity implied by distinctions of this sort. By tackling this type of problem, the Government believe that they can help to remove some of the underlying causes
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of resentment and unrest within industry, which take their toll in strikes and lost production. Therefore, we think that the Bill can make a positive contribution towards an improvement in industrial relations, from which both industry and the community at large should benefit.
My Lords, I said that I might include in my remarks on the Bill, because I think now, would be appropriate, something of a purely personal nature. This, because of steps which I have taken, will be the last occasion on which I will be speaking from this Bench. Yesterday the Prime Minister agreed to my request that I should be allowed to demit Office as Minster of State at the Scottish Office. I am now in my 15th year as a spokesman on Scottish affairs and in my eighth year as Minister at the Scottish Office. I cannot say that I want to leave because I have disliked the work, because I have enjoyed it enormously, particularly for the friendship between my colleagues on this side of the House and the enormous degree of friendship which I have received from other sides of the House, particularly from my Scottish colleagues; there have been times when as a Minister I have been accused—or congratulated, depending on the point of view—of having a very worth while working Scottish coalition in this House. But when I came back into Office at the beginning of March last year I indicated to the Secretary of State and to the Prime Minister that for personal reasons I would wish to return to business after a reasonably short period. I had in mind that that might be a year. In fact it has now gone to a year and a half.
I am fortunate that the Prime Minister has been able to find a very suitable successor, and as from tomorrow the Minister of State at the Scottish Office in the Lords will be my noble friend Lord Kirk-hill, who will be making his maiden speech on a Bill this afternoon; he will be making his maiden speech as a Back-Bencher and the following day he will be a Minister. I should like to thank all in this House who have been so kind to me. I am not, of course, leaving the House. I hope to be of help to my friends and a nuisance to noble Lords on the other side of the House. But I look forward to going back to other things while I am not too old to be of use. My Lords, it is pleasing that the last occasion on which I move a Motion is one where, irrespective of the

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views which noble Lords may have on the contents of the Bill, the traditions of the House make it certain that I am moving a successful Motion. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Hughes).
11.53 a.m.
The Earl of GOWRIE: My Lords, the noble Lord, Lord Hughes, and I have quite often faced each other over the Dispatch Box, whether from one side of the House or the other, and I must say I am extremely sorry that this is to be no longer the case. I understand that we are in something of the nature of a reshuffle of Lord Provosts, a mysterious and august body of men, which I cannot pretend to know much about, even though I am an exiled Scot. But on employment affairs, while I certainly wish that the noble Lord's swansong had not been directed to an ugly duckling of a Bill, I shall miss doing battle with the noble Lord. He said that he looked forward to continuing to make contributions in your Lordships' House, and I am sure we would all assent to that. He said that he would from the Back-Benches be something of a nuisance to those of us on this side of the House. May I say to the noble Lord, in wishing him well, that I hope that he will be a nuisance to his own Front Bench as well. It is certainly something that I have occasionally wished to be, and sometimes one envies people who go back to the relative freedom of the Back-Benches. We do all wish him very well and regret his going while we quite understand it
Noble Lords: Hear, hear!
The Earl of GOWRIE: My Lords, one likes to think of the last day of term as a rather jolly occasion with not much in the way of work, and if we draw the line at paper darts and ink bombs and so on, at least we may have a little licensed revelling. But as things turn out we have to consider giving a Second Reading to a Bill of 185 pages and 116 clauses. We have not had a very great deal of time to consider it; it arrived from another place only yesterday morning. That we have it at all is only due, in my view, to the really heroic dedication and hard work of the Stationery Office in printing it. I would like to pay tribute
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to them for a job which, if the same care and speed could be carried out with more pleasant material, would make as a great printing and publishing nation. But I cannot say to the Government that I believe that this is very satisfactory way of doing things. As a spokesman I acknowledge that it is my job to keep pace with the progress of such a Bill through another place, but as a Member of your Lordships' House I feel that we all need a lot more time to consider the principles involved in the Bill. It is very weighty stuff. It is a great carthorse of a Bill. In racing terms—and I see the noble Lord, Lord Wigg, has scratched today—it could be described as being by Jack Jones out of Robert Carr.
Those of us on this side of the House who learned the hard way, or thought we had learned, that free collective bargaining was the Ark of the Covenant of British trade unionism, or that the most profound and constant act of faith of our trade unions was that the law should be kept out of industrial relations, will have listened with some amazement to the speech of the noble Lord, Lord Hughes. Clause after clause, provision after provision, a gigantic legislative salad with 57, or rather 115, varieties, of employees' rights, protections, redresses, compensations, benefits and subsidies. Not much meat in the salad, not much about obligations or responsibilities or contracts or production, not much indeed about work. Time off is mentioned but not time on. Very little about the risks or the difficulties or the cash starvation of employers. Indeed employers appear in this Bill in an incredibly old-fashioned sort of Victorian pantomime role, moustached oppressors of the masses, and yet so solidly rich that they can easily, if not cheerfully, bear the great weight of sanctions which the Bill heaps on them.
Four years ago we had a long, hard, though I must say not quite such a hot, summer on the Industrial Relations Bill. My favourite member of Parliament, Mr. Brian Walden, has called that Bill a fatal blunder, the worst mistake by the Conservative Party since the war. Well, perhaps so, but at least it was not one-sided. It cannot have been one-sided because so many of its provisions, so much of its thinking, have turned up in this Bill. Even the dear old NIRC has popped up, in drag, so to speak, as the Employment

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Appeal Tribunal. Perhaps its first show will be called The Official Solicitor Rides Again. Having High Court status, it can presumably require witnesses to attend, and can therefore presumably gaol them for contempt, if they do not. Of course, I do not think that this will happen. Of course, I do not object to defining the framework of law for industrial relations. I welcome it, even as I recall with a little puzzlement the ringing denunciations of framing laws in this context which we heard from the other side of the House only four years ago.
There is indeed real fascination in the amount of "double-think" about free collective bargaining in this Bill. We feel that the extension of statutory regulations into areas which have in practice been reserved for free collective bargaining—guaranteed payments, the maternity arrangements which the noble Lord, Lord Hughes, mentioned, time off for trade union activity and the like—would all be better in Codes of Practice rather than framed in Statutes. They are traditionally matters for agreement, as the noble Lord acknowledged, and agreement is what we are seeking. But my real objection, our real objection on this side of the House, is that it is in theory and in practice wrong for any framework of law to be carved out with one sector of the community only in mind. One may legitimately, it seems to me, direct policy towards a particular sector of society to even out previous discrimination or unfairness, for example, but not, surely, a broad framework, indeed a comprehensive system of general law. To do so is quite partial and quite wrong.
Let us take the small businessman first. He provides one-third of all employment outside the public sector. Since VAT and the Conservative Government's pay freeze—I am falling over myself to be non-partisan here—he has been thrashing about in a jungle of controls all of which require paper work, time, extra staff, extra training—unaffordable, unoptional extras. There are HP controls, profit regulations, census returns, consumer protection legislation, labelling regulation changes, trades descriptions, VAT, training boards, remuneration Grants and Charges and now this Employment Protection Bill. My noble friends Lady Vickers and Lady Elles will, I think, be
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addressing themselves to the maternity provisions. Perhaps I am too modest to be able to mention them, but how on earth will the small employer cope? Surely we must throw this burden of maternity leave cost over the whole employing community or put it squarely—perhaps I should say roundly—where it belongs, on the
My Lords, where the medium sector is concerned, I believe that my earlier remarks will suffice. Management morale is lowered further by adding the insult of this Bill to the injury of inflation. By insult I mean the consistent way in which employers are treated as second-class citizens in the tone and language of the Bill. Directly inflationary is the extension of the terms and conditions of employment implicit in Clause 89 and Schedule 11. In this context employees can seek comparable wages and conditions with those employed in similar situations in their district. We believe that this provision, which started life to deal with small regional pockets of low pay, might, as it is at present drafted, find itself extensively used throughout industry by anyone paid less than average wages and lead to leapfrogging of wages and further inflation.
Finally, where the public and large firm sector is concerned, we are very worried that employers of all sizes may be penalised under this Bill by having, in effect, to compensate or reinstate workers who are laid off through public sector disputes which are nothing to do with the firms of the employees in question, but which may vitally affect its transportation or energy supply. These are among the provisions which we shall seek to amend and my noble friend Lady Elles will draw your Lordships' attention to others.
Three independent members and an independent chairman have been nominated by the Secretary of State: three members have been nominated by the TUC, and three by the CBI. Leaving aside the degree of independence possible to those affiliated to the TUC as well as nominated by it, where are the representatives of these working people and their families? The Council, in our view, is far too exclusive. There are no women on it. It has no representatives of working people who belong to unions not affiliated to the TUC. There are 1 million working people in unions

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not affiliated to the TUC. Nor does the Council have representatives of work people who do belong to unions. There are 12 million of these; more than half of our national workforce. These are the lesser breeds without Mr. Jack Jones' law.
We hear so much, and we heard so much during the Industrial Relations Bill, about the freedom of association; yet some freedoms of association are obviously considered by this Bill to be more free than others. We are perilously near the year 1984, and the noble Lord, Lord George-Brown, reminded us of this last week. It seems to me interesting to notice that as time races by towards that numinous date the great radical writer George Orwell increasingly provides food for Conservative thought nowadays: not a touch of his vanished hand in Stuart Holland's The Socialist Challenge, for instance. But surely the Council should be enlarged to include nominees from unions, staff and professional associations, which are politically independent and not affiliated to the TUC. I have nothing against the TUC, but it is not politically independent. It is not supposed to be politically independent. Yet millions of working people in this country do not vote Labour at General Elections. Should an openly and declaredly and legitimately political body thus "independently" represent them? I believe that their proper representatives sit in Parliament. No Code of Industrial Relations Practice, nor criteria of independence of trade unions, should be taken into account by the tribunals or the Central Arbitration Committee, nor the official concerned with registration until they have been approved by Parliament.
My Lords, I have tried to show that we have no philosophical objection to a framework of industrial relations law, particularly to one which builds so extensively on our own work in this field. Our objection is that the present framework is lopsided; that it was drawn up with the scantiest attention to the views of the CBI, for instance; that as well as tipping the scales of justice away from the unaffiliated worker and the underrepresented employer, it will positively provoke inequities and crises of the kind
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that can only pollute rather than reclaim our troubled industrial relations landscape.
Let me give two quick examples of this last danger. No one with the slightest knowledge of industrial relations disputes in Britain, or the permanent backdrop of economic crisis which they erect and against which they take place, will be in the least surprised to learn that the majority of disputes are less between employer and employee as between one work organisation and another as these organisations act out the battle for differentials. One of the dearest myths of the Parry opposite is that the labour movement is fundamentally egalitarian: it is nothing of the kind, as Tory Administrations who pursue fundamentally egalitarian policies learned to their cost at General Elections. Whether or not we like it, the disciplines of the work place are still fiercely competitive as between one sector and another. Much of the mine workers' militancy in 1973–74 grew up not because Mr. Heath was at No. 10 Downing Street and not Mr. Wilson, not because the Industrial Relations Act was on the books, but because in 1972 young miners who left the mines to work on the building "lump" were earning more than the most seasoned face workers. That was something that we on this side forgot to think about.
In Clauses 11 to 16 of this Bill it is proposed that independent trade unions should be able to refer a recognition dispute to ACAS. If the ACAS recommends recognition and the employer does not comply with the recommendation, the union may seek unilateral arbitration by the Central Arbitration Committee. So far so reasonable-sounding, perhaps. But as we know, recognition disputes frequently involve more than one union. In such cases the employer may be powerless to resolve the dispute, yet he is equally powerless to refer the dispute to the ACAS. There have been many instances where the warring unions have not invoked the Bridlington procedures and the TUC have not accepted a notification from the employer. So the wretched employer becomes a pig in the middle, clobbered from both sides. It is just one instance—noble Lords speaking later in the debate will no doubt

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think of others—of how in this Bill the sweeties are all reserved for the recognised unions, and the smacks all for the employers. If we really want industrial peace and equity we must redress the balance a little.
My Lords, while I hope to have carried the House with me so far, I am certain that your Lordships will follow me on my second example of a blatant passing by of workpeople as a whole, especially since the Bill somewhat sneakily amends a provision passed in thin House before being passed again in another place last year. Your Lordships will remember that last year we approved an Amendment to the Safety and Health at Work Bill moved in the name of the noble Baroness, Lady Sccar. This, in effect, restored a proviso in the Conservative 1973 Act allowing safety representatives either to be appointed by trade unions or to be appointed by workpeople generally. Under cover of this Bill, the Government have removed the second possibility which passed last year in both Houses. We believe that it is really outrageous to violate the spirit of Robens in this way and by these means. While accepting a vital role for the unions in an area in which I acknowledge they are most sincerely concerned, we really must consider the 50 per cent. non-unionised workforce. Few things are shabbier in this Bill than the forced re-entry of safety and health into an arena of political dispute. My noble friend Lord Ferrers will, I understand, be dealing with other problems implicit in this section later in the debate.
In the meantime, and for my closing remarks, I want to try to look at this Bill within our present economic context. We all want the Government to succeed in the battle against inflation, even if they are in the main doing battle against their own political cowardice in delaying the fight for so long. Does this Bill help? My Lords, it does not; it hinders. Take the temporary employment subsidy for which we have enabling legislation in this Bill and which the noble Lord, Lord Hughes, outlined for us. I acknowledge that there may indeed be merits in the subsidy, although like so much else in the Bill it looks uneconomic in the literal sense. Skilled labour may be hoarded
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rather than made productive; unskilled labour may be unmobile and lacking incentives to retrain. But while we have enabling legislation we have no idea as to what criteria are to be applied in producing the subsidy. Who is to determine whether a firm applying for a subsidy is simply waiting for business to pick up, or postponing real economic decisions just a little while longer? What investigations of a commercial nature are to be made before a subsidy is granted, and who will make them? I hope the noble Lord, Lord Jacques, will have something to say on this when he comes to wind up.
I acknowledge that the Government do not expect to have all provisions fully operational until the end of next year when the relative slackening of economic activity over the last two years, plus, we all hope, accord to the £6 wage limit, will have somewhat reduced the rates of inflation. But my fear, even so, is that the expectations which people will have of this Bill, especially at a time of still increasing unemployment, will then stoke the inflation up again.
My Lords, this is called the Employment Protection Bill. It will start being enacted—votes in Parliament and your Lordships' House permitting—against the grim background of more men out of work than at any time since the 'thirties. Employment in Britain revolves around three mighty sectors. There is the public sector and the large firm sector (some of these multinationals) which sets the pace; the medium-sized or local sector, firms engaged in manufacturing particularly associated with the regions, such as cutlery, clothes, brickmaking or whatever; and then there is the small business and the service sector in which I include agriculture. All three of these sectors are in dire trouble. All three suffer very greatly under this Bill, not so much from its intentions but from the practical difficulties of adapting to a shift in emphasis towards the employees' rights at a time when employers are desperately trying to keep themselves in business and the employee at work—protecting his employment, if you like.
It is the declared, and honestly declared, policy of the governing Party

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opposite, to bring about, and I quote their Manifesto:
"A fundamental and irreversible shift in the balance of wealth and power in favour of working people and their families."
Very well, that is a matter of policy. One may find the thinking behind it shoddy and the implications confused and dangerous. Who among us, for example, may not be called working people. But it is political policy of a kind. Yet when we come to the Bill, supposedly an instrument of this "fundamental and irreversible shift" we do not find working people at the heart of the provisions at all, but large and powerful and indeed competing organisations.
Consider the Advisory, Conciliation and Arbitration Service, ACAS. I wonder whether any of your Lordships share with me the detestation of the way that our civilisation is beginning to run on acronyms. Why do we not rechristen it the Admonitory and Reminder Service for Employers, for example. ACAS is the subject of Part I of this Bill. As the noble Lord, Lord Hughes, has told us, the service, which has a valuable role, and in general we welcome it, will be controlled by a council, and is empowered in certain circumstances to offer conciliation or mediation if a trade dispute exists or is likely to arise.
May I close by stressing that word "amend". I do not ask the Government to drop this legislation or abandon the frame work of industrial relations law. I do ask them to help us to help them to help us all to provide the legal atmosphere in which we can all breathe more freely. We need peace and equity on the industry relations front more than in any other single area of our national life. We have done worse in this arena than any of our competitors. Our industrial relations are the laughing stock of our enemies and the pity of our friends. No one in this country or outside it seriously believes that our major trade unions are quivering vulnerable bodies in need of the expensive protection this Bill heaps upon them. I do not think that they believe it themselves—but why do they abandon to Statute, in provision after provision of this Bill, areas which have long been well served by free collective bargaining? We need to protect employment in the short as well as in the long term. This can be done not by
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the inflexibility of Statute but only by the shared creativity of work.
12.16 p.m.
Lord ROCHESTER: My Lords, I should like to begin by joining with the noble Earl, Lord Gowrie, in offering to the noble Lord, Lord Hughes, the very best wishes of my noble friends and myself on his retirement from the Front Bench. We shall miss—if I may put it in this way—his warm answers and human approach to our deliberations, and we are glad to know that we shall still be able to hear him occasionally from the Back Benches.
In commenting on the Bill in general terms, I should like to strike as fair a balance as I can. Therefore, let me begin by acknowledging that in the view of my colleagues and myself on these Benches many of the measures proposed in the Bill represent a substantial general improvement in conditions of employment which conform, as the noble Lord, Lord Hughes, said, to the best practice in those companies which are generally recognised as leaders in the field of employee relationships. I am sure that the Government are right to aim in this general direction, not least because in so doing they give evidence of their desire, which we certainly share, that the employment conditions of manual workers should be brought more closely into line with those of more privileged employees. We have a practical reservation on this point, which is that since the Bill was first introduced in another place our national economic situation has so greatly deteriorated.
As the noble Lord, Lord Hughes, acknowledged, this Bill will have the effect of somewhat increasing employers' costs—for the moment we need not argue as to the precise amount. However, as the noble Lord, Lord Hughes, also said, the last clause of the Bill stipulates that its provisions will come into effect at such time as the Secretary of State may by order appoint, and different times may be so appointed. I was glad to hear that the Government appear to have in mind introducing the Bill by stages, so that employers can more easily afford the additional costs which they will have to meet.
There is the further question of how far it is reasonable to place so much of the financial burden on employers, rather

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than on the State. An example is the maternity pay—and I do not seem to be quite so modest as the noble Earl, Lord Gowrie, since I am able to refer to it—under Clause 37, where the responsibility is placed on the employer to make this payment, but we feel it should be on the State. The next point I must reluctantly make concerns the one-sided nature, as we see it, of this Bill. At the Second Reading of the Industry Bill in your Lordships' House, I said that, in my view, a sense, of true partnership in industry was unlikely to develop from an Act of Parliament which imposed compulsion on one party and on the other no obligation at all. This Bill, too, imposes quite heavy burdens on management, but no corresponding obligation on trade unions. For example, arising out of an application to the Central Arbitration Committee following a failure to comply with the recommendation of the Advisory, Conciliation and Arbitration Service, sanctions may be applied against an employer, whereas there is no provision for any enforcement action against a trade union.
All the rights under the Bill appear to be given to trade unions, and there are no corresponding ones for employers. Why should not employers have equal access with trade unions to the Service, in union recognition cases and the inquiries to which they give rise? Employers sometimes have problems in this area and they, too, are in need of assistance when unions are competing for recognition. We on these Benches very much dislike being placed in the position of appearing constantly to be taking the employers' side in opposition to that of trade unions. That is not a position in which I personally like to be, as must be evident from the fact that only yesterday I was sayng that I should like to see a state of 100 per cent. union membership throughout British industry. But it is because so much of the Government's current legislation in the industrial sphere has, in our view, a bias in favour of trade unions—and when elements, at least, of the trade union movement have recently not hesitated to make use of their monopolistic power against the interests of the community in general—that we have been forced into this position.
With the noble Earl, Lord Gowrie, we have considerable doubts as to the effectiveness
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of legislation in the sphere of industrial relations, doubts which in the aftermath of the failure of the Industrial Relations Act the Government seem to share. Of course we wish the Advisory Conciliation and Arbitration Service well, particularly as regards the general duty with which it is charged in the first clause of the Bill, that of promoting the improvement of industrial relations. But do not let it be supposed for a moment that good industrial relations will therefore result, particularly when there appears to be no inducement in the Bill for trade unions to play their part in this laborious task.
I come to the Title of the Bill and its main objective. A basic purpose of the Bill is clearly to increase job security by establishing new rights for employees, and that is fine so far as it goes. But all the rights appear to apply to existing jobs; I can see precious little reference in the Bill to the need to create new jobs and to train people for them. Yet, in the long run, employment will be much more surely protected if we try to think and act in terms of job mobility, rather than legislate on the basis of the preservation of existing jobs; and if any of your Lordships ever had any doubt on that score, I think it will have been dispelled by the grim Statement we received last week in this House on the position of Norton Villiers Triumph.
I should like to make a brief comment on various matters of a miscellaneous kind in the order in which they appear in the Bill; first, in regard to the arbitration function of the Service. It appears to be only in the case of disputes between employers' and workers' representatives on the statutory joint industrial councils, which are to replace wages councils, that arbitration decisions are to be final and binding, but should people go to arbitration if they are not prepared to accept the outcome? And if it is thought to be of value that an arbitration decision should be binding in the area of joint industrial councils, should not that principle have universal application? I know it may be claimed that such a condition might discourage people from going to arbitration, but what of the alternative possibility; namely, that without such a condition arbitration may be brought into disrepute? In this connection, I should he grateful if, when the noble Lord, Lord Jacques, replies, he would tell us in how

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many of the arbitration cases heard by the Service since its establishment its findings have been rejected, and what proportion that number bears to the total number of cases that have been heard.
We welcome Clause 6 which states that the Service may issue Codes of Practice containing practical guidance aimed at improving industrial relations. On two matters—the disclosure of information for purposes of collective bargaining and members of trade unions having time off to take part in trade union activities—specific Codes of Practice are envisaged in the Bill. First, would the Government please tell us whether these particular Codes will become effective before the relevant provisions of the Bill come into force? Clause 14 states that in the course of its inquiries into a recognition issue the Service may ascertain the opinions of employees by any means it thinks fit. In undertaking these inquiries, will the Service look for a standard percentage of union membership before making a recommendation that a particular union should be recognised? If not, what criteria will be applied, or is this to be left entirely to the Service to determine? Secondly, should not employers have the right not only, as now envisaged in the Bill, to make representations to the Service in regard to the arrangements for any proposed ballot of employees in recognition disputes, but also to give evidence in any inquiry?
We welcome the provision in Clause 53 by which an employee under notice of dismissal as a result of redundancy is to be given time off to look for new employment or to make arrangements to be trained for that employment. We also support the requirement in Clause 77 that the Secretary of State should have regard to the national economic situation in reviewing annually an employee's normal working hours and weekly pay for various purposes. But should not this requirement apply to all the Bill's provisions? Under Clause 45, consistently with the line we took in debating the Trade Union and Labour Relations (Amendment) Bill, we feel that an employee who genuinely objects on the ground of conscience rather than only on the ground of religious belief to being a member of any trade union should not have, action short of dismissal taken against him by his employer. And we dislike
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how, under Clauses 46 and 47, when an employee presents a complaint to an industrial tribunal concerning his employer's action against him, pressure that may have been brought to bear on the employer to take that action has to be disregarded.
Like the noble Earl, Lord Gowrie, we have reservations concerning the inflationary effect of Clause 89 and Schedule 11 under which, as the noble Earl was saying, claims may be made that an employer is applying terms and conditions of employment less favourable than those recognised or in some cases lower than the general level of terms and conditions for comparable workers in a particular trade or industry. In this connection, I should like to know from the noble Lord, Lord Jacques, how precisely these parts of the Bill may be affected by the Government's recently announced counter-inflationary measures. I am not clear on this point.
We are also somewhat concerned about Clause 101, dealing with unemployment and supplementary benefits. The question here is simple: are the Government satisfied that in the current climate of industrial relations, the Amendments proposed in this clause to recent social security and supplementary benefits Acts will have the effect of improving industrial relations? I suggest that that is the test by which that particular point should he judged. We are opposed—and the noble Earl, Lord Gowrie, has already made some reference to this—to Clause 104 of the Bill, restricting safety representatives to those appointed by recognised trade unions, and we shall seek to restore the provisions of the Health and Safety at Work etc. Act in this regard.
Finally, perhaps your Lordships will spare a thought for the poor fellow who, already almost overwhelmed with other industrial legislation, will now be exposed under Clause 105 to personal prosecution if, through neglect, he commits an offence under the Bill. The ordinary British manager must be forgiven if he sometimes wonders whether he will ever again be allowed to concentrate on what should be his prime task of helping in the production and the exporting of the goods and services on which the future of this country depends. My Lords, I have tried to speak about the Bill in a balanced way. But from what I have

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said, your Lordships will understand that there are many parts of the Bill which we feel should be improved and we shall seek to do this during the Committee stage.
12.31 p.m.
Viscount MASSEREENE and FERRARD: My Lords, on this very hot day I shall be very brief. From these Benches I should like to say first of all how sorry we are that the noble Lord, Lord Hughes, is not to continue in this House as Minister of State for the Scottish Office. I am sure that this sentiment will be felt by all the Scottish Peers on this side of the House who have drawn swords, in a friendly manner, with the noble Lord, whom we have found a most kind adversary as well as a very fair-minded person. I hope that wherever the noble Lord goes—into whatever commercial enterprise or other organisation he enters—he may have the same success as he has had in this House.
Your Lordships will be relieved to learn that I do not intend to deal with all the aspects of the Bill, if only because we have not yet had time to go through it properly. As I think was pointed out by my noble friend on the Front Bench, to produce a Bill of this magnitude at the end of the Session is taxing the patience of this House to a great extent. I wonder how many of those people who drafted this Bill are themselves employers. I say this because much of what is contained in the Bill has been the practice—certainly among good employers—for some considerable time. But whether it is wise to put such arrangements into statutory provisions, to bring in the majesty of the law, is a matter of doubt. We have too much law and the Bill will increase that law to far too great an extent.
Is it really the right time—apart from it being the end of the Session—to introduce this Bill? Small employers, as well as some big ones, are going bankrupt almost daily, and workers are being paid off daily. As my noble friend on the Front Bench said, this Bill is very one-sided. It puts many obligations on to the employers but none on to the trade unions. The noble Lord. Lord Hughes, made it a small matter of fact that the Bill would add only something over £100
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million to employers' costs. In these days adding anything to employers' costs is a serious matter. As we all know, in the long run employment can be protected only by productivity and by the creation of real wealth. We cannot in the end protect employment by printing a lot of paper money in order to pay wages which are completely out of touch with productivity. As I have often said, this is the road to eventual ruin.
It is obvious that the Bill is the diktat of the trade unions. I have always spoken up in the House for the participation of employees in the companies which employ them. But noble Lords opposite do not seem to realise that there is a great difference between worker participation and trade union participation. As we have heard today—and hundreds of times previously—the unions do not represent even half the work force in this country, but they have arrogated to themselves vast power, to a great extent without responsibility, and the Bill will increase that power without adding any responsibility. There are no obligations under the Bill for the unions to stick to contracts. There is no obligation to try to prevent strikes or restrictive practices. I quite agree that many trade union leaders try to do this, but it is not written into Statute.
Why should employers have all these legal Statutes heaped on them to enforce them to abide by certain rules and conditions when the same does not apply to unions? I appreciate that I am merely repeating what my noble friend on the Front Bench said, and so I shall now refrain from this. I wish however to make a plea for small employers and small businesses. We get heaped on to us—and have heaped on to us an ever-increasing avalanche of legislation. It is very difficult for a small employer, who may not have a team of accountants or even a good secretary, to keep pace with this legislation, and so that employer may unintentionally break the law. The Bill will add to the burden of small employers in terms of having to abide by the law. It is bad enough having to deal with PAYE and all the rest. I have often thought—I am being a little flippant here—that if one is not sufficiently responsible to complete one's own tax return, one is not sufficiently responsible to vote.

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I agree with quite a number of the clauses in the Bill, but to a great extent all good employers have always done what is proposed in those clauses. Should not the question of lay-offs, which arises under Clause 22, really be the responsibility of the State? We have a very highly developed Welfare State and at this moment this matter should not be loaded on to employers. There is also the question of arrangements for maternity leave for employees. Of course this is not my sphere, but the average employer has always made promises to those employees who have had to be absent for this reason. In my experience employers always do all they can to take on employees again after their child has been born.
Here, again, ought it not to be a charge on the State? There is a difficulty. If you have a female employee in a very technical job it is very difficult, especially for the small firm, to retrain somebody for that job, and when you have retrained someone to say, "I am sorry, but you now have to leave". I was pleased to hear what the noble Lord, Lord Hughes, said on this. I have not read the whole of the Bill but there is a clause in it which protects the employer against that kind of dismissal, but it appears rather unfair on the person who has temporarily stepped into the breach. As regards the clauses in Part II, no employer who I know has objected to a member of a trade union being employed by his firm—certainly I have not. So far as I am aware, plenty of time off has always been given for union activities. If that were not so, how could the unions have become so powerful and well organised? The proof of the pudding is in the eating.
Would it not have been wise to define the words "trade union activity" rather more carefully? In the Bill, this term "trade union activity" means presumably holding trade union meetings, and so on. Could it mean causing disruption to the works, and, in an irresponsible manner, holding up production? It would have been better if it could have clearly defined the meaning of activity. I understand what it means, but it could be interpreted in another manner.
There is one point which I should have brought to your Lordships' attention earlier: I should like to make a remark
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about the Advisory Conciliation and Arbitration Service. This Service seems narrow; this seems too bound up with collective bargaining. This Service ought to concentrate on conciliation, it should concern itself more with the rights of employees, no matter from what quarter the injustice to the employee has come. It may have come from the unions, not necessarily from the employer. It may have come from another employee. I should like to repeat the remark that I think that this Service is too narrow.
In conclusion, I will repeat what I have said before in this House: if only we could have a Bill in this House to try to create some wealth, it would be such a cheerful change! I am afraid that this Bill does nothing at all to do that. It will only spend more; it will add to inflation. It may also temporarily help some employees—and I am all for that. If employees are laid off through no fault of theirs, I am all for helping them. To conclude I am disappointed with this Bill, to put it mildly.
12.45 p.m.
Lord BRUCE of DONINGTON: My Lords, as an emigré Scot, I should like to express my very deep regrets that my noble friend has decided to lay down his present Office. He is one of those noble Lords occuping my own Front Bench who have contributed so much to preserving the traditional uneasy peace that subsists between any Front Bench and its own Back-Benches. On purely personal grounds, I very much regret his departure from the Front Bench of a noble friend who, in the earlier stages of my membership of this House, did so much by his kindness in helping me to assimilate some of its traditions and usages.
I must also apologise to the House for intruding today on a subject with which I am not thoroughly familiar—indeed, intruding on a debate on the Bill which, although I studied it with what I hope was normal diligence till the small hours of this morning, I cannot pretend to have completely mastered. I have not mastered all the subject matter it contains. I sympathise sincerely with the dilemma of the noble Earl, Lord Gowrie, who, despite the short time for which he had the Bill at his disposal, made a fine Opposition case. I wish in the course of this debate I could have been sustained

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by many of my noble friends on this side of the House who have had very considerable, indeed, in some cases, a lifetime's experience in the trade union movement. I should have liked them today to have been as erudite on their own subject as they are sometimes on some of the subjects on which from time to time I venture to speak in your Lordships' House. But for reasons that escape me for the moment, this is evidently not practicable. The noble Earl, Lord Gowrie, and the noble Lord, Lord Rochester, referred to the one-sided nature of the Bill. The society in which we live is very one-sided. It contains a comparatively small number of people, who, in addition to possessing in many cases an income which they earn—and sometimes they are in receipt of an income which they do not earn—also have capital resources.
This Bill is one-sided in the sense that it endeavours to redress the balance more in favour of those whose capital is in fact their income, whose only resources do not lie in any acres of land or homes that they have, in investments they may have accumulated or inherited. Both their income and their capital arises from what they are able to earn in the course of their working lives. This Bill is one-sided in the sense that it endeavours to redress, albeit by only a little, the balance within society more in the direction of those vast numbers of people in Britain who have to earn—really earn—every penny that they get.
The noble Earl, Lord Gowrie, referred to the undoubted fact that the Bill itself imposed no duties or responsibilities. He seemed to regard that as a matter of some complaint. I should like to draw the attention of the noble Lord and of your Lordships' House to the fact that the very existence of this Bill imposes a duty and a responsibility upon the trade union movement and the working class movement in this country. It is indeed part of the social contract that the Government should bring in a measure of this kind, extending and consolidating the rights of the trade unions and extending the area of benefit in certain very necessary directions in favour of employees, particularly in circumstances of sickness, maternity, insolvency and so on. This is the Government's contribution to a policy of voluntary
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incomes restraint. I hope that this Bill, in its totality, may be viewed within that context. I know very well there are many who have paid lip service to the Social Contract and have done their very best to ensure, for political reasons, that it should fail. Principal among those who have sought that end are some, but not all, of the editors of our great national newspapers, who have done more, together with the other media, than anybody else to secure the breakdown of the Social Contract as originally conceived.
This Bill represents the Government's contribution to a policy of voluntary incomes restraint. It calls for a sense of responsibility on the part of the labour and trade union movement, and indeed the response has already been forthcoming. I very much doubt whether, if this Bill had been deferred or if the essential spirit behind it had been watered down, it would have been possible to secure that degree of trade union cooperation which has been forthcoming in respect of the current wages policy. The nation should be very much indebted to, and in time should come to express gratitude for, the statesmanship of people like Mr. Len Murray and Mr. Jack Jones for having made an appropriate response to the contribution to the Social Contract which is represented by this Bill.
The noble Viscount, Lord Massereene and Ferrard, referred to the cost of the provisions of the Bill, making at the same time a rather snide observation about "tame accountants". The tame accountant, as your Lordships may perhaps have apprehended over the past few months, is a comparatively rare animal but, pursuing the matter in as non-controversial terms as possible, I would say that although the provisions of this Bill in a all year will add some £120 million to the employers' bill, with another £15 million being incurred by the State—and incidentally they will add a further 700 to the body of civil servants we have at present—it ought not to add to the unit cost. This is because, against the cost of £120 million, or £135 million if one includes the State contribution, one has to balance the undoubted improvements in industrial relations which will result from the willing co-operation which the labour and trade union movement will give in the implementation of the Bill. I do not share the pessimism of the noble Earl, Lord

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Gowrie. I think this Bill and the social climate generated by it will promote more industrial peace and that, when in force and with the spirit which will be engendered, will enable us in the years ahead to minimise the effects of industrial disputes and indeed to minimise the incidence of those industrial disputes. As the noble Earl will know perfectly well, the cost to industry of industrial disputes can involve in any one year a far greater amount than £1,220 million. Therefore I should have thought, taking what I believe to be a quite justifiable view—though I admit it may be an optimistic one—that this Bill will assist industrial relations generally. I should have thought it would help to reduce unit costs rather than impose any extra burden either upon the taxpayer or the consumer, who would obviously have to pay for any real increase in unit costs which is incurred.
Everything will depend on the social climate within which this Bill is to operate. If the editors and the proprietors of the great national media, which normally serve—and I make no complaint about this—the interests of the Party opposite, during the years ahead, seize upon every industrial dispute on an exaggerated basis and use that as a weapon to beat the Government of the day over the head, and if they go out of their way to exacerbate industrial disputes by one-sided and unfair reporting, the purposes of this Bill will be frustrated. If, on the other hand, we can look forward to a period when the media generally, while reserving their editorial rights to express strong political opinions, endeavour to give the public a balanced view by factually reporting what happens in our national life, then the purpose of the Bill, its surrounding legislation and indeed the operating of the income arrangements which are really built round it, will succeed. It is in that spirit that I commend the Bill to your Lordships' House.
1.0 p.m.
Baroness HORNSBY-SMITH: My Lords, may I join my colleagues in their regret at the fact that the noble Lord, Lord Hughes, is leaving the Front Bench, and in their felicitations for whatever new sphere he may be going into. As a mere Sassenach, I have not been involved in any disputations with the noble Lord; I should not dare to plunge into Scottish
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affairs. May we wish him every success in the new sphere in his career?
I do not propose to follow the noble Lord, Lord Bruce of Donington, because I escape his castigations. I have never inherited, I do not own a brick and I have spent my life living on what I, myself, have earned. Surely it is without precedent in this House, and, indeed, in another place, for two Bills of such great importance and complexity to be presented for Second Reading in one day; and that the last day of the Summer term with a lamentably thin House. Those of us who have spent years in the other place remember the fury and, indeed, the quite brilliant expositions on Parliamentary rights and the M.P.'s democratic duties as expounded by a slight figure, a great orator, sitting on a Bench below the Gangway. That gentleman is now the right honourable Secretary of State for Employment, Mr. Michael Foot. It is his Employment Protection Bill, with 116 clauses and 17 Schedules, which is being rushed through, as I have said, a thin House on the last day of term. In this regard, I do not think that he is practising what he so frequently preached in another place.
My Lords, the basic aim of this Bill is one that we all support. There is much in it which has our support, and which should have it, as it reflects much that we had in the previous Conservative Bill. To that extent we welcome it, but we are concerned and believe it would have been much fairer and a much better Bill if it had not again, as did the Industry Bill, deliberately provided for two classes of workers—the trade unionists and the rest. Workers' representation, if there is to be harmony within factories—and the factories are the units which count under the over-riding umbrella of industry—should include all who work. It should not give consultative power and representative power to only 45 per cent. of them. It is just not fair statutorily to disenfranchise from the councils of employment, for councils of area association and, even, from some of the national bodies set up, 14 million workers who work as hard and who should, in my view, have the same rights.
This is, as my noble friend Lord Gowrie pointed out, two Bills in one; the rights of individual employees, whomsoever they may be, and the improvement

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of industrial relations generally. It also, at the same time, imposes at a time of great concern for many businesses—and can we for a moment take out the image of the enormous company and the huge combine; because 80 per cent. of British manufacturing industry is carried out by companies with less than 200 employees? To them these additional impositions, to them this recession in orders, are matters of absolute life and death, of whether they to survive. This will impose enormous financial burdens on them over the ensuing years. It also imposes onerous legal obligations on employers. At the same time, it gives increased legal rights and privileges to unions and employees without any corresponding duties, either to honour contracts or to avoid strikes. It gives many new rights to employees at the expense of the employers, the cost of many of which at the moment fall on the public funds and are now being transferred to the already hard-pressed employers.
In Part I, under the machinery for promoting the improvement of industrial relations, we have the setting up of the Advisory, Conciliation and Arbitration Service (ACAS) and also the Central Arbitration Committee (CAC). We also have the Certification Officer who takes the place of the Registrar of Friendly Societies. In the latter's long and distinguished career through many succeeding officials, he has established a position of great integrity and impartiality. The functions of the new Certification Officer would appear to prevent any genuinely independent trade union—that is to say, independent of the employer or of a politically affiliated TUC—from having any of the rights accorded to what is statutorily defined in this Bill as an independent trade union. This will debar certain professional organisations—and these phofessional people, small though they may be in numbers, may be the very people who build the most correct and safest factories; who race across the world ahead of their stomachs to the East and behind their stomachs to the West endeavouring to get orders to keep those people in employment.
Later in the Bill, in Clauses 77 and 78, we have the setting up of the Employment Appeal Tribunal. This we welcome
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because this body is, in effect, the NIRC in its appellate jurisdiction reincarnate. The second part of Part I is designed to facilitate trade unions gaining, recognition by employers. The unions, but again not the employers, are entitled to submit recognition issues to the ACAS and, if the ACAS recommend a recognition, arbitration before the CAC can take place at the union's insistence—the employer has not even been consulted—and the CAC is entitled, as a sanction, to take the place of the employer in collective bargaining with the union. This is to say that it is entitled to decide what terms and conditions of employment must be contractually recognised by the employer.
Your Lordships will notice that the employer has no right to bring recognition issues before the ACAS; so that if, for example—and we have all known of its occurrence—two warring unions each jealous for the position of their own skilled workers and in conflict over who should do what in a given industry; if they are causing unlimited trouble over recognition, each claiming sole rights to certain jobs, and each threatening to strike if the other is awarded that recognition, the employer has to grin and bear it, unheard and unrepresented, while the ACAS and the CAC make the decision. He cannot take the matter to ACAS and thence through to the CAC. This is putting an intolerable burden and responsibility on employers who have to sit back defenceless while these unfortunate—and we all deplore them; and the trade union members as much as anybody else—conflicts over demarcation continue.
My Lords, the third part of Part I deals with disclosure of information to trade unions by employers for the purpose of collective bargaining. Again, the duty of the employer is to reveal—and I am not quibbling about this—a large amount of confidential information to the union; but not to the employee. Again, as in the Industry Bill, I believe that there should be disclosure to his own employees and the selected or elected representatives of the factory or undertaking. That applies to all those who are working within his factory, whether they are in the union or not—and there are many factories where the accredited union is in the minority, particularly where there is a large proportion of

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women workers who are in no union at all.
Then we have the rights of employees and the guaranteed work payments, which after an improvement in Committee stage in another place appear to be fair and just. And let us be fair and just, my Lords, because there are many companies which already implement these arrangements for their employees. When the noble Lord, Lord Bruce of Donington, protests about the division between the manual and white collar workers, let us remember that there are many firms which assess the benefits not on the white collar or the blue collar basis, but on years of service given to the company, which is as it should be. But we have a peculiar anomaly in the provision for the payment of wages where an employee is suspended from his normal job on medical grounds. What it amounts to is that the employee gets half a year on full pay when he is so suspended. If he is able to go and do a light job during that period he has still to receive his full pay in respect of his normal job. But if he is actually incapable of work and completely disabled in relation to work, then he has no rights to take the money from the employer but will be paid under other branches of the law—for example, the Industrial Injuries Act.
We come to what I think will be a much contested question of dismissal in, relation to pregnancy or, alternatively, payment during pregnancy. This subject I know is going to be dealt with by my noble friends Lady Elles and Lady Vickers, so I will not go into detail, but I want to mention one small point. Again I come back to my 80 per cent. of manufacturers with small companies. Three firms have raised this very point with me. One employs 50, the largest about 120 in the workshop. They are family businesses. In the office of one of them is the founder of the company, his sister, his son, and three employed staff, two of them girls. They run the firm on an office staff of six, all of whom, perhaps apart from a fortnight's holiday, over a term would have to be replaced because they all do an individual job. A young married woman is the typist. She is pregnant. She goes off a month before, and is off work six months after, the date of the birth—seven months during which that little company employs a new secretary.
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It has to continue payments to the young woman who is pregnant; it has to guarantee that she gets her job back. But what about the poor little soul who has gone into the new job and six months later the company, whether or not that young woman is a more competent employee, has to chuck her out unless the company is going to pay two people for doing the work of one?
Not enough thought has been given to the small company with a tiny office where the young people are marrying early and having children while they are young—and good luck to them! Staff are replaced and then the replacements are told: "I am sorry, but Mrs. Snooks must have her job back." This is going to cause quite a lot of trouble, not only in small companies but in big companies employing vast numbers of young women. This may not be so now when they are cutting down staff, but in a boom time when a company cannot afford to be without staff this will be so. In any month in a large textile firm there can he 40 women going off work owing to pregnancy. They are replaced, and then the replacements are told they must get out. This is something that requires looking at seriously.
We then have the clauses on trade union membership and activities, which do not vary greatly from our Industrial Relations Act 1971, except to the extent of taking away the right to insist on non-membership of a trade union for any reason other than religious objection. This is unduly limiting. The Bill in this connection again hammers the employer where an employer is compelled to dismiss an employee or discriminate against him under compulsion or threat of a strike. Where the union says: "We will not work with this man", the employer has no right at all to recover the compensation which he has to pay to the employee, from the union or from the striking employee. In this respect the Bill reverses the provisions in Section 33 of the 1971 Act. Surely in such circumstances, where the employer may not have wished the man to go, he should be able to recover from the Redundancy Fund what he has been forced unwillingly to pay to an employee whom he did not wish to dismiss.
There are many changes in the remedies for unfair dismissal, providing for rein

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statement as the primary remedy and splitting the compensation into a basic award and a compensatory award. These provisions, my Lords, as has been said, narrow the gap in some instances between the white collar and manual workers. To that extent we welcome the initial security and aid given to valuable employees. But there are objections to those provisions concerning a dismissed employee who may have been dismissed for perfectly good reasons. He goes to his trade union official and says: The reason I was dismissed was that I was a member of the union or because of my trade union activities". It may be true; it may be false. The matter then goes to the tribunal, but before that he receives summary award from the date of dismissal to the completion of the definitive hearing of his complaint of unfair dismissal. The employer has to pay up all along the line. If it is proved by the tribunal that this man was quite fairly dismissed, that the employer had every right to dissmiss him, the employer has had to pay all that money and he has no right to draw any of it back. I believe the procedure is entirely contrary to any other form of legal procedure in giving the legal remedy before any attempt is made to discuss and decide the issue. If at the hearing it is found the dismissal was fair or was unfair but nothing whatever to do with trade union discrimination, the employee keeps all the money. In other words, so far as the employer is concerned, it is heads he loses, tails he loses. I believe it is important that we should be shown to be fair and conforming to what has always been the basic legal process in this country.
In Part IV of the Bill we have very onerous provisions relating to redundancy. Over anything like mass redundancies occurring, three months' prior notice must be given to both the Minister and the unions, and the unions are able to obtain protective awards for the benefit of employees. I listened most closely to, and warmly welcomed, the comment of the noble Lord, Lord Hughes, that in exceptional circumstances the Minister could, as I understood it, review the full financial implications of these provisions. So many small businesses are vital to the giant businesses. They make, perhaps,
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a valve or a specialised form of instrument. They provide some part of the great network of the giant companies. Many of these companies are in a parlous position. If, through a recession in the motor car industry, the demands on their piece of equipment are halved and if in order to keep the company going they have to lay off some of their staff, the three months' notice and payment could mean the difference between struggling through and going bankrupt. I hope I did not read too much into the comments of the noble Lord, Lord Hughes, when he said that there would be provision to consider such items.
This could have been such a good Bill. There is so much with which we agree. However, I am sad that repeated dogma in Bill after Bill is providing two classes of workers—the elite who are trade unionists affiliated to the Trades Union Congress and the others, who are in the majority, who appear to be denied as their working brothers. I shall be happy to support much of the Bill, but I hope that we in this House will be the same consultation and representation able to amend it so that it will be fairer to all.
1.22 p.m.
Earl FERRERS: My Lords, we all know that at the end of the summer most Governments get themselves into legislative difficulties of some kind or another. I hope that the Government will not take it amiss if I say as gently as possible, since this is the last day of the term, that this year they have got themselves into the most monumental and unprecedented legislative muddle of all. It was only the other day that we were discussing a Bill which has only reached the Committee stage of another place and today we are having the Second Reading of a Bill which only the night before last was being amended at Report stage in another place. How the Government have managed to get the Bill printed is quite extraordinary and I congratulate them upon it—and, indeed, the staff of the Stationery Office who physically have had to get the work done. It was a unique effort. But it does not do justice either to your Lordships' House or to people outside the House who are affected by the Bill, some of whom may be

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advisers or interested parties, who do not have the facilities that we have and therefore are literally in a position where they cannot know how the amended Bill will affect them before it is shot into a Second Reading in this House.
It is a very important Bill and it is extraordinary to find the House quite so thinly attended. I know it is lunch time, but the fact is that there are only two Government Members on the Front Bench and not even one member sitting behind the Front Bench to support them in what is a very cardinal Bill of their own. Indeed, the thinness of the House was made even more marked by the noble Lord, Lord Bruce of Donington, who delivered himself of a customary fairly provocative speech and then disappeared from the House within three minutes of having sat down, thereby not even according the House the normal courtesy which is to wait until the next speaker has made his speech.
I intend to confine myself solely to one point in this Bill; namely, to eight lines in Clause 104 and what flows from it, particularly Schedule 14. Last year Parliament passed the Health and Safety at Work Act 1974. By this Act a Health and Safety Commission was set up which was to be served by advisory committees for different industries, but because of Amendments which were made by your Lordships to that Bill which were substantiated in another place health and safety matters relating to agriculture were kept, as they always have been, under the direct responsibility of the Minister of Agriculture. There were very good reasons for doing this, although I accept that they did not meet with the approval of the Government—certainly not with the approval of the Department of Employment.
I remember the noble Lord, Lord Hughes, arguing against this, and we shall all miss his presence on the Front Bench. I have always enjoyed—I say this even though he is not here at the moment—his spirited defence or support of Government policies. These were always made far more effective when he deposited his brief on the Dispatch Box and let the internal dynamo take over. We shall be sorry to see him go. Far he it from me to put any form of pecking order of interest on noble Lords opposite who make speeches, but if I were to do so the
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noble Lord, Lord Hughes, came very high indeed on the list from our point of view of listening to the expounding of Government policies. We shall be sorry not to see him on the Front Bench, but I hope that he will have a very successful and happy time on the Back-Benches.
The Health and Safety at Work Act 1974 came into operation last year. Slipped into this Bill—which is an employment protection Bill—is Clause 104 which effectively totally reverses the provisions of the Health and Safety at Work Act as regards agriculture. Clause 104 refers to Schedule 14. If you look at that Schedule, your Lordship will see that it consists of two and a half pages of what is virtually a Marshalled List of Amendments—as one might expect to see in a Committee stage—of the Health and Safety at Work Act. I venture to suggest that that Act should not be amended in the manner proposed. It has only recently become law and it should be given a chance to work. Even if it ought to be amended, this is not the right Bill by which to amend it. This is a Bill which is designed to form an industrial relations framework. It is concerned principally with employees and it has a heavy bias towards those who are members of trade unions.
In agriculture, however, 64 per cent. of those engaged in it are not employees. They are self-employed. Therefore, this is a wholly inappropriate Bill in which to deal with this problem. Apart from anything else, anybody wishing to know the law on health and safety at work would naturally look at the Health and Safety at Work Act and would not expect to find anything material about it in an employment protection Bill—certainly not to find the whole thing rehashed as it is. Even if they did find this Bill and looked at Schedule 14 with its pages of additions and deletions, they would virtually have to type out afresh the 1974 Act, with these Amendments, to know exactly what the law of the land is.
Apart from thinking that it is the wrong way in which to amend the 1974 Act and that the result will be almost incomprehensible to
anybody who is not a mental gymnast, I venture to suggest to your Lordships that the Health and Safety at Work Act should not be amended. It became law only last July and many of its provisions did not become effective until

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1st April of this year. For years the Ministry of Agriculture have been responsible for safety and health at work on farms. The circumstances of agriculture are different from those in other industry, as everybody recognises—so different that it is the only industry which has its own sponsoring Ministry. They are the people who have intimate knowledge and experience of the problems and the workings of farms and farmers.
It is a fragmented industry where only 8 per cent. of the farms employ five or more people, where, unlike factories, workers often work away from the homesteads and where, unlike factories, employees and employers frequently work together side by side. I suggest that there are few people who would deny that the risks in agriculture are totally different from those to be found in other industries. Indeed, the majority of fatalities in agriculture are among the self-employed, not the employees.
I believe there can be only two reasons why the Government are making this change. The first is that they may feel they have a commitment to the unions to make the change; and the second is that they may feel that safety will be better under the proposed alternatives. To deal with the first point, the Government may well feel that they have a commitment to the National Union of Agricultural Workers, because that union committed itself at one of its annual conferences to wanting safety put under the Commission. But that was before the health and safety at work legislation came into force and, although it has not been in operation very long, there have been many improvements in agriculture as a result of that Act coming into force. Therefore, the situation is now very different from what it was when the union passed that resolution at one of its annual conferences. Many improvements have been made and I have reason to believe that there are many people who are satisfied with what is happening and who would not of their own volition wish for a change.
The second point is: will safety in agriculture be better if the proposed alterations in Clause 104 and Schedule 14 come into operation? I think not. The Health and Safety Commission was set up under the 1974 Act, but the advisory committees for each industry have not
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yet even come into being; they are just at the point of initial consultation as to who shall be members. But in agriculture the farm safety steering group, which the Act said should be set up, has in fact been set up and is advising the Minister. It was set up earlier this year, it has sat several times, and has produced considerable draft legislation, much of which has already reached the stage of consultation with the industry, and one revised set of regulations has already been passed into law.
The first code of practice issued under the Health and Safety at Work etc. Act will be a Ministry of Agriculture code relating to the protection of slurry pits. But the Safety Commission have not yet started work on the proposed revision of any existing regulations or on formulating new ones and they are unlikely to do so for at least a year. They do not have the machinery, but the Ministry of Agriculture has. Yet this Bill intends to reverse the remarkable progress that the Ministry of Agriculture has made under the Act, and to put the responsibility in the hands of a Commission which has not yet even got off the ground.
Since the passing of that Act last year, the Ministry of Agriculture have substantially strengthened their inspectorate. They have employed over 40 more full-time inspectors; improvement notices and prohibition notices are already being issued by the inspectorate, and the Act is therefore working. The farm safety steering group, which, as I said, has beeen working since the beginning of this year, is quite a high-powered group, It has on it representatives of the National Farmers' Union, the National Union of Agricultural Workers and the Transport and General Workers' Union, and they are all enthusiastic about it. It is unique, also, in that it has a Minister in the chair. If Clause 104 goes through, the group will come to an end straight away and will eventually be replaced by advisory committee 14 of the Health and Safety Commission, which will be chaired not by a Minister, but by a more normal mortal. That is not expected to come into operation until next year.
I hope I have shown your Lordships that under the Health and Safety at Work etc. Act agriculture has improved and benefited far more than any other industry, so it would be totally wrong to alter

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the system which it introduced. Of course we all want safety, we all want more safety in agriculture, as in any other industry. We want it for those involved in the industry, whether they are employees, employers or self-employed, or whether they are wives or children who stand to suffer from accidents and fatalities, but whose suffering is not measured by statistics. Sandards must be raised, and I venture to suggest that the Ministry of Agriculture, acting on the 1974 Act, have done just that. So we should be ill-advised, not from a Party point of view but from a safety point of view, to punch the existing and improving system on the nose and to replace it with something unknown, untried and, at present, unformed. This would he an odd thing to do during this year, which is National Farm Safety Year. For these reasons, I hope that Clause 104 will not remain as it is in the Bill.
1.35 p.m.
Lord TERRINGTON: My Lords, I had not originally intended to take part in this Second Reading debate, but having looked at the disclosure of information clauses I felt that I must make some brief comments on that aspect of the Bill. Some noble Lords may be aware that I have recently taken an active interest in the disclosure clauses relating to the Industry Bill, and in this regard I had a certain amount of success. I therefore thought it might be appropriate to continue the discussion on this Bill, which contains important disclosure clauses of a somewhat different nature.
I particularly note that whereas the Industry Bill contains specific items of information to be made available, this Bill lays down that an employer shall disclose to trade union representatives on request all such information relating to his undertaking as is in his possession. I appreciate, of course, that it has to be informtion without which trade union representatives would be impeded in carrying on collective bargaining, and information which it would be in accordance with good industrial relations practice for an employer to disclose. But this is a pretty wide-ranging area of disclosure which could certainly raise material of a price-sensitive nature, and would therefore have some quite important implications.
I fully appreciate the purpose behind these clauses, and I should be the last
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person in the world to object to disclosure of suitable information to trade unions in furtherance of good industrial relations. Indeed, I made it quite clear during the Committee stage of the Industry Bill that I have always been in favour of maximum disclosure to trade unions and to shareholders alike. But, my Lords, the emphasis is on "alike" and, once again, it would appear that possibly price-sensitive material is to be disclosed to trade union representatives without regard to the interests of the members of the undertaking.
I have no wish to take up your Lordships' time by going over the ground which I covered on the Industry Bill, but I can assure your Lordships that the Stock Exchange, of which I must declare membership, is extremely concerned about these disclosure clauses. They see them giving rise to the same kind of problems as we were recently discussing during the Industry Bill, unless, of course, paragraph (e) of Clause 18(1) is intended to include the release of price-sensitive material as possibly causing substantial injury to the employer's undertaking. Personally, I doubt this, because it would be far too restrictive in the context of the information required for collective bargaining, and would interfere with the major purpose of the Bill.
I would therefore ask the Government between now and Committee stage to take a careful look at this matter of the disclosure of price-sensitive information, and, perhaps, to come forward with some plans to safeguard the position of the investing public. I will not say any more at this stage, but I am of the opinion that a specific reference to the disclosure of information to shareholders, at the same time as to trade union representatives, is required in the Bill and I await with great interest to hear the Minister reply to this point.
1.39 p.m.
Lord CULLEN of ASHBOURNE: My Lords, I shall be very brief indeed. I am on my feet only to record the fact that the noble Lord, Lord Terrington, and I, are still batting together on this subject of disclosure to shareholders. I should like to ask the noble Lord, Lord Jacques, whether he can give me some political education, now that we have amended the Industry Bill in the way we have, as to whether the appropriate amendments will

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be drawn up to the Employment Protection Bill between now and Committee stage, because, if not, the noble Lord, Lord Terrington, and I will be very busy tabling Amendments.
Lord JACQUES: My Lords, I can answer that now. There will be no Amendments between now and the Committee stage.
1.40 p.m.
Lord HEWLETT: My Lords, I rise to join the noble Earl, Lord Gowrie, the noble Baroness, Lady Hornsby-Smith, the noble Earl, Lord Ferrers, and many others speaking from this side in protesting at the unfairness and gross inefficiency of Her Majesty's Government in the handling of business. How on earth can any Member of this House, if they do not happen to live in London, read a Bill which is not available, before they actually attend the Session at which the Second Reading is to take place? Noble Lords must do their work on stale material, subsequently amended in the other place before the Bill gets to us. This is disgraceful. To try to cram two Second Readings into the last day of a Parliamentary Session is equally thoughtless. I think I should like it set on record, and I am afraid I will say it, that the actual tally of the House at 1.25 p.m., on what is a most important Bill was, 2 Ministers, present without a single supporter; 3 Cross-Benchers, one Liberal, 9 Conservatives and of course, the noble Lord sitting on the Woolsack. I do not think we do our House the slightest credit if that is the tally of Members sufficiently interested in a Second Reading debate on an important Bill. But it is not the fault of the Members; it is the fault of the Government for arranging business so badly, and having such lack of consideration for the Members of your Lordships' House. So frequently there is criticism of industry from Members opposite. If industry were run half as badly as this House, it would be bankrupt.
My Lords, I am taking part in this debate in order to express the widespread feeling of disquiet in industry caused by this further piece of proposed one-sided and quite expensive legislation. It is not much good some of us striving, and for the most part being quite successful, to have first-class human relations in industry
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when this Government seem to be hell-bent upon a partisan approach to what are extremely delicate problems. I speak from experience. I have been 25 years in industry in a company that for 83 years has had only one strike, and that was a sudden, snap strike at one hour's notice last year. I do not think we can be accused of making an insensitive approach, of being the old Victorian employers with the whiplash approach towards industry when, for 83 years, we have had trouble-free running. How on earth can management be expected to react to yet more expensive legislation, with a whole fleet of additional busybodies attempting to monitor their every move?
Like the other speakers, the noble Earl. Lord Gowrie, for one, I thought that the cry of the trade unions was:"Keep legislation out of industrial relations" their principal criticism of the Industrial Relations Act. But here we are with a complete volte face.Who is doing the U-turn now, I would ask? To return as quickly as possible to free collective bargaining was, I thought, the aim of the trade union movement, and not to have brought in one-sided legislation, so demonstrably pro-trade union, as was made clear in this debate—not pro-industrial or, indeed, pro-agricultural worker.
So many good companies, enterprises of all sizes, have excellent arrangements covering almost all the good objectives—and there are some very good objectives in this Bill. But, no, that is not enough far too simple! Everyone must be regimented, dragooned, made to conform in every final minutae and particular point to a pattern of legislation of such great length as we have already had described today, and yet so ill-defined that in part it really does beggar description. It seems designed to increase the number of issues that can be the subject of disputes. Indeed, these may well arise. Formerly they have been settled perfectly amicably without difficulty within well-run enterprises. Indeed, so much is now left to interpretation as to widen the field of potential conflict still further.
My Lords, at a time when industry really is struggling, struggling under enormous economic difficulties, the attitude of this Government is to heap still more duties and obligations upon management

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in industry, while placing no corresponding obligations or duties whatsoever upon organised labour—only rights and privileges there! Quite foolishly, this Government seem to think that industry is the great and everlasting milch cow of this country. More and more taxation, higher and higher obligations, greater and greater costs, obligatory costs—National Health, and so on; less flexibility upon prices. Yet, somehow, industry is expected just to carry on being the great provider. But I have news for the Government. Some industries and companies are already having to cut back much further than they perhaps realise on capital programmes and on research and development. If we take our agricultural metaphor a little further, the seed corn is now being eaten, the very thing we should not be doing at a time like this. We should be spending more on research and development, we should be increasing industrial capacity, ready to take advantage of what may well be much improved trading conditions. But, no; we must have more bureaucracy, more civil servants to regiment and try to run industry.
The noble Viscount, Lord Massereene and Ferrard, was quite right in saying that wealth just is not being created at the necessary level to sustain our present standard of living as a country. Unless Government stop trying to penalise industry still further, frankly there will not even be, the present level of wealth created to sustain the tremendous welfare services quite properly created in this country for the benefit of the less well off. It simply is not on to continue with this behaviour. I consider that Her Majesty's Government are being highly irresponsible in both the volume and the expense of legislation they are putting forward at a time of the greatest difficulty that industry has known, to some of us, the greatest difficulty in living memory—and that even includes the 'thirties.
My Lords, I see that the noble Lord, Lord Wigg, has added his name to the speakers list in what I call "the gap" Last week the noble Lord said that we were not wholeheartedly wanting nationalised industries to succeed. Our complaint is about the appalling performance of nationalised industry, and the fact that private industry and the ordinary taxpayer are constantly having to pay out
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more and more to nationalise industry to meet their increasing costs, against a poorer service rendered. Yet this is the very time when Government, who have spent money as though it were going out of fashion, now feel that poor old free enterprise can be called on for yet further contributions when the worst recession certainly since the 'thirties, prevails. I would feel so much more confident if I knew that those calling for such untimely extra burdens on industry, had had to face in their own lives the discipline of running an enterprise profitably in ordinary times, let alone in times like these. A little practical experience of not being able to start, let alone continue, extravagant schemes for which someone else, usually the taxpayer, will pay, would be a salutary experience, if I may say so with all respect. People are quick enough to criticise private enterprise for "failing the nation"—a fashionable phrase—as they so charmingly put it these days. Many of those in authority with regard to Government policy, I regret to say have not so much as run a sweetshop in their lives.
Viscount MASSEREENE and FERRARO: Hear, hear!
Lord HEWLETT: How can industries and companies, forced, alas! to go on short time working, and in some cases to effect lay-offs, meet increased guaranteed payments to employees? Let us be practical about it. Given the fact that they cannot continue maintaining employment at that level, not playing politics, if they are going to go under if they keep on that size of labour force, how the devil can they pay increasingly, through having to go on short-time or having to effect lay-offs? Most of us in industry are not irresponsible. We think very deeply indeed. We go through sheer mental hell at the thought of putting one person out of work. It is not a game we play. We are not playing Monopoly, or one of those other games. We are taking, I hope, a highly responsible view, and we know the families—in some cases we have known them for two or three generations—who have worked in our enterprises.
How can companies consider the position which is now put forward in this Bill in regard to women employees who leave to have babies? Will the work that they were doing so during their absence,

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or—as has been asked already, in this debate—are replacements to be hired and fired meantime? Do not say to me, my Lords, there must be someone who can be found inside the company to do that job. That immediately supposes over-manning, with personnel so good as to be able to do several jobs of a specialised nature. That would be unwarrantable waste in industry, and would quite properly, receive vehement and strong criticism. That is an unlikely story.
I will tell your Lordships what the likely story is, if I may. Women of childbearing age will not be favoured for employment, because companies will not be able to face the prospect of the situation into which this Bill puts them. If Her Majesty's Government wanted to benefit that women's age-group, they would not make such an impractical and silly suggestion. We have had equal pay, sex non-discrimination, and then they produce this Bill, which is virtually mutually exclusive. That is not very clear thinking on the part of Her Majesty's Government.
There are all these provisions and so many others which show how ill-thought out is this Bill, in its rushed progress through the other House and now its arrival, so to speak, on our doorstep this morning. It is the sheer irrelevance of the Bill, as with so many other pieces of legislation of an ill-prepared nature, which most bothers industry. I say to the Government: Get down to the essentials. Only when you have solved the major problems of inflation and unemployment should you come along with your so-called bright ideas. A little experience would be worth a whole load of theory.
My Lords, if I may just try to reply to one or two points in other noble Lords' speeches may I say how warmly I supported the way in which the noble Earl, Lord Gowrie, spoke in reply to the moving of this Second Reading, and I thank the noble Lord, Lord Rochester, also, for his contribution. He suggested that it was a good aim to bring the conditions of manual workers more into line with the more privileged workers in industry. As the noble Baroness, Lady Hornsby-Smith, so rightly said, many companies have long since abandoned the old Victorian idea of blue-collar workers and
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white-collar workers. Many of us have been running entirely equal schemes for all employees throughout. The most privileged workers today are the members of trade unions on the shop floor, particularly where, as the noble Lord, Lord Rochester, pointed out, some excessive monopoly power can he, and has been in recent years, wielded.
I could not go along with the noble Lord, Lord Rochester, in, if I may say so, dismissing rather lightly the increased cost upon industry, rather as the noble Lord, Lord Hughes, had done. The Government estimate is about £120 million—and I ask your Lordships to note the phrase "Government estimate"—but their inaccuracies have been so extraordinary in regard to the expected costs of legislation that you might easily be able to double it. The impingement of some of these provisions in this Bill upon individual industries may be catastrophic—I am thinking particularly of textiles in Lancashire—such as in regard to the position of women employees who go away to have children. I agree that we cannot—and the noble Lord, Lord Rochester, made this point most fairly—establish job security by law. We talk in this House as though we were living a couple of hundred years ago and set the pace of the country. Alas, we are not totally independent and isolated from all other communities on earth. I would call upon this House to realise the effects of world trading conditions, and try to be governed by the practicality of what we are endeavouring to do.
The noble Lord, Lord Bruce of Donington, who has so far been the sole supporter of Her Majesty's Government on this Bill, acknowledged at the opening of his speech—and I heard him carefully—his total lack of experience in this field. I would echo those sentiments. I would say that the contribution which he made as highly charged Party political stuff, which had remarkably little to do with the contents of the Bill. He opened by a virulent attack upon what he called "unearned income". Can we get this straight? In so many cases income from investment, income from savings, represents what people have worked for all their lives. I will give way to the noble Lord.
Lord BRUCE of DONINGTON: My Lords, the noble Lord has been good

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enough to refer to me. Will he point out exactly where I attacked unearned income. I mentioned its existence, but I certainly did not attack it.
Lord HEWLETT: My Lords, the noble Lord, Lord Bruce of Donington, referred to the fact that some people were privileged enough to have earned income, unearned income and capital resources. My Lords, I have given way once. I must learn from the noble Lord, Lord Wigg, who would not let me have a second go. The noble Lord, Lord Bruce of Donington, went on to speak in derogatory terms of those who have a degree of freedom in this regard. I merely want to state to your Lordships that savings income, the representation of darned hard work and thrift—good Heavens, my Lords! Whoever heard of thrift in recent years—are the products which form unearned income in many cases. I really believe we should stop making snide remarks and expressing Party political dogma.
This Bill imposes no obligation, said the noble Lord, Lord Bruce of Donington, save and except under the terms of the Social Contract. But that did not work except to the disadvantage of this country; hence the legislation we talked about only last week. Who does the noble Lord blame? He lashed out at the editors of most of the national newspapers, but I cannot for the life of me believe that the charge that he made—that many or, indeed, most of them have had any such wish or intention to wreck the Social Contract—can possibly be substantiated. He went on to refer to unfair and biased reporting, in regard to industrial disputes, through the Press and other media. I do not need to stand up and defend the Press; they are quite capable of defending themselves. But whoever is being attacked by the noble Lord, Lord Bruce of Donington, with sparrow shot—"let us fire in all directions generally in the hope that we catch somebody"—it is not worthy of this House. I doubt whether any national newspaper editor set out to attack the Social Contract. They may have criticised the fact that it did not work well, and this has been proved, as we say, in the eating. But everyone endeavoured—certainly, everyone I met in the industry, in newspapers and in the other media—to see that it
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was a success, for they knew that the likely outcome if it was not was the sort of legislation which we had to debate last week; that is, the counter-inflation measures.
So I would strongly criticise Her Majesty's Government for the manner in which this Bill has been presented; for its timing, for its comparative irrelevance, for the fact that it keeps further burdens upon industry at a time when it is struggling to survive, let alone to make a high profit. And it is also basically and fundamentally unfair. It is divisive, the very thing the Government accused the previous Government of being in regard to the Industrial Relations Act. While wishing Her Majesty's Government a very pleasant holiday, may I suggest that they spend some of their time more usefully in getting their priorities right, and then come forward to this House with relevant legislation which helps to cure, by their example and not just by their precept, the present difficulties of this nation?
2.0 p.m.
Lord HOUGHTON of SOWERBY: My Lords, your Lordships' House always enjoys the robust style of the noble Lord. Lord Hewlett. He not only says what he means but he says it audibly, which is a very great convenience in your Lordships' House. I certainly agree with him that this House is being treated badly by the Government in being asked today to debate the Second Reading of an important Bill, and a very big Bill, such as this.
They would not treat the House of Commons like this. Imagine the House of Commons now discussing the Second Reading of a Bill of this importance and quality! No, they are on tiddly adjournments, and we are asked to consider one of the major planks of the Government's policy. I protest, along with the noble Lord, about that. I do not share many of the views expressed by the noble Lord, although he may agree with some of the things that I have to say. I must apologise for not being here—I was prevented unavoidably from hearing the early part of the debate—when I seem to have missed a provocative and exciting speech by my noble friend Lord Bruce of Donington. That is as I understand from

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the account I have heard of it just now from the noble Lord.
The noble Lord must not confuse industrial relations with basic conditions of service. There is a difference. For example, I remember at a time when we were trying to negotiate equal pay in the Civil Service the Official Side of our Whitley Council said, "We cannot negotiate on equal pay in the Civil Service. This is a large matter affecting the whole of industry as well as the public services. It is of national importance. This is not within the scope of negotiations on wages and conditions of service" Indeed, we had to wait many years to get an agreement on equal pay, and the rest of industry and the rest of women in employment have had to await a law to bring equal pay into operation.
There are some things that cannot be negotiated at plant level or even industry level because of the effect upon conditions of employment of large numbers of other people elsewhere. Some of the features of this Bill are of that kind. They are conditions which must be made generally applicable if they are to be negotiated at all. Otherwise, employers will tend to say, "We cannot concede this. It is putting a burden upon us which our competitors may not share and which will put us at a disadvantage." So in prescribing what I would describe as basic conditions of service, it is sometimes not only convenient but desirable to put them in an Act of Parliament so that they apply generally.
Having said that, I would wish for a moment or two to dwell on the background of this Bill. I feel all the time that we are dealing with major questions of Government policy without always putting them in their right perspective. The Secretary of State for Employment has repeatedly said that this Bill is part of the fulfilment of the Social Contract. It is therefore one of three important measures to be taken which were all referred to in the so-called Social Contract. The first of course was the outright repeal of the Industrial Relations Act 1971, and the re-enactment of certain parts of that and additions to it, all of which are contained in the Trade Union and Labour Relations Act 1974. That was Part 1. Part 2 is this Bill. Part 3 is our old friend "industrial
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democracy", upon which we have had a good deal of discussion already on the Industry Bill, and which was the subject of an announcement two days ago concerning the Government's intention to have the matter fully examined by a Committee, to report, it is hoped, within a year.
This means that the Government are fulfilling their part of the Social Contract, even though the other contracting parties, the trade unions, have manifestly failed for their part to make it effective. I do not blame the trade unions for this because it was always made clear during the discussions on this matter that the TUC could never do more than exercise influence. It had moral influence; I doubt whether it could be called moral authority.
The Trades Union Congress never disguised their inability to control the actions of affiliated unions. That is why the Social Contract was on paper so one-sided. It contained commitments that were made by the political wing of the Party without any corresponding commitments on the part of the trade unions' side because they could not promise to deliver. I believe that much harm has been done to the trade union movement by the way in which this document of mutual understanding agreed upon in 1973 was elevated for political purposes in 1974 to be a Social Contract. It never was a Social Contract. The word was never used. Indeed, when, in the course of the discussions, I used the term "package deal" that was rejected. The word, "Compact" was rejected. It was never more than an understanding between the industrial and political wings of the Party, enabling them both to understand each other and to give certain assurances as to the policy of the Labour Government when there was one. Bear in mind that this agreement was reached months beore there was a Labour Government, and at a time when a Labour Government were not expected for months, if not longer. After all, this was 1973, and that Parliament had still quite a long time to run.
I think that for quite worthy motives the heavier the strain upon the TUC's point of view and its guidelines and the heavier the pressure became, the greater the emphasis upon the word "contract".

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Here, of course, the Trades Union Congress began to take up the word, "contract" in order to give it the force of law among their own affiliated unions. I think everyone was put in a false position as a result of desperate attempts, first, to strengthen this mutual understanding politically and, secondly, to strengthen it from the point of the Trades Union Congress vis-à-vis the unions themselves. The Social Contract, as understood, has collapsed. The trade unions are being blamed a great deal, and the TUC are being regarded as weak and incapable for having failed to deliver their side of this understanding. We must understand that at the moment the trade unions are being asked to concede a form of restraint far more drastic than anything contemplated in the Social Contract. We must put this on the credit side. It is not their fault. In my view—contrary to what the noble Lord, Lord Hewlett, has said—this is not the moment for the Government to relax their intention to carry out what they said they would do. I hope I have got that point home. More than the Social Contract is involved. We have gone beyond asking the trade unions to fulfil their part of the Social Contract: we are now asking them to fulfil an obligation which is not part of a contract at all—an obligation to the Government to restrain their demands for increased wages under the steps recently announced.
Nevertheless, the Bill will place considerable additional burdens upon industry at almost the worst possible time and this is the dilemma of the Government. We have to bear in mind that all that the Bill contains was set out in documents exchanged between the Trades Union Congress and the Labour Party in 1972 and in 1973. The ill fortunes which have befallen the country since then were not even envisaged. At that time who could have foreseen the swingeing increase in the price of oil that would rock the whole foundations of our economy and our industrial prosperity? In view of the fact that this Bill places these additional burdens upon industry at this difficult time. I think your Lordships' House is justified in pointing to the need for some reciprocal activity from the unions themselves.
In this Bill many new rights are established for employees, unaccompanied by any new rights for employers. Undoubtedly,
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the Bill is strongly biased in favour of the worker, the employee and the union. In fact that is the intention of the Bill—to redress the balance to a much greater extent than has been the case in the past, especially among employees who are not protected by strong trade unions. Undoubtedly this Bill will protect a great many workers who could not ordinarily look to their unions to negotiate these conditions or protect them from injustice. I am trying to say now that while every one of the new rights of employees can be justified in human terms and as a contribution towards fair treatment and liberal and considerate terms of employment, they cannot easily be borne by industry without some marginal improvement in efficiency and productivity. This I think is the message we are entitled to send out to those who will benefit under this Bill. Were this Bill being introduced in better times we might not be so concerned. The cost could perhaps be borne by industry, or passed on to the consumer or to the overseas buyer, but we now know that we are really struggling for survival. In these circumstances, when additional burdens are put on industry for the benefit of employees, we should say, "Can we now look for some part of this cost to be met by increased efficiency and improved productivity?"
My Lords, the trade unions have become a power in the land. My noble friend Lord Pannell said yesterday that they had become "an estate of the Realm". My noble friend Lord George-Brown was uttering words yesterday about the monopoly power of the unions which can be exercised unwisely, as all other forms of power can be. But I am not despising power or indeed criticising the TUC for having gathered so much of it together. Nevertheless, when a trade union movement holds in many respects more power than Parliament itself, then the whole question of the responsibility of power can be stressed time and again without any imputation being made that those who do so are against the unions.
I have already said that this Bill was conceived in Congress House, in outline and in detail, when we had the discussions between the TUC and the Labour Party in 1972–73. The three main planks in the Government policy as regards industry, industrial relations and the unions really rise out of the debris of the

1901
attempts of the last Labour Government to deal with this subject and the ashes of the Industrial Relations Act 1971 Thus all this is really erected on the failures of the past and it is now undoubtedly one of the important parts of the Government's policy. Can we hope that the trilogy of measures I have described, which are now on their way through the Parliamentary process, all at the behest of the TUC, will repay the country in terms of economic improvement as well as in better conditions of employment? That is the hope we are entitled to express, and without it we are only adding to what has been described as the greatest economic crisis since the war. Nothing we do at the present time, however beneficial it might be for sections of the community, can be justified unless it is imperative on social or humane grounds, or unless, by conceding it to those who are in a position to yield greater efficiency and productivity, they will respond by doing so.
There are two main provisions of the Bill to which I wish to refer. I welcome the provisions about maternity leave and pay for women, and this is really a postscript to the Sex Discrimination Bill which we were discussing recently. We must bear in mind all the time that the opportunities for women which we were seeking in the Sex Discrimination Bill are not of full value to women unless we are to deal with women as mothers and put them in a position to work outside the home without undue worry about the security of their jobs if they becom pregnant. The public sector in Britain is far in advance of private industry on this matter. It is quite surprising the extent to which in the public services—through peaceful negotiations and without strike action—conditions of employment have been negotiated which are so much better than one finds in private industry; and in the treatment of women who become pregnant and who are mothers, there is an improvement in their conditions far greater than we see in industry.
We are told that we are very much behind the rest of Europe in this respect and that other countries have gone much further and faster than ourselves. There was a keen debate in the other place two days ago on the qualifying period of 104 weeks' employment before a woman would be entitled to the concessions given
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for maternity under the Bill. There was an attempt to reduce that period to 12 months. In my view, to begin with and in present circumstances the two-year period is reasonable. This is especially so because at present—or at least until now—there is far too big a turnover in employment, particularly among women. About 12 million P45 forms are issued every year—a fact which represents the movement of people from one employer to another. This turnover of employment has been one of the side effects of full employment. Any encouragement, no matter how slight, to people to stay in their jobs a little longer, and not to change jobs so frequently, would probably be beneficial at the present time. A great deal is lost in training and in dislocation of processes because of changes in staff.
My final point concerns the Advisory, Conciliation and Arbitration Service, which, I read, has already dealt with over 1,000 references. But I want to see the "big boys" going to the Service. It is all very well for a Service of this kind to deal with numerous tiddlers, the small beer in industrial disputes—taking them as related to the national interest. I do not wish to suggest that industrial disputes can be ignored; they are probably all important. But now that the Service has been set up in the manner which the Trades Union Congress sought—and in this respect everything has been conceded to the TUC point of view—we ought to see a greater emphasis by the unions themselves on the use of the Service.
We must look increasingly on free collective bargaining as a thing of the past. I cannot see that it will continue in a fully planned economy, which is the direction in which we are heading very quickly at the moment. Collective bargaining, which brings out the big stick, should be regarded as a potential threat to the interests of the nation. I do not think people, especially those holding positions of great responsibility, in either industry or the unions, should always claim to be the judges of their own cause. The signposts to the ACAS should be numerous and should be fully legible for all to see. This includes, and perhaps even more especially it should refer to, the bigger and more powerful unions whose example would mean so much to

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others. If the Bill produces the sort of results I have in mind they will be on the credit side. We should look increasingly to those who are to benefit from the Bill to use it fully in the interests of the country, to refrain from action which will harm the economy, when facilities exist for their grievances WI be dealt with under their own chosen instrument.
2.23 p.m.
Baroness VICKERS: My Lords, before saying a few words about the Bill, I wish to ask the noble Lord, Lord Jacques, if he would be kind enough to convey to the noble Lord, Lord Hughes, my regret that he is leaving. I have been in this House for only a short time, but I recall that it was the noble Lord, Lord Hughes, who made the reply when I made my maiden speech. Echoing what the noble Lord, Lord Houghton of Sowerby, said, I think the noble Lord had difficulty in answering my first question because ho could not hear it. I hope that my diction has improved since then.
Having listened to what the noble Lord, Lord Houghton, said, I found, as always, his speech constructive and well put together. Today he gave us a very good background to the reason for the Bill. My only fear about the Bill is that it has perhaps been produced a little too soon. I am glad that this time the noble Lord did not go down for decimalisation with regard to women, which we had an
argument about when discussing the Sex Discrimination Bill. I wish to differ from the noble Lord in regard to the position of women under the Bill. In the Sunday Telegraph of 27th July there was a headline, "Mr. Foot's Unemployment Creation Bill". A very good article followed that headline, although I did not agree with all of it. But there are points regarding women which will cause difficulty unless Clauses 35 to 44 of the Bill are amended.
With regard to job security, I hope that the Government will consider changing the responsibility from the employers to the State, because if the employers have to pay equal pay and have to pay the amount of money which will be a burden under this Bill, they will discriminate against women, particularly younger women, and they will take on women who are not of child-bearing age. I think this must be remembered. Therefore, we come to the many industries such.
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as textiles, food, clothing manufacturing, electronics, radio and television, just to mention a few, which, when equal pay comes in and with considerable unemployment among males, if employers must also bear the burden of this extra money, the women will not get the jobs.
My Lords, the Department of Employment published their Manpower Paper No. 12. It proves something of what I mean. It was called "Women and Work—Overseas Practice"—and the noble Lord mentioned overseas practice. It gives details in regard to an EEC Report on Employment of Women in 1972 which stated in conclusion:
"Maternity should be viewed as a social function and not as an occupational disadvantage."
I think that that is expressed very well. It should be a social function and not an occupational disadvantage. The ILO also reported that the stage has now been reached in much of the world—and I underline "much of the world"—where women workers need not fear dismissal on account of pregnancy and need not suffer excessive financial loss during the prescribed period of maternity leave. I think that noble Lords will agree that the ILO is a very responsible body to make such a statement.
The USA has legislative guidelines in regard to pregnancy and this is considered a temporary disability to be treated' no differently from illness or problems resulting in absence from work. It seems to me very strange when we are bringing in new Bill and now that we are in the EEC that all other countries except Southern Ireland and ourselves make legal provision for leave, generally about 14 weeks, and for maintenance of income and compensation for loss of earnings. In these other countries, the payments for maternity benefits are usually done through social security schemes. There are some private insurance schemes to which employers contribute. The option of extended leave after birth is advocated in the ILO Recommendations of 1965 called The Employment of Women with Family Responsibilities.
I should like to mention some other countries outside the EEC. Sweden is a country which has often been highly praised by members of the Government. Since 1973 there has been a new maternity

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insurance scheme. It has been a parental insurance scheme. Following the birth of a child, parents may decide which of them is to look after the child and receive sickness benefit for 180 days. The father can also claim sickness benefit for looking after children under the age of 10 years during his wife's confinement. A parent can stay at home for two and a half years to take care of his or her child or, interestingly enough, an adopted child, without losing rights of unemployment benefit.
My Lords, if you take Eastern Europe, Hungary gives five months' maternity leave on full pay. They can choose to remain at home until the child is three years old. This period counts for pension and she receives a monthly mother's allowance. As the noble Lord, Lord Houghton, said, this really means that we are thinking of married women with children. The USSR has similar provisions.
As the noble Lord mentioned, the public sector treats women better. They have 18 weeks paid leave which is written into their contract. When I was a member of the LCC I was one of those who fought for this for teachers at that time. In local government employment, in the National Health Service, in electricity, in the water and gas services and in the universities, they all get this benefit. The poorer sections of women, the lower paid, get only six weeks. So, again, there is no equality. I hope that this may be considered during the Committee stage.
When one turns to Clause 43, this is going to be extremely difficult to work. It says:
"Where an employer… on engaging an employee"—
this is to take the place of a woman who is pregnant—
"informs the employee in writing that his employment will be terminated"—
I suppose the word can be "his" or "hers"—
"on return to work of another employee who is, or will be absent wholly or partly because of pregnancy or confinement;…"
(b) says:
"dismisses the first-mentioned employee to make it possible to give work to the employee."
Who is going to take on a job of this kind knowing that they are going to be
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dismissed at any time when the other woman decides to return?
Clause 41 makes the situation even more difficult because in subsection (2) it says:
"An employer may postpone an employee's return to work until a date not more than four weeks after the notified day of return if he notifies her before that date that for specific reasons he is postponing her return until that date, and accordingly she will be entitled to return to work with him on that date."
This is going to be unsettling for two people: the person who takes the job, knowing it is going to be a temporary job anyhow, and knowing that the woman may not be able to return to work for a longer period than was anticipated in the beginning; and for the permanent one who has to wait until the other person gets out of a job. Surely this is not a good way to try to run an industry
I suggest the employment of women is of interest to the State, not of the individual employers. By this I mean that the children of these women, who now it is proposed should be paid for by the employers, will not be of any use to the employers; but we hope that they will be of use to the State and the country in the future. Therefore the burden should be on the State. I believe that a woman who has opted for the married women's insurance stamp will not, as this Bill is at present, get maternity allowance from the State. My noble friend Lady Hornsby-Smith mentioned that in the small businesses the employer will often be classed as self-employed, and he will have a high National Insurance contribution. If he has to bear this extra cost, he will not employ women in the future because with equal pay, with extra cost put on by this Bill when it becomes an Act, he will be forced to put up his prices. This is one of the things we are trying to stop at the present moment.
Regrettably, a great number of firms—I believe between 30,000 and 40,000—have recently become bankrupt. I believe it is suggested—quite rightly—that women could be paid from an extended redundancy payment fund. After all, this is another State scheme. Why should not the State take over the entire payment? This would be much more preferable to leaving it to industry which has enough burdens at the present time. I hope that

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consideration will be given to these points when we come to the Committee stage.
As I see it, most other countries give good benefit through their State schemes. In Belgium a woman is entitled to receive social security sickness benefits, and she gets 60 per cent. of her pay as a minimum. France is even better, since 90 per cent. of the basic wage is given to enable the woman to remain at home. I am ending with these points: We want to give maternity protection and we should cover all aspects of five different conditions. We should give leave before and after birth. I would sooner we did that on the lines of the EEC countries than is proposed at the moment. There should be protection against dismissal during pregnancy and the right to return afterwards; but not to turn out the individual who has taken the job. It is necessary sometimes to have nursing breaks, and there should be the right to extend these beyond the statutory minimum period. This applies if the women concerned have had a bad labour. Also perhaps lighter work might be given, as is done in European countries, as a measure of safeguard for the health and safety of women during pregnancy and after the birth of children. This particularly concerns the unmarried woman, because she is the one who has to go back to work and earn a living for herself and her child.
Having read Clause 44. I should like to ask for some simple leaflet to be issued explaining this part of the Bill, which is extremely difficult to grasp fully. For instance, the phrase "expected week of confinement" means the week in which the confinement is expected to take place. Confinements are often rather irregular, and in making their claims women will need sonic interpretation of that clause, putting into simple language what they may claim. I sincerely hope that consideration will be given to the point I have made that the cost of these benefits should be borne by the State rather than by the employer. I do not think anybody would object to that. It would certainly be one way of helping to keep many prices lower than they would be if all the burden were to fall on individual firms. This would also help industry in the present difficult times.
2.37 p.m.
Lord WIGG: My Lords, I must apologise on two counts: first, for not having
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my name on the list—I had put it down but then took it off again because I was not sure of being able to get here in time—and, secondly, for not being here during the whole of the debate. However, I want to say one or two things which I believe to be important.
My noble friend Lord Houghton spoke of this Bill as being a Bill born of the mistakes of the past. I think it enshrines a great hope for the future. Some 10 days ago I spoke in our debate on the economy and said that I thought two things were necessary. The first was to find acceptance, not only of the letter but also of the spirit of total acceptance, of the principle of collective bargaining; and, secondly, if we have a mixed economy that is viable, the private sector must be able to function in terms of a reasonable profit as an inducement not only to produce but also to modernise. This is vital for the future.
Turning now to the point raised by the noble Baroness, which in principle has my support, may I say that I should not want to take away any of the rights envisaged in the Bill, or any of the financial advantages conferred by this Bill on the mother-to-be. But there is one advantage that the mother-to-be can have which is not mentioned in the Bill, and that is that the father of her child should have a secure job at a reasonably high standard of pay. That is one of the things which is needed and, if I may use one of my phrases which I wear almost to a shadow: if one's bleeding heart runs away with one's bloody head too much, as sometimes seems to happen in legislation of this sort, somebody has to pay the bill. I cannot find anybody yet who has sat down to calculate the cost to industry of Clauses 35 to 45. I want the Bill to be passed, but I do not believe that industry, particularly small industry, can meet that cost, and it ought to be borne by the State. When a woman has a child, she has that child not as an employee but as a social being; and society as a whole should meet the charge. If it does not, then either the woman will not have a job; there will be evasion or, if the cost is too great, the employer will go broke. Therefore I would ask the Government very earnestly to look at these clauses again in the cold hard light of reality.
The Bill as a whole has not only my support, but my enthusiastic support for

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the reason I have already mentioned. It enshrines hope for the future. The cause of a great deal of this country's difficulties at the present time—and it may choke it—is that we have been left a legacy of a class system that operates through all sections of our society. Two wars have got rid of a lot of it, but memories are very deeply rooted. Memories of the 1930s, memories of unemployment, memories of economic instability are there, so that very often without cause, suspicion is aroused and it means that we are still a very long way from what is wanted by my noble friend Lord Houghton, and what I want: a situation where no man (and no organisation) shall be judge in his own cause. Some who have had the advantages of a legal training call this the rule of law. I call it the rule of common sense.
ACAS—the Advisory Conciliation and Arbitration Service—is the first step in industry at all levels in the direction of, first of all, negotiation; the second is professional conciliation; and thirdly, there is the great price, arbitration. Be it noted that in capitalist America—which of course at the higher levels is not encumbered with politicians who wear their consciences on their breasts—they have got that. They also have professional conciliation.
That brings me to one of my objections regarding this Bill. The provision is contained in paragraph 7 of Schedule 1. There it is said that staff can be recruited subject to the Minister of the Civil Service. I know what this means. I was chairman of a statutory Board, and I knew what it meant on the Board of which I was chairman, and what it did not mean. It means to say that the decision has already been taken by the Secretary of State for Employment, who is a kindly, God-fearing person; that in fact the Civil Service unions have gone round and knocked at the door, and ACAS is going to be staffed with civil servants. This happens, of course, to come at a time of some redundancy. A number of boards which functioned under the previous Administration have people for whom jobs are to be found. So, instead of having professional conciliators—a difficult job, goodness only knows—
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we are going to have managers of employment exchanges whose idea of conciliation is to make absolutely sure that the meeting place is well-warmed and well lit, that the blotting paper and a pencil are put out, with a cup of tea at 4.30. But the job of conciliation as conceived in the United States is the job of a highly trained, highly intelligent professional, who will perhaps see just a glimpse of light at the end of the tunnel, light miles away. He will go for it and keep at it until he can get one body in one room and one body in another room and finally he can bring them together and achieve a settlement.
This is not the equipment to be found among civil servants. The Civil Service is a magnificent body, but it is neutral; it is neutral as between right and wrong "Minister, that is this and that is that. If you do that then you may be faced with this. If you do this then you must take account of that." And the arguments are nicely balanced. So the successful Minister does neither one thing nor the other, and in return he is supplied with clever answers to supplementary questions, whether it be in this House or in another place.
On the issue of collective bargaining—I said this in the previous debate and I say it again—there can be no neutrality. The price this country has to pay tor economic survival is willingness at all levels to sit down at the table and see the other fellow's point of view in order to secure a settlement. As I say, that should be by negotiation if possible; by conciliation if it is necessary to go to the second stage; and thirdly and finally, at some stage in our economic development—and may that day come soon—both sides will have to accept, whether or not they like it, the decisions taken by Parliament.
I entirely endorse what the noble Lord, Lord Houghton of Sowerby, with his much greater experience of the industrial field, has said more ably than I can. This is the goal and the Employment Protection Bill is the first step toward it. I should have been quite content if Part I only had been a Bill and if it could have been taken through all its stages with such speed as to be on the Statute Book already. May I pay my tribute to the work of ACAS. At present it works with hardly any powers, except promises for

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the future. I pay tribute to the work of that service and to the work of its chairman, Mr. Mortimer, in relation to a very difficult dispute upon which it would not be fair of me to dwell today.
I believe that when we come to the Commute stage we should do all we can to get this Bill on to the Statute Book. Perhaps the noble Lord, Lord Paget of Northampton, can help me here. If there are those in this House who can improve the drafting of the Bill, they will find plenty of material upon which to work because this is not a very well-drafted Bill. However, those are minutiae. If we can quickly produce a Bill that works we shall be making a very great contribution to the economic wellbeing of this country.
2.47 p.m.
Lord HANKEY: My Lords, I apologise for not having put my name on the list of speakers. However, since I received the Bill by post only this morning just as I was leaving for London it was hardly possible for me to do so. I want to register a protest to the Government. I think that they are treating your Lordships' House with gross discourtesy in facing it at such short notice with a document this thick, of this complexity and of this great importance. It is quite unreasonable. I do not know how the noble Earl managed to make such an excellent and distinguished criticism of it. I am sure that he worked throughout the night to do so. Unfortunately, I was unable to work throughout the night on a Bill of this great importance, although I should have liked to do so.
I agree with so much that has already been said that I do not intend to repeat it because the day is getting on and we have in front of us another Second Reading. However, may I congratulate the noble Lord, Lord Houghton of Sowerby, with whom I agree so very often on his most constructive and interesting speech.
We must be careful not to lend ourselves to the processes of "double think". I lived among Marxists for years and the processes of "double think" are so damaging and so intellectually destructive and socially divisive that we must not lend ourselves to them. When I read Articles 99 and 100 I was electrified
1912
to see that the idea of damages for breach of contract is again entering into our labour legislation. I think it ought to have been there for years, but let your Lordships not forget that the other place have not yet approved the Bill, with the Amendments, on trade union and labour relations which we sent to them only a few months ago, one of the principles of which is that any contract can he broken by any employee or trade union without any fear of the consequences. Therefore, this is complete "double think".
I am not surprised that the Labour Benches have been so empty today when I remember the eloquent and very well-reasoned speeches, with many of which I had some sympathy, stating that industrial relations could not really be subject to law and that they depend much more upon good will. I do not think that you can go so far as that. If you do not have a correct background of law you cannot expect that the trouble-makers in our factories, businesses and mines, can be kept in order. The vast majority of our work people are fed up to the teeth with all these strikes and trouble-making. It does not matter where you go. I travel very widely about this country and I have friends in every social sphere, and they almost all say that they are fed up, and can one wonder?—"Dad never brings a full pay packet home". It is an awful bore for our people.
If one follows up what has been done in the Trade Union and Labour Relations Act, which gives every trouble-maker the right to dismiss employees who behave a court, without giving the employer the right to dimiss employees who behave badly, or to bring a trade union before a court because it has behaved badly, then you are multiplying the causes of trouble and the means of causing trouble in our economy. It must be realised that there are a great many people in positions of responsibility who want to bring down our economy. I have not the smallest doubt that that is the object of a lot of people. I drew your Lordships' attention to the fact that the last trade union Bill but one—the one in 1974—was drafted by a Communist at the request of the relevant Minister; I believe that the last one was, too. I do not make any innuendoes out of this; I just state the fact. It is extraordinary when one reads it to see what a fertile

1913
source of trouble this present Bill will be. It cannot have any other effect, and if you want to bring down our industry and our country then pass this Bill as it stands. It will have exactly that effect and, in my opinion, it has been intended by some people to have that effect. I am not affixing any responsibility.
The Earl of LONGFORD: My Lords, may I just ask, strictly on a point of information, since the noble Lord seems to be so much better informed than some of us about the authorship of this Bill, whether he can reveal the name of this Communist? What was he doing there at all? Was he a civil servant, an outside adviser or what was he up to?
Lord HANKEY: My Lords, he was not a civil servant. I am not revealing his name. If the noble Earl will make the same sort of inquiries as I have made, he will easily confirm my information. I was not speaking about this Bill, but about the 1974 Act.
I should now like to say how much I agree with the introduction of the Arbitration Service. I think this should have been a service in statutory existence a long time ago and I am very glad that it is in this Bill. There are many other Parts of this Bill which are quite excellent and I hope they will go through, but I hope your Lordships will not hesitate to deal drastically with this Bill in the areas which are dangerous, and they are fairly numerous.
I also want to say that I do not see how we are going to have time before the end of the Session to deal with a Bill of this length and complexity. The Schedules are very long and they require close examination. Many of your Lordships have drawn attention to points which I must confess I have not had time to read in the train this morning. There are many points that ought to be gone into very carefully, and there will be a great deal to be said on both sides.
Lord HOUGHTON of SOWERBY: My Lords, with respect one did not have to wait until this morning to start studying this Bill. I have not had an advance copy, but I have been at it for weeks.
Lord HANKEY: My Lords, I understand that the House of Commons cleared it only a few hours ago.
Lord HOUGHTON of SOWERBY: My Lords, with respect, although the Bill in its present form had to wait for the House of Commons, the Bill itself was published months ago and one knew what was involved here. After all, on Second Reading we are discussing the principles of the Bill, so if the noble Lord has such great interest and knowledge—which I must say in some respects I suspect—he could have studied it.
Lord HANKEY: In that case, my Lords, it might have been courteous of the Government to distribute it to us and to say, "this is probably the basis on which your Lordships will be asked to discuss it at 24 hours' notice". In my case, it was only two hours and I express some indignation about this. I hope that the Government will not try to rattle your Lordships into passing something in a hurry. If ever there was a case for a Bill to be held over for discussion in the next Session, I should have thought this was it. It is an important Bill which needs careful thought; it is full of good stuff, but it is also full of some extremely dangerous material.
2.55 p.m.
Baroness ELLES: My Lords, with the encouragement of the noble Lord, Lord Hankey, not to be rattled, I shall now try to wind up for this side of the House on this very important Bill. I think enough has been said both on this side of the House and from the Cross-Benches to show that we deplore the speed at which we have been forced to work. I am quite certain that there is no provision in this Bill for the unions to work the hours that we have had to put in—without pay, of course—to produce an answer to your Lordships' House today.
I should like to begin by thanking all those who have taken part in this debate today, particular those on my own Benches who have come to support us in debating this Bill. I should like to congratulate my noble friend Lord Hewlett, on his robust speech and for putting things so bluntly, which only the voice of experience can do. I also wish to thank my noble friend Lady Hornsby-Smith, who again, speaks with great personal experience and knowledge of industry and of work in the unions. Other speakers I will mention as I go through some of the points. I know your Lordships will not expect me to go

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through all the points raised, because a lot will arise later in the Committee stage, but I will try to outline some of the matters which we want to emphasise this afternoon.
My Lords, before going more deeply into the Bill, I should also like to congratulate the noble Lord, Lord Houghton of Sowerby, on a very distinguished speech, which contributed to the value of this debate. It is a novel experience for me not only to wind up, but to listen to the contribution of the noble Lord, Lord Wigg, if I may say so with admiration and respect. I think he has made a valuable and important contribution to solving the problems with which we are faced. Nevertheless, I should like to say to the noble Lord, Lord Houghton, that I was somewhat surprised when he emphasised the fact that this Bill is fulfilling a part of the Social Contract—although later on, if I understood him correctly, he said that there never was a Social Contract. So one must indeed query why this Bill is now necessary.
The noble Lord also said that unions had been asked to exercise great restraint, but I have never known that it was an obligation on anybody, a union or an individual, to have to ask for an increase of wages at regular intervals, knowing that nobody, neither the State nor private enterprise, could afford to pay. The other day the noble Lord, Lord George-Brown, pointed out that the restraint that they were asked to exercise will cost the nation another £6,000 million, at least. This must be taken in relation to what has been said.
My Lords, with regard to the Bill itself the arguments in favour of a framework for good industrial relations are well known. What we are seeking on this side of the House are arguments to prove that the Bill before us establishes a framework which will produce good industrial relations. It clearly contains provisions which we all welcome as necessary and in many cases encapsulates in legal form what are already recognised as good industrial practices by large numbers of firms, and this has been borne out by many speakers today, as well as some measures prompted by a more progressive and enlightened policy for the protection of employees, which has been elaborated by the Commission and members of the European Parliament under the EEC
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Treaty. I was very glad to see in the Report of the Second Reading debate in the other place that the Minister responsible referred to the fact that the Government had taken part in discussions on redundancies over the last year and a half. I am sorry that their presence was not more evident in other institutions in the Community.
The Bill fails in four main aspects. As has already been said, its balance is heavily weighted in favour of one sector of the work force only, not even 50 per cent. of the work force, with a million non-affiliated unions and over 12 million non-unionist employees. Consequently, it fails to take account of the undeniable fact that much of our industrial unrest lies not as between employee and employer, but between employee and employee, whether on grounds of trade union recognition, unacceptable practice, maintenance or non-maintenance of pay differentials or discrimination between different work forces. So the Bill takes its inspiration from what might be called the present mythology based on 19th century practice, and not from the need to create a flourishing and progressive industrial society which we need as a nation, and which relics on its trading capacity for our very survival.
We want to see an employment policy which will not only protect people while at work but give security during their working lives—I think this is a point that has not been brought out sufficiently—not necessarily in the same job, but with greater protection during periods of adaptation and change. The full employment policy of the post-War era are no longer realisable, as we see to our cost, but at least let there be some constructive alternatives, and frankly from the other side I have not heard one. We also want to see a policy which will take into account the increasing number of unemployed school-leavers; one of the most shocking symptoms of irresponsible government, which spends £4,000 million in education and at the end of the day has over 55,000 young people without any job and practically without any prospect.
Secondly, there is no mention of any obligation on the part of the employee to fulfil his obligations as a worker, in recognition of the rights that he acquires, and which we accept on this side, relating

1917
to fair treatment contained in the Bill. Thirdly, it fails to recognise the urgent necessity for reduction in overmanning in industry, which is one of the main contributions to inflation in this country. The policy behind this Bill appears to be to let the employer, nationalised or private sector, go on paying an employee, regardless of whether he is producing anything at all, rather than become unemployed for a time and enable him to retrain for a more productive job. No one in this country, least of all on this side of the House, wants to see massive unemployment, with which we are now faced. We are all only too well aware of the hardship, suffering and inevitable insecurity caused to individuals and families. I would add that it is not only noble Lords on the other side of the House who are only too well aware of poverty of families. Many of us on this side have no private income of any kind. I would ask noble Lords on the other side not to always attack capital, as though they have none and it was all on this side of the House. That is not the fact.
The EARL of LONGFORD: My Lords, just as a matter of statistical speculation, would it not be likely—if we took the average, not necessarily of noble Lords we see here today, but just an overall calculation—that the average wealth of Conservative Peers would be four times that of the Labour Peers; would not that be a reasonable speculation?
Baroness ELLES: My Lords, I think the remark is entirely hypothetical. One has only to think of the very high incomes which are being earned by heads of nationalised industries. If they cannot save on that, they ought to be able to.
The Earl of LONGFORD: My Lords, we do not see many of them here.
Baroness ELLES: My Lords, after this interesting speculation as to how much noble Lords opposite have and how much we have, perhaps we could continue. What has to be accepted as a consequence of advanced industrialisation is that jobs will change through the course of a lifetime, whoever has the capital. What is needed is some constructive planning to enable a man to retrain and to readapt to new jobs. The only evidence of constructive
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and creative job making which has come out of this, so far as I can see, are the 700 extra civil servants who will be taken on to run it. This job creation is an area where State intervention is needed, and where the Government could call in aid the resources of the European Social Fund, loans under the ECSC Treaty and from the European Investment Bank, all of which are available to us as a Member-State and which could be used with benefit. In this regard it might well be asked—and perhaps the noble Lord would be kind enough to answer it at the end—what measures have been taken to demand aid from the European Social Fund, not only for Government enterprises but for training and retraining schemes under local authorities and public works and so on.
I do not think it is only the Government who have the right to put in programmes and claim under the European Social Fund. Although it is done through the Government, it is not only the Government which have the right to receive funds from these sources. It may be that the Government have, so far, taken every penny paid into the European Social Fund, but, as I understand it, that is not the objective of the Fund. Fourthly, and most serious of all, this Bill is one more example of the failure of the Government to tackle one of the real and deep-seated causes of unemployment which is the lack of confidence both at home and abroad needed to encourage investment in the industries of this country, and to create new jobs as old ones phase out. We are no longer competitive in world markets. Mr. Benn recognised the need for investment, but the money has so far had to be found in this country by penal fiscal legislation in order to save the industries which are collapsing all around us.
The Bill is putting even more strain and costs—unquantifiable so far as we can understand it, though a figure has been mentioned of £100 to £150 million—on industries which are already suffering from the economic and fiscal policies of the Government. The nationalised industries do not seem to care. They can carry their losses on our backs. I think it was published yesterday that they have already cost the country something like £7 billion. But the private sector is showing signs of exhaustion. The number of company

1919
liquidations alone indicates the kind of thing which is already happening. In 1973 there were just over 2,500 liquidations. In 1974 it went up to 3,720, and already in the first half of this year we are again over 2,500 liquidations, which is equivalent to the whole of 1973.
Many points have been raised during the debate, and the Minister will no doubt be replying with his usual clarity and courtesy. One of the points I should like to mention relates to maternity benefits. This is a matter on which we should be grateful to the Government for further consideration. We approve the principle of protection introduced in the Bill. We approve of protecting a woman who becomes pregnant from dismissal on grounds of her pregnancy. We approve of maternity benefit during and after confinement, and we think that some right of reinstatement should be given in accordance with indeed some of the best practice of our own firms and in line with other EEC Member-States.
In accordance with practices in other Member-States, however, we are convinced that the benefits should not be borne by the employer, as my noble friend Lady Vickers so rightly pointed out, but be part of general security provisions. This is for three main reasons. First, there is a very real danger that the unmarried woman will have more difficulty in getting a job. Indeed, pressure will be brought upon her not to undertake to have a family for a certain period of time. I have already heard many cases of this where a young woman will go for an interview and the employer will say, "Now, you are not going to have a family, are you?" She is, of course, under pressure to accept the job, and then she may or may not have her family. It seems to me that this is a form of intolerable pressure on private decisions and on restriction of employment opportunities. We do not support the present proposal of making an employer pay for these surplus maternity benefits, but it should be borne fully by the State.
We must also ask why should a woman employed for two years get a benefit which a woman employed for one year and 11 months is not entitled to. This is the kind of unnecessary and unimaginative legislation which creates discrimination on totally false grounds. If this was part of the social security provisions there
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would be no question of creating a new class of mother who would draw more pay as opposed to the one who comes in a month later and would not be entitled to the same sum. I hope that the Government would look at this.
I was very grateful to my noble friend Lady Vickers for all the information she gave us as to the provisions in other Member-States of Europe and, of course, outside the EEC. One point that I am not sure that she mentioned but is a very useful consideration in this matter is the fact that in Italy, for instance, there is social security provision for a mother who is working to be able to go back and look after her child up to the age of three years if that child is ill at any time. The mother draws the social security as though she was ill herself. This seems to me a very sensible way of dealing with a very difficult family problem, and which gives the mother far more sense of security and responsibility if she knows that in a case of necessity she can go home without losing the chance of her job or her salary. I hope that my noble friend Lady Vickers will put down some Amendments on this subject when we come to the Committee stage.
I should like to say one word to the noble Lord, Lord Houghton of Sowerby, with regard to the turnover. He referred to the very large turnover among young women who change their jobs. Perhaps he should be reminded that young women who take jobs are in nearly all cases the worst paid and have the most boring jobs with no chance of promotion. This should be taken into account when seeking reasons as to why they change their jobs. If, as I have done, you talk about jobs to students at Oxford University and propose to a brilliant young graduate of Christchurch that he should go and take a secretarial course at the end of his term in the summer of his third year, you can imagine what the reply might be. On the other hand, many brilliant girls coming out of Somerville or LMH have to do precisely that in order to get their first job. These matters are not nearly well enough understood or realised.
With regard to maternity benefit, there is a further point to which I should like to draw the attention of the noble Lord. The ILO Convention 103 relates to maternity protection. That provides that the

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cost of payment should not be borne personally by the employer. For instance, in the case of a small business or a single employer this would inevitably be so. No one could accuse the ILO of batting for the employer, but undoubtedly they realise the discriminating effect of the provision where an employer has to pay extra maternity benefit and the effect on a woman seeking a job—indeed, on any job opportunities for young women of childbearing age. I would ask the Government to look again at this point, not only with regard to the social security position, but also in regard to reinstatement.
My noble friend Lady Hornsby-Smith has made very clear the difficulties that small businesses would face if they had to guarantee reinstatement to a woman who has left work in order to have a child. On the other hand, every encouragement of a financial means should be given to the woman to look after her child. The physical and mental adaptation in the family is not sufficiently taken into account and different women react in different ways. I do not think that this is something that can be legislated for. It must be flexible, and good practice which is carried on in many firms should be encouraged and continued. This very delicate and personal area, which has a very bad effect on the mother if she is forced to go back to work before she really wants to, can have a very detrimental effect on society.
We all know the difficulties of mothers who have to raise their children, and every encouragement should be given to them to be able to stay at home and not to have to go out to work in order to support their children. This is a principle which the unions might well take on board: that when a mother returns to work it is not because she necessarily needs the money and has lost a whole year at work and therefore can be paid less than anybody else. Perhaps the character formation might be taken into account. I can assure noble Lords that anybody who has been a mother of children and lived within a family for many years learns tolerance, patience, judgment and good humour—all virtues which you can never learn just by being in a factory. These are irreplaceable values which should be recognised in
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financial terms, just as any other value should be recognised.
Having dealt with maternity benefit, somewhat feelingly, if I may say so, from personal experience, I should be grateful for some clarification of one or two other matters in the Bill. One is the effect of the provisions on redundancy. The EEC has been studying this problem for a long time, and indeed were held up in advancing their programme by non-co-operation from the Government. The Commission recognised the problems of short-lived industrial enterprises, the decline of older industries and the advance of technology and change in employment structures.
We welcome the provisions which relate to redundancy, but it is noted that they are not quite parallel with the EEC Directive which gives different timescales—I think it is 30 days instead of 90 days—but obviously the Government are taking more protective measures than the EEC Directive. The Directive refers specifically to consultation with "workers' representatives". Bearing in mind the 12 million or so non-union members of the workforce, would they be protected under the Bill? As I read it, Clause 90 refers specifically to dealing with trade union representatives and that is not in accordance with the Directive of the Commission which, as I say, refers to workers' representatives and not necessarily to members of trade unions. Perhaps the noble Lord will clarify the position here.
A further question which was raised both by my noble friend Lord Gowrie and the noble Lord, Lord Rochester, was the meaning and interpretation of Clause 89 in combination with Schedule 11. As it stands, the Bill in this respect appears to drive a coach and horses through the Remuneration, Charges and Grants Bill which, as we know, restricts rises for a year to £6 a week. Or is this another exception which we shall have to deal with in holding back inflation? It seems under the Bill as drafted that a trade union may make a claim to the Central Arbitration Committee that its members are receiving less favourable terms and conditions, including presumably wages, than are received by comparable workers in the same district in the same circumstances. On the face of it, this is highly inflationary and will affect the general level of terms and conditions on which

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the calculation may be based. As my noble friend Lord Gowrie ably explained, this will create an intolerable system of leap-frogging. I should like further information on Clause 102 in regard to the Employments Agencies Bill, which I understand now transfers licensing and enforcement powers from local authorities to the Secretary of State. May we be told what consultations took place with local authorities? Were they consulted before the Bill was presented to the other place and what were their views on the matter? We have not heard anything about this so far.
The able intervention by my noble friend Lord Ferrers in regard to Clause 104 on the health and safety measures for agricultural workers showed the complexity of practically every clause in the Bill. Our regret on this side of the House is that we have not had time to study the Bill thoroughly and accurately in accordance with the new Amendments and changes which have been made since the Bill was in another place, and I should put it on record, as other noble Lords have, that it was only this morning not that we got the Bill—the noble Lord, Lord Wigg, was right to say that one could get a copy of the Bill at any time—but that we had the printed Hansard of the Report stage in the House of Commons of Tuesday night; so it was only this morning that one could technically find out what Amendments have been made to the Bill before it came before your Lordships' House two hours later.
This is an intolerable way to do a job if one is trying to do it properly. It is all very well saying that we can read the Bill, but if one is to study it adequately and go deeply into the significance of these very difficult and complicated provisions, which have very important repercussions on the workforce in this country, then it is intolerable that we should have been given precisely two hours in which to do so. We shall be grateful to the noble Lord if he will clarify the points which I and other noble Lords have raised. He will have gathered what our views are on this Bill, but we shall try to make it a better Bill before it leaves this House. We realise its very great importance for the economic survival of this country and we will certainly
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do our best to make it a Bill which will work.
On a personal note, I should like to say on my behalf and on behalf of all noble Lords on this side of the House how very much we have enjoyed hearing the noble Lord, Lord Hughes, and we hope that when he retires—I understand to go to business rather than to pleasure—he will not have to suffer some of the horrors that he has presented to us in this Bill.
3.20 p.m.
Lord JACQUES: My Lords, it is a long, hot summer, and I am particularly pleased that we are to consider the remaining stages of this Bill in the cool of the autumn, when I hope some of those noble Lords who spoke from the Opposition Benches may perhaps have mellowed a little. Before I reply to the debate I wish to say what a pleasure it has been for me in the past few years to have worked with my noble friend Lord Hughes. We have worked together continuously in one or two Departments in turn and I have always found that he has been able and willing to give the maximum help and courtesy, and, above all, humour. For that I wish to thank him personally.
It would be quite impossible for me to reply to all the issues raised in the debate. Indeed, if I tried to reply to half of them I should still be an unconscionable time, and so I shall cover what I think are the most important points. Any Bill which is protective, or which seeks to redress a balance, can be seen to be biased. The legislation on consumer credit can be seen to be biased in favour of the consumer. The legislation on trade descriptions is biased in favour of the buyer. Even the Factories Acts and the health and safety legislation can be seen as being biased in favour of the worker. In that sense of course this Bill is biased. It is biased in favour of the manual worker, because it seeks to redress the imbalance between the manual worker and the white collar worker. In that sense I accept that it is biased.
The Bill will bite only where the employer refuses to observe reasonable conditions and reasonable standards of industrial relations. The Bill should certainly be of help to employers,

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because, whether we like it or not, the best weapon we have against strikes is conciliation and arbitration, and this Bill puts on a statutory basis the voluntary Conciliation and Arbitration Service, which can, and we hope will, be used by the employer in the same way as it can be used by the union. Some astonishment was expressed that we were relying on Statute rather than on collective agreement. This Bill is different from some of the other Bills we have had in this field. It is not regulatory. It sets down minimum standards, and the reason why it should do that was very neatly spelled out by my noble friend Lord Houghton of Sowerby.
It has also been claimed that the Bill is intended not for the poor workpeople, but for the trade unions. By the guarantee payments, the maternity benefits and the insolvency protection we are helping the lowest paid, who feel it most when difficulties arise. Furthermore, by the greater freedom to the Wages Councils and by the development of statutory JICs from the Wages Councils, we shall give help, despite the complaints from the Opposition, to those people who are receiving the lowest statutory minimum rate of wages.
So far as the cost is concerned, my noble friend Lord Wigg must not have been here—he is still not here—when my noble friend Lord Hughes spoke, otherwise he would have known that the question of cost had not only been reckoned but also spelled out. On the question of cost, I shall say only one thing. There is ample provision in the Bill for phasing, and it is intended that the operation of the Bill will be phased with regard to three things. First, the economic situation, with particular reference to inflation: secondly, the cost to industry, bearing in mind that the rates are an average of only 10p per worker per week and the spread is uneven; and thirdly, with regard to the availability of the skilled labour which is needed for carrying out some of the services which are provided, such as ACAS. Those are the things which will dominate the question of the operation of the Bill.
On the operation of the Central Arbitration Committee, a point was asked by the noble Earl, Lord Gowrie. I would point out that as the Bill stands it requires that the Secretary of State consult with
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organisations representing employers as he considers appropriate before appointing three members and, similarly, organisations representing workers, before appointing another three. The remaining three will be independent persons whom the Secretary of State considers suitable. A fourth member from each side of industry may be appointed after appropriate consultations, at the discretion of the Secretary of State. There has therefore been a modification in the Bill, I think, since the point was raised by the noble Earl.
My Lords, while on ACAS, the question was raised about how many arbitration cases there had been and in how many the findings had not been accepted. Between September 1974 and January 1975 there were 230 arbitration cases. We have no hard facts on the number rejected, but I am informed by the Service that rejection by either party is a very rare occurrence. I can take it no further than that. I was also asked why the findings of the Arbitration Committee should not be compulsory. For my part I should be happy if they could be so; but I am firmly of the opinion that before making acceptance of the decision of the Arbitration Committee by both parties compulsory, you would have to develop over a much longer period the confidence needed in an independence service. You certainly cannot do anything like that at its initiation. There would have to be intermediate steps and you could, in certain cases, try to get agreement beforehand that both parties would accept the decision of the Arbitration Committee so that the system runs smoothly and gradually before coming to the point where you make it compulsory.
There was some mention of the Employment Appeal Tribunal and it was related to the NIRC; but that comparison is not a reasonable one. The NIRC had original jurisdiction functions as well as appellate functions. All the difficulties that were experienced by NIRC and all the criticisms to which they were subject arose out of the exercise of those original jurisdiction functions. The Employment Appeal Tribunal has no original jurisdiction functions and therefore I think that the comparison is not on all four legs.
The Earl of GOWRIE: My Lords, the noble Lord will forgive me, but is

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it not true, however, that the new tribunal can arraign people for contempt of court?
Lord JACQUES: My Lords, not being a lawyer, I am not going to try to answer that "off the cuff". I can say that it has not got powers of injunction—which was a source of trouble under the old system. On recognition, there is of course a difficulty regarding the employer having rights of appeal. First, if there has been a decision and circumstances change, the employer can go to the Central Arbitration Committee. But most employers would want to go to that Committee on questions of inter-union dispute. So far as the TUC unions are concerned, there is already machinery for dealing with them. It is important that nothing should be done in the Bill which would prejudice recourse to this machinery which deals successfully with a significant number of such disputes, and is also a preventive measure. There is no doubt that much more will be said on this, especially when we come to Committee.
My right honourable friend has promised to consider the possibility of some statutory procedure if that can be married up with the volutary procedure which has been accepted by the TUC So far as information is concerned, I was astonished that this matter was raised. This Bill received a Second Reading in the other place on 28th April 1975. At column 54 of the Official Report, the Leader of the Opposition accused us of having stolen these words from the 1971 Act, and she said that because they had been taken from the 1971 Act they were quite acceptable. At column 147, the Shadow Minister who wound up the debate for the Opposition repeated those words. So, my Lords, you can find it in both column. There are safeguards, and if the issue is raised in Committee I shall certainly spell out in detail the safeguards which are in the Bill.
Regarding maternity, the two main issues raised were whether the State should pay, and the difficulty of reinstatement. When I said, "Whether the State should pay", it reminded me that I long ago came to the conclusion that in relation to public expenditure this House has assumed two functions: first, a daily
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function of insisting that the Government support every known project, and give as much as possible to every idea that comes along; and, secondly, at intervals of about two months, to slam the Government for having spent too much. It keeps on doing that, year after year. I do not think anybody can get away from that.
The present position in industry is that a large number of good employers are already making up the State benefit to full amount in maternity cases. All that this Bill is proposing to do is to insist that all employers do what good employers are doing. In this we are not isolated, by any means. The contents of the Bill in respect of redundancy are almost wholly parallel with what is being done in West Germany; and likewise, in Belgium there is a direct contribution by the employer. Furthermore, since part is paid by the State and part is paid by the employer, it is a flexible position which can be changed at any time over the years. All you have to do is increase or reduce the part which is paid for by the State.
Baroness ELLES: My Lords, would the noble Lord give way? Would he agree that the economic situation in Germany is not precisely parallel with that in this country?
Lord JACQUES: My Lords, I would agree with that. It is a debating point, which has no great significance. What you are failing to face up to is that the employer will have to pay whether or not it is paid by the State, because it is practically certain that if this is to be taken over by the State, then the major contribution will be the employers' contribution to the insurance scheme. There is no doubt about that. I would remind the noble Baroness, in that respect, that in the EEC countries the employer pays a far bigger contribution to the State scheme than he does in this country.
Baroness ELLES: My Lords, would the noble Lord give way once more? Perhaps he would also know that the Social Security benefits that are paid out in EEC countries are infinitely greater than in this country and that, in comparison, the payments in this country are a disgrace.
Lord JACQUES: My Lords, the Party to which the noble Baroness belongs have been in Office during this century and in the post-War period for much longer than my own Party have, so you must take a great deal of the responsibility for that and, incidentally, if you do not let me get on I shall never finish!
The other issue raised on maternity concerned reinstatement. There are difficulties, but I think they have been grossly exaggerated. For 20 years I managed an organisation which made up the wages from the State benefit to full wages, not merely in maternity cases but in cases of sickness of every kind; and we are still doing that after 30 years. We not only pay their benefit but we guarantee reinstatement. We had no great difficulty; so if you can do it for all sickness it is relatively easy to do it just for maternity. On the question of time off, the main question was whether we could expect the Codes before the Bill was implemented. This is a matter for the Service, but it is the Government's hope that the Codes will be available when the Bill comes into operation. I was also asked whether, as regards the statutory joint industrial councils, we had any kind of criteria in mind. In such cases, of course, it would be a decision of the Secretary of State and not of the Service, but I should imagine that my right honourable friend and his successors would depend very largely upon the Service for their information and advice.
Lord ROCHESTER: My Lords, may I intervene, if the noble Lord will forgive me? If he is referring to my question, that did not relate to the joint industrial councils but rather to recognition disputes; and the question concerned what criteria might be adopted by the Committee in examining those disputes. For example, would there be a percentage of union membership which would have to be there before a union would be recognised?
Lord JACQUES: My Lords, I think that is the same kind of question, and perhaps I might say that in such cases it would be the Central Committee which would make the decision. Obviously they would make their criteria, but I think I can say, without speculating too much, that they would be strongly influenced by the number of workers concerned who were also members of trade unions.
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If there were something like 20 or 30 per cent. the case would not be a strong one, but if the percentage were 60 or 70, then the case would be very much stronger. I think that might be the kind of criteria they would have in mind, but I have no authority to speak for the Service. In due course they will be able, if not to speak for themselves, at least to act for themselves. I think we are making too much of the extension of the terms and conditions.
After all, it has to be shown that a general level is being observed in the same trade, in the same district, and that the employer has the same circumstances. The requirements are so great that if it eliminates a few anomalous pockets of low pay that is about all it will do, and that is all it is intended to do. I would remind your Lordships that these provisions are what already apply in the fair wages resolution. That has not given rise to any great difficulty; nor would I think it would give rise to any great difficulty here.
So far as redundancies are concerned I would make two points. In effect, the Bill says: "Here is the ideal notice. This is what we think you should do as a good employer. But in practice you will have to do what is reasonable and practicable. In so far as you fall short of the ideal you will have to justify falling short. But there is a measure of flexibility." The noble Baroness asked me about the EEC Directive. The EEC Directive on Collective Redundancies defines workers' representatives according to the provisions of national legislation. In Germany, for example, the term means members of works councils; in the United Kingdom it means trade unions.
I come now to the temporary employment subsidy, on which I was asked who would be eligible for it. I think I can do no better than to quote a statement made in another place, and I will restrict the quotation to one paragraph which covers the main point:
"One of the conditions is that there should be reasonable prospects. With the assistance of the subsidy the workers concerned will he kept in employment for the period of the subsidy and then either retained in the firm or redeployed more effectively elsewhere. Another condition is that the employer should provide evidence in good faith of the decision to declare the impending redundancy. Support for the application from the union concerned is required. In order to qualify for the subsidy firms will have to give an undertaking to the

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effect that they are not insolvent or near to Insolvency. The scheme is intended to encourage the retention of workers in employment but not to enable companies to continue trading when otherwise they would be unable to do so. Finally, as announced in the White Paper Attack on Inflation the subsidy will not be available to any firms which breach the pay limit."
That is as far as I can comment on that particular issue at this stage
On the question of employment agency registration, the organisations representing local authorities were invited to meet the Minister before the Second Reading of the Bill in another place. They were unable to do so because of other engagements and he met them subsequently. Noble Lords will be aware that we on this side of the House have always said that we would prefer registration of employment agencies to be in the Central Government Department. It appears to us to be common sense that, if there is a Department which is specialising in this field and knows something about the people who are to register, it has the people who should do the registration; and if there has to be any administrative supervision at a later stage, they are the people who should do it. For the latter part, local authorities are quite unsuited to that kind of work.
I come now to health and safety. So far as agriculture is concerned, the Government feel that there should be a closer and more integrated relationship with the Health and Safety Commission. Accordingly, they have provided for this in the Bill and will be prepared to argue it out in detail in Committee. I believe that I have covered the main points which have been raised. Since I have been on my feet for 25 minutes, may I thank your Lordships for having put up with me for so long and say how glad I am to sit down.
Lord ROCHESTER: My Lords, before the noble Lord sits down, I raised a rather important question relating to Clause 89 and Schedule 11. The noble Baroness, Lady Elles, also referred to the inflationary effect of that clause and that Schedule. I wonder whether the noble Lord can say anything to reassure us on the effect that the Government's recent counter-inflationary measures may have on the proposed provisions in the Bill.
Lord JACQUES: My Lords, I do not like to send letters that arise out of
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Second Reading debates. However, since there is another Second Reading debate to follow this one, with the noble Lord's permission I will send a letter to him.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

PETROLEUM AND SUBMARINE PIPE-LINES BILL
3.47 p.m.
The MINISTER of STATE, DEPARTMENT of ENERGY (Lord Balogh): My Lords, I beg to move that this Bill be now read a second time. Before I embark on my more difficult task, may I join all those who have expressed great regret at the news of the resignation of the noble Lord, Lord Hughes, as a Minister, although I am quite sure that we shall have his sage advice from time to time from the Back Benches, backed by his own authority which is perhaps even greater than that of the Government. In particular, I owe him an immense debt of gratitude for redeeming my opening speeches by his masterly summing-up of debates which were witty and sharp as well as being totally sincere and very kind.
May I also anticipate his contribution to the debate and congratulate my noble friend Lord Kirkhill on his multiple trans-substantiation and assure him that his audience today, at any rate, if not less discriminating certainly will be more benevolent than some of the assemblies which he addresses in the great North. We shall all listen with great interest to what he has to say about the topic of which he has greater first-hand knowledge than the rest of us. We hope to hear him often because he is not really the ultimate arbiter when he speaks, as I know very well from my own horrible experience.
My Lords, if ever the cliche "last but not least" has applied, certainly it can be claimed for this occasion. Here we are at the very last debate of a crowded session, yet the subject of that debate is certainly second to none in importance. In a previous useful discussion in the long and exhausting days and nights in another place, which fortunately I have not had to undergo, the basic principles of this Bill received a thorough going over. I will not weary noble Lords with them now.

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On this occasion I should like to stress the large area of agreement which exists between the two sides not only of both Houses but also between the Government and the oil companies. I am sure that noble Lords opposite will do their best to diminish disagreement for the purposes of this debate, but this will not really disquiet us. I quote from the speech of the right honourable Member for Wan-stead and Woodford in another place on 29th July:
"We agree that the Exchequer should have a proper share of the revenues from the oil and gas. We agree that the Government should exercise proper controls over the operations. We agree that the Government need to have an expert understanding of the workings of the industry."
We agree that there must be powers to regulate the rate of depletion. We agree that every effort must be made to press ahead with the development of offshore oil fields and exploring for new reservoirs if we are to achieve and sustain self-sufficiency. We agree, too, that for the foreseeable future, only the oil industry can undertake these immensely complex and difficult tasks.
This Bill is essential to the attainment of many of the objectives I have just quoted. With participation as provided for in this Bill and with the Petroleum Revenue Tax we can tell the oil companies that, so far as this Government are concerned, the book is closed. I hope and trust that the Government and the companies, and all parts of the nation, will now work together to make the new policy a success. I hope more especially that the participation negotiations will be speedily ended and successful. I have never claimed that the discovery of gas and oil in the British Continental Shelf will by itself cure our evils and restore Britain to the rightful place to which her qualities and history entitle her. It will, however, if cleverly used, powerfully contribute to our rehabilitation.
With your Lordships' permission I shall resolutely refrain from looking back to find fault and I hope I shall be more fortunate in inspiring the same spirit in noble Lords opposite than I was on the last occasion. I shall thus try to go in greater detail through the provisions of the Bill, describing where necessary how they are related to the general themes we discussed in the previous
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debates. I wish freely to acknowledge the assistance and expertise of the oil companies in helping to improve the Bill in its passage through another place. We have pledged ourselves to undertake extensive consultations with the industry and I think I can honestly claim that we redeemed that pledge handsomely.
By way of introduction I would say only that the Bill has three principal aims. The first is that of greater public involvement in the production of oil and gas from United Kingdom waters. In our last debate I explained at some length why the Government believe that this involvement is necessary. I will repeat now only that every major oil-producing country in the world has embarked on a policy of participation in its oil industry—every such country, that is, except the United States, and even in that country there are many moves in the current Congress towards greater involvement in the oil industry by the Federal Government. I would once more ask your Lordships to see our proposals in this worldwide context and not in the context of our own familiar and rather tedious and inconclusive debates about nationalisation. We are not nationalising the oil industry. What we are doing is to establish a partnership between the State Oil Company and the private sector in existing and future consortia formed to exploit licences.
The second aim of the Bill is that of greater public control over licensees. I hope I do not need to convince your Lordships of the importance of this. I gave some examples in our last debate of the gaps in our present controls. We have no control over the rate of depletion, no requirement for continuing exploration after the first 6 years of a 46-year licence, no adequate power to obtain information or to prevent flaring of gas. No responsible Government could have allowed these gaps to continue and indeed I am glad to see that the Opposition has endorsed the need for new controls which happen to be along the lines proposed in the Bill. I hope therefore that there will be general agreement in the House about this.
My Lords, the third general aim of the Bill is to encourage and facilitate the development of our North Sea resources. There was, quite rightly, much emphasis in our recent debate on the importance

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and urgency of getting early and substantial production of our own oil. One or two noble Lords seemed to think that the Government did not share this sense of importance and urgency. Nothing could be further from our thoughts. The right pattern of depletion in the 1980s will require very careful consideration, but there is no doubt that an early and rapid build-up towards production of oil at least equal to our consumption of it is very much in the national interest. The Government have been bending all their efforts to this end, have helped firms in need and will continue to do so. There are important provisions in this Bill which will enable us to do so more effectively. On those, too, I venture to hope that there will be general agreement in this House.
My Lords, perhaps it would now be helpful to the House if I go in more detail through the provisions of the Bill. Part I establishes our State Oil Company, the British National Oil Corporation. It is this body which we intend to acquire the knowledge and expertise needed fully to safeguard national interests and eventually complete national oil exploration and production capability, which, as I said in our earlier debate, we regard as one of the main advantages of participation. The acceptance of the noble Lord, Lord Kearton, of the Chairmanship of the organising committee is an earnest of success. Clearly however the growth of the BNOC must be gradual. Precipitateness would prejudice our aims and the country's interests. We are now negotiating for participation in current licences to 25 companies, and it is through its position as co-licensee and as a member of operating committees that the BNOC will learn the business, and monitor developments. Five companies have already accepted, to which must be added a sixth, the London Scottish Marine Oil Company. The company, with its merged interest with Cawoods and National Carbonising, and with its associated Scottish Canadian transportation company, holds a 9 per cent. share of the Ninian field. This company has accepted, and unlike the report in the Scotsman. I can assure the House it was a voluntary agreement, without any sort of pressure.
Later, when the BNOC has established itself, it should be able to acquire licences of its own and act as an operator. It
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might also extend its interests downstream or abroad, in order to make the best use of the knowledge and of the oil it has acquired. Its powers are therefore widely drawn in Clause 2 to allow for such expansion, although in practice its early operations will be strictly confined to oil and gas production in the United Kingdom shelf. We recognise of course that expansion abroad or downstream will have considerable implications, for example for private sector firms in the same industry, and that is why assent by the Secretary of State will be required for such expansion activity, for which he will be answerable to Parliament.
My Lords, I said earlier that in considering the case for participation we must he willing to consider novel ideas. Can I suggest that we should adopt the same approach to the BNOC. Its functions will not be like those of the nationalised industries, and the provisions made for it in the Bill therefore differ considerably from those made for those industries. It will have a mixture of functions. It will act as a partner in offshore licences and might eventually go downstream; in all those functions it will act commercially and the financial duties to be laid on it under Clause 5 will ensure that it does.
Confidentiality about the affairs of each of its partners to the other partners will be strictly maintained. But as the sole licensee it will not necessarily act commercially. For instance, it could establish reserves. Any reserves thus established will have a role similar to that of the United States Naval Oil Reserves, which have now come in so handily. There is also provision in Clause 2(1) for it to act as an agent and adviser of the Government, which we regard as an important part of its role if it is to make the best use of the expertise it will acquire. Statoil in Norway regards it as one of its most important functions to act as general adviser to the Government on oil matters.
The relationship between the Government and the BNOC also requires fresh thinking. The pattern established for the nationalised industries has not worked outstandingly well under Governments of either Party. It is even less appropriate for the new Corporation. This must be a serious body if it is to fulfil the task of being an equal partner of the great multinational companies operating in this exceptionally intricate and difficult field.

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In this context, I think I should repeat emphatically the assurance given by my honourable and right honourable friends in another place. The BNOC, where it is in partnership or competition with the private sector, will not receive in any respect preferential treatment from the Government.
At the same time, the importance of oil to the nation's economy, the vast sums of money passing through the BNOC's hands, and its possible use as agent and adviser to the Government—all these things indicate the need for a specially close relationship between the Corporation and the Government. I would draw noble Lords' attention, in particular, to the provision in Clause 1 for the appointment of two official members to the Corporation. This is designed to ensure the best possible communications between the Corporation and the Government, and indeed follows the example of most other State oil companies in the world. I would also mention the National Oil Account, although this appears in Clause 40 in Part V. All the Corporation's revenues and royalties will be paid into the Account, and out of the Account all their needs will be met. Some have seen the Account as a sinister device to reduce Parliamentary control. On the contrary, public and Parliamentary scrutiny of the Corporation's handling of the vast sums going through its hands will be more complete than for any nationalised industry.
Part II of the Bill provides for the new licence controls. It may help the House if I take a moment to describe the arrangement of this Part. The amendments to be made in seaward licences are set out in Part I of Schedule 2, and the consolidated licences incorporating these amendments are set out in full in Part II of the same Schedule with the amendments printed in heavy type. Schedule 3 deals with land licences in the same way. I hope that the House will find this arrangement, which was designed to help Parliament, convenient. The changes themselves close all the gaps which I mentioned earlier.
The most important new control, over the rate of production, is contained in model Clauses 15 and 16, which noble Lords will find for seaward licences on pages 79 to 83 in Part II of Schedule 2.
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This control, like all those in Schedule 2, has been discussed in detail with the industry, and I believe that it provides effective control for the Government while taking full account of the practicalities of the industry and the licensee's own legitimate interests. Model Clause 14 enables the Secretary of State to require exploration throughout the life of the licence, but only on the scale which a good licensee would have found it in his own interest to conduct anyway. A greater safeguard could not be imagined. Model Clause 11 gives the Government power to take royalty in kind; 21 gives, for the first time, effective control over the flaring of gas—we do not want to become an exploited economy in this country—29 empowers the Government to obtain a wider range of information, and 38 gives effective control over deals in licence rights.
Part III has a rather similar function, giving the Government, for the first time, effective control over the development of pipe-lines. This is one of the most important gaps we have to fill. Such control is, of course, designed to avoid proliferation of pipe-lines, in order to minimise possible damaging side effects, such as the risk of pollution, and interference with the fishing industry and other users of the sea, and in order to avoid wasteful duplication of investments between different licensees—we do not want to have a pipe-line boom akin to the railway boom of the 19th century—which is a consideration of the first importance when pipelines can cost £1 million a mile.
This Part of the Bill therefore requires an authorisation for the construction and use of all future pipe-lines, and gives the Secretary of State a power to order modifications to a proposed or an existing pipe-line to allow a third party to use it; in that case, the third party to pay the cost. Of course, the Secretary of State can order third party use of an existing pipe-line only where such use would not prejudice the owner's actual or expected use of it. One of the most important clauses in this Part of the Bill is Clause 26 which, again for the first time, gives complete control over the safety of men engaged in pipe-line works offshore.
I cannot leave those parts of the Bill conferring new controls without saying a word about retrospection. No issue arises in relation to our pipe-line controls,

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since authorisations are to be required only for future pipe-lines. But Part 11 affects the terms of current as well as future production licences. These changes are not retrospective, since they do not make unlawful, or a breach of licence terms, any action which, before the Bill was passed, could not have been so described. There is no doubt that they do change the terms of licences already in existence. But as I pointed out several times in and out of Government, these licences were grievously defective.
The changes are necessary because current licences will account for all production until the next decade and probably the great bulk of it for some time after that. If the new controls—on whose need there is, I think, general agreement—are to be effective, they must therefore apply to current as well as future licences. I wish previous Governments had taken this necessary precaution before they licensed these vast and very profitable areas, but the action which this Bill takes as a result of that failure is imperative. Here, again, we can say that the imposition of price control in the US and the Canadian legislation impeding exports are much more far reaching in their effects on the profitability of the oil companies. I should like to reiterate the assurances given by my right honourable friend the present Secretary for Industry on 6th December last year. Under the procedure now contained in the Bill, the industry and their bankers will know from the start the maximum amount of cutback any field can suffer. And we shall, of course, consult the licensee before fixing both the maximum amount, and the actual cutback, if there is one.
Part IV of the Bill contains new controls over refinery construction, a rather different area of policy from offshore aspects of the Bill, but one that is by no means unconnected. The ability to refine our own oil requirements in this country has always been important in terms of security and the balance of payments. There is now the added dimension that we need enough refining capacity, and the right type of capacity, to achieve the best pattern of disposal of North Sea oil. Our policy on this was announced by the previous Secretary of State for Energy on 6th December last year.
Your Lordships will, I am sure, agree that it is important to ensure that developments
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in the crucial area of refining accord with Government policy. In the debates in another place it has been clear that there is general acceptance not only of that point, but of the form that it is proposed the new control should take. One of the main considerations we have had in mind is the position of planning authorities who, in the past, have had to form a view on the national merits of refinery projects at the same time as assessing environmental impact, safety aspects, and so forth. It will, I am sure, make sense to all concerned that the oil policy implications of refinery schemes should be separately judged in advance.
I mentioned at the beginning of my speech that the three main aims of the Bill were participation, control and encouragement of production. Part V deals mainly with the third. There are provisions of first-rate importance here. Clause 41 gives the Secretary of State power to repay royalties where in his view this is desirable to promote the development of our petroleum resources. The repayment will, moreover, be free of tax, which will make it an exceedingly valuable help to marginal fields. In view of the solicitude which was very sincerely expressed on the other side, I think this is an important statement. I ought to emphasise that we regard repayment of royalty as a last resort, to be employed only where the automatic adjustments built into petroleum revenue tax still leave a marginal field uneconomic. But, with this qualification, we believe it to be a most important means of flexibility in varying Government take according to the circumstances of individual fields.
Another valuable provision is in Clause 42 which gives the Secretary of State power to guarantee borrowings of up to £600 million by oil companies, and to lend them up to £50 million where in his view this is desirable to facilitate the development of our petroleum resources. It is not merely control, it is positive encouragement. There have been many signs that some licensees are unable to raise the colossal sums of money necessary, especially in view of the rise in costs, to bring a field into production. Your Lordships will recall the recent case of the Thistle field, where two licensees found themselves in this position, and a contingent Government guarantee had to

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be given. I therefore attach importance to Clause 42 as a weapon in the Government's armoury for promoting development.
A previous Secretary of State for Energy proudly enunciated in this House: "North Sea oil is ours and that is that." This Bill (and the Oil Taxation Act) represent no less than the activation, indeed the redemption, of that pledge. I have no doubt that in different circumstances that Secretary of State would not have wanted less control and participation than is contained in our Act and Bill. I commend this Bill to your Lordships.
Moved, That the Bill be now read 2a—(Lord Balogh.)
4.13 p.m.
Lord STRATHCONA and MOUNT ROYAL: My Lords, the slightly curious way in which we have been dealing with this Bill means that we must try to avoid going over the same ground too often. I shall endeavour not to repeat myself, but if I do it is to some extent because previously we did not get very many answers. That perhaps sounds a little disloyal as we pay our tributes to the noble Lord, Lord Hughes, who is leaving us. All I can say is that he displayed a characteristic masterly evasiveness when he wound up the debate last time. This leads me to welcome our new arrival, the noble Lord, Lord Kirkhill, a fellow member of the Smith clan, which gives me some family feeling towards him, and following in the noble tradition of Lord Provosts who have been translated to this House. As far as I recall, this is the first time a new Minister of State will at the same time have made his maiden speech from the Back-Bench. Anyway we shall hear him with great interest. I hope he does not feel the normal trepidation which most of us have felt when first addressing this House.
I shall try as far as possible to follow the noble Lord, Lord Balogh, in looking for the areas of agreement. I have said this before. The difficulty, speaking from the Opposition Bench, is because it is one's job to try to point out the areas of worry and disagreement, and it is sometimes apparent that one disagrees with the whole shooting match. This is not by any means so here. We recognise that many of the features of this Bill were
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desirable. However, I think it is probably true to say that we believe that this Bill at this time is very largely unnecessary, and is certainly unnecessarily divisive. I am sorry to have to say that, but it is right that I should say it.
However, let us not lose sight, as the noble Lord pointed out, of the basic objectives behind the Bill. We are anxious to achieve self-sufficiency in our oil resources for this country as soon as possible, not only for the balance of payments, with the relief that that must bring, but also for the reassurance that comes with the greater security of the supply of oil. It is worth remembering, however, that it is easy to exaggerate the importance of this security of supply question because I should have thought it unlikely that Europe as a whole would be in the happy situation of having a European security of supply, and I think it would be extremely difficult for a British Government to laugh at their neighbours across the Channel and say, "Pull up the ladder, Jack, I'm all right; we have plenty of oil." So let us not exaggerate the potential security that we stand to gain, but nevertheless let us be thankful for it if we can achieve it.
There is no doubt that it is right that the Government on behalf of the people of this country should see a proper take of what is, after all, a national asset which we are proceeding to exploit and deplete, and certainly no one would demur from wanting to see proper oilfield practice and, as the noble Lord pointed out, this is indeed in the interests of the oil companies. There are perhaps two slightly different aspects to this question of depletion control. There is the long-term national interest of getting larger overall production from a field by not rushing the production too much in the early days, and then there is the other issue, which is rather more contentious, which is the period which could come once we have reached self-sufficiency when it is thought in the national interest to restrain the production which the ordinary short-term commercial interests might suggest as being desirable. Then again, as the noble Lord mentioned, we obviously would want to avoid seeing wasteful duplication of the very expensive assets and to promote the most rational utilisation of them. I think most of us could agree with that.

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Some of those objectives might not be wholly palatable to the Scottish Nationalists, but mercifully they represent a small minority in this House. But these are the criteria against which we must judge the effectiveness of the Bill. As for the acquisition of knowledge, we believe that this would be better achieved by an independent agency. There are various reasons for this; it has a better long-term continuity, there is less likelihood of interference and there is a greater sense of confidence built up by the companies towards an agency which is separated off from the Government. I should have thought that, on the whole, this has been the experience of other countries. As for depletion control, I am not wholly persuaded by the noble Lord's case that it is necessary for the existing licences to be revoked. This is a highly technical question and this is clearly neither the place nor the time for us to argue it. Why I think we would believe is that if it is necessary to revoke licences, then this should be done according to what the noble Lord called something in the nature of a voluntary principle; at least it should be done by negotiation and, regrettably, this is not the situation with which we are dealing here.
I should have thought that, on the whole, we could have achieved depletion controls which we are to need by changing the nature of the new licences which are about to be issued. But we cannot afford to underrate the very serious damage which has already been done by the Government's declared intention of this post hoc alteration of a contract into which they solemnly entered. These are documents signed under seal, and it is a great sadness to talk to companies who say: "We never expected to find this kind of thing going on with Britain."
Let us be quite clear about what is happening. These companies are being told that something which has been sold to them is now not to be delivered as and when they want it. It seems to me that the analogy here is that on selling a house one enters into a contract to sell it, and then after the contract is signed one says to the buyer that it may be necessary later to deprive him of the use of some of the rooms—
Lord BALOGH: My Lords, would not the noble Lord agree that this is not
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really a matter of buying a house, but rather a situation affecting national interests of the utmost importance, and which has been exercised in many other countries, more especially in the United States of America—where price control has been imposed, as the noble Lord probably knows—and in Canada where the licences have been changed? After all, a force majeure situation with which we are confronted at present, as a result of the OPEC operations, cannot be described as "buying a house."
Lord STRATHCONA and MOUNT ROYAL: My Lords, I accept that we can make differences here. But I do not even find the Government regretting their having to go into the unilateral alteration of contracts—
Lord BALOGH: But, my Lords, we have just said so.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am delighted to hear the noble Lord, at least, express his own regret. However, we might have expected to see a practical demonstration of the nature of his regret by saying that in so far as anybody will lose by what the Government are having to do, they feel that they should at least discuss the possibility of compensating those people for it. I wish to refer to a quotation, which I have been unable to check, but which I believe goes back to Mary, Queen of Scots, who said:
"When formal obligations are being unilaterally abandoned can informal assurances be relied upon?"
It is this aspect of the matter which concerns us very much, and it is a bad precedent for the British Government. It weakens our ability to complain when other people do it to us, and it lays us wide open to the possibility of retaliation, although, naturally, one sincerely hopes that other people will not throw this kind of abrogation of agreements in our face.
We also believe that it is unnecessary to launch the BNOC into the competitive jungle of the oil business. After all, this is epitomised by the free-booting Texans now to be seen—dressed in their traditional garb—in Aberdeen. This is a business where the risks are high and the rewards are great; all of which leads us to believe that the less direct involvement the Government have in that kind

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of industry, the better. If the Government felt that they had to get involved—and we now accept that they do feel that—then this is a funny way to set about it.
The noble Lord says two things: first, that he accepts that nationalised industries have not a wholly happy record in this country. I welcome that statement very much indeed and I could not demur from it for a moment. It is not something which we very often hear said on the noble Lord's side of the House. One cannot but also welcome what the noble Lord says about needing to have a fresh look at the way in which we handle these kind of industries. The question is whether or not the proposals for the BNOC are likely to be successful. There are two major differences, as I see them, between the way in which the BNOC is intended to operate and the way in which either a private company or an ordinary nationalised corporation—such as we have got to know them—operates. The first difference is in being free from petroleum revenue tax. One sees the certain bureaucratic desirability of not levying a tax and then giving it back. But what concerns us very much is that this will create a difference of motivation between the two partners.
The oil companies are extremely used to combine in all sorts of ways. They are accustomed to combining at the upstream, or production end and competing against the same company at the downstream, the refining and distributing end. This does not bother them. But they have found a difficulty in the past where you have two companies with different tax structures which tend to give them different objectives and motivations. Let me give an example. There is the kind of situation which used to arise because American companies had depreciation arrangements for their assets which British companies did not. My information is that this created a conflict between partners in the past. I would suggest that that is one angle where this elimination of petroleum revenue tax on BNOC is likely to create difficulty.
Furthermore, my Lords, it will lead to a lack of credibility. I am sure the noble Lord himself must have met this before; but companies overseas, prior to all these negotiations, never really believed that
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British Petroleum was not a Government-controlled company. In vain would one say, "The Government have a very large holding in BP and the company have Government directors; but they are not accustomed to behave as Government directors, as such." It was a surprise to me to find the extent to which people say: "That is what you all say, but we know that this is not really the case." If that is true of BP, I quail to think of what will be said about BNOC. I fear that this will create additional conflicts which can only slow down the operation.
Then I fear that the same situation is going to be exacerbated by the rather complicated concept of the national oil account. This seems to me to be open to two objections. I totally take the point when the noble Lord says that this is an attempt to bring a nationalised corporation under Government control. But is it not going to create a situation whereby this Government corporation has no control over its own finances? All its revenue is going to the national oil account under the control of the Minister. In a fast-moving, free-booting, freewheeling situation, is it not going to delay the power of the BNOC to take decisions while it refers to the Minister. I know that it is unkind to accuse Whitehall of being slow; but the fact is that Governments are not good at taking quick commercial decisions. All the money will come under the control of the Minister from the national oil account. That is on one side. On the other side, we shall have a situation where enormous sums of money are going to flow into the total control of this Minister. This Minister is going to control sums of the order of £2,000 million. He is going to have power to use this money in almost any area he likes. As the noble Lord said, they can go downstream or abroad.
All this is going under the control of the Minister. I would have said this even before we got this Minister in this position at the present time; but it is an unhappy accident that it happens to be him but it merely exaggerates one's concern at the situation we are setting up. The danger is that if we once get nationalised corporations behaving in a non-commercial manner competing noncompetitively right down the line, even as far down as the chemical works, the

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danger is that by behaving in an uncommercial way they can make a previously viable operation non-commercial and one finishes up with a nationalised monopoly. I do not believe I need to develop the dangers of that case any more. These are genuine fears which we see and which the industry expresses.
However, let us go back to the positive side and welcome the assurances which the noble Lord gave about confidentiality as between the various activities of this many-headed monster which he is about to create. Here, again, there is an element of a credibility gap as to its ability to exercise its acknowledged acquisition in one area, and not to use that knowledge to the detriment of its partners in another. We must accept and welcome what the Minister said about that. I am astonished that he can speak so cheerfully about the confidence of the oil companies which he feels he enjoys. The message I am receiving is a different one, that their confidence has been destroyed to the point where they believe that many of the rather onerous burdens which are put upon the industry by this Bill are not there for their own good; they are there—some of these oil companies believe—as potential levers to force them to go into this so-called voluntary participation. It is no use the noble Lord saying that this is a great target which is being set up. I can assure him that this is a genuine fear which the oil companies have expressed.
I believe that the use of this word "voluntary" in this connection is nothing less than what I call a hypocritical farce. The kind of danger it creates is this. Here we have an industry which is very rapidly fluctuating, rapidly developing—the combinations change all the time—and licences are bought and sold, partners change. Every time a company wants to change its partnership arrangements, it has to get the permission of the Minister. What they fear, and what they say has already happened, is that the first thing the Government say when you go to discuss these matters is "We will talk about the question of the change of your licence, or partners. But before we do so, we have your agreement that we are going to have a voluntary 51 per cent. participation, do we not?" The noble Lord sometimes uses words that we argue about such as the words "nationalisation" and
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"participation". I do not suppose we shall agree what they mean. I have a horrible feeling that we shall not agree about what is meant by "voluntary". I suspect that his idea is considerably different from my own.
The other question which I should like to ask—and I raised this last time—is about the amount of money which will flow into the business as a result of BNOC's injection and participation. There is a sum of £900 million mentioned, which is "peanuts" in the kind of terms of which we are talking. You can pick your figure, my Lords, from anywhere between £5,000 million and £15,000 million wanted over the next few years. Then on top of that, as I understand it, there will be a certain amount of money re-circulating from oil revenues and royalties which the BNOC will use to put back. That is not new money going into the industry. Could the Minister tell us how much new money he thinks will flow into this industry as a result of the activities being suggested in this Bill? Is he so sure that the British Government are in a stronger position to raise money at a better rate in the international money markets than some of the international oil companies? I regret to say that I doubt it at the present time.
What about the nature of the participation agreements? We are coy about them, are we not? It is impossible to discover the details. If they are so voluntary, and if everybody is so happy about them, can we not publish the agreements which the oil companies are agreeing to enter into, and should we not then find that the oil companies knew what it was they were being asked to participate in? The Government would no doubt call it "an offer", but all I would say is that the oil companies regard it as something they are being pressurised to agree to.
Lord LOVELL-DAVIS: My Lords, if I may intervene briefly, the noble Lord has asked me several questions which I hope to answer in due course, but I should like to ask him a question at this stage, because I think it is important. He raised this matter of participation. It is a question which my right honourable friend the Under-Secretary in another place puts regularly and to which he has, as yet, received no answer from the Party opposite. Have the Party

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opposite now ruled out participation? Both the former Prime Minister and the present Conservative spokesman in another place have admitted that they considered it seriously while in Office—though opinions seem to differ on whether it was rejected, at least for current licences, before or after they left Office. Whatever they thought when in Government, perhaps they would not now seek to participate in the existing licences; but they have steadfastly declined to rule it out for the future. Can the noble Lord tell us whether or not the Party opposite accept that there has to be participation?
Lord STRATHCONA and MOUNT ROYAL: My Lords, I have some difficulty in answering the historical part of that question, and in a sense I suppose I am also in some difficulty in committing my Party ahead; but I do not say that we would not rule out the possibility of genuine voluntary participation if that is what the companies wanted. What I am complaining about is that we just do not see the "voluntary" element in the participation which is being mooted at the present time. I have a suspicion that the noble Lord is referring to the possibilities of carried interest, which used to be talked about some two years ago, but I think that the thoughts of all of us have matured somewhat since that time—at least I hope they have, because we are in a rapidly evolving situation and the concept of compulsory participation in any form by a Conservative Government is something which I should find it extremely difficult to go along with.
As usual in a debate, I have already spoken for longer than I intended. Unfortunately, the history of this legislation has been rather unhappy. The first announcement of this Bill came last November, but five months elapsed before finally it appeared. I do not think we should complain about that in itself, because we do not really believe this Bill was needed at this time, except for one or two non-controversial elements which could have been passed through quite easily. The Bill, having been produced, it was then guillotined unmercifully in another place, without any suggestion that the Opposition had been obstructive in the discussions that were going on upstairs. As a result the Bill comes to
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us, a great many issues never having been discussed at all in the other place.
My Lords, it is too much to hope that the Government will drop the Bill—and I must say I cannot think of a more suitable thing for them to announce on a hot day at the tail-end of this part of the Session, but we must not hope for miracles. What we shall do in September, when we come back to the task, which I confess will cast a certain shadow over my own holiday during the next month, is to endeavour to persuade the Government that there are matters of principle about which it is right for us to be worried. We also hope that they in turn will be receptive to some of the detailed and more technical Amendments which have not yet been discussed and which have been left to this House to deal with.
May I go back to what I said earlier. We shall approach the Committee stage of this Bill in good faith, genuinely wanting to do our best to get it right, because we believe that we are now making the ground rules for an exciting, but risky and dangerous, enterprise, upon which the very prosperity of this industrial country is to depend in the years ahead.
4.40 p.m.
Lord AVEBURY: My Lords, in my view Parliament is at its most futile and irrelevant when it is discussing questions of political taxonomy and I do not propose to enter into an argument about whether this Bill or clauses of it could be classified as Socialism, or to argue with the noble Lord. Lord Strathcona, about whether the Bill as a whole is unnecessary and divisive. I should like to start from the rather different proposition that non-renewable natural resources of all kinds belong to the people as a whole and it is a matter of convenience rather than right if private interests are allowed to exploit them. I also believe that during the remainder of this century the problem which is to be of overriding importance for the over-developed world is that of adjustment from perennial growth to levels of consumption of non-renewable resources that can he sustained indefinitely. When it is said that ownership by the people is the guiding principle, it means that, or at least I hope it means that, in the sense that the people are the life tenants, rather than having absolute rights including any right to

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squander in a period of less than half a century the natural resources which have taken thousands of millennia to accumulate, leaving nothing for succeeding generations.
Worldwide, the ratio of production to reserves of crude oil stands at just over 34 years of supply at current rates of production, and has been declining steadily since the early 1950s. If consumption were stabilised at the 1974 level it would be necessary to discover 20 new oilfields of 1 billion barrels each, the size of the largest in the North Sea, to maintain this ratio at 34 years. But since the geologists tell us that the oil provinces which are those easiest to exploit geographically and geologically have been developed already, the further discoveries that remain to be made will require larger and larger inputs of energy, leaving smaller net amounts for the end users. And since the best estimates that have been made of the remaining reserves in the non-Communist world are around 750 billion barrels, however large the inputs may be the rate of discovery must decline.
That has been well illustrated in the ease of the Eastern Mexican Gulf where the companies paid 1·4 billion for exploration rights that produced 14 dry holes in a row. The United States Geological Survey has revised downwards the estimates of recoverable reserves to a maximum of 130 billion barrels, and in the meanwhile their production of natural gas has also declined sharply. Domestic production of oil in the United States is now 7 per cent. below the rate immediately prior to the Arab oil embargo, and over a quarter of American oil consumption is now having to be imported from OPEC countries. So they are much further away from the goal of national self-sufficiency than they were immediately prior to the crisis.
What that means is that over the next 30 years or so the law of supply and demand will continue to force upwards the price of oil and gas—and I must disagree with those who suggest that by the time production from the North Sea has built up to the 100 million ton mark at the end of this decade its cost is likely to appear less attractive in relation to world oil prices. I think there is an upper limit which is set by the existence of coal and nuclear options, but that
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limit also is receding upwards with time. One should also bear in mind that to alter the mix of fuels in an economy is a very long-term process because, after all, after 21 years of sustained effort, involving many thousands of our best scientists and engineers, at a cost of billions of pounds, only 10 per cent. of our electricity supplies are generated from nuclear heat. In the coal industry, we approved last year a programme of investment amounting to £600 million merely in order to keep production at the present level in the middle 1980s.
It is not at all clear to me, therefore, why the policy of both Tory and Labour Governments has been to secure the most rapid possible build-up of North Sea oil supplies to a peak which is estimated to occur towards the end of the next decade. All the authorities, including the super-optimist Professor Peter Odell, agree that with this strategy output is likely to decline fairly sharply thereafter and that we shall then be infinitely worse off than we were during 1973 and 1974. What is likely to happen is that we shall again become a net importer at the end of that period, making steadily increasing demands on overseas suppliers to replace dwindling home production, but in far more hostile market conditions than have obtained over the last two years.
If one looks at the matter in strictly accounting terms, we have to decide what will be the worth of North Sea oil at world market prices in the years in which it will be produced, assuming a variety of depletion policies. If one examines this, it could well be that a longer extraction period would make more sense from that strictly accounting point of view. Also, one has to take into account, as my noble friend Lord Thurso pointed out in the debate two weeks ago, the effect of a rapid build-up and then a rapid decline of the economy of Scotland. We shall have created a huge infrastructure, particularly in the North-East of Scotland. We are in danger of repeating over a shorter period at the end of this century the problems of dependence on a declining industry, which Scotland has already been through in coalmining and ship-building.
I must take issue with the noble Lord, Lord Campbell of Croy, who said in the previous debate that he thought we could leave it until 1981 to see what the extraction rate should be in future years. This

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point was also made by the noble Lord, Lord Balogh, in opening the debate this afternoon. It is also by no means obvious to me that we should have aimed all along at reaching self-sufficiency by 1980. I do not accept, as the noble Lord said, that this is now universally agreed, although I must accept, on the other hand, that if we placed restrictions in the near future on the operators of the fields that are already being developed, it would tend to undermine their creditworthiness. As the noble Lord, Lord Balogh, pointed out this afternoon, one knows that some of the smaller companies have already been in severe difficulties over borrowing the huge sums required. The best form of depletion control, as was rightly said by the right honourable Member for Wanstead and Woodford in another place, is the timing of new licences. One wants to use pro-rating only as a last resort.
However, I do not believe that our central objective should be, as the Under-Secretary of State put it in another place, to fashion an intelligent balance between the temptation to export and the long-term need to conserve. Within the limits of commercial practicality, the aim should be to stretch production as far into the future as it will go. If one is to believe the stories spread by the Conservatives in another place, the BNOC should help the pace of development to be slowed down merely by the threat of its existence.
There has been endless repetition of blood-curdling stories about the flight of drilling rigs from the British North Sea to escape the Red menace. To me, at least, those tales have an oddly familiar ring. They recalled the speeches that were made by the Tories in another place when we talked about the exploitation of gas in the Southern sector of the North Sea. We were frequently told that it was quite impossible for us to meet the targets set out in the 1967 White Paper, because of the policies of the then Socialist Government; whereas, as noble Lords will be aware, the story of the development of gas in the Southern sector of the North Sea has been one of great success.
I do not believe that the BNOC is going to make any difference to the process of exploitation for many years to come because the Government have given
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assurances that the participation arrangements are financially neutral, and as I understand it that means that so far as the discoveries already made are concerned there is no conceivable reason why managements should slow down. In the last debate the noble Lord, Lord Balogh, explained that companies would be neither better off nor worse off as a result of participation. Presumably he meant that to be understood as neither better off nor worse off in terms of the net rate of returns after royalty, corporation tax and PRT in relation to the size of their remaining investment. He said that discussions were continuing on how this could be achieved, and as the noble Lord, Lord Strathcona and Mount Royal said, it would be interesting to know more about the exact formulation of the terms. If we could be given some indication even of the general principles that are being applied in negotiations with the companies that would be better than nothing. There was an explanation of a kind given by the Under-Secretary of State in Standing Committee in another place, which I have read several times, and so far as I can see no capital payment is envisaged for the 51 per cent. of the investment which has already been incurred by the companies, but I should like the noble Lord to go into this in a little more detail.
The Under-Secretary of State gave some figures relating to 1976 with which I will not weary the House, but what they amounted to was this. The Government would be putting up 51 per cent. of the new capital expenditure then being incurred and they would receive 51 per cent. of the revenues from the oil being produced, but there was a silence about what was going to happen with regard to the very substantial investment that the companies have already incurred.
My right honourable friend the Member for Orkney and Shetland had some other criticisms to make of the BNOC. These were, first, that it requires up to £900 million of new borrowing at a time when almost everyone agrees that public spending ought to be reduced; and, secondly, that some 800 people, many of them possessing extremely rare skills, will have to be recruited to run the Corporation. I should like to ask the Government why we should not provide that participation can proceed only at the rate which the BNOC could finance out of its revenues

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so that we do not create any new borrowing at all. If we did that the magic figure of 51 per cent. required by the Government would be reached ultimately; it would merely take a little longer to reach.
If the Corporation has to build up its operations more slowly, the problems of recruitment of expert staff would be that much reduced. A further advantage that occurs to me is that the adverse effect on the balance of payments of acquiring 51 per cent. of the existing investment, assuming that there is any cash payment there, from overseas companies would be deferred. I am not so naive as to imagine that any of these arguments will appeal to the Government, but I should like to know why it is considered so essential, as it appears to be from the figures given by the Under-Secretary of State, that by the end of 1976 these participation arrangements have to be completed for all existing fields.
Then there is the element of retrospection in the amended model terms which has already been referred to by the noble Lord. It is a matter of very great concern, as he said, because it is impossible to predict the extent to which the Government are going to use these new powers, and even when assurances have been given behind the scenes to oil companies, I think it will be generally recognised that there is no satisfactory substitute for obligations written into a Statute which cannot then be varied or revoked by some Minister who may not be as well disposed towards the private enterprise sector as is the present Secretary of State. It is argued that in the last round licences should not have been granted for periods as long as 46 years without a break. I do not think that anyone would dispute that if, in 1972, we had had any idea of the size of the North Sea oil province, the terms would have been much less favourable.
Lord BALOGH: My Lords, if the noble Lord, Lord Avebury, will give way, may I say that one of the Tory Ministers in 1971 said that we would he independent in oil, and production would be between 100 million and 140 million tonnes, which is not peanuts. It cannot be argued that the previous Government had no knowledge by that time of the potential of the North Sea.
Lord AVEBURY: My Lords, I would be interested to pursue that quotation, perhaps on Committee stage. I was under the impression that when the last round of licences were awarded, we had not yet made the enormous discoveries; we had not assessed the size of the Forties Field, which made the turning point in evaluating the ultimate potential of the North Sea. Perhaps the noble Lord, Lord Balogh, would be kind enough to let me have that quotation—
Lord CAMPBELL of CROY: And me.
Lord AVEBURY:—that there was knowledge in 1971 of the ultimate resources, although I accept what he says. I certainly did not think that it was generally known at that time.
Lord CAMPBELL of CROY: Guessing.
Lord AVEBURY: My Lords, I was going to say that in commercial contracts of all kinds it frequently happens that after a contract is entered into, changes in the situation make the terms more attractive, and one of the parties—and in our law the other party—has no right unilaterally to alter these terms. Of course, the State has such a right, but in international law it is subject to the payment of reasonable and prompt compensation. Yet there is no obligation on the Government to pay anything at all to the licensees if and when the new powers in Schedule 2 are exercised.
I suppose it might be argued by the Government that, practically speaking, the same result could be achieved by a variation of petroleum revenue tax if they were not able to claw back money from the oil companies under operating licensing terms. But the noble Lord, Lord Balogh, said this afternoon—and, of course, we all warmly approve of his statement—that from now on the oil companies would know exactly where they stand under a settled régime of tax and participation.
My Lords, I want to express some unhappiness about the incompatibility of the functions given to the BNOC. The former Secretary of State said that he did not want to see it become a political eunuch, but the degree of control by the

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Government, the complexity and peculiarity of the accounting and fiscal rules within which it will operate are such that it is difficult to imagine it behaving as a commercial organisation where it is required to do so. But it may be required to undertake unprofitable work, as was mentioned by the noble Lord, and it is to be exempt from PRT. It will be almost impossible for outside observers, including the Select Committee on Nationalised Industries—to whom I hope the BNOC will be subject—to isolate the commercial from the non-commercial transactions, and so measure BNOC by the standards applied elsewhere.
The criticisms to be made of the Bill are very largely concerned with the relations between the State and commercial companies, and the associated question of how far the State should become involved in a sphere of activity which, up to now, has been left to private enterprise, or nearly so. I do not belittle the importance of those questions, which must be settled now if the development of the United Kingdom sector of the North Sea is to proceed in an orderly manner, nor would I underestimate the strength of the political passions invoked when questions of this kind arise. But in my opinion there is a far more serious problem which I am afraid is virtually ignored by politicians because it stretches beyond the horizon of the next Election.
Neither the play of market forces nor the intervention of Governments seem able to cope with this problem of the management of finite resources in such a way as to achieve a smooth transition to the lower levels of consumption, which I believe are inevitable as these resources dwindle. Throughout the overdeveloped world as a whole the lesson of the crisis of October 1973 and its aftermath has been overlooked. I think there has been a general failure of political will and there is no evidence in this Bill or in the Government's overall policies for oil that that deficiency is being made good.
Lord BALOGH: My Lords, before the noble Lord sits down, may I just tell him for information, that in the figures which I quoted I was being really conservative; I said only 140 million tonnes. "Exciting North Sea oil prospect
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for Britain"—Sir John Eden addressing Aberdeen Chamber of Commerce, 1st December, 1971. The reference is Victoria Street, SW1, Extension 3798, reference No. 1033. He declared that there was sufficient to sustain a rate of production of 1 million barrels a day, that is, 50 million tonnes by 1975, and thought it would not be unreasonable to suppose that this figure will be trebled by the end of the decade. I hope that the noble Lord's impressions about the coming of Doomsday are as accurate as his recollection of the lack of knowledge of the Government about the size of the fields. I should say that this is the Northern part of the North Sea, including the Norwegian sector.
Lord AVEBURY: My Lords, perhaps I was too kind to the noble Lord's predecessors in Office in saying that nobody realised at the time of the previous licence round what was the ultimate size of the reserves. The noble Lord has produced a quotation, and it is for the Tories to reply to those allegations. I think the noble Lord merely reinforces the-point I was making, that no one who had sufficient knowledge of the ultimate size of these reserves would in the first place have awarded the licences for as long as 46 years. If that is what happened, and certainly it did judging from the quotation, then the Tories are to be severely criticised.
Lord BALOGH: My Lords, the noble Lord also complained that since we arrived in power and got to know the size of the fields we are now trying to alter certain of the control measures. I do not know how the noble Lord thinks he can have it both ways.
Lord AVEBURY: No, my Lords, I certainly do not say, and have never said, that the Government should not take these control measures. I said that they are perfectly entitled to revoke or vary licences and to take power to control depletion or anything else. What I did say was that in these cases where the contract is altered retrospectively it is normal, and it is provided by international law, that compensation should be paid to holders of those rights.
5.3 p.m.
Lord KIRKHILL: My Lords, in rising to make an initial contribution to debates

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in your Lordships' Chamber, I think I should point out to my fellow member of the Smith clan, the noble Lord, Lord Strathcona, that I speak from the Back Benches in a rather Gilbertian manner, being, as I believe, at the moment a Minister-elect rather than a Minister affirmed, so I think the priorities are being observed. Of course, I thank him for his very warm welcome to me personally, as I do my noble friend Lord Balogh for his sentiments equally sympathetically expressed.
I thought it might be pertinent if I were to emphasise that there are at least two paramount considerations which seem to me to be relevant in the provisions of the Bill now before your Lordships. First, it must always be kept clearly in mind that tile major discoveries of oil deposits in our Northern waters constitute a new energy source and resource for Great Britain as a whole, and, while finite in duration, in marked contrast to the coal industry, whose long-term energy potential is, in my view, unrivalled, it unquestionably will be the principal influence leading to energy self-sufficiency by this country in the very early 1980s. Incidentally, this is a position which no other European nation will enjoy at that time, and which indicates, in my view, that if the burden of inflation can be brought under control over the coming months then an expanding economy in the 1980s is no mere rhetoric but is more probably a realistic prospect.
Secondly, it is already clear that the downstream potential development arising froth these discoveries is, and will be, enormous, giving rise to the need for complex decisions on future investment commitments. It might be, for example, that a balance will have to be maintained between the competing demand for increased refinery capacity, if this should be needed, as against perhaps the expansion of the petrochemical industry, and from such competing demands problems of location, of ultimate control and ownership, and of the very real needs and aspirations of the people most concerned, will require to be considered within a comprehensive social ethos. I conceive that in the birth of the British National Oil Corporation public participation in what will be profitable terms, unlike some recent forays, will ensure that rather wider
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considerations than those of straight commercial assessment will obtain.
Thus far, Scotland has been a principal beneficiary of onshore oil development. Many thousands of additional jobs have been created. In my own native city of Aberdeen there is virtually no unemployment today, and this in an area which, as recently as 1970, could be described as "cosy corner" in an article under that heading in the Economist magazine. It would be more apposite today to describe it as "the land of plenty."
Nevertheless, it should be said that the direct effects of North Sea Oil are unlikely by themselves to transform the Scottish economy, despite the potential to do so. The problem is that if you have an industry which has high value added—and the oil industry is exactly that—direct effects depend on costs of extraction. It could be that by the time the oil is flowing sufficiently to have an effect on the balance of payments and to contribute to the revenue, there will still be unacceptably high levels of unemployment in the West of Scotland.
I therefore welcome very much the decision to site the headquarters of the British National Oil Corporation in Scotland, believing that this firm decision by the Government is the real sort of devolution which the people of Scotland will be delighted to accept. By this action the Government have shown a marked confidence in the future of the Scottish economy, and in association with the offshore supplies already sited there it is clear that a serious effort has been made to devolve a measure of total power from the centre while at the same time, as the Bill clearly intends, supporting the fiscal and economic unity of the United Kingdom as a whole.
5.8 p.m.
Lord IRONSIDE: My Lords, first, may I congratulate the noble Lord, Lord Kirkhill, on his appointment as Minister of State in the Scottish Office. I have listened with particular interest to what the noble Lord has said in his speech, which I think all your Lordships will agree has been short and agreeable, and delivered with great skill and clarity. The noble Lord has chosen the hard way of making two maiden speeches in your Lordships' House, this one being a sort

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of trial run for the Dispatch Box. It is unusual, I think maybe unique, that we have a Minister of State elective speaking from the Back Benches. The House will admire the noble Lord for not withdrawing but choosing to subject himself to the customary practice for Back-Bench maiden speakers before going to the Dispatch Box.
In assuring him of a warm welcome to this House, let me assure him also that it is the first occasion on which I have had the opportunity of following a maiden speaker, but with the association that my family has with Aberdeenshire I am happy to follow the noble Lord who, as a past Lord Provost of Aberdeen, speaks with particular authority and with first-hand knowledge of oil and gas developments and of the way in which the face of that great city, and of Scotland as a whole, has changed in recent years. He has so rightly described it now as a land of plenty. We are fortunate in having the benefit of the noble Lord's experience on the Second Reading of this important Bill, and it goes without saying that we hope we shall hear him again on many other occasions. I also hope that he will sometimes listen to us.
My Lords, as the House is today going into Recess, I shall try to be as concise as possible, but as your Lordships know this Bill covers a lot of new ground, and I believe that we should study the contents with sufficient care in order to make absolutely certain that it is returned to the Commons in a more acceptable form than it is in now, in spite of the fact that there is a shortage of time after reaching us at this late stage. I may be able to help my noble friend Lord Strathcona and Mount Royal who inquired what is to be said about BNOC in future years. A US banker friend of mine asked me what progress is being made in the recovery of North Sea oil and gas, and he said, "I do not know what you call BNOC, but I reckon it stands for 'British nonsense over crude'." I was inclined to agree with him.
But, seriously, we have to reckon with the Bill and I wish to refer in the main to Part III, which makes provision for submarine pipelines. I think this might well be described as being the non-controversial Part of the Bill, but, as your
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Lordships know, until it has been properly examined in Committee we cannot tell for sure whether it is as innocent as it appears. Before I go any further, I should like to declare an interest, as on previous occasions, in that I am associated with International Research and Development Company Limited and connected directly with new British developments relating to underwater explosive techniques for joining large diameter piping and planning the exploitation of these and other new techniques with Vickers Oceanics and their fleet of submersibles. The noble Lord opposite will have been briefed by his Department about these activities, and will therefore recognise that if I speak with a possible bias I also speak with some knowledge of British industrial endeavour in the offshore field.
We have talked about British industrial endeavour in the offshore field on many occasions, and I have attended conferences, listened to debates in this House, and read much comment in journals, newspapers and so on. But when I try to sum up in my own mind what progress has been made, I always come to the conclusion that in spite of many developments, some of which are successful, we are really not making the impact in the big time league which we ought to be. It is true that we are learning in the North Sea, at a certain pace, but there is convincing evidence that our competitors are also learning the course fast on our backs. For example, we see the difficulties that have now overcome the new, second generation pipelaying barge—the semi-submersible of US design—in the way that its capstan shafts have proved to be just not man enough for the job in the North Sea. In so many ways we start all square with our competitors in the North Sea, and it should not be assumed that the previous experience of the Americans in other waters is the overriding factor in the North Sea.
I do not want to argue these points any further on this occasion, and I think it is sufficient to say that the approach adopted by the Commission of the European Community, in financing projects in the hydrocarbon sector to lift offshore endeavour into a higher gear, needs taking note of, in contrast to the British Government's support in the offshore field, which is directed much more towards long term research and data gathering and is only a fraction of that amount of money at

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present being allocated by the Commission. Time is slipping by and we still have no major facilities for contracting.
If, therefore, under the terms of its general functions, the BNOC were to seek substantial aid from the Commission as the Steel Corporation and other bodies in England have done, it might be seen that at least some good has emerged from its formation if the end result was a British pipelaying facility, derrick barge facility or some other major offshore investment of that nature. But will the BNOC really be in a position to do such a thing? As we have already heard, it has to feel its way almost from the start. As I see it, it will depend very greatly upon industry in every way for development and, above all, it should in my view be exposed to the commercial disciplines if it is to be accepted; in other words, it should represent fair competition to those who are engaged in carrying on similar business.
One of the powers which the new Corporation will be able to exercise is to carry out research, which is probably a reasonable power to take in view of the fact that other nationalised industries have similar powers and that the oil industry itself carries its own research facilities. The new Corporation has no such facilities at the moment and it will be, as I have said, dependent very largely, as is most of the oil industry, on developments in engineering industries and the private sector as a whole. Hence, it will also be vital for the Corporation to be in a position to sponsor research, and this would be in general line with the powers of other organisations set up by various Governments in recent times.
To mention just two such organisations which have such powers there is, first, the Nature Conservancy Council and, secondly, the British Library. To quote briefly exactly what is said in this connection in the case of the Nature Conservancy Council, it is:
"The commissioning or support, whether by financial means or otherwise, or research."
The British Library Act says:
"Generally for contributing to the efficient management of other libraries and information services, to carry out and sponsor research".
So a precedent has certainly been set for sponsoring research. This I believe to be fair, but I do not understand the Government's intention in the spheres
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of training, the offering of research services, advising and assistance. Is it intended that the Corporation will take over the functions of the national training centres already set up in Scotland? Is it intended that the Corporation will set up a research centre which will not only serve its own purposes, but also undertake research on a contract basis for others? I hope the Government will explain to the House their intention in these matters.
Part III of the Bill, which concerns the operation of pipe-lines, provides for the orderly supervision of the pipe-line network, the arteries of the controlled waters. Because of their importance and the fact that they must be protected, it is right that their construction and operation should be regulated, but not overregulated, and it is my suspicion that many of the clauses in this part of the Bill are here in order to give gathering powers to the BNOC over what is built, what is passed through these pipes and what is finally abandoned—a sort of cradle to the grave service. I have a feeling that many of the clauses in this Part of the Bill could quite simply and properly have been incorporated in offshore regulations under other Acts, such as the Mineral Workings (Offshore Installations) Act, but being in this Bill they must of course now be
examined.
The Government are treading new ground and so it seems are the Parliamentary draftsmen, as we are faced with some language in Part III which, because it is imprecise, becomes vague and somewhat unprofessional and possibly difficult to understand. For example, the whole tone of Part III relates to fluid flow and substances which might be conveyed, but the best description that the Bill offers is "things"; in other words, all that has been thought of and all that has not. As I said, this is imprecise when it need not be so, and it gives the impression of a lack of understanding of a situation in which the Government are seeking considerable powers of intervention. Furthermore, in connection with Part III, there appear to be some provisions on safety and inspection that do not adequately express the Government's desired intention, nor do they meet what many people in professional circles think is required; and they may even step

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beyond what is desirable. This will probably need probing further during the Committee stage, to see whether any improvements can be introduced.
Powers to regulate the use of pipe-lines are obviously important, but they must be seen to be fair, for example in terms of adequate compensation for intervention and modifications to the network, and in adequate rights of appeal. In due course, we shall be faced with the adoption of depletion policies and co-operative actions in the event of supply difficulties that relate to the European Economic Community and the International Energy Agency. The Bill goes to great lengths to secure Government intervention; but your Lordships will realise that the EEC is also trying to adopt an interventionist policy and, although the degree of intervention proposed is less than what it was two years ago, nevertheless the prospect is that the Council of Ministers will agree on some degree of intervention in due course. The Commission is seeking power in an emergency to impose rules which are subject only to appeal in Council, where decision by qualified majority could upset any plans for the British Government to dispose of North Sea oil and the powers to be taken by the Secretary of State under this Bill.
This means that the Secretary of State may be overruled and may find that in practice his powers may be limited by the diktat of Brussels, and we may find that North Sea oil was ours and that was that. In Committee we should take into account these factors and ensure that we do not overlook the way both the International Energy Agency and the EEC may affect our own offshore oil domain. I do not wish to say anything further, and I hope that through debate this Bill can be improved before it leaves this House.
5.22 p.m.
The Earl of LAUDERDALE: My Lords, it is a particular personal disappointment to me that the noble Lord, Lord Balogh, cannot at this moment be in his accustomed place because, as he would expect, I have one or two little posies to throw in his direction. When the noble Lord told us in the last debate that he was the expert behind the BNOC my hopes began to rise. He knows my
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regard for him both personally and for his ability. But now that we have had the chance to learn about this Bill and to digest what we were told in the last debate, I am forced to the conclusion that the noble and academic Lord is a simple flat-earther. It is not altogether surprising that our good friend, the noble Lord, Lord Hughes, is now leaving the company of the flat-earthers. We shall miss him, and not least perhaps after his rather unhappy excursion into the problems of deviated drilling in the last debate. We shall miss him very much, but we still hope to see and hear him in the future.
The noble Lord, Lord Kirkhill, is a bold man to join that flat-earthing company. He gave us a most interesting and enjoyable maiden speech. He comes from a distinguished stable, a stable of Provosts of Aberdeen, dating back in my knowledge at least to before the year 1410; and that year sticks in my mind because it was the year of the Battle of Harlaw when a Maitland kinsman of mine was Provost of Aberdeen, and he led the victorious Aberdonians in the battle.
My Lords, one accepts the aims of the noble Lord, Lord Balogh, and of the Government; indeed, the noble Lord himself appealed to us to search for areas of agreement. To use his words in the last debate we must:
"meet the urgent need for efficient and continuing development of the United Kingdom's petroleum resources."—[Official Report, 23/7/75; col. 327]
We need adequate control over, and adequate revenue from, the oil and gas, and finally we must get the balance right, as he put it, between the national interest and the oil companies themselves. In our submission all of those objectives could be obtained by means of tax.
But I wish to support my noble friend Lord Strathcona and Mount Royal who was put in a spot just now by being challenged as to the Tory attitude to participation in future. I have always been in favour of a carried interest provision in future licences. I have always been in favour of that as a basis of a bipartisan policy. But this Bill flies in the very face of fact, of logic and of experience. Relative to BNOC we were told the other day—and it was said again today—that participation necessarily

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involves the creation of a State oil company. What are the facts? First, we have the considerable success of the British Gas Council and of the National Coal Board exploration company. The National Coal Board exploration have more North Sea oil and gas now than either Gulf, Texaco, Standard Oil of California, Union of California or Burmah. What about the logic of it all? The British Gas Council is to carry on outside BNOC. This seems very strange, particularly when they have been so successful. There is much more to be said for having their competition, the British Gas Council and NCB, on the same lines as Norsk Hydro—people forget about that—which has a State participation of 51·4 per cent., and Statoil. Then if British national partnership is the aim, why not sell the 50 per cent. of the BNOC stock to the British public as the Canadian Government are doing with the Canadian Petroleum Company which is their chosen instrument for State intervention?
Questions have been asked, and I stress them again, about how BNOC is going to team up with private enterprise partners in the various consortia. We were told by the noble Lord in the last debate in one of those flashes of genial frankness that make him so endearing to us, that "BNOC will have a lot to learn. One of the advantages of participation in the current licences is that it will be able to learn the business". Surely, as a distinguished academician, the noble Lord, Lord Balogh, must agree that the pupil-teacher relationship does not work in universities unless the pupil is willing to learn instead of trying to take administrative and policy decisions.
How will the consortia, with BNOC in it, arrive at their best policy decisions? This is a point that was raised more than once this afternoon. There will be hideous dichotomies of judgment; they are inevitable when 49 per cent. of the consortia are going to be subject to the petroleum revenue tax and 51 per cent. exempt. The authors of this Bill are flat-earthers.
What about overseas experience? The noble Lord, Lord Balogh, invited us to look at it in a worldwide context. Let us see what has happened! In the last debate we were told that "with the exception of the USA, every major oil producer is developing State participation
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in the oil industry". Let us look at some illustrations. Norway: without retrospective revision of licences; without the State forcibly seizing on the oil companies' oil for Statoil; and without subsidising the State's oil by tax exemptions. Look at Denmark! The same applies. What about Holland? The same again. And Ireland? This country, too, follows the same pattern. Australia, the same again; New Zealand, the same again; Canada, the same again. The pattern of experience is not wholly to be dismissed. In addition, Canada, with her State interest, has needed to reverse both the federal and Albertan policies in order to arrest the flight of the oil experts and companies. And even having done that—and perhaps in conjunction with it—Canada is still honouring her natural gas obligations to the USA, although those obligations are distasteful, inconvenient and even burdonsome."Dictum meam pactum"—"My word is a bond; a bond is a bond". What about Australia? There the State policy has simply killed new exploration. Only the flat-earthers could ignore such experience.
We have had glowing talk of glowing prospects. This is digging into existing capital with a vengeance. We were told last time that Britain should be capable of producing between 100 million and 150 million tons per annum through the 1980s, perhaps more. That is at column 327 of Hansard of the previous debate held on 23rd July. What are the facts? A figure of 1,500 million tons over 10 years requires a minimum reserve of something like 2,500 million tons to allow for the build-up between now and the 1980s, and also to allow for the tailing-off in the 1990s; and 2,500 million tons are the minimum proven reserves needed to sustain the kind of programme which the noble Lord has proclaimed, and in which he has followed, it would seem, his Tory predecessors.
What, indeed, are the facts? Proven reserves at this moment, according to the Brown Book, are not more than 1,000 million tons. These are distributed among 13 fields that are now under development. I will come to the new discoveries in a moment. With such a shortfall, it is necessary to start now on the development of other fields and fiscally and politically to encourage this. Just hearken, my Lords, to this list of the

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great, neglected, undeveloped discoveries, some 13 of them: Alwyn, Andrew, Brae, Bruce, Crawford, Hutton, Josephine, Lomond, Mabel, Maureen, Magnus, Tern and the British sector of the Statfjord field. What is holding them back? Only a flat-earther would be blind to this fact.
Then we were told that we must,
"continue to attract the oil companies' investments and support their activities".
The smaller fields of 300 million barrels can be developed only if they are unencumbered by a shotgun marriage to a partner so virginal that she admits to needing training, yet this innocent virgin is insisting on more than half the estate before the marriage is consummated. I often wonder how the flat-earthers got married. Just listen to this, my Lords. Here is a flat-earther turned preacher with an almost evangelical fervour. At column 336 of Hansard in the debate on 23rd July he said:
"…the last 12 months have seen oil developments coming to fruition."
The present development work was committed before the Government started intervening. The flat earth preacher goes on, carried away with his enthusiasm. So at column 336 of Hansard he said:
"There have been no less than 17 discoveries, 12 of them since the end of March."
These 12 discoveries amount to no more at present than shows of oil. A show of oil is very different from a reservoir. Two or three may not prove commercial, three are likely to prove commercial, half a dozen may never be developed at all. The flat-earther geographers cannot distinguish between a showing and a real developable find.
Then we have had all this talk about free negotiation, voluntary negotiation. The noble Lord, Lord Strathcona and Mount Royal, was right when he said that perhaps we shall never agree across the Floor of the House as to what each side means by "free". How on earth is it possible to have free negotiation between unequal partners when, on the one hand, there is the Government able to take power to control, regulate and tax as much as they like? Have the flat earthers ever tried free negotiations with a gunman? Have they ever tried free negotiation with a hijacker or with
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the Japanese Red Army? If one chap has got the gun, then negotiation is very far from free.
Just listen, my Lords, to the innuendo here, and now I am quoting the noble Lord—my noble friend—Lord Balogh, in column 335 last time:
"The Government can carefully choose one company to receive a potentially valuable licence."
After that threat I ask: will the Government guarantee publicly that any company or consortium not accepting the terms of participation will not be the victim of discrimination in the future; for example, in the next licensing round? Can the "flat-earthers" not read? Let us listen to Mr. Harold Lever, speaking on 20th February. I quote:
"It was very possible, if they"—
that is, the oil companies—
"did not agree to State participation, that the Cabinet could feel free, and indeed might feel obliged, to nationalise that portion of the licence that they thought right."
Free negotiation! We have been told many of the results already achieved, and let us have a look—Burmah, Tricentrol, Blackfriars and Deminex. To how much of the discovered reserves do they have access—not more than 4 per cent. Those companies fell into the trap only because they were at the end of the road financially, as the banks would not finance them under the threat of PRT, and BNOC; the Government had to come in with a guarantee. What about BP? We have been told, "Ah, BP have agreed". BP already had a strong Government interest in their company. As we understand it, they have accepted the principle. We also understand—and perhaps the Government will deny this if it is untrue—that they have accepted the principle with a major qualification, which is that there shall be no financial change. Have the final arrangements been held up as regards BP, because this guarantee has yet to be written in? Like the "flat-earthers", I, too, am eager to be away to my bucket and spade. I shall not detain your Lordships any longer, but I warn the Government that the "flat-earthers" are in danger of falling off the edge.
5.38 p.m.
Lord WYNNE-JONES: My Lords, like the noble Lords who have spoken earlier, I should like to congratulate my

1971
noble friend Lord Kirkhill on his splendid introduction to this House. We shall all look forward to hearing him speak from the Front Benches, especially since we have noticed the brevity of his speech today.
The noble Earl, Lord Lauderdale, always gives us very good value for money. I think that he probably gives even better value for money when he observes my noble friend Lord Balogh sitting on the Front Bench opposite to him. I was not very certain today when he started off by referring to his associations with Aberdeen—or perhaps it was his ancestors' associations with Aberdeen—when it seemed to me that perhaps he was trying to inveigle the noble Lord, Lord Kirkhill, into some sort of cabal, shall we say? But he continued with many interesting and fascinating remarks. He moved over the whole range of oil company policy. At one moment the British National Oil Corporation was, I think, "an innocent virgin", but a little later it was suddenly transformed into a hijacker, a gunman and even into the Japanese Red Army; so that one really began to wonder at this—was it a many-headed monster he referred to? Indeed, one began to wonder what sort of monster the noble Earl was building up in front of us. This British National Oil Corporation is something which is being set up to do a necessary job for the people of this country. It is in order to ensure that the oil of the North Sea and indeed of any other part to which we have access should be under proper national control.
The noble Lord, Lord Avebury, earlier on referred, I thought in a quite important way, to the fact that we had no permanent resources of oil; that all such resources are necessarily limited in time, and it was therefore quite essential that we should have national control over the whole exploitation of such resources. But it is much more than that in this particular case. It is true that the long-term objective is extremely important. It is also true that all the developments which take place from winning oil should be properly considered nationally. I have little doubt that in the long run we shall move a lot further in this direction I do not pretend that what we are doing today is the end of the road at all; it is not. But it is an important step in order to start thinking properly about how we
1972
exploit, how we use, the oil resources of the country.
The noble Lord, Lord Ironside, quite rightly referred to the European Economic Community. Mention of the same matter was made by the noble Earl, Lord Lauderdale. This question of what the European Community, working through its Commission, tries to do with the oil resources of this country is an extremely important one. Under the Treaty it has the right to put forward proposals. If these are passed by the Council of Ministers, they will be operative. Those of us who have been trying to look into this matter for some little time (and the noble Earl, Lord Lauderdale, indeed has been chairman of a Committee of this House doing this very job) know perfectly well that the Community is making proposals which have to be considered very carefully and critically inside this country and indeed every other country which is part of the Community. I am not saying that the proposals are wrong. I am merely saying they are proposals which must be looked at with extreme care.
One of the difficulties at the present time is that, except for a relatively small number of experts—sometimes referred to, not inappropriately, as so-called experts within Ministries—we have no national body which is capable of answering on this field of oil. The corporations which are dealing with it, extracting the oil, exploiting the resources, are not in the main national corporations, part of this country; they are international corporations. The British National Oil Corporation should be able to build up expertise to do this job thoroughly and competently. In my opinion, it is much better that such a job should be done by a commercial corporation rather than through an ordinary Civil Service. I do not think it is a Civil Service job. The Civil Service can do an excellent job, but I do not think it is its function to bring the kind of expertise that is required into examining this whole position. I believe that the British National Oil Corporation can play an absolutely vital part in doing this. So, far from denigrating it, laughing at it, talking about "flat earth" and so on, I would say, rather, that the British National Oil Corporation is a well-rounded conception, not "flat earthian" at all; that it is something which can properly look at and tackle

1973
this problem. And this is, in my opinion, an extremely important problem.
The noble Lord, Lord Ironside, also made reference to another point which I should like to take up; that is the question of research. There is in this Bill singularly little reference to research. One would have thought that in a field like this, research was absolutely essential. It may be said that plenty of research into oil is already being done. It is true that an enormous amount of research is already being done and that it is unnecessary to duplicate that research. However, there must be a commitment to research, otherwise this major national oil corporation will not, in my opinion, succeed in making the real progress that we expect it to make.
The noble Earl, Lord Lauderdale, referred to the lack of effectiveness in, for instance, much of our steel industry. With regard to the problem of North Sea oil, it is a well known fact that large diameter pipes have not been produced in this country and that there were no facilities for producing them, but that was before the British Steel Corporation was set up. This complete failure to produce what was required for North Sea developments was due to the private steel industry. The British National Oil Corporation can lay emphasis upon what is required. If a research organisation is set up, it can make clear to bodies like the British Steel Corporation and, indeed, to the whole of British industry, what will be required for North Sea developments. Together with the noble Lord, Lord Ironside, I place great emphasis on the necessity for co-operation between the whole range of our industry and such a body as the British National Oil Corporation. I agree with him also that it is vital that the British National Oil Corporation should be able to place contracts for research with a number of organisations throughout the country. The Corporation can do this only if it has a research organisation. Therefore, when my noble friend replies to the debate, may I ask him to give us some hope that it will be considered that an important part of the work of the British National Oil Corporation is to undertake the research that is appropriate to what it is going to do so that it can build up the expertise that is required to make it
1974
not just a paper organisation—that would be madness, that would be folly—but something which will play an absolutely vital part in the development of our oil resources.
There is one other point to which I wish to draw attention, and I do so to seek information. On page 24 of the Bill, I notice that reference is made to inspectors and matters of safety. That is very appropriate, but not so very long ago we passed the Health and Safety at Work Act. If one looks at that Act, one sees that a Health and Safety Commission has been set up and also a Health and Safety Executive. As I understood it, these bodies were supposed to act for the whole of industry. I was critical about this at the time and pointed out in your Lordships' House that I thought it was a mistake to confuse the health and safety regulations and the Inspectorate which are required in coalmines and chemical works with what is required in the more ordinary type of engineering works. It seems to me that this Bill sets up its own Inspectorate which will be quite separate from the Health and Safety Commission and the Health and Safety Executive. I personally hope that it will, but it seems to me a little odd that we have passed this Act, which is supposed to unify the whole question of health and safety, and that this Bill should set up its own method of dealing with it. I do not know whether my noble friend can explain this point to me when he replies. I hope that your Lordships will regard this, not as a trivial, unimportant or even "flat earthian" concept but rather as something which is a vital contribution to the future of this country and to the proper utilisation of the resources of this country.
5.50 p.m.
Lord CAMPBELL of CROY: My Lords, I should first like to join in the congratulations to the noble Lord, Lord Kirkhall, upon his maiden speech made, if I may say so respectfully, with such ease and confidence that I am sure all others who have made maiden speeches envy the way in which he did it. We look forward to hearing from him on many occasions because it is so clear that he has a great deal to contribute to our deliberations. I am especially glad to have been able to hear him in the last debate before the Recess, since

1975
we have known each other for some years and I am well aware of his distinguished tenure of office as Lord Provost of Aberdeen. He had to deal there with the unusual situations and problems which arose in recent years as the offshore oil industry developed fast in and around Aberdeen, so he is well qualified to take part in this debate. I should also like to congratulate him on the announcement this morning that he is to be a Minister at the Scottish Office, and I wish him well personally in that appointment.
I should like to join the noble Lord, Lord Balogh, in applauding the contribution as a Minister which the noble Lord, Lord Hughes, has made over a long period, both in your Lordships' House and in the service of Scotland. We look forward to seeing him from time to time. I know that on occasion I shall see him in Scotland, but I am sure your Lordships all hope that we shall see him frequently here again.
With regard to the Bill, I will not repeat the comments which I made in the previous debate on 23rd July; I will simply summarise what I said about the BNOC, that this kind of juggernaut is inappropriate, unnecessary and more related to politics than to winning oil. It would be comprehensible if the Government wished to delay the winning of oil in the next few years, as indeed the Norwegian Government does in the case of the Norwegian sector; but the Government agree with us that over the next five to six years we should try to win all the oil we can from the British Continental Shelf. I am not sure whether the noble Lord, Lord Avebury, had mistaken what has been said in the past, because I think he was suggesting that both Front Benches here were in favour of going all out to obtain as much oil as possible up to a peak in the 1980s and continuing up to the end of the 1980s. That is certainly not our policy. I think he was right in quoting me at another stage as saying that I thought we should try to get as much oil as we possibly could up to self-sufficiency, which is about 1980–81. We have certainly not suggested from this Bench that we should then continue to go all out to get as much oil as possible at peak production. We think that in the 1980s the annual production should
1976
be regulated according to optimum depletion rates, and that of course is something that we shall come to in the course of considering this Bill in detail.
As a country we cannot afford the money for these schemes, nor can we afford the time which they will absorb. This would be so in normal times, but in the present state of our economy the main proposals in this Bill can only be described as folly. Offshore oil is providing an uncovenanted opportunity, if we act with urgency, in improving our sagging economy. I said in the last debate that I do not regard it as a panacea for all our economic ills, and I must repeat that; but it certainly is an uncovenanted opportunity. How will history pronounce upon this Government's reactions? Perhaps that providence threw Britain a lifeline, but we only played tug-of-war with it.
The device of the Government of having two debates has enabled discussion to extend over a wider field than the single debate of the 23rd July. The main points in the Bill have been referred to again, and we on this side have registered our principal objections. Since the last debate the Government have had time to prepare replies to the points raised then, because many questions remained unanswered at the end of that debate. I can assure the Government that they will be in absolutely no danger of repeating themselves today if they decide in the winding-up speech to reply to some of these points. What was astonishing in the attitude of the Government in the debate on 23rd July was that they appeared to be speaking to the same old brief, that there was no slowing down in the North Sea operations, that no slowing down had occurred or was occurring. I think this is part of what the noble Earl, Lord Lauderdale, characterised as "flat-earthing".
My Lords, we would have thought that the Government would have discarded this attitude in the face of all the evidence, also because the new Secretary of State for Energy has himself admitted to the falling-off in platform orders for the United Kingdom Continental Shelf. He did this on a visit to Scotland. I quoted him in the last debate. Since then—and this is important—he repeated what he said in another place last week, in the

1977
Third Reading debate on this Bill. He spent a considerable part of his speech on the subject of the shortage of platform orders, and gave the latest estimate of the orders up to 1980 for the United Kingdom sector of the North Sea. The latest estimate is 53, with a bracket of possibilities ranging from as low as 43 up to 61. He confessed that this was a cause of concern. The figure is considerably less than the estimate which the Government gave last year, when the bracket was 55 to 80. Your Lordships will notice that the estimate of 53 is less than the lower end of that bracket last year, of 55.
In the debate on 23rd July, the Government tried to explain that the reduction was due to the capacity of platforms being increased from 24 to 36 wells and the noble Earl, Lord Lauderdale, immediately pointed out that this change was well established some time ago. The Secretary of State for Energy again has been much more frank. In the Press he was reported as stating that it was not easy for the companies to accelerate orders for platforms when the exact spot for which they were needed was not known; in other words, unless exploration, appraisal and development are continuing apace the platform business flags. I will say more in a minute about the rate of activity in the North Sea, but the new Secretary of State for Energy is not concerned to continue the old story. He appears to be apprising himself of the facts and speaking openly about them. I am glad to see that a fresh look is being taken at the situation.
My Lords, let us look at some of the reasons causing delay and reduction in platform orders; first and foremost, the difficulties of raising finance and of making estimates of profitability of oil fields in the light of known Government proposals such as taxation, and the uncertainties about unknowns such as 51 per cent. participation. During his speech on this Bill last week, the Secretary of State for Energy stated in another place that the Government were giving support for a fabricating yard at Hunterston in the South-West of Scotland and that a guarantee was forthcoming from the Government covering loans of £1·5 million. This would cease to be operative when the consortium in question had received an
1978
order. An announcement had been made about this a day or two earlier, and in the Press the amount reported was £11·5 million. The decimal point seems to have moved about in the figures, so I would ask the Government to announce whether the figure is £11·5 million or £1·5 million as was reported in Hansard of the other place. What is the right figure?
Apart from Hunterston, there is also a platform-building site being prepared at Portavadie in Scotland. Government support is also being given to that. But there are still no orders for that, or indeed for the Hunterston project. I hope there will be, as I am sure all noble Lords do. What is the financial position? What will happen if in fact no orders are forthcoming? How long are the Government going to wait for an order before taking some other action? We should be grateful if that could be explained, if not today, then before we come to the Committee stage of the Bill.
It is disappointing and disquieting to observe this slowing down in platform orders, acknowledged by Mr. Benn. I recognise that there are more difficulties in the construction of concrete platforms than with steel, and this I predicted in my Statement, as the Minister concerned, on 31st January 1974 in another place, when I proposed action to deal with the difficulties of concrete construction and suggested changes in planning procedures. The change of Government intervened and those proposals were, unfortunately, not followed up. But it has been some comfort, at least, that we did make a flying start in 1971 and early 1972 with the steel platform fabrication yards.
I was glad to be present at the naming ceremony of the platform Highland II at Nigg Bay a few weeks ago, and at Nigg Bay and elsewhere they have not forgotten that accelerated action enabled planning permission to be granted there, and in other places in Scotland, in a matter of a few days, without a public inquiry which would otherwise have occupied the best part of a year. That was at a time when only a small proportion of the North Sea oilfields were known. It is encouraging that that platform, Highland II, was completed ahead of schedule. I would ask your Lordships to note that. There were delays in earlier platforms, because of design changes and other troubles, but I think it is encouraging that this most

1979
recent one was completed ahead of time. The worrying questions now are where and when are the new orders going to arrive. As the Secretary of State for Energy indicated, platform orders can hardly be placed until companies know where the platforms are to go in the fields.
This brings me to exploration and activity. On 23rd July I mentioned a survey which had been undertaken, and this was done by confidentially consulting each operator in the North Sea. It was carried out by the United Kingdom Offshore Operators Association. As a result, an estimate was given that the average number of rigs operating in 1976 in the British sector would be 20. I asked the Government whether they have made an estimate, because, of course, that is a great reduction on what had previously been expected, and it is a measure of the amount of activity in the North Sea. Again, if the noble Lord cannot give the answer at short notice in his winding-up speech, can he let me know what the estimate is or whether they agree with this estimate? I understand that the Secretary of State for Energy was provided with it some weeks ago. I hope they will let us know in writing during the Recess before we come to discuss the Bill again.
The points on which we invited explanation from the Government at the last debate and on which we have not had answers include the following. Why is the BNOC suggested in this form? We have not had an answer to that. The noble Lord, Lord Balogh, described to us today more about the BNOC, but did not explain why this form was necessary. It appears to be almost a part of the Department of Energy. The noble Lord, Lord Wynne-Jones, was saying that civil servants were not the right kind of people to man this kind of body, but the way in which this Corporation is to be set up makes it look as though it will be almost a part of the Department.
Then we come to the question of the exemption from petroleum revenue tax, to which my noble friend Lord Strathcona referred again today. The Government have stated their reason for the exemption, and that is to avoid money going from one Government pocket to another. They have also said that commercial discipline will be exercised for downstream activities. But how can the Corporation—and this is the question
1980
put in the last debate—fail to have an advantage in the oilfields when competing in development and production with companies, when they are not having to pay PRT as everyone else will? That is a question to which we have not had an answer.
Then, in relation to another taxation point, I noted that the noble Lord, Lord Balogh, referred to an inaccurate statement in the Scotsman today. Of course I take his word for it, but I also noticed something since the last debate in the Scotsman of 22nd July; that is, an article by the Parliamentary Under-Secretary in the Department of Energy, under his name. This raises the question of the ring fence, because that article stated something quite contrary to what the noble Lord, Lord Balogh, had told us in your Lordships' House. Since the Public Accounts Committee issued its Report in March 1973, many of us following these matters have been concerned that a ring fence should be erected well before any profits from our offshore oil could arise, but it is important to know where that ring fence is to be and exactly what it is to ring.
I quote from that article by the Parliamentary Under-Secretary:
"The Act created a ring fence around North Sea operations which prevents corporation tax being eroded by, for instance, companies setting capital and losses incurred in activities elsewhere against North Sea profits."
When I queried this with the noble Lord, Lord Balogh, and said that surely it is the United Kingdom Continental Shelf and not the North Sea, he agreed in this House that it was the Continental Shelf, because otherwise when, as we all expect, oil is found in the Celtic Sea, and even more probably, off the West Coast of Scotland and the Western Approaches off Cornwall, it is important to know whether or not that is included within the ring fence. Our understanding is that it is within the ring fence, and we must get this established so that those who are following these matters closely, particularly in Scotland, and were concerned about the original PAC Report know where the fence is to be. Will the Government make that clear once and for all? If, as I suspect, the noble Lord is right and the article is wrong, perhaps something should be done to correct the misinformation which has

1981
gone out to the readers of that newspaper.
The Bill is reaching us at a very late stage before the Recess. It is also reaching us at a very late stage before the end of the Session. We shall return in September, and I am sure that we shall all be invigorated by taking some outdoor air and having some relaxation, but we shall then examine this Bill very fully and help the Government, if they persist with it, to make improvements to it.
6.9 p.m.
Lord LOVELL-DAVIS: My Lords, I am as glad to embark on this last speech of the present energetic Session as I expect noble Lords will be to see me sit down when I finish, particularly if I try to cover all the points raised. Before I start, I have the agreeable duty of congratulating my noble friend Lord Kirkhill on his succinct, interesting, and helpful introductory speech in your Lordships' House. It has been said before, but it is none the less sincere for that, that we shall look forward to what he has to say on all occasions as he takes his place on this Front Bench.
We have had a useful and interesting debate, and although in length it has accorded more with the expectations than the hopes of my noble friend Lord Shepherd, it could scarcely have been otherwise, and I do not complain about that, for this is one of the most important Bills to come before Parliament, concerning one of our most important natural resources, oil and natural gas, and how its exploitation is to be organised and regulated. The noble Earl, Lord Lauderdale, who I see is not in his place, almost tempted me—and perhaps it is as well since he is not here that I did not rise to it—to start by launching into a political attack on the original activity, or lack of activity, of his Party in respect of North Sea oil. However, I think my noble friend Lord Wynne-Jones put the boot in for me, so I shall maintain the note of sweet reason first sounded by my noble friend the Minister of State. I will simply get his contribution into context now by replying to the assertion that all current development was committed before present Government policies were announced.
1982
Since the announcement in detail of the Government's intentions in the White Paper of last July, contracts for four major platforms have been signed worth well in excess of £200 million, together with substantial orders for equipment. There is no sign of Government policy causing a slowdown in development activity. The point has been made many times, but will bear repeating, that oil and natural gas together account for more than half our primary energy requirements. Oil alone accounts for 45 per cent.; it also accounts for some 20 per cent. of our current import bill and is equivalent in value to about 6 per cent. of our gross national product. This is a measure of the importance of the matters dealt with in this Bill, and an indication of savings in the balance of payments which the nation can expect in the coming years.
Before turning to the detailed points which noble Lords have raised in debate, I should like briefly to look at a few aspects of the Bill which have generally given rise to comment or are worthy of particular note; first, BNOC and participation—the two are inseparable. If the State is to participate in licences it must have the capability to play its full role. That means that it must acquire the expertise necessary to take informed and sensible decisions, and it must live day to day with the oil business and among the oilmen themselves. This needs a purpose-built organisation—one capable of involving itself in all aspects of the oil business. The noble Lord, Lord Strathcona and Mount Royal, said that knowledge could be better achieved by an independent agency, but such an agency cannot itself explore for and produce oil as the BNOC can. The only way to understand these things is to do them yourself.
The noble Earl, Lord Lauderdale, asked: why not use the British Gas Corporation or the National Coal Board, both of which, as the noble Earl said, have been very successful? But searching for and producing oil in the North Sea cannot be their main concern; we need a body to concentrate full time on it. The job cannot be done at arm's length from the industry. I wonder what sort of organisation a party of noble Lords

1983
opposite would establish if they had participation. Of course they would not participate in existing licences—perhaps not at all—but, as I pointed out during the speech of the noble Lord, Lord Strathcona and Mount Royal, at the beginning, they have steadfastly refused to commit themselves against it for the future. They might yet be grateful for the British National Oil Corporation and they are wise not to rule out participation entirely. The case for it is strong.
The noble Lord, Lord Strathcona and Mount Royal, raised the matter of the BNOC structure, and this is a point which was also raised by the noble Lord, Lord Campbell of Croy, on the exemption from PRT. We have said that in partnership BNOC will behave like a private sector partner. Exemption from PRT will make no difference. We are discussing these matters with the industry. The noble Lord, Lord Strathcona and Mount Royal, said that foreigners would be suspicious of BNOC, but the National Iranian Oil Company has a licence in the North Sea and Statoil has licences on the Dutch Shelf, so these two State oil companies have successfully expanded beyond their own countries. He also said that BNOC may take slow decisions, but by common consent the NCB and the British Gas Corporation have been very good partners in the North Sea.
A matter also raised in connection with BNOC by the noble Lords, Lord Avebury and Lord Campbell of Croy, concerned the total cost of participation. First, regarding time, participation will not cost the Exchequer money since the outlay will be recovered with remuneration; and, secondly, we shall aim to get the recovery and the remuneration quickly.
Lord STRATHCONA and MOUNT ROYAL: My Lords, may I interrupt the noble Lord, because I am not sure what he is saying? He says that it will not cost the Exchequer money, presumably because it will earn a return. Is he aware that I asked whether it would bring in new money? I do not know what the noble Lord means by the expression "cost money", because we are talking about cash flow, are we not?
Lord LOVELL-DAVIS: My Lords, it will of course bring in money in terms of saving us extremely large sums of
1984
money on our balance of payments in time, and whether we decide to become exporters of oil will depend on whether or not it will bring new money into the economy.
Lord AVEBURY: My Lords, may I also interrupt the noble Lord? I ask aim to clarify a partial cash flow statement, as it were, that was given by Mr. John Smith, the Under-Secretary of State, in Standing Committee on 25th June. The noble Lord may perhaps not be able to answer this now, but during the Recess he might care to circulate to those who have taken part in this debate a notional cash flow for 1976 and 1977, so that we may see where the 51 per cent. payment occurs. This would be most useful for the further proceedings in Committee.
Lord LOVELL-DAVIS: My Lords, the fact is that participation has not been worked out to the extent that I could really do that. I could certainly clarify anything that the Under-Secretary said in Standing Committee, in so far as I am able to do so, but there is a limit beyond which I am simply not able to go at this time. I will, however, look into the matter for the noble Lord. I have already referred to the importance of oil in our economy, yet oil is the one important energy source where there is no direct public sector involvement. I do not say that we are badly served by the private sector oil companies. On the contrary, we admire them and are grateful for their skills, which have within a short space of time turned the North Sea into a major oil province. But the fact is that the interests of the large oil companies, with operations spanning almost the entire globe, and the interests of individual nations need not and do not always coincide, a point that the noble Lord, Lord Strathcona, conceded in his opening remarks.
The noble Lord, Lord Avebury, also referred to a specific aspect of this; not necessarily the reconciliation of interests but the importance of proper depletion control, as provided for in this Bill. We are going for early and rapid build-up, because of the enormous security and balance of payments advantages, and because investment for production until the end of the decade is already committed. There is a lot in the old adage that if you want a job well done you are best

1985
doing it yourself. With our own capability through participation with BNOC, we shall be in a much better position to pursue, as we want to pursue, a policy of partnership with the private sector on equal terms. The noble Lord, Lord Avebury, referred in this connection to the business of being neither better nor worse off. The details are a matter for negotiation and in negotiations one cannot predict the outcome or show one's hand.
We shall, of course, take into account investment already incurred and, in this respect, I wish to refer to a point raised by the noble Lord, Lord Ironside, on the subject of BNOC and research. The BNOC clearly has powers to carry out research under Clause 2(2)(b). Adequate research and development will be one of its main functions. Under Clause 2(1)(f) it can also provide research services and training facilities to other persons, but it will not cut across the work of the Petroleum Industry Training Board—I am sorry I said "main" functions, I do not mean "main" functions: but one of its functions. I remind noble Lords that in opting for participation we are taking the same route as—
Lord IRONSIDE: My Lords, before the noble Lord goes on to his next point, is he able to say whether the BNOC will have powers to sponsor research in addition to being able to carry it out?
Lord LOVELL-DAVIS: Yes, my Lords, of course it will. I remind noble Lords that in opting for participation we are taking the same route as every other major oil or gas producer, apart from the United States—and even there there is, to say the least, a body of opinion which believes that they have been less than ideally served by leaving it all to the oil companies and the play of market forces. The noble Lord, Lord Strathcona and Mount Royal, said that it was unnecessary to set up the BNOC and that it could be left to the oil companies. Therefore I had better take the opportunity of quoting some examples of other Governments who have adopted participation: Norway, the Netherlands, Ireland, Canada, Australia, New Zealand and Denmark. It happens that the Norwegians and the Irish have accepted participation in carried interest form, a
1986
principle which the noble Earl, Lord Lauderdale, apparently endorses.
My Lords, one would expect noble Lords opposite to show more enthusiasm for participation, representing, as it does, the essence of the mixed economy; a combination of private initiative and social consideration; the best of both worlds. Criticism and suspicion have also centred on the National Oil Account. In another place, on Third Reading, Mr. Jenkin, presumably in a desperate search for phrases memorable enough to obliterate earlier pronouncements more relevant to oral hygiene than energy conservation, described the NOA as an "open-ended slush fund to finance State socialism". It was a good try, though it loses some of its effect by being wide of the mark. The fact is that the National Oil Account will fulfil two functions. First, it will provide for Parliament and public a convenient account—a record—of the revenue and expenditure arising from the issue of licences and the operations of BNOC, and one which will be subject to the scrutiny of the Comptroller and Auditor General who, of course, is the servant, not of the Executive, but of Parliament.
If obfuscation and evasion were the Government's purpose one might be pardoned for thinking that they have been remarkably maladroit in achieving them. But the NOA does something else besides. It is a fact that the sums of money which will accrue through participation, especially in future licences where BNOC might be sole licensee, will be very large indeed. These sums belong to the nation, and it is right that they should be available to the nation without difficulty or delay for meeting the cost of public expenditure in accordance with the Government's priorities. The Party opposite do not dispute this; they continually advocate it. What they do not realise is that this is precisely what the National Oil Account achieves. Under Clause 40 of the Bill all BNOC's revenues are surrendered to the National Oil Account whence they can be transferred to the Consolidated Fund. Without these provisions these very large sums of money would remain with BNOC.
I should not like to leave this debate without saying a word about the licence changes. Noble Lords, including the noble

1987
Lord, Lord Strathcona and Mount Royal, have objected that these changes are to apply to existing licences and that there is no provision for compensation to be paid to licensees. The noble Lord, Lord Strathcona and Mount Royal, spoke of revocation of licences. This is not correct. The licences will continue with new terms. The noble Lord also said that we could control depletion through the new licences. This is not practical since current licences will cover the great bulk of production for years to come—
Lord STRATHCONA and MOUNT ROYAL: My Lords, I admit that this is more of a Committee point, but since the noble Lord has raised it, I cannot let him get away with it. Is it not a fact that if a company is asked to drill in a certain area and it declines to do so on economic grounds, then the Government have the right to revoke the entire licence, which may or may not be part of that field?
Lord LOVELL-DAVIS: I think that that is a very simple statement of the situation. I think it is far too simple. It contains an essence of truth, but there is far more in it than that.
Lord STRATHCONA and MOUNT ROYAL: My Lords, it cannot be denied that they have the right to revoke.
Lord LOVELL-DAVIS: My Lords, they have the right to change under certain conditions and perhaps they have the right to revoke; but we are not talking about revocation.
Lord STRATHCONA and MOUNT ROYAL: But the noble Lord is talking about it.
Lord LOVELL-DAVIS: My Lords, I think we will leave it to the Committee stage. It is rather late in the day.
The noble Lord also suggested renegotiation. There are over 200 licensees. Is it really practical to negotiate all the changes in the Bill with so large a number? My noble friend Lord Hughes referred to this matter when he spoke on 23rd July. Of course the unilateral variation of contracts is to be regretted. So, too, is the fact that variation has proved necessary.
My Lords, I welcome back the noble Earl, Lord Lauderdale. I shall
1988
have some remarks to address to him in answer to some of his questions. I do not wish to rehearse the argument about what degree of blame attaches to whom for the present situation; but the fact remains that the complete absence of power over depletion, over exploration of the initial six-year term and over certain dealings in licences and in licensed companies, was simply not acceptable, given that production up to 1980 (which will give us self-sufficiency in oil) will come from fields already licensed. The Party opposite do not deny this.
Mr. Jenkin, on the Third Reading of the Bill in another place, accented the need for tighter controls. I would point out, as my noble friend pointed out, that we are not making illegal anything that was legal when it was done. We have consulted very extensively with the licensees and have sufficiently amended the provisions to take account of their representations. Of course they are not entirely content; of course they would wish to be compensated. But these powers are taken in the national interest and, just as when Governments change rates of taxation or the value of a currency there is no question of compensation, so here I believe that we have acted fairly and properly in the national interest. We welcome the oil companies' investment in the North Sea. We want to see them stay there and to increase their investment. We want them to earn a fair return and we want to work in partnership with them. But we want it to be a fair partnership which takes account of national as well as commercial interests.
Finally, my Lords, I should like to say a word about two topics which although not arising directly from the Bill are of considerable interest. They are platform sites and the level of exploration activity offshore. The Government have announced support for the construction of a platform development site at Hunterston (to which the noble Lord, Lord Campbell, referred) and steps are being taken to see whether a more even spacing of orders for platforms can be achieved. I do not wish to dwell on the detail of these questions. I recognise that there were some questions raised by the noble Lord, Lord Campbell, to which I should like to reply; I shall certainly also take up some of them in writing; and the rest we shall have to discuss in

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Committee. Such matters as I mention are mentioned to highlight the Government's continuous concern that British industry and British workers should benefit from the very lucrative onshore market which North Sea oil has brought into being.
Secondly, the level of activity. We often hear from members of the Party opposite—as we have heard this afternoon from the noble Lord, Lord Campbell of Croy—sour comments that activity is declining, and they are only too ready, it seems, to lay the blame at the Government's door. But, in practice, events confirm that the momentum of exploration activity has not been lost. On average, just over 30 rigs have been operating on the United Kingdom Shelf in the first half of this year, and this is more than ever before in a comparable period. I answered questions on this very subject addressed to the Government by the noble Earl, Lord Lauderdale, and I thought that we had made our case. Twelve new discoveries of oil have been made since the Brown Book was published in April—
The Earl of LAUDERDALE: Will the noble Lord give way for one moment?
Lord LOVELL-DAVIS: I do not think I will give way. The noble Earl has missed most of my speech. The hour grows late.
Lord CAMPBELL of CROY: My Lords, as the noble Lord mentioned me, will he give way to me? We had an answer regarding 30 rigs in the first half of this year from the noble Lord, Lord Hughes, in the last debate. The question I put was about the estimate for 1976, which the United Kingdom Offshore Operators' Association produced and has sent to the Secretary of State, that on average there will be only 20 in 1976. It was to comment on that that I put the question.
Lord LOVELL-DAVIS: My Lords, I have with the noble Earl, Lord Lauderdale, bandied about with the number of rigs in the area. If I remember correctly, the figure last time was something over 29, when we had forecast 30. The important thing is the level of activity which is what I am talking about. As my noble friend Lord Hughes said
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in the earlier debate, one of our main reasons for the reduction in our estimate of platform orders is that the technological progress, especially with subsea completion, has enabled the companies to plan for, on average, a smaller number of platforms for discovery.
We have now had the first month's production from the Argyll field and, if all goes well, three more fields will be in production by the end of the year. I believe the signs are set fair for the nation to grasp to the full the opportunities which our offshore oil presents. I turn now to some of the detailed points which have been raised. I hope noble Lords will understand why, at this stage, I may not be able to cover all of them, but must, perforce, leave them to the Committee stage.
The noble Lord, Lord Ironside, asked me whether the BNOC would be able to borrow from the EEC. In fact they can borrow under Clause 6(2)(a). He also asked me why Part III of the Bill was necessary. We could not have taken powers over pipe-lines under the Mineral Workings (Offshore Installations) Act to which he referred. This does not apply to pipe-lines, and I understand it really covers only safety. The noble Lord, Lord Avebury, asked me what would be the situation vis-á-vis recruitment of staff for BNOC. We cannot say; BNOC has not been set up yet. Norway's Statoil has found no difficulty in building up rapidly to 200. Their annual report says there have been several candidates for each vacancy. He also asked why we were not proceeding more slowly. If participation has benefits, the sooner we get them the better. The most important point is that if we were to go more slowly, this would only prolong uncertainty.
My noble friend Lord Wynne-Jones is not with us and I shall leave my replies to him until I see him at a later date. The noble Earl, Lord Lauderdale, asked: why not give the public 50 per cent. of BNOC? This would defeat the objective of giving adequate Government control and take. I should point out that the noble Earl is wrong in saying that the public own 50 per cent. of Petrocanada.
The Earl of LAUDERDALE: My Lords, will the noble Lord allow me to intervene now? I missed the earlier part

1991
of his speech because I was trying to put some verbs into my own prose. I apologise for not having been here earlier. What I said was that Petrocanada were now preparing to offer to the public 50 per cent.
Lord LOVELL-DAVIS: My Lords, this is not how I understood it. Maybe the noble Earl is right. It is in fact true of the Alberta Energy Company. There are a number of other points which were raised, and it is rather difficult for me to cover them now. However, since the noble Lord, Lord Ironside, was kind enough to let me know in advance some of the questions he was going to raise, I should like to deal with one point. He criticised the use of the word "things". This word had been used to indicate the widest possible variety of commodities that can be transmitted by pipe-lines—liquids, gases and even solids in suspension or floating in water. The term "things" was first used in the Conservative Pipelines Act of 1962, which relates to land. This has never given rise to any trouble or criticism over the years and so it was felt proper to use the same word for offshore pipe-lines.
I find it rather depressing to reflect that ever since I came to your Lordships' House, North Sea oil, which poses great and exciting challenges and offers the nation the prospect of vast rewards for its success, has so often seemed to many noble Lords opposite to be a subject only for criticism and gloomy forecast. One might have wished for a more constructive and optimistic response and, as my noble friend the Minister of State has implied, perhaps we shall find it as we proceed with the Bill. The industry, it is fair to say, has been more constructive and realistic. Indeed, I should like, as did my right honourable friend the Secretary of State in another place, to express the Government's gratitude to the industry for help and advice. Some noble Lords have said or implied that the industry may be deterred by the action taken by the Government in this Bill. Nothing could be further from the Government's intention.
We believe that this Bill is urgently needed in the national interest, but we are always ready to listen to legitimate points made by the industry and, as an
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earnest of this, we have made changes to the Bill in another place which, without affecting its principle, took account of points made by the industry about the practicalities of the operations in the North Sea. I hope that we shall continue to work with the industry in this way. Certainly they will find the Government very willing to consider sympathetically any points they bring up about the administration of the Bill when it becomes an Act.
We all know that this is an important Bill. It prepares the ground for the nation to reap the rewards that are its due in the coming decades from North Sea oil. The detail of the Bill has already been extensively examined in another place. Noble Lords will wish to give it further scrutiny, and when we resume in September we shall address ourselves to that task. Today we are concerned with the principle of the Bill. We believe it to be a good and necessary Bill. It is a Bill to protect the nation's inheritance for this and future generations. I invite this House to give the Bill a Second Reading.
On Question, Bill read 2a, and committed to a Committee of the Whole House.
Baroness LLEWELYN-DAVIS of HASTOE: My Lords, before moving the adjournment of the House, may we on this Bench wish noble Lords in all parts of the House a very happy and, above all, a restful Recess. I beg to move that this House do now adjourn.