Lords Sitting of 5 April 1976

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

NORTHERN IRELAND: RAF AND NAVY WORKSHOPS
Lord DUNLEATH: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why it is considered necessary to create approximately 2,000 redundancies in the RAF and Navy workshops in Northern Ireland where the male unemployment rate is over 11 per cent. and when the jobs are not to be abolished in the interests of economy but rather instead to be transferred to Great Britain.
Lord WINTERBOTTOM: My Lords, the closure of these units is among the many painful measures required to achieve the substantial economies in public expenditure which the Government have recently announced. Although this involves the transfer of work to units in Great Britain, it is a consequence of overall reductions which are being made in naval and RAF maintenance work.
Lord DUNLEATH: My Lords, in thanking the noble Lord for his reply, bearing in mind the fact that unemployment benefit will have to be paid to many of the workers who are made redundant, a large proportion of whom are middle aged and skilled in specialist trades for which there are few job opportunities in Northern Ireland now that Rolls-Royce, IEL and other engineering plants are closing, can I ask what Her Majesty's Government estimate will be the annual saving?
Lord WINTER BOTTOM: My Lords, the saving is in the region of £2·4 million. However, I should like to point out to the noble Lord that, inconvenient as it
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may be, a possibility of transfer to other similar establishments in the United Kingdom is open to these employees.
Lord BELSTEAD: My Lords, can the noble Lord give us any idea as to the alternative methods of employment which may be open to those who are now to be unemployed?
Lord WINTERBOTTOM: No, my Lords; that is another question. However, as I said, there is employment available for these employees in the United Kingdom as a whole. If we take simply the submarine torpedo establishment in Antrim, there would be work for some of them at Plymouth where the work is being transferred.
Lord BYERS: My Lords, if all these people are to be transferred or wish to transfer, where will be the saving of £2·4 million?
Lord WINTERBOTTOM: My Lords, among other things, the resurfacing of the Aldergrove airfield will be necessary in three years' time if the Phantom task is to continue there.
Lord DERWENT: My Lords, where will these people live when they come to England?
Lord WINTERBOTTOM: My Lords, those of us who are declared redundant—this is one of the problems of politicians—have to find places to live when we change our employment.
Lord BROCKWAY: My Lords, the Question refers to 11 per cent. unemployment in Northern Ireland. Can the Minister say what are the new economic proposals which Her Majesty's Government are making to deal with this disastrous unemployment percentage?
Lord WINTERBOTTOM: My Lords, if we talk about the purely statistical question, unemployment at St. Athan, to which the Phantom task is going, is at a higher level than at Aldergrove.
Lord BELSTEAD: My Lords, can the noble Lord give us a figure for Antrim, which is the nearest town to which these people would normally go for employment?
Lord WINTERBOTTOM: Yes, my Lords, it is 8·7 per cent. To me, that is interesting, as the Belfast unemployment

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rate is 6·8 per cent. and that at St. Athan is 7·8 per cent.

NON-RETURNABLE BOTTLES
2.41 p.m.
Lord DUNLEATH: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what they suggest he should do with the 672 empty mineral water bottles that are at present in his possession.
Baroness STEDMAN: My Lords, non-returnable glass bottles can be easily disposed of by local authorities with other domestic refuse. The noble Lord lives in County Down and I am assured that his local authority would be able to cope with his bottles.
Lord DUNLEATH: My Lords, in thanking the noble Baroness for her reply, whose courtesy and, indeed, realism I much appreciated, may I ask whether she does not agree that the increasing trend towards non-returnable containers constitutes a grossly extravagant waste of the world's resources, and compounds the problem of refuse disposal, which is a particular problem in my area of North Down?
Baroness STEDMAN: My Lords, at the moment the trade seems to prefer non-returnable bottles. In fact, there were some 15 firms in the country which between them produced 6,000 million containers each year. The main raw materials are sand, limestone and soda ash, all of which are indigenous, virtually inexhaustible and comparatively cheap. The proportion of returnable containers now in use is down to 15·6 per cent. The cost of collecting and crushing the glass is not such that people are able or willing to do it as an economic proposition.
Lord SWANSEA: My Lords, is the noble Baroness aware that empty bottles placed around strawberry plants are very beneficial to their growth?
Baroness STEDMAN: My Lords, I shall remind my husband of that when I get home.
Lord GOODMAN: My Lords, may I ask the Minister to urge upon the noble Lord that he should not be discouraged from drinking mineral waters and other non-alcoholic beverages on account of this particular local difficulty?
Baroness EMMET of AMBERLEY: My Lords, is the noble Baroness aware that, in countries other than ours, waste glass bottles are re-used for all kinds of purposes, including resurfacing roads? I do not think we have properly investigated the possibilities.
Baroness STEDMAN: My Lords, various experiments are in force in different parts of the world, and the Waste Management Advisory Council are keeping them under observation.

BELIZE: MENTAL HOSPITAL
2.42 p.m.
Baroness VICKERS: 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 consider allocating a sum of money through the Ministry of Overseas Development for the rebuilding of the mental hospital at Belize.
Lord ORAM: My Lords, if asked, we will certainly consider this, but so far no request has been received.
Baroness VICKERS: My Lords, I thank the noble Lord for that Answer. I gather that in the past requests have been received. This hospital is in a shocking condition and is in the hurricane area. Those concerned would very much like to move it to the new capital Belmopan, where there is ample land and plenty of resources; and this could be done much more cheaply. Will the noble Lord look into this matter again? I will request those involved to put in an application, if that is desired by the noble Lord.
Lord ORAM: My Lords, we understand that the Belize Government are considering plans for a wing to hospitals that are proposed, but it will depend on the priority they give to such a project compared with other projects they may have in mind. I can assure the noble Baroness that the British Development Division in the Caribbean is concerned

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with this matter and a team will be visiting Belize quite shortly. No doubt these questions will be examined then.

CIVIL SERVANTS AND RETIREMENT EMPLOYMENT
2.44 p.m.
Lord HALE: 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 in what circumstances senior civil servants are permitted on retirement to accept directorships or other employment with commercial organisations with whom they have been dealing before retirement or who are engaged in similar business activities.
The LORD PRIVY SEAL (Lord Shepherd): My Lords, a full copy of the rules governing the acceptance of such appointments by senior civil servants is in the Library. They are designed to ensure the avoidance of any ground for suspicion that serving officers might be ready to bestow favours on firms in the hope of future benefits to come.
Lord HALE: My Lords, is my noble friend aware that it has been suggested by reputable newspapers—and I understood that an inquiry has been instituted—that a former director of sales at the Ministry of Defence went straight to an armaments firm in Jersey? In imports via Jersey—which for some ridiculous reason does not require export licences—he partook in the export of arms direct from several ordnance factories to South Africa, which is alleged to have participated in the sending of the 41 Centurion tanks which went to Jordan and finished up in South Africa or Rhodesia. Is my noble friend aware that we have a full account of the discussions which took place of the meeting at which existing civil servants and the Customs officers of Jersey discussed these matters and hoped to make these arrangements? So it is alleged.
Lord SHEPHERD: My Lords, this particular matter is under consideration, but I would remind my noble friend and the House that on 3rd July 1975 my right honourable friend the Prime Minister concluded that the present rules were sensible and adequate. But he proposed
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that in the case of the most senior Crown servants we should set up an advisory committee to consider any case referred to it. The advisory committee has, in fact, been functioning for some months.
Lord WIGG: My Lords, would the Minister be good enough to say whether there is any variation in treatment between senior officers of the Armed Forces and civil servants? If there is a discrepancy or a difference, would he be good enough to see that the higher standard should apply to both Services?
Lord SHEPHERD: My Lords, there is no difference between those who serve in the military forces and those who serve on the civil side.
Lord CAMPBELL of CROY: My Lords, the noble Lord the Leader of the House will be aware that I am a member of the advisory committee which was set up only within the past year. Does he agree that while the responsibility for decisions in individual cases lies with the Prime Minister of the day, the advisory committee, none the less, does its best, under the chairmanship of the noble Lord, Lord Diamond, to give full and impartial advice?
Lord SHEPHERD: My Lords, that is so. I am very grateful for the intervention of the noble Lord. I know of two decisions, with which I personally very much agree, which were recently taken by the advisory committee and which were accepted by the Prime Minister.
Lord POPPLEWELL: My Lords, in view of the serious allegations by my noble friend Lord Hale, can my noble friend say whether an inquiry is taking place into these allegations?
Lord SHEPHERD: My Lords, I beg my noble friend not to take everything that appears in the Press as being the gospel truth. This matter is being looked into, and I do not wish to go any further than that.
Lord SELSDON: My Lords, does the noble Lord agree that since civil servants retire at a relatively early age, in many cases they can make a major contribution to the country by serving commercial industry thereafter? Is this not something which the Government should encourage?
Lord SHEPHERD: My Lords, I am not certain in your Lordships' House what is an early age. But undoubtedly, as civil servants retire at 60 or 65 (whichever the case may be), many can render very great service to industry and commerce. I think that the general rules have applied since 1937, and I believe that we should rely upon those rules. Where civil servants can play a useful part in industry and commerce we should welcome it.
Baroness SUMMERSKILL: My Lords, does my noble friend agree that the principle which we are now discussing should perhaps also apply to Ministers?
Lord SHEPHERD: My Lords, if my noble friend tables a Question on that matter, I shall seek to answer it.
Lord ORR-EWING: My Lords, can the noble Lord say whether there are any rules for Ministers? Is there an insulation period before they can accept responsibilities in nationalised industries or other bodies; or are there no rules for Ministers? If there are no rules, would it not be worth while considering whether there ought to be some rules?
Lord SHEPHERD: My Lords, this is a different question to which there cannot be, nor should there be, a snap answer. Ministers are in a different position. Ministers themselves very rarely conduct the sensitive negotiations between Government and industry which civil servants conduct. I think there is a difference here; but, my Lords, I think one must also recognise that Ministers are not pursuing a career in the way that civil servants are, and that when they lose office they still have a home to keep. To deny them an opportunity to earn an income would, I think, certainly reduce the number of those available to Prime Ministers as candidates from which to choose their Ministers.
Lord HALE: My Lords, is the noble Lord aware that his declaration that people taking jobs after retirement is of benefit to the community might be a little more true if there were not 1½ million unemployed? Furthermore, is he really saying that he views with benevolence the possibility of someone who knows all the rules and regulations of the Ministry of Defence taking immediate
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employment with an armaments firm outside the jurisdiction of this country but inside its commercial comity?
Lord SHEPHERD: My Lords, under the rules, which have prevailed ever since 1937, anyone who is of Under-Secretary rank or above—and the equivalent applies to the military service—and who wishes to take up employment on retirement must make an application to the respective Minister. The respective Minister then has to decide. In certain cases, this is a matter for the Prime Minister as Minister for the Civil Service. As to the first part of my noble friend's supplementary question, there are a number of people who have made a major contribution within the Civil Service and who are still able to play a great part, by way of strengthening industry and commerce, in overcoming the present unacceptable level of unemployment. My Lords, at this moment we are not a country which can turn aside those who have capability, and above all else integrity, in the furtherance of industry and commerce.
The CHAIRMAN of COMMITTEES (The Earl of Listowel): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, on behalf of the Committee of Selection, That the Viscount Amory be added to the Select Committee on Commodity Prices in place of the Lord Gain-ford resigned.—(The Earl of Listowel.)
On Question, Motion agreed to.

WIMBLEDON AND PUTNEY COMMONS BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
SAMUEL MONTAGU & CO. LIMITED BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

PUBLIC LENDING RIGHT BILL [H.L.]
2.54 p.m.
Lord STRABOLGI: My Lords, I beg to move that this Bill be now read a second time. It is a great privilege to

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introduce this Bill in your Lordships' House, and I am glad that a number of noble Lords who are interested in these matters are intending to speak. I look forward to their speeches, and particularly to the maiden speech of the noble Lord, Lord McNair.
My Lords, the Bill's purpose is to give effect to the Government's undertaking to establish a public lending right for authors of books. The new right would entitle authors to payment from public funds in recognition of the use made of their books when they are borrowed from public libraries.
The public library system in this country has expanded enormously in modern times, and is envied, rightly, throughout the world. It represents a major service to the community. As a nation, we read more books per household than any other country, and to make this possible we borrow from libraries many more books than we buy. Put another way, we borrow more than 600 million books annually from public libraries in the United Kingdom. We have established more than 6,000 public library outlets to satisfy our massive appetite for reading. Thirteen million books are bought each year to replenish and improve the library stocks.
For his or her unique contribution to this service, the author's reward can be disproportionately small. When a copy of a book is bought by a local authority for one of its public libraries, the author normally receives a royalty of around 10 per cent. of the book price. When dozens or possibly hundreds of people borrow it during the years the copy may live on the library shelf, the return to the author remains the same. By any standards, my Lords, I submit that this sort of return seems less than fair. It has occasioned much resentment among authors, who have long campaigned for a public lending right to redress the present situation.
My Lords, life without books I think for most of us, certainly for myself, would be very bleak indeed, but we tend to take them for granted. I am sure most authors would agree with Alfred de Vigny, who wrote that it is more difficult to put together a small book than a large Government. Certainly the authors' campaign has earned the growing
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sympathy and support of the public and Members of both Houses of Parliament. In the past few years there have been debates in both Houses and a Bill from my noble friend Lord Willis, who I am glad is going to speak this afternoon, and there have been two similar attempts at Private Members' Bills in another place. That it has taken so long to respond to this sense of grievance might suggest that successive Governments have been dragging their feet. But this ignores the surprising complexity of giving effect to a viable public lending right scheme. It has been the present Government's first task to lay a sound base on which to build.
Some, sceptical of the difficulties, have pointed to schemes in other countries for compensating authors which seemingly have been constructed and implemented without undue difficulty. We have kept closely in touch with those concerned with such schemes, and have learned from their experiences. The main difference is that, with one exception, the other countries' schemes are not based on Statute. That of West Germany confers a statutory public lending right as we understand it, but the scheme is only just now coming into operation. Legislation was enacted three years ago, but failure to settle the practical details first prevented an earlier start from being made. Elsewhere, the schemes are administrative arrangements without the force of law—a factor of which authors in some of these countries are becoming increasingly aware.
The Government believe a duty must be placed on public library authorities to provide the necessary information to ensure a fair and reasonably accurate assessment of the use made of eligible authors' books, and it would not be appropriate to leave this just to administrative arrangements. Moreover, the authors' representatives have made clear that anything less than a statutory right would not be acceptable to them. It is in any case essential to provide for proper control by Parliament of the use of public funds.
In considering the practical aspects the Government have been concerned above all not to encumber libraries with costly and time-consuming new tasks. Along with other local authority services, libraries are facing major problems of

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resources at present, and we are determined that public lending right shall not add to their problems. So that there may be no uncertainty on this point, I give two assurances on behalf of the Government.
First, these proposals will involve no charge on public libraries or on borrowers. Expenses incurred by libraries in recording loans of the books will be met from the Central Fund to be established for the public lending right, and those expenses will be the first charge on it. When it becomes possible to finance that Fund, it will be established from moneys available for the support of the arts, in which authors hold an honourable place, and not from resources provided for libraries. Secondly, the detailed operational scheme will be worked out after full discussion with local authorities so that it is as consistent as possible with their own procedures, both existing and projected. We attach very considerable importance to these safeguards for libraries and I hope these assurances will remove any doubt there may have been.
My Lords, I turn now to the practical aspects. As I have said, finding a workable way of giving practical effect to the proposed right has not been easy. Put at its simplest, the problem was to find a method of measuring accurately the use of every book borrowed for the purpose of calculating the payment due to its author which would not be so complicated and expensive as to be unacceptable.
My honourable friend the Minister for for the Arts established a Technical Investigation Group of authors, publishers, librarians, public library authorities and the Department of Education and Science, who worked extremely hard for 18 months in analysing the options, detailing the procedures, and setting out the practical and expenditure implications. The main report on the study was published in March 1975 and their final report last month. These reports, the first in blue, the second in red, provide the basis for our legislative proposals and the Government gratefully acknowledge the splendid work of the group.
The group, who have become known as TIG, were asked to examine two schemes. The loans-based scheme which, as I have mentioned, is favoured by the authors, involves the recording of loans of books
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in a sample of public libraries. Counting all loans from all libraries would be extremely expensive and it was necessary to find a sampling method which could be justified statistically. The other scheme, based on purchases, involves the recording of all purchases of books by public library authorities.
I do not propose to go into the results of the study in detail but a brief summary of some of the findings may assist the House. Both of the schemes investigated were found to be technically feasible and to cost almost the same to run. The group estimated that some 113,000 authors might be eligible initially under the loans scheme but only 87,000 in a purchase scheme, because this could not cover books already in libraries; furthermore, not all authors would necessarily register. If a sample of 72 library service points, as considered by the technical group, is adopted, the annual cost of administering a loans-based scheme is estimated at about £400,000.
This choice between the two schemes for assessing individual entitlements, the loans scheme and the purchase scheme, has been one of the crucial issues in the eyes of the authors. In the last few years the writers' organisations have united in a strong, even passionate, championing of the loans scheme, which they consider best represents actual use of books. The purchase scheme would be simpler to operate but its crucial weaknesses, so far as the authors are concerned, are that it would provide only a very rough indication of book use and that it would exclude books already on library shelves. The loans-based scheme, even allowing for the statistical imperfections implicit in the use of sampling techniques, would relate authors' remuneration more closely to the use made of their books, which is the basic intention of a public lending right.
The Government have given very careful consideration to the choice of scheme. Their conclusion, reflected in the Bill, is that the better measure of actual use of all the books in libraries provided by the loans scheme should be the deciding factor. This conclusion was reinforced by the strong preference of the authors for the loans-based scheme.
My Lords, I come now to reference books. I regret to say that the technical

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group was not able to find an acceptable method of dealing with books in reference libraries in a loans scheme. Indeed, they found this one of their most intractable problems. The authors of reference books provide an important service to the community and the Government would like to be able to assist them; but we were faced with the following difficulties.
First, the Technical Investigation Group advised that the work of reference libraries could not go ahead if a record of every consultation had to be made—for example, of a railway timetable or an encyclopaedia. Second, problems were encountered in devising a satisfactory sample system at acceptable cost for calculating the stock which would cover the small number of very large reference libraries—19 of these contained more than half of the total stock—and also the large number of smaller ones. Third, only a small proportion of the heavily used books in reference libraries would in any case be eligible. Many are joint works, compilations, or works where the authors have given their services on a fee basis. In addition to all the other problems it would be very expensive to sift out books which would be eligible from the rest. A considerable number of books are to be found in both loan and reference collections of the same library. To this extent, at least, their authors will not lose out completely.
The Government have therefore concluded, though with reluctance, that the Bill must be confined to books lent out by public libraries, at least initially. If, later on, an acceptable and effective scheme for reference books emerges, the Government will consider further legislation to extend the scheme. I can give that assurance.
I come now to the details of the Bill. I have thought it necessary to dwell at some length on the background to it. I now turn to its main provisions. Clause 1 establishes public lending right as a right of authors to be paid out of a Central Fund in respect of their books lent out of public libraries in the United Kingdom. The detailed application of the right and the basis of payments from the Fund will be set out in a scheme to be put before Parliament in due course for approval. An independent Registrar of Public Lending Right will be appointed
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by my right honourable friend the Secretary of State. His duties, as defined in the Bill, will be to establish and maintain a register of persons entitled to public lending right and their hooks, to administer the scheme and to make payments from the Central Fund, which will be in his charge. The right will be contingent upon registration of every book by the author or his representative.
Clause 2 establishes the Central Fund out of which the public lending right will be financed. Clause 2(4) provides that the expenses of administering the scheme, including the expenses of the library authorities in the sample, will be refunded as the first charge on the Fund. The very small increase in manpower which library authorities are expected to require will be covered by these arrangements. The balance of the Fund will be available for payments to authors. It is vital therefore that expenses are kept consistently to a minimum and this has been a critical issue in determining the extent of the coverage of the scheme.
Clause 2(2) places an upper limit of £1 million, on the annual liabilities of the Fund. Principles of sound finance require that the scheme shall not be open ended and that Parliament mantains a firm control over the resources devoted to it. Clause 2(3) empowers my right honourable friend the Secretary of State, with the consent of the Treasury, to increase the limit by order in a Statutory Instrument under the Affirmative Resolution procedure. Clause 2(6) provides for proper accounting procedures. Clause 3 relates to the making of the scheme and its presentation to Parliament. A central point of Clause 3(3) is that the entitlement to public lending right and its size will be dependent on the number of times books are lent by "particular libraries"; that is, by libraries in the designated sample. The entitlement is therefore a contingent entitlement and not an absolute one. It follows that there is no right unless the sample reveals it. We are satisfied that the proposed sample will be the best compromise between costs and coverage, both in its size and in its representation of regional and minority reading interests, such as Welsh-language books.
Clause 3(5) places a duty on public library authorities with libraries in the

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sample to furnish the Registrar with information on books lent by them. The methods by which this can be done were set out in detail in the reports of the Technical Group. The supply of the necessary equipment, the settling of the detailed procedures and the training of staff will be matters for discussion with public library authorities in the period leading up to implementation of the scheme. As in the case of the preparation of the scheme, there is provision for consultations on proposals to vary it.
Clause 4 makes provision for a register of public lending right, and this will be conclusive as to whether the right subsists in a particular book and to whom payment is due. The onus will be on the applicant to furnish proof of his claim to the satisfaction of the Registrar. The detailed scheme will spell out the full procedure. Clause 5 is interpretative. The Schedule to the Bill sets out in the usual form detailed provision for the Registrar and staff, who will not be civil servants. The Registrar will require up to a dozen staff only at first to build up the register and arrange matters with libraries and around 35 people, mainly clerical staff, when the scheme is in full operation.
My Lords, regarding finance and timing, it is not possible to say when this measure could come into effect. But this is no reason in the Government's view for delaying the introduction of legislation and the detailed working out of a scheme any longer. At least we shall have established the principle, the legal framework and the clear basis which the Bill provides for implementation when resources allow. I am confident that authors will see this as a firm beginning to the process of fair return for which they have striven over the years. I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Lord Strabolgi.)
3.15 p.m.
Lord ELTON: My Lords, in quoting De Vigny's remark about the difficulty of putting together small books being greater than that of putting together large governments, maybe he has said something that is relevant at both ends of the corridor in this building today in a special sense. In the debate on the Second Reading of the Bill introduced by the noble
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Lord, Lord Willis, on 4th July 1975, it became clear that while noble Lords were divided—some of them hotly—on how public lending right should be established and administered, there was universal acceptance that public lending right should be established and administered. The necessity for establishing the right arises because without it there exists both injustice and hardship. The voice of the noble Lord, Lord Paget of Northampton, was alone in being raised to dispute that proposition. Noble Lords will forgive me—and the noble Lord, Lord Paget, will, I hope, acquit me of ignoring rather than dissenting from his view if I do not therefore spend time in arguing a case of which the House has already shown itself to be sufficiently persuaded, and in which our good intentions on this side of the House are not in question.
Injustice exists because repeated loans—or repeated use without ownership, as the Committee set up by my noble friend Lord Eccles referred to it in 1972—of an author's work deprive him of the fruits of labours for which he might justly expect to be rewarded. Hardship exists because very few authors can support themselves, even in the meanest circumstances, by pen alone. An author's garret may be a romantic place to talk about—and even perhaps to work in if it is waterproof—but it is not a fit place in which to live. In a day and age when the State are often accused of paying too much to those who can work but will not, it is entirely wrong that it should at the same time countenance a system which pays less than a just reward for those who can work and do so.
At one stage, authors and their representatives were blandly contemplating a rather larrger sum than has been mentioned this afternoon. I say "blandly" but perhaps their contemplation was less than bland since what they wanted was not a pool at all, but a commitment on the part of Government to payment of a fixed sum per recorded loan. The noble Lord, Lord Strabolgi, has already referred to the lessons which were learned about the dangers, in the construction of agricultural support prices, of having an open-ended commitment such as that. In days such as these, purse strings have to be kept tightly rather than loosely drawn. But whatever the state of the authors of the pool, money of the order of £3 million to £4 million is not at present available,

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and the figure written into the Bill is £1 million. As the noble Lord pointed out, that has to cover administrative expenses amounting, according to the estimate in the Preamble, to £300,000 and which the noble Lord has already said is expected to amount to £400,000 leaving a balance of only £600,000 for distribution among the authors themselves to be distributed between around 600 million loans. There is thus a problem.
We have both an injustice and a hardship. If we remedy the injustice, paying out equally in respect of every loan made, we shall not have enough with which to mitigate the hardship. If, on the other hand, we significantly mitigate the hardship, we shall not have enough to remedy the injustice. One million pounds—less expenses of this order—will not be enough for that. There is not a great deal of point in paying public lending right in large quantities to the authors of world best sellers, who will merely transfer it straight back to the Exchequer in tax, unless wisely but disloyally they have left the country to escape the punishment which these days Her Majesty's Government regard as the just reward for hard work and success. Equally, there is little point in paying sums so small that they are exceeded by the administrative costs of paying them such will he the deserts of a great many authors whatever scheme is devised under the Bill. One solution to such a scheme therefore would be an upper and lower limit to the amounts to be paid, one above which it was not necessary to pay and below which it was not administratively sensible to pay.
In a statement published in the Bookseller on 24th July the principle of the upper limit was at least accepted, though with reluctance, on behalf of the combined front of Writers Action Group, the Society of Authors and the Writers Guild of Great Britain. By such a means, those between the upper and lower limits wherever they are placed—and it is left to the Secretary of State to place them—will we hope get something worth having.
At this stage I have to say that, properly speaking, in view of what the noble Lord, Lord Strabolgi, has said, none of these considerations is our concern, for unhappily although all those concerned
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with public lending rights in this House are now duly assembled together, neither now nor at any later stage of the Bill, in either House, will the contents of the scheme, which will be the principal eventual result of this piece of legislation, be our proper concern. That would not be the case unless it were to be substantially amended. As it stands, Parliament will be able to consider the scheme only when the Secretary of State, in his own good and probably protracted time, has concocted what he thinks is a worthwhile scheme and brings it along for Parliamentary imprimatur. What we have before us at the moment is merely a framework for a framework. I cannot help thinking that Her Majesty's Government found that they had yet again made pledges—on this occasion to the noble Lord, Lord Willis—incapable of redemption in the normal way. They promised a Bill. Here is a Bill. They promised a Bill on a public lending right scheme, but it could not be got ready in time. So here is the Bill anyway, without the scheme. It is rather like Winnie the Pooh's birthday present to Eeyore: there is no honey in the honey jar—it is just a useful pot to put things in. I only hope that the authors, who deserve very much better treatment, are as pleased with it as Eeyore was. The danger is that inflation and administrative cost will do to the £1 million what deflation and too much haste did to Piglet's balloon—in which case, it will not make much difference whether they take out their rights or leave them in the pot. I apologise to those noble Lords whose education has been so neglected that they are not familiar with the allusions that I have made.
Here, anyway, is the Bill without the scheme. If we do not like it, I strongly suspect that we either lump it or risk having insufficient time to get a better one into the Commons before their timetable is too full to save it from lapsing at Prorogation. In view of that danger—and it is one which we in this House can with justice resent—and in view of the fact that legislation in this field is much overdue and that the scheme, when finally completed, would have to be agreed by both Houses before it comes into effect, I will not as yet suggest that a Second Reading be withheld until a scheme is incorporated. But the Government must expect amendments laying down closer guidance on the nature of the final

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scheme. Before leaving the matter, however, I cannot fail to point out a number of the difficulties that will lie ahead for the Secretary of State and the Registrar who presumably will help him to draw it up.
Noble Lords will have noticed that so far I have referred to "authors" and "books". The term "author" is not defined, as one might expect, in Clause 5(2). One wonders whether its use in Clause 1(1) is intended to be exclusive of other possible owners of the original public lending right or whether it is meant to include all authors. Are foreigners included, for instance? Where a foreign author is translated into English, does any right vest in his translator? If so, how much and for how long, and will it still exist if the translation is new even though the author is long defunct? Does the term "author" include or exclude the term "co-author"? How will public lending rights payments be apportioned between co-authors, if they are admitted to the scheme? The noble Lord has given us some guidance on this, but I am not sure that it is guidance that we welcome. Her Majesty's Government may think this is a matter of detail but there are a series of matters which, on their own criteria, will decide the eventual character and workability of the Bill.
Another conspicuous omission from Clause 5 is any definition of the term "book". This may be for the good, if insufficient, reason that the Registrar will presumably have to have a hand in drawing up the scheme since the Secretary of State has for some time not been able to do it on his own. The Registrar and the Secretary of State themselves will have to come pretty close to defining a book when drawing up the new scheme for submission to Parliament. At present, the point at which a paperback becomes a pamphlet is not at all clear, particularly when it is re-bound. Personally, I think that the use of the word "book" is certainly significant and may be regrettable. A lot of authors produce, and a lot of libraries stock, works that are not books at all, but which contain a considerable amount of authorship work in them, whether they be visual aid or audio-visual aid or other material con-
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taining the work of the author, not bound together in leaves.
If the Government think they can legitimately deny us definitions of what they mean by "author" and "book" in the Bill, on the ground that this will have to be left to the Registrar and the Secretary of State, surely they are not also going to tell us that the Registrar and the Secretary of State, rather than Parliament, are the right people to decide what is to be taken as proof of ownership of public lending right. Will it coincide with proven ownership of copyright? Will the two, in fact, be coincidental? If so, why have we not been told? If not, do they see circumstances in which copyright and public lending right can be assigned to separate and distinct assignees? To keep the public lending right coterminus with copyright would seem to be a sensible solution to the problem in one way, but it would lead to difficulties in another way, because it would then assign a right which existed in books not only lent from libraries, as specified in Clause 5 (2), and very restrictively so described, excluding, as the noble Lord said, for reasons of administration, many kinds of reference and other libraries. I was glad to note that the noble Lord said that this area was susceptible of being extended after the Bill was working as an Act. I think that should be firmly on the Record, though its implication is that other matters already defined in the Bill can also be altered, and it removes one reason for not including the definitions of "author" and "book" in the Bill.
I must now turn to ask Her Majesty's Government what they mean by Clause 3, on which the noble Lord spent some time. At the end of it, I was not clear exactly what process he had in mind. A draft scheme is to be laid before each House of Parliament and, if approved by each House, it shall be brought into force by a Statutory Instrument. That is clear enough, but what is to happen if the draft is approved only in one House, for instance, or if, as I would submit, is verging on the certain rather than the probable, it is amended? Supposing, also, it is amended by each House in a different sense? The noble Lord shakes his head and I look forward to his assurances at the end of the day. But, as

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I see it, we have to have an arbiter, or a Parliamentary procedure. We should like to know whether it is intended to deal with this draft scheme as a Statutory Instrument not susceptible to amendment, which frankly would not be acceptable to us, or whether there is to be an arbiter or a means of exchange between the Houses on different Amendments as they arise.
Lord GEORGE-BROWN: My Lords, will the noble Lord forgive me? I do not follow why the noble Lord says that. This House has just surrendered that over the Bill concerned with Press freedom, and has made it quite clear that in such a situation we just gave in.
Lord ELTON: My Lords, I am not anxious to be drawn into a controversy on matters of constitutional precedent, but seek merely to establish what will happen when we have a large, detailed and practical scheme put before us, many of the substantial and fundamental issues of which give character to the legislation and which are, as yet, not spelt out in the Bill, thus making this the only occasion on which we can interfere not with the nuts and bolts—which I do not think should concern us—but with the principles on which it is built.
The noble Lord has told us also a good deal of what is intended as the means of sampling. Up to this point, that had been merely a matter of intelligent guesswork, hearsay and reading between the lines of the Technical Group reports. We shall want to consider before Committee stage what the noble Lord has said, and particularly to take note of the complete and, to some of us, unexpected exclusion of any means of giving public lending rights to the authors of reference books.
Finally, there is one point I should like to make absolutely clear. It is not the function of this House to rush through legislation which is inefficient or ill-thought through. I know that Her Majesty's Government are already anxious about the danger of losing legislation which is not of prime political importance if it goes too late to the other place. That is well and good, but, if it is used to deny time to get this very unsatisfactory, vague and weak piece of legislation into shape to do the essential and desirable work which it is designed
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to do, let them not make the charge against us on this side, if we insist on doing our job thoroughly, that we are attempting to deny yet again to the authors what we have all along said is their just due. That responsibility will remain theirs. They promised this Bill formally as an Election pledge for enactment by July 1974. We have been waiting and ready ever since. This Bill is little and it is late, but it is better than nothing and we shall make the best of it that we can.
3.30 p.m.
Lord GOODMAN: My Lords, this ought to be a day of rejoicing. I think the most one can say is that it is a day of very mild rejoicing. Nevertheless, I think we should rejoice a little, and it would be wrong if one did not at the outset mention the name of A. P. Herbert, who I think would have had both some welcoming and some rather scathing things to say about what we have heard today on this matter. First, there should be a general declaration to the authors of this country who may have innocently and unwittingly believed that as a result of this Bill there will be something coming to them in the next week or month or even year, with which they can pay their rent, buy a meal and pay their children's school fees, and who may generally consider themselves to be slightly better off, that that is a very hopeful expectation. It should he announced as loudly as possible that any author who is unwise enough to think that he can convert his expectations under this Bill into a loan from his bank manager should seek a very early interview with the bank manager in order to be disillusioned.
Nevertheless, I do not take quite the despairing and pessimistic view of the matter that has been expressed by the Opposition speaker, because I think that the introduction of the Bill has to be considered in association with another extremely important Government decision, which was the grant to the Arts Council last week. We heard that an additional £10 million is being given to the Arts Council, and this is an immensely progressive step. It is known that the Arts Council have a responsibility to administer the situation in regard to authorship as well as other things, and the availability of additional funds to the

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Arts Council may open up a prospect of greater generosity under this Bill than emerges from the text of the Bill itself.
I would invite your Lordships to consider what might be the hopes of an author under this Bill. The noble Lord who spoke for the Government was kind enough to give us two sets of very valuable statistics. He told us that 600 million books are borrowed each Near and after administrative expenses there is to be a sum of £600,000 a year to be distributed among the 600 million books. It is many years since I did any arithmetic, and I was notably deficient on that subject as a schoolboy, but my rapid calculation tells me that for each book there is one-tenth of a penny per annum: and that one author who has written 10 books, which is not an inconsiderable contribution to the literary stocks of our libraries, will receive a whole penny per annum for his exertions. But the noble Lord gave us the slightly more satisfying statistic that only 113,000 authors would be competing for the £600,000. Therefore, again taking it as an average, there is a hope that an author might get some sum approaching a fiver a year as a result of the benevolence and munificence of this Bill.
We welcome the Bill, we welcome the framework and we welcome the principle. I should particularly like to congratulate the present Minister for the Arts, who has brought this matter to at least the conclusion of a whisper of a suggestion of a nuance that something may one day happen. I think he can congratulate himself on this, because he has been very severely criticised under a number of heads, and in many respects unfairly criticised. He has produced this massive addition for the Arts Council. He has produced the Bill and he has done a number of very good things. He has also earned some criticism for his very eccentric notions about what "democracy" is, and his idea that you can elect an Arts Council, and several other notions too horrible even to be mentioned at large in an informed assembly. But it would be wrong not to praise him for this activity and for many other activities, and when the story comes to be told he will emerge as one of the better Ministers for the Arts, who has worked zealously and conscientiously to improve the lot of artists and writers.
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Nevertheless, this Bill must be recognised for what is it. It is an introduction to something that may happen, and it ought to happen with great speed. Authors have been waiting anxiously for some redress for what is a simple act of pillage. It is not a question of charity. It is not a question of redressing a want of benevolence. It is a question of giving people what is an unarguable legal right. An author writes a book, it is placed on a library shelf and a great many people come to borrow it, but he receives exactly the same reward as if that book had been purchased by one person for the use of himself and his family. That is intolerable. Authors have been clamouring for redress for years and at this stage they do not have the redress, but they have the promise that something could happen. I urge the Government to see that something happens quickly.
I also urge—and I may move an Amendment during the Committee stage—that the derisory sum of £1 million be removed altogether from the contents of the Bill. It cannot provide anything in the way of compensation for authors, and it is better not to promise anything than to make this pitiful and rather offensive suggestion that they will be paid in pennies for their life's work. Also, there is no sense in putting in a sum of £1 million if there is no date for the Bill's introduction. What is the sense in indicating a sum, if you do not know what that sum will be worth, what inflationary features will work upon it or what we can afford at the time when it is introduced? Why not leave out the sum altogether?
If I may make a practical suggestion, why not use the services of some expert body like the Performing Rights Tribunal, which I believe is still in existence, to determine each year what is to be paid for this purpose? They determine what is to be paid for the copyright of music in relation to usage on television and in other places. Why should not the Performing Rights Tribunal be asked to determine each year what is a proper amount to be paid to authors for the use and exploitation of their work in libraries? They are experts in these matters. They could assess the amount with very little or no difficulty. I believe that the Tribunal is in existence—it is some time since I had dealings with it—but if it is

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not I am sure there is another suitable tribunal that could adjudicate on this matter.
But it is wrong to suggest a certain sum which will be rapidly eroded by increasing administrative costs, because each time Mr. Jones decides that it should be £10 instead of £6, and that the annual addition should be made to people's wages, the £400,000 will become £500,000 and the amount left for the authors will be appropriately reduced. I venture to suggest that any sum of money should be removed from this Bill. As was said by the noble Lord, Lord Elton, this is a framework, and there should be a construction around the framework of a solid realistic structure, giving appropriate rewards to authorship.
Both of the speeches introducing this Bill were admirable in the sense that they took due regard of the difficulties, but were a little niggardly in their appreciation of the contribution that the author makes to society. He deserves to be treated with much greater generosity than he has been treated up till now. He is, if not the most important, certainly one of the most important of the citizens of any civilised society and his contribution cannot be assessed in financial terms. The idea that we tell him that for all the work that he puts into libraries he is to receive one-tenth of a penny per book is not worthy of this Legislature and it is not worthy of us. That is one change that I would invite the Government to make with speed and with generosity, and with a recognition that this amount of money has no relationship whatever to the importance or value of the subject that is being rewarded.
Having said that, there is little more that I should like to add, except that there are a great many difficulties that need to be resolved. Should reference books be included or not? Plainly, they should be included, but I do not think it matters a lot if they are not included at the first try. We can leave that for later legislation or amendments. There are many things that we cannot hope to achieve in the first blush of a new and complex code of legislation. We cannot, perhaps, include reference books, although I should have thought it would not require a genius to determine some way of compensating for them. I have a feeling that if all these matters were
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left to an independent tribunal, and a case was presented by both sides, they would emerge with a judgment in a matter of weeks that has taken the officials working on this matter years and years.
We may be told that with so complete a matter it is quite right that it should have taken 20 years to evolve this simple Bill. I think it would be doing a great disservice to human resource and human intelligence, and to the imagination and efficiency of government, to believe that that statement has a vestige of truth. Why it has taken 20 years is one of the unexplained mysteries of our time, but certainly it could have been done in 20 weeks. People with efficiency and determination could have produced a code more quickly. I had the opportunity of observing in my seven years at the Arts Council, when we were urging that this reward should at last be achieved, the difficulties that were produced—and they were not technical difficulties; they were human difficulties.
There was a collection of human beings in positions of authority, not in positions of power. In the governmental machine, the man who has authority is not the man who wears the finest uniform; it is the man who happens to be sitting next to the tap and who has the duty to turn it on or to turn it off. He is the man who has to make the recommendation. He remains an anonymous character and we are told by the Radcliffe Committee that he should remain so. Whether that is right or wrong is not a matter for discussion today. But what is certain is that if you have a body of people who are determined that something shall not be achieved because quite honestly they believe it to be wrong, the difficulties that the Minister has in achieving it take 20 years to overcome. It is on that account that this has taken 20 years.
It should be said that a great number of conscientious, misguided, unfortunate wretches in positions of influence but not of power have been able to prevent this legislation for 20 years. It should not be said that there are inherent difficulties which have baffled the greatest brains in the country for 20 years. To use a word which is quite unsuitable for the House of Lords, this is unmitigated piffle. The simple fact is that a number of people set their faces against it and have been able to achieve

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the blockage. It is no use the Minister wagging his head because I saw it happen. I was present at one meeting with the present Minister of the Arts when his civil servants blandly denied that agreement had been reached with his predecessor. Also it would be quite wrong not to say a word of praise to Norman St. John-Stevas who within a few weeks had tackled this matter with great determination and resource and had produced a scheme. It was not a scheme which wholly satisfied the authors but it was an immense advance on anything else. When we had a subsequent meeting with the new Minister his civil servants declared that no such scheme had been agreed, although in everyone's possession there were memoranda recording it. From the Parliamentary and constitutional point of view I feel it is useful that occasionally we should not befog the issue with suggestions that the realities of life are not, in fact, realities—that it takes 20 years for a Government as equipped, as resolute and as rich as this to produce a Bill of this minnow-like quality. It does not take 20 years. It could have been done in 20 weeks.
Having said this, I return to the note of rejoicing upon which I started. We have a Bill, a structure, a framework, upon which to build and which opens up a vestige of hope to authors that at long last this hideous wrong will be redressed. Hence we should welcome the Bill. To pay another little tribute, it is not wholly inappropriate that this Bill should emerge in the last hours of the present Prime Minister's régime. From the outset the present Prime Minister has been a very good friend to the arts. When I became the Chairman of the Arts Council and occasionally had discussions with him on the matter, although he had not the time for a detailed investigation of artistic matters—his own inclinations lay far more towards political history and matters of that kind—he was enthusiastic that the arts in this country should be supported. The one certainty is that whatever else has happened to our economy, to our defence, to a multitude of things of which he used to be proud, we can continue to be extremely proud of the artistic quality of what goes on in this country. We still have authors,
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orchestras, operas and composers of quality. It is in order that that quality may be preserved, perpetuated and improved that it is important that we should get on with this Bill.
3.44 p.m.
Lord McNAIR: My Lords, I am indeed hoping that your Lordships will not deny me the lenience which habitually is shown to "first offenders". I must make it clear at once that although I have no previous convictions—no form in this House, at any rate—I have a motive. In the technical sense of the word, I have an interest in the public lending right that is so microscopically small that after listening to the noble Lord, Lord Goodman, I can hardly see it at all. But no matter how small that interest is, it must be declared and, like most authors, I live in hope that it may get bigger. It did not seem to me to be right that in a maiden speech I should take this Bill to pieces and criticise it clause by clause. Of course it is not perfect but it is so much better than nothing that I should like to give it a warm, if guarded, welcome on behalf of my noble friends.
I said that I was living in hope. Hope is the only thing that most authors are not short of. Unfortunately, I do not know how the noble Lord, Lord Dunleath, earns his living but I am quite sure that it was not by writing that he built up that enviable collection of empties. From this store of hope we have drawn very heavily in waiting for this Bill. If the noble Lord, Lord Elton, will lend to me that most apt and useful Spoonerism which escaped his lips some weeks ago, going back over 40 years we have had an endless succession of od hac bodies, Working Parties and study groups. The noble Lord, Lord Goodman, to whom all writers are lastingly and deeply in debt, has described some of his sessions with these officials as "purgatorial torment". As we have seen this afternoon, the noble Lord is not a man who is given to hyperbole. Let us hope that after his long suspension in purgatory he will soon be leading us, if not straight into Paradise at any rate several steps further away from that inferno of disappointment and injustice from which it seemed we were never to escape.
Why is a public lending right for authors so urgently necessary? At this point in the preparation of these few

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impromptu, extempore remarks, the delivery of which seems to have brought on a direct attack of dyslexia, I wondered for a moment whether I might find the courage to tell your Lordships the oldest book joke known to man. Needless to say, I do not have that courage, but for an ulterior reason I must remind your Lordships what it is about. It is about the college boat club which could not possibly give to its president a book for his birthday because, as one of his friends happened to know, he had got a book! My excuse for resurrecting that poor old joke is that I want to make the perfectly serious point that, alas, great numbers of our fellow citizens, possibly a majority, have not got a book. Among those countries where education is universal and where literacy is the rule rather than the exception, we are the worst book buyers of the lot. We are bottom of the league, and this is a fairly recent development.
I have noticed that in controlling those outbreaks of insomnia which occasionally sweep this House nothing works faster than figures, so I will confine myself to one stark statistic. The noble Lord, Lord Strabolgi, nearly gave this statistic, but I think not quite. In 1920, for every book that we borrowed from a public library we bought 10 from a bookshop. Today it is safe to say that that ratio has been reversed and that for every book we buy we borrow 10. The reason for this is that we have the finest public library service in the world. This is one piece of chauvinism which I will permit myself any day of the week, for our public library service is one of our enduring and remaining glories. Stocking over 100 million volumes, lending them to people through over 6,000 outlets and making over 600 million separate loans a year, surely this adds up to a magnificent social service of which we can all be proud—or, rather, of which we could all be proud if it did not also add up to a lot of "free reads" and a blank denial which is perfectly legal at present but ethically indefensible; a denial of the author's right to some reward for service given. In that sentence I suggest that your Lordships will find at least part of the definition of the word "slavery".
I also used the words, "social service". They remind me of the long running
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argument about our railway system: should it pay its way like a commercial undertaking or should it be, at least in part, a social service paid for out of taxation? I have a third suggestion. Why do we not run the railways in the way in which we run the public libraries, by simply not paying the railwaymen? I should perhaps warn the House that I have not yet had comments on this idea from Mr. Weighell or Mr. Buckton. I am trying to make the point, perhaps in a rather fanciful or satirical way, that authors are physically unable to prise their rights out of the community by their own power. They might claim—I hope no one would dispute it—that they have done the State some service. But they are economically defenceless and that is why they ask Parliament to defend them. Where else should they turn?
3.51 p.m.
Lord WILLIS: My Lords, it falls to me to congratulate the noble Lord, Lord McNair, on that very interesting maiden speech and to thank him above all—and I am sure all noble Lords will join me in this—for salting his remarks with a little humour. That is something that perhaps we do not have often enough in this House. I hope we shall hear a great deal more from the noble Lord; certainly I do not think he could have chosen a better subject on which to speak and to support.
This afternoon we have had a lot of nostalgia about how memorable an occassion this is in certain respects. In some ways it is quite memorable for me personally, because for upwards of 25 to 30 years I have been giving different Governments advice on various matters, none of which they have taken. However, on the occasion last July when I introduced a Bill on public lending rights, I suggested that such a Bill should come to the Lords. The Government have agreed. I hope they have laid down a precedent and that any future Government will listen to me a little more often!
To be serious, my Lords, the noble Lord, Lord Goodman, is absolutely right when he says that the principle enshrined in this Bill is a welcome one, and among all the tributes that have been paid I should like to add to his tribute to Sir Alan Herbert for the great fight he put up for authors, and equally to the late

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John Brophy, who really began it, and finally to two noble ladies—not noble in the sense of your Lordships' House but noble in every sense, of soul, spirit and purpose—Brigid Brophy, the daughter of John Brophy, and Maureen Duffy. They have fought unselfishly for this measure and have made great sacrifices to bring it at least to this stage.
I am sure your Lordships will not want me to go over all the arguments and discussions that we had when I introduced my Private Bill last year, as well as some of the arguments with which we are all familiar. But I want to stress once again the point that it is really a matter of simple justice that is being set out in this Bill—the payment to authors; it is nothing more and nothing less. Particularly I welcome the fact that it pushes aside, I hope for all time, the idea that authorship is an effete, part-time occupation to be indulged in by gentlemen, and not at all a profession. There were echoes—in fact more than echoes—of this in the speech made by the noble Lord, Lord Paget of Northampton, in the last debate. I looked it up the other day. He actually said that there is no harm in authors being authors part-time, and he went on to say that it would not do authors any harm if they did normal work besides writing, or some phrase of that description. I am sure he did not mean it in that sense, but I find it deeply offensive. In my view, professional authorship is a dignified and honourable profession, and nobody in this House or anywhere else can tell me that it is less arduous to be a writer than it is to be a miner or a solicitor or a Member of Parliament, to none of whom is it suggested that they should get a "normal job" in addition.
Authors have to put up with all kinds of things. For example, last Wednesday I worked all night. I stopped for a cup of coffee at about 9 o'clock in the morning and took the dog into the woods, and I had not been to bed then for 24 hours. In the woods I met a friend of mine going off to work, and he said: "Oh, you fellows have a good time—out walking your dog". That is the kind of attitude one meets. People ask: "What do you do for a living, though?" Can we once and for all abolish this attitude and, as the Bill suggests, agree that
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authors are a profession like any other profession; that they make their contribution to society as other professions do? This nonsense about part-time authorship should be abolished.
I want to qualify the welcome that one can give to the Bill. To me it seems a little like an operation carried out by a rather bad surgeon who leaves out more than he puts back. As the noble Lord, Lord Goodman, said, it is incomprehensible that we were told, 18 months ago, that a Technical Investigation Group would be set up to work out the details of a public lending right scheme and for that reason legislation could not be introduced. We have had the report of the Technical Investigation Group which has discussed and dealt with a great number of problems and cleared the ground from which could have developed a scheme, but we have no such scheme.
We are further told, in association with the Bill, that it may take one, two or three years to draw up a scheme. I find that incomprehensible and disappointing, and I agree with the noble Lord, Lord Goodman, that if we were to put our minds to it we could get out a scheme in 20 weeks. I do not know about the tribunal mentioned by the noble Lord, Lord Goodman, but I think it is a good suggestion as a body to which to appeal in terms of the money, and it certainly still exists and is in operation.
I hope that we are not being given here a Bill which enshrines the right for there to be a public lending right for authors, yet we are to be fobbed off year after year, as previously we have been fobbed off, with promises that a scheme is being prepared, that it is going to take time or that the money is not available. As an author—and I should have declared my interest; I have books on library shelves—I am in a difficult position this afternoon. I feel that if I attack the Bill too strongly people will say: "We can't please these fellows. They have been arguing for three, four, five, 20 years for a Bill. We have given them a Bill. Now what do they do? They get on their feet and attack it". That is the dilemma in which I find myself.
I am pleased that the Government have introduced this Bill, but it is really rather a dismal and shabby Bill to bring forward after all the discussions we have been having. Let me give just one or two examples.

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We have already mentioned reference books and I was a little puzzled by the reference made by my noble friend Lord Strabolgi with regard to them. I was under the impression that the Technical Investigation Group had covered the question of reference books and had worked out that it would cost only another £12,000 per annum to cover reference books, and that there was a perfectly adequate method of stock sampling plus loan sampling of reference books which would give some measure of justice to the authors of such books.
There is another vital omission from the Bill which I think we shall have to put right at the Committee stage. There is no protection for the weaker author on the question of assignment of rights. Under this Bill it would be perfectly possible for a publisher to take all the public lending rights in the contract that he gives to an author and leave the author nothing. What is much more likely is that many publishers will seek to put their teeth into this very small apple and take 25 per cent. or even a larger proportion of the author's earnings under public lending right. It will not be much under this Bill and with this sum of money, but they will certainly try to lay down the principle. I think the Bill must lay it down that the money must be paid direct to authors and not to publishers, and that there can be no assignment rights in this respect.
Then again, the Technical Investigation Group proposed the setting up of an advisory council which would advise the Registrar and the Minister on how the scheme should be operated. I find it extraordinary that there is no allowance for this in the Bill. Clearly, the Registrar and the Minister will have to consult with authors and organisations to ensure that we get a workable scheme going. I should have thought that it would have been simple and reasonable to have an advisory committee on which there are librarians, authors and publishers and everybody else concerned so that they may advise the Registrar and the Minister. This seemed to be agreed, and I find it odd that it has been missed out.
The time-scale, of course, worries me enormously, as I know it worries my novelist friends. It could go on for ever. We could have a Bill lying on the Table
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waiting for legislation to come before both Houses of Parliament before it can be implemented. The noble Lord, Lord Elton, was right when he said that all kinds of amendments to the scheme may be needed when it comes before Parliament. We may not be able to reach agreement; there may be long arguments. We may again be sufferers from lack of Parliamentary time. This could drag on not for one or two years but even longer before the necessary Statutory Instruments are passed and the authors start drawing money. So I beg the Government and the Minister to look again at the question of the time-scale to see whether something cannot be done.
There was a great deal in what the noble Lord, Lord Goodman, said about missing out the money clause altogether. At the moment, it is rather ludicrous. In another year it will be not £400,000, but £500,000, and the year after that it will probably be more. This amount left to distribute to authors will become less and less. I would be prepared to take a gamble and leave the figure out, and merely say that there should be a reasonable figure paid from the Central Fund. I am sure that the Government of the day, whatever their complexion, and the Minister of the day, whatever his complexion, would take a reasonable attitude towards this and that we could certainly persuade them to give a little more than the £1 million, in the light of inflation, increased costs and so on.
There are a number of other items we shall have to come back to in Committee; for example, the question of overseas and foreign authors. We must have reciprocity in these matters. The Australian scheme, for example, pays only Australian authors. Are we proposing here to pay Australian and all the other authors? There is the question, as the noble Lord, Lord Elton, said, of the English translator of a foreign language work. How do we work that out? It may be arguable whether this kind of question comes in under the scheme, but many of them in fact hinge on points of principle and therefore have to be discussed. That is why I think the Bill is a little untidy and a little disappointing. I am like a boy who has been waiting for months for his birthday to come round, and has opened up a beautifully covered parcel only to find an empty box and a

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note of good will. I accept with gratitude the empty box, and I accept with gratitude, on behalf of authors, the note of good will. I only hope that there is more meaning to it than we have had in the past.
4.4 p.m.
Viscount ECCLES: My Lords, I am glad to follow the noble Lord, Lord Willis, because I agree with a very great deal of what he has just said. When some time ago the noble Lord, Lord Strabolgi, told me that a Bill had been drafted and was going to be introduced to set up a public lending right, I hardly believed it could be true. After all these years of meetings and committees and investigations, were we really going to see this elephant's child in the light of day? The noble Baroness, Lady Lee, will remember, and so do I, that for years we tried to bring forth a Bill, but we could not find a way to do it.
Baroness LEE of ASHERIDGE: My Lords, if I may interrupt the noble Viscount, I know how very hard he tried and we all tried. But I never liked to be put in the position where I was told what to do by civil servants. There was a scheme. It was rejected, but not by the civil servants, who cannot speak for themselves. It just happened that I could not persuade the Chancellor at that moment to give me the £5 million I was asking for. I put that point just to keep the record straight.
Viscount ECCLES: My Lords, the House will be grateful to the noble Baroness for putting the record straight. I was saying that it is maddeningly difficult to do this, and therefore one approaches this Bill knowing that, but at the same time feeling that at least we ought to be in a position to consider whether it gives the authors enough of what they claim as a right, a right with which the great majority of your Lordships agree, and then, if it does, what really is the cost to the rest of the community. If we let the Bill go from here to the other place we must be satisfied that the costs of administration neither put an unreasonable burden on the taxpayer nor swallow up an indecent proportion of the £1 million Fund, and, as several noble Lords have already indi-
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cated, this is, unfortunately, likely to be the case.
Secondly, we must be sure that publishers are not asked to implement a marking or coding system that will interfere with their business. Thirdly, and most important, we must see that the service to the public given by the local authority libraries is in no way reduced or impoverished by the working of the scheme. I agree very much with my noble friend Lord Elton that the Bill as it stands—I refer to Clause 3(6)—is not satisfactory, and we shall have to put into the Bill a specific assurance that every penny of cost that falls upon the public libraries will be fact be reimbursed. Those are the kind of tests which this Bill must pass. Otherwise we shall be putting on the Statute Book a measure which achieved a victory for the authors but did more harm than good to society as a whole. Even so, the authors' victory could turn out to be a defeat, for the co-operation of taxpayers, publishers and librarians, without which the scheme would never work, would be seriously at risk. Then the Bill would become a dead letter and this we must prevent if we can.
We are in acute difficulty because we are only discussing an enabling Bill, which cannot at this stage pass the tests which would secure the essential cooperation of those who must work the scheme. All the details of the loan-based scheme are left for the Secretary of State to decide. We cannot know, except within very wide margins of error, whether the estimates of cost are worth the paper they are written on; and every day, as noble Lords have already pointed out, costs are rising. The local authorities cannot know until they see the details of the scheme how much extra work will fall upon the public libraries. As drafted, the Bill seems to go out of its way to damage the good will of the local authorities, for it tells them that a scheme is coming which will require them to do a number of things, but until the scheme does come they can only imagine the worst. That is the situation described by Shakespeare:
"How easy is a bush supposed a bear".
Within the Bill as drafted there are many unsatisfactory features. My noble

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friend Lord Elton has already drawn attention to the fact that there is no definition of either "author" or "book". I am not a lawyer, but I have been in Parliament a long time, and it seems to me highly improper, in a Bill which is essentially about authors and books, to give no definition of either. The Bill's Title, for example, reads:
"An Act to provide public lending right for authors,…"
I wish the noble and learned Lord was on the Woolsack because I am sure that the House would be greatly interested, as I know the Library Association would be interested, in the Lord Chancellor's opinion on this matter, because we have a Bill which, in its Title, is about authors yet the body of the Bill does not tell you what an author is. Perhaps the noble Lord who is to wind up could enlighten us on the opinion of his legal advisers.
This is not only a question of the proper method of legislation. In any public lending right scheme the definition of book is vital. We have already heard that it is going to exclude reference books. What about books by several authors? Books which are translations of works by foreign authors? Pamphlets of less than how many pages? Single issues of journals devoted to an article by one author? Then you have all the other media through which other information is now conveyed in which the copyright is just as good as in the printed book. There is no definition in the Bill. It is left to the Secretary of State to do what he likes.
The definition of "author" is equally tricky and equally essential. What about the Commonwealth and foreign authors? Will they be eligible for a cut out of the Fund? If so, the costs of administration will be considerably increased and British authors will get even less. On the other hand, if overseas authors are not eligible what about our obligations through international conventions? Are these going to be cast aside? As the Bill stands the Secretary of State could, if he chose, define an author as a writer who must belong to a closed shop, or even be a member of his own political Party, and your Lordships would have no opportunity of amending any definition that the Secretary of State might care to make. It is no good reminding us that the
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Minister in charge of this Bill in another place, Mr. Hugh Jenkins, is famous for his profound knowledge of literature and his non-partisan impartiality. He will not be there forever. Whatever happens to Ministers, an author and a book must be defined in the Bill, and the definition approved by Parliament.
Again without the details of the scheme we cannot know how unsatisfactory the outcome of Clause 3(3) may be. This reads as follows:
"The scheme shall be so framed as to make entitlement to public lending right dependent on, and its extent ascertainable by reference to, the number of occasions on which books are lent out from particular libraries, to be specified by the scheme or identified in accordance with provision made by it."
I ask your Lordships to take note of that word "particular". Why do the Government want this power to pick out certain libraries from among all the local authority libraries and leave out others? Unless the sample of how many times an author's books are borrowed is small the cost of calculating the entitlement will kill the scheme. If the sample can cover only a small proportion of all public libraries, it must be unfair. There can hardly be a dozen authors out of the 100,000 we have heard of whose books are evenly spread throughout the libraries of the United Kingdom.
The noble Lord, Lord Strabolgi, told us that the Government intended the sample to cover 72 libraries out of 6,000. I think that the Government will be hard put to it on Committee stage to justify the unfairness of a sample which is kept down to a size that can be paid for out of the £1 million, and even then is calculated at present prices to cost £400,000. Your Lordships may not be aware that the instructions to the investigating committee were to work only on books by a single author. That alone means that if the definition of a book is enlarged in the way in which it ought to be enlarged that figure of £400,000 will go shooting up.
The noble Lord did not tell us what Clause 3(4)(a) means. It looks to me as though this subsection means that books lent by public libraries to school libraries are included. I think that that is how it reads. That, your Lordships will realise, will create enormous difficulties. Is it the intention under that subsection to exclude from the scheme books which

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are read in the library and not taken away by borrowers? If I followed the noble Lord, Lord Strabolgi, that is the intention. I wonder whether the authors of all the reference books which are not commonly taken home have been asked to agree to their exclusion in a Bill which is entitled "Public Lending Right".
Clause 3(5)(a) alarms the libraries, and it alarms me. It reads as follows:
"The scheme may provide for requiring local library authorities—
(a) to give information as and when, and in the form in which, the Registrar may call for it or the Secretary of State may direct, as to loans made by them to the public of books in respect of which public lending right subsists, or of other books;".
What is meant by "or of other books"—that is, books which are not within the public lending right scheme but in respect of which libraries are to be compelled to give information? How much time is that going to take up of the staff of public libraries? This is just the kind of threat to the libraries that should be cleared up before the Bill leaves your Lordships' House.
I would think that paragraph (b) of subsection (4), as it stands, is unacceptable. All hooks which fall within the scheme must be specially marked or coded: that is obvious. No scheme for loans could work otherwise. But who have to do the marking or coding, and who have to use the mark or code when it is inserted in every book?—the publishers and the public libraries. But in this subsection there is no provision for consulting either the publishers or the libraries about the manner in which the coding is to be done. Their only protection is in Clause 1(2) where the Secretary of State undertakes to consult as and when he thinks proper. This will not do. The Bill, as it stands, would allow him to impose on publishers and libraries a system of marking or coding which they considered unworkable; and to do this without consulting them. I know that the noble Lord, Lord Strabolgi, told us that of course there will be consultations, but that is not good enough. This must be put in the Bill if the good will of libraries and publishers is to be obtained.
Noble Lords opposite are, of course, inclined to cry "nonsense" when we point out how dictatorial the Labour
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Government are becoming. Here in this Bill is a classic example. Under the Bill local authorities could be made to do things which would certainly impair the public library service. Libraries could be made to accept these new duties without the right to be consulted and without Parliament having had an opportunity to amend the scheme.
That brings me to the heart of the matter, which is enshrined in Clause 3(1):
"As soon as may be after this Act comes into force, the Secretary of State shall prepare the draft of a scheme for its purposes and lay a copy of the draft before each House of Parliament."
That means that the Bill allows for the approval or rejection of the draft scheme by Resolution of each House of Parliament. But your Lordships would not be able to table Amendments. We could outline the general nature of the Amendments we had in mind, but if the Government refused to take the scheme away and bring it back amended, we would have to choose between accepting it and throwing it out. In either case, an effective public lending right might be delayed for years. It may be that Mesdames Brophy and Duffy are saying that anything on the Statute Book is better than nothing. It may be that the tough tail that wags the authors' dog cannot see how thin the ice is on which this Bill stands. But we in this House have to tell them that anything is not better than nothing if it will not work, and that is no debating point; it is a very real danger because it is not only an enabling Bill but in its text is full of serious ambiguity.
What, therefore, can we do? I want this Bill to succeed so I have taken all the trouble I can to look up the precedents for dealing with the kind of delegated legislation which is coming forward in the scheme. Precedents exist for amending a draft scheme. The last I can find is the Government of Burma Act 1935. If we followed that precedent we would have to amend Clause 3(1) to read something like this: "If the draft scheme is approved by a Resolution of each House or is so approved with an Amendment or Amendments to which both Houses have agreed, the Secretary of State shall bring the scheme into force in the form of the draft or the amended draft, as the case may be."

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This form of words does not ensure that Amendments made by one House are considered by the other, though it might be possible, as was done in the case of the India and Burma Orders, by informal agreement to provide for this to be done. I have not had time to discuss this Amendment with my noble friend on the Front Bench; I am putting it forward now because I see no other way to get the Government out of a position which, if they maintain it, is likely to forfeit the good will of the libraries and prove highly disappointing to many authors. This would be avoided if Parliament—which, after all, is full of authors—could discuss and amend the scheme. I therefore press the Government to tell us this afternoon whether they will accept an Amendment on the lines I have suggested. We could then all vote for the Second Reading with a good conscience. But if no such Amendment is acceptable, then we are left with a Bill which does not grant a public lending right but sets up a Fund to be distributed to certain authors in any way the Secretary of State may determine. I can hardly believe that your Lordships would think this a satisfactory way to do justice to so many authors who have waited so long.
4.25 p.m.
Lord GIBSON: My Lords, I find myself, like most noble Lords, poised somewhere between the satisfaction expressed by the Government spokesman, the noble Lord, Lord Strabolgi, and the dissatisfaction and despair expressed by the noble Lord, Lord Elton. I am a little nearer to satisfaction, because I think that, coming back to Eeyore, the pot with nothing in it is better than no pot at all, though having listened with great attention to what the noble Viscount, Lord Eccles, has just told us, it is as clear to me as I think it will be to many noble Lords that the pot itself needs considerable alteration. There is, of course, nothing in it. We do not need to go again into the statistics which have been mentioned by several noble Lords, but the fact is that even to get a halfpenny a read, the sum would have to be £3 million, and I agree with those noble Lords who have suggested that it would be much better to leave the money out.
I take this view especially because in the last few days the Government have shown that they are responsive to the
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demands of the Arts. Speaking as Chairman of the Arts Council, I take this opportunity of saying that if Parliament grants the money requested in the Supply Estimates for the Arts Council, our task will be very much easier than I had feared it would be. I hope that this will not be taken as a general indication of benevolence to all kinds of applicants who are not on our books at present because, goodness knows! with inflation running at its present rate it will make it possible for us only to keep going in broad terms with the things we are already doing. But at least if we are able to do that, we will see the great achievements of the last 25 years carried on through these very difficult and stormy times—and the Government deserve great credit for the way in which they have responded to this financial crisis. I wish to add my tribute to the Minister for the Arts who has secured this grant.
Literature is a field which, in any case, gets very little money from the Arts Council, but it is important, in spite of having referred to the Government's grant for the Arts Council, not to confuse State subsidy for the Arts with what is being proposed through a Public Lending Right Bill. They are quite different things, and it seems to me that the purpose of the Bill is simply to bring, or to go some way towards bringing, the remuneration of a profession more into relation with the extent to which the books written by the members of that profession are read by the public in this country—where, it has been said, the proportion of people who borrow books from libraries rather than buy them is far higher than in any other country, certainly in the Western World.
That is the purpose of the public lending right and it is quite distinct from the State subsidy for literature. Therefore, the Bill is not brought forward in any sense as an act of charity, and if it does not provide an adequate sum for the purpose for which it is being produced, then it simply gives the form of the remedy without the substance and this is a very severe disappointment. I must say, however, that in spite of that, I think we should give a resounding welcome to the fact that the Government have found legislative time for a measure which is of so much importance to literature. But let us leave out the money, and then

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perhaps we can make our case for more money in the months and years to come.
My Lords, I should declare an interest as a publisher, or as the chairman of a group which controls publishing interests. In response to a point made by the noble Lord, Lord Willis, I should say that I agree with his suggestion that the right should be made non-assignable. It would be a great pity if publishers were put in a position of being able to negotiate with authors to take part of this right from them. I hope that this point will be attended to in Committee.
However, the most worrying thing about this Bill is that we are discussing an enabling Bill, and I thought that the interjection by the noble Lord, Lord George-Brown, was very relevant, because we are being asked nowadays to give Secretaries of State substantial powers through delegated legislation and the preparation of schemes, which seems to me inherently undesirable. Does not this Bill leave much too much to the Secretary of State? It states that the classes, descriptions and categories of books, and the scales of payment shall be determined by a scheme prepared by the Secretary of State after such consultations as he thinks fit with those who represent authors, local library authorities and others.
Would not it be wiser to specify in the Bill, much more closely, the form of the consultations which should be required of him? Would not it be better to set up under the Bill an advisory council, as the noble Lord, Lord Willis, suggested, consisting of representatives of the groups mentioned in Clause 1(2)—namely, the authors, local library authorities, and other people concerned—and give that advisory council some kind of a formal relationship with the Secretary of State? Thus something which those most affected have agreed upon can come back to Parliament in the form of a scheme which the Secretary of State is to lay before us?
I say that without prejudice to the argument that the Bill in its present form is greatly amended before it leaves Parliament to go to the Secretary of State for the preparation of a scheme. Moreover, I venture to think that the Secretary of State will need a continuing contact with authors and libraries as time goes on, in
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the sense that the scheme will need adjustment in the light of experience. A formal advisory council would be of help to him and would be a safeguard, because we shall hear publicly what the views of that council are.
That seems to me to be a point of great importance. For that reason I should like this council to be set up under the Bill. The acceptance of this point would give much more confidence to writers and librarians that there is a voice which speaks for them and which can interpret their needs to the Secretary of State in a manner to which he must give heed. It might conceivably be appropriate for the Arts Council to be represented on such a council.
Like other speakers, I notice that reference books are omitted from the Bill, as the noble Lord, Lord Strabolgi, told us. He told us the difficulties which the Technical Investigation Group had encountered. Perhaps these books can be left out for the time being, but it is a further injustice and one which I hope the means can be found to remedy at a later stage. If the money is anything like as low as is now proposed, it is really quite irrelevant; they will not get anything, anyway.
My last point concerns the definition of the word, "authors", which apart from its other lack of clarity, as referred to by the noble Viscount, Lord Eccles, does not specify whether the Bill relates to authors of British nationality, or to authors from any part of the world. I recall that last July a Government spokesman told us that to seek to narrow the geographical ambit of this right for this purpose would put this country in breach of its obligations under the Berne and Universal Copyright Conventions. But the fact remains that if popular American authors—Norman Mailer, Saul Bellow—and the estate of John Steinbeck—started to put in claims, they could take a quarter of the funds before we see anything at all for British authors. I appreciate the technical difficulty, but this is a point to which we must pay some attention in the Bill before it goes to the scheme. We ought to give some indication of our wishes in the matter, and whether or not we are to ask for reciprocity.
These are the blemishes in the Bill as I see hem. I know that at least

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some of the criticisms and suggestions I have made echo the views of many people in the world of literature and writers generally, especially among those representative of writers who have fought so hard and so long to gain acceptance of the principle of the public lending right. I hope that these suggestions will be considered by the Government. I and others will certainly be ready to give any assistance we can in discussions which may lead to Amendments, to secure for this Bill the enthusiastic and general acceptance which one wishes one could have given it in the first instance.
4.35 p.m.
Lord PAGET of NORTHAMPTON: My Lords, when the noble Lord, Lord Elton, spoke early in this debate from the other side of the Chamber he made, in general terms, the statement that all were agreed as to the principle of the Bill, with the possible exception of myself. I should give him the warning that where, on the one side, there is a highly articulate pressure group with a vested interest and, on the other side, a general public, whose indifference to the whole matter is fairly profound, it is probably an error to mistake silence for general consent. I believe that on this subject very much the larger proportion of talking will certainly be on the side of those who are putting on the pressure.
For myself, I believe that the whole basis of this is a quite bogus principle. There is no such thing as a moral right to being paid because one's work is lent by a public library. If a man sells something, he does not normally have any right whatever to decide what the buyer does with what he has bought. If authors do not want to sell to public libraries, they do not have to do so. When I said that in a previous debate, on the Bill put forward by the noble Lord, Lord Willis, the noble Lord, Lord Goodman, interrupted me and said, in effect, that if authors did not want to sell to a public library they would not get a publisher. I believe that that completely gives the whole show away. They would not get a publisher because the publisher knows how profitable it is to sell to public libraries. He sells to public libraries because it is profitable; profitable to him, and profitable to the author. If there were not public libraries to buy
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these books, a very great number of them would never be published at all. Those who answer—
Lord ROBBINS: My Lords, would the noble Lord elucidate the very fundamental principle which I think is involved by his argument: what is his attitude to the right of copyright?
Lord PAGET of NORTHAMPTON: My Lords, the right of copyright is a right like any other that can be sold. If the author reserves his right of copyright, he reserves it; if he sells it, he sells it. When an author sells to a public library he sells the right to have his book lent; he knows what the public library is buying it for, and he sells it to the public library for that purpose. Equally, if I sell my book to somebody to copy, knowing that he wants to copy, I am not protected by any copyright; I have given it to the man who bought it.
So far as I know, there is no type of a right here. In so far as one comes into it at all, it is merely an interference with the ordinary free trade of buying and selling. What seems to happen—and I find this a quite deplorable act—is that under pressure of this very articulate group, Government at some point says, "We will do something about this." They had a look at the Bill of the noble Lord, Lord Willis, and said, "That won't do." Then they asked themselves what will do? Then they said, "We can't think of anything"; so, as the noble Lord, Lord Elton, put it, they say, "We'll put an empty pot and see if somebody else can fill it with a scheme." To my mind, that is something of an insult to Parliament. I do not believe that we should allow our Governments to say, as it were, "We had a pledge to legislate and we can't think what to legislate about so we are handing over to somebody else." I do not feel that that will do.
The Bill does not tell us what authors or books will benefit. It will not be the books which the public would select. If it were, the subsidy would go to the pornographers and crime writers, because the public's first choice every time is sex and crime, followed perhaps by the sort of romances which Miss Barbara Cartland serves up. Those are the selling lines. No, it is apparently to

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be the books which are selected for purchase for public libraries by library committees. I suppose upon the basis of what that library committee think is good for the reader. In other words, the money will go to books which are to be selected on the basis of a private unofficial censorship. We are to subsidise the benefits of this somewhat odd system.
I find that very hard indeed to support. I should like to know who is going to have a right and how. It is to be a sample selection of library committees which will decide who are to be the happy beneficiaries at one-tenth of a penny a book or £5 an author. The noble Lord, Lord Willis, in his speech on his own Bill, and to some extent today, appeared to feel that the authors of books should be endowed with a living wage and that it was monstrous that they should not be. That is a proposition from which I totally dissent.
Lord WILLIS: My Lords, if the noble Lord will allow me to intervene for a moment, I never at any time said that an author should be "endowed" with a living wage. I said that an author should be able to "earn" a living wage. Nobody wants to be endowed.
Lord PAGET of NORTHAMPTON: My Lords, if the author does not earn a living wage and still received it, I should have thought that "endowed" was not a bad word. So far as this is concerned, I would say that, in this age as in most ages, probably a majority, and certainly a great deal, of the best and most valuable writing has come from those whose first profession is not authorship. Great examples are people like Sir Winston Churchill, people who have taken their past experience and who have had the kind of life which introduced something as a result of which they felt they must express the ideas they had acquired. This has been the case in all ages and I believe that the corollary is also certainly true. It is that the worst writing in this and every age comes from professional writers—that is, professional writers who have a formula or a trick. "Find the formula what sells," as my old friend Ian Fleming put it. What one needs is to provide an intellectual narcotic to put the mind to sleep together with a stimulus to arouse the senses. That seems
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to be the really selling formula which inspires the books which pile highest on the bookstalls.
Lord ROBBINS: My Lords, is the noble Lord prepared to apply this extremely severe condemnation to Shakespeare, Pope and Dr. Johnson?
Lord PAGET of NORTHAMPTON: My Lords, I am not saying for a moment that in every generation the majority of the best work has been by amateurs, or the other way round. There has been great work by professionals and great work by amateurs and I should think it extremely doubtful as to whether Shakespeare was a professional author. His first engagement was with his theatre company and he was busy with its development and work, it was certainly not from a narrow concentration on the writing that his great general sense of drama came. My point is that in almost any age, the worst writing comes from the professionals who have found a formula which they can turn out again and again, and which sells.
To my mind, if one had £1 million to spend one could hardly find a worse way of doing so. Forty per cent. will be spent on administration and what remains will be spread so thinly as to be worthless. What I should like to see if I were happy enough to be on the Arts Council or to be the Minister is a fund to provide research facilities for authors who submit synopses of work which they want to do and which seems valuable but which requires research. I believe that if there were £1 million available for that purpose, it could be very well spent.
Lord SLATER: My Lords, I was very interested in what the noble Lord had to say about 40 per cent. of the £1 million being lost in administration costs. Is he not forgetting that as a result of the Government setting up circulation in regard to libraries up and down the country, even in areas like mine which never had a public library and which now has a public library, all people in such places have been given the privilege and the opportunity of participating in reading the classics and everything else which comprises a library?
Lord PAGET of NORTHAMPTON: My Lords, I am sorry to say that I did not entirely follow the noble Lord's point.

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What is suggested here is that £1 million should be set aside to help authors. I feel that, instead of using that sum as an incredibly thinly spread subsidy and one that is exceedingly expensive to administer—to the extent of 40 per cent. of the total amount—it would be far better spent by setting up a fund which could finance research when valuable synopses which required such research were put forward. I would much rather see it used in that way, and I have no doubt that other noble Lords can think of many other valuable schemes which could be carried out with that £1 million instead of, as I see it, wasting it.
4.50 p.m.
Lord IRONSIDE: My Lords, I should first like to congratulate the noble Lord, Lord McNair, on his maiden speech. He said he had no convictions, but I think he spoke with conviction, and spoke to us amusingly. Even if we do not hear him again during the later stages of this Bill, I hope we shall hear him again in the future. First, my Lords, I think it is worth mentioning that this Bill establishes a new right for the citizen, which is an unusual event nowadays when citizen rights are fast disappearing. The public lending right is one which has been long sought after by authors, and personally I hope that this Bill will reach the Statute Book without hindrance—although, having listened to what my noble friend Lord Eccles has said, we may not see it turn out this way; we may see it more as legislating for an administrative scheme or a licensing system.
As the history of copyright and universal copyright convention is spread over a century, I think the advances made on the concept of lending right in such a comparatively short time—some noble Lords think that, even so, it has been rather a long time, but by comparison with copyright it has been a very short time—must indicate the close relationship in principle of the one right with the other. That public lending right is an extension of copyright is a logical progression of authors' rights. I should like to pay personal tribute to the noble Lord, Lord Willis, who is not in the Chamber at this moment but who introduced his own Bill, putting in a great deal of effort and thereby allowing us to debate many of the basic principles of such a right.
Lord PAGET of NORTHAMPTON: My Lords, would the noble Lord allow me to interrupt him? If, as he has said, this were to be treated as an extension of copyright, certainly it would have no effect at all, because the public libraries which bought a book would simply buy the lending right.
Lord IRONSIDE: My Lords, I was drawing attention to the fact that there are certain similarities in principle between this right and copyright, but I do not really want to be drawn into the sort of detail into which the noble Lord, Lord Paget, is trying to draw me. The Government have published their Bill, I think after considerable thought as to the views of this House, professional bodies, local authorities and the public at large. There seem to me to be very many good points contained in the Bill, but, nevertheless, this does not mean that I agree entirely with all the clauses; and I should think that there are many technical problems to be overcome during the next few years and during the initial period of operation of the scheme. The main point is that under these circumstances a Secretary of State must not close his mind to developments, and we must not freeze our minds on the subject. We must consider legislation that is adequate and flexible, so that improvements can be introduced without recourse to new legislation.
I am not certain whether this debate is really a debate on the scheme or a debate on the Bill (although, having listened to many noble Lords I feel that it is more a debate on the scheme) but I believe that it is extremely important to make absolutely certain that this House has a full understanding of the principles of the scheme which is being first proposed via the medium of the report and from what the noble Lord on the Government Front Bench said when he introduced the Bill. The final report stops short of making any recommendations, but only draws attention to the options which would be open to any Secretary of State. Clause 1 refers to "books", and I would draw attention to the same point that other speakers have drawn attention to, which is that there is no definition here. This immediately raises doubts in my mind as to what is meant by this term. No

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definition is given in Clause 5. I believe that the definition should match the definitions already given in the Copyright Act 1956, and it is my understanding that if such definitions were used then the extent of the material which this Bill covers—and is intended to cover, I am sure—would be very precisely defined.
One point here, my Lords, which I believe to be important is that the public lending right is intended to help those authors who are writing the original material in the English language; and I think here one might almost say that the Welsh language would be included as well, and any other languages indigenous to the British Isles. Therefore, should a foreign author originate work in the English language I believe he would be as eligible for the right as any citizen author of this country. Quite clearly, the right is not here to benefit authors writing originally in a foreign language or a foreign language which has been translated into English; but, of course, this raises the question of the use of the English language as the mother tongue in other foreign countries. So where do we draw the lines? I mention this point because no doubt some time in the future we shall be faced, as the noble Lord, Lord Willis, has said, with an international public lending right convention when English authors would like to benefit from loans in other English-speaking countries, such as the United States, Australia and many others. Is there to be another 100 years' battle on this subject, as we had with copyright? Will there be another Dickens to fight this case for us? For the time being, my Lords, we must look after our own authors, and I think we can only do this in this present Bill.
In Clause 1(5) it is provided that the sum of money due to an author,
"shall be recoverable from the Registrar as a debt due to the person for the time being entitled to that right in respect of the book".
I presume that this wording is being used in order to give a legal status to the sum of money involved so that it can be seen for what it is, but perhaps the noble Lord, Lord Strabolgi, will explain that point to the House when he winds up. I am particularly pleased to see from Clause 1 that the right is transmissible, that there are successors in title and that it
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will persist for an elapsed time of 50 years following the author's death. I think Lord Willis has made an important point here about making sure that the publisher is not able to intervene and make an arrangement with the author as to assigning the right. This of course follows exactly the principles of the Copyright Act 1956, and I am sure most people will agree that the Government have taken a very wise course in doing this. However, I should like to ask the noble Lord, Lord Strabolgi, what the Government's intentions are as to the establishment of the right by registration. For instance, will it be possible for people other than the assumed holder to apply on his behalf? Will it be possible to de-register? And what about the position of those authors who are domiciled in other parts of the world? I think there are a number of details which the House should like to know about these aspects of the scheme, and I hope that the noble Lord will be able to tell us in his reply.
Going on to Clause 3 of the Bill, I notice that allowance is made for books to be numbered or otherwise marked with a view to facilitating the maintenance of the register. I hope the Government have it in mind here to use the international book numbering system, and will not try to invent their own notations, which I think would be a very retrograde step in the library field at the present time. It is to my mind most important that the Registrar's catalogue should conform to other standard library catalogues.
In Clause 4, the scheme provides that the register is to be conclusive evidence as to entitlement of the right. I am not a lawyer, but I am wondering here whether in fact this is the case at law. That is why I mentioned earlier that we need to know a great deal more about the details of registration which the Government are proposing in the initial scheme—and, of course, I include deregistration here. Also, I notice that under Clause 4(6) the Registrar can produce certified copies of an entry which shall be deemed to be admissible in evidence in a court of law. Under these circumstances, it would seem that registration carries with it legal ownership in the broadest sense, but I think we should be very careful indeed here about details of registration, as it might well be possible for the Registrar to make an entry to which there

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could be an objection. Admittedly, there is a remedy for false entry, but how is the Registrar to know quite precisely and definitely who has the legal title in the first place to a lending right? There is an analogy here, I think, my Lords, on the question of legal ownership, comparing this with the ownership of a house. Unless a property is registered it means that a solicitor has to carry out a search in order to establish satisfactory title to ownership. I therefore ask the Government whether they consider that Clause 4 and the provisions in Clause 1 are sufficient to take care of this situation.
In Clause 5, I have taken a look at the Public Libraries and Museums Act 1964 and in a way the noble Lord, Lord Paget, referred to this when he referred to the ability of committees to say what books are held in their libraries and what books are held for the purposes of sampling. One must remember here that the reader can always go to the library and ask for a particular book. This is what the readers do. Therefore the library committee will in a way be guided by its own readers, so that the situation he mentioned may not arise. The other Act mentioned in Clause 5 the Public Libraries Act (Scotland) 1955, and I notice that there is a difference between the Act in England and the Act in Scotland from the point of view of coverage. In Scotland, the Act includes both statutory and non-statutory library authorities. In England, such a definition does not arise. All that I am saying is that there appears to be a difference. I should like to ask the Government whether they intend to introduce similar legislation in Scotland and Northern Ireland as an extension of the Bill which is now before the House.
Coming to the report, I think that great steps forward have been made technically in the intervening period between the first and the final reports. I think that we can now see more clearly what sort of scheme will be suited to this country. It seems to me that the loans scheme is, after all, shown to be the best and that the purchase scheme suffers from many defects which cannot be easily overcome. I think that it would be true to say that technical developments are making a loans scheme more possible than a purchase scheme. The disadvantage of the
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purchase scheme, to my mind, must be, in the main, that publishers are free to come and go and carry on their business without the regulation of a statutory Act of Parliament except that of the Companies Act; whereas public libraries fall under specific statutory control. As we have seen over the years, technical developments in the field of libraries are advancing rapidly to the point where the public lending right scheme should become relatively easy to implement.
In the final Report I want to draw attention to two things. One is the reference libraries and the other the fairness of distribution of what I call the Shelf Fund or the Central Fund. As I said earlier, I think that at all times we want to keep an open mind about methods, because a technological change will considerably influence our thinking in future years. First, the question of reference. Undoubtedly, greater use will be made of reference libraries and, even if the Government cannot think of a satisfactory scheme to cover loans from reference libraries, we must make certain that this present legislation will allow the Secretary of State to cover this aspect of lending without recourse to legislation—with any safeguards that may be appropriate. The noble Lord has already given us assurances that the Secretary of State will keep an open mind on this subject.
On the sharing out of monies which become available for distribution, I think that most people will be inclined to say: "Let us assess the degree of lending for the author; and, having done so, let us pay him his due on the Shelf Fund after deduction of administrative costs"—which, to my mind, are very alarming at the rate of 47 per cent. or thereabouts. However, we may find a certain degree of unfairness, but how are we to assess what is fair and unfair in this field? I listened with interest to the views of other Members of your Lordships' House and I have not come to any firm conclusion at the present time; but I think it worth drawing the attention of the House to the fact that in any scheme there are going to be a very large number of authors who are going to get little recompense from this scheme—certainly in the way it stands at the moment—whichever way one looks at the matter.

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On the other hand, some authors may benefit greatly from the scheme. In these circumstances, we should perhaps pay more attention to the latter aspect. I venture to suggest, as did the noble Lord, Lord Paget, earlier, that the highest paid authors may not find it worth while to claim their due from the Shelf Fund and may assign their rights. I realise that it is a difficult point and certainly on this side of the House we would like to encourage the "high-flyer" but, on the other hand, apart from being a just return for authors, one of the purposes of the public lending right, as in other countries, is to encourage creative authors in the development of the written word in their mother tongue. It is not always the highflying authors as the noble Lord, Lord Paget, said—and I apologise for what I said before—or the novelists who write the best English. It is very often the underpaid author who creates the high quality language for us to enjoy.
To conclude, I would say that the Government have made a good start and I hope that when the Bill leaves this House it will be in a very much improved state. The final report of the investigators clearly lays out the options and I hope that the Government will produce a positive scheme and give assurances before the Bill leaves this House.
5.6 p.m.
Lady KINLOSS: My Lords, it is a pleasure to congratulate the noble Lord Lord McNair, on an excellent and witty maiden speech and I hope we shall heat from him again in this House. I must thank the noble Lord, Lord Strabolgi, for a very lucid and helpful explanation of this Bill. I am glad to find myself 90 per cent. in agreement with what he has said. I have noted with pleasure that it contains a number of points which I raised in objections to the last Public Lending Right Bill of the noble Lord, Lord Willis, which was before the House. As I did last time I spoke, I must declare an interest as the wife of an author. I think that our gratitude should be expressed to the members of the technical investigation group, both civil servants and other members of the Steering Committee, for the research which produced the final report on the public lending right. I found it helpful and illuminating.
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There are a number of points that I think will need to be looked at to make this a satisfactory Bill. I find no definition of "book". Does it mean a single volume or a work which may be in one or more volumes? I cannot find a definition of "author". If I understood correctly, the noble Lord, Lord Strabolgi, multiple authorship will not be considered; but I can think of highly successful works of joint authorship and edited works of multiple authorship. In the case of joint authorship, if it is considered in the future, can authors join together in registering? Then there is the question of edited works of multiple authorship, by which I mean that there are more than two authors. In such cases, it is common practice for individual writers to cede all their rights to the editor or editors or to the publisher for a single down payment which extinguishes the individual copyright. In such cases, do the editors or publishers count as authors?
There is no reference to anonymous works. What machinery should there be for an anonymous author to identify himself? There is no mention of works published posthumously. Can the heirs of the copyright register? There is also no mention of second or subsequent editions which may differ so substantially from the first edition as to constitute a new work under the same title? Would such editions be a new starting point for the PLR period? I do not find any suggestion of maximum limits for payment nor yet for minimum limits to prevent minute payments of an uneconomic kind. These are all points of detail which should not prevent a successful Second Reading for this Bill. We can surely deal with them in Committee.
I agree wholeheartedly with the report when it says that,
"an initial PLR scheme would not be immutable and could be refined in the light of experience,"
and there should be further consideration of the problem of eligible reference authors. Looking at the meticulous way in which research has so far been carried out, I am sure that this problem will be tackled just as well; but I was very much surprised in Part IV, paragraph 34, of the report where it says:
"The starting point for our further studies was our conclusion that any system which

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provided for the counting of consultations of books in reference libraries would disrupt the work of libraries to an unacceptable degree."
The noble Lord, Lord Strabolgi, said it is not possible at present to consider reference books. On this point of reference books, I consulted a university librarian of many years' standing who not only has created two university libraries from scratch, but who has also been a public librarian. His knowledge and experience is of a kind which cannot be lightly brushed aside. Plainly, the loan-based PLR scheme depends upon librarians, or a proportion of them, counting loans in a number of selected libraries. In the reference sections of libraries there is no control, nor is it desirable to control the consultation of reference books. It would be inconvenient to control their consultation in the way that a work must pass a given point, when it is loaned.
But, at the same time, it is the general practice in reference libraries that readers do not replace on the book stacks the works they have consulted. Not only is this a rule in the majority of reference sections of libraries, but, so I am told, the majority of readers prefer it this way. It ensure that at the hands of the librarians reference books get back into their correct places. If, as they pass a given check point, loaned books can be recorded by mechanical means, I see no reason why the same mechanical means cannot be applied to reference books when they are collected, and before they are replaced on the shelves: this would not, in the view of my librarian friend, entail very much extra work. I think such a scheme requires serious experiment. The only objection that I have heard made to such a scheme is that once a work has been removed from the shelves for consultation, it might be consulted by two or more persons before being replaced. I do not find this objection very substantial because it is similar to what happens to loaned books which are frequently read, as we all know, by several members of a family.
There are also two other systems available for this purpose known to me at the moment—there may be others. One was the Swedish system which the noble Lord, Lord Willis, kindly explained when he was answering questions that I raised on his Bill. It seems to me that this system also should receive careful con-
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sideration. The other system was mentioned in a brief letter to The Times some weeks ago which described Australian practice. It depended upon the amount of shelf space taken up by given reference works. I do not find that this scheme has much merit, as books vary greatly in size and width. I think that by excluding the reference sections of public libraries from the Bill a certain injustice would be done to reference authors and, at the same time, a certain injustice to the Government and to the Secretary of State in restricting his powers exclusively to authors whose works are loaned.
As to reference books, they are just as much used by the public as those books which are loaned. The Bill restricts the Secretary of State from introducing a scheme to include reference works without introducing fresh legislation. Legislation is always expensive in time as well as in money. Surely, my Lords, it is better to deal with the whole question now. It may be, since there are a number of courses of action open, that the noble Lord, Lord Strabolgi, might care to refer the Bill to a Select Committee. This could have the advantage of bringing some fresh minds to bear upon what is certainly an exceedingly difficult point. There is, however, a somewhat easier alternative, and one which perhaps could be more helpful to the Government, which would be to insert into the Bill in Clause 1 and in certain other clauses such words as would enable the Secretary of State to prepare a draft scheme which would apply to reference authors in the same manner that the Bill empowers him to draw up a scheme for loan authors: and, having regard to the intentions of Clause 3(2), to bring the different schemes into effect, should he choose, at different dates.
My Lords, I realise that the noble Lord. Lord Strabolgi, has given very careful consideration to this Bill. I realise that I have raised a number of questions that do not permit of any simple answers. When the noble Lord comes to reply to this debate, I shall not expect him to give me any immediate answers.
5.15 p.m.
Lord CULLEN of ASHBOURNE: My Lords, I have only one point to add to those which have already been raised. I hope it will not be considered to be too irrelevant. Before doing so, I should like to add my congratulations to the

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noble Lord, Lord McNair, on an interesting and most entertaining speech. Anybody who can be entertaining in their maiden speech is worthy of great congratulation. I must first declare my interest as Chairman of the National Listening Library, which makes talking books for the handicapped. This is a parallel, much smaller and much younger organisation to the RNIB, which provides a similar service to the blind. I have gathered that it is possible that further legislation may occur in the future to extend the public lending right to libraries other than public lending libraries, and the Government have already been urged by my noble friend Lord Eccles and other noble Lords to define what is meant by a book. If, in the course of time, it is decided by Government that a book which has been recorded on a cassette is a book for the purposes of this legislation, and that libraries who supply such talking books are to be included in this scheme, the National Listening Library would be in no position to shoulder any financial burden at all in providing the information required by the Secretary of State.
5.17 p.m.
Lord DOUGLAS of BARLOCH: My Lords, I am afraid that I must also enter a note of dissent on this subject. But first I should like to add my congratulations to the noble Lord who made his maiden speech and who bears the name which is very much respected by all of us. I am sure we shall hear from him again.
This Bill is at any rate a triumph for a pressure group, a very successful piece of manipulation of public opinion. But surely a great deal of the argument is completely misconceived. This is not a Bill for encouraging literary talents; it is to provide some kind of revenue to the owners of the copyright of books of all kinds, many of which have no literary merit whatsoever. Many of them are possibly textbooks and items of that kind, all of which, apparently, are to participate in whatever benefits may come out of this.
Do not let us think that the Bill will encourage struggling authors. We are told that the amount available will be perhaps one-tenth of a penny for every book which is lent, or perhaps £6 a year
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on average for each author. But the basis of this, as we understand it, is that the distribution will depend in some way upon the number of times that the book is lent. The successful authors, the Agatha Christies and people of that kind, will get most of the money which is available. What will be left to the man who has published his first book and which has at that time had very little success? He is not going to be appreciably any better off. I think this is a delusion, and this scheme has little to do with art or literary merit. Moreover, every author automatically is endowed with copyright in his book. That is the law of this country. Nor only that, but under the international copyright conventions he is endowed with copyright in his book in every country which is a party to these conventions. He does not, however, have to lift a finger in order to have that right vested in him.
An inventor who discovers some new process or article of manufacture has to establish his right in the Patent Office by proving that he was the inventor. He runs up against all kinds of difficulties in doing so, because if by chance anybody has published the idea before in some obscure publication but has never thought of patenting it, he cannot get a patent for his invention. In any case, if he does, it lasts for only 16 years. Copyright in a book lasts for the author's life and for 50 years afterwards. I would ask your Lordships to remember that it also extends to every form in which that book may be reproduced. If it is turned into a play or a film, the author still enjoys copyright in them and may sometimes reap an enormous revenue from them. But he will still get an additional sum out of this so-called lending right. This does not bear investigation, and the fact that it does not is clear from the form of the Bill, which itself is not thought out, which is quite inchoate and which in effect acknowledges that the matter bristles with inequalities and difficulties.
5.22 p.m.
Lord LEATHERLAND: My Lords, I have no wish to prolong this debate, which may seem strange to some of your Lordships, but I should like to mention one matter. A few minutes before this debate began, I had a letter delivered to me from the Association of County

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Councils. I am in fairly close touch with that body because I was a county council member for 25 years. However, in that letter were set out a number of points on which they differ from what is contained in the Bill. They do not want to see the Bill killed but they would like to see it administered in a different manner. One of their main objections is that it would put further administrative burdens on county councils. They spend £60 million each year on the upkeep of libraries in their areas, and this is therefore an important matter for them. They are disturbed because a great deal of additional administrative expense may well be incurred. Even if that were not to be the case, it may well be that a great deal of manpower and womanpower would have to be employed in order to provide the library service.
That is all I wish to say, except that I hope the Minister will not accept the suggestion put forward by the noble Lady, Lady Kinloss, to refer the matter to a Select Committee. That can only be a delaying process, and a Bill such as this has already been delayed for 20 years since the idea was originally introduced by the late Sir Alan Herbert. Therefore, I hope that we shall deal with the Bill in the normal Parliamentary way. We shall have the usual Committee stage, during which I hope not too many Amendments will be moved; otherwise the Bill could be delayed here and there would not be time in the other place for it to pass into law this year.
With regard to the scheme to be drawn up, I think it would be of assistance to us if, when we are considering the Bill on Committee stage or, at the latest, on Report stage, we had before us the text of this scheme. Undoubtedly there are a few minor defects in the Bill as it stands at present. As the noble Lady said, it contains nothing about reference books and there is no mention of translators or illustrators, who have a great deal to do with some published books. Also, nothing at all is said about "ghost" writers. These people belong to an ever-expanding profession, and I think that some regard should be given to them when payments are made to authors. That is all I wish to say, my Lords, but I wonder whether I might transmit to my noble friend the letter from the Association of County Councils. I think it
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would then be only a matter of courtesy for him to communicate with them.
5.25 p.m.
Baroness PHILLIPS: My Lords, I shall not detain the House for more than a moment, other than to say that I was not able to listen to the first part of the debate but from what I have heard it appears that the Bill received a very grudging welcome, even from those who have been wanting such a Bill for a long time. I should merely like to say that I have watched the noble Lord the Minister who is now dealing with the Bill when he was on the Back-Benches during the term of office of a previous Labour Govment and also when in Opposition, and he has worked very hard for this particular principle. I think it would be ungenerous if we did not pay him a tribute at this stage when he is now dealing with the Bill. However small or inadequate it may appear to be, he has established the principle.
5.26 p.m.
Lord STRABOLGI: My Lords, I think we have had a very interesting and full debate. I am most grateful that so many of your Lordships from all parts of the House have taken part. Before replying to the points in detail. I should like to add my congratulations to the others which have been offered to the noble Lord, Lord McNair, on his excellent maiden speech. The noble Lord's father was a distinguished international lawyer, well known to your Lordships, and indeed well known all over the world. The noble Lord himself is now carving out a career in writing: he has already written several books. I am very glad that he took part today and hope that we shall hear from him on many other occasions. I should also like to thank my noble friend Lady Phillips for her very kind personal remarks, which I greatly appreciate. I also greatly appreciated the kind remarks of the noble Lords, Lord Goodman and Lord Gibson, in their references to the additional grant to the Arts Council and to my honourable friend Mr. Hugh Jenkins. I shall pass those observations on to him because, having now worked closely with him for over two years, I know how much he has the arts at heart and how much he has striven to get money out of the Treasury at a time when this is not always easy. I very

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much appreciate what has been said this afternoon.
I am glad that the Bill has received a welcome, although, as my noble friend Lady Phillips said, it has been somewhat qualified. Indeed, there has been some hostility from noble friends behind me: the noble Lord, Lord Paget of Northampton, and the noble Lord, Lord Douglas of Barloch. Nevertheless, I am very glad that they took part, because I think their contributions have led to a more lively debate. Many of the points that have been raised can be gone into later, but there is one point on which I absolutely refuse to be drawn; and that is over the difference between amateur and professional authors and which of them is the better—which was a hare started by my noble friend Lord Paget. With regard to professional authors, when my noble friend was speaking of the past there immediately passed through my mind the names of Dickens and Balzac.
As I said, we shall have an interesting Committee stage and I can assure the noble Lord, Lord Elton, whose constructive attitude to the Bill I much appreciated, that this will not be in any way restricted. I agree with my noble friend Lord Leatherland that it would be much better to deal with this Bill on the Floor of the House rather than upstairs in Committee. A Select Committee on the Hare Coursing Bill is already sitting, and there is probably quite enough to do already without setting up another Select Committee.
I shall now try to answer various points which have been raised by noble Lords. The term "books" in the Bill, which was referred to first by the noble Viscount, Lord Eccles, and then by most other noble Lords, is used in the sense in which it will be generally understood. I agree that the Bill does not include a definition, but the Government intend that the scheme for which provision is made in Clause 1(2) shall specify precisely what is included, and that such items as magazines, pamphlets, music and tapes shall not be covered. I am aware that the Copyright Act refers to "works", as I think the noble Lord, Lord Ironside, said, but of course in the Copyright Act this description includes many iterms other than books.
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With regard to the classes, descriptions and categories of books, there is nothing untoward in our leaving to the scheme such details as these in respect of which the right may subsist. It is appropriate that they should be left to the subordinate instrument, which would allow for variation from time to time if desired. Our minds are, however, quite clear on what we should attempt initially. Our intention is that the scheme will apply initially only to books by single authors. Joint and multi-author books will be excluded initially, and so will people such as compilers, revisers and translators where they are dealing with the works of others. As I said in my speech, there is a clear limit to what can be covered all at once. There is also, as has been said, no definition of "author" in the Bill, but then there is no definition of the word in the Copyright Act. But this is a Committee point, and it is one to which we can perhaps return.
Several noble Lords—the noble Lord, Lord Goodman, my noble friend Lord Willis and the noble Lord, Lord Gibson—have suggested that there should be an advisory council or an independent tribunal. I am aware that the authors would like this—indeed, they have made it perfectly clear to my honourable friend—but the fact is that the scope and operation of the right will be controlled in very considerable detail by this legislation and its subordinate instructions, and the Registrar's activities will be almost entirely executive. Once a scheme is established, there will be little on which the Government will require advice from a standing body, and the expense of keeping it going, which would have to be met from the Central Fund, would not be justified. Of course, this does not mean that there will he no consultation—far from it. It is the Government's intention to consult the interested parties very fully in the preparation of the scheme, and thereafter my honourable friend will, as always, be ready to discuss issues as they arise.
I was asked about transmission or assignation of the right. Clause 1(7) provides for transmission or assignation of the right, but that which does not exist cannot be established, transmitted, assigned or otherwise dealt in. We can do no more than create a new right, enable

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an author to register it so far as his or her books are concerned and then let them do with it what they will. The author who dies before the right comes into force, or who omits to establish his right before he dies, or allows somebody through law to establish it on his behalf cannot transmit this property. I sympathise with those who think this is hard on those whose books have been used in public libraries for years, but a line has to be drawn somewhere. In other words, this is a new right. It is a different right from copyright, although of course it will exist during the copyright period provided that the author, during his lifetime, has registered his right to it.
With regard to the point which my noble friend Lord Leatherland raised about local authorities, it will be a cardinal point in the scheme that the costs incurred by public library authorities will be refunded in full from the Central Fund. Estimates of these costs are included in the estimate of running costs for the scheme as a whole. I can give my noble friend the assurance that the libraries will not be penalised one jot by the introduction of this measure.
The noble Lord, Lord Ironside, and other noble Lords asked me about the technical side of the scheme. There will be two main tasks. The books in the sample libraries will have to be labelled with machine readable codes, and the code of each book borrowed will have to be read electronically for reporting to the Registrar. The detailed arrangements will be settled with the Registrar and, as I have said, the costs will be reimbursed. I can assure the noble Lord, Lord Ironside, that we shall use the ISBN coding for the identification of books, but of course this code will have to be set out in machine readable code form and this is one of the matters on which we are working at present. Numbers will also have to be created in consultation with the International Standard Book Numbering Agency, and assigned to books which have no TSB numbers allocated to them. I do not know whether I made it clear in my speech that "public library authorities" do not cover educational, industrial, research or specialised libraries, or the national libraries.
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There was also the question of copyright. I think it was the noble Lord, Lord Goodman, who spoke about attempts being made in the past to do this through copyright, but there were great difficulties. Naturally, I am not in a position to know exactly the details of my predecessor's investigations, but I know that there would have been great difficuties and it is not practicable. The essence of copyright is that the owner is free to fix the price at which his works are used, and this is not compatible with the proper financial control essential for any scheme that is to be financed from public funds. In any case, the Whitford Committee on Copyright is reviewing copyright questions in detail, and any such proposal, on which we still have an open mind, would have to await the outcome of that study.
I was asked about overseas authors. It it correct that the proposed right will be available to authors from overseas if their books are borrowed from public libraries and are revealed in the sample and if they register their right. The international copyright conventions, which the United Kingdom has signed, require that such rights are not denied to citizens of other signatory countries. I understand that the West German scheme, which is also based on legislation, recognises this obligation.
I was asked about the size of individual payments, which authors will naturally want to know about. There are a number of variables, however, which will affect the size of the payments in any one year—the sum of money allocated to the Central Fund, the total registrations by authors, the number of loans recorded of individual books and in total, the administrative expenses to be deducted for the year and the effects of the tapering scale designed to prevent a very few popular authors scooping most of the pool which will be set out in the scheme—which I think takes care of the point raised by one noble Lord about the estates of Agatha Christie and other very successful authors. Allowing for all these factors, if £600,000 were available for distribution, a small proportion of authors could receive annually sums of over £100, a large proportion modest payments of £10 or more and another large group, whose books rarely leave the shelves, very little. But as the noble

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Lord, Lord Ironside, was kind enough to say, the Government have made a good start—and this is a start—and once we can establish the right and set up the mechanics of the scheme, then we shall have to see where we can go in future as more finance becomes available.
I do not want to go on too long, but I must deal with the question of reference books. I have noted very carefully what has been said by my noble friend Lady Kinloss. The problem is that it is not practicable to measure the use of reference books directly without completely disrupting the work of libraries. Furthermore, although the cost of collecting data regarding the stocks of reference libraries might be reduced by sampling, difficulties arise in the case of the 19 largest reference libraries which together house over half the country's public library reference stocks.
There is an additional consideration. The limitation of the scheme to books by single authors will exclude the great majority of the very heavily used reference books. We would therefore be collecting considerable quantities of data only to discard it. There are other difficulties with encyclopaedias. I cannot think what the Registrar would do in the case of the Encyclopaedia Britannica, in which almost every article is written by a different author. However, I repeat the assurance given in my opening speech; that is, that if an acceptable and effective scheme for reference books emerges the Government will consider further legislation to extend the scheme.
Turning to finance, as I have said we are making an important start in establishing the right. I am certain that authors will not expect to be exempted from the economic constraints which the rest of the country has had to accept. The Government will provide funds for the full implementation of the scheme when resources allow. We would not be bringing in legislation now—I say this to noble Lords who have criticised the Bill in this respect—if we did not have this further objective in mind. The fact has to be faced that it will be some time yet before public lending right is in operation. With the overriding need to reduce expenditure, the Government are unable at present to earmark resources for full operation. I cannot say, there-
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fore, when it will be possible to bring the Act into force or to lay the detailed scheme before Parliament for approval, but these and other matters are ones that we can deal with in Committee—and also the question of the publishers. I can give an assurance that the publishers will not be asked to put in the machine readable codes as part of their ISBNs. They will be put in by the sample libraries.
Before I conclude, I must reply to one point which was made on Clause 3(5) by the noble Viscount, Lord Eccles. I hasten to assure the noble Viscount that there is nothing sinister about the words "other books". This is to save libraries time in finding out whether books lent out are registered, and it means that the Registrar will then sift them. The "other books" are the ones which will not accrue to public lending right.
Viscount ECCLES: My Lords, I thank the noble Lord for that information, but may I ask him two questions. First, given that there are 6,000 libraries and 100,000 authors, is the noble Lord satisfied that a sample of 72 libraries will give a fair result? Secondly, will the noble Lord consider making an Amendment to Clause 3(1) which will allow your Lordships' House to table Amendments to the scheme when it is brought before us?
Lord STRABOLGI: My Lords, all I can say about the sample of the libraries is that this question was gone into very fully by the Technical Investigation Group and that they were confident that a sample of this kind, particularly if it were a rotating sample and not necessarily always the same libraries, would be sufficiently accurate for these purposes. With regard to the suggestion of the noble Lord, I will go into it and let him know. En principe, of course, I am always glad to consider Amendments put down by the noble Viscount. I think that we shall have a very interesting Committee stage. I hope that answers all of the main points. There are very many other points that I could answer, but probably it would be best if we were to leave those until the Committee stage.
Viscount ECCLES: My Lords, the noble Lord will realise that if it is a rotating sample it is not just 72 libraries which will have to insert the code; it

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is any library which might be chosen next time. This will mean a great deal of work.
Lord STRABOLGI: My Lords, this will all be set out in the scheme. However, the libraries will be reimbursed for their work; they are not going to be asked to do it as a kind of voluntary chore. As I say, this will all be spelled out in considerable detail in the scheme which this Bill enables. My Lords, I beg to move.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

COMPANIES (No. 2) BILL [H.L.]
5.45 p.m.
Lord WINTERBOTTOM: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Winterbottom.)
On Question, Motion agreed to. House in Committee accordingly.
[The Lord Maybray-King in the Chair.]
On Question, Whether Clause 1 shall stand part of the Bill?
Lord LYELL: There is one point on Clause 1 about which the noble Lord, Lord Winterbottom, might be able to assist us. It is the question of the printing of accounts which I raised on the Second Reading of this Bill. Will the noble Lord be kind enough to confirm what he wrote to me in his nice letter, that accounts and other documents are accepted by the Registrar of Companies if they are typewritten and also if they are legible and durable? I understand that electrostatic copying of various kinds is permissible—as, indeed, is laid down in the October 1974 edition of the notes for the guidance of registered companies. This is a small point but one which is of very great interest to over 500,000 company secretaries. Over the weekend I read various reports that 640,000 companies will be filed at Cardiff. Probably that figure is a trifle over-optimistic. I understand that there are about 50,000 in Edinburgh, so this is probably a gross figure. Nevertheless, 500,000 companies are covered by this small point and I
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should be grateful if the noble Lord could confirm it.
Lord WINTERBOTTOM: I am grateful to the noble Lord for raising this point and also for doing so on Second Reading. The point was raised also by one of my noble friends and obviously is a matter of concern to the House as a whole. The only purpose of the requirement is to ensure that accounts are legible and in a form which will be durable. All too often at present they are, for example, poor-quality carbon copies which rapidly fade and become torn. The Registrar proposes to announce that printing will be held to include letterpress, photocopies of typed documents, offset litho printing and, for very small companies, top-copy typing—that is to say, not carbon copies. Spirit duplicating and dieline copying will not be acceptable because they tend to fade on exposure to light. And all documents must be suitable for microfilming. Nevertheless, if the range of possibilities is adhered to, even the smallest company should have no difficulty in preparing its accounts in one of the acceptable forms.
Clause 1 agreed to.
Clause 2 [Account reference period of a company]:
5.50 p.m.
Lord LYELL Lord LYELL moved Amendment No. 1
Page 4, line 14, leave out ("December") and insert ("March").
The noble Lord said: This is a fairly brief Amendment which seeks merely to permit the Secretary of State to alter the date which the Registrar will allot to a newly registered company. Under the Bill as it stands, this particular date will be automatically 31st December. From the conversations that we have had on this side of the House, we believe that the Registrar might receive some considerable assistance, as indeed would auditors and company secretaries, if the automatic date were to be 31st March and not 31st December. Various companies like to have their accounting reference periods at a date other than the 31st December for all sorts of reasons, but where the preponderance of companies end their accounting reference period on the 31st December then the Registrar will have some alleviation from the heavy work

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load demanded by the sending out of reminders to companies and in chasing up the laggards among them. I think such a change from 31st December to 31st March would help auditors, company secretaries and all kinds of other people who are concerned in preparing and filing accounts for submission to the Registrar. I beg to move.
Lord MILNE: I am not going to repeat the arguments put forward by my noble friend Lord Lyell, but clearly this would be a great advantage to the profession of accountants who, at 31st December, suffer considerable congestion. I would rather like to see the word "or" put into the Bill, but I certainly think the Amendment is a reasonable one.
Lord WINTERBOTTOM: Both noble Lords obviously have the same objective in mind. The most common date for the end of a company's financial year is 31st December, but I think noble Lords would agree that the concentration on this date creates problems for auditors, and the purpose of this Amendment is presumably to try to spread the load more evenly. The choice of the accounting reference date to be assigned to companies which do not notify the Registrar of their reference date is inevitably arbitrary. But the choice must be one which causes the least possible inconvenience to those concerned; namely, the auditors and the companies.
As 31st December is the most common financial year end, the choice of this date will ensure that it coincides with the existing financial year end of the maximum number of companies. Any other date would mean that more companies would have either to change their financial year or to agree an alternative reference date with the Registrar under the provisions of subsection (3). Either course would cause the company some inconvenience and the latter would add to the Registrar's workload. The choice of an alternative date would do little to spread the work load for auditors or the Registrar. The Registrar intends to send out notices and reminders about the new arrangements which should ensure that only a small minority of companies fails to notify him of their accounting reference date. Of these, few are likely to retain 31st December as their reference
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date unless this happens to coincide with their existing arrangements. The drift towards 31st December resulting from this provision is thus likely to be small. An interesting point is that 31st March is the second most popular financial year end. To the extent that there is a drift towards the date chosen, therefore, the substitution of 31st March for 31st December would merely shift the load from one peak period to another. I am grateful to the noble Lord for his positive and constructive proposals, but apparently in purely technical terms the assistance given by this Amendment would not be great.
Lord LYELL: I would thank the noble Lord for that very full explanation, and I should also like to thank my noble friend Lord Milne for his observation. I would stress to the noble Lord, Lord Winterbottom, that I understood that this movement in the accounting reference year end would be of some assistance to the auditing profession. I am glad that the noble Lord has confirmed that it would not be of assistance to the Registrar, because we had understood that the change to 31st March would be helpful. Nevertheless, after what the noble Lord has said I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Clause 3 [Alteration of accounting reference period]:
5.55 p.m.
Lord LYELL Lord LYELL moved Amendment No. 2:
Page 5, line 21, at end insert ("or immediately preceding")
The noble Lord said: This Amendment may at first seem fairly simple and straightforward, not to say short, but we believe there are one or two problems which are likely to occur when one individual company decides to join a group of larger companies or perhaps wishes to change its accounting reference period. If the Committee will permit me, I should like to give a short example. Let us suppose that there is an individual company called "A. Limited" whose accounting reference period ends at the calendar year-end on 31st December. Let us suppose that it decides to join a larger group of companies having its accounting

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reference period ending on 31st March. That seems fairly simple so far, but if the merger between the group and A. Limited is decided on and agreed, let us say, at the end of January or during February, a number of difficulties will arise. It would be logical that A. Limited—the individual company—should make its accounting reference period coincide with that of the group, which would be very much to the convenience of the group, but we understand that under the Bill as at present drafted only the current accounting period can be extended.
Thus in order to allow A. Limited to alter its accounting reference period so as to coincide with the group, A. Limited would have to make up and deliver to the Registrar of Companies not one, but two sets of accounts. The first one would be to the end of December for about 12 months, and the second set of accounts would be towards the end of March, for three months. Under the Bill as at present drafted, any extension of the accounting reference period must be to the current accounting reference period. This would mean that A. Limited would extend its current accounting reference period and it would be at least 15 months, and possibly longer, before A. Limited could have its own accounting reference period to coincide with that of the group. This Amendment would permit A. Limited merely to extend the accounting reference period so that its own and the accounting reference period of the group might coincide as speedily as possible. I beg to move.
The Earl of LIMERICK: I rise to say a word in support of my noble friend Lord Lyell. He has put forward a clear instance where it would seem to be convenient to all concerned that his Amendment (or words to the same effect) should be incorporated in the Bill. In the absence of any strong technical reasons to the contrary, I hope that the Government can accept this Amendment.
Lord WINTERBOTTOM: The Government are grateful to the noble Lord, Lord Lyell, for tabling this Amendment. We believe that in fact his proposals have substance and we will try to meet the point he has raised. However, we believe that the drafting of the Amendment as it now stands is obscure. As the noble Lord has explained, the purpose is pre-
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sumably to allow a company to change an accounting reference period retrospectively, but as at present drafted, as the noble Lord has pointed out, this is not permitted by the clause. It is argued, particularly by the accountancy bodies, that this is unduly restrictive, especially following a take-over when it is necessary to align the accounting reference periods of the companies concerned. Having said that, may I add that we will try to draft an Amendment, which perhaps will seem as obscure to your Lordships but will probably be less obscure to the lawyers, in order to achieve this particular objective.
I should like to make a point in relation to this, in order to enable us to get the matter properly settled. A general power to alter an accounting reference period retrospectively would be—or or could be—open to abuse. In particular, it would not be acceptable for a company which was already in default to evade its obligations by retrospectively lengthening its reference period. Similarly, a retrospective lengthening could be used by a company as a means of postponing the date by which it was required to file its accounts. Nevertheless, the Government accept that there is a case for allowing a retrospective alteration of an accounting reference period in order to align the reference periods of companies within a group.
Any such alteration should, however, be permitted only during the period allowed for laying and filing accounts. No alteration should be possible when the company concerned is already in default in filing the accounts for the period concerned. Perhaps I was a little guarded. We shall put down an Amendment at the appropriate stage. If there are other circumstances in which the ability to make retrospective alterations would be valuable and would not give rise to abuse, the Government would, of course, be prepared to consider them. But as yet no case has been made out for any further relaxation of the rules beyond those points raised by the noble Lord, Lord Lyell, and the noble Earl, Lord Limerick.
Lord LYELL: I am very grateful for the kind welcome this Amendment has received from the noble Lord. I understood that the drafting might give rise to obscurity, as the noble Lord has said. Nevertheless, we are very grateful for the

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response this Amendment has received. I beg leave to withdraw the Amendment.
Amendment, leave, withdrawn.
6.2 p.m.
The Earl of LIMERICK The Earl of LIMERICK moved Amendment No. 3:
Page 6, line 3, at end insert—
("or
(c) the notice is given for the purpose of enabling the directors of a holding company to comply with its obligation under section 153 of the Act of 1948.")
The noble Earl said: In moving Amendment No. 3 I should apologise to the House because this Amendment and Amendment No. 4 were tabled rather late. I was able to give notice of the context of the Amendments on Friday to the noble Lord, Lord Winterbottom. This Amendment, I believe and hope, has the merit almost of speaking for itself. It has been noted that there is nothing either in Clause 3 or in Clause 8 which gives any reflection of the duties imposed on directors by Section 153 of the 1948 Act. It would seem appropriate that there should be words inserted here in Clause 3 to enable the accounting reference period of subsidiary companies to be brought into line with those of holding companies. The circumstances in which this could arise are quite clear. If a company becomes a subsidiary of another company in circumstances when it has already changed its reference period within the past five years, in the absence of some such provision as in this Amendment there would seem to be no discretion available to the Secretary of State or no means by which this company could again change its reference period, and thereby the directors of the holding company be empowered to discharge their duties under Section 153.
I think it is possible that I have been guilty of a semantic error in the last word in line 2 of the Amendment, being "its". Since we are talking of the duties imposed in the terms of Section 153 on the directors, that word should probably read "their". I am sure that this small matter would not stand between this Amendment and its acceptance by the Government if it in other ways commends itself to them. I beg to move.
Lord WINTERBOTTOM: May I make two points. First, may I thank
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the noble Earl for spotting a possible flaw in the drafting. May I say also that the drafting did not arrive too late for the convenience of my Department and myself. It has already been altered—possibly as a result of a phone call—to correct what the noble Earl has said might be a flaw in its drafting. My draft says, "to comply with their obligation". So perhaps we are communicating telepathetically, which is a new technique.
May I say that the clause already allows the Secretary of State to authorise extension of a company's accounting reference period not normally permitted by subsection (4). One of the purposes for which it was proposed to use this power was to enable the accounting reference periods of a holding company and a subsidiary to be aligned. The Amendment as proposed would make permission to extend the current accounting reference period for this purpose automatic rather than discretionary. This has considerable attractions both for the companies and for the Department, which would thus have to deal with fewer applications for special authorisations.
It will be necessary, I regret, to consider whether the Amendment could result in any loopholes or lead to any abuses, particularly when taken together with the relaxation of the prohibition on retrospective alterations of an accounting reference period which is also being considered. Subject, however, to this, the Government have considerable sympathy with this Amendment, and I hope I shall be able to come up with something at Report stage.
The Earl of LIMERICK: I take that to be an invitation to me to withdraw the Amendment at this moment. In view of what the noble Lord has been good enough to say, I am happy to beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 3 shall stand part of the Bill?
Lord LYELL: Before we leave this clause, I wonder whether it would be in order to ask the noble Lord whether or not the Secretary of State would be able to approve extending the accounting reference period to more than 18 months?

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Otherwise we could find our company—I was speaking about company A Limited—again making up two sets of accounts for 12 months and possibly for seven or eight months so as to bring its accounting period into line with that of a group. I would be very grateful if the noble Lord could give me albeit an instantaneous reaction.
Lord WINTERBOTTOM: I am not really very good at instantaneous reactions. Am I right in thinking that what the noble Lord would like is extension of the accounting reference period to more than 18 months?
Lord LYELL: Yes.
Lord WINTERBOTTOM: In that case I shall take advice, and if we can extend it I will do so. At this moment I cannot give any firm undertaking.
Clause 3 agreed to.
Clause 4 [Penalties for not complying with section 1 within the period allowed for laying and delivering accounts]:
The Earl of LIMERICK The Earl of LIMERICK moved Amendment No. 4:
Page 7, line 17, leave out from ("a") to ("of") in line 18 and insert ("fine").
The noble Earl said: In moving Amendment No. 4, I am venturing on to rather thinner ice; first, because I am conscious of the fact that Clause 4 bears a rather startling similarity to Clause 60 of the ill-fated Bill of 1973 and I was not altogether unfamiliar with the procedure by which that Bill was brought forward. More particularly, it is a ground on to which those with no specialist knowledge of the law venture at their peril. The point I want to bring out in moving this Amendment is this. I should apologise for a small technical irregularity, which I am advised has been brought to the attention of the noble Lord; that is, that the Amendment should read,
"…leave out from ("a") to the second ("of") in line 18".
I think that is apparent.
The point is that I am informed by those more learned in the law than I that there is a vital difference in the onus of proof imported by this distinction between civil proceedings and a fine imposed in criminal proceedings. In criminal
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proceedings the prosecution, I believe, would have to prove beyond reasonable doubt that there had been non-compliance, whereas in civil proceedings it is the Secretary of State who would have to prove that non-compliance rests simply on a balance of probabilities. In other words, this burden of proof is greater in criminal proceedings, and it seems doubtful in principle that such a penal provision should be enforced as if it were a civil dispute. It also seems illogical that, in relation to the same offence, the burden of proof should be different as between directors and the company. I make no complaint, of course, about the principle of levying a penalty on the company. It is merely my purpose to elicit the reason for the difference in procedure in pursuit of the directors, on the one hand, and the company, on the other. I beg to move.
Lord WINTERBOTTOM: May I, in replying to the noble Earl, see whether I have understood him clearly as to the intentions of this Amendment. As the clause stands directors of any company who fail to lay accounts before the company in general meeting or to file them at Companies House within the period allowed are guilty of an offence and are liable to heavy fines. In addition, if the accounts are not filed on time, the company is liable to a civil penalty of an amount which increases as the length of default increases subject to a maximum of £450. It is this civil penalty which the Amendment would convert into a criminal penalty. This is if I have understood the noble Earl correctly.
I cannot, unfortunately, be as helpful on this particular Amendment as on the two earlier ones. As drafted, the clause makes a company which is late in filing its accounts liable to a civil penalty which is payable to the Secretary of State. This is, in part, an incentive to companies to file their accounts promptly and, in part, a punishment for failure to do so. It also recognises the very considerable amount of work involved for the Registrar in pursuing companies which are in default. The cost of running Companies House is greatly increased by the large number of companies which fail to file documents on time. I think the Committee will agree that it is right that these companies should be asked to pay a penalty. The Amendment would remove

1479
this civil penalty and substitute a criminal penalty (which would not, of course, be payable to the Secretary of State). As drafted, it would be a very curious criminal penalty as it would be a fixed penalty rather than the more usual maximum. The court would thus not have the power to vary the penalty in the light of the circumstances in a particular case.
The reason why, under the clause as drafted, it is the directors rather than the company who are guilty of an offence and liable to a fine is that the duty to lay and file accounts is specifically imposed on the directors. It is more common to impose a duty on the company, but in this case it was decided to put the duty on the directors in order to stress their personal responsibility for ensuring that it was complied with. It follows that it is the directors who are guilty of an offence if they do not do so. It would be rather odd to make the company criminally liable in these circumstances since it is the directors who have to make the decision.
The Earl of LIMERICK: There is nothing between us in the desirability of enforcing this part of the Bill, nor indeed in the measure of the penalty to be imposed. I think that my Amendment would not have had the effect of changing the penalty payable. It might, as the noble Lord suggested, mean that it was payable to a different party. I think that that would not be a matter of primary concern to the company. I was concerned solely with the question of the onus of proof, since I am advised that the onus of proof would be less great if the Amendment were accepted than it is if the Bill is in the form in which it now rests. I do not know whether I could be further enlightened on this point. I shall be happy to withdraw the Amendment and study what the noble Lord has said. If he can give me any final word on this it would be helpful.
Lord WINTERBOTTOM: I appreciate the noble Earl's attitude. It is a complex point. Perhaps in addition to what I said I might write to him, and then we might decide what we do at a later stage.
Amendment, by leave, withdrawn.
On Question, Whether Clause 4 shall stand part of the Bill?
The Earl of LIMERICK: I have one point to raise on which it did not seem necessary to put down an Amendment on Clause 4. There is a defence in Clause 4(2) available to those charged under Clause 4(1), whereby they can plead that they took reasonable steps in securing that those requirements would be complied with before the end of the period allowed for laying and delivering accounts. However, there is no comparable defence provided in respect of an offence which may be committed under subsection (3). On the face of it this is odd. One can envisage circumstances of a printing dispute, or a postal strike, whereby it would be beyond the competence of those charged with the duty to fulfil the letter of their requirement under subsection (3), and yet apparently they are denied a defence analogous to that available from the burden of subsection (1) which is provided under subsection (2). I wonder whether there is some reason which can be adduced for this difference?
Lord WINTERBOTTOM: I cannot myself adduce any reason. May I make the same offer to the noble Earl. May I take advice on the point. It would seem to be an interesting and valid one, and if tidying up is necessary we might tidy it up at Report stage.
Clause 4 agreed to.
Clause 5 agreed to.
Clause 6 [The period allowed for laying and delivering accounts]:
6.17 p.m.
Lord LYELL Lord LYELL moved Amendment No. 5:
Page 8, line 32, at end insert—
("() Notwithstanding subsection (2) above the period allowed for laying and delivering accounts in relation to any accounting reference period of a company shall be not longer than seven days after the date then the said accounts are laid before the shareholders of the company in general meeting.")
The noble Lord said: This is, in spite of the somewhat lengthy layout of the words, a fairly simple Amendment. It seeks merely to accelerate the delivery of accounts to the Registrar. It seems to us that there can be some unreasonable delays in delivering accounts to the Registrar even with the permitted time

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limits of seven and 10 months respectively for public and for private companies. I hope that this Amendment is reasonable. It has the support of those of us who are concerned with company administration. I beg to move.
Lord WINTERBOTTOM: The noble Lord's Amendment is in the spirit and intention of the Government, but unfortunately it does not quite enable us to achieve our joint objectives. We both want that accounts that are sent to shareholders should be filed promptly, and of course the Government very much hope that companies will follow the practice suggested. There is nothing in the clause which will prevent them from doing so. Nevertheless, the Government cannot accept this Amendment as they do not agree that this should be a legal requirement. The objection is that it would be almost impossible to enforce. The Registrar dos not know when a company's accounts are laid before the shareholders and he will not therefore know when they are due to be filed. This is one of the main drawbacks in the present requirements. It is largely to avoid this difficulty that the new arrangements were devised. It would therefore be completely counter-productive, in our view, to introduce a requirement which suffered from the same drawback, even though it would be qualified by the long stop that all accounts had to be filed within a specified maximum period.
The enforcement difficulties of a provision on the lines proposed would result in a need for extra staff. The Registrar would, of course, be expected to try to enforce the requirement and to investigate complaints about non-compliance. This would require a considerable amount of staff time as it would first be necessary to discover if the accounts in question had in fact been laid before the company and, if so, when. The Amendment would, in fact, affect only a small percentage of companies. The vast majority of the 640,000 companies in both countries on the register are small, and past experience suggests that they will barely succeed in laying and filing their accounts within the periods to be allowed and that there is virtually no prospect of their laying their accounts in time for the Amendment to affect the timing of the filing of their accounts by more than a few days at most. The Government's view is, thus,
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that companies, especially listed companies and other large companies in which there is the greatest public interest, should, as a matter of good practice, file their accounts immediately after laying them but that this should not be made a legal requirement. The law sets a minimum standard applicable to all companies, but noble Lords will agree that the larger companies can reasonably be expected voluntarily to comply with a higher standard. That is the view of Her Majesty's Government on this matter.
Lord LYELL: I thank the noble Lord for the very full way in which he has set out the Government's position and, subject to further study—we might return to this matter at a later stage—I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 6 agreed to.
Clauses 7 to 11 agreed to.
Clause 12 [Accounting records]:
6.22 p.m.
Lord LYELL Lord LYELL moved Amendment No. 6:
Page 14, line 41, after ("records") insert ("in such manner as to enable the directors to inform themselves at any time of the financial position of the company and of its ability to pay its debts as they fall due, and which are")
The noble Lord said: This is one of the most important Amendments I have set out before the Committee today. It will, we believe, define much more clearly Clause 12(1). Subsection (2) of this clause details exactly what the accounts shall contain, but as many noble Lords will know, commercial life is both complex and, indeed, fast moving, and those with experience of this matter and those who have consulted others on the subject consider that the Amendment is necessary. To use a sporting example, we seek not only the picture at the finish of the event but also the action photographs at any stage of the event—in this case at any time during the accounting reference period. The Bill as drafted will help to see that accounting records give a true and a fair view of the balance sheet and the profit and loss account and, to use a sporting metaphor, these two documents will provide the photograph at the finish of the event, in this case the accounting reference period. However, we do not

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consider that a true and a fair view can necessarily be used to define the situation at any point during the accounting reference period, and for this reason we have suggested the Amendment.
Lord WINTERBOTTOM: The intentions of the Amendment are obviously right. We have seen in the present troubled times several companies run into serious financial difficulties which, partly because of inadequate accounting records, have not been foreseen by directors. The purpose of the Amendment as we understand it is to underline the importance of this aspect of keeping proper accounting records, and of course one must agree with this. However, we believe that the Amendment would not help this objective. The first half of the Amendment is, we believe, unnecessary as it is already implied in the clause as drafted. If a company's accounting records are, in the words of subsection (1),
"Sufficient to give a true and fair view of the state of the company's affairs"—
which has been defined—they must necessarily also be such as to enable the directors to inform themselves at any time of the company's financial position. This part of the Amendment thus achieves nothing. The noble Lord might not agree with this point because he mentioned the photograph at the finishing post, but the horses may gallop on a little before the photograph is developed.
The second half of the Amendment is highly desirable in principle but impossible in practice. Of course, directors need to know whether or not the company will be able to pay its debts as they fall due, but unfortunately this is not something which can be deduced from the accounting records alone. Accounting records are necessarily concerned with recording what has happened in the past, not with predicting the future. The records can, and should, show what debts the company is due to pay and when, what its assets are and what payments are due it. This is, of course, essential information for the directors. But whether or not the company can pay its debts as they fall due will also depend on other factors which do not appear in the records: will the company be able to raise more money? Will the bank agree to an increase in the overdraft or will it withdraw existing facilities? Will a major
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creditor default? Sometimes they do. These factors are crucial to the company's future prospects, but are quite outside the scope of the accounting records. If a company is hopelessly insolvent, the fact should be apparent and clear to the people who understand these things from the records, but these are unusual circumstances and by then it is often too late.
As it is normally impossible for the accounting records, however efficiently kept, to be kept in such a manner as to enable the directors to reach an overall view of the company's ability to pay its debts, except perhaps in the most dire circumstances, it would be wrong to impose such a requirement on companies. However, I should have thought that the experience of the past few years for those in business life would point clearly to the importance of watching cash flow at the various monthly board meetings between the publishing of annual accounts, and the value of the Amendment would be to underline once again the importance of cash flow in the difficult business climate in which we are operating.
Lord LYELL: I cannot admit that I am entirely satisfied or happy with the noble Lord's reply. Possibly it may be a question of drafting or perhaps it may be a question of lack of clarity of language, but I understand that the Amendment as drafted would show that such accounting records should be kept,
"in such manner as to enable the directors to inform themselves…of the financial position…"
at any time during the year.
The question of a true and fair view has concerned accountants for many years, I think ever since the Companies Act 1948 was passed. But the definition of "true and fair view" at the moment greatly concerns the accounting profession because it considers this true and fair view to be, so to speak, the finishing photograph, and what I am concerned with—what the profession and the first part of the Amendment is concerned with—is what we might call the stewards' camera. The noble Lord mentioned the horses galloping past the finishing post. What we as accountants are concerned with is foul play at the jumps—dirty riding and that sort of thing—and the

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stewards have a camera on the racecourse. Accountants are keen to have these powers and to be able to use all the techniques that they have available to them at any time during the year, and that is the purpose we seek in the Amendment. I am grateful for what the noble Lord has said, although I am not entirely happy and should like to return to the point at the next stage after further consultations.
Lord MILNE: I would have backed the noble Lord, Lord Lyell, in his Amendment had it not been for the wording, "at any time". As an accountant turned poacher/director, thinking of companies in the contracting world where there is an enormous amount of work in progress and there are many computers and where the cash flow is difficult to estimate at any given moment, I find that, though I am very keen on such a provision—and I know that the profession is also—the words, "at any time" are difficult.
Lord LYELL: I should like to thank the noble Lord for his support. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 12 agreed to.
Clauses 13 and 14 agreed to.
Clause 15 [Resignation of auditors]:
6.33 p.m.
Lord LYELL Lord LYELL moved Amendment No. 7:
Page 18, line 35, at end insert—
"() This section shall apply where a retiring auditor declines to offer himself for re-appointment at the annual general meeting."
The noble Lord said: This clause provides the most valuable support for the auditor in executing his duty and the accountancy profession believes that it is most welcome. However, the clause, as at present drafted, gives the possibility that an auditor would be able to resign his office without necessarily giving notice in writing. In the clause, as printed, it appears that the auditor,
"may resign his office by depositing a notice…".
The Amendment seeks to include in the provisions of the clause any auditor who attends the annual general meeting of the company and who merely declines to allow his name to go forward as the
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company's auditor for the forthcoming year. That would permit a retiring auditor to vacate his office without giving the full reasons to the members of the company in writing. It is to clear up that anomaly that I beg to move the Amendment.
The Earl of LIMERICK: This is a point to which I also drew attention on Second Reading and I rise merely to express support in this matter for my noble friend Lord Lyell.
Lord WINTERBOTTOM: The noble Lord was good enough to explain to me the intentions underlying the Amendment. The situation which he envisages is something which could arise. However, we believe that the requirement to make a statement is not appropriate in the case of an auditor who does not seek re-appointment at the annual general meeting. The purpose of the requirement in Clause 15 is to prevent a weak auditor from resigning in mid-year—in fact, half way down the course—without saying anything and without completing his audit because he has discovered something which suggests that things are going wrong and he is not ready to face up to his responsibilities in such a situation. By the end of the year, the audit will have been completed and, if things are found to be wrong, the auditor will have to qualify the accounts. The auditor's report is thus the safeguard for shareholders and creditors in this situation and it is not necessary to require the auditor to make a further statement.
It is also difficult to see how a requirement to make a statement would be enforced in the case of an auditor who does not seek re-appointment. An auditor can resign only if he first makes the required statement, but it would be ridiculous to force an auditor to offer himself for re-appointment. A penalty for failing to make a statement might be one possibility, but to make failure to make such a statement a criminal offence does not seem appropriate. That is the reason why, although we are in sympathy with the noble Lord's attempt to block a potential loophole, we believe that this is a non-starter.
Lord LYELL: I am grateful for the nice way in which the noble Lord has put that, but I cannot say that I am entirely satisfied. The noble Lord says that the

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intention of the clause is to prevent a weak auditor from resigning in the middle of the accounting reference period. The belief of the accountancy profession is that a weak auditor is a weak auditor at any time. It does not matter whether it is six or eight months later; a weak auditor could resign after four months of the accounting reference period and yet at the end of the year he will still know and recognise that there are grave malpractices or flaws in the company's accounting system. He may qualify the accounts, but the accountancy profession believes that the members of the company—and this is particularly so in the case of small companies whose annual general meetings are but sparsely attended—should have a statement in writing from the retiring auditor giving his reasons for retirement. I emphasise that it is his retirement and not necessarily his resignation, but we feel that he should give his reasons for not wishing to go forward.
I understand that it is a matter of professional etiquette among the accountancy bodies that, where an auditor relinquishes office, he will allow his successor as auditor to know the reasons for his retirement, and that that is normally achieved with the minimum of fuss and bother. However, the accountancy bodies spotted what they feel to be a loophole and they are worried.
Clause 15(1) says that the auditor of a company "may resign his office by depositing a notice…" I wonder whether, if we were to substitute the word "must" for "may" and say that, when he resigns his office, he must deposit a notice in writing, that would suffice. That is the main point of the present Amendment. I feel that perhaps I and my advisers should have seen this earlier and, while I thank the noble Lord for the kind manner in which he has given the Government's reply and while I give notice that we shall probably raise this again at a later stage, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 15 shall stand part of the Bill?
Lord LYELL: Before we finish with Clause 15, may I ask the noble Lord, Lord Winterbottom, for some guidance? On Second Reading, I raised the point of an auditor facing the possibility of a libel action. The noble Lord most kindly wrote to me and set my mind at rest on this point. Nevertheless, I should be grateful if he could confirm what I believe to be the case—namely, that an auditor has qualified privilege from being sued for libel by directors or members of the company concerned or members of the public, so long as his remarks in the statement which must accompany his notice of resignation are confined to his statutory duty, explaining his resignation to the members. This would, I trust, preclude directors from issuing a writ the moment an auditor gave notice of his resignation. Indeed, the directors might claim that reasons for resignation such as criticisms of the directors were sub judice. Can the noble Lord confirm that what I believe to be the case is so and that there is qualified privilege?
Lord WINTERBOTTOM: I am grateful to the noble Lord for the opportunity to place on the record the position in this important matter. The answer is that when a resigning auditor has to make under Clause 15, or chooses to make under Clause 16, a statement, he will have qualified privilege. Therefore, unless the auditor uses a statement for some improper purpose—for instance, he is malicious in the legal sense—no person who is criticised will be able to sue him successfully for libel. That is an important matter.
With regard to Clause 15, the noble Lord was very persuasive on his Amendment, and as I have shown one chink in my argument perhaps we could have another look at the matter at Report stage. The question of "may" and "must" is important, and I have just thought of another small gap of light which we might look at in due course.
Lord LYELL: I am very grateful to the noble Lord.
Clause 15 agreed to.
Clauses 16 and 17 agreed to.
6.41 p.m.
Lord REIGATE Lord REIGATE moved Amendment No. 8:
After Clause 17, page 21, line 10, at end insert the following new clause:
Minimum paid up share capital required for company limited by shares
Share capital
.—(1) A company limited by shares shall not commence any business or exercise any borrowing powers unless—

(a)the amount paid up on its shares, whether in cash or other consideration, is not less than the statutory minimum; and

(b)there has been delivered to the registrar of companies for registration a statutory declaration by all the directors of the company, in the prescribed form, that paragraph (a) above is complied with;

and, if the directors take into account for the purposes of their declaration any consideration other than cash, the declaration shall include a statement to that effect and a certificate in the prescribed form by an auditor of the company (or a person qualified for appointment as such) that in his opinion the directors have reasonable grounds for making the declaration.
(2) The statutory minimum for the purposes of this section shall be such amount as is specified by regulations made by the Secretary of State by statutory instrument, and different amounts may be so specified in relation to public companies and private companies.
(3) The Secretary of State may by regulations made by statutory instrument provide that consideration of any description specified in the regulations (other than cash) shall not be taken into account for the purposes of this section, and references in this section to consideration other than cash shall be construed accordingly.
(4) No regulations shall be made under this section unless a draft of the instrument containing the regulations has been laid before Parliament and has been approved by resolution of each House of Parliament.
(5) If a company commences business or exercises borrowing powers in contravention of subsection (1) above, every person who is responsible for the contravention shall be guilty of an offence and liable—

(a)on conviction on indictment, to a fine;

(b)on summary conviction, to a fine not exceeding £40 for every day during which the contravention continues;

but nothing in that subsection shall invalidate any transaction entered into by a company.
(6) Neither subsection (1) above nor any alteration by regulations of the statutory minimum shall apply to a company which has lawfully commenced business or exercised any borrowing powers before that subsection, or, as the case may be, those regulations come into operation.
(7) A private company shall not alter its articles in such a manner as to become a public company at a time when the statutory minimum specified for the purposes of this section in relation to public companies is higher than that specified in relation to private companies unless paragraphs (a) and (b) of subsection (1) above, as they would apply to a public company which has not commenced business or exercised any borrowing powers, have first been complied with.
(8) Notwithstanding anything in its articles, a company limited by shares shall not reduce its share capital—

(a) at a time when the nominal value of its paid up share capital does not exceed the statutory minimum; or

(b) so as to reduce the nominal value of its paid up share capital below that minimum.

(9) Section 109 of the Act of 1948 (restrictions on commencement of business) shall cease to have effect.
The noble Lord said: I should like your Lordships to think that this modest, brief Amendment was entirely my own handiwork, like a pavement artist, and that I was a born Parliamentary draftsman. But like George Washington I cannot tell a lie, and it would become quite clear that the whole of this Amendment, and the subsequent Amendments in my name, are lifted from the 1973 Bill which, unfortunately, was dropped when the change of power took place two years ago.
On Second Reading it was made quite clear that some of us thought that the Government were missing a major opportunity to bring into being some rather extended powers such as were included in the 1973 Bill. Therefore on that occasion I gave notice that it was my intention to move one or other of these Amendments. I must apologise that the Amendment was tabled only last Thursday. This was not due to any dilatoriness on my part, but simply and solely to the fact, unbelievable though it may seem, that there was not a copy of the 1973 Bill in the Library of either House. I should like to apologise particularly to the noble Lord, Lord Winterbottom, though not with any great sincerity, because I am certain that when he saw the Amendment his officials were able to say to him: "Minister, we recognise these Amendments. They are awfully good Amendments. The drafting is perfect, and in a sane world they would be accepted." But I have a feeling that that will not be the kind of answer I am to get from the noble Lord today.
I now wish to revert to the subject of the Amendment. The £100 limited liability company has been a byword and a joke for years. In any shady case it is always a question that somebody has formed yet another £100 company. So it seemed to me very sensible that under the 1973 Bill the Secretary of State would be able to take power to increase that amount by regulation. That seemed perfectly sane, sensible and reasonable, and I find it quite extraordinary that the Government have not chosen to incorporate this very sensible little reform in their Bill.
When the noble Lord was doing battle on Second Reading, he told us that the Government had instituted a wide-ranging review of company law, and therefore we should have to wait for that, but I still think it is a pity that they have not taken this opportunity. We are waiting for Bullock and for a wide-ranging review, and at this rate I feel we are going to wait until the cows some home. It is a great pity that this opportunity has been missed. I beg to move.
The Earl of LIMERICK: My noble friend Lord Reigate has done even better than he suggested. He has contrived by some strange process that his Amendments Nos. 8 to 11 bear a striking similarity to Clauses 8 to 11 of the 1973 Bill. As he says, the drafting is immaculate. I have a good memory for faces and I worked closely and happily with officials who are advising the noble Lord. I shall be more than intrigued to learn why they may consider that the case for including these Amendments in this Bill is less strong and compelling than when it was presented to me in 1973.
Lord WINTERBOTTOM: I feel that this is to be the most interesting part of our deliberations this evening. First, I completely absolve the noble Lord, Lord Reigate, of any discourtesy regarding late tabling of the Amendments, because I and my advisers suffered from the same problem. What happens to Bills which become lost is an interesting question. I suppose that they lie in some dusty archive in my Department. This was our problem, as well as that of the noble Lord, and thus I do not charge him with discourtesy.
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I hope that he will not charge me with willing blindness on the virtues of his Amendments. All his Amendments have a great deal to commend them. However, since the Bill was laid in 1973 profound change has come about in our legal relationship to those activities which are common to us and to other members of the Common Market. When I was first briefed on this Bill I asked specifically whether anything in the Bill as it stands cut across Common Market legislation, and I was told, "No" But I hope the noble Lord will accept it when I say that his Amendments Nos. 8, 9. 10 and 11 are all—I do not say in conflict—in parallel with legislation which we are to discuss this week. They are all relevant to the second EEC draft Directive.
I know that the noble Lord has been doing his homework because I guided his steps in the direction of a tutor. If they were accepted, all these four Amendments, admirable and well drafted though they are, might have to be modified if and when the Common Market Directive becomes law. I am not speaking as an expert—there are other noble Lords more expert than myself—but as I understand the position, once a Directive is agreed by the Council of Ministers it cannot be modified by member Parliaments. It is the law of the European Community. It has so happened that our Scrutiny Committee has requested us to look at the second Directive, which covers the areas of the four Amendments I have mentioned.
I now wish to give the formal reply to the noble Lord. We are now speaking about Amendment No. 8. The draft second EEC Directive on Company Law contains provisions concerning a minimum capital which a company must have before it is incorporated or allowed to start trading. The terms of the draft Directive are at present being negotiated in Brussels, and although these negotiations have reached an advanced stage, the terms of the instrument which will finally emerge from the discussions are not yet settled. It would therefore clearly be inappropriate at this stage to include in the Bill a provision on the lines of the proposed new clause which might very well have to be scrapped in the second Bill which is approaching.

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British company law will in any event have to be amended in order to implement the requirements of the draft second Directive. It is desirable to make all the necessary Amendments to our law at the same time, rather than deal with them in a piecemeal fashion. That is why Her Majesty's Government are opposing this, and the next three, Amendments. But is might be extremely vain-able if we were to take the discussion a stage further on Thursday of this week when we have to discuss these four Directives.
The Earl of LIMERICK: There is one other serious point which underlies this matter. One's memory goes dim after 2½ years, but if I recall correctly, this question of minimum paid-up capital is not unassociated with the distinction between private and public companies. There is in European law a very inconvenient distinction for us in that the rigour of some of the provisions applicable to large companies could be applied to small companies if some such distinction is not imported. I recall (without recalling closely the detail) that this was a point very much in our minds in looking at these two sections of the Bill together in 1973—that of the minimum paid-up capital and the distinction between the public and the private companies. It would indeed be helpful if the Minister could go one step further and tell your Lordships' Committee that this point is one which, likewise, is in his mind and in the minds of his advisers as they approach the discussions on Thursday and as we approach the later stages of this Bill.
Lord REIGATE: The noble Lord's reply was as disappointing as I expected and as he was kind enough to warn me it was going to be, so it came as no shock to know that my Amendment was not going to be accepted. I was a little confused by his argument, because he very kindly referred me to the documents which are going to be discussed on Thursday, and I found the relevant sentence, which reads as follows:
"This Article requires that on formation of a company a minimum capital shall be subscribed, the amount of which shall be not less than 25,000 units of account, say £10,000".
That is not the point, but then it goes on to say:
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"This would require legislation in the United Kingdom".
It would not if my Amendment was accepted, because the whole point of my Amendment is that the present £100 is abolished and it is left to the Secretary of State to fix the amount. He can fix it at £100, and, by Statutory Instrument, when the time comes, he can raise it to £10,000. All that is happening is that the Government are taking the line that the necessary Bill to implement the European thing will be just one clause longer. What a waste of time!
However, I can see that I am not going to get anywhere with the noble Lord or with the Government—except, of course, that when the Head of Government changes there is always some hope that a more enlightened attitude might prevail. But for the moment I therefore ask leave to withdraw the Amendment standing in my name; and, in view of the slightly stultifying and obfuscating attitude of the Government, I shall not move the other Amendments standing in my name.
Lord WINTERBOTTOM: Including the last two, which are not covered by the second Directive?
Lord REIGATE: Numbers 9, 10 and 11.
Amendment, by leave, withdrawn.
Lord REIGATE Lord REIGATE moved Amendment No. 12:
After Clause 17 insert the following new clause:
Listed companies not to issue equity shares with restricted voting rights
Non-voting shares etc.
.—(1) No company any of the shares in which are for the time being listed on a recognised stock exchange shall, except with the consent of the Secretary of State, issue any equity share which does not carry—

(a)an unqualified right to vote at general meetings of the company; and

(b)on a poll, a constant number of votes determined in accordance with subsections (3) to (5) below.

(2)For the purposes of this section a right to vote is unqualified if it is not subject to any restriction by reference to the matter to be voted on, and a number is constant if it does not vary by reference to that matter.
(3)Where the company has not previously issued any equity shares carrying unqualified voting rights, the number of votes required in the case of a share by subsection (1)(b)

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above shall be such number as the company may determine, being a number which, in proportion to nominal value, is the same as that determined in the case of each of the other equity shares (if any) issued on the same occasion.
(4) Where the company has previously issued any equity shares carrying unqualified voting rights, the number of votes required in the case of a share by subsection (1)(b) above shall be such number as, in proportion to nominal value, is equal to the number of votes carried on a poll by each of the existing shares or, if those shares do not all carry the same number of votes in proportion to nominal value, of such of them as carry the highest number in proportion to nominal value.
(5) Where any of a company's existing shares carries a number of votes which is not constant, the share shall be treated for the purposes of subsection (4) above as carrying that number of votes which it carries in relation to the generality of matters to be voted on; and if the share carries special voting rights (that is to say, rights different from those carried by other shares of the same nominal value) in relation to some matters but not others, the reference in this subsection to the generality of matters to be voted on shall be construed as a reference to the matters in relation to which the share carries no special voting rights.
(6) Any share issued in contravention of this section shall, notwithstanding anything in the company's memorandum or articles or in the terms of issue, carry the rights and, on a poll, the number of votes required by paragraphs (a) and (b) of subsection (1) above (subsection (3) being read as if it required the share to carry one vote for every ½p of nominal value); but, save as aforesaid, nothing in this section shall invalidate any issue of shares or expose a company issuing any shares to any penalty.
(7) Subsection (1) above shall not preclude the issue of a share which at the time of issue does not comply with that subsection if—

(a)the rights making it an equity share are expressed by the terms of issue to be conditional on the exercise by the holder of an option in that behalf; and

(b)the share will comply with that subsection if the option is exercised;

and for the purposes of subsections (3) to (5) above any share in respect of which such an option is exercisable shall be treated as carrying the rights and, on a poll, the number of votes which it would carry if the option were exercised.
(8) Nothing in this section applies to any share issued by a company in pursuance of an obligation entered into by the company before the coming into operation of this section.
The noble Lord said: I can be very brief on this. This is dealing with the question of non-voting shares. In 1973 the enlightened Government of the day took the line that non-voting shares were a bad thing, and so included this clause,
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which I have carefully repeated today. I think it will be interesting to know whether, after two years, the Government have any views at all on the matter. I beg to move.
Lord WINTERBOTTOM: The Government are not groping in the dark; they are simply moving towards the light, and the rate at which we move must depend on the complexity of the subject. This Bill is an interim measure—and I have said that time and time again—designed to deal with certain urgent problems. Non-voting shares do not fall into this category, and this Bill is not, therefore, the appropriate place in which to deal with them. They should be considered as part of the Government's wider review of company law. The issue by listed companies of equity shares with restricted voting rights is now very rare, and it is unusual for a company to come to the market for the first time without first enfranchising its shares. The Stock Exchange and the institutional investors strongly discourage the issue of new equity shares which do not carry' full voting rights. Over the last few years, several companies have enfranchised existing classes of shares with restricted voting rights. Ranks is the latest example. The Government welcome these moves.
The provisions in the 1973 Bill were an unhappy compromise. They would have caused considerable problems and imposed awkward restrictions on the freedom of listed companies with existing equity shares with restricted or no voting rights. On the other hand, they would have allowed the issue to continue unresolved indefinitely, as they did not require the enfranchisement of existing restricted voting shares. The provisions in the 1973 Bill must therefore be further considered in the course of the Government's general review of company law, and this will be done. It may be that market forces are already achieving the desired results without any of the frictions and problems caused by legislation; it may be, however, that legislation will be needed to bring the laggards into line. These matters need to be studied. It would be premature to legislate before completing this study, and inappropriate, in any case, to legislate on this subject in this Bill.
Lord REIGATE: That is not really a very satisfactory reply, because when

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the noble Lord comes to read it in the Official Report he will probably see that he in fact contradicted himself. But that is neither here nor there. It is quite clear that the Government are not going to allow the scope of this Bill to be expanded in your Lordships' House at all. I can only hope that more sense will prevail in the other place and that this opportunity will not be allowed to pass. I therefore ask leave to withdraw my Amendment. I should like to say only that when the end comes and the voices are collected it may be that someone will say, "Content" and perhaps no one will say, "Not-Content", but I shall be murmuring under my breath "Mal-Content!"
Amendment, by leave, withdrawn.
Clauses 18 to 24 agreed to.
Clause 25 [Size, durability and legibility of documents delivered to registrar]:
Lord LYELL Lord LYELL moved Amendment No. 14:
Page 28, line 32, leave out ("fourteenth") and insert ("thirtieth").
The noble Lord said: This is a very small Amendment. It seems to some of us who are concerned with company administration that a period of 14 days for allowing accounts to be reprinted or for altering the format might in some cases, and particularly where the smaller companies are concerned, involve unnecessary hardship and expense, and an unreasonable amount of trouble for the company secretary or the company administrators. This is just in the nature of a probing Amendment to see whether the Government will allow an extension of a further 14 days—say, 30 days. With that, I beg to move.
Lord WINTERBOTTOM: Again, we welcome the intention but question the answer. The requirements as to the form of documents will be published, and the Registrar intends to bring them to the attention of all companies. There will therefore be little excuse for any company to submit a document in an unacceptable form. The grace period, therefore, is a concession to those who fail to comply with statutory requirements.
The clause applies to all documents delivered to the Registrar, and not only to accounts and directors' reports. This is where the problem arises. Many of the
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documents have to be filed within strict time limits after a particular event has occurred. This time limit is often less than 30 days. For example, notices of changes in directors or the address of the registered office must be filed within 14 days. There are several similar requirements. It would not be desirable to allow a company a longer period in which to resubmit a document in an acceptable form than it had to submit the document in the first place. We believe that it is unlikely that a printed document would be found unacceptable and would thus have to be reprinted. The requirements will be designed primarily to ensure that documents are legible and durable. Any document which is printed (in the form that we have talked about today) is likely to meet those criteria. The documents which cause problems are those which are in manuscript or are poor quality copies of typescript, and these would not take long to reproduce in an acceptable form. But I think the key point is the conflict between the 30 days proposed and the legal requirements for 14 days in other areas of company law. That is why we resist this Amendment.
Lord LYELL: I should like to thank the noble Lord for that. Possibly I might be able to come back to this point at a later stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 25 agreed to.
Clauses 26 and 27 agreed to.
Lord MONSON Lord MONSON moved Amendment No. 15:
After Clause 27, insert the following new clause:
Proxy Voting
.—(1) Every notice calling a meeting of a company having share capital which is sent to persons entitled to attend and vote thereat shall he accompanied by a proxy form with provision for two-way voting on all resolutions intended to be proposed. All such proxy forms sent to United Kingdom residents shall be reply-paid; and if default is made in complying with this subsection as respects any meeting, every officer of the company who is in default shall be liable to a fine not exceeding fifty pounds.
(2)The above subsection shall not apply to any company whose issued share capital to less than £100,000.
(3)This section shall come into force on 1 January 1978.
The noble Lord said: This is something of a trial balloon. When I spoke of my intention to introduce an Amendment on these lines on Second Reading there were murmurs of approval from various parts of the House. The noble Lord, Lord Winterbottom, remained non-commital, whether on grounds of principle or on technical grounds or on grounds of time I am not sure. The object of the Amendment is to help the small shareholder, albeit in a minor way. Small shareholders are legally part owners of the company in which they hold shares. This is all too often overlooked. I believe they should be assisted to exercise the responsibility that goes with ownership. Shareholders' dividends have not kept pace with the cost of living over the past five years or more, nor have the capital values of their holdings kept in line with inflation. Postal charges go up almost quarterly, and while there are shareholders living in remote rural parts of Scotland, Wales or indeed England, and who may be minus a stamp, such people are understandably disinclined to drive a long way to get to a post office unless they can be fairly certain that the thing they are voting for has a good chance of success.
It is argued by many directors that I know that small shareholders often fail to reply even when proxy forms are reply-paid. I would suggest that when the company is doing well there is no need for anybody to spend money on postage, whether shareholders directly or the company indirectly. It is when the directors are not behaving in a satisfactory manner, either towards shareholders, employees, customers or the public at large that such provisions as I have proposed would, I suggest, come in useful. Take the case of an engineering company which, a year or so ago, passed its dividend as a result of a disastrous fall in profits, but where at the same time the chairman increased his salary from £10,000 to £15,000 a year. In such circumstances shareholders would welcome the opportunity to register a protest even though there may be little chance of success. I might add that, of six blue chip companies who replied to a query that I made as to whether or not they would support proposals on these lines, three were in favour, two were in favour in principle, but felt it should be
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done by an Amendment to the Stock Exchange listing requirements rather than by legislation, and only one out of the six was opposed.
There is a precedent for this sort of shareholder protection in Section 136 of the 1948 Companies Act, but the protection given is rather random. Section 136(2) provides that:
"…there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy…"
Section 136(4) states:
"If…invitations…are issued at the company's expense to some only of the members…"
and not all, the officers responsible for the offence will be liable to a fine of up to £100. But Section 136 does not go any further than that.
Clause 5 of the Stock Exchange listing requirements stipulates that a proxy form with a provision for two-way voting shall be sent with all resolutions to be proposed. This listing requirement does not help with unquoted companies. It might be argued that there are not many unquoted companies with share capital in excess of £100,000 where the shareholders are neither all members of one family nor institutional shareholders; none the less it seems reasonable to include them as well.
The main point is that the Stock Exchange listing requirement does not at present include the words "reply paid", and so long as it does not do so I believe that Parliament has a right to step in and fill the gap. In order to draft this Amendment it was necessary in the first instance to require the sending of proxy forms, which is not in any Companies Act at present, although it is in the Stock Exchange listing requirements. That having been done, it was possible to insert the requirements that all such proxy forms should be reply-paid.
I have taken the wording partly from Section 136 of the 1948 Act, including the provision for a penalty of up to £50. I have taken the wording partly from Clause 5 of the Stock Exchange listing agreement which is a little more detailed and also includes the word "person" rather than "member", which could be advantageous in so far as it covers convertible loan stockholders and others who might be morally entitled to cast a vote

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in such circumstances. Some of the wording is my own. Finally, a company secretary of one of our well-known public companies pointed out that for technical reasons the provision ought to be confined to United Kingdom shareholders only. I should like also to include those resident in the Channel Islands and in the Isle of Man, but I am not sure whether the reply-paid provisions would be easily applicable to them in the long term. Perhaps that could be looked at at a later stage, provided the principle of this Amendment is accepted. I think it is reasonable that the requirements should be confined to companies with issued capital of £100,000 or over, and that the company should be given a generous 18 months to prepare for this ruling, if Parliament accepts the principle of it.
In putting down this Amendment, I was inspired by the words of the noble Baroness, Lady Phillips, at the Third Reading of her excellent Bill to permit shops in holiday resorts to stay open for a longer period of the year. She is not present now, but I am sure she will not mind if I paraphrase what she said; that is, that if Back-Benchers wished to get anything through this House there are two requirements. The first is that it should be simple and straight forward; and, secondly, one should be content to take one small step at a time. I believe that this Amendment fulfils both criteria, and I hope it may be accepted in principle.
Lord LYELL: I should like to add my support to the Amendment proposed by the noble Lord, Lord Monson. I think it is a very relevant point that shareholders should have every possible opportunity to participate in the annual general meeting and other meetings of their company; therefore we should support any measure which helps shareholders to participate.
Lord WINTERBOTTOM: Noble Lords may or may not believe me, but I listen to arguments put forward by noble Lords on these occasions. In order to understand the noble Lord's arguments, will he please say what he means by "two-way voting". I should like that defined before I reply.
Lord MONSON: It means that you can vote either for or against the resolution.
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It comes straight out of the listing requirements of the Stock Exchange.
Lord WINTERBOTTOM: The noble Lord indicated the problem we face. When things are going well either you do not bother to send in the proxy forms—you think the company is in good hands—or, if you do support the company, they go into the hands of the company secretary and are produced if necessary. The problem is really when things are going badly. I am not sure that merely sending in your proxy form, voting against one or more measures, is a real safeguard. Presumably someone has to marshal the votes which are opposed to company policy before this action becomes effective. Certainly the Government agree with both noble Lords that it is desirable that the average shareholder should take a more active interest in the affairs of the company, and should vote on the resolutions put before the company in general meeting.
It is arguable—and the noble Lord, Lord Monson has given examples—that reply-paid proxy forms may help to achieve this. But we believe that this is not something which should be required by law. I have a feeling that we are tending to tell too many people what is good for them rather than leaving them to reach their own decisions as to what they should do. The law provides the basic right of a member of a company with a share capital to appoint a proxy; but the mechanics of the appointment are something which can only be left to the company and not laid down by legislation. Companies send out proxy forms, sometimes reply-paid. The Stock Exchange already requires listed companies to send out proxy forms to provide for two-way voting, as the noble Lord said. Whether or not the forms are reply-paid is a matter which is left to the discretion of the company. We believe this is a relatively minor matter of company administration, and is really a public relations operation by the company itself. It should be left to individual companies to determine. The reply-paid forms could be very costly for a company with a large number of shareholders, and we believe it should be left to the company to decide whether or not to use its resources in this way. We believe it would not be right for the law to determine these matters.

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I have every sympathy with the objectives of the noble Lord, but I do not see how the new clause, as drafted, would help the shareholder in the North of Scotland who is dissatisfied with the operation of a company which is holding its annual general meeting in London.
Viscount LONG: My Lords, I have not taken part so far in this debate, but I notice that subsection (2) of the Amendment refers to the fact that subsection (1) shall not apply to a company with an issued share capital of less than £100,000. So far as I know, this point has not been mentioned. Do the Government agree with this figure? There are so many companies with a share capital of less than £100,000 that I think the noble Lord ought to refer to this.
Lord WINTERBOTTOM: May I think about that point? I was arguing the case against any pre-paid proxy form being sent out. There may be a distinction between those companies with an issued share capital of above £100,000 and those below. The influence on the smaller company would be greater. May I have another think about this? We could tidy it up at Report stage.
Viscount LONG: I am most grateful. The noble Lord also referred to North of the Border, and I wondered whether this was applicable to the South-West or the South-East.
Lord MONSON: I thank the noble Lord, Lord Winterbottom, for indicating that he will look at this matter again. I cannot accept his view that this would be a tremendous burden on companies. One of the reasons why I suggested confining it to companies with an issued share capital of over £100,000 was for the reasons he mentioned: some smaller companies might find difficulties. But it costs only £15 to obtain a reply-paid licence, and most public companies have one. They only pay one half penny more than the actual postage for each proxy returned. The most telling point is that between 75 per cent. and 80 per cent. of public companies already provide reply-paid cards. There does not seem any valid reason why the minority should not fall into line with the majority. The noble Lord was kind enough to say that he would look at this again, and there-
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fore I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Remaining clauses and Schedules agreed to.
House resumed: Bill reported without Amendment.