Lords Sitting of 2 December 1976

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

"CONSUMERS AND THE NATIONALISED INDUSTRIES"
Baroness BURTON of COVENTRY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether it is their intention to make a considered statement on the recommendations contained in the Report of the National Consumer Council entitled Consumers and the Nationalised Industries together with the action intended and, if so, when this statement may be expected.
Lord ORAM: My Lords, the Government will make a full Statement when consultations have been completed with those most affected by the Report's recommendations. I cannot at this stage, therefore, comment on specific recommendations; neither can I give a precise indication of the likely timing of the Government's Statement.
Baroness BURTON of COVENTRY: My Lords, I am sure that the Minister will agree that that is not a very helpful Answer. May I ask the Minister whether he recalls that Her Majesty the Queen's gracious Speech states:
"My Government will continue to attach high priority to safeguarding the interests of consumers".
In view of that statement, would the Minister let me know when it would be in order to put down another Question?
Lord ORAM: My Lords, I will certainly speak to my noble friend about the most suitable timetable for her pursuit of these matters. I assure her that the phrase in the gracious Speech is genuine. I have assured my noble friend, and I assure her now, that I personally take a
414
close interest in this Report, which is, indeed, a most important one. I will willingly collaborate with my noble friend in ensuring that a proper airing is given to its proposals.
Lord POPPLEWELL: My Lords, can my noble friend say whether it is anticipated that the Government will make their Statement before the end of the inquiry that is now being made by the Nationalised Industries Committee in the other place, who are discussing certain of these factors? Will the Government wait for the issue of the Committee's report before they make their Statement?
Lord ORAM: My Lords, my noble friend is quite right to point to the connection between the National Consumer Council's Report and two other interesting reports. It may be helpful if I quote from a Written Reply in another place which the Prime Minister gave recently. Referring to the report on nationalised industries by the National Economic Development Office the Prime Minister said:
"We shall publish our conclusions"—
that is, on that report—
"next year in a White Paper, which will also take account of our decisions on board structure, following the study of industrial democracy in the nationalised industries and on related recommendations in the National Consumer Council's Report on Consumers and the Nationalised Industries".
Although there is this connection with two other reports, it does not preclude individual attention being given to the National Consumer Council's Report to which my noble friend Lady Burton has called attention.
Baroness BURTON of COVENTRY: My Lords, may I ask the Minister whether he will bear in mind the possible connection between all the points he has mentioned and the Motion in the Minutes in the No Day Named section?
Lord ORAM: My Lords, I have indeed noticed that Motion and if my noble friend makes progress with it I, as well as she, will be pleased.
Lord ROCHESTER: My Lords, in relation to the National Economic Development Office report to which he has referred, is the noble Lord aware that

415
although its main recommendation is that a policy council should be interposed between the executive board of each industry and the responsible Minister, it, too, recommends that there should be consumer representatives on those policy councils? If I may respectfully say so, given that the main justification for nationalising certain interests is said to be that they should be run in the interests of the community as a whole, is it not about time that that objective should be reflected, preferably in agreement with other parties, in those industries being organised in a way which takes more adequate account of the consumer interest?
Lord ORAM: My Lords, rather than deal with this kind of issue at Question Time, I think that we should await the fuller debates which are thought of and the White Paper which the Prime Minister indicated. However, I certainly take note of the noble Lord's observations.
Lord HARMAR-NICHOLLS: My Lords, before we have the fuller debate on the White Paper, could the Government define the phrase "industrial democracy"—what it means and how the Government intend it to be taken?
Lord ORAM: My Lords, there is a distinguished committee meeting under the chairmanship of the noble Lord, Lord Bullock. I have little doubt that they will turn their attention to the problem to which the noble Lord has called our attention.

ST. JOHN AMBULANCE SERVICE: CENTENARY STAMP
3.14 p.m.
Baroness YOUNG: 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 issue a special stamp to mark the centenary of the St. John Ambulance Service.
Lord WINTERBOTTOM: My Lords, the decision on the choice of special postage stamp issues is one for the Post
416
Office. They tell me that owing to the claims of other events they had reluctantly to exclude this centenary from the 1977 programme.
Baroness YOUNG: My Lords, I am sure the noble Lord will regard that as a very disappointing reply. Does he not think that, particularly at this time of economic crisis, the special issue of postage stamps which mark important centenaries such as that of the St. John Ambulance Brigade would be of great benefit in indicating how much work voluntary organisations do; and can he bring to the notice of his colleagues, both in the Post Office and in another place, that they should look for this kind of opportunity and make use of it when it presents itself?
Lord WINTERBOTTOM: My Lords, the noble Baroness is quite right in the sense that it is clearly to the advantage of the Post Office and the nation as a whole that these special issues should come out on appropriate dates to record special events; but I think we must not forget that the 1977 programme is particularly strained by the Silver Jubilee series, next year being the Silver Jubilee of Her Majesty the Queen, and there will be an extended period of sale of these stamps to fit in with the various regional visits and events to celebrate the anniversary. In addition, it includes the obligation to pay due tribute to the meeting of the Commonwealth Heads of Government which will be taking place. But I will ensure that the views of the noble Baroness are conveyed to the Stamp Advisory Committee which advises the Post Office on this matter.
Viscount HANWORTH: My Lords, can the noble Lord say how many special issues there have been during the last year? It would seem that there has been a very large number.
Lord DUNCAN-SANDYS: My Lords, in view of the much wider considerations involved, is it really right to leave decisions of this kind entirely to the Post Office?
Lord WINTERBOTTOM: My Lords, I will first answer the question put to me by the noble Viscount, Lord Hanworth. The answer is that there have been six such special issues. With regard to the question of whether or not to leave this

417
decision to the Post Office, I am sure that the noble Lord, Lord Duncan-Sandys, would like to minimise the interference by central Government of a nationalised industry—
Several noble Lords: Oh!
Lord WINTERBOTTOM: My Lords, I did not say that we would, but that it would be our wish; and for that reason I think it is wise to allow the Stamp Advisory Committee to get on with the job.
Lord RHODES: My Lords, is the Minister aware that his reply to this Question will go down very badly in the North of England? This organisation has one of the most impressive records of voluntary service in the whole of the community, and it should be recognised.
Lord REIGATE: My Lords, is either House of Parliament represented on the Stamp Advisory Committee, and, if not, why not?
Lord WINTERBOTTOM: My Lords, if the noble Lord will table a Question I will give him the information with regard to the members of the Committee.
The Earl of KIMBERLEY: My Lords, can the noble Lord say how much money the Post Office makes on these commemorative issues? And if it makes a large amount of money, could we not have the St. John Ambulance Service stamp as well as the Silver Jubilee stamps?
Lord WINTERBOTTOM: My Lords, that is another question.
Earl ST. ALDWYN: My Lords, the noble Lord said that there were six special issues this year. Can he tell us how many are planned for 1977?
Lord WINTERBOTTOM: My Lords, I am afraid I must apologise to the House for giving the wrong information. It is not this year. The programme for the coming year is a set on British achievements in chemistry, the Royal Silver Jubilee, a Commonwealth issue on the occasion of the Commonwealth Heads of Government meeting, racquet sports—
418
which commemorates the centenary of Wimbledon—British wildlife and the customary Christmas series.
Earl ST. ALDWYN: My Lords, might it not be appropriate to have a special St. John Ambulance Service stamp at Christmastime? This is very much a Christian organisation which serves the community as a whole, and surely it would be appropriate for a stamp to be issued at Christmas?
Lord WINTERBOTTOM: My Lords, I will convey that point of view to the Stamp Advisory Committee.
Baroness MACLEOD of BORVE: My Lords, in view of the success of the charities stamp which I think was inaugurated a year ago, and as a result of which a profit was sent to the charities, because one paid, I think, 8½p for a 6½p stamp, would not a good way of celebrating this centenary of the St. John Ambulance Service be to use a stamp for that purpose?
Lord WINTERBOTTOM: My Lords, I am grateful to the noble Baroness for that suggestion.
Lord MACKIE of BENSHIE: My Lords, may I ask the noble Lord what sort of "rackets" the Government wish to commemorate?
Lord WINTERBOTTOM: My Lords, has the noble Lord any particular racket in mind?
Lord ORR-EWING: My Lords, would the noble Lord consider postponing the wildlife series for one year? Wildlife is always with us, but this is the centenary of the St. John Ambulance Service and, therefore, it should have some sort of priority. Can the noble Lord consider this suggestion seriously?
Viscount BARRINGTON: My Lords, I do not in any way want to suggest that this House has been taken over by Wales, but I find in my notebook a Welsh stamp commemorating a centenary. Is it not a fact that St. John has at least as much right to be commemorated as St. David, whom I respect?

DEVELOPING COUNTRIES: ECONOMIC ASSISTANCE
3.18 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what decisions were made at the E.E.C. meeting of Heads of Government regarding proposals for debt relief to developing countries and price guarantees for their exports to be considered at the forthcoming North-South conference in Paris.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, the European Council reaffirmed the importance it attaches to making a contribution to the economic development of the developing countries. However, we are in the middle of a negotiating conference and noble Lords will, I know, understand that I cannot at this stage elaborate on the details of our position and that of our Community partners.
Lord BROCKWAY: My Lords, is it not the case that a great part of the discussion at the EEC concerned the possible high charges for oil? Is it not now recognised that the prices for oil will largely depend on a much wider economic agreement with the developing countries? Is it not regrettable that the North-South conference in Paris is likely to be postponed, so preventing this matter from being dealt with urgently?
Lord GORONWY-ROBERTS: Yes, indeed, my Lords. Oil, and all other relevant economic factors bearing on the question of a more equitable and practicable relationship between North and South, as my noble friend has said, has been discussed. I have made available to the House as soon as possible—indeed it is printed in the Official Report published today—the Statement made by my right honourable friend the Prime Minister as a result of this meeting.
My Lords, as to the second and third points raised by my noble friend, it is unfortunately a fact, and perhaps natural, that various members of this Conference
420
on both sides—the Group of 8 and the Group of 19—have questions of emphasis which have not yet been resolved. It looks increasingly likely that the projected ministerial meeting of the 15th to 17th December may have to be postponed; but that, of course, may prove to be helpful to an agreed resolution at the end of the Conference.
Lord ELTON: My Lords, does the noble Lord the Minister agree that the disunity amongst the Western countries which became evident at the UNCTAD IV conference at Nairobi gave us great concern at the time, since it delayed the harmonisation of views between North and South, which many of us believe vital to the future security and stability of the world? Is he aware that it is most disturbing to hear that the differences are still unresolved, and this difficulty is likely to become more acute the longer a delay in finding a solution continues?
Lord GORONWY-ROBERTS: My Lords, I would not say they are likely to become more acute the longer the ministerial meeting is postponed. I would hope that the postponement—if it is decided to postpone the meeting, and I am not sure yet that it will be—will help to resolve the natural divergence of view that arises between partners, even friends and allies. This is inevitable, and should not cause us to despair of a successful outcome to this conference. As to what happened at the UNCTAD conference, this is perhaps another question. It may be that this conference will overtake some of the deficiencies of the Nairobiconference.
Lord GLADWYN: My Lords, is it not a fact that agreement was nearly reached on this subject at the meeting at the Hague a few days ago? Would it not be possible for the remaining small differences to be smoothed out now by the patient officials?
Lord GORONWY-ROBERTS: Yes, my Lords, it is quite possible. Discussions will continue. I am glad of the opportunity of assuring the House that in the next few weeks there will be continuing discussions with a view to resolving whatever differences may have arisen between various members of the conference. In view of what the noble Lord, Lord Elton, said, I should like to emphasise that these divergencies are not confined

421
to the Group of 8. There are two sides to the conference: the Group of 8, the developed countries, and the Group of 19, the developing countries. On a comprehensive and a complicated matter like this, both sides quite naturally come up with divergent views on this, that, or the other question. So I hope the House would not anticipate that this conference has struck serious difficulty. We are hoping very much that, when the ministerial meeting is convened, these differences will be found to be resolvable.
Lord BROCKWAY: My Lords, in view of the welcome statement in the City of London by my right honourable friend the Prime Minister, and his own Statement yesterday, may I ask my noble friend the Minister whether we could have an assurance that Her Majesty's Government are doing their utmost in these conferences to secure an agreement with the developing countries and are not in a minority in the EEC, which has been rather obstructive on this matter?
Lord GORONWY-ROBERTS: My Lords, I have endeavoured not to dilate upon details of divergence among members of the EEC. In view of the question of my noble friend Lord Brockway, I must assure the House that whatever divergence exists which may lead to a postponement of a decision, this does not lie at the threshold of the United Kingdom. As the whole House will recall, Her Majesty's Government—and not only this Government—over the years have made a positive contribution in all the fora concerned about these questions; for example, at the Kingston Conference, when the United Kingdom took a very useful and effective initiative.

ORDNANCE SURVEY CHARGES
3.25 p.m.
Lord TEVIOT: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the price policy reviewing body have met to consider the increased royalty charges sought by the Ordnance Survey from the map publishing
422
organisations and, if so, whether they will make a statement.
Baroness STEDMAN: My Lords, as I said in my reply to the noble Lord on 27th September, extensive discussions have been proceeding within Government about the guidance to be given to Ordnance Survey on its pricing policy. This guidance will cover, inter alia, royalty charges to map publishers. I cannot anticipate any statement on this subject, but I hope that it will be possible to make an announcement early in the New Year.
Lord TEVIOT: My Lords, I thank the noble Baroness, Lady Stedman, for that reply. Would she not agree that these charges are based on the supposition that there is copyright in information which, in itself, will create a precedent of the 1956 Copyright Act? Therefore, would it not be better to wait for the result of the Whitford Committee which is reviewing this matter, withholding the increase of 1st January for that reason?
Baroness STEDMAN: My Lords, we went into this in some detail in the debate in June last year. I explained then at some length why the Government did not feel they ought to wait for the report of the Whitford Committee. The Government have seen nothing in the interim period to make them change their mind.

CRUELTY TO ANIMALS BILL [H.L.]
Baroness PHILLIPS: My Lords, I beg to introduce a Bill to restrict certain experiments on animals. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read l a.—(Baroness Phillips.)
On Question, Bill read l a, and to be printed.

STATUTORY INSTRUMENTS (JOINT COMMITTEE)
The CHAIRMAN of COMMITTEES (Lord Aberdare): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That a Select Committee of seven Lords be appointed to join with a Committee appointed by the Commons to consider—

(1) Every instrument which is laid before each House of Parliament and upon which proceedings may be or might have been taken in either House of Parliament, in pursuance of an Act of Parliament; being

(a) a statutory instrument, or a draft of a statutory instrument;

(b) a scheme, or an amendment of a scheme, or draft thereof, requiring approval by statutory instrument;

(c) any other instrument (whether or not in draft), where the proceedings in pursuance of an Act of Parliament are proceedings by way of an affirmative resolution; or

(d) an order subject to special parliamentary procedure;

(2) Every general statutory instrument not within the foregoing classes, and not required to be laid before or to be subject to proceedings in the Commons only, but not including Measures under the Church of England Assembly (Powers) Act 1919 and instruments made under such Measures:

with a view to determining whether the special attention of the House should be drawn to it on any of the following grounds—

(i) that it imposes a charge on the public revenues or contains provisions requiring payments to be made to the Exchequer or any Government Department or to any local or public authority in consideration of any licence or consent or of any services to be rendered, or prescribes the amount of any such charge or payments;

(ii) that it is made in pursuance of any enactment containing specific provisions excluding it from challenge in the courts, either at all times or after the expiration of a specific period;

(iii) that it purports to have retrospective effect where the parent Statute confers no express authority so to provide;

424

(iv) that there appears to have been unjustifiable delay in the publication or in the laying of it before Parliament;

(v) that there appears to have been unjustifiable delay in sending a notification under the proviso to subsection (1) of section 4 of the Statutory Instruments Act 1946, where an Instrument has come into operation before it has been laid before Parliament;

(vi) that there appears to be a doubt whether it is intra vires or that it appears to make some unusual or unexpected use of the powers conferred by the Statute under which it is made;

(vii) that for any special reason its form or purport call for elucidation;

(viii) that its drafting appears to be defective; or

on any other ground which does not impinge on its merits or on the policy behind it; and to report their decision with the reasons thereof in any particular case:—
That the Lords following, as proposed by the Committee of Selection, be named of the Committee:

Ampthill, L.

Atholl, D.

Auckland, L.

Darling of Hillsborough, L.

Peddie, L.

Vickers, B.

Wallace of Coslany, L.

That two be the quorum of the Committee.
That the Committee have power to agree with the Committee appointed by the Commons in the appointment of a Chairman.
That the Committee have power to appoint one or more Sub-Committees severally to join with any Sub-Committee or Sub-Committees appointed by the Committee appointed by the Commons; and to refer to such Sub-Committee or Sub-Committees any of the matters referred to the Committee.
That it be an instruction to the Committee that they do not consider any instrument which is directed by Act of Parliament to be laid before and to be

425
subject to proceedings in the Commons only; and that the Committee do not join with the Committee appointed by the Commons in considering any such instrument.
That it be a further instruction to the Committee that, before reporting that the special attention of the House be drawn to any instrument, the Committee do afford to any Government department concerned therewith an opportunity of furnishing orally or in writing to them or to any Sub-Committee of the Committee such explanations as the department think fit.
That the Joint Committee have leave to report from time to time.—(Lord Aberdare.)
On Question, Motion agreed to; and a Message ordered to be sent to the Commons to acquaint them therewith.

PRACTICE AND PROCEDURE
Lord ABERDARE: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That, as proposed in the First Report from the Committee of Selection, the Lords following be named of the Select Committee to consider the Practice and Procedure of the House and to make recommendations for the more effective performance of its functions:

Atholl, D.

Burton of Coventry, B.

Champion, L.

Crowther-Hunt, L.

Denham, L.

Fulton, L.

Hawke, L.

Home of the Hirsel, L.

Hood, V.

Kilbrandon, L.

Northfield, L.

O'Hagan, L.

Shackleton, L.

Shepherd, L. (Chairman)

Wade, L.

Windlesham, L.

That the Committee have leave to adjourn from place to place and to report from time to time;
426
That the Minutes of Evidence taken before the Committee from time to time be printed and, if the Committee think fit, be delivered out;
That the Committee have power to appoint Sub-Committees and to refer to such Sub-Committees any of the matters referred to the Committee;
That the Committee have power to co-opt any Lord for the purpose of serving on a Sub-Committee;
That the Committee, or any Sub-Committee appointed by them, have leave to confer and to meet concurrently with any Committee of the Commons on Procedure or any Sub-Committee of that Committee together with any such persons as that Committee or any Sub-Committee of that Committee may select to attend for the purpose of deliberating and examining witnesses, and have leave to agree with the Commons in the appointment of a Chairman for any such meeting;
That the Committee have power to appoint Specialist Advisers.
That the memoranda submitted to the Select Committee on Practice and Procedure in the last Session of Parliament be referred to the Committee.
That the Committee do meet at half-past Four o'clock on Wednesday next.—(Lord Aberdare.)
On Question, Motion agreed to.

FARM AMALGAMATIONS (VARIATION) SCHEME 1976
3.27 p.m.
Lord STRABOLGI: My Lords, I beg to move that the Farm Amalgamations (Variation) Scheme 1976, a draft of which was laid before this House on 2nd November 1976, be approved. I suggest that it would be convenient to discuss this scheme with the Farm Structure (Payments to Outgoers) Scheme 1976, since they go together.
As noble Lords will be aware, there has been a continuing trend since the end of the war for farms in the United Kingdom to increase in size, and this has had the

427
effect of increasing the productivity of the industry. The policy followed by successive Governments has been to encourage productivity and efficiency by gearing capital aids to viable farms. As part of this policy, the Farm Structure Schemes were introduced in 1967 to encourage small farmers either to take on more land or to release their land to form, or expand existing, commercial farms, which are defined for the purpose of the schemes as farms providing work for at least two men. Thus the schemes offered annuities or lump sums to farmers who left their land, and special grant for the amalgamating farmers to compensate them for their additional expenses.
Nevertheless, the response to these and succeeding schemes was disappointing. Our entry into the EEC in 1973 made it necessary to build the requirements of Directive 72/160 (concerning encouragement to cease farming) into the present schemes which, as noble Lords may recall, were introduced in September 1973. The Directive contained a number of features which did not suit United Kingdom conditions, but these cannot be held responsible for the poor take-up of the schemes, which covered a wider range of amalgamations than that prescribed by the Directive.
The lack of success of the 1973 schemes led us to carry out in 1974 and 1975 a detailed and comprehensive review to evaluate the contribution that all the schemes had made to United Kingdom farm structure and thus enable us to review our policy. The review found that the impact of the schemes had been minimal. For example, in 1967 there were some 150,000 "uncommercial" holdings (that is, employing on a full-time basis fewer than two persons) of which some 96,000 were run as full-time farms. The schemes were primarily directed at these, but in fact were concerned in only some 6,000 amalgamations between 1967 and 1975, notwithstanding that the number of "uncommercial" holdings had fallen by some 30,000 over this period and the total number of farms by some 60,000. The survey clearly demonstrated that amalgamations were going ahead irrespective of the schemes and this suggested that in many cases they were benefiting farmers who were intending to leave farming in any event. The economic
428
gains resulting from scheme amalgamations were not large and were associated with broadly equivalent Exchequer cost.
These findings caused us to conclude earlier this year that the schemes were not worth continuing. However, the EEC Directive requires us to provide a scheme for outgoers and pending the review of the Directive, which is now getting under way, it was decided at that time to defer a final decision until the future character of the Directive had been settled. This decision was, however, overtaken by the development of the economic situation, which, as noble Lords are aware, made it necessary for the Government to announce cuts in public expenditure in July. Part of the agricultural share in these savings is to come from the changes in the schemes which are made by the Instruments now before your Lordships' House, whose effect is to limit the schemes, by and large, to what is needed to satisfy EEC requirements. By doing this we hope to effect a saving during the next five years of not less than £2½ million. This, together with the consequential staff savings of some 20 man-years, is, I suggest, a worthwhile part of the total reduction of £25 million in respect of agriculture announced in July.
With your Lordships' permission, I will briefly outline the changes we propose. The Farm Amalgamations (Variation) Scheme 1976 brings to an end the present Amalgamation Scheme. This type of aid is not required under the Directive, and we are in fact the only country in the Community to operate such a scheme. As to the Farm Structure (Payments to Outgoers) Scheme 1976, this follows the general pattern of the 1973 scheme. But, whereas the current scheme offers annuities or equivalent lump sums to full-time farmers of any age who release their land for an approved amalgamation, the scheme now proposed restricts this provision to those in the age band of 55 to 65 specified in the Directive. In addition, the land must be released, as provided in the Directive, either to a farmer undertaking a development plan, or for afforestation, or, in certain prescribed circumstances, for public use.
The grant rates remain unchanged, and approved outgoers will continue to retain the option, which currently applies to this age category, of taking either the

429
annuity or the lump sum. The existing lower rate lump sum will continue to be paid to "part-time" farmers who release their land for the recognised purposes, and also to all approved outgoers who fall outside the age band. Noble Lords will wish to know that we have retained one of our existing provisions which is not specifically required by the Directive. This is the payment of half the annuity to the spouse of a deceased annuitant, subject, however, to the age provisions of the new scheme.
My Lords, as I indicated during our debate which, your Lordships recall, took place in the early hours of 6th October, on the EEC Commission's Report on the Structure Directives, we have doubts, which are shared by some of our Community partners, about the value of Directive 160. We hope that, following the review of the Directive, we shall be free to abolish these schemes. We believe that experience in this country has proved that the best way to aid small farmers to increase their productivity and income lies in providing investment aids of the kind already available under the Farm and Horticulture Development Scheme and the Farm Capital Grant Scheme. Noble Lords will be aware that last June we extended aid under these schemes, and further orders have been laid to extend the schemes still further; these orders will be coming before your Lordships shortly. These are the two schemes from which many farmers continue to benefit, thus assisting them to increase their productivity. The savings which will result from the changes we are proposing will make a contribution from agriculture to public expenditure savings. The agricultural industry has acknowledged the reasons for making these changes, and I commend the Instruments implementing them to your Lordships' House. I beg to move.
Moved, That the draft Farm Amalgamations (Variation) Scheme 1976, laid before the House on 2nd November, be approved.—(Lord Strabolgi.)
3.37 p.m.
Earl FERRERS: My Lords, we are extremely grateful to the noble Lord, Lord Strabolgi, for having introduced these two orders and explaining what they mean. I thought that I detected a
430
certain lack of enthusiasm in the noble Lord for these two orders, and this in a way is slightly surprising because I think in the past they have been of very great service to small farmers. They both refer to the incentives which the Government gave, and in my view quite rightly gave, before we joined the EEC, way back in 1967, to small farmers who were prepared to amalgamate their holdings. One of the schemes was to give a lump sum or an annuity to a farmer who gave up his farm for amalgamation purposes. The other, the Farm Amalgamation Scheme, provided grants for the farmer who had the vacated farm amalgamated to his. The noble Lord, Lord Strabolgi, pointed out that it is this scheme which is coming to an end. I could not help being a little amused by the title of the order, which is the Farm Amalgamations (Variation) Scheme, which infers a modest alteration in the existing scheme. It might have been more appropriate to have entitled it Farm Amalgamations (Coming to an End) Scheme, and then we should have known what it was about.
In my view, the Government are quite right to encourage the amalgamation of small unviable units in order to form larger, more viable units. That must be right for agriculture and it must be right for those involved in farming small unviable holdings. Everyone has, quite rightly, sympathy for the small farm and for the small farmer, but there is little virtue, and still less pleasure, in living and working in a unit which is unviable. It is not nice to find that the passage of years and the trend of economic life, over which individuals can exert little influence, have locked people not only into a business but into a way of life which has become unviable and from which they cannot escape. In so far as these schemes have been a help to cushion that, they have been worthy schemes. It may be that not so many people have availed themselves of these provisions as the Government would have liked or as they would have expected. But the fact that these provisions are there is a great help to those who have availed themselves of them and those who will avail themselves of them in the future. It is an indication of the Government's desire to see units become more viable.
My Lords, I could not help but contrast the Government's view today with that

431
which was expressed in the Agriculture (Miscellaneous Provisions) Act, which your Lordships will remember we passed in the last Session, because that gave hereditary rights of tenancy for what could be up to 100 years to all tenant farmers, including, of course, tenants of unviable holdings. Today the Government are saying in effect, "You are living in an unviable holding. Therefore you should be encouraged to leave it. "In the Agriculture (Miscellaneous Provisions) Act the Government were saying, "Even though you are living in an unviable holding you and your children, and your children's children, should be encouraged to stay on in it." It seems to me extraordinarily contradictory.
The definition of a commercial holding in these measures is one that can provide full-time work for two men. We sought in the Agriculture (Miscellaneous Provisions) Act to exclude the operation of the Act from farms incapable of providing full-time employment for one hand. Presumably, that is even more uneconomical than providing full-time employment for two men. But the noble Lord, Lord Melchett, said, "You cannot do that because you will be excluding 35,000 holdings from the operation of the Act". Presumably, if 35,000 holdings are covered by those which are incapable of providing full-time work for one man, there must be many more that are incapable of providing full-time employment for two men. I think that the noble Lord, Lord Strabolgi, said that there were 150,000 such holdings. That is a large number of holdings which could be affected by these orders.
I was a little surprised to hear that one of the reasons for doing away with the scheme is because market forces are operating. Of course when you get uneconomic units, whether they are in agriculture or elsewhere, market forces will operate, and these unviable units will come to an end and people will be hurt by that process. The object of these schemes was not only to accelerate the process but also to cushion the effect of the process. In so far as that has been curtailed I would be a little sorry.
There are few specific questions which I should like to ask the noble Lord. He said that there had been a disappointing
432
response to the schemes. I wonder whether he could say over a period of time how many people have taken advantage of the schemes, and how many amalgamations took place where people could have taken advantage of the schemes but did not. Am I right in believing that up until now an outgoer of any age could get either a lump sum or an annuity, but now these provisions will apply only to those aged between 55 and 65? I think that that is so, but I should be grateful if the noble Lord could say how many of those who have applied for the schemes in the past have been under the age of 55. That would at least give some indication of whether or not this is going to have a curtailing effect.
The noble Lord, Lord Strabolgi, said—and this I found a little difficult to understand, and I am sure it is my stupidity of comprehension—that the approved out-goers who fall outside the band will also get the lump sum, but not the annuity. I thought that the whole object of the scheme was to restrict the provisions to those within the age band of 55 to 65, and I do not see how or why those who fall outside it can be eligible for some of the benefits.
I wonder whether the noble Lord would also explain one thing, on the back of the order, where there is a note which explains what is going to happen. It says, in effect,
"…that Scheme shall be submitted to the appropriate Minister before"—
and then there is a blank—
"1976."
Presumably the date is to be affixed later. This means that no further applications will be accepted after that date for the approval of proposals for grant in respect of amalgamations under that scheme. I wonder why the date has not been put in. We do not know to what date the order refers. In view of the fact that there are only 29 possible dates that could be inserted, one wonders why the date 31st December has not been put in. It seems, somehow, a little sinisterly precise that the date has not been put in, because there might be some other date which is going to be included other than 31st December. If the noble Lord would be kind enough to explain that I should be very grateful.
3.45 p.m.
Lord MACKIE of BENSHIE: My Lords, I am sorry to have to restrain the noble Lord, Lord Davies of Leek, for yet a further period, but I have one or two comments to make on these two rather curious orders, one of which the Government are glad to see go and the other which they hope to see go quite soon. I congratulate them on the common sense of their attitude. It has been a very silly scheme, because anyone who wants to increase the size of his farm by buying a neighbouring farm, or by renting it, is willing to pay, and to pay a considerable increase in price for it because of the natural economics of the business of getting into a bigger farm and making it easier to work. The paying of many of the amalgamation grants has simply driven up the price of land, which is not a particularly desirable feature when you consider how expensive land is now, and how enormously difficult it is for a man to start a farm at any time.
The other comment I should like to make, very much in line with what the noble Earl, Lord Ferrers, was saying, is that it is not necessary that to be economic a farm provides work for two men. Everyone knows of small one-man farms throughout the country which are very economic, producing much more per acre, particularly in Wales, than large farms, and providing a living and a happy life for a man. I do not think that you should try to bribe people out of them. The prices should be fixed, but if a man is willing to work a small farm by himself and to take a smaller living for the satisfaction of so doing, then he is a valuable citizen and will carry on for a time.
Already such farmers are going out. As we are told, by the Government's rating there are 30,000 fewer small uneconomic farms, and only 6,000 taking advantage of this rather ludicrous grant. I think this also highlights the need for us to play very hard in the EEC over the Common Agricultural Policy. It cannot apply over the whole continent of Europe, and we must see that there is more room for national variation instead of having put on this country orders which we are forced to comply with but which are positively harmful to food production and to our economy. I think that really is all I wish to say. I was delighted to see
434
the Government's sensible attitude here. I am sorry that the noble Lord, Lord Peart, is not here, and that Adam Smith has quite a lot to do with it in that apparently economics put more people out of the uneconomic farms than did the amalgamation grant.
3.48 p.m.
Lord DAVIES of LEEK: My Lords, I was delighted to give way to the noble Lord who is an expert in this field, and it was only right and proper that I should have given way to the Front Bench on the other side. I was delighted to hear the tribute from the noble Lord, Lord Mackie, about the man on the small acreage, because this does not apply to the mountains, nor to the marginal regions of farming just the same as it applies to Cheshire or the Lincolnshire plains. After all is said and done, viability is not a fixed arithmetical or mathematical formula. What is viability? It is a way of life. One of the unheralded people who has contributed to solving the balance of payments problem is the wife of the farmer who has lived for years on marginal land on a small acreage, and who has been able to produce, with her help, food at home although there has been only one man on the land. That woman has contributed as much as, and often more than, some people sitting in an office to the balance of payments and to the life in Britain. Consequently we must watch this trap.
Noble Lords brought me into the Common Market kicking and screaming. I did not like it. But I know that the economy having gone to Brussels, and this problem many times being discussed with Mansholt and others, they look at the problem of farming from a different view altogether. They had millions of small farmers all over Europe who were much less practical farmers than ours. I use the expression "small farmers" though the farmer does not like to be described as a small farmer. I am speaking of the small acreage farm. I believe therefore that we must apply a national colour with common sense. I do not mean that we should be agressivly nationalistic but we should apply a national colour to a Common Agricultural Policy that accepts the common sense of the British farmer, be he Scottish, English or

435
Welsh, who has had generations of farming in the climate and conditions in which he lives. That should be a basic formula for reaching agreements on the Common Market.
I have one question. I do not want to delay the House because we have a lot of business, but there is one point that I do not like. There are two formulae which are coming in. We are told that this land is only to be used for lumping together if it is for farming, forestry and—and this is the béte noire of the statement—public use. A slick, powerful, old-fashioned county council looking for development land and small towns could mean that once again rich agricultural land will be taken up when millions of acres in Britain within the curtilage of big cities and towns are derelict. That land should be used up before we drive good, rich, small acreage agricultural land out of farming. I should therefore like to know what qualification is behind the phrase, "public use".
I could speak longer but I shall not because most of the practical points have been made by the capable speakers on the Front Benches of the Opposition both above and below the gangway. However, I could not let this pass by without a word from this side of the House and from somebody who comes from small acreage farming and also from a Welsh mining background.
Lord STRABOLGI: My Lords, I am very grateful for the general welcome that your Lordships have given to these orders and I shall do my best to answer the questions that have been raised. The noble Earl, Lord Ferrers, asked first why no date appeared on the order. This sometimes happens, as I am sure the noble Earl will remember from when he was a Minister. There is nothing sinister in it. It is merely a question of convenience because the schemes are to be brought in as quickly as possible and there was considerable pressure on the Parliamentary timetable so that it was not possible to fix a date. But, as soon as your Lordships approve the orders, which have already been approved by another place, and they have been signed by the Secretaries of State, at the final printing the earliest possible date will be inserted.
436
The noble Earl also asked me about the Agriculture (Miscellaneous Provisions) Act. Of course this was a measure that was designed to allow farms to pass from father to son. The question of viability was therefore not its main purpose. In any case, we hope that the capital grant schemes will aid unviable farms, as I said in my speech. These are the two schemes on which we rely.
The noble Earl also made a point about the number of people who would take advantage of the scheme and asked how many amalgamations took place in which people could have taken advantage of the scheme but did not. I can tell him that between October 1967 and August 1976 nearly 7,000 amalgamators and just over 5,000 outgoers benefited under the scheme. Some 3,000 to 4,000 amalgamations are estimated to take place each year, but it is not known how many of these might have been eligible under the scheme. It is known, however, that, when the schemes started in 1967, 150,000 holdings were potentially eligible, of which 96,000 were run as full-time farms. The impact of this scheme must therefore be judged by comparing the number of amalgamations affected with the potential number of farms.
The noble Earl also asked whether an outgoer of any age could obtain a lump sum or an annuity and whether these provisions were now to apply to only those between the ages of 55 and 65. Those aged under 55 receive the lump sum and those over 65 receive the annuity. Only those between 55 and 65 have the choice. In the proposed scheme where the grants are being paid only to those in that age bracket, the previous choice for the age group is being maintained. Approximately 20 per cent. of the outgoers in the past have been under the age of 55.
The noble Earl also asked whether part-time farmers would be eligible only for the lump sum and whether, as was said in the other place on 17th November, the existing lump sum to outgoers was being paid to those who fell outside the age band. Under the existing scheme, part-time farmers are eligible only for the lower rate lump sum—£10 an acre up to £1,000. This is retained under the new scheme but any outgoer under 55 and over 65 who is otherwise eligible under the scheme will also be entitled to the same

437
grant. This was what the Minister was referring to in his statement.
I felt that the noble Lord, Lord Mackie of Benshie, made a very valid point in pointing out that a small farm can still be viable and in saying that just because it is small it is not necessarily uneconomic. I fully agree and I should like to thank the noble Lord for this welcome that he gave to these orders. While large farms make a major contribution to production, efficient farm structure is not dependent on large farms, as the noble Lord rightly said. The health of agriculture depends on their being a sufficiency of farms to provide for those wishing to enter the industry—namely, the young—and those without large capital resources who wish to farm on their own account.
United Kingdom policy therefore emphasises the creation of viable farms so as to secure the maximum production possible while affording the farmer and his family a reasonable livelihood that is commensurate with that enjoyed by their counterparts in other industries. It is also to continue to provide for both owner occupation and tenancy of farms. My noble friend Lord Davies of Leek also took part in the debate in his usual eloquent way, and I am very glad that he did. He asked about public use. These schemes are not used where the Land Compensation Acts apply, which is in most cases and no schemes have yet been approved for public use, nor is it likely that any will be. I hope that that has answered the various questions put to me by noble Lords.
On Question, Motion agreed to.

FARM STRUCTURE (PAYMENTS TO OUTGOERS) SCHEME 1976
Lord STRABOLGI Lord STRABOLGI rose to move, That the draft Farm Structure (Payments to Outgoers) Scheme 1976, laid before the House on 2nd November, be approved. The noble Lord said: My Lords, I have already explained this order and I beg formally to move it.
Moved, That the Farm Stucture (Payments to Outgoers) Scheme 1976, be approved.—(Lord Strabolgi.)
On Question, Motion agreed to.

EUROPEAN EXPORT BANK: 47TH EEC REPORT
3.59 p.m.
Lord COBBOLD Lord COBBOLD rose to move, That this House takes note of the Forty-seventh Report of the European Communities Committee of last Session on the Setting up of a European Export Bank (S/349/76). The noble Lord said: My Lords, your Committee was greatly assisted by the evidence taken in writing and orally from representatives of HM Treasury, the Bank of England, the Export Credits Guarantee Department, the British Bankers' Association, the CBI and chambers of commerce.
Though in some respects witnesses expressed differing views, the principal conclusions of your Committee reflect, I think, the bulk of the evidence which they received. In a very broad way, I would sum up the main feelings of your Committee as follows. The objective of this proposal is to provide a solution to two separate but interacting problems. The first problem is the need to harmonise the practice of the various national export credit institutions in the various countries of the Community. Harmonisation is clearly desirable, and we were informed that some progress is being made, though for a number of reasons it is proving a regrettably slow process. The majority of witnesses found it difficult to see that the addition of another layer by creation of an EEB would make an effective contribution on this point of harmonisation. Your Committee agreed that if harmonisation were the only objective, it would not seem worth while to set up a whole new machinery to expedite a process which could, and should, be achieved more simply in the normal ways of discussion and co-operation. In any event it was felt that if an EEB were set up, it could not in practice for long be limited solely to providing export credit insurance, and it would inevitably be extended to deal with the provision and/or finding of finance.
The second problem, where the real objective of the proposal lies, is the gap which appears to exist in machinery for financing very large multi-national contracts involving contractors and their bankers in several Community countries. The real extent of this gap is in dispute,

439
but it seems likely that there have been, and may increasingly be, instances where very large contracts outside the Community are lost by the Community (in some cases with this country as the main sufferer) because the Community as a whole cannot match the speed and concentration in provision of credit insurance and finance which can be offered by the United States and Japan. Your Committee reached a clear conclusion that this is the hub of the matter. Unless it can be shown both that there is a real gap which cannot adequately be filled by existing agencies, and that an EEB could be organised on a sufficient scale to fill that gap and to provide effective competition with EXIM and MITI (the American and Japanese institions respectively), it would be difficult to justify setting up a new, expensive and perhaps cumbersome administration.
It became clear during our hearings that, while the proposal certainly deserves study, a decision could not sensibly be reached either as to the size of the gap or as to whether the proposed EEB would be the best means of filling it until a great deal more work has been done both on the principles and on the details of the proposal. We therefore recommended that as a matter of urgency working groups with real experience from the governmental, export credit insurance, and banking and industrial sides should be set up. We should see advantage in setting up working parties both in the Community and in London, where there is perhaps longer and more concentrated experience. Your Lordships will have noted that the Select Committee in another place have reached somewhat similar general conclusions. In the House of Commons Report published on 28th July the Committee mentioned that the evidence given to your Lordships' Committee was valuable to them in reaching their conclusions.
To digress a little from the report, I should like to say that this seems to me an example of one way in which subcommittees in the two Houses looking at the same subject can usefully co-operate with a saving of time to committee Members, to Parliamentary staff, and to witnesses. As a fairly recent recruit to the Committee, I have felt this co-operation to be most desirable whenever
440
it is convenient to both Houses. I hope that the concurrent work on the European Regional Development Fund, which we are starting next week and to which the noble Lord the Leader of the House referred in the debate last Thursday, will prove a further satisfactory instance of this type of co-operation.
I turn to a few points of more detail. We found it generally agreed that the insurance and financial activities of an EEB should in any case be limited to dealing with multi-national contracts and then only when really large figures were involved. The practical complications would be many, and they are spelt out in some detail in your Committee's Report. I may perhaps call your Lordships' attention to a few of the outstanding ones. First, there are the relations between a new EEB and the existing machinery, both the national export credit institutions and the banking and financial markets in the various countries. There are obvious difficulties in arranging finance part provided by EEB, which would be a nonprofit making institution, and part by the private sector in various countries where profit evidently has to be considered and where questions of cost and risk would often be dissimilar as between different countries. It was suggested by some witnesses that the banks in the various EEC countries, who are in close regular touch, might even find it more difficult rather than easier to reach agreement between themselves and their customers if there were a new institution intervening.
Again it is by no means clear that it would be desirable or practical for an EEB to rely largely on reinsurance arrangements with the various national export credit agencies which have differing methods and are naturally competitive with each other. Finally, there are all the problems of where and how the EEB would raise its finance—to be effective the figures might be very high indeed—complicated by questions of exchange risk, whether and to whom concessionary finance should be envisaged, and where the cost should fall. Among many other matters to be studied would be the possibilities of co-operation, or the line of demarcation, between an EEB and the existing European Investment Bank, and the extent to to which an EEB should be independent of, or under the direct control of, the Commission.
I have sought to suggest that the proposal is one which deserves serious study and which might, after full investigation, prove to be a way of helping to meet United States and Japanese competition on major multi-national contracts. But I have wished also to emphasise your Committee's view that the urgent need is for a very detailed study by competent working groups before a decision is reached. It is of interest to note that an allocation of funds for promoting an EEB, which was made in the Commission's preliminary draft budget for 1977, has been deleted in the more recent draft budget as no Council decision on this item has yet been taken.
Finally, my Lords, if an EEB is eventually set up I suggest, not only for selfish nationalist reasons, that it would have the best chance of getting off the ground if it were located in London, where there is more experience than in other European centres both of the working of export credit insurance and of co-operation with the private sector, both domestic and international. My Lords, I beg to move.
Moved, That this House takes note of the Forty-seventh Report of the European Communities Committee of last Session on the Setting up of a European Export Bank (S/349/76).—(Lord Cobbold.)
4.9 p.m.
Baroness ELLES: My Lords, we are grateful to the noble Lord, Lord Cobbold, for having introduced so helpfully the 47th Report of the Select Committee on European Community matters. I should also like to express, as I always do with real gratitude, our thanks to my noble friend Lady Tweedsmuir of Belhelvie and her Committee for having once again produced an admirable and lucid report. The report very clearly explains the Commission's proposal for the setting up of an EEB and some of the difficulties which would be consequential on the setting up of such a bank. Indeed, we have a typical example of a solution to a problem causing, in its turn, new problems without necessarily finding solutions.
It is evident from all the documentation from the major interested bodies that in order to facilitate and improve exports from multinational consortia to third countries there are two main elements
442
which are lacking at present: a co-ordinating body to provide the necessary credit insurance and export finance, and/or a common currency and a common insurance and reinsurance system. What is not clear at present is how many opportunities have been missed because of the lack of these two elements. In fact, so far as I can see it is impossible to estimate how large is the gap and how much, if the gap was filled, would be provided. This is something which must, I would imagine, remain an imponderable, because not only does one know of instances where perhaps something has failed to materialise in the long run, but one can also imagine many suppliers not even embarking on exporting in combination with other EEC companies in view of the difficulties due to lack of credit, insurance and so on. Certainly these difficulties will have prevented suppliers from embarking on certain export activities.
So the proposal to set up an EEB to meet the first need would appear logical and sensible—subject, of course, to the powers, terms and conditions under which it would operate—but the problems created by different currencies, fluctuating exchange rates, different national insurance legislation and procedures would not, of course, vanish. Indeed, there will be a great variety of problems in co-ordinating contracts, which may or may not take account of inflation, the rates of which of course vary from Member State to Member State. But what I believe the EEB would be able to do is to concentrate attention on those areas where there are problems and difficulties, and work out solutions in the light of practical experience; and no doubt proposals from an EEB could contribute to further Directives from the Commission, leading to more efficient working, and ensure comparable conditions throughout the Member States. One obvious example is the proposed measure to abolish progressively the regulations in the United Kingdom, France and Italy on escalation guarantees. I would imagine that is the kind of matter which could come out of the working of an EEB.
In this connection, it is clear, of course, that the relationship between the EEB and the Commission will be of considerable importance. The 47th Report quite rightly draws attention to this relationship,

443
and to the extent and form of the Commission's intervention. It would certainly be hoped, if an EEB is set up, that it would have a reasonable degree of independence, certainly so far as day-to-day affairs are concerned, rather than have to operate under rigid controls. The funding of the operation would be provided by a comparatively small sum, as I understand it, from the EEC budget. I understand that the original amount envisaged was something like 100 MUAs but that it has now been written down to a token amount as the decision has not yet been taken by the Council. The rest of the finance needed, I understand, would be raised in national or international markets. In this connection I wondered—and perhaps the noble Lord, Lord Cobbold, will be able to say something about this when he winds up—whether any ceiling would be envisaged for the size of borrowing that the EEB might undertake. I understand that it would be used for major efforts and projects outside the Community, but would there be an upper ceiling beyond which it would not be allowed to borrow?
The other point I should like to raise is in relation to the role of the member of the Board who represents the Commission. The European Parliament Development Committee, in its report of the 5th May, has correctly pointed out that there may be a conflict between the Community commercial policy and the policy of the European Community towards developing countries. Now here the EEB might again act as a catalyst to produce a more coherent and balanced overall policy whereby development policies and common commercial policies are brought closer together, and in this connection undoubtedly use would be made of the Inter-Service Group for Financial Institutions, which I understand has recently been set up.
Since one of the main purposes of the setting up of the EEB would be to encourage competition for the benefit of European Community producers, we should certainly take a closer look at the US EXIM and MITI, as recommended in the Committee's Report, and consider whether the powers as set out in the draft regulation of the Council are adequate or sufficient for an EEB, if it is to be set up, to carry out its proper task. The Economic and Social Committee raised
444
the issue concerning the use of a projected EEB by one or more suppliers from a single European Community country; and I think the noble Lord, Lord Cobbold, has answered that one in his introduction. I understand that the conclusion of the noble Lord's Committee was that only multinational consortia should use the EEB, and it should not be available to single suppliers or to multinational corporations. I wonder whether the noble Lord would kindly confirm that when he winds up, because this has obviously been a matter of concern to some bodies.
There is another important question to be asked if an EEB is to be set up, and that is in relation to the timing. If we are really losing out on exports to third countries, as it would appear—and the EEB is the only proposal which seems to provide any answer to filling this gap—how soon is it envisaged that such an institution could be set up? Would it be a matter of a year or two years, or could it be set up comparatively simply? I would certainly support the noble Lord in his proposal that London should be a centre of such a bank if it were to be set up. There is obviously no better place than the City for the EEB; it would be, at last, a main institution of the Community which would be in the United Kingdom, and we would certainly welcome that.
Rightly, of course, there is a reluctance to create yet another body, with all the consequent expense and tendency to bureaucracy, but it must be said that although not all the bodies giving evidence were in favour of the EEB, nobody, so far as I have been able to see, has provided any satisfactory or convincing alternative. It is also clear that if export opportunities are not to be lost—and this, of course, has great bearing, not only on the employment position in this country but also that in the other Member States—the EEB is so far the only constructive proposal. We cannot afford to miss out on opportunities or on any initiative which may stimulate commercial activities which are at present being lost. I think there is one other advantage in the setting up of an EEB. Whereas it could be a consortium of existing merchant banks in all the nine Member States—and it is clear that bankers feel that they could perfectly well do this themselves, and probably very much better than civil servants in an

445
EEB—such a consortium would not be a supranational legal body, as the EEB would in fact become. Certainly the EEB would therefore be protected under Community Law; and suppliers within the EEC and purchasers from outside the EEC would have their rights better protected under Community Law in being able to deal with one supranational institution.
It is obviously clear that the EEB may not be the sole answer, but it could act as an encouragement to concerted action on export credit insurance and the necessity, eventually, for some form of common currency, particularly for international financial operations. The very fact that the EEB would have to cope with the problems arising out of existing difficulties would, hopefully, eventually lead to the harmonisation of credit insurance, and would ensure the export financing arrangements so much needed for our exporting companies. I therefore welcome the report and particularly welcome the proposals and recommendation that Working Groups should be set up. We certainly shall look forward to hearing the results of the recommendation of such Working Groups and hope that they move forward as soon as possible to the necessary solution to this problem.
4.20 p.m.
Lord TANLAW: My Lords, from these Benches, we, too, welcome the general concept and the conclusions outlined in the 47th Report from the Select Committee on the European Communities and go along so far with the conclusions and recommendations of the noble Lord, Lord Cobbold. I think that we also accept in general the British Banking Association evidence given to the Committee and note their reservations. These were remarked upon by the noble Lord, Lord Cobbold, and by other members of the Committee. To begin, I should like to question the noble Lord who has immense experience, far greater than mine, in this. Is it right at this stage to describe the European Export Bank as a bank? I wonder whether it is not a little premature. Is it not really an agency similar to the ECGD? Their terms of reference appear on page 25 of the Select Committee Report:
"shall 'facilitate the export of goods and services by undertakings located in two or more Member
446
States to third countries, where such exports constitute operations of common European interest '."
No mention is made of financing under these terms of reference, although this was touched upon in the Select Committee. But at this stage, this theoretical stage perhaps, the EEB surely will begin just by issuing paper that is guaranteed by Member countries in order to provide insurance for multi-Member exports on large scale foreign contracts. All of this has to be achieved, as the noble Baroness, Lady Elles, has pointed out, on a relatively small base of borrowed capital. I do not think that this comes under the heading of a bank either under the Trade Descriptions Act or within the dictionary definition. I should like to think that the concept is exactly and precisely the same as that which promoted the formation of ECGD which is not a bank. Therefore, it may be misleading now to fix in our minds that the EEB is a bank. This is a personal view and I have no doubt that the noble Lord, Lord Cobbold, will put me right on this or confirm it.
The most effective role that an agency such as EEB can play is, as has been said and is said again in the Select Committee report, to harmonise the rules and terms of export credit insurance among the Member countries of the EEC so that the Members can compete with similar terms offered to exporters working with the backing of EXIM and MITI agencies of the USA and Japan. This, I think, is the reason why we all welcome it in all parts of the House and even in the banking industry itself. British industry mainly concerned with export of large contract size will welcome this too.
But if the EEB could manage to harmonise interest rates on short-term, medium-term and long-term contracts entered into by Member countries this, I think, would be a major advance. I think at this time, as was said in another debate, British exporting companies are being severely hampered by excessive interest rates in this country. High interest rates have virtually cancelled out any export advantage gained by the fall in sterling. I put this out as a thought as to whether something could be done on a Community basis, to harmonise interest rates on a Community basis

447
without the bother of going into a bank, with all the problems that have been listed in the Select Committee. I think this is of primary importance, much more so than the terms of export credit insurance. I do not want to deviate from the terms of reference of this debate, but it strikes to me that there is some urgent need for the harmonisation of interest rates on large-scale European contracts. I think that this could be done without necessarily going through all the paraphernalia of setting up the EEB or similar organisations.
Single-currency financing was mentioned as an objective. This is admirable, but it is still miles away. I think that we can virtually ignore this aspect for the time being until we have got nearer to harmonisation or, at least, nearer than we are at the moment. If it is accepted (and I believe it is) that the EEB is intended to be a Common Market version of ECGD it may be worth while looking more closely at some of the procedures presently adopted by ECGD to see whether they can be applied or have relevance to what we are discussing this afternoon. Before doing so, it may be worth asking the noble Lord, Lord Cobbold, how the EEB intends to define "foreign goods". I believe—and I stand to be corrected—that the ECGD would define Common Market manufactures of Common Market products as foreign goods under their terms of reference. Would the EEB, therefore, define foreign goods as products from any other Member country not involved in the major contract under discussion for insurance finance?
For example, if Germany and the United Kingdom were exporting nations, would any French goods quoted in the contract be defined by the EEB as foreign goods, or not? I would imagine that in these circumstances, unlike the ECGD, these products would not be considered as foreign because they are Community-manufactured products and, for the purposes of export credit insurance, they would not be penalised for incorporating other Member countries' products other than those asking for the finance. There may be another general problem which needs early definition, and that is: what is the definition of a "national company"? For instance, under ECGD, a United Kingdom company is defined—and I
448
stand again to be corrected—as any company which conducts business in this country. There are a number of non-EEC companies which are subsidiaries of, let us say, Japanese or American holding companies operating in this country. They are considered by ECGD as national companies. The question I am asking is this. Will subsidiaries of, let us say, Japanese and American companies operating in the Community (large subsidiaries, some of them) be classified as British, German or French companies when it comes to credit insurance when their mother companies, their holding companies, may be the very competitors for the contract for which the credit insurance has been asked?
I hope I have made myself clear. These are definitions of terms; but I raise this matter as I can see stumbling blocks here. I can see endless committees on the definition of "national"; many regulations defining subsidiaries of non-EEC companies operating who, like any other commercial organisation, also want credit insurance on good terms. Personally, I think we should "scrub" the details here. These companies, whether subsidiaries of Japanese, American or other foreign companies operating in this country. employ large numbers of citizens of the Community. I think that they should be judged on this basis alone: that the ECGD definition or terms of reference of a national company, if it is good enough for this country, should be good enough for the EEB if and when it operates in Europe. I also believe that it comes under the terms of reference that I quoted earlier which, I would remind your Lordships, spoke of:
"such exports constitute operations of common European interest".
I consider employment to be on immense and relevant common European interest at this stage.
Having another look at the ECGD Act. I foresee major problems arising under Section 2 which covers the political aspects of exports. We certainly concentrate in this House on the commercial aspects—and what a triumph it has been to support them! Section 2 covers the political aspects which no doubt noble Lords in banking business know. ECGD cover may be denied or penalised if a British company wishes cover to export goods to, say, Chile or South Africa. In certain other

449
Common Market countries these political restrictions—what I call Section 2 restrictions—may not apply.
Therefore what are we going to do when we have a multinational contract of the size that the noble Lord, Lord Cobbold, talked about, but the consumer of this contract is accepted politically in one of the Member countries but not in another? If we are not careful when we set up an EEB, or when we discuss it in detail, it will not be on terms of credit insurance, interest or balancing the different currencies, it will be for tiresome political reasons that the project falls apart. Some countries will say, "We want to exclude so and so", and another member may want to exclude some other country. I like to think that the concept of the EEB must be bigger than this. I implore those who are involved in the Working Parties not to get involved in, or bogged down on, the political problems of exporting to whom and why and when, because if the Working Parties get diverted on political matters in this way, I the germ of a marvellous idea which can bring benefit to the entire Community will fall away. I do not think that EXIM or MITI, the United States and Japanese export agencies, are nearly so fussy. If we are going to compete with them, we should start looking at the same terms as they use.
I should like to emphasise the warnings put forward by the British Bankers' Association and by other speakers this afternoon. There is the further danger of whether this will just be another level of bureaucracy. Will the EEB restrict, delay or further complicate existing arrangements that have to be made for a multinational export contract? Instead of improving the Common Market Members' position in the export world, if this goes wrong the EEB might make them less competitive than they are today. What I am saying is that it will merely slow down the bits of paper which have to be signed or countersigned. If we are not careful, the Member countries could end up with their EEB giving less competition than today. These remarks apply also to the relationship that the Commission establishes with the EEB and the areas in which it has the powers to issue binding Directives on the functions of the EEB. This is another point which should be clarified in detail before further
450
work is pursued on the general concept as outlined in the original proposals for the setting up of the European Export Bank.
As the EEB seems to be modelled on our own Export Credits Guarantee Department, I should like to make the plea with other speakers that the location of such an agency must be in the City of London. But wherever the EEB is located, a bank is, as the saying goes, only as good as its bankers. The same must apply to the EEB, whatever its functions or objectives may be in the world of export finance.
4.35 p.m.
Lord MAIS: My Lords, as the chairman of the Sub-Committee which studied the problem before us today, may I first thank the noble Lord, Lord Cobbold, for introducing this report and for all the work he and other Members of the Sub-Committee and staff have done in connection with the taking of evidence and the preparation of the report. There is so much ground one could cover—and possibly should cover—but time will not permit and I must therefore limit what I have to say to a few points which I felt were of particular importance.
I gained the impression during the taking of evidence from various bodies that there appears to be some doubt as to the role which a European Export Bank might be expected to play or should play. Whether its principal role would be to provide funds to finance multinational trade generally, or to provide additional guarantees such as are now covered in this country by the ECGD.
The principal need for an EEB is brought about by the present lack of harmonisation of existing systems provided by the individual national export credit authorities. If a European Export Bank could improve upon the facilities which are now available or bridge the gap until harmonisation can be achieved, clearly there would be considerable merit in the formation of such a bank.
But if the proposals to set up a European Export Bank do go ahead, I would say that the general consensus of opinion was that it should be an independent body and not wholly dependent on back to back arrangements with the individual national export credit authorities.

451
However, if it be the intention that it should act as a co-ordinator, it would—as was said by the noble Lord, Lord Tanlaw—simply provide an additional level of bureaucracy without in any way making a significant additional contribution to what is currently already available. Therefore, my Lords, we ought to consider or attempt to identify what need exists for a new insurance and financing mechanism within the Community which is not already available from the established arrangements in the individual Member States. I think all of us—or certainly most of us—would accept that there is room for improvement in the existing facilities when it comes to meeting the special requirements of multinational supply contracts.
Perhaps we might consider the principal reasons why this is so. First, because of the difficulties which are met by main contractors or consortium members in accepting responsibility for contract performance by sub-contractors or fellow consortia members. Secondly, the possibility of differences in credit terms and extent of cover acceptable to credit insurance bodies in the Member States participating in a particular contract or major order. Thirdly, the present unavoidable necessity of establishing separate financial arrangements from each country of major supply to the third country who is in the position of borrower. Fourthly, arising from the three points to which I have just referred, the protracted negotiating period prior to signing of the supply contract and the final settlement of financial arrangements or agreements.
I have had some experience of consortia operating overseas. It is the time factor involved in finalising financial facilities and guarantees which sometimes results in losing the contract. As the noble Lord, Lord Cobbold, mentioned in his address, we are definitely at a disadvantage when competing, against the United States or Japan. I name them because I think they are the particular ones who give trouble, but that does not alter the fact that we are frequently at a disadvantage with other countries. On the other hand, one must not, in my view, overlook—it would be quite unfair to do so—the very helpful and efficient service we have received and still receive from our own Export Credits Guarantee Department.
452
But one must question, when operating on a multinational basis, whether the needs of industry are adequately covered at the moment. In support of that, the British Bankers' Association said in giving evidence that they considered the only need not adequately covered by national agreements, so far as the United Kingdom was concerned, was in the area of multinational contracts. They went on to say that, apart from this single area which, by its nature, could not be resolved by individual national arrangements, they considered that the existing forms of support by the ECGD and the United Kingdom financial institutions were adequate. They did not envisage any requirement for the future development and participation of a European Export Bank in other forms of export financing and export business. I think most of us would probably agree with that contention.
The impression I have gained from the various witnesses who appeared before the Sub-Committee, and from my own observations, is that, generally speaking, it is felt, certainly as far as the United Kingdom is concerned, that our financial institutions can provide the necessary back-up finance for jumbo projects or major national or multinational undertakings. It could be that the build-up towards a European Export Bank followed a failure of credit insurers to harmonise their policy and to allow the normal mechanism in each country to work in a relatively simple form when more than one country was involved, and that the move towards a European Export Bank was primarily aimed at trying to move ahead in order to force the credit insurers and the credit institutions to follow a common line. That may or may not be so; it is a matter for conjecture.
I do not want for one moment to give the impression that I am in any way opposed to the establishment of a European Export Bank. I believe we should lend our support to a more detailed investigation of the problem and to try to isolate exactly what points are not taken care of by these agreements at a national level. The noble Lord, Lord Cobbold, referred to a good location for a European Export Bank and I do not believe any of your Lordships would imagine that I, for one, would disagree with his suggestion that the obvious place for it is the City of London.

453
As I see it, the problem arises not so much over the establishing of such an institution but over what its terms of reference are to be. As far as the United Kingdom is concerned, I personally believe that the financing facilities are adequate in nine cases out of ten. It is insurance and guarantees which sometimes appear to present problems.
I should like to end by adding my appreciation to that already expressed to the organisations and institutions who gave evidence before your Lordships' Sub-Committee. Without exception, they sent the most senior of their directors and representatives. They had obviously taken enormous trouble in preparing their evidence, and I hope they gained as much satisfaction from presenting it to us as we obtained from listening to what they had to say.
Lastly, my Lords, if I have to depart before this interesting debate has ended, I would crave your Lordships' pardon. I hope it will not be necessary, but I have a very long-standing engagement at which I have to take the chair. Therefore, I hope your Lordships will understand if I am not able to stay until the end of the debate.
4.46 p.m.
Lord O'BRIEN of LOTHBURY: My Lords, I am grateful for the opportunity of speaking in this debate, which was so effectively opened by my noble friend Lord Cobbold. I was, like him, a central banker for many years, but for the past three years—in what doubtless the noble Lord, Lord Shinwell, would call my "middle age"—I have been President of the British Bankers' Association. That is an Association, as your Lordships may well know, of all the banks of consequence operating in the United Kingdom. There are over 300 of them—British and foreign—and it is indeed a formidable Association. In my capacity as President, it may be said that I am an example of a gamekeeper turned poacher. Certainly, like Mr. Jack Jones, if I may associate myself with that potent figure, I am now a spokesman on sectional interests. However, in what I have to say to your Lordships today, I shall try to draw on my past experience as well.
The proposal for a European Export Bank, as we all know, emanates from the
454
Commission in Brussels. I have already been concerned with these proposals as a member of the Council of the European Banking Federation, which unifies for Community purposes the nine separate national banking associations within the Community. The Federation maintains close relations with the Commission in Brussels on all subjects of concern to banks in the EEC, and by their advice and comment seeks to promote the harmonisation, rationalisation and control of banking within the Community in the most sensible and productive manner possible.
As I said, the proposal we are now discussing has already been considered by the banks. Not unnaturally, they started by viewing with some scepticism, not to say suspicion, what appeared to be grandiose proposals which, if implemented, would remove all, or at least part, of the financing of exports from the existing channels—that is to say, the banking system—or might simply add another corps of bureaucrats in a field where they are not necessary.
In the United Kingdom, and in many other countries today, the foundation of finance for exports is State-provided insurance of credit and transfer risks. Most exports, as we all know, are paid for in a matter of months and the financing of them, largely in bills of exchange, causes little problem. Longer-term credit covering larger contracts concerning, for example, the export of heavy engineering goods, has caused difficulties. The competition to secure such exports has led to ever longer-term credit being offered. The Berne Union has tried to keep this competition within bounds, but it remains an important, and not infrequently decisive, factor in securing large-scale contracts for export.
Over the years there have been many demands for an export bank in the United Kingdom, but less is heard of such demands now. As I see it, the reasons for that are fourfold. First, the Export Credits Guarantee Department, to which the noble Lord, Lord Mais, has referred, has continuously improved its services, so that now I believe it leaves little cause for complaint as to its cost, comprehensiveness or flexibility. Secondly, the banks, which means principally the clearing banks, have not shrunk from providing increasing amounts of longer-term credit,

455
which many big contracts now require. They have been helped in this by the refinancing facilities made available to them first by the Bank of England and, subsequently, by Her Majesty's Government. Her Majesty's Government have also helped the exporter by bearing some part of the burden of present high interest rates, which otherwise would frustrate many potential British exports.
I have described briefly what has happened in the United Kingdom, to show how the adaptation of existing machinery was sufficient to cope with our export credit problems. The question is: would this suffice in the EEC? Could the nine individual systems of export insurance and finance be effectively welded into one instrument able to serve the Community as well as the Ex-Im Bank serves the USA, and the comparable Japanese arrangements (MITI) serve them?
At the present stage in its development, the EEC is not, of course, fully comparable with the USA or Japan. Each of the nine countries competes with the others for exports, and this is likely to continue for many years yet. Even so, a harmonisation and improvement in export credit and guarantee arrangements, from which all could benefit, would strengthen the Community as a whole, and therefore be desirable. No doubt efforts to bring this about will continue, but progress so far has been disappointing. On the whole, however, the banks in Europe would favour persevering in these efforts, rather than setting up an entirely new institution, which they fear would want to operate quite independently of the banking system and without using bank finance. Not unnaturally, industrialists like the noble Lord, Lord Mais, hold somewhat different views. They tend to favour any scheme which would enable them to deal with one agency able to provide all the answers, so far as export finance and insurance were concerned.
I myself doubt whether it would be wise to be so ambitious, at least at the outset. I am sure we should continue to make the fullest possible use of the financial resources, expertise and close relations with exporters possessed by the banking system in this and other countries of the Community. The danger of a new institution being a fifth wheel to the coach is very real. All are agreed that
456
multinational contracts pose special problems. It would seem best to concentrate on them to begin with. If after further intensive study by the Commission, in company with acknowledged experts in this field, it is decided that the formation of a European Export Bank is likely to be a helpful innovation in dealing with this limited problem, I hope it will be established. Experience will show whether the idea was a good one, and help us to judge whether the activities of the Export Bank might usefully be extended. In the further preliminary studies which are undoubtedly necessary, I entirely agree that special attention must be given to the seven points listed in paragraph 16 of the Select Committee's thoughtful and most useful Report.
Consultation between the Commission and the banks is already going on. Officials of the Commission came to London in September, when they met some 50 representatives of British banks for talks on the subject. Two days ago, a group of experts of the European Banking Federation met in Brussels the External Economic Relations Committee of the European Parliament, which is responsible for preparing the Parliament's opinion on the Commission's proposals. I have had only a brief report of that meeting, but I gather that the representatives of the Parliament were inclined to feel that the establishment of a bank of this character at the present time would be premature. As your Lordships know, bankers have no dialectical skill so this must have been a spontaneous conclusion. Let me say that the banking fraternity, at any rate, is not idle, partly because it feels in some sense that its interests are being threatened. But I think that it will contribute to honest discussion of this proposal.
If, as I expect, something will eventually come of the Commission's proposals, we shall certainly press, as every other speaker so far has proposed, that this new bank should be set up in London. It can hardly be disputed that we have the most versatile and sophisticated financial centre in the Community, and that an Export Bank is therefore more likely to prosper in such a setting than elsewhere. Such considerations would seem to justify making an exception from the normal practice of establishing the Community's financial institutions in Luxembourg.

457
Perhaps I may end by making a more general comment about the EEC and its future, which I think has some relevance to the present possibly minor issue; and I speak as one wholly committed to the achievement of a united Europe. The barriers now standing in the way may sometimes seem insurmountable. Every subject bristles with difficulties. Effective political action is endlessly delayed. Most of the EEC countries have their hands full with their own economic problems. The over-ambitious hopes of only a few years ago now seem nonsense, as to some they were when first expressed. Even the committed may sometimes doubt whether the Community can have much of a future. We must not give way to such defeatist thoughts, but press on with patient and diligent work on all fronts—and it will have to be patient and diligent. We should not be dismayed even by repeated disappointments, but resolutely continue, realising that we are in for a long haul of which future generations will be the beneficiaries.
4.57 p.m.
Lord SELSDON: My Lords, I must first apologise to your Lordships because I may appear breathless and, secondly, because I could not attend the early part of this debate. But I have only just arrived from Paris, and I am not so good at running as I used to be in my earlier days. I speak today with some feeling on this subject and, while I have not been privileged to hear everything that noble Lords have said, I know that I shall share some of their views, although I may be slightly more practical. The needs are the first question. There is no doubt, in the current climate of our country, that exports and sales abroad are more critical than they have ever been. Therefore, any mechanism, however vague, however difficult to establish, which in some way contributes today towards increasing the United Kingdom's exports to third countries must be desirable. That to me is the prime function; not the arguments as to whether or not the vehicle created is perfect, but the arguments that something needs to be done, and it needs to be done much more desperately than noble Lords may believe.
I speak here as a banker, although the demands are not of the banking system but of the exporter. In a way, the financial system of the world is no longer
458
tailored to meet the needs of the exporter. This is perhaps because the shift in world trade, due to the increases in oil prices, and the development of Third World countries, happened relatively suddenly and coincided with a recession in industrialised nations. The banking system was not quite geared to having demands placed upon it to finance trade with impoverished countries or countries with a low credit rating. Perhaps it is significant to point out that approximately 40 per cent. Of EEC exports now go to Third World countries, as opposed to industrialised nations, and the rate of increase of these exports and of the export opportunities is very substantial.
Further, more and more of these exports are tending to be related to large projects or large groupings. It is not so much the individual export order but the large project which requires finance. The size of these projects is such that often no one country is willing to take the overall risk, although the financial systems of any industrialised nation or developed country are quite capable of handling the administration and the organisation of it. It is this move towards risk sharing, the co-ordination of finance or, a phrase now being used in Whitehall, crédit mixte, which is particularly important. Currently I believe that about 4 per cent. of British exports are now linked to major projects of one kind or another. The export opportunities are far greater than that, but are held up because people are unwilling or unable to provide the finance required or, more important, to take the sovereign risk or the country risk.
It was all this that was at the back of the mind of the people who proposed that there should be some form of European Export Bank. It may well be that it was when the entrepreneurs, companies or consultants found that the appropriate guarantees or financial sources were not available to a country that they started to approach the Commission on the basis that things could be done from there. Much of this led out of the development of the Lomé Convention and the willingness of the Community, under Lomé, to provide finance, not so much in the form of money but in the form of aid or technical co-operation, for the 46 ACP territories.
I do not like the idea of the creation of any new institution because new institutions take a long time to get off the ground.

459
As we have seen in the case of many of the proposed funds that there are around the world, they create suspicion and, above all, they do not have those initial informal links which often are so critical. It may not be appreciated by those who are not so closely involved that, when it comes to export credits, or know-how or expertise upon it, of all the countries in the world the United Kingdom is supreme. The ECGD was formed just after the First World War and without doubt commands a better reputation around the world than any other single agency for its fairness, integrity, speed of operation and willingness to see the point of view of the exporter rather than necessarily the point of view of Her Majesty's Treasury.
Anything that substitutes or replaces an established institution would, in my view, be wrong, but when the established institutions and the private banking sector find that there are certain areas in which they are unable to stray or unwilling to stray because of the size of the risks involved, some other animal or organisation which is prepared to take a risk-sharing role rather than a substituting role would be good. This is why I supported the principles behind it when the European Investment Bank was first proposed, but I do not necessarily support the establishment of a completely new institution.
Originally it was suggested that there should be 100 million units of account allocated to it, but what we were really after was some body which would share the sovereign risk and the guarantees—in other words, a guaranteeing organisation. Equally we knew that if there was a guaranteeing organisation, ultimately it would stray into the field of finance and that it might start to compete with other national organisations, or become a political vehicle, or be out on its own, creating more and more problems.
We discussed at length in Committee the need for this organisation to be linked in some way or another with the European Investment Bank rather than that it should stand completely independently on its own. However, when we look at the development of exports and at what has happened in the last six months rather than in the last 12 months, what I am
460
aware of is that as these jumbo projects, these larger-sized operations, have come into being, other sectors of the world, whom we never thought of as competitors before, have appeared—for instance, South Korea; Canada offering 50 year money at 1 per cent., in some cases; the Arab countries themselves; the developing countries themselves. Competition is very hot and competition on price is critical.
Our weakness has often been that the nations in Western Europe are themselves unwilling to provide the complete guarantee for a single project. The central banks and Governments of developing countries are willing to provide those guarantees. These countries may not have the credit rating necessary to compete with the West but they can go some way towards it. It would be wrong for any national Government within the EEC to agree in principle to take on board on its own the size of sovereign risks that many of the developing countries are willing to take on in their rush for growth or exports. It is not so much a question of the sources of money that are available. Our banking systems are such that at very short notice they can bring on stream vast amounts of money from all corners of the world, day or night, provided that the appropriate credit risk or guarantee is there.
Thus it seems to me that if the Community can put forward proposals for an export bank or an export guaranteeing organisation, or something of that kind, on the lines that have already been discussed, an organisation which does not attempt to replace national systems or to introduce a form of nationalisation of the banking systems indirectly by being the sole vehicle that has the power and strength on its own but which has clearly defined regulations that allow it to supplement the facilities of local national export organisations, I would support it wholeheartedly. Indeed, I would do more than that.
If we look at where the export demand currently lies and at the current commitment of the United Kingdom—the way in which it is over-extended in many cases in developing countries in terms of the level of credit that we have offered, or the level of exposure of ECGD as such—it is practically impossible to sell any more goods unless other sources of finance or guarantees are found. In a free world,

461
which we still have, there is always somebody, the entrepreneur, who will come along and find another source of finance. There is always somebody who will take a risk somewhere. The danger at the moment is that where it is impossible for the United Kingdom to accept that risk and where the private banking sector cannot take it on to its own balance sheet, the entrepreneur, of whatever nationality, goes off to another country, for financial reasons, and takes with him his export order. Once that export order is given and the equipment is on stream, then the replacement orders, the servicing and the things which accompany it also go and the market is lost.
These problems are very serious when we consider the trends. I do not believe that our export led boom will be a boom in the industrialised nations. If we are to have export led growth, which is so critical, I believe that the greatest part of those exports and the greatest growth will be in the Third World or in the developing countries which have a poor or a bad credit risk. Yet we have to look at the competition from the rest of the world. If other people are willing to take that risk and we cannot take it on board ourselves, if somehow we can use the power of the Community—after all, this is what the Community is all about when it comes to trade—I believe that we should do so. I do not believe that we should reject a proposal such as this out of hand.
Further, there are in the Community at the moment relatively few financial institutions. As the noble Lord, Lord O'Brien of Lothbury, pointed out, there is a need. If financial institutions of this kind are to be created to work with the private sector, they should be located in that area of the world where the private sector is most dominant. I think that everybody would agree that that area is London. Further, I believe that the high standing of Her Majesty's Government in these fields, the Ministry of Overseas Development and the ECGD itself can all be complementary. Many of the Third World exports tend to be to Anglophone countries or to those countries which have historic links with the United Kingdom. If we can attract such an institution to this country, or perhaps insist upon it, it could be beneficial. I would not feel happy if it were controlled and
462
operated outside this country, because in many ways our friends and competitors in Europe are often more capable of making government machinery work to their advantage than is our own private sector in the United Kingdom. Therefore, I support the concept, but I should like to be sure that it was this country which decided how it was to be utilised, because of all the countries in Western Europe we need exports more than any other.
5.10 p.m.
The Earl of BESSBOROUGH: My Lords, I hope that your Lordships will forgive me if I intervene most unexpectedly in this debate. Like the noble Lord, Lord Selsdon, I have just returned from Brussels. For most of last night I attended the Budget Committee of the European Parliament, and I want to confirm what my noble friend Lady Elles said about the provision for the European export bank having been deleted from the 1977 Budget. I have prepared no notes for what I am going to say now, but having listened to this debate I wanted to pay my tribute to the noble Lord, Lord Cobbold, and his Sub-Committee for having produced a very useful report and also to say how very wholeheartedly I agree with every word of what the noble Lord, Lord Selsdon, has said. I would hesitate to disagree with so noble a person as a former Governor of the Bank of England in the shape of the noble Lord, Lord O'Brien of Lothbury, but I believe that some body of this kind, perhaps not precisely in line with the Commission's proposals, would indeed be desirable.
In my view this guarantee organisation, as my noble friend described it, might perhaps apply not only to projects overseas, to third countries. I have recently been engaged in preliminary discussions with the European Investment Bank on the formation of a multi-national financial and industrial consortium for the reconstruction of the earthquake area in Northern Italy in the autonomous region of Friuli. Of course I went first to the European Investment Bank, who told me that they would not initiate any proposal of this kind but that if a series of banks from different Member States came forward and together proposed the formation of such a consortium with, for example, the steel industry—because as your Lordships know there is a steel industry to

463
be rebuilt, there are cement works and a considerable number of other factories—then the European Investment Bank would do everything possible to facilitate the formation of such a consortium.
However at the moment there are problems. I mentioned this to a personal friend who is now in a very well known merchant bank in the City of London. He is a very energetic and enterprising person—indeed, a former Ambassador—and he came forward and said, "I think we should try to do something. We must look at this". So on Wednesday of next week we are having a meeting with Sir Raymond Bell of the European Investment Bank and his other advisers, and representatives of industry who would be interested in becoming involved in such a project which has, of course, many complications and may not in fact in this case get off the ground. I think this will be an interesting effort which might lead to something more important later.
I have spoken to the Director-General of—I do not think he will mind my mentioning the precise name of the consortium—the Société Financielle Européenne. He said "It is very curious. The City of London is a great centre in world banking and yet the merchant banks in London are not as closely involved in the Community as are similar banking organisations in other Member States. So it seems to me that any new body which would encourage the association of banks in this country with their partners on the Continent, going somewhat beyond the admirable Federation which the noble Lord, Lord O'Brien, has mentioned, would be a good thing.
I merely put this idea forward because it is very much in my mind at the moment. It seems to me that there is no organisation to which one can go in the kind of circumstances which I have mentioned—circumstances which involve the long-term reconstruction of an area and not the immediate relief for which the Community have indeed made quite an important contribution. I could not agree more if such a body were centred in London, like everybody else, but I think that the noble Lord, Lord Cobbold, has certainly raised the key points in the last part of his report. I have looked at that carefully and I agree with what he says, but I should
464
like there to be an on-going discussion of this whole question and, as I have said, not confining it solely to third countries.
A Community guarantee will obviously be necessary if this consortium for the reconstruction of that part of Northern Italy is to go through. There must be a Community guarantee. Who precisely will provide that guarantee I do not know. We may get a little further on the subject next week, but I just wanted to put these new ideas into your Lordships' minds in the hope that you will also give it thought and perhaps in winding up the debate the noble Lord, Lord Cobbold, may also express an opinion on them.
5.16 p.m.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, on behalf of the Government, I should like to say how very much we welcome this opportunity to debate the Commission's proposal for the establishment of a European export bank. It is the first time since the two Committees have reported in the other place and here that there has been such an opportunity as this; I am grateful to the noble Lord, Lord Cobbold, for giving us the opportunity. I should like to say to the noble Lord that one point on which I found myself in agreement with him was when, towards the end of his speech, he mentioned the unfortunate duplication of committees in both Houses. As talk of the reform of your Lordships' House has been very much in the air recently—but not, let me hasten to say, for any reason devolving from the European export bank—this is something which I hope will be a positive contribution to any debate on reform in the future.
As has been pointed out, the objective of the bank is to improve the chances of success of companies in Member countries who wish to collaborate in bidding for contracts for the large-scale—or in the jargon which is now used, "jumbo"—projects in countries outside the Community. It is true that the actual proposals are detailed and highly technical and I do not pretend to know all the intricacies of them, but the problems of collaborating on finance and insurance are really not surprising when one looks at the

465
different ways in which the financial systems of the Member countries have developed.
Talks have been going on for many years about harmonisation but there is little prospect of early success. We have not only seen these problems in regard to finance; we have seen them in a variety of areas within the EEC; for example in pollution and food additives and indeed right over the whole area. I found myself very much in agreement with the noble Lord, Lord O'Brien, when he said that the barriers may seem insurmountable. He mentioned that when he was talking about ranging over the whole field of the EEC and he said we must not give way to such defeatist thoughts. Having been a pro-European all the way through from the beginning, I agree that this is absolutely so and it requires an enormous amount of patient and long-suffering consideration.
It is also true that in the meantime American and Japanese companies do not have to face the same problems of co-operation on large projects as the European consortia do. A European export bank would be one way of trying to deal with these problems within the Community and to improve the Community's overall ability to compete for large-scale business. I do not pretend for one moment that there is such a thing as a European panacea, but I should have thought it was an attempt to go along the right road. However, there are clearly technical difficulties to be overcome before a bank can be set up and fully functioning. Therefore, as I think everybody has agreed, the Commission's initiative deserves a warm reception and also thorough examination. That the Commission's proposal is excellent in its objective is one thing, but it does not mean that it specifies in sufficient detail the manner in which the bank would handle these technical problems. Indeed, the noble Lord, Lord Tanlaw, raised the question of whether "bank" was the right term. I think this really is a matter of semantics. As it would undertake the banking function of borrowing, which ECGD does not do, I would define it as a bank lending to exporters and to buyers. Also, it is true that it would undertake insurance operations, which ECGD does, but I am sure noble Lords would agree that that is not one of the major obstacles.
466
The proposals of the Commission have many obvious attractions. First of all, there is the provision of a single point of contact for financing and insurance, which the noble Baroness, Lady Elles, pointed out, which could simplify the administrative problems which firms face over the negotiation of large multi-national operations involving two or more member countries. So there does not seem to me to be any reason why subsidiaries in the other sense of multi-national should not also be part of the process. The amount of business coming to undertakings in Member States could therefore increase as a consequence of the expanded and centralised facilities thus made available. The noble Lord, Lord Selsdon, made a very strong plea on the necessity for exports and anything that will increase our viability on the export side, a sentiment with which I find it difficult to disagree.
Secondly, the access of the European export bank to independent sources of borrowings could relieve Member States from a part of the financial burden of financing particular pieces of large export business, which is very important to us in our financial and economic context. The bank could also facilitate the financing of a multi-national credit deal in a single currency. Therefore, the Government believe that the Commission have usefully identified ways in which the Community's export capability could and should be improved. However, we are not confident that the many other technical aspects of the operations of the bank can be left to the management of the bank once it has been set up, as the Commission suggest. That is putting the cart before the horse. The most important problems which would arise were described by the noble Lord, Lord Cobbold, and I do not intend to reiterate them. The problems of principle and the political dimension were pointed out by the noble Lord, Lord Tanlaw. These must be settled before the bank is set up.
In addition to these major problems, there are also technical difficulties which will require thorough discussion before the bank can be set up, and before we can reach a final judgment as to whether it would provide the best and most cost-effective answer to the problems identified by the Commission. It is true that the bank would be no use if it were just

467
another tier of bureaucracy. It would have to be able to respond flexibly and quickly, and the technical feasibility of its operations would have to be hammered out in advance, if it were to have any starting point at all. This is absolutely essential.
Having said this, there is one other important point that cannot be overlooked. Competition between exporting nations over export credit terms, which can considerably reduce the value of the exports to the countries concerned, is always likely to be mutually damaging. The United Kingdom firmly supports continuing efforts to avoid such self-defeating competition and any escalation towards a credit war. Therefore, we have to ensure that while we take the necessary action to enable Community exporters to compete effectively, any action should not add further impetus to destructive competition over credit terms. I think this would be to our mutual disadvantage.
We are extremely grateful for the evidence so assiduously and carefully assembled by the Scrutiny Committee, which has been extremely useful in helping us to formulate our view. We particularly agree with the conclusion of the Scrutiny Committee that a more detailed examination of the proposal is needed. This is absolutely essential if a full assessment is to be made, expecially of the costs of the proposed bank, and also its potential benefits to the Community in terms of additional exports. Therefore, as the Committee recommend, we should like to see the proposal referred to an appropriate specialist group or groups, whichever turns out to be preferable. I am the last person to want to see an endless proliferation of studies, but, as has been agreed by noble Lords who have spoken, detailed preparation is absolutely necessary.
The noble Lord, Lord Selsdon, raised the question of whether this would duplicate other institutions. I would say that the bank would not, or certainly should not, encroach on or duplicate or be a substitute for national agencies such as ECGD. This would make the bank redundant before it got off the ground. The bank would have to deal with large-scale, jumbo projects which do not make up the bulk of ECGD business. In other
468
words, the bank would have to carve out its own place. It will not be just an extra institution added to the large number of institutions already existing within the EEC.
The noble Lord, Lord Mais, was right when he said we should attempt to identify what is needed in the existing facilities. The noble Baroness, Lady Elles, raised the question of the time the study would take. The study will take some time, especially as some of our partners, particularly France and Germany, are not convinced that there is a need for such a bank, although most other members are in favour. If it is to be a Community bank, then one must have Community agreement on it. As members of the Scrutiny Committee will know, there has been a generally favourable response to the proposal by the professionally interested bodies in the United Kingdom, including the CBI and the banking associations, although the noble Earl, Lord Bessborough, felt that perhaps there ought to be more enthusiasm from that quarter. We would continue to consult these organisations if, as we hope, a detailed study is launched in the Community. It is only fair to say that the whole proposition began in August 1975, so there has not really been a very long time for it to have got off the ground. If now we move forward to a more detailed study, then the interest and enthusiasm of other institutions should follow. A strong case has been made by several noble Lords for siting the bank in London, which is still the major financial centre of Europe. On the other hand, it is true that the other financial centres in the Community and other facilities are in Luxembourg. This will come out in the detailed study of the proposition.
My Lords, to summarise the view of the Government, the Commission have identified a real problem and probably a real need. We think that the capacity of the Community to compete for the large export projects can and should be improved. Therefore, the European export bank may well be the answer to the problems to a great extent, and may well be of great benefit to the United Kingdom. However, at this stage it would be foolish to commit ourselves to the proposal of the Commission until it has been expertly scrutinised. Therefore, the Government give their blessing to the recommendation

469
to follow the proposal that has been set out in the report of the Scrutiny Committee.
5.29 p.m.
Lord COBBOLD: My Lords, I am most grateful to the various Members of the House who have spoken in this debate, which I found very interesting. May I first thank the noble Lord, Lord Mais, who acted as chairman of the Sub-Committee through most of the hearings, and who has been instrumental in getting out this report. May I also express my thanks to my successor-but-one along the road, Lord O'Brien of Lothbury, and to the noble Lord, Lord Selsdon, for coming back from Paris. Both noble Lords made extremely well-informed and constructive speeches, to which I am sure your Lordships were glad to listen. The noble Baroness, Lady Elles, asked one or two questions—I would say, a lower ceiling I think, but not an upper.
The majority of our witnesses, and the Committee itself, felt that the European Export Bank should deal only in big projects, and various rather large figures were thought of. I did not hear an upper ceiling mentioned. I personally think that if the EEB really took over and got going, a figure of £100 million would prove to be something of a token figure; we are talking, I believe, in very large amounts indeed if this happens. I think the difficulties of the raising of finance for an EEB should not at all be underestimated when the working group comes to look at the matter.
Lady Elles also asked me to confirm what I think I had said about multinational contracts. Certainly the Committee's view and my own view is that the EEB should only deal with contracts where two or three or more Community countries' contractors are involved, and should not deal in respect of a single exporting country, because they would inevitably be in competition with the local national. She also mentioned multinational companies. This is not designed in any sense for multinational companies, but I can think of instances where multi-companies might be concerned in multinational contracts.
I rather agree with the noble Lord, Lord Tanlaw, about nomenclature. I think "bank" is slightly misleading, but
470
I cannot think of a better name. He suggested that one might start with insurance and think only about EEB finding or providing finance. All our witnesses, I think, were quite clear that in fact and in practice, even if they did only start with the insurance side, they would eventually have to find or provide finance themselves. Unless my memory plays me false—it goes back several years—the ECGD started as credit insurance only and went on later to provide Government finance. I think that is the general experience.
As to harmonisation of interest rates, if I thought the EEB could harmonise interest rates throughout the Community I would be very greatly in favour of it at once, but that is, surely, much too hopeful a prospect. The harmonisation of interest rates must depend on individual countries' general economic and financial policies. It is not going to be achieved, I am afraid, by setting up the EEB. On the definitions, I agree that they are complicated; that would be for the administration of an EEB. I should have thought that within the EEC you would not talk about foreign goods when a member country of the EEC was concerned. Also, I should have thought that subsidiaries operating in one of the countries would be classified as operating there. I certainly would not follow the noble Lord on the question of political exclusions. Finally, I would agree that it is absolutely essential to make sure that an EEB would make things easier and not more difficult.
I was extremely interested to hear the intervention of the noble Earl, Lord Bessborough. If I may say so, I would think that long-term finance projects are rather outside this field at the moment, and to start talking about anything more than exports for an EEB would confuse and delay the issue. Possibly it is more in the European Investment Bank field. Certainly I would not think it was in the EEB field at the moment. But I appreciate, as always, the noble Earl's enthusiasm for European adventures in general.
Turning to the noble Baroness, Lady Birk, of course I am extremely glad, as all members of our Sub-Committee will be, to know that the report has the general support of Her Majesty's Government. I am delighted to hear that she gives her support to the few words I said

471
about the Committees of the two Houses working together, which seems to me to be a very important development. I would particularly hope—the noble Baroness has said this is the case—that, before we get further, Her Majesty's Government will press very strongly for early examination in detail by people who really know what this is all about; it does seem to me extremely important that that should take place as early as possible. I am most grateful to your Lordships for a very interesting debate.
On Question, Motion agreed to.

MEASURING SYSTEMS FOR LIQUIDS: 39TH EEC REPORT
5.35 p.m.
Lord BROWN: My Lords, I rise to move That this House takes note of the Thirty-ninth Report of the European Communities Committee of last Session on Measuring Systems for Liquids other than Water. It does not sound a very enticing subject, but I believe it to be one of very considerable importance in the sense in which the Directive is drafted. The views I give are generally those held by Sub-Committee B of this House's European Committee. The draft Directive on the approximation of laws relating to measuring systems for liquids other than water is one of a number of Directives in the field of legalised metrology; in other words, what we in this country call weights and measures. The purpose of these Directives is to diminish barriers to trade, one of the basic concepts of the Common Market. Currently, measuring equipment for liquids manufactured in different countries of the Community may not be exportable to other countries simply because the various authorities for certifying this equipment differ in their requirements from country to country; some countries will not accept the sort of certification given by the authorities of another country. If, however, this draft Directive came into force, then equipment approved under its general provisions by the specific national approval board of a particular country may not be refused entry or use by other Member States.
The draft Directive is lengthy, detailed and highly technical. It was in the
472
course of compilation before the United Kingdom joined the Community, and it could not have been produced without a considerable contribution of thinking and detail from the manufacturers of measuring equipment in the Community countries. The nature of the Directive is such as to give rise to a question of general principle which your Lordships are now invited to consider. The question is this: is it desirable that Directives prescribing uniform principles of design—and I underline the word "design"—and construction should be the basis of legislation which seeks to establish uniform standards of measurement? The approach adopted by the United Kingdom, and indeed by the International Organisation of Legal Metrology, has been to base its international recommendations on requirements of performance and of operation rather than on details of design and construction.
The Community draft Directive contains 29 pages, most of the content of which is concerned with design rather than performance. Against this EEC Commission approach there are two main arguments of a general nature. The first is that such Directives may tend to freeze design at its present level and inhibit the development of better designs based on alternative concepts. It is true that within the machinery of the Commission there is a Technical Progress Committee to which appeals can be made if technical developments make a given Directive out of date. But appeals to allow of inventive steps which, by their very nature, might menace the competitive designs of manufacturers in other countries and which may in fact be covered by patents are likely to be long-drawn-out. They are therefore likely to delay innovation or even prevent it. Anybody who has had experience of trying to get alteration in the specifications of goods through the NATO COCOM committee—which is the committee which has to agree any changes in the list of goods that can be sent to Eastern Europe and China—knows what an infinitely prolonged experience it can be. Although COCOM is not analogous to the Appeals Committee of the EEC there is a certain similarity which causes me concern. Your Lordships may consider therefore that Directives drafted in a form which use the accuracy of the measurement as the criteria of approval rather than the

473
details of construction would be preferable, particularly as such Directives would obviate the necessity for appeals to introduce new types of design.
The second argument against the drafting of Directives in this form—that is, drafting the Directives to look almost like a manual of specifications—relates to patents. Common practice for manufacturers of all types of equipment is to apply for and often to be granted patents covering even the smallest details of every advance design which they believe to be novel. Thus banks of patents are built up. Sometimes simply to prevent other manufacturers from claiming monopoly rights, but more often to secure monopoly of an idea for the patentee.
I believe that it is almost inevitable that some features appearing in the 29 pages of the draft Directive on construction of this measuring equipment are already covered by patents. I have raised the matter of patents with the Department of Trade, who in turn raised it with the Commission. I am informed that the burden of the Commission's reply was that two instances had occurred of the existence of patents which had been noticed, and the position created during discussion of Commission working groups. It is not on this Directive but on previous Directives. They further made the point that if a particular proposal favoured one firm its competitors would not be slow to point this out. This is a totally unsatisfactory and unrealistic reply from the Commission, because to establish if patents exist a lengthy and very costly search in the Patent Offices of every country in the Community would be required.
Look at what manufacturers are asked to do. They are asked individually as manufacturers to discover the patents of every other company manufacturing measuring equipment for liquids in every country in the Community. To have to do this because the Directive is drafted in a particular way is not onerous; it is virtually impossible. I am already informed by the Department of Trade that it is the view of the United Kingdom Comptroller of Patents that an EEC Directive would not override patent rights in the sense of giving others an automatic right to manufacture or to use without payment.
There is no need for me to comment at length on the advantage accruing to a
474
manufacturer who possesses monopoly patent rights over some feature of construction embodied in an EEC Directive, or the disadvantage accruing to a manufacturer who could not get a licence under that patent to manufacture equipment which was being generally used in accordance with the Directives throughout the Community. Your Lordships will observe that I am advancing these two arguments as general principles. I do so because prudence requires us to look ahead.
In the evidence heard by Sub-Committee B of the European Community's Committee no mention was made of objections by United Kingdom manufacturers to the provisions of this Directive. Extraordinary as this may seem, I personally believe that this may have been because the point had not occurred to them. It had not occurred, so far as I could gather, to the Department of Trade. If it had occurred to manufacturers I cannot conceive that they would not have been very troubled.
Looking to the future, I submit that if it was to become customary for design specifications to be embodied in Directives, then the whole question of patents becomes very important. Speaking generally and not in the specific context of this Directive, if there are patents relevant to a particular design, and if the holders are unwilling to license all who wish to use such patents, the effect would be to limit the number of manufacturers able to comply with the Directive. In that way a Directive which is designed to diminish barriers to trade might unintentionally have the precisely opposite effect.
I am bound in fairness to say that there is one possible safeguard for a manufacturer denied a patent licence by some other manufacturer who possesses that patent. Under United Kingdom current law a foreign holder of a United Kingdom patent covering an article which is not being manufacturered in the United Kingdom can, under certain circumstances, be forced to give a licence to a United Kingdom manufacturer on terms adjudicated by the Patent Office. I think I am correct in saying that. Perhaps the Minister will correct me if I am not. This is termed a licence of right. But the procedure to obtain such a licence is

475
arduous, and success may not be achieved if goods are able to be imported at a reasonable price level. So the licence might be refused and thus exclude any United Kingdom manufacturer from making the equipment covered by that patent.
I may have exaggerated the danger of this patent issue. It is all too easy to do that when one has to pick out a particular point which has perhaps not received the attention it might have received in previous study, and I am open to the suggestion that I am exaggerating the danger. But I am bound to bring it before the House as a very serious point, and one to me that strikes home because in my industrial career I have had a great deal to do with patents and I know how damaging they can be.
Is it possible to suggest an alternative method for drafting such Directives as this one? The suggestion which Committee B considered was that such Directives should not prescribe design standards, but standards of accuracy in performance. It would then be for the competent authority in each country to certify that equipment manufactured within its jurisdiction complied with these standards of accuracy. There should be no impediment to the sale in any Member State of equipment so certified by a national authority. I can conceive that objections might well be raised to a re-formulation of the existing draft Directive in the form I have proposed, because I understand that years of work have gone into its preparation. But even if noble Lords do not wish to withhold approval of this draft Directive, they may nevertheless wish to put down a marker that this one should not constitute a precedent for the drafting of future Directives of this kind.
I shall now ask the noble Lord, if he can, to provide answers to the following questions: first, what is the current attitude of manufacturers in the United Kingdom to this Directive? If it has changed since the original evidence that we received, what is the current attitude of the weights and measures inspectors and the relevant section of the Department of Consumer Protection? Will the noble Lord give the House his best estimate of what might be the future position with regard to licences of right under prospective European patent legislation? Lastly, can the
476
noble Lord say where the draft Directive stands at the moment in terms of the Commission's timetable?
In conclusion, if your Lordships agree with the points that I have made, you may consider it advisable to invite the Minister to ensure that they are borne in mind by United Kingdom representatives who take part in any future discussion on this draft Directive and of laws relating to the measurement of liquids, or in discussion of analogous Directives in the future.
5.53 p.m.
Baroness ELLES: My Lords, the subject matter of this report was not debated in another place, so we are particularly grateful to the noble Lord, Lord Brown, for having raised the subject today. For the second time this afternoon, I must thank my noble friend Lady Tweedsmuir and her Committee for once again producing a document which I can only call a "child's guide to Directives", because it certainly helps us to understand what we are talking about, whereas the draft Directive and particularly the annexe to which the noble Lord, Lord Brown, referred are very much more difficult to comprehend.
As I understand it, there is no disagreement as to the objective of the draft Directive. It is, to establish minimum standards of accuracy in measurement and so protect the consumer. On the contrary, this is surely desirable and should contribute to increased trade between the Member States. One has only to think of the amount of inter-State tourism and the use of petrol pumps throughout the Community to accept that a minimum standard of accuracy should be a right and that, where there is not accuracy, the consumer, in whichever Member State he may find himself, may rightly complain.
The draft proposal does not go all the way to meet this desirable objective since it is optional; that is, it will affect only the export of meters and not those that are retained in the country of origin. It should be clarified for those who might have some doubts on this matter that the use of old measurements is not prohibited so that we shall not immediately have to measure in litres as opposed to gallons.

477
Standardised equipment and methods for measurement purposes undoubtedly help our export trade and the noble Lord, Lord Brown, himself quoted from paragraph 17 of the report evidence showing the barrier set up by the United States on account of non-conformity in regard to pressure vessels. This is a very real problem of which the noble Lord, Lord Brown, is well aware. The noble Lord has, however, raised one important matter which does not appear to have been satisfactorily answered, at any rate in the evidence so far available. Does the specification as to the construction of the meters refer to instruments already being produced in the Member States and which may be covered by a patent or patents? There seem to be at least three possible ways of answering this. First, it may not be known whether or not patents are in existence; I do not know how easy that is to find out. If the answer is in the affirmative, the specification might be very much to the advantage of a single Member State. If a patent or patents exist, clearly there must either be modification of the description to allow for variation in design or else withdrawal of the detailed description and retention of only a list of objectives to be attained, as the specifications were set out in the original draft Council Directive of 1971—No. 319. This annexe is very much less tight and restricted than the final one with which we are now presented.
While accepting the answer given in evidence in paragraph 41 of the Report, that the document's intention is manifestly not to be restrictive, and accepting the Commission's desire to identify technical criteria as relevant, it is not clear to me from the evidence how far these restrictions do restrict the mechanism to only one design. Of course there is also the point that this design may be patented. These things do not come out clearly from the evidence, so the question that I ask the Government is whether, in the opinion of the technical experts in the Minister's Department, it would be possible under the draft specification to have a variety of designs and to develop new designs and new types of meter? If the answer is, Yes, I see little cause for concern, but if it is, No, perhaps the Minister would look at this again as the noble Lord, Lord Brown, has suggested, and certainly I hope that he will ensure that
478
in future Directives of a similar nature restrictive practices such as these will be excluded.
The noble Lord, Lord Brown, has done a service in raising this point, which has been brought to your Lordships' House for, I believe, the first time. In particular, I should like to mention the letter from the Committee on Legal Affairs of the European Parliament dated 20th January 1976 in which it was stated that the Committee found that the proposal raised no particular legal problem. The noble Lord, Lord Brown, has raised a very particular legal problem—the question of patent law, which is a very difficult and complex subject and one which might have very serious consequences on, for instance, the production of meters in this country. I therefore express my gratitude to the noble Lord for raising this matter and, with him, I would join in asking the Minister to ensure that those in the Commission and in the other institutions of the European Community are made aware of this very real problem.
5.56 p.m.
Lord WINSTANLEY: My Lords, I have studied the report of your Lordships' Select Committee with great interest, as also the documents to which it relates. I have much agreement with many of the things said in the course of the collection of the evidence, some of which were underlined and endorsed by the noble Lord, Lord Brown, today. I believe that he is entirely right to direct our attention to the fact that the draft Directive is apparently rather more preoccupied with the apparatus whereby liquids are delivered than with the end result—that is, the actual measure.
I also very much agree with the noble Lord, Lord Brown, in what he said about patents. There, I can confirm what the noble Baroness, Lady Elles, has said. I do not believe for a moment that the noble Lord exaggerated the difficulties here. I am quite sure that, unless further steps are taken and safeguards introduced, very great and highly complex difficulties will arise in the field of patent law.
I believe that we must accept that this is consumer protection legislation and the consumer is very interested in the end

479
result rather than the complicated apparatus and the way in which it is designed. He is concerned about the quantity of liquid that is ultimately delivered and about getting the correct amount. However, since these Directives concern hydrocarbons and therefore petrol, it is perhaps worth mentioning that consumers are also interested in quality. It may interest your Lordships to know that some years ago I was concerned in an investigation into the octane grades of petrol. In connection with a television programme, we took innumerable samples of five star, four star and so on. These were analysed by official sources and the amount of so-called five star petrol that was not five star but which turned out to be two star, was considerable and rather worrying. On the other hand, there were not many worries about the actual volume and the measuring side of things, whereas these draft Directives are of course concerned with measurements and are really weights and measures legislation rather than dealing with quantity.
I should like to raise the question of the future of beer. I know that it is not referred to and that in the Directives hydrocarbons and milk are specifically mentioned; but the general provisions are intended to cover all liquids other than water, so one supposes that, in the fullness of time, these draft Directives will apply to beer. Beer is of course delivered in many parts of this country and of the EEC by the kind of apparatus that is considered in these Directives. It is carried by tankers, delivered to an entirely closed circuit system, into tanks, and ultimately dispensed, metered and so on. We are not at all clear about what is to be the future fate of the pint. I understand that a Question on this matter was asked in another place recently, and perhaps the noble Lord who is to reply to this debate will be able to confirm my belief that the answer given was that it was the present intention to retain the pint. I have no doubt that many people will be glad about that; nevertheless this is a factor which we must consider.
I believe that we must also consider the possible relevance of these draft Directives to British manufacturers and therefore potential exporters of the metering and dispensing apparatus for beer which is
480
now manufactured in this country. We have come a long way with regard to beer in recent years. Professionally, as a doctor, I was concerned some years ago in investigations into the possibility of the transmission of certain infectious diseases through contaminated beer. This arose in those days through the almost universal use of what was known by the euphemism "overspill", which is what poured down the outside of the glass. In some cases, as was shown in one prosecution, it was what was poured from the tray into the glass. I am delighted to say that we have now largely done away with the use of overspill. Indeed, I believe that the breweries are wholly opposed to it. This has been brought about very largely by the use of the marked glass which is oversized, with the metered equipment which delivers an exactly measured pint or half pint; thus there is no need for overspill. It will not have escaped the notice of your Lordships that it is impossible to put a pint of good beer in good quality into one of the old kind of Board of Trade stamped pint pots. If there is a froth on the top you must leave about a quarter of an inch, which is about a fiftieth of a pint.
Therefore, by introducing these kind of systems, the serving of beer by apparatus which delivers a measured pint or half pint into an oversized glass with a mark, one first of all does away with the possibility of serving dirty or contaminated beer, which certainly was a possibility in the past, and, secondly, one also does away with the possibility of serving short measure, which is not without some significance. We have in this country manufacturers of this equipment. They are manufacturing highly sophisticated and efficient brewery equipment—metering systems—many of which do away with even the need for a stamped glass, because now some of these meters are certified by the Board of Trade and they deliver an exact pint or an exact half pint. In those circumstances, the beer can be served not into a stamped glass—as the law otherwise requires—but it can be served also into a plant pot, flower vase or such because everybody knows that the measure is exactly right.
But how are those who are manufacturing this equipment in this country—and there are many firms making excellent equipment—to benefit from export

481
opportunities while we retain our own measures? Their concern is not only with the transfer to a new measure other than the pint, but with the point which has already been made in the debate by the noble Lord, Lord Brown, that the draft Directives are very much preoccupied with the apparatus rather than with the end results. It is most important that we ensure that in the end our manufacturers have to comply with unified and harmonised regulations throughout the whole of the EEC, whereas at the moment West Germany has, I believe, regulations regarding the diameter of pipes which are used in beer measuring and beer dispensing systems, rather than with the end results. Again, we come here into the field of patents, into the field of designs. I believe that some of our brewery equipment provides excellent export potential, and indeed, with unified systems, in the end would provide real commercial advantages to this country, and to West Germany, the Netherlands and many other parts of the EEC. But I am not at all sure how these people will react at the moment to these draft Directives, or to what extent they help in any way at all. Indeed I have my doubts about whether they really do help.
So we come back to the point made by the noble Lord, Lord Brown. We have to concentrate a little more on the end result rather than on the intermediate means, and we have to concentrate on a unified system throughout the EEC, dealing with one specific factor which can easily be complied with, rather than try to get the satisfactory end results which we all want, by attempting to unify a whole range of different regulations in different fields, covering design and covering manufacturing processes in another way. Therefore I very much endorse what the noble Lord, Lord Brown, said about the need for a careful look into these draft Directives and about the need for caution with regard to their implementation. Nevertheless, anything which can be done to unify measuring systems and to protect the consumer on a unified basis throughout the EEC will be of tremendous advantage to EEC consumers, wherever they happen to live. It will also be of great advantage to manufacturers of certain equipment in this country, who are at present denied export opportunities because of the com-
482
plexity of regulations now existing in different Member States of the EEC which make it impossible for them to comply with each and every one of them.
If we have one set of regulations governing the lot, even if we retain the pint, it would probably still be possible to adapt the machinery so as to comply with that one set of regulations. I believe that at the moment we are losing export opportunities which could possibly bring great benefit to this country. With those few words I of course support at least the aim of the draft Directives, if no more than that.
6.6 p.m.
Lord LUCAS of CHILWORTH: My Lords, the noble Lord, Lord Brown, posed quite early in the debate a question to the noble Lord. Lord Oram. He asked whether the Minister could say to what extent United Kingdom manufacturers have knowledge of this Directive. He doubted that they had much knowledge. I doubted that they had much knowledge, so in preparation for your Lordships' consideration of this measure I went to see some manufacturers and I met something of a blank wall. They really did not know very much more than I did, which was precious little. So I then thought that perhaps it is not the manufacturers we should be worrying about; perhaps we should be thinking about the people who are going to invent the machinery. So I went to a number of companies and to one particular technical research and development company, privately operated, who gave me the benefit of their advice. In fact, that company knew nothing about the Directive until I talked to them about it, and they, all of them very eminent, highly professional qualified engineers and scientists, were somewhat horrified.
The Directive is written around presently known types of equipment, and conformity to the criteria set down in the Directive would, I believe, inhibit innovation and enterprise. I should like to remind your Lordships of something which my noble friend Lady Elles said. I do not wish to pick her up on a particular point, but she referred fairly constantly to metering of measurement. But we are not really concerned with

483
meters. We are concerned with measuring devices. I will refer to this a little later and give a particular example. In the minds of almost everybody the term "a meter" supposes a set of wheels going around and a physical clock showing a result. I shall come back to that because we are not concerned with meters; we are concerned with measuring of liquids.
With those introductory remarks, I should like to seek by question of the noble Lord, Lord Winstanley, a clarification of the rather unhappy point he made about petrol. Your Lordships will remember that I have to be a little on guard when people say things about the dispensing of petrol. The noble Lord said that certain investigations were carried out and that there were a great number of errors as between two-star and five-star. However, he also said that there were very few errors in the quantities which were dispensed. I would ask him by way of question whether perhaps the errors as between grades were not more physical than mechanical.
Lord WINSTANLEY: My Lords, I would certainly accept that. I did not say "a great number"; I said "a small number but nevertheless a significant number", which is rather different from "a great number". But I should think that what had happened was something totally beyond the control of the apparatus. It was something which had happened under the control of the people who happened to be working the apparatus in those particular cases.
Lord LUCAS of CHILWORTH: My Lords, I am very much obliged to the noble Lord because that is precisely the kind of answer for which I was looking. I said that the Directive as written around the known pieces of equipment was restrictive; and in today's Daily Telegraph there is, unhappily, a report that the £25,000 annual McRobert Award for British engineering innovation is not being awarded this year. Presumably nobody has come up with an engineering innovation that warrants the award. If engineering scientists are going to be inhibited by this kind of Directive, I think it is a very sad thing. The Directive goes into a great number of quite useless, in my view, details. For example, it says
484
at paragraph 175 on page 8—and I am merely going to pick out one little piece:
"No pipe is to be connected to the blow-off arrangement".
My Lords, why not? It really is rather stupid to set down in a specification a blank statement of that kind without giving a reason. An inventive engineer may require a pipe to be affixed to the blow-off arrangement, but here he is prohibited from so affixing it. Throughout the Directive there is a great number of details, which are unexplained, which I believe would tend to restrict the inventive genius of engineers and scientists.
My Lords, design criteria, in engineering terms, should lay down as a basic specification only the minimum standards of accuracy, reliability, performance and repeatability, but not the method by which they should be achieved. In fact, this is exactly what has happened here. As an example, though perhaps something of an over-simplification, suppose that 25 years ago there had been a Directive of this nature concerned with the simple domestic radio receiver. Broadly, a specification might be given to a radio engineer to make a device sensitive to radio waves within a given range and subject to some selective tuning arrangement within that range. That is the basic requirement. The engineer will take that basic requirement and use his inventive genius, his skills and his knowledge to produce an article to meet those design criteria. How he achieves it is his business. But if we go a little further and say, "And such device shall have valve sizes of 75 millimetres by 25 millimetres", he is immediately restricted. That is what he has to put in. As I say, if a Directive written in those terms had been in force 25 years ago, I doubt whether today we should have transistors and all the benefits that flow from them.
My Lords, I want to finish by returning to the comment about measuring devices. Currently, static liquid levels can be measured by ultrasonic devices. To my mind, there is little doubt that in a very few years' time such devices could easily be employed to measure flowing liquid volumes. The noble Baroness will now appreciate, I think, the point I made when I referred to her discussing the devices always as meters, because an ultrasonic device could hardly fall into that category.

485
My research development engineer friends (who, incidentally, have not found the answer yet, I hasten to tell your Lordships) are very concerned because, were they to offer this under the terms of the Directive, they would be out of court. They say so.
Were they working on this problem today, and were this Directive compulsory—I appreciate it is only optional, but that is only one stage removed from unification—they would abandon the work completely because they would be stuck, notwithstanding the safeguard to which the noble Lord, Lord Brown, referred in the Technical Progress Committee. If one reads the evidence as given to the Sub-Committee, it is quite plain that access to that Committee and the workings of it are very involved. They must by the very nature of the system be longwinded; and no engineer is going to work under constraints of that kind. I believe these are real problems, my Lords, and I believe that, however difficult it may be to modify the Directive, certain modification is needed and perhaps should be put in hand straight away.
The last and overriding point that I should like to make—and I fear, my Lords, that it is not original, because somebody else said it only a short while ago in a medical programme—is that legislation of this kind should not be used to stifle engineering or, indeed, any other science. That, I fear, is what is likely to happen with this kind of Directive.
Baroness ELLES: My Lords, before the noble Lord sits down, I wonder whether I might answer what he said in reference to my comment about meters. I should perhaps say that I mentioned meters only once, as far as I can check with my own bad writing; and I said, "the construction of the meters as referred to in the specification". In the annexe which I have, which gives the specifications, it refers to meters the whole time. It says, in fact, that where there are "several meters intended for a single measuring operation, the meters are considered as forming a single measuring system". Throughout this document, as I understood it, the word "meter" was a general word taken to cover the measuring system. I absolutely appreciate what the noble Lord is saying, that a meter as such, in
486
ordinary common parlance, does not cover all the various attachments or different forms of measuring system, but so far as concerns the specification to which I was referring, it refers the whole time to meters. So I hope the noble Lord will accept that I mentioned it in these terms.
6.19 p.m.
Lord BRIMELOW: My Lords, I apologise for intervening in this discussion without notice, but there is one point which has so far escaped me. That point is the desirability of timely and adequate consultation between the Commission of the European Community and other authoritative organisations which are simultaneously doing work in the same field. The importance of this point was stressed in this House on 1st July this year by the noble Earl, Lord Selkirk, in connection with the hall-marking of precious metals.
My noble friend Lord Brown mentioned that there is an International Organisation of Legal Metrology which does work in this field. He mentioned that its work is based rather on the specification of minimum performance standards—which is the way in which my noble friend, Lord Brown and Sub-Committee "B" would prefer to see draft Directives formulated. I believe that the Commission is in touch with the International Organisation of Legal Metrology, but in the evidence received by the Committee it was not clear that there had been timely and adequate consultation before the drafting of the Directive was completed. It is a point of some substance and I hope it will not be lost sight of in the drafting of future analogous Directives.
6.20 p.m.
Lord ORAM: My Lords, I am sure that we are all grateful to my noble friend Lord Brown for initiating this debate this evening. We are also grateful to him and his colleagues in the Select Committee Sub-Committee for the work they are doing in examining from the British point of view proposals such as that we are now concerned with—and not only this one, but a whole variety of subjects, some very technical, as this is, and others perhaps less so. There has been much public debate in recent weeks about the usefulness of your Lordships' House and

487
I am sure that if those here present were to embark on that subject this evening it would be a very interesting discussion and with varied views. I feel sure that no one who approaches with a fair mind the work of the Committee that scrutinises the Directives that come from Brussels and which makes the kind of criticism that has been voiced this evening, can deny the usefulness of at least that part of your Lordships' House. The Government, and indeed industry, in the United Kingdom are hopeful that a Directive can be adopted in this area of measuring systems for liquids other than water because we all believe it will be of benefit to United Kingdom industry and also to the consumers to have common standards in the Member States of the EEC. I was glad that both the noble Baroness, Lady Elles, and the noble Lord, Lord Winstanley, indicated their agreement with that main objective.
I note that the Select Committee took the same view before indicating its reservations; but it is important that we note not only the unanimity in approaching the general purpose of the Directive but also the very strong reservations that the Committee have expressed in their Report and which have been voiced so effectively and strongly again here this evening. This particular proposal for a Directive on measuring systems for liquids other than water—and my noble friend Lord Brown said that this was not a very engaging subject and was a rather intricate phrase, so perhaps in future I may call it "measuring systems" for the sake of brevity—will be the third in a threefold approach to this problem. The other two were adopted by the EEC in 1971 before our accession to the Community and they have already been implemented in our own legislation. Those two are the Directives on meters and on ancillary equipment for meters for liquids other than water. All three of these Directives stem from a programme drawn up in 1969 which sets out those subjects on which progress should be made for the elimination of technical barriers to trade in measuring instruments.
It was first of all necessary to lay down a general framework applicable in all Member States for the control of measuring instruments in order to ensure
488
accuracy and to protect the consumer. That general framework was set out in the Directive of 26th July 1971. The framework has three principal components: first, a system of pattern or type examination for new designs to assess their general suitability in accordance with whatever requirements might be laid down; and, secondly, once pattern approval has been obtained, a testing procedure which is called "initial verification" on each and every instrument to see that it is both accurate and constructed in accordance with the approved pattern. Both these procedures are analogous to existing procedures under our own Weights and Measures Act 1963. Patterns are examined by the Department of Prices and Consumer Protection and then equipment from the production line is submitted to weights and measures inspectors for testing and for stamping as fit for use in trade.
The third component is what has come to be known as the Technical Progress Committee. It was this to which my noble friend Lord Brown and the noble Lord, Lord Lucas, referred. This Committee has no counterpart in our domestic legislation and is a procedural device for the up-dating of technical annexes without the necessity of Directives going through the full Council machinery. It is therefore somewhat easier and quicker to operate; although I note the fears expressed this evening that any such machinery inevitably is capable of being a delaying mechanism.
I think it would be appropriate to give a brief outline of the scope of the draft Directive on measuring systems. The scope of the Directive covers two particular areas. First, it covers liquids such as hydrocarbons, milk and wine. The noble Lord, Lord Winstanley, was wondering about beer. He raised the matter with some anxiety in his voice. He seems to have a particular affection for this subject. I can tell him that the Directive would apply to beer delivered by road tankers but not to the operation to which he was mostly directing his remarks, the beer meter on the bar for serving pints. There, it is a question of first pre-determining quantities; and that is not appropriate for the kind of measuring systems covered in the Directive. However, he is quite right in thinking that beer being delivered in tankers comes within the scope of this Directive.

489
Secondly, such systems may be either static, such as petrol pumps, or mobile as mounted on lorries delivering domestic fuel oil for central heating systems. It is envisaged that whatever the system, it will probably contain one or more meters for the measurement of the quantity delivered or received together with ancillary devices such as ticket printers or price-computing mechanisms. These will derive from the other two Directives I mentioned earlier. The measuring system will be subject to pattern approval in one of the Member States. The work of examining the pattern will be carried out by the designated metrological service of that Member State, and it will be their task to judge the system against the requirements in the Directive.
Once that hurdle has been passed, measuring systems from the production line will be able to be manufactured and submitted for initial verification. This will mean that they will then be able to be marketed and used in any Member State of the Community without further metrological processes, and this, of course, is where the barriers to trade come down. No longer will it be necessary for the United Kingdom manufacturer to apply in each of the Member States for their separate approvals according to their own laws. Such procedures are obviously not only tedious but expensive, and it was on this basis that I know the Committee was able to agree that a Directive in this area would be of advantage to the industries concerned.
Since I am referring to the industries, may I take up a point which the noble Lord, Lord Lucas of Chilworth, mentioned when he doubted whether, from his experience, manufacturers know or knew about this Directive. I assure him that consultations between the Department, a whole range of manufacturing trade associations and individual firms have taken place. I have a list of 25 associations and important manufacturing firms, so I think that he will recognise that there are some people, at any rate—and a wide range of people—within the industry who are well informed on this matter. He happens to have been a little unlucky in those whom he approached.
There were, as indicated, a number of points which the Committee reported on as causing them a good deal of concern.
490
The first main point was that the detailed technical specifications set out in the annex might inhibit or even prevent technical improvements based on new concepts. This was the point which the noble Lord, Lord Lucas of Chilworth, was making in his discussions with inventor friends. It is true that the annex to the Directive contains a considerable quantity of detailed technical provisions, and I do not dissent from the arguments which have been put forward that these could have an inhibiting effect on innovations.
But there are two points that I should like to make in this connection. First—and the point has been made before—one must bear in mind the Technical Progress Committee, which I also mentioned. I should like to stress this, because noble Lords will not have found the Committee referred to in the measuring systems document itself, but it does exist. It is the task of the Technical Progress Committee to examine suggestions for updating the technical parts of Directives, not just on these measuring systems but on all the other categories of weighing or measuring equipment for which Directives have already been adopted. There is therefore a procedure which would enable technological progress to be taken account of.
Secondly, I can tell your Lordships that the Government are equally concerned with these technical specifications and they are already seeking to get the proposal amended in Brussels. The report of the Committee is very helpful in this respect. We hope that it will be possible to have the Directive referring mainly to performance requirements instead of technical specifications. That is the main point. Performance requirements would enable the manufacturer to use his initiative and innovate in whatever direction he chose, provided the result will meet the requirements on performance. How far the Government are successful in changing the character of the draft Directive in this way will depend on the progress of negotiations in Brussels. I am able to tell your Lordships that already in the discussions in Brussels which have taken place since June (when the Committee reported) the Government have been successful in getting certain technical details deleted and performance

491
specifications put in their place. I hope therefore that this indication of the way in which the Government are proceeding in this matter will be of some assurance to noble Lords.
The second main point brought out by the Committee arises from those same technical specifications. The Committee feared that there might be a patent covering the only design of equipment which could meet the specification laid down. The noble Baroness, Lady Elles, referred to this. The company holding such a patent would therefore be in an advantageous position, and it might be possible for them, so to speak, to corner the market or possibly make it very expensive for their competitors. The Government have considered this potential difficulty and have also discussed it with representatives of United Kingdom industry and the EEC Commission. The general consensus is that such a situation is unlikely to arise. United Kingdom industry has examined the proposal as it stands in some detail; and while they cannot say with definite conviction that there are no patents covering particular items, they do feel that problems connected with patent infringements are unlikely. The EEC Commission also feels that the possibility is remote.
I recognise that my noble friend Lord Brown has this evening brought forward some additional strong arguments in this connection, and I can assure him that I will have his additional remarks closely examined in this respect. He asked me, among a number of matters, a question about licences of right. I am afraid that I cannot at this stage give him what he requires about future legislation. He referred to future European legislation, but there is of course, as mentioned in the gracious Speech, a Bill pending in this House, and I will write to him on the point he made in connection with patents.
But if I now turn back to the first main point of concern, noble Lords will agree that the further we are able to move the Directive away from detailed technical specifications and towards performance requirements, the less likely we are to meet any difficulties on patents. By putting our efforts in that, we are at the same time—in so far as we are successful —lessening the real problem concerning
492
patents. However, should the remote likelihood occur of difficulty arising over a patent, I am advised that it would be open to any Member State—which of course includes ourselves—to remedy the situation by asking the Commission to submit an amending Directive with the minimum of delay through the Technical Progress Committee procedure.
I have already given what I hope is a suitable reply to my noble friend on his question concerning patents, and I should now like to turn to the three other points which he raised. He asked about the current attitude of manufacturers, and I have already indicated the degree to which they have been approached on this matter. They are interested in the adoption of a Directive, so that it completes what I would call the three-fold Directives in this connection. There are for them prospects of easier exporting to other Member States once they have obtained their EEC pattern approvals.
My noble friend also asked about the attitude of inspectors: they will be responsible for the process of initial verification of each individual measuring system which has received EEC pattern approval. But if what my noble friend has in mind is the attitude of the Weights and Measures Service of the Department of Prices and Consumer Protection, I can assure him it is that Service which is leading the negotiations in Brussels, on behalf of the United Kingdom. I indicated earlier that they are fighting the battle mentioned to us by the Sub-Committee. That team are hopeful of achieving a satisfactory Directive which will eliminate the technical barriers to trade in this area, which will be to the benefit of the United Kingdom industry.
I hope I have answered the main points that have been raised, but we shall listen with interest to what my noble friend has to say in summing up the debate. I hope that what I have said about the line that the Government are taking in Brussels, and what all concerned feel about the possibility of patent difficulties, will give sufficient assurance to the House so that we may be able to look forward to a successful outcome of the negotiations in Brussels and the eventual elimination of technical barriers to trade in that sector, with the prospect of increased export business. I am sure that should be our major objective.
6.43 p.m.
Lord BROWN: My Lords, it is later than I expected and therefore I shall be brief. I am grateful to noble Lords who have taken part in this debate, which has been most interesting and, I think, very useful. I hope all those who have spoken will excuse me from mentioning their contributions individually, because that always takes time and I am not sure that they would not rather get away this evening fairly quickly.
Turning to the points put by my noble friend on the Front Bench, it must be said, first, that I think we are all grateful for the general assurance given that we are fighting now against the particular form of this Directive. No doubt we shall continue to try to prevent similar practices being adopted towards analogous Directives in future. That is very good news and I personally am very pleased to hear it.
Turning to a slightly more critical note—not necessarily implying criticism of the Government themselves—when industry says it is reasonably satisfied, or words to that effect, about the patent situation, I think they are indulging in wishful thinking. I know a great deal about patents from an industrial point of view, and I cannot conceive that they can be satisfied. They are running risks. Those who are aware of the complexity of the banks of patents held by their own competitors right across Europe know very well that they cannot possibly be aware of whether any of those are going to become mixed up with the specifications in this Directive.
Equally, the Commission are indulging in extreme wishful thinking. I have used the word "absurdity" in connection with the Commission's response. They are saying that they have put into a Directive a particular design specification for some measuring equipment—which is presumably the best that their experts advise them is available. Then subsequently it comes to their notice, after the Directive has been passed, that the particular equipment is the subject of patents held by some manufacturing firm. What do they propose to do about it?—to alter the Directive so that they get a less good design of measuring equipment, in order to avoid the specification. Can your Lordships think of a more absurd result?
494
If they did not do that, they would have to take overriding authority to abolish the patent or to insist on free licences all round. That is the difficulty one gets into with Directives of this sort, based on design; so I think they are indulging in wishful thinking. I hope that Her Majesty's Government will go on using this patent argument, which is probably the most powerful one against the use of design specifications of this sort.
I am grateful for the attitude that has been expressed by my noble friend Lord Oram, and for the assurance that our officials are fighting this hard in Brussels. I hope they will be successful.
On Question, Motion agreed to.

FIREARMS (VARIATION OF FEES) ORDER 1976
6.47 p.m.
Lord SWANSEA Lord SWANSEA rose to ask Her Majesty's Government whether they will reconsider the scale of fees contained in the Firearms (Variation of Fees) Order 1976 and the Firearms (Variation of Fees) (Scotland) Order 1976. The noble Lord said: My Lords, I beg leave to ask Her Majesty's Government the Question standing in my name on the Order Paper. Your Lordships may well wonder why I did not lodge a Prayer against these orders during the time allowed for praying; but as you will no doubt remember, such was the pressure of business in your Lordships' House during October that I was advised by the usual channels that there would not be any time available for a debate on such a Motion. I feel that your Lordships would hardly have welcomed any additional business at that time; and that is why I have left it until now to raise the question of these increased fees for firearm certificates and shot gun licences.
It is hard to say which has caused more annoyance in shooting circles: the actual content of these orders or the manner in which they were introduced and laid before Parliament. They were made on 26th August, in the middle of the Summer Recess. They were laid on 7th September, again during the Recess. They came into operation on 1st October, only four days after your Lordships' House returned from the Summer Recess and ten days

495
before the other place returned from the Recess. The orders were rejected in Standing Committee in another place but were reinstated on the Floor of the House. There really has been no time for these orders to he debated before they came into effect.
I feel that Her Majesty's Government have not really played the game so far as these orders are concerned. How is it that they could have come into effect before the end of praying time? It seems to me almost to indicate a contempt for Parliament; that Parliament is being taken for granted, and that these orders have been allowed to come into effect before Parliament has had a chance to say anything about them. I have heard it argued that one reason for this was the beginning of the game-shooting season, but I do not think that that is a very valid argument because, unlike game licences, shot gun certificates and firearm certificates do not expire at a fixed time of the year.
These swingeing increases, many times the fees which have been charged up to now, can only be described as punitive. One cannot help asking why one section of the community should be penalised in this manner, because those to whom firearm certificates and shot gun certificates are issued, after due investigation, are by definition among the most law-abiding in the community, and it is very hard on them that they should be subjected not only to filling in forms, and protracted and often inefficient police procedures, but to paying through the nose for the privilege. The Government profess to support and encourage sport in all its forms, through the medium of the Sports Council and in other ways, but in this case I wonder whether their policy is not actively to discourage a large section of the community from following the recreation of their choice.
These new fees will hit a large section of the community very hard indeed, and I would remind your Lordships that shooting is one of the fastest growing participant sports in this country. The National Rifle Association, which controls full-bore shooting, has 700 affiliated clubs, 80 affiliated county and Services associations and about 2,600 members, and those numbers are growing all the time. The
496
National Small-bore Rifle Association has 3,300 affiliated clubs and approximately 100,000 members. The Clay Pigeon Shooting Association has 500 affiliated clubs and about 5,700 members. The Wildfowlers' Association has some 40,000 members. So we are not just talking about that much maligned grouse shooting, but about a very much larger section of the community, one which is a very appreciable proportion of the population which takes part in sport. I think that the Government would be ill advised to turn a deaf ear to their protests.
Apart from the organised associations, there are many thousands of what one might call week-end shooters, those who go out wildfowling, pigeon shooting, rabbit shooting and so on, giving a service to the farming community. Also, one must not forget the farmer and the gamekeeper, to whom the gun is a tool of his trade. All these people will be extremely hard hit by these new fees.
There was an interesting Answer given to a Question in another place on 11th November, about the administrative costs in selected police areas on which these new fees were allegedly based. The cost of issuing a firearm certificate on first application varies from £51 in the Metropolitan Police area to £4·70 in the Avon-Somerset area. For a renewal of a firearm certificate the figures are £33·68 in the Metropolitan area and £3·67 in Lancashire. The cost of issuing a shot gun certificate is given as £12 in the Metropolitan area and £1·67 in the Avon-Somerset area. Renewal of a shot gun certificate costs £7 in the Metropolitan area and £1·63 in the Avon-Somerset area. There is such a wide disparity between these figures—one wonders why the Metropolitan Police should be top of the league table by a very considerable amount in relation to other forces—that it is hard to see how the Government arrived at an average figure at all. The only answer seems to have been to pick some figures out of the air, and it appears that that is just what they have done.
The renewal fees, in particular, are out of proportion to the fees for the issue of certificates. In the case of a firearm certificate, the fee for a grant is £12 while the fee for renewal is now £10. I cannot be expected to believe that, even assuming that it costs £12 to establish the bona fides of an applicant for a firearm certificate,

497
it costs £10 only three years later to make sure that that person is still a law-abiding character. I find that very hard to believe. Similarly, the renewal fee of £4 for a shotgun certificate is very high in proportion to the fee of £5 for a grant. I hope that the Government will take another look at these figures, because they are simply not fair.
I wonder how the figures of police costs were arrived at. I cannot help feeling that in some police areas there must be a lot of police time wasted unnecessarily in calling on applicants at their houses. For instance, I heard the example of another noble Lord whose firearm certificate was due for renewal, and he told the police that they could come to see him on a certain date when he would have his firearm certificate ready for them. Nevertheless, two policemen turned up on another day before the appointed day, but he did not have his firearm certificate with him, so he told them to go away and come back on the day for which they had made the appointment. Subsequently, an inspector and a sergeant turned up, and one wonders why it was necessary to send high-ranking officers.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, may I intervene? If the noble Lord would like to give me details of this case, I will gladly look into it.
Lord SWANSEA: My Lords, I am very much obliged to the noble Lord. But one wonders why it is necessary for more than one police officer to be sent on such an errand, if it is necessary to send one at all. The orders show signs of being drawn up hastily and in an ill-considered manner. As an example of that, I would draw your Lordships' attention to Section 32 in its original form. Subsection (1)(c) states that a fee for a variation shall not be charged if it is done at the same time as the renewal of the certificate. That provision was omitted from the order. I feel sure that it must have been omitted inadvertently because the point was picked up by the vigilant secretary of a shooting organisation who drew the attention of the Home Office to it. I gather that the Home Office has admitted that an error was made, and it has now been put right. But that is no more nor less than sheer carelessness. It makes me wonder whether
498
the order as it stands is defective and whether it should be withdrawn and re-drafted. The Secretary of State has the power to vary the fees, which is what he has done in the case of this order, but I do not think he has any power to make amendments of substance in the body of the Act—which, by the omission of this provision in Section 32, is what this is.
I am afraid that so far I have been very critical of the Government's actions over this order. I hope that it is still within their power to do something to case the lot of the shooters. One way in which this could be done would be to extend the period of validity of firearm and shot gun certificates. It is clear that the present period of validity is entrenched in the Act, so it would require legislation to amend it. The Government have already said that they have plans for amending the Firearms Act in various respects. I should like to think that, if and when that happens, the Government will embody a provision in their new legislation to extend the period of validity of firearm and shot gun certificates from the present three years to five or six years. The new fees are a quite unreasonable imposition, taken over a three year period, but they might just be tolerable, or slightly more palatable to the shooting public, if they were spread over a longer period. After all, in this country more people are killed on the roads than by shooting, yet now we have driving licences which are valid for life.
I hope that the Government will think again about these orders and that they will not be afraid to change their minds. If they do, it will not be regarded as climbing down but rather as a victory of mature judgment over hasty and ill-considered first ideas. I hope very much that the Government will take heed of what is said this evening and will reconsider these fees. I hope also that when they introduce legislation to amend the Firearms Act they will extend the period of validity of these certificates. If the Government will listen to the voice of the shooters throughout the country and act on the voice of the people, they will not lose face. Rather they will be applauded for reaching a sensible decision with their second barrel.
7.4 p.m.
Lord COTTESLOE: My Lords, I am very glad that my noble friend Lord

499
Swansea has raised this matter today. When, a few weeks ago, I asked a Question on the subject, the noble Lord, Lord Harris of Greenwich, gave me rather a dusty answer, to the effect that a decision had been made and that there was no question of discussion or of further consideration. However, I understand, and I hope I am right in understanding, that the Government have since let it be known that their attitude is in some ways a little less rigid.
On the general policy that the licence fees should pay for the control, that is, on the face of it, logical and reasonable. I was told by the noble Lord that it was the Government's policy, not only in this particular matter but right across the board. I think that those were the words that he used. All the same, I have some misgivings about the universal application of such a policy. For instance, I read that it is proposed to make the fees charged to safe and careful drivers of cars pay for the treatment in hospital of the victims of dangerous drivers. That may or may not be true, but it is seriously put forward. Surely such an arrangement could not be regarded as either equitable or even logical.
In a wider sphere, what about the charges made by the nationalised industries? There, I suppose, nobody would question in principle that the charges should cover the costs, but we all know perfectly well that in many cases they fail to do so, year after year, by many millions of pounds. Therefore, although in general the principle of fees covering costs seems reasonable, one has certain reservations, particularly if, in this case, the costs covered are calculated, as I have somewhere read, to include the cost of prosecutions for infringements of the regulations. I hope that the Minister may be able to assure us that they are not so calculated, that the law-abiding will not be required to pay, within this limited field, for the malefactors.
But accepting the principle, it leads to such swingeing increases that they will inevitably cause hardship to many thousands of law-abiding citizens who use shot guns or rifles for sport and recreation. When I raised this matter a few weeks ago, the noble Lord, Lord Leatherland,
500
suggested that shooting was a privilege of the rich who could well afford such fees. But that is not so, as I think the noble Lord was perfectly well aware, for many thousands of people, men and women, up and down the country—my noble friend Lord Swansea gave the figures—who use firearms for sport and recreation are of very limited means. I think not only of the hard-working farmers, smallholders and market gardeners who use firearms to keep at bay the birds and beasts which batten on their crops, but even more of the many thousands of members of small-bore rifle clubs up and down the country, using·22 calibre rifles on 25 yard ranges—modest and law-abiding people, for the most part, of strictly limited means.
No doubt the costs are carefully calculated, though an average of £30 or more for the expenses of the police in making their inquiries before granting a firearm certificate in the first instance does appear to be grossly excessive. Certainly a fee of £10 for the straightforward renewal of a licence already in existence is not at all reasonable. Indeed, it is considerably higher than the calculated cost, even in the Metropolitan area, which is top of the league.
I hope that the Minister will be able to tell us that he will take a searching look at these expenses to see whether it is really essential that they should be incurred on such a scale, and that the very obvious way in which the fees could be halved, in effect, by doubling the period of validity of the licence will be seriously considered. I understand that legislation would be needed to extend the period and I note that a Bill for that purpose was introduced a few weeks ago by Mr. Marcus Kimball in another place. I am not quite sure whether that Bill lapsed with the end of the Session; I suppose it did, but if so I hope it will be reintroduced and I very much hope that the Minister may be able to tell us that, if so, time will be found to enable that short and, in my view, essentially non-controversial, measure to find its way on to the Statute Book. It would do much to alleviate what will, by many thousands of law-abiding citizens, otherwise be felt to be a deplorable hardship and an unnecessary deterrent to the pursuit of their chosen pastime.
7.11 p.m.
Lord SANDYS: My Lords, we have had a short and very interesting debate on a matter raised by my noble friend Lord Swansea and I am particularly glad to take part in another debate in which he has raised once again the issue of firearms, because I took part in the last debate, on 23rd October 1973, when he raised the broader issue of firearms control.
One of the important factors when we consider the cost of the certificates is that so short a time ago as 1968 when the Firearms Act reached the Statute Book, we were dealing with a single fee of five shillings for both a firearm certificate and a shot gun certificate. I think it is a measure of both the effects of inflation and certainly the costs of administration concerned in putting into effect the provisions of the Firearms Act, that we are now facing this remarkable rise in fees. I hope I shall not weary the House in recounting how these rose. Of course from 1968 the firearm certificate fee diverged from the shot gun fee, but if I take the higher of the two, from 1969 when it was still five shillings it rose in 1970 to £2·10, in 1971 to £3·10, in 1975 to £7 and now, in 1976, we are facing a £12 fee for a firearm certificate.
I believe that the arguments advanced by both my noble friends are convincing ones for seeking the Government's attention to this matter and redressing it in the ways they have both described. I believe that a further matter has given great concern, a matter to which my noble friend Lord Swansea referred; namely, the manner of the introduction of the order. However, I wish to dwell a little more on the philosophy behind the register. I draw comfort from the Green Paper which we discussed on 23rd October 1973 (Cmnd. 5297) which referred to the philosophy behind the register, and it said this at page 9 of that document:
"two kinds of measures are required for the prevention of crime: measures to reduce the opportunities open to the criminal as well as those which provide for his punishment. One essential aim of any serious attempt to contain the growth of violent crime should therefore be to eliminate avoidable opportunities to acquire firearms for criminal purposes".
During that debate my noble friend Lord Gisborough raised an interesting point because he questioned the value of the register as such, and he said this:
502
"If the Home Office are wedded to this certificate and insist on keeping it I think they must prove that it is of some value." (Official Report, 32/10/73; col. 596.)
I think from this side of the House we accept that a degree of control for the reasons advanced is necessary, and we hope the Home Office will be able to give an assurance that the register really is fulfilling a useful purpose.
I turn now to Schedule 2 of the order because I do not think this has been touched on by either of my noble friends. That concerns the situation of the registration of dealers. Since the 1968 Act, and certainly in previous Statutes, it has been an offence—and Section 3 of the 1968 Act makes it an offence—for a dealer to deal in both firearms and ammunition without registering. In 1968 we were dealing with a registration fee of £5 with a fee of £1 for renewal. Today, we are looking at a very different situation, both in the trade as such and also in the registration fee provided. Here we are now faced with the position which the Government have compelled dealers to face; namely, an initial registration fee of £25 and a renewal certificate fee of £20. In a large number of places where trade in ammunition rather than weapons is a source of support to sportsmen and clay pigeon clubs and other bodies, I believe that the hardware merchant will suffer. I believe that quite a large number of hardware merchants will find that the new fees for registration and renewal will be such that they will believe that on small margins of their trade it will scarcely be worth while continuing their business if the fees are to be sustained and increased, because if we look at the way in which fees have been increased over the past few years, what may we expect in 1977 and 1978?
I turn now to the position as it was in 1971, and we have had some difficulty in establishing the numbers of firearm certificates and shot gun certificates. The Green Paper to which I referred (Cmnd. 5297) acquainted us, on page 9, with the information that in that year, 1971, 190,000 firearm certificates were issued in England and Wales and 38,000 in Scotland. There were 715,000 shot gun certificates in England and Wales and 77,000 in Scotland. Granted that those figures are now five years out of date and may well have moved in either direction, it is rather difficult to

503
calculate what the revenue is likely to be. Nevertheless, if one assumes that the renewal fee for a shot gun certificate is going to be £5 and for a firearm certificate is going to be increased, as the order sets out, to £12, we are faced with a situation in which the revenue is liable to acquire a total figure of £6,250,000 from these new imposts.
I have little doubt that my figures are incorrect, and I hope that the Home Office will be able to assure us that costs are only just being covered by fees—a point which my noble friend Lord Cottesloe referred to—because if I am right and there is a considerable surplus to the revenue account, a considerable surplus in fees paid, over and above costs, it will indeed be a justification for the argument put forward by my noble friend Lord Swansea that an inequitable position has been reached.
My Lords, I do not think that this punitive increase can be justified by the Government unless the costs are such that they varied to the high extent which the Question revealed in another place on 11th November. It gives a very wide band of police costs. I hope that in his reply, the noble Lord, Lord Harris of Greenwich, will be able to give us a little more information in this regard. I am grateful to my noble friend for bringing forward this Unstarred Question, because I believe it is a matter which a large number of sportsmen in this country would seek to redress.
7.21 p.m.
Lord HARRIS of GREENWICH: My Lords, like the noble Lord, Lord Sandys, I am glad that we have had an opportunity for a debate on these orders. Certainly the increases introduced by these orders are substantial, and it is perfectly natural that the people affected should ask why we found it necessary to introduce them, particularly in view of the fact that firearms fees were substantially increased as recently as July 1975.
The background to these increases is this. For many years, only a nominal fee was charged for licences and certificates issued in respect of activities which were controlled in the interests of public safety. As the noble Lord, Lord Sandys, has just said, until 1968 the fee for a firearm
504
certificate was five shillings. Since then, the policy has been changed by successive Governments—I may say as a result of their general philosophy on this matter—but also as a result, no doubt, of Section 5 of the Public Expenditure and Receipts Act 1968, which provides for the fees charged under certain Acts to be raised by order,
"With a view to securing from the fees, charges or other payments…a net return corresponding more nearly with the cost of the matters for which they are payable…".
That was the intention of Parliament in 1968, and it has been implemented since then.
My Lords, since then, as a result of this view, our policy has been that the fees for licences and certificates for controls such as those involved in the 1968 Act, but not only that—and I will come to one or two other examples in a moment—should be set at such a level as to cover the cost of certification and registration procedures, but not, I may say to the noble Lord, Lord Cottesloe, for the cost of prosecutions. I believe that that policy is right.
Where controls are required to regulate a certain kind of activity, people engaged in that activity should pay the economic cost of the issue of their licences or certificates to do so. If they do not, the deficit has to be added to the burdens already borne by taxpayers and ratepayers in general. The noble Lord, Lord Swansea, said that we should listen to the voice of the shooters, but on an occasion like this we should bear in mind the interests of the general body of taxpayers as well. As I indicated a moment or two ago, this policy does not apply only to firearms. It applies to the whole range of fees, from the licences issued for petrol filling stations to the registration of aliens. The firearms fees are not the only ones which have increased steeply over the past two years. The reason for this increase has been the level of inflation.
Perhaps I may give two examples with which the Home Office is concerned. The fee for an alien's registration certificate was raised in 1975 from 25p to £2·50, a fairly substantial rate of increase. The fee for a naturalisation certificate was increased from £30 to £40 in 1975, and to £70 in 1976. I hope noble Lords will not assume that we are searching round to persecute the shooters. This is a policy being implemented over a wide area.
Lord SWANSEA: My Lords, I am grateful to the noble Lord, Lord Harris of Greenwich, for allowing me to interrupt him. He mentioned things like the registration of aliens and so on. But are not such payments once-only payments, whereas what we are talking about this evening are periodic payments?
Lord HARRIS of GREENWICH: My Lords, I am talking about a policy which has been implemented by Governments of both Parties over a wide range of fees, some on a once-for-all basis, others of an annual character. The fact is that there is no conceivable reason why in this case there should be a public subsidy. If it were any other issue, the noble Lord would be one of the first people saying just that. The situation is that these fees are kept under review to ensure that they keep pace with rising costs.
At the end of last year, we carried out a review of the costs in a representative number of police force areas in Great Britain, of issuing, renewing and replacing firearm and shot gun certificates, and of registering firearm dealers. The noble Lord, Lord Swansea, said that we had picked our figures out of the air. I do not think that that is right in any way whatsoever. The review was a careful one. It covered the Metropolitan Police area, and eight other forces, including one in Scotland, chosen to give a reasonable picture of the costs in urban and rural areas, and in metropolitan and non-metropolitan counties. The sample was nearly 20 per cent. of all the police forces in Great Britain, and we have not the slightest reason for believing that the results would have been any different if we had called for a return from every force in the country. It would have cost a great deal more money, and there is no certainty that we would have reached a different result.
My Lords, the noble Lord, Lord Swansea, raised the question of why costs are greater in metropolitan areas. The noble Lord is right; costs are higher in metropolitan areas than in any other area. The fact is that the crime situation is a great deal more serious in metropolitan areas, particularly in the Metropolitan Police area. It is the view of the Commissioner that he wishes to devote more resources to this matter because of the grave crime situation which appertains in
506
London. With great respect to the noble Lord, there are few people in this country who would dissent from the judgment of the Metropolitan Police Commissioner on a matter of this kind. He is responsible for the safety of the citizens of London, and if that is his view, certainly it will be one supported by the Government.
The review that I have just mentioned showed that the fees fixed in 1975 fell a long way short of the costs of administering the certification and registration procedures. A good deal of stress has been laid on the fact that the increased fees will cost the shooters somewhere about £1 million a year, and indeed that figure is just about right, because the 1975 review showed that the anticipated revenue from firearms fees in 1975-76 was nearly £1 million less than the estimated costs of the certification and registration procedures. Indeed, even with the new scale of fees—and this deals with the point just raised by the noble Lord, Lord Sandys—we do not expect revenue to balance expenditure until 1977-78, and that will happen only if there has been no increase in costs during the intervening period.
We got into this difficulty because there was no increase in the firearms fees between 1970 and 1975. A review was carried out in 1972, but it was another three years before the fees were raised. By then, the 1972 figures were wholly out of date, given the rate of inflation in that period, and although an arbitrary percentage was added to those figures to cover rising costs during the previous three years, this came nowhere near meeting the additional costs which had resulted from the rapidly escalating rate of inflation during this period. Had the 1975 figures been set at a more realistic level, the sharp increases in costs introduced by the recent order would have been unnecessary.
However, that is by the way. To put the matter in its simplest terms, the 1975 survey showed that the firearm certification procedures were being operated at a heavy deficit after the revenue from fees had been deducted. This deficit could be recovered in only two ways; either by increasing the firearms fees or by increasing the income from rates and taxes. In that situation it was, in the Government's view, wholly right to increase the firearms fees.

507
The noble Lord, Lord Sandys, asked a question about the numbers. He mentioned the Green Paper of 1971 and the number of firearm certificates and shot gun certificates then. The most recent I have are for 1974. These show that in 1971, as the noble Lord said, the number of firearm certificates was running at 190,000 in England and Wales. This had slipped back marginally by 1974 to 185,865. So far as shot gun certificates were concerned there had been an increase; in 1971 the figures were 715,000, and in 1974 the figures were 766,952.
There are some who argue that there was in fact a third option open to the Government, and that was to reduce the cost of administering the certification procedures by cutting down the time spent by the police on this work. I intervened in the speech of the noble Lord, when he cited a particular example of a Member of your Lordships' House who had apparently been interviewed by a surprising number of police officers. If he will let me know the details of this case, I am sure the chief constable or chief officer concerned will look into it. But I do not believe that the police handle this matter with less than their customary efficiency; I have never seen any evidence to that effect. If any such suggestion is made, I will of course look into it.
On the argument itself, that we should cut down on the amount of work and therefore the cost of administering the whole procedure, I am afraid I must be quite blunt with the House; I just cannot accept this argument. Most of the costs of administering these procedures arise not from clerical and administrative work at headquarters but from the inquiries carried out by police officers on the ground to establish the suitability of the applicant and his security arrangements for ensuring safe custody of the firearms. It is the responsibility of chief officers of police to decide how much time and effort should be devoted to the operation of the firearms control, and clearly this will vary from one force to another. But the responsibility rests with the chief officer, and the Home Secretary has no power to intervene. Neither would he wish to do so. It is clearly desirable in the public interest that the firearms control should be operated effectively, and the suggestion
508
that chief officers of police should be invited to devote less time to this work, in the present crime situation, is wholly misconceived.
The noble Lord, Lord Swansea, and the noble Lord, Lord Cottesloe, have suggested that the increased fees might be offset by increasing the validity of firearm and shot-gun certificates from the existing three years to either five or six. The situation is that there is at present no power, to do this, because Section 26 of the 1968 Firearms Act provides that certificates shall be valid for three years or such shorter period as may be prescribed. Moreover, I am not convinced that extending the period of validity would necessarily have the anticipated effect. At present the police carry out their inquiries into the suitability of the applicant and of his security arrangements at three year intervals, when the certificate comes up for renewal. If the period of validity were extended, the police might either carry out these checks less frequently, with a consequent reduction in the efficiency of the firearms control, or they might carry out additional checks during the validity of the certificates. If they opted for the second course, additional expenses would be incurred and this would have to be reflected in the scale of fees. We might, therefore, find that the extended validity of a firearm certificate was offset by an even higher fee. However, I accept that there might be some savings on the clerical and administrative work at headquarters, and this suggestion is certainly one on which we are prepared to keep an open mind; we will look at it carefully when the opportunity occurs to amend the 1968 Act.
The noble Lord, Lord Swansea, referred to the manner in which the orders were introduced. It is true that outside bodies such as the Long Room Committee, which represents of course, the interests of the various associations concerned with the sporting use or sale of firearms, were not consulted; he is quite right in saying that. There are many occasions where consultation is valuable, and views expressed by those closely concerned with the use or sale of firearms may have a significant effect on the Government's proposals. Certainly I am in favour of consultation on matters of concern to outside bodies in any case where there is scope for various courses of action. But consultation is

509
useful only where there is more than one option, and the Government can consider the views expressed before deciding which of those courses of action to take. In this case we had, of course, no such option. Only one course was open to us; no matter what views had been expressed by the shooting associations we were bound by the Government's economic policy to increase the firearms fees to the level set in the 1976 orders.
In these circumstances it would have been a mockery to go through the motions of consulting outside bodies. The best we could do was to give outside bodies such as the Long Room Committee advance notice of the Government's intention to increase the fees, and this was done on 6th August, some two months before the new orders were to come into operation.
Lord SWANSEA: My Lords, that was in the middle of the holiday period when it was exceedingly difficult for any committee, the Long Room Committee or any other body, to call a meeting of its members.
Lord HARRIS of GREENWICH: My Lords, with great respect, I believe that two months is a fairly substantial period of time. I am not quite clear whether the noble Lord would have been happier had the Government brought in the orders a month earlier. Certainly the revenue would have been more substantial if we had brought the orders in earlier, but, as I understood it, his view was that it was a pity we had increased the scale of fees to the present level. Certainly we would be anxious to talk to the Long Room Committee on any matter, but there is no point in having fake consultations. Having been at the receiving end of some of these in the past, I must say I find it a particularly unattractive way of wasting one's time when one is told one is being consulted and one knows perfectly well that there is no consultation involved and one is simply being told that a decision has been arrived at.
Finally, I should make it clear that there is no truth in the suggestion that the Government increased the firearms fees with the object of reducing the number of
510
firearms in private possession. We have no intention of depriving genuine shooters of the right to enjoy their sport. We accept that the great majority of shooters are law-abiding people who are fully prepared to co-operate with the police, and it is no part of our philosophy to subject them to unnecessary harassment or restriction. But not everyone who wishes to possess a firearm is a responsible shooter, and controls are necessary to ensure that these lethal weapons are not held by irresponsible or manifestly unsuitable people. The cost of administering the certification procedures must be paid for, and the fees must accordingly be set at an economic level. The Government do not intend to allow these fees to be subsidised by the taxpayer. I cannot, therefore, undertake to reconsider the scale of fees contained in these orders.
Lord SANDYS: My Lords, before the noble Lord sits down, may I say that there was one point raised by my noble friend Lord Swansea in regard to whether the order was substantially correctly drafted in so far as the question of variation of a firearm certificate was concerned. He referred to Section 32(1)(c), and the drafting of the order refers only in general terms under Section 32(1)(b) to variation. Can the noble Lord confirm that the variation of certificates is catered for within the order?
Lord HARRIS of GREENWICH: My Lords, I shall gladly go into that matter.