HL Deb 26 July 1976 vol 373 cc1145-62

8.8 p.m.

Lord TERRINGTON

My Lords, I beg to move that the Bill be now read a second time. Having spent the greater part of my working life in a city partnership it gives me particular pleasure to he associated with a Bill of this nature in your Lordships' House. I say "particular pleasure", because this Bill is concerned with modernisation and simplification in an area which I realise from personal experience is highly desirable, especially for the investing public.

Before embarking on the Bill itself, it might he helpful if I were to spend a short while on matters relating to the existing procedure for transferring securities, because I suspect that the average investor is probably not aware of exactly what is involved. But before doing so, in order to avoid any possible misunderstanding I should like to explain that this Bill is solely connected with a computerised settlement system. It is not concerned with computerised dealing and therefore has nothing to do with the Ariel system set up by certain institutions.

To begin with, it may come as a surprise to your Lordships to learn that settlement work represents between a quarter and a third of the running costs of a London firm of stockbrokers, and despite economies carried out during 1974 those settlement costs continue to rise. Furthermore, the present system has difficulty in coping with the enormous amount of paper that has to be handled at times of high market activity, and certain aspects of the system complicate settlement as well as bemusing investors of all types.

In fact, both in 1968 and 1972, and again in the first quarter of 1975 there was evidence that the systen was in danger of breaking down, as it did in New York in 1970. I can vouch from personal experience what that meant in Wall Street, because I was working there at the time. The increasing difficulties of managing the settlement arise mainly from the fact that it relies heavily on skilled and experienced staff in firms' offices who carry out complex but routine work. This type of staff is becoming increasingly difficult to recruit, particularly where overtime is involved. Therefore, it seems to be quite logical that the Stock Exchange authorities should decide to simplify the process by transferring the complexities of settlement to a centre equipped with computers and modern systems which can overcome the problems now facing the market.

So far, I have avoided the use of jargon, but in explaining the existing system of settlement, perhaps I may he allowed some licence so that I can spell out my main reasons for believing a change is urgently required. The present procedure is based on what is known as "ticket passing" which, although appearing distinctively simple, is complex, expensive, and creates peak loads during periods of high dealing activity. It is a system under which the broker deals with a jobber, but to avoid the costs and delays of registration into the name of a jobber, the broker is normally paired with another broker dealing in the opposite way. Since in most instances the buyer has dealt in a different amount of stock from the seller, the result is a need to "split" and certify stock. Furthermore, when delivery instructions are passed on a "ticket" from buyer to jobber and thence to the seller, every stock "split" implies splitting the "ticket."

This antiquated and somewhat cumbersome system has operated almost unchanged for the past 100 years. What is now proposed is much simpler, and is called "Talisman", or, in other words, Transfer Machinery and Lodgment for Investors, Stock Management for Jobbers. The basic idea is to set up a depository for the holding of stock passing through the market in the course of the settlement. Its aim is to simplify present practice, while at the same time retaining all the advantages of the present fortnightly account, although I might add here that the system is highly flexible and can therefore fit in with various international settlement systems which do not operate on the basis of a fortnightly account.

Under the system, the Stock Exchange authorities will set up a nominee company called SEPON, or in other words, Stock Exchange Pool Nominees. This company will have a single undesignated shareholding account in the register of every company participating in the scheme. All sold stock will be transferred from the seller into the name of SEPON and purchasers will receive transfers out of SEPON. This is the "pool" account, to use another piece of jargon, and is a single holding of all stock in the course of transfer.

Finally, the Stock Exchange Centre, acting as the agent for each owner, will maintain within the "pool" account a number of separate accounts for each jobber dealing in the stock. These stock accounts reflect the changing status of stock during the settlement process. I could go into a great deal of detail on the whole question of transfer procedures under this new system, but, if I may, I will confine myself to one overriding matter about which I believe your Lordships wish to be informed when considering the merits of the Bill.

Here, I should like to emphasise that while the legal title of a stock will pass to SEPON on registration with the company concerned, the beneficial rights attaching will remain with the seller until he has been paid. Not until account day will the beneficial ownership be transferred to the jobber, and the selling broker will then receive payment. What happens to the stock of course will depend on instructions given to the Centre by the jobber, but normally it will be used to fulfil purchase orders—or, to employ another piece of jargon, a process called "apportionment". Once this has taken place, beneficial ownership is transferred to the buyer.

My Lords, I have tried to outline the existing and the proposed new systems in the simplest possible way, and I hope that in the process I have not bored your Lordships to excess. But I feel that some of the details of the mechanism have to be explained as the necessary background to the Bill. I should now like to turn to the positive advantages attaching to this new system, with particular reference to the investing public. By that, I mean all investors, whether investing directly or through pension funds, life assurance companies or unit trusts.

At this point I should declare another personal interest, as a member of the Wider Shareownership Council, by saying that any proposition which simplifies matters for the smaller investors is especially welcome to me, because I am a firm believer in employee participation through equity investment.

My Lords, the "Talisman" system in fact will return to the simplicity of having bargains "settled as dealt" This will eliminate the delays so often experienced today and herein, in my submission, lies the chief merit of this modernising Bill. In future, investors will receive their certificates more quickly and also their dividends and rights issues. At present, there is often a delay when securities are sold "cum dividend" or "cum rights". In transferring those dividends or rights from the seller to the buyer under the new system, these problems will be sorted out quickly by the Stock Exchange Centre.

I do not think my introduction would be complete without some reference to the benefit accruing to the United Kingdom securities industry itself. Although these are naturally financial benefits, they are not unimportant, bearing in mind the role of the City of London as a major financial centre. Not only will there be a saving in costs to member firms of the Stock Exchange, but company registrars also will benefit from a much more even flow of transfers. In fact, I understand that the registrars of larger companies have estimated that this system should reduce their costs by something like 10 per cent. To my mind, any system which can reduce costs and free the time of member firms to concentrate on providing a better service to United Kingdom and international investors merits wholehearted support. It is on this note that I now turn to the Bill itself.

This Bill is necessary to allow the principal legal innovation of "Talisman", which is to enable the transfer of securities by book entry and also to allow an interest in a beneficial title to be pledged to a third party by entry in a pledged account. Clause 1 takes care of this point by exempting companies from issuing certificates relating to securities allotted or transferred to a Stock Exchange nominee designated by the Secretary of State, in other words, SEPON. This exemption is necessary because the number of shares held by SEPON will be changed from day to day. No useful purpose would be served by requiring companies continually to issue and reissue certificates. In any case, it would impose an intolerable burden on company registrars. Instead, the company will maintain in its registers a running total of the number of securities held by SEPON at any one time.

The next most important point is the need to amend the Stock Transfer Act 1963, to enable new transfer forms to be authorised. Here, I should like to mention that the noble Lord, Lord Clitheroe, who introduced the 1963 Bill into your Lordships' House, has asked me to say that he fully supports this new Bill. The prescribed forms to be used for the transfer of registered securities arc set out in the Schedules to the 1963 Act. Section 3(2) of that Act provides that the Treasury may amend the said Schedules so as to alter the forms or substitute new forms, or add forms for use as alternatives. The introduction of "Talisman" will involve a substantial change in the system for transferring securities dealt in on the Stock Exchange, and will require more radical alterations in the transfer forms than was envisaged when the Stock Transfer Act was drafted. In particular, special forms will need to be prescribed for transfers to and from SEPON. These forms will not need to contain all the information envisaged by the 1963 Act. They will be executed mechanically rather than by hand. Clause 6 widens the powers available under that Act so as to enable such forms to be prescribed, but existing forms, of course, will continue to be authorised for transfers not made through SEPON. Under this scheme, there will be two transfers, a seller's and a buyer's, and it is proposed that duty will be levied on the actual buyer of the stock. This is taken care of in Clause 6. Arrangements have been made in the 1976 Finance Bill empowering the Stock Exchange to collect this duty on behalf of the Inland Revenue

My Lords, so far as the other clauses in the Bill are concerned, I should like to draw some attention to Clause 2. The efficiency of the new system depends on the early deposit of certificates by the seller in order that securities can be transferred to SEPON. Since the seller may have only recently taken delivery of the securities, it is essential that new certificates should be issued promptly to purchasers. One of the principal obstacles to the prompt issue of certificates is the necessity for them to be under the common seal of the company. The process of affixing the seal may take time, particularly if the certificates have to be sent elsewhere for this purpose. In order to cut out delay, this clause enables companies to have a special seal which may be used for authenticating certificates and for no other purpose. If a company chooses to make use of this facility it will be able to entrust the special seal marked "Securities" to the company registrar, who will then be able to issue certificates without reference to head offices.

Before leaving this clause, perhaps I ought to mention that gilt-edged securities, such as Government and corporation stocks, are not to be included in the Talisman settlement system, as they are, of course, dealt in for cash and not for the account.

With regard to Clause 3, this clarifies the law regarding the keeping of registers and other records on computers. At present there is some doubt about whether company records may in fact be kept in this way. Clearly it is desirable that in these modern times there should be no impediment to keeping records on a computer, provided suitable safeguards are applied, and in fact the 1973 Companies Act included such provisions in Sections 81 and 82. The clause, therefore, requires that any information kept in a non-legible form shall be capable of reproduction in a legible form, and that any duties imposed on companies to allow inspection of records, or to provide copies of them, shall be interpreted as being a duty to allow inspection or to provide copies of a reproduction of information in legible form.

This clause also gives the Secretary of State the power, by regulation, subject to Negative Resolution procedure, to make special provision in connection with registers and records kept on computers, as the Companies Acts lay down various requirements concerning records, such as the places where they are to be kept and rights to inspection. These Acts were, of course, drafted long before computers were in common use and they naturally assume that the records will be in legible form. But it is important to ensure that the rights of the users of the records are not in any way prejudiced as a result of the information being computerised. Furthermore, it is important that companies cannot use computerised records as a means of evading the law, and it is, therefore, necessary to adapt the existing requirements so as to make them applicable to computerised records. This regulation making power will enable this to be done.

The clause, of course, applies to records generally, but for the purposes of this Bill the most important records are the registers of members and debenture holders. In large companies registers will include thousands of entries, and it will, therefore, be of major convenience for registrars to have this matter put beyond any doubt. It will greatly facilitate the process of keeping the registers up to date, while, at the same time, the safeguards provided in the Bill and in the regulations will ensure that the interests of all those who require access to the registers are fully protected.

I have already spoken at some length rather late in the day, but I hope your Lordships will bear with me a little longer because I must finally deal with an important clause which was not included in the original Bill, but was added in Committee in another place. Clause 5 is concerned with the position of securities held by trustees operating under this new system, and it removes any doubt that might exist as to the ability of trustees and personal representatives to participate in the Talisman scheme.

As I have already explained, under the new settlement system, sellers will part with title in securities to a Stock Exchange nominee before receiving payment and buyers will make payment before the securities are transferred to them from that nominee. It might have been argued in relation to trustees or personal representatives that to part with title before receipt of the purchase moneys or to pay the purchase price before the transfer of the securities to them amounted to a breach of trust or a failure to administer the estate properly. This additional clause specifically provides that trustees and personal representatives are not liable to be charged with breach of trust on the grounds that they have paid the purchase price before securities are transferred to them or that they have transferred securities to Sepon before receipt of payment. I hope that noble Lords who may have been concerned about this aspect of the Bill in its original form will find this clause satisfactory, as I am aware of some views expressed that trustees need specific authority to participate in the Talisman settlement system.

Finally, I should like to say a brief word about liability from losses arising from the use of Talisman. I am aware that concern has been expressed about this question, as losses might be due to a breakdown in the system or to fraud or negligence on the part of those operating it. But this is not a new problem, and in fact there could be less risk of loss under Talisman than under the present system, as sellers will no longer have to complete open transfers. In future all transfers will be made out to Sepon, thus reducing the opportunity for fraud or error. However, the Stock Exchange authorities recognise the importance of public confidence in this new system, and have accepted that, in the event of a valid claim, they will he fully responsible for any malfunction or misfeasance in the operating of the system. Furthermore, they are taking steps to ensure that anyone who does suffer a valid loss is reimbused quickly.

In commending this Bill to the House I should like to conclude by saying this: a great deal of thought and preparation has gone into this new system. As long ago as 1970 a City Working Party, under the chairmanship of the then Chief Accountant of the Bank of England, published its report. A part of this report contained proposals which formed the basis for Talisman, and as a result the Stock Exchange Council set up the Directorate of Information Systems and Settlement charged with the responsibility for developing and introducing the new system after extensive consultation with representatives of the securities industry.

In November 1972 the Council decided that introduction of the new system could not take place in a single step. It, therefore, authorised the development of CHARM (or to give it its rather dull official name, Checking and Reporting for the Market). This intermediate step, which is based on the "ticket" system, is now substantially in operation. Although no firm decision has been taken by the Stock Exchange, the authorities are considering the use of a pilot operation of Talisman in 1977 which will enable all organisations concerned to obtain practical experience of the new system on a limited scale at a low, and therefore controllable, volume.

I believe that a limited running-in procedure is a desirable prelude to the full working of the Talisman system, but, of course, this cannot be carried out next year unless the necessary legislation contained in this Bill is passed during the present Parliamentary Session. So you will see, my Lords, that there is now some real urgency in this matter, and in seeking the support of the House for the Second Reading of this Bill I would ask your Lordships to bear this rather important point in mind. My Lords, I beg to move.

Moved, That the Bill be now read 2a.—(Lord Terrington.)

8.28 p.m.

Lord CULLEN of ASHBOURNE

My Lords, my noble friend Lord Terrington—and I use the word "friend" in a personal rather than a conventional sense—has provided a very full explanation of the complex background to this short and simple Bill. Accordingly, I do not think there is any need for me to go into any further description of the present antiquated machinery or to go into the details of Talisman. I should, however, like to add my support to the Bill and briefly reinforce one or two of the arguments for bringing in this new system.

During the many years that I was working in the Stock Exchange, I have so frequently been aware of the disruptive effects of the peak loading of settlement arrangements on Account Day for transactions carried out during the previous 10 days and sometimes 15 days. If times were more normal, I would have encouraged noble Lords to visit the transfer department of a firm of stockbrokers on Account Day to see how hectic is the activity culminating in the delivery and payment of stock before the banks close. But the volume of transactions is now so low that such a visit would only reveal a relatively false picture.

My noble friend has pointed out many of the advantages that will be gained by Talisman. One of the most important will be the elimination of the delays that are often experienced by the buyer of shares in obtaining benefits attaching to those shares, dividends and interest payments, rights and capitalisations, takeovers, conversions and so on. This is particularly important in the case of' private investors, many of whom naturally do not understand the technical reasons for such delays, though the institutions are well able to look after their own interests. I have, however, made it my business to inquire of a number of institutions, all of whom are in favour of Talisman in principle, as are the various governing bodies.

There will be a vast amount of detailed work to be done at managerial level by the banks and other institutions in conjunction with the Stock Exchange, which is planning a pilot operation in 1977. There is, therefore, great urgency, as the noble Lord, Lord Terrington, said, that this Bill should pass quickly, so that the myriad nuts and bolts can be put together, since the managers of these institutions are naturally not prepared to get down to detail prior to the passage of the Bill.

I hope and believe that the Government look favourably on this Bill, and I should not like what I am now going to say to be taken amiss in any way, particularly as it is not strictly relevant to the Bill. It is, however, so topical that I cannot resist making a comment. Noble Lords will have noticed in the Press last Thursday that a flat refusal was given by the Chancellor of the Exchequer to a carefully reasoned argument by the Stock Exchange for the removal or reduction of the dollar premium surrender. The surrender rule, as your Lordships will know, obliges United Kingdom residents to give up to the Treasury 25 per cent. of the premium attached to an overseas stock every time it is sold. This refusal is a regular annual event which has been the outcome of submissions made by the Stock Exchange to the Government of the day since this temporary measure was introduced 11 years ago.

It is common ground that greater investment is needed for modernisation and expansion of our manufacturing industries so that our visible exports are competitive. By the same token, it is just as important that the service industries, which are responsible for our invisible exports, are similarly developed. Considering the tremendous part they have played over the last 200 years it would be madness not to build them up to the greatest possible extent. Unfortunately, what occurs in practice is that succeeding Governments impose or maintain positive handicaps to growth and development. The dollar premium surrender is a prime example.

Noble Lords will be aware that this impost was introduced as a temporary measure in April 1965. This action, at a stroke, wrecked the market in North American securities. Not only is this temporary measure still in force, but it was widened to include sterling area securities in 1974, and this has resulted in a large part of the South African market moving to the USA. A few weeks ago there were three firms of jobbers dealing in Kaffirs—as gold mining shares are known in the market. One of the three withdrew before the Chancellor's reply was received, and another immediately afterwards. So now there is only one. I do not consider that this constitutes a proper market. No doubt more business will now move to the USA. What can be the purpose of shackling the City, which is responsible for so many of our invisible exports?

I hope that the noble Lord, Lord Oram, will forgive me for raising this matter at this time, though I did give him advance warning of my intention. But I do wonder whether many noble Lords, or honourable Members in another place, are conscious of the handicaps that are imposed upon the securities industry by Governments of either Party. Having briefly drawn attention to it today, I will seek an opportunity for further debate on this subject after the Summer Recess. So, my Lords, I will say no more except to reiterate my support for this modernising Bill.

8.26 p.m.

Lord LYELL

My Lords, I think that the House will be immensely grateful to the noble Lord, Lord Terrington, for his detailed and excellent speech. This Bill may not be one of the longer Bills to come before the House, but nevertheless it is a very important Bill for the Stock Exchange, for the financial institutions in the City of London, and I believe for the general public at large. The details which we have had explained to us by the noble Lord, Lord Terrington, are not over-complicated—at least compared with some Bills that come before your Lordships—yet these details have to ensure that our system of registering certain company records and documents provides the best and most efficient service to all who may need these records.

The clauses dealing with exemptions from the obligation to prepare separate share certificates and company seals give adequate safeguards to everyone, but it is Clause 3 that I consider the most interesting, and indeed the most important, clause in the Bill. As we have heard from the noble Lord, Lord Terrington, this clause covers the use of computers and non-legible data for company records. This is going to allow the Stock Exchange, and other institutions, to make the fullest use of electronic data processing, so that all securities transactions can be speeded up, with no loss of efficiency, nor of the ability, for those who are concerned in share registers, to obtain legible copies of the information they may need from time to time.

If there is one major point in the Bill that should be emphasised it is this one, since company registrars are already able to give very swift and accurate information, and we have already heard from the noble Lord, Lord Terrington, of how they approve of this particular clause. Indeed, this clause will enable them to provide the services that they already render more efficiently and, what is very important, at no increased costs. Indeed, there may be decreased cost to start with.

Other details in the Bill we have seen, and heard from the noble Lord, Lord Terrington, cover unregistered companies and the rights and duties of trustees. There is of course this highly technical point which arises in Clause 6 dealing with the possible alteration of stock transfer forms, but it seems that the entire purpose of this Bill is to improve the efficiency of handling, dealing in, and in buying, selling and examining securities, bonds, stocks and shares.

This process of changing our company law to permit the pooling of Stock Exchange bargains is, I understand, the third and final stage of this acronym called "Talisman" that we heard so nicely explained by the noble Lord. This, apart from ensuring that the London Stock Exchange maintains its competitive position among the leading exchanges in the world—for example, the New York Stock Exchange, together with the Tokyo Stock Exchange—should give, and I believe will give, to the British investing public and to the other London financial institutions the sort of efficient service that the Stock Exchange wants to give.

The noble Lord, Lord Oram, will be aware that these financial institutions do much to promote the well-being and health of the City of London, which, as all of us know, is responsible for such a large proportion of our invisible exports. It is for this reason that I join the noble Lord, Lord Terrington, and my noble friend Lord Cullen, in their plea to the Government to at least re-examine the apparently temporary provision of the 25 per cent. premium surrender when overseas shares are sold. This provides a valuable sum for the reserves, currently in the region of £180 million each year; but there is this sad side-effect for the London Stock Market, and it is the influx of U.S. and foreign brokers into London. Already the United States' dealing side of the London Stock Exchange is minimal, and there are signs as we have already heard from my noble friend Lord Cullen, that other markets are already being affected.

Investors are very sophisticated and intelligent people and when United Kingdom investors find the Government placing what may appear to be temporary barriers before them on such occasions when they wish to invest in any overseas security, its attractiveness must be immensely strong if United Kingdom investors wish to continue investing in overseas markets. Portfolio investment by United Kingdom citizens abroad is still very strong, but what concerns the financial institutions in London is the cost of switching investments they may make overseas back to the United Kingdom.

The noble Lord, Lord Oram, will be aware of the correspondence between his right honourable friend the Chancellor of the Exchequer and other Members of Parliament, but I should like to add my support at this stage to the pleas of both noble Lords who spoke before me. The House may not see the immediate relevance to these pleas for a re-examination of the surrender premium, but the Stock Exchange believes in being able to offer all investors, United Kingdom and overseas investors, a competitive and comprehensive service.

We have been discussing this evening a Bill which will ensure, we hope, that the third link in the "Talisman" system is forged and it will be a notable step in providing the more efficient matching of bargains for investors in the United Kingdom. But the stock market is part of the financial institutions of London, which in turn provide a large part of the City's invisible exports. What we have discussed will help the back end, as I would call it—the administration, the administrative end—of the Stock Exchange, whereas the continuation of the surrender inhibits what I might call the front end of the market, that side of obtaining new markets. Such business is not easily found nor easily retained.

My Lords, we are talking of an institution that can provide an investor from any part of the world with an opportunity to invest in securities which are now collectively worth nearly £78 billion; £47 billion worth of securities were traded in the last year on the London Stock Exchange. The former figure shows that a large proportion of portfolio investment capital finds a profitable home in the United Kingdom, and the latter figure shows that investors find the London Stock Exchange to be a very keen and competitive market. Our discussing these measures this evening will mean that the investors of the world can continue to look on London as providing the efficient service which befits one of the three major stock exchanges of the world.

The "Talisman" system, which I understand was begun in one form in 1971, should be fully operative by 1977 or 1978 and certainly by, say, 1980, but all the advantages of speed, efficiency and security will be maximised by the operation of this system and, what is more, as we have heard from Lord Terrington, the investor and, above all, the small investor, will gain. All the provisions of the Bill seek to increase efficiency while maintaining security for the investing public, and for these reasons alone I am happy to support Lord Terrington's efforts and, of course, the Bill.

8.44 p.m.

Lord ORAM

My Lords, on behalf of the Government, I wish to say briefly that we welcome the Bill, and I compliment the noble Lord, Lord Terrington, on having taken it up in your Lordships' House after its successful passage through another plcae in the hands of Mr. Shersby. Lord Terrington almost apologised at one point for using jargon, but I found the way in which he explained the Bill most clear and I am sure that if he did use jargon he used it in a way that was most helpful to noble Lords and we are indebted to him for his explanation.

The new Talisman settlement system represents a vital step towards a more modern and more efficient Stock Exchange capable of meeting contemporary demands. It is easy to underrate the many jobs which go on behind the scenes, but without an efficient settlement system it is impossible to have an efficient Stock Exchange. Investors will not be prepared to invest their money on the Stock Exchange unless they can be sure that they will receive their certificates promptly, will get the dividends and rights issues to which they are entitied without delay or fuss and that when they sell their securities they will receive payment on the due date. Talisman is an important advance and will help the Stock Exchange to provide a better service to investors while also benefiting companies and streamlining the Stock Exchange's own procedures. The increased efficiency of the settlement system will, as Lord Terrington explained, bring useful financial savings, benefiting in particular the institutional investors; insurance companies, trade unions and pension funds.

The Bill enables the new settlement system to take effect. It makes some minor but necessary technical changes in the law relating to the issuing of certificates and the keeping of registers and other records which will enable companies to take advantage of modern computer and other data processing methods. It will thus also in some ways benefit other companies, and not merely those whose shares are listed on the Stock Exchange. The changes proposed are minor but nevertheless well worth while and the Government therefore readily support the Bill. The benefits of the Talisman system to the Stock Exchange, to the securities industry and its users will be considerable and the Government therefore give their wholehearted support to the Bill, which will enable it to be operated to full advantage.

One other issue has been raised tonight, both by the noble Lord, Lord Cullen of Ashbourne, and the noble Lord, Lord Lyell, and I am indebted to Lord Cullen for having given me notice that he intended to raise the question of the dollar premium surrender rule. His concern is apparent from what he said, and I am sure he welcomed the support he got from his Front Bench. He conceded, and I am glad that he did, that the question he raised is only indirectly related—I was tempted to say "remotely connected"—with the Bill, but neither I nor, I am sure, Lord Terrington, will complain that he has seized this opportunity of putting his views on the record; there is a connection and I am not denying it. However, he will not be expecting me to add anything to what my right honourable friend the Chancellor of the Exchequer has already said in reply to the representations which were made to him by the chairman of the Stock Exchange.

This question of the 25 per cent. requirement has of course been a subject of regular representations to the Treasury by the Stock Exchange, and the Chancellor has recently had the question fully reappraised. The principal objection to the proposed change at the present time is the reduction which would be made in the substantial contribution which the requirement makes to our foreign reserves, which are so vital for the years ahead. The Chancellor made clear in his reply to the chairman's recent letter that while the matter would be kept under review—and I gather that Lord Cullen intends to keep it before your Lordships' House—an alteration to the rules in a way which would reduce the benefit to our balance of payments in the shorter-term cannot be contemplated, and I am sorry that there is nothing further that I am in a position to add to my right honourable friend's statement. Although, therefore, I am afraid that we must agree to differ on this particular matter, we can, as I have indicated, all agree about the value of the Bill which Lord Terrington has introduced, and on that subject I am glad to give the Government's full support and to commend the Bill to your Lordships' House.

8.50 p.m.

Lord TERRINGTON

My Lords, I am most grateful to the noble Lords who have spoken in support of the Bill and to the noble Lord, Lord Oram, for giving it the Government's blessing. I particularly want to say this to the noble Lord because, during the last Session, as some noble Lords may be aware, I found myself at variance with the Government Front Bench over certain matters that concerned the Stock Exchange and, on two occasions, I felt compelled to divide the House on my Amendments. It has therefore given me great pleasure on this occasion to find myself in harmony with the Government. I am most grateful for their support and I look forward to a speedy passage through the House for this Bill. At the same time, I should like to go on record as expressing my appreciation of all the help we have received from the staff of the noble Lord's Department.

Finally, I should like to return the compliment to the noble Lord, Lord Cullen of Ashbourne, by referring to him as "my noble friend" and to say that, although his final remarks about the dollar premium were not strictly relevant to our debate, I very much welcomed them. As some noble Lords may be aware, I have personally concerned myself with this particular subject in your Lordships' House on a number of occasions in recent years and I am therefore equally disappointed with the decision of the Chancellor of the Exchequer last Thursday. However, I do not think that it would be appropriate for me to pursue the matter on this occasion but, as my noble friend has suggested, we could perhaps return to it in the autumn after our holidays, as a basis for further discussion. Once again, I should like to thank all the noble Lords who have taken part in the debate.

On Question, Bill read 2a, and committed to a Committee of the Whole House.