Lords Sitting of 9 March 1976

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

EUROPEAN PARLIAMENT SITE
Lord O'HAGAN: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will press for a permanent site in Brussels for the European Parliament.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, in the first instance it is for the Assembly itself to consider what is needed. I understand the Assembly's Political Affairs Committee is preparing a report on the question. When the time comes Her Majesty's Government will play their full part in any discussions between Member States.
Lord O'HAGAN: My Lords, in thanking the Minister for that slightly circumlocutory Answer, may I ask him whether his answer to the Question on the Order Paper is Yes or No?
Lord GORONWY-ROBERTS: My Lords, the Question on the Order Paper asks whether we will press for a permanent site in Brussels for the European Parliament. The answer is, first, that what is needed is, in the first instance for the Assembly to decide. Secondly, the Assembly, through its Political Affairs Committee, is examining this. When the Committee reports, we, like other Members of the Community, will consider their recommendations.
Lord O'HAGAN: My Lords, can we take it that the Government are not in favour of having a directly elected European Parliament perpetually condemned to being an itinerant Assembly?
Lord GORONWY-ROBERTS: My Lords, the noble Lord is usually so punctilious about these matters that I hesitate to suggest that there is a slight non sequitur in what he has just said. I do not see that the locale of the European Assembly is in any way related to how it will be elected.
Lord PARGITER: My Lords, would my noble friend agree that having regard to its position and its lack of communication facilities, Strasbourg is hardly a suitable place for a permanent Assembly?
Lord GORONWY-ROBERTS: My Lords, I doubt whether there would be any unanimity about the ideal site for this or any other new Assembly. Indeed, our friends and allies the French would probably disagree very strongly with what my noble friend has just said.
Lord SLATER: My Lords, is my noble friend aware that it can be said that the noble Lord, Lord O'Hagan, who asked this Question has not moved one inch away from his former views in the Council of Europe? This is exhibited by the stand that he has taken on this occasion which, although many of us do not agree with him, can be commended.
Lord GORONWY-ROBERTS: My Lords, I am grateful to my noble friend for what he has just said. I see no reason to dissent from anything he has said.

SQUATTING: LAW COMMISSION'S REPORT
2.40 p.m.
The Earl of KIMBERLEY: 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 have received the Law Commission's Report on Conspiracy which deals with offences of entering and remaining on private property, that is squatting, and if so when it will be made public.
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, the Government have received the Law Commission's Report and it will be published shortly.
The Earl of KIMBERLEY: My Lords, I thank the noble and learned Lord for his Answer.

MERCENARIES: PASSPORT WITHDRAWALS
2.41 p.m.
Lord ORR-EWING: 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 on what authority the police confiscated some 30 passports held by British citizens who had voluntered as mercenaries (against whom no charge had been made) and why these passports will not be returned until they sign certain undertakings.
Lord GORONWY-ROBERTS: My Lords, the grant or with withdrawal of passport facilities is a Prerogative matter exercised in the United Kingdom by the Secretary of State for Foreign and Commonwealth Affairs. The list of categories of persons to whom passports are refused or from whom they may be withdrawn, given in another place on the 15th November 1974, included those
"whose past or proposed activities are so demonstrably undesirable that the grant or continued enjoyment of passport facilities would be contrary to the public interest".
Having made the decision to withdraw the passports from returning mercenaries on these grounds, the Secretary of State saw no reason to restrict their freedom to travel to any country but Angola.
Lord ORR-EWING: My Lords, is it not setting a dangerous precedent to threaten citizens into signing documents giving up their lawful rights on the ground that their actions do not suit the present policy of Her Majesty's present Government?
Lord GORONWY-ROBERTS: My Lords, the noble Lord refers to dangerous precedents. This is a power very rarely invoked; the last recorded cognate instance. I think, occurred in 1961 when a similar set of circumstances existed in the Congo. At that time the Government of the day, of which the noble Lord was a distinguished member, acted in precisely the way we have acted this time.
Lord SH1NWELL: My Lords, if these people are considered undesirable is that not surely a very good reason why they should be allowed to leave? Apart from that, does my noble friend recall the Communiqué which emerged from the Conference at Helsinki, which included, among other declarations, although it was presented in a somewhat ambiguous form, the assertion that there should be complete mobility of labour and of persons who wished to leave their own country? Surely it would be quite wrong to do something about which we protest when it is done by the Soviet Union? Will my noble friend at the same time reply to this supplementary question: under which Statute does the Secretary of State for Foreign and Commonwealth Affairs come to a decision on a matter of this kind? Is it possible to point to any law on the subject?
Lord GORONWY-ROBERTS: My Lords, the position is that there is no Statute law on the grant of passports, which is a Royal Prerogative exercised in the United Kingdom by the Secretary of State for Foreign and Commonwealth Affairs. In regard to agreements such as Helsinki, or indeed any convention on human rights, no such convention or agreement would exclude the power of States to intervene in this way, for instance, in cases of criminality, or, as in this instance, where a clear public interest is involved.
Baroness ELLES: My Lords, can the Minister confirm that this undertaking, if it is given by the mercenaries, will have no legal significance because, once a British citizen leaves these shores, he is not within the jurisdiction of this country and can do precisely what he likes in any other part of the world? Secondly, does the Minister also agree that any citizen can leave this country without a passport, and that the only necessity on leaving these shores is to be able to show one's identity? Therefore, the passport is not a legal document which is necessary in order to leave these shores.
Lord GORONWY-ROBERTS: My Lords, referring to the second part of the question, that may be so. However, the person in question would have to find a willing carrier and would also have to be admitted at the point of his proposed destination. On the first point, as to the

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likelihood that the people who have made these undertakings may break them, that is always possible. If so, such persons would be breaking the law—that is to say, they would be contravening the 1925 Act.
Baroness EMMET of AMBERLEY: My Lords, the noble Baroness has just put part of the question which I should have liked to put. Is it not a fact that no British subject can be prevented from leaving this country if he chooses to do so, or from coming back if he chooses to do so, unless there is some criminal offence under which he might be arrested? Secondly, is the passport the property of the person—because we now have to pay some £5 to obtain one—or is it the property of the Government?
Lord GORONWY-ROBERTS: My Lords, without notice I could not say what is the exact legal position as to the property in this matter, but I shall try to do so if the noble Baroness will put down a Question to me, or possibly to the Minister who answers on Home Office Questions. On the first point, if, in contravention of an undertaking signed, a person were in fact to leave the country, he would he breaking the law—that is, the 1925 Statute—which makes it an offence to obtain a passport (and, in this case, to re-obtain a passport) by signing a false declaration or by not conforming with a signed declaration. As to his return, clearly somebody who had left the country illegally might not wish to return to face charges: if he did, he would prompty be charged.
Baroness ELLES: My Lords, would the Minister kindly say what agreement has been reached between this Government and the Government of Angola as to stopping these people entering Angola?
Lord GORONWY-ROBERTS: My Lords, I do not think that such an agreement has been found to be necessary. As events have moved so swiftly in Angola, the fact is that, to our knowledge, no further mercenaries have left these shores for that country. If they had, it is very unlikely that they would have been allowed to land there.
Lord GARDINER: My Lords, may I ask my noble friend whether he has seen
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the Justice report on passports, which is now over a year old and which unanimously recommended that every citizen should have a legal right to a passport, with a right of appeal to a court? If so, have the Government formed any view about this?
Lord GORONWY-ROBERTS: My Lords, the Government have not come to any new decision on this. We are aware of the strong arguments for changing the position in that way. We are not so far convinced that the rights of the citizen would be substantially increased if such a change were made. The operation of granting and, on rare occasions, withdrawing passports, has, retrospectively, worked very well under the system of the Royal Prerogative exercised by the Secretary of State responsible.
Lord GORE-BOOTH: My Lords, is the Minister aware that the withdrawal of passports, the limitation of the issue of passports, and especially the limitation of destination, are some of the favourite weapons used by authoritarian countries to keep control over their citizens and, therefore, that any use of this power must give rise to some disquiet?
Lord GORONWY-ROBERTS: My Lords, naturally any use of a restrictive power of this kind must give rise to questioning and reappraisal. I repeat that this power is very rarely used; I gave an example showing how rarely it has been exercised in this particular type of case.
Lord HARMAR-NICHOLLS: My Lords, is the noble Lord aware that in insisting upon an undertaking, the Government are weakening the power of the Prerogative of withdrawing the passport? Is he aware that it is one thing to withdraw a passport—which denotes that someone really has not the support of his own country—but another thing to insist upon an undertaking? Ought not the undertaking to be open to appeal to see whether it is a fair one? Otherwise, the two together will put us almost into the category of a totalitarian country.
Lord GORONWY-ROBERTS: My Lords, I would not go anywhere near so far as to suggest that these conditions place us within the totalitarian ambit. However, I concede to the noble Lord,

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as I do to my noble friend Lord Gore-Booth, that this is a matter which we must constantly examine and reappraise, and a power which we must exercise only rarely and after very careful consideration.
Lord BYERS: My Lords, does that mean that the Government are at the moment reappraising this practice which has led to some misgiving?
Lord GORONWY-ROBERTS: My Lords, we are constantly reappraising the workings of Executive actions, particularly when they do not rest on Statutes and when, indeed, they rest on Prerogative, as in this case.
Lord DRUMALBYN: My Lords, is the noble Lord saying that he has considered, or is considering, the Justice report at the present time? He says that he is constantly considering these things, but is he in fact now considering the Justice report?
Lord GORONWY-ROBERTS: My Lords, that was the point put to me by the noble and learned Lord, Lord Gardiner. I cannot say that I am considering it; the Government are, of course, taking that report very fully into cognisance.
Lord BROCKWAY: My Lords, is it not the fact that the passport promises great protection by our Government for citizens abroad? Is it not also true that it would be impossible to carry out that promise for citizens who have joined armed forces in another country?
Lord GORONWY-ROBERTS: My Lords, that has been found to be the case. The two cases which I have adduced this afternoon—the present one and the one in the Congo in 1961—would seem to bear that out.
Lord ORR-EWING: My Lords, may I ask the noble Lord to say whether in 1961 people were asked to sign a document before their passports were returned to them? May I further ask him to say what were the conditions—if he cannot give me an answer now perhaps he could publish the details in the Official Report—or what was the wording of the document they were asked to sign? In view of the noble Lord's obvious anxiety and the obvious anxiety in all parts of the House over this matter, may I ask him
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to consider whether, if this action is to be taken in future, it would be in the interests of our standards in this country that the condition which these people have been asked to sign should be made public so that we may all see when a Government interfere with lawful rights of the citizen?
Lord GORONWY-ROBERTS: Yes, my Lords, I can give an immediate undertaking on the second point and, indeed, I have given the conditions that were laid down in the case of the Angolan mercenaries. As to the wording, as the noble Lord put it, of the conditions—and I will look into whether any conditions were indeed laid down in 1961—I will see whether I can circulate in the Official Report, as he suggests, exactly what was said then.
Lord SLATER: My Lords, is my noble friend aware that when, in 1961, the then Government introduced their policy, it was in regard to the number of colonials who were coming into this country and who were carrying British passports? We find ourselves in the situation today of being more cosmopolitan than ever before in our history. Would he agree that this particular question does not help the matter at all?
Lord GORONWY-ROBERTS: My Lords, the situation in 1961 and the situation today are in many respects closely analogous. I will endeavour to obtain the details in which the noble Lord, Lord Orr-Ewing, is interested. There is, of course, the other very substantial matter that my noble friend Lord Slater has raised, in regard to passports generally, but for the moment I think we are concerned with conditions applied to withdrawn passports and their restoration to those who held them.
Lord MONSON: My Lords, may I ask the Minister to explain what he meant by the phrase "illegally leaving this country" when, as two noble Baronesses on the Benches opposite have pointed out, any British subject is at complete liberty to leave this country with or without a passport?
The LORD PRIVY SEAL (Lord Shepherd): My Lords, before my noble friend replies to that supplementary question. I suggest that we have already discussed this matter at some length.

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Perhaps the House will agree that this should be the last supplementary question, and that if the matter requires to be raised we should find another occasion for it.
Lord GORONWY-ROBERTS: I would suggest, my Lords, in answer to the noble Lord, Lord Monson, that a person who had had his passport restored to him under these regulations on a condition that he accepted on the honour of his signature, which would be that he should not leave the country for a specified country would, if he then broke that condition, in fact be leaving the country illegally, having obtained a passport by false pretences.
Baroness ELLES: My Lords, may I ask—
Several Noble Lords: No!

BUSINESS STUDIES: COURSE COSTINGS
2.55 p.m.
Lord ELTON: 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 is the average total cost of courses at polytechnics in England and Wales leading to the higher national certificate in business studies when they are pursued by full-time study, day release, evening classes and directed private study respectively.
The PARLIAMENTARY UNDER-SECRETARY of STATE, NORTHERN IRELAND OFFICE (Lord Donaldson of Kingsbridge): My Lords, courses leading to the higher national diploma are normally for two years and are available only for students studying full-time or under sandwich course arrangements. Separate costings are not available for courses in business studies. The available costings distinguish only between courses using laboratory facilities and those which do not. This latter group, made up mainly of social, administrative and business studies, has an estimated average annual recurrent institutional cost per student of £1,380 at 1975 survey prices.
Lord ELTON: My Lords, while thanking the Minister for that reply, may I ask
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whether he would agree that it does not go all the way to answering the Question at which it is aimed? Is he aware that the Question relates to certificate courses while he, perhaps inadvertently referred to diploma courses? Leaving that aside, may I ask whether he would agree that, with the projected severe and particularly capital intensive cuts in educational expenditure in the future, there should be some cost effective accounting, in this of all fields, in our educational programme of reorganisation?
Lord DONALDSON of KINGSBRIDGE: My Lords, I am not quite clear what the noble Lord meant when he referred to certificates. His Question referred to diplomas and my reply referred to diplomas, so I am a little confused about that. In relation to the three types of course—social, administrative and business studies—for which I have given an average costing, the difference between one and the other is reckoned to be extremely small, so I believe that the figure of £1,380 is a reasonable attempt to answer the noble Lord's Question. I do not think I want to take it further than that, but if the noble Lord wants to go into details about the future, then we shall have to wait for the report of the Business Educational Council, which I think will make new arrangements which may make somewhat simpler the entry to these courses.
Lord ELTON: My Lords, may I draw the attention of the noble Lord to to-day's Order Paper, which I think is the same as yesterday's intended future business where the word "certificate" is applied? However, I would not say that that is of absolute moment because the noble Lord has adduced the point which I wanted to make, namely, that at present there is no means of distinguishing between the cost effectiveness of the three routes either to a certificate or to a diploma, and that the BEC is sitting and should have this material available. If it is not available to the noble Lord, I may be right in deducing that it is not available to the Council either and this is a situation which I hope the noble Lord will take steps to remedy, if indeed it exists.
Lord DONALDSON of KINGSBRIDGE: My Lords, I appreciate the noble Lord's point and we will certainly look into it.

BUSINESS OF THE HOUSE
2.59 p.m.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, on behalf of my noble friend the Leader of the House, I beg to move the Motion standing in his name on the Order Paper.
Moved, That Standing Order No. 37 (Arrangement of the Order Paper) be dispensed with on Monday next to allow the Motion standing in the name of the Lord Strathcona and Mount Royal to be taken after the Motion of the Lord Winter bottom on Civil Aviation Policy Guidance.—(Baroness Llewelyn-Davies of Hastoe.)
On Question, Motion agreed to.

LEGITIMACY BILL [H.L.]
The LORD CHANCELLOR: My Lords, I beg to introduce a Bill to consolidate certain enactments relating to legitimacy. I beg to move that the Bill be read a first time.
Moved, That the Bill be now read la —(The Lord Chancellor.)
On Question, Bill read la, and to be printed.

TRADE UNION AND LABOUR RELATIONS (AMENDMENT) BILL
Read 3a, with the Amendments, and passed, and returned to the Commons.

PREVENTION OF TERRORISM (TEMPORARY PROVISIONS) BILL
Report received.
Schedule 3 [Supplemental provisions for sections 1 to 13]:
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich)The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich) moved the following Amendment:
Page 16, line 4, leave out from ("Proceedings") to end of line 7 and insert ("shall not be instituted—

(a) in England and Wales for an offence under section 1, 2, 9, 10 or 11 of this Act, except by or with the consent of the Attorney General, or

(b) in Northern Ireland for an offence under section 9, 10 or 11 of this Act, except
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by or with the consent of the Attorney General for Northern Ireland.").

The noble Lord said: My Lords, I beg to move the Amendment which stands in my name. This Amendment is a purely drafting Amendment. It amends paragraph 3 of Schedule 3, which prevents proceedings being instituted for offences under the Bill, except with the consent of the Attorney General. Its purpose is to make it absolutely clear that the reference in Schedule 3 to the Attorney General includes a reference to the Attorney General for Northern Ireland in relation to proceedings in Northern Ireland.
On Question, Amendment agreed to.

POST OFFICE (BANKING SERVICES) BILL
3.2 p.m.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of INDUSTRY (Lord Melchett): My Lords, I beg to move that this Bill be now read a second time. This Bill does three main things. It enables the Post Office to offer wider banking services; it provides the Post Office with a capital reconstruction in respect of its banking services; and it requires the Secretary of State to set the Post Office a financial target for its banking services. I think it would be for the convenience of the House if we could all agree to call the Post Office banking services by their simple and usual name, Giro. Although the word "Giro" appears only once in the Bill, it is Giro with which it is exclusively concerned. The reason why the Bill does not use the word "Giro "in its title Or content is because Gira has no legal identity. Giro is simply a division within the Post Office, comparable to a division of a company, and therefore it has neither assets nor debts of its own. These are possessed, or owed, by the Post Office itself.
Under the 1969 Post Office Act, the Post Office has power to provide
"a banking service of the kind commonly known as a Giro System".
Clause 1 of this Bill removes that qualification. Under the Bill, Giro will be able to provide banking services without them having to be
"of the kind commonly known as a Giro System".

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There is no legal definition in this Bill, or in any other Statute, of a bank, a banker, or a banking service. If the House accepts this Bill, Giro will, subject to certain safeguards, be able to offer the kind of services that are normally provided by a bank.
The significance of removing the qualification
"of the kind commonly known as a Giro System"
should not be exaggerated. What the first part of Clause 1 does is to relieve Giro from the obligation of ascertaining what a Giro system is commonly understood to be, and from any obligation to identify the services common to the majority of Giro systems operated elsewhere, when the 1969 Act came into force. The effect of Clause 1 is thus largely clarifying and for the removal of doubt.
Giro, in addition to providing conventional cheque facilities, already has power under the 1969 Act to lend money and to offer overdrafts. It has been successfully running a personal loan scheme since June, and the Treasury has authorised it to provide overdrafts to nationalised industries and to local authorities. It has been authorised to do this within strict limits: at present a total of £2 million for personal loans, and £2 million for overdrafts. This cautious and limited approach will continue to apply to future approvals by the monetary authorities for new or extended banking services. So Clause 1 does not give Giro banking powers for the first time. It simply removes a somewhat obscure and technical restriction.
Noble Lords may wonder why we want to extend Giro's powers. We want to strengthen Giro, and so increase its contribution to the community. Giro's history, and the market research it has conducted, shows that a money transfer service by itself is not profitable. People and organisations tend to look to a single source to provide them with a range of banking services. A good example of this is the popular business deposit scheme where, because Giro cannot provide the flexibility afforded by an overdraft, a large proportion of the money collected into Giro is transferred rapidly to the clearing banks. Moreover, social and economic benefits will flow from the
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availability to ordinary people of bank accounts. A high proportion of weekly paid people do not have bank accounts, and may be attracted to do so through the familiar surroundings of the Post Office.
There are three aspects of Giro's banking activities I should like to touch on. First, there is the question of fair competition with other banking institutions. Giro will lend at normal competitive rates of interest and will not on-lend money from the National Loans Fund. We—that is, my Department, the Treasury, and the Bank of England—will not let Giro embark on new or extended services unless we are as sure as we can be that these will make a contribution to Giro's overall profits. In the case of Government business, Giro will not be given a preferential status. Our sole concern will be to see that Giro gets a fair crack of the whip in competition with its more established rivals. Giro will continue to pay, on the same basis as Government Departments, its fair share of the cost of using Post Office counters.
Secondly, there is the question of Giro's competence to run banking services. Giro did not fulfil the expectations set out for it in 1965, but this cannot fairly be blamed on Giro's existing management. The evidence points to Giro giving a good service and satisfying its customers. That evidence is impressive: an annual turnover of £25,000 million 180 million transactions a year; £3,500 million worth of business per year in business deposits; 20 million rent collection transacations a year. Giro made a small profit last year, due, I admit, in part to favourable movements in the stock market. More important, Giro has achieved a swing round in its trading results before interest from loss to profit of nearly £7 million over the past four years. With its new banking service Giro has made 4,000 personal loans so far without any bad debts. Giro's future will be carefully monitored by the monetary authorities, who will take into account its resources both in terms of financial assets and management capacity.
This brings me to the third aspect of Giro's banking activities with which I want to deal: namely, Giro's capital adequacy and the application of monetary and other controls to it. By way of background I should repeat what I implied earlier; namely, that Giro does not stand alone. It has the resources

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of the Post Office behind it. Its liabilities to its depositors are incurred by the Post Office. The capital adequacy rules agreed between the clearing banks and the Bank of England are meant to be flexible. So in authorising Giro to provide banking services we have taken account of the fact that a much higher proportion of the assets held by Giro are entirely risk free, compared to the proportion held by the major clearing banks. Also about 40 per cent. of Giro's customer balances are public sector balances which are not, by their very nature, subject to the same volatility as the balances of other customers.
Giro is not a bank on all fours with the clearing banks. But Giro conforms to those requirements which the monetary authorities consider necessary. For example, Giro's liquidity ratio is set at 20 per cent., at least as stringent, and probably more so, than the reserve asset ratio imposed on banks. As Giro develops, all the appropriate monetary, credit, and prudential restraints will apply.
I should like to turn to the capital reconstruction of Giro; that is, to Clauses 3 and 4 of the Bill. Under these clauses we propose to write off losses and introduce public dividend capital. Since it started operation in October 1968, Giro has accumulated losses, including interest on losses, of £33.4 million. That is up to the end of the last financial year, 31st March 1975. We have decided to write off half those losses; that is, to reduce them to £16.7 million. After this write-off, Giro's capital is reduced from £42.5 million to £25.8 million. The next stage of the reconstruction is to convert half of this remaining capital, £13 million, into public dividend capital. For legal reasons, the method of reconstruction adopted in the Bill is to write off a gross amount of £29.7 million in Clause 4—that is, £13 million plus £16.7 million—and to reinstate simultaneously the £13 million under Clause 3(6) as public dividend capital. We certainly do not relish writing off losses, but to do so is simply a recognition of reality. It does not make sense to expect Giro to carry on with its present burden of debt when it has little or no prospect of working this off in the foreseeable future. The proportion of the write-off, one-half of the accumulated losses, is not arbitrary, but I cannot claim that it is scientifically
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exact. It is based on our best judgment of how much indebtedness Giro might be reasonably expected to meet given the necessary management effort.
As I explained, from 31st March 1975 Giro will have a capital structure consisting of both long-term fixed interest bearing debt from the National Loans Fund and public dividend capital, on which Giro will be expected to pay dividends to the Government. The purpose of introducing PDC is to recognise that Giro is affected by changes in monetary conditions over which it has no control, and that these changes have a significant effect on its investment earnings and, hence, on its profitability. Unlike the obligation with fixed interest debt, it will be able to pay higher and lower dividends respectively in good and bad years. But the introduction of PDC should not be regarded as a device to provide Giro with interest-free capital. We shall look for dividends at least commensurate with the interest that would have been due on the replaced £13 million of National Loans Fund money.
The ratio of PDC to National Loans Fund indebtedness is 50:50. This gearing is not of crucial significance. To achieve the cushioning effects I referred to the PDC element has to be substantial, and we thought it right to follow the rough order of gearing which other nationalised industries, with PDC, already have. I referred to PDC not being a soft option. One way to ensure this is to set a financial objective. Clause 2 of the Bill makes this obligatory. We have already set the objective after discussion with Giro, and they have accepted it. Over the three years 1975–76 to 1977–78, Giro, after meeting interest charges on its remaining National Loans Fund capital, will have to earn an average pre-tax, pre-dividend return of 12½ per cent. on its public dividend capital plus retained profits. In order to achieve this objective, the return by the third of the three years is expected to be approaching 20 per cent. This is about the average achieved by the big four clearing banks in recent years. It is not an easy target. Giro will have to work hard to meet it, and do significantly better than it has in the past. At the other extreme, we have not set Giro an objective which it is unlikely to meet; there is no point in

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that. We believe l2½ per cent. is the highest practicable objective.
My Lords, Giro is an established and valuable service. I believe that was the conclusion reached by noble Lords opposite when they were in Government, after a searching inquiry. It is a conclusion which this Government fully endorse. I have tried to explain what the Bill is about and why the House should give it a Second Reading. It is a practical measure, in that it removes a technical doubt over Giro's freedom to provide the services its customers want. It is a realistic measure, in that it recognises that Giro cannot just go on with its present burden of debt. It is a responsible measure, because we are limiting the write-off of losses and setting Giro demanding objectives. Giro cannot be allowed to compete unfairly with its rivals. At the same time, it cannot provide a fully effective and competitive service while its hands are tied. This Bill represents an advance in the public sector, but only in the sense that the Bill enables Giro to improve on a public service provided by the Post Office and used of their own free will by many organisations and individuals. My Lords, I commend the Bill to the House.
Moved, That the Bill be now read 2a.—(Lord Melchett.)
3.16 p.m.
Lord ABERDARE: My Lords, I am grateful to the noble Lord, Lord Melchett, for having explained this Bill to us. It is a complicated Bill and he has explained it extremely lucidly and carefully—and, I thought, with enormous confidence, launching into it, for the first ten minutes of his speech, without the presence of any official advisers to assist him. But, having said that to the noble Lord, I am afraid that is the last of the nice remarks that I can make because, quite apart from the undesirable nature of this Bill, it seems to us to be an extraordinary moment to bring it forward. We are bound to ask where the Government's priorities lie when, at a time of grave economic crisis such as this, they take up Parliamentary time with a Bill that in our view is wholly unnecessary, potentially dangerous and adds a further burden to public expenditure. How much more readily would the country rally to
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the Government's call to face the present economic situation and to combat inflation if only they would concentrate on matters of vital concern to the country's well being and at least postpone measures such as this, which are controversial and inessential!
The Chancellor of the Exchequer is always talking of an export-led recovery, and in the excellent debate that we had in this House last Wednesday my noble friend Lord Gowrie made the case that our most successful exports are our invisible exports. For that achievement, surely, the banks, among others, deserve our admiration and our gratitude; and here is one sector of our economy that needs no Government assistance and should be kept as free as possible of any form of outside interference. Of late there have been several Government statements—and very welcome they have been—emphasising the essential part played by the private sector in the creation of wealth. In that same debate last Wednesday, in a most forceful and admirable maiden speech, the noble Lord, Lord Northfield, urged his own Party to accept the private sector much more openly than it has ever done, and to champion its success and profitability and confidence in it.
That being so, why, then, bring the State into banking—the vital supplier of credit to the creators of wealth? It may be said that Giro's banking operation will be very small compared with those of the clearing banks or even those of the Trustee Savings Banks, but we know what happens when once the State gets its foot in the door. If any warnings were necessary, we have it in the words of Mr. Singer, the managing director of Giro, who is quotedin the Guardian of the 20th February as saying that the National Savings Movement, Giro and the Paymaster Generals Office could beneficially be combined into a State Bank the size of Barclays. I freely admit from what the noble Lord, Lord Melchett, has told us that the Bill does not go that far, but it is perfectly possible to imagine circumstances arising in the future, once Giro is providing banking services, when a Government—not necessarily this Government—will seize the opportunity to establish a powerful State bank by such means. Surely, the Post Office has more pressing priorities at the moment than launching

1217
into banking. Would it not be better for the Post Office to concentrate on its postal services and telephone services than to start making personal loans and giving overdrafts? The Post Office is at present undertaking a major review of its services. I should have thought it wise to await the outcome of that review before passing this Bill.
As the noble Lord reminded us, when we were in Government we conducted a thorough review of Giro with the aid of Cooper Brothers (now Cooper & Lybrand) at a time when Giro was losing some £6 million a year. We accepted the recommendations made by Cooper Brothers that Giro should continue but with substantial changes in management, financial control and marketing policy, in order to improve its performance. Certainly we did not at that moment contemplate that Giro would move into full banking services. What we did was to give it two targets to achieve: the first, to make a positive contribution to Post Office finances within a year of introducing new tariffs; the second, to cover its overheads including depreciation and interest on both assets and losses within five years. Giro has achieved both those targets ahead of time and, as the noble Lord has reminded us, for the first time has made a small profit in 1974–75. Why not let it continue to progress into profit, to repay its debt and to build up its reserves? This surely would be the normal way forward for any institution that sought to offer banking services.
My Lords, not long ago we passed through this House the Trustee Savings Banks Bill and that Bill had its Second Reading in another place on 17th February. In that debate the Paymaster-General said:
"The Treasury will continue to keep an eye on the banks' operations and development, particularly on the rate at which the banks build up their own reserves. The building up of the banks' reserves is, of course, a crucial element in the transition, which, indeed, cannot be brought to an end before an adequate level of reserves has been achieved."—[Official Report (Commons), 17/2/76; col. 1207.]
"Of course," and "indeed"—but why did not the Paymaster-General or the noble Lord, Lord Melchett, say something about Giro in the same spirit. Giro's reserves are negative. After this Bill, it will have public dividend capital of £13 million against a written-down
1218
debt of £16.7 million—a deficit of £3.7 million.
I know that the noble Lord, Lord Melchett, repeated the assurances given in another place that the whole of the resources of the Post Office stand behind the Giro system; so that if losses occur they will be borne by the Post Office—and that means the taxpayer. I would ask the Government this. Why should we risk taxpayers' money on so speculative a venture when it is totally unnecessary? We have only to think of the recent plight of the Crown Agents which should surely urge caution upon us when venturing public money into this sort of field. We have seen already some of the trouble that secondary banks can get into and I wonder whether we can be really confident that Giro has the necessary skills to fare any better.
The noble Lord spoke of the skills of the management of Giro. I would not for one moment quibble with what he said, but Giro is now to move into something quite different, into banking services. Can we be sure that those same skills that have built up Giro as a money transfer system are going to be the skills necessary for banking? The clearing banks have had years of experience of giving credit and their bank managers are highly trained for this very purpose. They know their customers locally and they have the evidence of their local bank accounts before them. Not so Giro. It will not be the local postmistress who grants you a loan. She might be a quite shrewd judge; but it will not be her. It will be done on a points system, as I understand it, of centralised credit control. I think that if I were the managing director of Giro I should be having nightmares about the level of bad debts under such a system.
Moreover, it appears that Giro is to be free, under this Bill, to issue credit cards and to buy and sell in the foreign exchange market. If we are to judge by the example of those other credit card companies, Access and Barclaycard, credit card operations are immensely expensive to set up and are not always profitable to run. Again, I wonder whether this is the right time or whether it is necessary for Giro to have these powers—and foreign exchange transactions can certainly result in very heavy losses. We have only to think of the

1219
large loss of Lloyds International only a few months ago; yet Giro is to have no restrictions placed on its banking operations in this Bill.
What a contrast this is to the recent Trustee Savings Banks Bill. In that case we were told of a ten years' programme during which Government control would gradually be relaxed until only those restrictions placed on all banks would apply to the Trustee Savings Banks. Why then is it thought right that Trustee Savings Banks with their wealth of experience and large capital reserves need a ten-year transition period to full banking status while Giro with relatively little or no experience in the banking field, and few reserves, is to qualify at once? It seems illogical to me, and wrong. We know too, because the Government have told us, that they have in preparation new banking supervisory legislation which will deal, among other things, with the Trustee Savings Banks and the Giro. Surely this is again an added reason not to press ahead with this Bill at this time.
My Lords, to sum up our objections to the Bill: we see no need for it, especially in present economic circumstances, and we believe it has potential dangers both for the banking system itself and for the taxpayer who will have to carry the can for any failure. I would not wish to invite your Lordships to vote against the Second Reading, much as we dislike the Bill, but I hope we shall look at it carefully at Committee stage with a view to going into some of its more difficult propositions.
3.30 p.m.
Lord BANKS: My Lords, the noble Lord, Lord Melchett, has set out the objectives of the Bill clearly for us; obviously those objectives do not commend themselves to the noble Lord, Lord Aberdare. The first comment I should like to make on the Bill is that it does not involve the establishment of any new institution, and that is a welcome change from much of the legislation we have in front of us. It seems to me there is no objection being presented from any part of the House to the continuance of the present role for Giro as a money transmission service. Indeed, as has been pointed out, the last Conservative Government carried out an investigation into Giro and decided it ought to be continued.
1220
I imagine that they, with the rest of us, would wish to see an expansion of that service.
It follows from that that there is no objection in principle being expressed to Giro's competing with the clearing banks and with the Trustee Savings Banks because it already does this in the sphere of money transmission. The objection is to the extension of overdrafts to business and personal account holders which, as I understand it, are already available to local authorities and nationalised industries. There is also objection to the extension of the personal loan facility which is already available at the present time and the provision of bridging loans, cheque cards and possibly credit cards, although there are no plans at present for the introduction of credit cards.
The objection to this extension of services has been made on several grounds. It is said that there will be unfair competition; that Giro, with something like £150 million to invest, will be competing unfairly with the Trustee Savings Banks with £4,000 million of depositors' money and the clearing banks, like Barclays, whose assets are something like £7,000 million. But we have been assured that Giro will not be subsidised by the rest of the Post Office, and that it is the intention that the new Giro credit operations will be self-supporting. Also, as the noble Lord, Lord Aberdare, pointed out, they will be subject to the same credit controls as apply to the banks. It could be argued that if Giro did not have this extension of services it would be operating with its hands tied behind its back (if I may use that metaphor) in competing with the clearing banks and Trustee Savings Banks since the latter are now to have this same extension of services: It is clear, for example, that if cheque cards are not available there are going to be many circumstances in which a Giro cheque cannot be used in order to make a payment.
It is said that there is not sufficient expertise in Giro, but it has been pointed out by the noble Lord, Lord Melchett, that there are some 4,000 personal loans at the moment and no bad debts, and these cover something like £1,500,000. Overdrafts at the moment, and in the immediate future. will not be extended for the purpose of investment capital but merely for the purpose of easing problems of cash flow. Mr. Alfred Singer, the

1221
managing director of Giro, was interview by the Guardian recently. This interview was dealt with in two articles. In one he seemed to be looking to future possibilities and the other discussed the immediate prospects. These articles attracted much attention. In discussing the immediate prospects he seemed anxious to make it clear that progress would be slow and cautious. It was going to be a gradual move from the present position.
The noble Lord, Lord Aberdare, said the vetting of loans would be dealt with centrally. This is a practice followed by many credit institutions and an expertise is already building up centrally. I should like more clarification on how many staff will actually be involved in doing this. This point was not satisfactorily dealt with in another place. At one time it was said that a manager and 14 people had already been employed in order to carry out this work; on another occasion is was said that if the Bill were passed they would be employed to carry out this work; and on yet another occasion it was said there would be no increase in public sector employees. It would be useful to know how many people are likely to be involved in central vetting, although that is a practice which is used by other credit institutions.
We are told that there is a possible loss to the taxpayer; of course that is true. But, if there is the cautious approach which has been outlined by the noble Lord, Lord Melchett, and to which Mr. Singer referred, this is not likely to occur. A gradual building up of the credit side of the business would obviate the possibility of any considerable losses for the taxpayer to bear. It is argued there is a lack of market research. The Government have been a little coy in saying exactly what has been done. Marplan and Lancaster University have carried out some researches. It is obvious that the details of those researches cannot be made public since they were carried out for the purpose of marketing by a concern in competition with other concerns. Nevertheless, it would be reassuring to have some more information as to the scope of the research which has been carried out.
There has already been reference this afternoon and in another place to a comment made by a Guardian reporter
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about something said by Mr. Singer in his interview. The Guardian reporter suggested Mr Singer had in mind the possibility of the establishment of a massive State bank. As I read it, what Mr. Singer was contemplating was the possibility that Giro, the National Savings movement, the National Savings Bank and the Paymaster-General's office might combine; there would appear to be some sense in putting together these Government operations which all take place at the moment. Of course the Trustee Savings Banks would not be involved in that, as might be inferred from the article. They have a separate role as neutral banks to perform.
The Page Report on National Savings pointed out that within the Post Office there are three different services for money transmission: first, Giro, which is a part of the Post Office service; then the National Savings Bank, which has been part of the Department of National Savings but for which the Post Office is an agent; then there is money transmission by means of postal orders, money orders and telegraphic money transmission services. The Page Report commented:
"If we had been charged with the task of establishing a State operation to cover current account banking, short and long term saving and ready facilities for transmission of money, both for members of the public who already participate in the banking savings system and those who are outside it, we would hardly have recommended the establishment of three independent systems which are subject to two different controlling bodies."
Further, the Report says that in the longer term the merger between the two organisations might be the solution to the problems of both.
But of course any merger of that kind, or any development along the lines about which Mr. Singer was speculating, would have to be the subject of further legislation one's view about such a possibility should not prejudice one's attitude to the Bill which is before us this afternoon.
Finally, a great deal was made in another place of the threat of nationalisation, and the proposals contained in the Bill were somehow seen as paving the way for nationalisation. I do not believe for a moment that they do that. I am totally opposed to the nationalisation of the clearing banks. I know that the Labour Party has, on occasion, committed

1223
itself to such nationalisation, and I think it would help if the Government would say not merely that they have no plans —which I think was the phrase used by the noble Lord, Lord Jacques, when we discussed the Trustee Savings Banks Bill —but that they have no intention of nationalising the clearing banks and think that such a move would be wrong. My noble friends and I are completely opposed to the nationalisation of the clearing banks, but I say again that I do not see these present proposals as necessarily leading in that direction.
To sum up, I am all for competition between Giro, the clearing banks and the Trustee Savings Banks. I believe this to be a modest measure which would allow the Giro to compete on more equal terms and I believe that its customers will benefit from the new facilities. I should like, in conclusion, to stress again the importance of maintaining the declared policy of cautious advance and slow expansion in the credit field. So long as we are assured that that policy will be followed, I am happy to express general support for this Bill.
3.42 p.m.
Lord DAVIES of LEEK: My Lords, I have not put my name down and therefore do not propose to take more than a few minutes. I think that this debate, though perhaps a small one, is of great importance. The noble Lord, Lord Banks (who is so appropriately named) having made a constructive speech about this sector of the banking system, I should like to follow him with a few remarks of my own. In passing, having listened with care to the speech of the noble Lord, Lord Aberdare, I think that there were caveats there of which one should take note. It is important, as both speakers—one from the Liberal Benches and the other from the Front Bench opposite—have pointed out, that we should know that the limits of taxation are the limits of the taxpayers' obligations to the system. But despite the occasional failures of the Post Office, I am a bit tired of the fact that in debates, whether here or in another place, somebody always "knocks" the Post Office.
It is time we realised the vast amount of work which is done for ordinary peopleby the Giro system and what is involved in the work done over Post Office coun-
1224
ters. I walked into a very obscure sub-post office the other day. It was, if I may use the expression, all "beezed up" —and I hope that the reporter will be able to spell that slang phrase because I am not quite sure of it myself—with thick glass and aluminium plating. I said to the person who, at terrible expense, was selling me some stamps, "Why all this?" The answer was: "This is for our protection because of all the raids on the Post Office". In other words, it is often forgotten by the Governments-that-be that a tremendous amount of money has to be spent on the protection of post offices and sub-post offices throughout the country because of the vast amount of work they do. One can think of the 9,000-odd civil servants employed in Newcastle on Tyne, who are needed to work the old age pension system—and I know about that from my previous experience as a Minister concerned with social security. There is a vast amount of work which is done for the ordinary person by the Post Office and upon which the ordinary housewife and other people depend. The work they do is indeed great.
I was in at the birth of Giro—and incidentally, what horrible words these are! "Giro" sounds like a female washing powder; it is a word which does not fit into the beauty of the English language and, believe it or not, roses by any other name do not always smell as sweet. I believe that more publicity and advice should be given in connection with the Giro system. The very word alienates many ordinary people, though the intention was to approach the ordinary housewife. This all adds to the vast amount of work which the Post Office has to do. I approve of the, as it seemed to me, very constructive suggestion which was made by the noble Lord, Lord Banks, when he pointed out that now National Savings and other forms of savings are going through the Post Office, it may be—and this was hinted at in a Guardian report the other day—the Government should look at means of co-ordinating the vast number of financial transactions now taking place over post office counters in thousands of towns throughout the British Isles.
I must point out to the noble Lord, Lord Aberdare, with all due respect' and he himself, as quite an athlete in the

1225
tennis world should know this—that competition is the spice of life. What is wrong with establishing a Giro bank which can offer fair, honest and constructive competition? The Opposition is always talking about competition. We need a little of it in this world of supermarkęs. The little shopkeeper used to blame the Labour movement for destroying him. He is not being destroyed by that: he is being destroyed by the ultra-competitiveness of the mighty supermarket and the hypermarket. Hypermarkets are now elephantine—especially the new one at Brent Cross where they have car parks for thousands of cars and where one street now has a hundred buses a day running along it towards the hypermarket. Why do planners think of these things in this super society in which we live? My noble friend speaks of "development". Yes, it is called "development". Does my noble friend want to interrupt me?
Lord SHINWELL: My Lords, my noble friend misunderstood my comment. The noble Lord sitting beside me made a remark, and I said that it seemed to me a little irrelevant. I did not refer to "development" at all.
Lord DAVIES of LEEK: My Lords, does my noble friend imply that his remark was irrelevant or that mine was? It does not matter. The irrelevancy of the remark does not matter. There is nothing wrong in developing a competitive side to the banking system. Finally, I think that more attention should be paid to the function of Giro and that we should try to get it across to the man in the street and the housewife, so that the facilities can be more used—for instance, in paying bills and in other elementary functions in the running of the home today—because it is something that we originally thought would be of great value to society.
3.48 p.m.
Lord SLATER: My Lords, if noble Lords will excuse me for just two or three minutes, I should like to say that I was in at the birth, as it were, of Giro so far as the Post Office was concerned. I have listened to the speech made from the Liberal Benches by the noble Lord, Lord Banks, and to the observations made by the noble Lord, Lord Aberdare, when he said that the Opposition would not
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vote against the Second Reading of this Bill. I would say that I was not only in at the birth but I also saw the system in operation in Sweden and elsewhere. These systems were the forerunners of Giro, and we were able to make comparisons at that time. Giro was the forerunner of the commercial system of banking operations in those particular countries. I was also concerned when the Bill was being examined during the Committee stage upstairs. We had our arguments with the Opposition in regard to it. It took some getting off the ground in the first place. We had to meet many difficulties before this Giro system could become operative. I believe that the more people get to know what Giro means as a method of financial banking, the better it will be.
Not only did we introduce that Bill, which finally received the Royal Assent, but we also held various functions at St. Martin's-le-Grand in order to hear the observations of big industrialists from all over the country as to how it could benefit them and how wages could be paid through the system; for instance, those of local authorities. My noble friend Lord Davies referred to the name, but that is something which was brought into being not by us but by those nations which were the forerunners of this banking system. It is also true that we introduced the Savings Bank, and the Minister for Posts and Telecommunications at that time had power to fix the rate of interest. So the Post Office has not been standing idle on this issue.
I think I am justified in saying that Giro provided a scheme whereby we were able to absorb thousands of people into the service in that great building at Bootle, not far from Liverpool. It is there for everyone to see, and I advise any noble Lord who has not seen Giro in operation to make a special visit to see the amount of work that is done by the people who operate it. He will also see how the general customer receives every attention in regard to his investment, whether with the CWS, the Westminster Bank, Barclays Bank and so on. I am all in favour of what was said by the noble Lord, Lord Banks, about the credit card. This is something which we overlooked, and I see no reason why it should not be introduced. I hope that the Post Office will give serious consideration

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to some of the observations made by the noble Lord, Lord Banks, who, in general, supports the Bill, which is not a means of taking advantage of the Savings Bank or even the old Post Office, where our children put the coppers given to them at the weekend and saved them up. I sincerely hope that the House will not only give a Second Reading to this Bill, but will do whatever it can to extend the facilities by letting the general public know the services that will be accorded to them if they become members of Giro.
3.54 p.m.
Lord MELCHETT: My Lords, I should like to thank noble Lords for the general—I would almost say "unanimous", but of course it was not quite that—welcome which they have given the Bill. First, I should like to join with my noble friends Lord Davies of Leek and Lord Slater in paying tribute to the service provided by the Post Office, and in particular by the staff of Giro. The Giro service is extremely efficient and well-run under Mr. Singer. I am grateful to the noble Lord. Lord Banks, for the tribute that he paid to the staff, and I am sorry that the noble Lord, Lord Aberdare, did not feel able to repeat the very fulsome tribute that was paid by the Front Bench spokesman in another place, to the quality of the service which the staff of Giro are providing.
Lord ABERDARE: I am sorry, my Lords, but I think I did. I said that I thought the management expertise was very high and very good, and I certainly repeat that now. I said only that there is no evidence that they are equally skilled in providing banking services.
Lord MELCHETT: My Lords, I qualified my criticism—if it was a criticism—of the noble Lord by saying that he did not quite repeat the fulsome tribute of his colleague in another place, and I think I am right in that. My noble friend Lord Davies had complaints about the word "Giro", but of course, as my noble friend Lord Slater said, this is an international term; and I think my noble friend Lord Davies will agree that "Giro", with its four letters, is a good deal preferable to the more cumbersome phrase, "Post Office banking services", which appears in the Bill.
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I can certainly give the noble Lord, Lord Banks, the assurance which he sought, that there would be a cautious advance and a slow expansion, which I believe are the words he used. This is exactly the approach that the Government see Giro making, and I hope that, having given him that assurance, he will be able to give the Bill full support. He asked me a question about the number of staff. I believe that there was a slight error in the Bill as it was first printed, and that may have given rise to some misunderstanding. The staff involved are of course Post Office staff, and are not civil servants. I understand that at the moment there is a loan manager and 14 extra staff already employed and engaged in the granting of personal loans. This is a point which the noble Lord, Lord Banks, made very adequately. Indeed, I think he did the whole of my job for me in answering the queries of the noble Lord, Lord Aberdare.
Giro is already engaged in providing personal loans. This Bill does not represent a sudden massive increase in banking in the public sector, with Giro leaping into the clearing banks' private preserves, or anything like that; it represents a slow, cautious advance and removes a technical and obscure qualification. I do not know whether the noble Lord, Lord Aberdare, knows what Giro services were commonly provided in the countries where there were Giro services in 1969, but I dare say it is something that is very difficult to find out, and that qualification on Giro is removed by the Bill. The personal loan service which Giro now runs commenced last June and since then, as I have said, about 4,000 loans have been made without any bad debts being incurred. Those 4,000 loans represent a total sum of about £1,500,000. I imagine, contrary to what the noble Lord, Lord Aberdare, suggested about Mr. Singer having nightmares, that he sleeps very soundly with that kind of record already behind him.
The noble Lord, Lord Banks, asked me about market research which has been undertaken by Giro. The most recent studies have been prepared by Taylor Nelson Associates, a subsidiary of Marplan, as the noble Lord himself mentioned, and by management consultants Peat, Marwick and Mitchell, Arthur Anderson and also by the

1229
Statistics and Business Research Department of the Post Office itself. I am sure the noble Lord will appreciate that such studies contain a great deal of confidential and commercially sensitive information, and I do not think it would be appropriate to go into the detail of questions which are really matters for the day-to-day management of the Post Office. However, it is clear that these studies, which cover between them both the personal account and commercial sectors, reinforce the general evidence to which I referred in introducing the Bill; the additional services which Giro is starting to offer and will be able to continue and slowly expand once the Bill is passed, will very much increase the effectiveness of the Giro service to many people.
The noble Lord, Lord Aberdare, referred to the question of public expenditure. Of course, the intention is that Giro's banking services will be self-financing, and the noble Lord acknowledged that they made a profit in the last financial year. The intention that Giro's banking service will be self-financing means that there can be no question of Giro on-lending Exchequer funds. Giro will have its own banking fund, consisting of moneys from its customers, and these will be the source of its investment plans and of its loans or overdrafts to its account holders. Giro's accounts will show the size of its balances and the nature of its investments. Giro's future capital requirements are small and are not, in the foreseeable future, directly linked with the extension of banking services. Calls on the National Loans Fund will be largely the provision of working capital.
I deeply regret that the noble Lord, Lord Aberdare, did not feel able to welcome a measure that will increase the extent to which Giro can compete fairly with its rivals. I should have thought that would have certain attractions for the noble Lord. If I may say so—I hesitate to accuse him of this—it appears that he has been reading some of the wilder speeches that were made from the Back-Benches in another place which bear absolutely no relation to what this Bill is about and what it implies for the future of Giro itself. The noble Lord asked me why we did not let Giro progress into profit. That is exactly what
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we are intending to do. The noble Lord did not refer to the research, to which the noble Lord, Lord Banks, referred, which shows that without some extension of the services which Giro can provide it is unlikely to be able to produce a really profitable service. The noble Lord did not make any reference to the very stringent objectives, outlined in my opening speech, which we have set Giro for the future. As I said in my opening speech, after a period of years Giro will have to be doing as well as the established clearing banks, with a long history behind them, are doing at the moment.
The noble Lord, Lord Aberdare, did not mention a matter to which my noble friend Lord Slater referred; namely, the extent to which Giro provides a service to the nation. In my opening speech I mentioned the fact that Giro now collects 20 million rents per year. This is a huge number and it is an extremely important service. It reduces by a great deal the cost of rent collection and, therefore, reduces public expenditure in that section. It provides a secure and safe service which, before, very often was not either secure or safe. It reduces the likelihood of crimes being committed. I should have thought that this example of what Giro is doing ought to be warmly welcomed. In view of what has been said in the debate this afternoon by the noble Lord, Lord Banks, and by my noble friends, I hope that the Bill will secure a speedy passage through the House.
Lord REDESDALE: My Lords, before the noble Lord sits down, I wonder whether it would be possible for him to explain further the market research aspect that he glossed over rather quickly. He said that this is extremely sensitive information. If market research is paid for by taxpayers' money, I should have thought that that information could be published and, therefore, that all of us might have a sight of it. I appreciate that there may be other aspects, but I should be grateful if the noble Lord could explain this point in a little more detail.
Lord MELCHETT: My Lords, I have tried to explain that Giro is in competition with several rival organisations. It is operating in a commercial field and has to operate commercially. If the noble Lord went to the managing director of Barclay's Bank and asked that

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bank to reveal its market research data, I think that he would get a short answer. If we expect Giro to compete effectively in a fair and open way, it is only fair that we should accord the same privacy to their confidential and commercial information as we accord to their rivals.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

MEMBERS' PENSIONS (NORTHERN IRELAND) ORDER 1976
4.5 p.m.
Lord DONALDSON of KINGS-BRIDGE: My Lords, I beg to move, That the Members' Pensions (Northern Ireland) Order 1976, a draft of which was laid before this House on 25th February 1976, be approved. The purpose of the order is to make improvements in the contributory pension scheme for former Members of the Northern Ireland House of Commons which is provided for in the Ministerial Salaries and Members' Pensions Act (Northern Ireland) 1965. The Northern Ireland scheme of 1965 is similar to that which applied to Members of another place until 1972 under the provisions of Part II of the Ministerial Salaries and Members' Pensions Act 1965. The Parliamentary and Other Pensions Act 1972 gave Members of the other place more favourable conditions. Parallel action in Northern Ireland was not taken at the time of the Westminster Act in view of the constitutional uncertainties which culminated in the abolition of the Parliament of Northern Ireland.
It is now proposed that the pension scheme for former Members of the Parliament of Northern Ireland should be improved, in certain respects, in line with the scheme for Members of the other place, for persons ceasing to be Members after 1st January 1972, which was the effective date of the corresponding improvements introduced under the 1972 Act. This order will give effect to these proposals by amending the Ministerial Salaries and Members' Pensions Act (Northern Ireland) 1965.
Article 1 of the order provides that it shall come into operation on the seventh day after it is made and Article 2 applies
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the Interpretation Act (Northern Ireland) 1954 to it. Under Section 5 of the Act of 1965, certain fixed sums were paid annually into the Members' Contributory Pensions (Northern Ireland) Fund from moneys provided by Parliament. Article 3(1) of the order provides instead, in line with Section 5 of the Westminster Act of 1972, for the annual payment into the Fund, out of moneys appropriated by measure, of an amount recommended by an actuary. As a consequence of this, and because there will be no further Members' contributions from salary, Article 3(2) provides for the repeal of certain provisions of the Act of 1965.
Article 4 reduces the qualifying period for pension from 10 years' to four years' reckonable service. This change will give entitlement to pensions at age 65 to a number of former Members who did not become Members of the Assembly. Article 5 gives former Members the right to elect to receive an actuarially reduced pension at the age of 60 instead of waiting until the age of 65. And Article 6 precludes the payment of a pension during any period when the person concerned was a Member of the Assembly, or a Member of the Convention, or a candidate for election to either of them.
Finally Article 7 gives former Members who have not or will not become entitled to a Member's pension, the right to receive a refund of contributions immediately, if they so choose, instead of having to wait for varying periods as provided in section 10(1)(b) of the 1965 Act. The proposals contained in this order for the Northern Ireland scheme are in line with provisions of the 1972 Act. I commend the order to the House. My Lords, I beg to move.
Moved, That the draft Members' Pensions (Northern Ireland) Order 1976, laid before the House on 25th February, be approved.—(Lord Donaldson of Kings-bridge.)
4.9 p.m.
Lord SHINWELL: My Lords, I should not consider it appropriate to object to the provisions of this order, but in reducing the period of reckonable service from 10 to four years in the case of former Members of the Northern Ireland Assembly while at the same time ignoring the position of former Members of another place who retired before the 1965 pensions legislation was introduced and

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carried through both Houses (although I am not certain that it came through your Lordships' House) it occurs to me that this might have been the appropriate occasion for a review of the whole of the pensions scheme. Let me explain.
There are several Members of your Lordships' House—and I am not among them—who retired before the 1965 scheme. Some of them—I need hardly be called upon to mention names but they are on both sides of your Lordships'House—who had 10 years' service before 1965, some of them 15, some of them 20 years' and some of them even longer were deprived of the benefit of the pension scheme because it was initiated only in 1965. The result is that in some of the cases which come to mind they are the recipients of a pension which has nothing to do with the ordinary pension scheme of 1965 but is based on the Members' fund, which was contributed to by annual subscriptions of £24 and as a result they benefited from that fund.
It seems to me that if the period of reckonable service in the case of Northern Ireland Members who retired after 1972 is to be reduced from 10 to four years, which in the circumstances is a desirable provision to which I raise no objection at all, the Government might have decided to take the opportunity of reviewing the pension scheme so that some of my former colleagues benefited. I need hardly declare an interest, except to mention that I have the benefit of the 10 years scheme, like other Members of another place who eventually retired, though I had 42½ years' service in another place —but that is an anomoly that one has to endure. Other Members of your Lordships' House are affected and it seems to me in the circumstances, since a revision of the pension scheme affecting former Members of the Northern Ireland Assembly is under review, it would have been as well to make a thorough going job of the whole position. That is all I wish to say about it, but I take advantage of the presence on the Front Bench of my noble friend who is responsible for this legislation in your Lorsdhips' House so that he may convey my observation to his right honourable friend.
Lord DONALDSON of KINGS-BRIDGE: My Lord, I am grateful that my noble friend does not expect
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me to do more than that, which I will certainly do. But I might point out that this order is an attempt to put right something which was wrong in the sense that the Westminster Members of Parliament under the Westminster Act had this reduction from 10 to four years and it is bringing the Northern Ireland Members of Parliament into line with them; so it need not in any sense apply to the whole field. But my noble friend's views will be conveyed to the correct source in Government in order that they may be looked at.
On Question, Motion agreed to.

DEPARTMENT OF HOUSING, LOCAL GOVERNMENT AND PLANNING (DISSOLUTION) (NORTHERN IRELAND) ORDER 1976
4.14 p.m.
Lord DONALDSON of KINGS-BRIDGE: My Lords, I beg to move that the draft Department of Housing, Local Government and Planning (Dissolution) (Northern Ireland) Order 1976, a draft of which was laid before the House on 25th February, be approved. My right honourable friend the Secretary of State announced on 29th January in another place the intention to merge the Northern Ireland Department of Housing, Local Government and Planning, with the Northern Ireland Department of the Environment from 1st April 1976. This draft order seeks to give legislative effect to that announcement.
There is an inter-relationship of the functions carried out by both Departments and it has been concluded that their amalgamation will achieve more effective co-ordination of services and a saving of resources. Before the 1st January 1974 all the functions of the Department of Housing. Local Government and Planning and the Department of the Environment were exercisable by the Ministry of Development. By merging the two Departments, this order, in effect, brings together again all the functions of the Ministry of Development and makes them exercisable by the Department of the Environment.
Article 3 provides for the dissolution of the Department of Housing. Local Government and Planning and for the

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transfer of its functions, assets and liabilities to the Department of the Environment, and the transfer of the functions of the Head of the Department of Housing, Local Government and Planning to the Head of the Department of the Environment.
Article 4 makes the necessary adaptation of references to the Department of Housing, Local Government and Planning in legislation, judgments, contracts and other documents, safeguards things previously done by that Department, provides for the continuance of things commenced by it and provides for the substitution of the Department of the Environment in pending proceedings. Finally Article 5 provides for the repeal and revocation of enactments. A merger of this nature is to be welcomed as part of the general revision in the interests of efficiency and streamlining of administration and I commend the order to the House. My Lords, I beg to move.
Moved, That the draft Department of Housing, Local Government and Planning (Dissolution) (Northern Ireland) Order 1976, laid before the House on 25th February, be approved.—(Lord Donaldson of Kingsbridge.)
On Question, Motion agreed to.

APPROPRIATION (NORTHERN IRELAND) ORDER 1976
4.16 p.m.
Lord DONALDSON of KINGS-BRIDGE Lord DONALDSON of KINGS-BRIDGE rose to move, That the draft Appropriation (Northern Ireland) Order 1976, laid before the House on 25th February, be approved. The noble Lord said: As your Lordships will remember, the procedure for Northern Ireland's supply legislation under direct rule arrangements is that the Main Estimate of Northern Ireland Departments is published in the early summer and appropriated just before the Recess in July; the Autumn Supplementary Estimate is published in November and appropriated in December; and the Spring Supplementary Estimate and Further Spring Supplementary Estimate published in February, are appropriated in March, together with a sum on account of the following financial year. The Appro-
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priation Order for the Main Estimate provides an opportunity for a full debate, and your Lordships may recall that we also had a wide-ranging debate last December (which lasted, I think, 1½ hours) on the order to appropriate the Autumn Supplementary Estimate for the current year. I can of course consider questions on the wide range of subjects covered by the Estimates we are now considering, but I hope that on this occasion we can have a more limited discussion and concentrate in the main on the financial technicalities.
This order has two purposes. In the first place, it appropriates the published Spring Supplementary Estimate and Further Spring Supplementary Estimate for the current year. Secondly, it appropriates the sum required on account of 1976–77 to put Northern Ireland Departments in funds until such time as the Main Estimate has been published and Parliament has approved the appropriation of the balance of the funds required. The additional provision sought for Spring Supplementary Estimate and Further Spring Supplementary Estimate is some £54 million which brings the total Estimates provision for 1975–76 to some £1,028 million, and £32 million of the increase, or some 60 per cent. has come about as a result of pay and price increases. Real increases in public expenditure amount to some £18 million; the most important of these are the additional £14 million contributed to the Northern Ireland Housing Executive and some £2½ million required to write off housing deficits remaining on the accounts of the former New Town Commissions. I would emphasise, however, that these real increases are consistent with Northern Ireland's approved allocation of public expenditure for this year. The balance of the £54 million—some £4 million—is for miscellaneous financial transactions which do not count as public expenditure, including a payment from the Northern Ireland Consolidated Fund into the National Insurance Fund resulting from an adjustment in the actuarial calculations.
What this order does is to appropriate not only the Spring Supplementary Estimate and Further Spring Supplementary Estimate already referred to, but also a sum of £464 million on account of 1976–77, which is 45 per cent. of the total

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estimates for the current financial year. This is the normal way of providing funds to Government Departments in advance of the Main Estimates. I should, however, like to draw attention to the fact that, as has been agreed by the Public Accounts Committee and the Expenditure Committee, the Northern Ireland Estimates, as from 1976–77, will be presented in a revised form in which expenditure will be set out by programme rather than by Department. This will bring the Northern Ireland Estimates into line with the United Kingdom Supply Estimates, which underwent a similar revision in 1974–75. It does however mean that the grouping of services in the Vote on Account is different from that in the Supplementary Estimate for 1975–76. I commend the order to the House.
Moved, That the draft Appropriation (Northern Ireland) Order 1976, laid before the House on 25th February, beapproved.—(Lord Donaldson of Kings-bridge.)
4.21 p.m.
Lord BELSTEAD: My Lords, I should like to thank the noble Lord, Lord Donaldson of Kingsbridge, for his explanation of this order which in Part II of the Schedule lists the sums granted for several services, sums on account for the next financial year. It is not always entirely easy to discover exactly what services are being either included or omitted from these Appropriation Orders, and the situation is made a little more complicated, as the noble Lord himself said in his closing words, by the fact that the classes of expenditure have altered as between this year and the previous similar order of a year ago. Therefore, I must apologise to the noble Lord if I do not compare like with like.
May I first raise a question about the relation of this order to the recent White Paper on Public Expenditure, Cmnd. 6393. The White Paper on Public Expenditure shows that between the current financial year and the year 1979–80 total expenditure for Northern Ireland, as it is listed in the White Paper, is planned to be reduced from £1,321 million to £1,258 million, a reduction of some £63 million. However, initially this reduction is not going to "bite" on Northern Ireland; savings are going to
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be made from 1977 onwards. The noble Lord will recall that the White Paper on Public Expenditure of last month makes it clear that the increase in total expenditure in Northern Ireland from this year to next year is to be contained to an increase of only £16 million. All that is set out in Table 2.15 of the February White Paper.
My Lords, what is troubling me is that the increase of sums granted on account by this order compared to the equivalent order of a year ago is nearly £150 million. The first Appropriation Order of last year granting sums on account was approximately £316 million for 1975–76; and this year it is granting over £463 million. Although I take the point that this is money being granted on account and is only a part of what will be the total expenditure for the next financial year, I should be grateful for an explanation of how this tallies with the restrictions of the White Paper on Public Expenditure which, after all, was published only last month. May I specifically ask about Class I of this order which relates to agriculture? The appalling weakness of the pound at present brings home to us as never before how we in the United Kingdom need to produce as much food as possible for home consumption. In this work, Northern Ireland could help very effectively if farmers in Ulster are fairly certain that they will get a fair return for their work. May I ask the noble Lord what the situation is concerning the remoteness grant, which is some compensation for the heavy transport costs to and from Northern Ireland. The noble Lord was good enough to refer to this last December in a debate on a previous Appropriation Order. What I am really asking for is a renewal of the assurance he gave at that time.
My Lords, I see that in heading No. 3 of Class I there is a grant of £3,885,000, and I quote:
"For expenditure on agricultural assistance schemes, food processing and marketing".
I understood last year that the processing of meat in Northern Ireland was being carried on at a very much reduced level. In a country where 14 per cent. of the working population is employed in agriculture or associated industries, it really is a tragedy if the rearing of livestock has declined.

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May I ask the noble Lord, Lord Donaldson, whether he has any up-to-date census figures for the beef and pig herds in Northern Ireland as compared to, let us say, a year previously. What effect on breeding and rearing does he think that last week's EEC agricultural decisions are going to have so far as Northern Ireland is concerned? Thirdly, may I ask the noble Lord whether the Government are concerned that the Green Pound for the Republic has now been devalued by 2 per cent.?—so there is bound to be renewed incentive for cross-border smuggling. If that is the case, then I can only conclude that the meat processing business in Northern Ireland is liable to be endangered further.
May I ask about the work of the housing executive which would be related to Class V of this order? I was very glad to read in the White Paper on Public Expenditure that priority will continue to be given to housing in Northern Ireland. Do the Government have any figures for the number of houses completed last year? Are the housing executive being unduly hampered by the size of the public debt, which I understand still assumes considerable proportions so far as the non-payment of rent and rates is concerned? What has been done to recover the money thus owed?
On this occasion, I have only one question to ask the noble Lord, Lord Donaldson, about the vital subject of job promotion in Northern Ireland. I realise that things are very difficult in this respect at the present time, and acknowledge that the Government continue to do everything they possibly can to maintain and, indeed, to promote jobs. I see that under Class II, over £44 million is being granted to the Department of Commerce for selective assistance to industry and shipbuilding. It would appear that in the order of a year ago, the equivalent entry was some £31 million for the industrial development services, but on that occasion there was no mention of shipbuilding. Can the noble Lord tell us whether the £44 million mentioned in this order is an increase in real terms? Or has assistance for Harland and Wolff perhaps been imported into this Bill, which was possibly previously covered in some other way? As an entirely separate question, I
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should like to ask the noble Lord whether, in these difficult times, there has been any sign of dropping off in the take-up of grants to industry and commerce in recent months.
In conclusion, may I make one small criticism. I know that times are anything but easy for the Government, and I make this criticism tentatively. I would put to the noble Lord that what I feel is missing from statements which come from the Government about industry and commerce in Northern Ireland is any indication of an overall plan. It is the hope of all of us that before long the world trade revival will bring an upturn in the British economy. It has been said again and again that when this occurs we must be ready to take advantage of it. I hope that the Government may use the forthcoming months of direct rule to plan their overall strategy for the Northern Ireland economy in rather more detail than they have so far revealed, so that the Province will be ready to make the best use of the opportunities which we hope will come its way.
4.29 p.m.
Lord DONALDSON of KINGS-BRIDGE: My Lords, I am grateful to the noble Lord, Lord Belstead, for his support of this order. I will try to deal with all the points he has made, but if I fail to deal with any of them, I shall write to the noble Lord, because he asked me a fairly long and elaborate list of questions. I should like to begin by trying to relate the figures which he was querying. This is really a job for an accountant, and is something for neither the noble Lord nor myself.
The sum on account which is sought for in this order is greater than the equivalent sum on account sought a year ago, because the fact is that the sum on account is 45 per cent. of the total estimates and in the current year the total estimates are higher. The sum on account is thus bound to be bigger for 1976–77 because the total estimates for 1975–76 are much larger than those for 1974–75. The difference the noble Lord was asking about is contained entirely in that, and is really not worth pursuing; I do not think it represents a reality which means anything to any of us. The sum on account is only an advance instalment. It does not affect the total of the

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estimate which will later be sought, nor the sums which will be spent at the end of the day. The important sum in PESC terms is the total which will be spent, not the sum on account. I hope that goes some way to explaining that, I always think, particularly awkward piece of mathematics for those who are not accountants.
The noble Lord asked about the public expenditure cuts. These cuts have been necessary, as I think everybody in your Lordships' House will agree, to make room for the investment and exports which are essential to our prosperity in years ahead and to help in the battle against inflation. I think nobody doubts that this is the most important battle in front of us. This has meant a searching review of our priorities, and in order to preserve what we regard as the most important we have inevitably been obliged to cut some of the others. On the brighter side, as I think the noble Lord mentioned, housing expenditure is to rise from £110.8 million in 1975–76 to £141 million in 1979–80. Expenditure on social security, education and health will also rise over the next five years.
Within the trade, industry and employment programme the expenditure on industrial development and tourism is to rise by 20 per cent. in the same period, and the momentum of the Northern Ireland sophisticated trading programme, which we often boast of in this House, will be maintained. Moreover, sadly but inevitably, the law and order programme will require more resources than were allocated to it a year or so ago. I do not think anybody really thinks this could be withheld.
To protect these priorities we have naturally had to curtail some other plans. Even in some of the programmes I have mentioned we have had to forgo some of the projects we had previously hoped to carry out for example, capital spending on the health services and on education will be less than we had previously planned and the roads programme will be substantially reduced from the levels we anticipated last year. So provision is stabilised at about the level of the last two or three years. This has involved the postponement and curtailment of a number of projects, the most painful of which is perhaps
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the Madam's Bank Bridge in Londonderry, which will now not be started before 1980–81 Certain noble Lords will be pleased to hear that we have managed to fit in provision to improve and extend Aldergrove airport, and work will start in about a year's time.
With regard to the remoteness grant the position it not very different from the position when I last referred to it, because no decisions have been made. It will end on 31st March 1977, and the factors which gave rise to the remoteness grant will be considered during the coming year with a view to deciding whether or not it will be continued, and if so at what rate. It is worth noticing that the remoteness grant is £1,900,000, and the United Kingdom Government have produced for Northern Ireland the figure to which the noble Lord referred over the feed price, which is £3½ million, roughly speaking, towards the equalisation of the cost of feed in Belfast as opposed to the cost of feed in Liverpool. This is an extremely constructive form of subsidy and Northern Ireland Ministers we are grateful to the Treasury of the United Kingdom Government for letting us have that. Clearly they will have something of an argument about the remoteness grant in the fact that they have given us well over twice as much in another field.
Viscount AMORY: My Lords, can the noble Lord tell me whether the remoteness grant is receivable in full from the EEC?
Lord DONALDSON of KINGS-BRIDGE: No, my Lords; I do not think it is receivable at all from the EEC. The situation of EEC aid to remote areas is covered, I think, in an entirely different way. If I am wrong I will write to the noble Viscount, but I am pretty sure I am right about that
The noble Lord, Lord Belstead, asked about the farming situation. The recent package which has just been brought out is generally welcomed by the Northern Ireland farmer. We in Northern Ireland produce mainly livestock and livestock products, beef, milk and sheep, based largely on grassland, and pigs, eggs and poultry on imported feeding stuffs. The latter have not really been affected by Mr. Peart's package. The awards on milk and sheep will help very much to retain

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confidence among the milk and lamb producers. The beef producers are pleased that the system of variable premiums has been maintained, but are conscious of the fact that because of the limitation on premiums which Mr. Peart had to agree to their total returns will depend on firm market prices not falling too far below the level of prices in Great Britain. I should like at this point to say that I think we owe the greatest thanks to my right honourable friend the Minister, who fought a bitter battle to keep these beef premiums which are even more important from the point of view of Northern Ireland than from that of the English farmer.
As regards the Irish and United Kingdom Green Pounds, the increased differential between the values of the United Kingdom and Irish Green Pounds means that monetary compensation amounts will apply to trade across the border between Northern Ireland and the Republic. The noble Lord will remember that they have been cancelled recently because the two values got so close. In particular, of course, this produces, as the noble Lord said, an incentive to the smuggling of fat cattle and pigs, and this is something we shall have to deal with. It is not a new problem, but it is a problem which will inevitably arise here. We are looking at the possibility of taking countervailing action under the Meat Industry Employment Scheme, but it is fairly elaborate and I think I would rather not go into it now. There will be MCAs of something like £9 on a 600 lb. beef carcase and about £1 per pig, so they are quite large sums. This is something we have to look at very carefully. The noble Lord asked for the dairy herd and beef figures. The dairy herd is about 239,000 and the beef herd is about 328,000, about a 2 per cent. Fall; pigs are 645,000, 23 per cent. down on 1974.
To turn to housing, in the public sector the Northern Ireland Housing Executive completed a total of 4,885 new houses and in addition brought back into use 780 houses which were bricked up, vacant or derelict. This is not a very brilliant figure; it is in fact the lowest we have had since 1962. As the noble Lord will know, there are a number of reasons for this. One of the major ones has, of course, been the effect of the civil disturbances
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on the building programme. In the last few years some 25,000 houses have been damaged by bombs, fire and vandalism. Something like 60,000 people have moved from home because of the violence or threat of violence. Over 10,000 houses have been abandoned or bricked up. There has been widespread squatting and housing schemes have been delayed because of the paramilitaries' intimidation of contractors.
We take the view that, in all the circumstances, the Housing Executive is doing a sterling job, and there is no intention of reverting to local government control of housing in Northern Ireland. It would be a retrograde step to move away from the concept of a single, impartial housing authority. The future outlook is one of improvement and an upturn in completions is to be expected this year. A realistic indication of the total building programme up to 1980–81 would be 35,000 to 40,000 houses. My Lords, the only other point I see on my paper is that the noble Lord asked whether there was any sign of a decline in the taking up of grants. I shall make inquiry about this but off the cuff the answer is, No. However, I should like to verify this. I think I have answered most of the noble Lord's questions, and if not I will reply by letter.
On Question, Motion agreed to.

LAW OF THE SEA CONFERENCE: POLICY AND AIMS
4.41 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY rose to ask Her Majesty's Government whether they will make a Statement on the aims and policy to be adopted by the British delegation at the Law of the Sea Conference due to start in New York in mid-March, subject to any requirements of protecting the United Kingdom's negotiating position. The noble Lord said: My Lords, I hope that the Government will welcome this as an opportunity of stating publicly some of their principal aims. This is a timely moment because it is a few days before the Law of the Sea Conference resumes at its forthcoming session in New York. I am personally grateful that the noble Lord, Lord Goronwy-Roberts, is to reply to this debate. I know that he returned only yesterday from the United States. I hope he is not

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suffering from jet-lag. I know that he has had a busy week or more on the other side of the Atlantic.
This House has taken a special interest in this subject and has found time for debates at various stages. There was one only three weeks ago which, although it was restricted to a certain part of the subject matter of the Conference, none the less enabled noble Lords to give their views and make suggestions to the Government. From this Bench we have urged the Government to play an influential part at the Conference. We have urged them to spare no effort to achieve fair and practical agreements on such matters as the proposed 200 mile economic zone, a 12 mile territorial sea, and a sensible international regime for the oceans and waters beyond the continental shelves and the economic zones.
The character and methods of the Conference are somewhat strange. There are some 140 countries—the membership of the United Nations—trying to arrive at a consensus of agreement. This has been untidy. The membership includes landlocked countries, and some countries which have a very small direct interest in the subjects of the Conference. Therefore, there is bound to be a temptation for them to join groups and to gain some bargaining leverage—a familiar United Nations scene. This means that settlements could be delayed until some nations are satisfied, or receive assurances, on other issues.
The previous sessions at Caracas and then at Geneva last summer have produced some general agreement on certain important matters, but, so far as I know, no definitive measures or changes have yet been made in international law. What is described as a "single negotiating text" has been circulated to all the delegations. I believe that much can be found wrong with that text, both in the acceptability of the new proposals in it and also in its drafting in places; but it constitutes a basis for discussion and a common denominator for reference purposes. I would not advocate this as a way of formulating international law or carrying out the world's business, but it is the system being used and we, as a country, must adapt ourselves to it in order to get the best results.
No doubt the three Committees will again come into session at the beginning
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of the resumed Conference: one on the international authority to bring in a regime beyond the continental shelves and economic zones; the second on the various forms of coastal zones; and the third dealing with pollution, research, and related matters. I submit that the results of this Law of the Sea Conference are more important for Britain than for any other country in the world. Most of the subjects involved directly affect us for five principal reasons. First, we are a fishing nation with special and urgent problems; secondly, we are also a leading shipping nation with a very large proportion of overseas trade. Freedom of passage for our vessels in every part of the globe is crucial for us. Similarly, from the defence viewpoint, to protect our interests and to support our alliances, we uphold the rights of innocent movement of warships and aircraft. Fourthly, our continental shelf is very extensive in relation to our land area. Furthermore, it has proved already to be rich in oil and gas. Fifthly, we have to import large quantities of metals and ores. It is in our interest to open up the alternative sources on the ocean's floors.
The United Kingdom upholds the rule of law, and British Governments have aimed, and will no doubt continue to aim, for international agreement on new arrangements. Britannia has shed her former majesty over the seas, but she must use her trident to point the way for others, and indeed even to do some prodding when negotiation slows down. Determined and skilful diplomacy is required, for the maritime nations are in a minority among the participants at the Conference. The world's fishing, shipping, and industrialised countries can be outvoted by the rest, including the landlocked States, if matters are forced to an issue.
The most urgent subject for Britain, as I said in the last debate three weeks ago, is fishing. It is directly connected with the 200-mile economic zone, which is agreed in principle by the large majority at the Conference. The Government will no doubt be pressing for action on this, and will assume that necessary progress will be made made in New York to authorise it.
I recognise that the Government may not wish to say more than that today.

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From this Bench, however, we can look further. Whether or not the general agreement already reached on a 200 mile economic zone is translated into some instrument during the next two months, it is clear that about 20 countries, including the United States, Canada, and other leading maritime nations, will, after the New York session, wish to put the 200 mile zone into effect together, in concert, by agreement, not unilaterally. This economic zone is not an exclusive fishing limit. It is an area in which the coastal State is responsible for conservation arrangements. It can be seen that the unilateral action already taken by Iceland claiming 200 miles for fishing limits is completely out of step with what is proposed. On the general agreement now reached on the economic zone the British Government must be ready to join in international action by the maritime countries of the kind I have suggested. That was the way in which the fishing limits were effectively extended to 12 miles and recognised in international law in the early 1960s.
In particular, the British Government must work out, with the other members of the EEC, arrangements round our shores. The proposal recently made by the EEC Commission for a 12-mile exclusive fishing limit, though appearing to perpetuate the satisfactory situation in the past, is not appropriate for the future; it should be much greater. This is because many of the larger British trawlers will no longer be able to fish in distant waters and will be augmenting the catching strength in our home waters. Furthermore, confidence in quota systems has been eroded among our fishermen; there is no assurance that quotas will be observed or that they can be enforced and there is no system for the allocation of quotas which does not appear to be arbitrary. I would add, however, that the Commission's proposal at least torpedoes the scare story, mischieviously spread by the SNP, that EEC boats would be fishing up to our beaches. Of course that was nonsense. This was impossible, anyway, before 1938 because of the 10-year agreement, and it is now clear from these minimum proposals put forward by the Commission that the principle of an exclusive fishing zone is accepted as continuing thereafter.
There is another sense in which the Government must be ready for a 200-mile economic zone. Britain will be faced with the task of administering and policing a very large area of sea around our shores; for example, there will be the controls over fishing and pollution to be managed. I wonder whether the Government recognise the size of the problem and the amount of work that will be involved. I would point to the fact that five vessels have been ordered —they are of the Jura type, I believe—to carry out this kind of work in connection with both fishing and protection of our oil installations. However, others have pointed out, and I agree with them, that these boats are much too slow. We believe that more will be needed and that it will also be necessary to have faster vessels to get to the scene quickly when there are incidents or complaints. I recognise that the emphasis is now on capacity to stay at sea for three weeks or so, but there will be other needs and I draw the attention of the Government to these now.
As stated in our last debate, a multitude of Departments and agencies are at present involved in the maritime management of Britain's affairs. In the debate which the noble Baroness, Lady White, introduced—she stepped in when the noble Lord, Lord Henley, became prey to 'flu—it was pointed out by a number of speakers that co-ordination and supervision was required, and I suggested that this was a task not necessarily for one Department but for a senior Minister, who would supervise and co-ordinate the many activities of these numerous bodies.
I will not go into the details of the matters to be raised at the Conference, but I will mention three other main points: pollution, freedom of passage and the proposed international authority.
On pollution, the Conference is naturally concentrating on the coastal States' interest. I believe that the Conference should be aiming to build on the international conventions which have already been agreed. The question which arises is: who enforces the agreed principles? The flag State should be responsible for its own shipping. That is the country which can most easily carry out the necessary discipline and enforce the penalties, but there are doubts among many at the

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Conference as to whether some of the flag-of-convenience States can take on those responsibilities. Thus, the coastal State and the port State appear to be being brought in as well. Of course, vessels are accountable and vulnerable when in port; that is the time when action can be taken and inquiries made, but I urge the Government not to allow the flag State to escape from its responsibilities, or to be relieved of the basic task of disciplining its own fleets.
I come next to freedom of navigation and innocent movement. Here Britain has a vital interest and Britain, I understand, has taken a leading part in putting forward the concept of transit passage. We can look at this from the points of view of, first, the strategic considerations, with which we are much concerned, and, secondly, the interests of coastal States. On the question of strategic considerations, we want the Conference to accept that warships and even submerged submarines have the right to go through international straits, even though the territorial seas are to be expanded to 12 miles. Then, as regards the coastal States' interest, we in the Channel at Dover have very acute problems in dealing with shipping traffic and the dangers of pollution. Thus, we are in a position to see both sides of this difficult problem and I hope that the British delegation will continue to promote the concept of innocent passage—transit passage, as it is now being called in the document that has been circulated—and that it will achieve satisfactory provisions, recognising that these must contain an element of compromise.
On my third point, the oceans and seas beyond the economic zones and continental shelves, the Conference has before it proposals for an international authority which are too grandiose and top heavy. If they were carried out, it would be like setting up another United Nations with an assembly, a council, two commissions and a judicial tribunal besides a body to carry out the deep sea operations. Apart from anything else, the expense of contributing to that kind of organisation would be excessive. What is needed is a body which will be the world authority and have the last word, and which will carry out licensing and also be in charge of the proposed funds because the United Nations has by
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declaration stated that the resources of the seabed beyond the continental shelves constitute a heritage of mankind.
It now appears that technological advance in deep sea mining is ahead of progress towards international agreement. The consortia which we are getting together for these operations consist of several industrial nations and they will be able to start economic deep sea mining before a regime is agreed and ready. The world needs the metals, especially nickle; and the United Kingdom in particular, being an importer of many of the substances which we know are available in the nodules on the seabed, has a special interest. The research and development which are taking place now at high cost will falter if the prospects recede of putting them to use for the benefit of the world as a whole.
Then there is the argument about the area of the continental shelf where it extends beyond the 200-mile economic zone. My understanding of the British view, to which I subscribe, is that the resources of the seabed where they are in the continental shelf beyond the economic zone, should be under the control of the coastal State. The argument which appears still to be settled is about whether there should be any contribution to the international authority related to the successful extraction of substances from that part of the continental shelf. That is the kind of matter which should not hold up the setting up of an international regime. It is clear that many of the underdeveloped countries and landlocked States intend to link agreement on this kind of matter with other issues before the Conference. A situation may, therefore, arise where those countries are causing delay to the conclusion of formalities where agreement has been reached, and that they may be causing this delay for purely bargaining purposes related to separate matters in which they may have a very indirect interest.
It is accepted that the results must be in the form of one or more packages. Most nations taking part must accept that concessions will have to be made both by industrial maritime nations and by the others. But there is a limit to the amount of time that can be allowed to pass. I am certain that the United States and other industrial

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countries will become impatient if agreement, which has been reached, appears to be being held up unnecessarily because of horse trading. I hope that the Government will make it clear that there is a limit to the time that Britain can wait, if delay is caused by a group of countries with little direct interest and little capacity themselves to participate in the marine activities concerned.
To sum up, my Lords, the principal aims which I suggest the Government should be observing are, first, a 12-mile territorial sea, and, secondly, a 200-mile economic zone. Both of these are now virtually agreed, and I hope that it will be possible for them to be put into effect after this coming session. Thirdly, there is the unimpeded passage of straits with the necessary safeguards for the coastal States. There must also be improved arrangements made to prevent and control pollution; and progress towards the creation of a realistic international régime, supervising seabed resources beyond the continental shelf and economic zones. Finally, there is also need of a system for settling disputes, because it is disappointing that there has been scant agreement so far on that important part of the proposed changes in international law.
Personally, I wish the official delegation well in the coming two months. I extend these wishes to its new full-time leader, Mr. Donald Logan, who has succeeded Sir Roger Jackling. I wish to pay a tribute to the work which Sir Roger Jackling has done, until very recently, in leading in this field, which is so important to Britain. Furthermore, I give my good wishes to any Ministers who attend parts of the Conference. I understand that one or two may do so for particular subjects. There is bound to be much gruelling labour ahead for the delegation. The results, if successful, and if not too slow in coming, will be more significant for this country than for any other.
5.3 p.m.
Lord PAGET of NORTHAMPTON: My Lords, we are all grateful to the noble Lord, Lord Campbell of Croy, for having raised this subject. I propose to be very brief. I was tempted to speak by only one observation which the noble
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Lord made, and with which I profoundly agree: this is not the way to make international law. In the old days international law had two main sources: the work of the great Jurists, such as Grotius, and the treaties of responsible Powers. When the laws of the sea were made, they were made by the naval Powers coming to agreement with each other. The naval Powers were responsible for the order of the sea, for the maintenance of their freedom, for the suppression and control of piracy. They were the proper people to consider the order of the sea.
Unfortunately, in the past 30 years we have watched a terrible deterioration in public order, which has been largely the result of the creation of the United Nations. There has been the introduction of the idea that power and responsibility shall be divorced. In the old days we should have dealt with these very necessary problems: problems of the conservation of the whale, of the cod, of the herring; problems of the use of free passage between the naval Powers, America, Russia, ourselves, the French: Powers with the capacity to implement an order that is arranged. That order would have been imposed on those who themselves did not take the responsibility for maintaining order by maintaining a naval power which always had a world and international responsibility.
But now the great Powers find themselves inhibited from asserting any kind of order. The United Nations has come into being. It is a body where the majority is not a majority of people, not a majority of power, not a majority of wealth, but a majority of States. And the majority of those States are simply fascist or military dictatorships. Two-thirds of the members of the United Nations are one-Party or military States, and opposition is legal in the countries of less than a quarter of the members of the United Nations. Yet is is that kind of State which proceeds to take over the assertion of law. At this Law of the Sea Conference it is not the responsible, it is not the interested, who will control. It is those who arc most adept in log rolling; those who can get votes for their particular interest by promising support for wholly irrelevant interests in quite different directions from other people who are there.

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The noble Lord, Lord Campbell of Croy, was right when he said that this is not the way to make international law. The other difficulty that has come from this inhibition of the great naval Powers, who used to be very successfully responsible for a world order over many centuries, is the lack of self-confidence. That is illustrated, almost pitiably illustrated, by our performance in the Icelandic dispute, in which a tiny Power, with a few gunboats, is defying the decision of the World Court, defying by a mere assertion what has always been recognised as international law, and attacking and injuring our ships on their lawful occasions, doing what they have always done for generation after generation. We have this inhibition. It may come from atomic power which one cannot use, and it may be spread over naval power which one cannot use. One is too big and too strong.
It is no longer decent to assert one's rights, or to say to these quite lawless piratical gunboats: "If you do this again, you will be arrested, and if you resist arrest, you will be sunk." One will not establish any kind of order on the sea unless somebody is to say that to pirates, and who from this Law of the Sea Conference is to be that person? Even if an agreement and order are obtained, one has no enforceable power. One does not touch the newly assumed right of defying the law as one is small. Indeed, today it requires some courage to raise a nervous, quiet voice, just occasionally, to assert the rights of the strong against the weak. This is the kind of condition to which we have come, and I myself hope that we shall get back to some form of sanity; to some sort of recognition that in the international sphere power ought once again to be linked with responsibility and responsibility with power.
5.10 p.m.
Baroness WHITE: My Lords, I must apologise for not having put my name down on the list of speakers. I was not sure whether I could be here, and, though I am fairly well familiar with the background, I have not had time to study the current situation with the closeness it deserves. But I am very anxious, because of the small number of names on the list, that Her Majesty's Government should be under no illusions about the importance which many of us attach to this subject of the Law of the Sea Con-
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ference and its resumption. I am afraid I do not share the atavistic philosophy of my noble friend, but he has touched upon some of the consequences of modern development and I should like to emphasise just one aspect of this, which is the attitude of certain States towards research if, as we expect, we have an agreement on a 200-mile exclusive economic zone. This may seem to be a relatively minor aspect when so many other matters are to be discussed at New York, but it may be one of increasing importance.
When for various reasons countries feel it necessary to impose prohibitions, and certainly restrictions, on scientific research, I think we can lose considerably in the progress of mankind in these matters. There are some countries which take research to be not disinterested but always in the economic interests of someone. They consider that that someone should be themselves, and that they should not be required to allow research to be undertaken in their waters unless they can see some quite specific benefits accruing to their own economy. There are others which, perhaps for good reasons, associate research with espionage and resist it on those grounds, whether or not there is evidence to support this assumption. I am not for one moment denying that they may on occasion be perfectly right in their assumption; but I know that there is considerable anxiety among our own scientific workers, and others in the world, at the restrictions which may follow any agreement on exclusive economic zones unless some protective measures are taken in the interests of scientific progress. In the view of many of us it should not be left to the exclusive decision of the coastal State as to whether or no certain scientific matters should be pursued. It appears to me there should be some kind of international surveillance. This has been obtained in other spheres—atomic energy, for example —and I hope very much that some constructive propositions may be put forward by Her Majesty's Government and others in this matter.
The only other point I should like to make on the very many important topics touched on by the noble Lord, Lord Campbell of Croy, with whom I agreed on almost everything I heard him say, is that we should not underestimate the

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speed with which technology is advancing in the matter of the exploitation of mineral wealth not just on the surface of the seabed but possibly within the seabed. It so happens that today I was speaking with a person associated with one of our large oil companies who said it was ironic that they were drilling for oil through a very thick seam of coal. It seems to me plain that before very long we shall be seeking to exploit the mineral resources of not just the seabed but the earth below the ocean. This is something which, again, we have a very strong interest in seeing properly regulated, so far as possible, from the outset, so that we do not find ourselves in a disadvantageous position by attempting to be law-abiding ourselves when others may not be.
I do not entirely agree with the analysis of the Icelandic situation, possibly because I am much concerned about the conservation of fish as well as about keeping the law, but I feel this is an area where we must be very much on our guard not to be overtaken by events and to show adequate foresight for our undoubted interests.
5.15 p.m.
Lord RITCHIE-CALDER: My Lords, I apologise for intervening in this debate but, following my noble friend and reacting considerably to what my other noble friend had to say, I feel compelled to intervene on a subject to which I have given something like eight years' very close attention. I am not going to give my eight years' experience to your Lordships, but I am going to underline very strongly the fact that the most dangerous aspects of the law of the sea eventualities are what my noble friend Lady White has been saying. I have said it before—that is one of the reasons why I was not going to speak—but it is true that we know less about the bottom of the sea than we know about the hind side of the moon. We know less about what are going to be the possible effects on the ecosystem of all the things we are talking about than we know about practically anything. The reason is very simple, and it is because we have not systematically determined these things. We think we know. We talk very dramatically about
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the bottom of the sea, but one thing is true; that is, that unless we have access both to the economic zone and to the 12-mile limit—and, regrettably, one aspect of our marine ecology has already been lost—and access to the estuarine areas as well, then we are going to have a disaster at sea, because we are going to produce such effects on the eco-system that it will be tantamount to a catastrophe.
The other thing which is manifest is what the noble Lord, Lord Campbell of Croy, very effectively demonstrated; that is, the reality of the ocean bed as a source of minerals. I agree with him entirely, and with my noble friend Lady White, that the technology of getting these materials has gone far beyond the limits of our portion, because obviously we do not know what we will do if we start disturbing the ocean bed, we do not know what we will do if we start creating situations in which all kinds of catastrophic possibilities are released. This is because we do not have the knowledge, and if we cannot have the access to that knowledge, if the countries do not agree—and my noble friend Lady White has pointed out why many of them, with some justification, feel inhibited—then they, like the rest of us, are going to be the victims of the situation. There is only one answer, and with all apologies to the noble Lord, Lord Paget, it must be international and it must be the United Nations in some kind of metamorphosis or extension. There must be an international authority dealing with the research and development on whom everybody can rely; that is to say, this is not a system of espionage; this is not the multinational corporations—I am quoting now the reactions of coastal States—going in to look for resources which they will then deceptively persuade the countries to exploit. This is the kind of thing we can do only by international organisation. I am not talking about control—that derives from it—but the fact is that I have no real confidence, if I may say so to my noble friend the Minister, that we are going to get very much out of the next round of the Law of the Sea Conference. What is clear, and what cannot be escaped, is that we are going to have the 200-mile economic zone and the 12-mile limit, because if they do not specify it, then people will take it anyway.

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Beyond that, I think that we have to go to another line in which by very careful work—and I am talking now from some insight—which has been done in the education (I hate to use the term) of the developing countries as to what they are taking on and what the hazards are, then we might get a satisfactory solution the next time round. Unless we do, we are in great trouble. It is not just that I see disappearing our common heritage by the extension of the zones, but that there is inherent in all this a myopia which is quite terrifying. I would say to my noble friend Lord Paget that that myopia is not confined to the less-developed countries.
5.21 p.m.
Lord GORONWY-ROBERTS: My Lords, the House always listens with attention and respect to the noble Lord, Lord Campbell of Croy, particularly on this subject on which he is a master. Today he has deployed that very considerable knowledge with great skill and with responsibility. He was joined in this short but very useful and timely debate by three other Members of your Lordships' House to whom I, at least, listened with great pleasure for varying reasons. We had the candid isolationism of my noble friend, Lord Paget. I rarely agree with him, but I always enjoy him. Then we had what I thought was a notable speech from my noble friend Lady White, drawing on a good deal of experience and knowledge in this field to which I should like to refer before I finally sit down. Finally, there was a contribution, informed and scholarly as we would expect, from my noble friend Lord Ritchie-Calder who struck a note of warning as well as of hope in these matters.
The principal overall objective of the Government in the next session of the Conference will be to continue to work for widespread agreement on a Convention which will be generally acceptable to all States. As noble Lords rightly pointed out, there will have to be a certain degree of compromise arising from consultations not only with the Conference itself, but on the margin. The aim is to get a general Convention generally accepted. At the close of the Geneva session of the Conference an Informal Single Negotiating Text was produced at the request of
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the Conference. This represented a very big step forward. There are, as we have heard, a number of amendments which this country would wish to see to this document, some of them drafting and some of them amendments of content; but we have decided, in the interests of making progress, to accept it as the main focus of negotiations at the New York session which is to begin next week. This is the first point that the noble Lord made and I immediately respond to it in those terms.
In informal contacts between the sessions, we have urged other Governments to do the same. We see the best prospect of progress in the further refinement of their texts by the chairmen of the main Committees, following a series of informal consultations. We hope that this will lead to the adoption by the Conference of an amended version of the Single Negotiating Text so that it becomes the basic text for the final negotiating phase embodying a substantial measure of agreement on the substantive questions it covers.
On individual issues, our principle objectives include that of assuring our jurisdiction over the resources of our continental shelf, principally oil and gas, as far as the outer edge of the continental margin. At least a third of the States at the Conference have a similar obective and this is supported in the terms of the Single Negotiating Text. Not all States share this view and to assist this objective we are considering possible schemes for sharing with the international community a proportion of the revenue derived from exploitation of the hydrocarbon resources which lie between the 200-mile limit and the outer edge of the margin. This concept is provided for in the Single Negotiating Text, but I hasten to give the assurance that we could not consider any revenue sharing within the 200-mile limit. It is a readiness to consider revenue sharing arrangements between the 200-mile limit and the outer edge of the margin.
Thirdly, to take the noble Lord's points in turn, we support proposals for a 200-mile exclusive economic zone as part of the overall Convention. This enjoys the support of the great majority of States at the Conference. Within the zone the coastal State would have sovereign rights over fisheries within the 200-mile EEZ.

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Our support is conditional on a satisfactory régime for fisheries, and also on maintenance of high seas freedoms, particularly of navigation, over flight and communication within the zones. We have opposed unilateral extensions of fisheries limits in advance of the outcome of the Conference. The actual fisheries régime to apply within the United Kingdom zone in relation to our EEC partners would depend on what emerges from discussions now taking place in Brussels on the modification of the Common Fisheries Policy in the light of the new (as we hope and expect) 200 mile zones.
There are other fields in which our readiness to agree to extensions of coastal State jurisdiction is conditional on adequate safeguards for our interests in freedom of navigation and over flight. To this end, we shall be seeking agreement to a maximum breadth of 12 miles for the territorial sea. This, too, commands widespread support at the Conference. We seek to couple this with the maintenance and clarification of the right of innocent passage through the territorial sea and with the establishment of a right of unimpeded passage for all ships and aircraft through straits used for international navigation. The noble Lord rightly attached importance to this point. Similarly, recognition of the new concept of an archipelagic State must be subject to preservation of rights of passage through archipelagos. Proposals along these lines promoted by the British delegation enjoy broadly based support at the Conference and are substantially incorporated in the Single Negotiating Text.
Returning to pollution, we have put forward proposals on marine pollution, designed to make an effective contribution to controlling such pollution, particularly from ships, about which many coastal States are especially concerned, while not causing unreasonable interference with the legitimate interests of shipping. On vessel source pollution, we believe that rules should in general he internationally agreed and the primary responsibility for ensuring compliance, under internationally agreed regulations, must remain with the flag States. But we have now accepted that a State may also exercise a significant role in the enforcement of such regulations in respect of vessels which are voluntarily in its ports. In
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addition, recognising the legitimate interests of the State off whose coasts a ship is passing. we have proposed that the coastal State may require a ship suspected of having infringed an internationally agreed regulation, to give information about its destination and State of registration, so that the incident can be properly investigated. The Single Negotiating Text does not fully reflect our position or that of other States which share our interests. We shall be holding discussions with these States seeking to co-ordinate our approach on this issue at the forthcoming session.
On the régime for the exploitation of deep seabed minerals from the area beyond the limits of national jurisdiction, the Single Negotiating Text is less satisfactory than on other issues. This is a much more difficult and complicated issue. Our principal aim will be to ensure that there is in the Convention an obligation on the Authority which is to be established to administer the international seabed régime, to promote and encourage the development of seabed minerals, perhaps through joint ventures between the Authority and State or States or companies—and some States are their own companies—which may wish to engage in seabed mining. In addition, recognising the broad support for the Authority itself having a direct operating role, we shall be prepared in New York to examine the practical implications of this, in parallel with operations conducted by States or their companies. I know there are two broad schools of thought on this: that the sea should be explored and exploited. by an Authority, a kind of internationalisation of the whole thing. On the other hand, there is a school of thought which insists that companies—and there are not very many of them specialising in this field—and States should be drawn in as units of exploratory and exploitative effort. We are poised to look at any proposal which combines the principle of internationalisation with the best use of available skills and enterprise in this field.
Some developing countries fear that any exploitation of minerals from the seabed would have serious implications for the economies of those developing countries because they depend for the bulk of their export earnings on these minerals. They wish to write into the

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Convention powers for the Authority to control seabed mining so as to minimise these effects. They fear the competition of the sea with the mineral output of the land. We understand these concerns but believe that they should be catered for by world-wide arrangements concerning the commodities in question, taking, into account production from all sources, including the seabed. We are used to international commodity agreements regarding traditional foodstuffs and indeed some raw materials. These arrangements are among the most effective international arrangements of which we have experience.
I see no reason why we should not use that experience and those procedures to make the effective exploitation of the resources of the seabed a contributory part of the extractive industry of those countries which at the moment depend for their livelihood, in some cases almost entirely, on their Own minerals. We must avoid separating the industrial use or the sea from that of the land, otherwise we may set up a new competition which may, without our being conscious of it, impair the economies of some countries which most need help at this time.
I have not gone into full details about our negotiating position at New York. I know from Lord Campbell of Croy's speech that he and the House will not expect me to do so in advance of the actual negotiations. I would repeat that, as we have made clear, there are issues on which we cannot compromise, but we shall be most actively pursuing at New York a real consensus, based on a package of agreements on individual issues, to form the framework of a new Law of the Sea Convention which will be generally respected and observed.
Referring to the five Jura class vessels which are on order for policing both fisheries, oil and gas installations the noble Lord asked for assurances. The Government have examined carefully the requirements which will be needed for such vessels and we believe the specifications of these vessels currently on order will satisfy the requirements. Regarding the settlement of disputes, the Government will be working for a compulsory procedure for settlement of disputes as an integral part of any new Convention. This links with my noble friend's plea
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for an international authority to engage in this new, challenging and potentially rewarding human activity. My noble friend Lord Paget is right that there is no authority unless there is assention, and we shall be working for a compulsory procedure of settlement of disputes in relation to the setting up of an international authority.
Lord PAGET of NORTHAMPTON: My Lords, will my noble friend tell me whom it is proposed shall enforce that authority? Will it be the great Powers, which have the means to enforce it, or the United Nations, which has not?
Lord GORONWY-ROBERTS: My Lords, my noble friend is asking me to anticipate the detailed procedures of the conference. In setting up an international authority and tying to it a compulsory process of settlement of disputes, the Conference will of course study the question of sanction and its application. I would not anticipate precisely how they will agree to organise that, except to demur somewhat at this early stage at what my noble friend suggested; that is, that it should lie in the power of the traditional enforcing countries. I believe that day is past and that today it is a question of assembling the consensual power of all the participants in an international agreement of this sort; otherwise there can be no power at all.
My noble friend Lady White, during her most attractive speech, raised a number of points. I was delighted that she drew to our attention, for instance, the important question of marine scientific research. The Conference will be working towards the achievement of a regime permitting the maximum freedom for marine scientific research, consistent, of course, with sovereign rights which will be enjoyed by a coastal State, regarding the resources of its economic zone and continental shelf. The noble Baroness and I—and, I am sure, also the Government—would go a little further than that. There is absolutely no reason at all why research should not be as wide as possible, even penetrating into the territorial sea—though that, of course, would need to be by arrangement with the sovereign Power. But the point is made, and is part of our attitude at the Conference, that, in common with the other arrangements I have mentioned. there should be

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the maximum freedom for research. My noble friend also struck the right note at the beginning of her speech when she said that, despite the comparative brevity of this debate, nobody should assume that the question is an unimportant one. This was reinforced by all those who have taken part, notably by my noble friend Lord Ritchie-Calder.
Progress in these massive questions, which throw up so many complicated and difficult issues, must necessarily be gradual. That does not mean we can afford to be slow, and, of course, progress has not been slow; it has been gradual. We are now approaching the fourth session, and these questions will not be settled finally at that session, which is to take place between the 15th March and the 5th May. There may well be another session this year, following which, back in Caracas, we may have the Convention session, where a Convention will finally be accepted and ratified by all countries. A good deal turns on this: not only the tapping of valuable resources for the human race, but also the codification of a system of exploitation, of sharing and of the settlement of disputes which, as we know from recent experience, can affect profoundly the relationship between States. I cordially welcome everything that was said by the noble Lord in asking this Question, and I equally welcome the contributions made by my noble friends to a debate which I believe will bear fruitful re-reading tomorrow and which has been, at least to me, very pleasing to listen to this afternoon.

SAMUEL MONTAGU & CO. LIMITED BILL [H.L.]
Examiners Certificate that the further Standing Orders applicable have been complied with: Ordered to lie on the Table. Bill committed to the Committee on Unopposed Bills.
ANGLIAN WATER AUTHORITY BILL [H.L.]
Petition for Additional Provision of the Anglian Water Authority under their Common Seal, together with proposed Clauses and Amendments annexed thereto; read and referred to the Examiners.
BRITISH TRANSPORT DOCKS (FELIXSTOWE) BILL
Examiners Special Report; referred to the Standing Orders Committee.
ROAD TRAFFIC (DRIVERS' AGES AND HOURS OF WORK) BILL [H.L.]
Returned from the Commons agreed to with Amendments; the said Amendments to be printed.
TRUSTEE SAVINGS BANKS BILL [H.L.]
Returned from the Commons agreed to with Amendments; the said Amendments to be printed.