Lords Sitting of 18 March 1976

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

ANGOLA AND CUBAN TROOPS
Baroness ELLES: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government through what diplomatic channels they intend to take action on the removal of Cuban troops from Angola.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, we have made clear from the outset, through diplomatic channels and publicly, our view that all foreign troops should be withdrawn from Angola. Naturally, we remain in the closest diplomatic contact with our friends and allies, both in Africa and the West, on all Southern African problems. We wish to develop relations of friendship and cooperation with Angola.
Baroness ELLES: My Lords, I thank the Minister for that reply. Now that the Cubans have achieved the objective of obtaining recognition and freedom for Angola, is it not time that Her Majesty's Government, together with other members of the EEC, and possibly the United States, took stronger measures against Cuban troops in order that they should be withdrawn either through economic, political or commercial measures or even through the international measures which have been available for some time in the United Nations?
Lord GORONWY-ROBERTS: My Lords, the noble Baroness is suggesting what can only be described as an operation of the West in Africa in present conditions. I would strongly advise that that kind of sectional and possibly ideological intervention would not conduce to the stability and peace of
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Southern Africa. I prefer the views, if I may say so frankly, wisely expressed on the media the other night by the noble Lord, Lord Home of the Hirsel. If there is intervention it must not be identified by African nationalism as a kind of recrudescence of Western imperialism. If there is any intervention it must be universal and is best considered in the context of the United Nations.
Lord PAGET of NORTHAMPTON: My Lords, is not this a little unrealistic? It is Cuban troops who have conquered Angola and are at present sending for their wives and families, and there is nothing we can do about it. Can the noble Lord tell us something about the negotiations which I gather we are at present undertaking in order to provide Mozambique with money which will enable them to hire some Cubans of their own?
Lord GORONWY-ROBERTS: My Lords, in my pursuit of reality under the tutelage of my noble friend, I should require some little time to disentangle the implications of that question. He raises important matters, as always. The part of the question that relates to Mozambique I think he would do better to put down as a separate Question on aid to Mozambique. On the question of the Cuban presence in Angola, we have made it abundantly clear, and will constantly do so, that while the Cubans may be there by invitation of the Government of that country, so far there is no invitation for them to enter any other country. If they did, a new and very serious situation would be created.
Lord CARRINGTON: My Lords, is the noble Lord aware that those of us who think that double standards operate in these matters in the United Nations and in other international organisations also think that this does no credit to those organisations and makes it very difficult for those who wish to see them effective to be as enthusiastic as they should otherwise be?
Lord GORONWY-ROBERTS: My Lords, I am bound to agree with the noble Lord so far as any international organisations reflect double standards. He has in mind, of course, the possibility of the Secretary-General considering the facilities open to him under Article 99. I have no doubt that he is constantly

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looking at the powers he has under that Article. I have no doubt also that this Secretary-General as well as his predecessors is, as they were, bound to consider whether intervention by the United Nations would be successful in terms of its acceptance by the countries in Southern and Central Africa immediately concerned. Those countries are, of course, not all extremist; a number of them, very important countries in Africa, are moderate and constructive.
Lord HARMAR-NICHOLLS: My Lords, if the noble Lord is using the noble Lord, Lord Home of the Hirsel, as part of his shield, may I say that there was nothing in Lord Home's broadcast (if we listened to the same broadcast) which said anything other than that it was dangerous and unsatisfactory for Cuban troops to remain in Angola.
Lord GORONWY-ROBERTS: My Lords, I agree. I thought that it was a most constructive and satisfactory interview. I was particularly struck by the wisdom of his remarks about the need for careful thought when we consider intervention in Southern and Central Africa.
Lord SHINWELL: My Lords, is not Cuba a member of the United Nations; and, if so, is it not remarkable that the United Nations have not made any protest?
Lord GORONWY-ROBERTS: Certainly, my Lords. The United Nations, whether under the Article which enables the Security Council to move or whether under the Article to which the noble Lord and I referred in our recent exchange, must have regard to the acceptability of such an initiative among the countries immediately concerned. It is no good proceeding "cold" in these matters and finding that even a United Nations' initiative is faced by a quite sudden but real opposition from the Continent itself.
Baroness ELLES: My Lords, would the Minister agree that the last part of my question referred to the use of international machinery at the United Nations? Is it not rather remarkable that a unanimous resolution can be passed by the Security Council to give aid to Mozambique, but the British Representative
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is unable to table any resolution regarding Cuban troops?
Lord GORONWY-ROBERTS: No, it is not, my Lords. The United Nations must be understood to be an instrument of international action which still rests, rightly or wrongly, on a sufficiency of acceptability for what moves it decides on. I was asked just now whether there were double standards. Double standards arise when resolutions are moved and passed and some of them are not acceptable to all the Members of the United Nations. This is not so far, I regret to say, a world authority which can take initiatives with a strength that national authorities have. It must always feel its way and see how many of its own members will uphold it in its own decisions.
Lord SEGAL: My Lords, could my noble friend explain what is the special interest of Cuba in Angola, and why Cuban troops were sent there in the first place?
Lord GORONWY-ROBERTS: No, my Lords, I could not explain with any authority the intracacies of Cuban foreign policy. We have our own thoughts about this, and we have our own statements and actions to take. We have, since the fighting became obviously international, made it very clear on our own account, through the Community which joined us in this and through the Commonwealth, where we stand: that there is no justification for the intervention—certainly militarily—of any one country in the affairs of another anywhere in the world.
Lord CARRINGTON: My Lords, in answer to my noble friend the noble Lord came dangerously near, it seemed to me, to saying one should never raise anything in the United Nations unless it had a chance of success. Would he please deny that?
Lord GORONWY-ROBERTS: My Lords, I do not think the noble Lord should edit my remarks. I said that the United Nations was the only world authority we have; it is nevertheless imperfect—and I regret to say this—and therefore must proceed by resolution and action entirely on a sufficiency of support for those actions by its own members.

PRICE COMPARISON SCHEMES
3.16 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 has been the total cost to date of Government support of price comparison schemes as outlined in Circular No. 4/75 of the Department of Prices and Consumer Protection; and what steps, beyond giving the advice contained within that circular, they have taken to see that only like items are compared with each other.
Lord ORAM: My Lords, the Government grant commitment is up to £1,000 per annum for each approved scheme and so far 253 schemes have been approved. Payments of grant to date total £10,945. The Department of Prices and Consumer Protection maintains close contact with participating authorities and provides further advice and guidance where necessary. Once a survey is in operation, the weekly results are sent to the Department where they are carefully examined.
Lord ELTON: My Lords, while thanking the noble Lord for his reply, may I ask him this question? How is it that on a number of occasions we find shops in a town which stock two qualities of one line but others which stock only one quality? The more expensive quality in the first shop is compared with the cheaper quality in the others. Is the noble Lord aware that it is usually the small shopkeeper, with the specialist shop, who stocks a multiplicity of lines and again this militates against the survival of the small shop?
Lord ORAM: My Lords, the first point raised by the noble Lord is probably due to the treatment of branded goods, and their treatment is dealt with at considerable length in the circular to which the noble Lord's Question refers. Probably it arises because one shop has its own branded commodity whereas the other shop does not. On the question of the small shops, it is recognised that their service is a different type of service. They cannot in all cases compete in price; but they compete in other ways such as
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convenience and personal service. Therefore, to subject them to a strict price comparison would not be fair to them, or indeed to other traders. They are in a different line of business.
Lord ELTON: My Lords, is the noble Lord aware that I am referring specifically to comparisons of sugar—between a fine grade and an ordinary grade—with regard to which there is no question of branding? Would the noble Lord agree that his reply to my question implies that the elaborate pro forma replies issued in the circular to which he referred are not being used? Further, will the noble Lord tell us whether the review of the scheme promised for the end of last year in Clause 21 of the circular has yet been made, and, if so, what was the result of it?
Lord ORAM: My Lords, the advice in the circular is that the lowest prices in each case should be shown. It may be that in certain cases this has not been followed through. If the noble Lord has cases that he would care to let me see, then of course I shall have them examined. The review to which he referred is being undertaken. Of course, it is early days yet for this scheme, and the experience so far is now being assessed.

SOVIET FREIGHT CHARGES
3.20 p.m.
Baroness WARD of NORTH TYNESIDE: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what countries have accepted a request from the United Kingdom to co-operate in making a joint representation to the Soviet Union on the subject of competitive cargo freight rates.
Lord WINTERBOTTOM: My Lords, the matter has not followed the course predicated by the noble Baroness. As I have indicated in earlier Answers to the noble Baroness, matters are being considered in various internatonal fora.
Baroness WARD of NORTH TYNESIDE: My Lords, I thank the noble Lord for that Answer. Presumably he has studied Soviet Shipping, which is a very

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interesting document. May I ask whether action is being taken on the suggestions made in Soviet Shipping, which is not issued by Soviet shipping but is about Soviet shipping? Also, can the noble Lord say what action as requested by the Chamber of Shipping is being taken, in view of the fact that if we are not very careful we shall have no British shipping left, and it is a very important invisible export?
Lord WINTERBOTTOM: My Lords, I have not had the pleasure of reading the publication mentioned by the noble Baroness. If she will send me a copy I shall read it with interest. What we are doing is discussing the problems that may arise with the OECD and the Consultative Shipping Group, which is made up of 12 European nations and Japan; and, of course, we have bilateral contacts, and such consultation will continue. As I have said before, our aim is to come to a common appraisal of the situation and then decide what may be required. A number of possibilities are being canvassed. Her Majesty's Government are not inactive, but I prefer not to be pressed beyond this point.
Lord DERWENT: My Lords, the noble Lord has repeatedly told us about these fora. Can he name them?
Lord WINTERBOTTOM: My Lords, I thought I had. The OECD is the Organisation for Economic Co-operation and Development, which is the commercial body covering Europe under the United Nations; and the Consultative Shipping Group is 12 European nations plus Japan.
Baroness WARD of NORTH TYNESIDE: My Lords, I thank the noble Lord for the help he is giving, of which I am sure everybody is very appreciative. If he has not seen Soviet Shipping, and if I send him the copy which was lent to me by one of the noble Lords on this side who is interested in shipping, may I have an undertaking that he will let me have it back again?
Lord WINTERBOTTOM: My Lords, I believe that book stealing is worse than horse stealing.

NHS: REGIONAL HEALTH AUTHORITY ESTIMATES
3.23 p.m.
Baroness WARD of NORTH TYNESIDE: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the finance available to the Regional Health Authority housed in Newcastle-on-Tyne is less or more in 1976–77 than in 1975–76 and whether the Area Health Authorities covered by the region have yet received their estimates and which areas are requested to arrange for hospital closures.
Lord WELLS-PESTELL: My Lords, the overall financial allocations recently notified to the Northern Regional Health Authority are about 3 per cent. greater for 1976–77 than those for 1975–76. The Northern Regional Health Authority have not yet made their allocation to the Area Health Authorities in their region, but expect to do so shortly. Area Health Authorities have a general responsibility for considering the most suitable deployment of resources for the benefit of patients, including the use or continued use of particular health buildings. The Northern Regional Health Authority have not requested Area Health Authorities to make arrangements in connection with any closure.
Baroness WARD of NORTH TYNESIDE: My Lords, I thank the noble Lord very much indeed for the help which he has given. Is he aware that, as the estimates for the Northern Regional Health Authority have only recently been received and the other authorities have not yet received their estimates, it is very difficult for the Health Authorities in any part of the country to plan their future efficiently? Is it a fact that there is no money left in the Treasury for the Health Service?
Lord WELLS-PESTELL: My Lords, I do not think it is an unusual procedure, judging by the practice over a good many years. The Northern Regional Health Authority, along with all the other Regional Health Authorities, received notice of their allocation on 18th February, and the Northern Regional

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Health Authority are not meeting again until 23rd March, when they will decide what are to be the allocations to their Area Health Authorities. One must bear in mind that it takes a little time to work out how much money will be available nationally. Taking the Regional Health Authorities for the country as a whole we have been able to increase the allocation from £3,948 million to £4,052 million and, in the circumstances, bearing in mind the present situation, I should have thought that was quite reasonable.
Baroness WARD of NORTH TYNESIDE: Hear, hear!
Lord WALLACE of COSLANY: My Lords, is the noble Lord aware that any increase for the North, and other regions mentioned by the noble Baroness, is at the expense of the so-called over-bedded South-East where we shall have to face hospital closures?
Lord WELLS-PESTELL: My Lords, that is in some measure true, but I hope it will not be true from 1st April this year. We have put into operation a resource allocation working party, whose job will be to ascertain the real needs of each area. I accept that the Northern part of England has suffered rather considerably in comparison with the South. This has got to stop, and we are determined to stop it. That is why we have a resource allocation working party meeting at the moment. I should like to add that we are also introducing a new National Health Service planning system which will involve every hospital within a region, not just the Regional Health Authority and the Area Health Authority, so that they can make abundantly clear to their Regional Health Authority what their needs are. We regard certain areas in the North of England as deprived, and we intend to try to put a stop to that.
Baroness WARD of NORTH TYNESIDE: My Lords, I thank the noble Lord for all the information he has given, which is of great interest. But will he bear in mind, the regions having been extended under local government, that the Barrow-in-Furness hospitals are very badly equipped, and that more money is certainly needed to put them into better shape to look after patients?
Lord WELLS-PESTELL: My Lords, I would agree with the noble Baroness.
Lord ALPORT: My Lords, may I draw the attention of the noble Lord the Leader of the House, and of my noble friend Lord Carrington, to the fact that four Questions have taken 21 minutes? Is this not an inordinate time to spend on Questions which, in many cases, are of very small interest to the generality of Members of this House?
The LORD PRIVY SEAL (Lord Shepherd): My Lords, I think the records will show that on Thursdays, when the House tends to be better filled than at other times, 22 minutes is slightly better than average. I must say that, having taken 10 minutes on the first Question, we have not done too bady on the other three. Having replied to the noble Lord, I agree with him that we should watch with care the time we take on Questions. But I know that your Lordships attach great importance to Question and Answer, and I think that with a little forbearance and restraint we have not done too badly this afternoon.
Lord PANNELL: My Lords, will the noble Lord please consider referring to the proposed Select Committee the possibility, or perhaps I should say advisability, of having a chairman of this Assembly, rather than that there should still be an anarchist system to keep people in order, because those who have been in the other place know that it is one of the serious deficiencies of this place.
Lord SHEPHERD: My Lords, one of the benefits of having no Speaker in your Lordships' House is that those who are adept at the use of the point of order procedure do not have their opportunity here.
Lord PLATT: My Lords, if we do have something like a Speaker to this House, I suggest that one of his first duties should be to prevent continual and audible conversations taking place on the Bench immediately to my left.
Lord SHEPHERD: My Lords, like other noble Lords I tend to be led astray from our rules of order. I suggest that we now move to the next business.

PUBLIC LENDING RIGHT BILL [H.L.]
Lord STRABOLGI: My Lords, I beg to introduce a Bill to provide public lending right for authors, and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(Lord Strabolgi.)
On Question, Bill read 1a, and to be printed.

HOUSING (AMENDMENT) (SCOTLAND) BILL
Brought from the Commons endorsed with the Certificate from the Speaker that the Bill is a Money Bill within the meaning of the Parliament Act 1911; read 1a, and to be printed.

CONSOLIDATION BILLS
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Earl of Selkirk be appointed a member of the Joint Committee in the place of the Lord Kinnaird.—(The Lord Chancellor.)
On Question, Motion agreed to.

EDUCATION (SCOTLAND) BILL [H.L.]
Read 3a, an Amendment (privilege) made; Bill passed, and sent to the Commons.
INTERNATIONAL CARRIAGE OF PERISHABLE FOODSTUFFS BILL [H.L.]
Read 3a, an Amendment (privilege) made; Bill passed, and sent to the Commons.
WATER CHARGES BILL
Report received.

CROFTING REFORM (SCOTLAND) BILL
3.35 p.m.
The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill): My Lords, I beg to move that this Bill be now read a second time. This Bill introduces measures for the reform of crofting tenure which are long overdue. They stem from original recommendations made by the Crofters Commission as long ago as 1968 and 1969 and which have been the subject of considerable public discussion in Highland circles ever since. The previous Government introduced measures in another place in December 1973 but these were overtaken by the Election of March 1974.
The object of the Bill is to remove the constraints which prevent a crofter from developing his croft to its full potential, both agriculturally and non-agriculturally. During the past 90 years the crofting legislation has served the crofter well, but in some respects the very measures which were devised for his protection are now proving too restrictive. Though he has virtual security of tenure, a crofter does not own the land upon which he himself has erected his house and other buildings, and thus has no heritable title to his property. This prevents him from being in a position to realise the full market value of his buildings or from using them as security for a loan which he may require for some desirable development on his croft. His statutory entitlement is restricted to compensation for his improvements at their agricultural value should he give up his tenancy or be removed from his croft. Similarly, should the landlord resume any of the crofter's land for development or should an authority take possession of it in pursuance of a compulsory purchase order, the crofter's compensation is related to his losses in agricultural terms.
With the historical background of crofting and in the knowledge that his forebears have in many cases created crofts out of bare and inhospitable land, the crofter's feeling for his land goes far beyond that of an ordinary tenant and is more akin to that of an owner. The Bill recognises this in the three basic rights which are being conferred on the crofter. These are an incontestable right

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to acquire his house site and a reasonable amount of garden ground, a qualified right to acquire his inbye croft land at its crofting value and a right to share in the value of any of his land taken for development. The rights of purchase, however, are to be entirely optional; it will be for the crofter himself to decide whether he wishes to exercise them. If, however, he decides to remain as a tenant, he will now have the added benefit of being entitled to a share in the value of any land taken from him. The Bill also provides for the planning blight provisions to apply to crofters, thus giving further recognition to their interests as quasi owners, and contains measures for improving the management of common grazings. The important function of the control over the removal of land from crofting is to be transferred to the Crofters Commission.
One of the most important features of the Bill is the price formula for croft land. By means of this formula, which should put all crofters in the position of being able to buy their crofts if they so desire, the Government are providing that the price to the crofter will be based on the crofting value of his land. If, however, the crofter sells his land within five years of purchase he will become liable to pay a further sum to the landlord based on its market value. This will encourage those crofters who wish to buy and continue to work and develop their crofts, but should prove a disincentive to those whose only reason for purchase is to sell again for immediate gain. It would be unfair also to landlords to be under compulsion to sell, at a low price, land which was to be resold shortly afterwards at considerable profit to the purchaser.
I turn now to the Government's proposals for control over the removal of land from crofting. Our concern has been to devise a system which is sufficiently flexible to achieve a proper balance between the need to allow land to be released from crofting to facilitate development (which will in many cases benefit the crofting community) and to retain land in crofting where that is necessary to preserve the traditional crofting way of life. Under our proposals, the responsibility for this function is to be given to the Crofters Commission and we have provided guidelines for that body in the operation of the control.
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The responsibility for granting directions removing land from crofting control rests at present with the Secretary of State for Scotland. The Conservatives would have transferred this function to the Land Court but when we came to consider it we concluded that this was essentially an administrative rather than a judicial function. It was felt also that the responsibility should rest with someone closer in touch with crofting opinion than the Secretary of State for Scotland could possibly be. The natural choice, therefore, was the Crofters Commission. The Commission, with its field organisation, is probably better equipped than the Land Court to make a thorough investigation of the circumstances of a township as well as to deal with a possible significant increase in decrofting applications following the enactment of the Bill. I may say that the Commission is fully satisfied that the provisions will give them adequate control.
I should now like to give your Lordships some brief details about the clauses themselves. Clause 1 is the mainstay of the Bill and gives the crofter the right, failing agreement with his landlord, to apply to the Land Court for authority to purchase his house site or croft land. A cottar is given a similar right in respect of his house site. Clause 2 lays down the conditions under which the Land Court may authorise acquisition of croft land and Clause 3 provides the formulae for the calculation of the initial price of the land and any subsequent payment which may be necessary if resale takes place within five years. Clause 4 relates to the conditions and price under which the Land Court will authorise the acquisition of the house site. Clauses 5, 6, 7 and 8 contain various supplementary and consequential measures arising from the rights of purchase. Clauses 9 and 10 provide for the sharing of the value with the crofter where land is taken from his croft for development, and Clause 11 extends to crofters the protection from planning blight that applies to owners of property. Clause 12 extends the existing provisions relating to housing assistance for crofters to those crofters who purchase their house sites. This assistance, which is not available under existing legislation to owner-occupiers, will apply for a period of seven years after purchase. Clause 13 covers the control procedures which I dealt with earlier in

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some detail. Clauses 14, 15 and 16 amend the law relating to common grazings and assignations and Clause 17 makes certain changes in the procedures of the Land Court. Clause 18 provides for the payment of pensions to members of the Crofters Commission and the remaining clauses make provision in the usual form for Crown application, financial provision, and so on.
The Bill was very fully discussed in another place and the reports of the debates help to clarify what is necessarily a highly technical subject involving complex legal issues. The changes we have made as a consequence of these debates will, I hope, have made it easier for this House, and of course the people whose lives it will affect, to understand its provisions. My Lords, I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Lord kirkhill.)
3.42 p.m.
Lord CAMPBELL of CROY: My Lords, I should like first to thank the Minister, the noble Lord, Lord Kirkhill, for having explained so concisely and clearly the background to this Bill. I have a certain advantage over other noble Lords in this House, in that I have already taken part in a Second Reading debate upon this Bill. As some noble Lords from Scotland may know, on that occasion it was I who started the debate, because I introduced an almost identical Bill in another place in a debate shortly before the General Election of February 1974. I should warn the Front Bench opposite that there is a phenomenon which I have observed: whenever a crofting Bill appears a General Election seems to be not far behind. Much as I should like to see a change of Government, I hope we can get this Bill through first on this occasion. That last version of the Bill expired as uncompleted legislation in 1974. The present Government, with their own priorities, have not found time to introduce the Bill before now, but from this Bench we welcome the fact that they have introduced it in this Session.
The crofting system and the associated law are restricted to a defined area of the Highlands and Islands. I am sure noble Lords will expect me, as well as
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the noble Lord, Lord Kirkhill, to explain some of the background to the Bill, having myself been responsible for it. I regard the Bill as of considerable importance—although restricted in area—because it contains a generally agreed scheme for modernising the whole system and providing crofters with new options, including the option of becoming an owner-occupier and, with safeguards, choosing to leave the crofting system should they wish to do so. The general agreement reached was as a result of many meetings and consultations. Those that were held from 1970 until the introduction of the first version of the Bill at the end of 1973 were carried out, I can tell your Lordships, as a continuous operation. I had several meetings with the Crofters Commission and with the chairman, Mr. Shaw Grant, and the Commission in turn had many discussions with the representatives of crofters in different parts of the crofting counties. Much of the credit for the Bill should go to the Crofters Commission for the work which it did during that period.
The Crofters Commission took the first initiative, because in 1968 it published proposals which demonstrated the need to make a dramatic change in the whole system, and also the way in which this might be carried out. Its suggestion was a change to owner occupation for all crofters, but it also suggested that it should be compulsory that on a certain date every crofter should become an owner-occupier. We found that some crofters would like the option but did not necessarily want to change their existing status. Some of them were definitely against being compelled to become owner-occupiers. Therefore, before arriving in office in 1970 my colleagues and I had worked out a possible adaptation of the Commission's scheme and a scheme whereby owner occupation would be a free choice. That was the basis of the scheme eventually agreed, together with other provisions. The right to purchase the house and garden ground was one of the other provisions; another was the right to acquire inbye land for non-agricultural development, and the third was giving the crofter a share in the development value of the land on his croft.
These agreed proposals were published by me on 4th August 1972 in the form of a long Parliamentary Written Answer

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in another place. I suggest to anyone, who has not already obtained copies and who wishes to see the background to this Bill, that that Parliamentary Answer, which is easily available, sets out the origin and the principal purposes of this Bill. There was a criticism at the time that the statement should have been made by way of a White Paper and not a Written Answer, but I did not think it necessary or appropriate for a very abstruse subject—which this is, and which, although important, affects only a part of Scotland—to be dealt with in a White Paper. That view appears to have been vindicated, because the present Government have followed the same course; that is, they first indicated by Written Answer what they proposed to do before producing this Bill.
Changes in the crofting system are needed because desirable development for non-agricultural purposes was and is still, discouraged by the way the system operates. In particular, projects connected with tourism, projects connected with services to the new communities which have been growing as a result of developments related to North Sea oil and other developments, have been deterred because of the procedures of the crofting system. The crofter is unlikely to benefit from his own enterprise and effort under the existing system. That was one of the chief reasons for the provisions in this Bill.
The two alterations of any significance which constitute the difference between this version of the Bill and the first version introduced by me, are these: first, a price formula has been included in Clause 3. No doubt we shall examine that in detail in Committee. At this stage, I would tell your Lordships that I see no reason to advise you to dissent from this formula. It is related to 15 years' current rent. but the rent can he up-dated by the Land Court. This is important, because where a landowner has not raised rents for many years, a benevolent landowner who has kept down his rents might have been penalised if the last 15 years' actual rent were taken as the basis for a payment. Therefore, I am glad to see that he can apply to the Land Court in order to get an updated market rent considered, and would not be penalised for keeping rents low.
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My Lords, the second change was that, where land is being considered for removal from crofting control in Clause 13, the Crofters Commission is to be responsible for the decision and not the Secretary of State or the Land Court. There is an appeal to the Land Court which I think is important. This therefore gives to the Crofters Commission a form of planning permission power. Again, I see no objection to this, and trust that the Crofters Commission will use that power with care and wisdom.
It is interesting to compare the speech made by the present Secretary of State, the right honourable gentleman Mr. William Ross, on 16th December 1975 on the Second Reading of the Bill in another place, with my speech of the 22nd January 1974, in particular when we gave our descriptions of the clauses towards the end of our speeches. They are very similar, identical in places. I am not sure that the Scottish Office may not have used the same brief with some slight variations. I described Clause 1 as a "cornerstone"; the Secretary of State described it as the "mainstay". Again today, I noticed that the noble Lord, Lord Kirkhill, used the word "mainstay", and did not use a further version.
When the right honourable gentleman Mr. William Ross was summing up, he said:
"The Bill introduces a new era in crofting and offers the crofter a new freedom".
I said in my summing-up:
"It is a valuable and wide-ranging reform, and a charter for crofting freedom."
I cannot do otherwise than commend this Bill to the House, having myself been more responsible than anyone, I suppose, for originating it. But there is some irony to be found in the comments made by some others in the Second Reading debate in another place in 1974. For example, the present Parliamentary Secretary to the Ministry of Agriculture, then an Opposition Front Bench spokesman, in that debate said:
"To us the Bill represents a travesty of justice",
and,
"What is so outrageous is that it is a prescription for the decay of the crofting communities".
The present Parliamentary Under-Secretary for the Department of Prices and

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Consumer Protection condemned the Bill as
"a measure which virtually destroys the crofting system and the security of tenure of crofting communities".
I should like to ask the noble Lord, Lord Kirkhill, whether the Secretary of State for Scotland has received representations from these two junior Ministers, Dr. Strang and Mr. Maclennan, expressing the same feelings towards the Bill? Have they offered their resignations if the Bill is not withdrawn?—because no one can pretend that the small changes I referred to could possibly have altered the Bill to make it cease to be a "travesty of justice", or a "prescription for the decay" or the virtual destruction of the crofting system if it were so characterised in its earlier version. Have the two junior Ministers changed their minds? Or were those hysterically exaggerated words uttered in order to cause alarm among crofters, or to attract the attention of the Scottish Press? If these statements were put forward for either of the second two purposes I have mentioned, then I think that that was thoroughly irresponsible.
After the announcement in August 1972, I made clear that the way was open for volunary transactions and agreements, on the basis proposed, to proceed forthwith without having to wait for legislation to be passed. If transactions were entered into willingly by landowners and crofters, then the benefits could immediately be gained—for example, going ahead with a non-agricultural development, and those concerned would know that those transactions were in conformity with what would later be prescribed by legislation. I am glad to say that a number of transactions took place, which set a satisfactory pattern of agreement and prices. They demonstrated that the procedure could work voluntarily before the legislation had even come into effect.
The Secretary of State for Scotland is the owner of a large number of crofts. In 1972, when that statement of mine was made, he was the owner of about 2,000 crofts; that is, one-eighth of all the crofts. The Secretary of State for Scotland, incidentally, is the largest landowner in the United Kingdom—I do not know whether your Lordships realise that—and the croft ownership is a large part of it. In the same way, as Secretary of State,
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I started the process of enabling crofters who were tenants of the Secretary of State to become owner-occupiers if they wished. I am glad to tell your Lordships that according to my information, about 100 crofters did decide to become owner-occupiers, and so their land left the ownership of the Secretary of State for Scotland. That was a result of the initiative which I took at that time. I understand that the present Secretary of State is now adopting the same attitude, and allowing his crofters, if they wish, to opt for owner-occupation, whatever this Bill brings into effect. But I shall be glad of any comments on that matter that the noble Lord, Lord Kirkhill, may care to make at the end of the debate.
The Secretary of State in this Government has had difficulties with the Left Wing of his Party, because one-eight of the crofts—I do not know precisely the area of land which is owned by the Secretary of State—could be regarded as nationalised land, and allowing this land to move into a state of owner-occupation appeared to be going in the opposite direction to nationalisation. I recognise that the Secretary of State for Scotland has had to deal with criticism from his own Party because nationalised land appeared to be being denationalised under this scheme.
My Lords, before I sit down, I should like to put two points to the noble Lord, Lord Kirkhill, to see whether he can reply to them today, or at a later stage of the Bill. The first point concerns the housing assistance offered in the Bill. The provision is that there will be continuing housing assistance for crofters for a period of seven years after they have become owner-occupiers. Among some of those concerned with crofting, the opinion has been expressed that this provision might be more flexible, and that in certain circumstances and in certain cases the housing assistance might appropriately be continued beyond seven years. I do not know whether the Minister can tell us anything about this today.
My second point concerns the question of eligibility to be treated as a crofter. It has been generally understood that the units to be treated under the crofting laws are those registered with the Crofters Commission or with the Department, as such. Does the noble Lord

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the Minister think there is likely to be any dispute in the future as to what constitutes a croft within the Acts? One aspect of this is, of course, the changes in local government boundaries that have taken place. Previously, the crofting system applied only in the seven crofting counties. With the new boundaries, that area has been somewhat extended. But my understanding is that the crofting system is still limited to the present boundaries. Can the noble Lord the Minister also tell us whether he thinks there will be any difficulty in deciding the nature of a unit or an estate which would qualify to be treated as a croft under this Bill?
My Lords, I should like to end by congratulating the right honourable gentleman, Mr. William Ross, if it does not embarrass him for me to do so. He and I opposed each other in a Parliamentary and, therefore, an amicable way, over a period of many years at Dispatch Boxes in another place. I recognise his difficulties with those in his Party and elsewhere who opposed these proposals when they were first put forward. They have been opposed for various reasons. I think Mr. Ross should be applauded for reintroducing these proposals despite that opposition. If he had not done so, the results of a great deal of work would have been lost. Furthermore, the period when there was general agreement on these proposals, as there now is, would have passed and any future attempt to reform the crofting system would have meant starting again from the beginning. Your Lordships will therefore understand why, subject to any minor changes that may be made at a later stage, I think your Lordships' House should support this Bill.
4.1 p.m.
Viscount THURSO: My Lords, I find it charming to see the broad and happy measure of agreement between Her Majesty's Government and Her Majesty's Opposition over the matter of the Crofting Reform (Scotland) Bill. The only areas of disagreement that they have so far been able to find are the choice of the mot juste wherewith to applaud the individual clauses of the Bill. I must confess that I have to add my happy felicitations on the fact that this Bill is finally coming before your Lordships' House. In fact I would go further than
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either the noble Lord, Lord Kirkhill, who has introduced this Bill to us, or the noble Lord, Lord Campbell of Croy, who has so ably, one might say, seconded it, by supporting the Crofters Commission itself and saying that really the whole system of crofting is an anachronism; it is a purely feudal system of tenure very long overdue to be brought into the 20th century.
One or two points worry me. The noble Lord, Lord Kirkhill, for instance, said that he thought it might be necessary to preserve the traditional crofting way of life. I do not honestly think that you will ever preserve the so-called traditional crofting way of life. This is being changed for us at Kishorn and at Nigg and we are not going to see people living a peasant form of existence trying to scratch a living out of a small open boat combined with a few rough acres of ground. I think that in superseding the system of crofting tenure it must be the objective of Government and administration to see that we substitute for the old crofting form of tenure a good form of agricultural structure where the smaller farm is able to form part of the farming ladder and is able to contribute to the agricultural life and the agricultural industry of the country, at the same time preserving the only thing that really matters to the crofter, his home. This is what this Bill does, and that is why I support it. It gives the crofter the right to acquire his home irrevocably and without fear of legal peradventure, and in such a way that he can borrow upon it and develop it and use it as any other people use their home or their property.
One or two points were raised in another place during the debate of the First Scottish Standing Committee on this Bill, which I think we should still bear in mind, particularly those raised by my right honourable friend Mr. Grimond. The first of these points is the importance, in any decisions which are made by the Crofters Commission or the Land Court, of the welfare of the community being considered. The welfare of the community and the maintenance of the traditional crofting way of life are two different things altogether. It may very well be that there are considerations which relate to the welfare of the community which do not in fact preserve the traditional crofting way of life, and the

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preservation of the traditional crofting way of life is not necessarily to the welfare of the community. I think that it is perhaps a pity that we have not seen more emphasis upon the importance of the welfare of the community, perhaps through the Amendment which my right honourable friend moved in another place:
"that the making of such an order would be detrimental to the future of the crofting community affected by it,"
as an inhibition on the making of an order under Clause 2.
Among the other points which he raised was the question of the right of access to the foreshore. This is particularly a point which relates to some of the crofts in the islands and round the shore. It obviously does not relate to a croft inland. It was perhaps unkindly dealt with in the Scottish Standing Committee. We must see that we are satisfied, as this Bill passes through your Lordships' House, that in fact the rights of access for crofters who have rights of access to the foreshore are properly maintained.
Another point which was raised was the question of objection on behalf of others. This is an important point. In law you cannot raise objections to certain things unless you have a locus in the matter, and very often it is necessary for (shall we say?) the community to ask a landlord to object to something happening so that an inquiry can take place. I have been placed in this kind of position myself on more than one occasion by local authorities, where I have had a legal locus in a matter. I have been approached to give a ruling from the point of view of my locus in order to get the whole matter clarified. The suggestion that it might he possible for somebody to make an objection on behalf of others is not a bad suggestion to bear in mind as the Bill passes through your Lordships' House.
Finally, on the suggestions and Amendments which were put by my right honourable friend in another place, one Amendment I feel it was a pity not to have accepted read as follows:
"In all cases involving a change of use for land designated as croft land before the passing of this Act, whether by a landlord, crofter, owner or tenant, there should be a right of
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appeal to the Land Court by any interested body. The Land Court if it considers that the change will be detrimental to the long-term social and economic interests of the district shall have power to overrule any decision by the local planning authority."
This was really a drawing together of all the points I have just mentioned, putting the matter into the hands of the Land Court to deal with. I share this faith in the operation of the Land Court. I share the regard for the way in which the Land Court deals with matters affecting tenure of all kinds, and I would have faith if matters of decision were placed in its hands. I think it is a pity that this Amendment was not accepted and did not eventually form part of the Bill. Nevertheless, having said these things, in general I must welcome this Bill and wish it a fair passage unhindered, as was suggested, by the threat of General Elections or any other such disasters. We, on these Benches, will certainly hope to give it a fair wind and see it gets safely on to the Statute Book.
4.10 p.m.
Lord BALFOUR of INCHRYE: My Lords, at the outset of my few remarks I must declare an interest, having no less than 105 crofts on a property in Sutherland, so your Lordships will appreciate that I have some small knowledge of the crofter and his life. I think that this is a good and a fair Bill. By the time my noble friend Lord Campbell of Croy and the noble Lord, Lord Kirkhill, had spoken, I was not sure to whom one should give the credit for this Bill being good and fair. It struck me that we were getting something like a Party workers' co-operative between the two sides who finally have produced this satisfactory Bill.
I take issue with the noble Viscount, Lord Thurso, who rather deprecated the way of life of the crofter. Crofting is undoubtedly a way of life, and the crofters are proud of that. On my property we have broadly two classes of crofter: the crofter who can just make a living—and a not unreasonable one—and the crofter who is a part-time crofter. Four postmen in my area of East Sutherland are crofters; my gardener is a crofter and the railwaymen are crofters. That is all to the good. They contribute to the countryside, they contribute to their own and their family's earnings; and

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when people condemn crofting I think of the depleted Highlands population. In Sutherland some years ago, we had some 16,000 people. I think the last figure I saw was between 11,000 and 12,000—a pathetically small number—and if we did not have the crofting, supported as it is in various forms by Government grants, population depletion of the Highlands would be even more severe.
A crofter gets Government aid for his cattle, his sheep, his fencing, his land drainage and his general improvements, and it is easy for critics to say that the crofter lives on subsidies. He has that measure of support, but I should far prefer to see the continuation of that support at the expense of the general taxpayers rather than see the land go out of crofts. The social problem, as I see it, is what to do with the young people. I hope this Bill will assist the crofting industry, the crofting occupation, to a degree which will give some encouragement to the young people not to leave, as I am afraid they are rather tempted to do at the present time.
I have only three points to make on the Bill, and I shall make them briefly. The first is really a Committee point, but if the Minister can wipe it away in a sentence it will shorten proceedings later on. The Bill's proposals will entail a lot of conveyancing following applications by crofters to the Land Court, but there is nothing in the Bill to say who is to bear the legal costs of that conveyancing. I do not think that the landlord should have to bear those costs. The second point concerns Clause 2(3). There is given to the landlord the right to have a lease of sporting rights for shooting and fishing on land which is taken over by a crofter. Shooting and fishing are great fun, but they are not just fun. For a landlord they are a way of earning revenue for his estate which helps to enable him to keep it in good order and run it properly. I should like the Government to tell me whether they would agree that the lease should be a long-term lease, because this clause virtually takes away one of the earning assets of a landlord. Therefore, it is only right that the landlord should have security by way of revenue from the assets of which he is being deprived.
My third point concerns Clause 3 subsections (1) and (2). My noble friend
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Lord Campbell of Croy spoke about the 15 years' purchase. The Government have thrown a lifebelt to landlords who have tried to do their best by their crofters. I know one property where the rents have not been raised for many years: most of them were fixed in 1888. Perhaps they have not been raised because the landlord has some sympathy with the crofters' difficulties and struggles, but I would disagree with the noble Viscount, Lord Thurso, when he paints a picture of crofters living a sort of peasant life. He has built up the picture of a hovel, and of digging in rather barren ground. I am delighted to say that on most of the crofts on my property can be seen televison masts and motor cars. Whether that is because of Government help or whether it is entirely due to their industry I do not know, but it delights me to see them. I disagree profoundly with the noble Viscount, Lord Thurso, in his criticism of the standards of life and the prospects of crofters. One of these points can be dealt with in Committee, and no doubt the Minister will be able to reassure me on the question of the lease for sporting rights. Apart from these three points, I think that the Bill is a good one. As an owner of crofts, I welcome it and think that it is fair to both landlord and crofter.
4.17 p.m.
The Earl of CROMARTIE: My Lords, I too have to declare an interest in this matter, as apart from coming from one of the main crofter counties I have a number of good crofts and good friends on what remains of the Cromartie Estate. Recently I read a letter in the West Highland Free Press suggesting that no crofters had been consulted about the Bill, but so far as Ross and Cromarty was concerned this was quite untrue as when, during the good old days of the county council the prospect of crofting reform arose, the first thing that my county council and I did was to convene a meeting of mainland crofters as well as representatives from the Island of Lewis who, in those days, were part of our county.
This Bill varies but little from the original one, and I may say here and now that I am in favour of it, although there may be a few queries in my mind. In my very early youth I was at school with crofters and I have lived in close and happy proximity with them for most

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of my life both at my own home and on the West Coast when we still owned property on that side of the county. I might also add that I have served with them in both peace and war. As many of your Lordships may be aware, there is a considerable difference between the primarily arable crofts in the Eastern area to the crofts on the West Coast where the arable land is so often minimal, and they depend on a large and good common grazing for stock, especially where they do not combine fishing with agricultural work. Here I should perhaps commiserate with my kinsman, the noble Viscount, Lord Thurso; if his crofting land is so bad in Caithness, I could show him some very good land in Ross and Cromarty.
I do not intend to go back in history to the terrible conditions under which, in certain areas, crofters suffered. We all know what happened, which was quite inexcusable, even though one realises that much emotive exaggeration has been recorded, usually by people who know nothing whatever about Lice Highlands or the Highlanders or about their history. In my view, when the Highlands are having to take an influx of people from an entirely different environment and with little in common with the Highlanders, it is of vital importance that every effort should be made to maintain and improve the position of the crofting communities, both from the point of view of agriculture and for the maintenance of a valuable heritage.
I have spoken to many crofters about the Bill and I think that it is acceptable to them. The only fear I have is that as the Bill stands it could open the door to the developer and we could find, especially in places of scenic beauty, high-rise flats or some such horror sprouting up on crofting land, no doubt financed by people from outwith the British Isles. Perhaps the Minister will consider this point and make sure that the Crofters Commission and or the Land Court has not only the power but the duty to prevent anything like this from happening. For those of us who live and work in the Highlands, like the crofters themselves whose forbears have been in these areas from time immemorial, this is a very important point but it might be less so for
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the many absentee landlords who have, for the past half century or more, taken over so much of the country.
There are a few small points I wish to put to the Minister. First, with the appalling cost of imported fertilisers it might well happen that we shall have to go back to using our own resources, and one of the most important substances is seaweed. Any croft situated by the seashore should have the exclusive right to seaweed lying adjacent to the croft. Secondly, some have said that the rather indefinite title to the croft would make it difficult for a crofter to borrow from a bank or anywhere else for such improvements as he might wish to make if he wished to buy his croft. Thirdly, there has been criticism of the sporting rights being left with the landlord, but he also, I hope, has a right to live, and in many cases the loss of these rights might seriously interfere with his ability to let his shootings, and perhaps an even more valid reason is that if the adjacent crofts have the sporting rights it would not be long before there was nothing left for anybody to shoot. This, of course, does not imply that raiding deer should be allowed to come in and cause damage. I wish this Bill well and hope that it will be of advantage to the crofting community as a whole who make up such an important feature of our Highlands of Scotland.
4.24 p.m.
Lord BALERNO: My Lords, this long delayed but much required Bill has had a chequered career, but perhaps the delay has done no harm; it has given time for it to be well polished up and brought up to date and the improvements that have been added to it have been substantial and welcome. Especially welcome is the recognition of the great variety of conditions between the various crofting areas and consequently a very flexible approach, much more flexible than had originally been envisaged, has been adopted in the Bill, which makes it extremely sensible and realistic.
My noble friend Lord Campbell of Croy has covered the ground very fully and I have little to add to his lucid and comprehensive statement; but there is one question I wish to ask in regard to common grazings. It appears to me that

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the existing common grazing committees are in fact, though not in name, cooperative societies. I wonder, therefore, whether it would be possible to treat them as such for the purpose of grants under the EEC Common Agricultural Policy. Although the conversion of crofts to owner-occupation cannot be regarded as quite the final solution of the crofting problem, it goes a very long way towards it. Perhaps, therefore, we can envisage the phasing out of the Crofters Commission with its remaining responsibilities being taken over by the Scottish Land Court. The noble Viscount, Lord Thurso, has spoken of the good work that this Court has done. It was established in 1912 and has, despite certain vicissitudes, won the confidence of the Highland and agricultural communities. Under its present chairman, Lord Birsay, one could almost add that it has also won their affection.
I can remember at the turn of the century when in certain parts of the Highlands and Islands the "Black House" was the rule rather than the exception. The houses of which we are speaking today, however, are their successors and it is opportune to speak about the good work done by those civil servants responsible for administering the various land, housing, livestock and other agricultural grants down the years. Especially we should on this occasion remember the late Sir Robert Grey, who presided over the old Board of Agriculture and then was Permanent Secretary to the Department of Agriculture. He was in that position for over 15 years and was served by some men of remarkable ability and very great humanity. It was due to those men at all levels of the Service that the worst of the distresses of the last century were overcome. Their work and that of the Crofters Commission has paved the way for this Bill. It is only right, therefore, that we should pay tribute to those men. Most of them were Lowlanders who, by a combination of humanity and a considerable amount of good humour, greatly improved the conditions of life in the crofting communities.
4.28 p.m.
Lord BURTON: My Lords, I must declare an interest, for I am still the landlord of about a dozen crofts, though I used to own far more, and I have been involved in the management of a large number of crofts for 25 years. I think
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that I am, therefore, one of the few people in either House who has had extensive practical experience in trying to manage crofts. There are many misconceptions about crofting and I suspect that few of your Lordships have been either crofters or crofting landowners and have had to grapple with the crofting problem. There arc, of course, one or two notable exceptions—the noble Lord, Lord Balfour of Inchrye, with 100 crofts; the noble Earl, Lord Cromartie, and others—and to a large extent the same applies in the other House. However, on reading through their discussions one cannot but realise that few have had an appreciation of the complexities and unsatisfactory nature of this form of tenure.
This experience compels me to introduce a note of discord into your Lordships' debate. Confusion is multiplied by the fact that there are so many different types of croft and crofter in such widely different localities. A croft may be as small as one acre or less, and I know of one of 4,500 acres. The fact remains that there are just over 14,000 crofters. Along with their families, they number probably 30,000 to 50,000 people. The various political Parties vie for their votes, totally disregarding good land management or the handful of landowners involved. Further confusion is added by Ministers of all Parties receiving a totally one-sided account of matters from the Crofters Commission. It is the belief that all or most crofters or their ancestors have carved out their croft from the barren hill. The number of crofters in that position is steadily decreasing and they must now be in a considerable minority. The Commission has become the State-paid representative of the crofters instead of fulfilling its functions as laid down in Section 2 of the 1955 Act.
I have no doubt that the Minister will disagree with me, but I speak from practical experience. Take the instance of absentee crofters. How often has the Commission taken any action on Section 17 of the 1955 Act? Act after Act has been enacted, one altering the other, making crofting legislation probably the most complicated form of land tenure in the world. Now, on top of an already over-complicated situation, it is proposed to pass a further muddling Act. I feel that I should hasten to dispel the belief that crofting is merely a form of agricultural tenure. Frequently, virtually no

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agriculture at all is involved. I recently had a cottage, which happened to have a big enough garden, made into a croft by an astute lawyer acting for a tenant. I hesitate to publicise the fact as I believe that a great many more crofts could be created to the detriment of all except possibly the occupier.
The crofter has been painted as the poor, struggling occupier of ground, whereas in fact he is the most subsidised and fortunate individual in the country. The Conservative Government in 1955 made a great mistake in permitting any piece of ground of rental value under £50 or under 50 acres to be registered as croft ground, provided it was within the seven crofting counties. This brought a considerable amount of extra ground into crofting—a form of tenure which, it should have been clear to everyone, was a bad one. Since then, the situation has been aggravated by improved communications and changed social structures, with the result that certain crofters—very often those who came in newly under the 1955 Act—have been put in a quite unreasonably privileged position. For instance, why should crofters just outside Inverness or Dingwall, a great many of whom sublet their ground and at least one of whom I know lets his croft house as well, be given enormous privileges over their neighbours? They get special rating alleviation on their houses; they pay tiny rents; and in many cases they sublet their holdings to neighbouring farmers for rents of five or more times what they are paying to the landlord. In addition, they receive grants and subsidies which are not available to other sections of the community. I therefore ask the Government to consider an Amendment to the Bill which would prevent any more land being brought into crofting tenure. I do not know whether this has been considered in any way, but I believe that it should be given serious study.
Having lodged this criticism, I must say that there is a great deal of justification for subsidising the Islands and possibly some of the remoter areas of the West coast. But make no mistake, crofting is not an agricultural matter: it is a social matter. Where there is a social need, it is fair enough for something to be done about it. But, in the East coast areas, there is no reason why a small section
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of the community should be specially pampered at the expense of others. There is no reason why one householder should pay a fraction of the rates which his neighbour pays for his house. There is no reason why someone owning one piece of ground should receive grants and subsidies which are denied to his neighbour who owns another piece of ground. Indeed, there is no reason why someone on the Inverness-shire side of the boundary should get grants and subsidies which are denied to those in like circumstances in the counties of Moray and Nairn. The time has come—indeed is well past—when the crofting boundaries should certainly be moved West and probably North as well. There is no reason why a crofter who, through amalgamations implemented since 1955, is now working over 100 acres of arable, should receive crofting grants, and no reason why a crofter with 4,000 acres of hill land should receive these special privileges.
I would ask the Government to look very carefully at this situation to see whether they consider these injustices should be allowed to continue. As I stated before, there are special social reasons for subsidising Island communities. There, it is very different from crofting in Easter Ross, the Black Isle and the Inverness area. Though crofting tenure covers almost 45 per cent. of the land area of the crofting counties and a much higher proportion of the coastal areas, two-thirds of the total number of crofts are in the Islands and a great many more are in the West coastal areas. The Secretary of State owns 1,850 crofts and the Stornaway Trust owns 1,350. Those two landowners between them therefore own one-sixth of all the crofts in Scotland.
The Minister will no doubt tell us what an enormous agricultural production is derived from the crofting areas. However, he does not realise that this production is only a fraction of the capability of this land. Of over 18,000 crofts, only 2,000 drew production grants in 1974. I understand that that figure dropped to 1,500 in 1975, though there are of course about 4,000 who have been drawing livestock headage grants. Thus, only 5,500 crofts out of 18,000 claimed grants. That shows what an enormous number of occupiers are not really working their crofts. There is some doubt as to whether all those drawing production grants ever harvest

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their crops but, even so, your Lordships will see that only about one-third claim grants.
The Crofters Commission which, after all, does not produce a single cow, a single sheep or a single grain of corn, but which is purely an administrative machine, costs the country nearly a quarter of a million pounds a year. Remember that a largely similar production came out of the Highlands prior to 1955, when the Crofters Commission came into being. I strongly submit that we are not getting value for that quarter of a million pounds a year.
On top of this bureaucratic machine, there is the Department of Agriculture administering both grants and the Secretary of State's crofts. In addition, various estate staff administer the other crofts, so that there is a huge further unqualified annual expenditure on administration. The total rent accruing to the Secretary of State for his 1,850 crofts is £50,000, which gives an average rental for the Secretary of State's crofts of approximately £27 per croft—perhaps £2 or £3 per acre of arable, and less for the hill. Rentals probably fall well below the cost of administration.
Where land can be taken out of crofting tenure without creating social hardship this should be done, therefore. However, successive Governments have made this harder and harder. I am pleased to say that on the estates which are being administered by me well over half the crofts and crofting land have come out of crofting since 1955, without, I hope, any social upsets. Most of this ground is now very much better worked in more economic units and in most cases by ordinary agricultural tenants. The Bill will only make the situation more complicated and will make the estate units more uneconomical and merely give preferential treatment to a selected few.
On Monday night, I attended a local branch meeting of the NFU. It was a very well attended meeting and—quite unsolicited by me, I may say—a resolution was unanimously passed that this was a most unfair Bill and asking union headquarters why no action had been taken about it. The members could not understand why one private individual should be allowed compulsorily to acquire land at any time which suited him, from
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another private individual. They said that it was a totally different matter when the public required a piece of ground, and that compulsory acquisition was a public matter. They could not understand why a private individual should be allowed to do it. The Conservative Government thought that it made a nice political gimmick to talk about a "property-owning democracy" and the Labour Government merely do it, it appears to me, to injure the landowner. In the process, they cause damage to good land use and agricultural production and, consequent upon that, there is a reduction in rateable values.
Landowners will have their sporting rights—fishing or shooting—compulsorily taken from them and the extraordinary situation will be that the crofters will be able to lease back the rights which they have been able to take compulsorily. Take as an example trout fishing which, at present, is not a separate heritable right but goes with the riparian owner of the land. The result is that, regardless of whether there are any brown trout in the stretch of water which may well be a good sea trout or salmon river, if the Bill goes through in its present form the crofter will receive the right of fishing, ostensibly for trout, in the waters in question. It may well be that he will set up a caravan park in the area and that the salmon fishery owner will then find a whole queue of people spinning in his river and be powerless to do anything about it. Bear in mind that he will be powerless to stop the sale of that piece of ground. The Bill really runs in contradiction to another Government Bill which is at present before us—that is, the Freshwater and Salmon Fisheries Bill.
Mention has been made of marauding deer, and I should like to emphasise that nothing in the transfer of shooting rights will make any difference to the question of marauding deer. Under the 1959 Act the crofter has the right to kill marauding deer at the present time and nothing in this Bill will change that. Sport is an attraction for tourists and provides employment, often among the crofters themselves. It produces rates, too. To destroy this, one of the too few assets in the Highlands, seems to be madness.
Much of the Bill is a shamefully bad piece of legislation. If we cannot reject it altogether, certainly on the fishing

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aspect, and on a few other matters, we ought so to amend it that at least it would do less harm than it would as at present worded. The Bill might not be so bad if both the landlord and the crofter got equal justice from the Land Court, but this body is so biased that it is really an anachronism to call it a "court". Successive Labour Governments have packed this court with people of their persuasion over the years, so that the landlord has little hope of justice from them. Look, my Lords, at the ridiculously low rents awarded by the Land Court which has kept down the whole level of croft rents, and indeed of agricultural rents in the whole of the Highlands.
The Conservatives have congratulated the Government on adopting their Bill. But there have been major changes in taxation in the past two years. The Bill is now a big "con" trick on crofters. If one takes into account capital gains tax, capital transfer tax and—I am not sure about this, but probably development tax as well, any occupier of ground is almost certain to be in a better position as a tenant than as landlord. We have never been told the value the district valuer will place on crofting ground for taxation purposes. I suspect that it will not be 15 years purchase of the rent, in which case it means that on every transfer the crofter will have to pay a considerable amount of tax. Having said that, I must say that there are absolutely no objections to the proposals for house and garden to be taken over by the crofter, nor for the sharing in development. But the remainder of the Bill needs much careful surveillance.
The Minister in another place referred to the crofters' suspicion of the man from St. Andrew's House, so perhaps I can end on a lighter vein with a short account of an experience of mine. I happened to be out in the islands on county council work, when the weather become too stormy to cross from one island to another. So I thought I would go down to the harbour and see a crofter fisherman and find out what effects the rocket range was having on the lobster fishing.
On the pier I came across a chap who looked like a lobster fisherman and asked whether he could help me on this matter. He said that I had better talk to the skipper. So he duly shouted
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down into the bowels of a small boat, "Donald". A red beret appeared from beneath. The wearer of the beret came up and talked to me, but he was very cagey, giving "yes" and "no" answers. Eventually he said: "By the way, who are you?" I explained who I was, and said that I was there for the county council. He replied: "Och, thats' all right, then. I thought you might be from the income tax."
4.44 p.m.
Lord DOUGLAS of BARLOCH: My Lords, there is one point on which I should like to have some explanation. I confess that I am not very familiar with how the law regarding crofters now stands, although I well remember the passage of the Act of 1912. At that time, and, I think, for a considerable time afterwards, the position was that a crofter did not pay any rates upon his improvements. This was a very great advantage which arose out of the peculiar nature of the crofting tenure, because the improvements did not belong to the landlord, and consequently were not part of the rateable hereditament. I do not know whether that position still obtains, but if it does, then it appears to me that the crofter who takes advantage of the powers given to him under the Bill to purchase a freehold of his land will then automatically be in a disadvantageous position in respect of liability for rates. I should be grateful if my noble friend Lord Kirkhill would explain whether or not that is so.
4.45 p.m.
Lord KIRKHILL: My Lords, I am gratified by the wide-ranging and informed debate which we have had on the principle of this Bill and by the acceptance on all sides, with the exception of the noble Lord, Lord Burton, that our approach to crofting reform is on the right lines. It is perhaps not widely recognised that only some 4 per cent. of the 14,000 crofters are able to earn a full-time living from their crofts, and that many are spare-time, rather than part-time, agriculturalists. Amalgamation and restructuring is rarely an effective answer to the crofter's difficulties, since it aggravates the problems attendant on a dwindling population with an imbalanced age structure. Reinvigoration of the crofting system must, to a large extent,

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depend on exploitation of non-agricultural forms of enterprise that can be based on the croft. If we are to provide a proper incentive to crofters to participate more fully in the opportunities which tourism and craft industries are increasingly offering in many parts of the Highlands, we must remove the constraints which are inherent in the present crofting code. That is our objective in giving crofters the right to acquire their house site and their croft land. At this point the Government stand in complete opposition to the views which the noble Lord, Lord Burton, has just expressed. If such a right is to be of any real value the price must be pitched at a realistic level which crofters can afford, and that is why we have adopted a price formula based on crofting value.
Not all crofters will, of course, want to become owner-occupiers, and every crofter will have the freedom of choice to remain as a tenant if he wishes. If he does, he will retain all his present rights, but gain a valuable new right to a share in the value of any land taken from his croft for development. For the first time the crofter's moral and historical rights in his land will be recognised and he will have an incentive to co-operate with his landlord in releasing land for developments which could lead to benefits for the local community.
There must, of course, be a proper balance between the release of land for development and the retention of land which is needed by active crofters. The previous Bill gave development absolute priority, even where the release of land from crofting would, in the Government's view, have been damaging to the local community. I am glad to say that the new Bill has benefited materially from our criticism in the other place, when my Party was in Opposition. This Bill not only puts responsibility for crofting control in the hands of the Crofters Commission, where it properly belongs, but also provides the Commission with an effective control mechanism which requires it to take into consideration both the community interest and any demand for land.
I now wish to answer as many of the points raised with me as I can properly do. I welcome the very general, though comprehensive, analysis of the Bill which the noble Lord, Lord Campbell of Croy,
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elucidated in his earlier remarks. I am pleased that, broadly, he welcomed the Bill. I can confirm the point which the noble Lord made when he talked about consultation during the period of time when he was Secretary of State for Scotland. I confirm that these consultations with many widely and broadly based organisations have continued. I could not really disagree with the noble Lord's historic assessment of an earlier period of introduction of this Bill, although I consider that Ministers, whether of junior or senior rank, are usually flexible, and I could not think that my honourable friends in another place had displayed other than their usual flair for political flexibility.
Perhaps I could explain, for the benefit of all your Lordships, a particular point which the noble Lord, Lord Campbell of Croy, raised—and I think the noble Lord, Lord Burton, also referred to this point—when he referred to the question of purchase on a 15-year basis. I would explain that the yardstick we have adopted for crofting value—and there was considerable discussion about this point in another place, I might add—was based upon a standard practice in the valuation of agricultural land, which is to use a rent capitalisation multiplier. This multiplier reflects the rate of interest sought by an investor: the higher the risk the greater the interest demanded on an investment and, of course, the lower the multiplier. In recent years farm land values with vacant possession have been high. Land worth £600 an acre could be expected to provide a 2½ per cent. return on an investment, involving a 40-year capitalisation multiplier.
Tenanted land is not such a good investment as land with vacant possession, and therefore its value is much lower and the expected rate of return on an investment in it is much higher. Recent precedents indicate values for tenanted farmland of 50 per cent. of vacant possession value, representing a 5 per cent. return on investment or a 20-year capitalisation multiplier. Extending the analysis, croft land is even less attractive as an investment. The crofting tenant has almost complete security of tenure, pays only a fair rent (which is generally about one-third of open market rents) and is entitled to compensation for permanent improvements. The landlord, however, is

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freed from providing fixed equipment, and has a right to periodic revaluation of rents. It is reasonable to assume, therefore, taking all these factors into account, that an investment rate of 6·6 per cent., or a 15-year capitalisation multiplyer, fairly reflects a crofting value for sale purposes and strikes a correct balance in land valuation comparing agricultural land values with crofting land values.
This formula should produce a price which is reasonable for the crofter but which is not unfair to the landlord, taking into account the landlord's right—and the noble Lord, Lord Campbell of Croy, mentioned this right specifically—to apply to the Land Court to have a fair rent fixed for the purpose of calculating the purchase price and the crofter's liability to make a second payment to the landlord on resale or disposal of the land within five years of acquisition.
Lord BURTON: My Lords, may I ask the noble Lord one question on that? He mentioned that a fair rent—I am not sure who it is fair to—should be one-third of the open market value of a croft. Could the noble Lord explain how that is a fair rent—one-third of what you can get on the open market?
Lord KIRKHILL: No, my Lords, I cannot explain that definition. I am professionally advised that it is, however, a fact. It is a fact which I assume valuers use as part of the formula. The noble Lord, Lord Campbell of Croy, also asked of me whether I could give him some indication as to the present position relative to the Secretary of State's crofting holdings. These actually number now approximately 1,950, including 200 tenants of fishermen's holdings. I can also tell the noble Lord that part of the ongoing process to which he himself earlier referred, and which still continues up until this time, is that we have received inquiries: 81, in fact, from crofts, 31 for part-crofts and 56 for house sites and gardens. Active purchases which are not yet completed number 57 in the case of crofts, 22 in the case of part-crofts and 20 in the case of house sites and gardens. Completed purchases at the moment number 5 as regards crofts; 4, part-crofts and 33, house sites and gardens. So this is an on-going process, as the noble Lord very rightly said, and these
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are the figures which I have at this time. They may be of interest to him.
Viscount AMORY: My Lords, will the noble Lord forgive me for intervening for one moment? I think he left the question which my noble friend Lord Burton asked in a rather unsatisfactory position. If I remember rightly, my noble friend asked how it could be that a value of one-third of the current market price could be regarded as a fair value. I think many of us would like to have an answer to that, if the noble Lord could give us some further explanation, because at first sight it looks a very odd thing indeed.
Lord KIRKHILL: My Lords, I can only reiterate that the facts as I understand them are that the usual amount is about one-third. Of course, to use the term "fair rent" is, I think, to use one of those euphemisms which are in common use today in the professional world. I cannot add in any way to the points I made earlier in that regard.
Lord BURTON: My Lords, may I help the noble Lord?
Lord KIRKHILL: My Lords, I think I should like to go on at this stage.
Lord BURTON: Will the noble Lord give us an answer, then, when we reach Committee stage?
Lord KIRKHILL: My Lords, I doubt whether I shall be able to give your Lordships a comprehensive answer, but certainly noble Lords are always free to return to a point at Committee stage.
The noble Lord, Lord Campbell of Croy, also asked if I could give some further explanation in general terms as to the question of housing assistance. I should like to say to your Lordships that it was quite clear that if the existing statutory provisions remained unchanged and crofters and cottars ceased to be eligible for housing assistance on becoming owners of their crofts or house sites, this would seriously jeopardise the success of the Bill. We therefore make provision in Clause 12 for a concession allowing crofters and their family nominees and successors and cottars who acquired the site of their dwelling-house to retain their entitlement for housing assistance for a period of seven years after the date of acquisition. There could of course be arguments for a different

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period, and indeed it is the case that when in Opposition my right honourable friend the Secretary of State canvassed the thought of extending the period to 21 years.
Lord CAMPBELL of CROY: My Lords, would the noble Lord give way for a moment? I should like to make it clear, because I think otherwise he may give the House a misunderstanding of the situation on this point—and I am referring to my own words when introducing the Bill in 1974—that we also, in our Bill, had this same period of seven years.
Lord KIRKHILL: My Lords, I was aware of that fact, but I wanted to point out that when in Opposition my right honourable friend the Secretary of State for Scotland canvassed the thought of extending it to 21 years, and I was going on to say that upon reflection we have returned to the seven-year period, which we regard as being just about right. I know that some people have argued that the right to assistance for housing should continue, not only for seven years but indefinitely. Indeed, there are those who have argued that the kind of assistance for housing given to crofters should be extended generally to owner-occupiers of houses in the crofting counties. I should make it clear that the primary responsibility for housing in these areas rests on housing authorities, and the new policy of designating housing action areas is now being extended to the Islands. As I have said it is for the housing authorities to determine their policy for housing in general in their areas.
As regards the indefinite extension of the right to housing assistance for crofters who become owner-occupiers, I must make the point that such an extension would be manifestly unfair to other owner-occupiers who are denied eligibility to the standards of assistance provided for crofters. Where a crofter purchases his house site and assigns the remainder of the croft, there can be no expectation of automatic entitlement to assistance to provide a house on the croft land. The Department will consider each case on its merits, but applications in cases of assignation to a member of the crofter's family in anticipation of bequest, or to an individual where the crofter is
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aged or infirm and unable to work the croft, will be sympathetically considered. Because of pressure on the available funds it is more doubtful whether housing assistance will be available in other circumstances, in particular the situation where the crofter or his successors have purchased the house site, sold the house and then sought assistance for the erection of a new house on the remainder of the croft.
I should like to add at this point a specific reference to the position of the Glendale holders. Their position will now change in that the availability of I housing assistance for the owners of holdings in Glendale Estate, Skye, who are deemed to be crofters by virtue of Section 22(6) of the Crofters (Scotland) Act 1955 for the purpose of housing assistance, will alter. Under the terms of the Reform Bill, crofters who purchase their house sites will continue to be eligible for housing assistance for a period of seven years from the date of acquisition of the site. To maintain the owner-occupiers of Glendale holdings on the same footing as crofters it is fair that future entitlement to housing assistance should be limited to holders as at today's date, or a family successor to the title, for a period of sewn years from the date of Royal Assent to the Bill. This will bring the Glendale holders into line with crofters who purchase their house sites after the passage of the Bill.
Lord BURTON: My Lords, on that point of the Glendale crofters, there are a number of other crofters, particularly in Skye, who are in the same position. I think that the Department have sold a number of their crofts there recently. Why particularly are the Glendale crofters, as opposed to others, put in a privileged position?
Lord KIRKHILL: My Lords, I am not aware whether there are other crofters in Skye in a similar position to those who are part of the Glendale holdings; but the noble Lord has raised a point of substance and I give him the assurance that I will look into the matter.
I should like merely to touch on two further points which the noble Lord, Lord Campbell of Croy, raised. I think that I should make some reference to the changes made from the previous Bill concerning the de-crofting of land. Not

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only will the Crofters Commission have fully within their power the responsibility for giving de-crofting directions, but the Bill includes specific guidelines. These guidelines were not written into the previous Bill. The guidelines will indicate the circumstances in which de-crofting may take place. In the Government view, these new provisions provide a more effective control in the interests of preserving the crofting communities.
The noble Lord, Lord Campbell, also asked about the definition of "croft" and whether the reorganisation of local government will create any difficulties in identifying the area of crofting. The Bill makes no change in the definition of a croft, which definition is already enshrined in existing crofting legislation. This is the legal definition. In practice, crofts may be identified as those holdings included in the Register of Crofts maintained by the Crofters Commission. The reorganisation of local government has made no change to the area of crofting which in future will continue to be identifiable geographically as the former crofting counties.
The noble Viscount, Lord Thurso, also gave a general welcome to the Bill, and from the Government's point of view I express pleasure at the overall welcome that he gave to it. I am aware of the Amendment that his noble friend put down in another place. I am aware that the Amendment did not carry. I can only say that the Government view has been clearly expressed by me in my opening remarks and whether the noble Viscount feels that the Amendment should be re-submitted, of course, he will judge within the discretion of his own assessment of today's debate.
The noble Lord, Lord Balfour of Inchrye, as did other noble Lords, gave a general welcome. On his specific question as to who will or will not bear the legal costs, I can tell him that in the case of conveyance of a house site the Land Court may determine that all the expenses, including those of the landlord, shall be borne by the crofter or cottar. This is to avoid the landlord being put out of pocket in a transaction he is being compelled to undertake under Statute. In the case of the purchase of croft land, the Bill makes no provision
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regarding the legal costs, leaving the matter to be settled in the case of an agreed sale as part of the agreement or in a case referred to the Land Court under the terms and conditions laid down by the court.
The noble Lord also raised the question as to the position of those who are owners of sporting rights. This point was also touched on by the noble Earl, Lord Cromartie. The position regarding those who have an interest in sporting rights is that on many crofting estates there are established shooting and fishing rights which the Government recognise are valuable assets, and I can appreciate the legitimate concern of the landlord that his shooting and fishing rights should not be damaged by the crofters' acquisition of his land. However, on most crofting estates sporting rights are usually exercised extensively over the common grazings and only to a limited extent over inbye land.
Lord BURTON: My Lords, this is quite inaccurate. On the East coast the acquisition of crofts would cause considerable damage to low ground shooting; for instance, in Easter Ross, the Black Isle and Inverness areas. It is a complete fallacy to say that these rights are exercised mostly on common grazings.
Lord KIRKHILL: My Lords, I express the Government's view. It is at variance with the view expressed by the noble Lord, Lord Burton. I must say that we are at variance and I will proceed. In general, the ownership of the common grazings will remain in the hands of the landlords, and the crofter's rights to purchase will affect the common grazings only where he has an individual apportionment which is adjacent or contiguous to his croft. In the Government's view, in the majority of cases, the landlords' sporting interests will be unaffected by the sale of land to crofters. However, provision is made in Clause 2(3) for reasonable safeguards for the landlords' sporting interests where these could be damaged by such sales of land. The Land Court is empowered to make it a condition of its order authorising the conveyance of croft land that the crofter grants a lease to the landlord of the shooting or fishing rights relating to the land. This protection is reinforced by the provision that it will be obligatory

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for the Land Court to impose a leaseback condition in any case where the court are satisfied that if such a lease were not granted the landlords' sporting interests would be materially affected. The Government think that these provisions provide an adequate degree of protection for the landlords' interests.
Lord BALFOUR of INCHRYE: My Lords, on the granting of a lease has the Government any views as to whether the lease is for perpetuity or for a limited number of years?
Lord KIRKHILL: My Lords, I cannot reply to that specifically at this time. I will take it on board and undertake to let the noble Lord have the official Government view.
Lord BURTON: My Lords, would the lease be enforceable on a crofter's successors if he sells the croft or if he dies?
Lord KIRKHILL: My Lords, the lease is one which is certainly enforceable through succession. The noble Lord, Lord Balerno, kindly gave me advance notice that he was to raise a specific question with me, and proceeded thereupon to do so. He will now certainly get the very official reply which I have before me, which is to the effect that the Crofters Acts lay down the criteria for the appointment of grazing committees and give them specific duties and powers. However, this does not necessarily preclude them from benefiting from EEC funds. It is open to any body of agriculturalists to form themselves into an agricultural producer or marketing group, and if they ensure that their constitution satisfies the conditions laid down for any particular form of national or EEC assistance available for joint activity, they will be in a position to apply for such aid. There is thus no need to amend the crofting legislation to that end.
The noble Lord, Lord Burton, has expressed his own personal crofting credo before your Lordships' House. His view is at variance with the Government's view. By his interventions he clearly shows that although the Government's general intention seems to have some consensus, its acceptance is not one which appeals to him. Undoubtedly we shall hear yet again from the noble Lord on many other points as he continues to study the Bill. The noble Lord, Lord Douglas of Barloch, raised a specific
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question with me. I regret that I am not able to reply specifically to him this afternoon, but I undertake to write to him in detail about the very fine point of legal complexity that he raised.
Finally, let me remind noble Lords that some people have opposed these proposals on grounds of principle; namely, that croft land should be brought within public ownership in some way instead of being held by crofters as owner/occupiers: others because they fear that the crofters, with their newfound freedom to own their land, will be a prey to rapacious "carpetbaggers" from elsewhere. The noble Earl, Lord Cromartie, touched upon that. I do not share this view. I think the crofters are hard-headed enough to protect their interests; they have had hard schooling in a harsh environment among landlords who have not always been as enlightened as they might. But this Bill gives the crofter equality at last with the landlords. He can now own his land. My Lords, I look forward to the new springs of energy and enterprise which this will release as a source of real benefit to the crofting communities and the Highlands as a whole.
On Question, Bill read 2a, and cornmitted to a Committee of the Whole House.

POST OFFICE (BANKING SERVICES) BILL
5.13 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of INDUSTRY (Lord Melchett): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(Lord Melchett.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Viscount GOSCHEN in the Chair.]
Clause 1 [Extension of power of Post Office to provide banking services]:
Lord ABERDARE Lord ABERDARE moved Amendment No. 1:
Page 1, line 12, at end insert—
"(3) The words "banking services" in this section shall not include the issue of

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credit cards without the approval of the Secretary of State and the Treasury."
The noble Lord said: This is the first of seven Amendments, none of which is very revolutionary. They are all intended to be along the lines and in the spirit of Lord Melchett's words on Second Reading, and I hope that some of them at any rate will appeal to him and he will be able to accept them. The noble Lord stressed in his Second Reading speech that Clause 1 is largely a matter of clarification and for the removal of doubt in respect of the main Act, the Post Office Act 1969. He hoped we would not exaggerate the significance of this particular Bill. In his own words, he said that it represents a slow, cautions advance and removes a technical and obscure qualification. If we thought this was all it really did, I do not think we should be so worried about the Bill. In order to help us and set our fears aside, I hope that this Amendment, and one or two others I shall be moving, follow the Government's objective of a slow and cautious advance.
Under the Bill as it stands at the preent moment, the Giro will be able to issue its own credit cards. Is that consistent with a slow and cautious advance? So far as the history of credit cards is concerned, I do not think it is. This is confirmed because both Access and Barclaycard have proved extremely expensive. We are now dealing with public money and anything that could lead to the losses that both Access and Barclaycard have experienced does not seem to be consistent with a slow, cautious advance. It has been reported that the cost of setting up the Access operation, for example, was some £10 million, and I doubt whether that has yet made a profit. Barclaycard is also currently reported to be making losses.
So why do the Government suggest that Giro should risk public money in such a hazardous venture? In another place there was an Amendment on these lines which would not have allowed Giro to issue credit cards at all. I have not gone so far as that; I have merely suggested that before they do so they should at least receive the approval of the Secretary of State and the Treasury. I doubt whether Mr. Singer of Giro wishes to launch his own credit card; I should
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imagine that the difficulties would be overwhelming, particularly with the Consumer Credit Act now on the Statute Book which, in Section 51, makes it an offence to give a person a credit token if he has not asked for it. That would make it very difficult for him to launch a credit card of his own. I should have thought that this Amendment, which is only erring on the side of caution, would have been perfectly acceptable to Giro. I beg to move.
Lord CACCIA: I must first declare an interest: I am a director of the National Westminster Bank. I do not speak for that Bank or any part of the banking system; I speak entirely personally, as is proper in your Lordships' House. I hope that the Government will be ready to consider the points that are being put forward, and will be put forward, in the interests not of inhibiting Giro from entering into these various activities, but in the interests of slow and cautious progress.
As the noble Lord, Lord Aberdare, has already said, the clearing banks and others who have started credit cards in this country and elsewhere know that the launching years are apt to be expensive. In addition to that, a great number of credit cards are now available in this country, and it is a question of judgment whether this is an appropriate time to launch another such activity on behalf of Giro, as part of the banking services which it might wish to have. But it is not suggested in this Amendment that it should be prevented; merely that caution should be shown about the decision taken, and the Secretary of State and the Treasury should be known to support it, thereby bringing some further element of public accountability into the operation of Giro.
Therefore, once again, may I say that, like the noble Lord, Lord Aberdare, I hope that the Government might think it in the interests of Giro itself to have this kind of backing behind any extension of its activities that may be contemplated with credit cards.
Lord BANKS: When an Amendment somewhat similar to that to which the noble Lord, Lord Aberdare, has already referred was discussed in another place, the Minister of State said that there were no plans to introduce credit cards, which

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I recognise is not an argument against this Amendment. He went on to say that if Giro wants to bring forward proposals of this kind it will have to put them to the appropriate authorities. What he meant by that was not very clearly explained, and I am wondering whether the noble Lord, Lord Melchett can clarify that for us when he replies to the discussion on the Amendment. To what extent if at all, would the 1969 Act, the present Bill and the legislation which I understand is promised to control the banks and Giro, affect the situation if Giro decided to go ahead with a proposal for credit cards?
This Bill provides for Giro to compete on more equal terms with the clearing banks and, having agreed the principle, I would look very carefully at any proposal to restrict its application, even though there may be no plans to develop in that field at the moment. The Amendment is clearly not to protect the public as a whole, because that would have to cover all people who offer credit cards; nor to protect the economy, because the same would apply there. It is not that credit cards ar regarded as undesirable, because, as has already been pointed out, this Amendment does not cut them out altogether. I think the Amendment arises from a fear about the alleged lack of expertise, or lack of commercial wisdom, of the management of Giro. It seems to me that it passes the ultimate commercial decision to the Secretary of State and the Treasury, but I wonder what evidence there is that the Secretary of State and the Treasury will be more expert in making a commercial decision than the management of Giro. I must confess that I find it a little difficult to accept the doctrine that the gentlemen in Whitehall know best.
5.24 p.m.
Lord MELCHETT: I am very grateful for the spirit in which the noble Lord, Lord Aberdare, introduced this Amendment and the other Amendments which stand in his name this afternoon. I accept that he moved the Amendment very much in the general spirit in which I spoke to the Bill on Second Reading. I must say that I found some favour with the remarks of the noble Lord. Lord Banks, as I did when he spoke on Second Reading, and agreed with a lot of it. I
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hope that I shall be able to answer the questions which he asked me, and meet the fears which have been expressed by the noble Lords who supported the Amendment.
I know that some peopie do not like credit cards very much at all. Indeed, I believe my honourable friend the Minister of State in another place said that when he was given a credit card he cut it up into small pieces and sent it back again. The noble Lord will know that I, coming from a banking family, would not sneeze at somebody who was prepared to give me up to 60 or 90 days' credit at no charge at all, which, if one pays one's bill promptly to at least some of the credit card companies, is what one is getting and I think it is a very useful service. So that my honourable friend and I do not see eye to eye on the merits of credit cards in general.
But, as the noble Lord, Lord Banks, pointed out, that is not what the Amendment is directed to. It is the Government's view that Giro account holders are no less entitled to the facility of credit cards than account holders with other banks. However, the Government have had no substantive discussions with Giro about the introduction of credit cards; neither has Giro put forward any firm detailed proposals so no firm views have been formulated about the timing of the introduction of credit cards by Giro. We have done no more than agree in principle to the introduction of credit cards. This enables Giro to explore the potential and prospects for such a service. If and when a time comes for Giro, in the light of its own commercial judgment, to submit firm proposals, they will he considered very carefully by the appropriate authorities, but I would stress—as I think the noble Lord, Lord Banks, said—that in the first instance this is a matter of the Giro management's own commercial judgment.
I certainly would not follow the noble Lord, Lord Aberdare, and I hope he would not expect any Member of this Government to follow him, in his rather stringent comments about the private sector credit cards—Barclaycard and Access. I do not have any figures on their profitability, but I am sure that in this field, as in others, the private sector is doing very well. We have stressed during the passage of the Bill that before

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the introduction of any new services by Giro, or before the extension of existing services, Giro will have to seek the approval of my Department, which is the Department of Industry, and of the monetary authorities—the "monetary authorities" being the umbrella term which I understand includes the Bank of England and other Government fiscal and monetary authorities. So I hope that that is clear. I do not believe that writing a statutory requirement into the Bill, as this Amendment would do, would add very much and I suggest that we should hesitate before putting such a statutory obligation uniquely on Giro of all financial institutions.
Lord CACCIA: Before the noble Lord sits down, he has not explained very clearly who the "appropriate authorities" are, but I accept his statement on that. But if they came to a decision about a new development such as this, would Parliament be informed? As I said earlier, this is a matter for public accountability and in some other cases, such as the nationalised industries, one of the troubles has been that the public accountability side comes to light very long after the event. So I should have thought it was in the interests of clarity from the beginning that an announcement was made in Parliament when such a decision was taken.
Lord MELCHETT: It might be convenient if I responded to that point, as the noble Lord phrased the question before I sat down. If I may, I should like to take this away and check on it and possibly write to the noble Lord. I am not clear whether he is asking me about credit cards in particular, or about any extension of Giro's services, but one can see that it would be very difficult and time-consuming to come to Parliament every time Giro proposed some minor change; and, indeed, very restrictive on its commercial ability to compete fairly with the banks. My view is that, unless some change in Giro's financial structure or arrangements was necessitated by an extension of services, it would not be obligatory upon the Government to come and inform Parliament. The noble Lord may have seen that there has been some reporting in the Press of Giro's discussions with Barclaycard about this matter,
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no doubt prompted by the passage of this Bill through Parliament, so I think it is very unlikely that any extension of this kind in Giro's services would be undertaken without the public being aware. As I have already said, we have given agreement in principle for Giro to explore the possibilities of a service, so Parliament is being informed at a very early stage.
Lord ABERDARE: I should just like to explain, particularly for the information of the noble Lord, Lord Banks, the reason why we have put down this Amendment. It is entirely to protect the taxpayer. It is public money that is involved here, for this is a public sector banking operation. If credit cards were to be issued, money would be put at risk. What we on these Benches are concerned about—I should have thought it would be astonishing if the Liberal Party were not equally concerned about it—is that there should be some Parliamentary control over this investment. In the case of a public sector operation, the only way we can control investment is through the Secretary of State. Heaven knows, we do not like giving more powers to the Secretary of State than are necessary! But there seems to be no other alternative in order to control the operations of Giro. It may be that there is another alternative but I have not yet understood it.
The noble Lord, Lord Melchett, has told us—and this would put some of my fears to rest—that before Giro goes into credit cards or into any new field of operation, it would have to obtain the approval of the Department of Industry and the financial authorities. If I could be told where this is laid down and why it has to happen—I take it that these are the appropriate authorities that the noble Lord, Lord Banks, asked about—and could be sure that this is so, and if I could also be told where it is to be found in any legislation, I should be perfectly happy to withdraw this Amendment. However, it was because we could see no way in which Giro could be coil-trolled and no way of ensuring that Giro moved in a slow, cautious way that these Amendments have been put down.
If the noble Lord can satisfy me about where the control lies, I shall be very pleased to withdraw this Amendment.
Lord MELCHETT: I think I can give the noble Lord that assurance. There are probably three sources of control. In the first case, I am advised that it is almost certain that under Section 41 of the Post Office Act the Treasury's statutory powers would be engaged were Giro to issue credit cards. It is hard to envisage the operation of a credit card scheme without the existence of a banking fund to meet debts as they accumulated. Such a fund would be required to be set aside as an asset under Schedule 2 to the Act and would require the Treasury's designation under paragraph 17 of Part II of that Schedule. As I said to the noble Lord, Lord Caccia, if financial rearrangement, restructuring or new funds were concerned, certainly this would have to be made public.
I am sure that the noble Lord, Lord Aberdare, knows better than I do that in the banking world these things are not done simply by people having recourse to their statutory powers. I understand that bankers are civilised people who consult each other, in particular the Bank of England, when measures such as the introduction of a new credit card are contemplated. Even if he has not met Mr. Singer, I am sure that the noble Lord would not expect him to undertake something like this without coming along to the Government and the Department of Industry and consulting the Bank of England. I understand that the Bank of England Act 1946 gives reserve powers to the Bank which, given the way people operate, are unlikely to be used but would enable them to call upon Giro to provide information and tell them what they were doing, were Giro not to behave in the way in which I am sure we all know it will behave.
Lord ABERDARE: Did the noble Lord say that there were three sources of control? He mentioned Section 41 of the Post Office Act and the Bank of England Act. Is there another one?
Lord MELCHETT: I hope that all my references to the gentlemanly way in which such business is normally conducted constitute by far the most powerful kind of control, and it is the third limb of my argument.
Lord ABERDARE: I suppose that this is the best we can do. I am not very
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happy with the "gentlemanly" argument. It may be all right but it is not the kind of thing on which one usually relies when considering legislation. If, indeed, there are restrictions under Section 41 of the Post Office Act, if the Bank of England have powers, if necessary, under the 1946 Act, and if the noble Lord gives me his assurance that these two provisions effectively mean that Giro could not issue its own credit cards without prior consultation with the Treasury—this does not cover the Department of Industry point, but I am rather more concerned that the Treasury should have the right to approve—then I am prepared to accept the noble Lord's assurance and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.35 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 2:
Page 1, line 12, at end insert—
"(4) The words 'banking services' in this section shall not include foreign exchange transactions where such transactions are not authorised by account holders without the approval of the Secretary of State and the Treasury."
The noble Lord said: I beg to move Amendment No. 2. In the way it is phrased this Amendment is on similar lines to Amendment No. 1. Again it follows on an Amendment which was tabled in another place but seeks to go a little less far. Instead of preventing any kind of foreign exchange transaction from being undertaken by Giro, it says that such transactions can be authorised only with the approval of the Secretary of State and the Treasury. Again this Amendment is put down with the idea that there should be some control and that Giro should proceed slowly and cautiously. It worries many of us that there should be the possibility of Giro dabbling in the foreign exchange market, at least without Treasury approval. I appreciate that Giro may have to carry out foreign exchange transactions in the course of dealing with its clients' business and I have no objection to that. We have sought to exclude that point from the Amendment by saying:
"where such transactions are not authorised by account holders".
I do not understand, however, why it is necessary for Giro to have any further

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powers with regard to foreign exchange transactions.
When the matter was debated in another place, the Minister said that already Giro carries out a certain number of transactions of this kind in making settlements with other Giro services in Europe. Presumably the need for these settlements with other Giro services arises from transactions which have been authorised by account holders. In other words, Giro account holders have undertaken pertain transactions in other European Giro operations and there is a need for the two Giro authorities to deal together. That would be covered by my exclusion of:
"where such transactions are not authorised by account holders".
If this is not so, where else do these foreign transactions arise? We are very sceptical about the need for Giro to operate in foreign exchange. It is a very dangerous field, as the noble Lord, coming from the banking family that he does, will appreciate. While allowing Giro to conduct the transactions which are absolutely necessary for the normal conduct of its business, we thought it would be rather more cautious to have certain restrictions placed upon Giro when it comes to investment in foreign exchange, or speculation (although "speculation" is rather an unpleasant word) and putting its own money, which I repeat is public dividend capital, into foreign exchange transactions when that is not strictly necessary. Once again this Amendment is designed to implement that cautious approach which the noble Lord, Lord Melchett, has rightly stressed. I beg to move.
Lord CACCIA: May I support this Amendment, introduce just one other argument, and comment also on what the noble Lord, Lord Banks, has said, with which I have some sympathy.
Surely the difference between Giro and a private bank is that Giro is acting for the community. It is that aspect, and the public accountability aspect, which to my mind suggests that certain special caution is desirable in the interests of Giro itself. Obviously there are certain foreign exchange transactions which one does not have to be in the banking business to know about: one has had only to read the newspapers in the course of the last year or two to know that they have
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been extremely expensive. That is one thing for a private bank, but it would be looked at rather differently if it were done by a bank acting for the community. Therefore, I shall be interested to hear what the noble Lord, Lord Melchett, says as to why the community in this case—the Giro itself perhaps—does not need a little special protection and care.
Lord MELCHETT: I am having an interesting afternoon; having spent time on the first Amendment standing up for Barclaycard and Access I was staggered to hear the noble Lord say that the difference between Giro and the others was that Giro was acting for the community. My understanding was that the role which the major clearing banks see themselves as playing was just that acting for the community. But if the noble Lord means that public money is in Giro I take the point, although I stress that all the banks are acting for the community, at least in one sense.
My understanding is that Giro is already involved in foreign exchange transactions of the kind which the noble Lord, Lord Aberdare, wishes to make subject to the approval of the Secretary of State and the Treasury. In view of what the noble Lord said about not wishing to extend the power of the Secretary of State more than was necessary—and indeed that certainly rings a bell in connection with the discussions which we had on the Community Land Act when it was passing through this House, and cries from noble Lords opposite that the powers of the Secretary of State should not be extended—I hope we shall be able to agree that the position as it is now is probably the best. It is not the Secretary of State who operates control of the Giro but the Bank of England. As I believe the noble Lord said, Giro needs foreign exchange currencies to enable it to make overseas payments on behalf of its customers. Giro also operates reciprocal account arrangements with other Giros overseas under the terms of the Universal Postal Union agreements. These transactions require Exchange Control consent which Giro has received from the Bank of England. The terms of these consents are restricted by the types of transactions and by the usual strict limits on daily holdings of foreign currency.

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Those noble Lords who have experience of foreign exchange transactions will know that it is not possible to conduct business on a fully "covered" basis. Currency has to be purchased in round amounts as a result of the pattern of overseas transactions, but as I have explained Giro has to keep within strict limits imposed by the Bank of England. Should there be further developments in the foreign exchange activities of Giro, they will be subject to close control and scrutiny by the Bank of England, to whom Giro makes returns of its transactions in foreign currencies.
I hope the noble Lord will agree that the fact that the Bank of England is exercising this close and strict control over the activities of Giro in foreign exchange will be seen as preferable to the alternative which he has suggested; that is, that the Secretary of State and the Treasury should be responsible.
Lord ABERDARE: The noble Lord appeals to a soft spot in my heart, because I prefer the Bank of England to the Secretary of State. I am satisfied with that explanation and I think it is in line with my Amendment because the two types of business which the noble Lord said were already being conducted by the Giro in the foreign exchange field were either on behalf of customers, which presumably in my Amendment is covered by the words,
"where such transactions are…authorised by account holders",
or reciprocal arrangements with other Giros overseas, which again could arise only because there were transactions undertaken and authorised by account holders. That satisfies me that what is happening at the moment in the Giro is what my Amendment would enforce upon the Giro. Therefore, if any new kind of operation in the foreign exchange field is subject to exchange control consent (which is what the noble Lord said) and the Bank of England has the controlling power over it, then I accept that assurance and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
5.45 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 3:
After Clause 1, insert the following new clause:
Duty to comply with Government directions
". It shall be the duty of the Post Office to comply with such directions as may be given to it in respect of its banking services by the Secretary of State with the approval of the Treasury."
The noble Lord said: This Amendment is again designed to try to discover from the noble Lord who were the so-called "appropriate authoritiess" who were to ensure the cautious and limited approach of Giro. During the Second Reading debate we heard much about the cautious and limited approach that Giro would be making in its future development and that it would be under the control of the monetary authorities. The noble Lord then sought to reassure us that we were totally wrong in thinking that there would be a sudden surge into the banking field.
I drew the attention of the noble Lord to the contrast between the Government's actions in regard to the Trustee Savings Banks and their actions in regard to the Giro. The Trustee Savings Banks are to be subject to a 10-year period of control by the Government which will be gradually relaxed until they have reached the full status of the existing clearing banks. Presumably what is right for the development of the Trustee Savings Banks would also be right in order to follow the advice of the noble Lord, Lord Melchett, and make sure that the Giro also moves forward in a cautious and limited way. When I tabled this Amendment I had certainly not understood who the authorities were which would ensure this and I could not see that there was anything in the Bill that gave anybody power to ensure that they only developed slowly and cautiously. Therefore, I tabled this Amendment.
In the course of discussing Amendment No. 1, we have heard that there are certain powers under the Post Office Act and under the Bank of England Act which can allow the so-called "appropriate authorities" to have some control over what Giro is doing. However, I should like to have an explanation of how the Department of Industry and the Treasury control the development of Giro. For example, in the course of the Second Reading debate, the noble Lord told us that at the moment personal loans

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are limited to £2 million and overdrafts to another £2 million. This is the sort of restriction and slow development which one would think was perfectly right; but where are these powers that enable the Secretary of State and the Treasury to enforce such limits? It may be that they are the same powers as the noble Lord mentioned in discussing the first Amendment. I tabled this Amendment because I could not find where the powers were to restrain Giro and to make sure that its development was cautious and slow. I beg to move.
Lord BANKS: It seems to me that the powers requested in this Amendment are too sweeping and that inevitably they must lead to day-to-day interference with the working of the Giro. Surely the 1969 Act, the present Bill as it now stands and the promised legislation to control the banks and the Giro will he sufficient, particularly in the light of the explanation of the working of this framework which was given by the noble Lord, Lord Melchett, although like the noble Lord, Lord Aberdare, I would welcome any further explanation that he is now able to give.
Lord MELCHETT: I think I have already dealt with the financial controls exercised by the Bank of England, normally by the usual processes of consultation and discussion, and the powers under the Bank of England Act, if that is called upon. My reluctance to mention that is the understanding that it is such an unheard of idea that anyone would have to have recourse to statutory powers, that it would not be normal to mention it. But, of course, in addition there are three powers of direction affecting Giro in the 1969 Post Office Act, under Section 11: the Secretary of State may give directions of a general character in the national interest; secondly, the Secretary of State may give directions, again of a general character, in order to remedy defects in the general plans or arrangements in the Post Office, and thirdly, the Secretary of State can give a specific direction relating to national security or external relations with other countries. That is a superficial summary of a quite lengthy passage in the Act of 1969, as I am sure the noble Lord, Lord Aberdare, knows. It is set out in Section 11, subsections (1), (2), and (3).
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These powers already operate in respect of the banking services of the Post Office. Under Section 11(5) the Post Office is required to comply with them. The noble Lord, Lord Banks, touched on the possibility that this Amendment could give the Secretary of State power to make specific directions to the Post Office about Giro operations. I would agree with him if that was intended, but from the introductory remarks of the noble Lord, Lord Aberdare, I think it probably was not. But if that were intended, and the Amendment were included, it would be something very regrettable, and would, I agree with the noble Lord, Lord Banks, run the risk of leading the Secretary of State to interfere in a very detailed way with the Giro and in a way which would be quite unprecedented in the Statutes of the nationalised industries.
Lord ABERDARE: It was not intended in any way that the Secretary of State should interfere. It was intended, as the noble Lord realised, to make sure that there were powers so that Giro could not go headlong into banking services without some control, and someone being able to ensure that it moved cautiously. I think the noble Lord has satisfied me that these powers exist in the Post Office Act. Therefore, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 2 [Financial objective]:
Lord ABERDARE Lord ABERDARE moved Amendment No. 4:
Page 1, line 14, leave out ("concurrence") and insert ("approval").
The noble Lord said: This is a very simple Amendment. It is to leave out the word "concurrence" in the second line of Clause 2 and to insert the word "approval". At the moment, the Secretary of State from time to time may determine, after consultation with the Post Office, and with the concurrence of the Treasury, financial objectives to be achieved. Later on, in Clause 3(7), we have another reference to the Secretary of State acting with the approval of the Treasury. I do not know whether the words "concurrence" and "approval" mean exactly the same thing. If they do, I have no objection. But I have a feeling that "concurrence" is slightly

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weaker than "approval"; that you can act with someone's concurrence if in fact they do not object, but you cannot act with their approval unless you seek their approval first. Therefore, in order to strengthen this provision I hoped that the noble Lord, Lord Melchett, would accept the word "approval" instead of the word "concurrence". I beg to move.
Lord MELCHETT: As usual, the minds of the Parliamentary draftsmen are a mystery to mere mortals! I must say my first reaction was to agree entirely with everything said by the noble Lord, Lord Aberdare, but I am advised that there is absolutely no difference between "approval" and "concurrence", and indeed "consent", which I understand is also a similar term used in Statutes. Why one term is used in one place in the Bill and a different term in another, I do not know, but I can assure the noble Lord that there is no difference in the meaning, or difference in the control which will be exercised as a result of using one word or the other. I suggest that on that basis there is no real need to amend this particular word in the Bill.
Lord ABERDARE: In that case, I should have thought it would have been quite easy to accept my Amendment if there is no difference. However, rather than cause a lot of reprinting, and having been given the assurance that "concurrence" means "approval", I will beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.55 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 5:
Page 1, line 20, at end insert—
"(2) It shall be the duty of the Secretary of State to inform both Houses of Parliament as soon as possible of any such determination."
The noble Lord said: This may seem a rather strange Amendment to be moving in this House, but I was rather worried about subsection (1) of Clause 3, which reads:
"The Secretary of State may from time to time pay to the Post Office out of moneys provided by Parliament such sums, to be used by it for the purposes of its banking services, as he thinks fit."
In the course of the discussions we have had on this Bill—which have been exhaustive in another place—we have discussed the question of public dividend capital,
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and particularly the matter of fair competition between the Giro and the present clearing banks. Obviously it is important that if that competition is going to be fair, they must operate pari passu so far as capital-structures are concerned. It seemed that, under this subsection, the Secretary of State was completely free at any time to increase the public dividend capital available to Giro without any reference at all to Parliament which, in this case, because it is a financial matter, is obviously applicable only to another place. I am talking to the wrong Amendment; I have been talking to Amendment No. 6.
Lord MELCHETT: Perhaps we can take Amendments Nos. 5 and 6 together. If the noble Lord, Lord Aberdare, would like to do this to make things move more quickly, I am happy.
Lord ABERDARE: I do not know whether that is allowed, because Amendments Nos. 5 and 6 relate to different clauses. I do not think I can do that, but I will make my remarks shorter when I come to Amendment 6.
Amendment No. 5 is a very much more simple matter. Clause 2 allows the Secretary of State to determine financial objectives for the Giro. Already we have been told that for the first three years of Giro—that is, the years up to 1977/78—on average the Giro growth is expected to obtain a return of 12½ per cent. on its public dividend capital. Obviously, it is of great importance so far as fair competition with the private sector is concerned if at any time the Secretary of State can alter that financial objective. It seems to us only right that, if he were to act under this clause and make a new determination, he should inform both Houses of Parliament as soon as possible after he had made such a determination. After all, Parliament has a responsibility here. This public dividend capital is provided by the taxpayer, and the return on it is of vital importance so far as fair competition is concerned. Therefore, surely if under the Bill the Secretary of State is able to make new determinations, he should inform both Houses of Parliament.
I am not asking for any control. I am not asking that either or both Houses of Parliament should agree, but simply that

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they should be informed every time a new determination is made. I beg to move Amendment No. 5.
Lord MELCHETT: I am afraid that this Amendment would single out the Post Office for special treatment in a way that I understand is not precedented in other Statutes for nationalised industries. In the nationalised industries legislation, only that relating to the British Steel Corporation and the British Airways Board contains provisions relating to return on capital. Neither Statute contains a provision such as the noble Lord, Lord Aberdare, has in mind in this Amendment.
Having said that, of course I fully recognise the legitimate interest and concern of Parliament. Indeed, in announcing during the Second Reading debate in another place the initial financial objective of 12½per cent.—and I reiterated it during the Second Reading in this House—and in announcing that objective well in advance of enactment, I think we can fairly claim to have met the spirit of the noble Lord's Amendment already. Certainly the House should know what progress the Post Office Giro makes as a bank, and this will be reported in the Post Office Report and Accounts, which I think we deal with in a later Amendment. In addition, I am happy to give the noble Lord an undertaking that we will inform Parliament if we decide to change the 12½ per cent. objective we have announced. I hope with that clear undertaking the noble Lord will consent to withdraw this Amendment.
Lord ABERDARE: I am quite content with that assurance. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Clause 3 [Government investment in Post Office's banking services]:
6.1 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 6:
Page 2, line 1, after ("may") insert ("with the consent of the House of Commons").
The noble Lord said: I think I pretty well finished my speech on Amendment No. 6 when speaking to the previous Amendment. The object of this Amendment
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was simply to give Parliament, in this case the House of Commons, control over money which can evidently be given to the Post Office at any time by the Secretary of State. Admittedly, it is money that has already been provided by Parliament, but it is money which can well affect the matter of fair competition between the public sector Giro and the private sector banks, and it would seem to me that the House of Commons should have some say before this money is given to Giro. I beg to move.
Lord MELCHETT: The Post Office will receive its initial tranche of £13 million of public dividend capital under Clause 3(6) of the Bill. After that we have no further issues of public dividend capital in mind. Notwithstanding the pitfalls foreseen by the noble Lord in the field of credit cards and currency speculation, Giro's banking services are intended to be self-financing, and no future capital requirements directly linked with the extension of its banking services are foreseen The noble Lord may argue that that is all the more reason for accepting this Amendment. On the other hand, such a requirement to secure the consent of the House of Commons is not provided for in the other Acts that deal with public dividend capital which I mentioned, the Iron and Steel Act 1969 and the Civil Aviation Act 1971. Once again I think it probably would be undesirable to depart from those precedents. It would be singling out Giro in some particular way. I think I would need to be convinced of the justification for any particular treatment of Giro in this respect.
Moreover, any future issues of public dividend capital, if there were to be any—and, as I say, it is not our intention at the moment that there should be—would be provided for separately in a specific sub-head in one of my Department's Votes in an Estimate or Supplementary Estimate, and would thus be subject to the normal procedures in another place. The House of Commons will therefore be free to exercise its full rights over any future Departmental provision for this purpose. Lastly, noble Lords will note that in Clause 5 we provide for payments of PDC or dividends on that PDC to be reported to the Comptroller and Auditor-General, and through him to both Houses of Parliament. So I would suggest to the noble Lord that

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sufficient safeguards and scrutiny by another place do exist under the existing arrangements.
Lord ABERDARE: I am grateful to the noble Lord for that explanation. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 3 agreed to.
6.4 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 7:
After Clause 3 insert the following new clause:
"Report
.—(1) It shall be the duty of the Post Office to make to the Secretary of State as soon as possible after the end of each accounting year a report dealing with the operations of its banking services during that year.
(2) It shall be the duty of the Secretary of State to lay before each House of Parliament a copy of each report received by him under this section."
The noble Lord said: I beg to move Amendment No. 7. The noble Lord has on two occasions, on the last two Amendments, quoted precedents, and he is obviously very keen on following what has happened in the way of precedent. I can only tell him that the wording of this new clause is drawn directly from the industry Act, with which he is very familiar, and I can only presume that on the basis that it is a perfectly good precedent he will accept the Amendment without further ado. But if that does not impress him sufficiently, I would also wish to argue that this is an important Amendment in its own right, because if the Giro is to move into the provision of all banking services it surely is right that those who are making use of those services, as well as Parliament, should be able to study a proper statement of accounts and an annual report. I know that the noble Lord will tell me that there is a section in the present Post Office report which is devoted to Giro, but I would suggest that rather more than that is required if the Giro is to take on this very special rôle. If it is to become a full hank, if it is going to compete, as the noble Lord has told us, with the clearing banks, then I think that the least it should do is to publish its own annual report and accounts separately from those of the Post Office.
After all, this Post Office Report is a very bulky document, and there will be
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many people who are interested only in the Giro account that is given in that large Report. Many of the customers of Giro particularly will not be in the least interested in the general Post Office Report; they will only want to know what progress Giro itself is making. I should have thought that in the interests of economy the noble Lord would not wish that every time anybody wanted to see what Giro was up to they would have to be sent this enormously bulky and costly document through the post, at considerable cost in postage. If the noble Lord is not able to accept this Amendment, I hope he will at least consider the point that the Giro section of this Report should be separate, or at least it should be separable, so that everybody who wants to see the Giro report and accounts does not have to receive the full bulky document. I beg to move.
Lord CACCIA: May I intervene for one minute to support that proposal made by the noble Lord, Lord Aberdare. During the course of this debate the noble Lord has shown much understanding and sympathy with the spirit of the Amendments. He may say that as there is a Commission already looking into the future of the Post Office, and as one of the items in that Commission's terms of remit may be the question of whether the postal services and the telecommunications services should be divided, this is not the moment to hive off another activity before these matters have been generally considered. All the same, I hope that he will give at least some sympathy to the last part of what the noble Lord, Lord Aberdare, said, that there might be a detachable portion, or some report which is not necessarily part of the longer Report of the Post Office, with postal services, Giro and telecommunications all lumped into the same Report.
In response to one of the noble Lord's earlier interventions, may I say that I am delighted that he, as a member of a banking family, accepts that the clearing banks provide a community service. That, I think, is not in question. There is a separate question though, and it is a serious one, and it is what has really moved the noble Lord, Lord Aberdare, and certainly moved me, to intervene here. That is the public accountability of a new service being

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offered for and by the community. As there have been other cases of nationalised industries where this public accountability has become a matter of public debate and question, then it is surely necessary—and I think the noble Lord has accepted this and shown that it will be carried out—that very great care should be taken in expanding the services of the Giro, so that these kind of subsequent criticisms may not arise.
Viscount BARRINGTON: Although not knowing a great deal about this matter I rise briefly to support this Amendment on me grounds which the noble Lord, Lord Aberdare, has put forward. From the little that I have heard of this question it seems that when we consent to a thing, when we approve of it, and when we concur with it, makes no difference. But one is frequently asked in this House to consent to things one does not necessarily approve of, and I agree that the less print one has to wade through in order to know whether one approves of a thing or not, the better. I should like to support the proposition that, if it is possible for this report referring to Giro to be separable, that would be an excellent idea.
6.11 p.m.
Lord MELCHETT: I had better set the Record straight. When the noble Lord comes to study Hansard tomorrow he will find that I was saying that it was my understanding that the clearing banks viewed their role as serving the community. I was not expressing any view of the Government on that, but merely sticking up for them as I felt that the noble Lord had, by implication, rather done them down. He has now put me straight on that. It was not my intention to pray in aid the Carter Committee and the fact that it is looking into the Post Office at the moment. I have not used it in defending the Government's position on any of these Amendments, and I do not intend to on this one.
I think that the noble Lord, Lord Aberdare, has a good point—certainly if he quotes the precedent of the 1975 Industry Act, although I am not sure that that is quite as applicable as the precedents in the other nationalised industries Acts that I was quoting; he has my considerable sympathy. In the
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White Paper on this Bill the Government said that they will require the Post Office to publish separate Giro profit and loss accounts and balance sheets, and the White Paper pointed out that that has already been done in respect of 1974–75. By "separate" I mean a distinct presentation of Giro's performance within the Post Office's annual report and accounts.
The requirement on Giro to produce separate accounts is not specified in this Bill because, in our view, sufficient statutory provision already exists in Section 42(1) of the Post Office Act 1969. Indeed, that may well be why we have not followed the excellent precedent set in the Industry Act in this matter. The noble Lord is no doubt familiar with the provisions of the 1969 Act which provide that the accounts and the descriptive commentary should be made available to the public, and therefore I shall not go into that in any detail. The noble Lord had economy very much in mind, and of course that is very much in the forefront of everyone's mind at the moment. The noble Lord suggested that with that in view Giro should publish a separate, self-contained report and accounts and not have them included in, or at least have them separable from, the Post Office's own overall presentation. I agree that that might be desirable, particularly in the future if and when Giro expands, as I hope it will.
I should like to take up one remark which the noble Lord made in passing when he said that I had said that Giro would be competing with the clearing banks. I think that even the staunchest advocates of Giro's prowess would not pretend that Giro on its own at its present size is competing with all the major clearing banks as an equal partner. Our concern during the passage of the Bill has been to ensure that Giro is in a position to compete fairly with the clearing banks, and that it should not be subject to extra or onerous burdens of control, or other burdens, which the clearing banks do not have to face. It is in that sense that we have seen Giro as competing with the banks. It may well be a sensible and desirable move for Giro to publish separate report and accounts when its banking business has grown. It might well be right to meet the specialist interest in its banking services by publishing separately an expanded

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extract from its accounts which are presented in the Post Office's annual report, where I think they would always have to be presented.
While it would reduce costs not having to send out the Post Office's own report when somebody merely wanted to see how Giro was doing, I think that the noble Lord would agree that there is a counter-argument, that to produce separate report and accounts for Giro would increase the costs. I certainly do not rule out the production of a separate report and accounts, and it may well be something which Mr. Singer himself would welcome. I would suggest to the noble Lord that this is something which I could undertake to draw to the attention of Mr. Singer and the Chairman of the Post Office. He has very rightly raised it and I have considerable sympathy with it myself, as long as there is shown to be a clear demand for what the noble Lord is suggesting and it is not going to be too costly. However, I hope that, if I will undertake to draw it to the attention of Mr. Singer and the Chairman of the Post Office, the noble Lord will not feel it necessary to press the Amendment this afternoon.
Lord ABERDARE: I am grateful to the noble Lord. I think that that would be perfectly satisfactory. I would only suggest that the section on Giro should be separable so that at least it can be sent out separately, but not that anybody should go to the great expense of producing an entirely separate report
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from that in the major Post Office report. I should like to thank the noble Lord for the assurances that he has given me on various Amendments, and the trouble he has taken with these Amendments. I should also like to thank the noble Lord, Lord Caccia, for his support and assistance in the course of this quite interesting little Committee stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Remaining clauses agreed to.
House resumed: Bill reported without amendment.

PERSONAL STATEMENT
Lord WINTERBOTTOM: My Lords, with the leave of the House, may I make a short statement correcting something I said in answer to a Question by the noble Baroness, Lady Ward of Tyneside, earlier this afternoon? When I referred to a connection with the OECD and the United Nations, I should have said that the OECD is the commercial international body for the developed countries.

EDUCATION (SCHOOL-LEAVING DATES) BILL [H.L.]
Returned from the Commons agreed to with an Amendment; the said Amendment considered and agreed to.
House adjourned at seventeen minutes past six o'clock.