Lords Sitting of 24 February 1977

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

PAY POLICY AND PENSIONS
Lord ORR EWING: 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 whether, while the pay policy continues, they will so curtail pension increases in the public sector that increases are no larger than pay increases allowed to those who continue to work.
The LORD PRIVY SEAL (Lord Peart): My Lords, I said on 15th December 1976 that we would have to look very carefully at index-linked pensions. There is nothing that I can usefully add at this stage.
Lord ORR-EWING: My Lords, would the noble Lord agree that there does seem to be some unfairness in this, in that those who are continuing to work on behalf of our nation are very strictly limited in the increases that they can get, while others who have, either of their own will or with the encouragement of the Government, retired, can get very substantial increases? At this juncture in our economic position, this does not seem quite just and fair.
Lord PEART: My Lords, I cannot agree with the noble Lord. When one compares the situation with what happens in the private sector, there is no unfairness here.
Lord PAGET of NORTHAMPTON: My Lords, would the noble Lord agree that, if we start breaking our contracts with our public servants at a point when they are no longer in a position to resist us, we are starting a very dangerous precedent indeed?
Lord PEART: My Lords, for once I agree with my noble friend.
Lord DAVIES of LEEK: My Lords, is my noble friend aware—especially in view of the kindly supplementary question put by my noble friend below the gangway—that the dynamisation of pensions was done out of fairness to the civil servants by the Heath Government, and it was because the civil servants at that time were so badly treated? I concur completely with the supplementary question which has been put.
Lord PEART: My Lords, I am grateful for the support of my noble friend.
Lord WIGG: My Lords, would my noble friend not consider that, introducing the principle of justice into the concept implicit in this Question, he could perhaps raise a special fund by charging 100 per cent, on the increase in the value of shares, particularly when they increase as a result of a takeover bid?
Lord PEART: My Lords, I think that is another question.
Lord ORR-EWING: My Lords, in his first Answer the noble Lord said that he had undertaken to consider this matter. I rather gather from his further answers that he has already made up his mind; or is it still under consideration?
Lord PEART: My Lords, I am prepared to look at it carefully again, as I have said. I will do that.
Viscount ST. DAVIDS: My Lords, is it not clear that this way of treating pensions was entirely reasonable at a time when inflation was not so great, but this Government had no idea of the sort of mess they were going into and that is why it was allowed to go on?
Lord PEART: My Lords, I am glad the inference is that we did not create that mess.

PREMATURE RETIREMENT ESTIMATES
3.10 p.m.
Baroness YOUNG: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is their estimate of the number of people in the private and in the public sectors who have retired prematurely.
Lord WELLS-PESTELL: My Lords, I am afraid that the latest available information on this matter relates to 1971 and does not distinguish between people in the private and public sectors. The 1971 Census indicated that in Great Britain about 120,000 men aged 55 to 64 and about 40,000 single women between 50 and 59 considered themselves as retired. Meaningful information about married women cannot, I am sorry to say, be deduced from the Census returns. In addition, there would be a number of people in those age bands to which I have made reference who would remain in-capable of work until pension age. In May 1975 212,000 men aged 55 to 64 and 24,000 single women aged 50 to 59 were in receipt of invalidity pensions payable for long-term incapacity. Of these 236,000 people, 196,000 had been incapacitated for over a year.
Baroness YOUNG: My Lords, while thanking the noble Lord for the trouble he has taken to find a number of figures on this matter, would he not agree that it is of importance to know the numbers who do take premature retirement, not only in order to calculate the effect this would have on the earnings rule in regard to pensioners, but also because it could well conceal large numbers of the unemployed who have become unemployed because they have been obliged to retire early?
Lord WELLS-PESTELL: My Lords, I would accept that. I think that more information—and by that I mean not only more information, but more up-to-date information—on the numbers of people retiring prematurely should be available at the end of this year as a result of a survey into the reasons for retirement which is currently being carried out by the Office of Population Censuses and Surveys.
Lord BYERS: My Lords, may I ask the noble Lord when the 1976 Census is likely to be available and published?
Lord WELLS-PESTELL: My Lords, I just do not know.
Lord WINSTANLEY: My Lords, is the noble Lord, Lord Wells-Pestell, in a position to give the House any indication of the numbers of unemployed who have found employment as a direct result of the job release scheme? Further, would he confirm that many of those who have taken advantage of the job release scheme and obtained retirement at 64 were in fact people who were already off sick and unlikely to work again in any full sense of the word?
Lord WELLS-PESTELL: My Lords, I have come to your Lordships' House this afternoon hoping that I could deal with the question of premature retirement. I did not come prepared for anything other than that.
Lord DRUMALBYN: My Lords, would the noble Lord indicate whether the survey that is being carried out will distinguish between those who have retired with pensions related to their earnings in the private and public sectors, other than National Insurance benefits, and the others?
Lord WELLS-PESTELL: My Lords, all I know about the survey is that the terms of reference will be the reasons for retirement and that that may, in the course of the collection of information, bring up a number of other factors.

INDUSTRIAL STRATEGY
3.10 p.m.
Lord ORR-EWING: 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 where they have set down the precise terms of their current Industrial Strategy.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, in November 1975 the Chancellor of the Exchequer and the Secretary of State for Industry presented to Parliament a Command

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Paper entitled An Approach to Industrial Strategy. The contents of this document had been agreed by the National Economic Development Council at Chequers on 5th November 1975, and provided the basis for the development of the strategy. The interim reports of the sector Working Parties in the second round of the strategy were considered by the National Economic Development Council meeting on 2nd February. The main ministerial papers for this and the July 1976 meeting, amended only to exclude commercially confidential information, have been placed in the Library.
Lord ORR-EWING: My Lords, is the noble Baroness aware that in the last 17 months several thousand further firms have gone bankrupt, unemployment has soared and employment in manufacturing industry in successive Junes has fallen from 7·8 million to 7·5 million and now to 7·1 million, so there are 700,000 fewer people now working in the manufacturing industry? Do not these figures suggest that perhaps the present strategy is not working very effectively? Ought not this to be looked at once again with a more constructive and perhaps all-Party approach rather than with the dogma which has, perhaps, pervaded action until now?
Baroness BIRK: My Lords, this is not a question of dogma. The strategy is neither rigid nor capable of being completely quantified at this moment. It is a continually evolving process. It is based on agreement and discussions between the Government, management and the unions. Although I entirely agree with the noble Lord that the numbers of unemployed are a matter for enormous concern by everyone, we cannot look to the Industrial Strategy on its own for a net increase in employment in the short term; but we must look to an improvement in industrial performance for faster economic growth and lower unemployment in the medium term. In the meantime, I would point out to the noble Lord that there are signs of increased funds being available for investments. Interest rates are falling. Although I would not for a moment underestimate the seriousness of the situation, he should also look at the glimmers of light in it. Finally, there are hopeful signs that the discussion between
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the Government, the TUC and management will result in a third round of pay talks, which we hope will be successful.
Lord BROWN: My Lords, will the noble Baroness agree that the monetarist policy advocated by Sir Keith Joseph in a long letter to The Times today, and apparently the policy of the Conservative Party, would rapidly result in a very much bigger reduction than we have suffered in recent years in the number of people employed in industry?
Baroness BIRK: My Lords, my noble friend is absolutely right. It is impossible to see how that policy could work at all without an enormous increase in unemployment because that is part of its basis.
Lord MURRAY of GRAVESEND: My Lords, will the Minister not agree that, notwithstanding the voice of gloom and doom from the Opposition Benches, the interesting and encouraging figure that she has given should also be supplemented by the fact that, under this Government, we have had the best industrial record for very many years with regard to the numbers of man days lost?
Lord MOTTISTONE: My Lords, will the Minister agree that one of the heartening things about her Answer has been that she mentioned NEDO, and referred to management as one of the parties which are consulted. Does she not agree that this is, perhaps, a trend in the right direction? Was it not, after all, the case, during the earlier part of this Government's term of office, that management was always left out and a NEDO was never referred to? Was it not just the Government and the TUC getting together?
Baroness BIRK: My Lords, I would not agree that that was the case. Because the noble Lord raised the matter, perhaps I should say that management came much more into the picture when it realised that it also needed help from the public sector. The work of the National Enterprise Board and also the planning agreements have brought management into the picture to a much greater extent. Whatever the reasons, I agree that it is good that we should talk together.
Lord CAMPBELL of CROY: My Lords, do the Government still adhere to the principle which was announced at the Chequers meeting of November 1975; that is, that manufacturing industry should receive the highest priority in the Government's thinking? If so, when will the Government begin to adopt a policy based on that principle?
Baroness BIRK: My Lords, this is exactly what the Government are doing with the sector Working Parties, in which they have laid down the criteria that what is needed is improved productive efficiency, stronger financial backing, increased capacity, up-to-date products and more aggressive marketing. Therefore, a great deal of this is the responsibility of management as well as of the Government and the trade unions.
Lord ORR-EWING: My Lords, will the noble Baroness remember that it was Humpty Dumpty who said:
"A word means just what I choose it to mean—neither more nor less"?
In future, will she try to get away from the words and get on with the action, so that our country can make the recovery which we all so earnestly desire?
Baroness BIRK: My Lords, I shall. I hope that the noble Lord will, as well.

UK REPRESENTATION OVERSEAS: POLICY REVIEW
3.20 p.m.
Lord O'HAGAN: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they propose to publish the conclusions of the Central Policy Review Staff's review of the representation of the United Kingdom overseas.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, as I informed the House on the 3rd February, Sir Kenneth Berrill intends to let my right honourable friend the Foreign and Commonwealth Secretary have the report
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by the end of April. Clearly my right honourable friend will wish to study the report before he takes any decision with regard to publication.
Lord O'HAGAN: My Lords, since some of the contents of this report appear to have been widely disseminated, if not leaked, and since previous reports on the subject, such as the Duncan Report, were published, will not the Government give an undertaking now that they will publish the conclusions of the review, if not the review itself?
Lord GORONWY-ROBERTS: My Lords, my right honourable friend the late Foreign Secretary informed Parliament in another place, I think on 17th January this year, that the conclusions of the report, and as much as possible of the report itself, would be published.
Lord ELTON: My Lords, in view of the rather long time it is taking to bring out this report, which suggests a sense of coyness, and of the fact that this in turn suggests that there may be questions of large reductions of staff overseas, will the noble Lord, in looking at this matter, consider, if he does come to the conclusion that such a reduction is necessary—and it may not be—that some of the people who are not to represent us overseas shall be brought into the Foreign Office to form there the core of a forward planning or contingency planning unit, which apparently at present does not exist and which would be very useful?
Lord GORONWY-ROBERTS: My Lords, I could not of course possibly anticipate the content or the recommendations of the report. I have no doubt that Sir Kenneth Berrill will have taken into account ideas of the kind that the noble Lord has put forward today. As to the delay in presenting the report to my right honourable friend, we have to remember that this is a wide-ranging and somewhat complex inquiry into the full range of external services.
Lord HAILSHAM of SAINT MARY-LEBONE: My Lords, does the security of this information which may delay publication come into the category of "secret" or only "highly embarrassing"?
Lord GORONWY-ROBERTS: My Lords, I think that the noble and learned Lord, with his experience of these things, would be far more competent than I am to draw a distinction between the two. Perhaps I may add, he is rarely secretive but often highly embarrassing. On the point of substance, of course, it is not the question of security that delays the publication; it is the complexity of the inquiry.
I think that there is a point here that I owe in reply to the noble Lord, Lord O'Hagan. When the report is made known to the public, as my right honourable friend has said, repeating what was said by his predecessor, now Prime Minister, when he announced the inquiry, there will of course be certain necessary constraints on publication. We intend to publish the conclusions, but we need to look at certain aspects, for instance, security—and this is the point of substance made by the noble and learned Lord—when we come to the question of publication of the entire content of the report.
Lord AVEBURY: My Lords, is the Minister aware that the honourable lady, Dr. Shirley Summerskill, recently visited the overseas posts in the Indian sub-continent with a view to examining the role and functions of entry certificate officers there, but that nevertheless the waiting list for dependants and fiancées wishing to come to the United Kingdom has steadily lengthened? Is this a matter which can be taken into consideration by Sir Kenneth Berrill? What discussions has he had with the honourable lady about speeding things up!
Lord GORONWY-ROBERTS: My Lords, Sir Kenneth Berrill and his team will have looked at consular as well as other aspects of this question.
Baroness EMMET of AMBERLEY: My Lords, may I ask the noble Lord to appeal to Her Majesty's Government that in this year, which is Jubilee Year, our representation abroad should not be diminished or cut down? The eyes of all the world are turned on this country, especially on the Queen's Birthday, and the cutting down of the Queen's Birthday receptions abroad in this particular year would be very sad indeed.
Lord GORONWY-ROBERTS: My Lords, I hardly think that there will be time, if I may put it like that, to diminish or substantially alter our representation abroad before the celebrations of Her Majesty's Jubilee. As to the celebrations in posts abroad, we are telling posts to conduct these in the manner most appropriate in their opinion in the countries where they serve.
Lord GORE-BOOTH: My Lords, on the point of delay, may I ask whether the noble Lord would agree that yesterday's proceedings in this House show the danger of trying to produce a report too quickly?
Lord GORONWY-ROBERTS: Yes, indeed, my Lords, and I hope that in particular the noble and learned Lord opposite will take note of what my noble friend has said.
Lord HANKEY: My Lords, in considering the conclusions of this report, so far as one can judge them from what one has heard and read, will the Government bear in mind, in a year in which the United Kingdom is in a proper economic fix, and a low state of reputation abroad, that it is desirable that we should keep the maximum possible ability to play every card in our hand through our diplomatic representatives?
Lord GORONWY-ROBERTS: My Lords, it is always necessary to keep every possible card in our hands. However, I could not possibly agree with what my noble friend has said about the reputation of this country abroad. Its reputation abroad may be denigrated in this country, but when one goes abroad one has a completely different impression.
Lord O'HAGAN: My Lords, would the noble Lord agree that there are several precedents for the inquiries conducted by the Central Policy Review Staff being published without the Government being committed to the conclusions that the Central Policy Review Staff have reached?
Lord GORONWY-ROBERTS: Certainly, my Lords; and my right honourable friend, then Foreign Secretary and now Prime Minister, when he announced this review made precisely that point. He said that he was not bound to accept any of the recommendations, but that he hoped he could agree with the report.

GOVERNMENT STATEMENTS
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m. my noble and learned friend the Lord Chancellor will repeat a Statement on the Scotland and Wales Bill. This will be followed by my noble friend Lord Winterbottom who will repeat a Statement on assistance for the shipbuilding industry.

BUSINESS OF THE HOUSE
3.28 p.m.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, on behalf of my noble friend the Leader of the House, I beg to move the Motion standing in his name on the Order Paper.
Moved, That leave be given to the Lord Banks to advance the Second Reading of the Representation of the People (Amendment) Bill from Tuesday the 8th of March to Monday the 7th of March.—(Baroness Llewelyn-Davies of Hastoe.)
Lord SHINWELL: My Lords, I am sorry to intervene, but I am somewhat confused about the terminology in this proposition. I always understood, but I am ready to be corrected, particularly by the intellectuals in your Lordships' House, that the term "advance" meant going forward. Now I understand from this proposition that "advance" means going backward. Is this the new strategy of the Government? Can somebody explain the matter to me?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, it is my experience that we usually proceed crabwise. Whatever it is, it is quite effective.
On Question, Motion agreed to.

TORTS (INTERFERENCE WITH GOODS) BILL [H.L.]
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales that they, having been informed of the purport of the Torts (Interference with
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Goods) Bill, have consented to place their prerogative and interests so far as they are concerned on behalf of the Crown, the Duchy of Lancaster, and the Duchy of Cornwall at the disposal of Parliament for the purposes of this Bill.
I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(The Lord Chancellor.)
Lord HAILSHAM of SAINT MARY-LEBONE: My Lords, I congratulate the noble and learned Lord on getting this contentious piece of legislation through with so little discussion, although I am slightly puzzled as to how Her Majesty and the Prince of Wales can have their rights interfered with, because I do not usually associate them with the law of tort.
The LORD CHANCELLOR: My Lords, I do not think it is because of any apprehension that Her Majesty or His Royal Highness will be guilty of committing any torts, but that others might conceivably be guilty of inflicting torts upon them. Perhaps this question need not be pursued in too much detail.
On Question, Bill read 3a, and passed, and sent to the Commons.

PATENTS BILL [H.L.]
3.30 p.m.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, that the House do again resolve itself into Committee.—(Lord McCluskey.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 29 [Register of patents, etc.]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 131:
Page 22, line 43, at end insert (", except so far as the context otherwise requires").
The noble and learned Lord said: Clause 29(1) states the interpretation to be placed on the noun and the verb "register" wherever used in the Bill. They are to be taken as referring to the register of patents kept at the Patent Office in accordance with the clause. Elsewhere in the Bill, however, are references to another register; namely, the register of patent agents—and, for example, that is to be found in Clauses 102 and 103. The Amendment therefore limits the placing of the present interpretation on the word "register" to instances of its use in the Bill where it is intended to refer to the register of patents. Registered trade marks are also referred to in Clause 16(3). An almost identical Amendment has been tabled by the noble Lord, Lord Lyell, and the noble Lord, Lord Belstead. I am obliged to them for drawing the attention of the Committee to this point. I hope they will feel able to withdraw their Amendment, No. 132, and accept this Government Amendment.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendments Nos. 133 and 134:
Page 23, line 21, leave out ("and").
Page 23, line 23, at end insert ("and
(g) the publication and advertisement of any thing done under this Act or rules in relation to the register.").
The noble and learned Lord said: Amendment No. 134 is intended to add to the list of specific matters set out in Clause 29(2) with respect to which rules make provision. The Amendment allows for the making of rules about the publication and advertisement of anything done under the Bill or rules in relation to the register. It is desirable that there should be power to make rules relating to such matters to ensure that adequate publicity is given to them. Amendment No. 133 is obviously consequential.
On Question, Amendments agreed to.
Lord BELSTEAD Lord BELSTEAD moved Amendment No. 135:
Page 23, line 23, at end insert—
("(g) registration of a transaction, instrument or event shall take effect from the date it was submitted for registration, unless the Comptroller otherwise orders").
The noble Lord said: If adjudication or stamp is required for the registration of any transaction, instrument or event, a considerable period of time can elapse and it is important for the patentee who is seeking to apply the proper stamp fee that he should be able to know that registration under Clause 29 takes effect from the date of submission for registration, and it is for that reason that I move the Amendment.
Lord McCLUSKEY: The purpose of the Amendment is clear and the Government accept it in principle. Indeed, we are indebted to noble Lords opposite for drawing the matter to the Committee's attention. However, the Government have themselves proposed an Amendment, No. 154, which is designed to have the same effect. It does in fact have that effect in relation to Clause 30 and the noble Lord, Lord Belstead, may feel that the Government Amendment achieves his purpose in a better place and perhaps therefore in a better way to give effect to this perfectly valid point. I have nothing to add to what the noble Lord said, but I would ask him in the light of the Amendment which I propose to move, No. 154, not to insist on this one.
Lord BELSTEAD: I am grateful to the Minister and with his assurance that his Amendment totally covers the one which I sought to move, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 29, as amended, agreed to.
Clause 30 [Requirement for registration or notice]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 136:
Page 23, line 34, after first ("event") insert ("to which this section applies").
The noble and learned Lord said: With the permission of the Committee, I will speak at the same time to Amendments Nos. 138, 139, 140, 141 and 143. These are all Amendments to Clause 30 and they are related to one another. They are in fact minor drafting improvements and there is no change of substance in any of them. The Amendments which add the words "to which this section applies"—Nos. 136, 139, 140 and 143—have the effect of limiting the transactions,

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instruments and events to which the clause relates to transactions, instruments and events of the kind specified in subsection (4). Secondly, the word "incompatible" is thought to be better and more accurate than the word "inconsistent", and accordingly Amendment No. 138 makes that change in subsection (1).
The third type of Amendment, the one to subsection (2), should make it clearer that the rival claims with which we are concerned here must arise by virtue of different transactions. This change necessitates a consequential Amendment to subsection (2)(a), and that is Amendment No. 141.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 137:
Page 23, line 36, after ("application") insert ("for a patent").
The noble and learned Lord said: This, too, is a short and technical matter. Several kinds of application are referred to in the Bill. The principal of these are of course applications for a patent and the Amendment is inserted to remove any possible ambiguity over what was intended in this context.
Lord BELSTEAD: The only point that surprises me, while we are giving such minute attention to the drafting of the Bill, is that "application for a patent" was not defined in Clause 118. That would have saved the Government from having continually to talk about "an application for a patent" because the other patents would not have come under such a definition.
Lord McCLUSKEY: I have no doubt that the draftsmen might have taken that into account, but "application" is used in different contexts under the Bill and that might not have been quite so easy as it might appear to the noble Lord and to myself.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendments Nos. 138 to 141:
Page 23, line 36, leave out ("inconsistent") and insert ("incompatible").
Page 23, line 38, after ("event") insert ("to which this section applies").
Page 24, line 8, leave out ("a transaction, instrument or event") and insert ("different transactions, instruments or events to which this section applies").
Page 24, line 12, leave out ("neither transaction, instrument or event") and insert ("none of the transactions, instruments or events").
The noble and learned Lord said: I spoke to these Amendments when moving an earlier one. I beg to move.
On Question, Amendments agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 142:
Page 24, line 31, leave out from ("transaction") to ("to") in line 22 and insert ("instrument or event to be made or").
The noble and learned Lord said: Again, this is a purely drafting Amendment. The wording at this point in subsection 2 (b) is thought to be somewhat unhappy, and the Amendment is designed to make the provision easier to read.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 143:
Page 24, line 24, after ("event") insert ("to which this section applies").
The noble and learned Lord said: I have already spoken to this Amendment. I beg to move.
On Question, Amendment agreed to.
3.40 p.m.
Lord McCLUSKEY Lord McCLUSKEY had given Notice of his intention to move Amendment No. 145:
Page 24, line 26, leave out ("a patent or application") and insert ("from that transaction, instrument or event be entitled to that property or right").
The noble and learned Lord said: I am not quite sure why the noble Lord, Lord Lyell, did not move Amendment No. 144. Perhaps he thought that I was going to move Amendment No. 145. I regret to disappoint him. I believe that the position is that there was a typographical error in the Bill, and that noble Lords opposite sought to put it right and got it wrong. We too sought to put it right, but I have detected that our Amendment is also in error. Accordingly, a fourth attempt will be made at a later stage. At this point, I propose not to move Amendment No. 145.
The CHAIRMAN of COMMITTEES (Lord Aberdare): I should point out that, if Amendment No. 146 is agreed to, I cannot call Amendment No. 147.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 146:
Page 24, line 28, leave out ("the application is sought") and insert ("to which the application relates or the successor in title of either of them").
The noble and learned Lord said: The purpose and effect of this Amendment are as follows: Clause 30(1) provides how, where two or more persons are claiming inconsistent rights to, in or under a patent or application for a patent arising by virtue of different transactions, instruments or events, it is to be decided which prevails over the other or others. Subsection (3) makes special provision in the case of a claim to such rights against an inventor.
At present, line 28 refers to an application for a patent being "sought". This expression is thought to be inexact and the first five words of the Amendment express the desired concept more accurately. This Amendment subsumes Amendment No. 147 tabled by the noble Lords, Lord Lyell and Lord Belstead. If the present Amendment is agreed to Amendment No. 147 will not be moved, but I would also say that, having regard to the second look that we shall have to take at this whole clause in the light of what has happened to the previous two Amendments, we may have to look at this matter again. However, we accept in principle what was contained in Amendment No. 147. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 148:
Page 24, line 38, leave out ("any such") and insert ("a")
The noble and learned Lord said: This is a very minor drafting Amendment. It is identical to Amendments Nos. 150 and 151 so, with permission, I shall speak to all three at the same time. By referring, as the present wording does, to "any such patent" and so on, the reader is referred back to the patent previously referred to in the text of the clause. This should not be so. Subsection (4), which states the transactions, instruments and events to which the clause applies, should
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simply relate to patents and the like generally and not to any patent previously referred to in the preceding subsections. The Amendment rectifies this drafting error. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 149:
Page 24, line 41, leave out ("an exclusive") and insert ("a").
The noble and learned Lord said: This, similarly, is a drafting matter which has been corrected. I feel that the purpose of it must be obvious to those who have read it and could not be explained by me to those who have not. In the circumstances, I beg to move.
Lord LYELL: I am sure that we shall accept the Amendment, but we were looking forward to a detailed exposition of the Bill by the noble and learned Lord and we hope to be able to obtain extremely detailed explanations of all these minor points. Nevertheless, in this particular case we are glad that the noble and learned Lord assures us that on both sides of the Committee we have read this technical point.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendments Nos. 150 and 151:
Page 24, line 42, leave out ("any such") and insert ("a").
Page 25, line 1, leave out ("any such") and insert ("a").
The noble and learned Lord said: With permission, I shall move Amendments Nos. 150 and 151 together, these being the two Amendments which, as I pointed out, go with Amendment No. 148. I beg to move.
On Question, Amendments agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 152:
Page 25, line 2, leave out second ("by") and insert ("of").
The noble and learned Lord said: Again, this simply rectifies a typographical error. The reference in line 2 of page 25 should be to an assent "of" personal representatives. Accordingly, I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 153:
Page 25, line 5, leave out from ("authority") to ("any") in line 6 and insert ("transferring a patent or any right in or under it to any person or any such order or directions that an application should proceed in the name of any person or transferring any right in or under it to").
The noble and learned Lord said: Again, this is a drafting Amendment and, one hopes, an improvement. Subsection (4)(e) makes orders or directions of a court or other competent authority events to which the clause applies. As at present drafted, the wording is considered too narrow and the Amendment widens its scope so as to include more such orders or directions which could give rise to registrable rights. With that explanation, I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 154:
Page 25, line 8, at end insert—
("(4A) Any condition imposed by this section which requires the registration of a transaction, instrument or event shall, in a case where an application has been made for the registration of the transaction, instrument or event but it has not been registered, be treated as satisfied by the registration of the application.").
The noble and learned Lord said: This is the Amendment to which I referred when speaking on Amendment No. 135. I have already explained it. We accept the point made by noble Lords opposite in their Amendment, and I simply beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 155:
Page 25, line 9, after ("(3)") insert ("above")
The noble and learned Lord said: I can move this Amendment formally. It is simply intended to make for consistency of drafting style with similar references elsewhere in the Bill. I beg to move.
On Question, Amendment agreed to.
On Question, Whether Clause 30, as amended, shall stand part of the Bill?
Lord LLOYD of KILGERRAN: This clause is not of very great significance,
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but it is important from an administrative point of view as regards the registration of patents and the giving of notices. When I and many of my professional friends first read this clause we simply could not understand what part of it meant. The noble and learned Lord has referred to parts of this clause as being "unhappy". Twenty Amendments have been put down and I, as a practitioner in this matter, cannot construe the Bill before having had the opportunity of studying where all these Amendments are to be put in the Bill. Therefore, we reserve our position as regards the right to produce an Amendment if that should be necessary when we see the whole text of the clause.
Lord McCLUSKEY: I can only commend to the noble Lord that he should do as I have had to do; that is, he should take a piece of paper and write out the Amendments and, by underlining various parts, slowly twist the meaning from the text.
Lord LLOYD of KILGERRAN: But the noble and learned Lord had an advantage over me in that he knew how many Amendments would be introduced. I had no knowledge about that until I heard the debate.
Clause 30, as amended, agreed to.
Clause 31 [Rectification of Register]:
3.49 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 156:
Page 25, line 17, leave out ("of patents").
The noble and learned Lord said: This is a short Amendment which follows from the Amendment which I moved in relation to the word "register" in Clause 29(1). We can now leave out the words "of patents". I beg to move.
On Question, Amendment agreed to.
Clause 31, as amended, agreed to.
Clause 32 [Evidence of register, documents, etc.]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 156A:
Page 25, line 37, leave out from ("Office") to first ("any") in line 38.
The noble and learned Lord said: Clause 32 enables entries in the patents register and the contents of certain other documents kept in the Patent Office to be admitted in evidence on production of a copy of them purporting to be certified by the comptroller and sealed with the seal of the Patent Office without further proof. The certificate referred to in the second line of Clause 32(3) is the one to be issued by the comptroller to the proprietor of a patent in pursuance of Clause 21(2), stating that a patent has been issued to him. However, unlike Letters Patent issued under the Royal Prerogative, such a certificate has no legal effect. It is, of course, the register which has the legal effect. Under the Bill the question of who owns a patent or an interest in one is to be answered only by consulting the patent register. Thus there is no point in providing in the Bill for the admission in evidence of copies of such certificates, and this Amendment seeks to delete the relevant words which are seen to be unnecessary. I beg to move.
On Question, Amendment agreed to.
Clause 32, as amended, agreed to.
Lord STRABOLGI: My Lords, this may be a convenient moment to take the Statement being made in the other place, and I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

SCOTLAND AND WALES BILL
3.52 p.m.
The LORD CHANCELLOR: My Lords, the Statement made by my right honourable friend the Lord President in another place reads as follows:
"With permission, Mr. Speaker, I wish to make a Statement.
"The Government have considered the position on the Scotland and Wales Bill in the light of the decision of the House on Tuesday not to approve the proposed timetable Motion.
"The Government remain committed to the principle of devolution. We believe that devolution is essential both
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to satisfy the legitimate aspirations of the people of Scotland and Wales and to preserve the unity of the United Kingdom. We also believe that these objectives are met by the schemes embodied in the Scotland and Wales Bill.
"The vote on the Second Reading of the Bill demonstrated that a substantial majority of the House approve the basic principle of the Bill. However, it is clear from Tuesday's vote that many honourable Members have strong reservations which have yet to be removed about particular features of the proposals, and some have offered suggestions about how these might be changed. The Government believe that our proposals are in fact soundly based; but we are entirely willing not only to explain them further but also to consider how they might be improved, so that what finally reaches the Statute Book shall reflect the widest possible agreement in Parliament.
"The Government believe that in general the working out of legislative proposals is best conducted by the normal processes of the House of Commons. We are however ready in the exceptional circumstances of devolution to supplement these processes by special discussions. We intend therefore, within the coming week, to issue invitations to each of the other Parties represented in the House to enter into discussions. The aim of these discussions will be to explore how we may achieve, if it is possible, a wider agreement in the House. The Government envisage that it would be best to start the initial discussions on a bilateral basis, but will be fully prepared to consider suggestions to place substantive talks on a wider basis if the initial discussions suggest that this would be useful. At this stage, the Government would not wish to rule out any particular method that might prove a fruitful way of carrying matters forward."
My Lords, that concludes the Statement.
Lord STRATHCONA and MOUNT ROYAL: My Lords, the noble and learned Lord will be aware how eagerly this Statement has been awaited on all sides of the House. It is indeed welcome that in the Statement the Government should

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have recognised that legislation designed to bring about major constitutional change cannot be unduly rushed, but can proceed only after discussion has established at least a measure of all Party agreement, and indeed countrywide acceptance.
Having said how much we welcome the Statement, I should like to call attention to one rather curious feature of it. The Statement refers to,
"…the normal processes of the House of Commons."
I do not think that we in this House would wish to be hypersensitive, nor arrogant, nor would we wish in any way to upset our colleagues in another place. But I should like to suggest that possibly this House might have a contribution to make in a matter of this kind, of this constitutionally earth-shaking character, in which possibly the discussions which can be held in this House are free from the tyranny of looking over the shoulder at the ballot box and so could perhaps be of some value.
I should like to take up the very last point that the Statement makes, where it is said:
"…the Government would not wish to rule out any particular method that might prove a fruitful way of carrying matters forward."
I believe that we might have a contribution to make, my Lords.
Lord BANKS: My Lords, I, too, should like to thank the noble and learned Lord for repeating the Statement made in another place. We on these Benches agree that devolution is essential, and we warmly welcome the procedure which the Government now propose to follow of holding bilateral talks with the Parties represented in another place. That is, I think, a course which was first advocated by my honourable friend in another place, Mr. Russell Johnston, and it offers a hope of getting out of the present impasse.
I am wondering whether the Government have in mind any period of time for these discussions. We do not agree that the proposals in the Bill, as the Statement puts it, are entirely soundly based, and we are glad that the Government are prepared to consider improvements. I hope that in this connection they will be prepared to consider in particular the possibility of giving revenue raising powers to the Assemblies, the possibility of giving
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greater power over industry and agriculture, and the possibility of using a different electoral system. I am sure that much will depend upon the degree of flexibility which the Government bring to these matters.
The LORD CHANCELLOR: My Lords, I am grateful for the response which has been given to the Statement. I should like to reassure the noble Lord, Lord Strathcona and Mount Royal, that I think that my right honourable friend the Lord President was applying his mind to the proceedings in another place. I do not think that he intended, either expressly or otherwise, to exclude the obvious contribution which this House can make to the discussion, above all, of important constitutional questions—this in a House where there is so much expertise that can be directed to those problems.
The noble Lord, Lord Strathcona and Mount Royal, said that it was important that consideration of these matters should not be unduly rushed. No one can say that that has happened until now in the consideration of the Bill; but clearly there are many problems to be resolved. The noble Lord, Lord Banks, asked whether there was a time factor. It is clearly very desirable that these talks about talks (if I may so describe them) should be terminated as soon as is reasonably possible. The points that the noble Lord has raised are obviously the kind of matters that will fall for consideration in the discussion as to whether we can find a suitable basis to reach a wider level of agreement about the devolution proposals. No doubt the matters that he has mentioned will be part of the bilateral discussions which we hope will take place with the approval of all the Parties.
Lord HOME of the HIRSEL: My Lords, will the Lord Chancellor accept that there is, I suspect, great relief in many quarters, on all sides of the House, that the Government have taken this course of action? It is clearly far the best way to proceed. Would the Lord Chancellor perhaps represent to his colleagues that the present structure of local government in Scotland is very unsatisfactory, and cannot be divorced from the central problem of how you deal with the devolution of powers from Westminster? So could we hope that this question will be embraced by

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those who consider these matters in the wider context?
The LORD CHANCELLOR: My Lords, I am not quite sure how far I should go by way of commitment to extending the area of discussion into the sphere of reform of local government. There are many who think that some changes which took place in local government not so long ago have not been entirely successful, if I may put it as moderately as I can—and I see one of those responsible is smiling appreciatively at what I have said. It is a matter that falls for consideration, but I cannot promise the noble Lord, Lord Home, that it will be immediately on the tapis.
Lord GLADWYN: My Lords, may we deduce from the very welcome Statement which has just been made that the way is now happily clear for the early introduction of legislation regarding direct elections to the European Parliament?
The LORD CHANCELLOR: My Lords, that is a matter which is under consideration. It may well be that if there be an interval for further legislation there would be greater opportunity for discussing that among other measures.
Lord MACKIE of BENSHIE: My Lords, I wonder whether, when they consult, the Government intend in this case to consult with those people who believe in devolution—with their friends, instead of the enemies of devolution—because up till now the Government have tried to get away with the minimum consultation. I trust that the approach is now going to be much more positive, and that the consultations will also take into account the Government's own supporters who have not been too co-operative up till now.
The LORD CHANCELLOR: My Lords, I do not think the basis of discussion will be of a selective nature. Certainly it would be unfruitful to consult only those who agree with everything we have done so far; but clearly there will be discussions across the board, and I would not exempt those of my friends in another place who so far have manifested their own concern about some of the difficult problems that arise.
Viscount ECCLES: My Lords, while I welcome very much the Statement repeated by the noble and learned Lord, I think I understood him to say that the discussions would start off with bilateral discussions and then possibly move on to multilateral discussions. May I ask him whether it would not be better to get multilateral discussions moving as soon as possible? Suspicion will be aroused if the Government try to negotiate certain concessions with one Party and other concessions with another Party. What we want is to get Party politics out of this, and to get an agreed basis for devolution. That, I am sure, exists, but it will not be promoted by bilateral discussions.
The LORD CHANCELLOR: My Lords, this will be one of the objects of the bilateral discussions. We are not really sufficiently sure of what promising ground lies ahead for multilateral talks. It is better, I should have thought, to have talks with each of the Parties at this stage to see where we go from there. To plunge forthwith into a multilateral arrangement which might prove to be quite unacceptable could set the thing off on the wrong foot ab initio.

THE SHIPBUILDING INDUSTRY
4.4 p.m.
Lord WINTER BOTTOM: My Lords, with the permission of the House, I shall repeat a Statement being made in another place on assistance for the shipbuilding industry. The Statement is as follows:
"This House is aware of the serious crisis facing the world shipbuilding industry.
"Without swift action by the Government much of the merchant shipbuilding industry in the United Kingdom could close within two years. There would be heavy unemployment on the Clyde, the Tyne, the Wear and Tees and the Mersey, and in Belfast.
"This is unacceptable to the Government. Shipbuilding industries all over the world, from Japan to Sweden, are accepting the inevitability of contraction, and Britain cannot be insulated from this world trend. What we must do is ensure that it takes place within a positive forward looking policy framework.

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"The Government are determined to emerge from this crisis with a substantial and viable shipbuilding industry with secure long-term employment prospects.
"The Government have therefore decided to use their powers under Part 2 of the Industry Act 1972 to assist the yards in Britain to obtain orders. A sum of £65 million has been set aside for this purpose, of which half will be available during the next six months. This figure will be the control ceiling and will operate in place of the cash limit covering all forms of assistance for building ships, which will be terminated. The Industrial Development Advisory Board will be consulted about the fund.
"Harland and Wolff, which is already in public ownership, will not be part of British Shipbuilders and will continue to be dealt with by my right honourable friend the Secretary of State for Northern Ireland.
"In accordance with our obligations under the Treaty of Rome we have informed the Commission for the European Economic Community of our intention to introduce this intervention fund as a matter of urgency. In our view these proposals conform with our Treaty obligations. We continue to be firm advocates of a Community policy for shipbuilding.
"The intervention fund will be operated selectively to secure the maximum benefit at least cost. In its administration my Department will work in consultation with the organising committee for British Shipbuilders, which will have an important advisory role. In considering the use of the fund my Department will wish to discuss with the companies concerned the scope for reducing costs and improving performance.
"National Shipbuilders and Repairers Limited will have an important role in seeking new orders for the industry, and its activities will be assisted by the creation of the intervention fund. I shall be placing in the Library of both Houses a copy of the company's memorandum and articles of association as soon as the company is registered.
"To complement this action a major advance factory programme costing
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over £12 million has been put in hand in shipbuilding areas.
"To assist British Shipbuilders, when it is created, to alleviate the human problems caused by the contraction of the industry I shall be bringing forward proposals to Parliament for a redundancy scheme similar to that for the British Steel Corporation. Similar arrangements will be made for Harland and Wolff.
"My immediate concern is to secure orders in order to promote the increased competitiveness needed to secure a future for the industry. These measures to alleviate the industrial and social effects of the world shipbuilding crisis are important and must form part of a longer term strategy of modernisation and rationalisation following upon public ownership."
My Lords, that is the end of the Statement.
4.8 p.m.
Lord CAMPBELL of CROY: My Lords, we thank the noble Lord for having repeated the Statement being made in another place. The British merchant shipbuilding industry has certainly been facing most grave difficulties during recent months. We welcome the fact that the Government have now decided to take some action, and are not just waiting for the Bill. Is the noble Lord aware that the Government could have used the Industry Acts at any time during the last two years to carry out what they are now proposing?
In case there are any allegations that there has been deliberate delay arising from action in your Lordships' House, would the noble Lord agree that the determination of whether or not the Bill was hybrid was carried out under procedures laid down by officials of Parliament, and that the time has been spent on this procedure before any noble Lord in this House had an opportunity to speak on the Bill during this Session? That procedure exists in order to protect the rights of the individual. Further, does the noble Lord recall that we warned him and his colleagues in the last Session that the ship repairing section of the Bill might be hybrid, and that we proposed a course which would not have delayed the rest of the Bill?

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My Lords, as regards the inevitable contraction of the industry and the redundancies to which the noble Lord referred, from this Bench we welcome the action which is proposed, though it is belated. Is the noble Lord aware that last September I drew attention in your Lordships' House to the need to start dealing with these human problems, which are going to become very real in merchant shipbuilding areas in the coming months?
4.10 p.m.
Lord ROCHESTER: My Lords, we on these Benches would also like to thank the noble Lord for having repeated this Statement. We are not necessarily opposed to this grant from public funds. We are, however, concerned about the absence of any comprehensive policy in regard to this kind of expenditure. Does the noble Lord agree that Government aid to industry may now arise from the 1972 Industry Act, as in this case, from the Industry Act 1975, from the Industrial Common Ownership Act, from accelerated investment project grant, from Bills such as that seeking to nationalise the shipbuilding industry itself and so on? Is it not time to set up a satisfactory general administrative framework for the purpose of financing industry, an adequate system for monitoring such expenditure, business like budgeting arrangements for allocating grants and procedure for determining the relative merits of claims for assistance?
We welcome the reference in the Statement to the need for modernisation and rationalisation, and the intention to discuss with the companies concerned means of seeking to improve productivity; but I should like to ask, what is the position regarding the shipbuilding industry now? What is going to be done to rationalise it in view of the grave threat to thousands of jobs posed by world over-capacity? In particular, would not the best possible course be for the Government now to dismiss all idea of nationalising the ship repairing industry so that we can get down to business and see what is the best possible solution for shipbuilding?
4.12 p.m.
Lord WINTERBOTTOM: My Lords, I accept completely what the noble Lord, Lord Campbell of Croy, has said over
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drawing our attention to the powers existing under the 1972 Act in the course of the discussion of the Aircraft and Shipbuilding Industries Bill, on which we spent a little time before Christmas. I am not going to enter into a discussion on that aspect of the problem today. We should have an opportunity to do so later, on 8th March, I believe. I am not going to accuse any noble Lord here, or this House as a whole, of causing any delay. What has happened is that the Government have decided that action must be taken, and action will be taken under Part II of the 1972 Act.
The points made by the noble Lord, Lord Rochester, were very valid but they spread wider than simply how we propose to allocate the £65 million for the purpose of aiding shipbuilding in what is really the short-term. This is what we are doing now, to meet an immediate crisis. The longer-term solution we shall have an opportunity to discuss in the immediate future.
Lord SHINWELL: My Lords, is my noble friend aware that nothing is to be gained by re-opening the controversy over previous legislation? We must be concerned not with the past but with the future. It is about the future that I want to ask a few questions. Have the Government, by analysis or other means, discovered what shipping surplus exists not only in this country but throughout the world—in Japan, Germany, America and elsewhere? Are they not aware that there is far too much shipping, and that there is an excessive surplus? Are they aware that if they are proposing to build ships now of whatever kind, giant cargo vessels, medium liners, vessels to contain liquids and so on, all of this is highly speculative? Would it not be essential, before embarking on a venture of this kind, to discover what are the prospects for new shipping in the foreseeable future? Since there is a surplus of industrial shipping, might it not be more appropriate to order a few naval vessels (in spite of the arguments against further defensive apparatus) which are very much required and could provide employment for large numbers of people? If, merely to provide employment, we are going to build ships of an industrial character which may not be used for several years and may become redundant after construction, we might as well build naval vessels which are far more useful.
Lord WINTERBOTTOM: My Lords, I am confident that my right honourable friend the Secretary of State studied all the available statistics and information about world shipping before he reached the decision which I have announced today. Regarding the second point made by my noble friend, this is a question which is as close to my heart as it is to his, but it is not what we are talking about today.
Lord LEATHERLAND: My Lords, may I ask my noble friend whether any portion of this £65 million will be spent in aiding the ship repairers; particularly in view of the statement in today's newspapers that the Baily Company, which owns Bristol Channel Shipbuilders, has after two delays in presenting its annual accounts, presented a most unsatisfactory set of accounts having spent such an enormous amount of money during the year on publicity?
Lord WINTERBOTTOM: My Lords, that is an interesting point, but I do not think it has much relevance to what we are talking about today.

PATENTS BILL [H.L.]
4.15 p.m.
House again in Committee.
Clause 33 [Co-ownership of patents and applications for patents]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 157:
Page 26, line 26, at end insert ("and the supply of those means by virtue of this subsection shall not amount to an infringement of the patent").
The noble and learned Lord said: I beg to move Amendment No. 157, which is an Amendment to Clause 33. In order to explain the purpose of this Amendment, I must first refer the Committee to Clause 58(1), which details those acts which constitute infringement of a patent, and also to subsection (2) of that clause, which adds that it is also an infringement when anyone supplies a person other than a licensee or other person entitled to work an invention with any of the means, relating to an essential element of the invention, for putting it into effect, when he knows, or it is obvious, that those means are suitable for doing so and are intended to be used for that purpose.
Clause 33 regulates the rights of joint proprietors among themselves and subsection (2)(a) entitles each of them to do acts in respect of the invention which would otherwise amount to infringement without the consent of the other joint proprietors, unless there is an agreement among them to the contrary. If there were such an agreement, a person who supplied a joint proprietor who no longer had the right to be supplied with the essential means would be guilty of infringement. Subsection (4) of Clause 33 relieves such suppliers of the need to inquire whether any such restrictive agreement exists among the joint proprietors of the patent in question, and the Amendment makes it plain that no infringement is committed by anyone who supplies a joint proprietor with the "means essential", whether or not the joint proprietor has ceased to be a person entitled to use the invention for his own benefit.
On Question, Amendment agreed to.
Clause 33, as amended, agreed to.
Clause 34 [Determination of right to patent after grant]:
4.20 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendments Nos. 158 and 159:
Page 27, line 2, at end insert ("whether he is the true proprietor of the patent or whether the patent should have been granted to him (in either case alone or with any other persons) or").
Page 27, line 4, leave out from ("him") to ("and") in line 7 and insert ("(alone or jointly with any other persons)").
The noble and learned Lord said: With the leave of the Committee I will speak to Amendments Nos. 158 and 159 together. Clause 34(1)(a) has three distinct (although closely linked) functions. It covers questions referred under Clause 7 which have not been disposed of by the time the patent was granted. It covers questions as to whether the patent was granted to the right person (in this respect it is parallel to Clause 70(1)(b)). It also covers disputes about whether the current proprietor is the true proprietor for the time being. These Amendments taken together are intended to distinguish between these functions so as to enable the remainder of the clause and Clause 35 to be drafted by reference to them. I beg to move Amendments 158 and 159.
Lord BELSTEAD: This is a small drafting point. As I understand it, this Bill repeals Section 56 of the 1949 Act, which in subsection (2) provided for the court or the comptroller to apportion the benefit of an invention:
"or of any patent granted or to be granted between an employer and an employee".
As such apportionment is now going to be repealed, I wonder whether Amendment No. 159 should not read:
"or jointly with any other persons except as between an employer or an employee".
The noble and learned Lord may prefer to give me an answer in writing.
Lord McCLUSKEY: I am obliged to the noble Lord. I should prefer to write to him on this matter and I will undertake to do so.
On Question, Amendments agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 160:
Page 27, line 14, leave out lines 14 to 44 and insert—
("(2) Without prejudice to the generality of subsection (1) above, an order under that subsection may contain provision—

(a) directing that the person by whom the reference is made under that subsection shall be included (whether or not to the exclusion of any other person) among the persons registered as proprietors of the patent;

(b) directing the registration of a transaction, instrument or event by virtue of which that person has acquired any right in or under the patent;

(c) granting any licence or other right in or under the patent;

(d) directing the proprietor of the patent or any person having any right in or under the patent to do anything specified in the order as necessary to carry out the other provisions of the order.

(3) If any person to whom directions have been given under subsection (2)(d) above fails to do anything necessary for carrying out any such directions within 14 days after the date of the order containing the directions, the comptroller may on application made to him by any person in whose favour or on whose reference the order containing the directions was made authorise him to do that thing on behalf of the person to whom the directions were given.
(4) Where the comptroller finds on a reference under subsection (1)(a) above that a person is not the true sole proprietor of the patent, he may—

(a) order that any other person who was a party to the reference may, subject to section (Amendments of applications and patents not to include added matter) below, make a new application for the whole or part or any matter comprised in the specification for that patent; or

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(b) if he directs that the person registered as proprietor of the patent is to remain so registered or that the patent is to be transferred to any other person who was a party to the reference, require that the specification of the patent shall be so amended as to exclude any matter specified in the order (without contravening section (Amendments of applications and patents not to include added matter) below).

(5) On a reference under subsection (1)(a) above an order shall not be made under this section transferring a patent or requiring the specification of a patent to be amended on the ground that the patent was granted to any person not entitled to be granted it (alone or with any other persons) if the reference was made after the end of the period of two years beginning with the date of the grant, unless any person registered as a proprietor of the patent knew at the time of the grant or of any transfer of the patent to him that he was not or would not be entitled to the patent.").
The noble and learned Lord said: If this Amendment is accepted, it subsumes Amendment No. 161. Amendment No. 160 is a substantial Amendment. With regard to this Amendment, the proposed subsection (2) is new. It sets out, without prejudice to the generality of subsection (1), specific matters which may be provided for in an order under that subsection. It now follows, with necessary differences, Clause 7(2), as amended. The new subsection (3) closely follows the old subsection (2). By that I mean subsection (2) in the Bill. Its provisions are however slightly wider than those in the old subsection (2), so as to cover transfers and the like, by persons having rights under a patent, as well as the proprietor of the patent. It also follows the new Clause 7(5) in simplifying the procedure for enforcing an order.
The new subsection (4) spells out in greater detail than did the old subsection (5) what is to happen when, on a reference under this clause, the comptroller finds that the person registered is not entitled to the patent. In particular, it enables the person to whom the patent should have been granted to file a new application for a patent. The new subsection (5) is a correction so as to follow more closely the wording of Article 27(3) of the Community Patent Convention. I think that noble Lords opposite will accept that Amendment No. 161 standing in their name is subsumed by the Government Amendment. I beg to move.
Lord BELSTEAD: I am grateful to the noble and learned Lord for his explanation of the substantial Amendment which

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re-writes a considerable part of Clause 34. As I understand it, Clause 34 in its original form, and now the Bill as it will be amended, allows a person to refer to the comptroller the question whether the patent or any right in or under a patent should be transferred to that person, and the comptroller must make an order determining the question; and if the comptroller's decision is that the person who made the reference was the inventor of part of the patent, the comptroller shall require the specification of the patent to be amended excluding the matter which that person has successfully claimed as his invention. We all agree with that. That is perfectly all right. What is not all right is that we have put down Amendments Nos. 161 and 162 on the Marshalled List. With respect to the noble and learned Lord, I suggest that the two new subsections in Amendment No. 160 do not meet our points in our Amendments Nos. 161 and 162.
As to Amendment No. 161, in Clause 7 (3) there is a similar provision to the one to which I have referred relating to entitlement to a patent before grant, and in Clause 7 the comptroller may order that the person who made the reference may make an application for the whole or part of any of the matter which he successfully claimed as his invention. Such application shall be treated as having been filed on the date on which the earlier application was filed. Amendment No. 161 would seek to provide for someone who has successfully claimed part of the patent as his own invention not only to be able to make application for that part, but also to have it filed on the same date as the main application was filed, and published on the same day as the main application was published. For some reason, those provisions were missing from Clause 34 as it was drafted and they are still missing from the Government's main Amendment No. 160.
After all, subsection (4) of the Government's Amendment is simply the counter-part of Clause 7(3), except that of course Clause 34, as amended, is dealing with entitlement after grant, and Clause 7 deals with entitlement before grant. As Clauses 7 and 34 are supposed to match up, it seems that it would be necessary for both clauses to give the aggrieved inventor the same rights regarding filing and
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publication, and this is the effect of our Amendment No. 161.
As regards Amendment No. 162, the Government Amendment No. 160 has omitted entirely, so far as I can see, the content of what was Clause 34(4), which provides that where someone is seeking revocation and the court or comptroller decides that the patent was granted to the wrong person, the court or the comptroller may make an order determining the right of a patent, except that the order may not include the requirement that any matter in the specification which the real inventor did not invent shall be cut out of the specification. It always seemed to me, when I was reading Clause 34 before it was amended, that it was very strange that that provision was not included in the original draft. It is not included in the amended draft because the whole of subsection (4) has now been cut out. I should like first of all to ask the Government what has happened to subsection (4). Where has it gone? Is it printed elsewhere in the Bill? If it is so provided somewhere else in the Bill, have the Government been able to look at the point which we would have made had we been able to move Amendment No. 162?
Again, I am afraid that I did not give the noble and learned Lord notice that I was going to raise these matters. If he prefers to communicate with us after the debate, I shall be perfectly satisfied.
Lord LLOYD of KILGERRAN: May I support what the noble Lord, Lord Belstead, said about Amendment No. 161? In regard to Amendment No. 160 the noble and learned Lord said he felt that Amendment No. 161 was subsumed in Amendment No. 160. I could not follow how that happened, and for the reasons explained by the noble Lord, Lord Belstead, I wonder whether the Government will reconsider the matter arising under this Amendment. Also, will the noble and learned Lord let me know his answer to the points raised by the noble Lord, Lord Belstead?
Lord McCLUSKEY: I am obliged to noble Lords opposite. I am convinced that there is substance in both the points which have been made. In the light of what has been said, and given the opportunity to study carefully what has been

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said, I should like to look at both these matters again. I will undertake to do two things: first of all, to write to both noble Lords; secondly, to ensure that whatever may be necessary in order to put these matters right is brought forward at the next appropriate opportunity.
Amendment, by leave, withdrawn.
4.30 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 164:
Page 28, line 2, at end insert—
("(6A) Where a question is referred to the comptroller under subsection (1)(a) above an order shall not be made under subsection (2) or (4) above on the reference unless notice of the reference is given to all persons registered as proprietor of the patent or as having a right in or under the patent except those who are parties to the reference.").
The noble and learned Lord said: This Amendment introduces a new subsection (6A) into Clause 34, requiring the comptroller not to make an order under subsection (1)(a) of the clause unless notice of the reference has been given to all persons registered as proprietor of the patent or as having any other right in or under it, except those already parties to the reference. This will give the persons notified an opportunity to apply to be made parties to the reference and will ensure that their rights are not affected without their having had an opportunity to be heard. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 165:
Page 28, line 6, after ("and") insert (", without prejudice to the court's jurisdiction to determine any such question and make a declaration, or any declaratory jurisdiction of the court in Scotland,").
The noble and learned Lord said: Under Clause 34(7), the comptroller may decline to deal with any question referred to him under subsection (1) of that clause and, if he does so, subsection (7) states that the court shall have jurisdiction to do so. The words added by this Amendment—and I think we have seen similar Amendments before—are intended to make it clear that the fact that subsection (7) expressly confers jurisdiction upon the court to determine the question is not to be taken as in any way implying that any
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other jurisdiction which the High Court in England (or the Court of Session in Scotland) may have to make a declaration as to the rights of the parties is in any way impugned or diminished. I beg to move.
On Question, Amendment agreed to.
Clause 34, as amended, agreed to.
Clause 35 [Effect of transfer of patent under s. 34.]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 166:
Page 28, line 7, leave out subsection (1) and insert—
("(1) Where an order is made under section 34 above that a patent shall be transferred from any person or persons (the old proprietor or proprietors) to one or more persons (whether or not including an old proprietor), then, except in a case falling within subsection (1A) below, any licences or other rights granted or created by the person or persons who at the time of the grant or creation were registered as proprietor or proprietors of the patent shall, subject to the provisions of the order, continue in force and be treated as granted by the person or persons to whom the patent is ordered to be transferred (the new proprietor or proprietors).
(1A) Where an order is so made that a patent shall be transferred from the old proprietor or proprietors to one or more persons none of whom was an old proprietor (on the ground that the old proprietor or proprietors was or were not the true proprietor or proprietors), any licences or other rights in or under the patent shall, subject to the provisions of the order and subsection (2) below, lapse on the registration of that person or those persons as the new proprietor or proprietors of the patent.").
The noble and learned Lord said: The purpose of this Amendment is to make it clear that the Bill is in conformity with Articles 28 and 40(2) of the Community Patent Convention, as regards the effect of the transfer of a patent on licences and other rights in the patent. The new subsection (1) is intended to make it clear that, following Articles 28 and 40(2) of the Community Patent Convention, licences and other rights are not normally to lapse on a transfer. This proposition needs to be stated, since it would otherwise be the case that a licence granted by persons who between them were not all the persons entitled to the patent was invalid. The reason for departing from this general rule of law is that it is desirable that the licensee of proprietors who are on the register, and who therefore appear on the face of it to be the proper persons to grant a licence, should be protected.
The new subsection (1A) departs from the preceding general proposition in providing, as in Article 28 of the Community Patent Convention, that where there is a complete change of proprietorship as a result of proceedings under Clause 34 licences should lapse. Such a complete change of proprietorship can occur only within the time limits set out in the new Clause 34(5). Persons acting in good faith are protected by the provisions of subsection (2). I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendments Nos. 167 to 171:
Page 28, line 16, after ("proprietor") insert ("or proprietors");
Page 28, line 20, after ("invention") insert ("in question");
Page 28, line 22, after ("proprietor") insert ("or proprietors");
Page 28, line 23, after ("proprietor") insert ("or proprietors");
Page 28, line 29, after ("proprietor") insert ("or proprietors").
The noble and learned Lord said: The first, third, fourth and fifth of these Amendments are consequential on the addition of the new subsection (1A). The second Amendment—that is to say, page 28, line 20, after "invention" insert "in question"—is a drafting Amendment to make clear which invention is being referred to. As I said, these are simple drafting and consequential Amendments, and I beg to move.
On Question, Amendments agreed to.
Clause 35, as amended, agreed to.
Clause 36 [Right to employees' inventions]:
4.35 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 172:
Page 28, line 36, after ("shall") insert (", as between him and his employer,").
The noble and learned Lord said: The intention of Clause 36, upon which we are now embarking and which raises for consideration an interesting part of the Bill, is to regulate as between an employee and an employer the legal rights in inventions made by the employee. Apparently, it happens more frequently than one might suppose that two applications for patents for the same invention are filed on the same day. If the invention
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was made simultaneously by an employee and by a third party who was self-employed, under the clause as at present drafted the self-employed inventor might be held to have no rights at all in the invention. This is not, of course, the intention and, as I have said, Clause 36 is intended to regulate rights only as between employer and employee. This Amendment and Amendment No. 175 will I think make the position clear. I beg to move.
On Question, Amendment agreed to.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 173:
Page 28, line 39, leave out from first ("of") to ("or") in line 44 and insert ("research for which the employee had been engaged or made while he was assigned to the task of solving a specific problem;").
The noble Lord said: As the noble and learned Lord the Lord Chancellor has indicated, we are now entering upon the consideration of a group of clauses which are of very considerable importance from the industrial relations point of view. I have already, on Second Reading of this Bill, congratulated the Government on, for the first time in the history of patent legislation, introducing these clauses, particularly this first one in the group which recognises the rights of employee inventors. Although I do not want to go over the same ground again, I will say that hitherto there has been gross unfairness to the employee inventor in the industrial history of this country, and there has been a considerable sluggishness on the part of the Government in recognising that quite apart from the rights of other employees, there are rights belonging to an employee inventor which have been recognised in many other countries.
There are vast numbers of disputes on record between employees and employers, and therefore it is essential that Clause 36 should clarify the position, particularly as regards inventions which belong to the employer. So the purpose of my Amendment No. 173 is simply to make quite clear that where a firm has an employee who is employed for research purposes, or has a particular job assigned to him, and in the course of that work an invention arises that invention will belong to the employer. My Amendment would remove paragraph (a), which states that

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the employer has the right to the invention, if it has arisen in the course of the employee's normal duties.
However, what are the normal duties of an employee? If they are defined in the contract of employment, that is quite easy to determine. But normally there is very considerable latitude available for dispute. Towards the end of paragraph (a), it is stated,
"…that an invention might reasonably be expected to result from the carrying out of his duties."
Again those words "might reasonably be expected" may give rise to considerable dispute. My Amendment makes it clear that in the case of a research worker or employee who is assigned to a specific job, quite clearly and incontrovertibly that invention belongs to the employer. I beg to move.
Lord BROWN: From an industrial point of view, I support the Amendment which has been moved by the noble Lord, Lord Lloyd of Kilgerran.
Lord CAWLEY: I should like to raise a minor point. The noble Lord, Lord Lloyd of Kilgerran, said that this was the first time that the point had been raised in the House. In fact it is not. In 1965 this House passed a Bill called the Factory Employees (Inventions) Bill which was withdrawn in the other place.
Lord NELSON of STAFFORD: I am afraid that I find myself in disagreement with the noble Lord, Lord Lloyd of Kilgerran. He brings out very clearly the great difficulty that is involved in defining, in some four or five lines in a Bill of this nature, a satisfactory definition of ownership. This difficulty arises throughout the whole of this part of the Bill. Normally this is a common law matter. To try to condense such a definition into four or five lines in a highly technical Bill of this nature is an extremely difficult task, and that I well recognise.
I find myself in disagreement with the Amendment because it narrows the field even further. I agree that to try to define it is very desirable, but it is impossible to do so in five lines. To narrow it down to those engaged in research work is quite unrealistic from an industrial point of view. Research work is not confined to a few people. It is not even capable of
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definition. Where research finishes and development starts is extremely difficult to define. What is research? Whether it is done in a research department or as part of production engineering is not clearly defined. Therefore I suggest that if we must try to define this very difficult situation, the existing wording is a more desirable form of wording than that proposed by the noble Lord.
4.43 p.m.
The LORD CHANCELLOR: I am most grateful to the noble Lord, Lord Lloyd of Kilgerran, for his general commendation of this part of the Bill which improves greatly the position of the employee inventor. I do not know whether the noble Lord was indicting this Government for being sluggish. Bearing in mind that the Banks Report came out as long ago as 1970 and that that is the fons et origo of much of this Bill, we have really not done too badly.
Coming to the Amendment, I share the view that the noble Lord, Lord Nelson of Stafford, has expressed about the difficulty of the language here and respectfully agree with him that the proposed Amendment narrows the field. Clause 36(1)(a) was, I ought to say at the beginning, drafted to give effect to the agreement that was reached between industry and representatives of employees in a Working Party which was set up last year at the request of the Secretary of State for Trade. It is not easy to achieve the correct balance of interest between employers and employees as regards the ownership of inventions in order to ensure fairness to both. A great deal of discussion took place to achieve the consensus that was arrived at; so I appeal to noble Lords, when they are considering this part of the Bill, to bear in mind that to make two serious alterations to that balance might endanger the whole package.
Turning to the precise terms of the proposed Amendment, research work is, of course, a limited area and would be likely to exclude from the employer's ownership many inventions made, for instance, by development engineers. I imagine that this is the kind of point which the noble Lord, Lord Nelson of Stafford, has in mind. Also it has the effect of making the test of ownership of inventions much more rigid and less able to take account of all the circumstances

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of the employment of an employee who makes an invention. I will not claim perfection for the drafting, but it seems to me to be flexible and capable of dealing with the likely situations that may arise. With the greatest respect, I think it is better than that which is contained in the Amendment, which accordingly I fear I must resist.
Lord LYELL: Perhaps I may interject a few minor comments at this point. I agree with the noble and learned Lord who normally sits on the Woolsack and the noble Lord, Lord Lloyd of Kilgerran, that we are beginning to consider one of the more important and crucial areas of this very long Bill. Indeed, it is far longer than the Bill which is currently occupying the attention of the place at the other end of the corridor. The Amendment which we have before us at this stage seems to help inventors or particular individuals in two specific instances. Perhaps the Committee might also consider that any invention, if it is to be of any use or benefit to anyone, has to be further developed. It has to be produced, and also it has to be marketed and sold. The potential beneficiaries, if one may call them that, of this invention, concept or idea have to be made aware that the invention exists. We may have more to say about development, production and marketing in the next Amendment.
The protection of an individual inventor or, it may be, of a collection of individuals in a research team should include other individuals whose functions are merely ancillary, or are normally thought to be so. One possible example would be designers. I understand that normally they design a particular concept or idea and tend to design according to instructions which have arrived on their desks. However, I am given to understand that on numerous occasions designers can produce an improvement. This, too, might be classified, as we understand it, under Clause 36 as a separate invention and, indeed, could be patented as such.
The second point which we should like to raise at this early juncture, and which has been touched on by the noble and learned Lord who normally sits on the Woolsack—certainly he touched on it at Second Reading at col. 311 of the debate, and he has touched on it considerably this afternoon—is that Clauses 36
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to 40 have been arrived at as a result of the Working Party. We have heard that the relevant interests in the Bill which we have before us today were represented on that Working Party. It seems that a compromise position—I noticed that the noble and learned Lord did not choose to use that term when he was speaking of the Working Party at Second Reading, but I have decided that it would be reasonable to use it this afternoon—was reached.
Many of us on these Benches have our doubts as to how it is possible to be entirely fair to both employees and employers where there are complications and disputes as to ownership, particularly of some concept or invention which may be the result of work done by an individual in the course of his employment. Certainly we would not wish at this stage, or during the passage of the Bill, to upset what we consider to be the rather delicate arrangement which has been agreed, so we understand, between the members of the Working Party. We wonder whether it is wise to seek to gain further concessions. We wonder whether this Amendment is not seeking a further concession, and we look forward to hearing what the noble Lord, Lord Lloyd, has to say about it.
Lord LLOYD of KILGERRAN: I fully appreciate what the noble and learned Lord has said about this Amendment—that I am proposing to narrow the field in relation to paragraph (a). I am very grateful to the noble Lord, Lord Nelson of Stafford, who appreciated the great difficulty involved in being able to produce a clause which would simplify the position of the employer in those circumstances. I am sure that the noble Lord, Lord Nelson, would agree with me that there are a large number of disputes which have arisen in the past as between employers and employees, and that some attempt ought to be made to clarify the position of the employer. I am also grateful to the noble Lord, Lord Brown, for his 100 per cent, support of the words in my Amendment. Having heard what noble Lords have said, may I say that I shall reconsider the scope of this clause and come back to it on a subsequent occasion. In the meantime, I beg leave to withdrawn the Amendment.
Amendment, by leave, withdrawn.
4.53 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR had given Notice of his intention to move Amendment No. 174:
Page 29, line 3, leave out ("his special responsibilities") and insert ("the high level of his responsibilities (as for example in the case of a managing director, director of research and development or other person in charge of a significant part of the undertaking)").
The noble and learned Lord said: When we considered Clause 36(1)(b) as drafted at present, we felt that the phrase "special responsibilities" was not perhaps wholly clear. May I remind your Lordships of the provision of the paragraph, which is that an invention made by an employee should be taken to belong to his employer if—
"(b) the invention was made in the course of the duties of the employee and, at the time of making the invention, because of his special responsibilities, he had a special obligation to further the interests of the employer's undertaking."
It was because we felt that the words "special responsibility" were not very clear that we put down the Amendment that was tabled. It clarifies the position, but we now have had representations that the wording is too limited in its effect, because it refers to persons with a high level of responsibility and gives examples of that by reference to top management, as is indicated by the words "managing director", "director of research", and so on. That would leave an important grey area in the middle and senior management range out of the picture. On further consideration, we think that we should look again at the drafting of this subsection with a view to defining more clearly the category of invention which is intended to be covered by Clause 36(1)(b). In those circumstances, I do not move the Amendment.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 175:
Page 29, line 6, after ("shall") insert (", as between him and his employer,").
The noble and learned Lord said: I have the impression that we considered this Amendment when I spoke to Amendment No. 172. I beg to move.
On Question, Amendment agreed to.
On Question, Whether Clause 36, as amended, shall stand part of the Bill?
Lord LLOYD of KILGERRAN: As I indicated, this is a very important clause and I should like to have had the opportunity to speak to Amendment No. 174 if it had been moved by the noble and learned Lord. In view of the fact that he is proposing to reconsider the Amendment, perhaps I might say that I was proposing to support him as regards that Amendment, subject to one point. In the last line but one of the Amendment there is a reference to a:
"person in charge of a significant part of the undertaking".
The word "significant", it seems to me, may give rise to difficulties and there may be some better form of words to be used if, in his new draft, the noble and learned Lord proposes to use that phrase.
The LORD CHANCELLOR: I am
very grateful to the noble Lord. We shall bear in mind his pointer to another part of the proposed Amendment which needs thinking about again.
Lord BELSTEAD: May I refer to the same Amendment, because it was not moved, and ask whether the Government would consider not including special examples. I feel there is a difficulty here. The noble and learned Lord will have much more experience than I as to whether the inclusion of special examples in a Statute can be unnecessarily restricting to the courts. The noble and learned Lord may say to me that that is not the case, but I should like to put to him that several people were worried that several examples were put into the Government Amendment, which is perhaps a rather unusual way of proceeding when drafting a Bill.
I should like also to ask one question with regard to Clause 36. What would be the situation if an employee discovered an invention in breach of his contract of employment, such as through the unlawful use of his employer's facilities? May I quickly say that I may well be told that such a thing would practically never happen. I am sure that that is the case, but nevertheless, if it does, what would be the answer?
Lord CAWLEY: I feel that a list of examples can be very misleading, because the court tries to find out whether the office, say, in this case, is ejusdem generis with a series of other offices, and considerable argument is often caused as to

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whether or not the office concerned would be ejusdem generis.
The LORD CHANCELLOR: This is not an easy problem. Giving examples in legislation is now regarded as very fashionable and is commended by the Renton Committee Report. But it is only fair that I should say that your Lordships will have noticed that in discussing Clause 36(1)(a) I commended the generality of the description and rather fled from the suggested example which the noble Lord, Lord Lloyd of Kilgerran, indicated. We will have another look at this to see whether some general language can be effective to cover the kind of people we have in mind in Clause 36. It may well be that at the end of the day we shall not be able to improve on "special responsibilities". However, we will have another look at it.
All I can say to the noble Lord, Lord Belstead, is that the giving of examples is now something with which we shall become increasingly familiar. The noble Lord asked me a conundrum about what happens if an employee is unlawfully using his employer's facilities and—Eureka!—hits upon an important invention. I should like to think about that one. I would suspect that it becomes his employer's invention but whether, in those circumstances, he ought to enjoy any compensation under the provisions of this Bill is a point I should like to think about.
Lord NELSON of STAFFORD: May I say how much I welcome the remarks of the noble and learned Lord. To specify particular posts or responsibilities is extremely dangerous because they are not by any means the same in different circumstances. The responsibilities of "managing directors" and those of "directors of research" can vary. The titles have different meanings in different places. I very much welcome the fact that the noble and learned Lord is looking at this again and will bear these points in mind.
Clause 36, as amended, agreed to.
Clause 37 [Compensation of employee for certain inventions]:
The DEPUTY CHAIRMAN of COMMITTEES (The Earl of Listowel): Before I call Amendment No. 175A I
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should point out to the Committee that if this Amendment is agreed to I shall not be able to call Amendments Nos. 176 to 181 inclusive.
5 p.m.
Lord BROWN Lord BROWN moved Amendment No. 175A:
Page 29, line 8, leave out subsection (1).
The noble Lord said: Before I start speaking about this Amendment I should like to make quite clear just what I am talking about. One could roughly categorise employee inventors into three types: those who own the patents, those who own the patents but have licensed the inventions to their employers, and those who do not own the patents. The provisions in the Bill for giving proper treatment to the first two categories are in my view very sound indeed, so I am speaking about only the latter category of patents which, because of the nature of the employment of the employee, become the property of the employer. Clause 37(1) gives the right to such employees to claim compensation at a later date if they make a lot of money for the employer. Good as the intention is on the surface, I want to draw attention to the very grave problems to which this will give rise in the future.
In the first place, in British organisations which are set up to develop products or new means of manufacture—because they, too, can give rise to patents—it will create enormous jealousies and secrecy, because at present it is commonplace in those departments for a discussion to take place rather like this: "Whose name will go on this patent?" There is no objective means of determining who is the inventor because it has come out of the discussion and a lot of trials and tribulations over months, or even years, as to how to solve the problem. Nobody knows who the inventor is. No doubt in some laboratories it is a case of "Buggins's turn". This is a friendly arrangement because it does not matter so long as the department gets the credit and the firm's prosperity is increased by such an invention. However, if Clause 37(1) stands, it will matter a great deal in the future on every single occasion.
Lord LLOYD of KILGERRAN: If I may interrupt the noble Lord, did I understand him to say that it is the

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general practice in regard to the industries with which he is concerned that the industries do not know who the inventors are in relation to patent applications which are filed? The application is for the "true and first inventor", therefore I understood that searches had to be made as to who indeed is the inventor. I may have misunderstood the noble Lord.
Lord BROWN: The noble Lord has not misunderstood me one iota. The legal profession has always assumed it to be a matter of objective fact that a person's name appears—and I know very well that if one misquotes the name one can, under previous law, render the patent invalid, or so I have been told—but the fact of the matter is that, however the legal profession feels about it, this is the way it has to be done. The assumption behind the law as it stands is that one can objectively determine who the inventor is, and I am now telling the Committee that this is often not possible. It is the product of many minds. Unquestionably, and in my own personal experience, this goes on and I have discussed it on many occasions with other people. A patent comes out with a name or names on it and from then on it is assumed that they are the inventors, but the people concerned with the problem know very well that this is not so: it is indeterminate.
Lord LLOYD of KILGERRAN: I presume the noble Lord then fully realises that in those circumstances the patents can be attacked and rendered invalid. They are not in the name of the true and first inventor.
Lord BROWN: I should very much question whether an attack of that kind would succeed in the courts, because with the circumstances displayed it would become obvious that it was very much a hit and miss business to determine precisely who made the invention. I think this is the difference between the industrial point of view and the legal point of view. In industry we have to take account of what exists in these patents and fortunately for the legal profession they do not always have to go quite so deeply into it. This clause will put industry right into this mess. Following developments of enormous importance to British industry
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we are tending to lag on this and it puts a spanner in the works in the way I have described.
The other part of my argument is that to bring a patent through to a developed product, to "productionise" it, to make all the decisions to invest in the equipment to make it, to plan the marketing and to go ahead, is a long and costly process. All sorts of other people are engaged in this process. In the course of developing it alterations have to be made and ideas incorporated which are often as important as the original invention although they are not themselves patentable. All these people who have brought the invention to fruition are excluded from the right to claim proper compensation at a later date. If one looks at paragraphs (d) and (e) of Clause 38(3) one sees that the comptroller has to take into account the amount of skill and resources devoted to the exploitation of the patent but only from the point of view of determining the amount of compensation to the original patentee himself, not with the idea of giving the other people any compensation as well. So one gets the fortunate person whose name appears on the original application as the sole beneficiary of the work of many others involved in the application when the patent was first applied for and, still more, who helped to bring it to fruition.
The last part of my argument is this. Let us look at the problem it will give to the comptroller and possibly subsequently the Patents Court itself. In regard to the time taken to develop inventions, the period from the time of application to the grant of a patent is about 2½ years, according to this Bill; the time subsequently taken to develop it into a product of a saleable nature may be another two or three years; the time taken to "productionise" it will be another two or three years, and to create peak volume on the market, which is probably the situation which the original inventor will wish to claim, the time may add up to anything from seven to 10 years. A few of the people concerned will have left the company in the meantime and the patent comptroller will have to delve back seven, eight or nine years into the past in order to reach a conclusion. This will give rise to a large number of claims in the future. Believe me, every person employed as an inventor will have to keep his eye on this ball. The

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number of claims will be very great indeed. My final argument is that the people we are speaking about are employed to invent. Why should they be paid twice over? I cannot see at all the underlying logic of this part of the Bill. I beg to move.
Lord NELSON of STAFFORD: The noble Lord, Lord Brown, has touched on a number of facets of Clause 37 on which I feel grave concern and this might be an opportunity to comment further on some of the things he has said. I spoke at some length on this aspect of the Bill on Second Reading. The point which the noble Lord has made regarding the difficulty of defining who actually is the inventor is a very real problem. If the invention is going to belong to the employer it does not really matter; everybody pulls together and the patent is registered in the name of the firm. This is the atmosphere which all of us have to try to cultivate in industrial research, which is team work, and everybody pulls together to create in an invention an idea which will be to the benefit of the firm.
There is a great fear among many of us that this clause is going to create an atmosphere of secrecy between those participating in such a team, that they will be looking to their own interests rather than to the interests of the whole. The interchange between individuals which is the essence of ideas and inventions—"Have you tried this?", "Have you thought of that?", and so on—leading ultimately to success, will be very much stultified if people think that they have a personal interest in the question of where the idea came from. This is entirely against the atmosphere which we all try to create in industrial research today.
The implication also is that in some way the employee may be done out of something as a result of his work. That is a misconception. There are a few people who live by inventions—professional inventors—but in fact very few exist today. Most of this work is done as team work against an objective, and the vast majority of people working, certainly in industrial research, look for their reward out of the success achieved by their firm, the promotion which they will no doubt get as the result of their contribution to that work, or the enhancement of their professional prestige with their professional peers which
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will advance their career in their profession. Therefore, I must say I have much sympathy with the points which the noble Lord has put forward. The Amendment strikes at the heart of this clause; I well appreciate that, and that is why I speak to it at this moment.
I think also that the length of time involved is going to be very serious. Claims can be made many years after the invention was first made. I do not know how we are all going to keep records of who did what and when, if a claim can be put forward many years later, and how this is going to be done, either in the firm or in the Patent Office, or wherever these things are going to be lodged. I express very grave concern about the number of people involved in this. It is not patent law at all; it will be property law and every kind of contract law and everything else, as to who owns what. Therefore, I support the views that Lord Brown puts forward in his Amendment. I think we have the nub of the problem in what he has put forward.
Lord BROWN: I omitted to give the Committee a little information. I received a communication from ICI this morning. I will not take up time by reading it. There were three parts to it: one, a brief report from a manager of a research department of a division; secondly, a report from a section leader of a research department of another division; thirdly, a report on a group discussion of research and development staff of still another division. I can hand it to the noble and learned Lord if he would like to have it. The arguments put forward are very much in line with those I have put forward in moving this Amendment, and which the noble Lord, Lord Nelson, has put forward.
The LORD CHANCELLOR: I am bound to say that this Amendment strikes at a key provision in this part of the Bill relating to the rights of employee inventors. Of course, there are difficulties in the way of identifying inventors; there will be problems of identification. But, of course, if it is merely a problem of more than one person having been concerned in the invention, Clause 40(3) provides:
"In sections 36 to 39 above and this section references to the making of an invention by an employee are references to his making it alone or jointly with any other employee".

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It is fair that I should read the rest of the subsection:
"…but do not include references to his merely contributing advice or other assistance in the making of an invention by another employee".
At any rate, it deals with a situation where more than one employee is involved in the making of the invention.
What the clause does is to provide the employee who makes an invention belonging to his employer with the possibility of an award of compensation when the patent for the invention is of outstanding benefit to the employer. Normally employees who are employed to engage in inventive activity like research or development work will have no claim to compensation for their inventions, because they are no doubt being paid the rate for the job they are doing and this ought normally to be enough.
But exceptionally the clause contemplates an employed inventor who comes up with a "humdinger" of a winner, if those are suitable words to fall from the lips of a Lord Chancellor. In such cases the Working Party on Employed Inventors' Rights, to which I have referred, considered that it would be no more than fair in those exceptional circumstances to allow him a claim to compensation for the "bonanza" that he has earned for the employer. So we are not dealing here with hundreds of applications, with run-of-the-mill inventions which are patented by the thousand every year. We are dealing with the sort of invention which may revolutionise a company or perhaps even a whole industry. The Working Party took the view that in such exceptional cases there should be some recognition of the contribution which the inventor has made, and for this reason it was felt appropriate in those circumstances to allow the inventor to apply for compensation. I must invite noble Lords to consider this, if they disagree with what is proposed. I wonder what they think would be the feelings of an employee who by his remarkable invention brings this enormous outstanding benefit to his employer and gets no additional compensation or reward for it. He would, I should have thought, be entitled to be not exactly gruntled at the situation which has arisen.
Lord IRONSIDE: If I may interrupt the noble and learned Lord for one moment, would he not agree that very often it takes years to work out whether a particular invention has been of outstanding benefit to a firm and therefore this emphasises the truth of what the noble Lord, Lord Nelson of Stafford, has just said, that it would create difficulties in this area.
The LORD CHANCELLOR: I do not doubt that there will be difficulties, and the Secretary of State indeed will have power under Clause 112 of the Bill to prescribe a period within which claims must be made. I do not exclude the possibility that there will be difficulties. It will be difficult to decide what period of limitation to prescribe, whether it be too short or too long. But I invite noble Lords to ask themselves, if the difficulties can be surmounted in a given case, and we are dealing with an inventor, a researcher, who has made a remarkable discovery which may bring millions of pounds into the company, is it really to be said, "Oh, no, he does not deserve any compensation at all". I would think that to be a very hard-hearted and tight-fisted attitude from this normally most generous House.
I do, accordingly, take the view that, difficult though the situation may be, frail as human emotion may be, and jealousy might occasionally break in, it would be wrong to abandon what I regard as an important part of this improvement in the position of the employee-inventor, who indeed ought to be encouraged to invent. I am rather reminded of an occasion when there was a complaint in another place when Mr. Winston Churchill was Prime Minister, that Field Marshall Montgomery was claiming as his own the Articles of Surrender of the German Armies on Luneberg Heath; Mr. Churchill said,
"I think we ought to encourage our Field Marshals to secure the surrender of whole armies".
I think we ought to encourage our inventors to secure a "bonanza" in this way. I hope, therefore, we shall be able to proceed with this, although, naturally, we are very willing to see whether any greater precision in definition might be used.
5.20 p.m.
Lord WAKEFIELD of KENDAL: The noble and learned Lord the Lord Chancellor has throughout referred to the individual. My noble friend Lord Nelson of Stafford and the noble Lord, Lord Brown, have said again and again that so often these days it is team work that enables inventions to proceed. This is the difficulty. The noble and learned Lord the Lord Chancellor did not refer to the question of team work at all.
The LORD CHANCELLOR: With great respect, I drew attention to a specific provision in the Bill that an invention which is produced jointly with any other employee or employees is capable of being rewarded under this scheme.
Lord WAKEFIELD of KENDAL:
Although that is so, nevertheless is it not a fact that it is increasingly difficult to define that when so many take part in the development and evolution of an invention? That is the point that my noble friend Lord Nelson of Stafford emphasised. If we do what is suggested we should discourage—not encourage—team work. We would provide reasons for secrecy and things of that kind and, therefore, we should not progress. In this country we very much need team work in the development of inventions rather than simply individual effort.
The Earl of HALSBURY: I should like to say a few words in support of the view put forward by the noble and learned Lord the Lord Chancellor. During the Second Reading debate I drew attention to the difficulties raised by the noble Lords, Lord Brown, Lord Nelson of Stafford, Lord Wakefield of Kendal and other noble Lords. I am sorry that I missed the opening remarks made by the noble Lord, Lord Brown, but as he was speaking to the same effect as I did on Second Reading, I do not think that I missed the sense of his remarks. I have been hovering ever since about which side of the fence to come down on. I think that I agree with the view expressed by the noble and learned Lord the Lord Chancellor.
I should like to tell noble Lords the story of the television. Baird of course invented everything that was easy and did not matter. The key to the whole
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invention was the camera. It is often argued whether it was Britain or America that first invented the camera. In fact, neither was first because the two people who produced the first cameras were both Russian exiles—Zworykin in America working for RCA and Schoenberg in Britain working for EMI. When Sir Joseph Lockwood became chairman of EMI he told me that he was absolutely shocked at how little had been done for Schoenberg on whose original work a great industry was built. I appreciate the difficulties, but I think that we should confront them and not funk them. We should be liberal in our attitude and not just reflect the establishment—whether it is the industrial establishment, the Government establishment or any other establishment making life easy for itself on bureaucratic lines.
We should recognise that original inventors are people on whom our society has depended. There are very few of them. We should lay open to them some kind of machinery so that they can make a claim on it in the event that justice is not done. I quite agree with the noble Lord, Lord Nelson of Stafford, that on most occasions people are rewarded by promotion, advancement in salary or whatever. But suppose that they are not. Have they no recourse? I believe that Clause 37(1) should be left in the Bill and therefore I am against the Amendment.
Viscount ECCLES: I take the opposite view and support the noble Lord, Lord Brown. I know only a little about this subject and that relates to the man made fibre industry. In that industry there is no question but that it is teamwork all the time that produces the modifications in the fibres which have such enormous worldwide results. There is, perhaps, only one word in this clause that saves the whole thing and that is the word "substantial". I do not believe that anyone will be able to prove whether an invention is of substantial benefit to the employer until so long afterwards——
The LORD CHANCELLOR:"Outstanding".
Viscount ECCLES: I stand corrected: the word is "outstanding". It means that after years one has to prove that an

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outstanding benefit has accrued to the firm, by which time the team of course will be split up and there will be all kinds of difficulties. I understand that this has been included as a compromise. I know some of the industrial members of the working party and their view is that this will certainly lead to one dispute after another as to the degree of responsibility between one, two, three, four or fifty people who contributed to the particular invention. They said, "Never mind. If this is something that the Government want for their Working Party, the clause is now so badly drawn, do not amend it; let it go through and nothing much will happen. "That is a very unsatisfactory position. Parliament should not legislate to put into effect a compromise that has been reached by a Working Party where the drafting is such—I think I said this on Second Reading—that it is a feast for lawyers. That is all the clause is. It does not reflect the normal industrial situations which the noble Lord, Lord Brown, described very well to your Lordships.
My noble friend Lord Halsbury is perfectly right that once in a while an inventor—for example, Mr. Schoenberg or whoever it may be—will not be sufficiently rewarded. That is not what the clause is for. This compromise is to allow all sorts of people to stake claims—and they will do so whether or not the noble and learned Lord shakes his head. If the clause becomes law that is what will happen and it is a pity. We have had a good example in the devolution Statement of how the Government are willing to consult with other parties. I hope that between now and the Report stage they will consult a little further so that we can clear up this at present rather muddle-some matter.
The LORD CHANCELLOR: Is the noble Viscount against the whole idea because, if so, there is not much point in discussing it and the Committee will have to take a view? I could not quite follow whether the noble Viscount was suggesting that there might be some variation in the words, "of outstanding benefit", or some other formula.
Viscount ECCLES: I am no more against the whole idea than I am against public lending right, but no one has yet
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discovered the right way to put an idea into practice so that matters will not become worse rather than better. If I knew a way—and I am not a lawyer so I do not—in which a case, such as that of the television camera, could be treated in a fairer manner I should be glad to see that in the law. These matters depend on the decency of the employer and the generosity of those who make a large profit out of this or that saying, "I will share this with those who helped me on my way." I doubt whether one can legislate for that kind of generosity.
Lord BELSTEAD: Although I do not think that my opinions on this matter are of any great interest, perhaps it is right that the Opposition Front Bench should tell the Government which way they intend to vote if there is a Division. My noble friend Lord Eccles, as he so often does, has put his finger on the matter. He may not be against the idea in principle but he feels that the problem will arise over what will happen to the Bill in practice. I conclude that the difficulty does not lie so much in Clause 37(1)(a), to which the noble Lord, Lord Brown, drew our attention, but that the nigger in the woodpile comes later on in Clause 38 where we have this incredibly complicated machinery for seeing what the outstanding benefit will be from an employee's invention. I hesitate to tangle with the noble and learned Lord, but I should not have thought that Clause 112 will help very much. If, as people who have knowledge of industry have been saying in their remarks on this Amendment, it will take a very long time before one knows what the benefit will be, it is not going to help very much, because there happens to be a clause which says that a time will be prescribed to work out the answer.
I very much take my cue, although I do not reach the same conclusion, from my noble friend Lord Nelson who, with the noble Lord, Lord Brown, and other noble Lords who really know this subject, has pointed out that this matter is pitted with difficulties. The noble Lord, Lord Brown, put them very clearly when he was moving his Amendment. I could only wish that the voluntary schemes to which Banks drew attention with great approbation would proliferate in the future. My main worry is that under Clauses 36, 37, 38 and 39 we shall see a diminution of voluntary schemes in industry.

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I do not reach quite the same conclusion as my noble friend Lord Nelson on this. I have a feeling that, with his experience, he is saying that because it is so pitted with difficulties he would reach the same conclusion as the noble Lord, Lord Brown. My conclusion is that which was put forward by my noble friend Lord Lyell earlier on, that this was part of a package which was arrived at by a Working Party. I think perhaps the Working Party had reason for the conclusion they reached. I would guess that with their collective experience the Working Party bore in mind that an inventor who has got ambition and drive will very often, it is quite true, gain his reward from promotion and a better salary scale, and in the normal way within his business. But I would think also that the Working Party were ready to recognise the position of the pure researcher; the man who perhaps has no worldly ambition and who is devoted to his work, and whose discovery may bring great rewards not only to his employer but also, very likely, to other employees, licensees and retailers.
I therefore hope that it may be possible for the Committee to leave this subsection as it is drafted, despite the holes which the noble Lord, Lord Brown, and other noble Lords have been able to blow into it. But perhaps we may be able to give a little more consideration to this incredibly complicated machinery which we are going to come to when we come to Clause 38. For my own part, and for my noble friends' part, we would not find ourselves in the same Lobby as the noble Lord, Lord Brown, even though we accept so much of what he says. We would accept the advice which the noble and learned Lord the Lord Chancellor has given to the Committee on this Amendment.
5.33 p.m.
Lord LLOYD of KILGERRAN: May I rise briefly in support of what the noble and learned Lord has said in his speech, and what the noble Earl, Lord Halsbury, said. We have heard the expression, "the normal industrial position", coming from many noble Lords, and particularly from the noble Viscount, Lord Eccles, and the noble Lord, Lord Nelson of Stafford. What is the normal industrial situation at the present time? It is that there are
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many technical people employed in firms who have made at least £1 million for the benefit of their company. It is quite easy in these days for a rather obscure technical assistant, lowly paid, to make an invention which is of great benefit to a particular company. As the noble and learned Lord indicated, and it is within my own experience, there are vast numbers of men in the employ of industry who are disgruntled about their situation. It is all very well to say that they receive promotion from industry, and that they get their rewards in that way; but that does not apply to vast masses of men who have made a great contribution to the business of a firm by their patented invention.
I cannot believe that the patent departments of the great firms with which the noble Lord, Lord Nelson of Stafford, is associated can be in such difficulties that they cannot trace who invented some particular invention. But the argument produced by the noble Lord, Lord Brown, and the noble Lord, Lord Nelson, was largely based on the fact that this would probably break up research teams; that employees would be set against each other; that secrecy and hostility would be encouraged among members of research teams. I do not think that that is the present position in industry.
When this matter was being considered recently by Mr. Duckworth, who is the managing director of the National Research and Development Corporation, commonly known as NRDC, he was delivering the eleventh Graham lecture and was considering the position which had arisen in Germany in regard to the methods employed for rewards to employees. This is what he said about experience arising in Germany:
"Although this factor"—
the factor was that there was the possibility of breaking up the teams of research workers—
"is probably a very minor one, it does at least not seem to have hindered their prowess."
So from the experience in Germany there has not been this disaster about which we have heard from the noble Lords, Lord Brown and Lord Nelson.
Then there is the factor that it is difficult, if not impossible, to decide which of many employees is in fact the inventor.

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May I remind your Lordships that ever since the beginning of the century this country has been a signatory to an international treaty which makes it incumbent upon a patent to have placed upon it the name of the inventor. I must assume that when a name of an inventor is put on a patent it is the name of the person concerned with that invention.
Therefore, I should like to support the speech made by the noble and learned Lord in this matter, and to thank him for his sympathy, because it seems to me that if we can get into the Statute a procedure for rewarding employee inventors, then that would be a great advance in industrial relations in this country, and will help to encourage invention in the terms used by the Prime Minister recently; it will encourage invention in the best possible way.
Lord BROWN: In this House we are used to gracefully acknowledging the help which we get from our noble and learned friends. I think on this occasion our noble and learned friends ought to listen very carefully to what industrial people are saying. The noble Lord, Lord Lloyd, has commented on my support of my Amendment. He has exaggerated what I have said in order to dispose of it. I never spoke of disaster; or breaking up research teams. I spoke about jealousies, difficulties in getting the right name on the patents; the long-term nature of the development which would lead to outstanding benefits; the number of cases that come before the comptroller, and the secrecy which would arise. These are real things. Those who have had some familiarity with this problem in industry would support me in saying that this would happen.
The noble and learned Lord the Lord Chancellor talked of "humdinger" inventions. This is the sort of public image of what goes on in the development laboratories—break-throughs. There are occasional break-throughs, but they are very limited in number. The normal thing is a process of intellectual and physical development of things that goes on over a long period of time. There are very few "humdingers" which can be traced to one man's inventive genius. They occasionally arise.
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It is also argued that these people need to be encouraged. The people who work in these establishments where inventions are likely to arise are generally working in the area of industry which is most attractive to intelligent people. Do you think they need encouragement to do their job? I do not. I think they know that they are there to invent. As the noble Lord, Lord Nelson, said, if they are highly successful they will get promotion. They may very well get ex gratia payments over something very outstanding; but they do not need encouragement. That is their job, and they know it. They are scientists, or they are engineers; that is their job, and in my opinion the gratification of having discovered something very important, in their minds will exceed the later compensation which they might get, which will be regarded as a murky business because they know that much of what they have done is due to the help of other people who have been assisting them in these developments. Therefore, this idea that we are dealing with "humdingers", or winners, or break-throughs, is quite false in the generality of things.
When one comes to the term "outstanding benefit", there are lots of people who get their name on the patent who are going to assume that it has brought outstanding benefit to their employer, whether or not the courts will think this too. In any event, what is an outstanding benefit? Is it £5,000, £5 million or £500 million? Most people who have their names to a patent will need a very small assumed amount—because it can only be assumed—to cause them to take a case to the patent comptroller. And why cater for particular people who might make an outstanding contribution to their employer? It is the job of every senior person in industry to try to produce ideas of outstanding benefit to the employer in terms of production, management, industrial relations, marketing and everything else. If these jobs are well done they are all of outstanding benefit; so why single out those who happen to get what is called a patent? I think the Government are riding into great trouble over this.
I have been cogitating what to do about the Amendment. I was disappointed in the reaction of the noble Lord, Lord Belstead, and I do not think that tinkering with the next clause will help the situation.

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I suppose the Amendment would be lost rather than gained if I were to press it. Having expressed disappointment at the reaction of the Government, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.42 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 176:
Page 29, line 8, after ("to") insert ("the court or").
The noble and learned Lord said: It may be for the convenience of the Committee to deal at the same time with Amendments Nos. 180, 182 and 184. Clause 37 at present requires an employee applying for compensation to make his application to the comptroller; the application would go to the court only on appeal or if the comptroller had declined jurisdiction under subsection (5). On reflection, there seems to the Government to be no good reason why the applicant should not, if he so wishes, go direct to the court for the determination of his application. Indeed, this was specifically agreed by the Working Party which discussed these questions last year. I think there is no danger that an impecunious employee will be forced by his employer into expensive court proceedings because invariably it will be the employee who will be the applicant or plaintiff, as the case may be, and the choice will therefore be his, and this Amendment with the others I mentioned will give the court the necessary jurisdiction.
The DEPUTY CHAIRMAN of COMMITTEES (Lord Nugent of Guildford): Before the debate develops, I should explain that these Amendments interlock with some other Amendments on the Marshalled List; if Amendment No. 182 is agreed to, I shall not be able to call No. 181, and if No. 184 is agreed to, I shall not be able to call No. 185.
On Question, Amendment agreed to.
5.45 p.m.
Lord Lloyd of KILGERRAN Lord Lloyd of KILGERRAN moved Amendment No. 177:
Page 29, line 9, after ("period") insert ("(a)").
The noble Lord said: With the leave of the Committee, I will speak also to Amendments Nos. 181 and 185; 177 and
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181 are purely formal and the substantive point I wish to develop is contained in No. 185. The purpose of this provision is to set out a procedure for awarding compensation to employee inventors, it sets out a number of parameters which have to be taken into account in assessing the award and it goes on to say that the comptroller of patents should decide on any award to be made. I submit that all the papers in such a claim should be put to the comptroller and that he should be able to see whether they are in order; but the amount of the award should not be determined by him but by a separate tribunal.
When the papers come to the comptroller he can, as is the practice with many tribunals these days, act in a conciliatory way and try to arrive at an agreement about the dispute and help the parties to the dispute to resolve their difficulties. Having done that, he should then, if he is unable to resolve any dispute arising out of a claim for compensation, direct that the application for compensation be referred to a tribunal, and in my Amendment I suggest the form of that tribunal; it should have a qualified chairman, perhaps a chartered patent agent with knowledge of patent affairs, and other persons of experience in the commercial exploitation of patents.
As I have reminded your Lordships on more than one occasion, I had the privilege of being a member of the Royal Commission on Awards to Inventors which was set up after the war. It was established under the chairmanship of the late noble and learned Lord, Lord Cohen, for the purpose of deciding what compensation should be paid to persons and firms whose inventions had been used during the war. Some of them were patented inventions and the Commission decided the validity of patents and the infringement of patents in a broad and robust way. It also had to deal with unpatented inventions which had been of service of the country during the war. The Commission was composed of businessmen, scientists and lawyers and we were able to come to robust decisions having regard to all the factors concerned; that is, what kind of award, if any, should be given to applicants making claims.
In my view, a tribunal would be better able—I say this with great respect to the

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comptroller—to assess an award in circumstances of this kind because the members of the tribunal would be associated as industrialists with those difficult matters to which noble Lords have referred. My Amendment would enable the comptroller to refer a claim for award to a tribunal and not to deal with it himself. There would in my view be no appeal from the award of that tribunal, in the same way that after the war awards made by the Royal Commission did not give a right of appeal. It seems to me that acceptance of the Amendment would simplify the administrative work of the comptroller and would prove of considerable value to industry. Many of the difficulties which have been referred to in the discussion of earlier Amendments to Clauses 36 and 37 would disappear because we should have a tribunal the members of which would be fully familiar with the difficult technical problems that arise in patent disputes.
The LORD CHANCELLOR: I note the interesting suggestion put forward by the noble Lord, Lord Lloyd of Kilgerran. This suggestion was considered by the Working Party on Employees' Inventions to which we have referred more than once already; namely, whether it would be appropriate for claims for compensation to be determined by a specially set up statutory tribunal. When the question was considered, there was a great deal of support for the idea of tripartite tribunals being set up at factory level by agreement between the employer and employee. Indeed, I and the Government believe that such arrangements ought to be encouraged. I was glad to note that on Second Reading the noble Lord, Lord Ironside, lent his support to that idea. Of course that is one of the purposes of Clause 37(3) of the Bill.
However, a new statutory tribunal is, I feel, a very different question and conception. After all, the Bill already provides that an employee may apply to the comptroller for determination of a compensation question, and the Amendment that we have just agreed will also give direct jurisdiction to the court if the employee should prefer to go directly to the court. Those proposals were the recommendations of the Working Party, so we already have several courses open to an employee who wishes to apply for compensation. I doubt very much whether
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it is in the interests of the employee to set up yet another forum before which the claim can be brought. In addition, I venture to think that it would not be easy to find persons suitably qualified to constitute this tribunal and who yet had no possible interest in the decisions.
I know that what has actuated this proposal or may be influencing the approach of the noble Lord on this matter is the problem of expense. He may well think that procedure before such a tribunal might be less costly. I know that it will not be believed by any noble Lord present who is not a lawyer that lawyers are not concerned about the high cost of litigation—or, I should say, are concerned about the high cost of litigation. That was an unfortunate slip of the tongue! However, we anticipate that the procedures open to the employee to go to the comptroller, for instance, will not be expensive. It is not thought that it will cost anything more than a couple of hundred pounds at the most for that procedure to be followed, so I do not think that the cost element is very crucial in this situation.
I believe that, while we ought to encourage ad hoc and local arrangements between employer and employee in company or factory to sort these things out by agreement between themselves on a reference to a triumvirate, to set up a central tribunal with statutory powers would be an unnecessary elaboration and would be creating yet another mechanism that would have to be manned, provided and paid for. We already have an enormous proliferation of tribunals up and down the country and I am not persuaded that setting up a statutory tribunal in regard to this matter would be justified by the needs of the situation.
5.54 p.m.
Lord DAVIES of LEEK: I want to get this clear. Let us take a part of industry that is not like mechanical industry—for instance, the field of biochemistry. You get the production of a drug in a laboratory. I know from experience—I ought to declare a small interest in this—that it might take 10 or 20 scientists to produce drug A, which would have gone through the hands of a number of juniors who had just got their first degree and of many other people. DNA is an example of this. Consequently it is often very

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difficult in such fields as the pharmaceutical and the cosmetic industries to come to a conclusion as to where the weight of the invention lies. But it is not so difficult to reach the conclusion that without A, B, C and D working in line with X who originated the idea, there would have been nothing at all. Consequently, I come down on the side of some ad hoc organisation which knows the industry that it is dealing with. Whoever would be coming to a conclusion on this must know the ramifications of molecular roulette. Am I right, therefore, in saying that some sort of organisation like that would be in existence that would cover the point of the noble Lord, Lord Lloyd of Kilgerran? Have I made my point clear?
The LORD CHANCELLOR: I think that it may be that what I was suggesting—a tripartite tribunal set up at factory level—would enlist the kind of expertise in a specialised field to which my noble friend is referring. But a centralised statutory tribunal of three men to adjudicate over the whole range of the field seems to me to present certain difficulties.
Lord LLOYD of KILGERRAN: May I ask the noble and learned Lord a question about expense? He was quite right in thinking that one reason for putting forward the Amendment was to limit the expense. He referred to the fact that, under the procedure as set out in the Bill, £200 would be the kind of expense that would be incurred. But may I ask the noble and learned Lord whether Clause 91 gives powers for an appeal from the comptroller's decision? If there is an appeal, it will go to the High Court of Chancery and the expense will be very considerable. If the noble and learned Lord feels that it is difficult to set up a statutory committee that is always in being, I would have in mind an ad hoc committee; the comptroller could call upon people from a list of experienced men to deal with these things and could pay them on a daily basis. This would not be a tribunal requiring a big staff. A great deal of the preliminary work would have been undertaken by the staff of the Comptroller General. May I therefore ask the noble and learned Lord, in relation to expense, whether he is saying that the cost to the employee would be of the order of £200 and that there should be no appeal and no going
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to the Chancery Court? Alternatively, would he consider an ad hoc committee to deal with this matter?
The LORD CHANCELLOR: Perhaps I can turn the question back to the noble Lord, Lord Lloyd of Kilgerran. Is he suggesting that the statutory tribunal should be a final tribunal with no right of appeal from it? If the answer to that is, "Oh there must be a right of appeal", presumably that would go to a court, so we are enmeshed in the expenses of appellate procedures either way. It would be surprising if the noble Lord were to say that this statutory tribunal should have the power to give a final decision.
Lord LLOYD of KILGERRAN: I was contemplating a tribunal made up of ad hoc persons from which there was no appeal to the court. I thought that I had indicated in support of my Amendment that the position of the tribunal would be similar to that of the Royal Commission on Awards to Inventors. There is no appeal to the courts from the decisions of that body in making their awards. I had in mind the setting up of an ad hoc tribunal from which there was no appeal.
The LORD CHANCELLOR: I am sorry to trouble the noble Lord with direct questions, but what does he mean by an "ad hoc tribunal"? What I thought he contemplated was a statutory tribunal whose composition, powers and terms of reference would have to be defined by Statute. I do not quite know what the noble Lord means by an ad hoc tribunal. Does he mean the kind of tribunal that was contemplated in the discussions in the Working Party between employers and trade unions; that is, that within the ambit of what is provided for by collective agreement there should be tribunals set up ad hoc for the purposes of a particular claim? Is that what the noble Lord has in mind? If so, there is no great difference between us. But I do not quite understand his identifying a statutory tribunal as something that he calls an ad hoc tribunal.
Lord LLOYD of KILGERRAN: I apologise if I did not make myself perfectly clear. I realise that there are complications in regard to setting up tribunals. But I had in mind that once the Comptroller General was seized of the claim

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he could refer it to a group of individuals to decide, and it is that group that I have referred to as a tribunal. It would not be a tribunal with presidents, chairmen, and with a lot of staff and permanently appointed individuals receiving salaries. It could be a group of men, who I would call a tribunal, who would be experienced in the industrial field with which the claim was concerned, and they would decide the matter upon that basis. I am very sorry if I have not made my position quite clear, but I am sure that the noble and learned Lord, if he is sympathetic to the approach I am making, will deal with the administrative matters and provide a group of persons who are able to deal with this matter as cheaply as possible.
The LORD CHANCELLOR: I think that it was my fault in failing to understand what the noble Lord had said. I would hope that the comptroller's decision would be sufficient in a given case. I do not find attractive at the moment the proposal that the comptroller should transfer decision of a problem to a tribunal. I do not find that very practical, and I do not think it really necessary. But I am willing to look at this question, and perhaps we can come back to it again when I have understood the proposition a little more clearly myself.
Lord LLOYD of KILGERRAN: I am very grateful to the noble and learned Lord. No doubt he knows that in this connection I have the support at the present time of the Senate of the Inns of Court, the Law Society, and the Bar, who have specifically suggested that there should be some attempt made to solve this dispute at a tribunal which is similar to the Royal Commission on Awards to Inventors. Those bodies have in fact referred specific-ally to the jurisdiction of the Royal Commission on Awards to Inventors as being appropriate in these circumstances. In view of the fact that the noble and learned Lord has said that he will look at this question again, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
The DEPUTY CHAIRMAN of COMMITTEES: Notice has been given of a manuscript Amendment by the noble Lord, Lord Cawley. That comes here at No. 178.
Lord CAWLEY Lord CAWLEY moved as a manuscript Amendment, Amendment No. 178:
Page 29, leave out line 12.
The noble Lord said: We are concerned here with a minor point of principle. On Second Reading I pointed out that there was what might be described as a nonsense in subsection (1) of Clause 37 and it certainly required amendment. As the Government have not put down an Amendment, I have put one down. I do not know whether the Government consider that this is a case where the draftsman could merely take a pen and put a line through line 12 on page 29, so that it would not appear in the next print of the amended Bill. But in my submission he cannot do that, because at first sight it looks as though the sentence has been repeated. However, it has not been repeated. The second part of the sentence includes the words "among other things", whereas the first part does not include those words. So this is an ambiguity which I submit a draftsman cannot correct and we, as the Committee, ought to pass this Amendment, if it is what the Government intend, in order to resolve the ambiguity. I beg to move.
The LORD CHANCELLOR: I am grateful to the noble Lord for moving this proposal as an Amendment. Clearly the line should be left out, and while it is not a complete repetition it is, in substance, a repetition. We had anticipated that it would be done as a printing correction, since the text of the Bill as it was handed in was right, and for once the printers have made a mistake. But I am quite happy to accept the Amendment, and to agree that the matter should be dealt with formally by way of an Amendment.
On Question, Amendment agreed to.
6.5 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 179:
Page 29, line 14, leave out ("outstanding").
The noble Lord said: I should like to remind the Committee that the claim can be considered by the comptroller general from an employee if his invention has been, according to the wording of the Bill:
"…of outstanding benefit to the employer…"
The noble and learned Lord, in referring to this clause, paraphrased—if that is the

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correct term—the word, "outstanding", and he substituted a word which he felt at first rather anxious about, as it might not be appropriate for a noble and learned Lord to utter in this Chamber. He referred to it as a "humdinger" of an invention.
I think that most of us would find it difficult to decide what is meant by an "outstanding" invention. Therefore, I rise at this stage only in a probing capacity to ask the noble and learned Lord whether he is satisfied that, in all the circumstances, "outstanding" is the right word. Perhaps there are some distinguished industrialists here with great experience of these matters who, if they are interested, might in the course of the debate be able to suggest another word instead of "outstanding"——
Lord DAVIES of LEEK: If I may interupt the noble Lord, I can immediately give him an example of an outstanding invention. He will see it every night when he drives his car and looks at the cats eyes. They are outstanding enough, and they were an invention.
Lord LLOYD of KILGERRAN: I am very much obliged to the noble Lord for pointing out that invention. I say that because we are making some progress in that I have encouraged at least one noble Lord to make some observations in regard to this matter. I beg to move.
Lord LYELL: If I heard the noble Lord, Lord Lloyd of Kilgerran, correctly, he referred to an outstanding invention, but I do not see that mentioned in the Amendment which he is moving. What I see is a reference to "outstanding benefit to the employer". I hope that I am not being too much of a barrack-room lawyer as we are surrounded here by noble and learned lawyers; but the point which the noble Lord made about an outstanding invention—the noble Lord, Lord Davies of Leek, spoke of cats eyes which to me are an outstanding invention—is not in Clause 37(1) of the Bill, and I should be grateful for some enlightenment.
Lord LLOYD of KILGERRAN: I am grateful to the noble Lord, Lord Lyell. Of course the clause says that the invention must be of "outstanding benefit", and I am sorry about the confusion here. My Amendment is put forward so that I
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can ask the noble and learned Lord whether another word can be substituted here, rather than meet with difficulties which would arise from trying to construe what is meant by "outstanding benefit" to the company.
The LORD CHANCELLOR: I appreciate that this is a probing Amendment because the effect of it as it stands is that everyone who has given some benefit to the employer by his invention would be entitled to a claim. We would then indeed have a lawyers' picnic, which of course I would greatly regret. But the phrase, "outstanding benefit to the employer" is perhaps not more difficult than many other phrases which learned judges have to interpret in the course of their peregrinations and day's work. I can think of no better term to express the exceptional nature of the invention which we are considering here, an invention which is of "outstanding benefit to the employer". There is a later provision as to how the amount of the compensation should be determined. There are certain guidelines present to indicate how the amount of the compensation should be decided. But this is the best word that we have been able to discover to meet the exceptional situation that this remedy and this provision has in mind.
Lord BELSTEAD: The noble Lord, Lord Lloyd, is a distinguished lawyer at the Patent Bar. I am not a lawyer, but I have always understood that in the last 27 years the law has been interpreting the meaning of "an exceptional case" whenever some-one has applied for an extension of a patent for up to a period of 10 years; and I have no doubt that the noble Lord, Lord Lloyd, has made impassioned speeches on that subject and found that under Section 23 of the 1949 Act the judge concerned has been able to find an answer. All I would beg of the Government is that the noble and learned Lord would not keep on referring us to Section 38. I think I have been a loyal supporter of the Government from this side of the Committee with regard to these clauses so far, but I must say that Section 38 really is like a bad dream, and I would much rather not bring that into any argument until we get to the clause concerned.
The Earl of HALSBURY: While the noble Lord, Lord Lloyd of Kilgerran, was

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talking about the difficulties of "outstanding", I was scribbling down some synonyms—"outstanding", "exemplary", "exceptional", "super-excellent" and even "humdinger-like". Would the courts find one more difficult to construe than the other? They seem to be very much synonymous.
The Lord CHANCELLOR: One's grandchildren would probably use the word "super", but I do not think that would be a very good term of art in an Act of Parliament.
Lord NELSON of STAFFORD: I wish I could rise to the challenge of the noble Lord, Lord Lloyd, and produce an answer to his question, but that, I think, has been given most clearly by the words which have been used in this debate. I am, however, very glad that this Amendment is only a probing Amendment, because if we were to proceed to leave this word out I think it would negative much of the discussion we had on subsection (1) of this clause earlier on. In the meantime, I as an industrialist will give some further thought to see whether we can produce a better word.
Lord LLOYD of KILGERRAN: I am very much obliged to those noble Lords who have made contributions to this matter. In the circumstances, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 180:
Page 29, line 16, after ("employer") insert ("the court or").
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 182:
Page 29, line 19, after ("to") insert ("the court or").
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 183:
Page 29, line 25, leave out ("commencement of this Act") and insert ("appointed day").
The noble and learned Lord said: This is a minor drafting Amendment to preserve
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consistency in the Bill. In all the other places in the Bill the phrase, "appointed day" is used. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 184:
Page 29, line 37, at beginning insert ("the court or").
On Question, Amendment agreed to.
6.15 p.m.
Lord NELSON of STAFFORD Lord NELSON of STAFFORD moved Amendment No. 185A:
Page 29, line 41, at end insert ("to which a Trade Union of which the employee is a member and the employer or a body of which the employer is a member are parties").
The noble Lord said: The purpose of this Amendment is to make it quite clear that this subsection does not apply to those who are not parties to the collective agreements to which reference is made. It is rather unusual, I think, to have a collective agreement introduced into a highly technical Bill of this nature, and this presents a number of difficulties. In the first place, collective agreements are themselves largely concerned with conditions of employment. I am not aware of a collective agreement which involves the property rights of its members. However, that is not really quite my point. My point is that, as it reads, this applies not only to the members of the parties to the collective agreement but also to non-members; in other words, those who are not parties to the collective agreement.
I think this is an important Amendment, and I hope it will receive the careful consideration of the Government. There is a large number of people engaged in inventions, in research and in all the activities we have talked about who are professional men and are probably not members of a trade union. Your Lord-ships will be aware that many of the professional institutions representing professional men are searching their con-sciences at the present time as to whether they can reconcile their professional codes with the aims and objects of some of the trade unions they are being asked to join. But I think that to be involved in an obligation to give away, under this clause, their property rights in their inventions under a collective agreement to which they are not parties is not what is intended.

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This Amendment makes it quite clear that that is not so, and I beg to move.
The LORD CHANCELLOR: I confess to a feeling of sympathy with the views expressed by the noble Lord in moving this Amendment, but perhaps he may be reassured by the fact that Clause 37(3), which we are discussing, ousts an employee's right to apply to the court or the comptroller for an award of compensation only if the relevant collective agreement is in respect of
"employees of the same description as that employee".
So it is not intended that an agreement between an employer and a trade union in respect of inventions made by one category of employee should affect the position of other categories of employees. The subsection provides that the right of an employee inventor to seek compensation from his employer in respect of the patent for the invention shall not apply where a collective agreement provides for payment of compensation by the employer, and the proposed Amendment seeks to confine the operation of the subsection to cases where the collective agreement is one between a trade union and employer, or a body to which he belongs, and the employee is a member of the trade union in question. In the view of the Government, the first point is met by the fact that in Clause 37(3) the collective agreement must be one within the meaning of the Trade Union and Labour Relations Act 1974; that is, an agreement made by one or more trade unions with one or more employers or employers' associations.
As to the other restriction proposed by the Amendment—that the subsection should apply only where the employee is a member of a trade union which is a party to the collective agreement, which I think is the substantial point which the noble Lord is emphasising—we believe it is one which will weaken the intention of the provision, which is that disputes about compensation in respect of inventions should so far as possible be dealt with by normal negotiating machinery of industrial relations rather than by litigation itself. If it can be done on that basis, within a factory or a company in that way, that, we think, would be a more desirable state of affairs, if it can be accomplished, than recourse to litigation. That is the
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motivation, at any rate, of the idea embodied in Clause 37(3), and perhaps, in the light of what I have said, the noble Lord would like to consider this again, although I acknowledge that there are problems in regard to this matter.
6.20 p.m.
Lord BELSTEAD: May I say a word in support of my noble friend. A point which has not arisen in the discussion so far is that it may be that a collective agreement between a trade union and the management of a company for compensation for an employee's invention may not give the inventor such a good financial return as he would get if he went to the compensation scheme in Clause 47. I do not know what noble Lords think about that point. I think that that would be an acceptable state of affairs provided the inventor is a member of the union which had signed and negotiated the agreement; but I think it would appear to be unfair—and no doubt my noble friend Lord Nelson had this in mind—if the inventor is forced to accept less compensation than he felt he would get under the statutory scheme because a trade union of which he was not a member had negotiated terms which, in his case, were less advantageous. That is one worry which arises on this Amendment.
The noble and learned Lord rightly referred us to the fact that this subsection refers only to inventors who are
"of the same description as that invention to employees of the same description as that employee."
I accept that this means probably that the inventor, if a collective agreement has been made by the trade union, will very likely be a member of the union. But he may not be. One remembers the obvious example given in the Banks Report when Banks was discussing the whole question of to whom inventions should belong; and Banks gave the example of a man who sweeps the floor of the factory and, through observation, manages to discover an invention. Obviously this will be that man's particular reward.
One has only to go to a place of employment to find many people doing manual jobs who are either in different unions or, unless it is a closed shop, some of them are in unions and some are not.

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Although I accept that the noble and learned Lord is encouraging us to look at the text and is saying that the text of the Bill will make this work well, I am saying that unless you have a closed shop situation then my noble friend's Amendment is concerned with something which will occur from time to time.
Finally, may I say this. The noble and learned Lord at the end of his remarks asked us to accept that it would be better if there could be a basis of agreement at plant level because there had been a collective agreement made between the trade union concerned and the management, rather than to have to resort to the Statute and to litigation. I should like to accept that as being good advice. On the face of it, it sounds exceedingly good advice. But the fact is that when we come to look at the Statute, as at present drafted, we find that one thing it will do will be to knock on the head the voluntary agreement to which my noble friend Lord Nelson will refer in connection with his next Amendment, No. 185B.
I do not know the view of the Government regarding the next Amendment, which would allow voluntary agreements to exist side by side with the statutory agreements. If the Government are going to accept my noble friend's next Amendment, I should be happy to advise my noble friend that he ought to accept the Government advice on this Amendment; but if the Government are going to resist the next Amendment, I think they would be unreasonable at least not to take away and to look carefully at my noble friend's present Amendment, and come back with a more deeply considered answer at the next stage of the Bill.
The LORD CHANCELLOR: I hope that I indicated that I have not expressed myself dogmatically about this Amendment. I am bound to say in answer to the invitation which I have just had, that I shall be expressing the view that the next Amendment should not be accepted; so that I do not want to create a false impression at this time. I will look at this Amendment again carefully before the Report stage. I cannot say more than that. I will look at it; but difficult problems are raised in this context.
Lord DOUGLAS of BARLOCH: I am puzzled by this subsection. It appears to mean that an employee who did not happen to be a member of a trade union would not get any right at all to apply for compensation if his invention was of out-standing benefit to his employer. Surely that is not the intention. That is what it seems to me to mean.
Lord NELSON of STAFFORD: I am grateful to the noble and learned Lord for his explanation on this point. I must confess I am still somewhat puzzled by the exact interpretation of this. I think it terribly important that we are all quite clear exactly what is intended here. It is a complicated clause and we could pursue it further to try to get to the nub of the definition. But in view of the offer by the noble and learned Lord to examine this point again and to look at the implications, probably I should not take further time on it this afternoon. But I think we ought to bear this in mind and ensure that before this Bill goes too far we are all quite clear as to exactly what is implied by this subsection. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.28 p.m.
Lord NELSON of STAFFORD Lord NELSON of STAFFORD moved Amendment No. 185B:
Page 30, line 1, leave out subsection (4) and insert—
"(4) Subsections (1) and (2) above shall not apply to the invention of an employee where an agreement between him and his employer provides for the payment of compensation in respect of that invention provided that before entering into such agreement the employer shall have notified the employee of his right to apply to the Comptroller for an award of compensation under subsection (1) or subsection (2) above as the case may be.".
The noble Lord said: This Amendment is of rather a similar nature. It refers to an exception, as did subsection (3) that we have just looked at. This is a situation where the employee's interests may be worse off under the present situation. It could be that he already has an agreement of some sort with the employer which may be more to his advantage. We heard earlier about teams working together. It may be that the members of the team, in order to avoid disputes among themselves, may all decide to

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enter into an agreement with their employer as to what their respective positions would be in this regard.
This Amendment endeavours to make it clear that where an agreement is entered into as between the employee and employer, it is not overruled by the sub-section in the Bill. I think that this would make it clearer as to where the employee and employer stood, and it seems to me to be within the spirit of the intention of this clause. I should have thought that where a contract had been entered into as between an employer and employee in the full knowledge of his rights under this Bill—and this must be made clear—that contract should hold and should not be overruled. This Amendment takes care of that situation. I beg to move.
Lord NORTHFIELD: May I say that I, too, am a little puzzled by this. It relates to later clauses, also. If the noble Lord's Amendment is accepted, the danger is that this will become standard form in all agreements between employers and employees, and they will take steps in the contracts of employment to safe-guard themselves that they are never open to claims of this kind. It will become a sort of regulation that in employing people for research purposes you get them first to sign a piece of paper to say that they will forfeit their rights under the whole of the clause. Is that not a danger of the noble Lord's Amendment?
On the other hand, I see his point that it will be rather hard on an employer if he finds, having made an agreement with his employee, that the employee could later say: "This invention has made more than I expected and I must now go to the comptroller for extra compensation". Then the employee would find the price of the product, which he had fixed early on in the absence of knowledge that this claim was going to be made, might be trans-formed by the sudden claim on him—perhaps a successful one—for very high extra compensation. I am left halfway between the two. I see the disadvantages of the noble Lord's Amendment; equally, I see that some protection ought to be given to the employer in the situation in which he might find himself, of employees deliberately overriding some agreement they had already made. I intervene only to say to my noble friend that I hope he
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will not turn down this Amendment out of hand, but will see that there might be a need to find a middle way through this minefield.
Lord LYELL: If I may intervene at this stage to add our support to this Amendment, so ably moved by my noble friend Lord Nelson of Stafford, there are four points I should like to raise. First, is it not reasonable that the law of contract should not be simply overturned, particularly in view of the climate of labour relations in industry at present? We believe that climate is at least hopeful. We would not seek to use this Amendment if it became part of the Bill to seek to protect a bad or oppressive employer.
The second point is that as subsection (4) stands in the Bill at present, it seems to give the employee two major bites at the cherry—I go further and say even a mouthful of the cherry—as subsection (2) of the clause is still to apply. The employee has the option, as the noble Lord, Lord Northfield, pointed out; and the employee may at a later stage decide to exercise his option under subsection (2). I understood that was the case. It seems that any agreement which may be signed by the employee freely and without duress when he engages in his employment with the firm can, under the clause as at present drafted, be simply overturned at the express wish of the employee alone. Would not the noble and learned Lord agree that the Amendment gives the employee an option of relying on a good employer to reward him fairly and, let us remember, swiftly? Earlier on we were discussing the fact that the compensation which might come to be awarded under sub-sections (1) or (2) tends to take consider-able time to germinate. I am told it is anything up to 10 years.
Thirdly, at least the Amendment will allow the employer and. more importantly, other members of a research team to know that no individual member of that team can seize on a major part of the financial reward which may become due to the team and, we hope, to the firm as a whole as a result of their researches and successful experiments. That is a very important part of the Amendment. My noble friend Lord Nelson, and others who have spoken in the Committee, have stressed the importance of teamwork in

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research and development and, indeed, in experimentation.
Lastly, does not the subsection, as at present drafted, encourage a member of a research team or group to wait until an invention with which he or she might have been involved at an earlier stage achieves a measure of commercial success and then to put in a claim to the comptroller under subsection (2)? The noble Lord, Lord Northfield, touched on that. This would concern other members of the research team who may have left the firm, or indeed an aggrieved person who may be an ex-employee at that stage. An ex-employee could go against his ex-employer for suitable compensation. That is why we believe that this Amendment has considerable merit. For that reason, I should like to hear what the noble and learned Lord has to say.
Lord DAVIES of LEEK: Let us weave our way through these semantics and see whether we can make it clear. To me the logic of the semantics means this. Let us start at the bottom of the phrase before we go to the top:
"…in respect of that invention provided that before entering into such agreement the employer shall have notified the employee of his right to apply to the comptroller for an award of compensation under subsection (1) or subsection (2) above as the case may be".
Now I go to the beginning. It says that subsections (1) and (2) above shall not apply to the invention of an employee once he has signed an agreement—I am altering the words a little—provided the employer has told the employee, "Now look out! You are entitled to the pro-visions in subsections (1) and (2), but if you make a straight agreement with me that will no longer be so". I do not see any two bites of the cherry. Once the lawyers get at it you will not see any bite of the cherry at all!
6.36 p.m.
The Lord CHANCELLOR: It is extra-ordinary how these primitive urges emerge whenever the innocent body of men known as lawyers comes upon the scene. The advantage of allowing an employer and employee to reach a final settlement over the question of compensation at an early date was considered by the Working Party on Employee Inventors' Rights. But it was
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finally rejected by both sides of the Working Party because to take that course would cut an employee off from further compensation when a patent proved, in the event, to be of much greater value to his employer than originally seemed likely.
The whole question of whether or not contracting out of a right to compensation should be allowed is a point which has frequently been discussed in connection with award schemes for employee inventors. I can see that there are arguments both ways on it; but I think that the Bill is right on this matter. It is very difficult for an employer, for his party, before he has started exploiting an invention, or even at an early stage in its exploitation, to guess now much benefit he will get from it. The same difficulty arises in an even more acute form for the employee himself, who will not have the employer's commercial expertise. The life of a patent will in future be 20 years, and it is asking a good deal of an employer or employee to prophesy so far ahead.
Therefore, although what is proposed in the Amendment in favour of finality has great advantages in reducing the risks of litigation, et cetera, the Government nevertheless believe that it should always be possible for an employee to make a further application for compensation if, in the circumstances which have occurred, he sees that his employer has achieved outstanding benefit and substantial profit from the invention, and he believes that it is fair that he should share in this profit. Therefore there is a danger that acceptance of the Amendment could lead to substantial injustice. What is included and provided for in the Bill has been agreed by both sides of industry within the Working Party, and therefore the Government would prefer to leave the provision of the clause in this respect unaltered.
Lord BELSTEAD: Before my noble friend ends this discussion, it is a pity that the noble and learned Lord—in his kindly way of course—has said that he thinks that this Amendment cannot be accepted by the Government. I was surprised that no noble Lord has referred to the Banks Report. In paragraph 465 it said:
"While employee inventors should be given every encouragement and recognition, we doubt whether in the context of British industrial relations this is best done by the imposition of

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statutory obligations on the employer. A number of voluntary schemes already exist and these appear to operate well".
In essence, all that my noble friend Lord Nelson is asking for is that voluntary schemes which were approved of so strongly by the Banks Committee should be allowed to operate alongside the statutory scheme. My noble friend is in no way trying to overturn the statutory scheme. The noble Lord, Lord Northfield, referred to the danger of a man signing away his rights; but surely, the employer notifies the employee of his statutory right under this Bill—and my only criticism of my noble friend's Amendment is that I should have thought the notification ought to be in writing, but possibly that is subsumed in the word "notification". Also, I think that if this Amendment were passed there ought to be a period of time written into the Bill during which the employee should be allowed to consider his position. If those things are done, all my noble friend is saying is: "Don't stop that employee from availing himself of a company scheme if he prefers to do so."
The noble and learned Lord quite rightly drew our attention to the fact that the Working Party had taken the view that the danger was this. If there was a big reward to come in compensation, by acceptance of this Amendment an employee might find that he has done less well than he otherwise would have done. There are noble Lords here who could probably tell me that there are firms which have schemes that guarantee payment for patent applications, and that they then have a guarantee of a payment for grant afterwards. I believe one of the big oil companies has such a scheme, but the same cannot possibly be said of subsection (1) of Clause 37 where the employee may qualify for no compensation at all, and then only after several years have elapsed an outstanding benefit has been proved. Only a minor proportion of inventions for which a complete specification is filed each year are actually commercially used. If your Lordships would care to look at subsection (2)(c) of Clause 37, you will see that that, again, is an example of an occasion where a considerable time will elapse before an inventor will see anything coming out of the Bill, and he is going to be in some uncertainty. All I am saying, therefore, is that some employees might prefer,
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having looked at the employer's voluntary scheme, to say that they would rather have certainty than the uncertainty which is inherent in the statutory scheme. I agree at once that the bad employer could try to take advantage of this Amendment and that the new employee might be persuaded to sign away a good deal of his right. But what is the evidence? No. That contention is not supported by one tittle or jot of evidence. If one looks at the Banks Committee Report one finds that it was definite on this point. We were given no specific example of any inequitable treatment of any employee inventor—that is paragraph 465. What I am saying is that my noble friend is not following Banks to its conclusion.
This Amendment will do nothing to upset the statutory scheme. It would give the employee a degree of choice and, incidentally, would reduce the need for litigation. I am bound to say that if one looks forward to Clause 38, many voluntary schemes I have heard of might well continue to be preferable for employees. For many inventors, a bird in the hand might be worth several in the thicket through which they will have to force their way if they are actually to see anything coming to them out of the compensation provisions of Clause 37. Therefore, provided the notification of the provisions of the statutory scheme by the employer to the employee is absolutely clear, and is made in writing, and with a period of time given during which the employee can consider his position, there is every reason for this Amendment.
There is one reason more. Without this Amendment I can visualise that the voluntary award schemes, which the Banks Committee thought so right in British industry, are going to wither away and die. That would be much to be regretted and I believe that that reason, if no other, would appear to be a very persuasive argument for this Amendment. I realise that the noble and learned Lord, after what he has said, cannot now get up and say that he will accept the Amendment. He does not believe in the arguments that I have put forward in support of my noble friend. But I would urge that the arguments in support of this Amendment should be considered very seriously. It is such a pity these days, when we have so many statutory schemes

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and provisions for statutory boards and all the rest of it, that if there is already some sort of voluntary system, that system should not be allowed to continue to run by the side of the others. For that reason, I should be very grateful if the noble and learned Lord could at least say that he will communicate with my noble friend Lord Nelson before the next stage of the Bill.
The LORD CHANCELLOR: This has been considered, I am afraid, and considered very carefully. When the noble Lord says that the employee will not suffer from this, of course he will lose the statutory right to compensation. It is true that it would be the result of an agreement to do so, but the agreement may have been made at a point in time when he was not in a position to know the extent of the benefit accruing from an invention, and a later discovery that he had accepted an amount which in the circumstances proved comparatively trivial would create a great sense of injustice. I am afraid I cannot give any undertakings on this at all, and I should be misleading the Committee if I were to say so.
Lord BELSTEAD: That is perfectly fair. The noble and learned Lord is quite right to say that at this stage so that we know where we stand. But might I ask him whether he would accept the last contention I made, which is that if an Amendment of this sort is not accepted it is inevitable that the voluntary schemes in industry will wither away and die?
The LORD CHANCELLOR: I do not think so at all. I do not think this conflicts with voluntary schemes. This is a fall-back position for the employee who finds himself, having entered into an agreement, not knowing all the relevant facts at the time. I do not think it is contradictory and, indeed, I would hope that the voluntary agreements would prove so satisfactory that this kind of situation would not often arise. I was thinking of that earlier in the discussion we had on agreements that are made under collective bargaining between employees and trade unionists: they are quite tough at pushing their side of the bargain. So I do not think it conflicts with the value of voluntary agreements at all, but it is a useful fall-back protection.
Lord NELSON of STAFFORD: I am very grateful to the noble Lords who have participated in the discussion on this Amendment. I am particularly grateful to my noble friend Lord Belstead for his support of what I have put forward. I must say I was disappointed to hear that the noble and learned Lord is not able to look at this again. I would have hoped he might have done so, because I do not think anything that has been said has altered my view on this.
The noble Lord, Lord Northfield, raised a point which was very much in our minds in drafting this Amendment; namely, to steer a middle course. It has been mentioned that it could be used as a means of allowing employers to get out of their obligations to employees under the legislation, but that is not the intention at all. One could say that you could enter into an agreement with your employee that he would claim no compensation, but it says there quite clearly
"provides for the payment of compensation".
Therefore, it is not intended in that way at all. We have heard during the course of the discussions today of the length of time involved in many of these inventions before they come to fruition, and of the length of time it takes to deter-mine their true value. Meanwhile, people need money, as time goes on, if money is accruing to them, and it may be very welcome to an employee to have some monetary reward built into his agreement which would be of value to him now rather than in 15 or 20 years' time, or whatever it may be, before compensation is determined under the terms of this Bill.
Equally, there is the question of the number of people participating. A system like this, whereby a group can enter into an arrangement with an employer, could overcome that problem and might be a very welcome way of meeting the problem which has been touched upon on a number of occasions. I should have thought that there was considerable benefit to the employee in this, and that is my purpose in putting forward the Amendment.
I wonder whether I could ask the noble and learned Lord to look at this again, and see whether all these factors have been

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taken into account. I rather feel that this matter has been approached from the point of view that the employee must be protected all the time. That is not the purpose of this Amendment; its purpose is to give more advantage and more flexibility. If we proceed on the basis of the present clause, the employee does not know where he is or what will happen. Anything that he does can be overruled, and anything that the employer does can be overruled. Therefore, there is no basis for the voluntary schemes which have been mentioned, because they do not mean anything, and under the terms of this clause they can all be overruled. I think that the amended clause makes the position much clearer, and I do not think it would be beyond the wit of our legal friends, who have been referred to in our discussions, to draw up a kind of agreement which provides that, if the advantages go beyond a certain point, then either the case will be reopened or the compensation can be related to the additional advantage which has accrued. That seems an easy and simple thing to do. So I beg the noble and learned Lord to have a look at this again, and satisfy himself that there is not something of merit in this Amendment.
The LORD CHANCELLOR: I have said that I am afraid I cannot give any undertakings about this, but naturally I will read the report of this debate.
Lord NELSON of STAFFORD: I am sorry that the noble and learned Lord cannot give an undertaking, but I hope that he will be sympathetic to the points which have been put forward. We will obviously be looking at this again at a later stage, and maybe by that time he will have come to a different conclusion—I hope so. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.53 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 186:
Page 30, line 7, leave out from ("it") to end and insert—
"(6) In this section "the prescribed period" in relation to proceedings before the court means the period prescribed by rules of court."
The noble and learned Lord said: The Committee has agreed Amendments which will give the court, as well as the comptroller, jurisdiction to hear applications by employees under Clause 37 and this Amendment is consequential on those changes. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 187:
Page 30, line 7, at end insert—
"(7) References in this section to an invention belonging to an employer or employee are references to it so belonging as between the employer and the employee."
The noble and learned Lord said: This Amendment is consequential on Amendment No. 172 to Clause 36. I beg to move.
On Question, Amendment agreed to.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 188:
Page 30, line 7, at end insert—
"(6) In any application or proceedings under this section no costs shall be awarded against the employee."
The noble Lord said: The clauses that we have been considering set up a procedure whereby an employee inventor can make an application for compensation arising out of the use of his invention. It would, therefore, be grossly unjust to an employee if that procedure was so expensive that it was likely to frighten him off from making such an application.
As your Lordships have heard from time to time during discussions on this Bill, patent disputes can be extremely expensive. Litigation of all kinds is expensive, but patent litigation is probably the most expensive. Therefore, it is with that in view that I have made the suggestion that, at least, the expense to the employee applicant for compensation could be reduced if,
"In any application or proceedings under this section no costs shall be awarded against the employee."
There are other tribunals where no costs have been awarded because a claim has been made. Therefore, I hope that the noble and learned Lord will be sympathetic to my desire to reduce the costs to an employee of these proceedings, by making

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it mandatory that in no application or proceedings shall costs be awarded against an employee applicant. I beg to move.
The LORD CHANCELLOR: I earlier indicated that I share the noble Lord's anxiety that employees who are not well-off should not be deterred by the high cost of litigation, from seeking compensation in respect of an invention which they have made. But it is the case that the applicant under Clause 37, which we are considering, will invariably be an employee and he can go to the comptroller for his remedy. In proceedings before the comptroller, costs are awarded on a very moderate scale and the risk of having to pay such costs if he loses should not act as a bar, or an excessive disincentive, to an employee who has a legitimate claim. Nevertheless, it will be sufficient to deter employees who bring unmeritorious claims against their employer. One has to keep a balance here, and I am afraid that it is necessary to retain the modest sanction that a costs order will provide to prevent the comptroller from being flooded by claims without merit.
Lord LLOYD of KILGERRAN: I must express my deep disappointment that the noble and learned Lord has taken that view. It must be remembered that an employee who makes a claim has had a patent awarded to him. In many cases, he will be in the course of employment while making that application, and I should have thought that the fact that he was bringing a claim against his employer was, in itself, a deterrent. Of course, if he has left the employment of the employer, that is another matter. It is all very well to say that the costs awarded by the comptroller are low. They are low compared with the costs that may be awarded in the High Court, but they are nevertheless substantial and, with great respect, I should have thought that, as a matter of natural justice, when an applicant considers that his invention is of out-standing benefit to the company and that fact is disputed, the applicant should be able to make an application without the sanction of costs being awarded against him.
Under the Bill as drafted, it is possible for an appeal to arise from the comptroller to the Patents Court. There may not be
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many appeals, but when there is a conflict between an employee and an employer, and the employee is dissatisfied with the award of the comptroller, he should not be deterred from going to the court because of the sanction of costs. Therefore, I should like to make a further plea to the noble and learned Lord to reconsider this question. It is a matter of natural justice that an employee should not have this Sword of Damocles over his head, in respect of a claim of this kind.
Lord CAWLEY: I hope that in this case the court will not be encouraged to award costs to follow the event, because that would be disastrous. Just because an employee fails to get compensation, he should not automatically have costs awarded against him. I do not know what view the court will take, but that should be done only if a claim is completely unmeritorious.
The LORD CHANCELLOR: That is the language that I used, and I used it advisedly.
Lord LLOYD of KILGERRAN: I must again express my disappointment at the attitude of the noble and learned Lord. But this is a matter which we shall consider in the light of the discussion, and we may come back to it again at a later stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 37, as amended, agreed to.
Lord WELLS-PESTELL: Your Lord-ships may consider this an appropriate time to consider further business of the House. That being so, I move that this House do now resume.
Moved accordingly and, on Question, Motion agreed to.
House resumed.

RENT ACT 1974
7 p.m.
Baroness YOUNG Baroness YOUNG rose to ask Her Majesty's Government whether they intend to legislate to amend the Rent Act 1974. The noble Baroness said: My Lords, not so long ago I was asked to speak at a

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meeting. One of the questions that arose was whether I could name any one thing that, had I the power to do so, I should like to carry out in the field of the environment. I answered without a moment's hesitation: to do something about he housing situation. It is very much in that spirit that I offer today a debate on this Unstarred Question.
In the last two years I have already asked two Unstarred Questions on housing. In each case my intention was to see whether there was any way out of the difficulties created by legislation and the shortage of accommodation in the private rented sector. My first Unstarred Question concerned the working of the Rent Acts. The second one concerned the development of the North Wiltshire district council housing scheme which, of course, is an attempt to build a bridge between those private individuals who have houses to let and the local authority. I have been prompted to put down this third Unstarred Question on the private rented sector because of the publication of the Government's Consultation Document A Review of the Rent Acts. May I say at once that I was delighted to receive it and that I am most grateful to the noble Baroness, Lady Birk, for immediately sending a copy to me.
It is my intention this evening to see whether all-Party agreement can be reached on one relatively narrow part of the housing problem, that of private rented accommodation, and in particular the private furnished sector. I do this quite deliberately, not because I think that the problems of council housing, home ownership, subsidies, rebates, allowances or mortgages are unimportant; nor, indeed, because privately rented un-furnished accommodation does not present us with innumerable problems; nor because I have forgotten about the acute difficulties and tragedies of homelessness and squatting. These are all matters to which I shall return on another occasion. However, in the time available for an Unstarred Question I think that it is most useful to explore how best we can improve the housing situation in one area only; namely, furnished rented accommodation.
It is, I think, one of the great uses of your Lordships' House that we can raise matters which are themselves the subject
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of great Party political controversy in another place—and, indeed, sometimes in this place, but in a much calmer atmosphere. It is my personal belief that unless there is all-Party agreement the present tragedies in housing will continue for a very long time, and that so far as the private rented sector is concerned it will certainly get worse.
I said that I welcome the Consultation Document. I welcome it first because I think it means that the Government now recognise that there is a need for the private rented sector. I refer to paragraph 13 on page 5, particularly the part which reads:
"There are also various groups who need ready access to accommodation at short notice and who at present may find it difficult to rent from a council or to buy. They include mobile workers and their families, the young, the newly married and those suffering from family break-up".
very seldom do I go back to re-read what I have said—I suppose with befitting modesty, in that I might be obliged to eat my words! However, when I introduced my first Unstarred Question on 23rd January 1975 I did in fact mention the people who would be affected by the 1974 Act, and I now quote:
"But many people, particularly the young, whether married or single, need rented accommodation. The young married couple need it because they cannot afford to buy. Often young people, whether married or single, need rented accommodation only temporarily because of the nature of their work, for, after all, young people are the most mobile. Students want ' digs' for a time in their university town".—[Official Report, 23/1/75; col. 249.]
I think that there is a noticeable similarity in the wording of these two statements. I quote them only to show that I hope there is unanimity of agreement on the need for private rented accommodation, at any rate for certain groups of people who will inevitably find it very difficult to get council housing and who simply will not be able to afford to buy.
I suspect, indeed, that the difficulty in finding accommodation is adding to the difficulties of getting a job, and so contributing to unemployment. Further, since the last debate we now know that the fastest growing groups of households are those of one and two persons, for whom, of course, so much private accommodation is ideally suitable. I hope that we are agreed on this point. Although some people may believe that council housing

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is the answer to everybody's accommodation, I find it extremely difficult to believe that any local authority would give priority to a single person over a family and would, in any event, be able to house at very short notice, perhaps at a week's or a fortnight's notice, either a person or an individual. When the noble Baroness replies, it would be very helpful if she could give us information about the numbers of people affected.
I have no doubt at all that most home-less families want permanent accommodation in a council house. Nearly always they are going to get a vastly better bargain in a council house than in private accommodation. A council house, if it is new, will carry a subsidy of about £1,300 per annum in the first year, whereas if the family goes into private accommodation it is likely to be much less good and, in many instances, much less suitable. We know from Government statistics that there are approximately 6,600 families living in local authority homeless accommodation, and that a further 26,000 families applied for accommodation but were not found it by local authorities.
It is a little difficult to gather from the figures whether the numbers are increasing or decreasing. The collection of information has now been switched from the Department of Health and Social Security to the Department of the Environment and a different basis is being used. I quote the figures simply to show that we have a problem. What, however, the figures do not show are the numbers of the hidden homeless—that is, those people who are looking for accommodation but who have not applied to a local authority and about whom we know nothing. We shall know something about this problem when, in a fortnight's time, we debate the Motion initiated by the right reverend Prelate the Bishop of London who, I think, will be speaking about homeless young people coming to London and looking for accommodation. However, they are just the kind of people who will look for furnished accommodation and for whom we ought to make some kind of provision.
On the other side of the equation we know very little about supply because, so far as I can see, we have had no up-to-date figures since the 1971 Census. I hope very much that in the Consultation
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Document the questions on basic security are designed to find out, among other things, what is happening to the supply in the private rented sector. The fact is that almost everyone who is concerned with accommodation believes that accommodation is being kept empty and also that accommodation is being let to foreigners, not simply because people do not understand the Rent Acts—many people do not understand the Rent Acts—but because, if you let your accommodation to foreigners, you can be almost certain that they will go home and that you will then regain possession of your property.
I will quote two true stories from my personal experience. During the last local election campaign when I was canvassing in a block of flats I met a woman who said to me, "Yes, I was very fortunate to get this flat; you see, I carry a French pass-port". The second story concerns a friend of mine who lets a flat in her house. She lives in the top part of the house and she lets the ground floor. She said, "Of course I always get a good let and I never take anyone but foreigners and they stay for two or three years". Those are just two instances, without searching at all, which have come my way; two lots of accommodation which could be avail-able to the English but are let to foreigners. One has only to look at the advertisements in the newspapers to see that this has become quite an extensive practice.
Then we know that there are all kinds of "dodges" to try to get round the Rent Acts, whether by giving a very simple meal, by letting the flat on licence or whatever it may be. I have seen different estimates of the amount of accommodation that has been lost, but there are two figures given in an article which appeared in the magazine Chartered Surveyor for February 1977. It said that on the coming into force of the 1974 Rent Act the number of advertisements for furnished accommodation to let appearing in the Evening Standard dropped by 75 per cent, and it can be estimated that up to as many as 600,000 dwellings of one sort or another have been lost. I cannot say how accurate those figures are, but if there is any accuracy in them at all it amounts to a very depressing fact. For the fact remains that before the 1974 Rent Act, although the private rented sector as a whole was declining, the

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furnished private sector was increasing and one suspects now, because of these figures, that it too is declining. It is difficult to see how such a situation can possibly be of long-term benefit to the nation. I can see at once that it is of immediate benefit to those tenants who have security, but for those who are looking for accommodation the future is indeed bleak.
The Consultation Document is concerned with two major questions of letting—one of security and one of rent. I should like to say something about each, but I will preface my remarks on security by saying that I do not propose that those who have security now should have it taken away from them. That would be cruel and wrong, so I am looking for constructive, middle ground, based on the Consultation Document, that will not in fact take away from those who now enjoy security. I hope the Government also believe there is a middle way because in paragraph 4 of the Consultation Document the statement appears:
"The Government are prepared to consider new ideas or reconsider previously rejected proposals on all aspects of the Acts with the exception that the general principle of security of tenure for the tenant in his home is to be maintained."
In fact, if we turn to page 6, we see that objective (c) says:
"…to promote the efficient use of housing, particularly to meet needs not otherwise adequately catered for (for instance lettings to the young, single and mobile) and to encourage the use of property which might be available for letting for limited periods only."
It is difficult to see that the two statements are exactly the same and therefore I quote them because I believe there may be some middle ground between us and the Government on this matter. Surely objective (c) must be to encourage people to let under-used property. I believe the Government have already given encouragement to local authorities, to encourage local authority tenants to take in lodgers where that is suitable and I believe objective (c) on page 6 is designed to encourage the private individual to let under-used property or rooms in his own house.
Following upon that, I should like to make three suggestions. I should like to return to the question of the resident landlord. I think there is a distinction between the large and the small landlord
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and in the case of the small landlord, whom I call the "resident landlord", it might be possible to take his lettings out of the Rent Acts altogether. It is of course perfectly true that under the 1974 Act you can let a room in your own house and regain possession; but after the end of the first letting the tenant has security of tenure on a second fixed term letting. Even in the first case the problem arises that, where-as the Act says that the landlord can regain possession of part of his own house, there can be cases of considerable difficulty in regaining possession.
Indeed, we need only look at paragraph 13 on page 6 of the second part of the Consultation Document to see that:
"The Department have received many complaints about the delays and costs incurred in recovering possession. These complaints come particularly from resident landlords"
et cetera. The fact is that in most cases the system works well, but if a room is let to a tenant and for one reason or another it is not a success and the tenant decides that he or she will not leave, the landlord is within his rights to regain possession; but it can take a very long time and can also be expensive. It can present the whole of the household with most frightful trouble because you have someone in your own home who is thoroughly dissatisfied—a dissatisfied tenant with whom you do not get on. I believe that a lot more people would be encouraged to let if they felt there were no complexities; if they felt that they could retain possession. If a lot more people were encouraged to let it would of course be much easier for those who wanted to go into property because there would be much more property available.
Not so long ago I introduced in this House a debate on the retired, and among the many points I made was the point that there are thousands of elderly people in this country—after all nearly one in four is a pensioner—who have houses which are far too large for them and who would let if they were not frightened. At the same time there are a lot of people looking for accommodation. I can foresee the noble Lord, Lord Janner, telling me that it is all laid down in the Rent Acts and that the landlords have nothing to fear and it is all very easy. Of course he is a lawyer, so perhaps it is easier for him; but it is not very easy for a lot of people and in the meantime it creates great difficulties.
I would say to the noble Baroness, Lady Birk, that I am not asking for a new principle but rather to build on the principle that is already in the 1974 Act and to consider whether it would not be in the interests of the groups of people that the Consultation Document wants to help, for this group of people to be taken right out of the Rent Acts altogether.
Then, once again, I should like to suggest the idea of short-hold lettings for new tenancies. This is where a tenancy is being created for the very first time, so therefore there is no question of evicting anybody from anything. It is somebody who decides that they would like to let. I should like to base it on the Bill that was introduced in another place in June 1975 by my honourable friend Sir Brandon Rhys Williams. He proposed that for un-furnished lettings (but it could equally well apply to furnished lettings) there should be a system of short-hold tenure for up to one or five years which would be an agreed contract between the landlord and the tenant, with the understanding that the landlord could regain possession at the end of the contract. This would bring in new accommodation, not touching any-thing which is already let.
Next, I should like to make one suggestion in regard to paragraph 7 on the proposals about introducing other cases under Part II, Schedule 3, to the Rent Act 1968—the full security—on page 3 of the second part of the document. I notice that the Department has already been asked whether there are other cases that could be brought in and I wondered whether they had considered the case of Servicemen. There are a number of Servicemen who are buying houses, who are sent abroad, who have to move to another part of the country and who find it is very difficult to let, often because the fair rent does not cover the mortgage; therefore, they have to sell. They find that when they have moved to another part of the country they have to start buying again; it makes the whole thing very difficult. I do not necessarily expect an answer this evening, but it might be something the noble Baroness will consider worth looking at, because there are a number of people who fall into this category.
Now, I should like to turn to the question of rent, which I shall leave
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largely to others to comment upon. I read with great interest the table at the end of the Consultation Document. If I have understood it correctly, the percentage increase in fair rents over the period since 1966, when registered rents were first introduced, is in fact less than the percentage increase in rents for council housing, and considerably less than the increased costs of repairs and decorations and so on. It seems to me that under these circumstances fair rents are in fact, as a proportion, falling behind council rents, and are falling very seriously behind the cost of upkeep and repair.
Not unnaturally, the second thing which prevents anyone from letting is that the return, the amount of rent, is now out of alignment. I should like to suggest that, at any rate in a period of great inflation, there ought to be an annual review of rents. Very few people, I think, except owner-occupiers, know how very expensive it is to have repairs done. It is impossible for a great many landlords to have repairs done. As a consequence of all this, first, the tenant suffers, and, secondly, the country suffers because a lot of property is going to deteriorate, and this is surely not something we want to see. I suggest an annual review of rents which really takes account of inflation, because unless we have that we shall have as much deteriorating property on the one side as we have improved property on the other. We should always bear in mind that rent allowances are available for private tenants so that those who cannot afford to pay can be helped. So we are not asking for something which would be grossly unfair.
My Lords, in conclusion, I hope we may look at this short debate as the start of a dialogue. I know of too many hard cases myself, particularly of the young looking for housing, to feel in any way complacent. I would be happy to discuss further with the noble Baroness, Lady Birk, any of the matters that I have raised, or others that I could raise; the time is too short this evening. I hope that she and her colleagues will find this debate of value, just as I hope that we shall be able to see some progress in this matter.
7.24 p.m.
The Earl of SELKIRK: My Lords, I, too, welcome this Yellow Paper. I should declare an interest in that I rent a house

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and I have two maisonettes in that house let off, one of which may or may not be subject in some form to the 1974 Act. I am also President of the Building Societies' Association, and although I do not speak at all for them today I may express the view that I hope the time will soon come when political differences on the manner in which houses are made available will cease to be valid or accepted and that we shall return much more to finding what people want as housing. It is true that young people, I believe to the extent of some 90 per cent., would like to own their own houses. I am afraid they certainly will not reach that percentage for a very long time indeed.
If I may depart from the sweet reasonableness of Lady Young and talk in more general terms, I think that this paper has the germs of a great change of mind which could be of very vital importance indeed. If I may take it in quite general terms, our problem is that we have something like 20 million houses, but they are old, they are in the wrong places, and in many cases they are empty. This is the problem, particularly when we were told in the last year that there were something like 50,000 homeless people. We will not get over that problem entirely by building. We are running in the order of perhaps 300,000 houses a year, perhaps a little more, but this will not of itself ever be enough. Our greater resource lies in making houses available and ensuring that they are maintained. There is a field which is very large, and which could play an enormous part in raising the standard of housing, which is still far too low in this country. I have never quite understood why it is as low as it is, why in many respects we compare unfavourably with other countries in a somewhat similar stage of industrial development.
May I say that, quite apart from money, the problem of maintenance today is a very considerable one indeed. I know it is difficult to give figures of the extent to which houses are maintained; it is always easier to give the figures in regard to the houses which are new, or built, but maintenance is of far greater importance today than the building of new houses. One of the problems with housing over many years has been that Ministers, in their periods of office, two or three years, are not there long enough to see a long-term plan succeed. It is a long-term
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situation. It is 10 or 20 years before a new policy really begins to show fruit. We have been trying to do this, one way and another, for a very long time.
I would put it to the noble Baroness like this. I think we have got something like 31 per cent, plus of council houses, probably 53 per cent, plus of owner occupation, giving 85 per cent, security of tenure; all those houses provide security of tenure. If we add to that the tied houses, such as those of universities, perhaps the Armed Forces and other institutions, we are left with 10 per cent, private rented houses. That is about 2 million. I think the Yellow Paper has a misprint in it; it says 2,000, which is not quite true. I would suggest that this is the minimum required for the ordinary mobility and availability which a community such as this requires. To take the remaining 10 per cent, into complete security of occupation is, I believe, wrong.
I would go further than that. I suggest, too, that long-term rents them-selves are not a good thing. Renting of a house should essentially be for rather a short period. At the present time, as the noble Baroness, Lady Young, said, private houses are used to a very considerable extent for young people. They are there to take movements, to get people near their work. To a large extent they are single persons, some of them young, some of them old, and, of course, some who are very much less well off. But they are in conflict with the homeless, and it is significant that the figure of homelessness has increased since the summer of 1974; there has been quite a marked increase, and the figures, I believe, have not been challenged. This is a field which has not received the attention it should have done. Until we have the maintenance of perhaps 2 or 3 million houses, which are less than satisfactory, we shall still be facing an inadequate supply of housing.
My Lords, I am going to add only this. I hope the noble Baroness will be able to tell us, for instance, how many houses today are empty, and what steps the Government are trying to take to see that they are properly used for the purpose for which they were built. I hope she will be as good as her word in trying to see that the main principles upon which this

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Yellow Paper is devised will be carried out, because then, I believe, she can really provide a blessing not only to this generation but to many in the future.
7.30 p.m.
Baroness HORNSBY-SMITH: My Lords, I welcome the opportunity given to us by my noble friend Lady Young to debate this subject. I want to discuss the same aspect as she has. Anyone who has ever held a Member of Parliament's "surgery" over the weekend can have no illusions whatever about the shortage of housing, about the sad cases that come to one and so often one's feelings concerning inability to find those people accommodation. In an urban constituency such as the one I had one pleads time and again with worthy elderly people to let their accommodation. More often, one pleads with a widow who would have made the most delightfully cosy and kindly landlady. She is probably living alone in a large family house because her family has now married and gone away. Whatever may be the reasons those people are terrified to let their accommodation. They could do with the additional income in order to keep their house in better repair and, for example, to install better heating arrangements. However, there is a genuine and sad terror among a great many old people, many of them widows, who have spare accommodation which they could let—whether it is a bed-sitter, the whole floor of a house or three bedrooms on the second or third floor.
Whatever our distinguished lawyer friends may say about the Act protecting such people, many of those with houses of this nature just will not let. What prevents them from letting—and this applies particularly in the London area—is not only the fear of having to go to court to obtain repossession if they have an unsocial tenant. It is also the fear of rising violence, which latest statistics show is increasing among younger people. That fear is particularly prevalent in a widow who is alone in the house. I wish that there was some means whereby the Citizens Advice Bureaux or the local authority had an ancillary register. That register need not impinge on its housing list because very few local authorities ever find accommodation for the young, the
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spinster or the bachelor. If there were such a register these often elderly people living in their family houses could be registered, and could at least feel that as they were on the authority's list they would be likely to get reasonably worthy tenants.
I appreciate that the law provides that landlords can go straight to the county court for possession in cases where the tenant does not pay his rent, misuses the premises, illtreats the furniture or behaves in an anti-social manner. For multiple or experienced owners that is merely routine—they have gone through the drill so often. However, to thousands of one-property landlords, who are often elderly couples, who have never had any conceivable reason to go to a court of law, the majesty of the law is morally something to be kept away from and if they can possibly help it they do not want to invoke the law.
These people regard that as a barrier to letting in case they get bad tenants. One can say to them time and again that bad tenants are in the minority and that it is an outside chance that they will get someone who will behave badly. However, as one can see from the many half-empty houses, they remain unconvinced. I carried out a survey along one not-very-long street in my old constituency. There were 11 three-storey Victorian houses in which a total of 18 people were living. In seven of those 11 houses only the ground floor was occupied—the top floors were not used, except occasionally for the bathroom on the first floor. In five of them the residents had not left the ground floor for years because of in-capacity, arthritis, or whatever the case may be. They could have had worthwhile accommodation upstairs if they could have been safeguarded against the possibility of getting bad or anti-social tenants.
One of the results of this grave short-age is that those who do let sometimes find themselves the victims of deceit. Perhaps one or two perfectly charming young people come along and say that they would share the accommodation. Before they have been there a week, because of compassion for their friends, they will have doubled up and provided accommodation for those friends. There may be six people in accommodation that is adequate for only two. That gives rise to overcrowding and all the consequential demands of heating and lighting, battles

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over the limited bathroom and kitchen accommodation which, although adequate for two, is not adequate for six. This is an extraordinarily difficult problem. Old people are told that they are callous, inhuman and unkind if, having been prepared to take two people, they find that suddenly they have six people, some sleeping in sleeping-bags and they try to turn them out.
Equally, in blocks of flats more and more landlords are refusing to relet, and are selling. Perhaps the Minister in her reply can say whether there are any figures for London. A year or so ago I made inquiries of the then Minister for Housing who was then taking action against owners of multiple flats who were quite deliberately not reletting but instead were putting them up for sale. Many of these properties are being sold to foreigners. Those who can afford only to rent and who do not have the sums to lay down in order to buy property are being deprived of accommodation which some desperately need because of their jobs. In some cases the local authority has stepped in to buy some of the flats which are for sale within what are otherwise privately-owned blocks. It is a little hard for long-standing tenants to swallow the fact that they are paying the economic rent—they may have had their rents fixed by registration through the local authority—when others are receiving rent subsidies from the council.
I should like to make some remarks on behalf of some landlords who equally are being "done down" and appear to have no redress. The clause in one's lease says that one must not sublet. In block after block of flats in London landlords know perfectly well that their one or two legal tenants, who are paying £20 a week, are subletting to three or four other people and charging them £15 a week, thus themselves living rent free. It is practically impossible to prove that those people are not simply friends staying for a short while. In some cases we over-condemn those landlords who are not making sufficient sums to enable them to keep their flats in good repair, particularly with the high costs of today, when they can see before their very eyes smart young men or women taking in four tenants and subletting—literally having a tenant in every room—so creating a standard of overcrowding which a council would not permit. In many cases it is useless them
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trying to go to court to try to get them out.
In this immediate crisis period, before we can get the housing drive going further and do something to increase the supply, we should use what we have got in unoccupied premises, an enormous number of which are with elderly people who could do with the money. Somehow we must get their confidence to let, and not lead them to believe that, if they are unfortunate, they will not be able to get rid of a bad, unruly, bullying, or a non-paying tenant.
7.41 p.m.
Lord JANNER: My Lords, it appears to me that we are straying a little from the matter which has been raised this evening by the noble Baroness, Lady Young. I gathered that we were dealing with the 1974 Act, and not with all the rest of the problems that arise in respect of rented houses and properties that are let. I have a high regard for the noble Baroness, and I think that she presents her case in a very reasonable and alluring way. But I think "alluring" is the proper word that one has to use, because I am sorry to say I could not agree with her, or with the speakers who have followed her, in respect of this particular matter.
What we are losing sight of in this debate so far is that tenants—and I am not saying that all tenants are good, but they are not all ogres as some people might imagine, any more than all landlords are—have to be protected in so far as the occupancy of accommodation is concerned, and in so far as they should not be charged exorbitant rents, both of which points are covered to some extent by the Rent Acts and to a considerable extent by the 1974 Act. It is no good bringing forward exceptional cases. I wish that those who feel so badly about the Rent Acts would use their utmost endeavours to bring home to the people who have accommodation to let that the Rent Acts are not so bad that they should have the fears that have been expressed this evening. They are in most cases unfounded fears. Of course there are exceptional cases, but in most cases they are unfounded fears.
The trouble is that some people—and I am putting blame where it really rests—keep on denouncing the Rent Acts. These Acts have, in my view, been a most

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valuable asset to the people occupying rented houses in this country, from their commencement until the present time. People come forward with arguments which frighten the very people they want to protect. I do not know whether they realise that. The Government do their best by issuing circulars which explain them in fairly easy language which does not need a lawyer. Well, all right, it might need a Citizens' Advice Bureau to explain it, or, better still, a Member of Parliament who is doing his duty in his "surgery"; and he usually has the confidence of his constituents so that he can explain what the real position is.
The Acts are not bad. They have saved homes for millions of people who otherwise would have been turned out. They have provided, and are now providing, for a proper rent, a fair rent. The noble Lord is shaking his head. Blame the person who fixes the rent, blame the tribunal, but do not blame the law.
Lord REDESDALE: My Lords, would the noble Lord be kind enough to give way? I shook my head only because I feel that the charming way in which the noble Lord puts over his case shows that he is rather living in Cloud Cuckoo-land. He does not appreciate the fact that comes out of the figures of rented accommodation. It is not available, and it is because of the simple reasons that have been given by the noble Baroness. The noble Lord must wake up to reality.
Lord JANNER: My Lords, I am very much awake to the realities, I can assure the noble Lord. I have already stated why I think there is so much unrented accommodation. Let us take this Act we are talking about. I wish that the noble Lord would read again the provisions in the Act about the residential occupier. We are told about people being frightened to let. Of course if they do not know that whatever they fear can be removed very rapidly by the tenant being pushed out of possession under the very Act itself, they are naturally not prepared to let. What I am driving at is that the average person who has been referred to tonight is not aware of that fact. All right, they are afraid to go to the courts. There are plenty of voluntary bodies today who would help them in
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that regard. It may be that there are longer delays, but that is a different matter entirely; that is a general matter so far as court procedures are concerned. This knowledge would help in shortening waiting times, which are not so long as people are putting forward today. The county court is not such a difficult place, nor is the tribunal itself so difficult. They are not as difficult as those who have spoken this evening would lead us to believe.
The Act as it stands is a very useful Act. I believe that the Government were right in producing the Yellow Paper. If arguments are to be used, an opportunity should be given to everybody who wants to put a case forward. But to take away the Act now and try to disturb a position which has been in existence very usefully since it was introduced, is entirely wrong.
Baroness YOUNG: My Lords, would the noble Lord allow me to say that it is not my intention to suggest the repeal of the 1974 Act? I was merely talking about a rather narrow part of it.
Lord JANNER: My Lords, I appreciate that. But you are not talking about a narrow part of it. With the greatest respect, the noble Baroness should be talking about a narrow part of the Act but may I humbly say that she did not keep it as narrow as the subject she introduced. The subject is the 1974 Act. While it is true that one can to some extent elaborate the argument, the fact remains that the Act about which I am talking has protected people and I submit that they must continue to be protected.
At one time noble Lords spoke about widows; they brought tears to one's eyes talking of difficult cases—and certainly there were exceptional cases of widows with great difficulties. But the main purpose of the Act I am talking about—I say this with the greatest respect to everybody concerned—is to protect people from being thrown out of their homes. The 1974 Act covers a very limited period and in the other Acts the period is much more extensive. We must abide by the principle of affording protection to tenants so they can obtain accommodation at a fair rental. We may complain that the people administering the Act are not fair, but I assure noble Lords that in many cases where fair

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rents have been asked for the assessment has been for a much higher figure. Go to any district and inquire, and I assure noble Lords they will find this is a fact, even when in many instances the landlord has applied. I see the noble Lord, Lord Redesdale, shaking his head in dissent; if he will have a word with me later I will give him some examples.
We must afford people protection at fair rentals so that they may have their homes. Those who are holding up lettings are doing so either through ignorance of the actual position—in many instances they are frightened and do not know what protection there is for them—or because they are avaricious landlords who are not content with a fair rent; and that is something we should not encourage.
7.53 p.m.
The Earl of KINNOULL: My Lords, I always feel that the House has a warm regard for the noble Lord, Lord Janner, and it is always fun to listen to him. Despite his strict legal experience outside the House—when he is, no doubt, warning his clients against the dangers and problems of being a private landlord—he is always tempted to lace his remarks with a stimulating political flavour, although I suspect that on this occasion there would not have been many of us entirely convinced by his arguments.
I support and congratulate my noble friend Lady Young on the way in which, with her usual skill, she stripped this complicated subject to its bare simplicity; and to strip the subject of the Rent Acts, in whatever sphere of the Rent Acts, is quite an achievement. I also congratulate the Government—unhappily, a rare event—on producing the yellow Consultation Document which we are discussing, the main and genuine objectives of which, as I understand them, are to try to reach a consensus of all the Parties to establish the future role of the private sector in housing.
I particularly commend the two latter objectives of the document, to which Lord Janner did not refer: first, to endeavour to simplify the unnecessarily complex and obscure laws we have under the Rent Acts and, secondly, to try to provide a framework within which we can achieve a fair balance between the interests of the private landlord and those of the tenant. Those
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are commendable objectives and I congratulate the Government for putting them firmly in writing.
As Lord Janner reminded us, my noble friend's Question relates to a very limited aspect of the Rent Act in that fundamentally it covers furnished accommodation. This form of accommodation is provided only by the private sector; it is not provided by councils, housing associations, housing societies or housing co-operatives, and I do not think anybody in this House denies that its value is highly recognised as being quite essential to a complete housing policy. It offers immediate accommodation to varying people who require this sort of accommodation, particularly in large cities such as London. One need only think of those moving jobs, students and a whole host of people, including people who have just got married and are desperately looking for a home.
I do not think anybody underestimates the value of furnished accommodation. Yet, as my noble friend said—I think this is widely accepted outside the House—this valuable sector is in danger of drying up. I hope that when the noble Baroness, Lady Birk, replies to the debate, she will give some figures, because it is vital to our discussion to know the extent to which it is drying up. The figure I have seen is that when the 1974 Act was going through there were about 750,000 units of accommodation available in London, while today that number has dwindled, I am told, to about 150,000. I see Lord Janner shaking his head in disagreement; perhaps he has a figure. I have passed on the figure given to me, and perhaps Lady Birk will confirm or deny it.
The real trouble in this valuable sector of furnished accommodation is that there are no incentives for private landlords to retain this form of investment; indeed, there is a positive incentive to opt out. There is certainly no inducement to encourage fresh investments in this field.
Lord JANNER: My Lords, is the noble Earl saying that to have an incentive one must ask for more than a fair rent?
The Earl of KINNOULL: I am not suggesting that at all, my Lords, and I am surprised that the noble Lord should even think me simple enough to answer that

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tempting argument. I assure Lord Janner that I was not suggesting anything of the sort.
Lord JANNER: That is what the noble Lord is saying, my Lords.
The Earl of KINNOULL: I am saying nothing of the sort, my Lords. One aspect of the current legislation within the sector of furnished accommodation is that the very strings which tie round the landlord's flexibility have been so knotted, as my noble friend indicated, that there are now widespread abuses of the 1974 Act; this is suggested in Lady Birk's Consultative Document. Indeed, sadly, every effort today is concerned to thwart the legislation, as one so often sees with our tax laws.
Perhaps the worst feature and result of the 1974 Act in this sphere is that we are now reduced to this trickle of accommodation available, and the trickle in many cases is available only for selected tenants. As my noble friend indicated, it is available in the main to foreigners, embassy staff, students and anybody who has a limited time in that accommodation by the very nature of their jobs or occupations. I find that very distressing and, whatever steps the Government decide to take following the consultation period, I hope that my noble friend's suggestion to introduce an exemption for the private resident landlord within the framework of the 1974 Act will be very seriously considered. It is not a contentious suggestion. It does not allow any form of Rachmanism nor does it open the way to the making of vast profits at the expense of the tenants. It would not in any way allow wide-scale abuse. I believe that the consensus among the Parties today is that none of them wants any of these factors in its housing policy.
I see that the noble Lord, Lord Robbins, is here tonight. I do not know whether he intends to speak on behalf of the educational boards and their problems under the Rent Acts. The noble Baroness is always abreast of what is happening in this field and she will know of the fears which the noble Lord expressed at the time when the 1974 Act was going through. He said that he feared that there would be a lack of accommodation for new students at the opening of the academic year.
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A number of responsible studies on housing policy have been published recently. I commend to the attention of the noble Baroness a pamphlet entitled, Housing published by the chartered surveyors. This report concentrates on rented accommodation and in particular on furnished rented accommodation. One of the points discussed—and the noble Lord, Lord Janner, touched on this in his speech—is our present system of fair rents. Is the fair rents system fair and is it being operated in the correct way to give a reasonable inducement and return to the landlord as well as being fair to the tenant? The report suggests a solution to improving the fair rents system. As noble Lords will remember, once a rent has been set by the rent officer, it is settled for a period of three years. We now often discover that that by no means keeps up with inflation. The report suggests that the Minister should have the power to bring in an order covering the entire fair rent system to raise rentals in any one year to a level that would try to meet the heavy burden of repair costs and so on in the inflationary period involved.
I hope that the noble Baroness will consider that suggestion because I believe that it is a perfectly genuine proposal and something that might be of help. I should like to end on a plea which is not strictly connected with my noble friend's Question but which is on a point that I know goes to the heart of the noble Baroness. It concerns controlled tenancies. This relates to some half million units within the 18 million units which exist throughout the country. All these units are now declining to a sorry state, to the detriment of the tenant and often to the sadness of the landlord who cannot afford to repair his property. Frankly, I believe that this is the time for the Government, now that they are reviewing their housing policy, to examine this and to initiate a survey into this important sector, and not to hide away, as other Governments have done, from this problem.
8.5 p.m.
Lord MIDDLETON: My Lords, the present inefficient use that we make of our national housing is nothing short of deplorable. I fully recognise the social benefits which have flowed from the Rent Acts to which the noble Lord, Lord

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Janner, referred, but the fact of the matter is that, in 1977, unless you are rich and, preferably, a foreigner, it is virtually impossible to find accommodation to rent. My noble friend Lady Young has given us the 1976 figures for homeless households. Yet the number of empty houses in London alone—I admit that I have not been able to verify this figure—is generally thought to be about 100,000. Although in the rented sector the proportion of houses rented from private landlords has declined rapidly, there are nevertheless still approximately 2·8 million left. Of these, 1½ million are unfurnished lettings, half a million are furnished lettings and the remaining 0½8 million are houses that are tied in some way to a business or a particular employer. So there are still about one-sixth of all households living in privately rented housing. This is a substantial part of our national stock of housing.
It is therefore not surprising that, at a time when it is clear that there will not be enough money either for building or for ambitious schemes of municipalisation, the Government are turning their attention to the privately rented sector. We have had the recent Ministerial statements and the Consultative Document to which every person who has spoken tonight has referred. Clearly, the Government are considering what effect the Rent Act legislation over the past 30 years may have had not only on the supply of rented housing but also on the state of the privately owned housing stock, particularly in the inner urban areas.
I believe that there are ways of increasing the supply, and here I find myself in full agreement with my noble friend Lady Young. But I wonder whether the process of physical deterioration may not already be out of control in some areas. We have figures in the Consultative Document to show that in the 1971 House Condition Survey 40 per cent, of privately rented and tied dwellings lacked one or more basic amenities, 30 per cent, were in substantial disrepair and 25 per cent, were statutorily unfit for human habitation. So my noble friend's Question is very timely. It asks specifically whether the 1974 Rent Act is to be amended. I am in complete agreement with her that, if we are to amend any of the Rent Acts and associated legislation, the 1974 Act is the one to tackle at the outset. I also agree
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with her reasons for saying so. However, the Consultation Document refers to review "of the Rent Acts".
I am sure that the Government are aware that many of the problems affecting private renting arise from the proliferation and complexity of the Rent Act legislation. My noble friend Lord Kinnoull has referred to that complexity. Annex No. 1 to the Consultation Document sets out the legislation which it is proposed should be reviewed. It would be tedious to quote the list in detail but it refers to the 1968 Act, which was in itself a consolidating Act, and to no less than 14 other Acts, most of them passed after 1968, and to one Bill which has recently been introduced. I am sure that this complexity alone acts as a deterrent to letting; and that there is a very strong case for consolidation is admitted in the Consultation Paper. But a much more searching review of the whole range of legislation is called for, and the fact that views are being sought by the Department from interested bodies by 30th April next is a welcome sign of realistic thinking on the part of the Government.
But to come back to the 1974 Act, I take it that there is no dispute that the supply of furnished accommodation is rapidly drying up, and I echo the hope of my noble friend Lady Young that there may be scope for amending the 1974 Act in a way that would avoid the political see-saw effect that has bedevilled Rent Act legislation in the past. I hope that the noble Lord, Lord Janner, will not accuse me of straying too far if I say that I, too, with my noble friends Lady Young and Lord Kinnoull, would like to start with amending the legislation affecting the resident landlord. It must be a deterrent for an owner to relet part of his house to the same tenant for a second fixed term when that letting would become a protected tenancy under Part VI of the Rent Act 1968.
So far as new furnished lettings are concerned, I, too, am sure that a real impetus would be given to many more of these coming on to the market if owners and tenants were allowed to enter into agreements for fixed term tenancies, at the end of which the tenant could not stay on indefinitely under the protection of the Rent Acts. There is no encouragement whatever for anyone to let furnished

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accommodation to a tenant who cannot be removed if he wants to stay fast at the end of his term and whose tenancy may pass not just to one successor, but to two: first, perhaps to his wife, and then to a child of the family, extending the occupation into the next generation.
I believe that enforceable new fixed term tenancies would be acceptable to a public which sees little opportunity of obtaining furnished accommodation, except for holiday lettings and lettings to people who are not British residents. I am very much in favour of hospitality to our visitors from overseas, but not when it means denying short-term accommodation to our own young families. My noble friend Lady Young has quoted a passage from the Consultation Document, which says that there is a need for ready access to accommodation by mobile workers, and she quoted the other categories. I would stress the need for accommodation for mobile workers, and I would add that there is a similar need among students.
If we are to encourage furnished lettings, then the owner will require to know not only that he can regain possession, but that he can charge a reasonable rent. There must be sufficient incentive to let after the costs of repair and management are covered. But the tenants must not be exploited, and here the rent officers must continue to play a key role. A point which I do not think has been raised before is that the owner must be reasonably sure that he will recover his property in fair condition. Ordinary contractual obligations are usually not sufficient to ensure this, and some kind of deposit system should be permissible. There is reference in the Consultation Document to this question. I think that by now there have been enough cases to determine what does and what does not constitute furnishing, and that the complicated formulae relating to the ratio of the value of the furniture to the value of the premises will not be necessary.
I am quite aware that the Government are saying, both by Ministerial Statement and in the Consultation Document, that they are prepared to consider all aspects of the Acts, with the exception that the general principle of security of tenure for the tenant in his house is to be maintained.
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I agree with my noble friend Lady Young in accepting the general principle that one should not legislate to interfere with security of tenure in respect of existing tenancies, but I am convinced that one will not get anyone to re-let furnished accommodation to, or to create new furnished lettings for, British residents if there is a continued insistence upon the degree of security provided in the 1974 Act.
I do not wish this evening to stray into the more difficult territory of unfurnished private lettings, since my noble friend's Question does not really embrace this category. Nevertheless, I feel that the Government should not shy away from examining the question of security of tenure of unfurnished lettings, nor should they refuse to contemplate amending legislation. My noble friend Lady Young referred to short-term, and I think that she meant making possible and enforceable fixed term new lettings of private housing.
This Government have frequently com-mended the system of letting by private owners to local authorities on short-term tenancies, as exemplified in the North Wilts scheme. Indeed the Consultation Document invites comments and advice on just this type of leasing. Surely the main incentive for owners thus to release for letting surplus housing to increase the local housing pool, is that they know that they will recover their houses when they themselves require them for direct letting.
It should be borne in mind that security of tenure is now not to be found in the majority of rented lettings. At present local authority and housing association tenancies and tied house occupations, other than in agriculture, none of which are protected, outnumber private tenancies, which are covered by the Rent Acts. If it is the supply and quality of the latter which is causing concern, then it is at least worth considering how far this decline may be caused by the balance under the Rent Acts being too far towards the tenant in the matter of security. It does not seem to me to be very sensible to refuse point-blank to look into this question.
I shall listen with much interest to the Government's reply to my noble friend Lady Young. I believe that she was right at this stage to narrow the scope of her Question to the 1974 Rent Act. I

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am sure that in the reply the Government will wish to refer to their review of the other Rent Acts as well, and therefore I look forward at an appropriate time to a wider debate embracing all privately rented housing and accommodation, when the Department has had time to digest the replies to the questionnaire set out in the yellow document.
In a uncertain world one can be sure that privately rented housing, however unpalatable this may be to the Party opposite, must, from sheer economic necessity, continue to house a substantial proportion of our families. One can be sure also that unless something is done to loosen the dead-handed grip of the present Rent Acts, to provide financial incentive for an owner to let without exploitation of the needy, and to concentrate scarce resources into the improvement of rented houses in certain areas—unless we can achieve a substantial advance on all three of these fronts, then the present deterrent to the mobility of industrial skilled labour and the present frustrations and unhappiness of so many families will continue to constitute a national disgrace, and will militate against our economic recovery.
8.18 p.m.
Lord MOLSON: My Lords, it is traditional in this House to allow debates to range a little wide of the particular point that has been raised, and several noble Lords who have spoken have emphasised how difficult it is to deal with the 1974 Act without taking into consideration the broader issues that are raised by the review. It was for that reason that I notified the noble Baroness, Lady Birk, that there were matters that I wanted to raise tonight, to which I hoped she would be able to give a reply, which go a little outside the Question put by my noble friend Lady Young.
I welcome this Consultation Paper because it holds out the prospect of two Bills: a Rent Bill to consolidate the present law, and a substantive Bill, probably next Session. First, let me show the urgent need now of a consolidation Bill. Annex 1 of this Consultation Paper lists seven Acts of Parliament, throughout which the present law on rent is scattered. Other relevant
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provisions regarding security of tenure are scattered through another five Acts. A consolidation Act is uncontroversial, and takes up no Parliamentary time in either House. Delay, of course, is solely due to the immensely difficult task of Treasury counsel who have to harmonise the existing provisions.
There is another reason why a consolidation Bill is urgently needed. It would be an immensely difficult task to understand the promised substantive Rent Bill if we did not know the existing law. It would be difficult and would waste innumerable hours of Parliamentary time if, in considering a new Bill, we had to refer to seven Statutes which are at present in force. For these two reasons, I hope that the noble Baroness will be able to say tonight that a consolidation Bill will be introduced at an early date. Her Majesty's Government have made a very good beginning with the Bill introduced on 21st December last, consolidating the protection against eviction, and I hope they will follow the good example that they have set.
The outstanding fact about housing is that there are just about as many habitable housing units in the United Kingdom as there are households. I obtained these figures from the noble Baroness. There are 19·3 million fit dwellings and 19·4 million potential households. What, then, is the explanation of the amount of homelessness and the difficulty that people have in finding accommodation? The Department of the Environment has indicated that by 1991 it is quite likely that there will be half a million more houses in London than there are households; and all these matters do have to be taken into account. Why, then, do so many people find it difficult to find accommodation? There are many reasons. Probably the 1974 Act is the chief cause; but there are, of course, houses in areas with dead or dying industries; and many people, including the working classes, occupy two homes. But the main reason is an arbitrary and rigid system of rent fixing which discourages people, and even prevents them, from moving into more suitable accommodation. When the main body of council tenants are paying only 43 per cent, of the cost, it is no wonder that the strain upon the private sector, and especially upon furnished accommodation, is as great as it is.

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I am not going to waste your Lordships' time by attempting to answer the questionnaire, penetrating and wise as many of the questions are. They should, of course, be answered on paper. I hope, however, that the substantive legislation will be based on the principle of the determination of fair rents by independent tribunals. As a junior member of the Government, I vainly urged upon Mr. Harold Macmillan in 1952 that that should be his main approach to this problem, and I have repeatedly paid tribute to the late Richard Crossman for having introduced that principle. I hope that in her speech, even if it goes a little outside Lady Young's Question, Lady Birk will be able to give us some slight indication of what the present position is with regard to the fixing of fair rents. The original legislation, passed by Mr. Crossman, has, I think, for reasons of combating inflation, been modified by the Department of the Environment, and I am sure that many people, including myself, are not fully aware of the present position.
But, my Lords, I welcome this questionnaire. It practically promises a consolidation of the existing law upon the subject; it practically promises in a future Session a new substantive law dealing with rent restriction. And, although this Question deals only with the Act of 1974, it is quite impossible to amend or alter the Act of 1974 without taking into account the other seven Acts which are specified in Annex 1 of this White Paper, all of which are dealing with that or relevant subjects.
8.27 p.m.
Lord PITT of HAMPSTEAD: My Lords, I am sure we are all grateful to the noble Baroness for initiating this debate. As is my wont, I will deal with it as it affects London. It is well known that the private rented sector has been in a state of decline for almost 50 years. London's private sector has declined as much as that of the rest of the country; but although London's private sector has declined—it has in fact declined by 140,000 dwellings since 1971—there are still 570,000 dwellings in the private sector in London, which is in fact 22 per cent, of the stock. Again, London is probably the only part of the country, the only conurbation, where private
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tenants and council tenants are roughly equal; that is, 27 per cent, in each sector. I have not a later figure, but in 1971 London had 37 per cent, of all furnished lettings. So from what I am saying your Lordships can see that if something could be done about private rented dwellings in London much would be achieved.
Unfortunately, I must be fair to your Lordships and say that it is my view that merely tinkering with Rent Acts, or any other Acts of that sort, will make no difference; the deterioration, the drying up in terms of private rented dwellings, will continue. Therefore, if we are to have the bipartisan policy which the noble Baroness asked for, it must begin with the acceptance of the fact that the day of the private landlord is over, that our policies must be based on that fact, and that the people who are now looked after by the private landlord must have other arrangements made for them.
Lord ROBBINS: My Lords, I wonder whether the noble Lord could expand his proposition a little and explain to us the reason why the private sector has declined. Is this some mysterious natural law, the nature of which is veiled from us, or may it be simply economic considerations which leap to the mind when one asks oneself whether one would be prepared to advise anybody to put money into that sector, having regard to the complexity of the Rent Acts?
Lord PITT of HAMPSTEAD: Yes, my Lords, I can. I was trying to be brief. The Deputy Chief Whip asked me to be brief. I can give the reasons. As I see it, there are two main reasons why I, for one, am quite convinced that the privately rented sector will dry up. The first is credibility. The private rented sector has been in a state of continual decline for 50 years. It has now reached a situation where none of the important landlords or relevant associations will any longer believe that there is a future in private renting whatever any Government may say. This is the first point; and I believe that. The second point concerns economics. Once a person has vacant possession, he will get a very much better return by selling a house and investing the capital elsewhere than by renting it. Therefore, the impetus is for him to sell and to invest elsewhere.

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If you take a typical London house and sell it for £12,000—that would be about the price that you would get—you can get about £2,000 a year by investing that money in fixed interest securities; and you will have none of the headaches of being a landlord. What is more, if I can spell it out, that £2,000 a year, if it is in rent, must be at least £40 a week rent; and not even the noble Baroness will suggest that a Government formed by her Party would make it possible for landlords to get rent of £40 a week.
Lord MOLSON: My Lords, is not this very largely the result of the unsatisfactory position under which council tenants at the present time are paying rents that amount to only 43 per cent, of the cost of providing them with housing?
Lord PITT of HAMPSTEAD: My Lords, that may be true; but the fact is that when you balance the position if a person has a sum of money today buying a house and renting it out is not the best way of investing that money. Therefore he will not do it. Because that is so—that is how I see it—our policies must be geared to enable the people who are now serviced by the private-rented sector to be served by other authorities. It is my view that a right step was made when council tenants were encouraged to take in lodgers rather than prevented as they used to be. That was a step in the right direction.
I believe that local authorities should be encouraged to go into the furnished rented sector because you must have a furnished rented sector. I believe that they should be encouraged to provide more hostels and more accommodation for people; the old waiting list system must be abolished and people must be given a house on the basis of need and not on the basis of the period they have been on the waiting list.
All those things are necessary if you start from my premise. It is obvious that the Government does not start from my premise. The Yellow Paper suggests that the Government think that something can be done about the privately-rented sector; whereas I am saying that you should begin with the acceptance that it is going to dry up, and that all that one should be concerned about is what I would call the orderly transfer of responsibilities. In
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other words, instead of having the disorder that I think we are having at the moment we should have an orderly transfer of responsibility. Therefore, the people now being catered for by the private-rented sector should be catered for in the public sector and other agencies should be encouraged to come in and play a part.
I believe that we will need a kind of rounded policy, a comprehensive approach, and obviously one would need not only a change in the attitude of the local authorities and their responsibilities but a change of attitude on the part of central Government in what they allow the local authorities to do. The local authorities have had the money which was allowed for municipalisation considerably reduced. The municipalisation programme, if you accept my premise, is one of the ways in which the local authorities can start replacing the private landlords in the field in which they now serve and where, I am insisting, they will no longer be. I am talking long-term; but, as I see it, the 50-year drift will go on and we will end up with practically no private sector except—and I will give the one exception—at the luxury end.
It is only at the luxury end that the private landlord can feel able to get a proper return and, therefore, only there will he continue. My view, and I am expressing obviously a different view from that of other speakers this evening, is that Government policy should be aimed at dealing with that and getting what I call an orderly transfer of the responsibilities which are now on the private landlord on to the shoulders of the public sector.
I believe, however, having said that, that in the process of the orderly transfer, one must what I would call maximise the uses that can be made of the houses that are still in the private-rented sector. I think a multiplicity of approach is what is required. I will throw out a few suggestions; for my time is up. I think of selected acquisition of dwellings by the local authority in areas of housing stress—and I have mentioned that recently—and a further examination of the potential for short-lease schemes to encourage the landlords to let vacant dwellings. The noble Baroness made some mention of that earlier. There should be some selective relaxation of security of tenure provisions

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—and I will go along with her on that—even though this may be more cosmetic than real in its impact on lettings.
I have not, because of the time, gone into the argument of whether the 1974 Act has had the effect that was claimed for it; I do not believe that it has. I think that the RICS survey was not a good one and not very accurate; but there is no time to go into that. We can do some cosmetics along those lines; but I think it will be only cosmetics. Then we should also press the building societies to change their policies and to encourage lending on older proper-ties of private-rented sector origin. They are not doing it now. The local authorities were doing it, and are doing it, but the Government consistently cut the local authority allocations for this purpose; and somebody must do it. We must try to pressurise the building societies into doing it.
The Earl of SELKIRK: My Lords, I think the noble Lord, Lord Pitt of Hampstead, may well be aware that over £100 million has been spent by building societies on those precise properties.
Lord PITT of HAMPSTEAD: Yes, I know that; but they can spend a lot more because they have a lot more. My Lords, I know what I am talking about because I have been involved in trying to get building societies to do a lot more than they are so far prepared to do in this particular sphere, with the support of the local authorities, which they could get.
Another suggestion is that powers can be given to local authorities to acquire dwellings and pass them from non-improvers to improvers. A lot of the dwellings in the privately rented sector are steadily deteriorating. Again, local authorities could be encouraged to play a part there, not necessarily buying the properties and keeping them themselves, but passing them on to somebody else who will improve them. Obviously, the Government should look again at the whole question of repair grants, with a view to helping in this particular sphere.
Then we should be examining much more thoroughly the potential for co-ownership schemes between the private landlord and tenant or local authority and tenant, or between the local authority
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and private landlord. We should be looking more and more at agreements made in this field. Remember I am talking about a gradual transfer of responsibility. Another point we ought to examine is the potential for trade union or employer-financed housing associations as a means of increasing resources for preserving rented accommodation. I can see no reason why the trade unions should not go into this particular field, instead of others.
My Lords, I have spoken for longer than I ought. I have been urged to be brief. My speech has not been as coherent as it would otherwise have been; I have had to discard a lot of what I had written. I know that I have sounded pessimistic, but this is how I see the matter. I personally think that if we are going to do anything about housing we need to be realistic. I am awaiting with great interest the reply from the Minister.
The Earl of KINNOULL: My Lords, before the noble Lord sits down, knowing his genuine interest in the welfare of private tenants, why does he think that private tenants would welcome the move to becoming council house tenants, when they would lose the security of tenure?
Lord PITT of HAMPSTEAD: My Lords, I am not suggesting that they would welcome it one way or the other. Although in theory they do not have security of tenure in local authority dwellings, in practice they have very good security of tenure, the truth being that local authorities do not evict. They do not evict, for the pure and simple reason that the publicity of an eviction is not very good for them.
8.47 p.m.
Baroness BIRK: My Lords, it is clear that if I gave a simple answer to the noble Baroness's Question, it would be very short, it would be, "No" and I would then sit down. But I think from what has been said, both by the noble Baroness—who went rather wider than her original Question—and from other noble Lords, that what we really are talking about are the Rent Acts themselves. The Government are not carrying out a review of the 1974 Act, and we do not expect to bring in any legislation to amend it. What we are doing is reviewing

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the legislation on privately rented housing as a whole. I was pleased to hear what the noble Baroness said about her view, and also the flexibility with which she approached it. From the debate in January 1975, from which she quoted her remarks, we have probably in thought moved rather closer together. I said at that time that I thought that, although the arguments had been, as usual, put very reasonably, there was a political and social chasm and it went further and deeper than this particular Act. If that chasm has been made smaller, then we are getting some way towards some partial form of agreement on what should be done in the future.
With one exception, we have not come to any decisions. But it would be surprising if we concluded that this corpus of legislation—to which reference has been made by almost every speaker—could not be improved. The purpose of the Consultation Paper was to invite evidence and representations to help us come to conclusions. The one firm point was that the Paper reaffirmed our commitment to the general principle of security of tenure for the tenant in his home. That is a firm and fixed point. Otherwise, it sought to ask questions, not to answer them. Since 1915 there have been some 25 Acts of Parliament (the noble Lords, Lord Middleton and Lord Molson were quite right about this) wholly or mainly to do with rent restriction and security of tenure for tenants of private landlords. Some 20 further Acts have contained amending or extending provisions. Some of this mass of legislation has been repealed or superseded. But a lot of it still remains. At a very rough estimate, when it has all been consolidated, it will amount to some 170 sections and 25 Schedules. That is about 220 pages of the Statute Book. The only thing I have not worked out is the number of words, and that would be most formidable.
In the review we shall be trying to simplify and shorten the law. I hope that those who suggest amendments to the Acts will bear this objective in mind. I could not agree more with all the noble Lords who pointed out difficulties that arise from the complexity of legislation which it is extremely difficult for the ordinary person and even, indeed, often for Members of Parliament and lawyers
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to understand without great care and trouble.
So far as I know, nobody has gone through every word and comma in the Acts to see how much comes originally from Conservative—or Conservative-Liberal coalition—Acts and how much from Labour Acts. But at a very rough calculation, I would suggest that the score is about fifty-fifty, and that all Parties have been parents of Rent Acts. The Counter-Inflation Act 1973, for instance, brought practically all the more expensive unfurnished tenancies into rent regulation and security of tenure. At that time it was whispered that that Act dried up the supply of luxury accommodation and encouraged landlords to sell out or to let only to foreigners. But I will not dwell on that.
Nevertheless, it is the 1974 Rent Act that has entered popular demonology and become the symbol of everything alleged to be wrong with privately rented housing. It has become the whipping person for problems, many of which were apparent well before the 1974 change of Government. I should point out to the noble Baroness, Lady Hornsby-Smith—who made a very impassioned and humane plea for both landlords and would-be tenants who wanted accommodation—that there are people even in large houses who do not want to let rooms. It is nothing to do with the 1974 Act. They did not want to let them before that Act and they do not want to let them now. She also brought in the point about violence. The Rent Acts are not concerned with that. She may well be right; maybe it is a factor in this whole problem which is taken into account when one is looking at it in its whole social context. I do not think that one can refer to the 1974 Act on that basis.
Baroness HORNSBY-SMITH: My Lords, would the noble Baroness allow me to intervene? I brought in the question of violence, and if the noble Baroness reads Hansard, she will find that I deliberately said that that was something which could not be blamed on the Rent Act, and that there was this other consideration. I was blaming that on the Rent Act.
Baroness BIRK: My Lords, I thank the noble Baroness. We are in agreement over that. Nevertheless, the Act has been

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blamed for the emptiness of many privately owned houses. Yet the figures on empty houses which are always quoted are those of the 1971 Census, which was three years earlier.
I found the contribution of my noble friend Lord Pitt extremely invigorating, and I do not think that he is quite so far away from the Government's view as he may feel, because the effect of trying to pin everything on to the 1974 Act is that all the other factors, some of which he mentioned, and about which he is quite right, are then forgotten about; that happens if one concentrates on one Act and does not look at all the other parameters which are responsible. There are a number of them, and, as I say, I think his approach to this aspect was refreshing. Unfortunately, to follow up some of those would take us rather too far a field.
One way or another, Rent Acts have been with us for over 60 years now. Yet the 1911 Census, which was before anyone but a few Utopians on the Left ever suggested rent control, recorded that 5·6 per cent, of all houses were vacant; and lower rents were advocated in Keir Hardie's 1893 Manifesto. So this is not a new manifestation. The percentage of 5·6 is higher than in many of the five Censuses taken since the introduction of rent control. I do not wish to make too much of such an elderly statistic but it is clear that, even in the days of laissez-faire and a Liberal Government, many landlords were reluctant to let. No doubt there were many complex factors behind these statistics then, just as there are now, although the factors themselves may have changed.
It has also been said that the Rent Act 1974 has hastened the decline of the privately-rented sector. But there again the number, as has been pointed out and accepted during our discussion today, has been diminishing since 1914, and particularly since 1945. The only previous Rent Act which appears to have increased the rate of decline was the Rent Act of 1957, which lifted all controls on new lettings. So we do have to look rather beyond the 1974 Act. That Act was introduced, your Lordships will recall, because landlords of furnished accommodation were making use of their freedom from controls to evict their tenants and sell with vacant possession. It was necessary to take action to
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ensure that the decline did not take place in a precipitate and uncivilised way. However, I accept that some landlords may well have been deterred from letting: it would be foolish of me not to. There are so many ponderables and imponderables in this subject. But against that we must set figures which after the Act show a drop of nearly 50 per cent, in possession orders granted to non-resident landlords of furnished accommodation. On that point, I shall not add more to what my noble friend Lord Janner said.
The noble Baroness, Lady Young, referred to 600,000 dwellings having been lost since the 1974 Act. With all respect—and I think the same point was picked up, though with a slightly different figure by the noble Earl, Lord Kinnoull—I would point out that in 1974 there were not all that many furnished dwellings let by non-resident landlords in the whole country. So this is really one of the rather wild stories which have gone around as a result of that Act.
Baroness YOUNG: My Lords, I must apologise for interrupting the noble Baroness. I did in fact very carefully indicate that it was very difficult to get the figures and that this was one that I had been quoted. I quoted my source—from this magazine which has just been published from a reputable source. Of course, I entirely agree with what the noble Baroness has said: what we are looking for are accurate figures.
Baroness BIRK: My Lords, with great respect, I must point out to the noble Baroness that this is really an old ploy—one quotes something and then says, "Yes, I was quoting something else." But meanwhile the idea has been recorded and probably picked up by people. The noble Baroness also referred to a drop of 75 per cent, in the number of lettings advertised in the Evening Standard after the Act. The fall, as actually recorded in a survey commissioned by the Department, was 33 per cent. That occurred immediately after the introduction of the Act and was then followed by a recovery. I now understand that advertisements are running at about three-quarters of the pre-Act level.
That, of course, is a problem of these rather nebulous statistics. But I would

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not even have been drawn into that question, although I did have it in my speech, because I do not like using that kind of information myself. But I felt that here I must try to counterbalance some of the arguments and show how very "aery-faery" they are apt to become if one gets into this particular area of statistics. So misunderstanding about the Act has been widespread and, if the House will bear with me for a couple of minutes, perhaps I might remind your Lordships of what the Act in fact did, not what it is thought or supposed to have done.
First of all, it provided that furnished tenancies granted by non-resident land-lords should be subject to full Rent Act protection. Secondly, it provided that new unfurnished lettings by resident land-lords would no longer be fully protected but subject only to restricted protection of the rent tribunal. That was a sort of opening up of the Act. Thirdly, it maintained the existing absolute right of a home-owner—for instance, a Serviceman who is posted abroad comes into this category—who may have let his home and given his tenant due notice at the beginning of the tenancy, to recover possession when he or a member of his family want to live in it again. It also gave the courts a new discretionary power to grant possession where a returning home-occupier had failed to comply with the procedural formalities but it was only equitable to waive them.
Fourthly, the Act created certain new exemptions from Rent Act protection and new grounds for recovering possession from protected tenants, such as retirement homes, holiday accommodation, off-season and university and college accommodation. Fifthly, the Act increased a resident land-lord's right to take court action against an unsatisfactory tenant. Sixthly, the Act made some technical modifications to rent fixing procedures, to make them more flexible. Seventhly, the Act removed the remaining restrictions on the granting of rent allowances to furnished tenants; and it is quite true, as one speaker has pointed out—I believe it was the noble Earl, Lord Selkirk—that there was a need to draw to people's attention their right to rent rebate.
I should now like to turn to the Consultation Paper. I was particularly glad to hear the congratulations on it from the
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noble Earl, Lord Kinnoull. As he said, he does not very often congratulate the Government, and I rather feared that particular god when he came bringing gifts, but he was really very reasonable about it. Now that the Rent (Agriculture) Act is on the Statute Book, the Department are in a position to press forward with the review which, as your Lordships and the noble Baroness will know, has been talked about for some time. As a first step, we thought it right to give the many people in organisations affected by the Acts, or who were concerned about their effect, an opportunity to contribute—and I see this debate tonight as an important contribution to that important discussion.
The Consultation Paper is essentially a question-asking exercise. Indeed, it is built round a questionnaire. To judge by some of the comments that have been made on it, I think that noble Lords at some points were divided between whether it should have been a questionnaire or whether at this point the Government should have come forward with firm proposals. They were surprised at its open-ended form, but I hope they agree that it is much better that it should be in this form so that we are ready to consider new ideas or to reconsider previously rejected proposals.
We considered that we ought to see how the Act was working, and we realise that in places it needs a new look, as indeed the other Acts do. In particular, we shall be looking afresh at both the principles and practical procedures for rent fixing. If the noble Lord, Lord Molson, will forgive me, I think I would rather write to him on the point that he made. I can answer him now, but it would take some little time and I think it would be better to write to him regarding fixed rents, the effect of the Housing (Rents and Subsidies) Act and so on.
We were also looking at ways of taking account of the effects of inflation, raised by the noble Earl, Lord Selkirk. The objectives of the review are set out in the Consultation Paper and, briefly, I think they may cover largely these objectives. We shall be seeking to safeguard the interests of existing private tenants, and this seems to have general agreement. So that is a step on which both sides are agreed.

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Secondly, we want to ensure that fit privately rented houses are properly maintained and kept in repair, and do not deteriorate so that there is no alternative to clearance. My noble friend Lord Pitt and the noble Earl, Lord Selkirk, made particular points on this subject, which they were absolutely right to do, because the Consultation Paper asks for suggestions on how the rent fixing system could take account of landlords' actual costs, and on how the house improvement grant system might be amended to cater for the special problems of rented property.
Thirdly, we want to promote the efficient use of housing, and to encourage the use of property which might be available for letting for limited periods only. This is a point on which the noble Baroness, Lady Young, laid considerable stress. She was absolutely right in saying that there are certain groups—and I agree that she had said so before—notably single young people and mobile workers, for whom private renting is a convenient though temporary form of housing. This is clearly an area which must be considered and on which we are seeking views. I very much hope that if the noble Baroness has any further thoughts on this matter she will let me have them.
We, also, do not say that a landlord ought never to be able to recover possession, even from a good tenant. We recognise that there must be exceptions. For instance, the Acts already provide exemptions to cover resident landlords, home owners who let their homes while they are away, purchasers of homes for retiring into, and certain other proprietors of housing kept for defined purposes but not currently used for those purposes. The Consultation Paper invites suggestions for other categories of dwellings which, although temporarily vacant, will be needed again by their owners and which could be the subject of new exceptions. Here I am thinking particularly of categories such as flats over shops, houses held by executors pending the winding-up of estates and houses due for redevelopment. I must say that in the last category there is often far too long a period while a house is boarded up, left empty, whether for local authority or private development, when it could be used as fairly reasonable temporary housing. The Paper also asks for evidence
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of the number of houses which might be the subject of local authority leasing schemes, such as that pioneered by the North Wiltshire District Council.
We fully accept that resident landlords are a special case, and the 1974 Act recognised that their tenants ought not to have full security of tenure. Tonight, the noble Baroness, Lady Young, drew our attention to the provision designed to prevent resident landlords from avoiding the jurisdiction of the rent tribunal by granting a succession of fixed-term lettings. The Consultation Paper canvasses views on the general question of the jurisdiction of rent tribunals over resident landlords, but I must make it clear that we cannot see a way of taking the whole of the resident landlord area entirely out of the Act, as she wants to do.
The noble Baroness put forward the idea of short hold tenancies. At least in the form in which it has been put forward hitherto, it would represent an unacceptably wide breach in the principle of security of tenure and we doubt whether the limited safeguards that it incorporates would be effective, any more than the pre-1974 safeguards for furnished tenants were effective. But, again, I say that we are ready to look at new cases for possession to cover further special categories; and also at whether something of the kind she has mentioned could be worked, which incorporates the degree of security of tenure which we consider absolutely essential.
Paragraph 6 of the questionnaire in the Consultation Paper acknowledges the delay and expense which resident land-lords can face in recovering possession from bad tenants, and the fact that this may deter some property owners from letting; and questions 6 and 7 make it clear that we are prepared to look very carefully at these problems faced by resident landlords. But I must also make it clear that we attach great importance to maintaining a civilised procedure for recovery of possession, if a tenant refuses to go voluntarily. So that it would therefore be a case of finding the right balance between landlord and tenant, because, like other speakers. I certainly do not accept any dogmatic view that all tenants are good and all landlords are bad, or vice versa; one has to see this as a partnership, with the security point more on one side.

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Our fourth objective is to ensure that the methods and criteria for the determination of rents are tailored to meet the difficulties faced by both landlords and tenants. There is certainly a great deal of evidence that landlords who regard their property as an investment are far more concerned about rent levels than about recovery of possession. This was certainly the view of the Royal Institution of Chartered Surveyors in their recent report on housing. I will not go into the different features of the report. The noble Earl, Lord Kinnoull, thought, that it was a very good report, while my noble friend Lord Pitt thought that it was bad. Nevertheless, it put forward some ideas which we shall obviously be looking at and considering with all the other ideas.
Fifthly—and this is one of the most important points—we want to simplify the law. To judge by the many letters we receive in the Department, many people, particularly resident landlords and home owners who wish to let their houses while they are away, and other small landlords, find it very difficult to discover how the Acts affect them. Often, they genuinely think that they are prevented from recovering possession or from raising rents, when in fact they are not. I accept that this is a legitimate criticism, and it is quite wrong that a situation like this should be perpetuated a moment longer than is necessary. Therefore, we would very much welcome suggestions on how procedures and definitions could be simplified. The first step is consolidation, to which both the noble Lord, Lord Middleton, and the noble Lord, Lord Molson, referred. I cannot at present give the noble Lord, Lord Molson, a firm promise as to introduction, but I can assure him that work on the drafting of the Bill is well advanced and I hope that it will have its First Reading in this House before we rise for Easter.
Finally, we want to provide a legislative framework which maintains a fair balance between the interests of tenants and land-lords. In the 1960s, many people came to the view that the fair rent system in Richard Grossman's 1965 Act had come near to achieving this. In the event, it was strained by inflation and the proliferation of unprotected furnished lettings, often in properties which had previously been let unfurnished.
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Therefore we come back to the points which were made by my noble friend Lord Pitt of Hampstead: to the problems which beset us like a minefield. The noble Lord may well be right in the long term about many of the points that he made. However, when we are faced with a housing problem of this magnitude—here I join those people whose approach I do not necessarily agree with—we must use to the utmost even a diminishing area of our housing stock while we are trying to find a new way to deal with the problem or of interrelating the two.
Obviously, resident landlords are very concerned about security of tenure. So are home owners and purchasers of retirement homes. I hope that I have made it clear that we are aware of their problems and that we are seeing what we can do to help them. Certainly I and my Department will be taking very careful note of what noble Lords have said this evening. We shall look carefully at all their suggestions when we consider the evidence submitted in response to the Consultation Paper, to see in what way we can use the present rented housing stock to maximise its capacity for letting and help to overcome the problem of the homeless.
The noble Earl, Lord Selkirk, and the noble Lord, Lord Molson, mentioned that the number of dwellings in the country exceeds the number of households. The problem with the statistics which both the noble Earl and I have used is that, while he was using United Kingdom statistics, the official housing and construction statistics in the Consultation Paper are for England and Wales. The statistics show that there were nearly 17·9 million dwellings in England and Wales and only about 17·4 million households. This is an encouraging figure; it shows that a great deal of progress has been made over the last 30 years. Gross totals are, however, somewhat misleading.
I must point out that at any given time a certain number of houses must be empty to allow for mobility and also for modernisation and rehabilitation. If one allows a 4 per cent, vacancy reserve—and that is a figure commonly quoted—the surplus disappears. Nevertheless, the reserve varies very much from place to place. I am not saying that we should be complacent about the number of empty

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houses that there are at any one time, although we have to bear in mind the geographical distribution of dwellings, which does not always match that of households, and the sizes of the existing stock of dwellings, which do not match necessarily the demands of existing families. Certainly one of the great social changes of the last 30 years has been the increase in the number of small households. More than half of all house-holds now consist of one or two people, yet the housing stock still consists mainly of family-sized dwellings. It may be that there is no overall shortage, but in many places shortages are still all too real for many households.
If I may interpolate one figure, the noble Earl, Lord Selkirk, is not correct in thinking that there was an error and that the figure of 2,000 should have been 2 million. The figure of 2,000 is quite correct. It is a rough estimate of the small number of privately rented flats and houses above the rateable value limits of £1,500 in London and £750 elsewhere. It is in this general context of trying to see where there is injustice and hardship that we shall be developing our policy for the private rented sector. We do not intend to take decisions until we have studied carefully all the representations and evidence. Nevertheless, as I think I said in answer to a Question the other day, we hope to announce our conclusions in the course of this year.
I should welcome very much the dialogue which has been suggested by the noble Baroness. I hope that this debate, together with the Consultation Paper, has been a good start and will form part of the general discussion and consultation. Although we still have a fairly strong difference of opinion on security of tenure, certainly in the field of the residential landlord, I think that there is a great deal which can be done to make the best use of the existing stock of rented housing, even taking into account the change in living behaviour patterns over the last decade and the way it is panning out for the future. A great many surveys are being undertaken and much research is being done. However, as with all surveys they are always in the middle of it when the conclusions are needed. We are extremely conscious of these needs. If
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we can reach agreement on any area, certainly it can only be for the good of all people who are searching for homes. On that point the noble Baroness and I are in total agreement.