Lords Sitting of 7 July 1977

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

FISHERY PROTECTION VESSELS
Lord BOOTHBY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, in view of the fishery limits that must now be imposed in order to ensure the survival of the fishing industry, they are satisfied that the Royal Navy has enough fishery protection vessels to enforce them; and, if not, whether more will be laid down.
Lord WINTERBOTTOM: My Lords, in anticipation of the extension of Britain's fishery limits, orders were placed two years ago for five new vessels of the "Island" Class. These are in addition to the nine vessels of the Coastal Division of the Royal Navy's Fishery Protection Squadron and the six fishery protection vessels of the Department of Agriculture and Fisheries for Scotland, and to the vital surveillance effort regularly provided by Royal Navy Sea Devon and Royal Air Force Nimrod aircraft.
Two vessels of the "Island" Class are already undertaking operational patrols as part of the Offshore Division of the Fishery Protection Squadron; the third will undertake its first patrol in a few weeks' time, and the last two will be in service by early next year. Meanwhile, frigates are being used to make good the gap. Her Majesty's Government have no grounds for doubting the adequacy of their planned fishery protection resources, but are of course keeping the matter under constant review.
Lord BOOTHBY: My Lords, while thanking the noble Lord for his interesting but not altogether satisfactory reply, may I ask whether it is a fact that last year the Dutch caught three times their quota of
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herring off the West Coast of Scotland, and that recently Danish vessels have been fishing for herring in an area of the North Sea which is closed? Furthermore, do Her Majesty's Government realise that the British people as a whole will never tolerate the destruction of the fishing industry of this country, either by the European Economic Community or by anyone else?
Lord WINTERBOTTOM: My Lords, I am certain that the whole House will be in agreement with what the noble Lord has said in the last part of his supplementary question. May I say in reassurance that from 1st January to 4th July 1977 there have been 830 boardings of foreign fishing vessels and 98 boardings of British fishing vessels by fishery protection vessels of the Royal Navy and the Department of Agriculture and Fisheries for Scotland, resulting in 24 convictions for contraventions of fishing legislation within the extended fishery limits.
Baroness EMMET of AMBERLEY: My Lords, in view of the anticipated shortage of fish in the deep sea, may I ask the noble Lord whether he is satisfied that Her Majesty's Government are doing all they can to help fish farming in this country?
Lord WINTERBOTTOM: My Lords, that is another matter.
Lord SHINWELL: My Lords, may I ask my noble friend whether the Government have ever considered converting some of the redundant deep-sea trawlers—which have considerable speed—in order to supplement the Royal Navy?
Lord WINTERBOTTOM: Yes, my Lords, this has been considered but was turned down as not being the best solution. My noble friend must not forget that behind the Fishery Protection Squadron is the Royal Navy, with its frigates, and the surveillance flights by Nimrods, which in one hour can cover between 500 and 5,000 square miles of sea.
Lord PEDDIE: My Lords, may I ask a question which I asked previously but to which I did not receive an adequate reply? In view of the increasing threats

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to the British fishing industry, are the Government satisfied with the present machinery for continuing adequate discussions with the fishing industry and fishing interests on the protection of the British fishing industry?
Lord WINTERBOTTOM: My Lords, periodic discussions take place between the Royal Navy and the fishing industry to make certain that the facilities available for the protection of our fishing interests are always there to be called upon.
Lord GLENKINGLAS: My Lords, will the noble Lord bear in mind—and I am entirely in accord with his desire to do what I know all of us want—that, if we are to extend our fishing limit to 200 miles (which is, at the moment, a thought) then the present situation, even with Nimrods, is totally and absolutely unsatisfactory? Perhaps, within our capabilities, it always has been. I have spent many hours on Scottish fishery protection vessels and have listened to the fishermen talking to each other about exactly where we were and when to get out. I am certain that the same thing happens with naval vessels. Will he bear in mind that the larger we make our fishing limits—and I am not objecting to doing so—the more essential it is to provide the resources to patrol them, otherwise the effect will not be achieved?
Lord WINTERBOTTOM: My Lords, as I have explained more than once, the facilities available are very large—including not only those of the protection squadron but those of the whole Royal Navy and the RAF with its very great surveillance capacity.
Lord BALFOUR of INCHRYE: My Lords, on this subject of North Sea fishery protection, can the noble Lord say whether the examination within the Ministry of Defence of the possibility of aiding fish patrol work with lighter-than-air craft—which has been successful in the past—has been concluded; and, if so, what is the result of the study?
Lord WINTERBOTTOM: My Lords, I know that the noble Lord is interested in this matter. Studies have taken place, but the present thinking is that the capacity of lighter-than-air craft to remain
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on station in the sort of gale conditions that can occur in the North Sea precludes them from being an essential element of our protection services.
Lord SEGAL: My Lords, is my noble friend aware that the Dutch have an excellent habit of eating strips of salted herring at street corners? Would he advise his right honourable friend to take additional steps to promote our export trade in that direction?

COST OF LIVING AND EEC MEMBERSHIP
3.13 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 how the cost of living in the United Kingdom has been affected by membership of the EEC.
Lord ORAM: My Lords, this is a matter on which precise estimates are impossible. The one thing of which we can be confident is that any effect has been slight, and certainly well below the forecasts published by Governments of both Parties before we joined the Community.
Lord O'HAGAN: My Lords, has the noble Lord studied the speech made by Mr. Roy Hattersley on 18th June in which he stated that the effect in percentage terms over the past year was under 1 per cent? Do the Government as a whole agree with their Secretary of State on this matter? Will the noble Lord make inquiries as to whether it will be possible to issue these statistics on a regular basis and so prevent me from having to occupy your Lordships' time by asking for the information?
Lord ORAM: My Lords, indeed the Government as a whole agree with my right honourable friend the Secretary of State for Prices and Consumer Protection. He made a more precise Statement in another place on 20th June. He pointed out that the annual rate of inflation in this country is running at about 17·5 per cent.,

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and of this about 0·5 per cent. is due to the Common Agricultural Policy. I will follow up the second point which the noble Lord made about the publication of statistics of the kind which he seeks.
Lord CARRINGTON: My Lords, would the noble Lord make sure that his Answer is circulated to all members of the Cabinet?
Lord BYERS: My Lords, may I ask the noble Lord whether he really means that the Government as a whole accept this, or that a majority of the Government accept it?
Lord ORAM: My Lords, I have been giving facts, and my right honourable and honourable friends are well aware of the facts.
Lord BYERS: My Lords, I asked whether it was the majority of the Cabinet and the Government or the Government as a whole. This is a fact that the House ought to know.
Lord ORAM: My Lords, I am sure that all that I have said this afternoon is well accepted by the members of the Cabinet.
Lord DAVIES of LEEK: My Lords, if he accepts the request of the noble Lord the Leader of the Opposition to circulate the Cabinet with categorical statements, will my noble friend include in that process a statement which I extracted from the New Statesman and New Society today which told the British public in an advertisement before the referendum that they would be £7 a week better off by joining the Common Market? I am still waiting for my £7.
Lord FLETCHER: My Lords, would it be right to interpret the Minister's statement as saying that there is no evidence that the cost of living in the United Kingdom has been adversely affected by our membership of the EEC?
Lord ORAM: My Lords, what I said was that the cost of living has been very much less affected than the estimates that were made at the time that we joined. The estimates that were made by successive Governments were of the
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order of 15 to 20 per cent. As I have indicated, it is very much less; 0·5 per cent., in relation to the Common Agricultural Policy.
Lord SHINWELL: My Lords, is my noble friend aware that every time this Question has been asked we have had the same answer; namely, that the increase in the cost of living in this country attributable to the EEC is minimal? May I ask him this question. In view of the fact—and it is an inescapable fact well known to us all—that the cost of living in the other countries associated with the EEC is very much higher than in this country, is that due to membership of the EEC?
Lord ORAM: My Lords, there are many factors affecting increases in the cost of living other than membership by ourselves or other countries of the Community. The price of commodities which come from outside the Community, coffee, I tea and items of that kind, have increased very greatly in price. Labour costs have also increased. The oil crisis and many major factors of this kind have caused the increase in the cost of living, both on the Continent and here. These factors do not arise out of the arrangements between the Member nations of the Community.

BRITISH FILM INSTITUTE: GRANT AID
3.18 p.m.
Lord NUGENT of GUILDFORD: 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 annual grant the Department of Education and Science makes to the British Film Institute, what proportion of their annual expenditure this amounts to, and what conditions, if any, are attached to it.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Lord Donaldson of Kingsbridge): My Lords, the British Film Institute's grant-in-aid for 1976–1977 was £2·514 million which amounts to 70 per cent. of its

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expenditure for the year. Of that sum £100,000 was earmarked for the Housing the Cinema Fund; otherwise, the Institute has discretion to spend the grant within the objectives laid down in its constitution.
Lord NUGENT of GUILDFORD: My Lords, I thank the noble Lord for his Answer which confirms that the Institute is a Government sponsored body and is Government financed. Is he aware that the British Film Institute, which enjoys a high reputation, has this month slipped somewhat in putting on at the National Film Theatre a programme of films of homosexuality and lesbianism, some of them quite explicit? Is he aware that this is objectionable to the majority of our people on two grounds?—first, that the public look to Ministers to uphold the decencies of life, whereas the promotion of these perverted activities is quite the reverse; secondly, that, as the whole community are forced to finance this activity, we find it doubly objectionable, adding insult to injury, when we have to pay for it. Would he please ask the Institute whether it would return to its normal high standards and abjure activities of this kind?
Lord DONALDSON of KINGS-BRIDGE: My Lords, I am aware of this programme. I am also of the view that the British Film Institute is particularly well qualified to take its own view of whether or not the programme falls within the objects as laid down in its memorandum of association—
Lord NUGENT of GUILDFORD: Oh dear!
Lord DONALDSON of KINGS-BRIDGE: Perhaps I might further add that we should be denying the facts if we did not also accept that the subject to which the noble Lord has referred has attracted the attention of many distinguished film-makers and that the programme list which I have seen includes many distinguished films. My own views on the way in which the programme has been handled are immaterial. If I may adapt the words, I think, of Voltaire:
"Even were I to disagree with everything which the Institute have published, I would defend their right to do what they have done".
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, was not Voltaire referring to freedom of speech and not to the use of public funds?
Viscount HANWORTH: My Lords, may I ask whether the Minister is aware that this is not a completely private club, because members are allowed to take three guests? Therefore, it is not on all fours with, for example, a club in Soho. Is he also aware that there is a big question as to whether at least one of those films which are being shown is not illegal, for several reasons? When there is that doubt, does lie not think that, in view of the bad taste in exhibiting these films, it is justifiable for a Minister to interfere?
Lord DONALDSON of KINGS-BRIDGE: My Lords, this is a serious study of the characteristic treatment of the subject and it is accompanied by three seminars. The films that illustrate it include such accepted classics as Mädchen in Uniform; Rope by Alfred Hitchcock; Reflections in a Golden Eye adapted from Carson McCullers' novel; and the 1971 British film, Sunday, Bloody Sunday. Noble Lords will appreciate that these are not pornographic films for the prurient eye but entertainments or social commentaries that incorporate a homosexual element. It seems to me a proper subject for serious study. It is open to members only, although I agree they can take guests, and it is not open to the public.
The Earl of HALSBURY: My Lords, is the Minister aware that one of the films involved—The Bigger Splash—illustrates what I must put into Latin, as "Intromissio penis per anum? Does he think that is an edifying use of public facilities?
Lord DONALDSON of KINGS-BRIDGE: My Lords, in the first place it is not a public facility and, in the second place, the drawing of a line here is extremely difficult. I think the House is not being fair to the large number of people who are seriously interested in this subject and to the fact that a number of studies are worth examining psychologically and sociologically. I really do not feel inclined to intervene as a censor when, if I intervened as a censor in any other aspect, I should get into very serious trouble—and rightly—from you all.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, will not the noble Lord realise that, if a body like the Film Institute wants to be subsidised by the public, it really is doing itself an injury by offending public taste to the extent described by the noble Earl on the Cross-Benches? If it wants to exercise freedom, does the noble Lord not agree that it must not abuse it?
Lord DONALDSON of KINGS-BRIDGE: My Lords, of course I agree with that. No doubt the British Film Institute will read our exchange, which may affect its future behaviour, but I have absolutely no intention of acting as a censor here and I think the House would not wish me to do so.
Several noble Lords: Oh!
Baroness WARD of NORTH TYNESIDE: My Lords, may I ask the noble Lord whether he realises that most Members here disagree entirely with his answer?
Several noble Lords: Oh!
Baroness WARD of NORTH TYNESIDE: Would he not consider that a matter of this kind, which arouses much realistic and proper controversy, could be put, for once, to a referendum?
Lord AVEBURY: My Lords, is the noble Lord aware—
Baroness WARD of NORTH TYNESIDE: My Lords, may I have an answer, please?
Lord DONALDSON of KINGS-BRIDGE: My Lords, unfortunately, somebody sneezed at the major part of the noble Baroness's question and so I was a little confused. Perhaps she would be kind enough to repeat it.
Baroness WARD of NORTH TYNESIDE: My Lords, perhaps the noble Lord will be kind enough to write to me and put it in Hansard.
Lord DONALDSON of KINGS-BRIDGE: My Lords, with pleasure.
Lord AVEBURY: My Lords, is the noble Lord aware that many of us would
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strongly repudiate the inference that a majority of your Lordships' House is in favour of censorship, as implied by the noble Baroness, and that, whatever our views may be about these particular films, we would wholeheartedly agree with the attitude expressed by the Minister that he is not a censor and that it would be utterly wrong for him to set himself up in that capacity? Is he aware that we warmly applaud the stand that he has taken this afternoon?
Lord DONALDSON of KINGS-BRIDGE: My Lords, I am most grateful.
Lord PEDDIE: My Lords, would my noble friend not agree with my personal opinion that the majority of the critics who have voiced their opinion today have never seen the films issued by the British Film Institute?
Lord DONALDSON of KINGS-BRIDGE: My Lords, I would agree with that, but I would also respect the right of a noble Lord to criticise on principle and not only as a result of having I seen these films.
The Earl of LAUDERDALE: My Lords, could the noble Lord tell us what are the objectives of the British Film Institute to which he referred earlier? Would he be kind enough to explain how those allow or disallow the exhibition of material which, at any rate in the eyes of some, is corrupting?
Lord DONALDSON of KINGS-BRIDGE: My Lords, the British Film Institute is an independent company limited by guarantee, incorporated under the Companies Act and registered as a charity. Its objects are laid down in its memorandum of association, paragraph 3 of which provides that:
"the Institute is established to encourage the development of the art of the film; to promote its use as a record of contemporary life and manners; to foster study and appreciation of it from these points of view; to foster the study and appreciation of films for television and television programmes generally; to encourage the best use of television".
The Earl of HALSBURY: My Lords, does that amount to saying that the policy of Her Majesty's Government is to tread the narrow line between right and wrong, inclining neither to the one nor to the other?
Lord DONALDSON of KINGS-BRIDGE: My Lords, I think that is an inaccurate description of the path I am trying to tread. I am trying to tread the path of non-interference, from a post which ought not to interfere.
Lord ALPORT: My Lords, may I ask the noble Lord whether he does not think it would be better if your Lordships' House spent less of its time discussing matters concerned with sex?

RENT BILL [H.L.]
Read 3a; an Amendment (privilege) made; and passed, and sent to the Commons.
PROTECTION FROM EVICTION BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

MINIBUS BILL
3.30 p.m.
Baroness YOUNG: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Baroness Young.)
Lord DE CLIFFORD: My Lords, while welcoming the Bill, I should like, if I may, to say a few words before it is read a third time. I had intended to put down certain Amendments at Committee stage, but I did not feel that it was worth wasting your Lordships' time to put them down when it is quite apparent that this Bill is already partially in operation. I gathered this from the White Paper on transport policy, which the noble Baroness, Lady Stedman, commended to us the other day, and which I read. But I should like to make one or two points on what I regard as weaknesses in the Bill, and to express the hope that in operating it the Minister will help various people.
I think that this Bill will not help the people it is required to assist. It certainly will not help pensioners in rural districts. I do not believe that it is appreciated that
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it takes quite a collection of people to be able to buy a minibus, as I understand that each one costs nearly £3,000. That rather rules out any collection of pensioners in a small village who would like to apply for a permit. It therefore puts back on to the welfare societies and the churches, who are the only people able to provide the funds, the obligation to assist pensioners in rural districts under this Minibus Bill, if they can see their way to do that from within their own organisations. I trust that, when the positions becomes more widely known, some encouragement will be given to the various societies for this to be done.
Furthermore, when the Minister is issuing permits and giving directions or guidance to the Traffic Commissioners, will he please tell them not to base their thoughts on whether there will be wide interference with some bus service, or other public transport? Will he please ask them to look at this matter from an angle from which they do not normally look, which is the benefit of the community? I suggest that it would be very nice if somebody could very politely spell out to the Traffic Commissioners the meaning of "the benefit of the community", so that they can take it from there. With those words, I welcome this Bill. I hope that it does all that it is supposed to do, and I wish it well on behalf of everybody.
3.33 p.m.
Baroness YOUNG: My Lords, the answer to my noble friend Lord de Clifford, who has raised three points, is as follows. The Minibus Bill was never intended to be a substitute for public transport in rural areas. I wish that it could be, but it cannot be. Therefore, I regret to tell him that, had he decided to put down Amendments on that point, I should have had to resist them. As I hope I explained at Second Reading, the Bill can be of enormous benefit to voluntary organisations (which are defined in the Bill), religious organisations and others. If there is an old age pensioners' club that has a minibus, the difference that the Bill will make is that that club can use the minibus and make a charge to cover costs, without needing to have a driver with a public service vehicle licence, and without coming under the Road Traffic Acts. This will be of great

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help to them, and it will make it possible for them to continue using a minibus without breaking the law. In that way, it will help pensioners. It cannot possibly provide a bus service for elderly people in country districts. Much as one would like it, I regret to say that that is outside the terms of the Bill and, therefore, could not possibly be included.
That brings me to my noble friend's third point, which was the definition of "the benefit of the community". This has been put in, along with the groups to which the Bill applies that have been identified in Clause 1, to indicate voluntary organisations not covered by the other definitions. It could, for instance, be a group that was interested in conservation and which took out a minibus to look at some archaeological site or something like that.
I think that the Traffic Commissioners, in issuing their permits, will have to bear in mind the purposes of the Bill. I have no reason for supposing that they will not interpret them correctly, because the Bill is one which has all-Party support. I am sure that, when the regulations are drawn and a circular is issued on the interpretation of the Bill, the Commissioners will be left in no doubt as to the groups of people to whom the Bill ought to apply. Therefore, the Commissioners will be perfectly willing to give the permits, provided, of course, that a vehicle is a safe one, the driver is suitably qualified and the organisation falls within the definitions in Clause 1. I hope that that answers the questions that have been raised.
Lord SHINWELL: My Lords, I do not intend to intervene on the merits or demerits of this Bill. We have now before us the Third Reading of a Bill and what I want to ask is this: why is it that in another place—not that we should always follow the procedure of another place—when a Bill reaches the Third Reading, after having gone through First Reading, Second Reading, Committee stage and Report stage, it is finalised? That is the end of the story. No Amendments can be moved and no speeches can be made. Why should we waste time having to listen to speeches which have been heard over and over again during the various stages of a Bill? Could we
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not save some time by accepting the Third Reading and passing of a Bill as the final stage?
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, my noble friend was looking in my direction, but I fear that it does not fall to me to answer the question, because of the strange alchemy of your Lordships' House.
Baroness YOUNG: My Lords, with the leave of the House, I think the answer to the noble Lord, Lord Shinwell, is that it is possible in this House to move Amendments on Third Reading. As my noble friend said, he did not put down Amendments at Committee stage, and he therefore wished to raise some points which I hope I have answered.
Lord SHINWELL: My Lords, if I may pursue the matter for a moment, it seems to me to be all wrong. Surely this could be referred to the Committee on Procedure. This happens over and over again. We come to Third Reading and Members of the House, who have probably taken no part in the Committee or Report stages, make speeches. I cannot see why that should be permitted.
The LORD PRIVY SEAL (Lord Peart): My Lords, I would only say to the noble Lord, Lord Shinwell, who has long experience of the other House, that even there Third Reading is very useful for finalising attitudes. But if the noble Lord feels strongly about it, this matter could be referred to the Committee on Procedure to be looked at.
On Question, Bill read 3a, and passed.

SEXUAL OFFENCES (SCOTLAND) BILL [H.L.]
Lord BOOTHBY: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Lord Boothby.)
Lord LEATHERLAND: My Lords, in view of our rather excited exchanges at Question Time a few minutes ago, are we going to see a film about this Bill?
On Question, Bill read 3a, and passed, and sent to the Commons.

NEW TOWNS BILL
3.39 p.m.
Baroness STEDMAN: My Lords, I beg to move that this Bill be now read a second time. As the House knows, I have something of a special interest in the new towns in that, until I took on my present appointment, I was a member of the board of the Peterborough Development Corporation and had the privilege of being closely involved with its work.
The purpose of this Bill is to increase the limit which is set from time to time in Acts of this kind on the amount of money which may be borrowed by new town development corporations and the Commission for New Towns. The current limit of £2,250 million was set in May last year by the New Towns (Limit on Borrowing) Order 1976 following the last piece of legislation of this kind, the New Towns Act 1975. That limit encompasses the total of all outstanding debt by new towns since they were first established by the farsighted legislation of 1946. The existing limit is expected to be reached by September or October of this year and this Bill accordingly provides for further borrowing to be made available by raising the limit to £2,750 million, with provision for it to be raised by a further £500 million by an order to be made by my right honourable friend the Secretary of State. Any such order will require Parliamentary approval by way of an Affirmative Resolution in another place.
When this Bill was debated in another place the Opposition repeatedly claimed that no explanation had been given for the large sums of money which new towns were being authorised by the Bill to borrow. That claim was coupled with the suggestion that the need for the Bill could be largely avoided if private investment funds were brought into the new towns, either by financing joint developments or by selling existing new town assets to finance further development. Even though these criticisms of this Bill were misguided, as my honourable friend the Parliamentary Under-Secretary clearly demonstrated, they were twice pressed to a Division, despite the very serious consequences which would have followed had the Opposition been successful in denying the new towns these funds.
In view of what has gone before, I take
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this opportunity to answer yet again the criticisms of this Bill in another place—and perhaps forestall some which might otherwise be made here—by explaining in some detail why this money is needed and why the Government believe there is not at the present time any alternative to this Bill for providing it.
In one sense the purposes to which this money will be put are obvious. It will be used for the provision of houses, factories and shops, for roads and sewers and for the many amenities and facilities necessary to turn the towns into living and working communities. Three-quarters of the money in this Bill is required for capital investment in the physical fabric of our new towns. The expenditure was foreshadowed in the Government's expenditure plans which were published in the recent White Paper, Cmnd. 6721. These plans provide for about £300 million of new investment annually during the next three years. This figure requires further explanation. Perhaps some of the earlier confusion stems from the fact that the White Paper identifies only housing investment of £143 million in 1978–79 and £175 million in 1979–80 as separate items. The figure for new investment in all the other things I have mentioned is not separately identified but is aggregated with similar expenditure by local authorities. But allowance must he made for investment in these other aspects of new town development, since it all counts against the borrowing limit.
Moreover, these expenditure figures are set in the 1976 PESC survey prices and the new towns borrowing limit is not. No matter how helpful it would be for new towns to continue to pay for their activities at the prices which obtained in November 1975 they will, like all of us, have to continue to pay cash. The figures which are derived from the White Paper have, therefore, to be adjusted to take account of the expected increase in costs, particularly in construction costs. These changes are very difficult to predict but our best estimate at present is, as I said earlier, that new town investment will on average be about £300 million in cash terms for the next three years.
On top of this new investment must be added borrowing of about £100 million each year, again in cash terms, to meet revenue deficits which arise principally in

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the second and third generation towns which at this early stage of their development are not able to meet their debt charges from their rent income.
Thus I think that it will be clear how we have arrived at our estimate, that the proposed increase in the borrowing limit will last for some two and a half years—expiring during the second half of the financial year 1979–80—on the basis of the programme of expenditure which has already been announced. But it is difficult to be precise about how long the money will last, since much depends on future movements in interest rates and costs and on how quickly programmes can be implemented.
I should like to turn now to the suggestion that the need for this Bill could be largely avoided by seeking other sources of finance in the private investment market. One untapped source of funds, it is claimed, lies in projects of joint development financed by institutional funds on what we have come to call lease and lease-back arrangements. But there is nothing new about this suggestion, nor have the Government any objection to it. Indeed, it is already happening. Between 1969, when a previous Labour Government first gave approval for investment of this kind and established the Advisory Panel on Institutional Finance in New Towns, and May 1977, some 27 separate schemes for lease and lease-back arrangements were entered into in the new towns, involving sums of £55·2 million. I am delighted to tell the House that the Peterborough Development Corporation have just agreed lease and lease-back arrangements with Norwich Union Insurance who will advance £24 million towards the cost of a new shopping centre there. These are obviously useful additions to the funds available to our new towns, but it must be admitted that it does not seem likely that the contributions from these sources could be quickly expanded so that they substantially reduce the amount of borrowing that will be necessary during the lifetime of this Bill.
A more difficult aspect of the question of bringing institutional funds to the new towns arises in considering whether existing new town assets should be "rolled over" to finance further develop-
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ments. My honourable friend the Parliamentary Under-Secretary, when he spoke during the Third Reading debate in another place, explained what would be involved in order to be able to adopt such a policy in an effective and businesslike manner. I should like, with the forbearance of the House, to repeat what my honourable friend said:
"It is absolutely vital that the complexity of the background to the creation of the assets since the new town programme began is fully understood. The structure of the holdings in terms of the leasehold interests which attach to them, the rates of return and the existence or otherwise of the opportunities of review of rentals have to be taken into account. A fundamental analysis of these interests would have to be undertaken so that a realistic assessment could be made not only of the likely market value of those assets which might be selected for disposal but also to form some assessment of the financial loss which might be incurred by premature disposal, and at the heart of the exercise is the identification of the precise kind of interest which might be disposed of, for there is little doubt that outright disposal of freeholds which are, for instance, subject to long leaseholds at low annual rentals without review clauses—which was certainly the acceptable thing in the early days of the new towns—could be an irresponsible short-term activity".—[Official Report, Commons; 20/6/77; col. 1024.]
Thus on practical rather than ideological grounds, to determine the merits of such a policy will require a great deal of time and consideration. Managing a marketing exercise of the size and sophistication involved would likewise require much skilful preparation.
My right honourable friend the Secretary of State has agreed to consider the issues involved and he is now doing so. But it is clear that a programme of disposals on a scale sufficient to affect substantially the need for further borrowing in new towns during the two to two and a half year life of this Bill could not be undertaken in a way which was consistent with the proper management of public assets. I hope I have explained the need for this Bill and the way in which it relates to previously announced spending programmes. I hope, too, that I have been able to satisfy your Lordships that while our minds are certainly not closed to the use of other sources of funds for the new towns, those proposed do not offer an alternative to this Bill.
My Lords, I apologise for speaking at some length on the need for this Bill in the light of the points made in another place and I shall therefore be sparing in

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my general remarks on the virtues of the new towns and the value they offer, in social and ultimately in financial terms, for the substantial public investment in them. I think it is unnecessary in any event to dwell on this. There is general agreement here, in the country at large and internationally that our new towns have been outstandingly successful. That success has stemmed partly from the imaginative Act of 1946 and partly from the effort and dedication of the new town staff in using the money which has been provided over the years, not only to build houses and factories but to translate that hare provision into real communities providing improved living conditions and security for those who live and work there.
It is no reflection on the success of the new towns that my right honourable friend has recently proposed lower population targets for the third generation towns. Those revised targets have stemmed primarily from the very substantial reduction in the forecasts of population growth in the country as a whole. Lower population growth in the towns will, of course, eventually be reflected in the size of the continuing investment programme, and some savings which will allow some £10 million next year and £20 million the year after will be redeployed for other uses and are already in prospect. But since it is intended substantially to maintain the momentum of development in the third generation towns, it is not expected that larger savings will accrue until these towns begin to approach their revised population targets. Those savings will therefore be meat for discussion during a future new towns Money Bill. In the meantime, this Bill is necessary to allow the new towns to proceed with their still much needed work. There is, in the short term at least, no feasible alternative to this Bill and I have no hesitation in commending it to your Lordships. It is of course a Money Bill, but that does not inhibit discussion on it in your Lordships' House. I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a,—(Baroness Stedman.)
3.53 p.m.
Baroness YOUNG: My Lords, I should like to thank the noble Baroness, Lady
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Stedman, for introducing this Bill to us this afternoon. I do not always find myself in agreement with her, but, as she knows, I very much admire her knowledge of new towns and the way she has put out her case. I think that, from her point of view, she has made a very good case indeed for this Bill. It is of course a very important matter. It presents us with an opportunity to discuss new towns as a whole and new town policies and I think it is disappointing that so few have taken this opportunity to take part in the debate today.
I was particularly glad to hear her explanation as to how long this large sum of money is expected to last. This question was raised on several occasions in another place, and it is helpful to know that it is expected to last for approximately two and a half to three years. Then, presumably, we shall have a similar debate all over again. I do not intend to repeat the arguments which have already been set out fully in another place, but I should like to raise three main points. As the noble Baroness has said, the effect of this Bill is to allow new towns to borrow £1,000 million to last, as we now know, for the next two and a half years. It is of course an enormous sum of money, and, although it has all been set out in the Government expenditure White Papers, nevertheless anyone in local government always looks with a certain degree of scepticism nowadays when very large sums of money are going to be given to one part of local government.
After all, we know, and I can quite understand, why the Government have thought it necessary to give so much money to the inner cities. But anyone in local government knows that every time the Government give something to the inner cities they actually take away money that they were going to give to the shire counties, and that in fact there is not an increased amount of money for local government as a whole but it is a reshuffling of the pack between different parts of it. In this particular case it would be helpful to know whether by giving—or more accurately by allowing the new town corporations to borrow—this large sum of money, other sections of local government, notably the counties, the districts and the inner city areas, will be deprived of any money that they would otherwise

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have had. This is a very important point, which I know greatly concerns local authorities.
The second point I should like to make is one that the noble Baroness herself raised about the demographic projections. I do not think that anyone who takes an interest in environmental, educational or social service matters can have failed to read the report by the Central Policy Review Staff on population and the social services, and to try to understand the very important matters which it has set out.
What we do know from it is that the population projections over the last few years have all had to be revised down and the fall in the birthrate is startling, as also is the increase in the number of old people in the population, and in particular the enormous increase in the numbers of those over the age of 75. I think this cannot have other than a major bearing on new town policy, and rather than talking just about the houses I think it is worth considering the complexities of managing this large number of houses that have already been built in new towns and no doubt others that are to be built with the money that we are talking about this afternoon.
What is revealed from this review on population is that, although we have a situation in which there are at the moment more households than houses, and although we have a situation in the country as a whole in which the birthrate is falling, the growth of headship of families or the numbers of households of single persons is very much on the increase. Young people are moving away from their families and setting up home on their own; widows and widowers and elderly relatives, instead of living with their families are living alone and consequently there has been a tremendous growth in the number of single person households. Anyone who has looked at new towns, visited them or studied them will know that there is very little single person accommodation in them and I wonder whether spending yet more money on the development of houses is the right course of action, or whether we ought not to be thinking of a policy of converting a great many of the three-bedroomed houses into flats suitable for single people so that we are actually making a much more effective use of the housing stock.
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What occurred was a large build-up of young couples in new towns, and, as that rate is not going to continue, socially it would be far better to devise ways of encouraging older people to go into new towns. I myself feel that we make a great mistake in all our policies by not looking at the family as a whole, encouraging the family to stay together and to help one another. One of the defects of housing policy which has been brought home to me time and again, whether by one parent families, by the elderly, or by couples waiting to get houses, is that often, for example, by moving out into new towns they uproot themselves from all their relatives and they are cut off. Therefore, I consider that in new town expenditure it is necessary to see how the type of housing is being developed, and whether it is housing of the kind that keeps families together—particularly elderly relatives—so that in a real sense we have a community, and not a vast town with almost everybody in one age group.
I should like to return to the point about buying new town houses. I appreciate that this is ground over which we have trodden many times before, and I do not intend to elaborate this afternoon all the arguments for encouraging people to buy a new town house, nor, as I should like to see, for new town corporations selling their houses to their tenants whenever they would like to have them. However, the noble Baroness, Lady Stedman, spoke about the problems of financing new towns, and indeed that is what the Bill is all about. It seems to me that you create a much better community or town, call it what you will, if people own their own property or, at least, if a large proportion of people own their own property, and if businesses can buy the freeholds in the town.
If I took down her words correctly, the noble Baroness spoke about two methods of financing, one of which was the special scheme of leasing and lease back. She quoted the fact that there were 27 such schemes, and I entirely agree that they are extremely valuable. However, many small businesses want the right to buy a freehold in the middle of a town. I suspect that it was the combination of small businesses and houses that made the cities what they were. The fact that these have all been broken up and disbanded is

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one of the reasons why we have the present problems of the inner city. Therefore, I believe that the new towns would become better places if there were more people who owned their houses and more businesses privately owned on land that they owned themselves, because all those people would have identified with the place by actually putting their own money into the place where they lived.
The third matter to which I wish to draw attention is the relationship of new town policy with inner cities. It was not so long ago that your Lordships' House had an extremely interesting and important debate on the problems of inner cities. Indeed, the Government have issued a great many very interesting publications on the problems of inner cities, the studies that have been done and the amount of money that is required to revive the centres of towns. The figures indicating the depopulation of the cities of Liverpool, Manchester and London are well known and need no further repetition. Anyone who visits those places cannot help but be struck by the acres of empty and derelict land and the vandalism that is everywhere in the huge open ugly spaces. Therefore, we need to be very careful that we have the balance right in encouraging another £1,000 million of expenditure in new towns.
New towns have their contribution to make but, in developing the new we do not want to break up and ruin the old. There is a moral for us when looking at the empty old inner cities and the new centres in the new towns. It is essential as a matter of public policy that we get the balance right. As the noble Baroness Lady Stedman, has said, this is a Money Bill. It is not one to which we shall return in Committee or other stages. I am not someone who will condemn the new town policy. In my view some very interesting ideas have been tried out in them. However, they have not achieved quite the measure of success that we should have wished in many cases, because it is very difficult to create a new town and the community that lives in it. If one studies the history of towns one sees that they are places that grew organically. People wanted to go to live in them not because they were obliged to do so but because they were places where there were jobs. It is extremely difficult to create artificially something which has grown in other parts of the country naturally.
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Therefore, when we are short of money and in difficult economic circumstances, we must be careful that the money we put into new towns will not be taken away from other places that need it very badly. We ought to allow new towns a period to develop and grow naturally rather than force extra expansion upon them.
4.5 p.m.
Lord RAGLAN: My Lords, the noble Baroness, Lady Young, referred to a most important factor as regards the development of new towns. The yardstick previously favoured the building of three-bedroomed houses, but now new towns are being encouraged to build far more single-person dwellings. The single, biggest factor to stagger or surprise our policies on planning in the past 10 or 15 years has been the reduction of the occupation rate of houses which has dropped from about 4·1 per house to 2·9 per house. This has meant that a quarter more people are looking for houses than otherwise would have been the case, and this is one of the main reasons we continue to be short of housing.
I have been chairman of a new town for seven years and therefore I am interested in the purpose of the Bill. Our new town is awaiting the decision of the Secretary of State as to whether to go ahead with a small expansion. Therefore, if all goes well, I suppose that some of the money concerned in the Bill may come our way. We must wait and see, and waiting is a difficult business for all concerned.
Having declared what might be described as my interest, I wish to draw your Lordships' attention to certain matters relating to the management of new towns which I consider pertinent to raise during the passage of the Bill. In the long-term management of their affairs, new towns have enjoyed one great advantage and suffered from one disadvantage. The advantage is that, although new towns are a nationalised industry, they have not encountered the ambivalence of attitude which has made the effective and efficient running of our other nationalised industries so difficult. They were pioneered by a deeply imaginative feat of private enterprise, but the legatees of these pioneers were happy that under the 1947

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Act the Government had espoused their cause. There was no ideological clash, there was no history of bitterness and there were no undertones or overtones of confiscation.
Therefore, successive Governments have continued to back new towns and put money into them. Although the towns went through a period when they received a great deal of criticism, and much of that criticism may have derived from the fact that the relations between them and the local authorities were sometimes strained, it is now widely accepted all over the world that they have been extremely successful. Recently they passed a severe examination, and it has been shown that they are not in competition with the inner cities but have been responsible for providing a planned environment for about 10 per cent. of those who have voluntarily chosen to leave our city centres. All this is good and goes some way to explain why the new towns are run by well-adjusted characters who believe in what they are doing and are pleased and proud to do it.
The disadvantage, from which I believe they suffer, stems from their being under direct Parliamentary control, or rather under the relevant Minister via the Department of the Environment. Apart from some inevitable ups and downs, the liaison between the Department of the Environment's New Towns Department and the new towns themselves, is a good and constructive one. However, as a result of coming directly under a Minister, we feel the passing of every and any breeze which is stirred up during the airing of policy views, whether by the Government or by the Opposition. We are exposed to the personal opinions of each Minister who is put in charge of us.
Some of the towns are now over 25 years old. They represent by their nature a very long-term investment, demanding, one would think, a long-term policy of a kind. There can be in that long term many changes of Government. However, in the shortest term it takes, as has been recognised in the recent housing Green Paper, an average of four years from beginning to acquire the land until the time when the houses begin to be occupied.
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Yet in those four years there can be two changes of Government and/or three changes of Minister in charge. I submit that no commercial undertaking would sensibly be subjected to or be liable to so many changes in top management and changes of policy or threats of changes in policy. Furthermore, to add to the difficulties, each fresh Minister comes into the job with ideas and prejudices—he would not be human if he did not—but, when faced with actuality, he almost certainly has a change of mind, he modifies his views. Therefore, every change of Minister is likely to bring two changes of policy directly affecting new towns.
If one puts this kind of uncertainty alongside the need to which everyone is exposed, that is, to cater for the tap inevitably being turned on and off due to changes in the economic climate, it seems to me that a better way should be found of running the new towns programme. I suggest that perhaps this could be done by putting them under a State holding company of a kind, and a possible framework to build this on exists in the shape of the New Towns Commission. I have not thought through all the difficulties which might accompany such an operation. I am just looking for a way in which the policy direction on new towns could be taken somewhat further away from the influences which inevitably flow from having them under direct Ministerial control. I must add that nothing that I have said is intended to reflect in any way at all upon the intelligence or competence of any individual. It is just that I strongly believe that this aspect of our system of government is detrimental to the good running of the new towns. May I also add that I speak for no other person or organisation, and that the opinions are my own.
My Lords, I thought it might be helpful if I made a very short comment about the assets of new towns. I have seen it suggested that they should be valued, and, speaking for my own town, I do not think it would be a difficult operation to do some sort of valuation, although it would take some time. The historical costs are documented and the present day value of property can be guessed at, although it would be very hard indeed to apportion the general development expenses. But may I put in a word of caution. Running a new town is not a

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strictly commercial operation. Sacrifices in potential returns have to be made in the interests of improving community life. For instance, we had to yield the rent from a store in order to obtain a cinema which we knew would not be viable on its own. Incidentally, I believe that the Coal Board Pension Fund were involved somewhere in that deal, and that was long before the Norwich Union got involved in Peterborough.
We are not in the least a monolithically Government owned concern, and it is a myth that new towns are wholly Government owned; but we do retain the freehold if we can. My advice to anyone who consulted me—I am offering the service free this afternoon, of course—would be that retention of the freehold is a very important tool, both of planning and of management; and in the case of our town centre, which must be treated as a whole, it is an essential tool. However strong planning powers appear to be, possession is still nine-tenths of the law. In the interests of managing the assets of new towns on behalf of the community, I think upon examination it will be seen how necessary it is for the corporations to retain the freehold, if possible. We have sold freeholds on a matter of judgment, but, unless I was shown a very good reason indeed why I should sell, I would not do so as a matter of policy.
My Lords, I greatly welcome the informed debate which has been taking place in the last few months on policy towards new towns. Particularly I welcome the increasing reference which has been made to the desirability of using bodies of their structure to help in the renovation of old city areas. I believe that much good could come of that, but at the moment that is another matter.
4.17 p.m.
Lord SHINWELL: My Lords, it is very difficult to enter into competition with experts on this subject, and certainly I would not attempt to emulate the expertise to which we have just listened. But if I had my way, and could ensure a respectable vote in your Lordships' House, I would throw a spanner into the works, with what courage I possess, to ensure that not a single penny further should be spent on the new towns without a reappraisal of what has happened since
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1946, including looking at the vast sums of money that have been spent, and in particular whether we have gained the advantage which is justified from that expenditure and endeavour. Nothing that I say can detract from my congratulations to my noble friend who presented the case with such clarity, but I am bound to say that, in this thin House, with these wide open spaces, to be discussing the expenditure of hundreds of millions of pounds in the next few years, including vast borrowing facilities from whatever source can be found, is just a little too much.
I recall as a member of the Cabinet in 1946, when this concept was initiated, that there was considerable enthusiasm when the venture was exposed for the first time. The intention then was to escape from the squalor, sometimes the filth, and almost one could describe it as the inhumanity of existence in various parts of the country; I can recall in particular the county of Durham. However, we decided to embark on this alleged solution of the problem, only to create a vast number of others, because in creating the new towns we simultaneously created a number of ghost towns in the surrounding neigh-bourhoods. In fact if we had expended all the endeavour, all the industry, all the intelligence, and in particular all the finance that has gone into the new towns since 1946, in order to rehabilitate the old towns, we should have made a far better job of it.
I am not complaining about the advantage of a new town as compared with a derelict area which is blotched with slums and the like. Many of the new towns are admirable—probably every one of them can be regarded as admirable. I have not seen them all, but I have seen some. However, I would remind Members of your Lordships' House of the original idea, which was not merely to build houses, although that was essential and a prerequisite of the advent of industry because people had to have accommodation. The original idea was to promote industry in those areas and it was thought and argued very eloquently and intelligently by the experts from all sides of industry that new industries would be encouraged to go to the new towns.
That is far from being the case. Of course, many new industries have gone to the new towns and have then found

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themselves to be in a bankrupt condition. Many have discovered that it was possible to survive only with aid from the Government. Every kind of Government since 1946 has had to come to their aid. If that aid had been provided for some of the towns I have in mind—the villages and townships in the county of Durham, in the North-West and elsewhere—we should not now he faced with the derelict conditions that are to be found in those areas. At the time, it was not foreseen, particularly in the mining areas, that the mining industry would suffer pit closures on a vast scale and that hundreds of pits would close down in areas where the new towns were to be built—that is, not in the townships themselves but in areas contiguous to those townships.
I wonder whether the time has not arrived when the Government should embark on an independent examination. I do not mean the setting up of a Royal Commission. I do not like Royal Commissions; they never really do any good. They talk a lot and come to conclusions only to find that there have been more errors of judgment at the end of the day than at the beginning. There should be an examination of the problem by an unbiassed, independent board. That board should not comprise—and I say this with great respect—those who are members of the boards of new towns, who are naturally enthusiastic about their associations.
I mean no disrespect to my noble friend Lord Raglan, but I have had experience of being canvassed over and over again to see whether it was possible to use my influence—not that I ever had any at any time—in order to ensure the appointment of certain people either as chairman of a new board or corporation as it was called, or as members of a committee; or to exert pressure on a member of a committee of one of these corporations to the effect that it was now time to make room for someone else. I am not suggesting that any Member of your Lordships' House would be in that situation, but that sort of thing has happened One becomes a member of a committee or a board and immediately becomes enthusiastic and fascinated by its transactions and hopes for the best; naturally, one says the best one can on
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behalf of the project. It is now time to put an end to all that.
Lord RAGLAN: My Lords, perhaps I may offer my noble friend a seat on my board!
Lord SHINWELL: My Lords, I cannot recall ever having been offered a seat on any board. If I may say so, this matter is somewhat irrelevant, although I never object to interruptions, having been accustomed to them all my life. I can simply say that no Government have ever asked me to be a member of any board. I have never been a member of a board where there was anything gainful. I certainly mean nothing offensive when I say that there are at least 40 or 50 Members of your Lordships' House who have Government appointments. I have gone through the list. Some of them even have two salaries and many have part-time jobs with the appropriate salaries. During my whole existence in political life in this country I have never once been offered an appointment of that kind. I cannot say whether I should have accepted it, had I been offered one. However, that has nothing to do with the subject under discussion.
I suggest that there should be some examination of this problem—for it is a problem—before we spend too much money. I do not like the idea of investment and obtaining money from sources outside the Government. My noble friend Lord Raglan suggested that one of the problems facing the new towns is that they are under Ministerial control. I believe that the trouble lies in the fact that they are not under Ministerial control; they are a form of private enterprise and do pretty much as they like. I cannot understand why they cannot be transferred to the local authority in the area, as was the idea many years ago. Local authorities are elected bodies and there is no reason why we should not inject democracy into the new towns. At present, there is none.
The mere fact that my noble friend Lord Raglan is chairman of a board does not mean that he acts in a democratic fashion. As far as I know he never consults electors in the area about what the board should do. Of course not. It is a kind of private enterprise. It is accepted. A person is appointed as chairman and it is beside the point to ask whether he is an expert. He

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may be a politician, a would-be politician, a journalist, a retired businessman or a retired member of the Forces. Usually he is the latter and I do not object to such people getting a job at the end of their period of service in the Forces.
But what are the results? They carry on in the same old-fashioned way—in a form of private enterprise. No! The whole thing should be transferred to the local authorities, and the sooner the better. If I had the chance and if I could find anyone to support me, I would vote against any further finance being provided for these bodies. To begin with, it was an excellent and wonderful idea, an admirable concept. We expected much of it. On the whole, we have gained very little from it. We have not had the industries that we expected. A great many problems have been thrown into the situation. It is about time that we reversed the position and asked for a reappraisal of the whole situation, at any rate before spending vast sums of money.
4.30 p.m.
Lord LEATHERLAND: My Lords, I wholeheartedly agree with so many of the views of my noble friend Lord Shinwell that I hesitate to stand up and say that I disagree with practically everything that he has said about new towns. Probably he knows more about them than I do. He says that he was a Member of the Cabinet which inaugurated the new town system. I was not a member of that Cabinet—but that is probably the country's loss, and I will not pursue the point.
My noble friend has mentioned the difficulty which industry finds when it sets up its factories in new towns. He perhaps has been speaking of Durham where they have had Peterlee, which has not been among the most successful of the new towns, I will agree; but in my county of Essex we have two new towns and our experience there with regard to industry is diametrically opposed to that which my noble friend suggests.
We have two new towns, Harlow and Basildon. Harlow, I had nothing to do with its establishment. Basildon, I had very much to do with its establishment; I was one of its progenitors. I was the finance committee chairman of the local council in whose area my late noble friend Lord Silkin proposed to put a new town. We discussed whether the
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new town would be a financial advantage to the local authority. We analysed all the figures and found that the existing rated value of every hereditament in the district was £10 a year; so if you imposed a rate of 10s. in the pound, that brought you in the sum of £5.
We sat down and considered the matter. We said, "Well, if Mr. Silkin"—as he then was—"puts the new town in the middle of the four townships which constitute our urban district area then, as the years go by, this town will grow and grow and take in these four little townships where there are many unmade roads, where there is no street lighting, where there is no water supply in many cases, and certainly no sewerage supply". Then I said, "We will, with Government money, get a whole face cleaning operation put into operation in this part of Essex", and so it has worked out.
My noble friend suggested that the factories had great difficulty in running themselves successfully in these new towns. In Basildon, with the formation of which, as I said, I had very much to do, I had Mr. Silkin down at my country house night after night, and we went round the whole district urging upon the people the many advantages the new town would bring. It was necessary to do that because many of them, living in their ugly, insanitary little shacks around the fields, did not want to move. They have altered their minds since then.
The question of factories is one that has been a huge success in these two Essex New Towns. My noble friend suggested that it was desirable to have new industries. Well, at Basildon, we have a huge factory by Marconi; we have another one by the Ilford Film Company; we have another one, Yardleys the perfumiers, who I suppose can be regarded as a useful kind of institution, and we have a huge dairy factory that has established itself and has turned out hundreds of thousands of cartons of yoghurt every day. Those are new industries involved in the production of new products.
As for the degree to which these industries prosper, we set aside in Basildon a particular area for what we called nursery factories, where the little businessman could go, have a little factory of his own which he would rent from us, and then we would watch and see him develop it.

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Time after time the little businessmen who set up their businesses and got them going in these nursery factories have come to us and said, "Please let us have a bigger factory. We have increased our turnover tenfold during the last two or three years".
I know something about Basildon not only because I played, I say it modestly, such an active part in its foundation, but because later on in years the then Minister asked me to join its board, and for four years I sat on its board. Of course I was immediately removed when the Labour Government were defeated and a Conservative Government came into Office. That is one of the little passages in my life about which I am very sorry indeed. We were doing something constructive.
What is more—we have not heard a great deal about this in the debate today—these new towns have brought a great sum in human happiness to many thousands of people. I have mentioned the people who were living in little, insanitary shacks around the fields between the four little townships in our Essex area. Many of those people have now been accommodated in fine homes. They are very happy. Their children are going to first class new schools, and their husbands are able to cycle, or walk, to the factory where they want to work, instead of having to spend £2 or £3 and many hours a week travelling up to London, sometimes in the very early hours of the morning.
The noble Baroness, Lady Young, said something about these new towns growing up naturally. They are growing up naturally because people are acting naturally. People are having babies. These babies then become young people of 16 and 20, and, again acting naturally, the second generation gets married and they, in turn, again act naturally and have babies. So you get applications sometimes for new houses from those second and third generations, and we are able to accommodate them in the new towns. Therefore, the family is being kept together instead of being disintegrated, as the noble Baroness mentioned. There are disintegrations, I quite agree, when grandma stays in Stepney and the younger members of the family go out into the country.
One of the criticisms that was made of new towns in the early days was that
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there was no community spirit; people had emigrated to the new towns from this place and that place and the other place, and they did not know each other. But I know that in Basildon—and it is the same in Harlow—there are scores and scores of social societies which have grown up: music societies; operatic societies; billiard clubs; bowling clubs; local Labour parties, and all kinds of other worthy institutions, and there is a community spirit growing up in these places.
The noble Baroness rather hinted at the suggestion that these towns were becoming rather one class communities. She did not use the words directly, but she suggested that there should be more opportunity for people to purchase their houses. I agree with that. But in Basildon we foresaw this and set out what we called a middle class area—although we did not use such an old fashioned term as that. This was an area of superior houses which would be occupied by managers of the local factories and people of that ilk—not, I may say, by county councillors.
There is one thing that must be said about the financial aspect of this matter. The noble Baroness suggested, and my noble friend suggested, that it might be better to build and rebuild on some of the vacant plots in our rather deserted big cities. Well, if the new town corporation had to buy up land in those places the prices would be enormous and it would be absolutely impossible to build houses that could be let at anything like a reasonable rent. Another aspect of the financial question I must mention before I sit down, although I have been standing much longer than I expected to. In the early days of these new towns, when the county council had to provide clinics, schools, all kinds of other institutions, fire brigades and police forces, we found that the rateable revenue which we received from the new towns was less than what these facilities were costing. But now that the towns have grown up to a reasonable size the rateable revenue received is showing a surplus over the expenditure that the county council had had to incur. I suppose complaints can be made, and faults can be found about new towns; but to my mind, in terms of human happiness, in terms of human convenience, the establishment of the

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new towns has been one of the finest things that we have seen in this generation, and so I commend the Bill.
4.40 p.m.
The Lord Bishop of BIRMINGHAM: My Lords, I hesitate to rise to speak in this debate, not having put my name to the list of speakers, but as I once worked as a young parson in a parish in a new town, and later, on moving to Lancashire, had a fair amount to do, on the periphery, so to speak, with the development of the new town of Skelmersdale, I feel impelled to utter a word, first in support of what has been said about the problems of maintaining full employment and indeed of engendering sufficient employment in new towns. This is clearly a problem which has not yet been resolved and which poses very great difficulties. However, I am sure it is a matter of which Her Majesty's Government will never lose sight; it must be very disappointing indeed for people who move with their family to a new town, with all the hopes of job opportunity, only to find that those hopes are not realised.
There is a point which may seem trivial to some noble Lords but which, from my point of view, is not be be so regarded. It is the reference by the noble Lord, Lord Raglan, to the importance of retaining the freehold in new towns, especially in new town centres. I can admit the force of this but I hope it will not be exclusive, not least so far as the Churches are concerned, and I mean not only the Established Church and the other historic Churches of a Christian tradition in this land, but of other faiths which are taking their place in the pattern of the community and which, because they have at least a national background to them, can be regarded to be making a permanent contribution to the future religious structure of the country. To deny the freehold where Churches such as I have described wish to build themselves into the situation would, I believe, be a considerable impediment and I hope that no hard and fast line will be taken in that regard.
I welcome the fact that in supporting the provision of a very large amount of additional money for the new towns, we can know that this will in present
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circumstances help to forward the reclamation of the inner city areas in the old towns. I speak as Bishop of Birmingham and with particular regard to the report about the Small Heath area, one of a number in that city, and of course there are many others which could be cited. The sooner we see evidence of progress on that front the happier we shall be in the older cities and towns in this country, as I hope there will be continuing happiness on the part of those who are directly concerned with the progress of new towns in the other areas.
4.42 p.m.
Baroness STEDMAN: My Lords, this debate has ranged much wider, with many more participants, than we originally anticipated, but I am delighted at the interest that has been shown in it. I wish also to thank the noble Baroness, Lady Young., for her rather guarded welcome to the Bill and for her acceptance of the need for the new towns to have this facility to continue with their borrowing and with their work. Lady Young expressed concern over whether, in allowing new towns to borrow this large amount of money, it would mean that other sections of local government would be deprived of money which they thought they were going to get. I have seen no statements or papers of any kind implying that any other local government service will lose out because we are voting this afternoon in support of a Bill to enable the new towns to continue with their borrowing.
Indeed, the Government, through the new towns, are giving help to others, particularly the shire counties, where, as the noble Baroness will know, I have been concerned, both before becoming a Member of the Front Bench and since, about the effect of new towns within shirecounties and the effect of the cost of services in providing the facilities for the people coming in, in advance of getting any return in rateable value from them. I am sure the noble Baroness knows that there are now provisions whereby, if the rate burden in the shire counties proves to be too much because of the inclusion of a new town within their boundaries, the new town development corporations have power to help out the shire counties. Indeed, from the figures I have with me I see that the amounts that are being handed over—

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the contribution towards the burden—vary from £70,000 plus to over £1 million in some cases, to enable them to meet their obligations to the newcomers. We are, therefore, trying to let the new towns' money also be available to help with the local authority services that are needed for those people who go into the new towns.
The noble Baroness also referred to the sale of new town housing. I recall the debate we had when there was a suggestion of the handing over of the housing in the first generation of new towns and the question of the sale of new town housing arose, and it was my privilege in that debate to give the criteria by which the then Minister for Planning would consider applications from the new towns for permission to sell their new housing. In fact, we announced last May that we were considering the resumption of the sale of new town houses and that applications to do so were being considered from individual towns where the waiting list was less than three months for the main category of people housed in that town and where the new town development corporation had had the necessary consultation with the local authorities in the area. So far, nine of the corporations in England and five of the Scottish new towns have all been given permission to sell their houses and the sales are going ahead; and in addition the Commission for New Towns has made an application in respect of four of their towns. Thus, I hope Lady Young will be satisfied that, so far as the new towns are concerned at any rate, the Government's object of allowing people to own their own homes, as well as to provide the necessary rented accommodation, is being achieved.
The freehold question is of course a knotty one. It is a matter on which we must accept that on both sides of the House we shall not get absolute agreement. There are certain problems. There are the problems of timing and of management, to which my noble friend Lord Raglan referred. And I know that some of the new town corporations have sold freeholds in very special cases. I am sure that if there were very special cases the Department would still be willing to consider applications from the new town corporations.
Lord Raglan referred to the fact that we need more houses because we now have smaller households. This is something
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we have been finding in the new town in my own district. We find we require nothing like the number of school places that we thought would be needed seven or eight years ago when the new town houses were beginning to be occupied, because smaller families are moving in and smaller families are growing up in the town.
Lord Raglan also referred to the disadvantages of being under a Department of the Environment Minister and to the constant changes of Governments and Ministers, which meant that they had many more problems to deal with than perhaps an ordinary business organisation would have in regard to top management. I could suggest that the moral might be not to change the Government and, if one has a good Minister, not to change the Minister, but perhaps that is looking rather too far ahead.
He also made the extremely interesting suggestion—he admitted that he had not thought it through, and I am sure it is not something he would expect me to take on board without consideration—of some sort of State holding company to control the new towns, which he thought might perhaps be better and which would take them completely out of the local government field. I can see dangers there as well; we would have Ministers saying in Parliament, "This is not the responsibility of the Government but the responsibility of the board", and we should then run into trouble with noble Lords in this House if, as they thought, we evaded questions in that way.
I confess that my noble friend Lord Shinwell rather shook me. I remember, though he probably will not, that some 25 years ago, as a young housewife active in the Labour Party, I marched with my noble friend, in his constituency of Easington, behind his miners' banner in one of their famous miners' marches. I spoke on the same platform with him and was proud to do so. I also stayed with friends in one of the mining villages and they took me to see Peterlee, which was just starting. I must say that, as a young housewife, I would have preferred to live and bring up a family in the houses that were being offered in Peterlee than in the very close back-to back houses in the mining district, although I would accept that perhaps Peterlee did not have the same warm community spirit that one finds in the mining villages.

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The noble Lord asked whether we could have some reappraisal of new towns. That, my Lords, is what we have had. We have had a reappraisal of new towns in connection with inner cities. We have given new targets to the second and third generation new towns in order to make more money available to do just the kind of refurbishing which noble Lords have been asking us to do in our inner cities, to try to make them a much better place in which to live than they have become over the past 20 years.
But there are still many people who will look to the new towns for their homes and for their jobs, and who are just as enthusiastic today as were their original counterparts in 1946. They have a chance of a home, they have a chance of a job. They have all the amenities that go with a new district. They can have these things at rents which they can afford to pay, or at prices at which they can afford to buy their houses. In addition to that, we are now able to give money to the inner cities to help refurbish them.
All new town development boards are under very close scrutiny from their locals. They are not working as a thing apart. Many of the second and third generation new towns have, as of right, representatives of their local authorities on their hoards. From my own knowledge of new towns around my own area, and of the one with which I was involved, I know that there is very close liaison at all levels covering all kinds of amenities that are provided in the old town and the new. There is liaison between the existing authorities and the new town corporation, and it is at member and at officer level. They are certainly under very close scrutiny from the local people.
We hope that we will have more investment of the kind we have talked about, from the pension funds, from Norwich Union and institutions like them, who will help us; but this is not something on which we can depend completely to meet all our demands. Therefore, we must have this Bill to give the new town corporations the opportunity of borrowing the money if they cannot get it from other sources.
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The noble Lord, Lord Leatherland, confirmed my view of the new towns' abilities to attract industry and to provide the homes and the necessary amenities for families, as well as the very great human happiness that they can bring about. I think it was the noble Lord, Lord Shinwell, who spoke of new towns being a thing apart in the early days and not having the same kind of community spirit as older towns. I do not know what other new towns do, but in my own new town our existing city council, our district council, has been under tremendous pressure to do things for the older part of the city. The older residents point to the new residents and tell their city councillors of the kind of amenities and facilities which the new residents have, and to which they think they also are entitled.
The coming of a new town corporation, grafted on, as mine is, to an existing city, has been a tremendous advantage in terms of amenities for people in the older city where, before the advent of the new town, we had no community centres. Now almost every one of the wards in our city has a community centre because it is the practice of the development corporation to provide these facilities within each neighbourhood and each area as it builds it. Therefore the development corporation has also stimulated local demand for these things.
The right reverend Prelate the Bishop of Birmingham, referred to his doubts about the freehold situation as it applies to the Churches. This is a matter which we would have to look at before we could give a blanket assurance that freeholds would always be available for people who wanted to extend their church activities. Again I apologise for drawing on my own experience, but I should like to say that we have a rather super, one-off project within the new town of Peterborough, the Cresset, to which the Churches and all the voluntary organisations have contributed. The Churches are to use the buildings of the Cresset for their services, and the youth clubs and the old people will also use the premises. Surely this is one way in which the ratepayers and the development corporation can help the Church to get established within new areas.
My Lords, I think that, by and large,

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the Members of this House have accepted the need for the Bill, have accepted that our new town corporations are doing a good job, and that they are doing the job which we gave them to do. I am delighted that this Bill is being given a Second Reading, so enabling them to carry on doing that job.
On Question, Bill read 2a; Committee negatived.

LOCAL AUTHORITIES (RESTORATION OF WORKS POWERS) BILL
4.55 P.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, I beg to move that this Bill be now read a second time. This is a very short and simple Bill. It does no more than restore to 25 authorities powers which had been available to them up to the end of March this year. Under the general legislation, the direct labour organisation of a local authority is able to carry out both new construction and maintenance work for its parent authority. It may also undertake maintenance work for other local authorities and a wide range of public bodies. But a direct labour organisation does not have power to undertake new construction work for another local authority.
One of the effects of the local government reorganisation was to pose problems for a number of direct labour organisations since the scope for their employment was seriously affected when functions were transferred between the different types of authority. In particular, this meant that the direct labour organisations of the county boroughs, which were taken over by the new district councils, were no longer able to carry out new construction work on highways and education as those functions were transferred to the county councils.
Temporarily, this situation was dealt with by orders under the Local Government Act 1972. These orders enabled the direct labour organisations of 25 specified district councils to enter into agreements, up to 31st March 1977, to carry out new construction work for
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another local authority within the former county borough or borough area concerned. I should make it quite clear that each of these is wholly within the area of the particular district council, and there is absolutely no case of a direct labour organisation being permitted by the orders to do work outside the administrative area of its authority.
It obviously makes sense to continue these arrangements. For example, where a county council wishes to erect a school in the district council's area, the DLO of the district council may well have built a school for the former county borough council before local government reorganisation, and therefore have the experience and capacity to undertake the work. In these circumstances, it would surely be right for the county council to continue to have the opportunity to engage the DLO of the district council, if it wished to do so. To act otherwise could well be wasteful of resources.
Since the order powers expired at the end of March, the 25 district councils have not been able to enter into fresh agreements—although they have been able to carry on with work already started —and unless the Bill is enacted speedily there could be unnecessary redundancies in these organisations. The one substantive clause in this Bill does not extend the frontiers of direct labour; it simply makes the temporary orders permanent. Direct labour organisations account for only 8 per cent. of all construction output, and employ about 173,000 people. Most of their work consists of repairs and maintenance.
The Government's policy is to encourage efficient direct labour organisations. In this context the Government would have implemented in essence the recommendations in the report of June 1975 by the Chartered Institute of Public Finance and Accountancy. Separate accounts of DLO activities would then have been required. Charges would not have been limited to actual costs as at present, but could be based on original tenders, so that the extent of profits and losses would be known. All appropriate overheads would have had to be taken into account, including a return on capital employed. A local authority would have been under a duty to avoid making

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a loss, and powers would have been taken to close down activities where an organisation failed consistently to meet the financial objective.
This Bill today is concerned simply with 25 authorities, and even then with only a small part of the DLO activities of those authorities. It does not deal with new construction and maintenance work which a DLO may carry out for its own authority, nor with maintenance work which may be undertaken for a wide range of public bodies, including other local authorities; that is, client authorities.
To apply a new accounting system for the work covered by this Bill would mean that these 25 authorities would have to operate two different accounting systems, which would be both confusing and inefficient. It would therefore be unacceptable to include accounting provisions in this narrow, limited Bill, since it needs a far more comprehensive measure of the kind the Government originally intended to introduce. But, even without new accounting provisions, I roust stress that the client authority will itself be concerned to ensure that its work is undertaken as effectively and economically as possible. The safeguarding of the ratepayers' interests will he of particular concern to the authority in deciding the arrangements by which it gets its work done.
The Government will continue their work on improving procedures for direct labour organisations so that these can be embraced by subsequent legislation. Meanwhile, a Departmental Working Party has been concentrating on detailed arrangements on accounting, charging and tendering for new construction work in the light of the recommendations of the Chartered Institute of Public Finance and Accountancy. Its report on this is expected during the summer. The Working Party will then turn its attention to maintenance work, on which a further report by the same body is expected in the autumn. My right honourable friend the Minister for Housing and Construction has already undertaken to issue a consultation document when he has received the reports of the Working Party. My Lords, what we are concerned with today, therefore, I repeat, is a simple but necessary measure which deals with problems stemming from local government
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reorganisation, and I strongly recommend it to the House. I beg to move.
Moved, That the Bill be now read 2a.—(Baroness Birk.)
5.2 p.m.
Baroness YOUNG: My Lords, I should like to thank the noble Baroness, Lady Birk, for introducing this Bill to us this afternoon, and for her explanation. She says, quite rightly, that it is a short Bill, but, nevertheless, it is not quite as simple as I think she would lead the House to believe. As she has said, the Bill puts in statutory form the former orders allowing 25 district councils to carry out works for their county councils and neighbouring district councils in specified areas. These powers lapsed on the 31st March, and the Bill puts the orders in statutory form. This means, in fact, that the orders are permanent, as they are part of a statute; and, of course, as we know, there is a Scottish Bill to follow which takes the legislation into Scotland in a way in which it has not been taken before. So I think it would be wrong to suggest that there is no extension of powers, either in this Bill or, indeed, in the one that accompanies it.
However, what I think is disturbing to us on this side of the House is that, both on Second Reading and certainly on Third Reading, the Government Minister, the right hohourable Mr. Freeson, indicated that in fact a more comprehensive measure should follow; and if I heard the noble Baroness correctly, I think she repeated this statement. At any rate, on the 27th June, at column 132 of the Official Report of the proceedings in another place, Mr. Freeson said:
"As I indicated on Second Reading, I hope that before too long we shall be able to introduce the comprehensive measure that we had originally intended".
So I think there is no doubt at all that this is simply a forerunner, or holding measure, to something of the nature of the Bill originally intended by the Government.
I was therefore surprised to hear that the Government believed that we should have no objections to this, and that it would have a straightforward passage through this House. I think I should make it clear right at the outset that we are in principle opposed to direct labour departments in local authorities, and we are

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certainly opposed to any extension of this form of direct labour because it is, in effect, the nationalisation of the building industry by the back door. It is, I believe, very difficult to make out a case for direct labour building departments as such. I think it is perfectly possible for a local authority to have some direct labour for certain jobs which it would be extremely difficult to get done in any other way than by a local authority. The kind of jobs I am referring to are the gritting of roads in the winter time, and the rather unusual but difficult jobs that have to be done at particular times. But to have building works departments which are in direct competition with private industry seems to us absurd.
It is particularly absurd at a time when local authorities are under such acute financial pressures and when they already have enormous responsibilities which they must undertake. District councils, after all, have very considerable environmental responsibilities, frequently recreational responsibilities, responsibilities for museums and libraries, and so on. To undertake work which could be done by private enterprise seems an absurd way to spend public money.
Furthermore, at this particular time it is a very depressing state of affairs. There are now 204,000 unemployed in the building industry in this country, and I believe this constitutes one-fifth of the total unemployed in this country. It is true that there has been a very slight drop in the figures from February. This is almost inevitable, of course, as figures for construction work always alter in the summer time. Nevertheless, the figures indicate that the unemployment in the building industry is more than just a seasonal matter, and is therefore a very serious matter indeed for the country as a whole. At the same time, over the last two years there have been 2,500 company failures in the building industry, brought about by the general recession. I do not believe anyone can take any pride, either in the unemployment figures or in the business failures. They both indicate the sorry state to which this country has been reduced. What I think underlines them is that it is only by the support of private firms, of private enterprise, that wealth is created in this country to support the very services which local authorities must
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and, indeed, do run. To take away from them by setting up in competition, often in unfair competition, is not a sensible thing for the country to do and is not something which ought in any way to be encouraged because, of course, in almost every case it is a most wasteful exercise.
Many examples have been given of waste by direct building departments, but perhaps I might just say that the fact that there is absolutely no incentive for a direct labour department to be efficient, as of course it cannot go bankrupt, is one of the major difficulties which they are up against. If one considers the fact that last year, for example, the Government-supported National Building Agency produced a report showing that the Camden Borough Council may have lost up to £1 million because of the work done by its direct labour department, this, I think, is a deplorable and shocking event—and this particular example can be repeated time after time in the country. A report in the Evening News only two days ago indicated that, in Wandsworth, repairs to one house have cost the council thousands of more pounds than was necessary, and questions are obviously being asked in that council as to what is going on.
The reason why all this arises, of course, is that there is no suitable accountability for direct works departments. I was very interested to hear what the noble Baroness said on this point. I was interested that there should be a Working Party on accountability, and interested to know that this working party is expected to report later on this year. Nevertheless, I find quite unconvincing the argument that, when the Chartered Institute of Public Finance and Accountancy have published a report in which they make a number of recommendations on accounting procedures, so that it can be shown publicly to the council and to ratepayers whether direct work departments are producing as efficient and as economical a service as private enterprise firms can, when we have all these recommendations before us and when the Government believe them to be right in principle and would like to incorporate them into a larger Bill, they feel unable to incorporate them in this small Bill. Surely it is better to make a start in a small way, even if they cannot be included in something larger, than not to make a start at all, when it is in

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the interests of the local authorities themselves that their accounting procedures should be seen to be publicly appropriate and it is very much in the interests of the ratepayers that they should know that they are getting value for money.
Finally, my Lords, I think there is evidence to show that not all the 25 authorities covered by this Bill are at present making use of their powers, and that some of them would like to have their names taken off the list. This, again, is a matter to which we shall refer in Committee, and I do not intend to go into it further at this stage of the afternoon. Nevertheless, we on this side of the House feel there is no point at all in giving these powers to authorities which neither make use of them nor wish to make use of them.
The noble Baroness said that this was a short Bill; and many of the matters that I have referred to this afternoon will undoubtedly be raised again at the Committee stage. There is no use blinking at the fact that this is simply a forerunner to a larger Bill. In fact because of widespread concern by the building industry up and down the country that the Government, following their statement in the gracious Speech, intended to introduce a larger Bill which would have had the effect of nationalising the building industry, this Bill is the only thing that the Government were able to get through.
It is one that we are opposed to in principle. We believe it is the kind of Bill that encourages inefficiency and wastes public money at a time when the Government, and particularly local government, are short of money. It encourages Departments that are not publicly accountable. Now that the noble Baroness has said that the Government are not at this stage going to include the CIPFA recommendations, I think that this is all the more unfortunate. It is a Bill that we regard as completely unnecessary, and I am sorry that the Government have seen fit to bring it in.
5.11 p.m.
Lord O'HAGAN: My Lords, we are debating a strange little Bill with a strange Long Title: Local Authorities (Restoration of Works Powers) Bill. It sounds like something major and important and when
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we look inside we find that there is almost nothing there. But I would submit to your Lordships that it is important because behind the few, small clauses of the Bill are some major assumptions which have a wider significance.
The first question I should like to ask the noble Baroness, Lady Birk, is this. It follows from something that my noble friend Lady Young has said. Do we need this Bill at all? The noble Baroness read quickly from her brief the case for this legislation; but is it really necessary? And is it necessary to make it permanent? Do we need the whole apparatus of legislation going through both Houses of Parliament if all that is needed is the mere extension of some lapsed powers in a Bill? Can the Government assure the House that this is not a matter that could be done in some other way? Is legislation the answer for something that the noble Baroness said is really an attempt to correct an administrative oversight?
There are other wider questions which this Bill raises. Most of them have already been brought to your Lordships' attention by my noble friend Lady Young, but I should like to underline one or two. Those of us who study this subject know that the Minister for Housing and Reconstruction is a disappointed man. He wanted—and, from all reports still wants—a much wider, more fundamental, more radical Bill than the one now before the House. He was hoping to establish a permanent, far-reaching system for direct labour departments in local authorities to work outside the boundaries of those authorities. He and the Government went further. They intended to widen the scope of the work which direct labour departments are entitled to undertake. Where does this Bill fit into that scheme? Is this merely the forerunner of what the Government originally intended to do and had to withdraw at the last minute? I should like to ask the noble Baroness whether the original intentions of the Government remain the same. Have they withdrawn from them or will that previous Bill be reintroduced when the Parliamentary situation permits?—as it was put in another place. When the situation becomes easier for the Government, will they dust off that old Bill, take it out of the pigeonhole and attempt to ram it through both

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Houses? It seems that the Government are pursuing this Bill merely because they have to give a hint and a promise to their supporters of what they will do when they have the full chance to do so.
This is not a minor or narrow partisan matter; it is something of significance for any of us interested in local government. Local government has many tasks which it is called upon by central Government to do. To carry out those tasks we pay as ratepayers or as taxpayers through the rate support grant. It is very important that Parliament should impose upon local government only the tasks for which local government is qualified; therefore, if direct labour departments are to be extended in their scope and powers at some future time by this Government, we will pay if things go wrong; and we want to know how far the Government's intentions as originally expressed still stand.
There is another matter on which I should like to ask the noble Baroness for more information. It seems to me that what she was saying was self-contradictory. On the one hand, she laid great emphasis on the Government's enthusiasm for proper financial accountability and control of direct labour departments. She mentioned—and my noble friend Lady Young referred to this, also—that a Working Party had been set up and was, I believe, to report later in the summer. Yet both in the other place and here today the Government are saying, "If you had allowed us to go along with our original Bill, our wider Bill, we had a whole range of new techniques for controlling the expenditure of direct labour departments all ready to put on the Statute Book. We were going to make direct labour departments more accountable."
I want to ask the noble Baroness this: if those new procedures were ready to be introduced into a Bill, why are they not in this Bill? If they are ready, why is there a Working Party? It seems to me that the Government are having it both ways at the moment. I understand that the Chartered Institute of Public Finance and Accountancy issued its report in 1975. There has been ample time to study these matters. If the Government have studied them and were going to introduce these proposals into the original Bill, why cannot that be put before the House now?
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There is another matter that I must bring up in this House. I hope that I am not going to awaken the noble Lord, Lord Banks, from a quiet slumber; but what about the Liberal Party? Do they not care about the future of direct labour departments? What is their attitude in this matter? There is no Liberal spokesman down to speak. We want to know where they will stand in this matter. We must presume that silence means consent and that, in contrast to the other place, the Liberal Party in this House is in favour of this Bill and that, although Liberal spokesmen claim the credit for some of the things that happened to the original Bill, in this House they say nothing and care less.
I am in favour of short speeches, especially on short Bills and I will sit down very quickly indeed; but there are many detailed questions to which we must return in Committee because this small Bill has some larger matters concealed within it. Any noble Lord who looks into the question of direct labour organisations can find hosts of detrimental stories. I have a file of them but I will not weary your Lordships with all that I have learned and read. I want to know this from the Government. There are 25 local authorities mentioned in this Bill. I understand that only seven of them make regular use of their powers. What is the point of this Bill if it is for under one-third of the small number of local authorities for which it is designed? Is it really necessary? Or is it not a waste of Parliamentary time and merely a token flag waving to conceal the fact that the Government have had to withdraw the more fundamental measure to which they are still fully committed?
5.19 p.m.
Baroness BIRK: My Lords, the noble Baroness, Lady Young, did not feel able to agree with me that this was a short Bill and quite a simple one. I am always optimistic and I had hoped that everybody would see it the way I saw it. I appreciate that there is a fundamental difference of opinion about whether or not there should be direct labour organisations. That is one basic point. There has been constant doctrinaire opposition to this. There is no use my pretending that there is not a great gulf in this whole

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area. The Government have never claimed—and I certainly would not—that direct labour organisations are always perfect or that there is no room for improvement in their operations. On the other hand, I do not think that the noble Baroness or anybody else could argue that every private building operation is perfect, does not make bad errors or always conducts its business properly. There are occasions where the DLO has been used because the private building contractor has gone bankrupt. It is true that the district auditor's report is often quoted to point out failings in DLOs. The district auditors have also pointed out from time to time that there are savings which DLOs achieve, but these and also the occasions when DLOs have to take over jobs because firms have gone into liquidation, do not receive the same publicity.
There are many direct labour organisations throughout the country which provide an effective and efficient service for the authorities and also the ratepayers. Where work can be undertaken more economically and effectively by a DLO, because of continuity and local knowledge—and much of the work is on maintenance—it is in the ratepayers' interest that it should do so. The noble Baroness was not correct about Scotland. This Bill applies only to England and Wales and no temporary orders were made for Scotland. The Scottish measure simply seeks to regularise the activities of certain authorities which had been working for the predecessor authorities without the necessary powers to do so. That was just righting the situation.
If I may take up the basic points which cover some of the noble Baroness's comments as well, the noble Lord, Lord O'Hagan, asked about the need for the Bill. I repeat that it is required because the Local Government Act 1972, which reorganised local government, failed to deal with the situation of DLOs. The problems were dealt with initially by transitional orders under that Act, but our legal advice now is that the Act is not wide enough to enable the continuation of the powers to be achieved by further orders. If it had been possible to do so, we would certainly have not gone through the time-consuming work of introducing this Bill—and the noble Baroness and the noble Lord, Lord O'Hagan referred to that.
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Of the 25 authorities covered by the orders, 12 have used the powers. In these instances, the total value of work undertaken was nearly £3½million in 1975–76 and over £3½ million in 1976–77. While the use of the powers has been limited, their continuation is important for a number of the authorities. If they were not continued there would be significant redundancies. The noble Baroness is wrong regarding unemployment. I have gone into this matter because I considered the same questions. If one is unemployed, whether one is put out of work because there is no DLO for a local council, or because one worked for a private builder, the effect of unemployment is exactly the same on the individual. It is not right to say that to undertake work which could be done by private enterprise is absurd.
That brings us back to the tremendous gulf between us on that basis and which I do not think can be bridged. What is important for me to try to make clear once again is the difference between this small measure, which is trying to correct the present situation because the orders cannot be continued, and the far more comprehensive measure which the Government had in mind. It is true, as my right honourable friend has said in another place, that that measure in some form or other is still part of Government policy. Noble Lords opposite may dislike this intensely, but that is the situation and we can go on arguing about it till Doomsday. This is a difference in approach and view.
The important point which I tried to explain in moving the Second Reading is why the financial and other accounting provisions cannot he attached to this Bill. The reason is that this Bill applies only to the 25 authorities which were affected by the change in boundaries; and if these provisions were applied to them, they would be in a position of having two sets of accounting to do. It would apply only so far as these functions are concerned. Therefore not only would there be clumsiness but confusion, and an unbearable burden would be put on the local authorities.
Baroness YOUNG: My Lords, I am extremely sorry to interrupt the noble Baroness while she is in the middle of her argument, but is not the point that it would be perfectly possible for a local authority to introduce the CIPFA recom-

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mendations for those parts covered by this Bill, and in the other parts of its direct works department not covered by this Bill? There is nothing to prevent it doing that. Until the CIPFA recommendations are implemented—and this is important—we shall never know whether any direct works department has ever been more efficient than private enterprise because the basis for its accounting is different.
Baroness BIRK: My Lords, where a local authority can introduce any of the proposals, recommendations or advice, where it does not need legislation, there is nothing to stop it working on that basis. What cannot be done is to introduce into this narrow and restricted Bill a whole concept of a different form of financing, accounting and charging, which would require legislation. This legislation is being delayed in order to deal with the whole subject of DLOs. When that happens, the Secretary of State will have the added sanctions which will cover the points which the noble Baroness made regarding when the work of a DLO is not satisfactory. It will also mean that the terms of competition with private contractors are still more clearly laid down and more severely structured.
What seems to be forgotten is that this is not compulsory. No authority or county council has to go to the district council in order to avoid doing its own work; it only does so—and this Bill gives it power to do so—where it is obviously economically and financially beneficial so to do. The authority can still use outside contractors and many do. If authorities—and there are some— do not wish to make use of these powers, then they do not have to do so. It would have introduced hybridity into the Bill if any authorities out of the 25 had been omitted from this legislation.
This legislation keeps a status quo which was there before the 1972 Act and which has been continued by order. I would have thought noble Lords opposite would welcome this, grab it with two hands and say: "Thank goodness! it has not gone so far as we feared anything like this would go". What is going to happen in the future we shall have to leave for legislation. The fact that a Working
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Party is looking into this in great depth to try to get a better balance is a matter for congratulating the Government rather than "bashing" them. But whatever is said about it, and whatever Amendments the noble Baroness and her friends move in Committee, it would not alter the purpose of the Bill, as I have explained it; nor can they turn it into a larger, more sinister animal—which in fact it is not.
Lord O'HAGAN: My Lords, I shall not detain the noble Baroness, but should like simply to put the question which I put to her before; that is, if there were new and improved proposals for accounting procedures in direct labour organisations ready for the original Bill, where are they now? I know that the Long Title of this Bill may be restrictive —we have heard about that—but where are these proposals now? Were they not, in fact, ready in the first place?
Baroness BIRK: My Lords, the proposals would have been contained in the legislation which in fact was not proceeded with and was not published because of the Parliamentary situation in another place. That is the situation, as the noble Lord knows very well; it would have taken a very much more comprehensive look at the whole subject. This, as I keep repeating, is just to bring into line the 25 authorities, because the orders have now lapsed. If we do not do this, there will be redundancies and nothing will have been gained. But, nevertheless, it is not a compulsory measure. The comprehensive Bill, about which the noble Lord, is speaking would have set down the main principles of accounting and also the statutory framework for the detailed controls. The reason why the Working Party is still considering this is that they are still advising on the detailed arrangements. They have already advised on the broad arrangements, but this needs another Bill. I think that the comments addressed by the noble Lord to the Liberal Benches were probably better addressed to them than they would have been to me. I think he is probably right about that.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

NORTHERN IRELAND ACT 1974 (INTERIM PERIOD EXTENSION) ORDER 1977
5.31 p.m.
The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett): My Lords. I beg to move that the Northern Ireland Act 1974 (Interim Period Extension Order) 1977 be approved. In speaking to this order, I should like also to refer to the Northern Ireland (Various Emergency Provisions) (Continuance) Order 1977, which I will be moving immediately after this one. These two orders are closely linked and I hope that it will be for the convenience of the House if we discuss them together, and I then plan to move the second order formally.
The first order deals with direct rule. Under the Northern Ireland Act 1974, the arrangements for direct rule are renewable for a maximum of one year at a time, and the present legislation expires this month. In the present circumstances in Northern Ireland, the Government believe that there is no alternative to direct rule, and I am therefore seeking the approval of the House today to an order which will extend the statutory basis for direct rule for a further year from 16th July. The second order is concerned with security matters.
Although there has been some welcome improvement in recent months, the emergency in Northern Ireland continues and it is therefore necessary to renew for a further six months, from 24th July, the various emergency provisions under the Northern Ireland (Emergency Provisions) Act 1973, the Northern Ireland (Emergency Provisions) (Amendment) Act 1975 and the Northern Ireland (Young Persons) Act 1974.
I think I should emphasise that direct rule is not the Government's preferred form of government for Northern Ireland. Our aim remains the establishment of a form of devolved legislative government which will command widespread acceptance among all the people of Northern Ireland; but until this can be achieved there is no alternative to direct rule. I think it would be fair to say that direct rule is providing stability; this is helpful, hut stability is no substitute for a final constitutional settlement.
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During the period of direct rule, Government policy in Northern Ireland has three main facets. They are these: ending the violence; searching for a durable and acceptable constitutional solution; and improving the economy of Northern Ireland. Each of these aims has a degree of dependence upon the others. Recognising the need for movement on all three fronts, my right honourable friend the Secretary of State for Northern Ireland has in recent weeks taken steps to intensify security operations, to encourage Northern Ireland's political leaders to consider whether constitutional progress can be made and to stimulate the economy.
I believe that there has been some welcome progress on the security front, and this view is certainly justified by the available statistics. The Government are far from complacent and I know that all figures must be used with care, but two points stand out. First, the charging and conviction rate is up. Secondly, the level of violence is down. Comparing the first six months of this year with the corresponding period last year, shooting incidents are down from nearly 900 to just over 650, bomb explosions from almost 400 to 228, the weight of explosives used by terrorists from nine tons to less than two, and deaths from 174 to 79. Injuries have been cut by half. Although the overall trend of violence is unquestionably downwards, this is not to say that the Security Forces or the Government are in any way satisfied with the position. But we are confident that our general strategy is the right one.
I must emphasise, as my right honourable friend did in another place last Thursday, that we do not believe blanket measures will help in the present situation. The reintroduction of detention, or indiscriminate search and destroy operations, would produce few practical dividends to offset the alienation of the many innocent people who would experience the inevitable arbitrary and unfair consequences of such policies. Instead of introducing such draconian measures, we will continue to improve our present security policy. My right honourable friend repeated the main points of that policy of intensification in his speech during the renewal debate in another place last week, and I do not intend to repeat all of them today.

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I turn now to the need to continue direct rule, and to political and constitutional matters. The Government are anxious that there should be no misunderstanding about our constitutional objective in Northern Ireland. This remains the restoration of a devolved legislative Government. The essential criterion for the successful establishment of such a Government is that it should be widely acceptable in Northern Ireland—that is, acceptable to both parts of the community.
At the end of May this year—after the failure of the stoppage called by the United Ulster Action Council and after the district council elections—my right honourable friend held separate meetings with representatives of the official Unionist Party, the Social Democratic and Labour Party, the Alliance Party and the Democratic Unionist Party to discuss both security and constitutional matters. My right honourable friend told all the political Parties he met that, for his part, he was prepared to consider an interim arrangement which would involve the devolution of real power and responsibility, provided that it was an arrangement which would command widespread support from both parts of the community. Some Parties expressed an interest in continuing the discussion by looking at the possibility of creating some form of administration in Northern Ireland which would fall short of full legislative devolution. The exploration of the possibility of some interim arrangement is continuing, but is still at a very early stage.
To turn briefly to the economy, there is no doubt that economic progress is a vital factor in securing stability in Northern Ireland. The Government's economic policy is directed towards alleviating short-term difficulties, broadening Northern Ireland's industrial base and regenerating many of its existing undertakings for the longer term. We hope shortly to have the benefit of a new Economic Council to help us with this task. It is essential that Northern Ireland should be able to attract new investment in growth industries, and the Government regard it as an important part of their job to attract potential investors to Northern Ireland. Whatever we achieve on the industrial front, Northern Ireland, like the rest of the United Kingdom, faces the
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particular problem of very high levels of unemployment among young people.
I am particularly pleased, therefore, that we have been able to announce, in the Youth Opportunities Programme, a major new initiative which will increase by 2,000 to over 6,000 the number of training, job experience and employment places, and which will include a major expansion of further education and special courses for young people available for the Department of Education. The aim will be to offer a range of opportunities to those young people who are not able to get a job by conventional means within a few months of leaving school.
The Government believe that in Northern Ireland the last few months have been a time of slow but steady progress in a number of different ways. I repeat that we are certainly not complacent, and we do not believe we know all the answers. But we do believe that our policies are on the right lines and that they deserve support. We are making sustained and determined efforts to end the violence, to promote understanding among Northern Ireland's political leaders and to stimulate the economy. These three strands of our policy have a common theme and purpose. Our determination is to provide for Northern Ireland a stable future in which its people can live in peace. Direct rule is not our preferred position, but so long as it is necessary the Government will not shirk their responsibility to provide Northern Ireland with impartial, responsible and responsive government. In order to discharge that task, we need the legislation which I am asking your Lordships to renew today. My Lords, I beg to move.
Moved, That the draft Northern Ireland Act 1974 (Interim Period Extension) Order 1977, laid before the House on 24th May, be approved.—(Lord Melchett.)
5.42 p.m.
Viscount LONG: My Lords, I am sure that we are all most grateful to the noble Lord, Lord Melchett, for the way in which he has introduced these two orders, and for giving us so much information both about the economy in Northern Ireland and about security. I feel that it is better if I first say a few brief words on the security angle, because this is what we have all been watching very carefully. There are still certain of these

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frightful IRA gunmen, who are still shooting with their very fine weapons. Only yesterday two more policemen were shot, and the week before last two young soldiers, a padre and an officer were shot while returning from duty. Therefore, we on these Benches support all that the Government are doing to make sure that the security forces are given the best weapons, and to give encouragement from Westminster, in order to counteract the evils of the IRA, as well as to protect those people who always appear to be caught in the crossfire.
What worried some of us recently was the comment of the RUC on the comparison between its weapons and the high velocity rifles of the IRA. So I would ask the noble Lord whether the RUC have now been supplied with new rifles to counteract the IRA, as well as with the vehicles which they need to enable them to manoeuvre in a hurry, and under protection, around the danger spots. Unless we equip the security forces properly, they will be in difficulty before they even begin to move out of their barracks. So, as I said, we support all that the Government are doing to stop the IRA, and those who mistakenly believe that it is right to try to break down the country.
We also welcome the noble Lord's statement on the economy, and the way in which he and his right honourable friend Mr. Roy Mason are trying their hardest to keep the economy stable. The noble Lord mentioned that the Government want to draw investment into Northern Ireland in order to provide jobs and keep down unemployment, especially among young people. This we welcome, as we do the statement that education has a part to play in getting young people doing a proper job of work, rather than being on the streets, unemployed, and probably falling into the hands of the IRA or those who want them to behave in an indecent way with rifles and bombs.
Having said that, I should like to ask one question about the morale of the security forces in the province of Northern Ireland. Despite all the shootings that are going on, and the losses that they have had, is the morale of the RUC still good and is recruitment satisfactory? As I said, we welcome what the noble Lord has said on these orders, and we look
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forward to the day when they do not have to be introduced every six months or every year, but can be dispensed with entirely. But until the gunmen have been defeated, I am afraid that we must continue to accept these orders.
Lord HAILSHAM of SAINT MARY LEBONE: My Lords, may I say a word before the noble Lord replies, which I do not think my noble friend could have said for reasons which will be obvious. The noble Lord who has introduced these measures and who is one of the youngest Members of this House, in the full service of this House, is facing personally an uphill, difficult and intensely complex task. Some of us may be critical of the Secretary of State or the policies pursued, but I wish—and I am sure I speak for the older Members of this House—our young representative in Northern Ireland very great good fortune in the difficult responsibilities he has undertaken so early in his life. We admire the constructive and courageous way in which he is facing them.
5.47 p.m.
Lord MELCHETT: My Lords, I am deeply grateful to the noble and learned Lord for what he had to say. I take it as a tribute not only to myself but to my colleagues who are working in Northern Ireland with me, and I will make sure that the tribute is passed on to them. I am very grateful to him. The noble Viscount, Lord Long, asked me some important questions about the position of the security forces, and particularly of the RUC in Northern Ireland. I would say, first, that the noble Viscount is quite right in saying that the RUC have been placed under considerable extra pressure and danger in recent months, and I hope that I can convince the noble Viscount and your Lordships that both the Government and the RUC have responded very well to this increased pressure.
On the equipment front, two problems have arisen, to which attention has been addressed, so far as equipment for the RUC is concerned. The first concerns the acquisition of the M.I carbine by the RUC: and that stemmed, also, from the natural concern which the noble Viscount has expressed that the RUC should have the right weapons for the job they have to do in Northern Ireland. The recom-

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mendation in favour of the M.1 carbine came from the Chief Constable. The Chief Constable has available to him the resources of the force's research and planning branch, and the Police Authority technical officers, to advise on the range of weapons available and those best suited to the needs of the RUC. There were, unfortunately, some defects in the first consignment of M.1 carbines that were received by the RUC, but these have been resolved in consultation with the American manufacturer. A proportion of that first consignment is now in operational use and the balance is being used for training, Delivery of the main consignment of the new weapons is expected shortly.
The other problem concerns the reports of delays in the supply of armour-plated vehicles for the RUC, which again the noble Viscount mentioned. Most of the components are, of course, obtained through normal commercial channels and some difficulties have occurred. But these were tackled and overcome, and these new vehicles are now coming into service. So I hope the noble Viscount will feel that, on the two points he raised about equipment, action has been taken, and that, while problems were met, they have now been overcome.
The noble Viscount also asked me about the morale of the RUC. I can assure him, both from the advice that I have received and from my personal knowledge and contact with RUC officers, that their morale is excellent. The recent successes achieved by the RUC speak for themselves. This has undoubtedly done an enormous amount to improve the morale of the force.
When I opened the debate on the order I mentioned the very considerable increase in the number of arrests and convictions that has taken place in the last six months. This has been coupled with a decrease in the level of violence. I believe that this says a great deal for the spirit and success of the RUC. Its strength continues to increase and now stands at 5,423, compared with 5,055 12 months ago. In the first six months of this year there were 1,360 applications to join the force, which in itself is an indication of the morale and standing of the police in Northern Ireland. Already 278 recruits have been accepted.
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Our aim is to improve upon last year's record figure of 581 recruits. Similarly, and also very important, the strength of the full-time RUC reserve now stands at 943, compared with 729 on 20th June 1976; so there has also been a substantial increase in the full-time reserve.
May I conclude by thanking the noble Viscount very much for the welcome he has given to these orders, though coupled with a qualification which I certainly endorse: that we all look forward to the time when it will not be necessary to bring these orders before your Lordships' House at regular intervals.
On Question, Motion agreed to.

NORTHERN IRELAND (VARIOUS EMERGENCY PROVISIONS) (CONTINUANCE) ORDER 1977
5.52 p.m.
Lord MELCHETT: My Lords, I beg to move the draft Northern Ireland (Various Emergency Provisions) (Continuance) Order 1977.
Moved, That the draft Northern Ireland (Various Emergency Provisions) (Continuance) Order 1977, laid before the House on 24th May, be approved.—(Lord Melchett.)
On Question, Motion agreed to.

UNFAIR CONTRACT TERMS BILL
5.53 p.m.
Lord JACQUES: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Lord Jacques.)
On Question, Bill read 3a, with the Amendments.
Lord JACQUES Lord JACQUES moved Amendment No. 1:
After Clause 10, insert the following new clause:
Evasion by means of secondary contract
A person is not bound by any contract term prejudicing or taking away rights of his

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which arise under, or in connection with the performance of, another contract, so far as those rights extend to the enforcement of another's liability which this Part of this Act prevents that other from excluding or restricting.
The noble Lord said: My Lords, Clauses 2 and 3 of the Bill assume that a clause excluding or restricting the liability of the supplier of goods or services under a contract will be contained in a contract between the supplier and the customer, but this is not necessarily so. It may be contained in a contract between the customer and a person who was not a party to the original contract. I gave a detailed example during the Report stage on Monday. The purpose of the Amendment is to prevent evasion of the controls contained in the Bill by means of such a secondary contract.
I withdrew this Amendment during the Report stage on Monday in order to reconsider it in the light of the observations made by the noble and learned Lord, Lord Hailsham of Saint Marylebone, who doubted the need for the Amendment and criticised both its placing and its drafting. To deal first with the necessity for the Amendment, I should like to point out that the possibility of three-cornered contractual situations engineered by companies acting in collaboration came directly from the Law Commission. I submit that their advice on these matters ought not to he lightly disregarded. As to the placing of the Amendment, when I moved it on Monday it was to be found at the end of what is now Clause 13. Accepting the criticism of the noble and learned Lord and following the Scottish example, now I move it as a new clause after Clause 10, under the cross heading "Other provisions about contracts" rather than under the cross heading "Explanatory provisions".
Finally, I come to the wording of the Amendment. I have to report with regret that, after the most careful examination of the wording, we are unable to improve it. This is a difficult subject matter. We believe that the wording as it is now will stand up to analysis. It is, of course, not possible to achieve the desired purpose in the way it is achieved by the Scottish draftsman in his equivalent new clause, That method would be wrong for Part I, which is drafted throughout in terms different from those in Part II. I beg to move.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I am grateful to the noble Lord, Lord Jacques, for having considered the criticisms which I felt bound to make at the first attempt and for giving effect to some of them. I still think that this is an over-elaboration. The mania of modern legislation to try to predict every form of evasion and to stop the hole in advance is cluttering up the Statute Book with an absolute mass of gobbledegook, and I believe this to be an example of it. Also, despite what the noble Lord has said, I vastly prefer the relatively lucid language of the Scottish equivalent to the extremely obscure language of this new clause. Having said that, I do not wish to hold up the business of the House, and I am grateful to the noble Lord for having improved the position, even to a modest extent.
On Question, Amendment agreed to.
Clause 15 [Scope of Part II]:
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey)The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey) moved Amendment No. 2:
Page 8, line 3, leave out ("and").
The noble and learned Lord said: My Lords, may I speak to Amendments Nos. 2 and 3 at the same time. The real purpose of these Amendments is to avoid doubt—to make it clear, in other words, that the validity of any discharge or indemnity granted in settlement of any claim is not affected by any of the provisions in Part II of the Bill. Part II of the Bill contains several provisions which render void or of no effect a term of contract which purports to exclude or restrict liability for breach of duty or breach of contract. One finds an example in Clause 16(1) and, indeed, in other clauses.
It is not, of course, intended that controls should apply to any contractual provision which discharges any claim a person may have in respect of any liability which some other person may have incurred in the past. I understand that the problem which we visualise and have sought to cover by this avoidance of doubt provision does not arise in England. In England, the view is taken that what is termed in English law accord and

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satisfaction does not include or restrict any liability arising in future and that it merely operates to discharge a preexisting liability. I beg to move Amendment No. 2.
The Earl of SELKIRK: My Lords, I made an oblique reference to this point in my remarks during the Committee stage of the Bill, although I did not put the question directly to the noble and learned Lord. I believe this to be a sensible Amendment.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 3:
Page 8, line 4, at end insert ("and does not affect the validity of any discharge or indemnity given by a person in consideration of the receipt by him of compensation in settlement of any claim which he has.")
The noble and learned Lord said: My Lords, I beg to move Amendment No. 3.
On Question, Amendment agreed to.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 4:
Page 8, line 28, at end insert ("or the rights or obligations of its corporations or members or relates to the formation, constitution or dissolution of any unit trust scheme (as defined by section 26(1) of the Prevention of Fraud (Investments) Act 1958) or the rights or obligations of its trustee or managers or beneficiaries;")
The noble Lord said: My Lords, this Amendment relates to those who offer the opportunity to participate in investment in a particular way—that is, through unit trusts. I suppose that I should declare a modest interest. Like many others, I am a unit holder, with investments in two or three unit trusts. What the Bill provides in relation to these unit trusts is not clear, at least to some lawyers, particularly in relation to Scotland. I am not a lawyer and certainly the position is not clear to me.
It is important that in a matter of this kind the effect of the law should be the same in Scotland as in other parts of the country. The way in which the law is expressed in the Scottish part of the Bill—Part II—is necessarily different because of
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the difference between Scottish and English legal procedures and institutions. However, the outcome should be the same. That is what I think the EEC call "harmonisation". It is unfortunate that the point was not put to the Scottish Law Commission and there is doubt as to what the Bill intends. Clause 15(1) says that Part 11 applies only to contracts and subsection (2) says that Clauses 16 to 19 apply to any contract only to the extent that the contract fulfils one of five conditions, one of which is that it relates to services of whatever kind.
Subsection (3) goes on to exclude any contract, again to the extent that it is a contract of insurance or that it relates to the formation, constitution or dissolution of any body corporate or unincorporated association or partnership. As to the second paragragh, it appears that a unit trust scheme is not a body corporate or an unincorporated association or a partnership. Yet a unit trust provides opportunities for investment in much the same way as does a company. Indeed, under Section 17(1) of the Prevention of Frauds Investments Act, a unit trust scheme can be brought into operation only if it is sanctioned by the Department of Trade—if it is not the Department of Prices and Consumer Protection, because I am not quite clear how the Board of Trade empire was divided up between several separate departments—and its provisions are closely examined by a Government Department before authorisation is given. In those circumstances, one would have thought that the exclusion of unit trusts to the extent that they relate to the formation, constitution or dissolution of the trust should a fortiori extend to unit trusts as well as to companies, since no such authorisation is required in the case of companies.
The purpose of the Amendment is to ensure that a unit trust scheme shall enjoy the same exclusion as a company, corporated or unincorporated, or a partnership. It may be that, because of its nature and the authorisation that is needed, a unit trust scheme does not need such an exclusion. If so, I hope the noble and learned Lord the Solicitor-General for Scotland will tell us so, so far as Scotland is concerned. For that matter, perhaps he can tell us if the same applies to England.
It hardly seems conceivable that any unit trust scheme would be authorised if it included any provision restricting liability for breach of duty that the Department considered unreasonable. Nevertheless, unless this is explicitly stated in the Bill, beneficiaries under the trust—that is, investors—might challenge the reasonableness of any provision in the courts, and I suppose the courts might reach a different conclusion from that reached by the Department. I think this is undesirable, and for that reason I propose this Amendment, which would add further words to the exclusions in favour of unit trust schemes and the rights or obligations of these corporators or members. The reference to the rights or obligations of its corporators or members is taken from Schedule 1, paragraph 1(d)(ii) which provides exclusions from Clauses 2 to 4 of the Bill relating to England and Wales. I submit that the same provision should apply to Scotland, but I find no comparable words in Part II. I beg to move.
6.4 p.m.
Lord McCLUSKEY: My Lords, I am indebted to the noble Lord, Lord Drumalbyn, for giving me notice yesterday evening of his intention to move this Amendment. As he suggested, it really comes along rather late in the day, and I agree entirely with what he said; that is, that it is a great pity that this matter was not put, in the terms in which he has put it, to the Law Commissions. As the noble Lord has explained, this Amendment seeks two objectives: first, to add to the matters which are exempted from the Bill by Clause 15(3)(a)(i) the words,
"…or the rights or obligations of its corporators or members",
and of course as the noble Lord has explained these words are taken from the corresponding English part of the Bill. Secondly, the Amendment seeks to insert special exemption for contracts, so far as relating to the formation, and so on, of a unit trust or the rights or obligations of its trustees, managers or beneficaries.
If I may take the two points in that order, first the appropriate paragraph to which he has made reference in Schedule I makes a specific reference to:
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"…the rights and obligations of corporators or members".
We have considered this phrase very carefully in relation to Scotland and I have to advise the noble Lord that we have concluded that we cannot see that its inclusion in the Scottish part of the Bill in Clause 15 would make any significant improvement. Indeed, I fear it would cause some confusion because there would certainly be difficulty in Scotland in construing the term, "corporators", which I cannot confess to ever having encountered in my brief career in the law. It is not a word which is a term of art in Scots law, and for that reason I should be reluctant to allow it to come into this clause in this part of the Bill. It would seem to me to add confusion. In any event the words which he wishes to add seem to be covered already by the words in Clause 15(3)(a)(ii):
"… formation, constitution or dissolution of any body corporate or unincorporated association or partnership".
For these reasons I am not happy with, and would ask your Lordships not to accept, the first part of the Amendment. With regard to the second part, I would suggest that the noble Lord has chosen the wrong vehicle to move the Amendment, because he is proposing to amend the policy of the Bill in regard to unit trusts. If he wanted to do that, he should surely also have moved an Amendment to Schedule 1 as well as to Clause 15. It is our judgment that if he does not do so, and if this Amendment were to be carried, the law in Scotland would then in the result be different from that in England and Wales.
The question of the application of the Bill to unit trusts has been carefully considered in detail, both by the Department in England—the Department of Prices and Consumer Protection—and by the Scottish Office advisers concerned with the same matter. The view of both Departments is that, in so far as there are any provisions in a unit trust scheme which are contractual in character—and of course there may be provisions which are not contractual in character—and provide for services being rendered by the managers and the trustees, or by the trustees alone, no reason has been presented why they should not be subject to the controls imposed in the Bill. In

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so far as those provisions in a unit trust scheme are not contractual but fiduciary in nature, they would not of course be caught by Part II at all, because as Clause 15(1) makes clear, Part II, as the noble Lord has pointed out, applies only to contracts.
The provision in relation to companies was included because of the recommendation of the Law Commission. I would certainly he inclined to accept what the noble Lord has suggested or has implied; that is, that it is hardly likely that a unit trust scheme which has got past the Department—in fact it is the Department of Trade which is responsible —could then be attacked in the court as being unreasonable in some particular. So it may be that, in fact, this is very much a shadow of a fear rather than a real fear.
For that reason, also, I would ask the noble Lord not to press this Amendment. But I should like to make it clear that, in so far as the unit trust scheme contains contractual provisions relating to services, the policy of the Bill, both in England and Wales and in Scotland, is to cover the appropriate term of the contract. In case the noble Lord should think there is some difference between England and Scotland, I would remind him that if he looks at Schedule 1 in relation to England, and in particular at paragraph 1(e), the wording of that does not exclude a unit trust scheme. The wording there is:
"… any contract so far as it relates to the creation or transfer of securities or of"—
and perhaps, "of" is the important word—
"any right or interest in securities".
I suggest that the policy, as the Bill stands, is applied equally to England and Scotland and the effect of the Amendment would be to change the policy for Scotland. I therefore ask the noble Lord, Lord Drumalbyn, not to press this Amendment.
Lord DRUMALBYN: My Lords, I am grateful to the noble and learned Lord, Lord McCluskey. I apologise for giving him such short notice of this matter. However, perhaps an apology is also owed to me. The noble and learned Lord has explained the position with great
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clarity. I appreciate that, had I had the time and foresight, I would have amended the Schedule as well to make certain that there was no difference between the law of England and the law of Scotland, or its substance in relation to the Bill. The noble and learned Lord has satisfied me of the reasons for the policy decision to exclude unit trusts from the purview of the exclusions, and for that reason I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 5:
Page 8, line 28, at end insert—
"(iii)relates to the creation or transfer of securities or of any right or interest in securities;".
The noble Lord said: My Lords, this is an Amendment to which the noble and learned Lord the Solicitor-General has already referred obliquely. It is certainly shorter than the previous Amendment, and its meaning appears, on the face of it, to be clear. Therefore, I shall be brief. Schedule 1, as the noble and learned Lord has said, relates wholly to England and Wales, and includes a provision in paragraph 1 where it says:
"Sections 2 to 4 of this Act do not extend to—
(e) any contract so far as it relates to the creation or transfer of securities or of any right or interest in securities".
I cannot find any comparable provision in Part II of the Bill which applies only to Scotland.
Therefore, my first question must be: is the same result achieved in Part II in different words? If so where, and if not why not? My second question is: what is meant by "securities"? I cannot find a definition in the Bill, but from what the noble and learned Lord has already said it would seem to me that perhaps "securities" does cover the units of unit trust, and perhaps he will confirm this.
Although unit trusts differ from companies in that they do not engage in the provision of goods or services other than the services of their expertise and investment, a unit holder is investing in much the same way as the holder of securities in a company, except that they are spreading their risk over a number of securities

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chosen by the managers. For the purposes of the Bill there seems no reason why unit trust units should not be treated as securities. After all, I am advised that for tax purposes an authorised unit trust scheme falls to be treated by the Inland Revenue as if it were a company and the units were shares. In this case, of course, we are talking solely about a contract so far as it relates to the creation or transfer of securities or of any right or interest in the securities—"so far" and no further. To that extent it seems to me that the same general provision should apply to Scotland as to England and Wales. I hope that the word "securities" covers units in unit trusts as well as shares, whether fixed interest or otherwise, in companies.
Lord McCLUSKEY: My Lords, the reason why the noble Lord, Lord Drumalbyn, cannot find the equivalent provision in the Scottish part is that, as he knows, it is not there. I assure him that the same result is achieved. The reason it has to appear in Schedule 1 relating to the English part but is not required to appear in relation to the Scottish part. is that the whole drafting scheme of the Scottish part is different from the drafting scheme of the English part. In effect, the English part of the Bill applies to contracts unless they are taken out under Schedule 1. In the Scottish part of the Bill, Clauses 16 to 19 apply only to those contracts which are specified. Therefore, unless a contract is specified in Clause 15(2) one does not need to exclude it unless possibly for the avoidance of doubt, as one has in one or two cases. Therefore, if one now looks at Clause 15(2) one simply does not find that a contract of this kind is included. For that reason we did not go to the trouble of excluding it. That is the explanation.
As regards the other matter, there is, in fact, no definition of "securities" in the Bill. No definition is needed and I advise the noble Lord that my advice is that it certainly includes units or covers units under a unit trust. I am advised that the only statutory definition of securities which is available does not cover a wide enough area of all securities. However, my advice is that "securities" here does cover unit trusts.
Lord DRUMALBYN: My Lords, I am much obliged to the noble and learned Lord, Lord McCluskey. It is clear from what he has said that it would be unnecessary, and possibly undesirable, to put these words into the Bill, and therefore I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.17 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 6:
After Clause 23, insert the following new clause:
Evasion by means of secondary contract
Any term of any contract shall be void which purports to exclude or restrict, or has the effect of excluding or restricting—

(a) the exercise, by a party to any other contract of any right or remedy which arises in respect of that other contract in consequence of breach of duty, or of obligation, liability for which could not by virtue of the provisions of this Part of this Act be excluded or restricted by a term of that other contract;

(b)the application of the provisions of this Part of this Act in respect of that or any other contract.

The noble and learned Lord said: My Lords, this is the Scottish provision designed to have the same effect as the one introduced into the Bill in the first Amendment spoken to this afternoon by my noble friend Lord Jacques. The noble and learned Lord, Lord Hailsham of Saint Marylebone, complimented the Scottish draftsman on the previous occasion for the succinctness and lucidity of the drafting. Unfortunately, my noble friend Lord Jacques gave an example of a particular case which had not occurred to the draftsman and the Departments and he has caused a good deal of extra work since he introduced that example during the Report stage on Monday. The end result is that we have had to change the wording which was praised by the noble and learned Lord, Lord Hailsham of Saint Marylebone, on Monday night.
My Lords, again there is a difference in the drafting style and approach to the Bill in this regard. Part I of the Bill is expressed in personal terms and imposes controls upon the extent to which a person can exclude or restrict his liability for negligence and the like. However, when one turns to the Scottish Part it is not

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drafted in personal terms. Its provisions are addressed not to persons but in respect of contract terms. For example, it provides that a contract term which purports to do a certain thing shall be void or of no effect in certain circumstances. Therefore we could not adopt the English wording, and so the wording is different. The wording in the new clause achieves for Scotland what my noble friend Lord Jacques has spoken of as regards England. Paragraph (b) is designed to cover the particular example that he gave during the Report stage debate. I beg to move.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, again all I have to say about this is that I am sorry that the noble Lord, Lord Jacques, has obscured the felicity of language of the original draft of the Scottish draftsman. This again is a meaningless piece of gobbledegook designed to guard against an imaginary danger which will never come about and which, if it did come about, would either be wholly unreal or the courts could deal with it effectively without the aid of the complicated draftsmanship of this miserable Amendment. Having said that, I shall not hold up the business of the House.
On Question, Amendment agreed to.
Clause 27 [Choice of law clauses]:
Lord JACQUES Lord JACQUES moved Amendment No. 7:
Page 15, line 19, after ("7") insert ("10").
The noble Lord said: My Lords, this is a consequential Amendment on an Amendment which was accepted by the House at the Report stage. I beg to move.
On Question, Amendment agreed to.
Lord JACQUES: My Lords, I beg to move that this Bill do now pass. I ask the House to bear with me for just two minutes so that I might do what I very much want to do; that is, to express thanks for the help I have been given from all sides. First of all, I would especially thank my noble and learned friend the Lord Chancellor and his staff for the considerable
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assistance which they have given me. Without that assistance I doubt whether I could have piloted this Bill through the House. I would also thank my noble and learned friend Lord McCluskey and his staff for the help they have given me in handling the Scottish side. May I also thank my right honourable friend the Secretary of State for Prices and Consumer Protection and his staff for the assistance and briefing I have had on this Bill.
I thank noble Lords on all sides who have tried to improve the Bill, particularly the noble and learned Lord, Lord Hailsham and the noble Lord, Lord Lyell, from the Opposition Benches, and Lord Airedale from the Liberal Benches; nor do I forget the considerable help that we had from the noble and learned Law Lords on the Cross-Benches. They were of considerable help on the intricate, and in one case contentious. part of the Bill. I am grateful to all concerned. I am sure that my honourable friend Mr. Michael Ward, the MP for Peterborough who sponsored this Bill in the Commons, will feel that this House has dealt with his Bill in a very constructive way. I wish him every good fortune in the final stages of the Bill.
Moved, That the Bill do now pass.—(Lord Jacques.)
6.22 p.m.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I thank the noble Lord, Lord Jacques, for the kind things he has said about us on this side, and particularly about my noble friend Lord Lyell, who on our behalf has really shouldered an extraordinarily difficult and detailed task, with which I do not think I could have coped had I had to face it alone. If I may be allowed to say so, it is only another example of the way in which hereditary Peers are able to discharge important functions. They are young men of professional qualifications; they give their services for nothing. I do not think I could have coped with this technical little Bill if I had not been assisted by someone of that character. I am sure my noble friend will be glad to know what the noble Lord, Lord Jacques, has said.
I should also like to offer my congratulations to Lord Jacques. He has shouldered

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an immensely difficult task with extreme skill. We on this side miss him from the Government Bench; we know his extreme kindness and patience and conscientiousness in dealing with our various complains, whether querulous or reasonable, and these we have experienced again in the way in which he has dealt with us on this occasion. I think he has performed a very important task in getting the Bill through this House, with the assistance of the Government, as he rightly said. I do not think one ought to pass legislation of this kind unless it is approved by the Government of the day; it is far too complex and one is bound to make mistakes. But he had the assistance of the Government, and I think he has performed a very important task. The weight of opinion behind this Bill and the demand for it was really overwhelming. The words of the noble and learned Lord, Lord Morris of Borth-y-Gest and the noble and learned Lord, Lord Denning, will be fresh in your Lordships' minds. The two Law Commissions have backed it. The various consumer organisations have backed it, and I suppose the various particular interests whose views we felt it necessary to ventilate at various stages have not really knocked much of a dent in it.
I retain, I am sorry to say, my own scepticism about introducing reasonableness into the law of contract as a legal test, or rather extending it, because it is already there. I appear to be alone in this respect, or almost alone. I have done my best, as the noble Lord, Lord Jacques, very kindly said, to take a constructive and not destructive part in these debates. I am grateful for the small additions and amendments that, with the assistance of the Government and Lord Jacques, we were able to carry through. I hope in this respect I am not Athanasius contra mundum, but I feel that, sitting where I do with the background that I have, I ought to hold a sort of watching brief for the general theory of law in the legislation we pass. If I do not express quite the same enthusiasm for the Bill that the noble and learned Lords on the Cross-Benches expressed, I can only end by saying that I hope I am wrong. At any rate, the great mass of public opinion is with the noble Lord, Lord Jacques, and
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against me. I congratulate him on his success. It would have been wholly wrong had he not been allowed to carry through his worthy endeavours to fruition, because that is what the public wants.
6.24 p.m.
The LORD CHANCELLOR: My Lords, may I on behalf of the Government express my gratitude to Lord Jacques, the sponsor of the Bill in this House, for the cheerful, competent and masterful way in which he has led us through this highly technical Bill. The noble Lord, Lord Lyell, was not present to hear the well deserved tribute paid to him by the noble and learned Lord, Lord Hailsham, in a gracious speech for which we are all grateful. He suffered the long days and nights, the heat and battle, of the Patents Bill with a similar fortitude worthy indeed of his military background, and we are grateful to him.
The agreeable thing about the progress of this Bill is that sometimes it has enjoyed criticism, but always constructive criticism, from noble Lords of all Parties and of none. I think that perhaps we should expressly indicate our debt of gratitude to the Law Commission and the Scottish Law Commission, who laid the foundation for the Bill and continued their interest during the passage of the Bill. For our part also, we would like to thank those one does not often expressly refer to who have been guiding us with their expertise through the Bill.
I believe that the Bill represents a major step forward in the development of the law of contract and it is good that it has been given a general welcome in your Lordships' House. The experience has yet again shown the value of this House in improving legislation as it goes through the House.
On Question, Bill passed, and returned to the Commons.

LONDON TRANSPORT BILL
Returned from the Commons with the Amendments agreed to.