Lords Sitting of 12 July 1977

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

RABBIT CLEARANCE
Baroness SHARPLES: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they intend to reintroduce grants to rabbit clearance societies in view of the increase in the rabbit population in various parts of the country.
Lord STRABOLGI: No, my Lords.
Baroness SHARPLES: My Lords, does the noble Lord realise that the spending of, perhaps, £500,000 to help rabbit clearance societies would result in the possible saving of £150 million a year, in view of the damage caused by rabbits in certain areas—I agree that it is not everywhere—at the present time? Would the noble Lord agree with this?
Lord STRABOLGI: No, my Lords. Damage by rabbits is now only one-tenth of the pre-myxomatosis damage in value terms. The previous Conservative Administration abolished this grant in 1971. We think that they were quite right and we support its abolition.
Baroness SHARPLES: My Lords, I appreciate that rabbits are not concerned about politics, but I have heard that they are very much on the increase. So I would ask the noble Lord to look again at the figure of 10 per cent., because I think he will find that in the last month it has increased greatly.
Lord STRABOLGI: My Lords, we believe that grants from public sources do not make financial sense, since the
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benefits accrue primarily to the society members themselves. In a time of restraint on public expenditure, we do not believe that this is a candidate for increased assistance from public funds.
Lord DERWENT: My Lords, what does the noble Lord mean by "in value terms"? The value of what—rabbits?
Lord STRABOLGI: My Lords, the value of damage.
Lord BLYTON: My Lords, in view of the retail price of rabbits to the consumer, does the Minister not think that we should encourage the breeding of rabbits so that the price might come down?
Lord STRABOLGI: My Lords, of course that is a very interesting idea. It is one which I should like to pursue, and to balance against the damage done by these pests.
Lord CLIFFORD of CHUDLEIGH: My Lords, does the noble Lord realise that, if there is no effective control of rabbits, even small farmers will have to spend thousands of pounds on netting fields which they have not had to net for 10 or 15 years? Would the expense of that be considered for Government grant?
Lord STRABOLGI: My Lords, under the Pests Act 1954 the whole of England and Wales has been declared a rabbit clearance area, in which occupiers have a continuing responsibility to control rabbits on their land.
Lord SANDYS: My Lords, while recognising the need for control of public expenditure, will the Government consider using powers which they have under the 1947 Act should the situation become more serious, as my noble friend has suggested?
Lord STRABOLGI: Yes, my Lords, certainly. The Ministry are prepared to use statutory powers in appropriate cases, but persuasion remains the preferred method.
Earl ST. ALDWYN: My Lords, will the noble Lord seriously consider altering the Act as it stands at the moment, whereby it is illegal to spread myxomatosis in any form? The present strains in the country

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are so weak that they do not kill rabbits. Would he consider introducing a new strain from Australia, which has extremely virulent strains, for spreading in this country?
Lord STRABOLGI: My Lords, I am sure that we shall certainly take note of that very interesting suggestion. However, myxomatosis remains a substantial check to rabbit numbers. It can kill 70 to 90 per cent. of susceptible rabbits. But there is some evidence of increasing tolerance to this disease, and this is the subject of further research.
Lord POPPLEWELL: My Lords, will my noble friend consider suggesting to my noble and learned friend the Lord Chancellor that there should be some easement in the law affecting the old village poacher, so that he is allowed to get about the work of clearing rabbits without the heavy fines that are inflicted upon him when he is taken before a bench of landed magistrates?
Lord STRABOLGI: My Lords, I will certainly convey to my noble and learned friend what my noble friend has said.
Lord AIREDALE: My Lords, will the Government also note that there are others in this House to whom the spreading of a very unpleasant disease is abhorrent?

POST OFFICE REVIEW REPORT
2.41 p.m.
The Earl of KIMBERLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when the report of the Post Office Review Committee will be published.
Lord WINTERBOTTOM: My Lords, my right honourable friend the Secretary of State for Industry hopes to publish the report later this month.
The Earl of KIMBERLEY: My Lords, I thank the Minister for that somewhat unsatisfactory Answer, which means that
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we shall probably not be able to debate it this Session. May I ask whether the Government realise that in September 1976 the United States set up a similar commission—a copy of whose report I have in my hand—whose work was completed in April 1977, in just under seven months? Why has it taken the Carter Committee so long, it having been set up in November 1975? Lastly, can the noble Lord dispel the rumour that the report has been delayed until the Director of Postal Marketing, the Director of Mechanisation and the Managing Director of Posts have been replaced, because there might be adverse criticism of their organisation?
Lord WINTERBOTTOM: My Lords, all those are other questions.
Lord TAYLOR of GRYFE: My Lords, I want to ask the noble Lord what is the difference between the date of completion and the date of publication?
Lord WINTERBOTTOM: My Lords, I am afraid that I am unable—not unwilling—to answer the noble Lord's question.
Lord BYERS: My Lords, this is an important matter. Are we to see this report before the House rises on 27th July, if that is the date we are to rise?
Lord WINTERBOTTOM: My Lords, I cannot say, but I will certainly bring the feelings of the House to the attention of my right honourable friend.
Lord TAYLOR of GRYFE: My Lords, does the noble Lord agree that it is desirable to have early publication of Government reports rather than to incur the danger of reading them in the Sunday newspapers?
Lord BYERS: My Lords, I wonder whether the noble Lord is able to give us any indication of the questions that he is prepared to answer?
Lord WINTERBOTTOM: My Lords, I have been asked a simple Question to which I have given a simple Answer—later this month. Has the noble Lord no patience?

FISH: CAESIUM CONTAMINATION
2.44 p.m.
Lord DAVIES of LEEK: 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 efforts are being made to prevent any further contamination by radioactivity of fish in the Irish Sea as a result of the release of the radioactive substance caesium 137 from Windscale into the Irish Sea, the output of that element having increased four-fold between 1973 and 1975.
Lord STRABOLGI: My Lords, caesium discharges from Windscale arise from the ponds in which irradiated Magnox fuel is stored. The long-term solution to the problem will be the completion of the new Magnox storage and decanning plant and water treatment plant for which planning approval was recently given and which will be built with high priority. In the meantime, a number of short-term measures have been implemented which have already led to an improvement in the situation, and efforts continue to keep discharges as low as practicable until the new plant is available.
Lord DAVIES of LEEK: My Lords, first I am grateful to my noble friend for the reply he has given. Secondly, I know that the pollution caused by caesium 137 increased four-fold between 1972 and 1976. The Council for the Protection of Rural Wales are worried about the radioactivity of the silt in the Ravenglass Estuary of the River Esk. Fish-eaters are now getting 35 per cent. of the maximum dose of radioactivity which is allowed. Finally, is my noble friend aware that, despite the calculations of engineers and mathematicians, the interaction of machinery and the quirks of human aberration are such that no mathematical formula, either engineering, scientific or mathematic, is foolproof in the modern world?
Lord STRABOLGI: My Lords, the growth in the cesium level was due to the water from the Magnox fuel storage
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ponds containing more radioactive cœsium than in earlier years because of the corrosion of the Magnox fuel elements which I regret to say, for operational reasons, had to be stored for much longer than the normal period.
Lord DUNCAN-SANDYS: My Lords, can the Minister say when he expects the new plant to be completed?
Lord STRABOLGI: Yes, my Lords, by 1981.
Lord AVEBURY: My Lords, in order that the House should be fully informed about emissions from the Windscale plant, would the Minister consider placing a transcript of the appeal hearings in the Library of your Lordships' House?
Lord STRABOLGI: My Lords, that is something that we shall consider. However, I may say that the public inquiry now in progress at Windscale relates to a quite different process from the Magnox process which is the subject of this Question.
Baroness EMMET of AMBERLEY: My Lords, taking into consideration all the difficulties which appear to beset deep-sea fish farming, will the Minister bear in mind the urgency of helping fish farming?

CIVIL SERVANTS: TUC AFFILIATION
2.47 p.m.
Lord GRIDLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are satisfied that the decision of the Association of First Division Civil Servants to seek affiliation to the TUC will not affect the impartiality of the Service.
The LORD PRIVY SEAL (Lord Peart): My Lords, it is of course vital to Ministers in any Government to have a non-political Civil Service upon whose loyalty and impartial advice they are able to rely. The First Division Association has recently restated its belief in the

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need for it to remain a non-political association. I have no doubt that it will continue to uphold that tradition.
Lord GRIDLEY: My Lords, I thank the noble Lord the Leader of the House for his Answer. May I ask him whether or not he believes that there is a danger that, if these civil servants become affiliated to the TUC—whose job it is to secure improved pay and conditions for their officers—it might conceivably lead to a request for the withdrawal of their services? They are senior members of the Civil Service. Does he not agree that this might bring them into conflict with the Government? I accept what the noble Lord has said about this, but is there not an underlying danger here? Also, is not the degree of impartiality rather impaired?
Lord PEART: My Lords, the noble Lord will appreciate that I have already expressed my confidence in the ability of the Association to maintain its traditions of loyalty and impartiality. Also I believe that the Association could make a useful contribution to the counsels of the TUC. No, I am not worried about that. The noble Lord must appreciate that a leading political Conservative spokesman in another place said that, even though he regretted the narrowness of the majority, in view of the closeness of the result, he hoped the Association would proceed cautiously. There was no criticism.
Lord LEE of NEWTON: My Lords, is my noble friend satisfied that such an affiliation will have no deleterious effect upon the TUC?
Lord PEART: Yes, my Lords.
Lord BLYTON: My Lords, is the Minister aware that Tory philosophy is that a man has the right to join or not to join a trade union? Why, therefore, are they quibbling now if this Association wants to join the TUC?
Lord PEART: My Lords, I agree with my noble friend, who has expressed very clearly the philosophy of the Conservative Party. If that is what it is, then I do not dissent from it.
Lord CAMPBELL of CROY: My Lords, while the question whether the Association should join the TUC and the kind of relationship that there should be is an important and delicate one, does the noble Lord agree that the non-political nature of the British Civil Service is a priceless asset which it would be a great mistake to give up?
Lord PEART: My Lords, I implied that in my reply.
Lord COOPER of STOCKTON HEATH: My Lords, does my noble friend agree that this Question is based on a great deal of misunderstanding. When a body wishes to affiliate to the TUC, is it not the case that the TUC has to be satisfied whether it is acceptable or not?
Lord PEART: My Lords, I agree. It is not for the Government to interfere in this matter in any way.
Lord DUNCAN-SANDYS: My Lords, will Ministers be free to join the picket lines in Government offices?
Lord PEART: My Lords, that is another matter. It may well be that Conservatives may join the picket lines on occasions. No doubt they have done.
Lord GRINDLEY: My Lords, may I ask the noble Lord one final question? Has it been decided to dispense entirely with the Whitley Councils, which provided a very good way of carrying on these discussions?
Lord PEART: No, my Lords; not at all.
Baroness HORNSBY-SMITH: My Lords, would not the noble Lord agree that this is not a case of civil servants joining a trade union, because they have their own very powerful and very effective trade unions? Would he not also agree that we have every reason to be extraordinarily proud about the impartiality of our Civil Service, and that the headache is not that they would be joining the main organisation of unionship but joining an organisation with direct affiliations to one political Party, which might create a conflict of interest? Members on both sides of this House who have been

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privileged to serve with those civil servants have, through the years, come to rely on their absolute political impartiality, and we are genuinely concerned, though not from any Party political point of view, that there might be a conflict of interest.
Lord PEART: My Lords, I cannot accept what the noble Baroness has said. If she examines the relationship of the various unions with the TUC she will understand that her views are not really views that can be sustained.
Lord DAVIES of PENRHYS: My Lords, will my noble friend agree the possibility that, if this union joins the TUC, it may be less effective and less important?
Lord PEART: My Lords, all I am saying is that, whatever the Association does, it is its decision and the Government cannot interfere with it.

POSTAL SERVICES IN THE NW2 AREA
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I beg to ask Her Majesty's Government a Question of which I have given Private Notice. The Question is as follows:
"To ask Her Majesty's Government whether they will make a Statement about the steps taken by the Post Office to ensure the collection and delivery of all the mail in the NW2 postal area."
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House at a convenient moment after 3.30 p.m., my noble friend Lord Winter-bottom will answer this Question in the form of a Statement.
May I take this opportunity to tell the House that dinners will be available this evening in the Dining Room.

FOREIGN BOYCOTTS BILL [H.L.]
Lord BYERS: My Lords, I beg to introduce a Bill to protect individuals, companies and businesses from the direct and indirect consequences and pressures of foreign boycotts, requests or conditions.
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I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(Lord Byers).
On Question, Bill read 1a, and to be printed.

BRITISH RAILWAYS BILL
Read 2a, and committed to an Unopposed Bill Committee.

PRESUMPTION OF DEATH (SCOTLAND) BILL
2.55 p.m.
Lord RITCHIE-CALDER: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3ª—(Lord Ritchie-Calder).
On Question, Bill read 3a
Clause 5 [Effect on property rights of recall or variation of decree]:
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 1:
Page 5, line 15, leave out from ("annuity") to ("or") in line 16.
The noble Lord said: My Lords, this is a bit of unfinished business on this Bill, but it will not take very long. I beg to move Amendment No. 1 and I suggest that Amendment No. 2 be discussed with it. This Bill, which has the general support of your Lordships' House, has to go through Parliament quickly if it is to receive Royal Assent, as we hope, this summer. The Committee stage took place only a week ago in your Lordships' House. There was virtually no Report stage because it was taken formally immediately after the Committee stage, and there was no opportunity, therefore, for Amendments to be moved on Report stage. A few days were needed for the Government to consider the one principle point which was made at Committee, the point raised by the life insurance companies in Scotland. This is the opportunity to see whether during the intervening week the Government have been able to examine what was raised at the Committee stage

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and see whether they can accept these Amendments.
Briefly, the Bill rationalises the position when somebody has been missing for a long time; it provides that after seven years, in certain circumstances, that person can be presumed dead. The part with which we are dealing governs the position when a person reappears, where there has been by fraud an attempt to appear to be dead, or where by genuine mistake somebody has been assumed to be dead and then reappears. The provisions in Clauses 4 and 5 allow, among other things, for insurance payments which have been paid in good faith on somebody's presumed death to be repaid.
There is one category of insurance payment which has been specifically excluded from the discretion of the court which is to consider these matters. Neither the noble Lord, Lord Ritchie-Calder, who is sponsoring this Bill, nor the Government could clarify why this exclusion had been put in the Bill, other than that it appeared in the draft Bill which the Scottish Law Commission produced. But the draft Bill was not precisely the same as the recommendations in the report of the Scottish Law Commission, and that is why there appeared to be a discrepancy. It is a technical insurance point. The Government were good enough to say they would look into the matter and they needed a few days to do it.
The kind of policy which could inappropriately be excluded is a family income policy. This is called that name, or some other special name. Under it there is provision, on death within a specified period, for payments, fixed monthly or quarterly, to be payable until the end of that period. That policy is basically a temporary decreasing assurance payable by instalments. Although those instalments are sometimes called income they are by nature capital, and under long-standing Revenue practice are not subject to income tax. That is an important point. It is accepted that they are not income and they have not had to pay income tax. To include that kind of payment in the wording of this Bill would be to cause quite unnecessary difficulty and possibly litigation in future, because it would look as though those payments were not being regarded as capital but as income.
I am grateful to the noble and learned Lord, Lord McCluskey, for saying that he personally would look into the matter before today. He has pointed out that the Bill says that the court dealing with such a case has only to have regard to what is laid down in Clause 5, that it is not mandatory. But, none the less, if something is specifically mentioned for exclusion from their regard it will look as though they are not supposed to deal with that kind of payment. So I would again ask what reason there is for this specific exclusion? Why cannot this also be left to the discretion of the court? This is something which the Scottish insurance industry, which has been a leader in insurance throughout the world, is worried about. I hope that the Solicitor-General can today give us an answer to this point, and that he will be able to accept these Amendments.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, as the noble Lord, Lord Campbell of Croy, has said, these two Amendments were discussed during the Committee stage and we undertook to go away and look at the Amendments and the whole general question. The noble Lord, Lord Campbell of Croy, suggested that the intentions of the Scottish Law Commission had not been given effect to in their own draft Bill or in the present Bill which, in fact, is an exact replica of the draft Bill in this regard. The Scottish Law Commission have informed my noble friend Lord Ritchie-Calder and myself that they consider that the Bill, as drafted, correctly represents the policy proposed by them in paragraph 107 of the report to which the noble Lord, Lord Campbell of Croy, made reference during the Committee stage. In particular, they confirm that the words,
"or other periodical payment",
are intended to cover the type of policies described as "income benefit" policies by the noble Lord, Lord Campbell of Croy.
We and the Scottish Law Commission have looked closely again at the policy underlying this provision in the light of the views expressed by the noble Earl, Lord Selkirk, and the noble Lord, Lord Campbell of Croy, and we are not persuaded that any change to the Bill is justified. I should like to give three reasons. First, the periodical payments

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made under such policies as the noble Lord, Lord Campbell of Croy, described in column 278 of Hansard during the Committee stage and, indeed, today, and known as "income benefit", are likely to be regarded by the beneficiary as income, because of their very name. The insurance companies who sell these policies to the public under names such as "income benefit" or "family income policy" may be said to encourage members of the public to look upon them in this way; that is, as income payments. Payments made under such policies are likely to have been expended by the beneficiary as normal living expenses and considerable hardship might be suffered if these sums had to be repaid. Therefore, the first point is that the insurance companies which sell the policies as family income policies and income benefit policies cannot complain if they are treated in the Bill as, and equated to, income.
Secondly, the effect of the Amendment to line 3 of Clause 6(3) would be to enable the insurer, without any specific provision in the original policy, to require the beneficiary to effect insurance in respect of any claim the insurer might establish in the event of a variation order being pronounced in respect of each periodical payment. It is not uncommon for the benefits of such policies to be payable in relatively modest monthly or quarterly instalments. The expense of effecting appropriate insurance could bear harshly upon the beneficiary. If the original policy provides for substantial payments, the insurer can write that policy in such terms that a beneficiary who takes benefit following a Section 2 order could be required to insure against repayment. That is a particular example of the general answer that I gave to the noble Earl, Lord Selkirk, during the Committee stage. The Bill does not restrict the freedom of insurance companies to write their policies in whatever terms they deem to be appropriate.
Thirdly, the problem that we are discussing will be a very rare problem indeed. Several distinct circumstances must occur before any possible prejudice can be suffered by the insurance company. In the first place, decree in an action of declarator must be granted. During the past five years the number of petitions under the 1891 Act has averaged just over six per year in Scotland, the greatest
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number being eight in 1975. In the second place, there must have been effected in respect of the particular person a relevant income benefit policy on the life of the person whose death is presumed. In the third place, there must be circumstances occurring within five years of the decree to justify the recall or variation of the order. Therefore, if one studies those three circumstances, one sees that we may well be talking about a problem that will never arise.
I understand from what the noble Lord, Lord Campbell of Croy, has said, and indeed from what the insurance companies have written, that the life assurance companies may be particularly concerned that the provision in Clause 5(3)(b) might enable anyone with fraudulent intent to take out an income benefit policy, and thereby at a very small cost obtain substantial benefit from an assurance company with no prospect of being required to repay on variation or recall of the original decree of declarator of death. There is nothing in the Bill which would prevent the assurance companies from raising an action for repayment of the sums paid as a result of this fraudulent scheme. If the decree of declarator were obtained by fraud, an action to recall or to reduce that decree would, it appears to me, be competent and an action of damages would also appear to be competent against the party who had perpetrated the fraud. There is no five-year limit in respect of such an action. I hope that this explanation will reassure the life assurance companies. In the light of what I have said, perhaps the noble Lord, Lord Campbell of Croy, may feel able to withdraw his two Amendments.
Lord CAMPBELL of CROY: My Lords, I am grateful to the noble and learned Lord, Lord McCluskey, for having looked into the matter and today given us the result of the Government's investigations. We have been trying to get this part of the Bill right. However many cases might arise, the important point is to get the Bill worded correctly. The type of policy that we have been talking about is regarded, of course, by recipients, in many cases, as payments of income. and no doubt that is how income has been used in these policies in the past. However, as I pointed out a few moments

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ago, it is not regarded as income from the point of view of income tax, but it is regarded as repayment of capital, and that is what matters.
As regards the question of the Bill being used for fraud in the future, which the noble and learned Lord, Lord McCluskey, raised, that may well, of course, be in the mind of insurance companies. However, it is up to the insurance companies to write policies in future in such a way as to make that as difficult as possible for anybody contemplating fraud. The noble and learned Lord, Lord McCluskey, has said that he does not think that the Bill should be amended in the sense which my noble friend Lord Selkirk and I suggested during the Committee stage. However, I think that what the noble and learned Lord has said today will be helpful when the Bill, after enactment—I hope that it will be enacted fairly soon—is interpreted by the courts. I am grateful to him for his statement and I now beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 2 not moved.]
Lord RITCHIE-CALDER: My Lords, I am grateful to the noble Lord, Lord Campbell of Croy, and to my noble and learned friend Lord McCluskey, for bringing this matter to a conclusion. I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(Lord Ritchie-Calder.)
Lord CAMPBELL of CROY: My Lords, I should like to congratulate the the noble Lord, Lord Ritchie-Calder, for having taken on this task because it is an area of the law in Scotland which certainly needs rationalisation. It is complicated and technical and we are grateful to him for taking on the task and for the help which he has received from the noble and learned Lord, Lord McCluskey.
Lord McCLUSKEY: My Lords, I join in the congratulations. I am happy to support my noble friend Lord Ritchie-Calder in this endeavour. It is a long time since I appeared as junior counsel, but on this occasion I have done so with him as my senior. I am happy to support him and to be led by him.
On Question, Bill passed.

PRICE COMMISSION BILL
3.9 p.m.
Lord ORAM: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, that the House do again resolve itself into Committee.—(Lord Oram.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.
Clause 7 [Restrictions, undertakings and orders in consequence of reports on investigations]:
Lord MOTTISTONE Lord MOTTISTONE moved Amendment No. 30:
Page 13, line 29, at end insert—
("() If a relevant person for whom an order has been made under subsection (5) above can satisfy the Commission that costs related to a product, which is the subject of the Order have risen substantially since the Order was made, the Order shall be revoked by the Secretary of State.")
The noble Lord said: This Amendment is designed to strengthen subsection (6) immediately above it, and your Lordships may well question why it requires strengthening. I regret to say that it is mainly due—and we shall take this perhaps in greater detail when we deal with Clause 9—to the fact that we are not satisfied that the safeguards in Clause 9 are good enough. Quite frankly, we are not satisfied with the attitude of the present Secretary of State to the whole problem, and I gave some tongue to that in the Second Reading debate. Both on Second Reading and in the Third Reading debate in another place many things were said by the present Secretary of State which led one to believe that his predilections might lie in a direction which was not sufficiently sympathetic to the problems that might occur to businesses and, indirectly, to the employees of those businesses.
Therefore, it is important that we should have sufficient strength in Clause 7 to ensure that in certain rather extreme circumstances, which are the circumstances of rising costs, and to the satisfaction of the Commission, there should be an obligation on the Secretary of State to revoke in the terms of subsection (6).

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It is for that reason that we have introduced this Amendment. Noble Lords may say that one Secretary of State does not make "a candle" or whatever it is. But it is a fact that since I have had the privilege of sitting in your Lordships' House there has been an increasing number of places in Acts of Parliament and Bills before us where the Secretary of State has been given the ultimate power to look after the correction of regulations. This goes on and on—it repeats itself.
I suggest that the basic cause of the trouble lies in the fact that we have too many regulations. We try to regulate our lives minute by minute, detail by detail. As I attempted to say on Second Reading, for many areas of industry the market forces provide a much better regulation of prices than any Secretary of State or Price Commission can ever do. So by this very Bill we are in danger of over-regulating ourselves. But the trouble is that when we correct over-regulating by feeding in:
"The Secretary of State shall have power to revoke",
we are up against the problem that by his very nature the Secretary of State is a political person. It does not matter whether he sits on this side of the House or the other side of the House, or possibly one day on the Liberal Benches; I do not see the bishops becoming involved in this! Whatever it may be, the Secretary of State is a political animal and therefore will be conditioned by factors which do not of themselves bear a particular relationship to the problem in hand, which in this case is price control. The Secretary of State will be conditioned by all sorts of political factors which I shall not bother to go into for various reasons, quite apart from the fact that this is the Committee stage of the Bill.
The net result is that having used the Secretary of State to curb the regulations, one then has to consider whether it is necessary to curb the Secretary of State. In this particular case—and I shall not repeat this because we said it many times yesterday, and many noble Peers said it on Second Reading—the question of the escalation of costs, particularly of raw materials from overseas, is so serious, because it conditions the whole of this Bill, that we believe that the Secretary of State should be curbed in this area. I beg to move.
Lord WALLACE of COSLANY: I am afraid that we cannot accept the Amendment. That, of course, is nothing unusual. The Amendment fails to provide any test by which to judge whether or not a cost increase is substantial. It would therefore open up the issue to judicial review. Firms will be free to make representations to the Secretary of State at any time, that an order to which they are subject should be varied or revoked. We have undertaken in another place that we shall consult the Commission about any representations which we receive. We recognise that firms may face large cost increases of which the Commission could take no account when making their recommendations. There will therefore be occasions when orders need to be revoked or varied.
The Amendment does not define what is meant by "substantial". This would inevitably be a cause of dispute between the parties. Nor does it make provision for varying rather than revoking an order, which may be more appropriate in some cases. We are providing safeguards which in any case will give some protection to firms after an investigation. There will not always be a need to vary or revoke orders when the safeguards apply. That is the Government's view. I would suggest that the noble Lord either withdraws his Amendment or considers some revision of it.
Lord HAWKE: I am very glad to hear the noble Lord say that the Secretary of State has the power to revoke these orders when costs rise. I am rather surprised that he should shelter behind the interpretation of the word "substantially" because that word might easily have been omitted and the Amendment would then read:
"… which is the subject of the order have risen since the order was made,…".
This is a very important point—as I know to my cost—particularly as it affects textiles, where the raw material forms a substantial part of the cost of the finished article. In recent years the prices of wool, cotton and everything else have been rising phenomenally, and those who have been turning these materials into finished articles have suffered rather severely from the fact that they have been unable to obtain their margin on the increased costs.
Lord DRUMALBYN: I should like to ask a question about the technical effect. Representations may be made under Clause 7(3) as follows:
"the relevant person may make representations in writing to the Secretary of State as to what should be done in consequence of the recommendations included in the report".
That is during:
"any period while provisions included in a report have the effect mentioned in subsection (1) of this section in relation to an increase or a price".
But is he able to vary the recommendations of the Commission during the currency of the restriction, otherwise than if he does it in the last 14 days of the 28 days immediately following the recommendations? This is a puzzling arrangement of the clause. Perhaps the noble Lord would be good enough to satisfy himself that the Secretary of State will have the power to revoke or vary the price increase. If he does have that power, under what particular provision does it fall?
From what he has said, I am sure that the noble Lord appreciates the necessity of being able to vary price increases. May I say how ridiculous the situation would be if he did not. If the effect of an increase in an order was to hold down the prices of one competitor as against those of another, obviously that competitor would be selling much more at an artifically low price in relation to his competitor than he did previously. That would give him an absurd advantage through being forced to hold down the price in that way. Then, at the end of the time of the restriction—and we are familiar with this in other spheres, particularly in wages—he would obviously have to raise his prices by an artificially large amount. This is becoming too artificial altogether.
3.20 p.m.
Lord ROBBINS: May I, from the Cross-Benches, express profound disappointment at the negative response of the Government Front Bench on this particular Amendment. The case envisaged must be palpably inconvenient and worrying to the businesses concerned. I should have thought that, at any rate in this case, some concession could be made in the wording of the Bill to make it perfectly plain that, in the event of such an injustice, it would automatically be rescinded.
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I have been thinking about the prolonged debate which we had yesterday on earlier clauses. I yield to no one in my appreciation of the friendliness, courtesy, and integrity of those leading for the Government, but I ask myself what would be my position if, as a businessman, I were reading yesterday's Hansard. I am sure that I should say to myself, "They are determined that nothing shall be done to ease my position."
Lord WALLACE of COSLANY: In reply to the noble Lord, Lord Drumalbyn, may I say that the Secretary of State may vary, or revoke an order at any time. I refer the noble Lord to Clause 7(6). That is the position. I would also repeat what I have already said; that is, that the Government are providing safeguards which, in any case, will give some protection to firms after an investigation. There will not always be a need to vary or revoke orders when the safeguards apply.
There is one further point that I should like to put to the noble Lord, Lord Mottistone, and which may help him. The Amendment is deficient, in that it refers to a "person for whom an order has been made" rather than "to whom an order applies". It also fails to specify when the Secretary of State should revoke an order. Theoretically, he could do it on the last day on which the order runs, but that would not be his intent. Therefore, I hope that the noble Lord will withdraw this Amendment. He may want to withdraw it for further consideration, but I am afraid that the Government cannot accept the Amendment.
Lord MOTTISTONE: I thank the Government for their gentle reply. It would seem to me that, both in his opening remarks and in the remarks that he has just made, the noble Lord, Lord Wallace, pins the main criticism of the proposed clause on the technicalities of not having worded it correctly. It is quite true that, in discussing this with my friends, we had a lot of argument about the word "substantially" and whether we should put a figure in, which would deal with the first point that the noble Lord, Lord Wallace, raised. To be quite blunt, we could not come to an easy agreement as to what the figure should be.
As to the other deficiencies within the Amendment, these are those of the

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ignorant Back-Bencher rather than those of the well-supported Government spokesman. I should have thought that it was well within the wit of the Government to improve my Amendment to meet not only the point which the noble Lord, Lord Wallace, made at the end in his second address to your Lordships, but also the point he made to begin with.
Perhaps the Government would care to take this Amendment on board and improve it for me, because at no point did the noble Lord really say that he disagreed with the principle, which is that the Secretary of State requires special guidance in this rather special area. I agree with the noble Lord, Lord Robbins, that the Government have been what one might call unnecessarily stubborn about improving Amendments which do not in any way conflict with the principles of the Bill, and I think that it would be a good thing if they could demonstrate their accommodation on this. It seems to me that this is one matter on which they might be able to feel that they could iron out the bugs and produce an Amendment, because they are obviously more capable of doing it than I am.
From their point of view, they are, they hope, legislating for at least a year, and perhaps for longer. However, it could be that they will be sitting on these Benches and we shall be sitting on those Benches, and that they may be controlling one of our Secretaries of State. Therefore, it could, in a way, be a good thing for them to have the Secretary of State curbed, which might not have been the case if we had been talking about this a couple of years ago. May I suggest to the Government that they should take this on board, or is that asking too much?
Lord WALLACE of COSLANY: I am afraid that it is, but the noble Lord will have the opportunity to vary his own Amendment at a later stage, if he wishes. I am sorry that I cannot accept it.
Lord MOTTISTONE: I am sorry that the noble Lord feels that he cannot take it on board himself, but perhaps your Lordships will allow me to consider this for a later stage of the Bill and will allow me to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 31 not moved.]
3.27 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 32:
Page 14, line 15, at end insert—
("(9) Notwithstanding anything in the preceding provisions of this Act, if a person has given an undertaking under this section and it has been accepted or if an order made under subsection (5) of this section applies to a person and that person represents to the Commission that the circumstances have changed since the date of the undertaking or order so that a restriction of a price or margin is no longer appropriate the Commission shall forthwith investigate the representation and if the Commission think that it is justified the Commission shall not later than 28 days after receipt of the representation make recommendations to the Secretary of State in accordance with their findings; and if within 14 days after receiving such recommendations the Secretary of State does not release the undertaking or vary or revoke the order accordingly he shall lay before each House of Parliament a memorial giving his reasons therefore.")
The noble Lord said: On behalf of my noble friend Lord Mansfield and myself, I beg to move Amendment No. 32. Clause 7(6) of this Bill confers upon the Secretary of State discretionary power—and I emphasise the word "discretionary"—to vary an order which has been made by him after a Commission of investigation, which order restricts a price or a margin, and the discretionary power to vary is conferred upon the Secretary of State with relation to the price or margin which may be controlled by the order.
The purpose of the discretionary power is to allow the Secretary of State to ease, for example, the restraint upon a price increase, or upon a margin, which he has seen fit to apply in the light of a report from the Commission, and the discretionary power here conferred upon him is presumably provided so that he may ease the restraint when the circumstances substantially change. As a result of a report and an order from the Secretary of State, producers may have given certain undertakings. We seek by means of this Amendment to make provision for producers to be released from the effect of these undertakings, and indeed from the restraints upon the prices which they may have not raised as a result of the order.
It is not difficult to imagine circumstances where producers are faced with quite sudden cost increases which they could not have foreseen at the time that they gave an undertaking to the Secretary

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of State, or which indeed the Secretary of State himself could not have foreseen when he imposed certain restraints upon them. We believe that the discretionary power conferred by the Bill as presently drafted is really not adequate. We think that the power should be more fettered than that. We believe that in certain circumstances companies ought to be able to go to the Price Commission and, if the Commission agree, the Secretary of State ought then to be under an obligation, in certain circumstances, to release companies from any undertaking they may have given, and to waive any controls he may have imposed on the price which they would otherwise have wished to charge. That, in a nutshell, is what we seek to do with this Amendment. We propose to add a new subsection to Clause 7 of the Bill. I hope that this additional provision will meet with your Lordships' approval. I beg to move.
Lord WALLACE of COSLANY: To initiate formal procedures leading up to the variation or revocation of orders might lead to unnecessary delays where the circumstances demand urgent action. Conversely, in other cases 28 days might be too short a period for the Price Commission to reach a conclusion about the application. As the original order will have been the responsibility of the Secretary of State, it is more appropriate that firms should apply direct to him rather than to the Commission for variation or revocation of the order and the Government have undertaken to consult the Commission in every case.
The Secretary of State would not unreasonably refuse to vary or revoke an order. In any event, he can be expected to have regard to the criteria in Clause 2. He will obviously take account of the extent of the severity of the restriction envisaged in the Commission's report and the effect of any changes in circumstances on the severity of the order. The firm will also be protected by the safeguards under Clause 9.
The Amendment also refers to release from undertakings. The firm does not in fact need to ask the Commission or the Secretary of State for release from its undertaking, and this procedure is not envisaged elsewhere in the Bill. It is free simply to breach the undertaking
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if it considers such action justified. The breach would revive the Secretary of State's order-making power, but the firm would have the opportunity to make representations to the effect that an order implementing the Price Commission's original recommendations was no longer appropriate. That is the attitude of the Government to the Amendment and for this reason it is not acceptable.
Lord MOTTISTONE: The noble Lord's reply surprises me, especially when he says that one can breach any undertaking without incurring any form of penalty, except an order from the Secretary of State. Perhaps I am quoting out of context, but I draw his attention to Clause 5(3)(b) which says:
"…if he does so he shall be guilty of an offence and liable on summary conviction to a fine …".
There is all manner of nasty stuff built into the Bill and I think it would be quite wrong for someone to risk breaching an undertaking—an undertaking is something quite solemn in common English, let alone within the meaning of the Bill—in the hope that the Secretary of State will be kind. That seems ridiculous. Perhaps the noble Lord will examine that part of his reply, because it does not seem to fit in with what is in the Bill.
Lord HAWKE: Did I hear the noble Lord, Lord Wallace of Coslany, aright? I was astonished when I thought I heard him say that one could breach any of these orders at will. Would he please restate his opinion on that?
Lord WALLACE of COSLANY: I think there is some confusion here. This is not breaching an order but breaching an undertaking.
Lord HARMAR-NICHOLLS: Are they not very nearly the same?
Lord WALLACE of COSLANY: The Bill does not formally provide for any release from an undertaking; a firm is always free to breach its undertaking, as I said, and the only sanction is for the Secretary of State to make an order based on the Price Commission's original recommendations, if he still considers them appropriate. That is the basis of it and it is quite clear that a firm can breach an undertaking. As I say, this

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is not a question of breaching an order, when of course penalties could be imposed.
Lord HARMAR-NICHOLLS: This is all rather confusing. An undertaking is part of an order, is it not?
Lord WALLACE of COSLANY: No.
Lord HARMAR-NICHOLLS: What sort of undertaking is it, if it can be broken at will? I thought the Minister's original answer was particularly weak. One recognises a weak answer when irrelevant matters are brought in. The irrelevancy the noble Lord introduced in this case was that the 28 and the 14 days might be longer than would be warranted if it were left to the Secretary of State and the Commission under the Bill as drafted. By accepting the Amendment, the noble Lord would not be removing the speedier action which the Secretary of State could take if he so wished. This is designed to ensure that if one had a dilatory Secretary of State or one who, for some other reason, did not want to face up to new evidence, he would be restricted to the particular number of days set out in the Amendment.
I should have thought that the noble Lord would have recognised that, by drawing attention to the 28 and 14 days in the way he did, he was in fact drawing attention to this weakness. In my view, the Amendment would improve the Bill along the lines the noble Lord seemed to describe. If he does not want the rectification of a wrong to be delayed, then what he said he wants is more likely to be achieved by accepting the Amendment.
Lord DRUMALBYN: The noble Lord, Lord Wallace of Coslany, was probably right to say that my noble friends should have restricted their Amendment to the case where the terms of an order were breached because, in the case of making undertakings, a manufacturer will be likely to say to the Secretary of State after making his representations, "I undertake to observe the recommendations of the Commission", or whatever,"subject of course to things remaining more or less as they are". In that case, there would be no breach; if things did not remain more or less as they were—if, say, there were a large increase in wages—there would not be a breach. To that extent, the noble Lord was rather strong in the words he used on that point.
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It is possible, of course, that an undertaking may have been given without any such explicit conditions. But surely there would have been some underlying conditions that there would not be something to upset the agreement, such as a very great increase in wages or a strike. Would the noble Lord at least consider the possibility of accepting the Amendment in relation to any orders that may be made, where of course it would not be open to those concerned—the manufacturer or producer—to suggest any conditions of their own, nor in all probability would the order include any conditions?
In other words, I would support the Amendment in part, in so far as it relates to an order, but I am glad to hear from the noble Lord that the Secretary of State would be prepared to consider the situation where an undertaking had been given and where, through circumstances beyond his control, the manufacturer or person providing the services has been forced to make an increase in his prices, despite the undertaking, and that that would be fully understood.
Lord TREFGARNE: It appears that the Government have nothing further to say on the matter, but I certainly have. The noble Lord, Lord Wallace of Coslany, produced two points in argument against the Amendment. To begin with, I think that we are wrong to distinguish too sharply between undertakings and orders. Although undertakings are initiated by the producer and orders are initiated by the Secretary of State, the fact surely is that undertakings will have been given simply so that the Secretary of State refrains from making an order. When, and if, an undertaking was either not produced, or was broken, then the Secretary of State would forthwith make an order, and no doubt could do so very swiftly if he thought it was necessary. Our purpose, therefore, is to provide that the Secretary of State cannot unreasonably continue either the implementation of an undertaking, or the effect of an order when costs, or some other circumstances, have drastically changed since the order was made, or since the undertaking was given.
The other point that the noble Lord, Lord Wallace of Coslany, made was that sometimes the time scale that we have suggested in our new subsection would be too long; but as my noble friend Lord Harmar-Nicholls said, this is a new and

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additional subsection and does not remove from the Secretary of State any of the powers already contained in previous subsections of this clause. I am sorry to tell the noble Lord, Lord Wallace, that once again he has quite failed to persuade me with the force of his arguments. I do not think that it is appropriate for me to pursue the matter at this point, but we certainly reserve the right to do so at a later stage. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord STRABOLGI: This may be a convenient moment to take the Statement, and I beg to move that the House do now resume.
Moved accordingly and, on Question, Motion agreed to.
House resumed.

POSTAL SERVICES IN THE NW2 AREA
3.42 p.m.
Lord WINTERBOTTOM: My Lords, with the leave of the House, I will now repeat a Statement being made in another place in answer to a Private Notice Question on postal services in the NW2 area. The Statement is as follows:
"The Post Office tells me that it has closed the Cricklewood sorting office due to the suspension of staff for refusing to work as directed. The Post Office has advised its customers that there will be no deliveries or collections in the London NW2 area until further notice and therefore that mail should not be addressed there. Customers resident in, or who work in, the NW2 area have been advised to post their stamped mail elsewhere. The Post Office regrets the inconvenience to the public."
That concludes the Statement.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I put down this Private Notice Question in your Lordships' House, as noble Lords may realise, in order that we may keep step with what is being said and done in another place about this worrying matter. I am grateful
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to the noble Lord, Lord Winterbottom, for having repeated the Answer which has been given there. Does the noble Lord realise that the public is becoming increasingly anxious about this affair? It is, I think, only a few days since the Government announced their own court of inquiry, which was welcomed by all the Parties in both Houses of Parliament, and coupled that announcement with an appeal to those concerned, and those not concerned, to enable the court of inquiry, which has just begun, to carry on its investigation in an atmosphere of calm. Since then we have had the appalling violence of yesterday which many of us saw on television.
This Question and this Statement relate only to mail in NW2, but the mail affected is not limited to Grunwick, but extends to all the perfectly innocent inhabitants of that area, who apparently cannot receive their mail at all, nor can they post their mail, except elsewhere. The Question was confined to the NW2 area, but we have heard on the wireless today about the spreading of action to Nottingham. All this is in complete defiance of the Government's appeal. All this is in flagrant violation of the law. One wonders where the rule of law is going in this country.
Has not the time come for the Prime Minister to go on television and appeal to his supporters directly to obey the law and obey the appeal, which has been made by the Government, to allow the investigation to go through in peace and quiet? Is it the case that the people who are concerned in this matter have no respect for the law, or is it that they have no control whatever over some of their own followers? The Government must begin now to realise that this is a matter which is shaking the foundations of Parliamentary government in this country, and I ask the noble Lord whether he has authority to make a firm Statement in this House, or whether his colleagues have authority to make a firm Statement on behalf of the Government in another place, because this matter is becoming an extremely dangerous threat to our constitutional liberties.
Lord WINTERBOTTOM: My Lords, the concern felt by the public, as mentioned by the noble and learned Lord, is of course shared by the Government and

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by both Houses of Parliament. We all share the concern over the way in which this particular incident is escalating. In answer to the Private Notice Question, I must devote my attention to the specific issues involved in the NW2 area, although I can touch upon one or two other related points. At the outset, I should say that what the noble and learned Lord has said must carry weight because of his very distinguished political past, and I am certain that my noble Leader and the Prime Minister must take notice of what the noble and learned Lord is saying today.
I should like to touch upon the question of the spreading of the strike as a result of the reported—I only say "reported"—blacking of Grunwick mail which had been posted outside the London area. I understand that this posting was an action initiated by the National Association for Freedom, and whereas I think most of the mail was in fact dispatched from various areas in the country, in certain areas the dispatch was refused, and the staff of those offices are at the moment seeking the advice of their union, which is the Union of Post Office Workers. I understand that the Union of Post Office Workers Executive is meeting this afternoon to consider the advice which it should give to its members, and I think that noble Lords in the House as a whole will agree that the Post Office Executive has behaved constitutionally and properly throughout the whole of this very difficult affair.
Lord HARMAR-NICHOLLS: My Lords, is the noble Lord aware that the most puzzling part of this affair is the absence of a direct appeal by the Prime Minister, or some senior Cabinet Minister, asking people to obey the law? There have been indirect Statements, but when, in another place and here, Ministers have been invited to use the authority which only they have, as the elected leaders of Parliament, to make a direct appeal, for some reason they have been reluctant, and they have not done that so far. Is there no chance at all of the suggestion of my noble and learned friend being taken up, so that the Prime Minister appears on television, which is the usual way nowadays for letting people see that something authoritative is coming from an authoritative source, or must we still
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make do with these indirect Statements, which in themselves are ambiguous and do not carry the weight necessary to bring about adherence to law and order which a direct approach would have?
Lord WINTERBOTTOM: My Lords, this is a developing situation, and obviously steps must be taken in line with the developments. The noble Lord asked me whether there is any chance that a Statement such as has been suggested will be made. Following upon the appeal of the noble and learned Lord, Lord Hailsham—with his distinguished past—I am certain that this is something which will be given the closest consideration.
Lord LEATHERLAND: My Lords, is it not a fact that this case has been taken to the High Court, and is it not, therefore, undesirable that politicians should interfere with the proceedings of the High Court by making Statements over the head of the court? Furthermore, is it not a fact that the High Court has this afternoon decided that the company must make available to the union opportunities to recruit members in the factory and to recognise the union?
Lord WINTERBOTTOM: My Lords, my noble friend has been talking about the High Court. I understand that the court of inquiry which was held recently has in fact given a ruling this afternoon—I have just seen it on the tape—in favour of ACAS, but I have no more than what appears on the tape.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I think the noble Lord is slightly confused. As I understand the matter—and I hope I shall be corrected, either by the Lord Chancellor or by some other member of the Government—the Lord Chief Justice was due to give judgment in the ACAS case in the High Court at two o'clock today. That is a proceeding wholly outside the court of inquiry which was announced last week. I have not seen the result of the Lord Chief Justice's judgment, although what the noble Lord has just said, which I take it referred to it, does not surprise me, as a matter of fact, as an earnest seeker after truth with some experience of legal proceedings. So that matter is now no longer sub judice unless an appeal is entered.

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As regards the court of inquiry, of course, the sub judice rule does not apply; but what I was seeking to impress upon the House (and I believe with some measure of support from all quarters of the House) was that the questions which I was asking were directed to the open defiance of the law yesterday outside the factory gates; to the open defiance of the law at Cricklewood, to which the Question was primarily directed and which affects all the inhabitants in the NW2 area; and to the spreading of that sort of action by the Post Office to outside offices. These matters have nothing to do with the court of inquiry at the moment—they simply make the proceedings of the court of inquiry more difficult—and they have nothing whatever to do with the judgment delivered by the Lord Chief Justice.
Lord WINTERBOTTOM: My Lords, I apologise to the noble and learned Lord for getting confused on which court was dealing with what matter. I came here today really to answer questions relating to Section 58 of the 1953 Post Office Act. The law on picketing, of course, is something different, and I understand that that is receiving urgent attention.
Lord LEE of NEWTON: My Lords, is my noble friend saying that the Government are now considering changing the law on picketing? Is he aware that some of us who have been concerned with these things for many years are astounded that people can get away with what has been going on? Is he aware that there are now apparently at large professional demonstrators who have never carried a trade union card in their lives, and whose actions tend to denigrate the whole basis of British trade unionism? Will he therefore make sure that the Cabinet is looking very closely at the law on picketing, which is apparently now being abused?
Lord WINTERBOTTOM: My Lords, I thank my noble friend for his most helpful remarks.

PRICE COMMISSION BILL
3.53 p.m.
House again in Committee.
Clause 7 agreed to.
Clause 8 agreed to.
Clause 9 [Safeguard for basic profits]:
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 33:
Page 14, line 38, after ("fit") insert ("taking into account the matters listed in section 2(2) and in particular the need to ensure that companies are not handicapped financially by increases in any costs beyond their control,")
The noble Earl said: We turn now to Clause 9 of this Bill and to an Amendment to which we on these Benches attach considerable importance. Clause 9 is headed, "Safeguards for basic profits". It purports to place upon the Secretary of State the duty to make regulations which lay down minimum levels of profits which companies must not be prevented from earning through the operation of investigations or examinations under this Bill. I think that every noble Lord in this Committee must be concerned at the general decline of profits which has occurred over the last few years. I do not want to become too Party political, but one has to say that the rate of decline has accelerated, or at any rate sharpened, at times when the Government of the day have had a Labour complexion—and statistics will bear me out. The position, I suggest, is that any believer in the mixed economy must now be wary of imposing further controls on industry which may cause the situation to deteriorate still further. It was in this light that this Amendment was tabled in the name of my noble friends and myself.
We are concerned, in short, to prevent, or at any rate to minimise, the damage which can be inflicted on a company by the operation of this Bill. In previous debates many noble Lords have expressed alarm at the possible damage that a price freeze can do to a company, especially to those companies operating on low margins. Such a freeze, it has been suggested—and, in fact, it has scarcely been denied—could even threaten their ultimate viability as undertakings. Putting the matter in one sentence, therefore, we believe that the safeguards under the system proposed in this Bill should be at least of equal value with those under the previous Price Code. We do not attach particular value to the Government's proposals, and this Amendment seeks to remedy the position.
I will not go into the technicalities of profit margins at this stage, although I understand that some of my noble friends may well do so later on in the debate. What I would say is that a number of companies in quite different fields have expressed alarm at these new lower safeguards, and these feelings of alarm have in fact been communicated to the Department. I had perhaps better not call the Department obdurate, but the representations have not achieved more than minor improvements so far, while this Bill has progressed, and I therefore suggest that the case for improvements in this regard has been strengthened.
One asks: What does the Amendment seek to achieve? Noble Lords who may have followed the passage of the Bill through the other place will have realised that this Amendment is in different form from others which have been previously considered; and this is to try to meet Government objections which have been made to the concept, if I may so call it, of strengthened safeguards while the Bill has been discussed at various stages. The purpose of the Amendment is to provide a proper network—perhaps one might better describe it as a safety net—of truly protective safeguards, and at the same time, as I have said, to meet some of the criticisms which have been made of previous Amendments.
One of the arguments which the Government have relied on in the past is that the retention of the present Price Code safeguard levels would protect inefficient companies. Of course, efficiency, or indeed the lack of it, can manifest itself in many forms, and it is doubtful whether the Price Commission, investigating a proposed price rise which is put before it, is competent to act like a company doctor and within three months come to a meaningful appreciation of all the ramifications of a company which can lead to what I might call a cure, which by the very nature of the Commission's composition and duties has to be expressed in the form of a yea or nay to a price increase—and, of course, that yea or nay may be preceded by, accompanied by or coupled with a freeze.
When one couples these difficulties with the problem of cyclical profits it will, I suggest, become very difficult for a company to take a long view and to
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enter into meaningful forward planning of its affairs. Unless it can take a long view of its affairs, it is unlikely to make the investments which will eventually increase the size of its profits or turnover and lead to the expansion of jobs and the general increase in efficiency which is the avowed aim of the Government and which would undoubtedly lead to an appreciation of the national wealth. Nevertheless, apart from these aspects, unless the safeguard provisions are made stronger, if the Price Commission make a mistake—and from our discussions last night this does not seem to be a contingency that the Government are prepared to admit—or if in some way they misuse the discretion which the Bill gives them (and, let us face it, it is not unknown for organisations such as the Price Commission to exercise discretion unfairly or wrongly) a company which is subjected to such misuse of discretion may suffer lasting and even fatal damage without hope of recompense.
Had the roll-back procedure which we discussed yesterday obtained the approval of the Committee the damage would have been less severe, or potentially less severe; but the Committee came to the conclusion to which it was entitled to come and that idea was rejected. But a fairer and stronger system of safeguards for basic profits is now more than ever desirable. I commend this Amendment to the Committee. It is non-contentious, in the sense that it does not make the task of the Government, of the Price Commission or of the Secretary of State any more difficult, but it gives a very much better, more satisfactory safety net within which companies may operate. I beg to move.
4.3 p.m.
Lord MOTTISTONE: I should like to support my noble friend and I shall be going a little further into the details. As my noble friend has said, there would be no need for this Amendment if the safeguards were more satisfying. The safeguards, I am happy and grateful to say, have been before your Lordships since the Committee stage in another place and there have been (and the Government are to be commended for this) many opportunities for people to write in to raise points of detail. But the other side of the coin is that, on

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certain essential matters, the Secretary of State has so far been absolutely obdurate, and it is not entirely clear why he should have been so. Whether there is magic in the particular figures written into the safeguards (and, if your Lordships will allow it, I shall quote a few in a minute) or whether there is something else which is behind this which I find it difficult to discover, I do not know. In replying to the general debate on this Amendment, perhaps the noble Lord, Lord Oram, could give us some indication of the thinking behind the safeguards. The Secretary of State has not done so in meaningful terms. He has made generally bromide-like statements in reply to various representations by letter from industry and commerce; but there is nothing to underpin the actual figures.
I do not wish to labour the subject or to bore your Lordships with long explanations on this matter, and it may suffice to give one particular example. I refer to Command 6861, the consultative document on the prices policy. Paragraph 5 in page 4, describes, under the heading "Draft Safeguards", the principal safeguards for manufacturers and providers of services. It reads:
"The principal safeguard in the case of a manufacturer or provider of services in relation to a product is the greater of (a) a profit which affords a current margin of 3 per cent. and (b) a profit which affords a current margin of 50 per cent. of the base margin".
In the nature of these documents, one has now to turn to paragraph 7 to find that the base margin shall be the excess of the price ascertained under paragraph 2 over the total cost ascertained in accordance with paragraph 3. I shall not bore your Lordships with paragraphs 2 and 3 except to say that what is in question is the excess of the price (described in fairly reasonable terms) over the total costs—I repeat: the total costs.
To come back to what I quoted earlier, we are talking about a current margin of 3 per cent. or a current margin of 50 per cent. of the base margin. The two figures are the same if the base margin is 6 per cent. That is to say, they are the same if the excess of price over total cost is 6 per cent. Your Lordships may think this a very high figure or a very low figure, depending on what sort of activities you have been involved in. Suffice it to say
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that, in a great deal of industry today, it is a figure which does not, in itself, allow sufficient opportunity to invest for the future. In fact, it is a higher figure than the industry with which I am particularly connected has been experiencing during this past year. To explain what this is all about, a by-product of that is that this particular industry which is—and there is no point in my hiding it for I mentioned it on Second Reading—the biscuit industry, is currently part of a study under the National Economic Development Organisation to see how we can find a way of meeting the Government's industrial strategy.
One of the things which comes out of the studies leading up to the report—and I shall not quote from the report, partly because it is not finalised and also because it would be unfair to pre-empt the NEDO in making an announcement when it does so—is the following:
"We discovered in trying to find out what manufacturing capacity our industry had over the next five years and what they were proposing to do to increase it over the next five years that, on an average, across the whole industry, they were not proposing to expand by more than about 3 per cent".
The net result, they reported, was that collectively—although some firms are going to do more than others—they were going to have a decrease in employment of 0·8 per cent. across the board. That is, roughly․and we are talking about five years ahead—a static employment situation. Part of the Government's investment policy relates to trying to find ways of employing more people. So this is a disappointing situation.
I have gone further and have asked my friends and associates: "Why is it you cannot forecast that you will invest more in the next five years?" They have said: "Because it would be totally irresponsible of us to do that when we are so uncertain as to the amount of return of capital that we are going to get, as a result of our trading efforts and other factors". As everybody realises, part of the problem has nothing to do with the Government or the Bill, but is the cost of raw materials overseas (and one can spend hours going into that) and the fact that it is held down by the Government. It is easy for the Government to say: "Well, we have this as a safeguard. That is a sort of fallback position, that is the last situation

801
we will go to." But this is a figure which is written down. It does not mean to say, because 3 per cent. is the safeguard level, that that is going to be the level which will be allowed. Maybe people will notify a greater increase in price, but nobody will bother about it. There will not be an investigation and this will be a happy situation.
That is not the point. The fact is that this is the figure with which people have to plan; it is the only figure they have before them. They have to assume that there is a friendly Government—and I said earlier that the Secretary of State in the Second and Third Readings in another place indicated that he was not a friendly person. Taking that point, you cannot blame them in practical terms for using this base line of 3 per cent. as one on which they have to plan. The net result is that they say they are not going to have enough reserves to do more than the minimum amount of replacement investment; and actually this figure is not good enough for that. Probably all your Lordships own motor-cars, or at least run them if they are owned by somebody else. These motor-cars have to be replaced at intervals and my collegaues in industry have to replace worn out materials—forgetting improvement—in order to keep things going and not run down and employ even le ss people. So we are talking about a figure which is higher than this.
Three per cent. is barely adequate for necessary replacement of equipment. Any concept of improvement must look at a different figure. It is because the figure here is so low—and the earlier one under the previous Price Code was not much more generous—that those in industry feel they cannot say to NEDO that they are prepared over the next five years to take risks and commit themselves to making investments with the hope that by 1982 they will be employing another 5 per cent. of people, or whatever the figure might be. They cannot do that, and that is why this figure is so important.
I am sure that the Secretary of State and his advisers, in their wisdom, look at the problem from the other end and say: "We have to put in a figure which is approved by the Treasury and looks right in economic terms", and of course at the back of their minds it is a minimum figure which they hope they will never
802
have to use as a safeguard. Their attitude will be that they hope all of us will be more generous.
Forgive me for repeating myself but it is vital to convey this point. This has a deleterious effect on the attitude of mind of the people who are trying to plan for the future. It is the only figure that they have. I suggest to the Government that it is very reasonable for this Amendment to be passed. But the Amendment is only part of the way through. The Amendment allows us to ask: "Cannot we have written into the safeguards something which is more encouraging to industry so that they can plan for something better?" At the moment they are not even finding it possible to do that. I implore the Government not only to agree to this Amendment, which in itself is merely seeking to underpin the safeguards, but to try to convey to the Secretary of State the need to consider the problem from two sides, not merely from the one side from which he has considered it so far.
4.15 p.m.
Lord ORAM: The noble Earl, Lord Mansfield, stressed the great importance that he attaches to the Amendment, and indeed the wording of the Amendment is very significant, as I will at once agree. The noble Earl said that the Government's policy threatens a firm's viability. I am merely repeating a few of the phrases that I thought the noble Earl would wish to be emphasised.
The Earl of MANSFIELD: It is plain common sense.
Lord ORAM: I was not agreeing with the noble Earl; I was merely using one or two of his remarks as an introduction to what I wish to say. He used the word "alarm", and so on. I do not underestimate in any way the seriousness with which the noble Earl approaches this problem, but I suggest that some of the language that he has used approaches this problem with undue exaggeration. Such words as "alarm" and "threatening viability" are not justified by what the Bill proposes.
Lord TREFGARNE: If it is not alarm that affects the noble Lord, what is he alarmed by when he sees unemployment of one and a half million people?
Lord ORAM: Of course I am alarmed by that. But what I am saying is that the provisions of this Bill are not alarming. Indeed, they are part of the Government strategy which is intended to overcome the problems to which the noble Lord, Lord Trefgarne, refers. It is for these reasons that I welcomed the opening sentences of the noble Lord, Lord Mottisstone. He suggested that it might be helpful if I indicated the general background of more general safeguards which the Government have in mind against which the specific safeguards to be drawn up in Clause 9 are to be seen. That is an invitation to which I respond. In that respect, the noble Lord was perfectly correct.
It is helpful, and necessary, to get the situation in a clearer perspective. The Consultative Document on Clause 9 safeguards, which the Government issued on 15th June—the one to which the noble Lord referred—tried to do this. It tried to show why the safeguards which are proposed under Clause 9 are what they are, and how they are part of a wider range of more general safeguards.
This word "safeguards" can be a little misleading in this context. We are referring to the specific safeguards to be drawn up in regulations under Clause 9, but much of the Government's case in respect of this Bill rests on the more general safeguards that we believe are there to reassure firms in industry. In particular, the Government again explained in that White Paper—as it had been explained in its first Consultative Document of last February—that their policy is to replace the code rules about price increases, which bear on all firms, by this new process, by the investigations which bear only on the limited number of firms whose price increases or prices appear to require more justification than has been forthcoming, especially where it appears that the competitive forces are exercising insufficient price restraint. So we are not dealing with a policy which in principle could attack the profitability of every firm in Britain right across the board, and that was the effect of a succession of Price Codes in the earlier sense: they were applicable to firms right across Britain.
The present Bill, as I have indicated, applies to particular firms, carefully
804
chosen for very good reasons. Therefore the policy I am suggesting is carefully directed at proper targets. I hope that this helps to show why the safeguards which have been progressively built up in the present Code are inappropriate to the new policy. They are safeguards against restrictions applied overall and indiscriminately and, like most of the provisions of this present Code, they do not involve the exercise of much judgment. They are almost automatic accountancy processes; they protect historical performance, whether or not it has merited that protection in the past and whether or not it still merits protection.
May I briefly review the safeguards I have referred to as more general safeguards for industry. The first is in the system itself. As was said in the recent Consultative Document:
"For the great majority of enterprises pricing decisions will not be subject to external rules and will revert to business judgment under the surveillance of the new policy".
The second safeguard, I suggest, is in the Commission themselves. There can surely be no reason to infer from the appointments already announced that the Commission will be intent on bringing those firms which they select for investigation to the brink of insolvency. The Commission are not told to freeze prices. They are told to have regard to the criteria in Clause 2, including profitability, and they have the power to allow interim price increases—not only one but others if, as the investigation proceeds, the Commission believe them to be necessary and consistent with their duties. Moreover, the Commission have the duty to allow the interim price increases which are specified by the regulations made under Clause 9.
The Clause 9 safeguards, frankly, are not entirely on all fours with the new system proposed in the Bill, which I have just outlined. They were included at the insistence of industry, which wanted that kind of safeguard to be included. In a Bill which, as I have explained, otherwise turns on the judgment of the Commission and which turns away from the older system, the Clause 9 safeguards put a constraint on that judgment and they inject an historical basis into one part of the new controls. The Clause 9 safeguards are present because early discussions, as

805
I have said, showed that firms seemed to want a safeguard with numbers in it, comparable with the older system, at least to serve during the period in which they become accustomed to the way in which the new Commission will operate. But there cannot be any question of turning the Clause 9 safeguards into protection against being investigated, and of regarding the minimum profit level as one which should be pitched well above the level attained by a large number of firms within the field of investigation, and protecting a level of profits whose only justification is that, high or low, it was what was earned some years ago.
Having said that, perhaps I need not dwell upon some of the other safeguard provisions—safeguards in the narrower sense. A firm has the opportunity to ask for an interim price increase above the minimum level provided for in the Clause 9 safeguard. A firm's competitors can also suggest to the Commission that there should be a more than minimal interim price increase if a freeze on, say, the market leader would be unduly damaging to the others which follow it. Finally, the Secretary of State can veto an investigation at any time if, for example, he believes that the investigation, and the Commission's use of the interim price increase, is inflicting unacceptable damage on the enterprise concerned. In practice, and for the reasons which I have already given, the veto power is there to be used if necessary but, in my view, the likelihood of its being needed is not very great.
I am not trying to say that no firm should stand in fear of this Bill, but I do not believe that an efficient and competitive firm need have any fear. Those who are investigated also have the different form of protection which I have described. They may find the going hard, but there is no conceivable reason to conclude from what the Bill provides that the purpose or the effect of any investigation is to drive them out of business.
It has been said that the safeguards which the Government propose under Clause 9 of the Bill are inadequate. Exact details of the safeguards, following the general account given in the Consultative Document of 15th June, were published on 4th July, and the comments received on them will be carefully considered. May I say that the noble Lord, Lord Mottistone,
806
has quoted from the document and from his experience within the biscuit industry. I have no doubt that the association with which he is connected will put the same points through their normal channels, and I can assure the noble Lord that what he has said in this debate will also be taken into account in that way.
Some of the comments that are coming in are seeking higher levels of safeguard, but it is only fair to add that other comments made on behalf of wage-earners and the consumer show an anxiety lest the safeguards become a loophole or a means of escape from the new controls. I can give your Lordships an assurance that the Government do not intend to allow that to happen.
In my view, the Government's safeguard proposals go a long way towards meeting the substance of the Amendment put forward by noble Lords opposite. We propose that firms should be entitled to preserve a profit margin equivalent to 80 per cent. of their margin at a base date, while they are being investigated. For firms with a low level of profitability, 100 per cent. of the base margin may be preserved. The Price Commission will have a duty, as I have explained, to allow interim price increases in these circumstances. Moreover, if costs rise sharply in the course of an investigation, firms can claim a second interim price increase if they consider it necessary. But the Government cannot accept demands for safeguards set at such high levels that firms, with historically high profit margins, will be protected from effective investigation and price restriction where, in the view of the Commission, these are appropriate. Within these constraints, industry's comments on the Government's Consultative Document will, I assure your Lordships, be carefully considered before the Clause 9 regulations are made.
I hope that with that explanation of the overall policy of the Government in this respect, and the assurances that I have given about taking into due account the comments received on the basis of the Consultative Document, noble Lords opposite will feel that they need not press their Amendment this afternoon.
Lord ROBBINS: Before the noble Lords sits down, would he explain in what way the Secretary of State would be

807
embarrassed by the acceptance of the Amendment put forward by the noble Earl?
Lord ORAM: Because it is unnecessary in view of what is already in the Bill, what has been said in another place and what I have said today. It is a sound principle of legislation that that we do not enact unnecessary Amendments.
Lord MOTTISTONE: It seemed to me that the Government's answer, to which I listened with great attention and which covered a great deal of the ground that I had gone over, did not cover the rather difficult point of the ability on the part of businesses to plan. It is the other side of the coin. I have quite understood why the noble Lord, Lord Oram, replied as he did, and indeed one understands a great deal of the logic behind it, though, like the noble Lord, Lord Robbins, I do not see that as a reason for not having the Amendment. That is another issue. But I should be grateful if the noble Lord, Lord Oram, could undertake to look closely at what I said about the need to give encouragement to planning for development.
The Government have a conundrum. They are trying to make sure that the safeguards are low, so that they can investigate the inefficient, and by so doing, because it is the only figure that they can give, they are discouraging the efficient. The efficient say, "If 3 per cent. is the kind of figure they are looking at, then that is all I can be sure of. Therefore, I must not plan for expansion and I will have no extra jobs in 1982, because I cannot be sure of anything better".
The noble Lord made a certain amount of play with the fact that under the new system—and I quite understand his point—the safeguards are not nearly so necessary as they were under the old system, and that industry had asked for it. Industry asked for it because it needs to plan. It is surprising that I have to address noble Lords opposite on planning. Perhaps they are not frightfully good planners, but they believe in planning to a greater extent than we do on these Benches. Experience has shown business that it must plan, because lots of money is involved, other people's money, and, unlike some, they are very conscious of
808
being responsible for other people's money. Therefore, to be very serious, it is extremely important that they have yardsticks which are a kind of guarantee, and which enable them to plan. I am sorry to have to repeat this, but the noble Lord did not really take it up—I suppose because he was not expecting it—and I should be most grateful if he could give me an assurance that he will call the attention of his right honourable friend the Secretary of State for Prices and Consumer Protection to the remarks that I made in that respect.
Lord ORAM: The points that the noble Lord, Lord Mottistone, has made about the need for expansion, planning and so on are highly important. I do not deny that in the least. What I would draw to his attention is the fact that what he wants does not relate to safeguards under Clause 9. It relates more to the criteria by which the Commission will reach their judgments about price levels. As he was speaking on the second occasion, I was looking in Clause 2(2)(c) at the criteria dealing with profits. I am sure that this wording will appeal to the noble Lord, and it is worth quoting. The Commission are required to have regard to the need,
"to provide money for, and to encourage the promotion of, innovations and technical improvements in and the expansion in the United Kingdom of the enterprises"—
including biscuit firms—
"which consist of or include the relevant businesses".
So I suggest that that specifically puts a duty upon the Price Commission to have in mind all that the noble Lord has said.
Lord MOTTISTONE: I will not detain your Lordships any longer, but I should just like to say that that is a jolly good phrase. However, it does not produce any figures and one cannot plan without figures. Of course it does not produce any figures; figures would be inappropriate in an Act of Parliament. The principle is absolutely splendid, but without some kind of yardstick—and figures are a yardstick—one cannot make a financial plan for five years ahead.
Lord ORAM: That comes back to what I said in my main intervention, that these figures for which the noble Lord is asking, and which representatives of

809
firms have urged the Government to include in Clause 9, are much less relevant to the new procedures which are being enacted under this Bill, than to the old system. I would ask the noble Lord to ponder that, and what I said earlier, a little more closely than he appears to have done so far.
Lord DRUMALBYN: Before the noble Lord concludes, will he not concede that this Amendment refers to what the Secretary of State will put into regulations, whereas Clause 2 is concerned with what the Commission must have regard to? This is what the Secretary of State has to consider and put into regulations. Surely there is a big difference there?
Lord ORAM: Certainly; but there is a big difference, too, in the relative significance of the regulations under the new system, and the major approach which is through the exercise of the judgment of the Commission in relation to Clause 2. I accept that the Amendment relates to the regulations, but what I am saying is that under the new system those safeguards are of less significance, since there will not ultimately be the Price Code method of operation. The greater significance attaches to the operation of the Commission in the way we have been discussing on earlier clauses.
Lord MOTTISTONE: Does not the fact that the noble Lord had to quote Clause 2 to me, in answering my point, show that he, too, thinks our Amendment is necessary? Because what it does is to ask the Secretary of State to use Clause 2(2) in his deliberations, just as the noble Lord has done.
Lord ORAM: No. I quoted it for precisely the other reason, to show that the noble Lord's Amendment is unnecessary.
4.40 p.m.
The Earl of MANSFIELD: We start off with two basic premises: first, that the noble Lord, Lord Oram, has not chosen to say that this Amendment is technically deficient, and I take some consolation in that point. Secondly, the noble Lord has not chosen to say, as I suggested when I moved the Amendment, that it would cause the Secretary of State arty difficulty in carrying out his duty as laid down by this clause.
810
The noble Lord accused me of undue alarm and exaggeration. I do not know about that. One of the matters which has characterised the passage of the Bill, so far at least, through your Lordships' House can, I suggest, be summed up by the one four letter word "smug". Everything that the Government say makes one believe that we are about to enter a Shangri-la, a "Never-Never Land", where all, under the beneficent sway of the new Price Commission, will be just and fair, that companies will be allowed to get on with the business of running their undertakings, making reasonable profits and being socially aware of the needs of the wage earner and the consumer, and that somehow, under the benign direction of the Secretary of State, we shall enter a new world of prosperity and peace. If the noble Lord, Lord Oram, had been privy to some of the negotiations which accompanied this Bill and its introduction and had heard the alarms expressed by industry and companies from very different sections within it, he could not possibly have given vent to a statement of such unutterable smugness as he did when he prefaced his remarks about this Amendment.
What we are really speaking about has been very well exemplified by my noble friend Lord Mottistone. The word is "uncertainty". Of course we realise that investigations under the new powers will bear, and bear hardly, only on certain firms. There are to be, so we are told, only 40 investigations a year, but that will not help those firms to make up their minds about how to conduct their business. They will not know, because they will not have any proper guidelines, how to comport themselves, nor will they know whether or not they are to be brought within the Price Commission's net in the future. That is why one of the matters which concerns us most about the Bill is the continuing uncertainty of industry—manufacturing industry and distributors in particular—which cannot help them to earn the money and provide the expansion which we in this country so desperately seek.
The noble Lord went on to say that the Price Commission and their personnel will be a guarantee that an efficient and competitive firm need have no fear. The noble Lord may be content with the personnel of the Price Commission. I am

811
not sure that industry will be, but only time will tell. What I say is that it appears, at any rate from the words of the Secretary of State in the other place, that the Price Commission are not a body which will engender confidence, at least in the short term. They will have to earn that confidence by the sensible and just way in which they go about their business. I notice that the noble Lord is nodding and I am grateful to him. We say that in this Bill we must make as sure and certain as we can that the Secretary of State—who is, after all, going to be in control of this organization—knows how difficult his task will be, for it will be difficult because of the criteria to which he as well as the Price Commission must pay heed. Therefore we are determined to stiffen the Bill so far as we can.
It was said that there had been comments on behalf of wage earners and consumers. Here again the noble Lord shows a total disregard and ignorance of commercial life in this country. It is in the best interests of the wage earner to work for a firm which is as competitive and prosperous as it can possibly be. That firm will be neither prosperous nor competitive unless it is making a reasonable level of profits. Therefore I hope that any representations on behalf of wage earners will ram home to the Government the point that a firm which is unable to make proper profits will

CONTENTS

Aldenham, L.

Elliot of Harwood, B.

Luke, L.

Allerton, L.

Elton, L.

Lyell, L.

Alport, L.

Emmet of Amberley, B.

Mancroft, L.

Amory, V.

Exeter, M.

Mansfield, E.

Ampthill, L.

Faithfull, B.

Margadale, L.

Atholl, D.

Fraser of Kilmorack, L.

Melville, V.

Auckland, L.

Greenway, L.

Merrivale, L.

Balerno, L.

Gridley, L.

Monck, V.

Barnby, L.

Hailsham of Saint Marylebone, L

Monson, L.

Belstead, L.

Halsbury, E.

Morris, L.

Berkeley,, B.

Hanworth, V.

Mottistone, L.

Bessborough, E.

Harmar-Nicholls, L.

Mowbray and Stourton, L. [Teller.]

Campbell of Croy, L.

Hatherton, L.

Clancarty, E.

Hawke, L.

Newall, L.

Clifford of Chudleigh, L.

Hereford, V.

Northchurch, B.

Clitheroe, L.

Hewlett, L.

Nugent of Guildford, L.

Craigavon, V.

Hornsby-Smith, B.

Onslow, E.

Craigmyle, L.

Ilchester, E.

Pender, L.

Cullen of Ashbourne, L.

Inchyra, L.

Rankeillour, L.

de Clifford, L.

Inglewood, L.

Rathcavan, L.

De Freyne, L.

Ironside, L.

Redesdale, L.

Dehnam, L.

Killearn, L.

Reigate, L.

Derwent, L.

Kinross, L.

Robbins, L.

Drumalbyn, L.

Lauderdale, E.

Rochdale, V.

Ebbisham, L.

Long, V.

St. Aldwyn, E.

never provide the security of tenure, so far as jobs are concerned, which everybody is entitled to seek. The same remark applies to consumers. If firms are driven to the wall by ill-considered legislation such as this, two things will happen. First, their products will cease to flow. Secondly, the jobs which they provide will cease to exist. It is as simple as that.
I have pondered whether anything which the noble Lord has said leads me to conclude that there is any possibility that he could meet us on this point. I really do not think that there is. The noble Lord has given me no hope and no undertaking. In any event, we have sufficiently discussed this matter and it is my intention to divide the House. In particular, I wish to see the reaction of what I might call the poodles of the noble Lord, Lord Peart—
Several noble Lords: Very cheap!
The Earl of MANSFIELD:—from whom there has been a deafening silence on this important matter. We must come to a conclusion.
4.46 p.m.
On Question, Whether the said Amendment (No. 33) shall be agreed to?
Their Lordships divided: Contents, 92; Non-Contents, 96.

Sandford, L.

Stracona and Mount Royal, L.

Trefgarne, L.

Sandys, L. [Teller.]

Strathspey, L.

Vernon, L.

Skelmersdale, L.

Sudeley, L.

Vickers, B.

Spens, L.

Terrington, L.

Vivian, L.

Stamp, L.

Teviot, L.

Ward of North Tyneside, B.

Strathclyde, L.

Teynham, L.

Young, B.

NOT-CONTENTS

Airedale, L.

Gordon-Walker, L.

Peddie, L.

Amherst, E.

Greene of Harrow Weald, L.

Platt, L.

Aylestone, L.

Hale, L.

Popplewell, L.

Balogh, L.

Harris of Greenwich, L.

Rathcreedan, L.

Banks, L.

Henderson, L.

Rhodes, L.

Birk, B.

Houghton of Sowerby, L.

Ritchie-Calder, L.

Blyton, L.

Hunt, L.

Rochester, L.

Boston of Faversham, L.

Jacobson, L.

Rusholme, L.

Brockway, L.

Jacques, L.

Sainsbury, L.

Burntwood, L.

Janner, L.

Seear, B.

Burton of Coventry, B.

Kagan, L.

Shannon, E.

Byers, L.

Kinloss, Ly.

Shepherd, L.

Caradon, L.

Kirkhill, L.

Shinwell, L.

Champion, L.

Leatherland, L.

Simon, V.

Chorley, L.

Lee of Newton, L.

Sligo, M.

Collison, L.

Listowel, E.

Stedman, B.

Cooper of Stockton Heath, L.

Llewelyn-Davies of Hastoe, B.

Stewart of Alvechurch, B.

Crook, L.

Lloyd of Hampstead, L.

Stone, L.

Crowther-Hunt, L.

Lloyd of Kilgerran, L.

Stow Hill, L.

Cudlipp, L.

Loudoun, C.

Strabolgi, L. [Teller]

Darling of Hillsborough, L.

Lovell-Davis, L.

Taylor of Mansfield, L.

Davies of Leek, L.

McCarthy, L.

Wallace of Coslany, L.

Davies of Penrhys, L.

McCluskey, L.

Walston, L.

Delacourt-Smith of Alteryn, B.

Mackie of Benshie, L.

Wells-Pestell, L.

Douglas of Barloch, L.

MacLeod of Fuinary, L.

White, B.

Elwyn-Jones, L. (L. Chancellor.)

Maelor, L.

Wigg, L.

Fisher of Rednal, B.

Noel-Buxton, L.

Wigoder, L.

Foot, L.

Oram, L.

Williamson, L.

Gaitskell, B.

Pannell, L.

Willis, L.

George-Brown, L.

Pargiter, L.

Winterbottom, L. [Teller]

Gladwyn, L.

Parry, L.

Wootton of Abinger, B.

Glenamara, L.

Peart, L. (L. Privy Seal)

Wynne-Jones, L.

[Amendment No. 34 not moved.]
Clause 9 agreed to.
Clause 10 [Directors to examine questions]:
4.54 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 35:
Page 15, line 19, at end insert ("and in any such direction the Secretary of State shall state the reasons justifying the decision to direct the carrying out of an examination").
The noble Lord said: This is an Amendment to Clause 10, and it is a short Amendment which I can explain very briefly. The purpose of the Amendment is to provide that the Secretary of State shall declare his reasons for reaching a decision to direct the carrying out of an investigation or an examination. It is
814
important for those companies which are to be affected by an examination to know the reasons why the Secretary of State has ordered that an examination should take place, so that they are in a position to know what potential transgression the Secretary of State may believe them to have committed. This is really an extention of points that have been made earlier in this discussion. We have suggested on previous Amendments that companies are not, under this Bill as presently drafted, sufficiently well informed as to the reasons either why an investigation has been initiated or why a price has been frozen. The corollary of that, which we argued yesterday, is that when they are so informed they ought to have the right to make representations to the Secretary of State, or indeed to the Commission. However, the purpose of this Amendment is to insert some words at the end of this subsection, to provide that the Secretary of State shall provide to the companies concerned details of the reasons why he

815
has ordered an examination. I beg to move.
Lord WALLACE of COSLANY: If the Secretary of State were required to justify his direction he could be put in the position of prejudicing the outcome of the examination by the Price Commission. It would be better for all concerned if the Commission approached the examination with an open mind rather than against the background of a public statement of a prima facie case against the prices or charges concerned. The Secretary of State must, of course, give the Commission clear guidance as to what they are expected to examine. This can be done under Clause 10(2) by prescribing fairly detailed terms of reference, if appropriate. An additional statement in justification of the direction is unnecessary for this purpose. The Secretary of State is required by virtue of Clause 20 to have regard to the criteria in Clause 2 when considering whether to give a direction. He cannot, therefore, give a direction on frivolous or malicious grounds.
If noble Lords or any outside interests consider that the reasons for a particular direction are not clear, the Secretary of State is, of course, accountable to Parliament, and appropriate Questions may be put down to him for answer. I very much regret that we are unable to accept the Amendment. It is considered completely unnecessary, and in point of fact was not selected in another place.
Lord TREFGARNE: The noble Lord is quite right; this matter was not debated in the other place. I am not sure that I want to pursue this discussion a great deal longer, but I do think that the noble Lord's reply has really been typical, if I may say so, of all the replies, or almost all the replies, that we have received to our various Amendments on this Bill. The Government, for reasons best known to themselves, seem unwilling to yield so much as a centimeter. That, I regret, is yet a further example of what I can only call the Government's intransigence over the Bill.
We are making the very modest and, I should have thought, quite harmless request that the Secretary of State ought to state his reasons for directing that an
816
examination should take place. I am gratified that the Secretary of State's decisions in this respect can be questioned in Parliament and no doubt we shall take every opportunity to do that when the occasion arises. I shall not pursue the matter now, but I reserve the right to return to it at a later stage if I think it appropriate. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 10 agreed to.
Clause 11 [Examinations]:
5.2 p.m.
Lord REDESDALE Lord REDESDALE moved Amendment No. 36:
Page 15, line 44, at end insert:
("(1A) In respect of retail prices which are recommended by manufacturers or suppliers of goods or services it shall be the duty of the Commission to examine and report on the use of manufacturers' or suppliers' recommended prices only for the purpose of ensuring:

(i) that the sources of such prices are readily verifiable by consumers

(ii) that such prices are reasonable and fair in relation to known or determined retail margins

(iii) that a single manufacturer's or supplier's recommended price is uniformly available to persons selling such goods or services.").

The noble Lord said: With the permission of the House I should also like to speak to Amendments Nos. 45 and 46. I think that at the outset I should declare two interests, although I am afraid that they are extremely remote. However, it is better to be safe than sorry. I have connections with a catalogue mail order house and I am a director of a direct response company. Both of those businesses do, to a degree, use recommended retail prices. Therefore, although I declare those interests, they have at least given me an insight into what this matter is about.
It is interesting to note that in this particular Bill the recommended retail prices are not mentioned anywhere. A considerable amount of discussion took place on 19th May in Committee in another place, but both sides seemed to be fairly diametrically opposed, and when it came to a vote it was very close—eight to

817
nine. The main point at issue in Committee in another place was, looking at it objectively, that the Minister did not, in my view, give a particularly good justification for the case. Therefore I feel justified, at this stage, to raise the matter again. Indeed, one or two matters have arisen since then about recommended prices.
If I may labour this point for a moment, let me begin with the definition of recommended prices. Recommended prices occur when a manufacturer puts up a price and publishes it or a retailer publishes a price. Sometimes they are suggested recommended prices because a figure is not actually given and someone has to work out a figure on margins. I am the first to admit that there have been some abuses. Indeed, this was discussed in another place. The Minister said that 80 per cent. of cases of recommended retail prices were perfectly honest. He said that 20 per cent. of such cases were doubtful and I shall not contend with that figure, because I believe that the 80 per cent. is the important point.
Let us consider the reason for using recommended retail prices. I am the first to admit that the Minister did not say that he was going to abolish them, although there have been so many ambiguous statements one way or another that one was rather led to believe that the machinery would be put into effect and that certainly they would be abolished on one section; namely, small electrical goods and probably, on others later, although that is a supposition.
I contend that recommended prices benefit the consumer in that they are an anchor point. A customer can see in a catalogue the price recommended by the manufacturer and what saving he can make. Somebody may say that these figures are inflated, but my Amendment takes that into account. That is the point that I really want to bring home later on. The recommended price acts as an anchor point from which the consumer can see how much is the saving. Many of us talk about consumer confusion, but I do not believe it. In my experience there is not a high degree of impulse purchasing. I do not agree that someone sees an enormous saving and then goes off to buy. Consumers are considerably better educated than that and it is talking down to assume that they are totally confused.
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The anchor point is useful because the consumer can see the saving. It may be that there appears to be a very good saving and if it is an enormous saving consumers will be a little doubtful anyway. Having seen this saving they will tend to shop around, and there is plenty of evidence of that. If they shop around they can see that they can get these goods at a lower price somewhere else.
Certain developments have taken place and there has been some research. The research indicates, as regards 117 lines where a recommended price was shown—that is, a double price: a recommended price and a saving price—that the actual prices at which the goods were being sold in most cases (in fact, over 51 per cent.) were at a lower price than could be obtained anywhere else. Therefore, as regards those items the recommended prices indicated that there were savings and the prices were at a much lower rate than the prices in other areas. There was a saving not just against the recommended price but against goods where only a single price was shown. I think that that is a telling point and something to which consideration should be given.
I ask the Government to look at the matter again in a very reasonable light. I am not making a great plea on this point, but I think that before the Bill goes through and the machinery is put in hand so that recommended prices can be dispensed with by order and not discussed in Parliament, we must remember that we are changing a method of selling. It is much more drastic than perhaps appears on the surface. We are giving a great deal of power to the Secretary of State.
My Amendment sets out to do several things. First, it limits the criteria upon which the Price Commission can make recommendations. At the same time, it prevents any retailers or manufacturers from using recommended prices to their own ends and misleading the public. Therefore, the objective is two-fold and is achieved by this Amendment, which says:

"(i) that the sources of such prices are readily verifiable by consumers

(ii) that such prices are reasonable and fair in relation to known or determined retail margins

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(iii) that a single manufacturer's or supplier's recommended price is uniformly available to persons selling such goods or services".

I hope that the Minister will consider this matter very carefully. I contend that the Amendment catches any area where recommended prices can be used to confuse the consumer. It preserves a freedom which I think should be preserved; namely, that when one changes a method of retailing it should be discussed fully. This is a large item to change and it should not be done just by order without any discussion in Parliament. I beg to move.
5.9 p.m.
Lord ORAM: The noble Lord, Lord Redesdale, has moved his Amendment in a reasonable and reasoned way, which I welcome. In doing so he referred to the debate on this subject in another place. As I recall, he did not remind your Lordships of what my right honourable friend the Minister of State said about the Government's intention as regards the powers in the present draft of the Bill, and that is something that I should like to repeat now. He said that it is not the Government's intention to use the new powers to outlaw recommended resale prices in general.
Lord REDESDALE: "Retail," not "resale".
Lord ORAM: I know that "resale" is a broader term. I have not checked what my right honourable friend actually said, but I think the principle involved is much the same. The powers can be used only in sectors where the Commission so recommend. There are sectors where recommended prices bear no relation to actual retail prices and serve only to confuse consumers. I think that the noble Lord, Lord Redesdale, accepted a proportion of 80 "goodies" to 20 "baddies". Even if we can agree on that sort of proportion, that still leaves the 20 per cent. that need attention. We should want to add in those areas where the 20 per cent. are operative.
We need these statutory powers to prohibit recommended resale prices. Our experience shows that we cannot always regulate the practice by voluntary means. If the Amendment of the noble Lord is accepted, we should have to rely on
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voluntary means—I assure him that we should. Perhaps I can give him an example of where the voluntary method was ineffective—the noble Lord made a passing reference to this example. In their report on small electrical household appliances and recommended retail prices the Price Commission recommended that the use of recommended retail prices be discontinued because it was more likely to mislead then to help. We were unable to reach any voluntary agreement on this with the trade.
It has been suggested, although not by the noble Lord this afternoon, that this kind of power is not necessary in the Bill because there is the Fair Trading Act, the machinery of which could be used. But I would suggest that it is appropriate to include in the present Bill provisions concerning recommended resale prices. After all, the major concern in the Bill is with the permanent regulation of aspects of non-competitive behaviour. Powers to control recommended resale prices are necessary to regulate one aspect of such behaviour, and they could be needed in the context of a Price Commission report on pricing generally in a sector.
I concede that, although it might be possible to use powers in the Fair Trading Act to control recommended resale prices, it is clearly more appropriate in these circumstances to have powers in this Bill. The Amendment which the noble Lord has moved seeks to restrict the scope of the Commission in examination of these practices. It would reduce powers generally in this respect, powers which we have carefully considered. In our view, we are not taking any unnecessary powers. We have weighed the matter up and believe that such powers are necessary and that the Amendment in the name of the noble Lord, Lord Redesdale, would not help the case at all.
Lord REDESDALE: I thank the noble Lord for his answer on this matter. I do not agree with him that it is a question of a voluntary agreement. That is just not the case. I do not think that he can have read the Amendment. The Amendment simply changes the criteria on which the Price Commission operate. There is no question at all of a voluntary agreement being introduced. I should be grateful if the noble Lord would consider that and read the Amendment again.

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We are concerned about the powers of the Price Commission.
Admittedly, it was argued in another place that the Fair Trading Act covered this issue. The Minister admitted it, but only after he was forced to do so in Committee. Mr. Fraser admitted that the powers exist, although he did not admit that they were adequate to look after this matter. I shall go no further than that because the noble Lord raised the matter himself and I believe that it should be left as it was argued in another place.
However, I should like to return to the point that it is not a question of a voluntary agreement. I said that I would go by the Minister's figure of an 80–20 split; I did not quote the figure of 80–20. At the outside, it was only 20 and, in fact, I believe that it was much less. The point is that, at the end of the day, this Amendment sets out to rectify the situation. It is not simply a limiting Amendment; it rectifies the situation should anyone go outside and try to mislead the public. It gives the Price Commission the powers to carry out an examination. On that basis, I should like the Amendment to be reconsidered.
Lord ORAM: Perhaps we shall not reach agreement on this matter, but the present powers in the Bill would enable the Secretary of State by order to prohibit the use of recommended resale prices in particular sectors where the Commission so recommended. But the effect of the noble Lord's Amendment is that it would prevent the Commission from recommending such prohibition because it provides that the Commission's examination of recommended resale prices be limited to the three areas which are set out in the noble Lord's Amendment and which I need not read out. So, in the first place, the Commission would be limited in their recommendations and therefore the powers of the Secretary of State to act would also be limited. It is that which is an undue limitation on the powers of the Secretary of State.
Lord REDESDALE: The point at issue here is that the Minister of State is assuming too much power. Of course, it does not let the Minister of State have enough power; he has far too much power, and far too much power has been taken
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anyway on this. I shall not weary the House any further. I disagree. I do not think that the point has been taken or that it was taken in another place. However, I reserve the right to reintroduce this Amendment at a later stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 37 and 38 not moved.]
Clause 11 agreed to.
Clause 12 [Undertakings and orders in consequence of reports on examinations]:
5.19 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 39:
Page 17, line 1, leave out paragraph (b).
The noble Lord said: On behalf of my noble friends Lord Mansfield and Lord Mottistone, I rise to move Amendment No. 39. Noble Lords may be pleased to hear that this Amendment is a paving Amendment to Amendment No. 40 and that Amendments Nos. 41, 44, 47 and 48 are consequential upon Amendment No. 40. Therefore, with your Lordships' permission I shall speak to Amendments Nos. 39, 40, 41, 44, 47 and 48. When we have decided the fate of Amendment No. 39, the rest of the Amendments that have mentioned can be dealt with formally.
This clause empowers the Secretary of State to initiate what are called "sector examinations"; in other words, to instruct the Commission to conduct general examinations of prices in a particular sector. I do not think that we can underestimate the effect of such examinations upon the sectors; not only upon the market leaders but also equally, and perhaps more penally, upon the small businesses within those sectors subject to examination. As general examinations are initiated by the Secretary of State and not the Commission, it seems to us that they are likely, or at least more likely, to be of a political nature. I think that this criticism would apply whether the Secretary of State was appointed by the present Government or some other Government of some other political complexion in the future.
Because of the broader scope of general examinations, any order made by the Secretary or State arising from the

823
examination is unlikely to be able to take full account of the differing circumstances of companies in the relevant sector, and we believe that inequity could then result. For example, different companies buy their raw materials from different sources. Some companies may be financed by loans in foreign currency, and the level of the pound, the dollar, or the franc might change.
Additionally, there is no restriction on the scope of the Secretary of State's actions where he is limited to be no more severe than the Commission recommendation, as exists in the case of investigation initiated by the Commission themselves. In other words, the Secretary of State, having received the report from the Commission arising out of this paragraph, might choose to be even more severe than the Commission recommend He might do that, as I said before, for political reasons and not for commercial, economic, or even consumer oriented reasons. As a sector examination is likely to be of a less specific nature than a company investigation, it is thought that it might be less likely to be treated so seriously by individual companies, although the consequences of an examination could easily be much worse for individual enterprises, particularly smaller ones. It is for these reasons that we move this Amendment.
There are, however, some further points that I would put. I would say that the Government would be better advised, rather than to introduce these sector investigations, to rely upon publicity, which has been so effective in a number of areas just lately—for example, the difficulties that arose over the question of television rental charges. There was a lot of publicity over that and a voluntary agreement was eventually reached. The Price Justification Tribunal, which is relied upon in Australia for these purposes, has no power to enforce its recommendations and yet is regarded as being very successful. Indeed, I am told that no recommendations of that Tribunal have, so far at least, been flouted by the companies concerned. There are a good many more reasons why the Secretary of State's powers sought under this clause ought to be curtailed or removed, but I hope that the ones I have give will, at this
824
stage at least, be sufficient to convince your Lordships. I beg to move.
Lord MOTTISTONE: It seems to me that this is another case of the Secretary of State being given more power than is necessary. One wonders why. It would be helpful to us to have it spelled out in the reply to my noble friend why this particular extra power is thought to be so important. Is it related to the fact that in an earlier exchange one understood that an undertaking is not obligatory? I question the morality of an Act of Parliament which allows people to give an undertaking and not feel that they have to carry it out. This is a problem which I find is within the answers that were given on that earlier event. Is it for that reason that we are called upon now to have an underpinning of the undertaking by the Minister giving an order, or is it that the order is found necessary merely because the Secretary of State feels that he has not quite enough power within the Bill? If it could be explained a little more fully it would be easier for us to understand why it is in the Bill at all. It does not seem to fit.
5.25 p.m.
Lord WALLACE of COSLANY: I shall do my best, but so far it would appear that this Front Bench has not been satisfying the Opposition Benches at all. At any rate, I shall endeavour to give an answer to the noble Lord, Lord Mottistone, in particular. The Government recognise that the powers under Clause 12 can be applied to whole sectors of the economy over long periods. The powers are also available to reduce prices and not simply to freeze them. But with the abolition of the cost controls and the eventual disappearance of margin controls, such powers are justifiable to regulate pricing behaviour in sectors where competition is weak and will remain weak. These powers will form the basis for the link between prices policy and competition policy, where competition cannot be stimulated and where there is a clearly identified need for regulation of pricing behaviour.
Examinations cannot be used to spread the network of control over the whole economy. There will not be capacity in the new Price Commission for more than about 10 of these each year. Voluntary

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undertakings are not enough. Statutory back-up powers are needed to ensure that the minority of firms who might be reluctant to act on a reasoned Price Commission report can be brought into line. But in practice undertakings may prove to be more appropriate than orders in many cases.
The existing reference programme has achieved useful results, but there has been evidence of lack of co-operation over the follow-up to Price Commission reports. For example, the domestic electrical appliances industry have not co-operated by ending the practice of recommending retail prices as the Commission recommended. Where industries have come to voluntarily negotiated agreements with the Departments, they may have been influenced by the theoretical possibility that tight controls could have been imposed on them through the Price Code if the Price Commission's recommendations had not been voluntarily implemented. The Code will no longer be available in its present form after July and it is more appropriate to take specific powers to act on Commission recommendations than to rely on the blunt instrument of the Code.
There are, of course, various forms of protection available to firms. The use of the order-making powers must appear appropriate in consequence of the indications—of matters requiring remedy—and advice given in the Commission's report; there will be an opportunity for firms to make representations before any order is made; and the safeguards under Clause 9 will apply. Amendments tabled by the Government in the Commons now provide for Affirmative Resolution procedure where regulation of particular prices under Clause 12 orders lasts longer than 12 months. That is referred to in Clause 12(7). For that reason the Government are unable to accept the Amendment, and trust that noble Lords will see fit to withdraw it.
Baroness ELLIOT of HARWOOD: Every time we discuss the powers of the Commission they become more and more rigid and it is more and more difficult to see how any differences can be accounted for on this question of retail prices. If one fixes retail prices very rigidly, one will sometimes be doing a great deal of harm because costs will be greater than
826
those prices and one will sometimes be keeping up prices because they would have gone down had it not been for the Price Commission and the way they operate.
Having listened to the debates on the various Amendments, it seems that there is very little elasticity on the part of the Government, very little allowance for variations, and it seems that they are putting the Price Commission in an exceedingly dictatorial position, and that cannot be to the advantage of the consumer, and certainly it will be no advantage to the producer. I regret that the Government are maintaining an absolutely rigid view about this, because I think there is room for some variation which might be agreed on both sides, so making the Bill more acceptable and practicable. The Government are making it a very difficult Bill to work.
Viscount ROCHDALE: The noble Lord, Lord Wallace of Coslany, said the Government's position had been taken up largely because, as he said, there were markets which were not very competitive and would continue so to be. Clearly he feels strongly about this and has in mind a number of markets. May I ask him to give some examples of the markets he has in mind.
Lord MOTTISTONE: I was about to make that very point. However, if we can be assured that this will be applied only to markets where there is not much competition, I do not think the Minister will have much quarrelling from us; if the Liberals did not have their present self-imposed silence I think they would be with us on that point. In highly competitive markets we want to be guarded against arbitrary action on the part of the Secretary of State because, as we have said many times, we do not think the present Secretary of State is particularly sympathetic to the problems of industry. If we could be assured that, as the noble Lord said, this is designed to deal with markets in which there is little or no competition and that he will consider tabling an Amendment which said just that, that would go a long way to resolving the problem.
Lord DRUMALBYN: Is it not a fact that these provisions apply not only to markets for goods but also to markets

827
for services? In other words, does this provision cover the whole field of professional services?
Lord WALLACE of COSLANY: To answer the question posed by the noble Lord, Lord Mottistone, I think he will agree that there are very few perfect markets, and that is the main point we have in mind. Regarding the point made by the noble Baroness, Lady Elliot of Harwood, I would remind the Committee that the Government have agreed on Amendments in the Commons to introduce the Affirmative Resolution procedure, and that will provide an opportunity for challenge in both Houses. Therefore, although a great deal has been made of the increased powers of the Minister, they are sinister connotations which are not deserved. This is simply making sure that there is no escaping on the part of some difficult individuals, of whom there are a few here and there, and that is why the Government have taken this view.
Lord TREFGARNE: The noble Lord, Lord Wallace of Coslany, referred to the Affirmative Resolution procedure. Was he referring to the one which the Opposition have put into the Bill—I think it was Amendment No. 1—and, if so, is it his intention to persuade his honourable and right honourable friends in another place to accept that Amendment?
Lord WALLACE of COSLANY: No, and I will repeat what I said because the noble Lord has obviously misunderstood the point. Amendments tabled by the Government in the Commons now provide for the Affirmative Resolution procedure where the regulation of particular prices under Clause 12 orders last for longer than 12 months. Those Amendments were moved by the Government; the Government as well as the Opposition move Amendments, but we are more successful.
Viscount ROCHDALE: Would the noble Lord answer my question and name any markets he has in mind which today are not competitive? Clearly he must have some in mind from the way he spoke when he first replied to the Amendment.
Lord WALLACE of COSLANY: I said there were very few perfect markets. I could not be more specific and define one.
Lord TREFGARNE: I am still mystified about the Affirmative Resolution procedure which the noble Lord, Lord Wallace of Coslany, mentioned. I do not deny it is there, but I cannot find it; perhaps I am looking in the wrong place. However, to return to the Amendment, I argue my case on the assertion that voluntary agreements, particularly in relation to sector matters, are infinitely preferable to the sledge-hammer procedure which the Government seek to include here. The Government have failed, either in another place or here this afternoon, to persuade us that the voluntary agreement is in any way unsatisfactory. Nor have they been able to offer any examples where they have sought to achieve voluntary agreements and failed to do so; there are certainly none of any recent vintage.
In the last analysis, if companies do not comply with voluntary agreements or do not listen to recommendations from the Commission or suggestions from the Secretary of State, the Secretary of State or the Commission can initiate specific price or margin investigations in the relevant sectors, and maybe the Secretary of State can make an order arising out of such an investigation. I am totally persuaded that the effect of the Amendment would be entirely beneficial and I must therefore press it.
Lord WALLACE of COSLANY: Before we reach a decision on the Amendment, perhaps I might inform the noble Lord, Lord Trefgarne, that the Affirmative Resolution procedure to which I referred can be found in Clause 12(7).
Lord TREFGARNE: I am much obliged to the noble Lord.
5.39 p.m.
On Question, Whether the said Amendment (No. 39) shall be agreed to?
Their Lordships divided: Contents, 70; Not-Contents, 89.
Resolved in the negative, and Amendment disagreed to accordingly.
[Amendments Nos. 40 and 41 not moved.]
5.47 p.m.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 42:
Page 17, line 11, at end insert ("and such persons or organisations as appear to the Secretary of State to have an interest therein.")
The noble Earl said: I beg to move Amendment No. 42, which is also part of Clause 12. This is a matter of getting the Government to state their position over a point which is not the largest that the Committee has had to consider this afternoon. Clause 12, in effect, enables the Secretary of State to make orders or accept undertakings in consequence of reports which come as a result of examinations undertaken by the Commission.

831
Your Lordships will see in particular that under the last part of subsection (3), where the Secretary of State proposes to accept an undertaking or make an order
"…it shall be his duty, before deciding whether to accept or make it, to consult the Director General of Fair Trading …".
The Amendment seeks to widen the area of consultation to include,
"such persons or organisations as appear … to have an interest therein".
One can think of examples where there may be organisations which are vitally concerned and which would want to be consulted and, if necessary, to make representations at this stage. Therefore, it seems to us fair that something on these lines should be written into the Bill.
Lord WALLACE of COSLANY: With all due respect to the noble Earl, the Amendment is unnecessary. Reports by the Price Commission following examinations will have to be published, and persons who consider that they may be affected by the report's content will have 28 days following publication in which to make representations to the Secretary of State. During that period, the latter will not be able to make any order.
The Secretary of State's order-making powers will, of course, expire at the end of three months from the publication of the report. He will of course hold informal talks with the trade association concerned once a report has been published. The association will therefore be given fair warning if the Secretary of State decides that an order is necessary. However, it would be an unnecessary burden to impose a duty of statutory consultation on the Secretary of State in respect of orders and undertakings. The matters referred to the Commission under Clause 10 could be of interest to many firms and organisations, and it would be time-consuming to write separately to all of them. The requirement for an Affirmative Resolution procedure of both Houses of Parliament if the order is to last longer than 12 months is an additional safeguard for firms in the sector covered by a report. For those reasons we do not think the Amendment need be pressed.
Lord MOTTISTONE: Perhaps I could inject into the noble Lord's mind a thought
832
which his remarks did not quite cover. It seems to me there is a great problem here between having an impartial, generally knowledgeable adviser, like the Director General of Fair Trading, and having proper technical advice at an early stage before it comes to the publication stage. While fully appreciating that there are opportunities for people to make representations at a later stage, one is always slightly suspicious of Government and their main agencies that they do not really know the details, particularly when they are dealing with a sector of industry. Therefore, there is point in my noble friend's Amendment, to make sure that the Government do not think of themselves so arrogantly as to be experts, and welcome the opportunity to consult with people who have expert knowledge, which indeed is left entirely open to them to choose. It does not say specifically who should be chosen: it merely gives them the opportunity and the guidance, if you like, for future generations, to have consultation on an expert basis, which Governments I am sure ought to admit they lack.
Lord WALLACE of COSLANY: It is a very fine point that the noble Lord makes; but, quite honestly, I do not think the Amendment will make much difference at all. There is informal consultation already indicated, and an opportunity will be given for everyone to have full details. I do not see why we should have to extend it by including in the Amendment,
"… such persons or organisations as appear to the Secretary of State to have an interest therein".
He will already know. If he did not, he would not be a very good Secretary of State, would he?
Lord MOTTISTONE: The noble Lord said it.
Lord DRUMALBYN: I think many of your Lordships may be puzzled as to what this is all about, and I am bound to say that I think that noble Lords on the Front Bench opposite could have given us a rather clearer explanation of what we are talking about in these clauses. Am I right in thinking that when, in Clause 10, it talks about examining
"any question relating to prices or charges",
we are not really thinking about increases or decreases in prices or charges but about the way in which the prices

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are described; for instance, "So much off so-and-so", whether the charges should be described as including VAT, whether or not there should be recommended prices, and that sort of thing? These are questions "relating to prices or charges". Am I right about that? Because I do not see how one can inquire in general into prices or charges and come up with recommendations that could be formed into regulations, because prices vary so very much according to the outlet at the retail level. I remember one very large manufacturer telling me that there was no such thing as a general price; each price was a quotation suiting the market at that time, the prospective customer and all the rest of it. There is no way of making regulations about the level of prices in that sense.
From that, I deduce that these clauses must mean something else. Could the noble Lord now tell us what they mean, or at what they are directed? Only if we know that can we decide the sort of question we have to decide in this particular Amendment, which is to see whether what the Secretary of State proposes to do should be the subject of consultation.
Lord ORAM: Perhaps I may intervene briefly here. I thought the examples which the noble Lord, Lord Drumalbyn, gave were typical of the kind of problem that would be dealt with under these clauses, such as recommended retail prices and so on. The earlier part of the Bill, dealing with investigations into particular price increases by particular firms, is one kind of thing; but we are then taking powers to take more general problems concerning prices, such as those that the noble Lord quite rightly mentioned, and to ask the Price Commission to examine these more general questions. They could cover such things as general price levels, profit margins and price display matters, which do not relate to the actions of a particular firm in relation to a particular price but to more general questions of price policy.
Lord ROBBINS: I wonder whether the noble Lord could inform the Committee how many such investigations and orders he conceives to be likely to take place during any period of 12 months. I must say that I am entirely perplexed by answers which have been given from
834
his Bench this afternoon. At one stage—I think it arose from something which the noble Lord himself said—I thought that the various matters we were discussing related to areas where there were obvious monopolistic elements which in some way or other most of us would agree needed to be dealt with. But when the noble Lord, Lord Wallace, replied to a question asked by the noble Viscount, Lord Rochdale, sitting on this Bench, he said that very few markets were perfect; and, consequently, to my eyes he opened up the vision of vast intentions. After all, there are tens of thousands of prices which are charged every day. I should not like to say how many prices are charged and how many exchanges take place in a comparatively small economy during a year. I am completely perplexed as to the scope of operation of the Commission that we have been discussing for the last two afternoons.
Lord ORAM: Of course, to some extent I should use the old adage, "We must wait and see". To some extent, it is a case of finding out how big are the problems which are referred to the Price Commission. But we have made some rough estimate having regard to the likely resources for the Commission and having regard to the general nature of the problem as we see it. The estimate that we have made is that, as to investigations—that is, under the earlier part of the Bill—there may be something like 40 or 50 such investigations; and, as to the more general examinations as they are called, under the second part of the Bill, probably something in the order of 10. When the noble Lord, Lord Robbins, refers to the vast array of prices, of course he is right; but I would recall the points we have made earlier, particularly in relation to the investigatory procedure, about the careful selection from among the many price increases that seem to the Price Commission to warrant special investigation. As I said in reply to an earlier Amendment, it is a case of having special targets for special reasons. It is not a widespread operation in the sense in which the noble Lord was holding up his arms in despair.
The Earl of MANSFIELD: I cannot pretend that I am totally satisfied with the answers from noble Lords opposite. I do

835
not suppose that they would believe me if I said that I was. However, I do not think that we can push this matter any further this afternoon. I shall read the noble Lord's answers in the Official Report with considerable interest. Meanwhile, I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
6.1 p.m.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 43:
Page 17, line 11, at end insert—
("Provided that no order or undertaking imposes a restriction on a price increase, price or margin to a greater extent or for a longer period than recommended by the Commission in a report made in pursuance of subsection (1) of the previous section.")
The noble Earl said: This relates, in effect, to the same Part of the Bill and is one more attempt on the part of noble Lords on these Benches to try to ensure that the Secretary of State acts in a fair way. I am sure that he will believe that he is acting responsibly, but this is an extra safeguard. Under Clause 10, the Commission is given power to initiate what are called general examinations. These are rather wider powers than in earlier Parts of the Bill. The danger is that an order enforcing a recommendation could, in certain circumstances, do serious damage to companies whose circumstances have not been taken into account. For instance, an order relating to a sector could, in certain circumstances, cause inequity of treatment as between different companies in that sector. In order to rectify the position to some extent, the Amendment says in effect that the Secretary of State should not be able to make orders or accept undertakings which are more severe than the Commission recommend in their report. It may be that the noble Lord who is to reply will say that this restriction on the discretion or power of the Secretary of State is somewhere written into this clause. If it is, I should be glad to be directed to it. I beg to move.
Lord WALLACE of COSLANY: This Amendment was, I believe, debated in another place. Unlike orders following investigations, orders following examinations are not to be rigidly circumscribed by the Commission's report. Whereas the Commission will be able to make clear recommendations about price increases,
836
price levels and margins following an investigation, they will necessarily be less precise in the advice they offer or in the matters that they indicate in a report of an examination as in need of remedy. This is because examinations will cover not just particular prices but pricing policy in general within a sector. They will also be concerned with the generality of firms in a sector rather than with a single firm.
The Secretary of State is, therefore, only required to make orders or to accept undertakings "in consequence" of the indications or advice in a report. In general, this would mean that an order would impose a restriction on a price increase, price or margin which was no more severe than, and lasted no longer than, suggested in the Commission's report. But it is possible for there to be some divergence because only the totality of the order has to be in consequence of the report. There could then be some variation between the price regulatory aspect of an order and what was said in a report.
There is no case for limiting undertakings. The firms involved in a sectoral report do not have to offer them. Furthermore, we believe that undertakings could range very widely, covering matters not specifically mentioned in a report but on which firms were prepared to give undertakings.
With respect, I believe that the Amendment is misconceived. It refers to "recommendations" made by the Commission in a report. Clause 11(2) makes it clear that the Commission will not make any such recommendations and that they should merely include in a report, first, advice where they have been asked for it in a direction and, secondly, indications of any matters which the Commission consider are connected with the question and should be remedied. My hope, following that, is that the noble Earl will do what his colleagues did in the Commons in Committee and will withdraw the Amendment.
Lord MOTTISTONE: Do I understand from the noble Lord that the recommendations that might be made by the Commission under Clause 11 will specifically not include those items listed in the Amendment, such as price increases, prices or margins? Will that not be the

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subject of the advice that is given or did I not hear the noble Lord aright?
Lord WALLACE of COSLANY: What I said was that, in general, an order would impose a restriction on a price increase, price or margin which was no more severe than, and lasted no longer than, suggested in the Commission's report.
Lord MOTTISTONE: Therefore the Amendment is relevant to the subject under discussion. I thought that the noble Lord indicated that it was not.
Lord WALLACE of COSLANY: I did not say that it was irrelevant; I said that it was unnecessary.
Lord MOTTISTONE: As it is relevant and as I am dissatisfied with the general attitude of the Secretary of State to this matter, it seems to me that it would be reasonable to have this further restraint on his potential action. I would personally support my noble friends on this particular point.
The Earl of MANSFIELD: I do not think that this Amendment was withdrawn in another place because anybody was particularly satisfied with the answers of the Minister. My impression on reading Hansard is that they did not understand it any more than I did. They probably decided to have a go later on, but, as their procedures are different to ours, they did not get that opportunity. What I do not understand—and I am sure that it is due to my stupidity—is this. Does the noble Lord rely on the words "the Secretary of State considers appropriate"? What is it that the Government rely on in saying that there is in this subsection any fetter upon the discretion of the Secretary of State? I know it is said that he has to take the report and acts in consequence thereof; but what is it that restricts his right to make any order that he thinks fit?
Lord WALLACE of COSLANY: I would suggest to the noble Earl that it is in Clause 12(5).
The Earl of MANSFIELD: That subsection reads:
"The Secretary of State may at any time by order vary or revoke an order in force."
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That is not exactly a fetter on his discretion or powers of action. It seems to me that it gives him absolutely unlimited powers to do what he likes at any time. What I am asking the Government is this. If in the rather wider field which is initiated under Clause 10 the Secretary of State is minded to accept an undertaking or make an order—and the words, I think, are "in pursuance"'—is there a safeguard? If so, what is it?
Viscount SIMON: I do not know whether I completely misunderstood what the noble Lord on the Government Front Bench said, but I thought he said that in the circumstances of a Clause 12 order, the Commission would not have recommended any price increase, any limitation of a price increase or alteration of a margin; therefore the Amendment did not apply to recommendations made on this clause. If that is so, it seems, with great respect to the noble Earl, that the Amendment is misconceived.
Lord ORAM: I am grateful to the noble Viscount. I repeat my earlier remarks: the Amendment is, as the noble Viscount says, misconceived. It refers to "recommendations" made by the Commission in a report. Clause 11(2) makes clear that the Commission will not make any such recommendations and that they should merely include in a report (a) advice where they have been asked for it in a direction, and (b) indications of any matters which the Commission consider are connected with the question and should be remedied.
The Earl of MANSFIELD: The noble Lord's answer is coming perilously close to what on other occasions, and feeling more rude, I have described as "semantic waffle". If the Commission are going to give advice, presumably it is in the mind of the Commission that the Secretary of State should act upon it. I see the point that it is not going to be a formal document, report or piece of advice, as is contained in other parts of this Bill. I wonder what the point of it is unless there is going to be some advice upon which the Minister can make up his mind and act. I do not want to weary the Committee any further and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 44 to 46 not moved.]
6.13 p.m.
On Question, Whether Clause 12 shall stand part of the Bill?
Lord DRUMALBYN: I should like to ask two small questions on this. At the top of page 18 it says:
"(c) provide for the enforcement of the order by an authority specified in the order".
Can the noble Lord tell us anything about that? What authority has he in mind—the trading standards authority or what? Will it be obligatory for the Secretary of State to disclose the advice he gets from the Director General of Fair Trading about any proposal that he may make under subsection (3) of the clause? The noble Lord could write to me if he is not able to give the answer now.
Lord WALLACE of COSLANY: I will accept that offer because it is difficult at short notice to give the answer. I hope that we will advise him in sufficient time for the next stage.
Lord MOTTISTONE: Could the noble Lord say whether he will give this advice before the next stage of the Bill, which I understand is being rushed at us?
Lord WALLACE of COSLANY: I said that. I will endeavour to see that the noble Lord receives the information. I know that time is short.
Clause 12 agreed to.
[Amendment No. 47 not moved.]
Clauses 13 to 19 agreed to.
Clause 20 [Further duties to have regard to specified matters and sanction provisions]:
[Amendment No. 48 not moved.]
6.16 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 49:
Page 25, line 17, at end insert—
("(4) Notwithstanding the provisions of sections 15, 17 and subsection (3) of this section, the sanction provisions shall not be operative until a separate order is made by the Secretary of State under this subsection setting out the limits on pay increases to which the sanction
840
provisions relate and any such order shall require approval by resolution of each House of Parliament.")
The noble Lord said: On behalf of my noble friend Lord Mansfield and myself I beg to move Amendment No. 49. The purpose of the Amendment is to add a new subsection to Clause 20 of the Bill, to provide that the Secretary of State shall lay an order before either House and seek its approval with respect to limits on pay increases as part of his policy, and so that companies affected by the provisions of this Bill, as presently drafted, may have some guidance as to the levels of pay which the Secretary of State regards as reasonable when they are conducting negotiations with their people but, above all, when they are formulating their prices.
On this side of the Committee we would say that the control of pay in the battle against inflation is at least as important as the control of prices. The Bill provides for a very detailed price control mechanism, but control of pay is conspicuous by its absence from this Bill. We are told that the Government are in negotiation with the Trades Union Congress and I gather that there is a White Paper which we may see before the end of this Parliamentary Session, but nothing in this Bill, not a word. An Amendment along the lines suggested is the least that we can do to impress upon the Government—and, indeed, the Price Commission —that the effect of the omission from this Bill of the control of pay will be very serious and therefore we ought to add this new subsection.
I hope that on this occasion at least we may rely upon the support of the Liberal Benches. I am not wishing to be anything other than reasonable, but the Liberals have said clearly and publicly that they regard the control of pay as crucial. If I recall aright, the right honourable gentleman Mr. Steel has said clearly that his continued support for this Government is dependent upon the production of an effective pay policy. I regret that the Government have been discouraged of late in achieving that end. We have all heard of what has happened in the Isle of Man to the unfortunate Mr. Jones, and what has happened in Tynemouth at the Conference of the National Union of Mineworkers. It may be thought that now the Government are

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not able to produce an effective pay policy. Whether or not that is true remains to be seen. A prices policy without an effective pay policy is ineffective, unworkable and unjust.
Can we consider for a moment what would be the effect of a price policy without a pay policy? While I agree that the Government have declared their intention of producing an effective pay policy, none yet exists and certainly none is included in this Bill. The Session has but two or three weeks to run. The effect would be that one vital element of companies' costs—that is, wages and salaries—would be quite uncontrolled, while the control of their prices remained as effective as ever. We have seen, in some of the Amendments moved earlier, how price increases beyond the control of companies, such as changes in exchange rates or a change in the price of commodities coming from outside the United Kingdom, are only marginally protected, in our view, so far as producers and manufacturers are concerned.
Without a control of pay, a further huge element of cost remains outside the control of companies. My noble friend Lord Mansfield has spoken repeatedly and at length during this Committee stage on what happens when companies' profits are reduced. I would say that in this situation the question is not one only of reducing profits but of creating losses—and sustained losses lead to closures of companies, to redundancies and to massive dole queues. The dole queues in this country are already too long. I am sure the Government agree with that. But without proper pay controls added to the controls of prices which we are here debating, those dole queues will become longer and longer. I hope, therefore, that your Lordships will agree that this new subsection will be a useful addition. I beg to move.
Lord MOTTISTONE: I should like to support my noble friend, rather in the same way as I was saying earlier, that in order to plan people need to have sensible figures written into the safeguards; so it seems quite wrong and inequitable to have a clause in the Bill which can be operative when it might be compared against a vague statement. I am not saying there will be a vague statement in relation to pay, nor am I saying that the
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Government would wish there to be one: I am sure they do not. But it may be all that a Government, at some time—not necessarily this Government, but any Government—can achieve, and if they can achieve only a vague statement, it seems to me that without what one might call "figures" in the business, it is not reasonable to allow this clause to be operative.
As I read my noble friend's Amendment, all that it does is to say that sanctions will not be applied unless there is a pay policy—and by that is meant a formal pay policy which has probably been put before Parliament—rather than just a vague agreement with the TUC, which may be all that can be achieved either in this year or in another year. I should have thought, therefore, that this is the sort of Amendment over which the Government might be able to demonstrate to us that they are relenting, although so far on this Bill they do not seem to be very forthcoming.
6.24 p.m.
Baroness SEEAR: This is perhaps one of the most serious Amendments which has been brought forward by the Opposition Front Bench. Of course we agree that pay and prices are intimately related one to the other; but you cannot get an adequate pay policy unless there is an assurance that there is going to be some kind of a price policy. That absolutely stands without any further emphasis.
My Party, as the noble Lord, Lord Trefgarne, has said, stands absolutely behind the need to have a control over pay, but I do not think that at this time that can, or should be, expressed in terms of a simple figure. The idea has been put forward that there is to be a figure presented to Parliament and that unless it is presented in terms of control of pay, then the essence of the Bill is wrecked. That is, as I understand it, what the Conservative Front Bench are saying; and this Amendment is also saying that unless there is a very detailed and specific control over pay the whole principle of the Bill falls. That is what I read into the Amendment—
Lord MOTTISTONE: If the noble Baroness will forgive me, I think perhaps

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she needs to look at the Amendment more closely. It is only this clause and not the whole Bill, as I read it, which is under threat. Perhaps I have misunderstood my noble friend.
Baroness SEEAR: I do not think you are going to be able to get, and I do not think that we should write into this Bill at any stage, a requirement for a specific figure, which is what I understand the noble Lord, Lord Trefgarne, to be asking for. There has to be an agreement about pay, and obviously there has to be a limit on the extent to which pay can increase. Quite plainly, also, the operation of this whole Bill depends on reasonable control over pay. Unless that happens, the Bill cannot be put into force. While that is true, as I see it, that is not a reason for supporting this Amendment, which asks for something so specific in terms of pay control that I do not believe that it can be delivered at this stage.
Lord LEE of NEWTON: Do I take it, from the speech we have heard from the Opposition Front Bench, that the Tory Party have at last decided that they are in favour of maintaining an incomes policy? For the last two or three years we have been trying to get them to say that, but their history in this respect is somewhat varied. For two years, Mr. Heath would not touch one, and then suddenly he grabbed one. Since the change of leadership, we have tried very hard to find out what would happen as regards an incomes policy if the Tory Party were in power.
From what the noble Lord was saying, he will not accept that there is any need for any policy on prices unless we guarantee a pretty strict one on incomes. But the history of the last 12 months has shown that there is a far stricter control on incomes than on prices. Indeed, our problem now with the trade unions is that one cannot deny their claim that there has been a marked reduction in the standards of life. That comes about because, as I have suggested, there is a far stricter control on incomes than on prices. Therefore, if indeed we have now reached the advance stage at which there is a categorical assurance that the Tories would in fact support a strict prices
844
policy, provided there is an equally strict incomes policy, that is a great advance. We have not had it before.
Therefore it seems to me that they are willing to take into consideration—I will not give a percentage—the undoubted fact that living standards have been falling because, remarkably enough, the trade unions have adhered to Phase II of the incomes policy while prices have been going ahead much faster. At this stage, I am not arguing over who is to blame. As the noble Lord said, the devaluation of our currency has had quite a lot to do with it. On the other hand, there is the feeling in trade union ranks, and indeed among other ranks, that some of the increases we have seen have been quite unjustified.
I have spent my life, man and boy, working for a prices and incomes policy—indeed, I operated one for 12 months—which is fair and equitable on both sides. I do not think we can maintain one without the other. If there are to be increases in incomes which we feel are unjustified, then T would argue that the employers concerned should not be permitted to increase their prices. Therefore, I hope that the Opposition Front Bench will not be frivolous about this matter. As the noble Baroness suggested, it is one of the most vital issues we can discuss, and they should tell us whether they are now taking a stand on the need to keep complete control of incomes as a condition of accepting price control.
6.31 p.m.
Lord ORAM: I hesitated to see whether the noble Lord, Lord Trefgarne, wanted to reply to my noble friend's very pertinent question. Possibly he will take an opportunity of doing that later. But I think we should resist the temptation to go too broadly over the ground of pay and prices policy in relation to the purposes of this Amendment, interesting though such an exercise would be.
However, may I just say, in general, that I hope the noble Lord, Lord Mottistone, and the noble Lord, Lord Trefgarne, will not be too surprised if I say that found myself in sympathy with a certain amount of what they said about the importance of pay restraint equal to, or in addition to, price restraint. I thought

845
that the noble Baroness, Lady Seear, also emphasised very pertinently the need for effective action on both sides. This Bill is providing the instrument for action on the side of prices. That is what it sets out to do. But there is a link through the clause that we are now discussing.
In relation to the Amendment that has been moved, though in a sense I share the objective which the noble Lord has expressed, I must advise the Committee that it is quite unnecessary to act in this way, because the Amendment gives no more protection to companies than they already have. What the Amendment seeks to do is, in effect, already provided for in the Remuneration Charges and Grants Act 1975, as extended by this Bill in, I think, Clause 17. The 1975 Act provides that a pay sanction may be contained in a Price Code only when Section 1 of that Act is in force. Moreover, the pay sanction must refer to limits set out in a White Paper and in an order which has been approved in draft by both Houses of Parliament. "Limits" is the important word, and I agree with the noble Baroness, Lady Seear, that to try to define those limits in this year by a tight figure is probably not appropriate. But the word "limits" is in existing legislation, and it is that which provides the kind of safeguard which, presumably, the Amendment seeks to achieve.
It may also be seeking to achieve a certain clarity in the expression of pay policy. I believe that that, also, is achieved by existing legislation, and, if we bear in mind that the White Paper containing arrangements about pay must have the approval of both Houses of Parliament, that is a sufficient safeguard in respect of the clarity point. Of course, it is the Government's view that future pay arrangements should be framed in sufficiently clear terms to enable every firm and union—I take the point of the noble Lord, Lord Mottistone, in this connection—to know whether a proposed settlement is, or is not, in accordance with the arrangements as set out in the White Paper. Those would be our clear intentions.
I hope the Committee recognises that this week, embarking, as we are, upon particularly difficult and delicate negotiations with trade unions, is not the time for me to start pronouncing too categori-
846
cally upon these difficult questions. But on the narrower point of the link between pay policy and the pay sanction within this Bill, I hope I have sufficiently assured both noble Lords that their Amendment is not necessary.
6.36 p.m.
Lord TREFGARNE: I am sorry that I am not persuaded by the arguments of the noble Lord. I listened carefully to what the noble Baroness, Lady Seear, said. She was anxious, as indeed was the noble Lord, Lord Oram, not to write into the Bill precise figures which might cause difficulty at some later time, and of course my Amendment does not seek to do that. We ask only that such figures as may be arrived at should be approved by Parliament. As the noble Lord, Lord Oram, said, there are difficult and delicate negotiations in train this week, and I understand that a White Paper will be published at the end of those discussions. I do not suppose that we shall have a chance to debate that White Paper in this Session, but, whatever is contained in it will be to all intents and purposes the Government's pay policy for the year beginning on 1st August.
I am disappointed that the Government do not feel that, by an Amendment such as this, their hand would be strengthened rather than hindered in the negotiations now in train. I am equally disappointed that the noble Baroness, Lady Seear, and her colleagues do not feel able to offer more forthright support to this proposal. I must confess that the words of the noble Baroness tonight, which are presumably pronounced with all the usual force of the Liberal Front Bench, which I acknowledge, were not as forthright as those that I heard from her right honourable friend Mr. Steel. But be that as it may. As I have said, negotiations are now in progress and it may be that by next week, when we come to the next stage of the Bill, the matter will be more clearly in the Government's mind, and perhaps we shall be able on that occasion to have a more meaningful debate on this subject.
In those circumstances, I think it better to withdraw this Amendment and perhaps return to the matter at a later stage, hoping that we shall have a more clear

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response from the Government and, perhaps, more satisfaction. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 20 agreed to.
Clause 21 agreed to.
Clause 22 [Interpretation, supplementary provisions and repeals]:
6.40 p.m.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 50:
Page 27, line 7, at end insert ("but no such order shall so provide with regard to any matter concerning which provision is made in or in pursuance of sections 6(5), 7(5)(a)(i) and 9 of this Act.")
The noble Earl said: This is the penultimate Amendment on the Marshalled List. Clause 22(2) contains provisions which, when one looks at them for the first time, appear to be almost breathtaking in their simplicity and, at the same time, in the power which they give the Secretary of State. The clause says:
"The Secretary of State may by order—(a) provide that such of the provisions of this Act as are specified in the order shall not apply in such cases as are so specified".
It is true to say that some fetter on the Secretary of State is provided, because the subsection goes on to say that no order shall be made in pursuance of this subsection unless a draft has been approved, in effect, by each House of Parliament. Also it is true to say that the matter was taken up, in a very cursory manner, in the other place. One of my honourable friends—I think it was Mr. Shaw—voiced the worries and received some kind of assurance, in reasonably ringing tones, but no more was heard. I do not believe that assurances in ringing tones, or even in not so ringing tones, are quite good enough when one is discussing potential Acts of Parliament.
I should like to explain the worry, for it may be that somebody will be able to assure me that it is one which either is misconceived or can in some way be allayed. One appreciates that in certain circumstances the power to override the provisions of the Bill by order could be used to the advantage of industry, either as a sector or in relation to an individual
848
firm. Equally, one appreciates that such a power could be used in a way which might damage and harm either a firm or a group of firms. For instance, the Secretary of State could make an order to overrule the safeguard provisions which are contained in Clause 9. I believe that to be the most obvious example that I can give.
In such circumstances, I should like the noble Lord to tell me what it is that is contemplated by subsection (2). And, if there is to be any fetter on the control of the Secretary of State, is it provided by any more than the resolution clause at the end of the subsection?
Lord WALLACE of COSLANY: I hope that I can satisfy the noble Lord. The Amendment is unnecessary. The basic purpose of exception orders is to remove firms from the possibility of being investigated or examined. The Secretary of State has no intention of using the powers under Clause 22 to enable the safeguards and other restrictions on the Secretary of State's and the Price Commission's powers which the Bill contains to be disapplied. Regulations under Clause 9, which are subject to the Negative Resolution procedure, could in any case be drafted in such a way as to impose less generous safeguards on some firms rather than others. The Amendment would in no way alter this. The Government have already amended the Bill to require that exception orders must be approved in draft by both Houses of Parliament. Such a procedure would act as a strong deterrent to any Minister who wished to use Clause 22(2) to remove safeguards which the Bill confers on firms. I should like to add that the Amendment as drafted is somewhat loose and is regarded as defective because it refers to:
"… any matter concerning which … or in pursuance of sections 6(5) …".
The Amendment relates to prices and charges in general and would, in effect, ensure that virtually no exceptions could be made.
The Earl of MANSFIELD: I am not so sure that that would not be a good thing. I believe that the noble Lord is saying that we have the protection of the Resolution of each House of Parliament. That is the only protection. If the

849
Secretary of State were supported—as he would be, one assumes—by his majority in the other place, and if there were the alliance provided by the "Laberals" that we have here today, the safeguard would be less than effective. On that note, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 22 agreed to.
Clause 23 [Expenses]:
6.46 p.m.
Lord MOTTISTONE Lord MOTTISTONE moved Amendment No. 51:
Page 28, line 4, after ("department") insert ("and any company being investigated").
The noble Lord said: I do not propose to detain the Committee for long. This is in the nature of a probing Amendment. I touched upon it yesterday when I spoke to an earlier Amendment to the Bill. Its object is to call the attention of the Government to the fact that nowadays an enormous amount of expenditure is built in, almost by mistake, to many Acts of Parliament, including this Bill. During my time in this House we have reached the stage of very wisely putting into the Preamble to Bills their probable financial cost. This Bill says on page v that the administrative expenditure incurred by the Price Commission is expected to be £5 million per annum and that expenditure on grants under Clause 18 is expected to be £3·5 million. That is £8·5 million which the Government can put their fingers on. One is conscious of the fact that the Government are very aware of the problems involved in trying to make the economy as a whole more effective, but they tend to forget that the kind of things which are written into this Bill create an enormous amount of extra work and, in some cases, the engagement of extra people.
My own job at the moment is a direct result of intervention in our affairs by the European Economic Community. The organisation for which I work got on very nicely with a secretary and deputy secretary for many years. Then a Labour Government came into Office which made it rock a little, because of the intervention policies of Labour Governments. When we entered the Common Market my organisation decided that
850
yet another person was needed—and that is me. The result is that companies have to pay out a great deal of extra money. I can assure noble Lords that I am grateful to my organisation for it, but, to be quite frank, I feel that I am something of a drain. I am there only because central bureaucracies, whether based in Westminster or Brussels, are causing more work and hidden expenditure which, if you add it all up—not just the effects of this Bill but the countless other Bills which have been passed by Parliament over, say, the last 20 years—probably has more of an effect in letting prices run away than anything that this Bill is trying to control.
May I suggest that Governments need to tackle this problem, although I do not suppose that it is easy to produce a figure. Unfortunately, the Government have rushed the Bill through both Houses of Parliament so fast that I did not have time to ask my friends to produce a figure for noble Lords. It would be difficult to obtain an estimated figure, but it is the principle with which we want to involve ourselves. I could not put this down as an Amendment. I wanted to put down an Amendment to the statement on page v regarding the financial effects of the Bill. I should have liked my Amendment to use the phrase:
"… and the Government have also taken into account the vastly increased cost this is going to cause to companies which might be investigated",
or some such phrase, just to show that they understand and realise this fact.
We live in a collective economy and these things grow in tiny ways. Even if extra people are not employed, although in some cases they are, it takes up the time of busy executives who should be getting on with making money for their company and, indirectly, for their country. Therefore it is important that the Government should address their mind to the problem, to find out whether they can give me an undertaking that in future they will take note of the point and try to fit it into future Bills in order to help us to watch all the pennies, not just those which the Government control.
Lord ORAM: The most certain answer that I can give to the noble Lord in rejecting this Amendment is one which

851
frankly I have hesitated to bring forward. Having spent so many years in another place and such a short time in your Lordships' House, I am still puzzled by the contrast between the rules of order in the two assemblies, but this particular Amendment, I am advised, relates to one of the financial provisions of the Bill and is, therefore, strictly out of order.
Lord TREFGARNE: I wonder whether I might intervene. I do not think that will do. On a recent measure in which the noble Lord's noble friend Lady Birk and I were involved the same point was raised, and the answer then was that we are perfectly entitled to put financial Amendments into Bills in this House, although it is subsequently open to the other place to reject them on the grounds that we are interfering with their prerogative. But we are perfectly entitled to move, and indeed carry, Amendments of a financial nature in this House.
Lord ORAM: My Lords, I am grateful to the noble Lord. We live and learn. I did admit my hesitancy. I am glad there has been a recent precedent. In any case, I was not going to rest on that in not offering a reply to the noble Lord. The second point that I think he should realise is that his Amendment is deficient, in that it applies only to costs incurred during investigations, for some reason, which may be a good reason in his mind, he has left out expenses incurred during examinations. However, I expect half a loaf would satisfy him, but I am not going to give it to him, I am sorry to say. It would be a novel departure and conceivably a dangerous precedent to reimburse firms for expenses incurred during investigations. In any case, there is nothing to stop them from seeking to recover such expenses through prices, provided they can justify them in terms of the criteria in the Bill. Whether the noble Lord's firm could justify his salary in those terms is perhaps open to doubt, but it would be open to a firm to take these expenses into account in putting up their case. Indeed, where expenses are significant, we would expect the Commission to take them into account during the investigation. It is certainly not an Amendment which we can accept, and I think the noble Lord, Lord Mottistone, recognises that; but there would be possibilities of them recovering their expenses in other ways.
Lord MOTTISTONE: May I thank the noble Lord for his reply and indeed for being kind enough not to be totally guided by the thought that we cannot discuss finance at all in this House. There is just one tiny point. The burden of his answer, or the important part of it, was that companies could recover the costs through their increase in prices. The whole point of the Bill is to provide some measure of avoiding that. The whole point of my Amendment was to try to show the Government that, in having a Bill of this nature, they will cause extra expense, which in itself may have the very opposite effect of what they intend by the Bill. With those words, perhaps I might be allowed to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 23 agreed to.
Remaining clause and Schedules agreed to.
Title agreed to.
House resumed: Bill reported with an Amendment.

BRITISH LINEN BANK ORDER CONFIRMATION BILL
Brought from the Commons: read 1a, and (pursuant to the Private Legislation Procedure (Scotland) Act 1936) deemed to have been read 2a and reported from the Committee.

CONTROL OF OFFICE DEVELOPMENT BILL
6.56 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(Baroness Birk.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Lord Amherst of Hackney in the Chair.]
Clause 1 [Continuance in force of provisions relating to control of office development]:
Baroness YOUNG Baroness YOUNG moved Amendment No. 1:
Page 1, line 12, leave out ("seventeen") and insert ("fourteen").
The noble Baroness said: In moving this Amendment this evening I am very conscious that it has a long history, that we are treading over fairly well-known ground. For the benefit of those who have not studied all the procedures in another place, this Amendment has in fact all-Party support from the Greater London Council, and is, therefore, something which is promoted by local authorities and is very much in their interest. The Amendment was itself carried in Committee in another place and then was reversed on Report, entirely due, I believe, to the different voting of the Liberal Party in another place. I am not quite sure what their view about the matter will be this evening, but I hope very much that they will feel that it is a matter well worth consideration.
The effect of this Amendment will be to limit the purposes of the Bill to two more years only, not the five years as the Bill proposes. It is a matter which we believe is well worth consideration. If one considers what the Government have done in the matter of this Bill, it will be apparent that they, by moving their own Amendments to it, have lifted the need for office development permits from office developments of less than 30,000 square feet. As I understand it, this will have the effect of removing approximately 55 per cent. of the applications for ODPs altogether. So it is in itself a major concession. The Secretary of State also said at Second Reading in another place that he would be prepared to give ODPs for a number of speculative office developments. So again this is quite a change.
The Committee will no doubt be aware that a developer must obtain an office development permit before applying for planning permission. When this procedure was first introduced 12 years ago the situation both as regards planning procedures and the general state of the economy was in fact very different from that which obtains today. One of the facts
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is that planning procedures have enormously altered over the past 12 years. I would have thought, and it seems to us on this side of the House, that with the strengthened procedures, particularly in structure plans, it is not unreasonable to give to local authorities the power to determine whether or not an office development should take place, without the completely negative procedure of an office development permit. The procedure cannot, as it were, be put there for somebody to develop an office. It can only be either agreed or not agreed when a permission has been applied for. Therefore, since 1965 planning powers have been altered and strengthened. I should have thought that this negative control could be done away with.
Secondly, the economy is in a very different position. There is real concern about the situation in inner cities—not only about development in inner cities but about the consequence of not having development in inner cities, which is unemployment. I carefully read the arguments advanced by the Minister in another place against the Amendment. The principal argument was that by having the working of this Act for only two more years it would create uncertainty for local government and developers. However, I should have thought that two years was a reasonable length of time to allow these powers to lapse. We are not asking that the powers should lapse in August, which is what will happen unless the Bill comes into force.
I read very carefully the arguments put forward by the Liberal Party. So far as I could see, they were concerned largely that there should be no more large office blocks. Whether or not there are more large office blocks could be entirely controlled by planning permissions. I should have hoped, from a Party which at any rate in local government terms has expressed itself very interested in increasing the powers of the local authorities rather than decreasing them, that this opportunity to increase the powers of the local authorities would be one that would have appealed.
Finally, the argument is used that if there is not the ODP procedure, it is even less likely that developments will take place in development areas or what seem to be referred to as "assisted areas" of

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the country; that is to say, that developers will want to develop only in London and the South East. Time and again during Second Reading, in Committee and on Third Reading this argument was used, but my honourable friend Mr. Rossi said, yet again, that not one office of 10,000 square feet or more, for which an ODP had been refused, had in fact found its way out of the South East, and this never seems to have been refuted by anyone. Therefore, I cannot really believe that this is the case, and I think that we must conclude that there is no real reason of substance for thinking that these powers must continue. As I said at the beginning of my speech, this is a point which, as I understand it, had all Party support in the Greater London Council. I hope that it will commend itself to the Government.
This afternoon I received a Press Notice issued jointly by the Departments of the Environment and Transport on local government's role in industrial reorganisation. I entirely accept that we are not talking about industrial reorganisation. However, we are talking about office developments with their employment and other consequences for inner cities and other places, which is an extremely serious matter. The last sentences of the Press Notice are worth bearing in mind, and I quote them in full:
"The Secretaries of State offer full support to authorities "—
local authorities—
"in this initiative"—
that is to say, on industrial regeneration.
"They have asked their Regional Directors, as Chairman of the Economic Planning Boards, to review progress across the country and to report urgently on administrative or other problems which may impede or frustrate the contribution local government can make to the vital process of industrial regeneration".
I entirely agree with those sentiments. I am glad to see the Press statement and to learn that that is the Government's view. I should have thought that what I was proposing was entirely in line with that. I am talking about office developments which, of course, help with the problem of unemployment and will help both in London, which is losing population and in other parts of the country. It does not seem to me to go against the principle of what is being proposed,
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because we are simply shortening the length of time that the Bill will work. I believe that the amendment will have beneficial effects for the community at large and I hope very much that it will commend itself to the Committee. I beg to move.
7.5 p.m.
Lord SANDYS: I should like to support the Amendment of my noble friend Lady Young. As the noble Baroness, Lady Birk, listened at some length during my Second Reading speech to the considerable detail which I adduced in regard to the GLC, she will be glad to hear that I shall not repeat all the arguments. However, there are some further and fresh arguments that I wish to adduce and which relate particularly to the Government's document—the Office Location Review—produced by the noble Baroness's Department.
I begin my remarks by pointing out that because this was introduced originally in 1964 as a temporary measure, one can quote the well known quotation that there is nothing so permanent as a temporary measure. We believe that the time is now ripe to set aside the procedure. Therefore, I listened with care to, and read with diligence, what the noble Baroness, Lady Birk, said on Second Reading. I remarked upon the majestic, indeed rolling, phrases with which she supported the Government's view when she said:
"The time has now come again to consider whether powers for office development control should be once more renewed. The Government are firmly of the opinion that they should continue "—[Official Report, 27/6/77; col. 960.]
When examining with great care the Office Location Review, I came to a quite different opinion. I believe that the matter deserves a little further examination. Of course the Government lay great emphasis, as indeed did the noble Baroness, upon the assisted area objectives. Therefore, it was that aspect of the Office Location Review that I considered. I devoted my attention to paragraph 5.5 which said:
"It is arguable that the Government should seek to promote not merely transfer of jobs which are likely in the main to be clerical jobs, but also decentralisation on decision making functions. The argument is that this would, in the short term, provide better career opportunities in the regions and so in the long term contribute in diverse ways to improving their social and economic well-being".

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Further down, at paragraph 5.11, the report deals with the constraints on movement. It states what we know already, that until recently only some 6 to 7 per cent. of movement out of London was going to the assisted areas. Therefore, this is an extremely small factor. One could say that there is a success rate, but it is a very small success rate. If the noble Baroness, Lady Birk, places the whole weight of her case—which she does—on the movement to the assisted areas, I think that I may quote with justification Disraeli and say that there are exceptions to every rule, but it seldom does to take the advice of one's opponent. I certainly do not take the advice of the noble Baroness on this point because f read further in the report, as regard effectiveness which is dealt with at paragraph 6.9:
"The Layfield panel on the GLC Development Plan doubted the effectiveness of the control as a means of acting either on volume or on the distribution of employment, since it could operate only on new buildings".
One can turn in the summary to the argument which my noble friend Lady Young employed, and I believe that this is most important. It seems, in the main, that office jobs for assisted areas will continue to come from indigenous growth alone. The movement from other areas is likely to be extremely small. Therefore, what is the point of office development control? We have, in total, an excessive control of development from both local and central government which, in our submission, has the effect of inhibiting the creation of employment. I think we may say that the relaxation of controls, which from this side of the Committee we seek to promote, would be a further incentive to the very objects which the noble Baroness seeks to achieve. I hesitate to remind the noble Baroness of Ferrer's Law; she has heard it on many occasions. Ferrer's Law seeks to suggest that most pieces of legislation in the end are counter-productive to their intentions.
7.10 p.m.
Baroness BIRK: I do not think that it will come as any great surprise to the noble Baroness. Lady Young, and the noble Lord, Lord Sandys, who have spoken in support of the Amendment, that I resist the change from five years to two years. I also appreciate that basically
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they are arguing against office development permits altogether. The noble Lord, Lord Sandys, felt that there should be no controls of any sort and the noble Baroness, Lady Young, spoke about a negative situation which she thought should be eliminated. Therefore, as we start from different ends of the spectrum, it is hardly surprising that we should come to quite different conclusions.
On the basis that one does not like the controls at all one then goes to the minimum; the noble Baroness considers that the five years should be changed to two years. That is quite a different approach to the controls; it is a much more negative approach than our approach. It is quite true, as the noble Baroness said, that when control was first introduced it was given a life-span of seven years. When that elapsed in 1972 the then Conservative Government renewed the control and chose a period of five years. I am aware that then circumstances were different and that we had the structure plans. Nevertheless, there is an analogy here because at that time it was considered necessary in order that the structure plans for regionalisation could be allowed to develop and evolve.
It seems to me that here again we need the five years in order to make an impact on policy. At any time during this period if the Government find that it is unnecessary—and I say straight away that if a control is not necessary I should be the first to say that it should go and not be kept even for two years—it can simply be dispensed with. There is nothing obligatory about the period of five years. However, this legislation enables the Government to have it for five years without having to legislate again. A period of two years seems to be an unsuitable period because it would lead to uncertainty in the office property world and among local authorities in the area in which the control applies.
I disagree with the noble Baroness that this takes decisions away from local authorities. We are talking about a regional, and not a local, policy for office development permits. Office developments of any size take some time to mature; it could take anything from two to five years or more from the time a project is first thought about to completion. With that timetable of develop-

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ment everybody would very soon find it impossible to tell whether projects which they were planning would be subject to office development control or not, if the control has been extended for only two years.
A much more important point—and this is where the motivation and philosophy come in—is that office development, as we all know, is at present in the doldrums. If developers believe that control might be lifted in a couple of years, there could be a great incentive to delay even those schemes which they are now thinking of starting on the basis: "Well, if we wait for two years we shall not have to bother with this" That would be entirely counter-productive to the Government's plans for encouraging office development in the assisted areas. It is likely —
Baroness YOUNG: I am sorry to interrupt the noble Baroness, but I should like to ask her two questions. First, what are the circumstances in which the Government would be prepared to dispense with the ODP procedure and, secondly, on average how long does it take for an ODP to be agreed by the Secretary of State?
Baroness BIRK: Perhaps the noble Baroness would let me complete my sentence and develop my argument; it would be much easier all round and shorten the time. It is likely that the need for control will be greater in two years' time than it is now. With the upturn in the economy, which is predicted even by the CBI, there will be a growing demand for offices, both in the wrong places as well as in the right ones. The measures which we are now proposing for steering office employment into the areas which need it most will then be seen to be fully justified. We do not want any doubt at that time about whether office control is to continue or disappear.
Another important point concerns the number of ODPs and whether people move out of the area. They may not be very great in number, but those with whom I have discussed this—not just within the Department or with the local authorities, but business people on the ground—have said that when they are aware of this policy they have very often
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used the Location of Offices Bureau, (which the noble Lord, Lord Sandys, praised very highly last week on Second Reading)—and have asked, "What opportunities are there?" In fact, they have skirted the whole system. They have not even applied for an ODP, but have made their own plans and used the advisory services of the Location of Offices Bureau.
There is an important psychological aspect to this. I agree with the noble Baroness that it is essential for the country's economy to get this as part of the reorganisation of industry and commerce. I believe that we are all agreed on that. It is important that the idea that the offices should not be concentrated in London and particular places in the South-East should be encouraged over a fairly long period. People must get used to the idea. As we know, comparatively new ideas do not always catch on very easily.
As this country is moving away from being a totally industrial society towards becoming a much more commercial society which requires offices, and as we are concentrating greatly on services, the need for offices scattered around outside the concentrated areas, where it has always been thought proper and natural to locate them, is extremely important. We should like perhaps one or two companies to move out either because they have been refused an ODP or because they have not even applied for one because they realise that it is unlikely that they will get one. We now have the relaxation of restrictions on floor space—it is now 30,000 feet—and it means that up to 150 or even 200 people could be employed. That is not a small number if they are employed in an area where there is high unemployment.
A great deal has been said on the question of London, which perhaps is more relevant to the next Amendment. It is true that in areas of London unemployment is extremely high. I should like to point out that, whereas the unemployment percentage for the whole of the GLC area is 4 per cent., in the special development areas it is 10·1 per cent., in the development areas 8·9 per cent., and in the intermediate areas 5·9 per cent. Those three last all come under the category of assisted areas. Whichever way one looks at it, the assisted areas

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have a far higher overall degree of unemployment than London.
It is true that control might be abandoned if there were an alternative way of getting offices to develop in the assisted areas which was seen to be working; for example, a high take-up of the Department of Industry grants. The way to do it is, we believe, to give the opportunity for this tripartite arrangement—consisting of the Department of Industry grants, the Location of Offices Bureau with their advisory service, and the use of office development permits—to work. I quite appreciate that, if one does not like or believe in the whole system at all, one just goes for the minimum; but, as the Government believe in the need for this, it seems to me that it is absolutely right and proper that it should be for five years.
Incidentally, it takes about six weeks from the time of applying for an ODP to get the reply—which replies to a question the noble Baroness asked me. If this Amendment were agreed to, this would mean that another piece of legislation would have to be passed after the two years if it were considered that it was necessary to keep the controls in the interests of the distribution of offices throughout the country. It seems to make much more sense, apart from anything else, and be much simpler, to do as the Government are doing; that is, making it a period of five years, and if it is possible to relax those controls before the five years, doing so. Having said that, I hope that the noble Baroness will withdraw the Amendment.
7.22 p.m.
The Earl of KINNOULL: I did not intervene before because my noble friend had very ably supported my noble friend Lady Young. But listening to the noble Baroness, Lady Birk—and I listened to her carefully both now and during Second Reading—I find that one is disappointed becauses he never produces one shred of hard fact to support the purpose of this Bill. I know that my noble friend's point is a fairly narrow point; it is whether the Bill should be extended to five years, which the Government ask, or two years, as my noble friends ask. The noble Baroness repeated an argument in favour of five years which, I think, was identical with what
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was said in another place. It was simply that it might upset the office development market and confuse or perhaps damage the three-pronged attack of the Government to try to help the assisted areas.
I do not believe for one minute that the office development market is worried at all about the uncertainty of a Bill which gives the office development control a life of two years or five years. I would seriously challenge the noble Baroness to give us some evidence of how she thinks the office development markets could react in such a way. The noble Baroness knows that at present the construction industry and the office development market are at a very low ebb. Gone are the palmy days of the property boom; gone are the palmy days of new office speculative large blocks being put up. There are no funds now. The banks burned their fingers, as we all know. A lot of property companies burned their fingers. Coupled with that there is now a very rightful tax, the rating of empty office blocks, which discourages wholesale speculative office development without any tenants in mind.
What really happens today is that any sizeable block is always pre-let, because if it was not pre-let the developer would not get the funding. So for the noble Baroness to say that the office development market would be very wary, and that it would damage the market if we reduced the Bill from five years to two years, I believe has no foundation at all. I would seriously ask her now whether she could give us some facts on this. Could she tell us whom she has discussed it with? Was it with the Federation of Developers? Who has given the Government this advice? I hope that my noble friend will pursue this most carefully, because I do not think that the noble Baroness has yet been able to convince myself, or, I hope, the Committee, as to why we should reject this Amendment.
Baroness BIRK: I cannot add very much more to what I have said. We are speaking from opposite ends of a pole. The noble Earl wants chapter and verse. I explained that it is possible to quantify this to an extent. He is arguing—I thought I covered this before—that at the moment, and I agree, the property market is in the doldrums. What I am arguing is that when things begin to pick up it is

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important to keep controls for the time being, so that office buildings can be steered to the assisted areas. While everything is more or less at a standstill, one could argue that if there is no movement it does not matter so much. But what we are anxious about is that, once there is an uplift in the economy and there is movement and more building, there should be something operating which will encourage firms to go outside the central areas of London and the South-East. It is for this reason that we want to extend these controls for five years.
Although the noble Earl says that office buildings are always taken in advance, one has only to look round in order to see a great many empty office buildings in London, apart from the celebrated Centre Point which now seems to have given up trying to be an office building. There are empty office buildings, so he is not correct about that. The people I am talking about, to whom I have spoken, apart from the Departments, are people who are in business, who are concerned with building, with offices, with finance, and who seem to find this a very reasonable way for the Government to operate. They also take the view that, unless you do it in this way, people are not going to want to budge outside the areas which are familiar to them and which they are used to.
There is a further point; if you want to improve the employment prospects of young people, again you have to disperse office operations so far as you can. This can also have its effect on pressures on housing. We have to be frank about this. We have two entirely different points of view about this. I could go on talking all night about it, and so could noble Lords and noble Baronesses opposite. I hope that we shall not do so. I do not think that we shall ever come to a point of agreement. I am afraid that, in spite of what has been said—and I have listened carefully, and it has been said very courteously—there is no possibility of the Government reducing the five years to two years. In view of the undertaking that I have given, that it is inherent in the Bill—that it is part of it—that this can be brought to an end at any time it is considered to have outlived its usefulness, I hope that the Amendment will be withdrawn.
The Earl of KINNOULL: I am sorry that the noble Baroness, Lady Birk, has declared that she will not accept reason and logic. I do not have any political dogma on this and I regret that she is bored by what I say.
Baroness BIRK: I am not bored at all.
The Earl of KINNOULL: While I do not have any dogma on this, I feel sorry that she has not produced any evidence to support her case. She talks about the influence of ODPs, but she has not produced evidence to support that, whereas my noble friends have produced evidence to show that they have no substantial influence at all. Surely what really influences people to invest in assisted areas is the grants, because cash is involved. I should much prefer the Government to increase the grants to encourage people to build and create jobs in the assisted areas. My experience in the past has been that ODPs have been a very expensive form of control.
The noble Baroness says glibly—I do not mean that unkindly—that it takes six weeks, but of course there is no time scale for these applications. That is one of the awful things about such controls; there is no time scale and no appeal. In the early days, in 1966–67, it took up to two years to get one of these permits. My noble friends are aware of this, although the noble Baroness does not seem to be aware of it. To refer to six weeks is slightly to mislead the Committee.
Baroness BIRK: I was not deceiving the Committee. I am not sure about what happened some years ago, but I am told that it now takes an average of six weeks to get an ODP. That is what I was talking about. I was not talking about six or seven years ago. The noble Earl may be right. I do not know, but we seem to be going round in the same circle.
The noble Earl mentioned the grants from the Department of Industry and I agree, but what we are saying is that we need the grants together with the permits and the other advice to complete the package. The noble Earl does not think that the three together are necessary. We do, because we think that that is the

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extra element of persuasion to encourage people to move out. We accept that that will not happen in vast numbers, but it is necessary to have the provision there to be used when it is essential to do so. Beyond that, I cannot go. Incidentally, I might inform the noble Earl that I am not bored; like everybody else, I am just rather tired.
7.32 p.m.
Viscount SIMON: As the noble Baroness, Lady Young, particularly appealed to my noble friends and me to support the Amendment, I feel that something should be said from these Benches. I must confess that this is not a subject that I have studied deeply, although I have listened with care to the arguments that have been put forward both from the Opposition and by the noble Baroness, Lady Birk. It seems to me that this is a very evenly balanced argument and it has been possible for both sides to put forward very interesting and compelling cases.
In the end I lean towards the view of the noble Baroness, Lady Birk, because it seems to me that the fundamental point here is that a power to issue ODPs is a power which can at any moment be relaxed. There may be some small delay, but I cannot believe that in the sort of time scale that is involved in building office buildings that delay will be of great importance. I believe that, if the continuation of the power helps to move any substantial office buildings into areas which are less fortunate than London, the power should remain. After all, the power need never be exercised and, in all the circumstances, I think it wiser to accept the Government view on this.
I was rather surprised to hear the noble Lord, Lord Sandys, say he did not think a two-year period unduly short. Most developments of this kind take a great deal of planning and working out and I should have thought that two years was a very short time for developments of this kind to be subject to this control. The noble Baroness pointed out that there would be the possibility of people saying," We will wait two years and see what happens then". If Lady Young is asking what we on these Benches intend to do, while I do not know what my noble friends will do, I shall be inclined to support the Government on this issue.
Baroness YOUNG: I thank my noble friends Lord Sandys and the Earl of Kinnoull for their support on this occasion. I find it disappointing that the Government are not prepared to move at all on the Amendment or give any further consideration to it. As my noble friends have made perfectly clear, the noble Baroness, Lady Birk, has not produced a shred of evidence to support her case. She said that the Government required five years to make an impact with their policy and that to reduce the length of time to two years would create complications. She went on to say that, if circumstances differed, they would review the situation, but when I asked what would determine those circumstances she did not answer.
Yet we know from past policy that the ODP procedure made no difference to the assisted areas before 1972 and has made a difference subsequently only because of the grants that have been given. Therefore, we do not know in what way circumstances would differ. Before 1972, the economy was healthier than it is now, and ODPs made very little difference. Now that it is worse, they do not appear to be making much difference unless grants are given. So I do not know how circumstances will alter or the Government change their mind. They have clearly made up their mind that they prefer controls and want them to continue.
I was enormously interested, indeed touched, by the intervention of the noble Viscount, Lord Simon, and I appreciate his difficulty. It is rather like the difficulty of his honourable friend in another place who found himself in Committee and, as another of his honourable friends said, did not know very much about it and that was why he voted the wrong way. However, it was nice of the noble Viscount to intervene and I hardly expected him to say he would support me. We appreciate that, whatever happens, the Lib-Lab pact must remain intact. I hope, however, that he will not mind my telling him—in any event, he has made up his mind on the matter—that delay matters to some people. It is not an academic argument and, if an office development which may help to get rid of unemployment gets on, I should have thought that a good thing and something which the Liberals would have wished to promote.

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To say that delay does not matter is not true.
Viscount SIMON: I accept what the noble Baroness, Lady Young, says but, on the question of delay, the noble Baroness, Lady Birk, said that it was at present a matter of weeks and I do not think that that sort of delay really affects an issue of this kind. When the noble Baroness, Lady Young, speaks about a development that causes some added employment, surely we are entitled to say that, in the present dreadful situation in this country, if one can save 100 jobs in Newcastle it is better than saving 100 jobs in London. It is a horrible thing to say for the people of London, but we must try to see if we can spread unemployment more evenly through the country.
Baroness YOUNG: I am not sure that I would agree with the noble Viscount in that argument; unemployment wherever it occurs is terrible and one should do what one can to prevent it. I think that, in many cases, if controls were relaxed and developments allowed to take place, we should be more likely to get rid of unemployment than we shall by keeping controls on. However, that will be on the noble Viscount's conscience if unemployment is not helped.
We come back to the core of the argument, which is whether the ODP procedure helps assisted areas. This has been well trodden ground but the whole case was summed up most succinctly in the Commons Hansard on 15th June, when the noble Baroness's right honourable friend, Mr. Barnett, was summing up the debate. Tonight, the noble Baroness has been confirming what he said, and the Committee should take note of his words:
"The review"—
the Office Location Review—
"indicates that in the particular period examined large firms that were refused ODPs did not move to the assisted areas. The period concerned ended in 1972. In the following year the Government introduced a system of incentives to the service industries in order to attract mobile non-manufacturing employment to the assisted areas".
I underline that point. Then he goes on to say:
"… to repeat and emphasise to the House that in my view office development control is unlikely
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to be fully successful unless accompanied by grants of assistance to firms prepared to move to the regions and also accompanied by the Location of Offices Bureau with its new terms of reference".—[Official Report, 15/6/77; cols. 480–81.]
That makes it clear that it will not be the ODP procedure which will get offices in the development areas; it will need money to persuade them to go there, and the facts are perfectly plain—
Baroness BIRK: Will the noble Baroness give way? As I have said several times, it is the three things together. Of course the grants are a very important incentive, but what I have argued, and my honourable friend argued in the same way in another place, is that it is the combination of the three things together: the grants, the ODPs, and the Location of Offices Bureau. Those three are needed in order to get help to the assisted areas. To take out one and say that it is no good when it is part of a whole process does not prove anything. I am sorry that I forgot to answer the noble Baroness on the question of the circumstances in which there would be a relaxation. I should say that this would be when we get an upturn in the economy, and when there is an upsurge in the assisted areas, so that the back of the unemployment to which the noble Viscount referred has been broken and there is a better distribution of work throughout the country. Of course, unemployment is terrible wherever it occurs. But I remind the noble Baroness of the figures that I read out which showed that unemployment in the assisted areas is very considerably higher—more than double in every case—than it is in the area of the GLC.
Baroness YOUNG: I entirely appreciate the argument of the noble Baroness, but what she and her honourable friend in another place are saying—and this is on the record—is that when, before 1972, there were OPDs only, firms did not move. They moved only subsequently when grants were given. I entirely accept the fact that we ought to help development areas. All I am saying is that I do not think that the ODP procedure is making any difference to the situation. I can see that we are not going to agree on this matter tonight. I am very sorry that the Government have clearly made up their mind that controls will help the unemployment situation; I do not believe that they will. However, this is a matter on which

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we can read the Committee proceedings in Hansard, and then consider what to do at a later stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Baroness YOUNG Baroness YOUNG moved Amendment No. 2:
Page 1, line 12, at end insert—
("(2) The provisions of subsection (1) of this section shall not apply in relation to the development of any land in Greater London.").
The noble Baroness said: I beg to move Amendment No. 2. This Amendment, too, has the support of all the Parties in the Greater London Council, and the argument is that London should be withdrawn in toto from the scope of the Bill. Again, I have looked at the argument about this Amendment, which is that this proposal would, once again, be favouring London at the expense of the development areas. Yet the 1976 Review of Strategy for the South-East, which was a Departmental report, recommended that office development permits should be dropped for London. According to the Office Location Review of 1976, the principal reason for introducing office control in 1974 was because employment was increasing very rapidly in London, particularly when there were more offices, so that there was great pressure in particular on housing and transport in London.
As we all know, the situation has changed entirely since then. Far from there being growth in London, there has been a drop in the population every year for the past few years; and the Government's own plans for inner cities include great concern about what is happening in Inner London. At the same time, I believe it to be true that the Government would very much like to attract to London offices of international companies which would like to set up here. That would help unemployment in London, and the position could in turn be helped if London could simply determine these matters by using its own planning procedures. Once again I return to the argument that the Greater London Council is a very large and powerful local authority. It is advised by very good officers, and I should have thought that it, too, could determine whether or not office developments should take place.
Baroness BIRK: As I think the noble Baroness will be aware, in the context of the Bill, this is a wrecking Amendment. Its effect would be to allow the control of office development to lapse on 4th August, 1977, in relation to Greater London, but to carry on in respect of the South-East Region. This would produce a completely unbalanced state of affairs in which firms would be encouraged to build offices in London instead of elsewhere in the South-East.
I should like to draw the attention of the Committee to the White Paper A Policy for Inner Cities, at paragraph 55 of which it is stated that the
"development of services and office employment in the centre of cities and inner areas themselves would help to provide employment. In South East England office development permits which are required for the construction of offices over 30,000 square feet will be used to steer to inner areas outside central London those firms which can demonstrate that a move to an assisted area is not practicable. In addition, a limited number of speculative office buildings will be permitted in the inner areas where there is a shortage of office space, reasonable transport facilities, and the development is judged to be of maximum benefit to a declining area".
The Amendment does not make any distinction between these various areas within London. I am certainly not impressed by the fact that every person on the GLC supports the Amendment. It would be extremely odd if they did not; they have a special interest in this, and they are not ashamed to state it. But it is for the Government to be above the special interest and special pleading of the London area, and to look at the country as a whole and at the assisted areas.
The Amendment strikes at the root of the Government's policy towards office employment location which, I repeat, is to secure a better distribution of office jobs over the country as a whole. I must also repeat that although London's unemployment problems are severe—and I agree that in parts they are very severe—they certainly do not compare with those of the assisted areas, as I have shown. I do not want to repeat the figures. In the assisted areas, there is far less chance of obtaining an office job than there is in London, where there is a concentration of offices. As I said earlier, there is also a national trend towards office employment and away from industrial employment; and this trend is emerging all over the

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country. Therefore, the Government consider it of vital importance that the assisted areas should benefit from this swing by receiving, where possible, an increase in the number of jobs available. To withdraw the whole of the GLC area from this would be an absolutely fatal blow, and would completely unbalance the whole system. I think that here the noble Baroness is on even weaker ground than she was on her first Amendment.
The Earl of KINNOULL: Before my noble friend replies, I wonder whether the noble Baroness can say, in view of the fact that the Amendment deals specifically with London, and bearing in mind the Government's publication of the White Paper, and the interest in, and policy on, the regeneration of inner cities, taken together with the Minister's undertaking that he would regard sympathetically a number of cases in the GLC area, what has happened in London as regards ODPs during the last two or three years. What has been the policy of the Government? How many applications have there been? How many have been refused; and what has happened to them? I am quite sure that the Location of Offices Bureau must monitor all these things. Those are hard facts which would certainly help my noble friend and those outside.
I should like particularly to ask the noble Baroness what the Government mean by being sympathetic to applications within the GLC area. Can she give any indication of the number of applications which might be granted in the next three or four years? I think that that would be helpful.
Baroness BIRK: It is extremely difficult. I really cannot give the number of applications which might be granted. The number of applications to be granted also depends on the number of applications that are going to be made. When I quoted from the inner areas policy document, the point I was making and underlining was that, if we removed the whole of the GLC area from these controls, one could no longer differentiate between Central London and the West End —where I think many of us are agreed that office development should not be encouraged—and the inner areas outside Central London in relation to those firms
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which can demonstrate that a move to an assisted area is not practicable. In other words, what we are saying is that, outside Central London and the West End, some of the inner areas will in fact be treated in the same way as assisted areas. Then I went on to say that a limited number of speculative office buildings will be permitted where there is a shortage of office space, where there are reasonable transport facilities and where development is judged to be of maximum benefit to a declining area.
I think the noble Earl, who knows quite a lot about the property side of these matters, must agree that it is very difficult to be more precise about a future policy without having the firms applying at a particular time. What I have done is to give the general outline of the policy which is laid down and the guidelines within which the planning and permits in London will be operated, and I hope this is enough to convince the noble Earl that it would be a grave error. I can see his point, and I appreciate it though I do not agree with it. He probably does not want the control permits at all. But if you have them, to take out the whole of London not only does not make sense but completely reacts against the whole thing. The numbers given or refused, which I think was the other point the noble Earl asked me about, are published each year in an annual report on office development control; and if the noble Earl will allow me to do so, perhaps I can send him the most recent copy, as I am afraid I have not got it with me.
The Earl of KINNOULL: The noble Baroness will know, of course, that I was not being aggressive to her in any way, but she was kind enough to write to me before the Committee stage giving certain facts as to the number of applications which have been made in a year in the case of ODPs. This is a very important part, and I am surprised she is not able to give the number of applications which were particularly involved with the GLC area. I hope the noble Baroness will recall that, whatever the Government's policy is on London and the GLC, from 1965 onwards, for a period of about four or five years, there was a very sharp increase in office rents due

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entirely to the scarcity value of new developments going up. This is really one of the reasons why I was trying to pursue that argument.
Lord SANDYS: I should like to support this Amendment because I believe my noble friends have a very real point here. Perhaps I can concentrate my few remarks on the Government's own document, the Office Location Review, because the heartbeat of the statistics lies in Table 6, where figures are indeed given of the number of moves. They are: for the Greater London Area, 705; Outer Metropolitan Area, 586; and Outer South-East Area, 185—a very large number of moves in the South-East. But what is so significant is that, of all the moves in the period 1963 to 1976, 82 per cent. of the firms who were circulating within the South-East stayed within that area; and I think it is quite false, so far as we see the argument from this side of the Committee, to suggest that if the GLC area was taken out of the argument it would alter the situation. In our view, it would make no difference.
Baroness YOUNG: I am very surprised that the noble Baroness should not be surprised that there was unanimity of view in the GLC. In my experience of that body, there is very rarely unanimity among all Parties on anything. In this case, I drew attention to it because this is not a Party political matter from the point of view of local government, and that is the point I was trying to make. What I think the noble Baroness must realise is that we all wish to see unemployment brought down, in particular in the development or assisted areas. The question is whether or not this piece of legislation will have that effect; and, if it does, whether it is going to make the position of London much worse. I am very glad that my noble friend Lord Kinnoull drew attention to the fact that the last time the Government limited the number of offices in London they of course gave a golden handshake to every single property developer, whose rents rose enormously on the scarcity value of offices. This could well happen again, but I do not believe that this is the intention of the Government, although when you interfere in these matters it is the likely outcome.
I was also grateful to my noble friend Lord Sandys for being able to supply the
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figures which were required. My noble friend Lord Sandys, who is always so conscientious, has of course looked at all these matters, which are most relevant on the number of moves, the number of permissions that were given and the number that were refused. As I indicated, this is in no sense a Party political matter. It is something about which local government feels very strongly. It is something which we should have very much liked to see happen, because we think it is in the best interests of London; and no one can really be satisfied with the dereliction in so many parts of London. No one who has read the inner city reports can be anything but concerned about the degree of unemployment, certainly, in the inner areas of London; and one must recognise the amount of employment in London which is entirely in clerical work. I understand that more than 80 per cent. of office employment of females and more than one-third of office employment of males is by way of clerical workers in London. That means that enormous numbers of people are employed in these office developments, which would make a great deal of difference to unemployment and, I should have thought, would make a lot of difference to unemployment among the young. However, this is not a matter upon which we will agree this evening. I think I must consider what the noble Baroness has said and decide whether we shall return to it at another stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clause 2 agreed to.
7.58 p.m.
Baroness YOUNG Baroness YOUNG moved Amendment No. 3:
After Clause 2, insert the following new clause:
Amendment of s. 75 of the 1971 Act
.Section 75 of the 1971 Act (Exemption by reference to office floor space), shall have effect subject to the following amendments—

(a) in subsection (7) (which defines the prescribed exemption limit for the purpose of that section), for the figure "3,000" there shall be substituted the figure "100,000";

(b) in subsection (8) (which empowers the Secretary of State by order to modify the prescribed exemption limit), for the words "(whether greater or less than

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3,000 but not less than 1,000)", there shall be substituted the words "(being greater but not less than 100,000).

The noble Baroness said: As the Committee will appreciate, this Amendment is really a rather poorer version of Amendment No. 2, and as I got nowhere on Amendment No. 2 I should like to move Amendment No. 3 to see whether the Government will consider it, or indeed the Amendment to it by my noble friend Lord Kinnoull. This would in fact be continuing the principle that the Secretary of State has already started by raising the limit to which the ODP will apply to offices of more than 30,000 square feet. This Amendment would put the figure up to 100,000 square feet.
The reason for moving this Amendment is that we believe that in smaller developments there will be relatively few applicants who will be applying except when they are already established in a place, and will perhaps be wanting to increase their office space, or something like that. Up to this amount and over it would be somebody coming in with a very large development, indeed. If the Government are so set on the ODP principle, then it would be right that they should apply it only to those very large developments where it would work. It seems to us that this would be a very fair compromise between the two positions that have been indicated on either side of the House this evening. I do not view this in any sense as a Party political matter. I think that this Amendment is a compromise. It is not what we would have wished. I hope that the Government will consider it favourably. We think it falls half way between the position we should have preferred and the one the Government have adopted. I beg to move.
Lord SANDYS: I referred on Second Reading to a particular resolution which was passed by the Greater London Council on October 12th last year—
Baroness BIRK: I understood that the noble Earl, Lord Kinnoull, was going to move his Amendment to the Amendment of the noble Baroness; otherwise we shall get into some confusion.
The Earl of KINNOULL The Earl of KINNOULL moved Amendment No. 4 as an Amendment to Amendment No. 3:
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In paragraph (a), leave out ("100,000") and insert ("75,000").
The noble Earl said: I beg to move Amendment No. 4. In principle, I support my noble friend's Amendment in moving my Amendment. Whereas perhaps Amendment No. 1, in the words of the noble Baroness, Lady Birk, was a matter of blind dogma, this I do not think can in any way be described as dogmatic because what we are discussing is a matter of judgment, a judgment which even in the Government's eyes has varied from 3,000 square feet to 5,000 square feet, to 10,000 square feet, to 15,000 square feet and now to 30,000 square feet. The Government's judgment in increasing from 15,000 square feet to 30,000 square feet is where it stands at the moment. I think I should be correct in saying that every time the Government—either the present Government or other Governments of the day—increased the limit there was a unanimous "Whoopee!" from all the office developers who saw that the yoke of ODP was being removed from a sector of the development market so that they could then concentrate their minds on the often long and tortuous business of the planning procedure. What we have not mentioned this afternoon in Committee is that it is not just the ODPs which decide the issue. In fact, they have no relevance to it; it is the planning consent which matters after the ODP.
The reason why I have chosen 75,000 square feet—and one must remember that it is gross square footage—is that I am sure it is my noble friend's judgment and the Government's judgment that it is a matter of choice. If we accept that this policy is to help the assisted areas, then the only criteria of what the minimum should be is the question of jobs. The calculation that the noble Baroness gave us on Second Reading was that in the Government's view 30,000 square feet represented 200 jobs. I looked into this very carefully. In my view, and in the view of others, this is a very optimistic figure because we are talking about the gross square footage and in the gross square footage one has storage, all the common parts and all the facilities in an office block. I am told on the best advice that one should think more of the figure of 150 jobs for 30,000 square feet; in other words, 2 to 1, or 50 per cent.
What I am suggesting with 75,000 square feet gross as a minimum would be that 350 jobs would be the norm and, in the case of my noble friend, 500 jobs. When one looks at the office development market at the present time and for some time in the past, one sees that new development of over 75,000 square feet in any part of the United Kingdom has come as a result of either a Government decentralisation scheme or a national or multinational company deciding to relocate its business in that particular area. The general trend at the moment in new office development to cater for replacing some of the old offices is not in that category. Therefore, as the Government have shown a very welcome flexibility in increasing from 15,000 square feet to 30,000 square feet and knowing the charitable mind of the noble Baroness and in view of her earlier comments in not being able to give way on Amendment No. 1, I hope she will consider my Amendment and my noble friend's Amendment with sympathy; and I hope that she will accept one of them. I beg to move the Amendment to the Amendment.
Baroness BIRK: I shall take Amendment No. 5 as consequential and presume that it will be moved separately. Unfortunately, I must tell the noble Earl who very courteously hoped that this one would get through the net that neither the proposed new clause of the noble Baroness nor his Amendment to it, which reduces it somewhat, would be acceptable to the Government because a limit of either 100,000 square feet or even of 75,000 square feet would be too high for ODP control to have any worthwhile effect. The purpose of the recent increase—and I will not go over the history which has been stated by noble Lords opposite—in the limit to 30,000 square feet was to free from control the smaller developments which are not likely to be steered to an assisted area or to any London area; but there are many projects between 30,000 square feet and 75,000 square feet and even more between 75,000 square feet and 100,000 square feet which would be likely to be steered in this way. This is generally, I think, well known to be the view of the Department of Industry.
We should not wish to lose the opportunity of influencing the location of developments of the larger sizes by
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exempting them from control, which is what this Amendment does. An office of 75,000 square feet would accommodate about 550 staff and one of 100,000 square feet about 750 staff. Incidentally, I think that it is a matter which varies from building to building, but I think the noble Earl is being generous when he says that he thinks that the figure of 200 is too much for 30,000 square feet.
The Earl of KINNOULL: I said 350 for 75,000 square feet.
Baroness BIRK: I thought that he remarked that my figure of 200 people for 30,000 square feet was too large. I think that his 150 is on the generous side; but I think that we will settle for between 150 and 200 depending on the office and the planning and so on. Even 75,000 square feet would be far too high a level over which to relinquish control if there is to be control at all. We come back to the basic factor that noble Lords opposite do not want controls and therefore are now lifting the limits to such an extent that it makes it quite ludicrous.
There is another point. A change of this magnitude in the exemption limit would give great scope for avoidance. It would be very difficult to split a large office into five units of 30,000 square feet each; obviously, it would be much easier for a firm to split their staff between two units of 75,000 square feet or between one unit at 100,000 square feet and one of 50,000 square feet and thus avoid the control altogether. On the basis of the Amendments moved now, it is negativing the control altogether. A large exemption limit would also remove all flexibility from the operation of the control. While there may be little prospect in the near future of control being applied to offices below 30,000 square feet, it would be far too inflexible to have a limit of 75,000 square feet or 100,000 square feet without the possibility of moving down the scale.
I am sorry, I have made a mistake. I did not mean "in the near future"; I was looking at this the other way round. We would not be increasing the exemption in the near future. Certainly there is no question of applying control below 30,000 square feet now that that area has been increased. To have a limit of 75,000 square feet or 100,000 square feet is far too great and knocks the whole ODP

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scheme. It is impossible for me to accept Amendments Nos. 4 or 5, and the consequential one, Amendment No. 5.
The Earl of KINNOULL: The noble Baroness said that if she accepted these Amendments it would be ludicrous to the whole policy. I take issue because the whole purpose of these Amendments is to keep the policy going; and where it really creates jobs are the large developers. It is a matter of judgment. What we are trying to achieve is a reasonable upgrading, and meeting the ways where the office development controls do not have the bad effects that they have had in the past but have the good effects that the Government want to see in the future.
The noble Baroness used the word "avoidance". What the Government fear is that the multinationals, or some large group, would deliberately frustrate the ODPs by some clever manipulation. I imagine she meant by building two office blocks, splitting them separately. This creates a legal situation, whether or not, if one develops two office blocks on the same site, it constitutes two office blocks. What constitutes two office blocks? Does the block have to be separated by so much land or can it be joined together? If the noble Baroness is going to use that argument, she must give some further guidance as to how serious the argument of avoidance really is. This is a new angle on the whole argument that we are putting forward.
Baroness BIRK: I do not think that I have to go into details. I was saying that the greater possibilities are there because of the sheer size of putting up the limits so very high. There is that possibility. I am not at this stage saying that so many people are likely to do that or not, but there is that possibility and the sheer figures, the size, indicate that. That is all I am saying. That is a possibility: it may happen; it may not happen. It was an added argument; but the main argument is that we consider that this is putting the matter far too high. I consider the relaxation has been a generous one: 15,000 square feet is now doubled to 30,000 square feet. Now there is talk in terms of 75,000 square feet and 100,000 square feet. Incidentally, Amendments along these lines were not put down or
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moved or attempted to be moved in another place. So the colleagues of noble Lords opposite evidently did not think that there was anything in them, or that they would possibly find a place in a Bill of this sort, even if they were opposed to the Bill.
The Earl of KINNOULL: May I take up the point of avoidance again because it is very important? It is really effectively a smear on our Amendments. Is the noble Baroness saying that at the present time, with the permitted 30,000 square feet, a developer can buy a site fit for 70,000 square feet and split it up into two companies and therefore avoid the ODP? Is that what she is saying could happen? If so, then they come up to our limit. She must clarify that for the Committee. Is she saying that this is a real threat—a threat which has materialised—or is it something which has come out of her brief from which to try to stimulate her argument?
Baroness BIRK: I cannot say that it has materialised because the limits are not that high. All I am saying is that it is a physical possibility. It is not a smear on the Amendment. If, when one moves an Amendment, one says "X", and that there is a possibility that "Y" may follow, that is not a smear. I am saying that this is a possibility; this is what could happen. I am not saying it has to happen; I am not saying it would happen. If one opens the floodgates to that extent and makes this possible, it is something that I have to point out. I have pointed it out, and I accept that probably it had not occurred to the noble Earl. It is something he should think about. If he would like me to expand on it in terms of whether it is next door or not, I could write to him further about it. It is something, because of the sheer size of it, he must see as a possibility. I think it is both unfair and rather silly to say that it is a smear. It was not, and was not intended in that way at all. One has to look at the consequences of an action that one has taken. This is a possible consequence.
8.17 p.m.
Lord SANDYS: It may not have been a smear, but shall we suggest it was a slight? Implicit in the remarks of the

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noble Baroness was a suggestion that perhaps she placed some constraint upon the activities by my noble friends in putting on the Marshalled List Amendments which had not been put down in another place. Your Lordships are able to put down Amendments which are felt to be suitable.
Baroness BIRK: I know it is hot and everybody is getting weary, but I must say again that it is not a slight; it was not intended as a slight. Of course not only are noble Lords able to, but quite rightly do move Amendments. Many Amendments moved in this House have improved Bills beyond recognition. Since every aspect of this rather complicated, difficult and contentious little Bill seems to have been looked at, I was merely commenting—as I am entitled to do—that it does not seem to have been anything that had occurred to the noble Lord's friends in another place. Since they are very alert about this matter, and many of them also dislike this Bill as much as noble Lords opposite, I thought that once again it was just a fair comment. If the noble Lord would also like me to admire his ingenuity—and I know it is something which started in London with the GLC—then that is fine. I am prepared to answer it. It is something which I think is relevant when discussing a Bill which is going through the two House of Parliament.
Lord SANDYS: I return to the central point of the argument of the noble Baroness. It is a question of relinquishing control. The impression may have been gained by some noble Lords who are not so conversant with the Bill as the noble Baroness obviously is, that in the background there are two other powers of great importance. One is the normal planning procedure which in every case must be applied to any development of whatever size. Secondly, there are the reserve powers of the Secretary of State where a call-in procedure can be applied. In our submission, these are sufficient safeguards.
I should like to refer to what took place in the Greater London Council last October. I referred to this on Second Reading. I believe it is relevant to this Amendment. The Greater London Council at that time was controlled by the Party opposite. If I may, I will quote
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once again their resolution, which reads:
"That representation be made to the Secretary of State for the Environment as follows:

1. That the Office Development Permit system now be dropped and in any event should not be renewed when the present powers expire in August 1977;

2. That if, notwithstanding the Council's representation to the contrary, the control is to be continued it should be limited to developments of over 100,000 square feet".

There is a very clear recommendation of the GLC—on an all-Party basis, if I may say so. I believe that it underwrites most strongly the Amendment and, of course, the Amendment to the Amendment put by my noble friend.
Baroness YOUNG: We have had a very useful discussion on this matter. I am sorry that the noble Baroness should feel that new Amendments raised in this Chamber have just been thought up. I thought the function of the House of Lords was primarily to be an amending Chamber and —
Baroness BIRK: I thought I had explained this to the noble Lord. I am sorry; I seem to be misunderstood this evening. I said quite the contrary; I said that it had not been raised in another place, but I went to great lengths to say that not only was it right and proper but that many Bills had been greatly improved by Amendments moved by your Lordships, but that I did not think that was the case with these Amendments.
Baroness YOUNG: I am sorry that the noble Baroness does not think so, because I should have thought these Amendments would improve this Bill. I think there is a very valid point about this. One can argue about the figures. I do not believe that my noble friend Lord Kinnoull has had an answer on the very interesting point that he raised on the size of office development, nor indeed as to what would happen if a developer buys a site and asks to put up two office blocks, which amount to 75,000 square feet—perhaps one should say not two, but three office blocks of 30,000 square feet each, making 90,000 square feet in all, cumulatively. That is a very interesting point on which, of course, we have not had an answer.
We can argue for a very long time about these matters. When a great many reports

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have said that there would be a regeneration of Inner London, help for unemployment and regeneration of industrial life generally by the dropping of the rigid controls of the ODP system, it seems tragic that the Government are not prepared to move at all in this matter. As my noble friend Lord Sandys has indicated, there are already very adequate planning powers for local authorities in controlling developments and there are already grants to encourage office developments to go to the assisted areas. That is the way they are most likely to go when a grant is given to them. However, I can quite see that we are not going to be able to convince the Government tonight. I therefore beg leave to withdraw the Amendment.
Amendment to the Amendment, by leave, withdrawn.
Amendment, by leave, withdrawn.
[Amendment No. 5 not moved.]
Remaining clauses agreed to.
House resumed: Bill reported without amendment.
Baroness BIRK: My Lords, I do not know whether noble Lords opposite would be willing, since the Bill has not been amended, for me to move the Report stage now?
Baroness YOUNG: My Lords, I am afraid that we on this side of the House could not agree to this being taken on Report now. We should obviously want to have an opportunity of studying the report.

WATER CHARGES EQUALISATION BILL
8.27 p.m.
Bill read 3a, with the Amendments.
Baroness BIRK: I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Baroness Birk.)
Lord SANDFORD: My Lords, the past few weeks on this Bill have been
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useful both in further exposing for all to see the inherent difficulties of the Bill and also the Government's mishandling of it, and I should like to enlarge on those two aspects in a moment. Meanwhile, in our paradoxical House of Lords way, while fervently continuing to hope for the total demise of the Bill, we have nevertheless succeeded in improving it, just in case it does, unfortunately, reach the Statute Book.
Her Majesty's Government have improved it by belatedly remembering the water companies, and rewriting the Bill in this House to embrace them. We have improved it, first, by phasing the intro-ducation of the sharp increases—some of them over 20 per cent.—which many consumers would otherwise have suffered. Secondly, we have made it possible to continue relief by the well-tried way of the domestic element in the rate support grant. Thirdly, we have provided that, if the kind of equity Her Majesty's Government favour is to apply, it is the overall Bill for general rates and water rates combined which should be brought into the calculation, and not just differentials across the country in water rates alone. Fourthly, we have provided time for reflection and discussion, following the publication of Her Majesty's Government's White Paper on the water industry before the Bill is enacted. Incidentally, perhaps the noble Baroness, Lady Birk, could confirm that the same source of inspiration that led the noble Lord, Lord Davies of Leek, who has taken no part in this Bill so far, to ask his Question for Written Answer, will also cause the White Paper to come forth tomorrow.
Baroness BIRK: It is expected tomorrow, my Lords.
Lord SANDFORD: My Lords, that is good: I thought, or guessed, as much. Before we let this Bill pass, I must say again how bad and misbegotten I think it is. It is opposed by all four local authority associations: the Association of County Councils, the Association of Metropolitan Authorities, the Association of District Councils and by the London Boroughs Association. That is a rare honour—or dishonour. It is trebly mistimed. It is too late now to have any effect in this financial year, which was originally intended; it is too soon in

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relation to the White Paper, and it is now totally out of step with Welsh devolution with which it began but which has now stopped marching forward altogether.
As regards the consultation paper, the noble Baroness herself and her right honourable friends before her in another place all attempt to disguise the real political motives behind this Bill by claiming that it has some attributes of equity and fairness hidden away in it, and I should like to spend a moment or two on this final stage in trying to detect where that equity and fairness might lie. When one is talking about this, one is sometimes speaking in the sense that it is fair in that consumers should be charged for what they consume. But, of course, that is not at all the case here. This Bill is confined to domestic un-metered water sevices, and it is well known that charges are not related to what individual householders consume. Furthermore, no adjustment is made as between areas where the average per capita consumption is higher or lower than elsewhere. So there is not that kind of fairness.
The second kind of equity and fairness, which is particularly claimed by Socialists, is that consumers should be charged according to their ability to pay, but that is not the case here. There is, it is true and quite apart from this Bill, the existing inequity, which we have learned to live with of being charged according to the rateable value of one's house. This charge bears only a very limited relationship to the combined income of the members of the household who are using the water. But, so far from mitigating this inequity, which certainly exists, the Bill compounds it, because under the Bill certain households, regardless of their income, are being arbitrarily taxed, without any representation or any reference to their ability to pay, in order to favour certain other households, without any reference to the latter's need for help. So it is not that kind of fairness.
Is there a third kind of fairness which can be claimed as being an attribute of this Bill? There is another kind, and that is that consumers should pay according to the cost of the benefit that they are receiving; in this case, of having a public water supply provided for them. Is that
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the kind of fairness that can be attributed to the Bill? I do not think so. In fact, this is the element of fairness which prevails now, and is the one which this Bill does most to erode. Furthermore, in eroding it, the Bill runs completely counter to Her Majesty's Government's own White Paper (Cmnd. 3437) of 1967, which was entitled The Review of Financial and Economic Objectives. In that White Paper, the White Paper of a Socialist Government, in a rare flash of common sense they recognised, using their own words,
"that prices should be related to the cost of supply";
and they were talking not just of water but of a whole group of commodities and services. It is not that kind of fairness.
We have offered the Government an Amendment which would have authorised the payment of explicit selective subsidies by grant out of public funds. The noble Baroness rejected that honest option, and instead continued to pretend, on behalf of her colleagues, to favour a system of cross-subsidies financed by hidden discriminatory taxation on an arbitrary chosen group of consumers, without any regard to their ability to pay, as being a more respectable system. All I can say in bidding this Bill farewell is that, if the noble Baroness claims, as she did on Second Reading, that all this is in the best traditions of Socialism, it does not surprise me one bit that the country is quite fed up.
8.35 p.m.
Lord PEDDIE: My Lords, I do not wish to delay the House unduly, but I feel that some comment ought to be made before this Bill passes. I know that I have made comment, and indeed critical comment, during the course of the discussions upon this Bill, and I certainly have no wish to repeat them this evening. I agree that the Bill has been improved during its passage through this House, and not least of the improvements is the recognition of the significance of water companies. But my sole comment, which I now seize this opportunity to place on record, is that there is one aspect which deserves emphasis.
I have said before, and I repeat, that this Bill cuts across the declared policy

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of the Government on the subject of pricing in the public sector. The Government have gone on record, on more than one occasion, as saying that charges of nationalised industries should be related to costs; and, secondly, that the public should have some recognition of those costs in the prices that they pay. That is almost the same thing. Yet this Bill obscures that whole issue. There is no true relationship between costs and charges.
There is the further aspect of public accountability in nationalised industries. I pay tribute to this Government for their recognition of the importance of that matter. I am a great supporter of State enterprise, but I recognise that one of the disabilities and difficulties lies in perfecting a system where there will be full and complete public accountability. We have the possibility, by having charges in different areas related to costs and efficiency of operation, of at least making some contribution to public accountability, and I regret that this Bill completely obscures that question.
I need say no more. As I have indicated, I have no intention of repeating the criticisms. But I regret very much indeed that a declared policy of the Government and one that offered such considerable possibilities for the better conduct of nationalised industries has been thrust on one side for a pathetic Bill of such litte significance as this.
8.39 p.m.
Baroness BIRK: My Lords, what is quite clear, without any doubt, is that the noble Lord, Lord Sandford, does not like this Bill. In fact, it seems to me that he is consigning it to a very watery grave. We look at it in very different ways. Of course, the Bill was opposed by all four local authority associations. But, if the noble Lord will forgive my saying so, it has nothing to do with them. The noble Lord's Party took water away from local government. That is why most of the Amendments were totally misconceived, since he seems to be living in a world where water is still part of local government. Perhaps it is a kind of Freudian reaction to the 1972 Local Government Act, for which I share his dislike. Nevertheless, the fact that local authority
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associations do not like the Bill is quite irrelevant. The Water Charges Equalisation Bill is designed to provide a measure of relief for those people who are living in areas with high average domestic water bills. We believe that equity and fairness demand that the present range of average bills should be reduced to a narrower range. The noble Lord has put forward his own definition of equity and fairness. All evening, therefore, the noble Lord and his friends have been running along a different set of tramlines, and never do we meet.
The Bill provides for an equalisation scheme that is based on revenue transferred between water undertakers. No Exchequer funds are involved. The Amendment which the noble Lord was very anxious to press upon me but which I resisted and which he then withdrew would have created a much greater charge on public expenditure and would have been quite the wrong way to deal with it. However, I do not intend to go again over all the arguments. Unfortunately I did not convince the noble Lord last time, so it is quite certain that at this time of night and at this stage of the Bill I shall not convince him now that no Exchequer funds are involved. Since the Government's scheme is restricted to the effects of past expenditure, it cannot erode the incentives to water undertakers to conduct their affairs in an efficient and economical manner.
It is probably with rather more mixed feelings than those of the noble Lord opposite that I say that the Bill has been transformed since it came to your Lordships' House. Another place, having considered and rejected or given leave for the withdrawal of over 100 Amendments, may be surprised by how much the infant has changed or grown since it came to us in March. I very much hope that one or two of the changes will not be permanent because I believe that they are changes for the worse. But many of the alterations are undoubtedly for the better. We undertook in another place, and not belatedly, to incorporate the 28 private statutory water companies if we could find a workable way of doing so. The noble Lord knows as well as I do that the only problem was shortage of time, but directly there was time the water companies were brought in and Amendments were moved in this House.

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We found a way which was acceptable to both the water authorities and the water company associations. Those are the association bodies which the noble Lord should keep his eye on. On this occasion he should forget about the local government associations.
Lord SANDFORD: My Lords, I hope that the noble Baroness is not under any misapprehension that the Association of Water Companies is any less opposed than all of the others, because it certainly is opposed.
Baroness BIRK: My Lords, some members of the Association of Water Companies, depending on whether they are giving or receiving, have a certain attitude towards the Bill. Certainly they are not on record as an association as finding the Bill unacceptable. The companies have been brought within the scope of the Bill. We have also spelled out and clarified what we acknowledged in another place to be a shorthand description of the way that the scheme is intended to operate. The relationship between past capital expenditure, qualifying assets and qualifying financing costs is now, I trust, much more transparent than it was before. At the same time, the Bill has been amended in ways which I know have pleased the noble Lord but which I must warn him the Government cannot accept. As I have frankly indicated, we shall seek to reverse these Amendments in another place. The Amendment about which the noble Lord is so pleased for phasing in the scheme over three years makes the transfers, as I said during the Committee and Report stages, during the first two years derisory. The two Amendments which require relevant financing costs to be adjusted to take account of the level of general rates in each undertaker's area are both unworkable and perpetuate a confusion about the links between the levels of water charges and general rates. This has bedevilled our discussions all the way through the Bill because there are no such links. Two other Amendments requiring equalisation levies to be adjusted to take account of the extent to which rate support grant compensates areas with water charges are again, for similar reasons, redundant; and redundant Amendments, in my view, make very bad law.
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My noble friend Lord Peddie once again raised the point which he made on Second Reading. I can only repeat that this Bill is not designed to nationalise the water industry. It is designed to equalise water charges. I do not believe that I can add to my reply to the noble Lord on Second Reading. I believe that the Bill will result in considerable benefits to people who badly need them. Although the Bill has quite obviously not got the completely wholehearted support that I should very much like it to have, I commend it to your Lordships.
Lord SANDFORD: My Lords, before the noble Baroness sits down, may I reiterate one point. It is perfectly true that all the water companies will suffer under the Bill to varying degrees, some very severely and others less severely. However, the noble Baroness will not be helping her colleagues in another place if she leaves them in any doubt about the total opposition of the association as a whole to the Bill. I have their explicit authority for stating that.
On Question, Bill passed and returned to the Commons.

FIDELITY TRUST BILL [H.L.] INTERNATIONAL PLANNED PARENTHOOD FEDERATION BILL [H.L.]
Returned from the Commons agreed to.