Lords Sitting of 16 June 1977

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

AIRLINES AND PASSENGER OVERBOOKING
Baroness BURTON of COVENTRY: 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 further progress was made at the meeting of the European Civil Aviation Conference held on 10th June last concerning the scope for arrangements for overbooking compensation between airlines of Member States; and whether they will make a Statement.
Lord ORAM: My Lords, the meeting which was held on 10th June considered how best to carry forward study of the subject. A rapporteur supplied by the United Kingdom will circulate a questionnaire, the responses to which will provide a factual basis for a meeting of the Directors General of Civil Aviation later this year to consider both the extent of the problem and the ways it might be solved.
Baroness BURTON of COVENTRY: My Lords, does the noble Lord recall that on 5th May I thanked him and his right honourable friend for having had this matter referred to ECAC and for the sympathetic handling that it received? May I ask my noble friend, in view of what he has just said, whether it is possible to expedite the matter so that we do not have to wait until the end of the year, which would be, I think, some 15 or 16 months since the matter originally commenced?
Lord ORAM: My Lords, we shall be in touch with ECAC on the subject, including the timetable. We nave taken the initiative as I have indicated and are
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prepared to continue to do so, but I think that my noble friend will appreciate that when such matters enter the international field there are procedures which necessarily take some time.
Baroness BURTON of COVENTRY: My Lords, I do appreciate that. May I ask my noble friend whether he realises how much those who are interested in this matter hope that the Government initiative will overcome the lethargy that goes through these lengthy procedures?
Lord ORAM: My Lords, we shall do what we can.

HOUSE OF LORDS: TWO-DAY DEBATES
3.8 p.m.
Viscount AMORY: 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 the Leader of the House whether, when the programme of the House permits, as perhaps it does currently, he will have consideration given to the desirability of rather more two-day debates when the importance of the subject and the probable number of speakers justify such a course.
The LORD PRIVY SEAL (Lord Peart): Yes, my Lords, I shall be glad to give consideration to this. I might, however, add that the circumstances in which two-day debates are possible as well as desirable do not occur very frequently.
Viscount AMORY: My Lords, while thanking the noble Lord the Leader of the House for that helpful reply and recognising the problem to which he has referred, may I ask the noble Lord whether he recalls that over the past month or so we have had several important debates—notably, one on religious education, for which over 30 noble Lords put down their names to speak—and that there were in those debates many excellent speeches made very late in the evening to a very thin attendance? That seems to be rather a pity from the point of view of the House and perhaps a discourtesy to the distinguished orators involved.
Lord PEART: My Lords, I understand that. That was why I replied in the way that I did. I said that I would consider this suggestion. On the other hand, I recognise also that it might be helpful if noble Lords and Ministers made shorter speeches.
Lord PANNELL: My Lords, on this question of two-day debates, will the noble Lord the Leader of the House consider having a selection through the usual channels to get a reasonably balanced debate on either side of the House because, too often, we hear a whole series of monologues on the same theme?
Lord PEART: My Lords, I think it would be wrong for the Government to select speakers in that way. We must allow Members to put down their names of their own volition.
Lord NUGENT of GUILDFORD: My Lords, is the noble Lord aware that my noble friend's point is particularly apt, in that many sincere requests, sometimes coming from the lips of the noble Lord himself, for speakers who take part to stay at least to the end of the debate, are very often disappointed? It probably would be to the convenience of the House—as well as making the debates more profitable—if it were possible to split these important debates with a large number of speakers into two days. Will he bear that in mind when considering this matter?
Lord PEART: My Lords, I shall do so, but, contrary to the general impression, I think that there is very little slack in the programme at the moment. This is because we have a record number of Private Member's Bills this Session. There are no fewer than 21 in the House at the moment. Our noble colleagues are working very hard.
Lord CARRINGTON: My Lords, while not wishing to disagree with my noble friend behind me, may I ask whether the noble Lord the Leader of the House would bear in mind that on some occasions having a two-day debate instead of a one-day debate will merely mean that the speeches will be longer, because it will be a temptation to speak at length? Will he also recall that not a long time ago we had a debate on defence in which there
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were 20 speakers and we finished by 7 o'clock.
Lord PEART: My Lords, I agree with the noble Lord. That is why I made reference to noble Lords exercising self-discipline. Generally speaking, we can get through one-day debates with 30 speakers if Members co-operate well.
Lord TAYLOR of GRYFE: My Lords, in considering this matter, will the noble Lord the Leader of the House keep in mind that two-day debates on these important subjects may exclude consideration of other equally important debates for which there is now no day named? This practice would prohibit these particular subjects from coming forward for the consideration of the House.
Lord PEART: My Lords, my reply to that point is that I shall bear it in mind.

POLAND: BRITISH SHIPPING SALES
3.12 p.m.
Baroness WARD of NORTH TYNESIDE: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government to make a detailed Statement on the result of the representations made by the General Council for British Shipping about the financial arrangements recently made with Poland.
Lord WINTERBOTTOM: My Lords, the Government have taken full account of the representations made by the General Council of British Shipping about the financial arrangements for the Polish deal. I can gladly repeat and relate to the Polish deal the assurance given by my noble friend the Minister of State for Northern Ireland to the noble Lord, Lord Inverforth, during the Second Reading of the Aircraft and Shipbuilding Industries Bill on 8th March 1977—that the shipbuilding intervention fund will not be used to place United Kingdom shipowners at a disadvantage compared with overseas customers.
Baroness WARD of NORTH TYNESIDE: My Lords, while thanking the noble Lord for that Answer, may I ask him whether the Polish buyers are obtaining only ordinary, commercial terms? That would be a very important statement to have. Have we yet released the actual financial terms which were finally agreed on this very important matter? It is particularly important to the Chamber of Shipping.
Lord WINTERBOTTOM: My Lords, negotiations are still going on, but it is our firm intention to abide by our international obligations in negotiating financial arrangements for the deal. In addition, negotiations are also being conducted with a view to concluding the deal on commercial terms.
Baroness WARD of NORTH TYNESIDE: My Lords, while thanking the noble Lord for that answer, may I ask whether he is aware that on 23rd December details were being negotiated in the general interest of shipping, shipbuilding and all these problems? Is it not taking a very long time to arrive at a conclusion? Why has it taken so long?
Lord WINTERBOTTOM: My Lords, the deal is a very big one for 22 bulk carriers. The financial arrangements are somewhat sophisticated. For this reason, they must go forward in a proper, thorough way to ensure that the criteria to which I referred are in fact obeyed.
Baroness WARD of NORTH TYNESIDE: My Lords, will they be published?
Lord WINTERBOTTOM: Yes, my Lords; an announcement will be made.

ANGLO-SOVIET JOINT MARITIME COMMISSION
3.14 p.m.
Baroness WARD of NORTH TYNESIDE: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they can make a Statement on the recent visit to London of the Soviet
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Minister of Merchant Marine, Mr. Guzhenko, and senior Soviet officials and, in particular, on the Anglo-Soviet Joint Maritime Commission which was held in London in June.
Lord ORAM: My Lords, as the noble Baroness may be aware, Mr. Guzhenko's visit has only just ended. The Anglo-Soviet Joint Maritime Commission is, however, still in session and continues until tomorrow. Matters which were discussed at Ministerial level are being pursued in the Joint Commission. Any Statement therefore must await the end of the Commission's discussions.
Baroness WARD of NORTH TYNESIDE: My Lords, I thank the noble Lord for that Answer. Will he accept my appreciation for the help he has given, and add a little more help by letting me know what will be a suitable date for me to put down another Question, so that we shall have a real, detailed answer to this very important matter?
Lord ORAM: My Lords, of course I will endeavour to give as full an answer at any point that the noble Baroness seeks to choose. In order that an assessment of the conference should be made before I attempt such an answer, I hope that she will give the Department something over one week's notice. Certainly I will be as helpful as I can on such a point.
Baroness WARD of NORTH TYNESIDE: My Lords, I again thank the noble Lord. A week certainly would be a great improvement on the length of time it has taken a lot of negotiations—
Lord ORAM: My Lords, I did say a little more than a week.

ROYAL ASSENT
3.15 p.m.
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I have to notify the House in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
Statute Law (Repeals) Act 1977.
Australia and New Zealand Banking Group Act 1977.

COMMONWEALTH HEADS OF GOVERNMENT MEETING
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 the Leader of the House will repeat a Statement on the Commonwealth Heads of Government meeting.

BUSINESS OF THE HOUSE
Baroness LLEWELYN-DAVIES of HASTOE: On behalf of my noble friend the Leader of the House, I beg to move the Motion standing in his name on the Order Paper.
Moved, That leave be given to the Lord Wilberforce to advance his Motion on the Viscountcy of Oxfuird from Tuesday the 28th to Monday the 27th instant.—(Baroness Llewelyn-Davies of Hastoe.)
On Question Motion agreed to.

KENSINGTON AND CHELSEA CORPORATION BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
FIDELITY TRUST BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

WATER CHARGES EQUALISATION BILL
3.18 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 ABERDARE in the Chair.]
Clause 1 [Equalisation levies payable by certain water authorities]:
Baroness BIRK Baroness BIRK moved Amendment No. 1:
Page 1, line 5, leave out ("any financial year") and insert ("the year 1978 or any subsequent year").
The noble Baroness said: With the leave of the Committee, I will now move Amendment No. I and speak to Amendments Nos. 9, 13, 20, 29 to 31, and 33 to 38. This is the first of a series of Amendments which would have the effect of extending the equalisation scheme to the private water companies. In order to save time and general discussion on this series of Amendments, I will remind noble Lords of the background to this and put it in the context of the whole Bill.
During the Committee stage of the Bill in another place, the Government undertook to consider whether the private companies could be brought in, and I repeated this undertaking when the Bill had its Second Reading in your Lordships' House. There has been general agreement on all sides of both Houses that the principle of equalising unmeasured water supply charges is just as valid for the 28 private companies as for the 10 regional water authorities. Indeed, it is now clear that the range of water company charges is markedly wider than that of water authority charges. This year it goes from 66 per cent. above the national average in mid-Sussex to 38 per cent. below in Hartlepools. So it might be thought that there is an even greater need for some measure of equalisation so far as the companies are concerned than for the authorities.
The Government have discussed this matter both with the Water Companies Association and with representatives of the water authorities. We have produced what the companies and the authorities both agree to be a workable method of including the companies in the scheme. Some extra complications to the Bill would be necessary because of such problems as the companies' different accounting years, different both from one another and also from the water authorities. Further problems arise because most water companies treat depreciation in a different way from the water authorities. However, I believe that these problems

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of different financial practices can be resolved without any need for radical changes in the scheme, and I want to emphasise that in principle the scheme is exactly the same for the companies as for the authorities. While the number of Amendments is considerable, I can assure your Lordships that we have done our best to keep them as simple as possible.
The scheme itself remains a modest one, falling far short of full equalisation of bills. The Government have always believed that equalisation should be gradual, and I make no secret of the fact that significant variations in average unmeasured bills will remain. My Department estimates, using the figures for 1977/78, that the scheme including the companies would, if implemented this year, have the effect of narrowing the range of average bills from one of 66 per cent. above the national average and 38 per cent. below to one of 43 per cent. above the national average and 23 per cent. below. Of course, it is much too early to say precisely what the effects will be on next year's charges, but I expect the pattern will be very much the same.
However, while the overall picture remains one of a modest scheme, the contributions to the equalisation pool which would be required from some private water companies would be substantial when looked at as a proportion of their revenue requirements. For example, the Newcastle and Gateshead Company would pay £770,000; the Lee Valley and Portsmouth Companies both about £680,000 and the South Staffordshire Company would pay £1·1 million, as compared with £670,000 for the whole of the Severn-Trent Water Authority. The West Hampshire Company's expected transfer of £750,000 would mean a 27 per cent. increase in charges—the highest percentage increase as a result of equalisation in any water company or water authority. These are some edited highlights from my Written Answer in Hansard yesterday which, on the basis of this year's figures, set out what the pattern of transfer to and from the private companies would have been had the scheme come into effect this year.
Some companies, of course, would stand to gain from the Bill—those with very high charges like Mid-Sussex—but in aggregate the companies would be net
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contributors to the scheme to the tune of some £3·3 million. This consequence of extending the scheme to cover the private water companies, which has been accepted by the Water Companies Association on behalf of its members, means that each of the water authorities would be better off than in a scheme restricted to water authorities only. Those which stand to gain would gain more, while those which stand to lose would not have to pay so much.
This first Amendment is in substance consequential on the next Amendment, which has the effect of extending the equalisation scheme to the statutory water companies. One of the main practical problems in adapting the scheme to the water companies arises from the fact that they have different accounting years. The water authorities use the financial year ending 31st March for accounting purposes. Some companies use the financial year; others, the majority, have an accounting year ending on 31st December; and two companies have an accounting year ending in September. Although it will be necessary to compute a figure for the opening asset value of each water company as at 31st March 1976, it is not necessary to calculate notional financing costs on the basis of a common accounting period. Instead, while the orders under Clause 1 and Clause 2 will be made in respect of the calendar year, the relevant financing costs which will be equalised by those orders will be those incurred by each authority or company in the accounting year which begins during that calendar year—defined by a subsequent Amendment as the "corresponding accounting period". Thus, the relevant financing costs which Water Authority A will incur during the financial year 1978/79 will be equalized—per unit—with the equivalent costs incurred by Water Company B in the calendar year 1978. This approach is accepted by both the Water Companies Association and the Directors of Finance of the water authorities as being equitable and practical. I beg to move.
3.25 p.m.
Lord PEDDIE: At the time of the Second Reading, I was very critical of the Bill, and particularly of the principle upon which it was based. I do not withdraw that criticism, but at the same time I should

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like to take this opportunity of congratulating my noble friend and the Government on the manner in which they have dealt with the criticisms at that time regarding the non-inclusion of the water companies. I am told that the discussions that have taken place between representatives of the water companies, the authorities and the Government have been most amicable and most useful.
The Amendments which are being presented today by my noble friend are indicative of those useful discussions, and therefore I am sure that the discussions we shall have this afternoon will not take long. However, I should like to take this opportunity of expressing my personal appreciation of the way in which the strict and stern criticism was taken into consideration. In consequence, I think that the Bill, with all its imperfections, is infinitely better than when it was first presented. Once again, I should like to take this opportunity of congratulating my noble friend. I shall certainly give full support to the Amendments that she is presenting.
Lord SANDFORD: I too, should like to welcome Amendment No. 1, while at the same time not modifying—or at least not very much—my overall criticisms and general objections to the Bill as a whole. As the noble Lord, Lord Peddie, has said, now that the water companies are in, this is a better Bill than when it began, and one is left wondering how on earth it came about that the Government left them out in the first case. Perhaps we could return to that in a moment.
I should like to concentrate on Amendment No. 1 which is now before us, and to say that I particularly welcome it because it corresponds exactly to the first Amendment moved by my friends in another place on the 1st February, which at that time was resisted hotly by the Government because they were then hanging on to the totally unrealistic objective of having the Bill on the Statute Book by the beginning of this financial year. I cannot retract any of my criticisms of them for seeking to do such a wholly impracticable thing for entirely political reasons.
However, that leads to another reason I have for welcoming this Amendment; that is, it will give another place a further
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opportunity to discuss at length the mis-timing of the Bill and to expose once again the purely political motives the Government had for trying to enact it in the way that they did. In my view, it is important that there should be a further debate, because the context in which the Bill is going to be put on the Statute Book—if indeed it is going to be put on at all—is so entirely different, financially, politically and in all other respects.
There will be further Amendments to which I will want to speak, about the timing of the Bill and the date on which it is to come into force. All I wanted to stress at this moment was that it was totally unrealistic to expect it to be in force this financial year. The Bill would have had to be enacted about the middle of February for the rating authorities to be able to implement it, and it is for that reason that I am particularly glad that the Government have now taken the view that 1978 is the earliest practical moment when it can come into operation.
Baroness BIRK: I should first like to thank my noble friend Lord Peddie for the great generosity of his remarks, because I know that he felt very strongly about the points he made on Second Reading. So I am very grateful, both for his support and for the way in which he expressed it. I am also grateful for the rather more qualified support of the noble Lord, Lord Sandford. I think that the past is water under the bridge, but I would point out that the Government's objective then was not just purely political. Having said that, I would add that I do not believe that political motives are always so impure. There are good political motives as well as bad political motives, and it is a great pity when we get to a situation, which does not do any Party any good, where it is thought that the word "political" should always be associated with something rather dishonest or condemnatory. I am sure the noble Lord did not mean that, and I am equally certain that he will silently withdraw that thought.
The objective of the Government, of getting the Bill through at an earlier stage, was in order to bring about greater equity in water charges more quickly; in other words, to help those people who have been paying more than they will now pay under

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the new scheme. As the noble Lord is aware, it was due to the lengthy discussions, which in a democracy and a Parliament his Party were quite entitled to prolong, that there was a great deal of delay which meant, in the end, that there was an opportunity to discuss this matter with the water companies. So the noble Lord may agree that it has all turned out in the best possible way, which I hope may affect his approach to the rest of the Amendments in this Committee stage.
Lord SANDFORD: We must not spend too long on this one. There are pure and impure political motives, but I was not criticising the noble Baroness and her Government on that score. I was criticising them for the totally unrealistic objective of getting the Bill into operation by this financial year. It is not for me to try to discern what delays occurred in the other place. But the fact is that the Second Reading took place on 24th January, which was not by any means the beginning of the Session, and the Committee stage started on 1st February. However, for the Bill to have been operative this financial year it would have had to be through all stages in both Houses by the middle of February. It had a long Committee stage, but the date at which the Government were aiming was lost long before the Committee stage began.
Earl WALDEGRAVE: Also, I think that the Government ought to be very grateful to the Opposition for this delay, because if they had completed the Bill in the middle of February this year they would have left out 22 per cent. of the consumers, who would have had no equalisation of their water charges which appeared to be so desirable.
On Question, Amendment agreed to.
3.35 p.m.
Baroness BIRK Baroness BIRK moved Amendments Nos. 2 to 4:
Page 1, line 8, leave out ("water authority") and insert ("statutory water undertaker")
Page 1, line 9, leave out ("water authorities") and insert ("statutory water undertakers")
Page 1, line 10, leave out ("authority") and insert ("undertaker").
The noble Baroness said: With the leave of the Committee, I will now move Amendments Nos. 2 to 4 en bloc, and
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speak at the same time to Amendments Nos. 8, 10 to 12, 14 to 17, 21, 23 to 26, 32, 41 and 43. I will hastily assure the Committee that these are very short Amendments, whose effect is to extend the provisions of the Bill to the statutory water companies. Most of the content I have explained in moving Amendment No. 1, so I will just rest on saying that a "statutory water undertaker" is defined in Section 11(6) of the Water Act 1973 as any water authority, statutory water company, joint water board or joint water committee which are in turn defined as bodies constituted under Section 9 of the Water Act 1945 and on which a statutory water company is represented. However, no undertakers in the latter two categories supply water on an unmeasured basis, and they are therefore effectively excluded from equalisation by the limitation of later provisions of the Bill to the supply of water on an unmeasured basis. In other words, it is the companies dealing with small quantities of water which are excluded from the provisions of the Bill. I beg to move.
Lord TREFGARNE: We do not want to prolong the argument on these Amendments, which are in many ways similar in effect to the one which we have already discussed. But it is worth noting, according to my calculations, based upon the Written Answer which the noble Baroness provided yesterday to the noble Lord, Lord Janner, that the inclusion of the water companies in the provisions of the Bill will make available £3,250,000 or rather more in funds for distribution, and I believe that this is an improvement which the Government at least will think satisfactory.
Brief reference was made, in the remarks of the noble Baroness on the earlier Amendment, to the question of consultation with the water companies. As the noble Baroness will know, it transpired after a number of exchanges in the Standing Committee in another place that the water companies had not been consulted on the provisions of this Bill. They had been consulted on a previous discussion paper, but as to the provisions of the Bill and the possibility of their inclusion or exclusion they had not been consulted. It is therefore argued on this side that they should now have a chance of making their views carefully and fully known, both to

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the Government and to ourselves. As has already been said, they provide some 22 per cent. of the total water supply in this country and cover no fewer than 122 million consumers. Accordingly, we on this side are having consultations with them and, while we welcome the principle of their inclusion in this Bill, we must to some extent reserve our position as to the detailed arrangements that have been made for their inclusion, and may wish to come back to this matter at a later stage of the Bill.
Baroness BIRK: I think there is something that I should put right in regard to this matter. As I have already explained to the noble Lord, Lord Sandford, in answer to his comments when the Bill was originally drafted, it was envisaged that it would go through very rapidly. But, as I said, at the end of the day we may have got the best of both possible worlds with the companies included, even though there was a delay in the Bill. But at that time there was no question of private water companies coming in, because there was not time for them to do so, so that there was nothing on which to consult them. As I said when moving Amendment No. 1—and for the benefit of the noble Lord, Lord Trefgarne, I should perhaps repeat the point—the Government have discussed this matter, both with the water company associations and with representatives of water authorities. We have produced what the water companies and the authorities both agree to be a fair and workable method of including the companies in the scheme. That is a statement of fact. It means that not only were the companies consulted but that they agreed to this, so I cannot accept the non-consultation charge. I should be extremely surprised and astonished if the noble Lord and his friends find that they get a different answer from the companies. They have been brought into the Bill as a result of consultation and discussions which ended in the agreement that is reflected in the Bill.
On Question, Amendments agreed to.
Lord WALLACE of COSLANY: I beg to move that the House do now resume for the Statement.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

COMMONWEALTH HEADS OF GOVERNMENT MEETING
3.41 p.m.
Lord PEART: My Lords, with the leave of the House I will now repeat a Statement being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:
"I should like to make a Statement about the meeting of Commonwealth Heads of Government which ended in London yesterday.
"Thirty-three Heads of Government or their personal representatives attended, together with the Commonwealth Secretary General whose work contributed greatly to the success of the meeting. The communiqué and separate Statement on apartheid in sport have been placed in the Library.
"It has often been said that the Commonwealth provides a unique bridge between peoples of different races, areas and stages of development. This feeling has never been stronger than at the conclusion of our successful meetings at Lancaster House. We discussed serious and difficult issues without acrimony and with a growing understanding of each other's positions, and on many issues we reached a complete identity of view.
"A distinctive feature of the meeting was a concentration on basic human values and rights.
"One area where human beings are deprived of these basic rights is Southern Africa. All the Commonwealth leaders welcomed our current initiative to achieve an independent Zimbabwe enjoying majority rule in 1978 and all of them would prefer to reach that objective through a negotiated settlement, but a number were deeply sceptical about the chances of success. The exchanges reinforced my view that if the minority regime in Rhodesia fails to negotiate constructively, then the fighting and the bloodshed will continue and the destruction will go on, with all that that implies for the future of that country. Some Commonwealth leaders put their faith

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primarily in the armed struggle to bring about majority rule in Southern Africa. We shall continue to try to find another way.
"In the context of Southern Africa, and following informal discussion at Gleneagles, a Statement was issued on the question of sporting contacts with South Africa. This expressed our general detestation of apartheid in sport, and looked forward to the holding of the Commonwealth Games in Canada next year.
"We had constructive discussions on the international economic structure, noting with deep concern the declining living standards and poverty in which many are living in the developing countries. We affirmed our view that the economic health of both developed and developing countries is interdependent. Thus, in addition to the moral grounds for solving the problems of poverty and inequality, this is also necessary if the wealthier parts of the world are themselves to continue to prosper. Equally it was recognised that these problems could not be solved without the continued economic strength of the industrialised countries. There was disappointment that more could not be achieved in recent international negotiations, but the Conference noted the progress made and agreed that we should build on this in forthcoming negotiations. As a practical step we agreed to set up a Commonwealth technical working group to consider in detail the possible operations of a Common Fund, to report before the UNCTAD negotiations begin in Geneva in November.
"We identified some of the difficulties faced by the different regional groupings in the Commonwealth, and asked the Secretary General to draw up a special programme of Commonwealth assistance. The Heads of Government also welcomed the continuing expansion of the Commonwealth Fund for Technical Co-operation, and several members of the Commonwealth, including Her Majesty's Government, indicated that they would make substantial increases in their contributions to the Fund.
"Against the background of the tragic events in Uganda, Commonwealth leaders reaffirmed their belief in
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the fundamental rights of all men to life and liberty, to those personal freedoms that are the common heritage of their peoples and to respect for human dignity and the equal rights of all men. The Commonwealth condemned in unequivocal terms the disregard for the sanctity of life and of the massive violation of basic human rights in Uganda, which should invoke the concern of the world. The House will endorse this statement by Commonwealth leaders and will look forward, as does the whole of the Commonwealth, to the day when the people of Uganda can once more enjoy freedom and security and be represented with dignity at our meetings.
"There was a general wish to make this a useful and constructive Commonwealth meeting, and we succeeded. No one who attended is in any doubt that the discussions, both in the formal sessions and most particularly in the informal gatherings during the past 10 days, have proved once again the vitality and value of the Commonwealth."
My Lords, that concludes the Statement.
3.47 p.m.
Lord CARRINGTON: My Lords, the House will wish to thank the Leader of the House for having repeated the Statement, and will wish also to agree with the Statement that this was clearly a useful and constructive Commonwealth meeting, with far less propaganda and contention than there has been in recent years. I think that is to be greatly welcomed. One of the great values of meetings of this kind is the contacts which the Heads of Government can have with each other. Also, it would have been unthinkable for a meeting of the Heads of Commonwealth Governments not to have made a Statement about Uganda, and I am very glad that it was agreed unanimously to do so. The Commonwealth would cease to have any meaning if what is happening in Uganda were overlooked at a meeting of this kind.
I have greater hesitation about one aspect of the Communiqué. In the Statement which the Leader of the House has read out, the Government say that though some Commonwealth leaders put

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their faith primarily in the armed struggle, Her Majesty's Government will continue to try to find another way. I am glad that the Government have emphasised this point. However, I note that in the passage in the Communiqué about Rhodesia the words regarding majority rule in Rhodesia are as follows:
"In this connection they noted that the armed struggle has become complementary to other efforts, including a negotiated settlement, and agreed that its maintenance"—
"its" being force—
"was inevitable".
It may be that we in this country do not have the power to stop armed forces being used in Rhodesia at present, but I should have thought that it was dangerous tacitly to admit that these kinds of dispute should be solved by force. After all, it is against the Charter of the United Nations, which explicitly states that disputes of this kind should not be solved by force.
I have one perhaps rather revolutionary suggestion to make. On the next occasion of a Commonwealth Prime Ministers' meeting, I wonder whether it might not seriously be considered whether it is desirable to have a Communiqué at all. As I said earlier, it seems to me that the value of these meetings is the exchange of views between various Heads of Government. On this occasion I have noticed that almost more time has been spent by Heads of Government in discussing the Communiqué and its actual words than in discussing what the Communiqué is telling us. That seems to me to be a very bad situation. Perhaps we might think in future of going back to those old days of Commonwealth meetings when it was not felt necessary to issue a Communiqué about what was decided. The meeting was primarily designed for an exchange of views.
3.50 p.m.
Lord GLADWYN: My Lords, we, too, would like to thank the noble Lord the Leader of the House for repeating that Statement. We all agree that it is certainly useful that the Commonwealth should have reached general agreement on so many matters, even if, naturally, no actual decisions could be taken except of course in relatively minor spheres.
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It is very satisfactory—and here we join with the noble Lord, Lord Carrington—that there should have been condemnation of Amin, even if, unfortunately, it was not possible to condemn him by name. I imagine that the use of the adjective "overwhelming" in the longer Communiqué in connection with the condemnation may conceal the fact that the condemnation did not actually commit every Head of State represented in the Commonwealth. I presume that was the object of using that particular adjective. Perhaps the noble Lord will tell us if that was not so.
Generally speaking, we have no doubt that the meeting was instrumental in creating much good feeling among so many disparate nations, and to that extent it must be welcome in the eyes of this country and this House. But we must surely recognise, if we are at all realistic, that the interests of the Members of the Commonwealth cannot always be identical, any more than there could possibly be a community of interests in such an organisation as the United Nations. On certain general principles, such as the maintenance of human rights, the struggle against racism and the desirability of assisting the development of the poorer nations, no doubt there can be agreement and there should be agreement, but as to how exactly those principles should be applied there may well be profound disagreement. Indeed, the passage to which the noble Lord, Lord Carrington, referred; namely, that some Commonwealth leaders put their faith primarily in the armed struggle, but Her Majesty's Government continue to try to find another way, surely reveals a certain diversity of interests. That cannot be denied.
Therefore, I ask the Government to say whether they agree that that is so, and whether they further agree that common interests, as opposed to sentiment—which of course is not negligible; it is important to have sentiment—are far more easily discernible in the European Economic Community than they are in the Commonwealth, excellent though the latter may be, in smoothing relations between richer and poorer nations.
3.53 p.m.
Lord PEART: My Lords, I should like to thank the noble Lord, Lord Carrington,

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for his remarks. I agree with him especially about the armed struggle. He is quite right to emphasise that, and he indicated that it would be against the Charter of the United Nations. I note what he said.
I will pass on to the Prime Minister his suggestion about the Communiqué. It is a point worth noting that more time is often spent at the end of conferences in trying to agree to a Communiqué—we all know that, and it is true in many other fields of human activity. I am grateful to the noble Lord for welcoming the Statement on behalf of the Opposition, and also I am grateful to the noble Lord, Lord Gladwyn, speaking for the Liberal Party. I do not think I should get involved in all the subtleties about what we mean by certain words or comparing the Commonwealth with the European Economic Community. They are different bodies and the organisations are quite different. Each has its virtues and I do not want to create any rivalry between the two. It is interesting that many of my Commonwealth friends, when we were negotiating entry into Europe, were strongly in favour of Britain going into Europe at that time, so there is no difference of opinion here.
Lord DAVIES of LEEK: My Lords, while thanking the Minister for his Statement I should like partially to endorse the remark made by the noble Lord the Leader of the Opposition on the production of Communiqués. Leading from that, would it not be of value to give the opportunity to this House to debate the whole gamut of the Commonwealth Conference?
My second question—I have always understood, and it is my impression, that questions follow Statements—is: Does the Minister know whether this magnificent move towards industrial economic order produced by the Commonwealth Secretariat was under discussion? My third question is this: Has he any information on the progress—and this is much more important than Amin—of transnational firms and their relation to the Commonwealth, and on the terrific problem of finding stability for economic prices? I think that I have asked enough questions, and I had better sit down, in the hope that ultimately we shall get a debate in your Lordships' House.
Lord PEART: My Lords, if that is the case, I have noted carefully what my noble friend has said and I will await the time when he may be able to elaborate on it—but not now. I am not sure that all the points he has mentioned were covered in the Conference. I accept that the points with regard to trade and the development of economies were important, and I feel sure they would have been discussed.
Lord ALPORT: My Lords, following the remarks made by the noble Lord, Lord Davies of Leek, I should like to ask the noble Lord the Leader of the House whether he will consider seriously with the Opposition Front Bench the holding of a "full dress" debate on the Commonwealth before we rise in July. This is a subject which has been sadly neglected by this House for a long time past, and surely this is the right time for us to try, as a House of British Parliament, to assess the future of the Commonwealth in the years immediately ahead.
Lord PEART: My Lords, certainly I will take note of that suggestion. I know there is strong feeling about this. It may well be that the problem will be whether there is sufficient time, from the point of view of business. However, I have noted carefully what has been said by the noble Lord, Lord Davies of Leek, and by the noble Lord, Lord Alport. I would just say to your Lordships that the full Communiqué will be in the Library.
Baroness GAITSKELL: My Lords, as someone who has had the privilege of serving on the Human Rights Committee of the United Nations six times in 12 years—three months in each year—may I be allowed to congratulate the Government on the Conference and on the Communiqué. I have never heard anything quite so coherent; quite so full of promise. I say that without exaggeration, because we cannot achieve something spectacular by means of a short Conference. However, the atmosphere seemed to me to be more constructive than anything I have ever heard from the Commonwealth during the debates in the United Nations.
Lord PEART: My Lords, I am grateful for what my noble friend has said about this. Considering her experience in inter-

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national gatherings, it was a pleasing tribute and I thank her for it.
Lord HANKEY: My Lords, as regards the Communiqué, will the Government bear in mind that a meeting of this sort, which involves an enormous number of private conversations by people who do not readily agree at first, is apt to result in nothing very much unless some attempt is made to make concrete the points on which they are agreed. If there is no Communiqué, my experience of international meetings is that people are apt to leave the Conference and to express totally varying opinions about what happened and what was agreed. Will the Government bear that in mind when considering the important points made by the noble Lord, Lord Carrington?
Lord PEART: Certainly, my Lords. That is another point of view which shows some of the difficulties. Often it is necessary to have a Communiqué because it crystallizes the views and thoughts of the people participating in the Conference.
Lord JANNER: My Lords, while thanking my noble friend for the Statement he has made, and endorsing the fact that it is quite obvious that the Conference was a very useful one, may I ask him what steps are being taken in order to put into effect some of the resolutions that were passed or the sentiments that were expressed at the Conference itself? I am thinking, for example, of the unhappy and terrible state of affairs in Uganda and of the question of human rights in so far as the Helsinki Agreement is concerned, particularly with regard to approaches that should be made, some of which were emphasised in our recent debate, to ensure that the issues are dealt with on a common platform by the Commonwealth.
Lord PEART: I think it is too early yet for one to assess what each individual country will do. Obviously we want a joint Commonwealth approach on many of these matters, especially human rights. But, after all, the Conference has just finished. I am hopeful, in view of the spirit which prevailed, that action will be taken.
Lord GORE-BOOTH: My Lords, may I, as the senior official who helped to advise the Government eight years ago in the Commonwealth Conference, associate myself strongly with the remarks of the noble Baroness, Lady Gaitskell, on the successful management of this particular and by no means easy Conference. May I endorse what my noble friend Lord Hankey said about the issuing of a Communiqué, by adding to what he said the negative advantage of a Communiqué, which is that if there is wording which has been agreed then a number of people who might have liked to depart from that wording are in future unable to do so. This is a very great advantage.
Finally, may I ask one question on the difficult matter of armed struggle versus negotiation. Would it be in the thinking of the Government that perhaps some advantage could be taken of the situation to switch our criticisms of Mr. Smith? Is it not the case that perhaps calling Mr. Smith a bad man has rather worn out? But the point that has not worn out is that the longer unreasonable opposition to the development of majority rule goes on, when the inevitable majority rule comes the fewer young "British" Rhodesians, so to say, will there be to help in the development of the country?
Lord PEART: My Lords, I know the noble Lord, Lord Gore-Booth, has had long experience of the Foreign Office and dealt with international affairs. I note carefully what he has said. I take note of his remarks about the value of a Communiqué. On the specific Rhodesian matters, I again re-emphasise that Her Majesty's Government do not believe that armed struggle is the way to find a solution.
Baroness WARD of NORTH TYNESIDE: My Lords, may I add one point about the Communiqué. Whatever the future may be, it really would have been rather a pity if we had not had a Communiqué on this occasion, because the Commonwealth would not have expressed its views on what is happening in Uganda. It is very important that that was said at this particular Commonwealth Conference.
Lord PEART: My Lords, I am very grateful to the noble Baroness for her remarks.

WATER CHARGES EQUALISATION BILL
Committee stage resumed.
4.3 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 5:
Page 1, line 14, leave out subsection (2) and insert—
("(2) Subject to subsection (5A) below, in relation to each statutory water undertaker by which, in the year ending 31st March 1976, a supply of water was provided on an unmeasured basis, the Secretary of State shall determine for the purposes of this Act the amount which appears to him to represent the value at that date of that part of the undertaker's assets which was then referable to the supply of water on an unmeasured basis.
(2A) In this section the "qualifying asset value" of a statutory water undertaker for any accounting period means the amount determined under subsection (2) above in relation to the undertaker, less such amount as appears to the Secretary of State to be appropriate in respect of depreciation for any previous accounting period or periods beginning on or after 1st April 1976.
(2B) Any reference in this Act to the relevant financing costs of a statutory water undertaker for any year is a reference to an amount which is determined by reference to the qualifying asset value of the undertaker for the corresponding accounting period and consists of—

(a) such percentage (in this subsection referred to as "the qualifying percentage") of the interest payable by the undertaker in the corresponding accounting period as appears to the Secretary of State to be referable to indebtedness incurred with respect to assets whose value is reflected in the qualifying asset value for that period; and

(b) so much of the provision for depreciation made by the undertaker in the corresponding accounting period as appears to the Secretary of State to be referable to any such assets; and

(c) in the case of a statutory water company, the qualifying percentage of the franked payments, within the meaning of Part V of the Finance Act 1972, matte by the company in the corresponding accounting period.

(2C) For the purposes of this Act, in relation to the year 1978 or any subsequent year the corresponding accounting period of a statutory water undertaker is the accounting period of the undertaker which is co-terminous with or begins in that year.").
The noble Baroness said: This Amendment is in part consequential on the previous Amendments which extend the Bill to the statutory water companies, but it goes further than is required just for that purpose. Its effect is to expand the
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existing wording of subsection (2) of Clause 1, both to accommodate the different financial practices of water companies and to eliminate certain ambiguities which caused difficulty in another place.
The main purpose of the revised text, as of the existing subsection (2), is to define the "relevant financing costs" of each undertaker which are to be equalised. Those costs are in principle the same for both water authorities and water companies: the cost of financing the relevant historic debt. Those revenue costs include interest on the outstanding debt; depreciation of the assets in respect of which the debt was incurred; and, in the case of a water company, the appropriate proportion of dividend payments. For both water authorities and water companies some degree of apportionment and the use of broad assumptions is necessary to determine the appropriate cost figures, and the revised text, therefore, maintains the Secretary of State's discretion to decide what he will accept under each head.
The revised subsection (2) requires the Secretary of State to determine for each undertaker a figure representing the value at 31st March 1976 of that part of the undertaker's assets which was attributable to unmeasured water supply. This figure will serve as the basis for the calculation of relevant financing costs each year. It is used in effect as a proxy for the relevant outstanding historic debt at that date. It must, however, reduce from year to year—to reflect the repayment of the historic debt—and subsection (2A), therefore, defines the "qualifying asset value" of each undertaker for subsequent years as that starting value written down by an appropriate allowance for depreciation.
Subsection (2B) then defines the relevant financing costs under the three heads: interest, depreciation, and, in the case of a water company, "franked payments". The latter expression is defined in the Finance Act 1972 to include both dividend payments and advance corporation tax paid in respect of those dividend payments: in effect, the "franked payment" is the gross dividend payment. The Government's equalisation scheme treats these franked payments exactly as if they were interest payments, and the subsection provides accordingly.
Subsection (2C) defines the "corresponding accounting period" for a statutory water undertaker as the accounting period which begins during the calendar year in question. The reason for this I explained in moving Amendment No. 1. I beg to move.
Lord PEDDIE: I support this Amendment, but there is one point I should like to make on paragraph (c). I take it that what is meant here is the franked payments that are payable, not made by the company. As it is worded here it is capable of some misunderstanding, and to put down an Amendment to change it is fraught with enormous difficulties in connection with tax. I should like an assurance—and I am sure this must be the case—that it refers to the amounts payable and not to the amounts paid during that year. I think that is what is actually meant. I would not press this point at this moment. It is a somewhat technical point which is important, and I think an explanation now would avoid any amendment.
Baroness BIRK: I can give my noble friend that assurance. He is quite right; it is exactly as he has stated it.
On Question, Amendment agreed to.
Lord SANDFORD Lord SANDFORD moved Amendment No. 6:
Page 2, line 9, at end insert ("and less any relief received by premises in the water authority's area to which a supply of water is provided on an unmeasured basis through the rate support grant to the extent that such grant takes account of water supply charges.")
The noble Lord said: I beg to move Amendment No. 6. The Committee will recall that as long ago as September 1974 the Secretary of State for Wales, Mr. Morris, commissioned an inquiry by Sir Goronwy Daniel into water charges in the area of the Welsh National Water Development Authority. If I read two paragraphs from this, I think it sets the scene against which I would invite the Committee to consider my Amendment, No. 6. The Daniel Committee reported in these terms:
"Both the Conservative and Labour Governments recognised that water service charges would increase severely in some areas and announced their intention to ease the burden on domestic consumers through the appropriate element of the rate support grant system."
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I should like to stress that both Governments recognised at that moment that that was an appropriate way of dealing with the matter:
"The Conservative administration proposed a scheme of differential rate relief which they claimed was calculated to take account of all the special factors, including increased water service charges, applying in each district. The amount of the relief proposed for the Welsh National Water Development Authority area varied from 11p in the £ in Cardiff to 39·5p in the £ in Radnor. In Herefordshire the amount proposed varied from 23p to 29p in the £. The Labour Government considered that the differential system proposed had serious defects and replaced it with a flat rate grant of 13p in the £ in England and 33·5p in the £ in Wales."
However, they noticed that it was still a differential system.
The next paragraph states:
"Yet although the domestic rate relief given to Wales is substantial and valuable it has not allayed criticism of the increase in domestic water charges. One reason for this is that despite the clear statement by the Government that they had, among other things, taken into account the relatively higher water service charge increases in Wales, rate demand notes were printed by the local authorities in such a way as to give the impression that all the relief was to be off-set against general rates only. It is unfortunate that [the Welsh] local authorities have made little attempt to explain to their ratepayers that a significant part of the domestic relief in 1974/75 was in compensation for the increased water charges. A second reason is that the relief was given to Welsh ratepayers"—
that is under the Labour system—
"but the WNWDA"—
that is, the Welsh National Water Development Area—
"boundaries do not coincide with those of Wales. Some districts in England suffer from the big increase in the WNWDA charges without getting the high rate of domestic relief given in Wales. The principal sufferers are in Herefordshire where water charges went up by 150 and 200 per cent. and compare with the highest in Wales but where domestic rate relief is at the lower English level".
That is enough to indicate, through the report of the Daniel Committee, the way in which both Governments originally sought to deal with the problem with which this Bill deals by way of the domestic element in the rate support grant. It was used in the areas that we are discussing to deal with the increases in water charges. It was introduced for the first time not according to the Conservative pattern but according to the Labour pattern, and the differential rate is 33p in the pound for Welsh ratepayers compared with 13p in the pound for English ratepayers. That differential has since

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been maintained, though reduced from 20½p in the pound to 17½p in the pound, and it is being continued this year. I am not sure that it is justified, but I do not want to argue one way or the other about that.
Nor do I want to argue about the merits of the Conservative formula which would have dealt with the injustice in Herefordshire compared to the Labour one which was rather cruder and did not. The process of dealing with this matter by way of the domestic element in the rate support grant which both Governments selected is better than the one proposed in the Bill. If there is to be any method, I should prefer that to be continued rather than have this new system introduced. However, I am sure the Committee will agree that to the extent that domestic rate relief is being employed and might be continued in the future to help householders in Wales, or for that matter in Herefordshire, or in any other regional water authority area, it should be taken into account in calculating the level of levies and payments that will be required if this Bill is enacted. My Amendment so provides. I submit to the Committee that whatever their feelings about the various matters which are debatable here, there is no case whatever for providing relief for the same thing twice over. I beg to move.
4.13 p.m.
Baroness BIRK: Amendment No. 6 is closely related to the next Amendment as each is intended to have the effect of reducing equalisation levies and payments, and each is based on the misconception that water charges are in some way connected with local authority rates. Amendment No. 6, which the noble Lord, Lord Sandford, has just moved, reveals yet again the persisting conception that water service charges are taken into account in the calculation of rate support grant. They are not. Therefore, in substance this Amendment is really quite meaningless.
The noble Lord made great play about the Daniel Committee Report. I would remind him that that Committee reported in 1974 and the report was published in 1975. The Consultative Document on which this Bill is based is the Review of the Water Industry, which was published last year. Therefore—and I am sorry to
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keep on using this rather hackneyed phrase—once again we are dealing with a great deal of water that has gone under the bridge, but in this case the diversion is quite incorrect. Both these Amendments reflect this confusion which was revealed with tedious repetition both during the Bill's progress in another place—I cannot quite remember how many hours of the nine sittings, comprising 22 hours in Committee, during which this canard kept coming up, being shot down and coming up again—and in the Second Reading debate in this House. I thought, probably, quite immodestly, when I wound up that debate that I had really knocked this one out for good; I thought that mine was an extremely strong, persuasive and absolutely convincing argument. But, no—the noble Lord has evidently either forgotten it or was not listening to me, and it has come up again.
Since the 1973 Act, which was passed during the Conservative Administration, water charges have been quite separate from the general rates. They remain quite distinct. The noble Lord may take the view that the last Conservative Government were quite wrong in their local government reorganisation. I think they were, but for quite different reasons. Nevertheless, that again is past history and the Act is on the Statute Book. General rates are a tax upon the local occupation of property, while water charges are charges to consumers in the same sense as those for gas or electricity. The fact that they take the form of a rate is quite irrelevant. Perhaps at some point someone will just have to change the word, because now we are in the area of semantics.
There is absolutely no real connection between water rates and general rates. Therefore, there is no reason whatever why their levels should be similar or different in any particular place. The factors which influence them also have no connection. Moreover, water rates receive no rate support grant and they are not taken into account in the calculation of rate support grant payments to local authorities. There are no rebates, which is another very important difference. This equalisation measure is therefore the only way in which the Government can bring some relief to those areas where the cost of the basic and essential service of water

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supply would otherwise impose an unfair burden. As rate support grant has nothing whatsoever to do with water service charges, the practical effect of this Amendment would be nil. It might be that even the noble Lord, Lord Sandford, realises this, given the rather hesitant drafting of the Amendment where it reads:
"… to the extent that such grant takes account of water supply charges".
It does not and should not.
I cannot understand why this confusion about rate support grant has continued to arise, because even before the reorganisation of the water industry the water rates did not directly attract a rate support grant. What happened then was that a number of local authorities, particularly in Wales, to which the noble Lord referred several times, were accustomed to subsidise the water rate out of the general rate and thus, indirectly and of their own volition—and I repeat, of their own volition—to apply rate support grant to the reduction of water rates. In the exceptional circumstances of the 1974–75 rate support grant settlement, with the reorganisation of both local government and the water industry, an element of additional domestic relief was given to Welsh domestic ratepayers. But this was intended to compensate local authorities in Wales for the much greater combined effect which those two reorganisations had in Wales compared with England. The differential between the level of domestic relief in Wales and England was narrowed in 1975–76, and in subsequent rate support grant settlements there has been no question of relative water charges being taken into account by the Government in their decisions on levels of domestic relief. These decisions were based solely on the likely effect of changes in the levels of relief on local authority domestic rate poundages in England and Wales.
I do not think that it will now come as a surprise to the noble Lord that the Government cannot accept this Amendment. I trust that he and his noble friends will now accept our repeated assurance, and my personal repeated plea, that the calculation of rate support grant takes no account whatsoever of water service charges. It has been necessary to intone this so frequently that I begin to despair of the Opposition being prepared to accept
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facts that appear so unpalatable to them that they think that if they go on saying it often enough the truth will just go away. I am afraid it will not. The reality remains, and that is what I have been explaining.
Let me at least conclude by making a generous offer to the noble Lord. I am prepared to instruct my officials to show the noble Lord the computer programs used in the calculation of rate support grant. If he sees them, he might then accept that the water service charges are not taken into account. In other words, he can see and, as it were, feel the evidence with his own eyes and hands.
4.22 p.m.
Lord SANDFORD: I am grateful to the noble Baroness for that generous offer. I doubt whether it will sway me very much because it is not the point I was making. I was resting my case entirely on the Daniel Committee, which her right honourable friend commissioned two or three years ago and which reported in precisely the terms which I read out, and I added very few of my own words to them. They made it abundantly clear that although, as the noble Baroness says, water charges and general rate charges are quite separate—and of course they are—they have one factor in common, in that they are both based on the rateable value of the property, and that nothing that a domestic householder can do by way of private family economies alters the burden that he has to bear. That is the factor which they have in common, though I fully agree with the noble Baroness that they are not the same thing.
If I may say so, she is totally wrong in supposing that the water charge is anything like the electricity or gas charges which are related to what you consume. If you care to economise, you can reduce the size of your bill; you cannot do that with water. If it is to be reduced, it has to be done by some way of relief. I rest entirely on the Daniel Report which makes it crystal clear—I think the rest of the Committee will agree with me—that this was done by way of the domestic element in the rate support grant; that is, domestic rate relief. The Conservative Government proposed one method, the Labour Party

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proposed and executed another. There is no need for me to say anything more about the fact that it can be done.
When it was done it introduced for the first time a differential rate between England and Wales, and that differential rate has continued. It may be that the noble Baroness could persuade me, by letting her officials show me a lot of figures, that the considerations which have produced this differential rate between England and Wales after 1974–75 have been arrived at by some different calculation in which the existence of the high water charges in Wales has not been a factor, but that does not alter the point that I am trying to make. The point I am trying to make, and which my right honourable friends have been trying to make too, is that this system has been used in the past and it can be used in the future, and it looks as though it is being used at present. I would much prefer it to be used in the future. If it is used in future, then this Bill needs amendment to make sure that the relief is not given twice over for the same burden. That is the purpose of the Amendment, and the noble Baroness has done nothing whatever to persuade me that it does not achieve that purpose.
It has the additional purpose of giving another place another opportunity to look at this issue. It is perfectly true that it has been discussed many times before, but then the proposition that the water companies should be included in this Bill had to be discussed many times before. It was discussed over and over again in the Commons and in the end the Government saw the point. Although we are further on in the Bill, I do not despair of achieving that happy success again, but I doubt whether I shall do it without pressing this Amendment, which I propose to do.
Baroness BIRK: Before the noble Lord presses his Amendment, may I just answer two of the points he made, although I do not know whether it will make any difference. On the point he made about my comparison with gas and electricity, of course I accept the point that one pays for the amount of gas and electricity one consumes. But the general analogy is that they are services in a way that the rate which is levied on the value of the property in which one lives is not. It is quite a different matter.
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I am sorry that I have to say this again, but the Daniel Committee was concerned, as the noble Lord is well aware, with Wales and made their report to the Secretary of State for Wales. The rate support grant took account—and I have already said this—of the water charges in 1974 to 1975 and it also did so, to a limited extent, in 1975 to 1976, so that it worked it out on some of the lines of the Daniel Committee but it has not done so since.
Finally, Committees that are set up by any Government make recommendations to a Government, but it does not follow like night following day that the Government have to accept every recommendation made by a Committee, otherwise the Committees would be in the position of the Government and not just advising and making suggestions or recommendations on which it is then up to a Government to decide.
I would finally say that the two things are quite separate, and it would be a completely retrogressive step to try to introduce something which is absolutely cumbersome and wrong into this Bill. When the noble Lord says that it would give another place a further chance to discuss this if he presses this Amendment to a Division—which probably on sheer numbers he would win anyhow—they have spent hours discussing it. There really is no point to this, and just on that basis of good sense, since I know I cannot win this numbers game, I would ask the noble Lord to withdraw his Amendment.
4.28 p.m.
Earl WALDEGRAVE: Before the noble Lord withdraws this Amendment, may I say that it is extremely difficult for noble Lords in this House to listen to the Minister and the ex-Minister, both of them knowing how the Department works, flatly contradicting themselves when saying what can or cannot be done in the Department about rate support grants. It is of course possible that the Government may one day change and that the noble Lord, Lord Sandford, may be sitting again—and we hope he will, if he is not higher—in that Department, and he will stick to his view that under the Acts this is a method by which the rate support grant could be used in the future to alleviate this problem.

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I should like to mention one point. The noble Baroness opposite said that it would be absolutely wrong to have this principle in the Bill. I wonder whether she can substantiate that claim. Many of us think that, if you wish to equalise charges, it is absolutely wrong simply to take it from one water company, or one water authority, and pay it over to another water authority. It cannot be said that that is an absolutely right principle. What could be an absolutely right principle is that if through good, bad, or indifferent reasons, one authority or company has to charge its consumers too much now, those charges should be ameliorated. It is not absolutely wrong that those charges should be ameliorated by the Government. The way to ameliorate those charges would be through some machinery, such as the rate support grant, and not simply taking from Peter to pay Paul.
This Amendment states:
"…to the extent that such grant takes account …"
If it does not take account, it will not be used. What harm can those words do in this Bill? If the Bill ever becomes an Act here will be an alternative means by which charges can be equalised or partially equalised. If the rate support grant or some other machinery were used—of course I believe the noble Baroness when she tells us that it is not done now—the measure would say, in effect, "You will not have to pay twice" In so far as this amelioration is done by Government, by way of the rate support grant, we shall not have to debit London to credit Cardiff; and I do not believe that even the noble Baroness can go home thinking that what is proposed is absolutely right. It is one way of doing it, but it seems to me a rather rough and ready way, and a bad way, of doing it.
Lord SANDFORD: My noble friend Lord Waldegrave is absolutely right. He does not have to take my word for the way in which this could be done; he can take the word of the expert Daniel Committee, that relief for exceptionally high water charges can be, and has been, made by way of the domestic element in the rate support grant. The noble Baroness, Lady Birk, has confirmed that it has been done not only in one year but in a second year.
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My noble friend is also absolutely right in commending this particular way of doing it. I did so on Second Reading and I have not repeated the arguments today, but one of the strongest ones is that, by using the rate support grant, one is bringing relief to people who need it but one is getting it from those who are best able to pay, namely, the taxpayer. On the other hand, by the system proposed in the Bill one is raising the money, the levies, to make these payments from all and sundry regardless of their ability to pay. The poor family living in Inner London pays the same charge as the rich family, and furthermore such people are unable—the noble Baroness admitted this —to get any sort of rebate to help. I believe the Amendment would introduce the flexibility which my noble friend stressed and would provide for other ways of dealing with this problem, when the Bill is in force, without obliging the Government, whichever Government, to pay the same relief for the same thing twice over. For all these reasons I commend the Amendment to the Committee.
Lord PEDDLE: I am at a loss to understand the reasoning behind the comments of the noble Lord, Lord Sandford, particularly in the light of the statements he made on Second Reading and those he has made today. He is against the concept of equalisation. So am I. However, we have modified our view in the light of the concessions that have already been made. If one is against equalisation—and the noble Lord is strenuous in his opposition to it—so be it, but what he is asking us to do is to go even further towards the inequity of equalisation by calling on some other source of revenue to be thrown into the kitty to effect equalisation among those who are to be the recipients.
One cannot have one's cake and eat it. On the one hand we are against equalisation, and fair enough. But, on the other, do not argue against the Bill as drafted by saying, "Here is some other source of income" because, frankly—and I say this in the kindest possible way—it is quite hypocritical and contrary to the point of view of noble Lords opposite. They have consistently been against subsidy of any kind, yet on this occasion they search for some way to attack the Bill. I do not object to that and I join the noble

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Lord in attacking it, but at least he should do it on fair and equitable grounds. If one is against equalisation, be against it, but the noble Lord should not try to argue that we should introduce some new element by drawing on a source of income from another quarter and try to justify that from his point of view. In my view, on the ground of neither logic nor sincerity, can what the noble Lord suggests support his point of view.
Lord SANDFORD: The noble Lord, Lord Peddie, has made a powerful point, but unfortunately in Parliament and in politics, and on this side of the House in the present political circumstances where we have an elected Chamber with our opponents in the small majority, we have to abide by the conventions. If the conventions had allowed us to throw out this Bill on Second Reading we should have done so, but, as Lord Peddie knows perfectly well, the House of Lords cannot do that. My Party, with its inherent built-in majority in this Chamber—which many of us deplore, I particularly—cannot, and do not, use our power in that sort of way. I freely admit that it would be the logical thing to do. What I am trying to do here is to introduce a measure of flexibility into the Bill and, by pressing the Amendment, to secure that another place, where his Party is in control at the moment, has another opportunity to debate the matter. That is the way in which I would justify seeking to improve a Bill which, like him, I object to in principle.
Baroness BIRK: I completely understand. Let me follow through a little further the argument of my noble friend Lord Peddie and ask the noble Lord, Lord Sandford, whether he accepts in pressing the Amendment, should this work its way through—whether through the rate support grant or in some other way; this applies equally to the comments of the noble Earl, Lord Waldegrave—that he is saying in so many words that this means a greater Government subsidy and an increase in public expenditure? Does he agree that that would be the logical outcome of what he is saying and, if so, is he still prepared to press the Amendment?
Lord SANDFORD: It does not mean that at all. It simply provides in the Bill
326
for the system of relief which has been used at least twice before to be continued in the future if and when and where it is seen to be a better way of dealing with the matter than the one proposed in the Bill. As my noble friend Lord Waldegrave pointed out, it is not a black and white choice; it could be used to some extent. The point of the Amendment is to ensure that if it is decided to continue the system, where it is decided to continue it and when it is decided to continue it there will be taken into account the way in which the payments and levies are calculated under the Bill. It just introduces that measure of flexibility. In itself it certainly does not call for or involve any extra public expenditure.
Lord PEDDIE: I hope the noble Lord, Lord Sandford, will withdraw the Amendment, if only for the sake of the dignity of your Lordships' House. Many of the arguments he advanced—I listened to them with great interest—were indicative of criticism of the Bill and he used the word "political" time and again, as of course he is entitled to do. Political concepts were, according to him, the main inspiration of the Bill, yet now he frankly admits—and he almost shared the view I expressed a few moments ago—that he is using some almost pathetic device to achieve an objective. In my opinion that is not the purpose of this House.
Furthermore, there is the more significant aspect, and my noble friend has supported the point of view which I have mentioned. What, in effect, the noble Lord is saying is to my mind tantamount to a complete change in the whole policy of the Conservative Party. I say to the noble Lord, Lord Sandford, that what he is arguing is that at this moment there will be, as has been stated, an increase in the amount of a public contribution, and that the whole concept of equalisation should be extended and should be drawn from rates or taxes. God forbid that that kind of thing should happen! That is utterly counter to what I believe, and I know that it is counter to what the Conservatives believe. I say to the noble Lord, please do not sacrifice or throw out of the window all your principles, all the arguments that he used at the Second Reading, in order to achieve this. I do not often plead with anybody, but I say to the noble Lord: in your own interests, at least, withdraw the Amendment.
Lord SANDFORD: If I felt that any important principles were at stake, I would be swayed by that argument, but I am afraid that I do not. All the Amendment does is to provide for the continuation of a system of relief which each of our two Parties has advocated. There has been a slight difference in detail, but the system has been identical in principle, and it is one which the Labour Government have used at least twice before. It does not oblige any future Government to use this system. It does not oblige anybody to increase public expenditure in paying subsidies, but it enables a system, which up to this moment had been thought perfectly practical by both Parties, to be continued to some extent, in some places, at some time, if thought desirable.
I cannot be persuaded that to press an Amendment which does that involves any serious abandonment of any principles that I hold, the main and relevant one of which, at the moment, is that I dislike the Bill as a whole. All I am doing is to make it more flexible and better, and to give the other House an opportunity to debate it.
Lord REDCLIFFE-MAUD: As an Independent, I feel that I must say a few words. I have listened very carefully to both sides, and I feel an element of "a curse on both your Houses." As an Independent, I am interested that the Bill should perform its function as equably as possible, whatever Government are in Office and without there having to be a change, as is so constantly necessary nowadays, each time there is a change of Government. Therefore, as an Independent, I would feel unable to do other than support the Government in this particular matter, although it may well be that the system which a new Government of another Party would have then to introduce in order to amend this provision might prove to be more in the interest of the water consumers and payers, than if this Bill goes through as it stands.
It seems to me that what the noble Lord, Lord Peddie, said is true: you cannot have it both ways. If we vote for the Amendment we should in effect be trying to have it both ways in the sense that we would put into a Bill a provision which the Government that would administer it, if still in Office, would find absurd, while a Government which may succeed them, and would wish to change,
328
would have the convenience of not having to introduce amending legislation. I may be quite wrong, but it seems to me that if we pass the Amendment it would be ignored and not used by the present Government, but if they were thrown out and the Conservatives came in, without amending the Act we should be able to go over to the system which the Conservative Party prefers. I should be very grateful if the patient Baroness who has been responding to this proposal would reassure me whether I am right or wrong in this matter.
Baroness BIRK: I think that the noble Lord is right, and, indeed, I think that the matter goes even further than that, because the Bill is concerned only with equalisation of the water charges. The noble Lord, Lord Sandford, said, quite frankly and honestly, that he disliked the Bill altogether, and that he would like the whole Bill thrown out. What would then happen, if one follows the logical argument of the noble Lord who has just spoken, is that it would not be used by this Government, nor be thrown out in another place; or that particular proposition would certainly not be put into force. From what has been said, it does not look as if a Conservative Government, if, God forbid! we have one soon, would in fact want to amend it at all. In the words of the noble Lord opposite, they would want to get rid of the legislation, so in fact nothing would have been gained. This Bill would be made more difficult, or unworkable, or would be ignored.
I entirely agree with the noble Lord who has just spoken, and who has had tremendous experience in this area, that that is a bad thing to do in legislation, and I think that if another Government were in power they would change, or dispense with, the whole thing. I am very grateful for the noble Lord's words, and I think that as an independent point of view on the workings of the Bill they are absolutely correct, without the noble Lord being drawn into the political arguments on both sides of the Committee.
Earl WALDEGRAVE: I am grateful to the noble Baroness for what she said, because I am much more convinced by that argument than I was by the argument of the noble Lord, Lord Peddie. As I understand what the noble Lord,

329
Lord Sandford, was moving, he is saying that if we have to have equalisation—which we do not think is necessary—then, for heavens sake! let us use something which he says was used when he was a Minister in the Department, or let us take it into account. But we have now heard from the noble Baroness that if this proposal existed as an optional course her Government would not use it. Therefore, I wonder whether it is any use including an optional provision if the Government say that they are never going to use it. If that has been said, I wonder whether it is worthwhile asking the Committee to insert that provision, because the Government have roundly said, "We are never going to use it".
Like many others, I think that the Bill is such a bad Bill that if, as I hope there will be one day, there is a change of Government it will go out. We shall not want one odd optional provision in it. We shall throw the Bill out. I imagine that it will be one of the first Bills that we shall repeal. So on the basis of that very pragmatic and not very noble kind of argument, I wonder whether we might save your Lordships' time so far as trooping in and out of the Lobbies is concerned, but I must leave that matter to the noble Lord, Lord Sandford, with whom I have not discussed it.
Lord SANDFORD: The counsel which my noble friend gives would save us all much trouble because we could just wait for the Government to fall and then start from scratch all over again. But I see it as a duty in this Chamber, and on this
side, that if we cannot actually persuade the Government to drop Bills altogether (though perhaps we can in this case, if we persevere) then we should make them as workable and flexible as we can.
If I may pursue the point made by the noble Lord, Lord Redcliffe-Maud, would say that the Amendment would have no effect so far as this Government is concerned, because they would use the payments and the levies which the Bill provides. But it would enable a system which—I say again—both Parties have found useful on two occasions so far, to be introduced, or re-introduced, at any point, at any time, in any area, to any degree required. That seems to me to be improving the Bill, whatever one may feel about its overall merits. That is the reason why, having listened to all the arguments and suggestions that it is not really worth the candle and so on, I feel disposed to press the Amendment. I am quite convinced in my mind that if we are to have the Bill at all—and it is not our convention to throw Bills out altogether—we must do what we can (though most of the work may prove to be abortive, if we have another Government in a few months' time) to improve the Bill and make it as flexible as we can. To that extent, I want to press the Amendment.
4.49 p.m.
On Question, Whether the said Amendment (No. 6) shall be agreed to?
Their Lordships divided: Contents, 67; Not-Contents, 61.

CONTENTS

Abinger, L.

Elliot of Harwood, B.

Mowbray and Stourton, L. [Teller.]

Allan of Kilmahew, L.

Emmet of Amberley, B.

Avon, E.

Faithfull, B.

Moyne, L.

Balerno, L.

Falkland, V.

O'Hagan, L.

Barnby, L.

Falmouth, V.

Porritt, L.

Belstead, L.

Gisborough, L.

Rankeillour, L.

Berkeley, B.

Glenkinglas, L.

Rathcreedan, L.

Boothby, L.

Gray, L.

Ruthven of Freeland, Ly.

Caccia, L.

Greenway, L.

Sandford, L.

Carrington, L.

Haig, E.

Sandys, L.

Clancarty, E.

Hailsham of Saint Marylebone, L.

Selkirk, E.

Colwyn, L.

Hatherton, L.

Spens, L.

Cork and Orrery, E.

Hawke, L.

Strathclyde, L.

Cromartie, E.

Hornsby-Smith, B.

Strathspey, L.

Cullen of Ashbourne, L.

Ilchester, E.

Sudeley, L.

Daventry, V.

Lauderdale, E.

Swansea, L.

de Clifford, L.

Lindsey and Abingdon, E.

Trefgarne, L.

De Freyne, L.

Lloyd, L.

Vickers, B.

Denham, L. [Teller.]

Long, V.

Vivian, L.

Derwent, L.

Lyell, L.

Waldegrave, E.

Drumalbyn, L.

Monck, V.

Ward of North Tyneside, B.

Eccles, V.

Monson, L.

Westbury, L.

Elles, B.

Morris, L.

NOT-CONTENTS

Ampthill, L.

Henderson, L.

Phillips, B.

Banks, L.

Henley, L.

Pitt of Hampstead, L.

Beaumont of Whitley, L.

Houghton of Sowerby, L.

Redcliffe-Maud, L.

Birk, B.

Hylton-Foster, B.

Sainsbury, L.

Boston of Faversham, L.

Jacques, L.

St. John of Bletso, L.

Brockway, L.

Janner, L.

Shepherd, L.

Byers, L.

Kaldor, L.

Shinwell, L.

Caradon, L.

Leatherland, L.

Sligo, M.

Collison, L.

Lee of Asheridge, B.

Stedman, B. [Teller.]

Cooper of Stockton Heath, L.

Listowel, E.

Stewart of Alvechurch, B.

Crook, L.

Llewelyn-Davies of Hastoe, B.

Stone, L.

Cudlipp, L.

Loudoun, C.

Strabolgi, L.

Davies of Leek, L.

McCluskey, L.

Vaizey, L.

Donaldson of Kingsbridge, L.

Noel-Buxton, L.

Wallace of Coslany, L.

Foot, L.

Norwich, Bp.

White, B.

Gaitskell, B.

Ogmore, L.

Wigoder, L.

Gordon-Walker, L.

Oram, L.

Willis, L.

Goronwy-Roberts, L.

Pannell, L.

Winterbottom, L. [Teller.]

Greenwood of Rossendale, L.

Peart, L. (L. Privy Seal)

Wootton of Abinger, B.

Hale, L.

Peddie, L.

Wynne-Jones,, L.

Hanworth, V.

Resolved in the affirmative, and Amendment agreed to accordingly.
4.58 p.m.
Lord SANDFORD Lord SANDFORD moved Amendment No. 7:
Page 2, line 9, at end insert ("multiplied by the appropriate factor.
In this subsection "appropriate factor" means the proportion which the average bill for general rates and water services in respect of premises in the water supply area of the water authority to which a supply of water is provided on an unmeasured basis bears to the average bill for general rates and water services to such premises throughout England and Wales.")
The noble Lord said: This Amendment is based on the view that there is no justice in equalising householders' charges for water on its own. The householder who is on an unmetered water supply has two inescapable charges. They differ, as the noble Baroness said, but both relate to the rateable value of the property concerned. Neither is capable of being varied. No personal or family economies can do anything to reduce them. Whatever case may be put forward by the Government for reducing the inequalities in the average domestic bill for water has the same force, or lack of force, depending upon one's point of view, as has that for reducing inequalities in the average domestic bill for the general rate.
The current situation is clearly set out in the Answer that the noble Baroness, Lady Birk, gave me dated 26th April. I should like to take this opportunity of thanking her for it. There, she set out the average domestic water bill between the 10 authori-
332
ties, followed by the average domestic bill for the general rate in the various rating authorities. She makes the point clearly and quite properly that water charges are quite separate from the general rate, as indeed they are, though they are levied in the same way and, to some extent, billed on the same piece of paper. But that is neither here nor there.
That Answer and the Answer given to the noble Lord, Lord Janner, yesterday, make it clear that there is an inequality of about £10 per annum between the lowest average domestic bill for water of £15, in the Thames Water Authority area, and the highest average domestic bill for water, in the area of the Welsh National Water Development Authority, of £25. This Bill seeks to modify that, to get the bill for water more evenly borne between one householder consumer and another, and yesterday's Answer to the noble Lord, Lord Janner, shows how this would work out in the Bill as it is now drafted.
But we have to remember, I believe, that there is a far greater inequality between the inescapable charges for the general rate, which, like the water rate, is directly related to the rateable value of the property. These produce a divergence, not of £10 but of £150, between the average domestic bill in respect of general rates of £185 in Surrey, £166 in Innter London and a mere £36 in Powys and £47 in Dyfed, where we see that the Welsh have the advantage over the English by a very considerable margin. If there is to be a measure of equalisation

333
of water charges, I submit that the bare difference between the average bills for water in one regional water authority and another should be modified to a degree that corresponds with the inequalities that already exist in the average combined bill for water charges and general rates, and it is this modification which my Amendment seeks to bring about. Here, again, I would much prefer not to have a Bill at all, but if we are going to have one I would want to see it improved to this extent and to this extent made fairer, and another place given an opportunity to discuss this way of doing it.
May I illustrate broadly to the Committee how this would work out in one or two cases? I am advised that the average combined domestic bill over the whole of England and Wales might be of the order of £145, and the noble Baroness, Lady Birk, will correct me if I am far wrong. I hope I can take that as an illustrative figure. In the area of the Thames Water Authority, the average combined domestic bill for water and general rates is not £145, it is £172; so to that extent the ratepayers in that regional water authority's area pay considerably more than the average. I would submit, therefore, that the equalisation levy due from the Thames Water Authority area should be reduced—and my Amendment will see that it is effectively reduced —by an amount that reflects the excess of £172 over £145. Let me take another area, that of the Welsh National Water Development Authority. There, the average combined domestic bill for water and for general rates is £112. My Amendment would secure that the payment that would become due to the Welsh National Water Development Authority under Clause 2 of the Bill would be reduced, in effect, to an extent which reflects the difference between the low combined bill of £112 and the average combined bill of £145.
I commend this Amendment to the Committee as an Amendment of merit in itself, but also as a means to invite another place to consider a fairer and more just way of balancing burdens on householders throughout England and Wales if indeed it is thought advisable to attempt to do so at all, although I rather agree with the noble Lord, Lord Peddie, that in respect of water it would be better not to embark on this at all. The Amendment which we
334
have just moved into the Bill provides for the method which has been used so far of a differential domestic element in the rate support grant as between England and Wales. A later Amendment which I shall also move provides for an outright grant to the Welsh National Water Development Authority, which I think is the most open, honest and straightforward way of dealing with this matter and which secures that the burden is borne by all the taxpayers to the extent that each is best able to pay.
There may well be some criticism of me for importing incompatible alternative methods into the one Bill, but I do not think they are incompatible and, anyhow, I trust that there will not be any criticism from the noble Baroness on that score, whose Government are apparently about to introduce a Bill to provide two alternative and entirely incompatible ways of electing members to the European Parliament, and furthermore allowing Cabinet Ministers a free vote on the choice. Once again, I would much prefer that we did not have this Bill, but if we are to have it I think it is our duty to make it as flexible, workable and equitable as possible, and to give another place an opportunity to consider how that might best be done. I think this Amendment is another improvement, and I beg to move.
Baroness BIRK: The noble Lord said that this Amendment is intended to have the effect of linking equalisation transfers to general rate levels in such a way that the levies payable by regions with relatively high average general rates—for example, the Thames, Severn and Trent—will be reduced, and the amount of payments to other authorities will be reduced correspondingly. In fact, it is unworkable since local authority boundaries do not coincide with those of water authorities or, indeed, of the companies; and I am afraid that, once again, at the risk of being repetitious, though I shall try to cut it down, I must say that this Amendment, like the previous Amendment, still reflects the same confusion between water charges and the general rate. I have to say again that they remain quite distinct, though I will not go over the reasons again because I think I have now done that many times.
I think the noble Lord is in a way doing something of a somersault on his own case, because at every opportunity

335
he says how much he dislikes the Bill and would like to throw it out, and then he says, "Let us make it workable". I cannot help feeling that it would be much more logical for him to pursue the path which he has certainly been pursuing, even if unwittingly, of trying to make it as unworkable as possible. This proposal seems to me to be logical politically, but it does not seem to me to be logical if the noble Lord wants to make the Bill work. However, if he hates the Bill so much that he wants to wreck it as much as he can, then of course it does make sense; and it is on that basis, too, that I am resisting him. But not only is this Amendment misconceived; it would also be very difficult, if not impossible—and this is on purely practical grounds—to put into practice, for the reason I have already given; that is, that the boundaries of the regional water authorities and the private water companies are not co-terminous with local government boundaries.
One of the virtues of the equalisation scheme proposed by the Government is that it is easy to administer. I do not expect the noble Lord to agree with me that it has any virtues, but it is certainly easier to administer than what he is putting forward. The National Water Council will be able to implement it using its existing staff complement, and there are no other implications for public sector manpower. But the Amendment as moved by the noble Lord would put someone (and I am not sure who that would be) under a duty to determine the average general rate of unmeasured properties in each water authority and water company area. Such an exercise would certainly require additional staff resources—and now, once again, I come back to the point that I was making on the last Amendment and which was also made very strongly by my noble friend Lord Peddie. Apart from being wrong, as we believe, conceptually, this Amendment, like the last one, would involve an increase in public expenditure, and certainly an increase in personnel. I therefore ask the Committee to resist the Amendment.
Lord SANDFORD: Of course, the whole Bill involves an immense amount of extra work and I admit that this is an additional complication. I wish that we
336
could persuade the Government—and we may manage to do so in the end—to drop the Bill altogether, because to do so would certainly constitute a very considerable saving in manpower. If the various regional water authorities were left to get on with things and this relatively minor inequality amounting to scarcely more than £10 a year were tolerated, we should not have any of this trouble at all. Furthermore, we should have no incursion into the autonomy of the various regional water authorities—something which I think both Parties regard as important and desirable.
I cannot admit that this Amendment, although it would involve further complications and some difficulty, adds a great deal to the difficulties that are already added to the work of the regional water authorities by the whole scheme of equalisation. Certainly, if it were to be slightly rough and ready in its operation, it is nothing compared to the roughness of the arrangement here which applies only to householders on unmeasured water supplies and leaves out of account altogether those consumers who happen to be on measured water supplies. That is a tremendous anomaly which the Government seem to be able to tolerate with equanimity.
I base the force of this Amendment chiefly upon the injustice of shifting the burden, by way of the payments, from the Welsh ratepayers who are already enjoying some relief; shifting their light water rate burden, and transferring it to the shoulders of some of the poorest families in the inner city areas of, say, London who can obtain no rate relief or rebate.
In so far as my Amendment does something to mitigate or modify that effect, I should like to commend it to the Committee and accept the small amount of extra work that is involved on top of all the other extra work.
Baroness BIRK: I should like to ask the noble Lord to clarify something; but, before doing so, I must point out that it is not true that the provisions in the Bill would involve any extra work. I repeat that the National Water Council will be able to undertake any changes with its existing personnel. It will not involve any more public sector expenditure and the noble Lord himself agreed that what

337
he is proposing would involve that. The question I should like to ask for clarification is this. Does the combined bill that he is talking about include sewerage charges as well as the general and water rates? If it does not, then why not?
Lord SANDFORD: I do not know that we need to bring sewerage into it.
Baroness BIRK: But we must.
Lord SANDFORD: The factor that we are considering is the total average bill for general rate and water services (that is, the combined water services) in respect of each householder averaged over the whole area. The main point that I have been trying to make, and which is taken into account by my Amendment, is that although the water supply service charges vary as between £15 in the Thames and £25 in Wales, the variation as between the general rates which covers all the other things is as much as £150. I think that to the extent that that large variation exists, the small adjustments that this Bill secures should be modified.
Baroness BIRK: The noble Lord is either not clear or he has not come to any conclusion as to whether he is going to bring in the sewerage rate (which is also another important charge on people) as well when this apportionment takes place, according to his Amendment.
Lord SANDFORD: I shall look at that if the noble Baroness presses it upon me; I do not think it alters the situation at all. It is the large imbalance in the general rate burden which I want to bring into this Bill, to modify the very small inequality in the water rate which this Bill is seeking to deal with. I shall look at the point about the sewerage charge to see whether it makes any practical difference, but I do not think that it does.
5.15 p.m.
On Question, Whether the said Amendment (No. 7) shall be agreed to?
Their Lordships divided: Contents, 66; Not-Contents, 59.

CONTENTS

Abinger, L.

Falmouth, V.

Northchurch, B.

Amory, V.

Ferrers, E.

Norwich, Bp.

Auckland, L.

Gisborough, L.

O'Hagan, L.

Avon, E.

Glenkinglas, L.

Porritt, L.

Balerno, L.

Gray, L.

Rankeillour, L.

Balfour of Burleigh, L.

Greenway, L.

Ruthven of Freeland, Ly.

Balfour of Inchrye, L.

Haig, E.

Sandford, L.

Berkeley, B.

Hailsham of Saint Marylebone, L.

Sandys, L.

Carrington, L.

Hawke, L.

Selkirk, E.

Colwyn, L.

Hornsby-Smith, B.

Spens, L.

Cork and Orrery, E.

Ilchester, E.

Strathclyde, L.

Cullen of Ashbourne, L.

Lauderdale, E.

Strathspey, L.

Daventry, V.

Lindsey and Abingdon, E.

Sudeley, L.

de Clifford, L.

Lloyd, L.

Swansea, L.

De Freyne, L.

Long, V.

Trefgarne, L.

Denham, L. [Teller.]

Lyell, L.

Vivian, L.

Derwent, L.

Monck, V.

Wakefield of Kendal, L.

Drumalbyn, L.

Monson, L.

Waldegrave, E.

Elles, B.

Morris, L.

Ward of North Tyneside, B.

Elliot of Harwood, B.

Mowbray and Stourton, L. [Teller.]

Wardington, L.

Emmet of Amberley, B.

Westbury, L.

Faithfull, B.

Moyne, L.

Young, B.

Falkland, V.

NOT-CONTENTS

Ampthill, L.

Crook, L.

Henderson, L.

Banks, L.

Davies of Leek, L.

Henley, L.

Beaumont of Whitley, L.

Feversham, L.

Houghton of Sowerby, L.

Birk, B.

Foot, L.

Hylton-Foster, B.

Boston of Faversham, L.

Gaitskell, B.

Jacques, L.

Brockway, L.

Gordon-Walker, L.

Janner, L.

Clancarty, E.

Greenwood of Rossendale, L.

Kagan, L.

Collison, L.

Hale, L.

Kaldor, L.

Cooper of Stockton Heath, L.

Hanworth, V.

Leatherland, L.

Listowel, E.

Ponsonby of Shulbrede, L.

Strabolgi, L. [Teller.]

Llewelyn-Davies of Hastoe, B.

Rathcreedan, L.

Thomson of Monifieth, L.

Loudoun, C.

Redcliffe-Maud, L.

Vaizey, L.

McCluskey, L.

Rochester, L.

Wallace of Coslany, L. [Teller.]

Noel-Buxton, L.

Sainsbury, L.

White, B.

Oram, L.

Shepherd, L.

Wigg, L.

Pannell, L.

Shinwell, L.

Wigoder, L.

Peart, L. (L. Privy Seal.)

Sligo, M.

Willis, L.

Peddie, L.

Stedman, B.

Winterbottom, L.

Phillips, B.

Stewart of Alvechurch, B.

Wootton of Abinger, B.

Pitt of Hampstead, L.

Stone, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
5.25 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 8:
Page 2, line 10, leave out ("water authorities") and insert ("statutory water undertakers").
The noble Baroness said: I spoke to this Amendment with Amendment No. 2. I formally move.
Baroness BIRK Baroness BIRK moved Amendment No. 9:
Page 2, line 11, leave out ("financial").
The noble Baroness said: I spoke to this Amendment with Amendment No. 1. I formally move.
Baroness BIRK Baroness BIRK moved Amendments Nos. 10 and 12:
Page 2, line 13, leave out ("water authorities") and insert ("statutory water undertakers")
Page 2, line 18, leave out ("water authorities") and insert ("statutory water undertakers")
Page 2, line 20, leave out ("water authority") and insert ("statutory water undertaker").
The noble Baroness said: I spoke to these Amendments with Amendment No. 2. I formally move these Amendments en bloc.
Baroness BERK Baroness BERK moved Amendment No. 13:
Page 2, line 21, leave out ("financial").
The noble Baroness said: I spoke to this Amendment with Amendment No. 1. I formally move.
Baroness BIRK Baroness BIRK moved Amendments Nos. 14 to 17:
Page 2, line 24, leave out ("water authorities") and insert ("statutory water undertakers")
Page 2, line 27, leave out ("authority") and insert ("undertaker")
Page 2, line 29, leave out ("authority") and insert ("undertaker")
Page 2, line 31, leave out ("water authority") and insert ("statutory water undertaker").
The noble Baroness said: I have spoken to these Amendments with Amendment No. 2. I formally move these Amendments en bloc.
Baroness BIRK Baroness BIRK moved Amendment No. 18:
Page 2, line 34, at end insert—
("(5A) Nothing in this section or section 2 below shall apply to any statutory water under-undertaker whichin the year ending 31st March 1976 supplied less than one hundred million gallons of water.").
The noble Baroness said: The effect of this Amendment is to exclude from equalisation any statutory water undertaker whose supply falls below the prescribed level. All of the water authorities and the 28 water companies who are members of the Water Companies Association supply very much more than this level. There are, however, a number of very small undertakers whom we do not wish to bring into the scheme. One or two of them supply only by meter and would therefore, in any event, be excluded. Others do supply on an unmeasured basis (very small quantities and on a very local basis). Since charges are below average, they would gain nothing from being included while they are too small for any equalisation levy which they might be directed to make to be of benefit to anybody else. The Amendment is therefore designed to secure the exclusion of undertakers in this position in order to avoid the need for pointless work.
5.28 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 19:
Page 2, line 34, at end insert—
("(5A) In the first financial year in respect of which an order is made under subsection (1) above, the amount of the levy calculated under subsection (4) above shall be reduced by two-thirds and in the second financial year in respect of which such an order is made the said levy shall be reduced by one-third.")
The noble Lord said: On behalf of my noble friend, I move the Amendment to which my name is also appended. I propose to speak also to Amendments Nos. 22 and 27. Clause 1 of this Bill, to which Amendment No. 19 applies, and Clause 2, to which Amendments Nos. 22 and 27 apply, provide, as we have already heard, for levy in the case of Clause 1, and payment in the case of Clause 2, to be made across from one group of water undertakers to another.
I am advised that the likely effect upon, for example, water consumers in the areas served by the Thames Water Authority is an increase in their water charges of about 10 per cent. If the Bill comes into force, this will take place in the next financial year beginning next April. It is surely not beyond the bounds of probability—indeed some of your Lordships may think it quite probable—that inflation generally at that time will be running at at least 10 per cent. and perhaps more. The total increase in water accounts which may therefore fall upon authorities like the Thames Water Authority if the Bill is implemented in full, and as presently drafted, will he at least 20 or 25 per cent. That is more than the consumers in that area can be reasonably expected to bear.
As my noble friend has explained on previous Amendments, their rate accounts are substantially higher in that area than they are in other parts of the country. It is not beyond the realms of posibility that their domestic rate bills will also increase next year by a significant percentage. It is therefore the intention of these three Amendments to phase the introduction of the levy on the Thames Water Authority, and thus consequentially the payments provided for in Clause 2, over a period of three years.
Amendment No. 19 provides that the levy will in the first year—that is to say, the year beginning April 1978—be reduced
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by two-thirds, and in the following year—that is to say, in the financial year beginning April 1979—be reduced by one-third. Thus it follows that the levy, when calculated for the year beginning April 1980, will be at the level laid down in the Bill but not therefore until that time, namely, April 1980. The effect of Amendments Nos. 22 and 27 is similar, but the wording is such as to apply to the payments made to the receiving authorities and water companies. I beg to move.
5.32 p.m.
Baroness BIRK: These Amendments moved by the noble Lord are identical to ones which were prepared by the London Boroughs Association and they were tabled, but not moved, by the London Labour Members during the Committee stage in another place. As the noble Lord has carefully pointed out, what they seek to do is to phase in equalisation transfers to and from water undertakers in such a way that the scheme will only come into full operation in its third year. In the first and second years, levies and payments will be reduced by two-thirds and one-third respectively. It is true that we advised the water authorities to phase in their own equalisation schemes, but that was when we were talking about full equalisation.
However, as I said during Second Reading—and I emphasised this in moving the first Amendment this afternoon—the Government's equalisation scheme, as expounded in this Bill, is already a modest one and falls well short of full equalisation of bills. It is merely designed to even out peaks and troughs in average bills. Indeed many consumers in area where the charges are now very high—for example, Wales, the South West, East Anglia and some areas served by water companies—would argue, with some legitimacy, that the Government scheme does not go far enough. Even if the scheme had come into force for the current year, it would still have left a range of average bills between different water authorities of from 10 per cent. below the national average to 24 per cent. above it. Taking the companies into account, the range would remain even wider: from 23 per cent. below the national average to 43 per cent. above. Total transfers to and from the water authorities amount to only 2 per cent. of the autho-

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rities' revenue requirements. To reduce transfers to below what the Government propose would, in the circumstances and in the context of this Bill, make them quite derisory and reduce the scheme to a nonsense.
As Ministers made clear in another place, the scheme proposed in the Bill has a life expectancy of round about five years. In successive years, its significance will diminish as transfers become a smaller proportion of the water authorities' revenue requirements. That is because the financing costs arising from capital expenditure incurred before 1st April 1976 will become a smaller and smaller proportion of authorities' requirements. Therefore, although we shall be equalising the same element of the authorities' revenue requirements each year, that element will become a less and less important one in relation to the factors that make the charges what they are. It is for those reasons that I cannot advise the House to accept these Amendments. They would have the effect of diluting the effect of equalisation to such a degree as to run directly counter to the purpose of the Bill.
5.36 p.m.
Lord TREFGARNE: I cannot pretend that I am totally persuaded by what the noble Baroness has said. I rather believe that the present Government have demonstrably and lamentably failed in the general battle against inflation, not least because they themselves have contributed so significantly to it. It seems to me that the Government's resistance to this Amendment is simply another example of how they have failed to realise that some of the policies they have advocated have made inflation worse and not better. The percentage figures they play with are often, to say the least, unreliable: and although we may now hear from them that inflation next year will be down to single figures and as from the year after it will be below this or that percentage, they always get proved wrong in the event.
Is it not possible that next year they will be proved wrong yet again? May they then not bitterly regret that they have themselves, by the measures they have introduced, significantly increased the level of water rates payable, for example,
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by those living in central London?—those people who, as my noble friend has explained in connection with previous Amendments, may be lowly paid and have no means of securing any form of rebate on their water rates and who, willy-nilly, will be required next year to subsidise their colleagues living in Central Wales, for example, who indeed may have somewhat higher water rates but whose domestic rates are dramatically less than those payable in Central London. It is not my intention to press this Amendment this afternoon, but I will consider the matter with my noble friend and I reserve the right to return to it at a later stage of the Bill. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn,
Clause 1, as amended, agreed to.
Clause 2 [Equalisation payments to he made to certain water authorities]:
Baroness BIRK Baroness BIRK moved Amendment No. 20:
Page 2, line 35, leave out ("financial").
The noble Baroness said: I beg to move formally this Amendment. I spoke to Amendment No. 20 in moving Amendment No. 1.
Baroness BIRK Baroness BIRK moved Amendment No. 21:
Page 2, line 37, leave out ("water authorities") and insert ("statutory water undertakers").
The noble Baroness said: I spoke to Amendment No. 21 when I moved Amendment No. 2. I beg to move formally this Amendment.
5.40 p.m.
Baroness BIRK Baroness BIRK moved Amendments Nos. 23 to 26:
Page 3, line 4, leave out ("water authority") and insert ("statutory water undertaker")
Page 3, line 6, leave out ("water authorities") and insert ("statutory water undertakers")
Page 3, line 8, leave out ("authority") and insert ("undertaker")
Page 3, line 11, leave out ("water authority") and insert ("statutory water undertaker").
The noble Baroness said: I spoke to Amendments Nos. 23 to 26 with Amendment No. 2. With the leave of the Committee, I beg to move them en bloc.
Clause 2, as amended, agreed to.
Lord SANDFORD Lord SANDFORD moved Amendment No. 28:
After Clause 2, insert the following new clause:
"Grant in lieu
.—(1) The Secretary of State may, with the approval of the Treasury out of money provided by Parliament, make to the Welsh National Water Development Authority a grant in lieu of the whole or part of an equalisation payment.
(2) Where such a grant is made the amount of the grant shall be deducted proportionately from the equalisation levies to be paid by the water authorities and shall also be deducted from the amount of the equalisation payment to the Welsh National Water Development Authority."
The noble Lord said: This Amendment offers a third way of providing for the financial adjustments which the Government are seeking to make in the new political context in which we find ourselves. As I said when I was dealing with Amendments Nos. 6 and 7, the fact of the matter with which this Bill deals is the Government's wish to make payments to the Welsh National Water Development Authority, and the honest, straight forward and open way of doing it would be as indicated here. It would have the merit of doing what the Government want to do for Wales, though I am not for one moment persuaded that it is justified. But if it is done, it will ensure that the burden falls upon the tax payers and not arbitrarily upon certain householders, many of whom will not be in the best position to pay. Furthermore, it will do it without any of the complexities which the Bill or my Amendments would have, or the objections which the noble Baroness seems to think use of the rate support grant would have. It would be a quite straight forward and open block grant to the Welsh National Water Development Authority, and in many cases this would he the simplest way of proceeding. I shall be interested to hear how the noble Baroness reacts to the idea. I beg to move.
Baroness BIRK: The Amendment is quite clear and self-explanatory. As the
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noble Lord, Lord Sandford, said, it would allow the payment to the Welsh authority to take the form of a Government grant, instead of a payment from the equalisation pool. Before I get on to the substance of the Amendment, I must draw the attention of the Committee to the point that if it were carried it would undoubtedly be regarded as infringing the privileges of the Commons, since it involves an Exchequer payment and the Bill has no money resolution. Nevertheless, I think it only fair to discuss also the substance of it, which is unacceptable, because both this Government and the previous Government have made it clear that there can be no possibility of Exchequer grants to the water industry.
Apart from the obvious and unpalatable implications for public expenditure—and do not let us get away from the fact that this involves a considerable increase in public expenditure—there is no good reason why water charges should be singled out for subsidy from all the other bills facing households. It would be very dangerous to inaugurate subsidies to an industry whose annual revenue requirement is round about £1,200 million. For these reasons, the Government's equalisation scheme is a self-balancing one, and avoids this ingredient. of public subsidy and, inevitably, increased public expenditure. Payments in from authorities, and now companies, exactly match payments out to other authorities and companies, so that no Exchequer subsidy is involved.
It is not clear why this Amendment should single out one potential beneficiary from Exchequer subsidy. The average domestic bill without equalisation would also be well above the national average in the South-West and in Anglia, as well as in many other water company areas. I should also point out that if this Amendment were pressed and carried, it would frustrate one of the main objectives of equalisation: that of reducing average bills to a narrower range. An Exchequer grant, taking the hypothetical case, would reduce the bills in just one area—that is, in Wales—but would do nothing to make the compensating increases in bills in other authority areas where they are already below the national average. The troughs would therefore remain to a much greater extent than under the Government's equalisation scheme.

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I should say—and this applies to the previous Amendment which was withdrawn by the noble Lord—that whatever the rate of inflation, whatever is happening in the economy, not attempting to equalise water charges would still have its impact on those who find it difficult to afford them. There are poor people in the areas where the charges are high, just as there are in the areas where the charges are low, and the same applies to rates. Obviously, everybody will not be satisfied and there will be hard cases, but this applies in the area of rates, in the area of taxation and in every other area.
Lord TREFGARNE: I am obliged to the noble Baroness for giving way to me. I take what she says, that of course there are poor people in Wales as well as in London. But is it not the case that water consumers are much fewer in number in Wales than in central London? Furthermore, is it not the case that the general rates in Wales are much lower than they are in central London?
Baroness BIRK: Yes, but we are not talking only about Wales and London. We are talking about the whole of England and Wales. What I am saying is that it is not a very good idea to set out on an equalisation scheme, and then pick out certain areas and tie it up with inflation. I can understand the feeling against equalisation, which has been put very frankly by the noble Lord, Lord Sandford, but as the Government's view is that equalisation is the right way of dealing with these anomalies in the water industry, we see it as a leveller rather than as something which will produce greater anomalies in payments.
But the Amendment to make an Exchequer grant to Wales is very odd. All of the Opposition's Amendments to this Bill seem to involve increased public expenditure. It seems to me that the Opposition's stance in this sphere has been to berate the Government, constantly and interminably, on the level of public expenditure, and yet we have had Amendment after Amendment moved this afternoon the result of which would be to increase public expenditure. In this Amendment we now have a straight, flat subsidy to Wales. So that on all those grounds, quite apart from the in
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appropriateness of the Amendment and its having no meaning in this House, it is one which I am sure the Committee will want to resist.
Lord SANDFORD: I am grateful to the noble Baroness for making those points. This Amendment—I do not think this applies to the others—is certainly open to the criticism that it calls for a subsidy to a regionalised industry, and an increase in public expenditure. I am therefore not so enamoured of it as I was of the earlier Amendments, the second of which calls not for any increase in public expenditure but rather for a modification of the payments and levies within the industry.
I put forward this Amendment to hear the reactions of the noble Baroness and to see whether she agrees with me that if the main purpose of the Bill—as I believe it is—is to do something for the Principality, this is a more open and honest way of doing it. I do not think that the question of privilege arises. We are perfectly free to make amendments to the financial provisions of a Bill, although the other place is absolutely entitled to send back objections to those amendments, calling in aid their privilege in financial matters; and that would be the end of it. That is my understanding of the situation, but I do not think that we are debarred from making proposals of this kind.
Baroness BIRK: I am advised that the Bill contains no money resolution. Therefore the noble Lord is introducing this financial ingredient into a Bill which contains no money resolution. With great respect, therefore, I would say that it is out of order. It is an interesting debate, but it will not get us anywhere, even if the noble Lord feels that it will.
Lord SANDFORD: No, it will not. My advice is that we are perfectly entitled to do this, although the Commons may reply in the sense I have indicated. However, I do not intend to press the Amendment, so I do not think we need to pursue it any further. I beg leave to withdraw the Amendment.
The DEPUTY CHAIRMAN of COMMITTEES (Baroness Wootton of Abinger): I understood that Lord Trefgarne moved Amendment No. 28.
Lord TREFGARNE: Then I will withdraw it, too.
Amendment, by leave, withdrawn.
Clause 3 [Supplementary provisions as to directions and orders]:
5.52 p.m.
Baroness BIRK Baroness BIRK moved Amendments Nos. 29 to 31 en bloc.
Page 3, line 19, leave out ("financial")
Page 3, line 26, leave out ("financial")
Page 3, line 27, leave out ("financial year")
and insert ("year in respect of which orders have been made under sections 1 and 2 above").
The noble Baroness said: I spoke to these Amendments when I dealt with Amendment No. 1. With the leave of the Committee, I move formally Amendments Nos. 29 to 31 en bloc.
Baroness BIRK Baroness BIRK moved Amendment No. 32:
Page 3, line 29, leave out ("water authorities for that year") and insert ("statutory water undertakers").
The noble Baroness said: I spoke to Amendment No. 32 when I dealt with Amendment No. 2. Therefore I move formally this Amendment.
Baroness BIRK Baroness BIRK moved Amendments Nos. 33 and 34:
Page 3, line 38, leave out ("financial")
Page 3, line 41, leave out ("financial").
The noble Baroness said: I spoke to Amendments Nos. 33 and 34 when I dealt with Amendment No. 1. With the leave of the Committee, I will move together Amendments Nos. 33 and 34.
Clause 3, as amended, agreed to.
Clause 4 [Impact of equalisation levies and payments on water charges]:
Baroness BIRK Baroness BIRK moved Amendments Nos. 35 to 38 en bloc:
Page 4, line 12, leave out ("a financial") and insert ("any")
Page 4, line 14, leave out ("that year") and insert ("the corresponding accounting period")
Page 4, line 17, leave out ("a financial") and insert ("any")
Page 4, line 19, leave out ("that year") and insert ("the corresponding accounting period").
The noble Baroness said: With the leave of the Committee, I move formally Amendments Nos. 35 to 38 en bloc. I spoke also to these Amendments when I dealt with Amendment No. 1.
Baroness BIRK Baroness BIRK moved Amendment No. 39:
Page 4, line 20, at end insert—
("(2) Notwithstanding anything in any enactment,—

(a) the amount of any equalisation levy which a statutory water company is required to pay in respect of any year, and

(b) the amount of any equalisation payment which a statutory water company is entitled to receive in respect of any year,

shall be passed on in full, in the form of increased or reduced charges, to the persons to whom water is supplied by the company on an unmeasured basis in the corresponding accounting period.")
The noble Baroness said: Clause 4 deals with the application of equalisation levies and payments. It requires water authorities to apply money received under the scheme for the benefit of consumers of unmeasured water supplies and conversely to recover any equalisation levies through increased charges to such consumers. In the case of water authorities, the clause achieves this by reference to Section 30 of the Water Act 1973. However, these provisions do not apply to water companies, and the Amendment is necessary to ensure that the companies are under the same obligation as the authorities. I beg to move.
Clause 4, as amended, agreed to.
Clause 5 [Information and accounts]:
Baroness BIRK Baroness BIRK moved Amendment No. 40:
Page 4, line 21, leave out from ("to") to ("shall") in line 22 and insert ("the year 1978 and each subsequent year, each statutory water undertaker in relation to which a determination falls to be or has been made under section 1(2) above").
The noble Baroness said: This Amendment is consequential on earlier Amendments. It extends to all those statutory water undertakers to whom this Bill applies the duty to furnish to the Secretary of State such information as he may reasonably require for the purposes of the Bill. I beg to move.
Clause 5, as amended, agreed to.
Clause 6 [Citation, interpretation and extent]:
Baroness BIRK Baroness BIRK moved Amendment No. 41:
Page 4, line 34, at end insert ("and in this Act "statutory water company "and" statutory water undertakers" have the same meaning as in the Water Act 1973").
The noble Baroness said: As I spoke to this Amendment when I dealt with Amendment No. 2, I beg to move it formally.
5.58 p.m.
Lord SANDFORD Lord SANDFORD moved Amendment No. 42:
Page 4, line 34, at end insert—
("( ) This Act shall come into force at the expiration of the period of six months beginning with the day on which it is passed.").
The noble Lord said: I beg to move Amendment No. 42, which is designed to introduce a delay of six months between the enactment of the Bill and its coming into force. I do this because I believe that the Committee will agree with me that it is inappropriate to make this subsidiary but important change in advance of seeing the conclusions of Her Majesty's Government in a White Paper on reorganisation, upon which they initiated consultations a year ago. The last we heard from the Government on this was from the right honourable friend of the noble Baroness, Mr. Howell, the Minister of State, when in the Committee stage in another place on 17th February he used these words:
"I can confirm that our timetable is well on course for producing our White Paper in the spring."
Is it well on course, although we are now in midsummer, and what are we to expect by way of production of a White
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Paper? It may be that we shall be told, and I hope that we shall.
I submit that we ought not to be enacting this Bill. I still hope that the Government will drop it, as they have so seriously missed the timetable which they originally intended to pursue and thought was important. However, I now submit that in any case the other place must be given an opportunity to debate again many parts of it in the very changed and changing political context in which they find themselves.
I submit also—this is the point to which my Amendment specifically refers—that even if the Bill is enacted it ought not to come into force and be implemented, in whatever form it is passed, until Her Majesty's Government have published and allowed Parliament to see and debate their overall proposals for the water industry. As I say, I remain hopeful that having missed the bus with the Bill, the Government will drop it altogether and let the water industry get on with their job. However, if the Government enact the Bill, it is important to ensure that it is not implemented until it can be implemented in the context of the policies which I understand the Government intend to set out in their White Paper. I beg to move.
Baroness BIRK: Once again the noble Lord brought up the question of the White Paper and this Bill. I can now tell him that the White Paper will be published next month but there is simply no reason to wait for it because, as I have said repeatedly, this is a modest Bill dealing with the equalisation of water charges. It is true that the noble Lord also keeps expressing the hope that the Government will have second, third and fourth thoughts about the Bill. He is a hopeless optimist in regard to this. The two things are not connected. If this Amendment were to be carried it would mean that no order could be made under the Act until six months after Royal Assent. Since the earliest practical date on which we could have Royal Assent is the middle of July, that would mean that no orders could be made until January. But Clause 3(1), as amended by the Government Amendments bringing in the water companies, provides that an order,

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"shall be made before the beginning of the year to which the direction relates".
So this Amendment would mean that equalisation could not come in until 1979. I am not sure whether the noble Lord was aware of that or whether he genuinely only wanted to put it off for the six months. Perhaps the noble Lord would like to comment on that?
Lord SANDFORD: Certainly I should like to consider the position of the water companies, as the noble Baroness will know. We are now seeing for the first time the Government's proposals about the water companies because they have only just introduced them. The main points I made refer to the importance, as I see it, of not starting to implement the Bill, even if it is enacted, until all concerned have seen the Government's overall proposals for the water industry. I certainly take the point that the effect of this delay is now different inasmuch as we are not dealing with one single financial year.
Baroness BIRK: I thank the noble Lord for those remarks. I wanted to know whether I should accuse him of moving a wrecking Amendment or of accidentally not realising that the Amendment would put off the legislation for two years. I shall give him the benefit of the doubt and explain to him that the Amendment would mean that the Bill which he dislikes so much could not come into effect for two years if this Amendment were passed. The reason is that the slow progress of the Bill in another place obliged Ministers to accept that there was no prospect of the Bill taking effect in the current year. To put off equalisation until 1979—and this really is the point of our resistance to the Amendment—would mean that this measure had been delayed for two full years. Given the large majority for the Bill in another place and the unopposed Second Reading in your Lordships' House, I think perhaps this, possibly rather uncharitably, could be described as a mischievous move. I do not suppose the noble Lord had that in mind.
Subject to the Bill gaining Royal Assent, we shall make orders in November or December in relation to the year 1978. This will allow time for the water companies whose financial year starts on
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1st January to take their levy or payment into account when fixing their charges for that year. It will also allow the water authorities to take equalisation into account in the much lengthier process of preparing the submission of their budgets to the Price Commission. It will ensure that those consumers who are now faced with very high charges in Wales, East Anglia and the South-West will get relief at the earliest possible opportunity, and the effect of this Amendment would be to frustrate that. Therefore, I am sure that having explained the effect this Amendment would have, and as we have been over the ground of the private water companies earlier in the Committee stage and it was also discussed at considerable length during Second Reading, there is nothing to be gained, but a great deal to be lost, by waiting any longer. I repeat that the private water companies were consulted, and also the water authorities, and the proposals in the Bill were the result of the agreement with them and with the water authorities. Whether it was meant deliberately or inadvertently, in fact this Amendment would mean that the path of equalisation could not be started on for another two years. For those reasons I hope the Committee will certainly reject this Amendment and I feel it was a pity that such an Amendment was tabled at this stage of the Bill.
Earl WALDEGRAVE: Before the noble Lord decides what he wishes to do about this Amendment, I think that the tone of some of the arguments, and the arguments themselves which have been used by the Government to justify this appallingly unthought-out, untimetabled Bill, are quite unacceptable. I am absolutely certain that my noble friend did not intend to bring in a wrecking Amendment—indeed could not because the Amendments tabled by the noble Baroness to bring in the water companies were only tabled and passed this afternoon so the noble Lord could not have brought in a wrecking Amendment until he knew the content of the Amendments that were brought in and passed this afternoon.
That is really going rather far. All the noble Lord said, and I feel quite certain that all he intended, was that the Government had had many second thoughts about this Bill and the timetable of when it was to come in, when the Government would

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get it through, whether or not to have the water companies in, and so on. He now says that we were promised a White Paper in the spring. It is already June and we are now told that it is coming out some time after midsummer. Although we are having a funny spring this year I do not think that justifies the change of the word, "spring" to "summer" by the Government. The noble Baroness, Lady Birk, must not accuse the noble Lord, Lord Sandford, of bad faith in tabling this Amendment, and it appears that she was so accusing him. Of course, if she was not doing that, I will immediately withdraw but it sounded to me as though she was accusing him of bad faith and of bringing in a wrecking Amendment under the guise of an Amendment to give more time for consideration, and I do not think he was doing that.
Baroness BIRK: I think the noble Earl, Lord Waldegrave, could not have heard what I said when I replied to the noble Lord, Lord Sandford. In fact I interrupted myself when I was replying, in order to ask the noble Lord, Lord Sandford, whether he was aware that the effect of his Amendment would be to delay the implementation of the Bill for two years. I thought I was extremely gentle with him and I said that if he was not aware of the effect of that I would not accuse him of tabling a wrecking Amendment. I think he accepted that.
To say that this had come upon us like a 24-hour wonder is sheer nonsense, if I may say so with great respect. The question of the private water companies coming in was discussed in another place. It was discussed during Second Reading in your Lordships' House; the noble Lord himself and the noble Lord, Lord Somerleyton, and other noble Lords spoke strongly in favour of the water companies coming in. I made it quite clear that my right honourable friend had intended them to come in but at the time there had not been the opportunity for discussion when we wanted to get the Bill in operation during the current year. So this has been discussed exhaustively and I think the noble Lord, Lord Sandford, will agree that it is wrong to say that he was unaware of this until yesterday afternoon. Apart from anything else we have had correspondence about it. He has had notes on the clauses and he himself has
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certainly not put forward any such idea. I can quite understand the noble Earl, Lord Waldegrave, jumping to the defence of his noble friend, but I think on this occasion he has got it rather wrong.
Nevertheless, to get back to the Amendment, with whatever motives it was put forward—and I repeat that I do not accuse the noble Lord of bad faith: I wanted to try to find out and I probed to see what he was up to—this would be the effect of it, and for that reason the Government must resist it. I am resisting delaying the implementation of this Bill for another two years.
Lord SANDFORD: We must not get too cross with each other. I must say that the noble Baroness is provoking me somewhat when she says that all this was fully discussed in another place. I am afraid it was not. All that was discussed was whether the Government had consulted the water companies about their inclusion in this Bill, which eventually wrung from them, more than half way through the Committee stage, an undertaking that they would consult the water companies about the Bill. By the time we had our Second Reading they were committed to doing that and since then it has been done, and because it was being done we have had a very considerable delay between Second Reading and Committee stage here. It has now been discussed and we see the fruits of it; but I have to say that until I saw the fruits of those deliberations in the form of the Government's Amendments I could not tell, and I do not think anybody else could tell, the way in which they would be brought in.
I see now that one of the problems in spatchcocking the water companies into the Bill at this later stage is to take account of the different financial years that they operate. Therefore, my Amendment has an effect different from the one which I had intended. The reason for my Amendment was exactly, no more no less, the one which I gave, namely, that I think that if the Government are committed to producing a White Paper in the spring —and that is all I had to go on until a few moments ago—we ought not to be putting a Bill on the Statute Book and beginning to implement it until all concerned have seen the overall framework in which it would operate.

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The noble Baroness can say that equalisation of water charges is one thing; the new policies proposed in the White Paper are another. But there is no doubt at all that the White Paper, if it bears any resemblance to what the Government have led us to expect, is going to produce a changed framework in which this system is going to operate. It seemed to me to be entirely sensible to try to amend the Bill to ensure that, if and when it is enacted, which we hope it will not be, it is not implemented until this White Paper has at least been seen, and preferably debated, and consultations had gone on about it.
The noble Baroness has said two helpful things: first of all, that the White Paper will be out next month, July, not the spring. We know where we stand. And she has said that the first orders under the Bill need to be made in November. That gives a period from July to November in which I can reconsider my Amendment and retable it in a form which secures what I want and does not necessarily involve any delay in bringing the Bill into force. I shall seek to do that, and in the meantime I beg to leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 6, as amended, agreed to.
In the Title:
Baroness BIRK Baroness BIRK moved Amendment No. 43:
line 2, leave out ("water authorities") and insert ("statutory water undertakers").
Title, as amended, agreed to.
House resumed: Bill reported with the Amendments.

CONTROL OF OFFICE DEVELOPMENT BILL
Brought from the Commons; read 1ª, and to be printed.

CONTROL OF FOOD PREMISES (SCOTLAND) BILL
6.16 p.m.
Lord LYELL: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Lyell.)
House in Committee accordingly.
[The Lord DERWENT in the Chair.]
Clause 1 [Closure of food premises, stalls or vehicles dangerous to health]:
Lord GRAY Lord GRAY moved Amendment No. 1:
Page 1, line 15, at end insert—
("(c) the transport of food in or by any vehicle which is insanitary or which is so constructed or is in such condition that the food is exposed to the risk of contanimation."
The noble Lord said: In speaking to this Amendment it might be for the convenience of the Committee if I also addressed my remarks to Amendment No. 2, which is directly linked with it and consequential upon it. It would be best if I were to open my case for my Amendment by saying something about Clause 1 itself. Clause 1 contains the real muscle of the Bill. It arms sheriffs with power to close down premises which have been convicted of an offence against regulations made under Section 13 of the Food and Drugs (Scotland) Act 1956. Paragraphs (a) and (b) of subsection (1) provide that the offence which led to conviction under those regulations must have included one or more specific characteristics. Subparagraphs (i), (ii) and (iii) of subsection 1(b) list a group of conditions as to which the sheriff has to be satisfied before he makes a closure order. The remainder of the clause deals with various aspects of the making of a closure order and its possible subsequent withdrawal.
Under paragraphs (a) and (b) of subsection (1) the key words which control the considerations as to whether an offence against regulations is to lead in turn to a closure order are the words "the carrying on of a food business". For the purposes of the Bill the words "food business" are interpreted in Regulation 3 of the Food Hygiene (Scotland) Regulations 1959. I quote that definition:
"In these regulations, unless the context otherwise requires, the expression 'food business' means any trade or business consisting of or so much of any trade or business as consists of the selling, exposure, service, preparation, transport, storage, packaging, wrapping or delivery of food"

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It goes on to certain exceptions, but they do not concern us here.
I would wish to draw the attention of the Committee to the inclusion of transport in the list of activities in that definition which identify what can constitute a food business. Noble Lords will see that Clause 1(1)(b)(i), at line 17 on page 1 of the Bill, repeats several of the activities listed in the interpretation which I have quoted, but they will notice that among the absentees is "transport". It may be that food businesses engaged solely in transport have been deliberately excluded from the ambit of the Bill. I do not know whether that is so. However, a different point should be noted. A food business might well consist of premises where food is prepared and other quite separate premises, miles away, where the prepared food is subsequently to be sold. Quite patently, the food would have to be transported between one premise and the other during the course of business.
I may, perhaps, have drafted my Amendment—the new paragraph proposed to be included in Clause 1—too widely. Whether I have done so will depend on what my noble friend Lord Lyell has to say about the intention of the draftsman in regard to businesses which are solely concerned with the carriage of food. However, I ask noble Lords to consider whether it would not be appropriate at least to introduce the word "transport" into the Bill in the two ways suggested in my Amendments, if only to prevent a situation which I suppose could arise where a sheriff should be considering the condition of the transport involved in a business, but perhaps is precluded from doing so by the selective use of the words extracted from the definition clause. I beg to move.
Lord LYELL: I am sure that the Committee will be grateful to my noble friend Lord Gray for explaining his Amendment so clearly. The noble Lord pointed out that under the Food Hygiene Regulations 1959 there are provisions which govern the sale of food and, indeed, the conditions of food businesses in Scotland. The noble Lord clearly stated the definition of "food business"; he went right through all aspects of the food business. However, I am sure he noted that those definitions included the transport, packaging or delivery of food. As
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we understand it, the reference in Clause 1(1)(b) to "a food business" under Regulation 3 would already include the transport of food, which I believe is what my noble friend's Amendment seeks to introduce.
Further, under Regulation 30(1), as amended by the 1966 amending regulations, there is the following provision:
"Every stall or vehicle which is used in the course of or for the purpose of a food business shall be kept clean and be of such construction and in such order, repair and condition as will enable it to be effectively cleaned and the layout of any such stall or vehicle shall be such as will enable operations conducted therein for the purpose of food premises to be conducted hygienically".
That is quite a mouthful of rather detailed provisions from the regulations and I apologise to the Committee for it. I hope that my noble friend Lord Gray might consider that it is clear from that definition that the inclusion of the transport of food between points of production, storage, packaging, selling or the ultimate consumption of food, is indeed covered by the definition of a "food business", both as it is found in Clause 1(1)(b) of the Bill and also in the Food Hygiene Regulations 1959. That is all I wish to say. I hope that my noble friend will be reasonably satisfied with that, and if he has any further points I shall consider them.
Lord STRABOLGI: Perhaps I may say on behalf of the Government that I absolutely agree with what the noble Lord, Lord Lyell, has said. I am happy to confirm that the Food Hygiene Regulations, as appropriate, apply to vehicles used for the transport of food. Nevertheless, we are very grateful to the noble Lord, Lord Gray, with his great knowledge and experience of these matters, for raising it. It has given the noble Lord, Lord Lyell, and myself the opportunity to explain the purpose of the clause, which I may say is working very well in the English Act.
Lord BALERNO: I was unable to be present at the Second Reading debate of this Bill. I should like to take this opportunity to say how necessary the Bill is. In Scotland in recent months there have been several rather terrible cases, not just of cockroaches but of other things in kitchens and places where food is prepared and served. This Bill will be extremely useful. I am interested in the

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point raised by my noble friend Lord Lyell, but I wonder whether my noble friend Lord Gray is not right to raise this point. If he, as an intelligent person reading the Bill, spots that the transport of food is omitted when everything else is included, may not the Bill when it becomes an Act—if it goes through in its present form—be similarly interpreted by those who have not simply to enforce it but to obey it? Therefore, I suggest that for the avoidance of doubt it would be a good thing to include transport and to accept this Amendment. It would certainly do no harm.
Lord LYELL: I am grateful to my noble friend Lord Balerno. With respect, I would call myself a quasi-lawyer in that I have been plunged headlong into these matters. As I understand it, the inclusion of the Amendment as it is at present tabled would not necessarily cause more confusion but could be misleading. It is for that reason that I have sought to show that although the fears raised by my noble friend Lord Gray and, indeed, by my noble friend Lord Salerno, are not groundless, the inclusion in the Bill of transport, as stated in the Amendment, would be misleading.
If we included this particular aspect of a food business, which is already defined under the food hygiene regulations, we should probably have to include every other stage in the food processing business: the production, packaging, selling, storage, and every aspect of it. From what I understand to be the case, both as to the law and the interpretation of the regulations, the inclusion of this Amendment would necessitate the inclusion of many other aspects and considerably complicate this Bill, which is fairly brief, uncontroversial and simple. I hope that this goes some way towards explaining the position and allaying any fears which might be aroused in the noble Lord, Lord Balerno.
Lord GRAY: Before my noble friend sits down, may I ask him whether I heard him say that there was a defect in the drafting of the Amendment at present?
Lord LYELL: I had not understood that there was a defect in the drafting of the Amendment, but if the Amendment were to be included in the Bill at this point the Bill would not necessarily be misleading
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but would, or might, be taken to be incomplete in that we should have to include in the Bill every other aspect of the food business, which indeed, as the noble Lord pointed out in the first stage of his Amendment No. 1 would include transport, packaging and delivering. Of course that would operate right back to every stage, and there might have to be included a separate paragraph—not just paragraph (c) in Amendment No. 1—for every other process in the food business which is already included in the regulations. Indeed, this Bill stands on its own, but it also stands with the regulations and goes some way to interpret the regulations. I did not mean to suggest that the drafting was defective. I just thought, and I understood, that if the Amendment were to be inserted into the Bill the Bill would become over-detailed and could then be misleading. I do not say that it would be misleading, but it could be.
Lord GRAY: I am grateful to my noble friend Lord Lyell for the trouble he has taken in answering my Amendment, and also for the support I have had from my noble friend Lord Balerno. As I think my noble friend Lord Lyell already knows, my welcome for this Bill is wholehearted. I would do nothing wittingly to hinder it on its way to the Statute Book, and any Amendment which I am putting forward to what really represents a considerable and desirable improvement and strengthening of the food and drugs legislation in Scotland, and the enforcement of that legislation, I put forward only in a spirit of support.
I apologise to the Committee for taking time on this but I should like to take up one or two points made by my noble friend, or which arise from what he said. I do not know whether he has quite taken the point that I was making, that by being selective in the words chosen from the definition clause in the regulations there is a danger that this selection could be seen as excluding the others, because the Bill before us, at Clause 6(1)(a), says:
"any expression to which a meaning is assigned by the regulations in question shall, unless the context otherwise requires, have the same meaning in this Act as in those regulations;…".
I was only suggesting that we have created a context by selecting a few of the criteria in those regulations.

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I would certainly not want to introduce a lot of new paragraphs or subsections into the Bill. Despite the support which I have received from my noble friend Lord Balerno, I am anxious to see this Bill on its way. I am not sufficiently sure of my rightness as against that of my noble friend Lord Lyell. I think I could see my way to withdrawing this Amendment if my noble friend would look at what I have added in reply to his answer.
Lord STRABOLGI: Before the noble Lord, Lord Lyell, replies, perhaps I could assure your Lordships, and particularly the noble Lord, Lord Gray, that this Amendment is not necessary. The best legal advice at the disposal of the Scottish Office, and also of course of the Department here in London who put through the original Bill, is that this Amendment is not necessary, because what the noble Lord is rightly seeking to do is already contained in the Bill under Clause 1(1)(b); the reference to "a food business", which includes the transport of foods. I went into this in considerable depth this morning with my legal advisers and officials, and I can assure the noble Lord that his Amendment is not necessary.
Lord GRAY: In those circumstances, I think that this would be an appropriate moment for me to beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
6.37 p.m.
Lord GRAY Lord GRAY moved Amendment No. 3:
Page 1, line 20, after ("state") insert ("or situation").
The noble Lord said: The situation of any premises is one of the choice of criteria, upon fulfilment of which an application for a closure order must rest under the wording of Clause 1(1)(a) and (b). Therefore, "situation "should surely appear in the list of considerations set out in subsection (1), sub-paragraphs (i), (ii) and (iii), and about which the sheriff is required to be satisfied before granting a closure order. The state of the premises is cited as such a condition in sub-paragraph (ii), but unless the word "state" is held to embrace "situation", which I personally doubt it would, I submit that the correct course
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is that we should add the word "situation", as proposed in my Amendment. As my Amendment suggests, the correct place for it would be in sub-paragraph (ii). The corresponding sub-paragraph of the English Act equivalent to this Bill reads:
"… by reason of the situation, construction or insanitary or defective condition of the premises or stall or the insanitary or defective condition of the fittings or fixtures or equipment or the infestation of vermin or the accumulation of refuse …".
et cetera. While the Scottish draftsman is to be congratulated on so elegantly reducing the English verbiage to the one word "state" from the list of conditions in the English Act, it appears that, perhaps inadvertently or mistakenly, he has jettisoned an essential ingredient.
Lord LYELL: I thank my noble friend Lord Gray for moving the Amendment, which he did most eloquently. We have recently listened to many hours of legal argument—I certainly have, especially when debating matters with the noble and learned Lord, Lord McCluskey; many hours have been spent discussing Scottish law—and the Committee will be grateful to Lord Gray for his Amendment and for drawing a comparison between the Bill and the English Act which, I agree with him, is sought to be the equivalent.
The Committee will accept that I am a layman in these matters. When I looked at the phrase "state of the premises" I thought it was intended to cover the physical condition, the height and construction, of the premises, the vehicle or the stall. It would seem to cover the situation of the premises as well. However, there are far more eminent legal representatives than I in the Committee tonight and certainly the draftsmen have gone a great distance to help to improve the Bill.
I am instructed that the Bill as drafted, containing the words "state of the premises", might indeed cover the condition and construction of the premises, stall or vehicles, but that it might not cover the situation as Lord Gray has described it. We therefore feel that the Amendment should be accepted because it will put the matter beyond any reasonable doubt.
Lord STRABOLGI: I agree absolutely with the noble Lord, Lord Lyell, and it is the view of the Government that the

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Amendment makes an improvement to the Bill because, as he rightly said, it will put the matter beyond doubt. We are grateful to the noble Lord, Lord Gray, for moving it and I commend it to the Committee.
6.43 p.m.
On Question, Whether Clause 1, as amended, shall stand part of the Bill?
Lord GRAY: I am obliged to my noble friend Lord Lyell for accepting my last Amendment and to the Government for the blessing they gave it; my lucky number three has turned up for me again. Through the acceptance of that Amendment, the Committee has accepted or acknowledged the relevance of the word "situation" among the criteria about which the sheriff has to be satisfied in his consideration of an application for a closure order. The situation is cited, as I pointed out, elsewhere in Clause 1; it is used both in regard to fixed premises and to what might be termed mobile premises.
The point I wish to raise at this juncture concerns its application to fixed premises, a building. Is it possible that "situation" could be the prime or sole factor which led to the conviction under regulations which triggered the provisions of this Bill and led to the closure of premises? Could there not arise a case where, despite the best efforts of the proprietor or manager of a food business, the situation of the premises in terms of its proximity to other premises over which he had no control might lead to a closure order?
I readily accept that anyone who, through his own fault, does anything to offend against the regulations deserves no mercy, but there seems to be a possibility that it might be the negligence or activities or inactivities of a third party which led to the situation of the premises being a factor which was taken into consideration. All I should like to know, not necessarily tonight, is whether there is anything in the Bill or in any other legislation whereby action could be taken in such a situation by the sheriff against a third party, otherwise it would seem that the premises might be closed and, quite unfairly, the person whose premises were closed might be left to bring civil suit to get redress.
Lord LYELL: I thank my noble friend Lord Gray for raising that point. As I see it, the addition of the word "situation", which we have accepted, appears to me to mean the geographical location of the vehicle, stall or premises; where, to use the Scottish term, they are "situated". The only example that came to my mind as my noble friend was speaking was the possibility that food might become contaminated because of the geographical situation; that rats, vermin or mice might gain access to the food during its preparation, during the processing of the food or while it was being sold. Or perhaps the food, if it were consumed immediately adjacent to the premises, stall or vehicle, could come under a contamination risk because, for example, people dropped chip bags and then ate the chips. That is the kind of thing that I had in mind and, while it is unlikely, it is a risk. It was the geographical location that I had in mind when my noble friend was speaking.
I should like to consider what he said, because I think there is merit in it. Perhaps he will allow me to consider the point and get in touch with him at a later stage. I hope the one example that came to my mind, that of the geographical location of the premises, would not of itself mean that a food business was closed down. However, whatever the cause—whatever the geographical location of the food business—the object of the Bill (I know I have the support of the Committee in this) is to see that, no matter what are the circumstances, contaminated food should not be sold. I hope I have said enough to convince my noble friend at this stage, but I will consider the matter and be in touch with him. Meanwhile, I hope the Committee will agree the clause.
Lord GRAY: I willingly accede to the arrangement my noble friend Lord Lyell suggests—that he will get in touch with me—and I put the point tonight only when I had exhausted the powers of my own research because I find that Section 45 of the 1956 Act does not, on my reading of it, quite fit the situation, although it has been given effect in this Bill by Clause 4(2).
Lord LYELL: In fact, the winged messengers have produced something that tallies with that of my noble friend Lord Gray. I understand that provision for such a case as has been mentioned by my

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noble friend is made in Section 45, as my noble friend has said. I understand that that is the position and that also it would be for the court and the sheriff ultimately to decide whether this situation constituted an adequate and reasonable defence in a particular case. It might or it might not. I hope that my noble friend will accept that the court would probably be able to judge this issue on a local basis and I wonder whether we could leave it at that.
Clause 1, as amended, agreed to.
Clause 2 agreed to.
Clause 3 [Right of appeal]:
6.52 p.m.
Lord STRABOLGI Lord STRABOLGI moved Amendment No. 4:
Page 3, line 39, at end insert (", and any appeal under this subsection shall be by way of summary application.")
The noble Lord said: This Amendment seeks to rectify a technical weakness in the Bill brought to the attention of the Government by the Law Society of Scotland. We are grateful to the Society for doing this. As at present drafted, an appeal against granting or refusing an interim order shall be made to the sheriff principal but there is no indication in the Bill of the procedure by which such appeals should be made. While it is not strictly necessary to specify the procedure for such appeals, since the court can itself lay down the procedure which it considers most appropriate, this could lead to difficulties and uncertainties in implementation after the Bill becomes law.
The Amendment establishes two things, both in accordance with proposals made by the Law Society. First, it puts beyond doubt that an appeal against an interim closure order is a civil matter and analogous to an interim interdict. Secondly, it establishes clearly what procedure is to he followed in relation to such an appeal; that is, that the appeal is to be by summary application. This is a purely drafting Amendment which, I submit, is an improvement to the Bill. I beg to move.
Lord LYELL: If the Committee will permit it, I should like to thank the noble Lord, Lord Strabolgi, for having moved the Amendment. He was somewhat
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humble in suggesting that it was only a drafting Amendment. I believe that it has real substance and that the whole Committee is grateful for the work of the Law Society and for its vigilance as regards food hygiene, as regards the legal regulations and, indeed, as regards the Bill. We are grateful for the noble Lord's advice and I hope that we shall accept the Amendment.
Clause 3, as amended, agreed to.
Clauses 4 and 5 agreed to.
Clause 6 [Interpretation]:
On Question, Whether Clause 6 shall stand part of the Bill?
Lord GRAY: The clause deals with the interpretation of the expressions in the Bill. We have already heard something of this this evening. Subsection (1) has two paragraphs: paragraph (a) takes into the Bill from the regulations which I quoted the meanings assigned in those regulations; paragraph (b) reads:
"Sections 1 to 4 of this Act shall have effect as if the references to premises included places which are not premises within the meaning of those regulations."
It is in part with the first of those subparagraphs that I wish to deal and in part with another matter.
The noble Lord, Lord Strabolgi, was kind enough to write to me about a question that I had asked earlier about the definition of "premises", which is, for the purposes of this Bill, very important. Yet there is no definition of the word "premises" in the Bill. However, in his letter to me, the noble Lord said, if I may quote him:
… that I should explain that the Bill refers throughout to premises and whilst the Bill does not itself contain a definition, the Food and Drugs (Scotland) Act 1956, referred to in the Bill, defines the term in Section 58 as, 'a building or any part thereof'."
That answered quite adequately the question that I had put to the noble Lord although I had some doubts that the interpretation would come easily to those who might be looking for it. My first point is that this is primary legislation. We have here a word which is of key importance but we have to go to another Act to find the definition. Also, this is

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an Act which is not directly connected to the Bill but is connected to it by way of regulations which intervene.
My second point is that, again, we have here primary legislation which for another very important definition—that of a "food business"—depends upon subordinate legislation for the interpretation of the term within the Bill. I believe that it could happen that at some future date the subordinate legislation could be amended by this or a subsequent Government and the existing regulations repealed. I do not imagine it is likely to happen by accident that the definition would disappear but maybe the Government would feel it appropriate to change it. That would have the effect that through an instrument which I understand would require a Negative Resolution, an important definition of a term employed in the Bill could be altered and the Bill assume a character of which Parliament when speaking about it today would know nothing and the Bill would assume a character quite different to the character of the Bill that we are talking about.
I do not want to pursue this at length, but I should like just to ask whether it might not be worth considering strengthening and perhaps removing some of the lack of clarity from the definition clause by importing into the Bill appropriate and essential definitions from the other two enactments to which I have referred.
Lord LYELL: We are grateful to my noble friend for raising this point. However, I hope that he and the Committee as a whole will consider that the whole Bill rests on an offence having been committed under the Food Hygiene Regulations 1959. I take on board what my noble friend has said. Nevertheless, the definition of "premises" will, we hope, always be the same as the definition of "premises" in the food hygiene regulations.
If the Bill is enacted, and if it were to contain its own specific definition of "premises", we understand that it would require amending legislation to change that definition at any time when there was a change of the definition in the regulations. I would add that the corresponding English Act deals with the matter in the same way as is proposed in the Bill before us. This was accepted by this House, and by the other place, as appropriate, but I
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look carefully at the noble and learned Lord, Lord McCluskey, to see whether that is necessarily a good thing. But I hope that the noble Lord, Lord Gray, will be reasonably happy with that. Certainly I will endeavour to keep in touch, and I give him my word that I will look carefully at what he said.
Lord GRAY: I am grateful to my noble friend for what he said, and I appreciate the offer that he has made, and the courtesy with which he dealt with the points I raised. I wish to mention here only one matter. I think that he made a slip when he said that there was a definition of premises in the regulations. I think that it occurs in the Act, and arrives in this Bill only by virtue of the fact that the regulations which trigger the provisions of the Bill are written with regard to the definition in their parent Act.
Lord LYELL: I thank the noble Lord for saying that. What I intended to say and what I meant—though saying and meaning have great differences at times—was that we hope that the definition of premises would be the same as the definition of premises in the regulations, but indeed that definition might depend on the Act, as the noble Lord has said. But that taken, we are certainly looking at subordinate legislation of two different types. I take note of what the noble Lord has said.
Clause 6 agreed to.
Clause 7 agreed to.
Clause 8 [Short title, commencement and extent]:
7.2 p.m.
Lord STRABOLGI Lord STRABOLGI moved Amendment No. 5:
Page 5, line 20, leave out from ("force") to end of line 21 and insert ("on such day as the Secretary of State may by order made by statutory instrument appoint.")
The noble Lord said: I beg to move Amendment No. 5. This Amendment seeks to make a technical adjustment to the provision concerning the date on which the Bill will come into operation after enactment. As at present drafted, the Bill will come into operation two months after Royal Assent. Because of the

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rapid progress which the Bill has made, there is a possibility that the Bill could be operative before the completion of the current updating of the Scottish food hygiene regulations on some of the terms of which the Bill rests. By providing that the Bill will now come into operation on a day to be appointed by order by the Secretary of State, the possibility of enforcement difficulties for local authorities will be avoided.
On Question, Whether Clause 8, as amended, shall stand part of the Bill?
Lord GRAY: I apologise to the Committee for rising again, but perhaps Members of the Committee would view my speaking with a little more understanding if they were to know, as they may not, that the Bill passed through every stage in another place without one single syllable being uttered. It is only here, at Second Reading and today, that it has had any probing, or even any praise. I notice that the Bill extends to Scotland only. That is stating the obvious, but I missed the opportunity that I should have taken of rising when the Question was put on the previous clause stand part, in which ships were dealt with. I had not been going to talk about ships, but if I may be excused a simply appalling pun at this hour of the evening, I should say that I was going to ask an omnibus question about other types of vehicle. I should like to ask specifically whether aircraft are caught under the terms of the Bill, and furthermore whether oil rigs and railway trains are caught by the Bill? If they are in some cases, but are not in others, or if they are not all caught, should they not be so caught, or should they be so?
Lord LYELL: We are very grateful to the noble Lord, Lord Gray, for raising this point. I, too, am interested about, and worried by, the question of trains and aircraft which commence and terminate their journeys within Scotland. I understand that this is a matter which could be, and indeed should be, looked at when the 1956 Food Act is reviewed, and various other points which have been raised this evening could also be looked at, particularly the comment raised by my noble friend.
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With regard to oil rigs, I believe that if a food business were carried on at a particular oil rig, the Bill would apply. I am given to understand that oil rigs (I think that they are known as production complexes) where attached by mechanical, geological or possibly other means to the seabed, and where used for production, and are, more or less, a static complex, in a static location, are, for the purposes of law, Scottish structures. They are subject to Scottish law, and I understand at the moment that the Bill, if enacted, would apply to an oil rig.
However, when it comes to an exploration rig, which I understand is not only capable of moving about, but tends to move about in the North Sea, and which possibly might be defined as a ship, this would be a matter for legal experts, with greater knowledge than my noble friend and myself have, to determine. Nevertheless, we are grateful that he has raised this point, and I should like to look into it. I should be happy to keep in touch with the noble Lord, and let him know the position.
The DEPUTY CHAIRMAN of COMMITTEES (Lord Derwent): I apologise to the noble Lord, Lord Gray, for having been a little too quick for him earlier, but luckily our proceedings are sufficiently easy to have enabled him to get in his point.
Clause 8, as amended, agreed to.
House resumed: Bill reported with Amendments.

FARMHOUSE CIDER: TAXATION LEVEL
7.8 p.m.
Lord O'HAGAN Lord O'HAGAN rose to ask Her Majesty's Government whether they will now increase the figure for the annual production of farmhouse cider below which cider makers are exempt from taxation. The noble Lord said: My Lords, after food and water we come to cider, which is both, and above and beyond, either. I should perhaps explain to the House why I am troubling your Lordships with this matter, and I wish that I could issue a glass to all who have stayed to hear me, particularly my noble friend Lord Ferrers, who is kindly going to add a word, I believe.
In last year's spring Budget the Chancellor put a tax on cider for the first time, and in so doing he filled in a gap in the spectrum of tax on alcoholic drinks. It is not a general debate on whether cider itself should be taxed that I am trying to initiate tonight. I am not asking the noble and learned Lord who is to speak for the Government to repeal the tax on cider, popular though that would be up and down the country, particularly in the West Country. I am asking the Government to look at the effect of their tax on farmhouse cider makers, who represent a very small but, I think, important category of people who make cider.
My Lords, last year the Government introduced this tax, and at first the duty was 22p a gallon. It was then increased to a figure of 24p a gallon. The tax was introduced in September last year, and its effect was immediately felt in the West Country. On the 14th March I put down a Question for Written Answer in your Lordships' House about the results of the imposition of this tax, and when I had the reply—which showed that the Government were at least prepared to consider representations about this subject—I received a great deal of attention in the Press in the area where I live, which is the West Country. I also received many letters from farmhouse cider makers, and I have visited several of them in the places where they make cider. It may be that the Government up here in London, as it might look to those of us who live in the Western part of the country, have not yet heard of the amount of resentment that the imposition of this tax has caused, but the National Farmers' Union has, and I have a letter from Sir Henry Plumb supporting my case, which I shall quote later in the debate.
My Lords, what is the effect of this tax? What does it mean to the farmhouse producer? Perhaps I can give your Lordships an idea very quickly by quoting an account from one particular farmhouse cider maker—and I should make it quite plain that I have no commercial or financial interest either in this farmhouse cider making undertaking or in any other. My Lords, this individual who got in touch with me says this:
"Cider has been made on this farm since 1926. We currently produce 6,000 gallons per year, which we sell direct to local people who call at the farm. Until September 1976 our little
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business was a simple one. The cider was made and blended during spare moments from farm work. There was a minimum of paper work. Since September 1976 the situation has changed dramatically; for example, the task of blending. This is a weekly job involving the transfer of small quantities of cider from one barrel to another to achieve a consistent product. It used to take about two hours. Now each movement of cider must be recorded and entered in the entry book "—
that is the Government tax form—
"adding at least half an hour on to the job. The forms are complex and, being designed for much larger concerns, hardly relate to what I am doing.
"Then there is the problem of disposing of bad cider, a not infrequent necessity previously involving nothing more than pouring it down the drain. Now the Excise officer must be invited to attend. An appointment must be made so that he may observe the exact quantity of cider that is being emptied away. The old methods of production can no longer continue. No one other than myself can even attempt the paper work. Those who used to lend a hand with blending, emptying out barrels, etc., can no longer do so. The shared pleasure in making cider for the locality is a thing of the past.
"Financially, the effect of the duty has been disastrous. Before September 1976 our selling price was 75p a gallon. The current duty is 25p, more or less—33 per cent. of our previous selling price. Such a hefty price rise has made it impossible for us to pass on more than a fraction of our own increased costs; e.g., the price of apples and the agricultural wage. Sales have already dropped by 30 per cent. since the imposition of the duty. We cannot afford to lose any more.
"The future looks bleak unless the threshold is raised and unless the form-filling is simplified. The old purchase tax system was easily managed. Raising the threshold to 5,000 gallons would enable us, along with a depressingly small number of other producers, to carry on the old craft of farmhouse cider making. We would happily drop our current production to 5,000 gallons if it meant that we could continue to provide a good cheap drink. Farmhouse cider is more than a brand name; it describes a local drink, made from local fruit, whose production forms a small but integral part of the work and life of the farm."
My Lords, that particular gentleman put in a clear and coherent form the feelings of many farmhouse cider makers throughout the West Country and in other places, and it is that plea that I am presenting to your Lordships tonight in the hope that the Government, who I do not think have yet fully realised the consequences of what they have done, will now take the opportunity to reverse the disastrous trend that they have set in motion. It may be that farmhouse cider making was already something which was dying, but what the Government are doing is tolling the death knell of this traditional farmhouse industry.
My Lords, I wish to start with the burden of form-filling, and I should like to thank the Government for what they have said to me already. I have an Answer here, given on the 19th May, in which the Government have agreed to simplify the forms for cider makers who make less than 20,000 gallons of cider in a year. I should like to thank the Government for that concession and ask them when these forms will be available, and whether a copy could be sent to cider makers well before they actually have to be filled in so that they can get used to them. Perhaps the noble and learned Lord who is to answer can give us some information about this change in Government policy, because it was announced on the 19th May.
The burden of form-filling may be relieved, and it is the burden of form-filling which has caused much of the hardship to the farmhouse cider makers. But what worries me as a Parliamentarian is the enormous extent of the bureaucracy that is required for what I take to be a trifling and, indeed, insignificant amount of revenue produced for the Government. I know that the Government need every penny that they can get in order to spend it for purposes of which we sometimes approve and sometimes disapprove, but, nevertheless, the country needs the Government to have revenue to run things for us. Nevertheless, I should like to know from the noble and learned Lord whether he agrees with me that farmhouse cider makers do not yield the Government much money.
I have another Written Answer here, again dated 19th May, in which the Government told me that there were only two registered cider makers—and they are both in the West Country—producing under 5,000 gallons. It may be that that is wrong; it may be that since the 19th May the figures have changed; but that is what I was told on the 19th May by the noble Baroness, Lady Birk. My Lords, at the current level of taxation, which is 24.2p a gallon, I calculate that the gross annual return to the Government from these two producers who are producing up to 5,000 gallons, based on the Government's own figures, is a figure of £1,573; that is, 0·01 per cent. of the total income from the cider tax, the total cider tax now producing an income which is calculated by the Government to be about
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£11 million. To take the figures, also supplied to me by the Government on the same day, of the number of cider makers who are producing up to a figure of 15,000 gallons—and, again, most of those are in the West Country—if the tax was removed from them then over a full year that would represent a loss to the Government of 0·17 per cent. of the total income that they receive from the tax.
My Lords, as Sir Henry Plumb made so clear to me in a letter that he wrote on behalf of the NFU, the truth about cider production is this. The bigger producers produce between 98 and 99 per cent. of the total home production of cider, and it is the larger firms, the national firms and the smaller local firms, which produce the revenue for the Government and which, quite rightly, the Government charge to add to the general income that they need.
The case I want to put to your Lordships is that the cost of collection of this trifling and insignificant sum of money—and my calculations are based on the Government's own figures—is wholly uncompensated for by what is collected. The Customs officials make weekly visits to the farmhouse; these elaborate forms must be printed; the Customs and Excise officials must write letters, they must telephone, they must employ secretaries. In my part of the world they must travel long distances in cars. Some must spend whole afternoons sitting in farmyards counting the number of customers. Are such labours really justified by the insignificant amount of revenue the Government receive? If what I was asking for was brought into effect the Government would still retain 99·98 per cent. of their income from cider tax. That figure is based on the Government's two figures: the gross amount of revenue at £11 million and the number of cider makers registered. If that limit were extended to 15,000 gallons—and I believe that we should give consideration to extending it—the Government would still retain 99·74 per cent. of the total income they now receive.
I want to ask the noble and learned Lord, Lord McCluskey, this question: Do the Government seriously and honestly consider that the amount of revenue they receive from these small producers is worth the time, trouble and

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effort that officials must put in in order to collect it? Is it really justifiable in these days of difficult economic conditions that hard-pressed Customs and Excise officials should spend their time chasing round the backyards of farmhouses when they should be investigating much more serious matters which could yield a much larger income to the Government?
I do not want to criticise these Customs and Excise officials, either those who prepare the tax or those who have to collect it. They are only doing the job that the Government have made them do. I do not believe in attacking those who cannot answer back. My criticism is of the Government for their lack of concern about what happens to the farmers and the smaller producers in the cider industry. Unless the Government do not care what happens to part of the traditional way of life in many of the smaller rural communities they will lift this limit now. The tyranny of the form filling has already caused people to stop; the threat of the form filling has made some people discontinue; the knowledge that these forms will have to be filled in has made others give up who were thinking of carrying on.
If the Government care about what is part of a traditional farming enterprise—you feed the crushed apple to the beef cattle; you can do the harvesting first, for the cider making comes afterwards—and if the Government are concerned about the effect of their tax on the small farmhouse cider makers, they will lift the limit now. They will not, by so doing, bring about a decrease in the amount of revenue that they obtain; because I believe that some of these smaller producers might be willing to expand and to pay the tax if they knew that there was a certain amount that they could carry on producing that would be exempt and would give them a secure income. I think it is a possibility that the Government could in the end produce more income for themselves.
My Lords, I should like to thank the House for listening to me. I hope that the Government are prepared to listen and that they will give some due thought to the facts that they have heard from me, both tonight and at other times. Even if the noble and learned Lord is unable to say that this limit will be raised now, I hope that he will at least accept that what the
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Government have done so far is to drive the final nail in the coffin of the small producer. Unless the Government are prepared to lift the limit, they will carry the responsibility of putting an end to something that has been part of the traditional way of life in this country, and particularly in the West Country, for many hundreds of years.
In that serious vein I put this Unstarred Question tonight—not because it is a major matter for the long-term economic future of the country, but because it is something that is deeply felt in the part of the country from which I come. It is also that I believe the Government do not know about the effects on the ground of what they have been doing. When they have the facts brought home to them, the Government will see, in all fairness and generosity to those who want to carry on this traditional activity as part of their farm routine, that the time has come to lift this sentence of death from the farmhouse cider making industry.
7.26 p.m.
Earl FERRERS: My Lords, I, too, hope that the noble and learned Lord will listen—and will have listened, which is far more important—because I do not think many noble Lords have an intricate knowledge of cider making or of the industry other than, possibly, the consumption of the product. Still fewer have knowledge of the process of farmhouse cider making. My noble friend Lord O'Hagan comes from that part of the world where they do this cider making and where, as he has cogently explained, it is part of the tradition and way of life that operates there. He has used this evening the vehicle of the Unstarred Question for precisely the purpose for which it should be used; to highlight a specific part of our national life which can be affected which affects possibly only a very few people but when it affects them, it affects them heavily.
I do not think that anyone who heard my noble friend this evening could have thought that he had not put forward a very plausible case, at least, for consideration. Everyone knows that the majority of cider is made by the big companies and, as my noble friend has said, that is not the onus of his complaint. Everyone knows that the Govern-

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ment have a perfect right to impose a levy or Excise duty on cider as they have on whisky or beer and other things. That is not a cause of complaint and is nothing with which my noble friend quarrels.
I think I am right in saying that the only point to which he draws our attention is the method by which the imposition of this tax is affecting people individually and is affecting a part of an industry which is wholly home-based and one which is not, by any stretch of the imagination, subject to the normal methods of taxation that any other industry would be.
The problems with which these people are beset in carrying out the Government's wishes are extreme. They have been given vast quantities of paperwork and they are expected to fill up huge forms. I have some of the forms here. Perhaps I could quote from one of them:
Column 1:
"You enter the date. This column must be completed whenever an entry is made in any section of Part 1."
Column 2:
"Each fermentation must be a consecutive number. This column must be completed whenever entries are made in Columns 3, 5, 6 or 9."
Column 3:
"Notice to ferment. Notice must be given at least 12 hours before commencing to ferment. The column may be completed at the same time as column 1. Enter the date and the time."
Column 4:
"Enter the number of other identifying marks of the vessel in which the fermentation will take place."
Column 6:
"Enter the date and the time."
This is with regard to drawing off.
So we go on through columns 7, 8, 9, 10 and 11. That is only Part 1. There is then Parts 2, 3 and 4. All this is inflicted on a section of the rural community who have not the facilities, aptitude or resources to carry out this kind of work. Each barrel has to be numbered and, as may noble friend pointed out, if you transfer cider from one barrel to another you have to ring up the officials in order that they may come out and look at the barrel. If a barrel bursts, they
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have to be telephoned again and they come out to confirm that—and presumably to see whether the farmer has sucked up the contents!
It is an excessive state of affairs. My noble friend's suggestion is this: instead of leaving the figure at 1,500 gallons by which one is exempt, why not raise it to 5,000 gallons? That would make life a great deal easier for a great many people. The noble and learned Lord, Lord McCluskey, will be well briefed, and I should like to ask him some questions. Am I right in thinking that the total Excise revenue from cider making is £10 million? What will be the loss of revenue if the limit goes from 1,500 gallons—which it is at the moment—to 5,000 gallons?
What will be the savings enjoyed by the Inland Revenue by not having to collect this tax? The noble and learned Lord, Lord McCluskey, is a very conscientious person and I have no doubt he will be able to give the correct answer. My guess is that the total savings would outweigh that which is collected in tax. What puzzles me is the point to which my noble friend referred, and this is contained in a Written Answer to a Question he put on 19th May. In answer to the Question: "How many cider makers producing under … 5,000 gallons a year, have registered?" the noble Baroness, Lady Birk, said: "1 in Somerset and 1 in Dorset".
I find that a staggering figure. Apparently there are only two people who have been subjected to this vast quantity of paper. If that is so, I suggest that it is an absurdity. It is very likely that there are many more people who have not registered for some reason or another. I do not know whose responsibility it is to register. If there are a lot of people who have not registered, clearly the system is not working correctly.
My quiet calculation is that if both these two farmers each produce the maximum of 5,000 gallons—between them producing 10,000 gallons—and if the excise duty is 24·2p, the maximum that can be claimed is £2,420. I know that that does not agree with my noble friend's figure; but it seems to me that this is the maximum which the Inland Revenue could claim from this tax.
The object of my noble friend's Unstarred Question is not to encourage some fearful and secret industry like gin distilling

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or anything like that; it is not to benefit a specialised section of the population in a fiscal way which is unfair to others. It is not to denude the Government of revenue. All he wants to do is to make life simpler and more pleasant, both for those involved and for the Inland Revenue, to dispense with the absurdity of paperwork—and work which must be as frustrating to the Inland Revenue as it is to the farmers concerned—and all that to produce a net saving to the Government by not having to employ the people to undertake this particular task.
I am sure that the noble and learned Lord, Lord McCluskey, will take this point to heart. If he sees fit to accede to my noble friend's request, he can he assured that it will be a wonderful burden lifted off the backs of those farmers who carry out this traditional form of cider making, and it will be in a wonderful spirit of Jubilee Year. I hope that the noble and learned Lord will accede to this request because I can assure him that there is nothing sinister in it.
7.36 p.m.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, I hope that the noble Lord will forgive a mere Scot for rising to answer this Question. As a Scot, I have to express preference for a beverage other than cider or perry. But both as a Member of this noble House and as a Member of the Government Front Bench, I hope that I can properly approach the matter in the words of our daily prayer: "laying aside all private affections".
Were it not for the fact that I am more fully informed, I should be persuaded by what noble Lords have already said. Let me put the House more fully in the picture about the circumstances attending this particular duty. When the cider duty was introduced in the Budget in April 1976, the Chancellor said that he proposed to exempt small farmer producers from the new duty. Noble Lords will know that most traditional cider in the West Country is made by farmers, some of whom are relatively large producers. It was not the Government's intention that they should be exempt just because they were farmers; they had to he small producers. Neither the noble Lord, Lord O'Hagan, nor the noble
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Earl, Lord Ferrers, seeks to challenge this.
The only point arising therefore at this stage is: How big is small? After consultations between Customs and Excise officials on the one hand, and representatives of the National Farmers' Union and various associations which represented commercial cider makers on the other, it was decided that a cider maker would be exempt from the requirements of this duty if his annual production did not exceed 1,500 gallons. That is the figure which is in the regulations. This figure was seen, and, I would submit, accepted, by all as a reasonable compromise between those who wanted a higher exemption figure—and they included the National Farmers' Union—and those who wanted there to be no exemption at all.
The reasonableness of that figure is best illustrated by the fact that none of the bodies consulted has since made any representations whatsoever suggesting that the limit should be increased. The only representations which have been made are those by the noble Lord, Lord O'Hagan. None of the bodies has made any representation to the Government at all since the discussions which preceded the introduction of that particular limit. This is not altogether surprising because there are 67 cider makers which are exempt compared with only 48 who have to pay duty. An increase in the exemption limit from 1,500 to the figure suggested, of 5,000 gallons, would exempt only a further eight cider makers.
Your Lordships are entitled to an explanation of that figure because the Question for Written Answer which was put down by the noble Lord, Lord O'Hagan, asked how many cider makers producing under 5,000 gallons a year had registered in each county. The position is that the numbers were given for those producing under 5,000 gallons, but no fewer than six claimed that they produced exactly 5,000 gallons. So if the exemption limit were raised to 5,000 gallons, the number affected would be not two but eight.
Earl FERRERS: My Lords, that is a peculiarly precise figure. Is the noble and learned Lord quite certain that the

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number of six he has quoted refers to those who produce 5,000 or who produce more than 5,000?
Lord McCLUSKEY: My Lords, I am satisfied with what I have said. The position is, of course, that at this stage anyway, the small cider producers, and indeed the other cider producers, are making returns showing what their production is. As your Lordships will understand, one cannot be precise and therefore these are to some extent estimates; and it so happens that although two gave figures between 1,500 and 5,000 gallons, six estimated their production at 5,000 gallons. So the figure is precise but the estimate is simply what it claims to be—an estimate.
Earl FERRERS: My Lords, I am sorry to interrupt again, but may I ask whether, if in fact they did produce 5,001 gallons, the original figure of two would be correct?
Lord McCLUSKEY: Yes, my Lords.
Lord O'HAGAN: My Lords, I am trying to restrain myself and not to keep bobbing up, but is the noble and learned Lord really saying that the imposition of this tax has had no deterrent effect? Is he really saying that people were not frightened off from continuing to produce cider at all by the imposition of the tax? Is he really saying that the level of tax at the moment is not deterring others who might start, or wish to go on, from doing what they wish to do? It seems to me he is rather taking a "snapshot" of the present situation and not looking back, (a) to the effects that the imposition of the tax at this level has already had, and, (b) to the deterrent effect that it might have in the future.
Lord McCLUSKEY: My Lords, the Government have no knowledge of anyone who has been deterred from continuing to produce farmhouse cider by the fixing of the limit where it has been fixed. They have no knowledge of anyone who has been deterred from entering this field because of the limit, and none of the bodies has suggested that there is any such person. The noble Lord waves his arms in what obviously must be dissent, but I can only say that these bodies have been consulted. They include the National
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Farmers' Union and cider makers associations of different kinds, including one particular body representing the small producers; and we have no knowledge of anyone who has thrown his hands up in the manner demonstrated by the noble Lord and departed from producing cider because of the limit—
Lord O'HAGAN: My Lords, I hope the noble and learned Lord is not accusing me of not telling the truth. If he wants to come down to the West Country and meet some of these people he, or the Government, is welcome to do so at any time and I will put him up for the night. Just because the Government have not found out, it does not alter the facts of the case. My Lords, I will now sit down and keep sitting down; but I promise the noble and learned Lord that the Government have not taken the trouble to find out the facts, and it is no use justifying their ignorance.
Lord McCLUSKEY: My Lords, I hope that if the noble Lord has knowledge, which the Government do not have, of small producers who have retired from production because of the imposition of the limit of 1,500 gallons and, in particular, if he has knowledge of such producers who would resume production if the figure were fixed at 5,000, I hope that he will write to me. I will certainly bring that knowledge, which is novel, to the attention of Her Majesty's Customs and Excise.
There is another factor that has not been mentioned, which r think I must mention. The Government must weigh the interests of the small farmers, for whom cider making at this sort of level of production is perhaps a somewhat peripheral activity, against those of other small traditional cider producers, who are not farmers at all but for whom cider making may be their main means of livelihood. We are not at this point so concerned with the effect on the revenue of raising the exemption limit: indeed, raising it to 5,000 gallons would, we estimate, cost no more than about £10,000 in a full year in terms of lost revenue. I hope the noble Earl can see how that figure comes in relation to the eight people who would be exempt rather than the two, as appears from a first reading of the Written Answer to the Question that was asked. We are more concerned with the effect of an increase in

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the exemption limit on the cider makers whose production is a little above the exemption limit, whatever its level. That effect would be felt by all small producers who are above the limit, whether or not they were farmers.
As I have said, an increase in the limit would benefit only eight producers. They would become exempt, but it could seriously affect the trade of a larger number who would be faced with competition from cider makers who produced only slightly smaller quantities but who could sell, because there was no tax, at a price of up to 24p per gallon less. Such competition might ultimately have the opposite effect from that sought by the noble Lord, who, I think I understand correctly, has the wholly laudable aim of preserving the tradition of West Country cider making.
In this context, let me say that I have already repeated that none of the bodies or associations who represented these people has made any representation suggesting an increase in the limit. I should also add that, apart from the representations made by the noble Lord himself, only one representation has been received. It was made through a Member of the other place and was a complaint by a particular producer who was not entitled to exemption that he was facing unfair competition from a number of exempt producers in his locality who were able to sell at a lower price because they did not have to meet the tax. He was suggesting that exempt producers should be required to pay a fixed annual fee, so that he did not have to face unfair competition. Therefore, there are two sides to this question.
We are indebted, I must say, to the noble Lord, Lord O'Hagan, for raising a point which is very near to his heart, about the bureaucracy and the form filling. He has done a service, not least to the Customs and Excise, by doing that and what he has said has been taken to heart. Let me try to explain the present position in this way. The Customs and Excise, following these representations, and the meeting that they had with the noble Lord, are making a number of changes to reduce the burden of control on registered cider makers whose annual production of cider does not exceed 20,000 gallons; so we are able to take in a fair band of the small producers. The entry book, about which the noble Earl,
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Lord Ferrers, was so scathing, will in future be simplified if the type or scale of the small producer's business makes it possible to omit certain forms. I think that in particular he mentioned four forms; and either pages 3 and 4 or forms 3 and 4 will not be required to be filled in in the case of the small producers taking in cider from others or passing it on to others.
At the same time, some of the requirements for the detailed completion of other forms in the entry book are being relaxed. In particular, Customs will only be requiring daily totals of farm gate cider sales. I should explain that the simplified entry book is already in use—that is, in the last few weeks—and the simplified form in respect of sales is now being printed. It will, of course, be brought into use fairly soon. So I am happy to say that some progress has been made here, and I am also happy to acknowledge our debt to the noble Lord, Lord O'Hagan, in this respect.
In relation to particular points that were made, recording by small producers of blending and passing from one barrel to another is no longer required, I am happy to say. Of course, attendance by an official to witness the destruction of spoiled cider is not invariable, but control of destruction is necessary, otherwise there could be spurious claims to refunds. It is not true to say that a weekly visit is paid. Small producers are to be visited only occasionally. I am sure your Lordships will accept that there must be some check, but it will certainly not be a weekly check.
The noble Earl, Lord Ferrers, asked me specifically about the loss of revenue. I have tried to say that that loss is £10,000. The savings that would result would be very small and rather difficult to calculate. One would not expect to lose members of the Customs and Excise simply because one did not have to call upon the eight producers, or the two, or whatever may be the number, who became exempt by the raising of the limit.
The Government will certainly take into account what has been said, but I suggest that it is something of an exaggeration to speak of a sentence of death being imposed upon traditional small producers of cider. I suggest that that is really rather extreme. But having regard to the consideration of fairness to other small producers, and the

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interests of all West Country cider makers, in the absence of any evidence so far that anyone is likely to give up production because of the present level of exemption, and observing that the duty is still less than one year old, the Government are not yet persuaded that the exemption limit should be raised.
Earl FERRERS: My Lords, before the noble and learned Lord sits down, may I ask him to clarify this point: Is it really a fact that there are only two people in the whole country who produce less than 5,000 gallons, or is it that only two are registered? I find it extremely hard to believe that farmhouse cider is made by only two people.
Lord McCLUSKEY: My Lords, I think that I gave certain figures. There are 67 producers who are exempt, so that they are 67 who are producing less than a 12-months' total of 1,500 gallons. If you then go to the point between 1,500 and 4,999, you get another two. If you then go to 5,000 you get six, and if you go a little higher you attract more. So that the number below 5,000 is about 69. Perhaps that number makes more sense to the noble Earl.

WATER CHARGES EQUALISATION BILL
7.52 p.m.
The CHAIRMAN of COMMITTEES (Lord Aberdare): My Lords, with the
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leave of the House, I should like to make a Statement. Earlier this afternoon, in Committee on the Water Charges Equalisation Bill, the House inserted two Amendments, Nos. 6 and 7, into the Bill on Divisions. These two Amendments were, however, Amendments to a subsection of Clause 1 which had been left out by an earlier Amendment. Accordingly, Amendments Nos. 6 and 7 cannot be inserted into the Bill as amended in Committee. I regret that the Chairman did not bring this matter to the attention of the Committee before the Amendments were moved. I apologise most sincerely to the House. As it is my birthday today, I can only assume that it is the onset of old age.
Earl FERRERS: My Lords, I am sure that the House will be very grateful to the Lord Chairman for having pointed out the mistake that was made. I am quite certain that it is not his own senility that caused the mistake, but that it was merely an aberration and one of the things that happens periodically. We are very grateful to him for having explained what happened. I am not quite certain what is the effect, but I presume that it is different from what the House had anticipated it would be.
Lord McCLUSKEY: My Lords, I should like to associate myself with what the noble Earl has said, and say that we congratulate the Lord Chairman on his birthday.
House adjourned at seven minutes before eight o'clock.