Lords Sitting of 3 March 1977

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

CIVIL SERVICE PENSION SCHEME: COSTS
3.6 p.m.
Lord ORR-EWING: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many people are employed in administering the Civil Service pension scheme, and what is the total cost of doing so.
The LORD PRIVY SEAL (Lord Peart): My Lords, 686 people are directly engaged in the administration of the Civil Service pension scheme, including the awarding and payment of pensions and other superannuation benefits. The present cost, including an allowance for accommodation and other overhead expenses, is about £3·8 million a year. This is 1·2 per cent, of the total annual expenditure on Civil Service pensions.
Lord ORR-EWING: My Lords, is the noble Lord aware that that is a relatively satisfactory figure compared with some of the swollen administrative figures for other Departments? Does that figure include those who look after Forces pensions and gratuities?
Lord PEART: It is purely for the Civil Service, my Lords. I have checked this point carefully, because I had a feeling that the noble Lord would ask that supplementary question. I am grateful to him for his remarks.
Lord ORR-EWING: My Lords, the noble Lord's perception is as sensitive as his ears into which I poured that supplementary. The noble Lord has stood up, understandably, for maintaining pensions,
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the standard of pensions and the indexation of pensions; but is it right that we should now read that there exists strong pressure on, and possibly a decision by, the Government to take away the gratuities of our Service pensioners who signed on under an agreed contract of service? That seems to be totally unfair and I hope that the noble Lord, who is extremely fair, will make sure that those terms are honoured as part of the contract.
Lord PEART: That is another question, my Lords.

MIDDLE EAST DISPUTE: GENEVA CONFERENCE
3.8 p.m.
Lord CHELWOOD: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they and our EEC partners favour the recall of the Geneva Conference to seek a peaceful settlement in the Middle East; and if so what initiatives are being taken to this end.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, we and our EEC partners favour any negotiations, including the resumption of the Geneva Conference, which seem likely to help achieve the goal of a just and lasting settlement of the Middle East dispute, and we shall take whatever practical steps we can to assist in the peace-making process.
Lord CHELWOOD: My Lords, I am glad to hear that reply. May I ask the noble Lord whether he agrees that high hopes were raised in 1973 at the EEC Summit Conference when the Nine countries agreed to work as one,
"for the full implementation of Security Council Resolution No. 242 in all its parts, taking into account also the legitimate rights of the Palestinians "?
Arising out of that, may I ask two brief questions? First, is it the view of Her Majesty's Government that there should be no Geneva Conference unless there is Palestinian representation, not as refugees but as a national political entity?

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Secondly, am I right in saying without any fear of contradiction that Resolution No. 242 requires that Israel should withdraw from 70 illegal settlements in Arab territory occupied since the 1967 war?
Lord GORONWY-ROBERTS: My Lords, I think I can give substantial reassurance on all three points. As the noble Lord remarked, the European Community Summit meeting of 1973 remains the basis of the policy and attitude of the Nine on the Middle East question. The second reassurance is that Resolution No. 242, with Resolution No. 338, certainly remains the basis, as we and our partners see it, for a lasting and fair solution, and that of course in turn rests on the balance of assurance to Israel that it is recognised within secure boundaries and, on the other hand, of a restoration of territories taken in former conflicts. As to the third point the noble Lord raised, I can assure him that, while the question of participation in a Geneva or other type conference would be primarily a matter for the parties concerned, we would look for the widest possible participation and hope that everybody concerned would regard the question of participation with moderation and in a constructive way.
Lord WEIDENFELD: My Lords, does my noble friend agree that the Government should seek to use their influence to harmonise EEC policies with those of our American allies, who bear the brunt of the mediation, and, particularly on the question of participation, that the EEC backs the American position, which is against the participation of the PLO unless and until it adheres to Resolutions Nos. 242 and 338?
Lord GORONWY-ROBERTS: My Lords, we are, naturally, and have been, in very close touch with the United States on this important matter. Clearly the United States have a lead in the matter and we think it is right to support that lead. Having got a very substantial consensus on this question in the Nine, we naturally want to connect that consensus with a larger one involving the Americans and in particular the new American Administration. On the question of Palestinian participation, I revert to my answer to the noble Lord, Lord Chelwood: we would wish to see the fullest practical
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participation, but I repeat that this primarily depends on the acceptability of suggestions to those primarily concerned. We will work to get proper representation, and that includes a possible Palestinian presence.
The Earl of ONSLOW: My Lords, is the noble Lord aware—I am sure that he is—that the long-term survival of Israel is based on one of two things: either on the consent of the Arab world in which it lives, or on the United States of America? Is the noble Lord further aware that the Israelis do not seem to understand this and also that the mood for peace in the Arab world is very much stronger than we may have thought? Will the noble Lord take into account what is going to happen at the Palestinian Conference on 12th March and encourage the moderate element among the Palestinians and, furthermore, urge the Israelis not to quote only the immoderate Palestinians but occasionally to listen to the moderate Palestinians? Will he also encourage the Israelis not to use the terrorist argument with all the blood that there is on the hands of Menachem Begin?
Lord GORONWY-ROBERTS: My Lords, I am sure that the House will agree that the terrorists are present in all Parties—and, thank Heaven! the moderates are present in all Parties as well. We must depend on the latter. However, the noble Earl has made some valid points and I am glad to agree with him that the prospect of moving to a peaceful solution appears to be better today than for some time past. We certainly agree that the lasting security of Israel and, indeed, of every other country in that troubled area depends upon indigenous consent rather than international sanction, although it may be that, for a considerable period, both must march together, and perhaps merge. As regards the noble Earl's final point about the conditions of peace, he will not expect me to argue the two sides at Question Time. We in this House have had some excellent debates which have gone into this matter and have aired the broadly Arab attitude and the broadly Israeli attitude.
Lord GLADWYN: My Lords, is not one of the basic difficulties that Resolution No. 242 regarding the evacuation of occupied territories is ambiguous and

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always has been a difficulty? Is there any reason to suppose that the Nine are now agreed on the right interpretation of this resolution?
Lord GORONWY-ROBERTS: My Lords, I think that most international documents are ambiguous in one respect or another; even legal documents have been known to be somewhat ambiguous when they deal with land. However, I do not think that there is an ambiguity here that would not be resolved by genuine negotiation. I am well aware of the point that the noble Lord, Lord Gladwyn, has made, and I am quite sure that this will be among the very first and most important matters for negotiation.
Lord JANNER: My Lords, while I agree with my noble friend that it is highly essential that moderate people should come together, will he give an assurance that, unless and until there is a categorical statement by anyone who participates in the negotiations that they recognise Israel as a sovereign State, the negotiations will not be allowed to be used by the PLO so as to gain some kind of negotiating advantage in order to achieve their declared aim which is at present the destruction of Israel?
Lord GORONWY-ROBERTS: My Lords, as usual, my noble friend asks me to anticipate beyond the bounds of possibility. However, I take the central point he makes that, if we are to have a lasting fair and equitable agreement, a firm objective of any conference must be recognition of the Israeli State, internationally and regionally within firmly recognised and secure borders.

PARLIAMENTARY CONSTITUENCIES
3.18 p.m.
Lord ELLENBOROUGH: 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 the justification is in present circumstances for the under-representation of England and Northern Ireland and the over-representation of Scotland
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and Wales in the number of Parliamentary constituencies at Westminster.
Lord WELLS-PESTELL: My Lords, the present framework of representation of Scotland and Wales in another place dates, with minor modifications, from 1918. The position was reviewed by the Speaker's Conference of 1944 which recommended that there should be no reduction in Scottish or Welsh representation. The Government do not consider that the present arrangements need to be further reviewed at the present time. I am sure that your Lordships would agree that the question of the representation of Northern Ireland is a separate matter which must be considered in the light of the special needs and problems of that part of the United Kingdom.
Lord ELLENBOROUGH: My Lords, I thank the noble Lord for that Answer; but does he not appreciate that the Speaker's Conference of 1944 took place a long time ago and that the considerations relevant at that time are hardly relevant now? May I ask whether it is not a rather unsatisfactory state of affairs that the average size of the electorate per seat in England is 64,900; in Wales, 56,100; and, in Scotland, only 52,200? I appreciate that Northern Ireland is a special case. On consideration, would not the noble Lord agree that there is nothing to justify these considerable discrepancies in the number of Parliamentary seats allocated to the four constituent parts of the United Kingdom? Is it not time to make a decision to restore a more equitable distribution?
Lord AMULREE: My Lords, before the noble Lord replies, may I intervene to ask whether this is a proper subject to be discussed by your Lordships? It seems to me that this is a matter for the House of Commons and not for this House.
Lord WELLS-PESTELL: My Lords, I am not in a position to say whether or not this is a proper subject for this House. I have been given certain information on this matter, and unless I am out of order, I will continue. The noble Lord has said that the position is very different today from what it was in 1944. This is not so because of the 1939 registers in force in 1944; leaving out the university

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seats, the electorate per constituency in England was 23 per cent, higher than that in Scotland and 16 per cent. higher than that in Wales. The comparable figures for 1975 were much the same: 24 per cent. and 16 per cent., as against 23 per cent. and 16 per cent.
Lord LEE of NEWTON: My Lords, if there are to be inquiries into this important matter, will my noble friend find out whether there is any reason, or even excuse, for the gross over-representation of the Tory Party in this Chamber?
Lord MOLSON: My Lords, is it not clear that, if anything in the way of extensive devolution is put on to the Statute Book, one condition of that situation would obviously be a reconsideration of the balance or representation in Parliament of the different countries?
Lord WELLS-PESTELL: My Lords, so far as the Scottish and Welsh Bills are concerned—and the noble Lord is talking about devolution—I understand that a review of representation in another place undoubtedly would be necessary.
Viscount BROOKEBOROUGH: My Lords, if the Government accept that there is an injustice to Northern Ireland in under-representation, can the noble Lord give us an assurance that this matter will be urgently dealt with?—because this under-representation has existed for five years since the abolition of devolution. This is a matter of great concern.
Lord WELLS-PESTELL: My Lords, I can give no undertaking that this matter will be considered soon. I can only say that this is a matter which is constantly in the mind of the Government; but at the moment they do not feel that it is necessary to make any move in regard to this question.
Lord WYNNE-JONES: My Lords, does not the injustice consist of the progressive depopulation of Scotland and Wales?
Lord WELLS-PESTELL: My Lords, if there is any injustice at all, it is that England should have far greater representation than she has at the present moment.

AFRICAN PRESIDENTS AND TERRORISM
3.23 p.m.
Lord COLERAINE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are aware of any steps being taken by the so-called front line Presidents to suppress or discourage terrorism in Africa.
Lord GORONWY-ROBERTS: My Lords, Her Majesty's Government are not aware that the front line Presidents are failing to discourage terrorism. They have long made plain their preference for a peaceful solution based on genuine majority rule. In the absence of such a solution, however, they have felt that they have no alternative but to support the armed struggle.
Lord COLERAINE: My Lords, I am not clear that I heard correctly the earlier part of the noble Lord's reply. But I gather from what I did hear that he takes the view, and Her Majesty's Government take the view, that anyone who has a political grievance, if he cannot get it settled his way, is entitled to take military action. I would ask the noble Lord whether the attitude of the front line Presidents is a breach of the United Nations' Charter in at least two respects. In the first place, is it not interference with the internal affairs of another country? In the second place, is it not a breach of the peace rather than a threat to the peace?
May I put this further point to the noble Lord. I do not know whether he is haunted by the same fear that haunts me; namely, that Salisbury may prove to be the Sarajevo of a third and final world war. Will he impress upon the Prime Minister and the Foreign Secretary, who I understand are shortly to visit Washington, the urgency of persuading the Americans to take a more positive line in Africa than they have so far done, in order to avert what may be the most appalling clash between East and West?
Lord GORONWY-ROBERTS: My Lords, I do not think that anybody in this noble House would disagree with the

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closing passages of the noble Lord's supplementary question. Most certainly my right honourable friends the Prime Minister and the Foreign Secretary will pay attention to what the noble Lord (a former Minister and a right honourable gentleman) has to say on this matter. I will not detain the House on the question of constitutional niceties which are important and which the noble Lord raised, but I wish to take this opportunity of making it absolutely clear to him and to everybody else that Her Majesty's Government never have, do not now, and will not support armed struggle, still less terrorism. It is a matter of opinion as much as of fact as to who in Rhodesia for the past 11 or 12 years has been engaged in terrorism, and we could detain the House by arguing this matter.
I have said to the House before now that it is a tragedy that the past 11 years—11 years of illegal rule—have been wasted, without any attempt being made to move forward towards majority rule and equal rights in Rhodesia. Today we are all paying the price; the dangers in Africa, to which the noble Lord quite rightly drew attention towards the end of his remarks, are very acute indeed, and I place the greater part of the blame on those who for the past 11 years have not moved at all to solve those questions.
Baroness ELLES: My Lords, I agree with a great deal of what the Minister has said, but would he not agree that Ian Smith, whatever his faults and however much one may blame him, has in fact in the past few months made a considerable change in his attitude, first, by agreeing to achieve majority rule within two years and, secondly, by his recent actions in removing apartheid, particularly in relation to land tenure?
Lord GORONWY-ROBERTS: My Lords, I would address myself to Mr. Smith's policies and actions against the background of the past 11 years, not the past 11 days. One can only hope that these measures—too little—are not too late. It is not enough to condemn the front line Presidents and the leaders of black Africa for taking the attitudes they do. They have been extraordinarily patient for the major portion of those 11 years. They did not engage in violent action in protest against the illegal régime.
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I only hope that even Mr. Smith may be able to persuade a majority of his Party to agree to this moiety of tardy equity for 7 million black Africans in his country.
Lord HAILSHAM of SAINT MARY-LEBONE: My Lords, is there not a danger that we are losing sight of the importance to the world of the United Nations' Charter? Was it not in fact one of the main purposes to outlaw war except in direct self-defence? We have had two Questions today, both of which arise out of the fact that in different parts of the world nations resort to war, which they may beautify by the term "the armed struggle", in direct conflict with their obligations under the United Nations' Charter, which is not to resort to war as an instrument of policy. Is that not so?
Lord GORONWY-ROBERTS: My Lords, I agree with the noble and learned Lord that that is the meaning of the Charter; and I have said in answer to the noble Lord, Lord Coleraine, that we have not supported, and do not support, armed struggle, still less terrorism. But the facts are that, after a long period of expecting movement forward by the illegal regime, black Africans have lost patience. This is not to say that they are within the Charter; it is only to say that these are the facts.
Baroness LEE of ASHERIDGE: My Lords, is the Minister aware that the sentiments he has expressed were previously expressed in this country by one of the really great men among the front line leaders, Mr. Julius Nyerere? Is he aware that, when Mr. Nyerere was in this country as the honoured guest of the Crown, in dealing with the Palace and in dealing with the leaders of both Government and Opposition, his whole plea was that they should recognise the suffering that would be imposed on the African masses if no alternative was open to them except armed conflict? Is the Minister aware that everything that Mr. Nyerere cares about—the lives, the future and the dignity of his people—has been involved in seeking a peaceful solution, but that he also warned that if a peaceful solution was not available then the mood of the African people today, from North, South, East and West, is such that it will be a bloodbath, that we will all abhor, for both black and white?
Baroness WOOTTON of ABINGER: My Lords, are we asking Questions or are we having a debate?
Lord AVEBURY: My Lords, I have been trying to ask a question. Would the noble Lord agree that, while we would all condemn terrorism and the murder of innocent civilians, there have been many occasions in our history when British Governments have supported the struggle of peoples against oppressive dictatorships, from the days of Garibaldi, when he was fighting against the atrocious dictatorship of King Ferdinand (Bomba) in the Kingdom of the two Sicilies, to the Maquis in the last war; that when constitutional means of change are not open to a people then armed struggle may be the only alternative; and that after 11 years one could hardly disagree that that situation has been reached in Zimbabwe?
Lord GORONWY-ROBERTS: My Lords, when constitutional means of redress are obviously unavailing or unavailable then it is, I will not say natural but understandable, though not justified—and this is where I agree with the noble and learned Lord. We do not take the view that armed struggle in pursuit of political change, still less terrorism—and often the dividing line between the two is very thin—can receive the support of Her Majesty's Government. I am personally absolutely clear on this. I regret I cannot follow the noble Lord back to 1860 and discuss with him the views of Garibaldi. I prefer to agree entirely with my noble friend Lady Lee of Asheridge, when she refers to Nyerere, who, repeatedly, with others from black Africa, has in the past shown patience and expressed warnings. We have to address ourselves to the facts of life today; how can we retrieve, in the present circumstances, the possibility of a just and durable multilateral, multiracial solution in Rhodesia? It is not going to be easy, and the main reason, as I have said, is that 11 precious years have been lost.

NORTHERN IRELAND: TERRORISM
3.32 p.m.
Lord BELSTEAD: My Lords, I beg leave to ask Her Majesty's Government the Question of which I have given the
740
Government Private Notice. The Question is as follows:
To ask Her Majesty's Government, in view of the latest series of assassinations in Northern Ireland during the past few days, constituting a new development, whether they will make a statement.
Baroness LLEWELYN-DA VIES of HASTOE: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m., my noble friend Lord Melchett will answer this Question in the form of making a Statement.

SEXUAL OFFENCES (AMENDMENT) BILL [H.L.]
The Earl of ARRAN: My Lords, I beg to introduce a Bill to amend the Sexual Offences Act 1967, to lower the age at which persons may consent to homosexual acts in private. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read la.—(The Earl of Arran.)
On Question, Bill read la, and to be; printed.

RETURNING OFFICERS (SCOTLAND) BILL
Brought from the Commons; read la, and to be printed.

DEPUTY CHAIRMEN OF COMMITTEES
The CHAIRMAN of COMMITTEES (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, on behalf of the Committee of Selection, That the Lord Jacques be added to the panel of Lords appointed to act as Deputy Chairmen of Committees for this Session.—(Lord Aberdare.)
On Question, Motion agreed to.

AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL
Lord PEART: My Lords, I beg to move the Motion standing in my name

741
on the Order Paper. This Motion is necessary as a result of the Statement which I made yesterday. I do not think I need to explain it in detail beyond saying that until this step is taken it will not be possible to delete the ship repairing companies from the Bill. If the Motion is agreed to, the House will be able to go directly into a Committee of the Whole House after the Second Reading of the Bill next Tuesday. I beg to move.
Moved, That in view of the Government Statement of yesterday,—

(1) No Petition praying to be heard upon the merits against the Bill shall be heard; and

(2) The condition relating to the publication of notices in the Report of the Standing Orders (Private Bills) Committee of 23rd February shall be dispensed with.—(Lord Peart.)

On Question, Motion agreed to.

NORTHERN IRELAND: TERRORISM
3.37 p.m.
The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett): My Lords, with the leave of the House, I will now repeat a Statement being made in another place in answer to a Private Notice Question on Northern Ireland. The Statement is as follows:
"There has been a greater concentration in the last few days of violence against people in the business community. This is, sadly, not a new development, as there have been series of attacks on business people in the past.
"Her Majesty's Government regret these deaths. But I can assure the House that security measures are kept under constant review and are adjusted to deal with the changing patterns of violence".
My Lords, that concludes the Statement.
Lord BELSTEAD: My Lords, I am grateful to the noble Lord for that Answer. The reason for this Private Notice Question is the considerable number of tragic murders committed in Northern Ireland during the last month, although I accept from the noble Lord
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that they are not a totally new development. The murders began with the shooting of Mr. Geoffrey Agate in Londonderry at the beginning of February, then there were further such murders during the month and within the last 10 days eight businessmen and policemen have been murdered in Northern Ireland. May I just ask the Government to accept that I am in no way trying to press the noble Lord to reveal any information which would be of use to the IRA; but the Northern Ireland Office, the Department which the noble Lord serves, has been reported in the Irish Times within the last few days as stating that special protection will be offered to leading personalities, and I think it is right to ask the Government whether they can enlarge on that statement. May I just add that, in asking that question, I would ask the Government to accept that we on these Benches will support the Government in any measures which they deem necessary to end this brutal wave of killings.
Lord MELCHETT: My Lords, I am very grateful to the noble Lord for that response to the Statement. Certainly I can give him some information although, as he has accepted, it would not necessarily be sensible to reveal everything that is being done by the RUC and the Security Forces in Northern Ireland. But I can tell the noble Lord that a directive has been issued by the Deputy Chief Constable to all divisional commanders instructing them to mount additional mobile patrols, foot patrols and vehicle check points; to familiarise themselves with the homes of prominent members of the business community, and to pay these special attention; to offer advice to businessmen on measures they can take to protect themselves; and to call up reserve policemen as required. The directive will remain in force for as long as is considered necessary.
Viscount BROOKEBOROUGH: My Lords, I feel that this is a very grave moment in the history of Northern Ireland, and it would be wrong if I did not emphasise to the House the fact that at the present moment public opinion in Northern Ireland is really at a breaking point. It is extremely exercised; and I am going to ask the Government what would have happened here if these last four murders had occurred in London in the

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short period of time in which they have occurred in Northern Ireland. I believe that there would have been some dramatic and drastic action, and I think public opinion in Northern Ireland now requires some dramatic step to be taken.
Yesterday's murderers were teenagers. They were under 10 when the "Troubles" started. From that, it must be obvious to the Government that the present methods are not enough. I shall ask the Government this: can they not convince the terrorists that they will be caught, and, secondly, that the punishment will be sufficient to hurt? Even the Churchmen at the funerals of the victims are now calling for the reimposition of the death penalty, much though I, personally, and other people may dislike it. May I ask the Government whether they will seriously consider it, because what we are facing is the failure of the deterrent to deter? It may be all right to release an anarchist in England, but the battle is in the United Kingdom as a whole. Do the Government realise how much it undermines the firm statement made by the Secretary of State that there will be no amnesty for terrorists? Can they please do something to emphasise the fact that the Government are determined not to have an amnesty?
Finally, will the Government convey to the Security Forces the admiration of the whole House for their work, particularly the UDR and the RUC reserves? If society does not protect its population, then even peace loving people will take the law into their own hands. That is what we have to prevent.
Lord MELCHETT: My Lords, I certainly welcome the admiration of the House for the work of the Security Forces in Northern Ireland. It may be appropriate to remind ourselves of the very heavy casualties that the Security Forces have suffered over the past years in Northern Ireland when we are today discussing the series of brutal murders against the civilian population there. The noble Viscount asked what I thought would happen if a similar series of murders had taken place in this country, in Great Britain. I certainly believe that the Government would have reacted in exactly the way we react to the deaths of people in any part of the United Kingdom
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and in the same way as we are reacting to the brutal murders that have taken place in Northern Ireland.
As I said in reply to the noble Lord, Lord Belstead, this is not, unfortunately, a new development, although there have been a particularly large number of killings of this kind in recent days. I have to say to the noble Viscount that I do not think anyone can possibly say that there are any new sweeping measures which have not yet been tried which are likely to solve the problem in Northern Ireland. If there were, they would already have been tried. I would agree with the noble Viscount that the Security Forces are doing a fine job. This is something that we, as Ministers in Northern Ireland, constantly reiterate. They are apprehending the terrorists; they have been taken before the courts and tried and convicted in large numbers. We constantly reiterate the fact that the RUC, and the action they have taken, have our full support, and that the Army will remain in Northern Ireland as long as necessary to back up the RUC in the job they are doing. The most helpful thing, so far as that task is concerned, is that instead of casting doubts on the integrity of the statements every time the Government say this, everybody in Northern Ireland, for a change, will believe what is told to them endlessly and repeatedly and set about the job of backing us up.
Lord HAILSHAM of SAINT MARY-LEBONE: My Lords, without seeking in any way to impugn the integrity either of the Government or of the noble Lord—for I am sure that the sympathy of the whole House will be with him and them—can one altogether avoid the impression that the policy of the Government at the moment is one of enforcing the law but without any political imagination at all? How long is this to go on? Does the noble Lord think that this policy of what I believe to be political drift is really paying a dividend? Does he not think that the time will have to come when the Government will have to take further steps to look at political change?
Lord MELCHETT: My Lords, I could not accept that the Government policy is a policy of drift. I accept that, as yet, it has not paid a dividend. The dividend

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that we all seek on both sides of the House is a devolved Government in Northern Ireland that is acceptable to both communities in Northern Ireland. That is agreed policy between us. What, I believe, has been made clear by previous political initiatives taken by the United Kingdom Government is that it cannot be imposed on the people of Northern Ireland if the people there are not prepared to accept it. Our political initiative is to recognise that fact and to say to politicians and people of Northern Ireland: "In your hands lies your future. You must, at least, get to the stage where you are ready to talk to each other about some new political system in Northern Ireland to which both major Parties in this country have pledged themselves to and are committed to".
Lord WADE: My Lords, while we all appreciate that these murders are deplorable and despicable, and while we are aware of the strain on the Security Forces, may I ask a question which puts the matter in a slightly different context; I think it is both political and psychological. Would the noble Lord agree that in the circumstances at the moment in Northern Ireland it would be unwise to act precipitately? For example, an increase in the size of the military forces at present might have the opposite of the desired effect. That is one of the difficulties under which any Government are working at present.
Lord MELCHETT: Certainly, my Lords, before taking any steps to change the existing security policy, the Government must be convinced that new measures will be effective. That is the important thing. The Government are not convinced that there are any new sweeping measures as yet untried which are likely to be more effective than the policy currently being pursued—which is being effective in as much as terrorists are being arrested, taken before the courts, convicted and sentenced to long periods of imprisonment.
Lord HAILSHAM of SAINT MARY-LEBONE: My Lords, I do not want to prolong this. The noble Lord has said, as have other Ministers in successive Administrations, that the solution lies in the hands of the politicians in Northern Ireland. What I want to ask is this. Where is the forum at present available to
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those unfortunate people to find such a solution? When I was accusing the Government of a policy of drift, I was really asking the noble Lord whether we could not, apart from law enforcement measures, use a little more political imagination: because the present policy of waiting for somebody else to do something does not seem to be very successful.
Lord MELCHETT: My Lords, as one who spends most of the week in Northern Ireland, I would say that there are plenty of opportunities for the political Parties to get together and to exchange ideas. Recently, as the noble and learned Lord will know, all major political Parties in Northern Ireland had meetings with my right honourable friend the Secretary of State. Following that series of meetings, my right honourable friend said that it was clear to him that there was as yet not sufficient common ground between the Parties for real progress to be made. Once again, he made clear to the political Parties the grounds on which both major Parties in this country, indeed I believe all the main political Parties in this country, believed that a constitutional settlement would be desirable. While admitting that a great deal of movement has taken place, he enjoined the political Parties in Northern Ireland to move towards that; so the picture is not quite as dark as the noble and learned Lord is painting it. As soon as there is a real prospect for progress, the Government will be prepared to act in any way possible; but my right honourable friend at this moment is convinced that there is not sufficient common ground for that sort of initiative to be taken.

BRITISH AIRWAYS BOARD BILL [H.L.]
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I understand that no Amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript Amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the Order of Recommitment be discharged.
Moved, That the Order of Recommitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

PUBLIC LENDING RIGHT BILL [H.L.]
Bill read 3a: an Amendment (privilege) made.
Lord WILLIS: My Lords, I beg to move that this Bill do now pass. In doing so, I should like to thank my noble friends on all sides of the House for their co-operation in getting this Bill through its stages so quickly.
Moved, That the Bill do now pass.—(Lord Willis.)
On Question, Bill passed, and sent to the Commons.

PATENTS BILL [H.L.]
3.50 p.m.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, that the House do again resolve itself into Committee.—(Lord McCluskey.)
On Question, Motion agreed to.
House in Committee accordingly.
[LORD ABERDARE in the Chair.]
Clause 38 [Amount of compensation]:
Lord LYLE Lord LYLE moved Amendment No. 189:
Page 30, line 8, leave out ("employer") and insert ("employee").
The noble Lord said: We understood that the words in the Bill should be as they are on the Marshalled List. This is in the nature of a mere administrative and printing error.
The LORD CHANCELLOR: This is a good note of agreement upon which to start this part of the Committee stage. I am grateful to the noble Lord for drawing the attention of the Committee to this printing error. I agree of course with the Amendment.
On Question, Amendment agreed to.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 190:
Page 30, line 13, leave out subsection (2) and insert—
("(2) For the purpose of subsection (1) above a fair share of the benefit which the employer has derived or may reasonably be expected to derive from the patent shall, subject to the provisions of subsection (3) below, be taken to be the amount which could reasonably be expected to be obtained by the employee if he had not been connected with his employer.").
The noble Lord said: The Part of the Bill with which we are now dealing sets out a number of guidelines to assist either the court or comptroller on the amount of compensation which should be payable to the employee inventor in the circumstances set out in Clause 36. My Amendment is in the nature of a probing Amendment. It seems to us that the Amendment improves and helps the court or comptroller in deciding what is a fair share of the amount, whatever it is that is payable. Subsection (1) reads:
"An award of compensation to an employer…shall be such as will secure for the employee a fair share (having regard to all the circumstances) of the benefit which the employer has derived or may reasonably be expected to derive from the patent."
We have no quarrel with that initial statement, that the employee shall have a fair share of the benefit which the employer has derived.
Now comes the question: How does one consider what is the fair share that an employer should derive? It seems to us that subsection (2), as drafted, does not have the clarity that the court or comptroller might want in assessing the award. The Amendment I have suggested puts the matter round the other way, and says this—the words are simple:
"For the purpose of subsection (1) above"—
which I have read out—
"a fair share of the benefit which the employer has derived or may reasonably be expected to derive"—
quoting again the part of subsection (1) that I have already mentioned—
"shall, subject to the provisions of subsection (3) below, be taken to be the amount which could reasonably be expected to be obtained by the employee if he had not been connected with his employer".
One must look at the situation from the point of view of the employee, and that is of advantage to the employer. What could the employee, if he had not been associated with the employer, have derived or reasonably have been expected to derive? If it is put the other way round,

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as in the Bill at present, that the fair share must be assessed having regard to what the employer might have derived, then complicated parameters immediately arise.
The position in assessing what is the fair share within the context of subsection (1) would be simplified if the court or Comptroller General were to look at it from the point of view of the employee: What could he do with this patent if he had not been associated with the employer? My Amendment simplifies the position and, with great respect, that seems to be a clearer guideline than the somewhat muddled phraseology involved in subsection (2).
In order that there should be no misunderstanding about the other parts of the subsection, I find the other guidelines very reasonable and I will not be making any great criticism about them. Will the Government consider assessing that a fair share of the benefit which the employer has derived shall be an amount which could reasonably be expected to be obtained by the employee, if he had the patent, in the ordinary commercial circumstances? I beg to move.
Lord BROWN: Rather tentatively, I support this Amendment, while waiting to hear what the noble and learned Lord has to say about it. I support it on these grounds. If one says "a fair share of what the employer would have derived had he not been associated with the patent", then in logic one is putting it the wrong way round. If the invention had not arisen, nothing would have happened. But one wants to decide what would happen if the employer had not backed the invention. This is the purpose of the Amendment. It seems a strictly logical approach to the determination of the question of compensation in principle.
The LORD CHANCELLOR: There are two parts to this Amendment. The first proposes to leave out subsection (2) of the Bill. That subsection is a necessary provision in the Bill to avoid the possibility of the employer defeating the employee's claim by giving the patent away for next to nothing to a close relative or subsidiary of the firm. I am sure that that was not in the mind of the noble Lord when he moved the Amendment, he having ex pressed views in an entirely opposite direction earlier. Therefore, Clause 38 (2)
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should be retained. To delete it would be prejudicial to the interests of employees.
The new subsection which the noble Lord wishes to substitute seems, with great respect, to be directed to a different point. It would provide a test for the fair share of the benefit to which an employee was entitled that was divorced from the benefit actually obtained by the employer from the patent. It is preferable to maintain a link between what the employer has obtained and to what the employee may be entitled. The intention of the Amendment, however, seems to be that the fair share should be determined on the basis that an employee is in a position to negotiate at arm's length with his employer as if the compensation were to be the result of some kind of commercial transaction; but that goes much further than what the Government and the Bill intend. Indeed, it could work against the employee if the employer was a hard bargainer.
The main criticism of the Amendment is that it would establish a notion of compensation which is inappropriate to what I call the Clause 37(1) situations. These are the common cases where employees are employed to carry out inventive activity, and the compensation over and above what they receive in the ordinary course of their employment should not be looked upon as some kind of commercial deal. On the contrary, the Government consider that in such cases the compensation should be no more than what is, in the particular circumstances of the case, sufficient to ensure the fair treatment of the employees concerned. In Clause 37(2) situations, the invention originally belongs to the employee, who is not obliged to offer the rights in it to his employer. If he does, and the employer accepts them, a commercial transaction has taken place and it would seem to be an effect of the proposed Amendment that the employee would then have no further claim on his employer unless he could show that he got less than he would otherwise have done because he was an employee—which might not be very easy to do.
I do not know whether that is what the noble Lord intended by his Amendment, but the Bill as drafted—which does not constrain or restrict the court or the comptroller, whoever may be deciding

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the matter, in reaching a conclusion as to what is a fair share of the benefit derived, or expected to be derived, by the employer—is more likely to be something for the employee in Clause 37(2) situations than it would if the clause were amended as the noble Lord proposes. In the light of the explanation of the existing provisions, I hope that the noble Lord will be prepared to give the matter further thought.
Lord LLOYD of KILGERRAN: I am very grateful to the noble and learned Lord for the very long and careful consideration which the Government have obviously given to my Amendment. However, perhaps the way in which this discussion has proceeded illustrates my point. My Amendment gets the support of the practical businessman of great experience, like the noble Lord, Lord Brown; yet, on the other hand, there are obviously a number of legal matters which the Government find difficult to eradicate at this stage. The Amendment seems to me, to quote the words used by the noble Lord, Lord Brown, in supporting the Amendment,
"to put it the right way round",
but in view of the careful consideration that has been given to my Amendment, I beg leave to withdraw it. I may wish to return to it later when we see what other Amendments have been put into the Bill.
Amendment, by leave, withdrawn.
The CHAIRMAN of COMMITTEES: I must point out to your Lordships that, if Amendment No. 191 is agreed to, I cannot call Amendments Nos. 192 or 193.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 191:
Page 30, line 21, leave out from ("of") to end of line 42 and insert ("a patent for an invention which has always belonged to an employer, the court or the comptroller shall, among other things, take the following matters into account, that is to say—

(a) the nature of the employee's duties, his remuneration and the other advantages he derives or has derived from his employment or has derived in relation to the invention under this Act;

(b) the effort and skill which the employee has devoted to making the invention;

(c) the effort and skill which any other employee has devoted to making the invention jointly
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with the employee concerned, and the advice and other assistance contributed by any other employee who is not a joint inventor of the invention; and

(d) the contribution made by the employer to the making, developing and working of the invention by the provision of advice, facilities and other assistance and by his managerial and commercial skill and activities.

(3A) In determining the fair share of the benefit to be secured for an employee in respect of a patent for an invention which originally belonged to him, the court or the comptroller shall, among other things, take the following matters into account, that is to say—

(a) the amount of any sums received by the employee under this Act or otherwise in respect of the invention or the patent; and

(b) the extent to which the invention was made jointly by the employee with any other person.").

The noble and learned Lord said: As your Lordships will be aware, this group of clauses that we are now considering, namely, Nos. 36 to 40 inclusive, provide for compensation to be paid in appropriate cases to two quite different categories of employed inventors. The first category comprises those who are employed to invent, if I may use a single compressed phrase. Their inventions will have belonged to their employers throughout, and it is only in the circumstances covered by Clause 37(1) that those employees will be entitled to compensation. We had a spirited debate upon that matter the last time we considered the Bill, as to the lasting benefit to the employer, which is the concept involved in that subsection.
The second group comprises employees whose inventions belong to them. The fact that the inventor is employed will be irrelevant unless he chooses to assign his rights in the invention, or in any patent for the invention, to his employer. In those quite different circumstances, if the requirements of Clause 37(2) are satisfied, the inventor in this case, too, will be entitled to compensation. The categories, as I have indicated, are quite distinct and it is therefore logical that, in assessing compensation, the comptroller and the court should have regard to different considerations when assessing what is a fair share of the employer's benefit. Subsection (3) in its present form does not reflect that fact, since it lists six factors which are to be taken into account in both sets of circumstances, and the Amendment I move seeks to rectify the position.
If I may take first the case of the invention which originally belonged to the employee, the new subsection (3A) reflects the fact that all the comptroller or the court will be doing is to vary the terms of the contract between the employee and his employer. Only two factors need to be considered: first, how much the employee has already received in respect of the invention—that is in subsection (3A)(a)—and whether he is the only person who is entitled to compensation, or whether another employee is also entitled. That is covered by subsection (3A)(b), but in such a case matters such as the employee's duties, his remuneration, and the effort and skill which he has devoted to making the invention are irrelevant. Those matters, however, are very relevant to the assessment of a fair share of the employer's benefit which should accrue to the employee in a case where the invention has always belonged to the employer. That is why those matters are retained in the amended subsection (3), which will apply only to that category of invention.
Before sitting down, perhaps I should add that subsection (3)(d) of the Amendment also refers to the employer's contribution to
"the making, developing and working of the invention…".
I would emphasise the word "developing" as being a relevant factor in that connection. That point was noted by the noble Lords, Lord Lyell and Lord Belstead, in connection with Amendment No. 193, to which we shall be moving shortly and which I hope they may think has now been taken care of by this Amendment which I beg to move.
4.8 p.m.
Lord BELSTEAD: We are grateful to the noble and learned Lord for the explanation of the rewording of a considerable amount of Clause 38. May I also thank the noble and learned Lord for inserting the word "developing" into paragraph (d). That meets our Amendment No. 193, which we should not otherwise be allowed to move. Clearly the word "developing", as well as the words "making" and "working", should be taken into account when considering the employer's contribution.
A general criticism of these paragraphs is, I think, that the factors set out on this
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page of the Marshalled List are going to be taken into account by either the court or the comptroller several years after the invention has been discovered. That will almost certainly be the case in assessing outstanding benefit under Clause 37(1). I would suggest it might also be the case when the employee makes an application on the ground that he has received inadequate benefit under Clause 37(2)(c). I think this is an apprehension which many noble Lords had already voiced about the clause as a whole before we actually came to it.
I should like now to turn to the specific provisions of the Amendment. I must confess that, even though the noble and learned Lord has led us gently by the hand through the rewording of the clause, I am still not very happy about the new subsection (3A). As drafted, in the Bill there are six criteria applying to applications for compensation, whether those applications are made under Clause 37(1) or 37(2). What has happened is that the first two criteria in the Bill have been amalgamated to form paragraph (a) in the Amendment, which is followed by the next three criteria relating, also, only to inventions belonging to the employer, and then the final criterion, paragraph (f), has been transferred to the new subsection (3A) which deals only with employees' inventions originally belonging to the employee.
Under this new subsection (3A), the employee is having to prove that his benefit from the patent has been inadequate, compared to the employer's benefit. I wonder why there are only the two criteria to decide this, even though, of course, I accept what the noble and learned Lord said, which is that the whole point of this new Government Amendment is that there will be fewer criteria under subsection (3A) than there will be above. But if I may be specific, I would not accept—and I hope that the noble and learned Lord may be able to put me right—that paragraph (a) of the new subsection (3A) covers paragraph (a) above and, in fact, I do not think the Government mean it to. If the Government do not mean this, why should not the comptroller, in assessing whether benefit to an employee under new subsection (3A) is inadequate, take into account the employee's remuneration,

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"and the other advantages he derives or has derived from his employment or has derived in relation to the invention under this Act"?
All that new paragraph (a) of subsection (3A) is going to allow is for,
"the amount of any sums received by the employee under this Act or otherwise in respect of the invention or the patent"
to be taken into account. That wording is not the same as paragraph (a) above, and I should be interested to know why this is the case.
If I may move on, when I look at new paragraph (b) of the Amendment, I certainly accept that effort and skill are immaterial so far as new subsection (3A) is concerned, because it is the employee's own invention and what he had to do to make it is his own affair. Similarly, I accept that paragraph (b) of new subsection (3A) probably covers paragraph (c) above. But I now come to my other complaint, which is that there appears to be nothing at all under subsection (3A) which corresponds to paragraph (d) above, and I think that there ought to be. What I am saying is that any contribution which the employer may have made to secure the benefit which is going to be shared, appears to be a factor which is totally disregarded when benefit is being assessed under subsection (3A). I do not think, speaking for myself, that the words,
"the extent to which the invention was made jointly by the employee with any other person",
which is the wording in paragraph (b) of subsection (3A), is in any way the same as the assessment of the,
"advice, facilities and other assistance and…managerial and commercial skill and activities"
which the employer may have contributed not only to the making, but also to the developing and working of the invention.
The reason why I put these views forward is that on the last occasion when we sat in Committee on this Bill we had speeches pointing out that an invention needs to be developed, produced and marketed in order to make it a commercial success. If the comptroller, under Clause 37(2)(c), is to assess whether,
"the benefit derived by the employer from the contract of assignment, assignation or grant…was inadequate in relation to the benefit derived by the employer from the patent",
I should have thought that the criteria which are now contained in paragraph (d)
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above ought to be provided for, or ought to be provided for in a very similar way, in new subsection (3A).
I apologise to the noble and learned Lord for my rather convoluted argument and, for clarification, may I just remind him what my two real questions are? Apart from the general criticism that I think the criteria set out in this Amendment will probably have to be assessed several years after the discovery of an invention, I am trying to ask two questions. The first is: why does paragraph (a) of new subsection (3A) not correspond with paragraph (a) above? My second question is: why is there nothing in new subsection (3A) which corresponds with paragraph (d) above? I hope that I have made those two questions clear. I realise that, without notice, the noble and learned Lord may be able to give me only a little advice on this matter.
The LORD CHANCELLOR: Would it be convenient for me to deal with that matter now? If I may say so with respect, I do not think that the noble Lord's speech was convoluted, and I hope that my answer may be equally clear. The criteria are, of course, intended to be a guide to the comptroller or the court and it is imperative, where the provisions are admittedly rather wide and all-embracing, that the guidance given is as helpful and as precise as possible. I agree that, as the assessment may fall to be made some years after the invention has been made, there will be problems. But that is an inescapable situation and, whatever formula might be devised, applying it years later will present problems. I think that is inescapable by the nature of the circumstances which we are considering.
Coming to the rejigging, if I may use a good inventive phrase, the matters which arise in subsection (3A) relate to the circumstances where the employee who has made the relevant invention has done so when, if we look at Clause 36, it was not in the course of the normal duties falling upon him or in the course of duties falling outside his normal duties, but specifically assigned to him; nor was the invention made in the course of his duties as an employee, but was something quite outside conditions of that kind, where he had no obligation at all to make an invention. So it is very much his initiative, his time and his effort that have gone to achieve

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the invention. Therefore, in considering what should be the benefit payable to him in respect of that invention which has been his, and was originally his, the only relevant factors are those set out in paragraphs (a) and (b); namely, what he has already been paid for it by the employer; and, secondly, the extent to which the invention was made solely by him or jointly with other employees, whose effort might, indeed, have to be considered.
The nature of his duties is, in the circumstance, not relevant, nor are his remuneration and other advantages which he derives from his employment, nor the effort and skill which he has devoted to making the invention. It is the quality and value of the invention itself which will be relevant. The effort and skill which any other employee has devoted to it is covered in paragraph (b). The contribution of the employer is hardly likely to be relevant to the calculation of the compensation or benefit in the circumstances of subsection (3A), because it is done outwith the conditions that govern the award under Clause 37(1).
So if I may say so with respect, I think we have greatly simplified the task of those who have to apply these not easy provisions by the restructuring which, in my submission, is contained in the new subsection. I hope that that will, at least to some extent, have reassured the noble Lord on a field which I do not pretend is free of difficulty.
Lord BROWN: Given that we have to accept subsection (1) of Clause 37—and the Committee knows that I consider it bad law—I think that the Amendment, in totality, is right, because to have separate criteria for judging the case of an employee who owns an invention and one who does not is obviously sound. But I found myself in some sympathy with the noble Lord, Lord Belstead, and, again with deference and some timidity, I would suggest this. The Department which drafted this Bill is somewhat amateur in respect of patents. I spent five years in the Board of Trade and always found, excellent Department though it was, that knowledge there of patents and patent law was almost totally absent. They always had to rely on the comptroller, and this comes through in the Bill.
I want to draw attention to paragraph (d) of the new subsection which says:
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"the contribution made by the employer to the making, developing and working of the invention…"
It is commonplace in many good firms, although I regret to say that it is not general practice in industry, for an employee to produce an idea. It may go into the suggestion box. This is often the route by which an idea reaches management. Other ideas are perhaps communicated to the departmental manager who says, "Hold it ". He takes it up to the senior people, perhaps to their patent man, and they come down and say to the employee, "You have a patentable idea here". They take out a patent on his behalf which, with his name upon it, belongs to the employee. Furthermore, they may make a model, indulge in extensive trials and possibly spend a great deal of money on developing it, for which the employee is duly grateful. This is not general practice but it is commonplace practice. When the comptroller considers how much compensation the employee should be paid, the employee having assigned the patent to the employer, he is not invited to take any account of all this. To miss out this consideration altogether seems to me to be very amateur.
I am not seeking advice today from the noble and learned Lord. I want this opinion simply to go on the Record because I think that the department is missing out in its consideration of what really goes on in industry. Some clauses of the Bill are redolent of the omission to think sufficiently deeply about real practice.
Lord CAWLEY: I find myself in some difficulty in understanding why subsection (3A) is necessary—why, if the patent is the absolute property of the employee and he assigns it for a good consideration to the employer, he should not be in the same position as any other outsider. Is it suggested that the employer would put pressure on the employee to assign the invention to him, or is there any other reason for these provisions?
Lord DAVIES of LEEK: Paragraph (d) on page 2 of the Marshalled List of Amendments says clearly, although I should be glad if my noble and learned friend would correct me if I am wrong

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because it is a difficult question of semantics which we want to get right:
"the contribution made by the employer to the making, developing and working of the invention by the provision of advice, facilities and other assistance and by his managerial and commercial skill and activities"
will be taken into consideration. That is fair enough; it refers to the employer. In a maiden speech from below the gangway we had an example yesterday of an invention which cost only £5 but which, to develop it to the full, cost millions. That invention was developed in the man's firm. I do not believe that any just employee would object to a share of the development cost going to the firm that had developed it fully. Have I got it right now?
Lord BROWN: Yes. The point is that that particular set of criteria will not apply in the case of an employee who owns an invention and who has assigned or licensed it to the employer. If the Amendment is passed, the help that is given by the employer will be left out of consideration.
Lord DAVIES of LEEK: That is what I am not so sure of, but we will leave it at that.
4.24 p.m.
Lord BELSTEAD: I wonder whether the noble and learned Lord is able to answer that question. I will not repeat it; I was going to ask the same question but the noble Lord, Lord Brown, and the noble Lord, Lord Davies of Leek, have put it better than I could have done. May I ask a second question about the relationship between paragraph (a) of the new subsection (3A) and paragraph (a) above? If an employee has been given promotion, and thereby extra remuneration, I am surprised that under the new subsection (3A) things of that kind are not going to be taken into account by the comptroller. They are provided for in paragraph (a) above but not in the new subsection (3A).
I think that the noble and learned Lord will say to me that I am riding a hobby horse, but the reason why I am repeating the question—I know that the noble and learned Lord does not agree with me on this—is that when we considered the Bill a week ago my noble friend Lord Nelson of
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Stafford moved an Amendment about voluntary reward schemes. During the debate, I ventured to express the opinion that if the voluntary reward schemes were not allowed to exist side by side with the statutory reward scheme, the employee deciding whether he wished to go for the voluntary or the statutory scheme, the voluntary reward schemes would come to an end.
If the Government are going totally to reject the argument that paragraph (a) should not, in some form, come into subsection (3A) below, then I put it to the noble and learned Lord that this is proof of what I was attempting to say last time. The situation will be that if the employer has a voluntary reward scheme and the rewards of that scheme are not going to be taken into account when the comptroller or the court is assessing compensation under Clause 37(2)(c), I think that most employers will ask whether there is any point in allowing an employee, however worthy he may be, to have two bites at the cherry. Then the voluntary reward schemes will wither on the branch and die.
The LORD CHANCELLOR: First may I deal with the matter raised by my noble friend Lord Brown. I am sorry that he has thought it right to describe the provisions of 37(1) as bad law. My noble friend may not like the provisions of Clause 37(1), but if Parliament, in all its wisdom, likes them and Her Majesty the Queen then gives Royal Assent to the Bill it will become the law of the land, whether good or bad. That is all I can say about the unkindly observation which my noble friend has made.
Coming to the interesting matters which have been raised, I may inadvertently have misled the Committee to this extent about one aspect. If your Lordships will look at subsection (3A) it will be seen that:
"In determining the fair share of the benefit to be secured for an employee in respect of a patent for an invention which originally belonged to him, the court or the comptroller shall, among other things, take the following matters into account…"
Then follow paragraphs (a) and (b). Paragraphs (a) and (b) are intended to identify the main and paramount factors which should be taken into account, but the court or the comptroller is not prevented from taking into consideration, where they may be relevant or pertinent in deciding how much the employee ought

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to be awarded, any of the matters listed in paragraphs (a) to (d). However, in a situation where the invention originally belonged to the employee—it was invented entirely on his own initiative without involving any duties that he had to the employer—the relationship between the employer and the employee differs quite fundamentally from the situation that exists where the invention belongs as of right to the employer, because the employee is, in effect, employed to invent and gets extra salary and remuneration for his skill in that capacity.
In the first case that I have mentioned the employer-employee relationship is not really very different from parties negotiating at arm's length—somebody else coming in and offering the employer an invention. Therefore, with great respect, I do not think that paragraph (d) in the first part of the Amendment will normally or usually be relevant; but, as I have said, the considerations in subsection (3)(a) and (b) by virtue of the words "among other things" are not exhaustive and the court or the comptroller could in the appropriate case take them into account. If I had made that clear earlier, I think that perhaps we should not have got into the difficulty we are now in, but I hope that explanation will help the Committee.
I confess that I did not quite follow the point made by the noble Lord, Lord Cawley, about "assignment". I did not quite see how that arises under this Amendment, but no doubt that is my fault.
Lord CAWLEY: I said that the invention originally belonged to the employee so he must have been the inventor; he must have had the original patent, and he must surely have assigned it to his employer. I wondered why subsection (3)(a) is necessary if that is, as the noble and learned Lord said, akin to a transaction at arm's length. Was it because it was thought that the employer might not be in a position to put over unfair terms to the employee when the employee was in a position to negotiate freely with the employer to take a licence?
The LORD CHANCELLOR: I think we are in a situation where the employee may desire to have recourse to the court or the comptroller for them to assess what
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he claims to be his fair share of the benefit. I think it is intended to deal with that situation.
Lord BROWN: I should like to have one more little cut at this matter. I have been, so to speak, at the wrong end of the law in the Patents Court on one or two occasions. I can imagine the employer arguing before the comptroller or the Patents Court, and I can hear the comptroller saying to the employer: "You have sought to have me introduce into my decision about compensation the words of Clause 38 (3)(b)". That paragraph applies to inventions that are owned by an employer and not to inventions owned by the employee, which is the case we are considering. I can imagine his saying: "You have sought to make use of the words ' among other things' in subsection (3)(a) to imply that I, the comptroller, ought to take into account the contribution made by the employer; but if the law had intended that I should take into account paragraph (b) they would surely have included it under (3)(a). In fact, by including it under the previous subsection and by failing to include it in (3)(a) they have obviously implied that I should not take it into account under (3)(a)."I can almost hear the comptroller saying that and, with great respect, I think the noble and learned Lord's argument that such matters can be taken into account because subsection (3) says "among other things" will, in the case of this particular criteria, not apply.
The Lord CHANCELLOR: I am very willing to look into the point made by my noble friend. I think the words "among other things" cover the situation, but, as I regret to say I had somewhat overlooked them myself, it may be necessary to look again to see whether that matter should be more clearly identified. The whole scene is at large in the matter of the assessment, and all relevant factors will be taken into account and the value of subsection (3)(a) and (b) seem to me now, giving the matter further consideration, to do no more than identify the most important and the most relevant factors.
Lord BELSTEAD: I am sure we should all be very grateful to the noble and learned if he would look again at this point.

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Perhaps during his review of this Amendment he would also be so kind as to give attention to whether the words:
"the amount of any sums received by the employee under this Act or otherwise",
have some relevance to what the employee might receive, even though it is the employee's invention, by way of special remuneration from his employer, and this might perhaps be taken into account in subsection (3)(a). In saying that, I am not trying to wring the last penny from the employee who has made an invention which legally belongs to him. However, I think it is right that we should have spent a little time in trying to find out what these expressions, particularly "among other things" and "or otherwise", really mean.
The Lord CHANCELLOR: I am making no complaint.
The DEPUTY CHAIRMAN of COMMITTEES (Viscount Goschen): Does the noble and learned Lord wish to withdraw the Amendment?
The Lord CHANCELLOR: No, indeed not!
On Question, Amendment agreed to.
4.35 p.m.
The Lord CHANCELLOR The Lord CHANCELLOR moved Amendment No. 194:
Page 30, line 43, leave out ("this section") and insert ("section 37 above").
The noble and learned Lord said: In moving this Amendment perhaps I might also refer to Amendments Nos. 197 and 198 in the same connection. These changes reflect in the appropriate places in Clause 38 that it is under Clause 37 and not Clause 38 that the comptroller orders payment of compensation to an employee. These are purely drafting changes. I beg to move.
On Question, Amendment agreed to.
The Lord CHANCELLOR The Lord CHANCELLOR moved Amendment No. 195:
Page 31, line 1, after ("Where") insert ("the court or ").
The noble and learned Lord said: This Amendment is consequential on Amendment No. 176, which has the effect of allowing application for compensation
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under Clause 37 to go either to the court or to the comptroller. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 196:
Page 31, line 1, after ("order") insert ("the court or").
The noble and learned Lord said: This, similarly, is a drafting Amendment following Amendment No. 176. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 197:
Page 31, line 8, leave out ("this section") and insert ("section 37 above").
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 198:
Page 31, line 12, leave out ("this section") and insert ("section 37 above").
On Question, Amendment agreed to.
Clause 38, as amended, agreed to.
Clause 39 [Enforceability of contracts relating to employees' inventions.]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 199:
Page 31, line 19, leave out from second ("the") to ("in") in line 22 and insert ("employer or").
The noble and learned Lord said: This Amendment simplifies the drafting of Clause 39(1) by combining paragraphs (b) and (c) without effecting any material change. I beg to move.
On Question, Amendment agreed to.
Lord LYELL Lord LYELL moved Amendment No. 199A:
Page 31, line 24, after ("term") insert ("other than an obligation of confidence ").
The noble Lord said: I had originally intended to support my noble friend Lord Nelson of Stafford on this particular Amendment, but he asked me whether I should be able to move it on his behalf and I hope the Committee will accept his apologies. Owing to the pace at which we proceeded with our deliberations at the last sitting of the Committee we did not reach this Amendment. He is in

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Paris on Parliamentary business; so I hope the Committee will bear with us.
It is a fairly simple Amendment but the noble Lord, Lord Nelson of Stafford, would ask the Government to give the closest scrutiny to this Amendment. The main point that he feels deserves an answer, as I do, is what should happen where an employee makes, or makes a contribution to, an invention and in so doing uses confidential information which in fact and in law would belong to his employer? Can any employer have any confidence that an employee—who may have absolutely nothing to do with, and no detailed or specialised knowledge of, any particular research project—would not be able to use information gleaned from his employment which might be of great interest and use for the benefit of the employer's competitors, or indeed any outside concern? This is what seems perfectly possible under Clause 36(2). I shall come to Clause 39 later, but at the first strike it seems that Clause 36(2) is the relevant exclusion.
Perhaps it would be for the convenience of the Committee if I alluded to a possible example. Somebody who worked in a research laboratory, let us say an accountant or a statistician, might in the course of his work note that the research scientists had come up with a certain product. Let us suggest even that this particular product might be of a chemical or a polyolefin nature. The particular example I had in mind was a particular non-slip plastic or oily substance or surface which in this particular instance would be designed to be useful in industry. I have great knowledge of the use of one of these non-slip substances, first, on the sporting field. For this reason I am sorry that my noble friend Lord Orr-Ewing is not in his place, because he and I, and indeed other noble Lords, make great use of this substance, which I understand goes by the name of polytetrafluorethylene. It is used on the base of the skis that noble Lords and I tend to use, as well as on various utensils which are used for culinary purposes, non-stick frying pans and such things.
Let us suppose that this laboratory technician goes home, having noted that this product has been developed in the laboratory, and when he sees his food being cooked he notes that the eggs are
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sticking to the pan. He thinks "This could be a possible use of the product ". Let us also suppose—this is possibly going to be rather hypothetical—that the research scientists do not fry their own eggs or do not notice this use of their industrial substances. That could be a fairly long hypothesis, but nevertheless I believe the example is relevant. This particular assistant in the laboratory, who would not be directly involved on the reserach project, could make use of the knowledge he has gleaned as part of his employment.
He might wish to patent the invention in his own name. As I understand it, under Clause 36(2)—and this is what the noble and learned Lord the Lord Chancellor and the noble and learned Lord, Lord McCluskey, were alluding to—the employee can claim such an invention as his own. Also under Clause 39(2), we understand, he could do the same thing. In the latter case, in the clause we are discussing, that employee has very clearly breached his contract of employment with his employer in using confidential information, which he has derived not necessarily in the course of his work but through observation.
Another, possibly longer, hypothesis is a clerk—or even somebody of a lower technical category, perhaps even somebody who would be involved in general maintenance or indeed an outside employee. I have personal knowledge of this myself. I was involved, as part of my apprenticeship in Scotland, in stocktaking in a particular firm. My duties lay between myself and my employer—although in those days it was "my masters" as I had signed an apprenticeship, an indenture. As part of my duties I had to check that certain stocks of various chemical substances were held in the factory. The technicians took me round the factory. An empty hopper was wheeled on to a weighbridge and mixtures of four different types of substance were put into this hopper, graded very carefully, according to a predetermined formula. When the entire formula had been completed the technician said to me that he hoped I would not put this formula in my report. The allusion was very clear to me: that if I had done a relatively simple sum as a result of observing the amounts of chemical mixture put into the hopper, I would have had the formula for a paten table invention

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which was entirely secret to that particular firm. I probably could have derived some rudimentary chemical knowledge and gone and patented that invention on my own behalf. I was not in any way connected with this particular firm; I was connected with an outside firm.
This seems to me to be a possible second hypothesis, that somebody who is not directly involved in a research project could indeed, as we understand it, under Clause 39, use confidential information which he (or she) might derive from his employment for his own benefit. As we understand it, the employer would not have any right against any employee who used this confidential information which he had acquired. That is the substance of the Amendment that the noble Lord, Lord Nelson, has put down, and we should be very grateful if the noble and learned Lord could give us an answer. I beg to move.
The LORD CHANCELLOR: Clause 39 of the Bill gives effect to the recommendation of the Banks Committee that in contracts between employers and employees any term of the contract which would diminish the rights which an employee would otherwise have in inventions made by him should be unenforceable. The provision relates to inventions made by an employee. If we were faced with the situation where the employee was purporting to patent and exploit an invention in fact made by the employer, in those dreadful circumstances the noble Lord has just disclosed to us, he would never begin to set his claim on its feet. His employer would quickly say, "Sorry, Charlie. You have just pinched my invention", or words to that effect. So I do not think he would get very far in that way. He would be indeed—to coin a phrase of the noble Lord—embarking on a very slippery slope. He would need more than that non-stick substance, or "stick" substance as the case may be, to protect him—I suppose it would be "stick" substance.
I confess that I do not quite see what advantage would be gained, to either the employer or employee, by amending Clause 39 in the way that is proposed. Indeed, the Amendment could well open the door to terms in contracts which had
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the effect of diminishing an employee's rights in inventions made by him and, therefore, defeat the purposes of the provisions. However, I shall study the hypothetical illustrations that the noble Lord has given in order to discover whether they give rise to the need to provide for protection to an employer's inventions, or those owned by him, in regard to which concern has been expressed. However, as at present advised, I am not satisfied that this change would really be very helpful.
Lord CAWLEY: I should like to ask the noble and learned Lord whether the phrase "any term in a contract" covers implied terms as well as express terms, because in this type of contract there must be an implied term that one will not do anything in breach of confidence. I am not quite certain whether this covers "implied" or whether it applies only to an express term in a contract.
The LORD CHANCELLOR: As it refers to a contract, I should not have thought that it excludes implied terms. It would be quite remarkable if it did. I shall most certainly look at the point.
Lord CAWLEY: I should like to raise another matter. We have referred to polytetrafluorethylene, but I know of a case where a learned gentleman wrote a letter to Nature saying that he had discovered an organic molecule in which there was an iron atom. He said nothing about its possible uses. The oil companies "muscled in" straight away and patented it for use as an "anti-knock" compound. Therefore these things do occur. Afterwards there was a tremendous dispute. I have no idea of the result, but I think it turned out that it was not an "anti-knock" compound. If it had been an "anti-knock" compound, it would have been what the oil companies were looking for because it was non-poisonous.
The LORD CHANCELLOR: I am very willing to look at these hypothetical illustrations. Of course I take them seriously and I shall return to them. I hope the noble Lord, Lord Lyell, will forgive me for a certain amount of cheerfulness and breaking in on this solemn discussion. If at this stage he sees fit to withdraw his Amendment, I shall look at the points that have been made.
Lord LLOYD of KILGERRAN: I do not want to enter into any discussion about "anti-knocks" or "slippery slopes", but I could not understand the real reasons behind this Amendment. The law of confidence has been extended very greatly during the past ten years, and I did not think that the noble Lord's Amendment quite covered that position.
Lord LYELL: I had understood that this matter was raised by my noble friend Lord Nelson of Stafford, who is involved with matters of confidence. However, I shall certainly raise it with the noble Lord and have further discussions. I am very grateful to the noble and learned Lord for his explanation of how he understood the two hpyothetical cases. The noble and learned Lord dealt very effectively with my first example. He pointed out that where the employee, let us say the laboratory technician, sought to patent an invention from his employer, that certainly would not be allowed.
However, the second hypothesis is one of which I have some personal knowledge. I was not employed by this firm. I do not know whether my employment with an outside firm which had a commercial relationship with the research firm would class me as an employee of the research firm. However, I think that the noble and learned Lord, Lord McCluskey, will be able to deal with this matter at a later stage. I think that we have slipped on our skis quite far enough on this Amendment. On the cooking side, I am sure that the eggs have slipped out of the pan. Therefore, I beg leave to withdraw the Amendment, and hope to return to it, possibly more briefly, at another stage.
Amendment, by leave, withdrawn.
The DEPUTY CHAIRMAN of COMMITTEES: Before I call the next Amendment I should inform noble Lords that if Amendment No. 200 is agreed to I cannot call Amendment No. 201.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 200:
Page 31, line 26, leave out ("commencement of this section") and insert ("appointed day").
The noble and learned Lord said: The purpose of this Amendment is to bring the drafting of Clause 39(2), in respect of the coming into operation of the provision,
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into conformity with other parts of the Bill which refer to the "appointed day". This is a mere drafting Amendment. It also takes care of the point raised by the noble Lords, Lord Lyell and Lord Belstead, in Amendment No. 201. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 202:
Page 31, line 27, at end insert ("or applications for such patents").
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 203:
Page 31, line 30, at end insert ("or an application for any such patent.
(3) This section applies to any arrangement made with a Crown employee by or on behalf of the Crown as his employer as it applies to any contract made between an employee and an employer other than the Crown, and for the purposes of this section "Crown employee" means a person employed under or for the purposes of a Government department or any officer or body exercising on behalf of the Crown functions conferred by any enactment.").
The noble and learned Lord said: The new subsection which is introduced by this Amendment is to make clear that Crown employees have the same protection given by Clause 39(2) as employees in private industry. A special provision for Crown employees is necessary as they do not have contracts of employment as referred to in subsection (1) and would otherwise therefore not enjoy the safeguard provided by Clause 39(2). Therefore this new subsection is needed to make it clear that Crown servants are also to enjoy the protection given by subsection (2).
On Question, Amendment agreed to.
Clause 39, as amended, agreed to.
Clause 40 [Supplementary]:
The DEPUTY CHAIRMAN of COMMITTEES: If Amendment No. 204 is agreed to, I cannot call Amendment No. 205.
4.58 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 204:
>Page 32, line 15, leave out from ("derived") to end of line 16 and insert ("from the patent by

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his personal representatives or by any person in whom it was vested by their assent.").
The noble and learned Lord said: This Amendment prevents an employee inventor being deprived of the possibility of an award under Clause 37 by the death of his employer. If a claim is made by the employee after the employer has died, the compensation is to be related not only to the benefit derived by the employer when he was alive, but also to the benefit which may reasonably be expected to be derived by the person in whom, on his demise, his personal representatives vested the patent.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 206:
Page 32, line 22, leave out ("to 39") and insert ("and 38").
The noble and learned Lord said: The purpose of this Amendment is to delete from subsection (7) an inappropriate reference to Clause 39 as the latter does not refer to "benefit". The Amendment does not alter the meaning of the subsection.
On Question, Amendment agreed to.
Clause 40, as amended, agreed to.
Clause 41 [Avoidance of certain restrictive conditions]:
5 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendments Nos. 207 to 222:
Page 32, line 31, leave out from ("the") to ("or") in line 33 and insert ("supply of a patented product or of a licence to work a patented invention, or of a contract relating to any such supply").
Page 32, line 35, leave out ("disposal") and insert ("supply")
Page 32, line 41, leave out ("contract for").
Page 33, line 11, leave out ("whether made") and insert ("and licences whether made or granted").
Page 33, line 12, after ("made") insert ("or granted ").
Page 33, line 17, after ("pursuer") insert ("or a licence under the patent granted by him or with his consent").
Page 33, line 19, after ("contract") insert ("or licence").
Page 33, line 21, after ("contract") insert ("or granting of the licence").
Page 33, line 22, leave out ("dispose of") and insert ("supply").
Page 33, line 25, after ("contract") insert ("or licence").
Page 33, line 29, after ("contract") insert ("or licence").
Page 33, line 33, leave out ("for disposal") and insert ("to supply").
Page 33, line 35, leave out ("contract for").
Page 33, line 36, leave out ("contract") and insert ("licence").
Page 33, line 40, after ("contract") insert ("or licence").
Page 33, line 43, after ("contract") insert ("or licence").
The noble and learned Lord said: After the heady excitements of the last 35 Amendments we now return to the drafting minutiae with which it is my privilege and pleasure to deal. With the leave of your Lordships, I should like to take 22 Amendments at the same time. Amendments Nos. 207 to 222 inclusive are Amendments to Clause 41, and may I speak at the same time to Amendments Nos. 224 to 228 inclusive, and No. 230, which are Amendments to Clause 42. Clause 41 reproduces with minor drafting changes Section 57 of the 1949 Act, and this group of Amendments to which I am now speaking seeks only to make minor drafting improvements in the wording of the two clauses to which they relate.
The changes effected can be seen to be of three types, although they are to some extent mixed up with one another. First of all, the word "disposal" is replaced by the more accurate word "supply". This avoids the possibility of the word "disposal" being held to have different meanings in difference clauses: it also appears in Clause 58 in relation to infringement. The next group of Amendments is to delete the superflous words "contract for" wherever those words appear before the word "licence".
Next there is inclusion in several Amendments of references to licences which are granted as well as to those which are made. The Amendment to page 33 line 17, Amendment No. 212, ensures that the defence to infringement provided for in subsection (3) is also available when the defendant has a licence containing a term rendered void by subsection (1) of the clause as well as when he has a contract containing such a term. This remedies a deficiency in the existing draft of the clause. I beg to move Amendments Nos. 207 to 222 inclusive.
On Question, Amendments agreed to.
Lord LYELL Lord LYELL moved Amendment No. 223:
Page 34, line 4, at end insert—
("(7) For the avoidance of doubt it is hereby declared that any condition or term of a contract as referred to in this section which requires the person supplied or the licensee to utilise in pursuance of the contract raw materials or components of a specified design, constitution or quality shall not be void by reason only that such raw materials or components are for the time being obtainable only from the supplier or licensor or his nominee.")
The noble Lord said: We are grateful to the noble and learned Lord, Lord McCluskey, for pointing out that we are coming back to drafting Amendments. The Amendment that I should like to speak to now is, I hope, in the same category of drafting, but it is a little more complicated than the group of Amendments that we have just considered. This particular Amendment covers the situation in which a patentee grants a licence and he instructs the licensee to use certain specified raw materials for a specification. It may be long-winded and somewhat convoluted, but I would say that it is a simple Amendment. I think that the meaning is clear, that the licensor instructs the licensee to use certain raw materials for the specified specification. It also would be the case that these raw materials are, for the time being, only available from the licensor. The case would also be that the raw materials conform with the requirements of the working of the invention.
It is important to note that this Amendment includes the words "for the time being". I think your Lordships will find them at the last but one line of the Amendment at the bottom of the page. The effect of the Amendment is not to seek to protect merely the interests of the patentee as a supplier of raw materials, or of components, for the working of an invention for ever, but only for a limited period of time. We hope, and believe, that this particular Amendment is relevant because it follows on Article 85 of the Treaty of Rome which prohibits a practice of this sort.
However, in December 1962 the Commission sent out a letter, which I think was called the Announcement of the Commission on Patent Licence Agreements, but it is popularly known, I understand, in patent circles, as" the Christmas message," esoteric though this may be. In this letter the Commission mentioned the achieving of quality and standards if a patentee put an obligation on someone else to procure supplies from a particular source for the
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technically perfect exploitation of the patent. I think that the crux of the Amendment is that the patentee wants to see that his licensee is going to produce the product in the best way possible, so that the reputation and the name of the patentee, and we hope also of the licensee, are going to be protected. The technically perfect exploitation of the patent is apposite here. We hope that this particular Christmas message shows that this would be allowed. It is in essence this provision that the Amendment seeks to write into the Bill. I beg to move.
Lord McCLUSKEY: I fear that with the passing of the centuries the Christmas message has become more complicated and less appealing. The Government would like to consider more carefully this particular Amendment with a view to seeing whether what we see as its objectives, and what the noble Lord has explained are its objectives, can be achieved without disadvantage. It is thought possible that the clause might be abused as well as properly used if it were amended in this way; abused so as to enable the main intent of the clause to be avoided. On the other hand, we recognise that it has certain advantages, and if the noble Lord would care to withdraw the Amendment the Government would like to consider it further. In the meantime, in anticipation of that withdrawal, I thank the noble Lord for tabling this particular Amendment.
Lord LYELL: Once again I am grateful to the noble and learned Lord for the kind way in which he has listened to my explanation of the Amendment and also for the reception which he and the Government have given to it. We hope that the Government will be able to look favourably on some aspects of this Amendment, and we look forward to hearing what they have to say at a later stage. With that, I certainly take up the noble and learned Lord's invitation, and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 41, as amended, agreed to.
Clause 42 [Determination of parts of certain contracts]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendments Nos. 224 to 228:
Page 34, line 5, leave out from ("the") to

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first ("or") in line 7 and insert ("supply of a patented product or licence to work a patented invention, or contract relating to any such supply")
Page 34, line 9, after ("contract") insert ("or granting of the licence").
Page 34, line 11, after ("or") insert ("licence or").
Page 34, line 12, after ("contract") insert ("or licence").
Page 34, line 15, after ("contracts") insert ("and licences").
The noble and learned Lord said: I have already spoken to Amendments Nos. 224 to 228 inclusive, and with the leave of the Committee I would formally move these Amendments en bloc.
On Question, Amendments agreed to.
5.10 p.m.
Lord BELSTEAD Lord BELSTEAD moved Amendment No. 229:
Page 34, line 16, at end insert—
("( ) For the purpose of this section the expressions" patented product "and" patented invention "shall include respectively a product and a process the subject of a patent application or patent applications and the expression" the patent or all the patents by which the product or invention was protected at the time of making the contract "shall include the patent or patents granted on any such patent application or applications.").
The noble Lord said: when a proprietor of a patent licenses someone else to manufacture the invention, the licensor may not have reached the stage at which his patent has actually been granted; in other words, he may not have reached the stage when he is the proprietor—he may only have submitted an application—so a contract made at the time of a patent application should, I believe, also qualify under Clause 42 to allow either party to determine the contract after the patent or patents concerned have expired. As the clause is a defence for a licensee or someone who is being supplied with patented goods, in that under the clause conditions extending the effect of the patent beyond its actual term are prohibited, it would seem equitable for this Amendment to be made.
Lord McCLUSKEY: Again I begin by thanking the noble Lord for tabling the Amendment. The Government appreciate the idea which lies behind it and which the noble Lord has explained. Nevertheless, we should like to study it more closely before we can say that we are satisfied
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that the clause should be extended in the manner proposed. Again, therefore, I invite him, in the light of what the Government are prepared to do, to withdraw the Amendment and perhaps we can return to it on Report, when I hope to be positive, but cannot promise.
Lord BELSTEAD: I am grateful to the noble and learned Lord for those comments and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 230:
Page 34, line 18, after ("contract") insert ("or licence").
The noble and learned Lord said: I have already spoken to this. I beg to move.
On Question, Amendment agreed to.
Clause 42, as amended, agreed to.
Clause 43 [Patentee's application for entry in register that licences are available as of right]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 231:
Page 34, line 21, leave out from first ("the") to ("may") in line 22 and insert ("grant of a patent its proprietor").
The noble and learned Lord said: I will, with the permission of the House, speak at the same time to Amendment No. 235. This Amendment is consequential to an earlier one. The House may recall Amendment No. 98 to Clause 22 which makes the date of the publication of the notice of the grant of a patent the date on which the patent is to be treated as having been granted for the purposes of the Act. Amendment No. 231 to Clause 43 therefore replaces the reference to the publication of a notice of the grant of a patent by a reference to the grant of a patent to its proprietor. This is nothing more than a consequential Amendment. Amendment No. 235 to Clause 45 deals with the same matter.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 232:
Page 34, line 30, leave out ("such an") and insert ("that").
The noble and learned Lord said: As can be seen, this Amendment is a drafting Amendment. It does not affect the meaning of the clause as drafted.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 232A:
>Page 34, line 44, after ("defendant") insert ("or defender").
The noble and learned Lord said: This is an Amendment of which I can proudly say that I am the personal author. In Scotland the person who defends an action is known as the defender, in England as the defendant, and that had been omitted on this point. Thus, with a degree of pride and certainty that I am right about it, I beg to move.
On Question, Amendment agreed to.
Clause 43, as amended, agreed to.
Clause 44 [Cancellation of entry made under section 43]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 233:
Page 35, line 38, leave out ("such period as may be prescribed") and insert ("a period specified by the comptroller").
The noble and learned Lord said: This Amendment relates to proceedings for the cancellation of an entry in the register made under Clause 43 that licences under a patent are available of right, and is needed because a point does not exist in the proceedings from which a prescribed period for the purposes of subsection (4) could run. The Amendment therefore permits the comptroller to fix the period during which renewal fees payable under subsection (4) should be paid. This does not in any other sense affect the operation of the provision.
On Question, Amendment agreed to.
Clause 44, as amended, agreed to.
Clause 45 [Compulsory licences]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 234:
Page 36, line 11, after ("years") insert (",or of such other period as may be prescribed,").
The noble and learned Lord said: I can deal briefly with this Amendment.
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Forthcoming revision of the International (Paris) Convention for the protection of industrial property, particularly in the matter of compulsory licences, may make it necessary for United Kingdom patent law to be changed in order to conform to Convention requirements. The Amendment would allow this to be done by rule in respect of the period during which patents are immune to applications for compulsory licences, but in recognition of the importance of this matter to patentees, the provision for change is made subject to Affirmative Resolution procedure. In other words, we are simply avoiding the necessity for introducing legislation should this change be required.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 235:
Page 36, line 12, leave out ("publication in the journal of a notice of the").
The noble and learned Lord said: This is the last Amendment of the group of 22. I beg to move.
On Question, Amendment agreed to.
5.18 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 236:
Page 36, line 21, at end insert—
("(1A) A rule prescribing any such other period under subsection (1) above shall not be made unless a draft of the rule has been laid before, and approved by resolution of, each House of Parliament.").
The noble and learned Lord said: I think I mentioned this Amendment when I was speaking to Amendment No. 234. I beg to move.
On Question, Amendment agreed to.
Clause 45, as amended, agreed to.
Clauses 46 and 47 agreed to.
Clause 48 [Application by Crown in cases on monopoly or merger]:
On Question, Whether Clause 48 shall stand part of the Bill?
Lord LLOYD of KILGERRAN: Although no Amendment has been tabled to this clause from these Benches, it seems to us that it raises a question of some constitutional importance. The

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clause relates to the findings of the Monopolies Commission and enables the appropriate Minister or Ministers to make an application to the comptroller for relief. The Comptroller General is part of the Executive and it is of course without any disrespect to him that I would submit that perhaps an application by the Minister should go to the court rather than directly to the Comptroller General. Of course, the answer may be that the Comptroller General is acting in his quasi-judicial capacity but it is the function of the court to control the Executive. I should therefore be grateful if the Government would not necessarily give an answer now but would consider whether it is not invidious for the Comptroller General, as a civil servant, to be asked to exercise powers by the Minister or Ministers in relation to an application which the Crown feels desirable to be made in cases of monopoly or merger.
Lord McCLUSKEY: I should like to answer the noble Lord by saying that the Comptroller General does of course act in a quasi-judicial capacity. The other point that I might simply make is that this is not a new clause. It reproduces, with drafting changes, the provisions of Section 126 of the Fair Trading Act 1973, which, in turn, amended the 1949 Act. I do not know whether this point has been taken before and I would simply give the answer that I gave before; that is, that the comptroller is acting in a judicial capacity.
Clause 48 agreed to.
Clause 49 [Inventions relating to food or medicine, etc.]:
On Question, Whether Clause 49 shall stand part of the Bill?
5.22 p.m.
Lord NORTHFIELD: This clause refers to the pharmaceutical industry and I oppose it and hope that we shall agree to delete it without too much fuss. I declare a minor interest, in that, from time to time, I advise a pharmaceutical company. On Second Reading, my noble and learned friend referred to the fact that this is a repetition of what I might describe as the "friendless" Section 41 of the 1949 Act. He indicated that he thought that its mere presence in the Bill at the moment stimulated competition and restrained exorbitant prices. However, he went on
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to say that discussions were going on with the industry about the adverse effects on confidence and investment. He said that if more effective ways to prevent exorbitant profits could be found, he was prepared to reconsider the clause.
I believe that the first question we must ask my noble and learned friend is what has happened between Second Reading and now? Clearly, discussions will have taken place and I hope he can say what is their outcome. My understanding is that the discussions were part of a package deal which included the deletion of the clause and that the remainder of the package was virtually agreed, so that it is now up to the Government to carry out their part of the bargain and take the agreement to the point of deleting Clause 49.
However, whatever the outcome of these discussions, I believe that the clause should be deleted for quite other reasons. First, why are the powers in this clause needed? The powers are very wide indeed. It is a power of the comptroller virtually to make available anybody's patent to anyone he wishes without any real guidance or rules being laid down. Why is this great power needed over the pharmaceutical industry?
First, I believe that it is worth recording that the industry has no very bad record. Its exports are worth £400 million, which is about four times the cost of our imports of pharmaceutical products into this country. The industry is a net exporter and, as far as I can discover, its prices have certainly not been exorbitant. In recent years, they have risen half as fast as the Retail Price Index. Certainly, its return on capital seems to have declined quite dramatically. I do not know what complaint the Government have about the pharmaceutical industry faced with figures like that.
Secondly, I beg your Lordships to look at the powers that the Government already possess if they feel that there are exorbitant profits being made. First, the industry is subject to the voluntary price regulation scheme, which has worked very effectively indeed in recent years. This is a voluntary scheme. It works well and prices for drugs have ended at such a level that they are about the lowest in Europe. What is my noble and learned friend grumbling about? Furthermore,

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if he has some grumbles about the pharmaceutical industry, he already has an enormous armoury in the Bill with which to fight exorbitant prices. I shall not go into the provisions in detail—he must be very well aware of them as must other Members of your Lordships' House—but there are, for example, the clauses against monopoly. Under these, if a monopoly situation is being exploited and prices are unreasonable, the Government can surmount the patent and make it available for others to produce the product. Secondly, there are the provisions in Clause 45 which deal with compulsory licences for use when demand is not being met on reasonable terms. In other words, if a patentee is charging exorbitant prices, the Government can, under Clause 45, insist on compulsory licensing of other people to make the product and make it available at a reasonable price.
Later in the Bill, we have the provisions for the Crown to be able to use patents, as was done in 1961 when certain patented drugs were taken over by the Crown in order to provide drugs at a cheaper price for the National Health Service than the price for which they could be bought from the patentee. In other words, the difficulty with this situation is that my noble and learned friend is trying to defend the indefensible. He has an enormous armoury of powers against this industry which are working extremely well, particularly on the voluntary side of price regulation, and it is an industry with a good record. Apart from the Government, I know of no friend of the hated Section 41 which is now repeated in Clause 49.
What is the positive case against the clause? The positive case is really that, so long as the clause remains in the Bill, it will be an enormous deterrent to research taking place in this country. Who in the great multinationals will undertake substantial amounts of research in the future if they feel that, by some use of the present clause, the patent that results from their research may, very quickly and almost without anybody knowing, be made available to anybody, with no guidelines laid down as to why that is to be done or anything else? Certainly, there is a right of appeal in the subsequent clause, but there is undoubtedly a very widespread fear in the industry that this
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clause may be abused in the future and that, for that reason, research will be deterred. The Government, in their own publication about the issue, were quite wrong. The Government said that the case being made against the clause was that it was necessary for research-based pharmaceutical companies to be able to recover their costs. That is not the point at all. The point is the other way round: that they will not undertake this research if the product of the research and the patent is then available to almost anybody at the whim of the comptroller.
In many ways I would not have minded had the clause had some guidelines in it, but that is not satisfactory. For example, the comptroller ought to be told exactly when he should be using these swingeing powers. For example, it ought to be insisted in the clause that he had to take into account reasonable reward for relevant research. That is not even in the clause, and the comptroller could just ignore anything like that. So I think that the best thing to do is to delete the clause.
When one comes to the final crunch on this matter, the support for deleting it is extremely respectable. First, the Banks Committee itself spent a great deal of time on this matter. A very large part of Chapter 14 in the Banks Report is devoted to this issue. In paragraph 410 the Banks Report comes down absolutely firmly in favour of taking out the clause. I should like to read just one sentence from what is a very large part of the Banks Committee recommendations:
"Thus, in our opinion, the benefit which may accrue to the public through the licensing of an alternative supplier does not outweigh the discouragement to research inherent in a system which may deprive a successful researcher of a part of his expected return to the benefit of a manufacturer who may never have undertaken research of any kind."
Those are strong words. Those are words direct from the Banks Committee Report in favour of total abolition of the clause, and I am sure that it is quite right.
But the pedigree goes further. The National Economic Development Organisation's Working Party on the pharmaceutical industry also agreed that the clause should go; and I understand that after further consultations even the trade union members of that committee agreed that it ought to go. Again, if we look at

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the comparisons with Europe, as to whether we are getting out of step with Europe, we see that the clause is taking us further away from practice in Europe. The Banks Committee again says, in paragraph 402 of the report:
"…where the patent laws of major drug-producing countries have been revised in recent years, any change affecting drugs has been in the direction of providing fuller protection than they were previously afforded."
In other words, Europe is moving in one direction in this matter, and apparently in the clause we are moving in quite another direction.
My noble and learned friend may say that, despite my complaints, the industry is getting on rather nicely; it is exporting and is doing its research. He may want to throw this at me and ask what proof I have that the clause is misguided. I think that there are two answers to that. A number of the research developments that are going on now are what one might call pre-1975 discussions—up to which point it had been assumed that the clause was going anyway. I would suspect that it has been in the past two years that, as the Labour Party has begun to become fond of the clause again, second thoughts are beginning to take place in the pharmaceutical industry about research that is going on in this country. Secondly, if my noble and learned friend says that our export figures, as a result of research in this country, are fairly good, then I should say that he ought to look at some of the other figures. I gather that Ireland is getting a fair share of this research investment now. I do not want to overstate the case, but Ireland is doing much better than we are in bumping up its output of Pharmaceuticals for export.
I do not want to be too long, and I come to my final point. I want to say something to my noble and learned friend, and I shall use my words very carefully. I can tell him that there is one considerable investment which may well take place in this country by a very large international pharmaceutical firm which could run initially—and this will be for research—at about £16 million. I understand that the advice to that firm will be such that if the clause stays in the Bill the firm will not only refuse to carry on with this research project here, but will probably move it to France. That is a precise example of the danger of retaining the clause in the Bill.
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Noble Lords have borne with me on previous occasions when I have expressed my own personal passion for making the mixed economy work. I believe that in this country we must accept a substantial proportion of private enterprise in our economy, and once we accept it we should allow it to work properly. We should not fetter it to the point where we inhibit its confidence and take away its incentives. It is because this clause is exactly one of those hindrances—a totally unnecessary hindrance—to confidence, to foreign investment in this country, to the growth of a successful private enterprise sector that is doing quite well for this country already, and finally because, as I said at the beginning, my noble and learned friend has such an armoury in any case against the unscrupulous or the exorbitant, that I hope we will quite quickly and without much ado agree to delete the clause.
The Earl of HALSBURY: In rising to support the Motion in the name of the noble Lords, Lord Northfield and Lord Ferrier, and myself, I ask the Committee to take account of the fact that one is a Government Back-Bencher, the other an Opposition Back-Bencher, and I am an independent; so this ought to be a quite non-ideological matter. I was delighted to hear the noble Lord, Lord Northfield, give such an eloquent and well covered treatment of the subject matter, and I should like to add something on the same lines. There are five pharmaceutical firms in the United States, each of which is larger than the whole United Kingdom pharmaceutical industry put together. It is to our enormous advantage to have these people operating over here. I was having lunch with the English director of one of the largest of those firms today, and he said, "We are getting a little tired of being second-rate citizens". He confirmed exactly what the noble Lord, Lord Northfield, had said; that conditions are really much more propitious in Ireland. He said, "I can't imagine why we stay here".
The noble Lord, Lord Ferrier, and I are both industrialists who, in years gone by, have been connected with the pharmaceutical industry, though my involvement was only minimal, for two or three months. In addition, I have to declare an interest in the food industry, which is also covered by the clause. I cannot

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speak for the noble Lord, Lord Ferrier, who has asked me to convey his apologies that he cannot be in his place while we are discussing the Motion to which his name is attached. My own explanation is that the pharmaceutical industry has been pre-selected as the ideological whipping boy of the far Left. I do not think that we ought to deal with whipping boys in this day and age. It is a medieval concept of young princelings, who in theory had to be punished for derelictions, having one of their friends whipped instead, and presumably the two boys settled it afterwards. But this belongs to the province of the antiquarian and medieval juvenilia and I do not think that we ought to import it into British politics. I think that it is bad for the morale of industry to pick on someone to be a second-class citizen and to say that making profits is wicked, that making profits on something essential to humanity is doubly wicked, and therefore, since the victim is unpopular, injustice does not matter. I do not think that that is the way to approach the morale of industry because it makes everybody ask, "It is the pharmaceutical industry today. Which of us will it be tomorrow?"
I am not going to speak at any great length on this matter because the noble Lord, Lord Northfield, has covered it very fully. Normally speaking, in Committee we fence a little across the Floor of the Chamber. We engage in a certain amount of shadow boxing, and Amendments which are probing, elucidatory and so on are put up and are then withdrawn. But this is not that kind of clause. This is not something which you can get to work on with scissors and paper, cutting out a word here and putting in a word there. I think the old Clause 41 had no precedent in all the Patent Acts that pre-existed it. It was an experiment in 1949, and it is an experiment that has not worked. It has very rarely been operated, and on the rare occasions when it has been it has led to a lot of ill-feeling between manufacturers and industry. I think the time has come to be done with it.
5.40 p.m.
The LORD CHANCELLOR: It may be convenient for me to indicate to the Committee the position of the Government upon this matter, and I hope that
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the noble Earl, Lord Halsbury, who normally adopts a detached approach to these matters, will defer a final decision upon this at least until he has heard me speaking upon the Question. I have listened, of course, with very great care to the arguments which have been advanced by my noble friend Lord Northfield, supported as he is by the noble Earl, Lord Halsbury. I may say at once that the Government do not approach this matter from an ideological point of view at all, but from the point of view of what we regard as a legitimate concern for the public interest on this important issue.
The Government are as anxious as all those concerned with the industry to promote confidence, to encourage investment and to improve the relationship between the Government and the industry, and the position (and those arguments, which I accept) must be considered against the background of the quite unique contribution that the pharmaceutical industry makes to the wellbeing of our country and, of course, of our people. We have to bear in mind the special nature of its products, the very high standards of production, its dependence on continuing research, of course, and the price of its products. All these are matters of legitimate public interest; and, however responsibly the industry may meet those special responsibilities which it has, it is necessary to safeguard that public interest. Perhaps it may not be irrelevant for me to remind noble Lords that for all practical purposes the Department of Health and Social Security is in effect the only customer in this country for the products of the industry, or at any rate overwhelmingly the most important customer.
My noble friend Lord Northfield has properly drawn attention to the fact that there are other provisions in existence, apart from the provisions of Clause 49, which are available to restrain prices. There is the power to fix prices by order under the Emergency Laws (Repeals and Re-enactments) Act 1964; the Monopolies and Mergers Act can, as he has also said, be used; and the Crown can also use the provisions contained in Section 46 of the Patents Act 1949, which are repeated in Clauses 53 to 56 of this Bill. But, powerful as all these instruments are, they each have their limitations. They all depend on Government intervention and,

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to varying extents, on lengthy investigation leading to confirmation that there has been some abuse. Since recourse to those powers could have a significant effect on trading activity, any Government are likely to be reluctant to invoke them except in the most exceptional circumstances. A provision which does not require Government intervention, and which is not likely to be invoked unless the potential licensee can make a profit from a selling price below that of the patent-holder notwithstanding payment of a royalty, is, we believe, a useful restraint on prices.
The White Paper on Patent Law Reform set out briefly the Government's reasons for retaining the powers in this clause, and referring to the old Section 41 the White Paper says:
"It operates in-terrorem as a means of stimulating price competition and of restraining exorbitant prices".
I do not need to remind noble Lords that the pharmaceutical industry and its products comprise an exceptionally high proportion of patented discoveries, and important new drugs are invariably patented. During the effective patent life of new drugs, high profits can be made from their sale, and people being treated by those drugs cannot be treated by cheaper substitutes for what become essential medicines. It is really not like substituting margarine for butter; and it is the possibility of unreasonably high profits that is at the heart of this issue.
It has been urged that there are very few applications for compulsory licences, but I suggest that in this feature lies the strength of the provisions, since they would not be doing their job if there were a large number of applications. As I have suggested to your Lordships, a potential licensee will act only if he calculates that the patentee's profit margin is high enough to make it possible for a competitor to market profitably at a price lower than that of the patentee, despite his having to pay a royalty. The sparcity of applications for licences, far from showing the clause to be unnecessary, in my submission shows that it acts as a restraint, and a continuing restraint, on exorbitant prices.
I quite agree with what my noble friend Lord Northfield has said about the value
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of the Voluntary Price Regulation Scheme, which I readily admit has been helpful in controlling prices, and therefore profits, for the supply of medicines to the National Health Service. But despite the existence of that scheme, it is, given the nature of the industry, still possible for very high profits to be made; and without this clause, or some alternative provisions in respect of this matter which I shall refer to in a moment, such profits would probably be made in the early years of a new patented drug.
It is for these reasons that the Government are not disposed—indeed, cannot—to accept deletion of this clause unless agreement can be reached on alternative measures for the public protection. In this business of profits on medicines paid for the National Health Service out of the public purse to the tune of millions and millions of pounds, the Government have to strike a balance between the confidence and willingness of the industry to invest and the necessity to ensure that there are reasonable restraints against unreasonable profits. The Government recognise the strength of opinion in the industry—and we have heard it expressed strongly today—that the availability of compulsory licences may discourage investment in research and production in the United Kingdom, and indeed my noble friend has identified one significant illustration of that.
Therefore, the Government are very willing to consider, and are indeed now considering with the industry, means of safeguarding the public interest without the possible disadvantages that the industry associates with this clause; and it is with that objective of arriving at a voluntary agreement between the pharmaceutical industry and the Department that the whole problem is now being discussed with those most closely concerned.
Your Lordships will appreciate, I hope, that the extent to which the Government could move in this matter to the point of agreeing to the dropping of the clause depends upon the extent to which the industry, for its part, are prepared to co-operate. All that I can say to your Lordships now is that, certainly, if the

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informed, an important stage. Clearly, a voluntary agreement between the industry and the Department of Health and Social Security would be the most desirable result to be arrived at. Accordingly, I venture to invite my noble friend and the noble Earl, Lord Halsbury, and those who are disposed to take their view of this matter, in the light of the existence of discussions and the indication that I have made on behalf of the Government that we wish to arrive at a voluntary agreement on this matter in terms which we can present to the public as representing the public interest, at this stage to withdraw the Amendment to see the progress of these discussions which are now taking place.
Lord CAWLEY: The noble and learned Lord talked a great deal about medicines. This clause deals with food as well as medicines. Can the noble and learned Lord justify the clause in relation to food? Surely the Ministry is not the biggest buyer of food in the country.
The LORD CHANCELLOR: I think that the same considerations apply in respect of food where the activities of the food industry are relevant to the kind of provisions provided for in Clause 49.
Lord DOUGLAS of BARLOCH: Before the noble Lord withdraws his Amendment, if he decides to do so, may I suggest that, understanding very well why the Government feel that some protection of this kind is needed in respect of pharmaceutical products, the clause is not likely to have any great value. Many of us will probably remember the case of the tranquillisers Valium and Librium which was dealt with by another process entirely. It was referred to the Monopolies Commission and, as a result of their investigations, the prices which were charged for these drugs were reduced very substantially. But that was not a case in which a licence was granted to some other firm to produce them. That is a remedy which is rather ineffective, for this reason. These drugs are sold not by their scientific name but by trade names, as in the example which I have given. It becomes of interest to any other manufacturer to try to obtain a licence to manufacture and to market them only when their use has become established and it appears that there is something of value in them. But at that stage they have become known by their trade names.
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No doctor is going to prescribe medicines by their scientific, chemical, nomenclature; they are always prescribed by these short names. More than that, these names are protected by the Trade Marks Acts and they will continue to be protected by them if this clause is put into effect. Therefore, any manufacturer who gets the licence has to start at the beginning with a new trade name and build up a demand for the product under that name. Therefore, I venture to suggest, with all respect to my noble and learned friend, that there is not a great deal of value in this clause.
Lord CAWLEY: Listening to what the noble Lord, Lord Douglas of Barloch, has said, the get-up of the goods is also extremely important. A Butazolidine pill which is not coloured red will not be taken by most patients. Nevertheless, if another persons receives a licence to make Butazolidine and colours his pills red, he is passing off.
The LORD CHANCELLOR: I venture to find comfort in having some support for the colour red.
Lord PORRITT: I had hoped that it would not be necessary, after the eloquent advocacy of the noble Lord, Lord Northfield, and the noble Earl, Lord Halsbury, to say anything further. But in view of the fact that the public interest has been brought so much into the case, might I put a point of view from the medical angle—although I must express a slight interest as I am a director of a pharmaceutical company. There is no doubt in today's world that what is happening is greatly restricting the value of pharmaceutical companies to the public interest. They are finding it harder and harder to produce drugs of enormous value to the public. Nowadays, with inflation and the rising cost of producing a drug, even when it is discovered, it is almost impossible after toxicity and clinical trials, to get any new drug on to the market under at least seven years or probably more—between seven and ten years. In other words, to produce a drug for the benefit of the public now costs the pharmaceutical company something in the neighbourhood of £1 million. Hence, not only in this country, but worldwide, drugs which may be of the greatest value to the public are not being produced.

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If this clause in any way—as it most certainly does—restricts even more the activities of recognised and reputable pharmaceutical companies it is doing nothing but harm to the public interest. Most of the other things that have been said are, of course, very applicable. I know from personal experience that this clause would be very much a research deterrent. It would sap confidence in the industry; it would remove initiative and it would remove incentive in an important field. It seems to me, from all that we have heard, that it is quite unnecessary and, therefore, a great shame that even more brakes should be put on an industry which is trying to do something—and I underline this—for the public interest. I hope I have done something to dissuade your Lordships against the talk of exorbitant profit. If it costs as much to produce one good drug as I have mentioned, then the profits are not all that good in the majority of pharmaceutical companies. I should like strongly to support the deletion in totality of this clause.
Lord PLATT: Very briefly, because I am a medical man and have no financial interest in any pharmaceutical company whatever, I should like to indicate my strong support for those who are moving the deletion of this clause. The pharmaceutical industry is of tremendous importance in medicine. You have only to mention the modern drugs, the antibiotics and so on which are in everyday use, and you find that nearly all have been either discovered or developed in the pharmaceutical industry.
The industry takes enormous risks. They spend a great deal of money on research, and if it so happens that another firm has been researching on another drug which turns out to be slightly better than theirs, then the whole of that money can be lost. I am not saying that they do not make large profits. We all know that they do. But if there is a case where large profits should be accepted as part of the stimulus to an industry as important as this, I think we should show our view on this and vote for the deletion of the clause. As for delaying this until the discussions have taken place, this is taking a risk on the part of those who want to delete this clause. Further, is it not perhaps more
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logical that we should delete it and then the Government, if they can bring strong evidence to bear, can reintroduce the clause if they wish to do so?
6 p.m.
Lord JACQUES: We are getting a lot of confusing evidence from the people who wish the deletion of this clause. First of all, we are told by the mover that this clause is so effective that the company which wishes to invest £16 million in this country will not do so if this clause remains. Then another supporter of the deletion tells us that the clause is completely ineffective, anyway. Where are we? We are also told that it costs £1 million to produce a new drug; but there is nothing in this clause which prevents a pharmaceutical company from getting money back which has been invested in research. The clause prevents exorbitant profits on top of getting the money back. Do not let us have red herrings; let us put all the cards on the table.
In view of the statement of the noble and learned Lord the Lord Chancellor, it would be irresponsible on the part of this Committee to have this clause deleted. He has told us that the Government are at present negotiating and they hope to reach a voluntary agreement. The negotiations have reached a crucial stage. Surely, with a statement like that from a responsible officer of the Government, it would be foolhardy on the part of this Committee to delete the clause at this stage, especially when there will be opportunities later for deleting it if the Committee so wishes.
Lord LLOYD of KILGERRAN: May I strongly support what the noble Lord, Lord Jacques, has put to the Committee? I should like to remind the Committee that some 10 years ago the Government set up a committee under the chairmanship of the noble Lord, Lord Sainsbury, to examine the cost of Pharmaceuticals. I had the privilege of being a member of the Sainsbury Committee. All members of that committee were impressed by the opportunities that were available to pharmaceutical companies to charge high prices and make excessive profits. Examples of excessive profits made by companies were given to the committee upon which I had the privilege to serve.

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After all these years, it is fair at this stage, that we should be reminded of the great work that the noble Lord, Lord Sainsbury, did in assisting the Ministry of Health at that time to improve the so-called voluntary price scheme, which was not at all influential in keeping down prices. I support the noble Lord, Lord Jacques, in his earnest plea that at this early stage, while these discussions with the pharmaceutical companies are going on, the noble Lord, Lord Northfield, would be doing a great service in withdrawing his Amendment.
May I say something about the view taken by the noble Lord, Lord Northfield, regarding the operation of Section 41 of the Act, which is replaced by Clause 49. I have had the privilege of appearing before the comptroller in many cases for large companies where an applicant had made an application for a compulsory licence. Having regard to what the noble Lord said—that there were no guidelines in the sections of the Act to help the Comptroller General—the Comptroller General adopted an extremely fair and careful approach to the application at all times.
These were not cases that were dealt with off the cuff. I remember being in cases which lasted for 14 and 15 days, where evidence was put before the comptroller and there was cross-examination of both sides in order that the position should be realistically appreciated. It is my experience that the Comptroller General of Patents did not deal with these matters the way in which it has appeared to have been suggested by the noble Lord, Lord Northfield, because there were no guidelines in the Act.
Lord NORTHFIELD: I was not saying the comptroller used his powers wrongly or frivolously. I was simply saying that, until there is a section which contains some guidelines, no one can be sure what guidelines the comptroller uses.
Lord LLOYD of KILGERRAN: Of course the noble Lord was not saying that the comptroller acted frivolously or was in any way objectionable. The noble Lord indicated that there were no guidelines. But there is a history in relation to this section, and I can assure the noble Lord that the comptroller had many
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opportunities of being helped to come to a decision. The kind of royalties that were imposed by the Comptroller General were not 4 per cent. or 5 per cent.; I remember cases where royalties of from between 20 per cent. and 30 per cent. were included in the agreement. In all the circumstances, I support the noble Lord, Lord Jacques, in saying that at this stage at least this Amendment should be withdrawn.
Baroness WARD of NORTH TYNESIDE: I hope that we will now withdraw the clause. I always listen with very great interest to the noble and learned Lord the Lord Chancellor because he always has a marvellous way of putting across his case. That gives great pleasure; I like listening to him. If we withdraw the clause—and I hope we shall—he has an opportunity to take his own line and get on with the job. He is so clever that I ask him to get on with the job and let us do what I think is right: withdraw the clause now. I like action. With great respect, sometimes I get bored in this House, having been for 38 years in the Commons. I am used to action and I like action. If there is a case which, as I say, was beautifully put by the noble and learned Lord, then let him get on with it on this occasion. If he wants to, I am sure that he can get on with it. In the meantime, I want to see the clause deleted, and I hope that we shall vote it out.
Lord LYELL: Before we come to the action which is so earnestly desired by my noble friend Lady Ward, perhaps I may make one or two comments and ask the noble and learned Lord for clarification of the remarks that he has made. The Committee will recognise that this clause has given rise to more controversy, dispute, apprehension and doubt than any other measure contained in the Bill. During the course of my remarks on the Second Reading of this Bill I mentioned that the United Kingdom had the lowest medicine prices in Western Europe. These particular remarks brought what I can only describe as "noise" from noble Lords opposite and particularly from the Government Front Bench. I believe that this particular noise indicated approval.
However, I believe that it is relevant to examine the means by which the objective of cheap medicines is obtained. It seems

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that two methods have been widely discussed. One has been very widely discussed this afternoon; but there is another which has not been mentioned by name, yet it seems to have been brought into the deliberations and discussions. These two methods are Clause 49, as we have it in the Bill, and also something else: negotiations on the Voluntary Price Regulation Scheme are going on continually between the industry and the Government, represented by the Department of Health and Social Security. The noble and learned Lord mentioned this maxim which he called in terrorem. He mentioned it several times in the course of the Second Reading so far as this particular clause was concerned.
It seems to us that the Sword of Damocles hangs over one or two sectors of the pharmaceutical and chemical industry. When we consult what the Banks Committee said on this subject, we find that they were strongly opposed to the continuation of this concept of in terrorem. As the noble Lord, Lord Northfield, pointed out, the very short and clear recommendation of the Banks Committee was that the provisions of Section 41 of the Act, which are with us again in Clause 49 in this Bill, should be excluded; that they should no longer apply.
Noble Lords will find it stated in the Banks Report that the provisions of the old Section 41 were hardly used at all: that was up to 1969 or 1970. However, since Banks, use has been made of the section, and many more applications for licences have been successful. The proportion of successful to unsuccessful applications has been approximately the same as that recorded in the Banks Report, and we believe that indicates that the entire pharmaceutical industry in the United Kingdom is still full of vigour, strong and competitive. However, it would help them to know that the rules of competition are not to be biased against them.
When the noble and learned Lord the Lord Chancellor made his remarks, which were admirably clear, he mentioned the prices of medicine. One factor he mentioned as being involved in the negotiations on price between the industry and the Government was the marketing cost of those medicines. The noble and learned Lord mentioned one factor, but there were
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two others which he did not mention, namely, the costs of production and of research and development. I believe that anyone connected with the industry would agree that those are particularly relevant costs when looking at the marketing cost of the product.
The noble and learned Lord went on to speak about medicines on the National Health Service. I wonder whether he would agree that the prices paid by the Department of Health and Society Security should reflect costs of research and development which is carried on outwith the United Kingdom, and that the products sold in the United Kingdom through the Department of Health and Social Security should reflect those costs? I believe that research and development should be so reflected and that we should not just have imports on what one might call "the black market". I should be interested to hear whether the noble and learned Lord could give us further guidance on this point before we reach a decision.
Lord JACQUES: Would the noble Lord agree that if expenses which are incurred elsewhere than in the United Kingdom should be taken into account, sales of the drug elsewhere should also be taken into account?
Lord LYELL: I would agree that sales of the drug should be taken into account, but I also believe that expenses incurred on a worldwide basis should be taken into account too. The noble Lord, Lord Jacques, has put his finger exactly on the point that I am making; yet he and his noble and learned friend apparently believe that there should be only one-half of the equation, and that the prices in this country should not reflect research and development outwith the United Kingdom. That is clearly what I have understood the argument to be about this afternoon, and I think it is what many people in the industry have understood.
Lord LLOYD of KILGERRAN: May I interrupt the noble Lord at this point, because he is dealing with a question with which the Sainsbury Committee had to deal over many weeks; in other words, they had to find out what were the expenses of research of these international firms. So far as the great firms in Switzerland were concerned, we found that there was

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some regulation or law which would not allow those companies to disclose, even if they wished to do so, facts about research and their expenses in relation to that. Therefore, it is somewhat of an empty phrase to say that the Government should take account of the expenses of foreign firms, because it was the experience of the Committee on which I was privileged to sit that it was impossible to get that information in this country. Therefore, when dealing with pharmaceuticals, with the health of the community depending so much on them, the Government should have these powers in the case of emergencies which occasionally arise.
Lord LYELL: I am grateful to the noble Lord, Lord Lloyd, and I accept there may be laws outwith the United Kingdom which preclude relevant information being obtained. However, Switzerland is only one country, and there may be different laws in other countries. There might also be other disadvantages for companies based in the United Kingdom. We might have laws which preclude disclosure. However, although the point made by the noble Lord has relevance in part to the argument I have put forward, I would rather not dwell too much on it.
Lord LLOYD of KILGERRAN: I am sorry to interrupt the noble Lord again, but in his support of this Amendment, the noble Earl, Lord Halsbury, referred to these very large international companies. They have subsidiaries in this country, and I would repeat that it is quite impossible in certain circumstances to get from those foreign companies details of what they spend on research and development.
Lord LYELL: If the noble Lord will have patience I shall cover that point, but I feel I should get on, because we have spent long enough discussing this point. We believe very strongly that, wherever possible, voluntary schemes should be used. Indeed, when speaking earlier about employee inventions we spoke about voluntary award schemes and expressed our strong approval for them. I am sure noble Lords would agree that where there is the chance of a voluntary scheme operating, as in this case, parallel with the law, the choice must always be to use the voluntary scheme. Therefore I would put to the Government that, where we
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already have a Voluntary Price Regulation Scheme, there is no need for what I would call "a second prong" to the harpoon of the Department of Health and Social Security, which I believe they can use against industry when negotiating medicine prices.
Noble Lords will be aware that one particular company was engaged in long and detailed negotiations with the Department over the last few years. There was a great deal of publicity about it, and emotions ran high. It is interesting to learn that the company at that time had withdrawn from the Voluntary Price Regulation Scheme, as they felt that the provisions of Section 41 could be, and would be, used against them. Negotiations continued amid considerable publicity on prices as well as on other matters, between that company and various segments of the industry and the Department. The prices of certain products—I believe the noble Lord, Lord Douglas, referred to the products of the company—were reduced by up to 40 per cent. However, I am not aware of any publicity being given, and I did not hear any comments by noble Lords this afternoon, to the effect that since those prices were reduced some 3½ years ago, the Department and the company have reached an agreement, and the prices of those particular products have been raised no fewer than four times since the agreement was reached and the prices were originally reduced. Indeed, some of the products concerned cost four times the amount of the reduced price in 1973, and that has occurred under the Voluntary Price Regulation Scheme.
Lord BROWN: I am sorry to intervene, but the noble Lord ought to know that the drugs to which he is referring are the subject of a licence given to Berk Chemicals under Section 41.
Lord LYELL: Yes, I was aware of that; but I understood that the licence had no great relevance and that indeed the licensee no longer carries out work under the licence. That is my understanding of the situation, although the noble Lord is quite correct. That was a factor in the discussions 3½ years ago, yet under the voluntary scheme the prices have gone up, with the concurrence of the Department. The noble Lord, Lord Jacques, believed that all the cards were not on the table—
Lord DAVIES of LEEK: The noble Lord has gone on and on and on, and he has now contradicted himself. Will the noble Lord not agree that, only a moment or two ago, he was suggesting that some voluntary scheme may be snatched out of the air? Now he says that a voluntary scheme has resulted in prices going up and up, and the noble Lord is going on and on and on.
Lord LYELL: I have not gone on for as long as some noble Lords in this debate, and if the noble Lord had listened earlier he would have heard me say that there were at least two prongs—there are plenty more, such as Section 41 and other Crown user provisions. I said that one prong was Clause 49 and one of the others was the Voluntary Price Regulation Scheme. I think that that covers the noble Lord's point. The noble Lord, Lord Jacques, believed that all the cards were not on the table. The noble Lord is a man of financial expertise and knowledge, and he will know that there are rules, particularly in the case of this one country, Switzerland, which preclude the fullest disclosure. Nevertheless, the Voluntary Price Regulation Scheme seems to work and provide a modicum of agreement between the industry and the Department.
The moral seems to us clear on at least two counts. First, where possible one should use voluntary mechanisms as these render the statutory provisions unnecessary. Secondly, does it help good relations between a monopoly consumer, in this case the Department, and what I would call a near monopoly supplier, to demand fluctuations of pricing policy when the consumer has access to a plethora of figures and details under the Voluntary Price Regulation Scheme? I am sure that noble Lords who are interested will know that voluntary financial returns, certified by company auditors, are sent in each year to the Department by companies in the pharmaceutical industry, so that the Department can get first-hand knowledge of a company's pricing policies, and if the Department wants further information it can in almost all cases obtain it directly from the company. The major example that we have discussed, that raised by the noble Lord, Lord Douglas, shows that much emotion has been raised—we believe for no good
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purpose—when negotiations outwith the atmosphere of the provisions achieved a fair result and, in addition, destroyed many of the myths and scares raised during them.
Lastly, I want to add a word or two about the competitiveness and the confidence of pharmaceutical companies and their industry in the United Kingdom. First, it is the quality of competitiveness which I, and many others, believe does so much to ensure that our medicine prices are lower than those in Western Europe. Various people have mentioned exorbitant profits, but can they still justify that claim when they know that a daily dose of tranquilliser tablets or other treatment costs, on average, one-half to one-third as much in the United Kingdom as the same treatment—be it red pills, brown pills or yellow pills—in the rest of Western Europe? I also hope it is appreciated that, thanks to the research facilities which the industry has built up here, which have been alluded to by the noble Lord, Lord Northfield, and the noble Lord, Lord Porritt, who has experience in these matters, the industry has been able to produce net exports of pharmaceutical products of more than £300 million per annum. This is one of the strong points made by the noble Lord, Lord Northfield.
As to confidence in this industry, this is not something that we can just regard as a concept of the past. It concerns future intentions which are based on prospects allied to the current financial, economic and political scene. I, and many of my noble friends, are firmly of the conviction that this confidence has to be nurtured, and that it is destroyed by the continuance in Clause 49 of the provisions of the old Section 41. For this reason, I declare my support for the Amendment.
6.24 p.m.
The LORD CHANCELLOR: It is clear that we have been discussing matters of very great importance in this debate on this Amendment. The outcome either of the debate or of the discussions that are taking place between the Government and the industry is very important—important for the industry, but important also for the British people. We buy £400 million worth of drugs each year from the pharmaceutical industry. That is the extent of the public financial interest.

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Of course, there is an immense public interest, on the other hand, in seeing that the quality of the goods, drugs and inventions of that industry should be maintained, and that there should be a proper and fair return for its investment. Happily there is no evidence—certainly as yet—to indicate that the industry's investment in research is being reduced, and I understand that the investment in Ireland that has been referred to is mainly in production and not in research.
May I say how grateful I am for the eloquent support that I received from my political adversary and old friend, the noble Baroness, Lady Ward. We tussled with each other for 29 years in another place, and it looks like lasting for another 29 years here—I hope for both of us. But what I invite your Lordships to consider now is this. I have told the Committee that discussions are taking place between the Government and the industry on this important matter—important to the public and important to the industry. I am advised that there is a reasonable possibility that the discussions will make significant progress before Report stage. Surely the Committee will not want to prejudice the Government's position in these discussions by deleting the clause now. It has been suggested by the noble Lord, Lord Platt, that if the Committee does that now it can be restored, but it could not be restored here. I have little doubt that it would be restored in another place. But in this House there will be opportunities at Report stage of reverting to the matter, and I believe that that stage will be in the next month. There will also be an opportunity of returning to the matter at the Third Reading and final stages of the Bill.
I invite your Lordships seriously to consider the duty which this House owes, in negotiations of this kind affecting the public interest, to see that that public interest should not be prejudiced by a premature decision upon this matter in the Committee here tonight. I think that this would be a serious step to be taken in the situation which I have described, and I accordingly hope that the Committee will respond to the appeal from the noble Baroness, Lady Ward, from my noble friend Lord Jacques and from the noble Lord, Lord Lloyd of Kilgerran, to resolve this matter for the time being—and I do not ask for more than that— by not deleting the clause, so that the
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discussions can go on without prejudice to the position of the Government and the British public.
The Earl of HALSBURY: Faced with so eloquent an appeal from the noble and learned Lord the Lord Chancellor, declared with all his usual elegant phrases and courtesy, I naturally do not wish to return him a dusty answer. I have, however, to ask myself: should it be I who returns him a dusty answer or the Committee? Should not the Committee have an opportunity to decide for itself whether to respond to the appeal of the noble and learned Lord? There are undoubtedly people who feel that the clause should go now.
The matter that is most on my mind is the appeal made by the noble and learned Lord not to do anything to prejudice the course of negotiations. In terms of the phrase in terrorem, one does not like negotiating in terrorem. I do not like being held in terrorem at all, as a manufacturer, and this clause is a pistol pointed at the other side of the negotiating table. I do not think that the noble and learned Lord has drawn attention—and I must draw the attention of the Committee to it—to the fact that he has loaded a six-shooter and handed it, butt first, to the other side by coupling the negotiations with the Parliamentary timetable on this Bill. All they have to do is to be awkward until the Report stage, and rely on us to do the rest for them if that is our wish. Therefore, I think it would not be against the public interest to disarm both opponents and let them come to the negotiating table as equals. No other country has anything like this clause in its patent laws, and, from that point of view, I believe that the Committee should have an opportunity to express its views.
Lord NORTHFIELD: I am very grateful to my noble and learned friend for all the care he has taken in answering my case on this very difficult issue. I do not want for one moment to look as if I am in favour of protecting a pharmaceutical company that charges exorbitant prices, or makes unnecessary profits. I have not the slightest wish to appear in that role, but the difficulty is that my noble and learned friend did not deal at all with the recommendations of the Banks Committee. This is not an issue which should be judged on today's negotiations; I will

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come to these very briefly in one moment. In fact, the issue has a long history.
After great consideration the Banks Committee said that this clause ought to go. The Banks Committee, which did not wish to look as if it were protecting the unscrupulous, said—and I give this final quotation to my noble and learned friend from Section 409 of their Report:
"It is in the public interest that the final sanction should be available to the department whereby supplies of the drug can be obtained at competitive prices. However, we firmly believe that this result should be sought on a selective basis rather than by attempting to weaken patent protection for drugs overall".
That is the kernel of the case. My noble and learned friend has his protection against unscrupulous charges, which should be used constructively and selectively. It should not be used, as this clause and as this quotation indicates, in a way that attempts to weaken patent protection for drugs overall.
I am very sorry that I find myself in
great difficulty over acceding to my noble and learned friend's request that we should not press the issue at the stage. I asked my noble and learned friend what the position was regarding the negotiations, and he properly and kindly told me that he does not know. My understanding is that the negotiations are at the stage where they could be clinched by the deletion of this clause. In other words, there is agreement up to this point. If I am wrong about this, I will misled when we reach this matter at the Report stage. All I can say is that if noble Lords fell that they are bound to press the matter to a Division, I shall have to abstain because I cannot support the Government on this issue.
6.32 p.m.
On Question, Whether Clause 49 shall stand part of the Bill?
Their Lordships divided: Contents, 45; Not-Contents, 78.

CONTENTS

Amulree, L.

Hale, L.

Murray of Gravesend, L.

Banks, L.

Harris of Greenwich, L.

Peart, L. (L. Privy Seal.)

Boston of Faversham, L.

Henderson, L.

Phillips, B.

Brown, L.

Jacobson, L.

Pitt of Hampstead, L.

Byers, L.

Jacques, L.

Ritchie-Calder, L.

Castle, L.

Janner, L.

Seear, B.

Collison, L.

Kagan, L.

Stedman, B. [Teller.]

Davies of Leek, L.

Kilbracken, L.

Stewart of Alvechurch, B.

Donaldson of Kingsbridge, L.

Kinnoull, E.

Stone, L.

Douglas of Barloch, L.

Leatherland, L.

Strabolgi, L. [Teller.]

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

Llewelyn-Davies of Hastoe, B.

Wallace of Coslany, L.

Gaitskell, B.

Lloyd of Kilgerran, L.

Wells-Pestell, L.

Gladwyn, L.

Lovell-Davis, L.

Wigoder, L.

Gordon-Walker, L.

McCluskey, L.

Winterbottom, L.

Goronwy-Roberts, L.

Melchett, L.

Wootton of Abinger, B.

NOT-CONTENTS

Aldenham, L.

Greenway, L.

Redmayne, L.

Alexander of Tunis, E.

Halsbury, E. [Teller.]

Robbins, L.

Auckland, L.

Harcourt, V.

Romney, E.

Balfour of Inchrye, L.

Hylton-Foster, B.

St. Aldwyn, E.

Belstead, L.

Ironside, L.

St. Just, L.

Birdwood, L.

Killearn, L.

Sandford, L.

Broadbridge, L.

Kinloss, Ly.

Selsdon, L.

Brougham and Vaux, L.

Kinross, L.

Sempill, Ly.

Carr of Hadley, L.

Long, V.

Shuttleworth, L.

Cawley, L.

Loudoun, C.

Skelmersdale, L.

Colville of Culross, V.

Lyell, L.

Somers, L.

Colwyn, L.

Macleod of Borve, B.

Spens, L.

Craigmyle, L.

Margadale, L.

Stamp, L.

Cullen of Ashbourne, L.

Molson, L.

Strathcona and Mount Royal, L.

Daventry, V.

Monck, V.

Strathspey, L.

de Clifford, L.

Mowbray and Stourton, L.

Swansea, L.

Denham, L.

Moyne, L.

Thorneycroft, L.

Drumalbyn, L.

Nathan, L.

Trefgarne, L.

Emmet of Amberley, B.

Netherthorpe, L.

Vernon, L.

Falkland, V.

Newall, L.

Vickers, B.

Fraser of Kilmorack, L.

Nugent of Guildford, L.

Vivian, L.

Gainford, L.

Onslow, E.

Wakefield of Kendal, L.

Glasgow, E.

Pender, L.

Ward of North Tyneside, B.

Glendevon, L.

Platt, L.

Westburv, L.

Glenkinglas, L.

Porritt, L. [Teller.]

Windllesham, L.

Gowrie, E.

Rankeillour, L.

Young, B.

Resolved in the negative, and Clause 49 disagreed to accordingly.
Clause 50 [Opposition, appeal and arbitration]:
6.40 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 237:
Page 41, line 43, leave out ("in accordance with") and insert ("under")
The noble and learned Lord said: This is a pure drafting change made for the purposes of consistency. It has no effect upon the meaning of Clause 50. I beg to move.
On Question, Amendment agreed to.
Clause 50, as amended, agreed to.
Clause 51 [Supplementary provisions]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 238:
Page 42, line 33, leave out ("as").
The noble and learned Lord said: Again this is a pure drafting change. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 239:
Page 42, line 44, leave out subsection (6).
The noble and learned Lord said: The general policy of the Bill is to have procedural matters in the rules and Clause 51(6) as drafted is an exception to that. It is now proposed, again for consistency, to remove subsection (6). Of course there will be a corresponding provision which will appear in the rules when they are made. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 240:
Page 43, line 5, leave out ("arrangement or engagement") and insert ("or other international agreement").
The noble and learned Lord said: This again is a drafting change to update the terminology of a provision which now appears in the 1949 Act. No difference in effect is produced. Your Lordships will see that the same Amendment may eventually be required for Clause 84,
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page 70, line 2, which does not yet appear on the Marshalled List. I beg to move.
On Question, Amendment agreed to.
Clause 51, as amended, agreed to.
Clause 52 [Special provisions where patented invention is being worked abroad]:
Lord BELSTEAD Lord BELSTEAD moved Amendment No. 241:
Page 43, leave out line 7 and insert ("Except as provided in. subsection (1A) below").
The noble Lord said: In moving Amendment No. 241 I may perhaps also speak to Amendment No. 243. Articles 47 and 82 of the Community Patent Convention provide that, if any Member State within the EEC manufactures a patented product and supplies another EEC country, that other country may not grant compulsory licences. But Article 89(1) and (2) of the Convention provide an exemption reserving the right for any contracting State to declare that Articles 47 and 82 shall not apply within its territories for a period of not more than 10 years—that is dated from the coming into force of the CBC—and a possible further five years if the Council of the EEC so agrees.
So these two Amendments to which I am speaking will together write the effect of Article 89 of the Community Patent Convention into this Bill. If the Amendment is not agreed, then it strikes me that it would be possible for other EEC countries to export patented goods to us for which it would not be possible to grant licences in the United Kingdom, whereas we should be unable to enjoy the same advantage. So both from the point of harmonisation and of natural fairness, I beg to move.
Lord McCLUSKEY: I am not sure that I can accept what has just been said; that is, that the effect of these two Amendments is to write into the Bill the effect of the Community Patent Convention, because it is not clear (that the Community Patent Convention enables the members, as it were, to retaliate one against another as the Amendments would allow. Amendment No. 241 would allow an order to be made for a licence under a patent where the product is being made in, or imported from, certain of the Member States. It is based on the assumption that another Member State may enter a

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reservation under Article 89 of the Community Patent Convention and it enables the United Kingdom to retaliate in that event. The Government do not intend to put British industry at a disadvantage as compared with its competitors in the Member States. At present we have no intention of entering a reservation ourselves, but if other countries should do so and implement the reservation we should think it right to do so ourselves.
We believe that Clause 80, which we have not yet reached, gives us the power to do this and, if it does, the Amendment would be superfluous. We certainly propose to look more carefully into the powers which are given by Clause 80 and in the meantime the noble Lord opposite may wish to withdraw it. I might just mention another small point. Clause 52—one can see it shortly summarised in the Explanatory and Financial Memorandum—gives powers to extend to other countries the treatment afforded such Member States. This Amendment would have the effect of introducing a restriction rather than an extension, and noble Lords may think that, even if it should be included at some stage, this is not the correct place for it. So in the light of these considerations—the major and the minor one—I would invite noble Lords opposite not to press this Amendment at this stage but to allow the Government to consider the position under Clause 80 and to make a fuller statement when we come to that point.
Lord BELSTEAD: I am grateful to the noble and learned Lord for what he has said because it is useful on these clauses which are not easy to understand when one is trying to compare them with the two conventions—the Community Patent Convention and the European Patent Convention. I accept that it may well be that the wording of this Amendment is not exactly the intention which I had and that it provides for a certain retaliatory action of which the noble and learned Lord warned me. For that reason alone I would not dream of pressing the Amendment.
All I should like to ask at this stage, and I ask it as a complete layman, is whether in referring me to Clause 80, the
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noble and learned Lord was referring to Clause 80(1) where it is provided that:
"All rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Community Patent Convention…shall…have legal effect in the United Kingdom".
It would be comforting to think that means that the Convention, whether it be the EPC or the CPC, will have effect in this country, but if that is the case I ask myself why we are taking such immense trouble in this Bill to try to get the wording of the Bill as near as possible to the wording of two conventions concerned. For that reason, I should like to look carefully at what the noble and learned Lord has said to me and, having reserved my position and having read what the noble and learned Lord has said, I might possibly table a similar Amendment again. If I may ask the Government for a favour, if they feel that perhaps this Amendment was not totally misconceived but simply needed rewording, perhaps the noble and learned Lord would communicate with me between now and the Report stage.
Lord McCLUSKEY: I will certainly do that if we can—as I hope—resolve the question by that stage. If so, I shall certainly communicate with the noble Lord.
Lord BELSTEAD: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 242:
Page 43, line 7, at end insert ("it is provided that").
The noble and learned Lord said: In moving Amendment No. 242, perhaps I may also speak to Amendments Nos. 244 and 245. These are purely drafting changes. The two latter Amendments become necessary because, as a result of Amendment No. 242, subsection (1) now contains reference to two kinds of pro-visions in lines 7 and 16, and it must be made clear that it is the provisions of the convention that can be applied in respect of the countries not within the Community. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendments Nos. 244 and 245:
Page 43, line 18, after ("provisions") insert ("of the Convention").
Page 43, line 27, after ("provisions") insert ("of the Convention").
The noble and learned Lord said: With the leave of the Committee, I beg to move Amendments Nos. 244 and 245 together.
On Question, Amendments agreed to.
Clause 52, as amended, agreed to.
Clause 53 agreed to.
Lord STRABOLGI: This may be a convenient moment to adjourn the Committee. I beg to move that the House do now resume.
Moved accordingly and, on Question, Motion agreed to.
House resumed.

SOCIAL SECURITY (MISCELLANEOUS PROVISIONS) BILL
6.50 p.m.
Lord WELLS-PESTELL: My Lords, I beg to move that this Bill be now read a second time. As your Lordships will have noticed, this is most aptly entitled a "Miscellaneous Provisions" Bill, for it touches on a wide range of disparate, and often highly technical, matters in the field of social security. There are three main purposes to the Bill, each of which is important. One is the vital need to secure public expenditure savings. A second reason is to make some small but, I venture to suggest, useful improvements in benefit provisions. And, finally, there is the need to correct omissions and mistakes in legislation, and to provide firm statutory backing where at present the law appears open to doubt.
My Lords, I will not weary your Lordships by going through each clause of the Bill in detail; that would take far too long, and I am sure it is not your Lordships' wish that I do so. I have already provided copies of Notes on Clauses to certain noble Lords, and I hope that they have found them helpful. I will, however, draw your Lordships' attention to some of the more significant features of the Bill. From the point of view of public
810
expenditure the most important clause of the Bill is Clause 4, which relates to the retirement pension earnings rule. This is the rule whereby retirement pensioners in the first five years over pensionable age whose weekly earnings exceed a specified limit—at present £35 a week—have their pension progressively reduced. The earnings rule limit also represents the level of earnings below which a person can be treated as retired, and is, therefore, entitled to draw full pension on top of his earnings from work. Clause 4, together with Clause 5, will provide a net saving of £45 million in the financial year 1977/78, by not raising the £35 limit to £50 in April next, but instead providing for the limit to be uprated each year, starting this autumn, in line with average earnings. The gross savings are £60 million to the National Insurance Fund, which is offset by £15 million loss in income tax.
The Government recognise that the retirement pension earnings rule is disliked by many people, and have confirmed their commitment to its eventual phasing out when resources permit. Nevertheless, even relaxing the rule—let alone phasing it out—involves very considerable additional expenditure. I hope noble Lords will agree that this is something which the Government cannot contemplate at the present time.
In view of the controversy and confusion which has in recent months surrounded the cost figures relating to the retirement pension earnings rule, I should like briefly to make two points about them. First, the costings are made not by Ministers, but by the Government Actuary's Department. They, of course, have no political axe to grind. They are the experts on whom successive Governments rely for an independent assessment of available trends and indicators to determine the future costs of a particular policy proposal in the pensions field. No Government, as I am sure your Lordships appreciate, could plan without such forecasts, and policy must inevitably be based on the best estimates to hand at any time. The detailed facts and assumptions on which the Government Actuary's estimate is based were made freely available in another place, and there was no seriously-based challenge to their accuracy there. Those whose case is that the earnings rule could be abolished at

811
minimal cost have not been able to reconcile, if I may put it this way, their optimistic conclusion with the known facts, and have had to fall back on vague, and I would venture to say illogical and completely unsubstantiated hypothesis.
Secondly, the most important variable in the Government Actuary's calculations, the factor on which most of the savings depend, is the number of people who would be able to draw their pensions if the earnings rule limit is raised, but who at present cannot do so. It seems too obvious to say—though some seem reluctant to believe it—that if the earnings rule limit is increased then more people are free to draw their pension while continuing in work. That, in itself, must increase public expenditure. This is the crux of the argument.
My Lords, on this vital question let us simply consider the facts. Over the last two years, in which the earnings rule limit has been raised considerably, from £13 to £35 a week, the number of people over pension age who are deferring retirement has fallen considerably: from about 218,000 in November 1974 (a level which had remained fairly static since 1971) to around 135,000 (I admit the figure is provisional) today. I recognise that other factors, including higher unemployment, may have played a part, although on the other hand we should remember that the rate of increments for deferred retirement was also raised substantially in April 1975. Nevertheless, these figures are hard evidence which confirms what we might, using common sense, expect: that at 60 or 65 people will, by and large, take their pension when they can, if they are not prevented from doing so by their earnings; and that a higher earnings rule limit does in fact lead to more people drawing their pension and thus to greater public expenditure. Clause 4 of the Bill will provide a large and necessary saving in public expenditure without taking away any existing rights to retirement pensions. People over pension age will be left as free as they now are to undertake either full-time or part-time employment, if they wish to do so.
My Lords, I have spoken in some detail on Clause 4, which is the money-saving part of this Bill, and I do not want to take up too much of your Lordships' time.
812
I will, therefore, with your Lordships' permission, be brief on the other major clauses. Clause 11 deals with a subject in which I know a number of noble Lords have a special interest: the extension of eligibility for the mobility allowance consequent on the unavoidable decision to phase out production of the invalid tricycle. The clause will enable the Secretary of State to issue certificates to holders of tricycles issued under the old vehicle scheme, and to certain groups with similar reserved rights under that scheme, deeming them to satisfy the inability to walk test for award of the allowance. Because the vehicle scheme had no upper age limit, those transferring from the vehicle scheme will be able to receive mobility allowance even when over pension age.
I should emphasise, however, that, as the Secretary of State made clear in his letter to vehicle holders last December, the Government are ordering sufficient spares and stocks to keep the fleet going and to replace tricycles until at least 1981. There is therefore no question of existing holders of tricycles provided under the old vehicle scheme being suddenly deprived of their vehicles if they want to keep them. Moreover, they have been assured that the Government recognise that some of them will continue to need a specialised vehicle when eventually the tricycle can no longer be replaced, and will look at what is available on home and world markets. But some will wish to take the option of mobility allowance provided by this clause.
Clause 12(1) contains provisions to give statutory backing to the Supplementary Benefits Commission's long-standing practices with regard to student claims. It will enable the Commission to take into account any contribution to the student's grant which the parents are assessed as being able to make whether it is, in fact, paid—in cash or in kind—or not paid. It will also ensure that no part of the student's award is disregarded.
If the Commission were compelled—and I want to make this clear—to investigate every case where a student claimed that his parents were not paying their proportion of the grant, this would have the most serious practical implications. It would mean that the Commission's officers would have to mount detailed investigations into the exact family situation

813
in order to ascertain precisely what was or was not being provided for the student, not just in cash but also in kind. The word of the parent would not be sufficient, as this would open the door to collusion between parents and students in an attempt, in effect, to get the Commission to meet at least some of the parental contribution. It must be doubted whether the Commission could effectively carry out such a requirement, and it would certainly open the door to collusion, abuse of the social security system, and considerable ill-feeling all round. It would also have severe manpower implications. I am told that if the Commission had to investigate in detail each case where a student complained or claimed that his parents were not giving him his due support, it might need altogether about 125 extra civil servants at first, and that number would probably increase.
Your Lordships may know that since the Bill left another place the Court of Appeal has given its judgment in the case of Atkinson v. Barnsley Supplementary Benefits Appeal Tribunal. The judgment is relevant to this clause since it said, in effect, that the Commission were in error in using their discretionary powers to deal with whole classes of claimants, such as students. So far as students are concerned, we think that this clause will remedy that situation.
I must stress to your Lordships that the clause does not prevent students from receiving supplementary benefit if their grant and any other resources fall short of their assessed vacation requirements—if, for example, they are householders or have special expenses. Students who are severely disabled or who are lone parents will continue to receive supplementary benefit as before.
I should also mention that the Atkinson judgment casts considerable doubt on the wider use of the Commisison's discretionary power. This has serious operational consequences for the Supplementary Benefit Scheme, including the possibility of past claims to benefit being received. To deal with the wider problems raised by the judgment the Government will be introducing Amendments at the Committee stage.
Clause 18 is also one which I know will particularly interest a number of
814
noble Lords, relating, as at least some of it does, to the important but complicated questions facing occupational pension schemes in the final run-up to the introduction of the new pensions scheme next year. Subsections (6), (7) and (8) provide alternative arrangements whereby the solvency requirements of the Pensions Act may be satisfied by occupational schemes. Subsection (9) amends, by way of clarification, the provisions relating to the calculation of the various premiums when a scheme ceases to be contracted-out, and subsection (10) provides a regulation-making power to cover a particular situation in the same context.
My Lords, these proposals on occupational pensions are highly technical and, if I may speak for myself, very confusing to the uninitiated. At this stage I shall not pretend to your Lordships that I know them from beginning to end, so I hope that I shall not be pressed on some of these matters tonight. I should, however, make the general point that the Government firmly stand by the broad consensus of all sides of the House and the partnership between the occupational pensions industry and the Government which was achieved in 1975 and embodied in the Pensions Act of that year. Now that we are close to the start of the new scheme we want to avoid any changes which are not, let me say clearly essential, since unnecessary last minute changes in the rules can have only a disruptive and harmful effect, as I think noble Lords will appreciate. But that does not mean that we shall not continue to look closely and sympathetically at all proposals and representations from the industry.
My Lords, I have mentioned only the more notable parts of what is rather a pot-pourri of a Bill. The other provisions are also important, but will not, I hope, prove excessively controversial. They will provide significant improvements in a number of areas of social security where, for example, the law at present does not achieve original intentions or where for some other reason it is defective. The Bill also provides for some useful improvement and simplification of administrative arrangements, particularly in the field of industrial injuries, disease and war pensions. Last, but not least, the provision inserted in another place into

815
Clause 2 for a higher rate of increment on deferred retirement pensions and postponed guaranteed minimum pensions will improve benefit rights, as will other provisions included in Clauses 7, 9 and 14.
I hope noble Lords think that I have said enough at this stage. Perhaps I may—I hope successfully—commend the Bill to your Lordships. My Lords, I beg to move that the Bill be read a second time.
Moved, That the Bill be now read 2a.—(Lord Wells-Pestell.)
7.9 p.m.
Baroness YOUNG: My Lords, I should like to begin by thanking the noble Lord, Lord Wells-Pestell, for introducing this Bill and for explaining its content so clearly. This is not a Bill that at this stage will arouse any great Party political controversy, though inevitably there will be matters of difference between us. As the noble Lord said, in parts it is an extremely technical Bill, and I am therefore grateful to him for letting me have the Notes on Clauses in good time. Like him, I should like to begin by commenting on two major matters that are included in the Bill and to which we shall wish to return at a later stage.
The first one concerns the provisions in Clause 4 on the earnings rule. As I understand the position, the effect of this Bill was originally to prevent the earnings for retirement pensioners rising from the limit of £35 a week, as exists at present, to £50 a week, as was agreed. This was to come into force in April 1977 and is the case under existing legislation. Now the Government are proposing under Clause 5 to index-link the earnings of retirement pensions to average industrial earnings.
We on this side of the House have no quarrel with this point. Indeed the dynamising of earnings—if that is the correct expression to use these days—is much to be welcomed, and we, as indeed do the Government, would, for a variety of reasons, like to see the end of the earnings rule, but we accept the enormous public expenditure cost. However, I was glad that the noble Lord, Lord Wells-Pestell, went into some detail on the figures on the abolition of the earnings rule and those that were given
816
on Report stage in another place. At Committee stage we shall be pressing the noble Lord to undertake to review the operations of the earnings rule for retirement pensioners, and of course for the wives of retirement pensioners and invalidity pensioners.
I do not intend this evening to repeat the figures that were given by my right honourable friend in another place and which are fully recorded, but they give cause for some disquiet because the Government calculations on the cost of abolishing the earnings rule have varied so much. It is certainly not my intention to question the Government actuaries in the costs that they have put out and the calculations they have made. I too appreciate that they have a job to do, and I am sure they are doing it with the intention of arriving at the best projections that they can. Nevertheless, the projections have altered so much that I think it is necessary that, before too long, we should have some kind of statement on the costs, and how all this Clause 4 and Clause 5 variation in the earnings rule is going to work out.
The second point to which I should like to draw attention is of course the point about the students, in Clause 12. What is required now, it seems to me, is that the Government should make a clear and unequivocal statement about the position. Apart from anything else, there is the practical fact that the Easter vacation is almost upon us; indeed, it will be upon us before this Bill becomes law. In order to make the position quite clear I wrote down what I called the "Seven Ages of Students", to indicate the complexity of the situation into which we have got ourselves and which lies behind Clause 12 of the Bill.
As I understand the position, originally students were eligible for supplementary benefits in the Christmas and Easter vacations of 1976, but in the Christmas vacation of 1976 the Supplementary Benefits Commission changed the rules so that student grants were taken into account in considering cases. Part of the grant was assumed to cover their expenses during the Christmas and Easter vacations, and the consequence was that some of the offices of the Supplementary Benefits Commission stopped paying the supplementary benefit.

817
Then of course the Bill was published, and its first intention was that students would not be eligible for supplementary benefits in the Christmas and Easter vacations. Students then were shown to be eligible, on further amendment to the Bill, but the parental contribution was to be taken into account. The difficulty here is that all the statistics that one can obtain show that 73 per cent. of parents do not make the parental contribution. Why they do not make the parental contribution, we do not know.
It might well be, as the noble Lord suggested, that this is collusion between the students and the parents to get the Supplementary Benefits Commission to pay. We have no evidence at all of this. All we know is that it might well be the case that quite a number of parents now cannot pay, because of course it can be a major cost to have one or more children at a university to which a contribution must be made in order to complete the grant. At any rate, as the noble Lord said, in the meantime there has been a court case, the Atkinson case, which has clarified the position on this point, and we now find that the Government will need to bring further Amendments to this Bill in order to put the position back as they originally wanted it; namely, that students would be eligible for supplementary benefits, and only the parental contributions must be taken into account.
What really concerns students is that not only do 73 per cent, of parents not pay the contribution, but the alternatives are no longer available to them. For a great many students vacation employment is no longer available. Secondly, even if the grant is increased it is unlikely to keep up with inflation. The proportion of the grant which is designed to cover expenditure during the Christmas and Easter vacations has certainly not kept up with inflation, and there could indeed be cases of considerable hardship. This is a matter to which we shall need to return at a later stage. In the meantime, so complicated is the position that I think a clear statement from the Government is called for.
I was glad to hear from the noble Lord, Lord Wells-Pestell, that the Government stand by their proposals for handicapped students. It would be helpful to have it
818
printed in the Bill that handicapped students are eligible for supplementary benefit. I believe that to be the case, although the Bill does not explicitly say so. We shall again return to this point.
As the noble Lord said, this is a Miscellaneous Provisions Bill, and one of the difficulties with it is that one finds oneself hopping, as it were, from one issue to another. There are two other matters which I think will be of great interest to your Lordships' House. As the noble Lord said, Clause 11 is one of them because it concerns the mobility allowance and the anomalies arising from that allowance. I should like to study again what the noble Lord has said, because I understand that he will be bringing forward an Amendment at a later stage to cover some of the anomalies. We shall look forward to seeing that Amendment.
The other matter which I think will be of interest to your Lordships' House is an Amendment moved by my honourable friend in another place concerning pensions for the over 80s. This has been a matter of considerable concern to Members not only of your Lordships' House but outside, and arises, of course, only in cases of people who were not eligible to subscribe to the National Insurance Scheme in 1948. The number of such people still alive diminishes every year, but there is a small category of people who come back to this country but who have been out of the country for ten years and cannot count the years after the age of 80 towards the present ten-year qualification for the pension for the over 80s.
They are a very aged and diminishing number of people, who may suffer great hardships. I believe it would need only a small amount of public expenditure cost to give these people a pension. The cost is estimated to be between £250,000 and £500,000 a year. The important factor is that the sum would diminish each year, as of course the group of people who are not eligible diminishes each year.
However, as this is a Miscellaneous Provisions Bill, I should also like to draw to the noble Lord's attention another point which I believe has arisen recently and which I think the Government ought to consider. On 2nd February in another place my honourable friend Mr. Hannam introduced a Private Member's Bill to

819
remove what I am sure your Lordships' House will agree is an anomaly in the payments to those who care for disabled children. I understand that at present the natural parents of disabled children are entitled to attendance allowances which are tax free. Under Section 35(6) of the Social Security Act 1975 the Secretary of State for Social Services may by regulation withdraw these allowances in certain circumstances, and usually this is done when the child in question is in hospital for some long time. Regulations also cover children boarded out by local authorities. However, foster parents do not get the attendance allowance; they can be given the special care allowance by local authorities in lieu of the tax-free attendance allowance.
Recently a couple in Wiltshire agreed to foster a severely handicapped child and they have been taxed on the special allowance given to them by Wiltshire County Council. This seems to be an anomaly and one which goes against the spirit of the Government's Consultation Document on the Future of the Health and Personal Social Services, in which it would appear to be the intention of the Government that children should be fostered rather than left in institutions. In my view that is the right policy and, I should have thought, one by which we should give encouragement to foster parents to take on severely handicapped children. This particular anomaly that has arisen from a Treasury ruling should be looked at again and I hope to introduce Amendments on this point at a later stage.
As Lord Wells-Pestell said, a number of highly technical points arise under Clause 18. Like him and at this hour, I do not intend to pursue them. Nevertheless, I would like the noble Lord to consider before the next stage of the Bill the points raised in Committee in another place under the then numbered Clause 19. Those of us who are not expert in these matters understand that some experts are not satisfied with the technical replies that were given on the Amendments that were raised at that stage. A sensible way out of the dilemma would seem to be for there to be a meeting between those who advise the Government on actuarial matters and those in the private industries
820
who are concerned about these actuarial calculations because, what is being discussed is a matter of fact and, rather than pursue a great deal of technical detail across the Floor of the House, I should have thought that these were matters which could be resolved by a private meeting. Between now and the next stage, would the noble Lord consider whether this is the best way of proceeding? As I have indicated, this is not a Bill which we are against in principle. We wish to discuss in detail some of the interrelated but rather technical points and we wish the measure as speedy a passage through the House as possible.
7.23 p.m.
Lord BANKS: My Lords, I join the noble Baroness, Lady Young, in thanking the noble Lord, Lord Wells-Pestell, for the thorough explanation he gave of the various provisions of the Bill. I also thank him for letting me have in advance the notes on the clauses. Like the curate's egg, the Bill is good in parts; for example, I imagine that most noble Lords welcome the provision which enables disabled persons, if they wish, to exchange tricycles issued under the old scheme for the mobility allowance and to continue to receive that allowance after retirement age. We welcome that provision, whatever we may think of the withdrawal of tricycles and the general rules governing the mobility allowance scheme, both of which fall outside the scope of the Bill.
The miscellaneous tidying-up provisions, of which the Bill mainly consists, are broadly acceptable, if not exciting, subject to certain reservations which my noble friend Lord Byers will make. However, these provisions do not touch the main purpose of the Bill. In the debates in another place it was made clear by the Secretary of State for Social Services and the Minister for Social Security that the main object of the Bill was to secure savings in public expenditure, and as originally presented for Second Reading in another place there were three sources of such saving. The first was the reduction of unemployment benefit for those receiving an occupational pension of over £25 a week. The second was the provision, to which Lady Young referred, that students should no longer be eligible for

821
supplementary benefit during the Christmas and Easter vacations. The third was the proposal that the earnings limit for retirement pensioners should not go up to £50 from £35 in April as provided for in the Social Security Act 1975.
The first two of those provisions have not survived the scrutiny of another place. However, although the main provision in regard to students has been deleted, as Lady Young pointed out, the Bill introduces an unsatisfactory feature into the supplementary benefit arrangements for students, a provision to which Lord Wells-Pestell referred at some length. Under Clause 12, any prescribed contribution must be taken into account, notwithstanding the fact that the contribution is not actually made; parental contributions must be taken into account as if they had been paid, even though they had not been paid.
The survey to which Lady Young referred, conducted by the Department of Education and Science, revealed that 73 per cent, of students do not get the full parental contribution. Surely supplementary benefit should take into account the actual situation—even if that involves certain difficulties of administration such as those to which the noble Lord referred—because the whole purpose of supplementary benefit is to provide aid for actual situations and not for notional ones. In any case, the system of parental contributions for adults is nonsensical and humiliating, and to say that contributions must be assumed to have been paid when they have not is to make the system more nonsensical still.
The main saving is contained in the provision about the earnings rule; that remains in the Bill and keeps the limit at £35 instead of allowing it to rise. This is going against a previous decision of Parliament. It is not a new benefit which is being refused on grounds of economy; something which has already been provided for is being withdrawn because it is felt that that is essential to make a saving.
We on these Benches have been pledged to the abolition of the earnings rule for a great many years and I understand that all Parties now agree that it should be phased out. It is kept, then, not because of any principle but because it is alleged that the economic situation makes it
822
necessary to do so in order to make a net saving, as the noble Lord told us, of £45 million, this at a time when there is a surplus of £932 million in the National Insurance Fund this year and another surplus of £888 million anticipated for next year. And those figures, as the Government Actuary made clear in the report presented at the time of the last uprating, do not take into account this saving of £60 million gross which is now added to the surplus. The only reason why this is done is that it is a convenient way—building up this reserve—of reducing the public sector borrowing requirement.
When the 2 per cent, surcharge on employers' contributions was introduced, I maintained that it was an abuse of the National Insurance system; that is, to use it to raise taxes, which was in effect what was being done. Similarly, the noble Lord may recall that, when we discussed the uprating, I said that with a surplus of the size I have just mentioned, either benefits should be increased or contributions reduced, and that if that was not done it seemed an improper use of National Insurance contributions.
Similarly now, I feel that to insist on a saving of £45 million by withdrawing something that Parliament has already approved in order to assist with the problems relating to the public sector borrowing requirement is again an improper use of the National Insurance system. In my view, that is not the way these problems should be tackled. Incidentally, one hears a great deal at the present time about the possibility of tax cuts, and I notice that the Trades Union Congress is urging a package upon the Chancellor that would cost £2,500 million, of which £1,500 million would be in tax cuts. One can regard this as a case of taxation. After all, it is being used for what are virtually tax purposes and, at it speak, it is a rate of tax of 100 per cent. Surely, something that has already been provided for should have priority over other cuts in what is, in effect, taxation.
To sum up, I would say that, in so far as this is a tidying up measure, the Bill is certainly welcome to us on these Benches, though there are one or two points of criticism here and there. However, in so far as it uses the National Insurance system as a weapon in the management of the economy, which, in our view

823
it is doing with regard to the earnings provision, it is not something that we can welcome.
7.32 p.m.
Lord BYERS: My Lords, I do not intend to deal with the Bill as a whole. That has already been done by my noble friend Lord Banks. I have to declare an interest as the chairman of the Company Pensions Information Centre, I have been fairly close to the pensions scene over the last three and a half years and I should like to draw attention to one or two problems which have arisen in operating the Social Security Pensions Act 1975 and to suggest that the Bill now before us may have to be used as an appropriate vehicle for amending that Act in minor detail or for obtaining clarification from the Government at different stages of our proceedings.
One of the problems which I believe should be tackled is the delay which occurs by a strict interpretation of the 1975 Act by the Occupational Pensions Board in connection with the interpretation of the various stipulations concerning what are called the "requisite benefits". I want to make it clear that I am not criticising the Occupational Pensions Board. I believe that it is acting very properly and, indeed, I would not seek to criticise the Board when I see on the Cross-Benches the chairman of the Board, the noble Lord, Lord Allen of Abbeydale, who is unfortunately, in political and Parliamentary baulk because of the Addison Rules. I sympathise with him very much.
Some of these stipulations are mandatory and some are permissive. The appropriate place for complying in detail with these provisions is in the formal rules of the schemes themselves, and the Act appears to envisage this by using the word "rules", for instance, in Clause 33(l)(a ) and 36(2). But, in practice, very few schemes will be able to produce full and final rules or amendments to rules by April 1978 and, even if they could, I do not believe that it is reasonable to suppose that the Occupational Pensions Board would have time to examine them in detail before then. Therefore, I believe that there is a need for interim methods of documentation if the work is to be completed before April 1978. I am told that many insurance companies have
824
been negotiating with the OPB to establish standard methods for this purpose.
Unfortunately, the OPB officials concerned in these discussions take the view that they have no discretion to waive any of the detailed requirements in defining what are called "requisite benefits". I do not know whether they are right or wrong: they may well be right and I think that they could be. But at present the only place where this kind of detail can be recorded appears to be in the announcement usually issued to employees. This is a highly unsatisfactory situation because the kind of detail and formal expression needed tends to defeat the simple communication objectives which everybody insists are the right sort of approach for such document. Secondly, the variety of such documents and of alternative forms of requisite benefits make any kind of standardisation very difficult.
It is also likely that pensions practitioners will have great difficulty in persuading employers to accept standardised provisions in these documents and the OPB is likely to have to examine most of them individually and in detail at some time. Again, I say that the likelihood of their achieving this by April 1978 seems almost as remote as for the fall rules themselves.
The Minister will already be aware from discussions with representatives of the Life Offices that they regard the situation as reaching crisis point and feel that if there is no change of course it will be impossible in more than a minority of cases for the necessary documentation to be completed in time for the OPB to carry out the necessary work by April 1978. In fairness, I should say that the Occupational Pensions Board has today written me a letter that indicates that it does not think the matter all that serious. However, my technical advisers tell me that I am right and I shall be replying to that effect.
I want to propose a possible solution to what I believe to be a real problem. What I think is needed is the facility to meet the requirements of the Act by a short, generalised commitment in interim formal documentation. There are precedents for this—for example, a long-standing Inland Revenue practice, and the arrangements

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under the 1973 Act for the preservation requirements. I believe that the OPB is under the impression that there is no provision in the 1975 Act for it to issue interim certificates for contracting out. I do not believe that that is correct, because the drafters of the 1975 Act envisaged this situation and included a regulation-making power in Section 63(2)(g) which would make it possible to overcome the difficulty by adopting more streamlined systems of interim documentation.
I hope that the Government will feel able to give an assurance at some stage that they recognise the urgency of the situation and will issue the necessary regulations under this section. Alternatively, this House could take action to include the necessary discretion for the OPB in Section 33 of the 1975 Act. What I think is required is an amendment to the 1975 Act which could be made at a later stage of the Bill to give the OPB the discretion to issue a contracting-out certificate even where the scheme does not at that stage contain rules complying in detail with the requirements of the Act, but where the OPB is genuinely satisfied that it is intended to do so and that a formal commitment has been entered into. The OPB could lay down the date by which the detailed requirements must be satisfied. Subject to what the Government may feel, I should be prepared to put forward an Amendment to that effect at Committee stage.
I turn to one other point. Again, it is a practical point and has arisen, I am informed, between the OPB and the Life Offices. It arises from the interpretation of the legal requirements which must be followed in examining the solvency of guaranteed minimum pensions. Putting it at its simplest, it appears that the OPB view is that it cannot rely upon the security of an insurance policy unless it is issued to and vested in an individual member or, at the least, is outside the trusts of the relevant pension scheme. I do not understand why this should be the case, because the contracting-out provisions of the Boyd-Carpenter scheme worked happily for many years without anyone insisting on this requirement and without any suggestion that the precautions were inadequate.
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What I understand is that the requirement now will cause considerable proliferation of paperwork which will have to be paid for, and this will mean a reduction in the amounts of pension which can be provided for given contributions of the employer and the employee. In other words, the requirement is against the interest of providing better pensions, and if the OPB are correct in their interpretation of the law—as they may well be—then there is a need for the law to be put into more practical shape.
My Lords, I should like to make one final suggestion arising out of what I have been saying. In seeking to operate the provisions of the 1975 Act—and we are working under a very tight schedule now to try to get the Act into operation by April 1978; every day and every week counts—there will inevitably be a number of matters which will require clarification either by the Occupational Pensions Board or by the DHSS. If these matters can be disposed of quickly, then there is no problem at all; but with this tight timetable we cannot afford to allow unsolved problems to drag on, even for a few weeks. This is particularly true of matters which will affect the granting of contracting out certificates by the OPB.
Often these matters drag on—and I do not want to be misunderstood, and I am not being critical—because they are being dealt with in the very nature of things, as is quite right, at a relatively low level to begin with. My experience is that many of these problems can be solved if they are put to the highest level in good time. I should like to see meetings taking place from time to time between the OPB at top level, the DHSS at top level, possibly with the Minister, Mr. Stanley Orme, in the chair, and the outside parties involved, to examine any problems which have arisen which may cause delay in dealing with the granting of contracting out certificates.
I wonder whether I might draw an analogy. In the war we had in 21 Army Group a very similar problem in the Normandy campaign not long after D day. We realised that the availability of replacement tanks from the United Kingdom was not keeping pace with the tank casualties and that our calculations showed that the supply of tanks arriving

827
in Normandy could well dry up; and we were working against a very tight schedule for the breakout. We convened a conference in the beach-head comprising the top-brass from the factories dealing with the tanks, the transport system, the Navy and the senior officers of the tank regiments, not to mention from the War Office, and one or two others. It was not long before we identified the real bottleneck; I say not long, it was only a few hours. It appeared that whereas the Americans went into battle with the identical tanks after about 30 modifications had been made to them, our own people had insisted on modifications counted in hundreds. It took about a day to iron this out and to decide with the help of the experts on which modifications were essential and which could be dropped, and we decided how to cut through the red-tape and to get things moving. The tanks began to roll into Normandy very soon after that.
This is not just a military reminiscence. The point is that these kind of decisions have to be made quickly, and they have to be made at the top. If we are to avoid a chaotic log-jam at the OPB some organisational structure must be brought into being, in my view, to cut out avoidable delay. I hope that the Government will recognise the problem. I am quite sure that the noble Lord, Lord Wells-Pestell, who has been so extremely helpful in all pension matters, will see it quite quickly, and I am sure that something has to be created, even if it is only ad hoc, to solve the problem. I am not looking for a reply from the Government tonight. I merely want to put forward these suggestions in the hope that they will be considered.
7.44 p.m.
Lord WELLS-PESTELL: My Lords, I am grateful to the three noble Lords who have taken part in the debate. I think that I can say without being misunderstood that perhaps in the whole of your Lordships' House it would be difficult to find three people more competent to contribute in this particular field. I know that the noble Baroness would say that her involvement derives from her concern. Both she and I have a very deep concern in the field of social services, social welfare and social benefits, and the noble
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Lords, Lord Byers and Lord Banks, bring to discussions of this kind an expertise which we would not ever presume to possess; indeed, perhaps no one else in the House possesses quite that expertise. The Government will read Hansard very carefully because a number of quite definite suggestions have been made. I am under the impression that there has been an "on-going discussion"—I hate that expression, although it is used by professional social workers these days. I cannot bear it. But there has been an on-going discussion between experts; but it may well be, as the noble Lord, Lord Byers, suggested, that we ought to be looking at the matter afresh.
The noble Baroness raised the question of the Easter situation with regard to students. I can say at this stage that we shall deal with any claims that are made in accordance with the law as it is at the moment, until the law is changed, as we hope, by this Bill; but that is the position. I do not want to enter into a discussion at this time with the noble Lord, Lord Banks, about the responsibility of parents regarding the contributions that they are expected to make in relation to their sons and daughters who have been given student awards. Some of us feel quite strongly about this, but we realise that there are difficulties. It is very difficult to find a satisfactory way of dealing with this question, and sometimes one has to adopt a position which is going to meet the situation generally, even though it may be unfair to some. The noble Lord, Lord Byers, was good enough to say that he did not expect replies to what he——
Baroness SEEAR: My Lords, I hope that the noble Lord will forgive me for intervening, but I wish to refer to a matter with which I know he has great sympathy. With regard to the parental contribution, will he recognise that if nothing is done about this the people who will suffer most acutely will be the daughters where there is a question of choosing whether it is a son or a daughter who gets a university education? In cases where a parental contribution is required, many daughters simply will not go to university.
Lord WELLS-PESTELL: My Lords, the noble Baroness will know that my

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Department is not responsible for that particular system. This system has been adopted by Governments over many years, and one recognises that there are problems where there are one, two, and perhaps three children in a family going to university one after another. I am prepared to accept, because it is within my own personal knowledge, that the discrimination to which the noble Baroness has referred does in fact sometimes take place. But I think that the Government always have to look at the situation as it should be and consider whether it is right to have a system which provides a possibility of money being paid out twice from different sources. The noble Baroness will say that in 73 per cent. of cases it is not being paid out at all. We recognise this problem and it is a matter which causes us some concern.
The noble Lord, Lord Byers, referred to the solvency test. He mentioned certain difficulties in connection with contracting out. I think that he will understand when I say that this is a very technical and complex subject. It is one which we are very carefully examining in the Department, and it is also being carefully examined by the Occupational Pensions Board. Discussions are still continuing on the details of implementing the test and perhaps the noble Lord will allow me to leave the matter there. But as I said at the beginning of my reply, we will look very carefully at what has been said. I am grateful to the three noble Lords who have taken part for their balanced observations and comments. Although the situation may be a little different in Committee, nevertheless we are grateful for what they have said.
On Question, Bill read 2a and committed to a Committee of the Whole House.

TRANSPORT (NORTHERN IRELAND) ORDER 1977
7.50 p.m.
Lord MELCHETT Lord MELCHETT rose to move, That the draft Transport (Northern Ireland) Order 1977, laid before the House on 10th February, be approved. The noble Lord said: My Lords, I beg to move that this draft order be approved. May I, with great sadness, preface my remarks with a few words of tribute to the noble
830
Lord, Lord Faulkner, whose tragic death today in a riding accident has removed one of the major figures of the post-war years in Northern Ireland. Much of the industrial progress of the Province stemmed from his imaginative and far-sighted planning as Minister of Commerce; and in recent years he devoted his talents, great energy and skills to the task of seeking to create in Northern Ireland genuine partnership and reconciliation within the community. His death is a great loss to Northern Ireland and to this House, and I know that I speak for the whole House when I extend our deepest sympathy to Lady Faulkner and to the rest of his family.
My Lords, the order which we are considering this evening is a miscellaneous transport order, the main purpose of which is to enable the Northern Ireland Transport Holding Company, with the consent of the Department of the Environment for Northern Ireland, to transfer to a subsidiary company the functions, assets and staff previously transferred to the holding company from Belfast Corporation at the time of local government reorganisation. The proposed order would also enable the Department of the Environment, with the approval of the Department of Finance, to make grants to the holding company and its subsidiary companies; to rebate fuel tax duty incurred by bus companies; to provide for grants by the Department of the Environment for concessionary fares on passenger transport undertakings; and to permit alteration in the membership of the Transport Users' Committee. It increases certain fines for offences on railways, and enables the making of regulations about offences for fare evasion on buses. It also confers functions on the Department in relation to the railway company under certain EEC regulations; and, finally, it repeals spent provisions in railway legislation.
The proposal was published on 14th September 1976, and was given a wide distribution to statutory and non-statutory bodies, the Northern Ireland Committee of the Irish Congress of Trade Unions and the Press, in addition to the agreed distribution through Parliamentary channels. The order as now presented includes several points made by these bodies during the consultative period. The draft order was debated in the Northern Ireland Committee in another

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place on 16th December 1976, and, while many points of interest about its implementation were raised, the debate did not reveal the need for any modification to the content of the order.
My Lords, I do not intend to mention every article in detail, but I should like to say a little more about the most significant, and that is Article 2. This article would enable the holding company, with the consent of the Department of the Environment, to transfer to a subsidiary company all or any of the functions previously transferred to the holding company from the Belfast Corporation Transport Department. In effect, this means that Citybus, which at the moment is no more than a trading agency of the holding company, could be translated into a self-contained subsidiary. It is envisaged, as agreed by both unions and employers, that a merger of the Belfast transport undertaking with Ulsterbus is the longer-term objective. For the present, however, the disparities in terms and conditions of employment render this unattainable, and the present proposal to set up Citybus as a separate subsidiary is seen as an interim solution. A merger remains the ultimate objective, and discussions between unions and management will continue towards that end.
My Lords, I have mentioned only the most important article in any detail, but I would be happy to answer any questions that I can on any part of the order. As noble Lords will see, this proposal is not far-reaching in nature, and each of its miscellaneous provisions is designed to achieve a limited objective. My Lords, I beg to move.
Moved, That the draft Transport (Northern Ireland) Order 1977, laid before the House on 10th February, be approved.—(Lord Melchett.)
7.54 p.m.
Viscount LONG: My Lords, I should first like to thank the noble Lord for his kind tribute to my noble friend Lord Faulkner. From these Benches I would say that we have heard the very sad news that he died this afternoon after a riding accident, and there is no doubt that Northern Ireland has lost a great friend and a great political leader. It was as
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Brian Faulkner that many of us knew him, though I might say at this moment that I personally did not know him but was looking forward to meeting him, I having just been allocated this job with my noble friend Lord Belstead. But many knew him, and knew how well his Premiership went from 1971 to 1972 and, equally, how well, after the difficult period of the break-up, he led all the representatives in Ireland to try to counteract the enormous difficulties that faced Northern Ireland at that time. That, of course, as the noble Lord knows, was in the Assembly. My Lords, it is tragic indeed, as it was only a few days ago that we saw him take his seat in your Lordships' House; and I have already said how much many of us, on all sides of the House, were looking forward to hearing his wise words and counsel on the problems and the difficulties of Northern Ireland. It is a tragic day for all of us in your Lordships' House that we have lost such a great friend and a great brain on Irish affairs. I end this part of what I have to say by expressing from this side of the House our very deepest sympathy to his wife and to his family.
Having said that, my Lords, like the noble Lord I do not wish to detain the House on this draft Transport Order. Obviously, we welcome every move that is designed to improve the transport situation in Ireland. There is only one question, I think, that I should like to ask, and it is this. There seems to be some conflict between the taxi-cabs, or the black cabs, and the buses, and it appears to me, without going any deeper into this Instrument, that Citybus are losing out through want of control over these black cabs or taxis. I would ask the noble Lord whether there is any movement in Northern Ireland to counteract this. Of course, one fully realises that the black taxi-cab drivers are not very fond of the buses; they affect their own services. I also welcome page 6 of the order, in that you pay to get on a bus now rather than pay when you get off. I wonder why those paragraphs on page 6 were not brought forward before. It would have meant less embarrassment and difficulty for both the bus driver and the conductor. Having said that, I will not detain the House further. I repeat that we are indeed sad tonight at the tragic accident to Lord Faulkner.
Lord BYERS: My Lords, on behalf of the Liberal Party in this House I should like us to be associated with the tributes which have been paid by the two noble Lords who have already spoken. It is a real tragedy that this should have happened so soon after the noble Lord, Lord Faulkner, had been introduced into this House, when so many of us were hoping to benefit from his experience and his political contributions. We extend our sincerest sympathies to his widow and to his family.
7.59 p.m.
Lord WINDLESHAM: My Lords, it is some time since I spoke in a debate on a Northern Ireland order, although at one time it was my task to introduce a large number of such orders in the same way as the noble Lord, Lord Melchett, does now. I intervene this evening only to pay tribute to Lord Faulkner of Downpatrick. I first met him when I was a Minister at the Home Office and he was Prime Minister of Northern Ireland—the last Prime Minister of Northern Ireland before the Prorogation of the Stormont Parliament in 1972. Later I saw him frequently in Northern Ireland after the introduction of direct rule. My Lords, I came to admire his quality as a politician. His characteristics were great skill, high professionalism and exceptional toughness.
Brian Faulkner was a determined man and an effective leader of the Unionist Party. When the power-sharing experiment came to its brief period of fruition, it was Brian Faulkner, the former Unionist Leader, who headed the first Executive in which both communities were represented. As we know, the experiment lasted for only a short period but it was not for any lack of effort by Brian Faulkner that it was so. His death today is a double irony in that Brian Faulkner's political career was over. It finished some months ago when he left active politics. It is also ironic for a man who spent most of his career in public life—and the noble Lord, Lord O'Neill of the Maine, will correct me if I am wrong, but I believe Brian Faulkner was the youngest member when he was first elected to the Northern Ireland Parliament at Stormont—for a man who had spent so many years of his life exposed in public positions at personal
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risk that he should end his life so suddenly in a hunting accident.
I should like to add my sympathy to his wife, his family and friends. Brian Faulkner's place in the history of Northern Ireland is assured. I conclude by expressing the hope, as we remember him in this House this evening, that the principles for which he stood and for which he fought so hard will in the end take root and lead to the creation of a more stable, happier and more peaceful society in Northern Ireland.
Lord O'NEILL of the MAINE: My Lords, I should like to take this opportunity of associating myself with everything that has been said. I have just come back from ITV where, in conjunction with Jerry Fitt, I was paying a tribute to Brian Faulkner. People in Northern Ireland know that Brian Faulkner and I rather parted company a few years ago; but it was one of the happier events in my life that when he took his seat last week I had a reunion with both Brian and his wife, Lucy, and I am very happy that this should have been so. Of all the various facets of Brian's political life, I hope that he will be remembered for the great efforts he made as chairman of the Executive in the power-sharing venture to which the noble Lord has just referred. Had it been possible for the Assembly to survive, had it been possible for that power-sharing Executive to have survived, it might be that the troubles with which Lord Melchett is trying to deal today would not have reached their present peak. However, that is all a matter of history. But I hope that Brian will be remembered for his efforts there rather than for anything else.
I feel that among the minority he may perhaps be recalled as the man who was the architect of internment. I hope that they will try, at this time, to forget that and to remember that this was the man who risked his political life and his political future in trying to establish a power-sharing Government. It is a tragedy that this has happened; although knowing Brian as I did and knowing that the hunting field was perhaps more important to him than anything else, I think that he probably would have been happier to end his life in this way than in ways which are so open to people in Northern Ireland.

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It is a great tragedy that this has happened and, once again, I should like to associate myself with the words of the speakers who preceded me.
Lord MELCHETT: My Lords, the noble Viscount, Lord Long, raised the question of the black taxis in Belfast. As he may know, they do give rise to considerable concern and there are, unfortunately, grounds for believing that the existence of the illegal taxi services in Belfast may have resulted in a loss to the city buses in the last financial year of £1.5 million or more. This certainly cannot be regarded as a satisfactory state of affairs. I can assure the noble Viscount that the Government are, and will be, keeping this situation under careful review.
Other than that, the thrust of the comments, somewhat naturally, on this order has been on the tragic death of Lord Faulkner. Once again, I should like to associate myself, my colleagues in the Northern Ireland Office, all those in Government and on this side of the House with the remarks made by noble Lords opposite and, in particular, to express my warm agreement with Lord Windlesham's hopes for the future of which he spoke.
On Question, Motion agreed to.
8.4 p.m.

RATES AMENDMENT (NORTHERN IRELAND) ORDER 1977
Lord MELCHETT Lord MELCHETT rose to move, That the draft Rates Amendment (Northern Ireland) Order 1977, laid before the House on 1st February, be approved. The noble Lord said: My Lords, I beg to move the draft Rates Amendment (Northern Ireland) Order. The purpose of the short order before your Lordships tonight is to amend the law in Northern Ireland relating to rates and the valuation of property for rating purposes and also to achieve broad uniformity with the law in England.
Three main changes are proposed in the order: first, to extend domestic rate aid to apply to the private dwelling part of premises used partly for residential purposes and partly for other purposes; second, to give a right of appeal on the question whether rates on premises used
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for recreational purposes are subject to reduction; and, third, to allow rate relief for charity shops. Several amendments related to or in consequence of these changes, together with others of a comparatively minor and unrelated nature, are provided for in the order. These include the arrangements for paying rates by instalments, the right to discount on rates, the correction of clerical errors in the valuation list, rectifying minor in correct use of language and removal of industrial derating from any part of an industrial hereditament which is used for the purposes of a private dwelling. I beg to move.
Moved, That the draft Rates Amendment (Northern Ireland) Order 1977, laid before the House on 1st February, be approved.—(Lord Melchett.)
Viscount LONG: My Lords, I am most grateful to the noble Lord for his explanation of this order. There are two points I should like to raise. The first is on recreation. I believe that some recreation centres, particularly the indoor centres, find it intolerably difficult because they are charities to raise the money to meet their rates. Secondly, may I ask whether the local traders are being fairly treated? Added to the difficulties of inflation they have the problem of bombings and window smashing affecting their trade. I wonder whether those two points should not be looked at more sympathetically. I believe the noble Lord said that there was a right of appeal on recreational grounds. If that is the case, I welcome it; but I should like to feel that the local traders could also have a right of appeal. Other than that, I will not detain your Lordships.
Lord MELCHETT: My Lords, the noble Viscount is quite right in saying that this order introduces a right of appeal which will lie to the Lands Tribunal for Northern Ireland on the question of whether an hereditament is entitled to recreational rating relief. As the noble Lord may know, Article 4 of the 1975 Order inserted in the 1972 Order a new article which provided for rating relief for certain recreational hereditaments. It is the purpose of Article 4 in this order to give a right of appeal where the occupier of such a premises is not satisfied with the extent of rating provision incurred. I think that the noble Viscount's point is probably met by that.

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The noble Viscount also raised the question of the rating of commercial and industrial premises. As he knows, this is a matter which has given grounds for some concern in Northern Ireland. It will be very difficult to attempt to compare the position in Great Britain with that in Northern Ireland. It will be a very complex operation, and no attempt has been made to do this. However, a Working Party, which includes representatives appointed by the Association of District Councils, is examining the method of striking the regional rate in Northern Ireland. They will be considering, among other things, the aspect of comparability with Great Britain and, in particular, the comparability of the rating of industrial and commercial premises. The report of this Working Party is expected later this year. Hopefully, that will have something constructive to say on the problem which the noble Viscount mentioned.
On Question, Motion agreed to.