Lords Sitting of 30 January 1978

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

ROAD SIGNS: METRIC CONVERSION
The Earl of KINNOULL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the estimated cost of changing officially from miles to kilometres on our road system, and whether such action is likely this calendar year.
Baroness STEDMAN: My Lords, an estimate of the cost of converting traffic signs in the United Kingdom is between £7½ million and £8½ million at current prices. No action will be taken during 1978 to substitute kilometres for miles on our traffic signs and such a move would be preceded by extensive consultation, followed by a planning period of about five years. My right honourable friend the Secretary of State for Transport has recently made it clear that he is not contemplating any change for a long time.
The Earl of KINNOULL: My Lords, while thanking the noble Baroness for that assurance, may I ask her to confirm whether Her Majesty's Government are under an obligation to the EEC to produce a review by 1979, what evidence they are taking for that review, and what attitude they are taking towards the merits of the case?
Baroness STEDMAN: My Lords, the original Directive on the metric system in 1971 required its adoption in five years. After our accession to the Community, the Directive was again amended and, as it now reads, it shall be reviewed before 31st December, 1979. There is an expectation, on behalf of the EEC, that the
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United Kingdom will make reasonable efforts to phase out the mile as soon as possible after that date and that a final date will be fixed; but there is no written understanding which goes beyond the terms of the Directive. My Secretary of State has already said that he will have very extensive consultations before anything is done and he anticipates that it will not be done for at least another five years.
Lord SEGAL: My Lords, in the meantime, would my noble friend perhaps consider issuing a directive to local authorities saying that at least the number of miles might be recorded on any new road signs which are erected, because many of them seem totally deficient in giving any indication of the distance between one place and another?
Baroness STEDMAN: My Lords, I am not sure whether it is within our powers to issue such a directive. Our estimate has been derived from considering that all the speed limit signs would have to be changed in one operation and that the informatory distance signs would be changed during the period of normal maintenance; but I do not think I could give an assurance that we would send out a suggestion such as that made by my noble friend.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, will the noble Baroness undertake to alter English literature; for example, will it be three score and ten kilometres to Babylon, and half a kilometre, half a kilometre, half a kilometre onwards?

HONG KONG: EQUAL PAY
2.39 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will recommend to the Governor of Hong Kong payment to the 400 shorthand-audiotypists employed by the Government on a scale equivalent to the increases given to other female staff under the equal pay scheme.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, I am taking steps to get negotiations between the Hong Kong Government and the Shorthand and Audiotypists' Association reopened.
Lord BROCKWAY: My Lords, though I greatly appreciate that Answer, may I ask my noble friend whether it is not the case that in 1971 there was a very commendable equal pay decision between men and women in Hong Kong but that, because these typists do not have one man in their grade, they have not had the advantage of this equal pay proposal? I hope these negotiations will be successful.
Lord GORONWY-ROBERTS: My Lords, my noble friend sums up the position very fairly, and I join with him in a strong hope that at least an interim arrangement will be possible as a result of the new negotiations pending the institution of a regular statutory provision for settling disputes such as this.
Baroness WARD of NORTH TYNESIDE: My Lords, how long does the Minister think it will be before this matter is satisfactorily settled?
Lord GORONWY-ROBERTS: My Lords, I trust that the negotiations, which I hope the Hong Kong Government will institute at once, may lead immediately to a number of adjustments. As for the long-term provision for the settlement of disputes across the board throughout the public sector, that might take a little longer, but it will be well worth waiting for because Hong Kong needs it.

BELIZE: INDEPENDENCE NEGOTIATIONS
2.42 p.m.
Baroness ELLES: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the present position with regard to negotiations for the future independence of Belize.
Lord GORONWY-ROBERTS: My Lords, there were discussions with the Premier of Belize in London on 24th and 25th January. A copy of the joint Statement issued after the talks has been placed in the Library of the House. Further informal talks with the Guatemalans are envisaged in the near future to find a basis for continuing the negotiations.
Baroness ELLES: My Lords, while I thank the Minister for that reply, I wonder whether he could enlarge on one or two aspects of these negotiations. First, was any leverage used by Her Majesty's Government with regard to the withdrawal of the defence force from Belize in the event of Mr. Price and his Government not accepting a cession of territory to Guatemala? Secondly, will the Government confirm that the wishes of the people of Belize and the retention of their territorial integrity are overriding principles, beyond those of cession to Guatemala and the withdrawal of the defence force?
Lord GORONWY-ROBERTS. My Lords, I can give an unqualified assurance on both points. First, no such leverage was ever applied; and, secondly, there will be no settlement unless the people and Government of Belize accept it.
Baroness ELLES. My Lords, following that, I wonder whether the Minister will allow me to put one more supplementary question. What kind of guarantees are envisaged by Her Majesty's Government if, by any chance, there should be a cession of territory to Guatemala in agreement with the people of Belize; and what role do the Government expect the United States to play in conjunction with the Organisation of American States?
Lord GORONWY-ROBERTS: My Lords, these conditions are looking very far ahead into a most hypothetical future. I think we should rest firmly on what my right honourable friend the Prime Minister and my right honourable friend the Foreign Secretary said in the other place on 24th and 25th; that is, that any agreement which emerges from the continuing negotiations will first have to have the agreement of the people and Government of Belize; then we shall see.
Lord NORTHFIELD: My Lords, will my noble friend confirm that no pressure will be put on the Government of Belize in regard to this matter? Does he agree that most people who have studied this matter and followed it over many years are certain that the Guatemalan case is, on the whole, flimsy, if not even less than flimsy?
Lord GORONWY-ROBERTS: My Lords, I can confirm without reservation that no pressure will be placed in that way and for that purpose on the people and Government of Belize.
Lord SEGAL: My Lords, in the meantime, will Her Majesty's Government consider stepping up economic aid to Belize as a token of our continuing commitment to the welfare of that colony?
Lord GORONWY-ROBERTS: Yes, indeed, my Lords. We have said that we do not by any means exclude the possibility of extending aid to enable both countries to co-operate, with mutual benefits one to the other, in the development of the area under dispute.

NUCLEAR ARMS LIMITATION
2.45 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is their response to the suggestion of Mr. Desai, the Prime Minister of India, that the United Kingdom should act as a mediator between the USA and the USSR to secure real cuts in Soviet and American stockpiles of nuclear and other weapons, and to facilitate agreement on the non-proliferation of nuclear weapons.
Lord GORONWY-ROBERTS: My Lords, although Mr. Desai linked the question of Indian acceptance of safeguards with progress on a comprehensive test ban and other curbs on the nuclear arms race, he did not specifically call on the United Kingdom to mediate between the United States and the Soviet Union.
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Progress in limiting and reducing nuclear weapons is a supremely important goal. It is the object of the strategic arms limitation talks between the United States and the Soviet Union, which Her Majesty's Government greatly hope will succeed. Curbing the nuclear arms race is also a major aim in our tripartite negotiations with those two Powers on a comprehensive nuclear test ban.
Lord BROCKWAY: My Lords, would the Minister agree that the Prime Minister, on his visit to India, made a break-through in the deadlock between India and the USA and the Soviet Union regarding the non-proliferation treaty? Did Mr. Desai not indicate that he would be prepared to co-operate if there was a universal test ban, no addition to nuclear weapons and an agreement to the phased reduction of weapons? Have the Governments of the United States of America and the USSR been informed of this proposal by Mr. Desai?
Lord GORONWY-ROBERTS: My Lords, I have no doubt that the Governments of the two Powers which my noble friend has mentioned are well aware of Mr. Desai's views and, indeed, of his proposals. They are similarly aware of our views and our suggestions in what I may call a beneficent, interventive (my noble friend might call it mediative) role. As to the reference my noble friend made to our Prime Minister, I think we would all agree that during his visit to the sub-continent the Prime Minister contributed in an historic way not only to the maintenance and the improvement of Anglo-Indian relations but also to the peace of the world.

EEC COUNCIL OF MINISTERS: FEBRUARY BUSINESS
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, a Statement is being made today in another place about business to be taken during February in the EEC Council of Ministers. With the leave of the House, I will, as usual, arrange for the Statement to be made available in the Official Report.
Following is the Statement referred to:
"With your permission, Mr. Speaker, I will make a Statement about business to be taken by

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Ministers of the European Community during February. The monthly written forecast was deposited on Thursday, 26th January.
"At present three Council of Ministers meetings are proposed for February. Foreign Ministers will meet on the 7th, Agricultural Ministers on the 13th and 14th, and Finance Ministers on the 20th.
"Foreign Ministers are expected to consider a mandate for negotiations with Greece about customs union, the current position on the North-South dialogue, iron and steel imports, food aid, summertime, and trade relations with Cyprus and Japan. They may also consider dentists qualifications and training.
"Agriculture Ministers are expected to consider Mediterranean agriculture and resume their consideration of CAP prices for 1978–79.
"Finance Ministers are expected to consider the budgetary implications of the 1978–79 agricultural price proposals, and the draft co-insurance Directive".

DOMESTIC PROCEEDINGS AND MAGISTRATES' COURTS BILL [H.L.]
2.48 p.m.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, I beg to move that this Bill be now read a second time. This Bill deals with a fundamental problem relating to matrimonial proceedings, which is that there are at present two separate but overlapping matrimonial jurisdictions, one based in the High Court and divorce county courts and the other in the magistrates' court. There are at present considerable differences in the substance of the matrimonial law which applies in each jurisdiction. These place the applicant to the magistrates' court at a disadvantage. These differences were criticised by the Finer Committee in their report on One-Parent Families, and the principal object of this Bill is to remove them.
The present differences have arisen because, when the divorce law was reformed in 1969 and 1970, the magistrates' matrimonial law was not brought into line with it. The magistrates' jurisdiction operates in relation to marriages which are still in existence; the divorce courts deal with the dissolution of marriages which have broken down irretrievably. At present, divorce may be obtained on the simple ground that the
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marriage has broken down irretrievably. But in order to obtain a magistrates' matrimonial order it is necessary to show that one party has committed a "matrimonial offence". The provisions of this Bill will remove this necessity.
The Bill implements recommendations made in a Law Commission Report on Matrimonial Proceedings in Magistrates' Courts, which was published in October 1976. The Law Commission annexed to their report a draft Bill which is substantially reproduced in the Bill before the House today. There are some changes of detail and some new provisions, but in all major respects the Bill implements the Law Commission's recommendations.
The scheme of the Bill is as follows. Part I repeals the Matrimonial Proceedings (Magistrates' Courts) Act 1960 and provides a new code for matrimonial proceedings in magistrates' courts. This is, so far as desirable, consistent with the provisions of the reformed divorce law provided by the Matrimonial Causes Act 1973. I say "so far as desirable" because, since the magistrates' jurisdiction operates at a stage before a marriage is brought to an end, its objectives and those of the divorce law are not consistent in all respects. However, to a very large extent the provisions in Part I are the same as the corresponding provisions for the higher courts. Parts II and III of the Bill carry through the reforms of magistrates' matrimonial law made in Part I into other similar legislation, and so provide consistency with proceedings for guardianship, affiliation, custodianship and adoption, and certain matrimonial proceedings in the higher courts. Part III also contains some new provisions concerning the international enforcement of maintenance. Procedural provisions are contained in Part IV.
The Bill is long, but it is not as formidable as it appears at first sight. Many of the provisions in Part I simply re-enact the existing matrimonial law provided by the Act of 1960. Parts II and III, to a large extent, make a number of consequential amendments. The amount of completely new material in the Bill is therefore not very great.
The Bill is, as I have said, principally concerned with the removal of anomalies.

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However, it also creates two important new powers for the protection of battered wives and children. These are the powers which the Bill gives magistrates' courts to protect a battered spouse or child by granting personal protection orders and domestic exclusion orders. A personal protection order prohibits a party to the marriage from using or threatening violence, and a domestic exclusion order requires him to vacate the matrimonial home.
The Bill also enables a single justice to issue a warrant of arrest against a party to the marriage, where he has reasonable grounds for believing, on application made on oath, that that party has disobeyed a personal protection order or exclusion order. These provisions in the Bill give magistrates powers similar to the powers already available to the higher courts to grant injunctions. They thus provide, for the first time, a summary means of obtaining relief in cases of what was recently described as "domestic hooliganism". The provisions implement a recommendation made in another place by the Select Committee on Violence in Marriage and will, I believe, be widely welcomed. Another important new provision is that proceedings defined as "domestic proceedings" shall in future be heard only by magistrates who are members of a domestic court panel, which is to be specially appointed for this purpose. The setting up of domestic court panels, on lines similar to the panels which already exist for hearing juvenile proceedings, will make it possible to appoint justices for these types of case who are well suited to the work and wish to do it. It will also be possible to provide them with a specialist programme of training, and, through hearing domestic cases frequently, they will have the opportunity to build up considerable expertise.
I shall now refer briefly to the main provisions in the Bill. Clause 1 provides new grounds for seeking a magistrates' matrimonial order. These will replace the present rather squalid list of "matrimonial offences". The new grounds are simply: failure to provide reasonable maintenance; behaviour such that the applicant cannot reasonably be expected to live with the respondent; and desertion.
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The clause also introduces the principle already found in divorce law that each spouse has an equal duty to support the other.
Clause 2 gives the magistrates' court a new power to order a lump sum payment not exceeding £500 in matrimonial proceedings, in addition to the existing power to order maintenance. Clause 3 provides statutory guidelines for the matters which the court must take into account in deciding whether to order financial provision. This replaces the present provision under which an applicant to a magistrates' court is barred from receiving maintenance if the applicant had committed adultery, and provides instead that the court should take the parties' conduct into account only to the extent which it is just to do so.
Clause 6 introduces a new accelerated procedure for obtaining a magistrates' order where the parties are in agreement about financial provision. Under Clause 7, an order can be made for the custody of a child until he attains the age of 18 instead of the current limit of 16; this brings magistrates' courts into line with the higher courts. The magistrates' court will also be able to make a "joint order" under which one party to the marriage is given legal custody of the child, but the other party is allowed to retain some or all of his parental rights except for the right to the actual physical custody of the child. Persons who hold parental rights and duties jointly and who disagree may, under Clause 12, apply to the court for an order resolving the dispute. Clauses 13 and 14 contain the new powers—which I have already mentioned—for magistrates to make personal protection and domestic exclusion orders and to issue warrants of arrest for breach of such an order. Where it makes a custody order in matrimonial proceedings, the magistrates' court will have a new power under Clause 29 to direct that the child shall not be removed from England and Wales. Again, this corresponds to the power already available to the higher courts.
There are some new provisions in Part III relating to international enforcement of maintenance. These enable courts in the United Kingdom, where they are enforcing an order made by a court in some Commonwealth countries under the arrangements for reciprocal enforcement,

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to give effect to the intentions of the Commonwealth court as regards the date from which the order is to have effect. They also extend the arrangements for international enforcement so as to include maintenance payable to a former spouse. At present, the arrangements under Part II apply only where the parties are still married. This clause will enable us to give full effect to our international obligations under a United Nations Convention on the recovery abroad of maintenance. There are corresponding provisions for Northern Ireland and Scotland.
The provisions in Part IV may loosely be described as "procedural". They alter the basis of jurisdiction in civil proceedings in magistrates' courts from the petty sessions area to the commission area; empower a magistrates' court to suspend the operation of an order for payment and then to revive it; and increase the penalties for disobeying the magistrates' orders (other than orders for payment of money). The new financial penalties in Clause 70 are a daily sum not exceeding £50 or a single sum of not more than £1,000 instead of the present rates of £1 and £20 respectively. The alternative penalty of imprisonment for a period not exceeding two months remains unchanged.
The other provisions in Part IV were not included in the Law Commission draft Bill, but are consequential on more substantive reforms in Part I. Where a magistrates' court, in consequence of the new powers provided in the Bill, makes an order for payments to be made directly to a child, Clause 69 provides that the person with whom the child has his home may act on his behalf in proceedings relating to the order. Clause 71 provides a comprehensive definition of the various proceedings—matrimonial, guardianship, affiliation, custodianship and adoption proceedings—which fall within the general definition of "domestic proceedings". This replaces the provisions at present scattered in a number of different enactments.
Clause 73 amends the existing law and limits the persons who may be present during the hearing of domestic proceedings to those directly concerned in the case, the Press and any person whom the court considers has reasonable grounds for
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attendance. The clause also preserves the existing law which safeguards the privacy of adoption proceedings. Clause 74 preserves the existing law, also, this time on adoption proceedings (that no particulars may be published which would lead to the identification of the child), and raises the fine for breach of the restriction on newspaper reports of domestic proceedings. It does however remove the present penalty of imprisonment. Part V of the Bill contains supplementary provisions, and the Schedules make transitional provision, minor and consequential amendments and repeals.
The Bill introduces much needed reform in an important area of the law which directly affects many people's personal lives. The Law Commission recommendations embodied in the Bill have been widely welcomed by the legal profession, social service bodies and other groups concerned. They are, I believe, largely non-controversial. The Bill will simplify the law relating to domestic proceedings, to the benefit of the public, the courts and legal practitioners. It provides new powers for the protection of wives and children against domestic violence and will generally make it easier and less distressing to obtain a magistrates' matrimonial order. This legislation is an important step forward and, as such, I commend it to your Lordships' House. I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a.— (Lord Harris of Greenwich.)
3.3 p.m.
The Earl of MANSFIELD: My Lords, I am sure the House will join with me in thanking the noble Lord, Lord Harris of Greenwich, for introducing a long and fairly complex matter in 15 minutes; that is no mean feat. The Bill, which is non-Party, will attract a wide measure of support in your Lordships' House, representing, as it does, a major departure from the old matrimonial jurisdiction in the magistrates' courts which most will agree has become thoroughly out of date. Speaking personally for a moment, many young members of the Bar spend—or, at any rate, used to spend—long hours in magistrates' courts, in effect taking part in what were miniature contested

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divorce actions. The law was essentially the same; the result was of course different. The financial rewards, so far as the member of the Bar was concerned, were almost non-existent. I seem to remember being paid three guineas on the brief and two guineas for the conference. My noble and learned friend who sits beside me thinks that he was paid three guineas for the brief and one guinea for the conference. But I suspect that was inflation rather than the quality of my conference. But, my Lords, they were very good practice.
One of the matters which struck me was the type of people who became litigants in such situations, and the difficulties in which they found themselves. The type of summary matrimonial jurisdiction open to them afforded some measure of relief. Applicants for these orders tended to be of a fairly humble and less affluent walk of life. I do not wish to be misunderstood when I say that, but very often they were not of the view that a breakdown of their marriage, of necessity, led to divorce. In most cases the desired order was in effect a maintenance order for payment of what it was hoped would be a regular sum of money.
Public attitude to matrimonial relief has shifted in that there has been over the years a steady increase in petitions for divorce, accompanied by an equally steady decrease in applications for maintenance orders. From my researches it appears that in 1971, petitions for divorce by wives were in the region of about 66,000. In 1975 they had increased in volume to approximately 98,000. But applications for maintenance orders by wives in 1971 were in the region of 26,000; by 1975 they had decreased to about 12,000. So it is plain that, for whatever reason, magistrates' courts have become less popular so far as matrimonial relief is concerned, while petitions for divorce seem to have become more popular.
It is with that background in mind that one reads the report of the Law Commission and, in particular, its proposals for the future, and contrasts them with the conclusions of other bodies, such as the Finer Committee. I say at once that the Law Commission, in my respectful opinion,
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made a careful and workmanlike study of the problems. It came therefore somewhat as a surprise that the Commission endorsed a rather curious phrase used by the Working Party in paragraph 1.11 of the report, when it concluded:
"that the function of magistrates' courts today was to provide first aid in a marital casualty clearing station".
The phrase to me denotes that in such a situation the magistrates' court is the first stage in a continuing process; whether towards the eventual health or death of the marriage, matters not. However, at least half of the successful complainants in a magistrates' court—at any rate, in 1975—did not go on to obtain a divorce. So the analogy employed by the Commission is at least doubtful. The Finer Committee proposed the reform of matrimonial law and also the courts. It wanted in effect to set up one institution, a family court, administering a single unified system of family law. Whatever one personally may think of that recommendation, it was not one which commended itself to the Government; the Government did not accept it, and the Law Commission therefore made their deliberations in the light of the circumstances in which they found themselves. Indeed, they could not do anything else.
That the law is out of step with modern thinking is plain. One has only to go to Section 1 of the Matrimonial Proceedings (Magistrates' Courts) Act 1960 to see that. Indeed, the noble Lord, Lord Harris, described as squalid the list of complaints which would justify an order. It certainly does not have a modern ring about it. Paragraph (e) of subsection (1) instances where the respondent has insisted on having intercourse with the applicant while suffering from veneral disease; and paragraph (f) instances where the respondent is, for the time being, an habitual drunkard or addict, and so on. So that one welcomes the new grounds which are contained in Clause 1 of the Bill. It is perhaps significant that the applicant's own adultery will cease to be an absolute bar to an order. I suppose it is true to say that adultery will equally cease to be a ground for an order, unless the court comes to the conclusion that it comes within one of the four paragraphs of the section.

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Equally welcome will be the new flexibility of the maintenance orders which may be made by a court. I do not intend to weary your Lordships with this at length, but I suggest it is particularly welcome that periodical payments no longer have to be synonymous with weekly payments when ordered by a court. The payment of a lump sum not exceeding £500 is an interesting new innovation, although I wonder how many lump sum orders will be made and for what sum. I welcome Clause 5 which, in effect, empowers a court to make a maintenance order in favour of a child who has attained 18 years; or, indeed, a court may extend an existing order if the child is receiving some form of education or training, or if there are exceptional circumstances.
As the noble Lord, Lord Harris, told us, the Bill also provides personal protection for either party in circumstances of violence or threatened violence, and that is contained in Clause 13. The emphasis is on protection from violence; and it is interesting that magistrates have no discretion to order a respondent to permit entry to the matrimonial home. I say that, because it seems to me that the Bill is, perhaps, less successful as regards its reconciliation of concurrent jurisdictions than it is when it deals with provision for spouses or for guardianship of infants.
For instance, if one compares it with the Domestic Violence and Matrimonial Proceedings Act 1976, which, in effect, gives the county court judge complete discretion to make orders which restrain molestation, and for entry to an exclusion from the matrimonial home, one would imagine that that was a far more attractive Act on which a wife should pursue a remedy than the present Bill. One wonders why the two measures have not been made the same. Both of them—and this I personally deplore—give power to issue warrants of arrest, if orders of the court are to be disobeyed. Personally, I disapprove of this, because I do not like seeing policemen employed by the court in cases which have nothing to do with the criminal law. I made the point when the Act was before your Lordships' House and I make it again, no doubt in vain.
I have only two other matters with which to take up your Lordships' time, one of a rather basic nature and the other a good deal less so. The first concerns Clause 22
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and reconciliation. The Law Commission considered the matter on page 37, paragraph 4.12, and, bearing in mind that all are agreed that, at the point in time when parties approach a magistrates' court in these circumstances, a marriage may be very far from dead, I submit that the opportunity to write into the law some real and meaningful attempts at reconciliation has been lost.
The Law Commission merely says, in effect, that the primary function of any court is adjudication and, while that certainly does not exhaust its functions, a careful limit must be set to any functions going beyond adjudication. The Bill does not set any limit; it does not really give the court very much in the way of discretionary powers, and the writing in of a mechanism to encourage a court to help those who wish to proceed to a reconciliation, rather than an order, is something which might be considered in Committee. I appreciate that, if one has a maintenance order which is by consent, reconciliation has very little part to play. But there are very many instances where the future happiness of the spouses would be maintained by reconciliation, rather than by cash.
My only other point is a small one and I hesitate to mention it, but, as I may not be about when your Lordships deliberate upon this matter in Committee, perhaps I shall be forgiven if I do so. It relates to Clause 73, which the noble Lord has already mentioned. Paragraphs (b) and (c) of subsection (1) have the following effect. Paragraph (b) excludes from the court
"persons whom either party desires to be present";
and paragraph (c) relates to solicitors and counsel in attendance for other cases. There must be many instances when parties to litigation such as this, who may very well be upset and in considerable need of moral support, if I may so term it, would be more than distressed if the close relative or friend who has assisted them is excluded from the court.
The other point is that young barristers and, indeed, solicitors have to learn the ropes and the best way of learning them is by observing other people's mistakes, sitting in court and looking at other cases. I appreciate that, where circumstances arise which make privacy essential,

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if the evidence is to be of a nature which would cause embarrassment to the parties, then there is everything to be said for excluding everybody who does not have to be in court. But, otherwise, I suggest that there is nothing really wrong in letting members of the Bar and solicitors be present, even if they are not directly concerned with the case. Except for those few and fairly minor reservations, I am sure that all your Lordships will give this Bill a fair passage through the House.
3.18 p.m.
Baroness ROBSON of KIDDINGTON: My Lords, may I join the noble Earl, Lord Mansfield, in thanking the noble Lord, Lord Harris of Greenwich, for introducing this Bill so clearly. As has already been said, I think we all agree that this is a Bill which was overdue to be introduced in this country and it is one that we welcome, in the main. I have very few reservations at all about the Bill.
The noble Earl made a statement about the need to change the basis of the matrimonial courts, and pointed out that over the past few years they have been used less and less. I believe that there are two reasons for that. Obviously, the first reason is that it is easier to get a divorce these days than it was in the past; and the second is that the matrimonial courts have been used largely by the wives in a marriage. Since then, we have had the legislation covering equality of the sexes and, in my view, this Bill makes it clear for the first time that either party can have recourse to these courts. So one would envisage that, after this Bill has become law, there may be a slight increase in matrimonial cases, particularly as it is my personal experience that life has changed enormously with regard to matrimonial problems.
There was a time when it was always the wife who was being hard done by, or who was being deserted. My personal experience is that quite often these days it is the husband who is deserted and who is left to look after the children. Therefore when we look at this Bill we are looking at a quite new picture and role for the domestic courts of this country. With everybody else, I welcome the change in the grounds upon which an applicant can apply to the domestic court.
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I welcome enormously the power to award a lump sum. However well organised, regarding support for the deserted spouse, inevitably there is bound to be an interval between absolute desertion and the time of adjudication. My frequent experience—usually, I admit, of wives—has been that the deserted spouse has had to take up loans from relatives or friends and has then been saddled with the repayment, for the recovery of which money no recourse has been open to them. Therefore, I welcome the power to award a lump sum on those occasions.
Also I welcome the fact that the Bill raises the age of dependent children to 18 and that in certain cases the age of dependency is almost unlimited. I believe that this is essential. If there is mental or physical handicap, a child will be impaired by his disability and will be unable to earn a reasonable living. For such cases this clause is very helpful.
I believe that Clause 13 is the most important clause of all, and it is probable that all Members of the House will agree with me. Clause 13 relates to the power to exclude a husband or wife from the matrimonial home. Such a power is desperately important when battered children and families are involved, and this will be the first opportunity for magistrates to enforce such a ruling.
One point about Clause 13 which worries me slightly is that it gives to magistrates the power to exclude the wrongdoer from the matrimonial home. I believe that the phrase "the matrimonial home" needs to be more clearly defined. My experience has been that many of the unhappy families who have had recourse to the domestic or matrimonial courts have been living in homes which it would be very difficult to say were their matrimonial homes. My frequent experience has been that in cases of this kind the family has been living in the home of a parent—perhaps the home of the parent of the spouse who is at fault. Therefore, it is essential that we should define more clearly what is meant by "the matrimonial home". I welcome also the fact that in Clause 55 the exclusion order will not prevent a case for desertion being brought. Obviously this provision is essential if we are to help the complainant spouse.

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I should like to turn to Part I, Clause 26, which deals with the jurisdiction of the courts. I question whether jurisdiction should apply to the whole of the commission area rather than to the petty sessional division. I can understand the reasons for putting together two petty sessional divisions, but I should be very disturbed if there were to be only one domestic court in the area of each commission. I believe it to be essential that the members of the domestic court should have reasonable knowledge of the social and economic backgrounds of the area where they are adjudicating. As a member of a county commission, I am not aware of most of the major social questions relating to that part of Oxfordshire which lies South of Oxford, whereas I have a fair amount of knowledge relating to the social background and conditions in that part of Oxfordshire in which I live. If one is to adjudicate upon matrimonial cases it is essential to know something about the social background. Therefore I should be very concerned if there were to be only one domestic court in each commission.
I should also be glad if the powers of the Lord Chancellor to appoint were clarified. I should find it perfectly acceptable if this power to appoint were to relate basically to the rules regarding age and training, but I should prefer local justices to retain the power to appoint at their annual general meeting the chairman of the domestic court for their petty sessional division and to appoint their own panel. I agree very much with what is said in the Bill and in the Law Commission's Report about those people who deal with matrimonial proceedings having the right kind of background and being the right kind of people. I believe that benches know their own magistrates and that they should be left with the right to appoint their domestic courts in the traditional way.
May I finish by referring to Clause 73, to which the noble Earl, Lord Mansfield, referred, which deals with who is allowed to be present in domestic court proceedings. I have certain reservations about that clause, though only in so far as it relates to those persons whom either the complainant or the defendant would like to be present. I agree with the suggestion that legally qualified persons should be
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excluded if they are present in court for reasons which are not concerned with the case. I agree, further, that for most people these are disturbing occasions and that it would be helpful if they could have present with them a son, brother or sister, or somebody else of their choice.
I accept with alacrity the point that under Clause 76 magistrates should record at the time the reasons for their adjudication. I know that it has happened in the past that, when an appeal has been heard, it has been impossible to remember all the details of the case, however much one has re-read the evidence. I believe this to be a very sensible adjustment. With those few words, may I welcome the Bill and say that I hope it will be accepted by all Members of your Lordships' House.
3.29 p.m.
Lord PONSONBY of SHULBREDE: My Lords, I should also like to extend a general welcome to this Bill, particularly, as emphasised by my noble friend Lord Harris of Greenwich, since it brings matrimonial proceedings in magistrates' courts more generally into line with proceedings in the county courts. One point which I welcome in particular is that adultery will no longer be a bar to maintenance. The Divorce Law Reform Act 1969 transformed the whole concept of a matrimonial offence. Among other things, it brought in the concept of unreasonable behaviour and abandoned the old law of persistent cruelty. As has already been mentioned, this has meant that, for over seven years, it has been far easier to obtain a divorce from the county court on grounds of unreasonable behaviour than it has been to obtain an order in the magistrates' court on the grounds of persistent cruelty.
As mentioned by the noble Lord, Lord Harris of Greenwich, the Bill must among other things, be seen as a general tidying up of the law. No doubt because it is something which causes the other spouse distress adultery has been deleted as a ground. It amounts to unreasonable behaviour. Therefore, one wonders why the anachronistic concept of desertion has been retained. This is a legal concept that has given rise to a great deal of complex law over the years. A prima facie case of desertion must surely qualify

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as unreasonable behaviour, and one wonders why tidying up of the law could not also have included that.
For the first time, the Bill enables an applicant, usually the wife, to obtain a non-molestation injunction in the magistrates' court, referred to in the Bill as a protection order. It also gives power to the magistrates' court to evict a husband from the matrimonial home. On the face of it, this is a desirable reform, but it is one which has given me some cause for concern. If the respondent disobeys such an order of the court, the Bill attempts to provide penal provision to enforce it. Under Clause 14 a justice of the peace is to be given the power to issue a warrant for the offender's arrest. However the Bill is not entirely clear as to what powers the justice then has to deal with the alleged offender. For example, there is no provision in the Bill for bringing him before the court within a specified period of time. This is a lacuna which will have to be corrected.
The granting of a protection order or an exclusion order is a matter which can seriously affect the liberty or property rights of an individual. In either case, it is essential that the respondent should have every facility to put his case. This really means knowing in advance what case he has to answer. Except in extreme circumstances, such cases are dealt with in the county court on affidavit evidence, which enables the parties to know in advance the case they have to answer and what witnesses should be called. No such provision for affidavit evidence exists in the magistrates' court: consequently, a respondent hears the case against him for the first time when the applicant gives her evidence. This inevitably places the respondent or his legal advisers at a disadvantage. Surely it cannot be desirable, when dealing with matters as serious as this, to have two standards of justice, one in the county court and the other in the magistrates' court. As has already been stressed by the noble Earl, Lord Mansfield, I would remind your Lordships that these are civil and not criminal matters.
Another matter which causes me concern is the payment to the applicant or a child of the family of a lump sum. I can fully understand the need for this provision where families need a sum of money
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urgently to stave off a crisis, but I fail to understand how magistrates can reach a decision to order the respondent to pay such a sum unless they have the benefit of full discovery of documents and full powers to enforce such discovery.
These are some matters of detail which concern me about the Bill. There are others, such as the ease with which legal aid will be able to be obtained in the magistrates' court, which I feel we should discuss later at the Committee stage of the Bill. Upon these matters of detail will depend the ultimate shape of the Bill and whether or not the aim which is set out in the Preamble to the Bill, of expediting proceedings and not increasing public expenditure, is achieved. However, in general terms I welcome the Bill.
3.35 p.m.
Baroness MACLEOD of BORVE: My Lords, like other noble Lords, as a magistrate I am grateful to the noble Lord, Lord Harris of Greenwich, for introducing this Bill this afternoon. This Bill, which on the whole the magistrates welcome, deals with acute human problems, often the result of great unhappiness and bitterness. This is the aftermath of two people having made a mistake. It is easy to make laws and rules which it is hoped will rectify that mistake. In this Bill it seems that all the t's have been crossed and all the i's have been dotted, but time alone will tell whether in fact enough room for manoeuvre has been left to the magistrates deciding the cases. Every case has to be decided individually on its merits and on the particular circumstances. We will have an opportunity at another stage to go through this Bill clause by clause and I intend to comment on only a few of them this afternoon.
Clause 4 deals with the grounds of application for financial provision, and I am very pleased that it stresses that either party may apply for maintenance and financial provision. This highlights a trend in broken marriages today. Wives are leaving husbands and mothers are leaving husbands and children in greater numbers. This means, quite rightly under the sex equality law, that in these circumstances if a mother gets a job and the father has to leave his employment to look after their mutual children the wife will have to pay maintenance. Like other noble

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Lords, I am glad that under Clause 5 maintenance shall continue at least up to the age of 18. If those who leave school at 16 were to have no financial help from outside and could not get a job it would be hard indeed for them to face the world.
I also agree with the lump sum, but I was advised in my court this morning that it might be difficult for the adjudicating payments officer to differentiate in a problem of accounting between the periodical payments and the lump sum by instalments. I think there is going to be some difficulty there.
Under Clause 9, in the case of a child committeed to the care of the local authority it seems to me to be absolutely vital that the parents should have to keep in touch with the local authority, and that those who do not obey the law and who try to go abroad or to wash their hands of the children who are in their care should be fined more than £10. In these circumstances I should have felt that £100 was far more appropriate.
I also welcome Clause 22. It should be part of the Bill that an attempt should be made by people to reconcile the couples before the court, especially when they are very young. We have lately had an increasing number of young couples who come to the court wanting a separation. In the past it has been possible, although it has not been part of the law, for a remand to be made so that a probation officer or a well qualified person from the court could attempt to make a reconciliation, and I should like to see that possibility incorporated into the Bill. We all know that with young people time is very important, and I agree with my noble friend Lord Mansfield that if one could put the case back for at least three weeks for a report it might be of enormous benefit to the young people concerned.
As part of a very busy court that does not at this time have a special domestic court panel, I welcome, as I think all magistrates will, that there should be a special domestic courts panel. But we are rather worried about the rules and what they will contain. For instance, how many magistrates will constitute a panel? Who shall be responsible for the training of the magistrates? With great deference to the noble and learned Lord
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the Lord Chancellor, it seems to be rather far removed from everyday court sittings for the noble and learned Lord, with all his wisdom, to appoint the domestic court panels and, indeed, from his position on high, also to be able to withdraw any members of the domestic court. Like the noble Baroness, Lady Robson of Kiddington, I think that colleagues of the Bench would probably have better knowledge of who to appoint to this very difficult domestic court.
I would draw the attention of your Lordships to the fact that the juvenile court panels—which, in my view, are even more important than the domestic court panels—are appointed by the colleagues of the local Benches. We have a great knowledge of the people with whom we are working and I should like to see that incorporated into the Bill, although, of course, there must be reasons why others have decided otherwise. Also, it seems that the Secretary of State has to say how many courts there shall be and therefore there might well be a conflict of interest concerning that part of the Bill. We are all voluntary people and we do our best.
Clause 74 restricts newspaper reports of domestic proceedings, and this is vitally important. I would only draw attention to the fact that newspapers which infringe the law and mention the names or the schools of any parties in these proceedings are only to be fined £500. It would seem that a fine of £1,000 would be far more appropriate in those circumstances, because of course the damage would have been done. We have to remember that in dealing with domestic proceedings a great deal of unhappiness, often lasting many years, is experienced by both parties and if there are children under age we should be constantly aware that they do not get over the separation, as some parents conveniently seem to think. The separation of parents is a traumatic experience which will always leave its mark on the children and many may well be scarred for life.
3.44 p.m.
Lord HARRIS of GREENWICH: My Lords, I am grateful to all those who have participated in the debate, and it is a pleasure to reply to a debate as brief as

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this when there has been almost unanimous acclaim for the purposes of the Bill. I will deal with a number of the points which have been made today, but inevitably a number will have to be left to the Committee stage.
I think perhaps it might be right for me to say at the outset that this Bill, perhaps inevitably, has had a long gestation period. In December 1970 the Law Commission were invited by the then Home Secretary to consider what changes might be desirable in the magistrates' matrimonial law in the light of the reforms in 1969 and 1970 in the divorce law. The Law Commission set up a working party under their then chairman, Mr, Justice—now Lord—Scarman to consider these matters and their provisional conclusions were published in a consultative document in 1973. That document was then fairly widely distributed and, as a result of that distribution and the discussions which subsequently took place, the Law Commission re-examined their original proposals and they formulated the recommendations which appeared in their report and which were published in October 1976 and have been embodied in the draft Bill now before us. I think that period of some six years, and the fairly intensive discussions which have taken place, is one reason why the Bill has achieved such a welcome from both sides of the House.
I will deal with a number of the detailed points which have been made; I tender my apologies in advance to those noble Lords whose points I do not deal with, but inevitably it would be impossible to deal with them all this afternoon. The noble Earl, Lord Mansfield, raised one extremely important question at the outset of his speech. It related to the recommendations of the Finer Committee on family courts, and perhaps I should say a word about that. The Finer Committee suggested in their report that the needs of the proposed family court for additional manpower and accommodation could be met, for the most part from existing resources. Therefore, if the Government were to accept the recommendation which they made, there would be no substantial additional call on the public resources. I am afraid that we have come to the conclusion that this was an over-optimistic assumption.
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The fact of the matter is that the Finer Committee's recommendation would make it essential for there to be a significant amount of additional court accommodation. I think I shall carry with me my noble and learned friend the Lord Chancellor when I say that there is already a formidable problem with regard to court accommodation so far as his Vote and the Home Office Vote are concerned. It would be very difficult indeed to move into a situation where we were committing ourselves to yet further substantial calls on public resources in that area. Therefore, with regret, we came to the conclusion that there could be no question of pursuing that policy at this time. That deals with one point raised by the noble Earl, Lord Mansfield, and to some extent explains the position of Government so far as the recommendation of the Finer Committee is concerned.
A number of other points have been made. The noble Baroness, Lady Robson, raised the question of personal protection and domestic exclusion orders and, in particular, the question of the definition of "matrimonial home". Certainly we can look at this matter again before the Committee stage of the Bill, but the fact is that this term is used elsewhere on the Statute Book and, in particular, in the Matrimonial Homes Act. Therefore I think the most we should need is some cross-reference. I will gladly look at the matter again, but at the moment this term has been accepted and I do not think that in the past there has been a great deal of misunderstanding. Of course, if it is argued that there has been misunderstanding, we will look at the matter with pleasure.
Then the question was raised—by the noble Baroness and, I think, by the noble Earl, Lord Mansfield—of Clause 73 of the Bill, and in particular the people who should be permitted to be present in the court, whether the friends of people who might be appearing before the court should be there, or whether indeed members of the legal profession should be there as some form of training course. Certainly I do not in any way want to disparage the importance of the latter consideration, but I think we have to take into account the attitude of people who are having to reveal intimate details of their private lives, and I am by no means

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sure that it is unreasonable for us to say that we must limit this number fairly sharply. I will certainly take account of the point made by the noble Baroness; that is, that some people might want to have friends and members of their family present. But, of course, the court will have discretion in the matter; they will have a discretion in a matter of this kind, and I do not think in all the circumstances that is at all unreasonable.
Then the noble Baroness, Lady Macleod, and I think another noble Lord, raised the question of the panels. Certainly I will look at this point, but we have left this matter on one side for the rules, because we accept that there will have to be fairly detailed discussions with the Magistrates' Association on the way in which these rules will be drawn up. I think that is probably the most sensible way to proceed in this matter. I do not think it is necessary for everything to appear on the face of the Statute. Many matters of this kind can be left to the rules, and I think that is probably the best way to do it.
I have dealt with a number of matters which have been raised, and certainly I will consider the other points before we come to the Committee stage of this Bill. Certainly, this kind of measure, and indeed this particular measure, does not attract a great deal of attention either in the Press or elsewhere. Nevertheless, as has been said on all sides today, this is a Bill which will affect many tens or perhaps even hundreds of thousands of our fellow-citizens. It is, therefore, right for us to devote a considerable amount of our time and attention to this matter, because, if we get this measure right, it will, I hope, add very considerably to the welfare of many of our fellow-citizens.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

STATE SCHEME PREMIUMS (ACTUARIAL TABLES) REGULATIONS 1977
3.54 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL rose to move, That the draft State Scheme Premiums (Actuarial Tables) Regulations 1977, laid
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before the House on 15th December, be approved. The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. These regulations are concerned with the method of calculating certain State Scheme premiums payable under the Social Security Pensions Act 1975. The premiums involved are limited revaluation premiums, pensioners' rights premiums and the accrued rights premiums. The regulations would revoke the existing Actuarial Tables Regulations (Statutory Instrument No. 1217 of 1976) which I explained to your Lordships in some detail on 27th July 1976. At that time I gave a detailed explanation of the situations in which the various premiums are payable.
I do recognise that the existing regulations are indeed complicated, and I must confess that it has not proved possible to simplify the new draft. They are I think the most complicated that I have ever looked at, and I would not presume to stand before your Lordships and pretend to know them from A to Z. I think I might know them from A to B. Basically the complexity results from the requirement, which was recognised and incorporated in Section 46 of the Pensions Act 1975, that the premiums are intended actuarially to represent the cost to the State of taking over liabilities relinquished by pension schemes, and should have regard to the market value of stocks and equities prevailing at the time they are due, since pension schemes might well have to sell investments to pay the premiums.
It may help your Lordships if I explain the background to the requirement for the relationship of premiums to prices of stocks and shares. A contracting out application has to be accompanied by an actuarial certificate. That certificate covers the situation that would arise if the Scheme were to be wound up within a five-year period and states that the Scheme's resources would be sufficient to meet the priority liabilities. These priority liabilities include guaranteed minimum pensions and State scheme premiums, and clearly if there were no relationship between the amount of premiums and the current market value of investments it would be difficult for an actuary to certify that a Scheme's resources were sufficient.
The means of adjusting the premiums is through a factor employed in the calculation called the "market level indicator", which I think is reasonably clearly set out in the Instrument. In the existing regulations this is based in part on an index number applicable to 20-year Government stocks. When we were considering those regulations, which was last in July 1976, I explained to your Lordships that it was generally recognised that the index had shortcomings—I was quite frank in admitting that—and that a more suitable index, we hoped, was in the course of preparation. Nevertheless, it was decided to go ahead with the regulations so that employers and pension schemes would know approximately the amount of premiums they would have to pay. I explained that when the new index was available revised regulations would be required. The revision of the indices was completed by the Financial Times Actuaries Committee early in 1977, and from 17th May, 1977 a new set of indices began to be published in the Financial Times. Publication of the 20-year stock index was discontinued with the result that the existing regulations referred to a moribund index.
Following urgent discussions with the Government Actuary's Department, we prepared and circulated in August last a consultative document setting out our proposals for substituting new indices. The proposals were generally well received, and—I wish your Lordships to know this—comments by the pensions organisations were taken into account in preparing the regulations, the first draft of which was distributed to those organisations last November. The draft regulations which we are now considering, and which were laid before your Lordships' House on 15th December, 1977, were prepared in the light of comments received. On that basis, I would claim that there has been considerable consultation and that these regulations should in no way be contentious—at least I hope that they will not be.
As provided for in Section 46 of the Pensions Act 1975 they have been drafted after consultation with the Government Actuary. Section 46 is the section which requires the Government to consult with the Government Actuary in this matter. They use gross redemption yield figures, which your Lordships will find in
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Schedules 6 and 7, to enable the premium calculations to be made much in the way provided for in the existing regulations. I assure your Lordships that these regulations are essentially the same, except where amendments have been incorporated to accommodate the changed format and construction of the new yield indices. I therefore commend the regulations to your Lordships, having acknowledged that they are complicated and very technical. I beg to move that these regulations be approved.
Moved, That the draft State Scheme Premiums (Actuarial Tables) Regulations 1977, laid before the House on 15th December, be approved.—(Lord Wells-Pestell.)
4.1 p.m.
Lord LYELL: My Lords, the noble Lord, Lord Wells-Pestell, has been kind enough to admit that he gave us a very detailed explanation as to the previous set of actuarial tables in July 1976. I think the House will agree that he has done the same today. He has given a very detailed concise and, I believe, necessary explanation of these particular tables. First, I believe that the House will note the comments of the noble Lord, Lord Wells-Pestell. We are grateful for his kind comments on the Life Offices Association and the pension funds, with particular reference to the consultations that were held with these large institutions and the Government in drawing up the new tables.
As the noble Lord, Lord Wells-Pestell has said, it is a mere 18 months since he presented the regulations to us. However, he pointed out that we need a new set of regulations to take new circumstances into account. As he has said, these regulations are very much designed to assist the pension funds with all the information necessary to allow them to ascertain such liabilities when persons wish to contract back into the Sate scheme. However, I am afraid that I and, I am certain, the House are as baffled as we were in 1976 when examining the question of these complicated premiums, especially limited revaluation premiums, pensioner's rights premiums and the accrued rights premiums. The noble Lord, Lord Wells-Pestell, has gone a little way towards clarifying the operation of the premiums and what they mean. He has done much to help the

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House and certainly he has done much to help me, for which I am extremely grateful. I trust that I shall acquire greater knowledge of the various indices before very long.
However, there is one small question which I should like to raise in connection with these tables and it concerns the mix of equity to fixed interest investments. It clearly appears to be an average when the mix is declared to be 65 per cent. of equity and 35 per cent. of fixed interest. However, I wonder whether the noble Lord would not agree that the tables might be more comprehensive were they to take account of any possible variation in what one might term prudent investment, and particularly a prudent investment mix in what might be a very volatile investment market. Certainly, flexibility of investments is especially needed in the pension funds industry. Surely it would be wise to give the maximum flexibility to these funds, so ensuring that their liabilities reflect changing market conditions? I do not think that there is much between us on this point—at least I hope not. I wonder whether the noble Lord can give me a very brief answer, but probably we can settle the question later.
I know that the pension funds are very grateful for one particular point which has arisen in the actuarial tables and in the new indices: it is the ending of the completely open-ended commitment which was implicit in the 1976 regulations. Certainly, we on these Benches should like to thank the noble Lord, Lord Wells-Pestell, for his customary courtesy and, above all, his patience in explaining how these actuarial tables are meant to work and do work.
4.6 p.m.
Lord BANKS: My Lords, I should like briefly to add a word of thanks from these Benches to the noble Lord, Lord Wells-Pestell, for explaining on this and a previous occasion the exact nature of these regulations. The noble Lord has warned us that we must expect that, from time to time, the regulations setting out these premiums will be revised to take account of market conditions. As the noble Lord has said, this particular revision was forecast and has been the result of consultation with all those interested. The
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new set of tables, although extremely complicated, is not contentious and we therefore support their approval by the House.
4.7 p.m.
Lord WELLS-PESTELL: My Lords, I am grateful to both noble Lords for their support of these regulations. The noble Lord, Lord Lyell, raised two matters relating to what was really meant. The limited revaluation premium is payable when an employee leaves contracted out employment and his guaranteed minimum pension is preserved in his occupational pension scheme and revalued at the rate of 5 per cent. That is a brief explanation.
The accrued rights premium is to transfer the accrued guaranteed minimum pension of a contracted out employee to the State scheme, if his pension scheme ceases to be contracted out and if the Occupational Pensions Board does not approve arrangements for the guaranteed minimum pension to be preserved or transferred to another contracted out scheme. The pensioner's rights premium is payable in the same circumstances as an accrued rights premium, but in respect of a person who has already become entitled to receive a guaranteed minimum pension. As I have said, the existing regulations are complicated, but as the noble Lord, Lord Banks, has indicated that they are acceptable, I feel disposed to say that, if they meet with his approval, I have not very much to worry about.
The noble Lord, Lord Lyell, raised the question of what is called the mixߞ65: 35. The mix is according to market values in normal conditions and automatically takes account of different movements in values of equities and fixed interest securities. There were certain representations made as to whether it could not be 50: 50 or 60: 40, 70: 30 or 75: 25, but, looking at it from the Government Actuary's point of view, it is felt that a mix of 65: 35 will give us, shall I say, the security that we need over a very long term period. One must remember that a lot of pensioners these days live for a good many years after they have started their pension. Obviously, it must be seen that there is some sort of security of income. I hope that the noble Lord, Lord Lyell, is satisfied with that explanation.
On Question, Motion agreed to.

FOREIGN BOYCOTTS BILL [H.L.]
4.10 p.m.
Lord BYERS: My Lords, I beg to move that this Bill be now read a second time. The overall object of the Bill is to protect British individuals, companies and businesses from the direct and indirect consequences and pressures of foreign boycotts and the requests and conditions which are associated with them.
The Bill is supported by an all-Party Committee drawn from both Houses, comprising representatives of all the minority and majority Parties. Many people inside and outside Parliament feel that it is quite wrong that British companies should be told by foreign Governments whom they can employ and with whom they can work and trade. Although the Bill deals with boycotts in general and specifically excludes boycotts approved by Her Majesty's Government, it is, of course, from the Arab boycott of Israel that British firms are suffering most at the present time.
The ability of the Arab League boycott offices in Damascus and other Arab capitals to enforce compliance in Britain would be substantially reduced if this Bill becomes law. These Arab agencies demand that British firms comply with their boycott rules or go on their black-list. According to conservative estimates, over 1,000 British firms have been proscribed in this manner, some merely for failing to fill in boycott questionnaires or failing to provide Arab boycott offices with information about their companies, much of which they rightly regard as being confidential. Even British firms in their thousands which are not black-listed are subject to perpetual harassment. They are called on to complete forms and questionnaires, and an immense amount of time is wasted in studying and filling in documents which are regarded as totally unacceptable by chambers of commerce and industry throughout the civilised world.
The boycott is one of the main weapons in the economic war maintained by the Arab States against Israel. By insisting that British firms comply with the boycott, the Arabs have involved Britain in helping, no matter how reluctantly, in economic warfare against a friendly State and in a dispute in which Britain is not directly involved.
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It is little wonder that President Carter condemned this boycott as immoral. This is, indeed, a moral issue—an issue which I believe should commend itself to all right-thinking people, irrespective of Party. The United States has now passed anti-boycott legislation, and in drafting our Bill we followed this fairly closely. The widespread operation of the boycott in the United States can be gauged by the fact that 11,000 boycott demands were made of United States exporters in one six-month period alone from March to September, 1976; and that in 94 per cent. of these cases United States exporters had been coerced into compliance. During the six months ending 31st March 1977 the dollar value of transactions covered by boycott requests jumped from 1·5 billion dollars to 4·6 billion dollars. The Arab trade boycott, long considered to be a paper tiger, developed more power of coercion as a result of a vast increase of Arab petro-dollar wealth—hence the need for anti-boycott legislation.
The Canadian Government have made it clear that Canadian companies that comply with the boycott may lose all aid which is granted to exporting firms. In Germany the Government give strong backing to any German company under threat of boycott, blackmail or blacklisting—the Volkswagen case was the most classic. In France a tough anti-boycott law passed last July was unfortunately weakened by the executive action of the Government in exempting COFACE, the equivalent of our ECGD, but this is now being challenged in the Conseil d'Etat by French business interests.
The irony is that statistics show that countries which have resisted the boycott—Germany, the Netherlands, Denmark and, in particular, the United States—have clearly improved their position in the Arab markets; whereas France, until recently an accomplice of the boycott, made very moderate progress indeed.
I think that it is instructive to note what has happened to Arab-American trade since President Carter signed the anti-boycott law in June last year. Arab reprisals had been predicted by opponents of this law. In fact, there have been no such reprisals. United States trade with the Arab world continues to grow.

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United States influence in the Middle East continues unaffected by the legislation. That the Arabs even respect a courageous stance was shown in Britain when Barclays Bank refused to surrender to boycott pressure. In consequence Barclays was briefly blacklisted, then removed from the Arab blacklists, and now does useful business with both Israel and the Arab world, although I understand that while it was blacklisted it lost substantial business for a short time. One can only commend the tough action taken by Barclays at that time.
In dealing with Britain the Arab boycott offices thrive on the confusion which they create and the fear that they instil in British firms which, I am sorry to say, receive no real support from the Foreign Office or the Department of Trade, as firms do in the United States and in Germany. To some extent I think that that is due to a misunderstanding by members of our Government about the aims of the boycott. For instance, Mr. Clinton Davis, Parliamentary Under-Secretary at the Department of Trade, said in Tel Aviv on 8th January this year:
"We oppose and deplore the Arab boycott, but it is one thing to make our views clear and another to legislate to attempt to compel United Kingdom companies to trade in particular markets or with particular customers. Nor can we force them to forego valuable business elsewhere".
There is nothing in this Bill which would compel United Kingdom companies to trade in any particular market; nor is there in the United States legislation. Its objective—and the Government must understand this—is to protect British companies from boycott pressures where a boycott has no international or national sanction. That is why we believe that there must be legislation to protect those British companies which are not strong enough to stand up to the boycott.
A recent article published in The Economist said:
"The only way to protect companies from this Arab blackmail is by legislation. The British Government must come off the fence".
The policy of Her Majesty's Government has traditionally been to express abhorrence of boycotts, but to leave the decision on compliance to what they call:
"the commercial judgment of the British companies concerned";
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added to which, the Government Departments validate certificates of origin of goods vouched for by notaries public, and this gives far more offence than it is worth. In Holland the notaries public themselves see this as a moral issue and they will not validate these certificates. I believe that the case for legislation is overwhelming.
This Bill has been welcomed enthusiastically by a number of companies which have recently been blackmailed by the boycott. There are three degrees of boycott—primary, secondary and tertiary. A primary boycott is one where the Arab countries decide not to deal with Israel or with Israeli firms. That is entirely a matter for them. It is one aspect of their own war against Israel, and so be it. The primary boycott is not covered by this Bill.
The secondary boycott is where Arab contracts will not be given to foreign firms which trade with Israel or which have Jews—so-called Zionists—in their management or often on their staff. Certificates to this effect are often demanded by the Arab companies. Boycott pressure like that has caused loss of business and loss of jobs in Britain. For example, Britain lost a £3·5 million shipbuilding order to Norway in 1975 because 18 British shipbuilding yards declined to respond to an invitation from Israel to tender to build tugboats for the Israel Ports Authority. In 1976, the British construction industry declined to participate in a £150 million project to extend Haifa Port, again because of fears of contravening the Arab boycott.
The tertiary boycott is where Arab countries will not trade with foreign firms who do business with other foreign firms who trade with Israel. The secondary and tertiary boycotts are, in my view, totally insidious and are getting worse in their impact, as the Arab states flex their oil revenues. Metal Box is a company which was recently forced to withdraw from Israel under pressure from its United States and British customers, who in turn had come under Arab boycott pressure.
Further—and I find this extremely offensive—anti-Semitism is fostered by the boycott. For instance, a British secretary was offered a promotion by Gulf Oil. This was later withdrawn after she

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married a Jew. I am glad to say that, having sued under the Race Relations Act, she received quite considerable compensation. But that sort of thing should never happen. A British company, Mindacre Ltd., for example, asked an American firm whose products it hoped to sell, "Kindly confirm that your business is not owned by Jews or controlled by Jewish interests".
This Bill deals primarily with these secondary and tertiary aspects of the boycott. The main provisions of the Bill are, I hope, self-explanatory. Clause 1 states:
"'a foreign boycott' means any policy adopted by, or any action taken by, a foreign government"
or a foreign agency
"for the purpose of discriminating against any other nation or any other nation's citizens, or any religious, ethnic or political group in the course of trade or business".
It then defines:
"a foreign boycott request or condition",
and it defines what is meant by a "person". "Person" means,
"any individual, company, or the chief executive officer of any business organisation other than a company …".
Clause 2 states:
"It shall be an offence for any person whether by himself or by any person controlled by him to discriminate against or refuse to do business with any other person in furtherance of a foreign boycott or in response to a foreign boycott request or condition".
This clause also deals with the provision of information concerning people's religion, racial or national origin, business connections or membership of or connection with any organisation, if the information is required to further a foreign boycott. Quite often, people are asked to state categorically that they have not subscribed any money whatsoever to any organisation that has a Jewish or Israeli connection. The remainder of the clause deals with the processing of any letter of credit or shipping documents containing boycott conditions and, as I mentioned earlier, with the certificates of origin of goods.
Clause 3 makes it mandatory on another person who is requested to contravene the conditions of this Act to report it to the Secretary of State within 28 days. It places an obligation on the Secretary of State to compile a register of the information reported to him and then to publish it
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at quarterly intervals. There is one proviso, however; that is, that the Secretary of State may omit from publication any information that may be prejudicial to the interest of the State or the interests of persons affected thereby, and the penalty is provided.
Clause 4 makes certain that the Bill is not retrospective. Indeed, some notice would have to be given, as the Americans have done, before it came into operation, in order to allow businesses to make other arrangements. Clause 5 exempts boycotts declared to be in accordance with the policy of Her Majesty's Government. Clause 6, again, is a safeguard. It states that prosecutions cannot be brought under the Act without the consent of Her Majesty's Attorney-General.
Clause 7 provides that, where an individual or chief executive officer is convicted of an offence under this Act, he shall for a first offence be liable to a fine not exceeding £5,000 and for a second or subsequent offence to a fine not exceeding £10,000, or imprisonment for a period not exceeding two years, or both. Finally, in the case of a company convicted for a first offence, that company will be subject to a fine not exceeding £100,000, and in the case of a second or subsequent offence by the company, every officer or agent of the company who knowingly and wittingly permitted the offence will be liable to imprisonment for a period not exceeding two years.
I have no doubt that the critics of this measure—and there will be some—will claim that an anti-boycott law puts companies adhering to its provisions at a disadvantage compared with those who comply with the boycott. Professor Irwin Cotler of McGill University, who has done a lot of work on this, has, I think, completely rebutted this particular proposition. He says that,
"anti-boycott legislation in fact restores the fair competitive situation that was hitherto considered normal by forbidding all—
and I repeat "all"—
"firms from complying"
with it. He claims that there is no substitute for anti-boycott legislation. What is needed is to place the Arab boycott squarely outside the law. Business people, he says, need this kind of shield to protect them, and he adds, and I fully

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agree with him, that such shields should be internationalised.
I think it is interesting to note that American laws were already having an international impact before the Federal law was passed last year. From January of last year, in order to comply with the Californian anti-boycott law, European branches of the Bank of America and other banks based in California scrupulously rejected all letters of credit containing boycott conditions. This, however, was only a beginning. What is needed is the adoption of anti-boycott legislation, particularly in the industrialised countries of the West and particularly in all the countries of the EEC. This Bill is an attempt in Britain to pave the way for more comprehensive international action, particularly in the EEC.
There is little doubt that the boycott violates the non-discrimination Articles Numbers 85 and 86 of the Treaty of Rome and can in fact be met by the imposition of fines and other penalties under that Treaty. The boycott is a clear example of discrimination which breaches the General Agreement on Tariffs and Trade and violates Articles 2 of the United Nations Charter. That Article condemns the threat or use of force against any State, and that includes military, economic and any other form of coercion. I believe that it is high time that all parties in the United Kingdom should recognise the insidious nature of the blackmail and coercion of the boycott.
If your Lordships are good enough to give this Bill a Second Reading, as I hope you will, it is my intention to ask you to refer the Bill to a Select Committee. The reasons for this are twofold. First, it is clear that, even if the Government wished to give time for this Bill in another place—and, quite frankly, I do not think that they do—there is virtually no hope of getting it fitted into an already overcrowded legislative programme. As realists, we recognise that. Secondly, my colleagues and I on the all-Party Committee believe that a measure as important as this, and as new to British politics as this, should have its viability, practicality and effectiveness closely examined in the way that Select Committees of your Lordships' House are well equipped to achieve. Since this Bill
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may be taken as an example by other nations, particularly in Western Europe, it is important that all its provisions, and indeed its omissions, should be examined with the greatest care. The Companion to Standing Orders of your Lordships' House states that a Bill may be referred to a Select Committee when a more minute investigation or the hearing of evidence is required before coming to a decision. I believe that this is the right way to deal with this particular topic. I hope that the House will support the Motion that I shall move later, and that the House will give this Bill a Second Reading, I beg to move.
Moved, That the Bill be now read 2a—(Lord Byers.)
4.30 p.m.
Baroness ELLES: My Lords, the noble Lord, Lord Byers, has presented a Bill to the House which, on the face of it, is totally non-political, though he made it quite clear, openly and honestly, in his introductory speech that it is directed primarily against the Arab boycott. From these Benches we will try to keep the heat out of this issue and not discuss the Bill in particular terms as closely as he did.
Embargoes, boycotts and sanctions are not new phenomena among the practices restraining trade either at national or international level and economic coercion as an alternative to military strength has become a powerful weapon for political ends, regardless of their legitimacy. It is as well to remember that since the last war many countries have exerted and introduced boycotts against different target countries. To think of one obvious case, the United States boycott against Cuba, the Dominican Republic, China and the Soviet Union, either alone or in conjunction with other States within a regional organisation—in that particular case the Organisation of American States. The Organisation of African Unity similarly has imposed boycotts on individual target countries, among them Portugal and South Africa, and there are indications of other boycotting activities ahead of us.
Some boycotts imposed by a collection of foreign States will vary according to the efficiency, expediency or flexibility of individual States and the effects are sometimes,

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though not always, highly exaggerated and in fact counter-productive. I would draw the attention of Lord Byers to his remarks about the Central Boycott Office in Damascus when he said that it was their decision which decided whether countries were blacklisted. I quote from facts about the Arab trade boycott contained in the March 1976 issue of the Anglo-Israel Trade Journal, so nobody will suspect me of being partisan in this matter, where it was reported:
"Each regional office is, however, autonomous and acts independently, and the Central Office cannot impose its decisions upon the Member States of the Arab League".
This is not to make a Party point one way or the other; as I understand it, it is for individual States to decide themselves on the recommendations and the decisions do not in fact come from that Central Boycott Office.
The grounds on which boycotts are enforced also vary. The violation of human rights, now a guideline for State practice and conduct, may indeed be interpreted differently according to the power or pressures on a particular Government. To take one current example: in recent weeks Her Majesty's Government have withdrawn a contract from E1 Salvador on the grounds of violation of human rights, rightly or wrongly, and I do not make any comment on the justification of that action. On the other hand, only last night it was announced on television that we may be accepting a big shipbuilding contract to build ships for Vietnam. Anyone who has read The Times recently will know that human rights are not exactly respected in that country. I give this only as an example of where boycotts are introduced by Governments for certain reasons which are not necessarily agreed as Government policy in Parliament.
The need to introduce wide legislative measures to prohibit economic coercion, from whatever quarter it may come, should be realistically appraised, first as to their political repercussions, secondly as to their application in the courts, and thirdly as to their effects on the pattern of British trade. Considering that the noble Lord, Lord Byers, stated categorically that this Bill is directed against the Arab boycott, we should remember that the delicate situation in the Middle East, the search for a peaceful settlement
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of the different interests and demands and the consequences of failure to reach a negotiated settlement are far too serious to be ignored. One must ask whether the Bill will, by its effects, accrue to the overall benefit of the United Kingdom or its citizens—and I mean all its citizens, regardless of colour or creed—and I think the answer must be, No. The pressures exerted by some countries will be supplanted by pressures from other groups and the loser will be the British citizen engaged in trade and commerce. Any such measures would more likely lead to counter action by countries with which the United Kingdom has progressively developed good relations and would therefore be harmful rather than beneficial.
To consider the legal effects, let us for a moment turn to the United States where in recent months, as Lord Byers rightly said, legislation has been introduced to "counter discriminatory action coming from foreign boycotts". What has been referred to as a jungle of regulations has, after considerable debate, now been published, designed to govern the implementation of the Act, accompanied by the admission of the Government that their complexity will take several months to clarify. It should be added that since legislation against these boycotts is unenforceable against foreign countries in this country, any action that we take must be unilateral and applicable therefore only to our own companies or these which are carrying on trade in this country.
So far, except in certain cases, British companies and individuals have been free to choose with whom they trade; they have an absolute right already to refuse to co-operate with any aspect of a foreign boycott. Indeed, as Lord Byers said, many companies have already done so and they have earned the respect of other traders and the countries with which they trade. If businesses united and made a firm and robust stand against concerted foreign pressure, from whatever source and from whatever region of the world, there would be no ground whatever for even considering the introduction of this Bill today.
The legal effect of the Bill would be to turn all traders, agents and even those individuals whose task it is to issue certificates of origin into potential criminals. Its scope would be so wide that, as the Bill is at present drafted, nobody

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would know whether or not they were infringing it. Even a failure to report a request under Clause 2, regardless of whether that request was refused, would eventually incur penal sanctions. To impose a duty to inform of a request would be an intolerable and unreasonable imposition on the British commercial world, turning individuals into spies and informers as well as potential criminals.
In commercial terms, the operation of Clause 2 would in my view be unworkable. The United States Government also consider that it would be almost impossible to prove or disprove the intention of a company, and it is the word "intention" which bears the brunt of the difficulty:
"… which alters or, per contra, does not alter, its course of business whether in order to, or not, further a foreign boycott".
This would be a further fetter on the freedom of commercial firms to make a choice of market without any threat of prosecution. Clause 5 leaves the decision of Her Majesty's Government's policy to the Secretary of State. It is surely for Parliament to decide. As in the case of sanctions—I am thinking of the sanctions on Rhodesia—the necessary Parliamentary processes must be followed before any policy can take effect, it being subsequently for the courts to decide whether some particular restraint in trade is in accordance with existing domestic legislation or contrary to public policy. There are other obvious defects revealed in comparison with United States legislation. I could not in any way agree with the noble Lord, Lord Byers, when he said that his Bill was similar to the United States measure. The Bill refers to "any nation", whereas the United States measure makes it perfectly clear that it refers to a "friendly nation", a vital distinction. Political groups are included here as a ground for non-discrimination; they are not included in the United States measure. One could ask: any political group? Surely not if a fascist or anarchist group.
I raise these details simply to show that a great deal of work will have to be done on this Bill if it is ever to reach the Statute Book. Indeed, is there not enough legislation and collective and industrial action already in this country hampering the prosperous development
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of commerce and industry? We have sanctions, boycotts—indeed, we heard only the other day about blacklists of companies for exceeding the pay guidelines, not even statutory pay limits—localities boycotted by pressure groups, the deprivation of services and financial and fiscal restrictions, to name but a few of the measures imposed on the financial, industrial and commercial community of our country. The fact is that in any boycott the justice of their cause will be the motivation of those who seek to enforce it, just as it will be for those who seek to oppose a boycott. The one caught in the middle and who will suffer will undoubtedly be the British businessman on the success of whom, in trading relations with other countries, the economic prosperity of this country depends.
It should be recognised that the economic consequences for the United States would be comparatively negligible, and its retaliatory powers, of course, enormous. Can the economic strength of the United Kingdom be comparable? Surely not, regrettably. Any unilateral action taken by the United Kingdom would have little or no effect on the countries imposing the boycotts, but, regrettably, it would have a devastating effect on our own commerce. The additional burden caused by the Bill would inevitably lead to further unemployment through loss of markets, which would be a direct result if this Bill were ever to reach the Statute Book; and, indeed, there would be gain only for those countries which would only too willingly and readily take over our markets. This would seriously hamper the economic prospects of the British people, regardless of their origin, colour or creed. For a trading nation, indeed, I consider it to be a folly.
This is not by any means to say that no action should be taken. On the contrary, I must make it crystal clear from these Benches, first, that we support wholeheartedly the principle that there should be no discrimination on grounds of religion against anybody in this country. Indeed, as noble Lords will remember, my noble and learned friend Lord Hailsham made a dramatic plea for the inclusion of the grounds of religion in the Race Relations Act. I must say, personally, that I believe it regrettable that it was not included in that Bill. Nevertheless, this was the declared policy of our

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Party, and I do not hesitate to repeat it. Secondly, we strongly support those companies which resist pressures from third countries, and totally reject the right of any foreign Government to interfere in the domestic operation of our commercial and industrial activities. Foreign Governments should be firmly discouraged from applying pressures to British firms and individuals. Indeed, businessmen themselves can achieve considerable changes in the pattern of boycotting if they are willing to do so.
Three ways are open to us to achieve responses to foreign boycotts. The first is by diplomatic action, which, according to the United States Secretary of State, Mr. Vance, has already had beneficial results leading to more flexibility and modification. It has been said—and the noble Lord, Lord Byers, has confirmed this—that the Federal Republic of Germany has successfully countered foreign boycotts by taking a firm governmental line, at the same time protecting the assured markets for its companies—this without any legislation.
Secondly, the noble Lord, Lord Byers, has I believe rightly referred to the European Communities, which have been and are negotiating agreements with States in the Middle East. We have the opportunity, if our Ministers so decide, to benefit from our membership of the European Communities and to take advantage of it by using the available methods of consultation and co-operation. In this way we can continue, with other Member States, to contribute to the scientific and technological development of Middle East States. By no means should it be sought to impede or narrow this contribution. But we should not forget, whatever the view sometimes taken in this country of the European Communities, that respect for the European Communities outside Member States strengthens the view that multilateral action through the European Communities could be effective, and, at the same time, that such action would seek to ensure security and the safeguarding of the access of Member States to external markets for energy and commodity resources. In a world where trading operations have become so evidently interdependent—and how often have we heard that—unilateral measures are no longer effective;
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multilateral answers must be sought and found. Under the provisions of the GATT, to which, again, the noble Lord rightly referred, an opportunity is available for consultation on trading matters affecting States parties, which indeed include all the relevant States which have been referred to today.
It is also for international organisations to consider the possibility that the opportunity might be taken to lay down a code of conduct for business enterprises engaged in international trade. Till such a code or convention is elaborated, firm action on a multilateral basis is required. Consultation and co-operation are a better answer to boycotts than proposing heavy-handed unilateral legislation, detrimental to our economy and of benefit only to our commercial rivals in other countries. Indeed, a stronger economy in this country would enable us all the better to resist external pressures. A weakened economy, which might well be the result of this Bill, will leave us open to more pressures of every kind.
In conclusion, we on these Benches recognise the difficulties but do not think that the Bill will solve them. Indeed, like many solutions, I think it will create more problems. We are also not certain that the setting up of a Select Committee will be beneficial. We are suspicious that it will encourage divisiveness and produce utterances detrimental to all sides. Nevertheless, we appreciate that this is a subject which is of itself divisive and, recognising that strong feelings exist in this matter, we shall oppose neither the Bill nor the Motion from these Benches.
4.45 p.m.
Lord DENMAN: My Lords, in addressing your Lordships on this matter I must first declare two interests. I have for very many years been concerned with international trading in most parts of the world, including the Middle East. I also have the privilege to be a member of the Committee on Invisible Exports, which, in the City, is charged with overseeing and assisting our invisible earnings, to which I shall refer later. I hardly need remind your Lordships that our capacity to earn foreign exchange depends on the success of our exports, both visible and invisible. It is the duty of Governments

619
to facilitate both. This Bill will do diametrically the opposite, and therefore must be resisted. For the visible exporter, a whole series of new problems will beset him; but, perhaps most importantly, it may prevent his banker from doing his business, and therefore frustrate his exports. Fines, even imprisonment, await individuals who take an action which can be interpreted as a contravention of the proposed Act. This is bound to lead to a loss of confidence, a loss of endeavour and a loss of our vital earnings.
Other noble Lords, I know, will comment on the difficulties for our visible exporters, but I should like to dwell on our invisible earnings and give your Lordships one or two figures in support. It must be remembered that in this current year we are probably going to earn £15,000 million from our invisible exports. In contrast, our visible exports will be of the order of £26 million. This is an enormous proportion of our foreign exchange. I quote to demonstrate this, because the one essential of our invisible earnings is confidence—the confidence that the world has in us. With confidence goes freedom, and one of the priceless assets of our freedom is the elasticity which it provides to enable us to do our work. I think it would probably be fair to say that without any of these things we would never have had the Euro-dollar market in London—an earner which will last us for the rest of our lives.
I regard this Bill as a direct attack on this freedom, and therefore potentially highly damaging. What is needed for every invisible earner is maximum freedom of contract. I suggest that, as the noble Baroness, Lady Elles, has said, any further discussion on boycotts should be at the level of the Community of Europe. I cannot support a Bill which seems, without any dependence on motive, to place in jeopardy an action or a refusal to act by an individual or company which may be furthering a foreign boycott, and that boycott being someone else's discrimination against groups on grounds religious, ethnic or political. I regard it as totally wrong and highly damaging for Governments to attempt this task. I believe that what we have heard today is a very strong case for Governments to act, but not for Governments to land the responsibility on the business community.
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My last words to your Lordships would be that all noble Lords in this Chamber know very well the events of the last two months, in which there have been some very dramatic and surprising moves by leading politicians in the Middle East. I believe that this has created a more favourable opportunity than we have seen in the last 30 years towards a settlement, and I believe that this is being so effective that it is our duty to take every step we possibly can to say nothing to interfere or intervene. I believe that further discussion of this very important issue can have just that effect. I ask your Lordships to take this matter no further.
Lord WIGODER: My Lords, before the noble Lord sits down, could he inform us what the effect has been of the American anti-boycott legislation on American invisible exports?
Lord DENMAN: My Lords, I cannot answer that in detail. The Americans' invisible earnings are the largest in the world and we rank second. I do not believe that they have been in any way enhanced. My guess is that they will have been harmed.
4.50 p.m.
Lord SEGAL: My Lords, the House as a whole should feel greatly indebted to the noble Lord, Lord Byers, for introducing this Bill. Perhaps it is appropriate that it should fall to the Leader of the Liberal Party to sponsor such a Bill, for it was in the early years of the present century that the Liberal Party stood for the great principles of free trade and the freeing of restraints upon international trade, and it is fully in line with the great traditions of the Liberal Party. In replying, if I may, to two points raised by the noble Baroness, Lady Elles, she quoted, and rightly, previous other instances of a national boycott; but can she give to the House any instances of a boycott which is directed not against a government, or against a r½gime but against the very existence of a State itself?—because all the Arab countries which are joining in this boycott against Israel have refused to recognise the existence of Israel.
Baroness ELLES: My Lords, if I may be allowed to intervene, I am sure that the noble Lord will agree with me that the new situation in the Middle East

621
does not, in fact, accord with what he has said. The very presence of President Sadat in Jerusalem will counter that statement. I do not wish to be drawn into an Arab-Israeli discussion, for I do not think this is the right forum for it, but I do think that the presence of President Sadat in Jerusalem counters what the noble Lord has said.
Lord SEGAL: My Lords, by a typical instance of femine intuition, the noble Baroness has actually anticipated what I was going to say. May I also ask her whether she is aware, when she refers to the dangers of unilateral action, that both Houses of Congress have already taken action on similar lines? Surely this is not an instance of our taking unilateral action but rather, as the noble Lord, Lord Byers, has said, an instance of our being able to give a lead to Europe—which I always understood was one of the basic reasons for our having joined the European Communities in the first instance.
I have no hesitation whatever in giving my support to this Bill. I hope it will go well beyond the Second Reading and enlist not only the sympathy of our Government but also their active support. Whatever case the Government may have had, until recently, in accepting the existence of the notorious Arab blacklist against Israel, surely this case applies with very much less force today. We have now emerged as one of the major oil-producing countries and our Government ought to give not only a lead but a clear and emphatic directive to British firms that they should be quite free to trade with Israel without any restraint or fear of Arab reprisals.
Up to now, the Government have expressed their opposition to the Arab blacklist but have left it to the firms concerned to decide whether or not they trade with Israel at the risk of losing trade with their Arab customers. It is all very well for the Government to excuse themselves from giving a directive but perhaps they might remember the French proverb: "Qui s'excuse, s'accuse". How much better it would have been for our Government to give a lead now and to follow the example of the United States Government. This Bill does now give the Government such an opportunity; and, with our stronger economic position as an oil-producing
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country, all fair-minded people will hope that this Bill, after any necessary amendment in its later stages, will receive Government support.
Of course, we all fully realise the case that can be made out against this Bill: the loss of valuable trade which our country sorely needs. But our economy—and I will not at this stage be invidious enough to apportion the praise—is on the rise. The question we ought to ask ourselves is this: how far ought we to sacrifice our moral principles for a short-term, material gain in terms of expediency. As a friend once remarked to me when I was on a visit to an impoverished island in the Caribbean, "We may be poor, but surely we are not all that poor!" I submit that it would be a very valuable line for the Government to take, not only in order to fall in line with our American allies but to give a moral lead to Europe—and, after all, we have done this on many occasions in our past history—to assert their strength in upholding this country's great traditions in freeing trade and denying international blackmail.
There is, finally, another important aspect of this Arab boycott of Israel. I believe that many decent-minded Arabs are not at all proud about this boycott against Israel and that there are many who are anxious to end the state of war and to make peace with Israel who would be glad, indeed, to see the end of the boycott and who would welcome a firm stand by Britain in this matter. President Sadat, who has publicly invited a return of the Jews to Egypt, assured me as long ago as April of last year that on the day that Israel signed a treaty of peace with Egypt the Arab boycott would be lifted.
It is to be hoped that Britain today will set her face emphatically against the rejectionist Arab States and come out firmly in support of the forces of peace. Where firm action has been taken, as the noble Lord, Lord Byers, has already mentioned, by large industrial enterprises such as the Hilton and Sheraton Hotels, the Boeing Aircraft Company, the Ford Motor Company, IBM, Xerox, and the American General Electric Company, it has paid them handsome dividends and they continue to trade with both sides. It is the smaller firms that need today active Government support and today, fortunately, we are, indeed, as a country

623
able to act from a position of strength. May we hope now that our Government will deal firmly and unequivocally with this issue and give support to this Bill whatever amendment may be necessary through its later stages. I have no hesitation whatever in strongly supporting the Second Reading of this Bill.
5 p.m.
Viscount MONCK: My Lords, I must confess that this Bill fills me not only with dismay but with horror. It would appear that firms and individuals could suffer very heavy penalties for conforming to the policy of a foreign country over which neither they nor Her Majesty's Government have any control whatsoever. I am going to venture to give your Lordships a small instance from my own personal experience.
There is a firm which supplies a certain commodity—I am not going to mention any names at all—to a great many countries throughout the world. Among these countries there is a certain group in one part of the world, including one which I will refer to as "X". This firm supplied the lot. Then the other countries in that group, who had no love for "X", lost rather more love and said that anybody supplying "X" would not be admissible as a supplier to them. The firm had to make a decision. I can see what the moral decision could have been; but the fact is that the other countries needed far more in quantity—let alone value—than "X". In order to retain employment—because to have accepted "X" and to have been cut off from all the others would have undoubtedly meant unemployment—the firm, following that, never quoted to supply "X". They used to give a very plausible excuse, such as the terms "X" required for delivery were too quick for the firm to carry out. They gave an excuse, and there the matter ended.
As I said, I know that there is a moral side to it. But, against this, there was the question of loss of employment. I am afraid that I shall end by saying that I hope and pray that this Bill will never reach the Statute Book.
5.2 p.m.
Lord SELSDON: My Lords, I apologise as I may take a little more of your Lordships' time than previous speakers have. I do so because I feel that this is a particularly important issue, one which may have more far-reaching effects than many of your Lordships would believe. Essentially to me, there are two issues: a moral issue and a commercial issue. On moral grounds, I would join anybody who condemned any form of discrimination in the terms of a boycott against free trade. Furthermore, I go further and say that it has always been a principle of this country to support free trade anywhere in the world. Having said that, it would be stupid not to accept that over hundreds of years there have always been attempts by one nation, or minorities or majorities within a nation, to blackmail, arm twist or do things which might be undesirable in the interests of themselves and their trade.
The noble Lord, Lord Byers, disappointed me because he had no sooner started his speech than he turned round and said that this is a matter between the Arab world and Israel, and forgot the many other areas of the world where boycotts are applied from time to time and where human rights are threatened by one nation taking action against another. This can go to the extent of the Argentine with the Falkland Islands, North and South Vietnam and, as my noble friend Lady Elles mentioned, mainland China and Taiwan.
Lord BYERS: My Lords, if I may interrupt the noble Lord, he is in all those cases surely referring to the primary boycott, not the secondary or tertiary boycott. The primary boycott is not covered by this Bill.
Lord SELSDON: I take the noble Lord's point, my Lords. I was about to come on to the fact that, while it may appear on the surface that primary boycotts are not applied in those nations, the number of things that go on through the corridors of industrial and political power in relation to companies selling to these markets are, I understand, considerable. I have had personal experience of them in some of the countries that I have mentioned.

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Against that, however much one may moralise and condemn this, one is faced with something which is particularly important and significant. I should like to take a moment of your Lordships' time, speaking purely on commercial rather than moral grounds, to explain the situation as it now stands today. In this I speak as one of the deputy chairmen of the Committee of Middle East trade. I apologise for my noble friend Lord Limerick (who is currently chairman) in that I know he would have liked to speak. The points I make are therefore not totally my own, but we have obviously discussed this matter.
The Committee of Middle East Trade is a body which looks after all the COMET areas, as they are described; the Arab world, Israel, and certain other territories running as far as Afghanistan; although we are not sure whether Afghanistan comes in or out at the moment. Our role is to do what we can to assist the expansion of British trade in our areas. We come under BOTB from that point of view. Our members are made up of private sector interests right the way across the board, consultants, contractors, materials suppliers; a whole range of people who cover the spectrum of British industry. We have as representatives the CBI, the Middle East Association, Chambers of Commerce, ECGD, the Department of Trade and the Foreign Office. While at these meetings that we have had, and overall, we naturally condemn boycotts, and in particular this boycott, our role is that concerned with trade.
If I may give a few figures, so far as the Middle East is concerned, in 1977 our exports to Israel, which is within our area, were £274 million. Our exports to the Arab world were £2·7 billion. This is the magnitude of the problem which we are discussing when we start to dabble in areas which could adversely affect our trade. The noble Lord, Lord Byers, pointed out that the American situation did not adversely affect American trade. My advice is that that was not the case and it has been affected. This is a matter for discussion.
On the invisible exports side, I would point out that the large volume of American banks' invisible earnings do pass through London because there are currently more American banks in London
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than in New York. On sheer trade grounds, I am advised by COMET—and this obviously excludes the Government aspects of COMET because they could not be associated with this, and the noble Baroness, Lady Stedman, may have some comments on this—that such a Bill would be detrimental to our trade with the Middle East as a whole. More than that, I understand that it could be detrimental to other territories in the world that, for one reason or another, are linked with the Middle East.
In 1974 we had a £2 billion deficit with the Arab world. At the end of 1977 we just about broke even. If my own estimates are correct, I estimate a surplus of £500 million with the Arab world next year. This is a remarkable turn round, bearing in mind the increase in oil prices and everything else. Eight per cent. of all our trade now goes to the Arab world. I have been there myself and have been involved with organisations and the directors of companies that trade with all the countries of the Middle East. Personally, I have had very friendly and understanding talks with all sides in connection with this.
British companies which are on the blacklist seek help from those who are not. That form of informal co-operation is very considerable, and I hesitate to mention it in detail here. What is apparent is that any escalation into the emotional and political field of issues relating to the boycott will lose trade, even if that may not be in the interests of the purchasing country concerned. Further, I am led to believe that if we move towards a lasting settlement in the Middle East—and everyone in your Lordships' House would support this, and we welcome the initiatives that are being taken at the moment—these problems could gradually fade away.
There are many companies which, in the initial stages, when asked to complete questionnaires failed to fill them in and threw them in the wastepaper basket, or they never arrived, and then they found to their surprise that their trade was affected. There were problems of bureaucracy at the other end: people buying photocopying machines often from people who in theory were not allowed to sell them in the Arab world, copying everything and creating a tremendous bureaucratic muddle, until nobody knew what was blacklisted and what was not.

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In time there arose a thriving business: the black market for blacklisted goods. British Leyland cars were being sold at inflated prices throughout the Arab world via delivery in Geneva. Perhaps it might be more beneficial to the economy of British Leyland if they were still in that situation. There was the loading of ships in one port at Israel, moving to Italy, the rebagging of the commodity—fertilisers and phosphates—its transportation in another ship with the name changed, and its return. All the initiatives of the Mediterranean entrepreneur were brought in.
Against that background, one realises that a Bill like this would never be able to be enforced. But if it could be enforced, or if attempts were made to enforce it, then ways would be found to get over the problems of trading, because traders will trade. At the end of the day, no matter how many Governments try to step in the way, if people can sell their goods abroad for more than they cost them where they bought them, people will trade. I feel quite strongly on this issue that, if this issue is to escalate into the political area and the moral area, matters will be difficult. I should have preferred it if the noble Lord, Lord Byers, had put down a Motion to discuss, and I am sorry that even the right reverend Prelates are not here to comment on these issues.
The amount of discrimination which goes on among some territories, and within Arab territories themselves, is very considerable. We are aware that it is not necessarily a completely united area. But at the end of the day, if British exports, British balance of payments and British trade are all to suffer as a result of action by Her Majesty's Government, then I do not believe that Her Majesty's Government will wish to take such action. You see, my Lords, the Government's hands are tied. Whatever they do in issues like this must offend somebody, and must have an adverse effect. So that, speaking from as high on the Back Benches as I can get, I should like to guess what the Government's view might be if they were entitled or wished to put it forward.
I believe that in this case, and in everything to do with the boycott, Her Majesty's Government have given the maximum
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possible assistance to companies which have had to confront it. I personally—and I believe that the noble Lord, Lord Denman, would share this view—have nothing but praise for the Foreign Office, the Department, of Trade (CRE 5 in particular), the ECGD and others, who have recognised the problems of the boycott, for they historically have come across these problems again and again, particularly in the developing world. At the moment, I think that the view of the Government is absolutely right. Effectively, they say that the boycott does not exist, or they do not recognise it and therefore it does not exist. They do not wish to get involved. If they get involved, the Government will be played off, one side against the other. All the lobbies will come in with all the political problems and all the effects of votes. Furthermore, there are certain political commentators who would point out that the American boycott Bill or the French boycott Bill were introduced for political reasons, rather than for reasons of commerce or morality. Even in the French Bill, to which the noble Lord, Lord Byers, referred, COFACE were exempted, which was taken as a signal that all companies in France would be exempted if they got into difficulties. I have heard one interesting point advanced by those who have to visit and trade with the Arab world, that in many cases it would be infinitely preferable to stay in a British goal or pay a fine, rather than pay the hefty hotel bills and live in some of the squalor in those parts of the world.
The prospects for trade with Israel and with the Arab world are good, and they can continue to be good and to expand. As we move towards a settlement out there, one hopes to see increased involvement of Israeli trading expertise with many of the Arab world, and I understand that already people are looking for trading opportunities. One also hopes to see an increase in the level of exports from the United Kingdom to each of those Arab territories, and to Israel as well. Any step which introduces legislation which could affect this will be serious. It will be more serious not because of the legislation, but because of the way in which emotion and heat will be engendered and opinions aired, and this goes even for the appointment of a Select Committee. The one thing that I have never understood

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about the developing world is that it has an incredible jungle drum effect, and things happen even when there are no telephones or communications. Rumours fly around and action is often taken, based upon false information.
At the end of the day, I would not oppose the Second Reading of this Bill although I would not really support it either. I hope that the matter can be threshed out and discussed in some detail, and that, in the end, people recognise that if we do not push this Bill through our moral standards will in no way have fallen, but our commercial sense will remain as bright as it always has been. To the noble Lord, Lord Segal, I would quote the words of Voltaire:
"C'est mon opinion et je le partage".
5.14 p.m.
Lord SHINWELL: My Lords, it was not my intention to intervene in this debate, and I ask your Lordships to accept my apology for not putting my name down on the list of speakers. But it was only over the weekend that I discovered, by looking at the Order Paper, that this debate was to take place. I have been in various ways preoccupied lately, and that is my only excuse.
First, I wish not only to offer my congratulations to the noble Lord, Lord Byers, for initiating this debate, but to express my admiration of his courage in doing so, because there was obviously bound to be opposition. As to the nature of the opposition, if I dared to offer an opinion it would be regarded as political in character and that is not my intention. There is another reason why I have intervened. It is because I understand, to my regret, that my noble friend Lord Janner, whose name was on the list of speakers, is incapacitated and therefore unable to be present.
What we are discussing this afternoon is not the details of the proposed legislation, for the noble Lord, Lord Byers, was wise enough to make it clear that, on the assumption that this Bill was acceptable to your Lordships' House, it would not be passed automatically and without any restriction. It was to be referred to a Select Committee and, obviously, that Select Committee would enter into details; in particular, all those details referred
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to by the noble Baroness, Lady Elles, in her speech this afternoon.
What we are debating is a principle, a moral principle—one to which we must give every consideration. I recall an incident in another place many years ago, when a notable member of the Conservative Party, at a time when doubts existed as to whether we should embark on a military adventure at great risk to ourselves and to vast numbers of our people, declared from the Conservative side of the House that somebody should speak for England. He cared little or nothing about the risks, though they, too, must obviously have been in his mind. It was the late Leopold Amery. He spoke on the basis of a principle which is a tradition of our country and, in particular, a tradition associated with our business and commercial interests; namely, that it is the prerogative of all Governments, of whatever complexion, to protect business interests in the United Kingdom, and to resist every suggestion of blackmail and of intimidation, for whatever reason.
Of course, it would be another matter if there were to be a boycott by any other country against the United Kingdom, but that is not so. This is a boycott against another very small country, surrounded by enemies with, just now as it happens, the possibility of rapprochement and understanding leading to, we hope, permanent peace. That small country is surrounded by enemies, as I have said, and befriended by others—for example, to put it in the singular, by the Conservative Friends of Israel, an organisation established some time ago following the creation of a Labour organisation described as the Friends of Israel. So all Parties are united about this, and here may I include the Cross-Benches.
What do we mean by "the friends of Israel"? It means that we must take every possible step within our competence and capabilities to prevent the destruction of that small country, and that is what we shall be voting about if the noble Lord, Lord Byers, presses the Second Reading of his Bill to a Division. Let us not make any mistake about that, despite the eloquence of the noble Baroness, Lady Elles, and those who have supported her.
The noble Baroness said in the course of her remarkable speech—it was remarkable,

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with possibly many repercussions; I should not be in the least doubtful about that—that we cannot adopt unilateral measures; it would be another matter if we considered the question from a multilateral standpoint. I can deal with that point very readily. The noble Baroness meant that all of the countries of the Nine, and whoever cares to enter later into that combination, might come to a decision about the question. However, the noble Baroness knows only too well that there are certain members of the Nine, France in particular, who would not agree with the Bill initiated by the noble Lord, Lord Byers. This attitude has been demonstrated by that country's acts and by what has happened in recent years. Let us dismiss the idea of multilateral action; there is not the slightest possibility of it taking place.
Baroness ELLES: My Lords, would the noble Lord allow me to say that what I said was said in perfectly good faith. I do not consider that the noble Lord has the authority to question that. When I propose multilateral action I mean it, because I believe that the only way that this problem can be solved is through multilateral action within the European Community.
Lord SHINWELL: My Lords, I cannot accept what the noble Baroness believes. I am concerned about the facts of the situation. I need say no more about the French attitude; we all know about it. And this attitude applies undoubtedly elsewhere. Multilateral action is out of the question. We are considering whether we are going to take action here, in principle, which will afford unalloyed delight to the enemies of Israel. It is a fair point.
The Earl of ONSLOW: My Lords, if the noble Lord would be good enough to forgive me—
Lord SHINWELL: My Lords, perhaps I may be allowed to continue. I know the noble Earl's views. He has always been pro-Arab, so we can leave it at that. There is no point in the noble Earl interrupting me. In any case, I should not reply to him.
Several noble Lords: Order, order!
Lord SHINWELL: My Lords, I want to make this quite clear, however aggressive I may appear to be. If we understand each other, that is one thing; if we do not understand each other, it is another. But I understand the noble Earl. I have heard him much too often on this issue, and that can be that—I hope for good and for the future. May I come back to the point. We are considering whether we shall accept a concept that is associated with a high moral principle; namely, whether we are going to take action which will afford pleasure and delight to the enemies of Israel, or whether we are going to stand by a principle which is associated with our traditions. I hope that the noble Lord, Lord Byers, will press his Second Reading to a Division and I hope, further, that the friends of Israel on all sides of the House will support him so that not only the country but the whole world will know that we stand by principle.
I recognise the points made by the noble Lord, Lord Selsdon, the noble Viscount, Lord Monck, and the noble Baroness, Lady Elles. There are possible defects in this legislation which will have to be ironed out. I am all for that. Let us iron them out through a Select Committee, but let us stand by this principle.
I do not want to enter into a discussion of the disputations which are now taking place in the Middle East. I have doubts about the possibility of peace arising from President Sadat's advocacy and courage. Here I should like to say that I am satisfied that it is not in the mind of the noble Lord, Lord Byers, nor is it in mine, to do anything that will prevent the cultural, industrial, economic and social development of the Arabs in all parts of the world. The more we develop, the higher the culture, the higher the standard of civilisation, the better we shall like it. Such an idea is not in our minds, but we have to consider whether this country of ours, the United Kingdom Government and the friends of Israel in this Assembly are going to allow action to be taken which will lead to further aggression against the small country of Israel.
I do not believe that it is necessary for me to say much more. Indeed, it was not my intention to say anything at all. I said what I have said because I believe

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in what I am saying. I hope that the House will take the opportunity to refer this important topic to a Select Committee. Perhaps I may add a word regarding some of the arguments that have been adduced. If the boycott is removed, there are, of course, firms in this country which will lose certain contracts with Saudi Arabia. But it might be better in the long run if we gained something from the principle, even if we lost some of our trade.
There I leave the matter. I ask the House to support the understanding that the legislation, if passed, will go to a Select Committee so that all the details and defects can be ironed out. I ask the Members of your Lordships' House, the friends of Israel, to support the noble Lord, Lord Byers.
5.29 p.m.
The Earl of ONSLOW: My Lords, before the noble Lord sits down, would it be possible to ask him whether or not it is true that there could be two sets of morals? Certain people disagree with the settlement of Poles, Germans, Ukranians et cetera, in Palestine because they belong to a certain religion. The other point is this: does he not remember that the late Ernest Bevin said in another place that there are no honourable Arab Members of this House?
5.30 p.m.
Viscount SLIM: My Lords, I ask your indulgence for addressing you when I have not put my name on the Order Paper. I have been approached to say a few words as a businessman and as chairman of one of the committees of the London Chamber of Commerce and Industry. I have always wanted the honour of following the noble Lord, Lord Shinwell, in a debate. It is a rather frightening business to follow such eloquence and I hope the noble Lord will allow me to remind him of the affection and esteem in which my family has always held him, and particularly my father when my father worked for him, which he did with great pleasure.
I do not argue with the noble Lord, Lord Byers, about the intention of his Bill, but I should like to point out that we are an amazing race. If we can make things difficult for ourselves we do. There is enough bureaucracy, there are enough
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forms to fill in, there are enough laws at the moment, and trying to do business anywhere in the world is not easy. Some of us are not always successful, and, speaking personally, I feel that any further constraints laid upon the British businessman by such a law as the noble Lord proposes would really be as bad as the boycott itself. We businessmen require freedom. Of course we need help from our Government, from the noble Lord, Lord Selsdon, and the comments of the noble Lord, Lord Denman, and help from our own London Chamber of Commerce, but above all we want flexibility, room to move. If I read the noble Lord's Bill correctly, we see here that it refers not only to the Middle East but to any other boycott by which we are restrained, covered, pushed around. That will bounce off on us and red tape will multiply and our freedom of movement and action as businessmen will be curtailed even further.
With particular respect to the Arab boycott, my limited experience—and I travel a great deal in that area—is that, if there is a problem, there are certain bodies to which you can go, but there is nothing like an eyeball to eyeball with the Government or the company concerned in that distant country. It is a tough battle and it is one we businessmen are getting used to. I think mention has been made of the effect this is having on other countries which have passed legislation such as the noble Lord proposes. I do not pretend to be an expert, but the message that I get from the United States is that the Zionist lobby moved with such force that the legislation is now being questioned and that there is some doubt about employment in various areas. Indeed, the United States Government—and I am perfectly happy to stand corrected—are looking for mitigating circumstances that will alleviate some of the problems arising out of the very harsh measures which they have passed. From France, I am told that the Franco-Arab Chamber of Commerce says that the results of such legislation have been disastrous to Franco-Arab relationships and to general understanding. These are all bridges that can be mended, all things that different Governments can take action on.
So far as we are concerned, the international situation at the moment and the hopes we have in the Middle East make me

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sorry that the noble Lord should bring in his Bill at the present time. I think this is the time for the businessman to be on the scene and to make his judgment and his commercial decisions, and I do not feel that any Select Committee will help the situation. I do not feel that the Bill will help and I believe that out of a Select Committee will come a compromise, and more red tape for the businessman. I feel I cannot support the noble Lord, for whom I have nothing but respect and admiration, in such a Bill as he proposes.
Baroness WARD of NORTH TYNESIDE: My Lords, before the noble Viscount, having expressed the views that he has, sits down, may I ask him why the President of the CBI did not attend today to express the general view of businessmen and can I ask if he is aware that I entirely support what was said by the noble Lord, Lord Shinwell?
Viscount SLIM: My Lords, if I may answer the noble Baroness, I support what the noble Lord, Lord Shinwell, says about most things, but I have to speak, as we all do in this Chamber, of what I am thinking and of what my experience is. May I say to the noble Baroness that, to be quite honest, I am not a member of the CBI and I do not know what the President of the CBI does for a living?
5.37 p.m.
Baroness STEDMAN: My Lords, may I first of all apologise because the speed of previous business precluded me from hearing the opening sentence of the noble Lord, Lord Byers, when he was introducing the debate. Nevertheless, I have listened with very great interest to his speech introducing the Bill which is before us today. It has of course emerged very clearly that, although this Bill is concerned, as noble Viscount, Lord Slim, reminded us, with foreign boycotts generally, it is principally directed against the Arab boycott of Israel, and it is on this that the debate has concentrated almost exclusively.
The Arab boycott of Israel is a matter which arouses strong emotions. In the first place, it is related to the problem of peace in the Middle East. That is something which all of us want to see, not only for the benefit of all those, whatever their country or nationality,
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living in that area, but because peace in the Middle East is so important to the peace of the world. Strong emotions are also aroused by the general issue of economic boycotts. Many people see strong objections of principle against such boycotts, irrespective of the countries to which they are applied and the purposes which they are intended to serve.
The Government's attitude to the Arab boycott has been clearly stated on many occasions, and I am glad to have the opportunity to state it again. Her Majesty's Government are opposed to and deplore all trade boycotts other than those that are sanctioned by international support and authority. In accordance with that policy, the Government are always ready to meet and to offer advise in confidence to companies and individuals who meet problems in connection with the boycott. And, while being careful to avoid action which might be construed as recognition of the existence and validity of the Arab boycott, we are also willing to do all that we can to help in finding solutions. Over and above this, the Government does as much as it can to clear up misunderstandings about the boycott.
We pointed out for example, that the boycott does not apply to the export of goods other than war materials from this country to Israel. Indeed, many firms trade successfully with both Arab States and Israel and we give them every encouragement to do so. The Government's stand on the boycott is therefore clear, and we also take action in the ways I have indicated to try to mitigate its effects. The Government have consistently taken the view also that they have no intention of introducing legislation on this matter. It follows therefore that the Government are opposed to the Bill which is the subject of this debate. The reasons for the Government's attitude on this matter are as follows.
First, it is the Government's policy to assist, and not to impede, the efforts of our exporters in world markets. We want to see our exports grow to all countries, both to Israel and to the Arab States. I am glad to tell the House that they have done so. The value of our exports to Israel in 1977, as the noble Lord, Lord Selsdon, said, was £274 million, an increase of 10 per cent. in value over the figure for 1976 and 46 per

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cent. over the figure for 1973. In the Arab world there has been an exceptional growth in export opportunities over the past four years, for reasons which are well known, and British companies have taken full advantage of this. The value of our exports to Arab countries in 1977 is provisionally estimated at £2·7 billion, an increase in value of 32 per cent. compared with the figure for 1976 and an increase of 452 per cent. over the figure for 1973.
Over this period the importance of exports to the Arab States for our total export effort has been more than doubled. In 1973 the share of United Kingdom exports going to Arab markets was 4 per cent. In 1977 over 8 per cent. of United Kingdom exports went to Arab countries. In order to carry on their business our exporters have to comply with a whole range of import regulations and requirements imposed by various countries. However unwelcome some of these regulations and requirements may be, the Government have not felt it right to forbid our exporters to provide whatever documents or declarations are required to secure lawful access for their goods.
This principle has applied to the import regulations and other requirements of those countries which implement the Arab boycott of Israel. It has always been the Government's view that it is for individual companies to make their own commercial judgment about whether they should comply with these requirements. It is clear from the figures which I quoted earlier that many British companies evidently consider that it is in their commercial interest to comply with these requirements, however much they may dislike them. In making this judgment they no doubt take account of the interests not only of their shareholders but also of their employees. As the noble Viscount, Lord Monck, reminded us, there is no escaping the conclusion that tens of thousands, probably hundreds of thousands, of jobs in this country depend on the maintenance and growth of our exports to the Arab world.
The principle which lies behind this Bill is that companies should no longer be allowed to make this choice. It is proposed that we should make it an offence for companies to comply with these import regulations and other boycott requirements and thus deny them access
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to some of the most important markets for their goods. There are of course some who would argue that, on moral grounds, such companies, and their workers, should be compelled to make this sacrifice. The noble Lord, Lord Shinwell, has tried to take us to task on that. The question is however not simply whether the cost could be borne, but, equally important, whether such a sacrifice would have any effect in putting an end to the Arab boycott of Israel.
As the debate has shown, it is possible to make different judgments about that. Some noble Lords have placed much weight on the example of the legislation and regulations introduced recently in the United States, and have implied that the Arabs will be bound either to modify the boycott rules or to overlook them in the case of US firms. It would be rash to jump to such conclusions. The final regulations were issued only a few days ago and some will not take effect for some time yet. What we can say, however, is that, although the US legislation was passed in the early summer of 1977, there is no evidence whatever that its existence has caused Arab countries to contemplate getting rid of the boycott or to find some special way of releasing US companies from its provisions.
It is not for Her Majesty's Government to comment on the reasons which may have led the United States Government to introduce this legislation. I would however draw the attention of noble Lords to the fact that the circumstances of our two countries differ in two very major respects. First, the United Kingdom economy is much more dependent on exports than is the US economy; in 1976 US exports were only 10 per cent. of their GNP compared with more than twice as much—23 per cent.—for the United Kingdom. Secondly, as a market for exports, the Arab countries are significantly less important to the United States than they are to the United Kingdom.
My Lords, there are, in the Government's view, very strong general reasons why it would not be desirable to introduce legislation in the United Kingdom on this matter. In addition, there are some particular points about the Bill which is currently before the House which I would wish to draw to the attention of noble Lords. The justification for this legislation is said to be the protection of

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individuals, companies and businesses from the direct and indirect consequences and pressures of foreign boycotts. There is no way in which the passage of legislation will prevent these pressures and consequences from arising. Inquiries and requests for information will still be sent to companies. If they cannot respond to inquiries, the result may simply be that they are prevented from arguing their case or even from representing the true facts in a case involving mistaken or misleading information. Instead of removing pressures, therefore, the whole effect of the legislation could be to subject companies to two conflicting sets of pressure.
The Bill also seeks to prevent companies from refusing to do business with Israeli firms or United Kingdom firms on the boycott blacklist. It seeks to do this by the threat of criminal prosecution. It will be clear to noble Lords that this is a difficult field for legislation. It is, first of all, not easy to see how one could define the offence in question sufficiently precisely without catching at the same time other perfectly acceptable commercial decisions. The courts would be left with the task of distinguishing between the various motives and intentions which individuals and companies may have in refusing to do business with certain other companies.
There is also the question of the scope of the Bill. It is intended to apply to foreign boycotts generally, and not just to the Arab boycott of Israel. Noble Lords may be surprised to learn that something in the region of 90 countries operate boycotts against other States. Most of these are primary boycotts but some, like the US embargo of Cuba or the US strategic embargo of Eastern Europe and the USSR, have secondary features and can impinge upon the activities of companies and individuals in third countries. The consequences of bringing all existing boycotts within the ambit of the Bill are very difficult to assess. The noble Lord has sought to circumvent this difficulty in Clause 5 of the Bill, which provides that the Act shall not apply to boycotts declared by the Secretary of State to be in accordance with the policy of Her Majesty's Government. As I said earlier, the clear policy of the Government is to oppose and deplore all trade boycotts other than those that are
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sanctioned by international support and authority. It must therefore follow that, should legislation be passed in the form proposed, it could well have a wide application.
There are many points of detail about the Bill on which it would not be appropriate to comment in a Second Reading debate; for example, the breadth of the definitions, which would leave individuals and firms in a real state of uncertainty, and could mean that some people might find themselves in court for doing things which appeared quite reasonably to have no connection whatsoever with the Arab boycott of Israel. The real difficulties of detail in drawing up legislation on this subject are demonstrated by the United States experience. The Amendment to the United States Export Administration Act covering the boycott contained some five sections, but it has taken the United States Department of Commerce some 20 regulations and 250 examples to attempt to implement and clarify the position, and we have yet to see whether this attempt has been successful.
In the course of the debate, many aspects of the Arab boycott have been touched upon, and several, if not all, of them would fall to be considered by the Select Committee, if that is the wish of the House. But, before I sit down, I should like to refer very briefly to one or two points. The question has arisen of the certification of documents by the Foreign and Commonwealth Office. The practice of the Foreign and Commonwealth Office in certifying signatures on documents which have clauses related to the boycott has been criticised here and in another place. It was recently debated quite extensively in another place. I would make it clear yet again that the certification of signatures which is carried out in accordance with internationally recognised procedures cannot be regarded as endorsing the boycott or adding anything to the validity of the documents in question. The certification relates only to the signature of a notary or chamber official on the document in question and the Foreign and Commonwealth Office have no responsibility for the actual content of the document.
Then, the noble Baroness, Lady Elles, referred to the question of the Central Boycott Board and the fact that their decisions are not binding on all the

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countries. She is quite right. Some Arab countries, like Algeria, Morocco and Tunisia, do not even have a boycott office, and not all those Arab countries with a national office implement individual Central Boycott office decisions, particularly if it is not in their interests so to do. Neither do all the Arab countries insist on negative certificates of origin. On the other hand, some Arab countries, Iraq in particular, will refuse to deal with a firm even if it is only under investigation by the Central Boycott office. Therefore, it is quite common for firms to be blacklisted in one country and not another, and this adds considerably to the uncertainty of the boycott.
The noble Lord, Lord Byers, referred to the fact that the Netherlands, Denmark and Western Germany were standing up to the boycott. The Government are confident that the degree of assistance which they offer to United Kingdom firms is no less than that given by our European partners. We know of no instance where any of the Community States has given help which we should not be prepared to give to one of our own firms in like circumstances. We have increased our trade with Israel and have regained our place as Israel's second largest supplier, the United States being the first.
Then there were mild suggestions that the Arab boycott is illegal in international trade terms. Although GATT Article XI prohibits the introduction of restrictive or protective measures except under clearly defined circumstances, GATT Article XXI provides an exception for cases where measures are taken for the purposes of national security, and those Arab States which are members of GATT would almost certainly claim that this would cover the boycott. Then we were also questioned about Articles 85 and 86 of the Treaty of Rome and whether it was possible that the secondary effects might lead to a breach of the competition rules. I think this is most unlikely to occur. It must be remembered that the Articles in question concern restrictive agreements between undertakings and decisions by associations of undertakings only where they affect trade between Member States. So far as the EEC is concerned, we would, of course, be willing to take part in any discussion of the Arab boycott within the Community. But I would mention that the view of the
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Commission given recently in answer to a question in the European Assembly was that Community legislation in this field is not necessary.
If I may sum up, the attitude of Her Majesty's Government to this Bill is: first, we continue to oppose and deplore any trade boycott which lacks international support and authority; secondly, we are prepared to mitigate the effects of the boycott so far as we are able by assisting companies with particular problems and by clearing up general misunderstandings about the scope of the boycott; thirdly, we do not, however, intend to introduce legislation which would make it an offence for companies and individuals to comply with the boycott; fourthly, we consider that there are strong objections both of principle and of detail to the Bill which the noble Lord has brought before the House. The noble Lord has proposed that instead of proceeding directly to the next stage of the consideration of the Bill the House might wish to refer it to a Select Committee. The Government would not oppose this course if the House considered that this was an issue which could usefully be examined in this way.
5.56 p.m.
Lord BYERS: My Lords, I am grateful to the noble Baroness for having summed up the Government's view on this, although I must say I am extremely disappointed, because we do not seem to have made any progress whatsoever over many months on this matter. If I might start by referring to the speech of the noble Baroness, Lady Elles, I was surprised that she should in such strong terms, as the noble Lord, Lord Shinwell, said, appear to be defending the boycott. I think there will be some repercussions from this, although I must say that I was glad that as she developed her speech she seemed to be retreating and getting back to the freedom of trade. I agree with her on the need for a multinational approach to this problem. This is probably the only point on which I disagree with the noble Lord, Lord Shinwell.
Baroness ELLES: My Lords, I wonder whether the noble Lord would allow me to reiterate what I said very firmly towards the end of my speech; that is, we on these Benches reject totally the right of any foreign Government to interfere in the

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commercial domestic affairs of this country. I am not speaking specifically of the Arab or any other boycott; I am speaking of any foreign intervention by any foreign Government. I think our position is clear on this point.
Lord BYERS: My Lords, it was a great relief to me to hear that, after having listened to the opening remarks, which did worry me very much indeed. I do believe that if we are going to have multinational action we must at least have a draft of a Bill on which we can have the discussion in the EEC or with other nations. I believe we have to do this by sending this measure to a Select Committee. I have no doubt whatsoever that it will be in a changed form when it comes back. I hope it will be much improved. I want to see, as I think the noble Baroness does, a dialogue and a discussion going on in Europe and elsewhere to see how we can deal with the blackmail—there is no question about it—which is being exercised on British businesses from outside this country.
I should like to clear up one point. I think when the two noble Baronesses read Hansard tomorrow they will discover that what I said indicated that there is this Boycott Office in Damascus, but there are independent offices in some of the other States. I have checked my notes and I think I have got it right. I do think that this is a matter where we must emphasise, as the noble Lord, Lord Shinwell, did, the morality of the case being put forward. The noble Lord, Lord Denman, only advanced a case, in my view, for submitting to the boycott. I think this is the classic case which is put forward by all opponents of anti-boycott legislation. All these arguments were put forward in the American hearings, in the committee stages; they all came the same way. You may say America is a different kettle of fish, but the American experience is not bearing out the worries which these opponents of anti-boycott legislation sought to put forward in the evidence which they gave. I believe there is no case for complying with the boycott.
What worries me is this. The noble Baroness, Lady Elles, said there is a diplomatic way of dealing with these things, but our Government is not tough
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enough, and if you have not got a tough Government, in my view, you have to have legislation. If the noble Baroness, Lady Stedman, had said, "All right, we shall drop the validation of the certificates" that would have been a pretty tough stand. Instead of that, they hide behind saying, "We are not really validating the certificates: we are merely saying that it was the notary public who actually took the statement." Why do we do it? It gives grave offence to people in Israel and to a lot of businessmen who do not want to be bothered with going to the Government offices to get these certificates validated.
I find these certificates quite objectionable. I should have thought that the least the Government could have done tonight would be to say, "No, we agree. Let's drop the whole thing about the validation of certificates." They are weak. It is up to the commercial judgment of companies. It is no use the noble Baroness saying that the British Government give just as tough support to British enterprise as the West German Government give to theirs. The evidence is present. When Volkswagen came under threat, the West German Government moved in like a bulldozer and, in effect, said in Parliamentary language, "Stuff it".
The Government attitude has been stated on many occasions and the noble Baroness, Lady Stedman, has done so again tonight. I want to ensure that this remains as a political issue. One noble Lord said: "Don't let us escalate this into the political arena". It has been in the political arena for years. We must either have tough action by the Government to protect British companies or we must provide legislation which we can enact if we feel that that is the right thing to do. There is no question about it. We all want to see peace in the Middle East. Nobody would welcome it more than my friends on these Benches—we all want it. However, by sending this measure to a Select Committee, we shall now have time to get the matter discussed, looked at and minutely investigated, and to make sure that anything which is impractical or undesirable is eliminated from the Bill. That is what I believe we ought do do. Therefore, I hope that the Bill will be read a second time.
On Question, Bill read 2a.
Lord BYERS: My Lords, I beg to move that the Bill be referred to a Select Committee.
Moved, That the Bill be referred to a Select Committee.—(Lord Byers.)
On Question, Motion agreed to.