Lords Sitting of 11 July 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 Norwich

RHODESIA: SETTLEMENT NEGOTIATIONS
Lord BALFOUR of INCHRYE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will give some amplification of the words of the Minister of State, Foreign and Commonwealth Office, in this House on 26th June last (Official Report, col. 29),
"without the co-operation of the very substantial Rhodesian elements now outside the internal régime":
whether these words referred to elements within or without Rhodesia; and how the extent of opposition within the country can be assessed without the holding of free elections such as are proposed by the internal settlement leaders.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, in the remark quoted, I was referring to the desirability of involving all the parties, belonging both to the Patriotic Front and to the Salisbury régime, in direct talks for a negotiated settlement. The extent of popular support for each of these parties individually can only be judged in due course by free and fair elections, though I seriously doubt whether such elections can be held in the present climate within the country.
Lord BALFOUR of INCHRYE: My Lords, while thanking the Minister for his reply and the amplification of his
1430
words, may I ask him this: Does not the present policy of the Government contain a danger of losing the substance for the shadow? Is not the shadow the continuing illusion that the Patriotic Front leaders can be brought to the conference table with anything except their condition of a victory for a Marxist State in Rhodesia? Does not the substance mean greater support for those within Rhodesia who spurn warfare for political aims, who have admitted majority rule, and who have promised free elections? Is it not better to have a policy based on greater encouragement than has been given hitherto of those in the substance who have made efforts towards—
The LORD PRIVY SEAL (Lord Peart): My Lords, I hope that the noble Lord will understand that he ought to ask a direct question and not make speech.
Lord BALFOUR of INCHRYE: My Lords, I have no wish to abuse the Rules of the House, but I am putting forward the question in three forms. I could have done so in three supplementaries but I have done it in one. Is it not better to encourage the men in Rhodesia who have admitted the freedom of election rather than hang on to an illusion, which I am afraid will in the long run fail?
Lord GORONWY-ROBERTS: My Lords, I appreciate the noble Lord's concern that we should make progress to get everybody to the conference table. I should like once more to assure him and your Lordships' House that the Patriotic Front have in fact accepted the important principle of free and fair elections leading to independence, and have also indicated their readiness to attend talks with the Salisbury parties. The Salisbury parties for their part have given some indication of being ready to come to such a conference, although their vacillations have certainly been at least as strong as those of some of the members of the Patriotic Front. The Anglo-American mission is still in Southern Africa, and, without putting it too high, I think perceptible progress on those lines is being made.
Lord CARRINGTON: My Lords, for would the noble Lord not agree that the internal settlement has all the makings

1431
of a just settlement? It embodies the Five Principles, and though of course it is true that as yet the internal settlement and those running it have not carried out those principles, would it not be better for the Government to encourage internal settlement while at the same time seeking to associate others who are outside it?
Lord GORONWY-ROBERTS: My Lords, certainly we are doing everything that we can to encourage the Salisbury régime to give proof of their good intentions by coming unreservedly to a round table conference. If in addition to that they were now to implement some of the promises they made some months ago when they set up their régime, that would be a very great help indeed.
Lord WADE: My Lords, would the noble Lord agree that the practical point is the holding of free elections as soon as possible? It may be a great tragedy that they were not held long ago, but is there anything more that Her Majesty's Government can do to facilitate the holding of elections? That seems to be the vital step.
Lord GORONWY-ROBERTS: My Lords, I entirely agree that the nub of this issue is the holding of free and fair elections at which all parties will be tested as to their policies and, indeed, their good faith for the future. As to how much we can do to assist the present régime to hold meaningful and credible elections, I have very grave doubts. I hope it is within the recollection of the House that I have not been unduly critical of the efforts, wherever they have been made, to advance independence on proper lines, but I have very grave doubts indeed whether credible elections, elections that are seen to be fully participative, free and fair in the sight of everybody, can be held under the present régime. We will do everything we can of course to assist in a mutual régime agreed after a round table conference to go about its first task; namely, to prepare for such free and fair elections.
Lord BROCKWAY: My Lords, arising from the Minister's last reply, may I ask whether it is not inevitable that, if there is an election under the interim proposals, excluding the thousands of Zimbabweans
1432
who are outside, there would be a disastrous civil war? Has not Mr. John Davies on his return from Rhodesia said that the single most important point is that there should be an agreement on the lines which the Government have suggested?
Lord GORONWY-ROBERTS: My Lords, without being quite as certain as my noble friend as to the consequences of an ill-judged and improperly prepared election, I think there is a fair basis for what he has said. We all wish that this could be possible, but the situation in Rhodesia is such that I believe, without running the risk of misquoting Mr. Davies, he and others who have been there will at least agree that the circumstances and the climate now are not such that we can genuinely say we could organise free elections there. There is every chance that we could help to do that once there had been a round table conference at which all the parties had come together.
Lord SOMERS: My Lords, can the noble Lord quote any other case where an organisation such as the Patriotic Front, which has been responsible for guerrilla warfare and the deaths of thousands of innocent people, has been seriously considered as a political Party worthy of being brought to a conference table?
Lord GORONWY-ROBERTS: My Lords, I could give quite a few examples. I would only need to cross St. George's Channel, or, as we call it, the Celtic Sea and quote the eminent example of Mr. Eamon De Valera.
Lord BARNBY: My Lord, reverting to the first Answer given this afternoon and reverting also to the Minister's reply to a Question on the same date as discussion on the subject of today's Question, he said at column 27 of Hansard on 26th June:
"the possibility of a new departure is of course worth studying. I … undertake to bring the words …",
and so on. Is the Minister yet able to give any further information as regards the progress of negotiations? That is the first question. Secondly, having given the matter reconsideration, as he said in reply to a Question from the noble Baroness two weeks ago that there should

1433
be some British assistance for the elections, about which he has said a good deal today, is there nothing in progress that he has to report?
Lord GORONWY-ROBERTS: My Lords, I very much regret that I could not add to my Answer two weeks ago on the question of our being able constructively to assist the régime's proposals for elections. As to the progress of the negotiations—that is, of the inquiry and the talks held by the Anglo-American mission of Ambassador Low and Mr. Graham—as I said previously, without putting it too high I believe that perceptible progress is being made.
Lord PAGET of NORTHAMPTON: My Lords, is not the truth of the matter that Muzorewa wants—
Lord PEART: Order, please, my Lords. I thought I detected a sense of noble Lords wishing to proceed.
Lord PAGET of NORTHAMPTON: My Lords, I would agree with the noble Lord after I have put my question. Is not the truth of the matter that Muzorewa wants an election because he knows he will win it, and the Patriotic Front are determined to prevent having an election for exactly the same reason?

THE LAND FUND
2.48 p.m.
Baroness EMMET of AMBERLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are satisfied that the Land Fund is fulfilling the role it could play in saving our national heritage.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness BIRK): My Lords, current legislation provides only two uses for the National Land Fund: first, to pay for property accepted in lieu of tax and, secondly, to reimburse the cost of the acquisition of historic buildings by Government Departments. These two provisions have in the
1434
past contributed to the Government's efforts to help to preserve the national heritage. But, as the noble Baroness will be aware, the Expenditure Committee in another place has published a report on the National Land Fund and the heritage. The Government are considering its recommendations and criticisms, and will be responding to them.
Baroness EMMET of AMBERLEY: My Lords, while thanking the noble Baroness for that reply, may I draw her attention to pages 136–7 of the report of the Land Fund, where it says this:
"Some great national treasures have left the country and many great collections which should have been preserved intact have been broken up".
On the other page it says this:
"The reviewing committee believe that the combination of the capital transfer tax and the proposed annual wealth tax, in the form now suggested, will lead to a flood of sales which can only destroy the present system".
Perhaps the noble Baroness will realise that I am not asking for more money but for relief of taxation, in particular for the people who own these treasures and who are placed in an impossible position at the present moment.
Baroness BIRK: My Lords, this is something of which the Government and my colleagues in the Treasury are aware. I would say that is a different Question from the one which the noble Baroness is asking.
Lord ROBBINS: My Lords, is the noble Baroness aware that those of us who had the good fortune to be intimately connected with the late Lord Dalton are convinced that the interpretations which have since been placed on his ambitions by Ministers of both Parties represent a travesty of his intentions?
Baroness BIRK: My Lords, I would certainly agree that the way in which this has been implemented is very far from the intention of Lord Dalton. What happened was that his intention appeared in quite a different form in the Finance Act 1946. It is not only a question of going back through that history. It is because we want to conserve our heritage—which is what, I think, we are all in agreement about—that the Government are considering very seriously, and in depth, the recommendations of the sub-committee.
Lord REIGATE: My Lords, is it not a fact that there has been another committee set up by, I think, the noble Baroness, and which is chaired by the Treasury, which is considering this whole matter? Can we be assured that that report will be published, and can we know when it is likely to be before us?
Baroness BIRK: My Lords, I can certainly give no undertaking as to whether the report will be published or when, because that report is also being considered by the Government. As I think the noble Lord is aware, it is an inter-departmental committee report and, again, it depends on my colleagues deciding collectively what to do about it. But it is being looked at at the moment, in conjunction with the sub-committee's report.
Lord DAVIES of LEEK: My Lords, is my noble friend aware that some of us believe that the original intentions behind the National Land Fund are being thwarted? Also, can she say whether there will be an opportunity before the Recess to discuss this problem, because I am sure that from both sides of the House some constructive and valuable suggestions could be made about this Fund?
Baroness BIRK: My Lords, if I remember rightly, my noble friend raised the first part of his question when I was replying to the Question put by the noble Lord, Lord Sandys, a week or so ago. It is something which I have specifically passed on to my colleagues in the Treasury. But, of course, the question of discussing it depends on going through the usual channels in the House, though it may be wiser to wait for a Statement from the Government.
Lord GIBSON: My Lords, can the noble Baroness indicate whether the Government would allow the Fund to be used for endowment for maintenance purposes of historic buildings, instead of merely for annual maintenance grants as in the past?
Baroness BIRK: My Lords, this is one of the recommendations of the sub-committee and, again, I am afraid that I have to give the same reply, that this is under consideration with all the other recommendations.
Lord SANDYS: My Lords, will the Government at the same time consider very carefully the lessons which should have been learned from the Mentmore incident, in regard to the National Land Fund? Will the Government further consider the republication of the Gowers Report, which, the noble Baroness will recollect, was originally published about 1950, shortly after the Land Fund was brought into being?
Baroness BIRK: My Lords, to the best of my knowledge the Gowers Report is still obtainable. I do not think that it has to be republished. If there is any difficulty in getting it, I shall be grateful if the noble Lord will let me know. I am sorry, but I missed the first part of his question.
Lord SANDYS: My Lords, the Gowers Report is not available and I ask the Government to investigate the position, because it had to be reprinted in very small numbers about a year ago.
Lord SEGAL: My Lords, perhaps my noble friend will correct me on a point of accuracy. But is it not a regrettable fact that the late Mr. Hugh Dalton was not ennobled during his lifetime?

CPRS REVIEW OF OVERSEAS REPRESENTATION
2.55 p.m.
Lord BALLANTRAE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when their final decision will be made known concerning the recommendations made in the Review of Overseas Representation submitted by the Central Policy Review Staff in August 1977.
Lord GORONWY-ROBERTS: My Lords, it is the firm intention of the Government to publish their conclusions as soon as is practically possible.
Lord BALLANTRAE: My Lords, I thank the Minister for that illuminating reply, but may I ask him to comment on

1437
the fact that it is now 11 months since the review was published, eight months since he gave a welcome undertaking in this House that it would be commented on as soon as possible, and something like 18 months since the people in the three services concerned began to have reasonable fears about their future careers? Will the Minister also comment on the viewpoint that, while we all accept that the wheels of God grind slowly, that should not be taken by Government as a precedent for any Government action or inaction?
Lord GORONWY-ROBERTS: My Lords, it is, after all, a massive, wide-ranging report and we are hoping to come to decisions which will stand us in good stead for a considerable period to come. The noble Lord and others have rightly pointed out the uncertainty that arises on these occasions. We want to try to get it right this time, so that we do not have to pull the services up by the roots after a few years, but possibly create a system which will last for considerably longer than has proved to be the case after previous reports.
Lord CAMPBELL of CROY: My Lords, can the noble Lord not say more today, in order to reassure in the meantime those working in the British Council and the Overseas Information Services, especially in the United States, that they will not be dismissed before a final decision?
Lord GORONWY-ROBERTS: My Lords, I could not anticipate the terms of the White Paper. I can only repeat that it will be published, I hope quite soon, but certainly as soon as it is ready, and it is in a very far stage of preparation at the moment. I can certainly assure the noble Lord that the points he has raised have been given very considerable weight in the preparation of the White Paper.
Baroness VICKERS: My Lords, may I ask the noble Lord whether he realises that quite a lot of young people, men and women, are not opting to go into the Diplomatic Service or the Foreign Service, because they have no idea whether or not they will have a career? This is
1438
very unsettling for many who are now leaving the universities, and who would have liked to go into the services had they known what the future was to be.
Lord GORONWY-ROBERTS: Precisely, my Lords. I think that the noble Baroness joins the noble Lord, Lord Ballantrae, in the point that he made. It is time that we had a wide-ranging inquiry, which will result in a system which, subject to future internal adjustments—which, anywhere, are always being done—will stand us in good stead for a somewhat longer period than has proved to be the case in regard to previous inquiries.

CITIZEN BAND RADIO: PUBLIC AVAILABILITY
2.58 p.m.
Lord TANLAW: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will accept a recommendation of the National Electronics Council to improve public communications by allowing individuals access to the radio spectrum for A to B communication.
Lord WELLS-PESTELL: No, my Lords. We have given careful consideration to the report of the National Electronics Council on citizens band radio, but remain of the view that the advantages of introducing such a service would be outweighed by the disadvantages.
Lord TANLAW: My Lords, I thank the noble Lord the Minister for his reply. Has he conveniently overlooked the simple matter of physics, which is that the radio spectrum ignores all national boundaries and is governed only by the law of nature? If the noble Lord recognises this scientific fact, can he justify his reply, when there is no legal or constitutional basis for any nation State to claim a part or the whole of the magnetosphere, or to prevent an individual from having access to it? Will he then say why the United Kingdom is one of the few democracies outside the Communist

1439
bloc that has not allocated a frequency over which members of the public can communicate freely with one another? Finally, will he now confirm that it is still his Government's intention, as a matter of policy, not to provide the British public with a citizens band frequency?
Lord WELLS-PESTELL: My Lords, as I understand the position, it is the view of the Government not to provide citizens band radio for a whole variety of reasons, which, if I may say so with great respect, are far too many to go into at Question Time. The Government have taken advice and have looked at what has happened in other countries. There are many competing demands by the necessary users of radio, by mobile radio and by commercial industrial firms. There is also widespread evidence of abuse and misuse in countries that have this. Then there is the fact that it is almost impossible to effect control. If the noble Lord has read the issue of Radio Communication for July 1978, he will have seen that it includes an editorial from the March issue of Electronics Australia, in which these words appeared,
"Listen on the citizens band channels in almost any of our larger cities and you will discover what I mean by going on criticising it. You will hear everything from school kids swopping dirty yarns, to planning gang escapades, to prostitutes touting for business and, in the daily papers"—
it really is not funny, my Lords—
"stories of the abuse of citizens band radio are becoming more frequent. It seems possible that citizens band may even have played a key role in a recent murder".
The editorial goes on to say:
"In short, citizen band radio is becoming notorious, so much so that there is a growing backlash and many people are seriously suggesting that the authorities should reverse last year's decision and try to suppress it altogether".
America is experiencing this, and so also are other countries. We see no reason to introduce the possibility of that kind of thing here.
Lord TREFGARNE: My Lords, is the noble Lord aware that his answer will cause considerable disappointment? Is he further aware that it is possible to regulate the citizens band perfectly well and that this is done in many countries outside the United States, which I believe is the only country where there is unfettered use of the band? Is the noble Lord also
1440
aware that if a citizens band were to be introduced here it would bring forth a splendid industry to manufacture all the equipment for it, to the general advantage of all concerned?
Lord WELLS-PESTELL: My Lords, we would not accept what the noble Lord first said: that this can be controlled. It might be controlled in some measure but not in a satisfactory measure. I do not think one could argue—at least I hope we would not argue—that in order to produce an industry we should saddle ourselves with something that is very unacceptable.
Lord HAMNETT: My Lords, is the Minister aware of the conversational devastation caused in America on long-distance lorries by citizens radio?
Lord WELLS-PESTELL: My Lords, I could have given your Lordships a number of examples which would have justified the Government's action. I did not do so because this is merely a Question. However, I agree with what my noble friend has said.
Lord TANLAW: My Lords, is the noble Lord prepared to say that the examples which he gave do not take place over the telephone system?
Lord WELLS-PESTELL: My Lords, I do not think that the two are to be compared. I do not suggest that no improper conversations take place over telephones, but they take place between two people and are not necessarily heard by a large number of people.
Lord TORPHICHEN: My Lords, has the noble Lord considered the ill-effects on other alternative services of not allocating such a band? For instance, does the noble Lord think that it is wise that casual, would-be users of radio communications should be forced to use either the already overloaded Post Office radio telephone network or, worse, to misuse the amateur frequencies?
Lord WELLS-PESTELL: My Lords, I tried to make it perfectly clear at the beginning that the Government have to make a choice as to whether this is desirable or undesirable. They have studied very carefully citizens band radio

1441
in other countries and have come to the conclusion that the advantages are more than outweighed by the disadvantages.

IRON AND STEEL (AMENDMENT) BILL
3.4 p.m.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, I beg to move that this Bill be now read a second time. We come today to debate a Bill to raise the statutory limit on the amount of external finance which the British Steel Corporation and its wholly-owned subsidiaries can raise by borrowing. The Bill follows on the Government's White Paper British Steel Corporation: the Road to Viability, published in March 1978.
We need this Bill to carry out the Government's commitment to retain in Britain a substantial bulk steelmaking capacity to underpin our wider industrial strategy. We shall take all the steps that are sensible and appropriate to restore BSC to viability, but we shall do so in an orderly way. By this, I mean we shall avoid unnecessary disruption of the business, we shall pay full regard to the proper interests of customers and suppliers, and we shall reduce to the minimum the social hardships inevitably involved.
When the borrowing limit was increased in July of last year, my right honourable friend the Minister of State for Industry said in another place that the limit then fixed should carry the Corporation through until Spring 1979. At the beginning of April 1978, BSC's borrowings, counting against the limit, were £3,043·5 million; this amount, together with the estimated external financing requirement of £875 million in 1978–79, suggests that my right honourable friend's estimate was about right. As announced in the White Paper, we now need to carry the Corporation through until present uncertainties in the steel market have been overcome sufficiently to determine the precise size and nature of the reconstruction needed to produce a viable, long-term capital structure.
Noble Lords may ask when the capital reconstruction will be undertaken, and I
1442
cannot give them a firm timetable. We must wait until the present uncertainties are resolved, and we can be sure that the market has stabilised and is picking up. The extended borrowing powers we are discussing today are designed to cover BSC's needs for up to three years. We need only look across the Channel to see what would happen if the reconstruction were attempted prematurely. In France only a year ago a major reconstruction of the finances of the major steel companies took place. However, the continuing world-wide steel recession has undermined this effort and the French Government is now studying further measures that need to be taken. Reconstructions are now being planned in Belgium and Italy.
As explained in the White Paper, we intend to finance BSC by subscription of capital under Section 18(1) of the Iron and Steel Act 1975. The Government have no intention of writing off any of the capital subscribed from the beginning of this financial year. All the new capital subscribed under Section 18 as from 1st April this year will have to be properly remunerated by dividends once the reconstruction has taken place, although we do not expect any remuneration in advance of this, either in respect of advances under Section 18 now taking place or in respect of public dividend capital already on BSC's books. This is a realistic method of interim financing pending the reconstruction that we all recognise will be needed. At the present time, a substantial number of overseas steel companies are receiving finance in one form or another to tide them over the current crisis. Some companies in Europe and the USA are able to keep going only because their steel operations are subsidised by their other activities to an extent which is not open to BSC.
Given the depressed state of the steel market world-wide, your Lordships may wonder when the lean years will be over. I cannot predict that with any certainty. The pattern of trade in steel has been changing, and will continue to change to the disadvantage of traditional suppliers. The EEC's share of world steel production has fallen from 23 per cent. in 1969 to less than 19 per cent. in 1977, and the United States' share has come down from 22 per cent. to below 17 per cent. Increases

1443
in capacity in the developing countries and in Eastern Europe as well as Japan are resulting in severe over-capacity world-wide and intense import pressures. In the face of this, British Steel will be concentrating its efforts on improving quality and productivity.
To this end, apart from the completion of schemes already under way, investment will be directed to replacement, the balancing of primary and finishing facilities, quality improvement, cost reduction schemes and small schemes costing under £2 million. The major schemes at Ravens-craig and South Teesside will be completed at a total cost now estimated at nearly £1,000 million. These, together with the 11 meter blastfurnace at Llanwern, itself costing £100 million, will radically overhaul the Corporation's bulk iron and steel-making capabilities, more than covering likely demand until the mid-1980s.
Success with the Thrybergh bar mill and other developments in the Sheffield area is to be reinforced with continuous billet casting at Templeborough. Now that satisfactory commitments on manning have been given, the Corporation hopes to make an early start on the installation of continuous casting facilities at Port Talbot, subject to the financial evaluation of this project. This will make an important contribution to improving quality and retaining competitiveness in strip products, which is BSC's largest business area. Schemes under £2 million which are likely to cost over £350 million in the next two years, will play a particularly important part in cost reduction, in removing bottlenecks and in improving efficiency. The full responsibility within BSC for these schemes is now at divisional level, which means that the management of what is becoming a very important part of the investment programme has been decentralised.
The Corporation has provided a good deal of detailed information on investment plans in its booklet entitled Prospects for Steel, which was made available to those noble Lords with a particular interest in steel. The Corporation has gone to considerable lengths in this informative booklet to meet the needs of Parliament and I think we should be grateful to it for this. Sir Charles Villiers made another innovation this year by inviting noble Lords and those particularly
1444
concerned in another place with legislation on the iron and steel industry, to a special meeting to discuss BSC's annual report and accounts for 1977–78. That was done on publication day, 4th July.
The booklet Prospects for Steel stresses the need for capacity to move more into line with demand. Forecast levels of production up to 1982–83, ranging between 22·2 million and 16·1 million liquid tonnes, compared with a current effective manned capacity of about 22 million tonnes, plus another 5½ million coming on stream over the next few years, make it clear that there will be ample capability to meet any likely demand. Certainly new starts on building further capacity cannot now be justified. Neither BSC nor the country can afford to maintain surplus capacity in excess of reasonable expectations of future levels of demand, even in an upturn. It costs roughly £60 million a year to maintain 1 million tonnes of surplus capacity.
The Government's present view is that further rationalisation will be necessary in future, but the Government believe that this should be considered on a step-by-step approach which will retain flexibility to adapt to unexpected changes in the situation. The Government have agreed that the Corporation should seek to negotiate terms for the early closure of the high cost plants with the TUC steel committee and with the local work force concerned. Such consultations are not easy to carry through and require both the determination and goodwill of those concerned. The Government have made it clear to the Corporation that the negotiating procedures must be closely followed—there are no short cuts. But the British Steel Corporation must shed excess capacity in order to survive, and pressure to keep one works open can only increase the necessity of shutting another.
Your Lordships will be very much aware of the penalty which closures inflict on men who have developed their skills and shaped their lives to steel and who are situated in areas of high unemployment—unemployment which will be made worse by the steel closures. It is the aim of this Government to ensure that everything possible is done to provide alternative employment in the areas affected by steel-making closures. As such closures take

1445
place, we will bring forward measures designed to alleviate the local effects on employment, as we have now done in the cases of Hartlepool, Cardiff and Ebbw Vale. The temporary loss of rate income by local authorities seriously affected by closures will be taken into account. This will be compensated for by the extra resources element when the lower rateable value figures are used in the rate support grant calculations. There has been a certain amount of criticism of the level of redundancy payments offered to steel workers faced with losing their jobs. These settlements are in the Corporation's financial interest and reflect the very special problems of the steel closure areas.
Changes to the Corporation's fixed assets by the closure of obsolete plant and by re-equipment are only part of the picture. The Government are determined to see BSC restored to lasting viability, for which the achievement of competitive cost levels through improved performance is absolutely vital. We have declared our full, sustained and public support for BSC in its efforts, including the steps needed to achieve improved productivity through reduction in manning levels, more modern working practices and better use of raw materials and energy. The Corporation has set out in Prospects for Steel the actions it is taking in these areas. We place the greatest importance on progress through negotiated productivity agreements, which must bring an adequate return to the Corporation as well as to the workers concerned, and the sustained smooth operation of plant without interruption for either technical or industrial relations reasons. We expect total commitment by everyone in the Corporation workforce and management, to the objective of restored viability and its achievement.
We want the Corporation to be an efficient and fully competitive producer, but it has to be able to secure the revenues to sustain its operations. Customers need steel at competitive prices, but these prices must be realistic. It is in this context that we have been actively supporting the measures being taken by the EEC Commission to deal with the problems of large volumes of low-priced imports through agreements with supplying countries, and by setting minimum price levels within the Community for
1446
major categories of steel products covered by the Treaty of Paris. We are also encouraging the Commission to take full account of users' interests and to deal with any special problems with which particular groups of users are faced.
The step-by-step approach which the Corporation has adopted for dealing with its problems means that it must first of all concentrate on the policies to be followed and actions to be taken during the financial year 1978–79. The Corporation has projected, on certain stated assumptions, a loss of about £400 million for the year. Since Prospects for Steel was issued, Sir Charles Villiers has said:
"Nothing has got better and one or two assumptions connected with the market look to have got worse".
Nevertheless, management action is needed in close consultation with the TUC steel committee and local workforces to improve on the projected loss in every possible way. It is unacceptable for a nationalised industry to make losses of this magnitude, even though conditions are difficult and international competition is intense. The Government will be carefully monitoring the Corporation's performance and results as they come in. We expect a substantial improvement over the year resulting from action by management and unions. We believe such progress to be desirable if a rate of break-even is to be achieved by March 1980.
To turn more closely to the Bill, the immediate £750 million increase in the borrowing limit which is provided for in this Bill is required principally to finance a capital investment programme now proposed at £500 million for 1979–80 and—based on some recovery in steel demand—a substantial increase in working capital estimated at about £300 million in the same year. If a further increase is required later on, this will fall to be considered in another place under the terms of the Bill. The actual borrowings of the Corporation will be regulated by the annual system of cash limits and Section 18 advances will be made out of voted money. The great bulk of BSC's financial requirements will be met from this source. The Corporation will continue to make partly guaranteed and partly unguaranteed short-term borrowings for working capital purposes, which are subject to a current overall limit of

1447
£325 million. My Lords, in conclusion, the Bill is essential to provide a firm financial basis for the British Steel Corporation in the face of the exceptional uncertainties of the world market. We are determined to secure the future of the Corporation, and, to this end, I move that the Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Lord McCluskey.)
3.20 p.m.
Viscount LONG: My Lords, first, may I thank the noble and learned Lord for the kind way in which he explained these new loans provided for in the Iron and Steel (Amendment) Bill. I can assure him and others of your Lordships that I do not feel the slightest bit happy at having to agree to it or in knowing that the steel industry is in such a terrible state at the moment. But I will try my best to sound happy even if I am not. Of course, if any of your Lordships have seen what is written in the Bill your minds must be quite boggled with the enormous amount of money that is now having to be put up to save the steel industry as a whole. The fact remains that, unless we do it now, the whole of industry, not just the iron and steel industry, could possibly collapse, because all our industry bases its materials and its workings on the steel industry. So we are really virtually committed before we start.
I was interested to read in the Explanatory Memorandum to the Bill that:
"Borrowings by the Corporation against the statutory limit at 1st April 1978 are estimated to be £3,070 million and it is expected that the increased limits … will cover the Corporation's financing needs for about another three years".
And yet I have been listening to the noble and learned Lord with a great many doubts in his mind as to what the future really holds. I wonder, therefore, whether the Government have really done their sums right. I wonder whether three years is a safe period to deal with even in the Memorandum, and whether we should be looking much further ahead. I will try to show some of the problems, and your Lordships might well think that three years is definitely not the timing.
Before I go any further, I think it is justifiable to pay a tribute to the Iron and Steel Corporation, even though it has had difficulties. We have employed some
1448
of the finest craftsmen in the world in the iron and steel industry, and many of those men have gone abroad and taught other nations how to produce iron and steel and run foundries. Therefore, the industry have been extremely lucky with manpower. Equally they have always been able to produce a high quality steel, which up to the present has always been in great demand throughout the world. And, thirdly, they have always been a proud industry. The industry employs something like 168,000 people, and during this debate we might well ponder in our minds that some of these people might be in trouble during the reorganisation of the steel industry.
Last year—that is, to 1st April 1978—the industry made a loss of over £400 million. The annual report stated certain reasons why and how some of this deficit was incurred. I should like to describe a few of them now. The first reason stated in the report—this is one of the many problems—is the growing world surplus of steel capacity, leading to highly competitive conditions and a continuing high level of imports into the domestic market; second, an extremely low level of operation during the year, with high losses because of under-utilisation of capacity; third, continuation of a high cost base with too much old and overmanned plant; fourth, weaker selling prices arising from low demand, and yet steadily rising costs as a result of inflation; fifth, an interest charge of no less than £197 million, much of it for plant still under construction; sixth, some costly industrial disputes. My Lords, those are what the report explains as the deficiencies and problems.
I wonder whether we cannot add one or two more to the difficulties that the industry has had to bear. I wonder whether the Government should not have stepped in sooner. There has been the difficulty the industry has had with all the leaks that have come about, the Press reports. Those in themselves demoralise those who are trying to run the industry. Of course, the Government have found themselves falling between the two stools of ordering the industry immediately to reorganise itself, or leaving it and going for the Election without creating any problems within the industry or within the unions. They have partly gone one way—that is, making the industry reorganise itself—but not, I believe, fast

1449
enough. I would also say that not only would this present Government, when in power, be faced with the problem of the steel industry; any other Government would also have to act in the same conditions. A collapse of the steel industry, as I said just now, would certainly bring chaos to the whole of industry throughout this country. So any Government would have responsibility for keeping the industry going. The Government must act and act now to make sure of continuing progress for the future of the steel industry.
After losing £450 million last year it is claimed in the report that next year will see the Corporation breaking even. I am not at all certain about that; I am extremely doubtful. Time is almost running out. I see the Minister hoping for the best, that things will improve. I almost see him at the table with cherry stones on the plate in front of him, saying, "This year, next year, some time, never". I can see the problems he has there. Nevertheless, he has moved slightly forward in trying to get the steel industry to reorganise itself. In spite of that loss we still have construction schemes going ahead. There are two major schemes of £1,000 million each: one at Ravenscraig and the other at South Teesside. I believe the Minister in the other place, when debating this Bill, mentioned yet another plant that will have to be reorganised. I cannot mention it because I believe he withdrew, but there is doubt about that other plant.
Notwithstanding the cost of all these constructions and reorganisations that are bound to come about, we are faced with yet another problem, which is competition from the outside world. In past years we have been selling steel plants and expertise to other countries in the Third World—for example, to the smaller countries of Korea and Thailand. Now they can produce cheaper steel than we can simply because they have cheaper labour. Therefore, the Steel Corporation of the United Kingdom is faced with vast competition. It says in the Bill that these loans might help the Corporation's needs for finance over the next three years, but I still doubt whether three years is anywhere near the mark.
My remarks have been somewhat depressing, but I said at the outset that
1450
I was not happy and that I could not find any optimism. However, there must be something that we can do. I think that the Government must ensure that the Steel Corporation reorganises itself now and not just when it is given the money. It must go ahead and deal with the situation as soon as possible. I am aware that that will hurt some people and that the reorganisation of plant will probably mean a loss of jobs. That is the agony of the situation. I made reference just now to the over-manning of plant which must keep the costs up. Therefore, someone who is affected will, unfortunately, either have to go into a new factory or be rehabilitated somewhere in a different industry.
If these loans are used correctly and the Government and the Steel Corporation get down to the reorganisation, I believe that in a few years' time we shall probably witness—I certainly hope that I shall do so because I do not like to sound depressing as regards such an important industry—a new light coming through the tunnel; that the industry will begin to make its way with progress and profitability; that those who are employed in it will be happy, and that it will go from strength to strength.
Lord ROCHESTER: My Lords, before the noble and learned Lord replies to the debate I should like, with the leave of the House, to ask him one question which arises out of what he was saying regarding redundancy payments. Are the Government satisfied that the level of redundancy payments now being made in the steel industry will not prove excessively high in relation to similar payments that can be made in industries that are not subsidised by the taxpayer?
3.32 p.m.
Lord McCLUSKEY: My Lords, in replying to what has been said I should first like to thank the noble Viscount, Lord Long, for his generosity in acknowledging publicly the necessity for the Bill. That comes from him with good grace because I know that in another place the Bill was, of course, more severely criticised at this particular stage. However, now that it has arrived here I think that it is very fair of the noble Viscount to acknowledge its necessity and, indeed, to acknowledge that any Government, whatever its political

1451
complexion, would have to act upon the same conditions and face the same kind of problems and, at least in the short term, would have to approach the problem in very much the same way.
The noble Viscount suggested to me that perhaps the period which was taken into account in the Bill—the period of three years—might be too short. There are a number of points that I should seek to make in reply to that suggestion. In previous years, the British Steel Corporation has provided five-year cash flow forecasts annually on a roll-forward basis as part of its medium term plan. However, with the present uncertainties over steel, little reliability can be attached to forecasts so far ahead, so the Department is not currently looking at such forecasts. If your Lordships look at Prospects for Steel, you will see that there the British Steel Corporation indicated that realistic general indications of the financial outlook could hardly be provided for more than two years ahead—indeed, the Bill looks at such a period. When uncertainties have been sufficiently overcome for the Government to consider the precise size and nature of the reconstruction needed to produce a viable, long term capital structure for the Corporation, we shall have to look at a five year horizon and further ahead if possible. But there is no point in undertaking a reconstruction until we can be reasonably sure that it will be successful—I return to the point of the example of what happened so recently in France.
Indeed, if one goes back to 1973, at that particular time long term strategic plans were drawn up for the British Steel industry and they were very much falsified by events which were, quite naturally, not foreseen at that time. So, at present, one sees a relatively short term ahead and it is unwise, in the Government's view, to attempt to plan for any longer period than that envisaged by the Bill. It is hoped that within that period we can embark upon the necessary reconstruction—I say "necessary" because everyone is agreed that it is necessary.
The noble Viscount criticised the Government. He suggested that they should have stepped in sooner. Of course, the Government have been monitoring very closely and taking a very close interest in the steel industry for a number
1452
of years, and one would acknowledge that not all initiatives have, in fact, been successful. But your Lordships will recall the Beswick Plan and the publication of the White Paper earlier, and this Bill really follows upon that White Paper. Had the Government stepped in earlier the climate would have been no more certain, and it was not necessary to step in in these terms until the present time.
With regard to the leaks which the noble Viscount mentioned, no doubt there have been some leaks, but I do not think that these affect the substantial factors that have an effect upon demand for steel, the capacity to produce it and the long term problems of the industry. He also suggested that the Government ought to step in, as it were, now and that the reorganisation ought to proceed now. I can only revert to what I said when replying earlier to what the noble Viscount said—namely, that, in fact, the Government are endeavouring to face the difficulties in an uncertain climate and it would be wrong to attempt prematurely to reconstruct the industry.
The noble Lord, Lord Rochester, asked me a question about the level of redundancy payments Of course, one does find different levels of redundancy payment in different situations. There are the payments which are made normally under the Acts, and your Lordships have recently considered as regards shipbuilding other schemes for redundancy payment. Indeed, schemes have now been put forward and no doubt your Lordships will consider them in the reasonably near future.
It is very difficult to say that a particular scheme sets a precedent which others may not seek to follow. Plainly, they will attempt to do so. However, what the Government attempt to do and what the nationalised employers attempt to do in this kind of situation is to look particularly at the local conditions; at the earnings of those in the industry; at the prospects for the industry itself in that area; at the prospects for employment in the same area, and tragically it so happens that in, for example, shipbuilding and steel-making the redundancies tend to occur in the very areas where the prospects of re-employment are not good. So, the Government endeavour to look at each case on its merits and so do the nationalised employers.

1453
I do not think that I can go further in answer to the noble Lord, Lord Rochester, than to say that it is to be hoped that, if one faces such large scale redundancies in areas which are already affected by substantial and unduly high unemployment, each case will be considered upon its proper merits.
I should like to return to some words of the noble Viscount, Lord Long, who said that intervention by the Government may hurt some people. Of course, it will inevitably hurt some people. But people are only prepared to be hurt to a certain degree and ultimately, if the Government attempt to ride roughshod over the interests of the workforce—some even with assistance perhaps from national trade union leaders—such attempts will simply not succeed. Accordingly, one must proceed with the assistance, advice and co-operation of the local work force as well as the national trade union leaders. So, it is not a question of hurting people, but of recognising that in this kind of situation people are bound to be hurt. The Government's responsibility, like that of the Corporation, is to endeavour to ensure that that hurt is eased as much as possible. I hope that in the light of that the redundancy payments which have been made here will not be seen to be undue.
On Question, Bill read 2a; Committee negatived.

HOUSE OF COMMONS (ADMINISTRATION) BILL
3.40 p.m.
Lord PEART: My Lords, I beg to move that this Bill be now read a second time. I shall not take long over this as it is a matter for another place, but I thought that I would explain, quickly and shortly, what the Bill does.
The general purpose of the measure before us is to establish a new statutory framework for the staffing and administrative arrangements of the other place. The new House of Commons Commission, which it would establish, will supersede the present Commission established under the 1812 House of Commons Offices Act. Under the chairmanship of the Speaker the Commission is to become the single
1454
statutory employer of staff in the Departments of the House of Commons. Within the enabling provisions of the Bill, an administrative framework will be established for the development of a unified House of Commons Service.
The Bill follows recommendations made in 1975 by a Speaker's Committee under the chairmanship of Mr. Arthur Bottomley. This Committee had been asked to examine the recommendations made by Sir Edmund Compton for the reorganisation of the structure of the services and Departments of the House. It had been felt that there was a need to bring the several Departments together into a more unified structure, and so to provide the means for a more co-ordinated and flexible staffing policy. The legislation has been confined to the minimum necessary to establish the new Commission, and to enable it to consider the more detailed proposals made in the report.
I should like to turn to look quickly at some of the clauses. Clause 1 provides for the establishment and membership of the new Commission. It will have six members: the Speaker, as chairman; the Leader of the House of Commons; a Member nominated by the Opposition; and three other non-ministerial Members of the House of Commons. Clause 2 defines in general terms the Commission's functions and its responsibilities with regard to staff. Clause 3 provides, inter alia, that the Commission will in future be responsible, instead of a Treasury Minister, for presenting annual Estimates in respect of the expenses of the Departments of the House of Commons.
Clause 4 defines what is meant by "House Departments" in the Bill, and provides for the possible application of provisions in the Bill to staff, such as refreshment staff, who are employed in the House but who are not members of a House Department. Schedule 1 deals with a number of detailed matters regarding the membership and procedure of the Commission. Schedule 2 is primarily concerned with the application of employment legislation to House of Commons staff.
I referred earlier to the provision in Clause 3 of the Bill that the new Commission will become responsible for the presentation of the Estimates for the

1455
expenses of House Departments. The Parliamentary Secretary to the Privy Council Office undertook during the Report stage of this Bill in another place that a Statement would be made by the Government at a later stage to explain the significance of this.
At present the whole House of Commons Estimates are presented by a Treasury Minister. Under the provisions of the Bill, that part of the present House of Commons Estimates which covers Members' pay, allowances and pensions will be presented by a Treasury Minister as at present, but it will be the new House of Commons Commission, and not a Treasury Minister, that will be responsible, from 1979–80 onwards, for the preparation and laying before the House of Commons of that part of the present Estimate which relates to the expenses of House Departments and certain other expenses. Broadly speaking, these are staffing costs. But it is also provided that, at the Commission's discretion, this Estimate could in future cover
"any other expenses incurred for the service of the House of Commons".
It could, for example, cover items on the existing House of Commons Vote—for example, certain Refreshment Department costs—or additional matters such as House printing expenses if the Commission so decided.
Apart from this change the Estimate will not be dealt with in any special way. This Estimate will continue to be presented by command of Her Majesty. The name of a member of the House of Commons Commission will, however, replace that of the Chief Secretary to the Treasury on the presentation slip sent to the Public Bill Office of the House of Commons. The expenditure will still require the authorisation of the House of Commons in an appropriate Supply Resolution and in the ensuing Consolidated Fund Bill.
It is intended that the present procedure, whereby increases in House expenditure which would involve a grant or charge on the public revenue cannot be proposed without the agreement of Ministers, who will, of course, have regard to the public expenditure implications, will remain unchanged. House of Commons expenditure will continue to count as public expenditure within the framework of the Public Expenditure Survey. This provision
1456
in the Bill, which was initiated by Treasury Ministers, does nevertheless represent a step in the direction of greater independence for the House of Commons over its own affairs.
This Bill deals solely with staff in the House of Commons. It has nothing to do with the staff of this House. This House is entirely autonomous in this matter, and while I am sure the results of this legislation will be followed by those responsible here with great interest, there is no link between the two Houses in this respect. We have, of course, had our own inquiries here recently.
I hope that this Bill will be accepted on all sides here as uncontroversial and as being concerned with another place. While recognising that the Bill is not directly concerned with your Lordships' House, I would hope nevertheless that its aims will commend themselves to your Lordships. It is the Government's aim in this legislation to foster co-ordination of Departmental services in the House of Commons; to provide the framework for a unified staffing policy; and to assist in the development at all levels of proper staff consultative procedures. In so far as these developments will, I believe, conduce to the maintenance and improvement of the services of the other House, they will serve to promote the efficiency and good staff working relationships of Parliament as a whole. As such I commend the Bill to this House. My Lords, I beg to move.
Moved, That the Bill be now read 2a—(Lord Peart.)
3.46 p.m.
Lord CARRINGTON: My Lords, the House is grateful to the Leader of the House for explaining the provisions of this Bill. However, I do not think that it is either delicate or necessary for this House to concern itself with what goes on in the House of Commons. If the House of Commons wants to arrange its affairs like that, I should imagine that it is all right with your Lordships. We arrange our affairs differently. All I would say is that if there should ever be need for a Bill of such a character to be moved for reasons concerning this House, your Lordships will expect from the other place—though not, I think, with much

1457
confidence—the same restraint as I have shown this afternoon.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

LAND DRAINAGE (SCOTLAND) AMENDMENT ORDER 1978
3.48 p.m.
The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill)The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill) rose to move, That the draft Land Drainage (Scotland) Amendment Order 1978, laid before the House on 22nd June, be approved. The noble Lord said: My Lords, the purpose of this order is to revise to present value the maximum cost per hectare which may be specified in a draft improvement order if the Secretary of State is to make the order without the agreement of all the owners involved but with the agreement of a majority liable to bear more than half the cost of the improvement. The proposed amendment would re-establish the degree of balance between the majority and minority interests of these owners, as created under the original legislative provision, and is submitted in fulfilment of an undertaking given by the Government earlier this year that this cost figure would be reviewed.
The review, now completed, is based on the rise in the tender price index for drainage works since 1965. It indicates that the present £100 per hectare figure is now significantly out of line with present costs and should be revised to £325 per hectare so as to restore the effectiveness of the original legislation. The Scottish Land Owners' Federation and the National Farmers' Union of Scotland have been consulted and are agreeable to this revision. I beg to move.
Moved, That the draft Land Drainage (Scotland) Amendment Order 1978, laid before the House on 22nd June, be approved.—(Lord Kirkhill.)
Lord CAMPBELL of CROY: My Lords, we are grateful to the noble Lord, Lord Kirkhill, for explaining the purpose of this order and I, personally, do not see any objection to it. I am sure that noble Lords will give it their blessing.
On Question, Motion agreed to.

COMMUNITY SERVICE BY OFFENDERS (SCOTLAND) BILL
3.50 p.m.
Lord KIRKHILL: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(Lord Kirkhill.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Baroness WOOTTON of ABINGER in the Chair.]
Clause 1 agreed to.
Clause 2 [Further provisions about community service orders]:
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 1:
Page 2, line 45, at end insert ("and, where appropriate the particular days or times of day when the work is to be performed").
The noble Earl said: The Second Reading debate on this Bill was somewhat short. That was in part due, no doubt, to the fact that it is a short Bill and the principles of the Bill were agreed on all sides of your Lordships' House. A second consideration was that the hour was late. Whether in fact the House wanted to get on to other business, or I wanted to catch a night train to Scotland, I do not now recollect. Be that as it may, the debate was short, although interesting.
I regret that the noble Viscount, Lord Thurso, is not in his place—and in fact the Liberals seem to be entirely absent. I say that because what I want to discuss with your Lordships in this short Committee stage is really the philosophy behind part of this Bill and what it is likely to do for criminal justice in Scotland, and much more especially how it can be used to help offenders who otherwise would go to prison.
Why I regret that the noble Viscount, Lord Thurso, is not in his place is that when I made my comments about the Bill in general I said that to me the concept of making the punishment fit the crime

1459
was thoroughly meritorious. I could see nothing better. Of course I was only echoing, probably less eloquently, what the Under-Secretary said in another place when he came to the consideration of the principle of the Bill on 9th May in the Scottish Grand Committee. In paragraph 1, no less, he said:
"As an alternative to imprisonment, community service has indeed much to recommend it. It can be more constructive and more rehabilitative than a short prison sentence, and overall likely to prove cheaper. It offers both reparation to the community and punishment to fit the crime."
I think that nobody would quarrel with those sentiments.
The noble Viscount, Lord Thurso, in a way, did. He said that he would prefer to make the punishment fit the offender rather than the crime. That point of view was echoed by the noble Lord, Lord Kirkhill, when he replied to the debate. Of course I say to that, ça va sans dire; one cannot sentence people unless the sentence fits the offender, otherwise it is a gross miscarriage of justice. It cannot be anything else. So, in all our discussions, let us bear that in mind, and let us have in the forefront of our minds that unless a sentence fits the offender it is an improper sentence.
In the first Amendment—I shall come back to this in discussing other Amendments—what I am trying to do is to make for the maximum flexibility and the maximum harmony as between the sheriff, or the district justice who passes the sentence, and the social work department who have to provide, as it were, the work to be done and supervise its carrying out. The other place debated these matters extensively if not logically, as is their wont, and I do not believe that they paid sufficient regard to these points. It may well be that a sheriff who sentences somebody to a term of hours unpaid work may, as a professional, be completely au fait with what the social work department is doing, and the advantages, or disadvantages, of such an order in his particular part of the world. A justice of a district court is not in that happy position. He will not be nearly so close to the social work department and he will have less idea of what is going on.
The district courts, which I regard as a bold and imaginative experiment in Scotland, are sadly not being used as they
1460
should, but that is something which those of us who are keen to form an association of justices in Scotland hope to put right over the years. But I feel very strongly that the justices and indeed the sheriff should be part of the decision-making machinery as it affects these community service orders. Putting it another way, I think it would be wrong, and I think the experiment would get off to an unfortunate start and be much less likely to succeed, if the court is regarded as a judicial sausage machine which presses the community service order button and thereafter has no further part in the matter, and that the social work department will thereafter take charge and everything will be under its aegis.
I have spent a little time on this, because it is the theme of the Amendments I have drafted. What Amendment No. 1 says—and it is simple—is that the court shall be entitled, where appropriate, to fix the days or the times of day when the work is to be performed which is the subject of the community service order. Just think of this: the sort of people who, I hope, will be the subject of these orders are people who would normally go to prison, and that is the whole theme of the Bill. Clause 1 makes that plain. It is not an alternative to a fine; it is not a soft option for some other punishment—not that there are very many in Scotland; it is an alternative to imprisonment. It is the sort of sentence which many of us who have a part to play in Scotland have been longing to see applied for some time. I am thinking—perhaps for the record—of vandals or football hooligans, or people who drive their motor cars thoroughly badly.
What I am asking for is that the judge—rather than having to keep on saying "sheriff" or "justice"—should be able to say: "All right, you went to this football match and made a thorough nuisance of yourself. I am going to see to it that for the next three or four months instead of spending your Saturday afternoon agreeably on the terraces you will in fact carry out unpaid work". I anticipate that the reaction of judges to this legislation will depend in no small part on whether they think that it will have the effect that they want. If they think that these community service orders are merely a soft option to prison and that the defendant or the accused will go away

1461
and merely be allowed to work off his orders at a time when it is purely suitable and convenient for the social work department, then I anticipate that the whole system will fall into disrespect, as I said at Second Reading in derision, and I do not think that these orders will be made.
I know that the philosophy of the Government is to do just what I have said that I do not think should be done, and that the judge should be the button presser and the social work department should thereafter take over. I think that that is an unfortunate way of dealing with it. I think that in a limited way, as my Amendment implies, the judge should be able to say what he wants done and should be able, as it were, to invite the social work department to help him in that task.
I would not anticipate such an order ever being made on the first appearance of an accused person in court. I anticipate the judge continuing the case to see, first of all, whether the offender is suitable for such work and, more especially, whether the various conditions in Clause 1(2) can be fulfilled; if they cannot then the case goes no further. But if they can, when the offender next appears before the judge he can ask whether he is willing to be made the subject of such an order and make the order accordingly.
Lord KIRKHILL: I welcome what I judge by the noble Earl's remarks to be broad agreement in principle with the overall tenor of the Bill. He has an emphasis on certain points in the Bill which does not accord with the Government's view, but on Second Reading and again today he has indicated that the measure is welcome and should command, as I believe it does, fairly general support.
As he said, the Amendment would give the courts power to lay down the particular days and times of day at which the offender is required to undertake his community service. The power would be exercisable in all cases, although the court is, in effect, invited only to use it in appropriate cases. However, it is normal for the courts to be involved only in the passing of a sentence—deciding on the type of punishment and then its weight; for example, fixing the length of imprisonment, fixing the amount of the fine or, in
1462
the present case, the number of hours of community service. The Amendment would mean the courts' becoming involved in the detailed implementation of the sentence in a way which the Government regard as out of keeping with the courts' traditional role of sentencing.
The Earl of MANSFIELD: I invite the noble Lord to deal with one bit of logic there. Would he not agree that there is all the difference in the world between an order which, in effect, deprives somebody of his liberty and an order which is positive and which says, "You will perform work although you remain at liberty"? Does he not see that distinction?
Lord KIRKHILL: If the noble Earl will bear with me I will explain why the Government do not quite take that point. The punishment is, of course, the fact of having to do a fixed number of hours' work in one's own time; the precise nature and timetable of the work is subsidiary—this is where the Government do not accept the noble Earl's position—and, as such, a matter outwith the scope of the courts. Moreover, even if there were no objections in principle to the courts' involvement in the carrying out of the sentence, there are strong practical objections. Those constitute, in my mind, the nub of the argument against the clause, and again this is where the Government do not agree with the noble Earl. The courts do not possess the necessary detailed knowledge of the nature of the work available for offenders to carry out; nor do they know when the work is likely to be available. Especially, they cannot know what work will be available, say, six or nine months, or even a year ahead, and noble Lords will recall that the duration of a community service order is one year.
The Bill gives the local authority officer supervising the offender the power to specify the times at which the offender is to carry out his work and places the offender under an obligation to perform the work at those times; Clause 3(1)(b) gives effect to that. There is, thus, no question of the offender being able to suit himself. Failure to comply with the local authority officer's instructions would constitute a breach of the order and lay the offender open to action under

1463
Clause 4. The local authority officer is in the best position to judge what work the offender should carry out and he must bear in mind the work which is available, the times at which it is available and the character of the offender.
That is not to say the court cannot have any role in reaching a decision about when the offender should carry out the work. There is nothing to prevent the court, under the Bill as it stands, from recommending that the offender carry out the work on certain days of the week or at certain times; and I emphasise that. The local authority officer would, I am sure, pay very careful attention to any such comments by the court and would endeavour to meet the recommendation if that were at all possible. Such an arrangement in the view of the Government is much preferable to the sort of rigidity which the Amendment would create.
The Earl of MANSFIELD: I find the complacency of the Government little short of staggering. First of all the noble Lord, Lord Kirkhill, says the courts will not know the nature of the work or when it will be available. My answer to that is: why not? If I were in the position of considering a community service order and if I did not know what the nature of the work was and when it would be available, I would not make one.
Lord KIRKHILL: I do not want to bob up and down but, as the noble Earl is aware, I pointed out that the order can last up to one year. That is surely the difficulty.
The Earl of MANSFIELD: Of course an order can, and the noble Lord need not apologise for bobbing up and down; we are in Committee and I will bob up and down like mad if I think the debate warrants it, because this is the time when we can do that. Let me explain what worries me. Consider the case of a youth aged 21 or 22 who misbehaves, and let us keep to the football match because it is an excellent example. To such a young man, the rest of the season deprived of the opportunity of following his team on the terraces will be a very real punishment in itself: to say to that young man in September or October, "You will not follow your team"—whatever
1464
the team may be; I will not go into names—"because on Saturday afternoons you will do community service; you will help look after old folk, sweep out the hospital and do something useful".
Is the noble Lord really saying it is Government policy not to give the court that opportunity?—bearing in mind that the sheriff is employed to be a judge, to use judgment, whereas a social worker, with great respect, is not; he uses judgment but it is not of the same type. Is the noble Lord really saying that the judge is expected to give 10, 20 or 40 hours' community service, whatever it may be—I bear in mind the minimum, which I have omitted—and say, "You will do 40 hours, which is equivalent to 20 Saturday afternoons, but I do not know whether it will in fact be Saturday afternoons and it may not Saturdays at all. Therefore I make that order"?
I do not want to labour the point. I get the uncomfortable suspicion that the object of the Government is twofold. The first is to minimise the discretion of those who sit in judicial authority, and that is a pity. My second suspicion, which is rather deep, is that the Government either have not really thought out the implications of the Bill—I said that on Second Reading—or they want to make the whole scheme at the discretion of the social work department.
I quite see that social workers themselves do not particularly want to supervise young rips on a Saturday afternoon, but if a scheme like this is to have any chance of success at all so far as the community is concerned, it must be imaginative, it must provide new ways of coping with our crime rate—and I shall come back to that in my final Amendment; but if it is just to be, as I have suggested, a sausage machine, it is doomed to hopelessness. The cleavage between the Government and me is complete on this question and I do not think it would be any good for me to invite the Government to go and think again on this matter. The noble Lord sits there looking like a sphinx—if I am not being offensive—
Lord ROBERTHALL: It happens that I have recently had experience of a case of community work—in England rather than in Scotland, but perhaps the experience will be relevant. In that case

1465
a young man with whom I was very closely associated had committed a serious offence and he was sentenced to community work. But before passing sentence the judge suspended the case and took enormous trouble to consult the social authorities concerned in the place where it was proposed that he should work so that, at least in that case, the judge did get a great deal of information which he thought he needed before finalising the sentence. I must add that when the person in question came to serve his sentence the social worker in charge of him took immense trouble to find out the sort of work that he would do and to fit the hours to the job which he was fortunate enough to get. I was immensely impressed by the great trouble that was taken on both sides and I am glad to say that the experience of community work, at least for several years now, has been entirely successful.
Lord KIRKHILL: The sphinx is on his feet, to say that of course the Government would not be able to accommodate this point, as was clear, I think, from my earlier remarks. The main difference between us, in the light of what the noble Earl has just said, is that the Government believe that flexibility should be the keynote of these community orders. The best way to achieve that kind of flexibility is as we lay it down in the Bill which is being considered in Committee by your Lordships at this time.
I do not believe it is always possible to say months ahead that which is most suitable for the offender to engage in. That is something which is best left to the officer who will be supervising his activities. It may well be, so far as the question of football hooliganism is concerned, that some indeed may revert to repairing their vandalism outside the ground while the match is in progress inside. Who knows? But I cannot consider that, because a court does not say that, such a provision will not in fact be effected.
The Earl of MANSFIELD: As I have said, I think the disagreement is complete. To say that a system is more flexible because the judge has less power—and we are talking about sentencing procedure—is what, when I was taught Greek, is called
1466
a para pros dokiens. But I shall leave the matter there. If the noble Lord thinks that a pious expression on the part of a judge as to the timing of the serving of a community service order will have any weight with the social work department, then I think he is deceiving himself or is being deceived. I feel cross about this matter because we have so little opportunity for penal legislation for Scotland that the greatest opportunity ought to be taken of it. But for the present I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.15 p.m.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 2:
Page 3, line 10, at end insert—
("(2A) Upon making a community service order the court shall have regard to the desirability of relating the work to the nature of the offence.").
The noble Earl said: This is the same theme but a different aria. The question arises as to whether a court should be empowered or even encouraged to express an opinion as to what sort of work should be the lot of the accused person who is made the subject of a community service order. At one end of the sentencing scale there are those, I am afraid, like myself, who would adopt the American system and, as I tried to say on Second Reading, if somebody drove thoroughly badly I think I would say, "You can go and spend your Saturday afternoons for the next few months cleaning out the casualty ward in the local hospital to see what happens to the victims of people such as yourself who have driven naughtily". I am afraid that that is not a view which commends itself to this Government.
At the other end you have the judge who is, as I say, just invited to press the community service button and does so, and then it is the social work department which finds the work for the person concerned, allocates it and presumably sees that he does it. But I want to ask the noble Lord: what is the feeling of the Government about the form of community service work that will be available in an area? For instance, will there be the equivalent of what I might call the "municipal chain gang" which will be detailed off to paint a large section of old folks' homes, some (to quote the trendy

1467
expression) "ongoing task" which will occupy all those who are the subject of community service orders (assuming that they are reasonably fit) for a long time; or is there to be a series of smaller jobs of a very different nature, some of them involving hard manual work and others, for instance, of a much lighter type, which would be divided among the offenders according to their ages, capabilities and health? Will the social work departments use imagination? In other words, when as I anticipate there is a remand period—if I may so call it—between conviction and sentence, will they set about trying to think up schemes or a scheme which will accommodate the particular offender?
These questions are not just beating the air, because I believe very strongly that the attitude of the judges will in no small measure depend on the type of work which is available and the sort of tasks which these people will be called upon to perform. In the courts of which I have experience these days, the types of offender whom one could see would be the subject of this type of order are very much at I might call the lower scale of criminals. They are people who are not wicked but are more or less incapable of leading their lives in a useful and honest way. As things stand, there is very little that can be done with them. They cannot hold down a job and they cannot pay a fine. They cannot be the subject of a probation order because there is nothing to which they can be directed so far as their future life is concerned. But it would be of immense help if they could be made the subject of these community service orders, always pre-supposing that at the time when the judge is minded to make the sentence there is suitable work.
I know that the noble Lord said that the judge could make some sort of pious declaration of what he hoped would happen, and I assume that besides the timing of the work it would extend also to the character of the work. For myself, as I have said, such sentiments on the part of a court would be worse than useless because if they cannot be carried out, or if the social work department is in disagreement with them, it merely takes away from the authority of the court. I should not think that they would be so used; and I should be interested to hear the noble Lord's reactions to my question.
4.20 p.m.
Lord KIRKHILL: I have some sympathy with the principle underlying the noble Earl's proposal. However, he will not be surprised to hear that I will not be supporting it. This is both because I believe it to be unnecessary and because, as I was emphasising earlier, it takes the courts into the area of detailed arrangements which, in the Government's view, is not appropriate to their role. It is unnecessary because there is nothing at the moment to prevent the court, when making a community service order, from indicating a preference for the type of work which the offender should perform, or the type of work which he might be capable of doing in a reasonable manner.
The noble Earl asked me specifically what kind of work might be involved. It could include working in community centres, youth clubs, or old people's homes, doing gardening or decorating, or perhaps helping to construct or repair adventure playgrounds. There has even been a suggestion that conservation work in graveyards might be undertaken. At any rate, the list is fairly comprehensive. I consider that in appropriate cases the court will indicate a view and that the local authority officer will heed any request that the court may make. The noble Earl is doubtful of the efficacy of that kind of request, and he and I must simply disagree about that. I believe that the local authority officer will not be unmindful of an indication of the court's view.
I know that it has been argued that if a provision such as this were not included in the Bill, community service would come to be regarded as a soft option and, as a consequence, social work departments would be exposed to criticism for leniency towards offenders. I take the view that it would not be a soft option, if only because the person upon whom the order would be served can spend up to 240 hours of his own time doing obligatory work—certainly of course by consent. I agree that it is one of the virtues of community service that it provides an opportunity to make the punishment fit the crime. The noble Earl gave earlier an example of the football hooligan repairing the results of his vandalism—
The Earl of MANSFIELD: I hope the noble Lord will forgive me for interrupting, but I said no such thing.
Lord KIRKHILL: Well, in that case I misunderstood. It was the vandal repairing the results of his vandalism—
The Earl of MANSFIELD: With respect to the noble Lord, I must say that he has become muddled up on this point. I spoke about football vandals not being allowed to go to football matches on Saturday afternoons. That was the argument which I advanced in respect of timing. As to the quality of the work, I suggested that a very naughty driver might well spend his free time in clearing up casualty departments of hospitals—not repairing football stadia, or anything like it.
Lord KIRKHILL: Of course, I apologise to the noble Earl. Nevertheless the point is valid, and we are arguing only on the top of a pinhead if we are disagreeing over what I am saying.
Much will depend on the nature of the work placements which will be available at the appropriate time. If we are to attempt to fit the punishment to the crime, we shall not always be entirely successful. I do not think that that is necessarily the whole point of community service provision. As I indicated earlier when the noble Viscount, Lord Thurso, spoke, I would see merit in relating the offender to the particular work of rehabilitation. Undoubtedly, there is the case where an offender does not have the skills to undertake a particular task which may seem appropriate—an example of a simple task might be repairing a broken fence—and he might have to be directed to some other job of which he is capable. It is in order to retain that kind of flexibility that the Government wish to sustain the Bill in its present form.
The Earl of MANSFIELD: I want to come back to the noble Lord on this matter because he has not really answered what I was trying to put over, and which no doubt I failed to do. For instance, he has not mentioned anything about voluntary societies. If much use is to be made of the orders by the courts, it is extremely important to bear in mind that those who sit in the courts will want to know that there is some point and purpose to this question other than merely statistically lowering the gaol intake. I asked the noble Lord whether voluntary organisations in a particular locality were to be
1470
invited, for instance, to submit schemes. I should have thought that that would be an excellent idea, though I can see difficulties of supervision. If that is the case—and this is what happens in England, and it is, I assume, what will happen in Scotland—how will the detailed monitoring of the offender's performance be carried out, and by whom will it be carried out?
As I said on Second Reading, it seems to me that if this scheme is to become general throughout Scotland, and if it is to be of use, it will need the allocation of very considerable resources for its implementation, and I do not think that those resources presently exist. It appears to me that by using voluntary organisations of one kind or another the Government and the community can achieve what they want to do in a very cheap, yet effective, way. The noble Lord is very coy about the kind of work involved—whether it will be effective and useful work, or whether there is to be a deterrent element in it. I think there is supposed to be a deterrent element in the scheme because at column 95 of the Official Report of the Second Sitting of the Committee in the other place, on 25th May, Mr. Ewing said:
"I am not saying that the Bill will prove to be a deterrent, although I hope it will be. I think that those who have to carry out the sentences in public might well he deterred, and it will serve a meaningful purpose in deterring them from offending again".
I detect again there the nuance of the chain gang; some pillar of the local community who has got himself into trouble will be marching about with a pickaxe in full view of the local citizenry and will thereby be deterred. But I do not know what Mr. Ewing meant. Perhaps the noble Lord can tell me. I hope the noble Lord will agree that the points I have put forward are constructive and useful, and are made only because I am so determined that the sentencing procedures and what follow for Scotland should be improved.
Lord KIRKHILL: Perhaps I should have said earlier—I did not give sufficient weight to this—that in the pilot schemes which meantime exist in Lothian, Grampian and other areas, the voluntary bodies have indeed been considerably involved. As that has already taken place, I consider that an expansion of that kind

1471
of involvement will undoubtedly take place from this time onwards.
The Earl of MANSFIELD: This is a matter to which we may return at a later stage of the Bill. Meanwhile, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Clause 3 [Obligations of persons subject to community service orders]:
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 3:
Page 3, line 35, leave out subsection (3).
The noble Earl said: This is a short matter. I really want enlightenment from the noble Lord. Clause 3 (3) says:
"The instructions given by the local authority officer under this section shall, so far as practicable, be such as to avoid any conflict with the offender's religious beliefs …".
It is those latter words which I am bound to say at first blush I really find rather offensive. I ask myself: What could they possibly mean? One has visions of Hindus being made to work with greasy cartridges, or something; but there must be more to it than that. It may, on the other hand, be sloppy thinking on the part of the Government, and they do not want a Rangers supporter to have to go and paint the Celtic stand, and vice versa. But what worries me slightly, although not overmuch, is that some young gentlemen who may be reasonably ingenious, or in fact old gentlemen, for that matter, who may be old soldiers and even more ingenious, may well be able to out-manoeuvre the social workers, who are supposed to be carrying out their duties and making them work the necessary number of hours, by such a device; and I really wonder whether it is necessary to include that in subsection (3).
Putting it in another way, I entirely agree with the latter part of the subsection. I would not seek to have that cut out in any way, shape or form, and it would he a very foolish social worker who tied somebody up to undergo periods of community service when they should be either working or learning. That would be very stupid. But I wonder whether the noble Lord—perhaps he might like to
1472
consider it—really thinks that conflict with the offender's religious beliefs has any part in a Bill like this. I beg to move.
Baroness WOOTTON of ABINGER: Surely difficulty might arise in the case of somebody of the Jewish faith who was asked to perform work on the Sabbath, which would be in violation of his religious beliefs. The timing of work might be important, both in relation to work on the Jewish Sabbath and on the Christian Sunday.
Lord KIRKHILL: I think the noble Earl and I are in agreement that it seems eminently sensible that the offender should be able to continue with his employment or education. Indeed, it is possibly the greatest virtue of community service that offenders are enabled to keep their employment and thus preserve their family unit in certain cases; or to continue their education, on which, perhaps, their future as good citizens may depend. But, as my noble friend Lady Wootton has just said, I do not think we would dissent from the view that any religious views which the offender holds and which prevent him from working on particular days should be respected. That is the view of the Government: hence subsection (3).
The Earl of MANSFIELD: The noble Lord, Lord Kirkhill, has clutched with both hands at the straw which was held out to him by his noble friend; but is it necessary that this should be written into the statute? We have here a situation where judges are not going to be trusted to lay down the times of work and the type of work. We have had that debate, and I shall not go over it again. It is all to be left to the good sense of the social work departments. That is a point of view which I do not share but which I accept as being the Government's view. Whereupon, in the very next clause the Government turn the whole thing upside down by saying, "The social work department cannot be trusted, in effect, not to order somebody of the Jewish faith to work on the Sabbath, and therefore we have to write it into the Bill".
I just think that it is offensive; I think it is unfeeling; I think it shows a distinct lack of imagination on the part of the draftsman. If you are going to give the

1473
social work departments the very wide measure of latitude which they have, surely they can be trusted not to make somebody do something which his faith tells him not to do or make him do something at a time when he ought to be doing something else because of his religious conviction. But there it is; if that is the attitude of the Government, so be it. I see the noble Lord is rocking back and forth. Is it in anguish or because he wants to address the Committee?
Lord KIRKHILL: It is merely that I hope the noble Earl is emphasising the general question of religious conviction and not the particular position of anyone as it relates to an individually-held faith. It is the broad view of religious conviction which was in the Government's mind as they constructed this clause.
The Earl of MANSFIELD: I understand the noble Lord quite well. I think it is a very poor and insensitive piece of drafting, but there it is. He apparently sees some justification for it, and I beg to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 3 agreed to.
Clause 4 [Failure to comply with requirements of community service orders]:
4.37 p.m.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 4:
Page 4, line 11, leave out ("£50") and insert("£25").
The noble Earl said: I should tell your Lordships—I hope that the noble Lord the Chairman has already been told, and I certainly hope that the noble Lord, Lord Kirkhill, has been told—that there is in fact a misprint here. It should be "insert £20" and not "£25". Whether it is a misprint or whether it was that the hand that held the biro last week—to wit, mine—did not do what the brain told it to, I do not know; but that is the Amendment which I seek to write into the Bill.
The point of it is this. Under Section 186 of the Criminal Procedure (Scotland) Act 1975, failure to comply with the requirement
1474
of a probation order gives rise to a monetary penalty not exceeding £25. Here we have the Government setting up this new form of punishment and providing in Clause 4(2) that if the offender has failed, without reasonable excuse, to comply with any of the requirements of the order, the court may fine him a fine not exceeding £50. If the two methods of dealing with an offender were totally distinct, I would have no complaint. In fact, it seems to me that if a community service order is an alternative to prison, if somebody fails to comply and the court still thinks he should be kept out of prison, a monetary penalty might well be the answer. But the difficulty is that in Clause 7, to which we shall come directly, the Government have, as it were, sought to have the best of all worlds by imposing a probation order plus community service; and, as I understand the position, if I am right, the penalty can still not be more than £20.
If that is so, we have the slightly odd situation that a person upon whom there is imposed a community order simpliciter may be fined £50, whereas a person who is the subject of a probation order with unpaid work as a condition of it can be fined only £20. If I had had more time, I think I would have tried to pump probation order breaches up to £50—and I am not using very Parliamentary language when I say that. But I did not have time and I thought that for the sake of consistency it would be better to bring the penalty in respect of the community service orders to £20. I beg to move.
Lord KIRKHILL: This Amendment seeks to make the maximum fine available for breach of a community service order, if the order is to continue, £20 rather than £50. As the noble Lord has said, this would be in line with the present maximum fine for breach of a probation order, if that order is to continue. The Government consider that £20 is too low a maximum and that £50 gives the court a sufficiently severe penalty to warn offenders that they must perform the work that the court has ordered them to perform.
The £20 figure for breach of probation was fixed in 1967 and its value has since been eroded by inflation. The Government hope to take the earliest legislative

1475
opportunity to raise this fine to £50 so as to remove the anomaly to which the noble Earl has referred. This would have been done by the proposed Criminal Justice Bill which, sadly, did not go ahead this Session owing to lack of Parliamentary time. I think that that is as fair an explanation as I can give.
The Earl of MANSFIELD: I am grateful to the noble Lord. At least, it shows some consistency on the part of the Government. May I ask this? We cannot have a Criminal Justice Bill for Scotland this Session and I doubt whether we can have one this Parliament. As usual, in Scotland we are going to be left with the worst of all worlds with two parts of the same Bill which can have different penalties. That is not logical and can bring the law into disrepute. May I ask the noble Lord to go away and to consult with his advisers as to whether he could bring these penalties into line without altering the Long Title of the Bill. I doubt whether we can, but that would be more consistent than what the Government seek to do. In the meantime, I beg leave to withdraw the Amendment.
Amendment by leave, withdrawn.
Clause 4 agreed to.
Clauses 5 and 6 agreed to.
Clause 7 [Requirement that probationer shall perform unpaid work]:
4.44 p.m.
On Question, Whether Clause 7 shall stand part of the Bill?
The Earl of MANSFIELD: As your Lordships will know, community service orders of a kind have been on the Scottish penal landscape for some time. They were an unofficial, ad hoc and, probably in the strict sense, an illegal method of dealing with offenders because they were tacked on to probation orders in four areas of Scotland. It is as a result of those experiments, if I may so call them, that the present Bill emerges. The Government have not followed the procedures in their entirety which were the subject of the Criminal Justice Bill (now Act) of 1972, on which, as I said before, I made my maiden speech in this House to be followed closely by the noble Baroness, Lady Wootton, who was as always kind. I do
1476
not blame the Government for not following those procedures because there is no reason why Scotland should follow slavishly the legal procedures of England.
Nevertheless, I think the Government have got themselves into a pickle by trying to have the best of all worlds; that is, by having under this Bill community service orders simpliciter but by trying to retain probation plus community service under Clause 7. For three reasons, to which I shall come, I think this is a nonsense and I think also that it is bad law. I am fortified in this by several representations which have been made to me by persons connected with social work in Scotland.
My first argument is this. It is undesirable to have a judge in effect saying to himself: "I am minded to send somebody to prison. Have I an alternative in these circumstances?—Yes, I have! The alternative is a community service order". That, I think, is totally logical and that is what the Bill says. Where I part company with the Government is that it is illogical to say: "Can I send this person to prison?—No, I will not. I will put him on probation and have a community service order." To my mind, the probation order should mean that the full resources of the State in this connection are, as it were, beamed upon the offender to try to redeem him using all the various facilities and expertise which are available to the social work department.
I do not think it is a good idea that the people who are going to try to redeem an offender should also (even if in a different guise), be responsible for making him carry out work for which he may be constitutionally quite unsuited, which he may find most uncongenial and which he may not be fitted for—despite the efforts of the social workers to find suitable work for him. In other words, I believe that there should be a difference and a differentiation between the facilities which the probation order makes—which is not a punishment and never has been a punishment under our judicial system—and a community service order which is a punishment, is stated to be a punishment and is hoped to be a deterrent. That is my first argument. I know what the noble Lord is going to say. He is going to say that we must have extreme flexibility.
My second argument is this. It is an entirely different technical and nuts-and-

1477
bolts argument. If you have a resident in Scotland who is made the subject of what I might call a "Section 7 order", who, in other words, is put on probation with a condition of community service (unpaid work, if you like) with it, and he then moves to England, part of the probation order dealing with community service will then have to be lifted. This is because, as I understand it, and I think I am right, the two cannot go hand in hand; so that the court which has been minded to impose what was inelegantly described by one of the honourable friends of the noble Lord, Lord Kirkhill, in another place as a "beefed up" probation order will find that in fact the beef will then be removed and the emaciated skeleton of the probation order will be all that remains.
Again, one is left with an illogical situation and a silly situation. The noble Lord, Lord Kirkhill, may say it is unlikely to happen all that often. I do not believe that. Many of us Scots have had to desert our native heath in order to earn our living; and this may happen to a person who is the subject of such an order.
The third point is also technical and legal. I hope that I have got it right; but, no doubt, the noble Lord will correct me if I have not. Under Section 5 of the Rehabilitation of Offenders Act 1974, the noble Lord will know that the period after which the conviction is "spent"—if I may use that expression—starts to run one year from the date of the conviction or the ending of the order, whichever is the longer. If one is put on probation for a year, at the end of the year the conviction is spent for the purposes of the Rehabilitation of Offenders Act 1974. On the other hand, if one is made the subject of a community service order, as I understand the position, then the period is not one year or the ending of the order, whichever is longer, but five years.
We have this possibly illogical position that if the court decides to impose a community service order simpliciter, the period is five years; if the court is minded to impose what I might call a Clause 7 order, then the situation is different. So the person who is the subject of the "beefed up" order does much better under the Rehabilitation of Offenders Act than the person who is not. I wonder whether the Government intend the consequences
1478
of this, and whether they should like to consider the three arguments that I have put forward. We can, I suppose, return to this matter at a later stage.
Baroness WOOTTON of ABINGER: I think there is force in the noble Earl's technical arguments, but there is also a history behind this. I speak as the chairman of the committee which first recommended the introduction of community service in England and Wales. The committee argued for a long time whether community service should be an order in itself—simpliciter, as the noble Earl has said—or whether it should be a condition in a probation order. The committee was of the opinion that the arguments either way were very finely balanced, not having regard to the difficulties that would arise if subsequently this scheme was extended under the new Scottish Act.
Eventually, the committee recommended that it should be open for the court to do it either way. In the case of day centres, which have subsequently been introduced, the provision is for attendance at the day centre to be a condition of a probation order. It is not an independent sentence in itself. So both means have been used of occupying the time of persons who are subject to limitations upon how they spend their time. In the case of community service, the Government decided not to introduce the alternative of it being a condition in a probation order. It appears this has now been revived in the Scottish Bill as a possible alternative.
The arguments are still finely balanced and it is undesirable that the court should be bothered with having to consider which way to do it. This aspect largely determined the issue eventually with many members of the committee. Sentencing is getting so extraordinarily complicated that it might be desirable, if a community service order were to be imposed, that this should be an order in itself and there should not be yet another alternative of doing it a second way. For that reason, I have great sympathy with the technical reason which the noble Earl has produced for his Amendment.
Lord KIRKHILL: As the noble Earl anticipated, the Government believe it desirable that the courts should have the

1479
maximum possible flexibility in choosing the appropriate disposal for all of the offenders who come before them. There will be some cases in which the discipline and support provided by a probation order—which can last up to three years while a community service order lasts only one—will be needed as well as the obligation to perform work and others in which a community service order alone will be sufficient. The Bill therefore provides for both.
In addition, community service is still at a very early stage: even in England it is only now being extended to cover the whole country, and there is no conclusive evidence—as may be seen from a difference of view among social workers in Scotland—as to whether community service should be free-standing or attached to a probation order. By providing for both approaches the Bill gives the opportunity for both to be tried and I think both bodies of opinion accept that that is desirable. As is evident from the schemes already under way, we may expect that one or other approach, or perhaps a combination of the two, will be adopted in different areas, depending on the views of the courts and social workers concerned, worked out in discussion and through experience.
Additionally, noble Lords should realise that the Amendment does not succeed in what I have taken, thus far at least, to be its aim: to prevent community service requirements being attached to a probation order. At the moment the courts have the power to attach to a probation order any requirements which they consider necessary to securing the good conduct of the offender. It is this power that they use to order community service in the present pilot schemes and they could continue to use it even if Clause 7 were deleted from the Bill. The only effect of removing Clause 7 would be to take away some of the statutory limitations on such requirements; for example, the limitation to between 40 and 240 hours' of work or the precondition that the court must have been notified that arrangements exist for the offender to perform community service.
In short, the removal of Clause 7 would not stop the use of community service as a condition of a probation order; but the procedures relating to the arranging and
1480
supervising of community service orders would not apply. I understood the noble Earl in an earlier phase of his remarks to doubt the present legal validity of the experimental schemes. At the moment a court may attach to a probation order any requirement it considers "necessary" to secure the good conduct of the offender or to prevent a repetition by him of the offence or the commission of further offences. In the opinion of the Law Officers, who were specially consulted on this matter, this may include a requirement in appropriate cases to perform community service.
As to the case that probation orders with a community service condition attached cannot be "exported"—if that is the right word—to England, I am advised that, strictly speaking, this is the case. But the offender or the supervising officer could refer the case back to the court under Clause 5. The court could then, in the exercise of its powers under Clause 5(1)(d), substitute a simple community service order for the original sentence. This could be "exported". It is not expected that this situation will arise frequently.
The noble Earl pointed to the question of different rehabilitation periods for community service and community service as a requirement for probation. I can confirm that this is a slight but unavoidable anomaly. The rehabilitation period for community service in its own right is five years, while the period for community service as a requirement of probation is the same as that for a probation order: that is to say, the length of the order. This is not in itself, or even with the other main argument led by the noble Earl, an argument against Clause 7. I hope that has been of some help.
The Earl of MANSFIELD: I want to come back to the noble Lord about any necessary requirement which a court may impose on an individual when the court is minded either to make a person the subject of a community service order or to put them on probation with a condition of unpaid work. I assume that if the court is satisfied—and I do not have the full words of what the noble Lord, Lord Kirkhill, said, but I think he said this, if I may paraphrase it—the court could impose any necessary requirement in effect to prevent the offender from repeating the offence. If a judge came to the

1481
conclusion that the offender was a young man who was liable to commit offences on Saturday afternoons, he could make a condition of the probation order that he should absent himself from football grounds on Saturday afternoons and do unpaid work. If that is true it makes nonsense of a lot of this Bill, because if the judges want to specify either of the matters I suggested in my earlier Amendments they might want to do, they would adopt the flexibility which the noble Lord is so keen on and, far from making an order under this Bill, they would make an order under Clause 7. The noble Lord may like to reflect on that.
The noble Lord said that if someone decamps to England the probation order might be revoked under Clause 5(1)(d). I shall have to look that up, but unless under Clause 7 the provisions of Clause 5 are read into the original Act, then you could not revoke a probation order in those terms. That is something I should like to take up at a later stage of the Bill. I hope that the noble Lord will reflect on what I have said, because there seems to be a certain absence of logic somewhere.
Clause 7 agreed to.
Clauses 8 to 10 agreed to.
5.2 p.m.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 5:
After Clause 10, insert the following new clause:
Annual Reports to be laid before Parliament.
(". The Secretary of State shall lay before Parliament each year, or incorporate in annual reports he already makes, a report of the working of community service orders.").
The noble Earl said: This is a matter which received an airing in the other place but for all that I think it is proper that it should be raised again. The Amendment seeks to establish a duty on the part of the Secretary of State to make an annual report in effect as to the working of community service orders, either in the form of a report on its own to be laid before Parliament or as a report to be incorporated in the annual reports which the Secretary of State already makes.
I find it difficult to understand why the Government appear so reluctant to accept
1482
what seemed to me to be a very reasonable request on the part of my honourable friend when he moved this Amendment. I have attempted to find out what has happened in regard to community service orders since they first started in England and, even more so, since the pilot experimental schemes were introduced in Scotland. On the general working of the schemes in both countries, there is very nearly a deafening silence. The only report I can find—and it may be that I have not been sufficiently diligent or lucky—is the Home Office Research Study No. 39, which in its way is a helpful document, although it is not at all reassuring, may I say. I shall not go into it, but it produces some rather alarming statistics, and in particular says that the re-conviction rate of all subjects of these orders within 12 months is no less than 44 per cent.
Baroness WOOTTON of ABINGER: May I intervene just to say that that particular report related only to the pilot areas in England and Wales, as later statistics were not available.
The Earl of MANSFIELD: I am aware of that. The noble Baroness and I both know that the Home Office has nothing much to do with Scotland, and I am sure that your Lordships will take note of that also. Be that as it may, I do not think it affects the percentage of the re-convictions with which I was regaling the Committee. It is sad—
Baroness WOOTTON of ABINGER: I hope the noble Earl will forgive me for interrupting again. The point I wanted to make was that the statistics related to the first 600-odd cases in the six pilot areas. In the current year there have been 12,000 cases covering practically the whole of the country, and we have no information as to the recidivism rate among the subjects of the current community service orders.
The Earl of MANSFIELD: I am obliged to the noble Baroness; she comes to my aid in this matter. We are in the dark, and it is for that reason that my Amendment seeks to throw a little light. I hope, however, that, from what I have said this afternoon and at other times in this Chamber, noble Lords realise that I am a passionate believer in penal reform.

1483
But it is no good having penal reform unless we get the knowledge and the statistics as to what is happening and see whether it is a success and whether we can hopefully extend it into other areas or should think again and try something else. That is the burden of my argument: no more. I see, to my delight, that the noble Baroness is now smiling at me.
The effect of these orders is three-fold I think. First, it is to save people from going to prison, and we in Scotland have one of the highest prison populations in Europe. It is something to be deplored; and all of us who have any connection, in whatever capacity, with the legal system—and in my capacity with SACRO I certainly do—cannot fail to be disturbed by it. The Government have the resources to do something about these statistics, and anything that can be done should be done, I think.
Secondly, there is the fact that the community service order, hopefully, will deter people from crime and not only those who are made the subjects of orders. I am not terribly hopeful that once it gets about that this sort of sentence can be imposed by a court it will have a very salutary effect on the general population. I do not think it is realistic to believe that such would happen, but even if it has some effect it would be satisfactory and, after all, the object of bringing forward this legislation, or part of it, as the Under-Secretary said in the other place, is to deter from crime.
Thirdly, the most hopeful and likely effect of this Bill is that it will re-educate those who are made the subjects of community service orders so that they may be able to lead a better, more fruitful and certainly a happier life as a result of the voluntary or unpaid work they are ordered to do. As I have said, the very sparse statistics which are available do not show a very happy picture, but it may be that things will settle down in Scotland as the system becomes more generally applied and as people become used to working it and to working with these offenders.
All these things reinforce what I am trying to urge on the Government, namely, that there should be a duty to produce statistics and to produce them regularly, comprehensively and in a helpful form, so that all those who are interested, either
1484
because they are professionally engaged in these matters or because, for one reason or another, they have to deal with offenders at various stages, should be able to make up their minds as to how the scheme is going and, above all, how it might be improved. I know the Government say they are going to produce statistics of a sort next year, but how much better it would be to write into this Bill an Amendment such as this, which I do not think would cost very much money and which I think would have a very beneficial effect on the whole scheme. I beg to move.
Baroness WOOTTON of ABINGER: The noble Earl is mistaken, if he thinks that I am not in sympathy with the principle of this Amendment. I warmly welcome it. I wish, indeed, that such a clause had been inserted into the Bill relating to England and Wales. The only point that rather puzzles me is where this report is to come in. We now have a report from the Home Office on the Prison Department, and we also have a report on the Probation Department. But, so far as I am aware, there is no independent community service department and it does not lie properly under either of the other two. But this is obviously a technical matter which could be solved by the bureaucracy, and I very much hope that we shall have continuing reports.
Baroness WARD of NORTH TYNESIDE: I should like to support this Amendment. I was a magistrate for very many years, but I remember very well that when I was in another place there were very few magistrates there. I have no idea how many magistrates there are in your Lordships' House. But when we are introducing a new Bill, and a new idea for dealing with people who have offended against our laws, Parliament ought to know what is thought about it. Certainly, when I was a magistrate, it would have been very helpful indeed, when Bills made rather complicated arrangements, if we had been able to say "Can't we let Parliament know what our views are and then, if necessary, persuade Parliament to make an alteration in the law?" It is quite ridiculous, when Parliament is very concerned about this whole matter, that it is not to have a report. So I think that it is a most excellent suggestion that has been made by my noble friend.

1485
I do not mean to be objectionable to the noble Lord, Lord Kirkhill, because I am sure that he will be very nice about the Amendment, but it would sometimes be a good thing if, when Governments were dealing with these matters, they realised what magistrates themselves would like. I do not think that it is for Parliament to introduce a Bill without having regard to what magistrates would like. We have a perfect right to come forward, especially as, as I said, there were very few magistrates in another place when I was there. That would help the whole situation. So I hope that the noble Lord will accept this Amendment, and not just say that, for some reason or other, he does not think that it is a good Amendment.
He ought to think that it is a good Amendment, and he ought to welcome the idea that Parliament should be informed. Magistrates will then have a chance to put forward their views, if they do not like the laws or do not think that they are fair or just. They might even want something else which would make their task easier—because magistrates need quite a lot of help in these very difficult matters. So I look forward to hearing from the noble Lord, and I shall be most delighted if he says that it is a good Amendment and that he is pleased to accept it.
Baroness FAITHFULL: Very briefly, as a social worker I should like to support this Amendment. I do not see how, without figures and facts, one can carry out research and assess whether or not one is going in the right direction. f profoundly believe in community service orders, and have had personal experience of them, but we need to base our policy on facts.
5.15 p.m.
Lord KIRKHILL: I shall immediately have to disappoint both noble Baronesses by saying, in a deadpan manner, that I am unable to accept this Amendment. But perhaps I can be of some assistance by confirming that, despite the deafening silence on the Scottish scene at the moment, which the noble Earl detects or does not detect, depending on which way one looks at it, the existing experimental schemes are being monitored in considerable detail by the Scottish Office
1486
Central Research Unit, and it is expected that an interim report will be available at the beginning of next year. The Government believe that there will be continuing interest in community service, as schemes develop progressively throughout the country.
A general description of the working of community service will appear in the Annual Report of the Social Work Services Group, and detailed statistical information will be provided annually in Criminal Statistics—Scotland, published by the Scottish Home and Health Department, including a breakdown by age and sex of the offenders, by the type of court imposing the order and by the number of hours imposed. Of course, if there are other aspects which noble Lords wish to draw to my attention, the Government will be perfectly happy to examine the practicability of gathering information. But the Government do not feel that an obligation to produce a specific report on the operation of community service, as such, would be particularly helpful.
Baroness WARD of NORTH TYNESIDE: With the leave of the Committee, may I say one more word? That was a very disappointing answer, and I am surprised that the noble Lord, whom we all admire, was prepared to give such an unsatisfactory answer. Does he not realise that magistrates would like to have the opportunity of putting to Parliament what they think? I do not at all mind about this being monitored. What I want to ensure is that Parliament shall know what magistrates think of the laws that have been passed. It gives great confidence to magistrates—at least, so far as I know them—if they think that their views can be set out to Parliament, so that Parliament can then discuss them. We are always talking now about getting better contact between the community and Parliament, and here is an opportunity to do it.
It is absolutely ridiculous that someone should have advised the noble Lord to turn down this Amendment. After all, he has heard of the experience of two very well-known noble Baronesses, who know a great deal—probably, a great deal more than the noble Lord—about the difficulties in dealing with these matters. So I am absolutely horrified that the

1487
noble Lord should have been advised in that direction, and I hope that there will be an opportunity to discuss this again.
Lord KIRKHILL: The noble Baroness will realise that the report, as envisaged by the noble Earl, would come from the Secretary of State and not from magistrates as such. Perhaps I may make that distinction, although it is not perhaps very important. It is also fair for me to say that I have sympathy with the Amendment which the noble Earl seeks to make. The difficulty in accepting it that I find for my part is mostly one of the timetable, as the Bill has to go to the Commons. But I will look at the matter, and that is as much as I can say at this stage.
Lord LEATHERLAND: I suppose that there is something unholy about an alliance which finds me speaking in the same tone of voice as the noble Baroness, Lady Ward, but I feel there is a great deal in what she said. I do not support her for the reason that she gave; namely, that the views of JPs would need to be made known to the Government. I rather support her from the other angle, that JPs should learn how this scheme works. At the moment they do not know anything about it except what the Magistrates' Association has probably told them before the scheme comes into full-blooded operation. If, however, an annual report were to be issued describing the experiences of the authorities, it would be of enormous importance to magistrates who from time to time would have cases put before them which it would seem could be appropriately dealt with by this method. Although my noble friend cannot accept the Amendment at the moment, I hope that the Government will give further consideration to it and come forward with something else at the Report stage.
Lord BROWN: I am an ignoramus on this subject, and therefore a little puzzled. Perhaps the noble Earl, Lord Mansfield, could tell me, if not the rest of the Committee, why he is pressing this Amendment? I understood from my noble friend Lord Kirkhill that there will be an annual statistical report on the working of the service. I cannot see the difference between the procedure that will be operated in any case and the procedure that would
1488
emerge as a result of the Amendment. I am puzzled.
Lord LEATHERLAND: If I might be pardoned for speaking again, we are suggesting here something which is quite different from the statistical report that my noble friend has mentioned. We want a kind of essay in descriptive form which says that a particular youngster was taken and dealt with in a particular way, and that he responded to this or that kind of treatment or to this or that kind of employment to which, if I may use the word, he was sentenced. Therefore, the statistical report which is usually published in connection with the proceedings of all courts would not meet the situation. We want to know, in the form of a psychological analysis, if you like, how these youngsters have responded to the kind of treatment which has been given to them.
The Earl of MANSFIELD: This has been a useful debate and I thank the noble Lord, Lord Leatherland, for completing my task so far as the noble Lord, Lord Brown, is concerned. The purpose of the Amendment is twofold. It is to go a good deal further down the road of information than the mere gathering of statistics. Secondly, it is to embody the knowledge which is obtained from a number of different organisations and arms of the Government in one document where it can he read, digested and understood by a great many more folk than magistrates who, as some noble Lords will know, play a fairly insignificant role in the administration of justice in Scotland.
I hope that the noble Lord, Lord Kirkhill, will confer with his colleagues on this point, because he did not really say why he thought it was undesirable to have statistics in the form which is proposed by the Amendment. I know that the noble Lord said that there will be statistics and that there will also be a report of the Social Work Services Group; but he did not tell us either that it was too expensive or unnecessary or, going a little further, that it was undesirable to have knowledge which I feel would be very useful and would help along this imaginative and thoroughly praiseworthy scheme. It is a pity that it should be spoiled, if at all, by this lack of knowledge which is likely to come about. However, the noble

1489
Lord has been generous enough to say that he will look again at the matter. I do not believe that the other place will be so hectic during the next few weeks that they will be unable to consider, one hopes favourably, an Amendment such as this, or any others which your Lordships might feel should be written into the Bill at a later stage. That would be a sad argument to put forward. Having said that, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 11 agreed to.
Remaining clauses and the Schedules agreed to.
House resumed: Bill reported without Amendment.

TRANSPORT BILL
5.26 p.m.
Report received.
Clause 2 [County public transport plans]:
Lord SANDYS Lord SANDYS moved Amendment No. 1:
Page 3, line22, leave out ("1979") and insert ("1980").
The noble Lord said: My Lords, we return to Clause 2 of the Transport Bill and to a matter which I mentioned during both Second Reading and the Committee stage; namely, the preparation of a TPP. May I open my remarks by thanking the noble Baroness, Lady Stedman, for her very helpful reply to the Amendment which I moved during the Committee stage. We have studied her reply with great care. Consultation has subsequently taken place with one individual county council and with the Association of County Councils which comprises no fewer than 39 councils in England, known as the shire councils, and seven county councils in Wales. It does not, of course, apply to the Metropolitan counties.
To refer to what the noble Baroness said regarding changing the date from the timing in the Bill to the revised date, may I draw noble Lord's attention to what the noble Baroness said at col. 147 on 27th June:
"I appreciate that roughly nine months from now may seem a short time in which to consult
1490
on and produce a public transport plan, but it has been emphasised in another place that we do not expect the first public transport plan to be a perfect and finished document. TPP needed a running-in period and public transport plans need the same sort of period".
We in this House recognise what the noble Baroness has said, but it may be of interest to know the reaction of one county council—Derbyshire County Council—to what the noble Baroness said, and perhaps I may be allowed to quote from a letter dated 5th July:
"Our view is that an embryonic plan is not good enough and, further, that to prepare and publish the first plan by the 31st March 1979 and then prepare another plan by the 31st July 1979 will lead to confusion and uncertainty. Furthermore, it is believed that under these circumstances the possibility of disagreement between the parties involved will be increased, which might well be overcome or at least mitigated if one public transport plan were to be prepared in 1979, by 3Ist July, for eventual publication after undertaking the various consultations by the 31st March 1980. It is our belief that there is nothing to be lost and, indeed, everything to be gained by ensuring that the plan is properly prepared in the first instance, thus creating a firm, or at least firmer foundation on which to build future plans".
Here is a county council taking into consideration what the noble Baroness said during the Committee stage and deigning to disagree with that view.
I must confess that there is much to be said here for a pause for reconsideration. It is a complicated situation. Later in her remarks during the Committee stage the noble Baroness recognised that it was so and she said this:
"A public transport plan which took on its final form by 31st July in the year before that to which it related might be looking distinctly out of date by the following April, the beginning of the year to which it applied; or, alternatively, it might be couched so tentatively as to be of little value to operators and users".—[Official Report; 27/6/78, col. 148.]
Here we are in a dilemma on the situation and I hope the Government will be able to put this in a somewhat simpler form. Perhaps I may be permitted to make some suggestions. I suggest to the Government that the best answer is couched in the Amendment: that is, to read "31st March 1980" in lieu of 1979. There may be one further proposal, which is not in the Amendment but which I would suggest to the noble Baroness across the Table of the House. It is that it may be possible to evolve a system whereby the plans are in such a format as to be in the shape of a loose-leaf volume.

1491
There will of course be a very large number of them, one for each county in England and one for each county in Wales. If it were possible to up-date this annually by a scheme for the replacement of perhaps one or more single leaves, it would be a very much better system and would avoid a great deal of reprinting and duplication of effort. We believe that the right run-in period would be to choose the date 31st March 1980. I beg to move.
5.32 p.m.
Lord LEATHERLAND: My Lords, perhaps I may interrupt with a minor point compared with the one which has been raised by the noble Lord, Lord Sandys. I was for many years the leader of a large county council; indeed, I was the chairman of that county council. I forget the date on which county council elections were held every three years, but I have a feeling that it was in the period running up to 31st March because I remember that when we won the county council I took over on about the 1st April. If it be a fact, as apparently it is, that the election takes place in the period running up to 31st March, is it an appropriate date for us to insert in the Bill to be asking the council to draw up this plan with regard to motor transport in its county? This is a time when the political complexion of the council is in the melting pot and might suddenly change just before 31st March. I hope that point can be taken into consideration from the point of view of the smooth working of whatever scheme is adopted.
Baroness STEDMAN: My Lords, the Amendment moved by the noble Lord, Lord Sandys, in Committee, would have had the same effect as this Amendment; namely, to delay the introduction of the public transport plans. As he has quoted from me, I said on that occasion that we would view any delay with very great concern and I hoped that I had assured the noble Lord that we were not placing too great a burden on county councils by requiring the first plans to be prepared by 31st March 1979. The second plan, of course, is not to be prepared by the 31st July 1979; that is to be ready by the 31st March 1980. So they have not got this very short period between their first and second plans.
1492
The noble Lord wanted to have a running-in period for the new system. I agree with him. It is the nature of a public transport plan that it starts from where a county has got with discharging its public transport responsibilities, so that there is in any case a gradual build-up. Some counties will start with a comparatively well-developed plan of public transport policies; others, we know, have not got quite so far. But even the best plans are not going to be cut and dried proposals for years ahead. The plans are an annual statement of needs, problems, policies and objectives set against a five-year time-scale, and since public transport needs change, so too must the plans adapt to the changes that are needed.
So we have to accept that the first plans prepared by some counties will be embryonic—perhaps reflecting only a small advance on the content of their present TPPs. But in requiring an early plan we will make sure that the counties make a real start with their new duties right away. The plans that the counties publish by 31st March 1980—their second plans—will then be a better contribution towards improving pubic transport than if they were their first plans. By making the earliest practicable start county councils will begin to involve the operators, the other local authorities and the transport users that much sooner in their planning. The importance of wider consultation on public transport is something on which a number of noble Lords in this House from time to time have laid great weight. The sooner the countries start on that, the better, not least because the process of involving local people is something which obviously will take time.
I can follow that some counties might like, for understandable reasons, to have an extra year so that their first plans can be more polished. But the problems of public transport in many of our shire counties, to which the noble Lord referred, are becoming acute and we cannot afford this luxury of time. The formation of policies, as I have said, is to be an on-going process; the plan an expression of where it has reached at that particular time. We want the counties to begin their tasks right away, and indeed I believe that a number of counties have already started. The noble Lord made an interesting suggestion about using a loose-leaf volume. That is no problem

1493
at all; it is purely a matter for the counties to decide as to how they up-date their programme. It is a matter of mechanics for them, but because we want the counties to begin their task right away, I must ask the House not to accept this Amendment.
Lord LEATHERLAND: My Lords, my noble friend is being far too modest in not replying to the point I raised with regard to the inconvenience of the date 31st March, a week or two after the political complexion of the council may have changed.
Baroness STEDMAN: My Lords, with the leave of the House, may I apologise to my noble friend, while reminding him that we have had local government reorganisation and the elections are now held in May.
Lord SANDYS: My Lords, I have listened with close attention to the reply given by the noble Baroness, which follows closely on what she said at Committee stage. I believe that there is a difference of opinion which will be difficult to bridge. I think the noble Baroness is quite right when she says that there is overlapping. I do not use her exact words here but there is an overlapping of dates which will occur, whichever date we choose. Rather than go over this problem of the dates and associating it once again with the transport supplementary grant, I believe that the best solution would be for me to withdraw the Amendment and to rely upon the arrangements being made between the Department of Transport and the counties, and see what can be achieved by that method. I have pursued this matter with some diligence through three stages of the Bill and I hope the Government have taken on board the problem. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 2 not moved.]
5.39 p.m.
Viscount SIMON Viscount SIMON moved Amendment No. 3:
Page 4, line 3, at end insert—
("( ) In order to establish, for inclusion in the plan, what are the needs of the communities referred to in subsection (2)(a), the council
1494
shall ascertain, in whatever manner they consider most appropriate, the views of parish councils (or parish meetings where no parish council exists) and in Wales community councils, and shall take these views into account in preparing the plan.").
The noble Viscount said: My Lords, at the Committee stage I moved an Amendment to try to ensure that the parish councils, who are nearest to the roots, should be involved in the preparation of the plan by the counties. The noble Baroness raised certain very valid objections to that. She thought it imposed much too great a burden on the county councils. I had suggested, your Lordships may remember, ascertaining this information through the district councils. I accept that this involves a considerable amount of work. Having laid upon the county councils an obligation to ascertain the needs of the communities within the county she also thought that it was wrong to suggest how they should do it. So I have come back with the same object, but with a different method, and I think I have met the noble Baroness' objections.
The noble Baroness was good enough to call my attention and the attention of the Committee to Clause 2(2)(a). I find that this is in fact a much better peg upon which to hang my argument. Clause 2(2)(a) says that the plan-that is, the annual plan—
"shall contain a review of the county's needs, and the needs of the communities comprised in it".
In passing, the noble Baroness speaking in Committee said that the clause provided that the county councils shall "review the needs" of the individual communities. With great respect, I think she has not quite correctly read what the clause says. What is says is that the plan shall include "a review of the needs". I suggest that, in that context, the word "review" is used in rather the same sense as we talk about a naval review, where all the ships are laid out and you can see them all at a glance if you are in the right place. But what is suggested here really is that there should be a comprehensive account of the needs of the communities. Even if I am wrong on that, and she says that it does mean a reappraisal, the position remains the same. How can the county review the needs of the communities unless they know what the needs of the communities are? It is all very well to say this would be a very difficult thing to find out,

1495
but it seems to me that a duty is laid upon the councils to find it out.
In the Amendment I have now put down I have suggested that they should ascertain "in whatever manner they consider most appropriate" the views of the parish councils and the other bodies concerned. That seems to me to leave it entirely to them. If they say it is impossible to ascertain the needs by any means at all, then I would suggest to your Lordships they are really saying that it is impossible to comply with the Act, because you cannot review the needs of the communities unless you find out what those needs are. It was on those grounds that I thought I should come back with this proposition.
There has been a letter, which the noble Baroness has probably seen, from the Association of County Councils, objecting to the Amendment, and I have of course studied it with care, though in fact I received it only today; I make no complaint about that because the time has been short. There again they say that the counties will he informing themselves of the communities' views, where necessary by approaching parish councils. The only words on which I may differ from them are the words, "where necessary", because I would have thought it is necessary, if they have to ascertain the views, that they inform themselves what they are. I would hope that the noble Baroness might think the new wording I have proposed is quite harmless and that it just reminds county councils that, to get this position in proper perspective, they do really need to take account of the views of the individual communities. In this Amendment we are leaving it to them to do that in whatever way they think most appropriate. I beg to move.
5.45 p.m.
Lord CLIFFORD of CHUDLEIGH: My Lords, I wonder whether I might be permitted to support the noble Viscount, Lord Simon, in his Amendment. I should declare my interest, in that I am the president of the Devonshire Association of Parish Councils. I support this on the basis of trying to get some consultation to the grassroots in this country on this Bill, which concerns the local small isolated communities. I consider the
1496
argument of the noble Baroness in Committee somewhat invalid. My council—I am referring to the Devonshire Association of Parish Councils—should be consulted. It would only mean the county council having to consult the equivalent of one extra district council. After all, the equivalent of one extra district council is nothing. Most district councils are now urban weighted vote-wise. Therefore, to my mind it is unfair to the grassroots—that is, the isolated parish councils, or parish meetings where there are no parish councils—if they are going to be left out. Otherwise, the present district councils will give weighted urban viewpoint.
I speak also as an ex-vice-president of the erstwhile Rural District Councils Association, and these are points that we brought up time and time again in the debates on local government reorganisation; that is, that the small isolated individual rural communities were going to he left out. To my mind, it is essential that the rural view is given, and this is what I think the noble Viscount's Amendment would achieve, After all, it would only formalise a practice which good county councils have carried out for many years. The county councils are now going political. Parish councils are still independent. District councils are beginning to go political, and county councils already have, to a large extent. I could tell your Lordships one or two stories on that score, but perhaps it would not be apposite on the present Amendment. Therefore, it is even more important that the grassroots be consulted, that the isolated communities should not feel even more isolated, or driven to one or other of the Party machines to try to get what they consider fair treatment.
As I pointed out to the noble Lord, Lord Donaldson, in my Question on the grant to the Beaford (population 360) village hall, there are 400 village halls in the County of Devon. They are all fairly isolated. Something should be put in to make the county councils, who are now getting more and more enmeshed in the political machines and the urban vote, consult, not every parish council but the Association of Parish Councils—and every county has an association of parish councils, so far as I know. It might not be a quick answer. Most of the

1497
councils, I know, meet only once a month, but that is no excuse for ruling out consultation with that body. There is a national council, too. They can get an answer a, quick as a district council with its urban base.
Finally, I would ask the noble Baroness to consider the effect—and transport comes into this—of the local snow blizzard that we had in the South-West last February when so many of these outlying areas were cut off, some for a matter of weeks. If I could illustrate the point I am trying to make to the Government, at the last annual general meeting of my parish council association we had all the complaints coming in about the drought during the previous two years. We heard how the centralised water authorities all combined and we heard all about standpipes and so on. The representatives of the local parish councils came up with the same stories: "Why didn't they use the old water suppy? Why didn't they use the such-and-such leat?" The reason they did not do so was that the centralised, nationalised council bodies do not have a clue about what takes place locally. It is only the local parish councillors who know.
In my particular case—this is only an example—there was a water supply on my property which, for 70 years, had provided the village of Kingsteignton with water. Ten years ago we were told: "We don't want any small suppliers any longer", and the supply was cut off. They were only paying about £400 a year, so it did not matter much to me. They turned off the supply and that was that. Throughout the whole of the drought that small reservoir was overflowing to the same extent as before. Daily I expected someone to come and look at it, because it was only a question of turning on a pipe to put the supply into the system again. However, nobody came. I knew about that supply and so did the local people. All the people in the parish knew about the local reserve water supply which they used to have before the monolithic modernisation was introduced.
Surely when supplying to transport we can allow the Amendment to be passed which would get the centralised county councils to consult the small isolated communities. Such consultation can be
1498
done so easily by going to the centralised body: we do not need to go to every single parish council. We would receive a lot of answers. We would have had a large number of answers to the drought problems in the South-West if they had bothered to consult the local parishes. I beg the Government to allow the Amendment because, if this provision is included, county councils will have considerably less trouble as regards any problems that arise on this basis in the future.
Lord DAVIES of LEEK: My Lords, I do not wish to delay the House, but this matter is important. Many of us have had the opportunity to live and work in rural areas. I had the privilege of representing a rural area, the majority of which covered 1,000 square miles. It was situated in the North-East of Staffordshire with some 3,000 farms and with rural parishes. If a plan is being prepared by the county, the county planning authority—the centre and focus of power in the county—can be situated 60 miles away and there are people in the planning authority who do not know particular highways and by-ways. During one notorious winter bread had to be dropped in one village which had the appropriate name of Flash and Longnor, where they used to mint illegal money. People living in the area knew that, despite the snow drifts—which in some cases were 30 feet deep—a way could probably have been found to that area without the loss of life which occurred when the plane which dropped the bread crashed.
Rural areas should be consulted. What is happening to British democracy? Indeed, what is happening to local democracy? Everything is being over-centralised and in this apotheosis of the electronic computer, human beings do not seem to count any more and there is the superficial god-like attitude of the central people that the centre knows best; the centre knows what it is doing. Nine times out of 10 it boggles every plan that it embarks upon so far as rural areas are concerned—for example, in connection with the distribution of food in winter time or taking a coffin to bury the dead.
I hope that the Government will take notice of this Amendment. There are so many Members on the Opposition Benches that if they want to press this to a Division

1499
they can win without my vote. Therefore, I shall not walk in the Lobby with them. However, I hope that the Government will look at this Amendment because, in my view, this is a constructive Amendment worthy of consideration. I hope that my friend Lady Stedman will be able to say that the Government will look at this matter so that during the next stage we shall receive an answer which is more sympathetic than the Bill is at present.
Lord MOTTISTONE: My Lords, carried away as I am by the noble Lord, Lord Davies of Leek, I should still like to ask the noble Viscount, Lord Simon, if, when he comes to wind up the debate on this Amendment, he could explain why subsection (4) does not wholly meet the main sense of his Amendment. In my view, it seems to meet not only his point but that of the noble Lord, Lord Clifford of Chudleigh, and the noble Lord, Lord Davies of Leek.
Lord WIGG: My Lords, I am a little puzzled. I am deeply moved by the inefficiency that operates in the area of the noble Lord, Lord Clifford of Chudleigh, but it is understandable because there has been a Tory council there for generations. However, I must confess that it is a grave reflection upon their officials because, clearly, if there is a hardship—that is to say that when there is a drought they suffer and when there is too much water they suffer—they appear to suffer all the time. But what about the councillors whom they have elected? Do they not have a job?
We must address ourselves to the Amendment and how far it goes towards solving the problem. I am sure we should all accept that if the stories given to us are even 50 per cent. correct, something needs to be done about it. I suggest that the Bill itself imposes a duty upon district councils to consult. How many parish councils may there be in a district council's area? The Minister told us in Committee that in some areas it is quite frequent to find 30. Therefore, it seems to me that if this very woolly Amendment—woolly almost to the verge of being administratively barmy—were included in the Bill, the officials of the already inefficient councils (the centralised body of which the two previous speakers both complained, I am sure with justification), who are obviously
1500
not up to scratch, will spend the rest of their time, not putting things right when there is a drought or too much water, but in consultation.
I abhor liberalism and all that it stands for. I said that at an earlier stage and got myself into great trouble because I was specific in what I regarded as the regrettable influence of Liberalism on Toryism. I have respect for high Toryism but the wishy-washy cold cocoa version I have no respect for at all because it is basically barmy; it is verbal knitting. It does not mean a thing to impose a duty on a body to consult with a view to action as it may think appropriate. What in the name of goodness does that mean in practical terms?
Therefore, while I have the utmost sympathy with the object, this is not the way to secure it: it would be all consultation and no action. Given the choice, I prefer action to consultation. Therefore, I very much hope that without more ado we shall not waste our time on this matter, even though I am sure that all of us, however half-hearted we may be and whatever political philosophy we may have, are in sympathy with what the noble Viscount is seeking to do. However, I am completely sure that this is not the way to do it.
Lord CLITHEROE: My Lords, the noble Lord, Lord Mottistone, said that in his view the Amendment of the noble Viscount, Lord Simon, was unnecessary because of subsection (4). Subsection (4) does not mention parish meetings. Therefore, I prefer the Amendment of the noble Viscount, Lord Simon, and shall be happy to support it. I should also like to say that there are counties in England—Lancashire is one—where there is close contact between the county council, the parish councils and the district councils.
Lord SANDYS: My Lords, I should like to open my remarks by declaring an interest because, like o the noble Lord, Lord Clifford of Chudleigh, I am president of a county association of local councils, in my case Hereford and Worcester. Having discussed this Amendment with the Secretary of the National Association of Local Councils in London this morning I have come to the conclusion that, despite the fact that we have great sympathy

1501
with the noble Viscount, Lord Simon, with great respect this does not seem to be the perfect answer to this problem.
Our attention has been drawn by the Association of County Councils to a very interesting computation of the number of parishes there are in counties throuhgout England and also the community councils in Wales. The figure varies quite enormously. Nobody has mentioned specifics so far, but I think that they emphasise the argument. The county with the minimum number of parishes is the Isle of Wight, with only 16, and the county with the maximum is North Yorkshire, with no fewer than 762 parishes. Some of those parishes are, in fact, urban boroughs; some are rural parishes. One entirely accepts what the noble Viscount, Lord Simon, said earlier, that the vast majority of parishes in both England and Wales are of a rural nature, but not all.
I believe that the Bill as drafted contains grounds for thinking that the situation will be manageable. I refer, of course, to Clause 2(3) which is quite specific. It says:
"When preparing or revising the plan"—
and then there are qualifying remarks—
"the council shall enter into consultation with"—
and then it cites various bodies. It includes the district councils in the county; and it adds a further caveat in subsection (4):
"To all those mentioned in paragraphs (a) to (c) of subsection (3), and also to—
(a) the county's parish and (in Wales) community councils"
I accept what the noble Lord, Lord Clitheroe, said, that parish meetings are not included. I think it would be helpful if the Government could perhaps identify here whether the expression "parish" includes parish meetings, because in certain Acts it does. Perhaps we may be given an interpretation, because I think that it is a valuable and relevant point.
The other matter to which I must draw your Lordships' attention is, of course, that the districts, which are compelled by this section to be in consultation with the council, and the council, which is compelled to be in consultation with the districts, have the staff backup, which the parishes do not. I believe that, despite the blandishments of the noble Viscount, we should think very carefully about this
1502
matter, and I hope that he will not press the Amendment to a Division.
Baroness PHILLIPS: My Lords, I hate to take issue with the noble Lord, Lord Sandys, but I am also concerned with the Association of Parish Councils, as it was called. I think that we must concern ourselves particularly with the fact that they were the initiators of the original agitation about rural transport—it came from the grass roots. As a "townee" who lived in the country and who grew greatly to respect the strength of the parish meeting, I would certainly say that it should be included in any consultation. The noble Lord has just said—and the Minister will no doubt confirm this—that subsection (4) gives this provision. If that is so—and to take the point raised by the noble Lord, Lord Wigg, I would not like to appear barmy—why then, in one case do we get the phrase that they "discharge their responsibilities" by entering "into consultations", but in the second case we get the phrase that "they should be:
"afforded an opportunity of commenting on a preliminary draft of the plan"?
If there is a subtle difference, I am not sure what it is. However, I know from many sad experiences in towns that to comment on a plan which is already formulated means that people tell you what they will do at the point they will do it. If you are in a deputation, you are very lucky if you change the plan. On the contrary, "consultation" surely means coming in when the plan is actually being formulated.
I think that the parish is the place that knows of the difficulty of rural transport, far more than the county council or district council. Indeed, they were the first sufferers from the British Rail plan, which I think we have now forgotten. Very many villages are almost entirely cut off, except for those people who are fortunate enough either to have a car or some kind of coach to help them. Therefore, I should like to know the difference and if, in fact, there are sheep in one section and goats in the other, perhaps we could have an amalgamation in accepting this Amendment.
6.6 p.m.
Baroness STEDMAN: My Lords, the noble Viscount, Lord Simon, has given your Lordships another opportunity to

1503
debate the role of parish councils in public transport planning. I believe that this is one aspect of the wider problem of involving people in local public transport issues; I am sure that there is no difference of opinion on all sides of the House about the importance of that. The practical question is how to achieve this end: how much can be done by legislation and what must be left to the good sense and initiative of those concerned locally.
We must remember the range of circumstances for which we are legislating in this Bill. The non-metropolitan counties embrace every type of settlement from major cities to the smallest rural hamlet. In everyday terms the transport issues of local communities range from complaints about particular bus services to the fact that there is no bus service at all in another part. I do not believe that people are unaware of local authorities' responsibilities for these matters—after all, county councils have had the responsibility of co-ordinating public transport since 1974. Nor are people slow to make their views known. As my noble friend Lady Phillips said, the pressure for rural transport came from the grass roots, from the parishes.
The defect which our proposals are designed to remedy, is that there is insufficient public knowledge of how the county councils see the issues and what they propose to do about them. In other words, it is not so much opportunities to express views which are needed, but some coherent proposals to focus local debate. That is the importance of a public transport plan which will be widely available to the public. This idea of local debate also reflects the nature of the plan. As I have said, this is not to be a plan which is prepared over a long period by an elaborate procedure involving public inquiries and appeals to central Government. Equally, it is not a plan which will pretend to solve all a county's public transport problems or set them within a rigid framework for years to come. But it will be an account of the current issues the lines on which they are being tackled and the way in which these matters are likely to develop over the next few years. All this is an attempt to devise some continuing process which mirrors the changing world of public transport.
1504
It follows from what I have said about the nature of the problem and our solution that a county council must involve people at any time it is necessary and in whatever way is best. The district councils will be expected to consult with their parish councils and their parish meetings, and the parish meetings and the parish councils will be specifically asked to comment on the initial plans when they are formed. We are not thinking only of parishes, but also of trade unions, transport users and any other bodies with a special interest in transport, and, indeed, of individuals. Events are not going to fit neatly into any annual planning cycle. Services can be debated and changed, proposals for community transport or experimental services can be brought forward at any time. So we must see a development of existing contacts between the county councils, other local authorities and all those concerned with public transport. It is only by accepting that this is a developing process that we can sensibly ask for the first plans to be published as early as March next year. These may be rudimentary plans based on present knowledge and the amount of consultation which limited time allows, but they will start the whole process of building up local relationships.
The noble Lord, Lord Sandys, has referred to the communication which many of us have received from the Association of County Councils, and he quoted from it. I should like to quote further from it. They say that parish councils already have the right to comment under Clause 2(4), and that power will very adequately safeguard their position in so far as it has not already been looked after by their district council. It should be stressed that counties do not formulate their policies on transport, or on functions, on formal consultations alone. They have many specialist officers whose task it is to conduct surveys, et cetera, in the community to try to ascertain the needs of users of services. Bus operators are also increasingly becoming much more conscious of the need to find what users and potential users require, and county councillors are as much representative of the views of local people as district or parish councils, and they spend much of their time establishing what their communities require.

1505
Their last paragraph says that the Association—that is the Association of County Councils—believe that this Amendment will put an intolerable burden on the manpower resources of counties, would delay the production of plans, would result in the preparation and yearly amendment of plans as a primary activity rather than the implementation of policies. They hope that we will oppose it. Events are not going to fit neatly into any annual planning cycle, and it is only sensible that we should have as much consultation as we can at ground level.
I am sure that the noble Viscount, Lord Simon, will accept the spirit of what I have said. The difference between us is one of means and not ends. I do not believe it will help to say in legislation that county councils must formally establish each year the views of all their many parishes—or parish meetings—which amount to several hundred in some counties. Many of them will in any case be content with the services they have, or reconciled to the absence of such services. As the noble Viscount recognised in the Second Reading debate this would be an immense task, and if we set counties an impracticable administrative task they will lose heart for the prime job of planning public transport. An injunction laid upon them to collect views once a year would also be less rewarding than the process I have outlined of developing continuing contacts between county councils and everyone else concerned with public transport, backed by the provision in the Bill that parishes and other interested bodies must be given an opportunity to comment on the draft public transport plan.
In short, my Lords, the Government view is that the answer lies not in elaborating the statutory framework but in explaining to all those who will be concerned with public transport planning how we think relationships should develop to meet local circumstances. That is something we will do in the Department of Transport circular which we shall be sending to local authorities and public transport operators when the Bill has been enacted. I will undertake to this House to see that this circular takes account of the points that have been made, and I hope that with that assurance the noble Viscount will agree to withdraw his Amendment.
6.15 p.m.
Lord O'HAGAN: My Lords, before the noble Viscount, Lord Simon, decides what he is going to do about this Amendment I hope that I may be permitted to say a word. We have just heard a formidable case against the Amendment presented by the noble Baroness, Lady Stedman, with her normal grace, efficiency and charm, so that it is hard to resurrect some of the points that the noble Viscount, Lord Simon, and my noble kinsman Lord Clifford of Chudleigh, put before the House earlier in the debate on this Bill.
This Bill erects an elaborate structure, and much of the debate about the Bill has not been about its purposes or its detailed content but the manner in which the structure can be made to work most efficiently. We have looked at the relationship of the county councils to the transport commissioners, and so on. Several noble Lords and noble Baronesses have stressed the need for feeling from the lowest level being allowed to percolate up to the top when plans are being made. Living in a rural parish in a new county, the County of Avon, which is trying to concoct a structure plan from that of previous counties, I am very conscious of the technical difficulties that many noble Lords have seen in putting this additional burden of consultation upon those who have to carry out the duties of running county council work, be they councillors or be they officials. At district council level the same difficulties apply.
I do not think that this is a subject—and I hope that the noble Lord, Lord Wigg, will forgive me—on which one can take a purely Party political view. It is a matter that your Lordships collectively are particularly qualified to look at in an all round way. Here we have something that is going to affect the lives of everybody—what is the best way of making sure that the public is truly served. On the one side there is the view of the Association of County Councils and district councils, and on the other side the case that I heard this morning from a colleague in another place, Mr. Newton, about a new plan that had come out for a bus route through a particular housing estate in his area that was going to be most dangerous for children, and nobody had been consulted as to whether that route should go through that housing estate.

1507
I shall not detain your Lordships any longer. If this Amendment goes into the Bill we are doing our job, which is to give the other place a chance to look at a proposal again. If it does not, we have had a useful discussion, and the noble Baroness has already said that it will be taken into account when the circular is being drafted. I hope that your Lordships will make up your minds individually and see how the balance of argument takes you. I think that this is a most valuable point to have discussed again, and I am grateful to the noble Viscount, Lord Simon, for giving us a further opportunity of looking at it.
Viscount SIMON: My Lords, I have listened with tremendous interest to this discussion. Before I come to the noble Baroness, Lady Stedman, may I reply to the other speakers. I think that the noble Lord, Lord Clifford of Chudleigh, underlined the lack in certain cases of a proper relationship between county hall and the parishes. I am sure that in some counties it works very well; in others I suspect it is not as good. The noble Lord, Lord Mottistone, asked me why subsection (4) does not answer the question. I think that that question of his was admirably answered by the noble Baroness, Lady Phillips. Nobody can deny that the opportunity of making observations after a plan has been drafted is nothing like as good as consultation before the plan.
The noble Lord, Lord Wigg, said that he felt that this Amendment was typically liberally woolly. Well, I must say in justification of myself that it is a bit woolly but this is because the noble Baroness, on Committee stage, said that it is the county councils' responsibility and it would be quite wrong to usurp their functions by prescribing the way in which it should be done. That is why I used the words that they should do it in any way that they thought best. This covers all the different methods that have been suggested. They may use the district councils or, as the noble Lord, Lord Wigg, said, the elected representatives of the people—and I think that would be a very good way of doing it.
The noble Baroness said that many councils had specialist officers who were quite capable of finding out this position. That may be, in their case, the best way of finding it out. All I feel is that we want
1508
to say in the Bill that the needs of these communities must be found out. I should have been prepared to consider the argument that the Amendment was unnecessary, except that it seems to be necessary because of the immense amount of resistance that is given to the idea that the views of the parish councils ought to be considered. I will come in a moment to the letter from the county councils.
The noble Lord, Lord Sandys, said this was not a perfect answer, and I could not agree more. I do not know that there is a perfect answer in this field, but if he has one to suggest I hope he will table it as an Amendment for Third Reading because I think we are all agreed there is a problem here and we want to find the right solution. The noble Baroness, Lady Phillips, made an excellent point which I think dealt with the matter raised by the noble Lord, Lord Mottistone, and I will say no more on that.
I now come to the remarks of Lady Stedman. Lord O'Hagan said she made out a formidable case and I agree it sounded a bit formidable, but she was, I am sure unwittingly, doing what is an easy thing to do when making out a formidable case against an Amendment; namely, shooting down certain things which the Amendment does not say. She argued in favour of continuing discussions and said that they were much better than formal discussions once a year. The Amendment does not suggest there should be formal discussions once a year; it suggests that, by whatever means the county council think best, they will ascertain from the parish councils and small authorities what the needs are.
The noble Baroness, Lady Stedman, said the existing contacts should be developed, and I could not agree more. Where there are existing contacts with parish councils—and we have heard that in certain counties there are some, either directly or through the associations of parish councils—by all means let those existing contacts be developed, but can anybody put his hand on his heart and say there are no county councils where there are no existing contacts that enable a proper understanding of the needs of parish councils to be reflected in county hall? I accept from the noble Lord, Lord Wigg, that that shows—I will not say

1509
which Party has elected the councillors to county hall—that some Party of which he does not approve has elected them. I am sure that it happens. It seems clear that it is laid down in the Bill that councils should in some way ascertain the needs of the communities (because if they do not do so they cannot fulfil the necessary provisions), but nobody has said how they propose to do that.
The letter from the County Councils' Association does not really help us in this. They just say it will be a tremendous amount of work; they raise the point that parish councils have the right to comment under Clause 2(4)—and I have tried to deal with that—and they rightly emphasise the number of parish councils there are. As I mentioned earlier, they themselves suggested that specialist officers could conduct surveys to ascertain the needs of users. If they do that and if they think that is the best way to do it, then they are complying with the spirit, indeed the letter, of the Amendment. Because there has been this furious

CONTENTS

Ailsa, M.

Gainford, L.

Northchurch, B.

Airedale, L.

Greenway, L.

Ogmore, L.

Alexander of Tunis, E.

Grey, E.

O'Hagan, L.

Allerton, L.

Hampton, L.

Rankeillour, L.

Atholl, D.

Harmar-Nicholls, L.

Saint Brides, L.

Barrington, V.

Hatherton, L.

Seear, B. [Teller.]

Bledisloe, V.

Inglewood, L.

Selsdon, L.

Broadbridge, L.

Kimberley, E.

Sharples, B.

Cathcart, E.

Kinnaird, L.

Simon, V. [Teller.]

Chitnis, L.

Lindsey and Abingdon, E.

Strathclyde, L.

Clitheroe, L.

Lloyd of Kilgerran, L.

Swinfen, L.

Crathorne, L.

Lucas of Chilworth, L.

Terrington, L.

Daventry, V.

McNair, L.

Torphichen, L.

de Clifford, L.

Mancroft, L.

Vickers, B.

Derwent, L.

Massereene and Ferrard, V.

Vivian, L.

Forester, L.

Melville, V.

Wade, L.

Fraser of Kilmorack, L.

Monson, L.

Ward of North Tyneside, B.

NOT-CONTENTS

Abinger, L.

Houghton of Sowerby, L.

Ponsonby of Shulbrede, L

Ampthill, L.

Hylton-Foster, B.

Rhodes, L.

Bacon, B.

Lee of Newton, L.

Roberthall, L.

Blyton, L.

Listowel, E.

Segal, L.

Brimelow, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

Stedman, B.

Brougham and Vaux, L.

Stewart of Alvechurch, B.

Brown, L.

McGregor of Durris, L.

Stone, L.

Caccia, L.

Maelor, L.

Strabolgi, L.

Collison, L.

Milner of Leeds, L.

Taylor of Mansfield, L.

Davies of Penrhys, L.

Mishcon, L.

Teviot, L.

Fisher of Camden, L.

Morris, L.

Tryon, L.

Garner, L.

Mottistone, L.

Tweeddale, M.

Goronwy-Roberts, L.

Northfield, L.

Walston, L.

Gregson, L.

Oram, L.

Wells-Pestell, L. [Teller.]

Hale, L.

Paget of Northampton, L.

Whaddon, L.

Hamnett, L.

Peart, L. (L. Privy Seal.)

Wigg, L.

Hanworth, V.

Pitt of Hampstead, L.

Wilson of Radcliffe, L.

Hatch of Lusby, L.

resistance—I recognise that the noble Baroness has to speak on a brief from the Ministry of Transport, which is not her Department—perhaps they have been influenced by something the county councils have said, and we do not know what that might have been.
Baroness STEDMAN: The Department of Transport is my Department, my Lords.
Viscount SIMON: My Lords, I thought the noble Baroness knew a lot about the subject, and I can only congratulate her on the way she has mastered it. Withdrawing the remark I made about it not being her Department, I still think it is right to write this consideration into the Bill.
6.25 p.m.
On Question, Whether the said Amendment (No. 3) shall be agreed to?
Their Lordships divided: Contents, 51; Non-Contents, 51.
The DEPUTY SPEAKER (Lord Segal): My Lords, there have voted Contents, 51; Not-Contents, 51. There being an equality of votes, in accordance with Standing Order No. 53, which provides that no proposal to amend the Bill in the form which is before the House shall be agreed to unless there is a majority in favour of such Amendment, I declare the Amendment disagreed to.
6.33 p.m.
Lord DE CLIFFORD Lord DE CLIFFORD moved Amendment No. 4:
Page 6, line 19, at end insert—
("(3) In considering matters to be included in the plan county councils shall consult with neighbouring county councils to ensure as a priority that standard concessionary fares are granted throughout routes which run through more than one county.").
The noble Lord said: My Lords, after that very dramatic vote of the House I should like to draw your Lordships' attention once again to the matter which I raised on Committee. During the Committee stage the noble Baroness in her charming manner told me that I was trying to make county councils spend money which they did not have. I am coming back to this subject because I am not trying to make county councils spend money which they have not got. What I am trying to do is to ensure that when county councils draw up their plans for concessionary fares there shall not be gaps in the middle of routes which make it appear that people are going from a rich land to another land, and that the people who live in that other land cannot afford to pay to help their citizens to get these concessionary fares.
One of the things about which I feel very strongly is that the people who at the moment cannot get their concessionary fares are those who need them most. The people who get concessionary fares on through routes always get them because they are living in a rich council area, and the people who do not get them on these through routes, and who feel very strongly about this matter, are those for whom the councils say they cannot afford them. What I am asking here is that when councils consider concessionary fares in their plan, they shall give priority to the routes where concessionary fares are run by other counties, so that on one route we can have one standard concessionary fare for everyone. My Lords, I beg to move.
Baroness STEDMAN: My Lords, both the county and the district councils have powers to finance concessionary fares schemes but in practice the schemes are usually operated by the district councils. We know that there is a good deal of concern because travel concessions vary from one local authority to another, and we know too that problems do arise when passengers wish to make journeys that cross local authority boundaries, into areas with different concessionary schemes or none. We have asked local authorities to look at these problems in our recent circular on concessionary fares, and where an operator runs services in neighbouring authorities we have urged all these authorities to discuss the problems jointly with the operator. There will of course be more uniformity if all authorities bring their scheme up to the minimum of the half-fare concession which we have suggested in our circular.
The noble Lord asks that county councils should consult with their neighbours as a priority about this problem. We would argue that although the problem can be a serious one where a boundary, for example, divides a housing estate from its natural shopping centre, the problem is of much more limited concern where a long cross-country journey is involved, such as I believe was mentioned by the noble Lord at Committee stage, as to how we got from Ludlow to Birmingham with concessionary fares. The prime purpose of concessionary fares must be to cover the local journeys which are necessary to meet the day-to-day needs of the elderly and the handicapped, such as visits to the shops, the doctor, the post office, the hospital and so on. To cater for these trips must be our first priority and the additional funds which Government are making available are intended for that purpose.
Concessionary fares are not really intended for long-distance travel and the law confines those concessions to an authority's area and its "vicinity". In these days when resources are tight we should be doing the elderly and the handicapped little service if funds which are intended to help with daily needs had to he spread much more thinly to cater for long-distance travel. I would regret it if the noble Lord's Amendment distracted local authorities' attention from

1513
this basic need for the elderly and the handicapped. I do not wish to play down the problem he mentions, but I do not agree with him that this should be one of the top priorities of the counties. The first priority surely is to ensure that all pensioners have satisfactory concessionary fares for their local day-to-day journeys. At present, in more than 50 district council areas there are still no concessions at all and in more than 200 other districts they have concessions which meet less than half the cost of local bus fares—and that is the standard which we have urged local authorities to adopt.
I must ask noble Lords to reject this Amendment if the noble Lord insists on pressing it, because what we want to do is to encourage local authorities to put their own house in order before they turn to the problems of the long cross-country journeys.
Lord NORTHFIELD: My Lords, before my noble friend sits down, could she not offer help in one respect to the noble Lord opposite? In some cases a situation exists where people live in the country—I am familiar with this problem in Ludlow and all that area of Shropshire and the Midlands—and the town to which they would travel daily for shopping is in another district. So they are crossing boundaries, even in a district. Would it not be helpful at least to provide for some co-ordination to meet my noble friend's own point; namely, that we should be as helpful as possible about what we might call daily travel, rather than long-distance travel, when it covers cross-border activity?
Baroness STEDMAN: My Lords, with the leave of the House, I should say that this is the problem we have asked the local authorities to consider. Where it is necessary for their people to cross boundaries, they should have consultations with the other local authorities and with the bus operators. But we cannot ask local authorities, when they are so short of finance, and when we do not have any extra finance to give them, to use resources for concessionary fares for long-distance trips to the disadvantage of the elderly and the handicapped who want to get about on their shorter, local journeys.
Lord O'HAGAN: My Lords, the Amendment raises one of the most
1514
intractable problems in the present set-up regarding transport. Indeed, concessionary fares might well be top of the list of problems which would be suitable for your Lordships to consider in a Select Committee dealing with transport. Concessionary fares involve all the most difficult problems concerning the differences between transport as a service which pays its way and local needs, whether immediate or more remote, as well as the relationships of county councils with transport undertakings.
The problem cannot be tackled piecemeal, because it goes to the heart of the manner in which we in this country administer our transport system, particularly our bus system. In previous debates on Amendments to the earlier part of the Bill we expressed concern about the extent of the bureaucracy created by the development of TPPs on the lines that the Government have suggested, and so I believe that it is very difficult to support a proposal which appears to increase the amount of burden placed on a county council without offering any commensurate amount of income to deal with the work that would be involved. Moreover, as the noble Baroness has said, there is a responsibility on district councils as well, and they are not mentioned in the Amendment.
Perhaps at some future date the inherent inconsistencies within our system of operating, concessionary fares will throw up a need to examine the present system and the way it is organised, because there are the anomalies which have been referred to by my noble friend, as well as by noble Lords and the noble Baroness on the other side of the House. I believe that while that situation exists, it would be wrong to write into the Bill a requirement that county councils, as a priority, should look at the concessionary fares anomalies that arise across borders, because I suspect that in many cases the anomalies arise because of the nature of the views of the different county councils. Different county councils take different attitudes as to what are their responsibilities in these matters, and I suspect that very often all the consultation in the world might not necessarily lead to a great change in their attitude.
This is a subject to which we can return at Third Reading. My noble friend Lord de Clifford is noted for his persistence in

1515
applying himself to any topic on which he begins to develop a line of thought. It strikes me that the present Amendment is defective because it does not include district councils, and it is rather difficult to give a precise meaning to the phrase "as a priority" which imposes on county councils an obligation which, presumably, would be answerable at law, that they might find very difficult to discharge, especially when there are other, more pressing requirements with which they have to deal. I am sympathetic towards the intention behind my noble friend's Amendment, but I am not convinced that in its present form it would make an enormous difference to the problems on which he has focused his attention in bringing the Amendment to the House.
Lord DE CLIFFORD: My Lords, I have listened with great interest to the noble Baroness, who always puts her case so charmingly. She in fact said precisely what I had in mind and the noble Lord, Lord Northfield, also drew attention to the matter. I know that my Amendments are always defective because I am not very good at drafting them, but I am trying to get concessionary fares for local traffic on through routes. In my area there are people who have to travel from the area of one district council to that of another even to attend surgeries, and it seems completely incongruous that they cannot be granted concessionary fares while other people who travel the same distances on other routes can.
I am not trying to say that there should be concessionary fares the whole way on a through route from, say, Glasgow to Land's End. I was trying to say, though undoubtedly I have failed lamentably, that the local people who have to undertake local travel on through routes should be able to obtain concessionary fares which their neighbours may have. In view of what has been said, and bearing in mind in particular what the noble Baroness has said about drawing attention to this matter in letters to the councils, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 5 [Community bus services]:
6.48 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 5:
Page 6, line 32, at end insert—
("(2A) A community bus service may extend to the provision of excursions and tours as defined by section 159 of the 1968 Act.").
The noble Baroness said: My Lords, it might be convenient to the House, especially at this late hour, if I speak at the same time to Amendments Nos. 6 to 9, 12 and 16, as well as to No. 5, because they are all concerned with the same basic point. The main purpose of a community bus is to provide a regular public transport service to meet the everyday needs of the local people. But even with the economies that are achieved by using volunteer drivers rather than paid professionals, experience shows that the revenue from these basic stage services is not enough to meet all the costs of running the vehicle, in particular the capital cost and depreciation. So subsidy from the county council will be necessary. I am sure the House will agree that it should be kept as small as possible, for the morale of the organisers, as well as for the benefit of the ratepayers. The existing community bus groups have kept their overall deficit down by operating a few excursions and tours, and by contract hire on a very modest scale. The revenue they gain from these sources helps to subsidise the less remunerative, but essential, stage services which they run.
We had thought that Clause 5 was sufficiently widely drawn to allow the traffic commissioners to authorise the community bus to run excursions and tours, and certainly this had always been out intention. However, it now appears that the drafting could be more narrowly construed, and so we propose in Amendment No. 5, which is a largely technical Amendment, to make it absolutely clear that excursions and tours are in fact covered. At the same time it is becoming increasingly clear from the evidence we are now getting about the finances of community buses, that private hire is an equally important source of finance. As the clause is drawn at present, a community bus would still need PSV licences for the vehicle itself and the driver before it could undertake contract work. This is because the exemptions in subsection (4) apply only when the bus is being used in accordance with a road service licence, or a permit; and private hire is not authorised by a road service licence or a permit, but solely by PSV licences.
Although the community bus operators could have got round this obstacle by advertising their private hire services, or by some other technical device which would have required them to have a road service licence, we think that this is an unduly bureaucratic, and almost underhand, way of proceeding. So, even at this late stage, it is better to face the problem squarely and to provide for it specifically in this Bill. This we do in the new clause, Amendment No. 9, and in Amendments Nos. 6 and 8, which are simply paving Amendments to the new clause.
The new clause provides that the traffic commissioners can authorise the community bus to do private hire work, but incorporates a number of safeguards. The primary purpose of community bus groups is to provide stage services, and anything else must be ancillary to them. So, first, the community bus can do private hire work only if it is authorised to do so by the traffic commissioners, and they have powers under subsection (1) to impose such restrictions, if any, on the private hire operation as they think fit.
Secondly, subsection (2) provides that the vehicle used must be the same one which is used on a regular basis for the community bus service itself, so that the organisers cannot employ an additional vehicle solely for private hire work. Thirdly, subsection (3) provides that the traffic commissioners have to be satisfied before authorising operations as a contract carriage that this is reasonable in all the circumstances with a view to financial support of the community bus service.
The other Amendments to Clause 5 and the Amendments to Clause 7 and Schedule 2 are purely technical. They provide, for the avoidance of doubt, that the vehicle disc referred to in subsection (5) of Clause 5 has to be issued by the traffic commissioners, and that regulations made under Section 160 of the 1960 Act can cover the procedure governing applications for and the issue of the disc. The disc is the visible sign that the vehicle is properly authorised by the traffic commissioners, and it is particularly important that there should be no doubt about its authenticity if the community bus is also to be allowed to operate for private hire. These Amendments will widen the scope of the community
1518
bus's activities and improve its viability by further relaxations from licensing restrictions, while providing the necessary safeguards for existing operators, and I therefore commend them to the House. I beg to move Amendment No. 5.
Lord LUCAS of CHILWORTH: My Lords, I am sure that one can appreciate the purpose behind this Amendment and accept it, but there are one or two points which arise on it. I cannot understand why there should be the description in Amendment No. 9, where it says, in subsection (2):
"'The community bus' means any vehicle (being adapted to carry at least 8 and at most 16 passengers) …".
When the noble Baroness winds up, could she explain the mystique of the number 16? It was not so very long ago that vehicles of this type had a carrying capacity of 14 passengers, but modern design and construction has enabled additional use to be made of space, and so one gets 16. In fact, most vehicles of this type carry 17 people if you include the driver. What actually is a passenger? Because if you have longitudinal seats, some people may say that, as they are not divided, schoolchildren may count as half, and so on.
Something else I should like to know arises on the same Amendment, in subsection (3). The noble Baroness said that there shall be provision to ensure that an additional vehicle is being used. What happens if this community bus service develops itself into something of a regular route, running operation? One can envisage three times a week shopping from an outlying village into the city. If for any reason that vehicle is off the road, does it mean that the licence-holder has to go to the commissioners and get a substitution, or will the permit be transferable to another vehicle which may be hired for the express purpose of carrying out the work which the community bus would normally do? One accepts, of course, quite easily, that there must be some provision to ensure that the licence is not extended until a whole fleet of buses is running, but there seems to be some little difficulty here and, particularly with the kind of people operating the service, this may prove too much of a drawback.
Lord TEVIOT: My Lords, I am in agreement with Amendment No. 5, but

1519
with Amendment No. 9, together with its appendages, Nos. 6 and 8, the paving Amendments, I am afraid I am not happy. It is unfortunate that an Amendment of this nature should come before your Lordships' House at this late stage of the Bill. I agree that to some extent this is the pot calling the kettle black, because I introduced some Amendments only at a late hour yeterday; so I cannot say very much other than what I have just said. I say this, not in the spirit of the Amendment, which is something with which we are all in sympathy, but because it cuts across a basic principle of licensing for public road transport. This introduces the idea of a licence for private hire work granted through the road service licensing system.
In Part III of the Road Traffic Act 1960, licensing is dealt with in two ways. First, the vehicle and its owner are approved by the means of a public service vehicle licence; but, then, if passengers are to be carried as separate fares, a superior form of licence, a road service licence, is also required. One deals with the vehicle, the other with its operation. In this Amendment we have a confusion of the two systems. It is as if the Government were to say to a motorist, "You do not need a vehicle Excise licence", which enables him to put the car on the road, "provided that your driving licence is endorsed to the effect that you have paid the equivalent duty". It seems to me that this is nonsense, but it is a close parallel to what is proposed today; that is to say, the community bus is excused from PSV licensing but can undertake the basic work of a PSV, which is private hire, provided it has a road service licence which is endorsed for that purpose.
Here, my Lords, I am going to make certain remarks which are perhaps out of character, for I feel rather strongly about what I am going to say. I submit that if I had produced an Amendment of this nature it would have been ridiculed by the Government, whose Parliamentary draftsmen seem to think that there is some special mystique (and I use that rather over-played word which my noble friend has just used) in the language they use which is not available to we lesser mortals. On the contrary, it seems to
1520
them that their words mean, like Humpty-Dumpty and Alice, just precisely what they intend them to mean—no more, no less. Here we have a good idea but a bad Amendment. More important, I suggest that the type of work which it is intended that these community buses should undertake to augment their revenue from such services is not in fact genuine private hire because it involves the payment of a contribution—in other words, a fare—by each person travelling on a journey. In truth, this is excursion travel, and it is already very well covered by Amendment No. 5, which I hope your Lordships will agree.
I submit that Amendment No. 9 and what goes with it is not necessary, and that the unsuspected implications of its devious logic require further consideration. I ask the noble Baroness to withdraw it so that we may all have the opportunity to consider the correct way to assist community buses to achieve the success that we all wish them.
Lord O'HAGAN: My Lords, I should like to give a qualified welcome to the Amendments to which the noble Baroness has spoken. On the other hand, I am pleased that she has brought them forward, because I regard them as paving Amendments to my Amendment No. 11. The logic, about which she has talked so much at various stages of this Bill, in transport and in the transport policy of the Government, which moves her to introduce these Amendments, must lead on to her acceptance of Amendment No. 11. For that reason I am delighted.
I am also pleased that the Government are looking in detail at the best way of making the system of transport that we have in this country developed and evolved to cope with changed circumstances. In so far as these Amendments represent a development of view in the Department of Transport as to how the community buses can be made viable, I welcome that attitude. But I must share with my noble friends who have spoken a concern that a new part of the Bill of this complexity and importance is introduced at the Report stage in this house, because, as my noble friend Lord Teviot has said, there are many parts of it which need detailed examination. The Association of District Councils, for example, is not happy with

1521
some of the consequences it sees as likely to flow from this group of Amendments.
I will not weary the noble Baroness or the House with details as to their anxieties, but their anxieties are voluminous and not restricted to a single point. I do not wish to detain the House at this stage. We shall study with care what the noble Baroness has said, and what she will say in a minute or two, but it is difficult for those not in Government to cope with a complex group of Amendments of this sort at this stage of the Bill; and, therefore, while accepting the principle which she has said underlies this series of Amendments as something wholly praiseworthy, I hope it will be your Lordships' view that I can reserve our position on the Amendments themselves for we have not had time to look at them properly. Whereas the noble Baroness has a battalion of civil servants, we have only the backs of envelopes.
Baroness STEDMAN: My Lords, the noble Lord, Lord Teviot, suggested that it is wrong to introduce major changes at such a late stage and that it might have been better to wait and even perhaps legislate afresh on these points. But the problems of rural areas cannot wait, and I think we would rightly be accused of doing only half our job if we were to leave these problems unattended to. The noble Lord, Lord O'Hagan, gave a qualified welcome to it as tidying up the Bill and making it workable in principle.
The provisions on private hire are fully in accordance with the principle we have followed throughout of allowing as much flexibility as possible while enduring that adequate controls remain to prevent abuse. There are safeguards which will protect existing local operators and I am sure that the traffic commissioners can be trusted to discharge their functions impartially and wisely so that no one suffers, but the community as a whole benefits.
It is surely only natural that if the local Women's Institute—who may be very much involved themselves, even as drivers of the community bus—want to go on an outing and no services are available in the area, they should use their own community bus to do so and should be able to help subsidise or finance that service. That is what we are providing for, and I think it is a totally justifiable
1522
and indeed essential extension of the provisions that are already in the Bill.
Perhaps noble Lords have fears that, if we let the community buses run what may be termed contract service without having PSV licences, we might be creating unfair competition with the regular operators. This would be undesirable and it is not what we want to do. It would be wrong to permit a free for all. That is why we put the safeguards into the new clause and ensured that the community bus can only do contract work if the traffic commissioners are satisfied that this privilege is not going to be abused. We could have encouraged the community bus groups to find a way round the problem by some technical device which might have brought them within the scope of the road service licensing. But the question of private hire ought to be considered fully and openly, as it will be under the new clause. We did not want to do anything devious or underhand, which is why we brought in the new clause.
The noble Lord, Lord Lucas, asked what was the mystique about the limit of 16 seats. It is something like the mystique of the Parliamentary draftsmen where they have their own legal language. This is the only mystique about it. So far as the limit of 16 seats is concerned, this is the same as is imposed in Section 5(2) of the Minibus Act. The basic reason for this is that vehicles which are larger than 16 seats have different handling characteristics from those of the minibus and we do not think that the licence relaxations we propose in this Bill are appropriate for the larger vehicles.
The noble Lord also asked about the question of a new vehicle to replace the community bus which was off the road for any reason. There is no reason why the local community cannot apply to the traffic commissioners for more than one vehicle to he authorised to run on a regular community bus service, the second vehicle to be a standby vehicle. The point of the restriction which is put into the new clause is to provide that vehicles are used solely for the purpose of tours and excursions and solely for private hire. It does not preclude the possibility of a standby arrangement.
We accept that the industry has grown accustomed to the established procedure

1523
whereby it is the PSV licences alone which control private hire. They may fear that these new provisions are going to create some precedent for much wider changes in the licensing system. Such fears are groundless. The provisions are quite specific for the particular circumstances of the community bus. They have no wider connotation, and no wider connotation should be read into them.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 6:
Page 7, line 5, leave out ("in accordance with this section").
The noble Baroness said: My Lords, I have already spoken to this Amendment. I beg to move.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 7:
Page 7, line 21, leave out from ("document") to ("used") in line 22 and insert ("issued by the traffic commissioners as may be prescribed for a vehicle").
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 8:
Page 7, line 25, leave out ("virtue of this section") and insert ("the road service licence or section 30 permit").
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 9:
After Clause 5, insert the following new clause:
Use of community bus for contract work
(".—(1) A road service licence or section 30 permit authorising the provision of a community bus service may be granted so as to authorise the use of the community bus as a contract carriage, subject to such restrictions (if any) as the traffic commissioners think fit to impose.
(2) "The community bus" means any vehicle (being adapted to carry at least 8 and at most 16 passengers) which, whether or not belonging to the holders of the applicable road service licence or permit, is used on a regular basis for the purposes of the service.
(3) The licence or permit shall not be granted with an authorisation under subsection (1) unless the commissioners are satisfied that it is reasonable in all the circumstances with a view to financial support of the service.
(4) Section 5(4) and (5) of this Act apply to any use of the community bus as a contract carriage in the same way as they apply to any other use of it.
(5) This section and Part III of the 1960 Act shall be construed and have effect as if this section were contained in that Part of that Act.").
Clause 6 [Car-sharing for social and other purposes]:
7.8 p.m.
Lord LUCAS of CHILWORTH Lord LUCAS of CHILWORTH moved Amendment No. 10:
Page 9, line 6, at end insert—
(" (4) Section 145 of the 1972 Act shall be amended so as to add at the end of subsection 145(4)(b) the words "other than any such liability within the provisions of section 6 of and Schedule 1 to the Transport Act 1978 relating to car-sharing for social and other purposes".").
The noble Lord said: My Lords, this Amendment takes us back into the area of the insurance provisions under the car-sharing arrangements. Your Lordships will probably recall that during the Committee stage I expressed some doubt as to the validity of the undertakings which were provided by the Motor Conference in respect of insurance in the case of car-sharing. I should say immediately that the Motor Conference have been most generous in explaining to me exactly what their undertakings meant and, to a very large extent, they satisfied me. However, probably like the noble Baroness, or somebody in her Department, I have attempted to find out what is an "element of profit".
It was upon that that I could foresee some disagreement at an unfortunate stage where perhaps a claim was made and the insurer might decide that this element of profit had been reached and therefore the insurance was invalidated. The noble Baroness probably had the same difficulty as I have. It is almost impossible to define. But, on the way, I found out that I was dealing with a very complicated matter. On the one hand, we have the insurance company's responsibility in the matter of the car-sharing insurance arrangements; and, on the other hand, we have the law.
If the local school should say to me: "Please will you take five or six children

1525
in your car to play rounders in the New Forest on Saturday afternoon? We will give you some petrol money", I am perfectly entitled to do that without breaching an element of profit. In the event of my having an accident and there being claims against me for death, disfigurement or injury to the children—which might amount to substantial sums of money which I do not have—the Motor Insurers' Bureau will cover me under their "safety net" arrangements. If my own personal policy is sufficiently wide, that may cover it also. But it is probable that my own insurance company and the Bureau may come to some arrangement.
However, suppose for example the insurance company say: "I am very sorry, Lucas, we do not think, because of the amount of money you had "—or for some other reason unknown at this moment—"that you were engaged in a proper car-sharing arrangement. Of course, we understand our responsibilities so far as third parties are concerned, so you do not have to worry about that. But, so far as you and your motor car are concerned, we are sorry but the policy is null and void". Whereupon, the policeman comes on the scene and says, "Lucas, you have caused a traffic offence. You have been involved in an accident and we are going to charge you with dangerous driving, with driving without due care and attention and, in addition, we are going to charge you with being in breach of the law in so far as you have invalidated insurance cover".
While the insurance company can be fairly generous in the attitude that they take towards any claim I may make, the policeman cannot be so generous; he has to accept the letter of the law. If I do not have an adequate insurance cover I shall have to be prosecuted and undoubtedly will be found guilty. From the information given to me and the advice that I have taken, I believe that this Amendment is intended to provide an addition to the basic requirement of insurance, in that anybody on a car-sharing arrangement, whether or not approved by an insurance company but certainly within the terms of the Bill, will be covered. That is all it attempts to do.
In some respects one can draw a parallel to the kind of discussion I imagine went
1526
on in the 1930s when the question of compulsory insurance was first discussed. Very many opinions were offered, suggestions were made, drawn and withdrawn. At the end of the day death and injury liability were the minimum that could be included. Insurance policies today are very complicated. They have changed enormously. There is little doubt in my mind that the average man or woman, on being asked one Friday night: "Could you take the kids to a party on Saturday? We will give you the petrol money", is unlikely to contact his insurance company or broker, even if he can get hold of them on a Saturday, and say, "If I take the children to a picnic am I covered under car-sharing arrangements?" Even if the answer is "No", he will still wonder whether he can do this. The majority of people will just go and do it.
This whole question of insurance was debated at great length in the other place in Standing Committee and during Report stage. I hold the view expressed by honourable friends that the Government have got themselves into something of a jam here. They have accepted the advice which the Motor Conference have given, of course, in very good faith. I do not think that they have thought the matter through. If they are going to make car-sharing arrangements, they should ensure that all those people who might reasonably expect to undertake this task should be covered by insurance. There is only one way to do it; that is, to have a statutory requirement as a basic minimum. It is upon that basis that I beg to move this Amendment.
7.16 p.m.
Lord DAVIES of LEEK: I listened with interest to the noble Lord's constructive Amendment. I grant that my noble friend, the Government and whoever may have to deal with this have a difficult problem. The insurance industry do not want to go beyond mere petrol money because they fear that there might be quasi-taxi operations with private car policies carrying passengers. Such operations might increase. Nevertheless, those operations are outside the relaxation allowed by the Amendment. They would include public service vehicles, Without knowing completely how this could be worked out, in view of the growth of the number of cars and the needs of rural

1527
areas, and the example which has been given regarding carrying children, there should be some insurance to enable an innocent person to be covered.
I do not think that this Amendment should be passed aside easily. I believe there is a reality in the enigma, conundrum or problem that is posed. I am not qualified in these matters and cannot think how we can find an answer to this problem. The last words uttered by the noble Lord, Lord Lucas of Chilworth, that the Government may have got themselves into difficulties make me think that we should restudy the problem and see whether we can get effective cover for a person who is carrying out what is often a gracious job and helping in real difficulties. In nine times out of ten it would not be undertaken with the simple objective of making money. It could easily be proved if the object was to run as a private taxi service. Consequently, I hope that my noble friend would lend a sympathetic ear to the Amendment which has been so ably tabled by the noble Lord, Lord Lucas of Chilworth.
Lord SANDYS: I should like to support my noble friend who has given us a clear illustration of the problem. I am glad that he is supported by the noble Lord, Lord Davies of Leek. This continues a theme emphasised by the earlier Amendment of the noble Viscount, Lord Simon; that is, the need for reinforcing rural transport. In committee, we listened with interest to what the noble Baroness had to say in regard to the statement made by the Motor Insurers' Bureau.
The noble Baroness set out the statement, which went a certain distance; but as with all insurance policies, there was some small print at the end. I should like to emphasise this, because it relates quite particularly to what my noble friend said. This was the note that was appended, if I may be allowed to quote it again:
"If in any doubt whether a car-sharing arrangement is or is not covered by the terms of a private car policy the policy holders concerned should make an inquiry of their motor insurance".
That is the very problem that the noble Lord, Lord Lucas of Chilworth, identified so clearly with his excellent example of an every-day occurrence. The very business of contacting an insurance broker or the company itself lays a very considerable
1528
time problem on the person who has been asked to undertake a journey, perhaps at very short notice. The Amendment of the noble Lord, Lord Lucas, will overcome this and, as he rightly said, will give statutory backing to the provisions. I believe it deserves very serious consideration.
Baroness STEDMAN: I am always willing to give serious consideration to points raised from the Benches opposite and we have given a lot of consideration since the Committee stage to this question of insurance. I was happy to learn tonight from the noble Lord, Lord Lucas of Chilworth, that he was at any rate reasonably reassured following his discussions with the Motor Conference and that he accepted our view that the proposals made do meet the need for clarification as far as private motorists arc concerned. However, I believe he is still concerned about the question that he raised at Committee stage as to what is an element of profit and how one describes it. He, as I have, has come to the conclusion that it is a very difficult thing to define and to describe.
We have given a lot of thought to it and we do not think we should be rendering any real service by seeking to insist on a very high degree of precision at the global level, as it were, as to what constitutes an element of profit. We need to look at the matter in the context of the way in which the motor insurance industry works. I am indebted to the Motor Conference for having supplied me with some information about this. It will be known already to some of your Lordships, but I think it does bear repetition because it illustrates the problems that are inherent in generalisations about insurance. Incidentally, it highlights the very considerable achievement of the insurers in coming forward at all with the undertaking about car sharing.
As I understand it, there are approximately 65 insurance companies and groups of companies transacting motor insurance business and 39 syndicates at Lloyd's. Each is an independent entity from the point of view of the rates of premium they charge, the cover given by their policies, and their methods of operation. This independence is very jealously preserved and competition between them ensures that the motoring public has an adequate

1529
choice of insurance covers at reasonable rates of premium.
Despite this independence, I understand that almost all the motor insurance companies and all Lloyd's syndicates belong to trade associations which are, in the case of companies, the British Insurance Association and the Accident Offices Association and, in the case of syndicates, Lloyd's Motor Underwriters' Associations. All motor insurers also subscribe to the Motor Insurers' Bureau, which was set up to enter into certain agreements with the Government relating to cases involving uninsured motorists and untraced motorists. The Accident Offices Association and Lloyd's Motor Underwriters' Association exist for the advancement and protection of the interests of their members on matters of common concern in relation to the technical and commercial aspects of motor insurance. While they do not encroach into the area of rates of premium or the cover given for the premiums charged by their members, they do provide a forum for the discussion of matters—such as legislation—which affect all motor insurers in equal measure. The Motor Conference acts as a market forum representing both insurance companies and Lloyd's Syndicates in the form of a Standing Joint Committee of the AOA and LMUA, much in the same way as the touring clubs come together in the Standing Joint Committee of the AA and RAC.
Noble Lords will appreciate—as I am sure the noble Lord, Lord Lucas, does—that against this background there are difficulties in drafting criteria that would be universally applicable and leave no need at all for exercise of judgment in relation to the circumstances of any one of a myriad of private contracts. As I understand it, what the insurers have therefore done is to pinpoint a factor that in a general sense would separate the typical situation, where a motorist gives people lifts from motives of neighbourliness and they contribute their share of the costs, from that where he stands to gain financially from sharing his car. As they see it, the facts of the particular case are, as always, what matters, however precise the general formula under which the question has to be posed and answered. I can see that the greater the precision, the more difficult it is to reach an equitable and commonsense
1530
answer in the marginal case—and the more marginal cases arise.
I am satisfied that the ordinary motorist will have no real problem in grasping what the undertaking is driving at, or in deciding whether he ought to have a word with his insurers to be on the safe side. I am sure that public-spirited people, like the noble Lord, Lord Lucas, do not just once in a lifetime take other people's children to play rounders in the New Forest, and this is something he will have checked with his insurers. The insurers, on their side, agree that they will tell every policy-holder about the undertaking, as their policies come up for renewal, that passengers are required by the present law to he covered by insurance against personal injury, whatever the use of the vehicle or the conditions under which people are carried. Neither the provisions of this Bill nor the proposed Amendment would have any effect upon these requirements.
I hope that, in the light of these considerations and the explanations as to how the motor insurance business does work, the formula in the undertaking will be accepted as a sensible and workable one and ought in practice to cause no difficulty to the ordinary motorist. I hope, in the light of that, the noble Lord might consider withdrawing his Amendment.
Viscount SIMON: Before the noble Baroness sits down, there is one aspect I should like to ask about. She referred to the drivers offering lifts and said that they should not gain any financial advantage. That seems to me a little different from the suggestion here that it should not contain an element of profit. After all, if someone is driving from A to B anyway, if he gives three people a lift and they contribute to his petrol, he is getting a financial advantage. He cannot avoid it.
Baroness STEDMAN: That is illustrative of the difficulties we get into in trying to define an element of profit or a financial advantage. There are marginal cases and it is very difficult. We think the motor insurers' industry have gone as far as they can in the undertaking which they have given to us, and, in fact, as I said on Second Reading, they have gone further than we had hoped in our initial negotiations with them. I hope noble Lords

1531
will accept that the Amendment would not alter the terms of the Bill, that the motor insurers are satisfied and that the Department is satisfied that they have covered the points we wanted them to cover.
Lord LUCAS of CHILWORTH: I thank the noble Baroness for her response, which I must say is perhaps a little as I would have anticipated. She is certainly right in her understanding that, to a degree, the Motor Conference had satisfied me, particularly so far as large claims for third parties were concerned. My noble friend Lord Sandys referred again to the small print—this caveat right at the end, which suggests that the insured shall check with his company. Again, the noble Baroness referred to that when she said that the insurance companies have agreed to advise their clients, on renewal or at some convenient time before, that they should check this point. However, if you did all the things that you are exhorted to do on the pieces of paper that float through the letterbox during the lifetime of an average person, concerning gas, electricity, fire insurance, theft and so on—that is a fair mouthful, without even stopping to think—you would be running round asking people things every day. No, of course, the truth is that people do not do this. The truth is that they never realise that they should have done it, until it is too late. That is what really happens.
On a rather kinder note, if I were in the insurance business I would recruit the noble Baroness as soon as she left the Front Bench—and let us hope that she and her colleagues leave it fairly shortly—into the insurance world, because I have never heard such a splendid sales pitch for the insurance industry as she has given. It was absolutely magnificent. But she did not answer, in any shape or form, the point that I made; that is, where does a man stand vis-à-vis the law, in the event of the insurance company saying "I am sorry, but you are not covered under this car-sharing arrangement, because XYZ caveat" or something else "has not been adhered to"; and if a policeman comes along and says" "I am sorry, but you cannot drive your motor car without proper insurance. I must prosecute you"?
I do not want to delay the House, but I am sufficiently confident that the
1532
Government have not thought this through. They have not even offered to give further consideration to this matter. They think that the insurance companies, through the Motor Conference, have done all that, and more than, they should be required to do, and that the average motorist would he adequately covered. I am not so satisfied, and I do not believe that my noble friends on this side of the House think so either. I suspect that there may be at least one noble Lord on the other side of the House who would like to agree with me. Therefore, I feel that I shall have to press the Amendment.
On Question, Amendment negatived.
7.32 p.m.
Lord O'HAGAN Lord O'HAGAN moved Amendment No. 11:
Page 9, line 6, at end insert—
("(4) For the purposes of Part III of the Road Traffic Act 1960 a private vehicle shall not be treated as being a public service vehicle by reason only of the carriage, otherwise than in the course of a passenger transport business, of passengers in consideration of payment in respect of, or contributions in cash or in kind towards the expenses incurred in the provision or maintenance of, or of fuel for, the vehicle.
In this subsection "private vehicle" and "passenger transport business" have the meanings given by section 2(9) of the Passenger Vehicles (Experimental Areas) Act 1977.").
The noble Lord said: My Lords, we return to the topic of car-sharing, and this time under a slightly different heading. In their White Paper (Cmnd. 6836) the present Government said that, in addition, the legislation will remove restrictions which make it illegal for car drivers,
"…to make charges when they give lifts. These restrictions have probably had little effect, in practice, on private arrangements between neighbours. Rut they prevent the taking of payment for such organised arrangements as the Women's Royal Voluntary Service social car schemes. Payments by passengers could not only help to finance such schemes but also make them more acceptable to people using them".
We are all familiar with the sight of endless queues of cars coming into major towns and cities, with one person in the driving seat and all around him vacant seats in which passengers could be sitting. It is the Government's policy that car drivers can make charges for the lifts that they give, and it is to overcome the wasted numbers of journeys undertaken by motorists, with empty passenger seats around them, causing traffic queues and

1533
congestion, that I am seeking to insert this Amendment into the Bill.
The Amendment as drafted is complex and is not at all easy to understand. I readily admit that if the mystique of the Parliamentary draftsman—as my noble friend Lord Teviot described it—had been applied to the purposes for which I am moving this Amendment, it would no doubt have been clearer. But what I have tried to do is to use the Government's language. I have used the wording from the Passenger Vehicles (Experimental Areas) Act 1977, because that is a recent Act and it is an Act which this Government introduced. By using their words, I have sought to extend their policy which I have outlined by reading from their White Paper. I want to make it possible for commercial car-sharing to be within the ambit of the Bill.
Earlier on in our proceedings, we heard from the noble Baroness, Lady Stedman, how the Government have decided that a certain amount of fund-raising activities should be permitted to community buses. They have decided that that is the right thing to do and they are doing it. We have agreed to the Amendments. On the other side of the fence, it is right that, if a new type of arrangement is to be allowed by this Bill—that is, car-sharing—as well as the statutory bodies, the local authorities and the voluntary schemes, there should be some freedom for private enterprise to experiment, to "have a go", to take on problems that have not been dealt with by the existing transport services. This is a principle in which the Government themselves believe. They introduced the Passenger Vehicles (Experimental Areas) Act. This proposal is an attempt to take that view further and to make legal car-sharing on a commercial basis. It fits in with the Bill and I hope that the Government will accept it. My Lords, I beg to move.
Lord TEVIOT: My Lords. I am extremely sorry, but I am afraid that I am unhappy about my noble friend's Amendment, as I was with the noble Baroness's Amendment No. 9, although for rather different reasons. First, it seems to me that the proposed subsection covers, and goes beyond, the remainder of the provisions in Clause 6 and Schedule 1. It
1534
offers carte blanche for a private motorist to undermine the bus and coach industry in this country, which is hardly the intention of the Bill. As I recall, the noble Baroness assured the noble Viscount, Lord Simon, in Committee that this Bill would enable people to convey their fellows to and from their work. I am not sure whether she was right, and I am still seeking further advice on this point.
Nevertheless, if the Bill were to confer this freedom, the present Amendment would enable anyone to buy an old double-decker bus in which, apart from driving himself to work, he could convey perhaps 50 or 60 of his fellow workers. It seems to me that if the noble Baroness was right in the distinction between social and business transport—and until the contrary is shown to be the case I must accept that she is right—such an operation is quite within the terms of the Amendment, though I am sure that it was not in the mind of my noble friend. The Amendment goes altogether too far and I hope that, on consideration, he will withdraw it.
Baroness STEDMAN: My Lords, the noble Lord indicated that in putting down this Amendment he was seeking to ensure that the Bill reflected what the White Paper on Transport Policy last year said as to the Government's intentions on car-sharing. The noble Lord and I must read different things in, or into, the White Paper. Paragraph 155 said,
"…the legislation that the Government will bring forward will remove restrictions which make it illegal for car owners to make a charge when they give lifts".
Lord O'HAGAN: Is it drivers or owners?
Baroness STEDMAN: I said that it was,
"illegal for car owners to make a charge when they give lifts".
It went on to explain that, in practice, these restrictions probably had little effect on private arrangements between neighbours, but did inhibit organised social car schemes such as those run by the Women's Royal Voluntary Service. As I explained during the Second Reading of the Bill in this House, Clause 6 and Schedule 1 achieve what the White Paper proposed; first, by removing the historical

1535
anomaly that forbids regular informal car-sharing for payment; and, secondly by allowing social car schemes to be advertised.
So far as car-sharing is concerned, the Bill's provisions already cover the area with which the Amendment seems to be concerned, and without the rather complex wording about contributions to expenses. They simply provide a revised set of conditions to be fulfilled in order to qualify for the exemption from public service vehicle licensing, which is conferred on smaller vehicles carrying fare-paying passengers by Section 118(1) of the Road Traffic Act 1960. As for the ordinary private motorist who wants to share his car and his costs, the conditions are: no more than seven passengers, and no advertisement to the public, except where, in the case of a social car scheme, the local authority and the traffic commissioners have given their consents.
But there is a sting in the tail of the Amendment. The noble Lord says that he has taken the definition of a "private vehicle" from the Passenger Vehicles (Experimental Areas) Act. The proposed new subsection seeks to give its own form of licensing exemption to vehicles seating up to 16 passengers. This is not something which the Government are advocating, although it is something which was urged upon us during debates on the Bill in another place.
Perhaps some noble Lords think that private vehicle size is not significant and that we ought to give the same treatment to minibuses as to cars, but there are significant differences between the two kinds of vehicles and they are, in effect, recognised by the different provisions in the Bill. Clause 5, on community bus services, deals with minibuses. So far as seating capacity is concerned, noble Lords will notice that minibuses start where the car leaves off. This is not pure coincidence. The clause recognises that minibuses, because of their size, have a far greater potential to affect ordinary licensed bus services when they are used for other than purely personal transport and must remain subject to road service licensing control. In this way, the traffic commissioners can consider on its merits the case for their use in particular circumstances where they are able to fill a need.
1536
Clause 5 also recognises that certain safety requirements over and above those that are applicable to cars are desirable, and it makes provision for standards to be prescribed for both drivers and vehicles. In a similar way, the Minibus Act 1977, which governs the use of these vehicles for specialised groups of people by voluntary bodies and such-like organisations, provides for driver and vehicle standards to be laid down. We were told in the other place that "van-pooling", which I understand is a transatlantic way of describing some applications of minibus sharing, has many virtues to commend it; but conditions in other countries are not necessarily the same as they are here, and we should be wary of drawing conclusions that take account of different circumstances. In this Bill, we must pay regard to our own situation in assessing the value of particular forms of transport provision.
I suggest to your Lordships that. this Amendment would confuse the situation in regard to car-sharing. We also think that it would destroy the concept of the community bus which is embodied in the Bill for the sake of extremely doubtful and perhaps even illusory advantages. It is not an Amendment which I can commend to the House, and I hope that the noble Lord will either take it back for further consideration or withdraw it altogether.
Lord O'HAGAN: My Lords, I think that the Government are adopting a rather blinkered attitude to this subject. When it comes to community buses, their thoughts progress and they take some note of points that are brought to their attention, but when it comes to something that is outside the public sector they shut the door much harder, fiercer and tighter. While I appreciate that whatever is contained in the Bill will have an effect on the existing transport provision and that any Amendments made to the Bill will affect the balance of advantage gained by particular types of operator, I do not think that the argument of the noble Baroness against a commercial type of car-sharing is by any means compatible with the arguments that she advanced earlier in the evening about extending community bus services. The argument which the noble Baroness is putting forward is quite plain. It is one rule for those who arc part of the existing structure of local or central

1537
Government and another for everybody else. The Government will encourage the one to experiment but not the other.
I accept that this is a bit of a late night, last minute Amendment and that it is by no means perfect; it has plenty of things wrong with it. I shall certainly take it away and have a think about what the noble Baroness has told the House tonight. However, I warn your Lordships collectively that the smoke thrown up either by existing operators or by the transport department about this subject needs to he penetrated, because it conceals an antipathy towards schemes similar to that which has already been developed by the local authority for one particular area and which is considered to be quite compatible with existing arrangements. I can tell the noble Baroness that I have no commercial interest in this scheme.
I feel that we should take the opportunity that this Bill provides to look at a whole range of new transport mechanisms to deal with new transport needs. In the meanwhile, I shall keep my temper and withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 7 [Road service licences and permits]:
7.46 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 12:
Page 9, line 12, after ("commissioners") insert ("and related matters").
The noble Baroness said: My Lords, I spoke to this Amendment when I moved Amendment No. 5. I beg to move.
Lord O'HAGAN Lord O'HAGAN moved Amendment No. 13:
After Clause 10, insert the following new clause:
National policy for inland waterway transport
". It shall be the duty of the Secretary of State to promote a national policy for the use of inland waterways for commercial transport and to devise a standard technique and standard criteria for the appraisal of all forms of transport investment, including waterways.".
The noble Lord said: My Lords, I shall be brief. Inland waterways have no friends in Government circles, to the extent
1538
that they do not fit in. They are neither transport nor environment, and they do not seem to be on the top of anybody's in-tray so far as urgent activity is concerned. This is a miscellaneous provisions Bill dealing with transport. Although its Long Title may not directly include what I have put down on the Marshalled List, there is a crying need for action, because waterway transport is still useful. An explosive report was published in another place by the Select Committee on Nationalised Industries which, so far as I can make out, is not composed entirely of Members of the Conservative Party. It made some very stringent criticisms of the use being made of waterway transport. There is, I understand, a lack of urgency on the part of the Government as to what should be done about our waterways. As long ago as June of last year there were informal discussions in Brussels about a proposal that might help the waterways in South Yorkshire, but the Government would not move. I understand that they have taken no action.
Our inland waterways still provide a very important, though minor part of our public transport system, particularly freight. They also play an important part in exports, in that many of them are used for part of the journey that certain manufactured goods take to other countries. These inland waterways are part of our transport system, but they are neglected and more attention needs to be given to them. Mr. Shore said recently in another place:
"I accept that a successful extension of the canal system would give a welcome economic boost and a psychological stimulus to the area".
He was speaking of the area in Yorkshire that I have already mentioned.
This is a general problem. We have nearly 1,000 miles of inland waterways in this country, and they seem to be in need of further attention from Parliament and the Government if they are not to fall into decay. My new clause represents a development of the thinking behind the clause which was inserted in the Bill during the Committee stage here, when an Amendment moved by my noble friend Lord Cockfield laid a statutory duty upon British Rail. My new clause would lay a statutory duty on the Secretary of State to get on with the job. At the moment there is inactivity.
A recent White Paper published in June by the Government—British Waterways Board (Cmnd. 7248)—reveals that prolonged thought regarding this same area of Sheffield and South Yorkshire has gone on in the Government, who claim to have been asking for new evidence and investigating it, but nothing has happened.
This Amendment will not solve all the problems of the waterways, nor will it find more money. However, the Amendment makes it clear that concerted thought regarding the problems with which our inland waterways are faced is a responsibility of the Government. The second part, about which I am not as happy as I am about the first part, asks for a technique to be evolved for the appraisal of transport investment to provide the Department with a tool which they can justify publicly for the amount that they invest in particular types of transport, because at the moment there is a difference between the investment in roads and the investment in water when the question of interest is considered. I understand that roads are interest free and water is not, and it is that type of anomaly that would need to be investigated under the procedure I am suggesting.
This is a declaratory clause with all the faults and virtues that such clauses have. It is an attempt to give a set of priorities to the Secretary of State. I am sure there are plenty of things wrong with its wording, but it attempts to give more support to those who are concerned about our inland wateways and feel that they should be preserved, developed and. if need be, extended. I beg to move.
Lord COCKFIELD: My Lords, should like to support my noble friend on this Amendment. The position of the British Waterways Board as a whole is not a happy one. Last year their total turnover was £10 million and on that they succeeded in making a loss of £12 million. These are not very large figures but as a rate of loss this must rank pretty high even among the nationalised industries. But if one dissects the figures one ends up with a very different picture because two-thirds of the total loss is made on what might very broadly be described as non-commercial activities,
1540
the amenity activities, the cruising waterways, and so on. If one looks at the commercial activities of the British Waterways Board one sees that these account for only one-third of the total loss and indeed in the case of their freight services—that is the actual transport, the warehousing, the provision of dock services and so forth—they actually made a small profit.
The Government's policy, as set out in the document headed The Water Industry in England and Wales: The Next Steps, dated July 1977, is apparently to transfer the activities of the British Waterways Board to a proposed national water authority. While there may be strong arguments in favour of transferring what might be described as the amenity activities of the British Waterways Board to a new water authority, it seems very strange to propose transferring their commercial transport activities, which frankly ought to be looked at in terms of part of our overall transport activities in this country and not as part of our water supply. Quite simply, the purpose of this Amendment is to direct the attention of the Secretary of State to the development of the inland waterways so far as their commercial transport aspects are concerned. Despite the fact that, looking at the commercial activities as a whole, they show a loss, I think it would be quite wrong to write them off as something which can be abandoned. It is only right that we should make every effort possible to develop a proper inland water transport system, and the object of this Amendment is to pave the way for doing just that.
Viscount SIMON: My Lords, I should just like to say very briefly, subject of course to what the noble Baroness, Lady Stedman, has to say (and this being the Report stage I think that I have to speak before she does) that if the noble Lord, Lord O'Hagan, would take his Amendment away and bring back on Third Reading only the first half of it, I would advise my noble friends to support it. But I think the second half raises such a wide issue that it is really not very suitable for inclusion in a Bill of this kind.
Lord SANDYS: My Lords, I am sorry to hear the noble Viscount, Lord Simon, make the strictures which he did only a

1541
few seconds ago because this Amendment commends itself to these Benches very considerably. I was glad that my noble friend Lord Cockfield said what he did about the need for commercial development of the waterways. From looking at the White Paper Transport Policy, Cmnd. 6836, it is quite evident what a gap there is. We turn to chapter 7, which concerns freight, and we find there is scarcely a mention of the problem of the waterways until we reach paragraph 191. In that particular paragraph the Government are in a state of apology. They have every reason to be in a state of apology because it concerns a particular case, already referred to by my noble friend Lord O'Hagan: namely, the question of the Sheffield and South Yorkshire waterway.
This is something that I think should be placed clearly on the record because here were 18 miles of viable waterway which could have been a very useful commercial undertaking. It was a situation in which funds could have been made available, and indeed lengthy discussions took place on this very matter. But ultimately it was set aside for a whole host of reasons which it would be tedious to recite now. One of the principal reasons was that the Waterways Board were asked for no less a sum than 15 per cent. on their money. This was much too great an obligation to be placed on the Waterways Board, and the project fell into disuse. It has been set aside. Exactly the same thing has happened, for somewhat different reasons, to an even more interesting project which was the British Waterways docks at Immingham, which was concerned with a project called BACAT, largely concerning a mother ship loading barges on top. This ingenious device is a method used considerably on the larger waterways on the Continent and it would have increased substantially the commercial viability of British waterways in this country and the exchange with our European partners. There is no mention of BACAT or Immingham in the freight document; nor is there in the White Paper, Cmnd. 6876, referred to by the noble Lord, Lord Cockfield, The Water Industry in England and Wales: The Next Steps. This is a pity and it is quite definitely a gap in the commercial possibilities of our waterways
1542
and the very strong need for development, and I hope that the Government will respond to this Amendment.
Lord MOTTISTONE: My Lords, I hope that my noble friend will feel disposed to press this Amendment notwithstanding what the noble Viscount, Lord Simon, has said. Surely it is a good point to have this in the Bill at this stage. There is still one more stage to go, and if the Government do not like the text they can table an Amendment to put it straight, but for the various reasons which my noble friends have advanced the principle seems to me to be unanswerable.
Baroness STEDMAN: My Lords, this Amendment raises matters which have been very much to the fore lately in another place. The Government's policy in relation to the commercial use of waterways was set out in the White Paper on Transport Policy, which we published last year, and in our observations on the Fourth Report of the Select Committee on Nationalised Industries, which was only published last month. The two issues which are referred to in the Amendment were discussed at some length in those documents. In spite of what the noble Lord, Lord O'Hagan, and other noble Lords have said we are concerned about inland waterways; we have not just abandoned them. We see them as practicable for freight transport and we are anxious to see that sort of development.
What my right honourable friend the Secretary of State is looking for now is for the British Waterways Board to bring forward its proposals for the promotion and the development of these activities, and then we shall look at them as sympathetically as possible in the terms of the responsibilities for resource allocation and investment appraisal in the public sector as a whole. The Government will clearly need to have the best possible evidence about the likely traffic for any new facility, but where we are convinced of the potential of any project and resources can be made available there will he every possibility of its gaining approval.
As to the appraisal of investment in transport, it is the Government's policy that competition between the different modes of freight transport should be fair, and that they should operate without

1543
subsidy. The application of this policy and the measurement of returns from investment must take account of the fact that the different modes pay for their infrastructure in different ways. The cost of providing and maintaining commercial inland waterways is part of the costs of the Board, who can adapt their charges to users to reflect the quality of services and facilities which they provide. The cost of roads falls on central and local government, but the taxes on road users serve in a general way as a price system for the use of the roads. Such essential differences in finance and operation mean that it is simply not possible to devise, as the noble Lord would have us do, a
"standard technique and standard criteria for the appraisal of all forms of transport investment".
We are not unsympathetic to the objects that underlie this Amendment. But hope it will be recognised, in view of what I have just said, that the first part of the Amendment would serve no useful purpose and the second part of it would impose on the Secretary of State a duty which it is not possible for him to fulfil. The British Waterways Boad have put proposals to the Government for the Sheffield and South Yorkshire Navigation and these are under fresh consideration by the Government at present. I hope the noble Lord will not feel it necessary to press this Amendment. I would suggest to him that it is perhaps not appropriate to add it to this Transport Bill. The Government did issue in 1977 a White Paper on water which covered the future of the waterways as part of the water industry. The legislation that is foreshadowed in that White Paper would I think provide a much more appropriate context for a much more detailed debate on this subject and the enactment of any suitable statutory pro-
vision that had to follow. I hope the noble Lord will think about it and might be persuaded to withdraw his Amendment.
Lord O'HAGAN: My Lords, I thank the noble Baroness for that reply, which, as always, was careful and showed every sign of deep thought given to the topic; but I thought it was the worst answer she had given us today. I admit that there is something to be said against the second part of my Amendment, and when, as I hope, shortly we pass this Amendment it will be open to noble Lords on the Liberal Benches and elsewhere to put down Amendments to alter what I have on the Marshalled List. This is my first attempt and of course it will not be perfect. But, as my noble friend Lord Mottistone said, it is much more important to stand aside from the wording and look at the principle, and the principle of the matter is quite clear. Whatever Transport Bills the noble Baroness thinks will come or may come, this is the Bill we are dealing with now. It should say something about waterways. It should impose this sort of duty. Whatever the prospects for the future may be, I do not think that your Lordships should stop and, while the inland waterways system deteriorates, stand and wait for another Bill that this Government may or may not introduce. The right thing to do is to put the provision in the Bill now, and perhaps amend the Long Title afterwards. But, first of all, let us put it in the Bill.
8.4 p.m.
On Question, Whether the said Amendment (No. 13) shall he aggreed to?
Their Lordships divided: Contents, 42; Not-Contents, 30.

NOT-CONTENTS

Bacon, B.

Houghton of Sowerby, L.

Segal, L.

Birk, B.

Lee of Newton, L,

Stedman, B.

Blyton, L.

Llewelyn-Davies of Hastoe, B.

Stone, L.

Collison, L.

Maelor, L.

Strabolgi, L. [Teller.]

Davies of Leek, L.

Mishcon, L.

Taylor of Mansfield, L.

Davies of Penrhys, L.

Noel-Baker, L.

Walston, L.

Fisher of Camden, L.

Peart, L. (L. Privy Seal.)

Wells-Pestell, L. [Teller.]

Hale, L.

Phillips, B.

Whaddon, L.

Hatch of Lusby, L.

Pitt of Hampstead, L.

Wilson of Radcliffe, L.

Hood, V.

Ponsonby of Shulbrede, L.

Wynne-Jones, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
Clause 20 [Transport supplementary grant]:
8.12 p.m.
Lord O'HAGAN Lord O'HAGAN moved Amendment No. 14:
Page 16, line 41, leave out from beginning to ("and") in line 44.
The noble Lord said: My Lords, this is merely a consequential Amendment following the Amendments that were passed during Committee stage. I beg to move.
On Question, Amendment agreed to.
Schedule 2 [Amendments about road service licences and permits]:
Lord TEVIOT Lord TEVIOT moved Amendment No. 15:
Page 20, line 13, at end insert ("but shall have particular regard to the co-ordination and efficiency of the general provision of passenger services by road and, if the applicant is not the holder of a public service vehicle licence, to the matters specified in section 35(2) of the Transport Act 1968").
The noble Lord said: My Lords, I beg to move Amendment No. 15. Although I have never been happy about new Section (2D) to Section 135 of the Road Traffic Act 1960, I have not previously found a form of words that I have felt able to suggest to your Lordships' House. That is why I have not introduced it at an earlier stage. In the present Amendment I believe that we have a practical answer.
As originally enacted, when the traffic commissioners consider whether or not to grant a road service licence of any type, be it stage, express or excursion and tour, Section 135 prescribes the same criteria. Although I believe that the Amendments to that Section contained in the Bill are largely cosmetic, possibly seeking a psychological change in attitudes, certain of the
1546
new criteria are hardly relevant to coach touring holidays. Nevertheless, merely omitting them, as compared with the present requirements, does leave something of a vacuum. Here I feel that I should explain something of the importance of licensing for coach tours and I hope that your Lordships will bear with me.
We must remember that when such massive holiday organisations as Clarksons, Court Line and Horizon Holidays crashed, misery and despair was caused to many families and individuals. At the same time many other smaller tour operators went into liquidation, without being able to honour their commitments to their clients which did not receive publicity from the media. This lack of stability in the package holiday industry, despite the efforts of its national association, led the Government to introduce statutory controls, notably the Air Travel Reserve Fund. This holiday industry was built of speculative middle men who merely arranged facilities provided by others. It was precisely that which led to their financial instability.
I should contrast that with the situation in the coach touring industry which was, after all, the effective starting point of the package holiday between the wars. Although catastrophe followed catastrophe in other branches of the package holiday operation, the coach industry experienced the failure of just one medium-sized company which sold its holidays almost exclusively in America, Australia, New Zealand and South Africa. I believe, and the industry assures me that this is so, that its stable position was built upon the road service licensing of its tours. It is for that reason that I believe that the present Transport Bill should make a reasonable provision for the protection of the British public in this area.
Your Lordships will realise that in the new subsection (2A) the main consideration is that the traffic commissioners shall

1547
have regard to the interests of the public. That is absolutely right and it is, of course, what they have always sought to do. However, these words are imprecise and I submit to your Lordships that certain further guidance is called for. In the Amendment which I commend to your Lordships there are two elements. The first, is that these coach tours should not be seen in isolation from the remainder of public passenger transport services by road. It is true that the days of cross-subsidisation within the industry have largely passed, but we should not wholly disregard the interrelationship of different aspects of the business which, together, make it viable. In many cases the suggested words may not be applicable. I only say that, where they are applicable, it is in the public interest that the commissioners should have regard to them.
The second element of this Amendment relates directly to the position I have explained in the package holiday industry in general. It considers the possibility, in the new circumstances which will be created by the Bill when it is enacted, that speculators will seek to move in on the coach tour market. They will book hotel accommodation, no doubt arrange visits to places of interest and then seek to hire coaches. The providers of all those services will be offered contracts for seemingly large amounts, but when related to the individual service given it is probable that a sorry picture of low price, low quality service, will emerge. This is not idle talk because the results of such operations have been seen in practice in continental Europe.
The operation of extended tours should be the cream of the services offered by the coaching industry. At present the operators prove their fitness and the suitability of their vehicles when they obtain a PSV licence from the traffic commissioners. Then they go through the further procedure of obtaining a road service licence. As I have said, for the extended tour one expects to find the best of all the PSV operators providing the service. If, however, as seems quite possible under the present proposals of the Bill, non-licensed tour operators seek to come into this business and use coaches provided by other firms, then I submit that they have no reasonable control of the overall operation and that there should be applied to them the same criteria as are
1548
applied to the applicant for a PSV licence; that is, that the commissioners should have regard to the previous conduct of the applicant in any business involving transport operation. Then, it is extremely relevant that the tour operator should be responsible for ensuring that the law on drivers' hours is observed. Next, which again is particularly important in connection with extended tours, the arrangements for maintenance of the vehicles should be adequate for that purpose. Finally, the commissioners consider the financial resources of the applicant. I submit that all those matters are extremely relevant to the operation of tours which can be offered to the British public with reasonable confidence. I beg to move.
Baroness STEDMAN: My Lords, I do not want to be unkind, but this Amendment is regressive, restrictive and, in my view, unnecessary. It is also inconsistent with the provisions of the Bill as it stands at present. Subsection (2D), which was inserted by a Government Amendment during the Report stage in another place—an Amendment which had the clear support of the Opposition Front Bench—provides that in considering applications for extended tours the traffic commissioners are not required to take into account those criteria in subsections (2A)(a) to (c) which are concerned primarily with the need to ensure a co-ordinated and efficient network of public transport services.
This Amendment, albeit in different words, would have the effect of bringing back those matters which it has been agreed are not relevant to the consideration of extended tours. The noble Lord has argued that there is a need for some operators to balance and to some extent finance their stage services by their extended tours and by linking up with the package holiday tours. But it cannot be demonstrated that any revenue from extended tours is being ploughed back into stage services or improving the services offered to the public in general. The holiday package tours and extended tours are quite separate and a highly specialised form of bus operation; there is no link between them and the main network of conventional stage and express services. These long-distance tours have no real bearing on the ordinary network of local services.

1549
But the Amendment goes even further. It is designed to impose additional restrictions on top of those which are already in the existing legislation. The vehicles used on extended tours must already have PSV licences and before granting such licences the traffic commissioners have to be satisfied that the operator is a fit person and that all the requirements in Section 35(2) of the 1968 Act have been fulfilled. I accept entirely that these standards are essential for the safety and comfort of the passengers. The PSV licensing system will ensure that they are still met.
But the Amendment would also provide that the person who has the road service licence to operate the extended tours has to meet the same criteria as the operator who supplies the vehicles to him. I believe that this restriction is wrong in principle. As the licensing system stands at present, the responsibility is quite clearly placed on the operator who holds the PSV licence to ensure that his vehicles conform with all the requirements. This Amendment will divide and weaken that responsibility by sharing it with the tour operator. I believe that is fundamentally wrong and that it will strike at a very important principle of the PSV licensing system. It is normal practice within the licensing system for operators who hold road service licences to hire vehicles from a PSV operator from time to time. This important flexibility which the system offers would now be curtailed by the Amendment, which imports into the consideration of an application for extended tours the question whether the applicant meets criteria which it is the responsibility of the PSV operator and his alone to meet.
I do not accept that more protection is needed for existing operators or that the very modest degree of relaxation that we have allowed in subsection (2D) will lead to any dire consequences. The noble Lord has spoken of the need to protect consumers from unscrupulous operators, and has mentioned cases where tour operators have collapsed and the public has suffered because the safeguards were not there. I accept and share his concern, but certainly no one can criticise this Government's record on consumer protection or doubt our commitment. But I suggest that the noble Lord's concern
1550
is misdirected because the safeguards are all there at present in the exiting licensing system. The provisions in Schedule 2 do not create a free-for-all for extended tours. Existing operators can still object to applications for new services and can quite properly raise the question of the fitness of the operator and his ability to provide a proper service to the public. The real question is whether we trust the traffic commissioners. As has so often been said in previous debates, there must be a limit to the extent to which we hedge the traffic commissioners about with detailed statutory requirements which, in effect, negate their independent status and go some way towards diminishing their discretion. The noble Lord has until now been a stout advocate of the traffic commissioners. I hope that he will see that what he is proposing will do nothing but undermine that independence. Perhaps on reconsideration he might withdraw his Amendment.
Lord O'HAGAN: My Lords, I am not particularly happy about having to intervene between my noble and expert friend Lord Teviot and the noble Baroness, Lady Stedman, on this highly complicated point. It is very much a matter of the balance which any Bill of this nature gives to the different aspects of the regulations which affect bus operators. I think that the noble Baroness has dealt with this complex question in a way that would repay study. Although I am sure that there are several points in her answer which my noble friend will find highly unsatisfactory, I hope that at this stage he will be prepared to look at what the noble Baroness said, and perhaps return to the matter at a later stage of the Bill.
Lord TEVIOT: My Lords, I thank the noble Baroness for giving that very explicit reply. I am afraid that I do not agree with very much that she said. I did not think that one was being over-restrictive; I thought that one was being unnecessarily restrictive, for the reasons I outlined. I think that it is still rather dangerous to leave this out. However, on the advice of my noble friend I shall not push this matter now. I shall try to consider something at a later stage, or have further consultations behind the scenes, rather than on the Floor of the House.
I am certainly not attacking the Government over their record on consumer protection

1551
because I think that the record of both sides of the House has been excellent. The Government have some stalwart Members on their Back-Benches who have upheld consumer protection for years. Also, I have no intention of undermining the traffic commissioners, whom I have mentioned both in the Scotland Bill and here. However, again on the advice of my noble friend I see no point in pursuing this now. Therefore, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 16:
Page 20, line 37, at end insert—
("4A. In section 160(1) (general power to make regulations for purposes of Part 111 of the Act), after paragraph (c) insert—
("(cc) applications for, and issue of, the disc or other document required, under section 5(5) of the Transport Act 1978, in connection with a community bus service".").
The noble Baroness said: My Lords, I spoke to this Amendment when I dealt with Amendment No. 5. I beg to move.
On Question, Amendment agreed to.
8.26 p.m.
Lord TEVIOT Lord TEVIOT moved Amendment No. 17:
Page 20, line 42, at end insert ("and in subsection (2) (requirements for grant of permit), after the words "unless they" insert "have published details of the application and not less than 14 days thereafter".").
The noble Lord said: My Lords, again I apologise for introducing this Amendment at such a late stage in the proceedings of the Bill. However, like the Government, I do not always find it easy to spot all the deficiencies in a Bill when it is first published. Neither do I have a Department to do my devilling. The proposed Amendment does not ask much of the traffic commissioners or the applicant for a Section 30 permit. I understand that purely on a voluntary basis the commissioners in at least one traffic area have already published these applications, and it is normal practice for them to publish in Notices and Proceedings before a permit is granted. The reason for asking for this to be made a requirement rather than as a
1552
voluntary move is due to the increase in the size of vehicle which may operate under a Section 30 permit, and the consequent greater possibility of abstraction from existing services.
I stress that this is merely a safeguard and its intention is to protect the majority public interest. It is possible for a new service to be introduced for the benefit of its passengers, but if it attracts even a relatively small number from some other existing service, the damage could be sufficient to jeopardise that existing service. If it is lost, the last state for the community as a whole could be worse than the first.
It is not intended that the full procedures of road service licensing should be introduced. The very reason for Section 30 permits was to allow a simplified procedure, and that is right. However, publication of a Section 30 permit application would permit an existing operator to draw to the attention of the Commissioners the possible effect that the grant of a permit might have on his operations. The commissioners may not issue a permit unless they are satisfied that there are no other transport facilities available to meet the reasonable needs of the proposed route. Publication of an application will ensure that they have the necessary knowledge to make a decision in this respect. This is significant because larger vehicles are required only if a greater number of passengers is to be carried. That implies a larger catchment area for the route and makes it all important that the commissioners should be well informed regarding the possible effect on alternative facilities. The Amendment provides a small but important section of wider public interest. I beg to move.
8.30 p.m.
Baroness STEDMAN: My Lords, this Amendment was urged upon us most persuasively and in the most reasonable terms by the noble Lord, Lord Teviot. He has suggested that existing operators are not in any sense trying to turn the clock back by returning to the full road service licensing system with its complex and time consuming panoply of objections, public sittings and so on. But we should not be under any misapprehension about the effect of this Amendment. The philosophy behind the permit system is quite

1553
simple. In return for a very tightly drawn restriction on the cases in which permits can be granted—that is, only those cases where "there are no other transport facilities available to meet the reasonable needs of the proposed route"—the permit system dispenses with all those road service licensing procedures, including prior publication of the details of the application, which are designed to provide the traffic commissioners with the means of determining applications where there is a genuine dispute about the effect of the proposed service. In effect the permit system, with all the advantages it provides in terms of simplicity and speed can only be used where the traffic commissioners have satisfied themselves that there is no risk whatever of any harmful effect to existing services. The system has worked well and almost without criticism since it was introduced in 1968.
The noble Lord has suggested that by removing the size restriction so that vehicles of any size can be granted a permit we are opening the door to possible abuse. But I cannot see that the size of vehicles is relevant. The real question is whether the traffic commissioners, with their vast experience of bus operations in their area and their reputation for fairness and impartiality, can be trusted to judge when the permit system should be used and when the full road service licensing procedure would be more appropriate. If the traffic commissioners have any doubt about the effect on existing services they will, I am sure, take steps to ensure that those doubts are resolved. They may very well decide to consult the other operators informally and they may even in some cases decide to publish the application. But in most cases there will be no reasonable doubt that the service is filling a complete void, and to impose a requirement to publish in every case makes no allowance for the commissioners' good sense and makes a system whose virtue we hoped was its simplicity and speed unnecessarily cumbersome and bureaucratic. I hope that the noble Lord will think that I have made some good points, and that he may be prepared to withdraw his Amendment.
Lord SANDYS: My Lords, before my noble friend Lord Teviot decides what to do about his Amendment, which is a well-intentioned one and moved in very
1554
reasonable terms, as the noble Baroness acknowledged, may I say that I think we are up against a particular dilemma over the role of the traffic commissioners. I hope that my noble friend will feel disposed to withdraw the Amendment. It appears that, although the Section 30 permit would give rise to some complications, so far as we can see there does seem a very strong reason for keeping a not too close bureaucratic hold.
Lord TEVIOT: My Lords, I feel less happy with those remarks of my noble friend than I did with those of my other noble friend on my last Amendment.
Lord O'HAGAN: My Lords, would my noble friend like me to speak on this Amendment as well?
Lord TEVIOT: My Lords, I should be delighted. My noble friend has not done so. This was a perfectly straightforward, simple Amendment, and I think there should be the safeguard in this Bill. The Amendment does not ask for very much. It is not very restrictive. It is not cumbersome. I know that the noble Baroness accepted the argument that I was not wishing to go back to the bad old days, but I feel that people should be aware of what is going on. Therefore, I am going to press this Amendment.
On Question, Amendment negatived.
Schedule 3 [Amendments about lorries]:
8.35 p.m.
Lord LUCAS of CHILWORTH Lord LUCAS of CHILWORTH moved Amendment No. 18:
Page 21, line 6, at end insert—
("Provided that the goods vehicle examiner or the constable in uniform before requiring any person in charge of a goods vehicle to proceed to a place more than one mile from where the requirement is made, shall first be satisfied that there are good reasons to believe that the vehicle is not in a fit and serviceable condition.").
The noble Lord said: My Lords, in moving this Amendment I return to the problem and the difficulties associated with diverting lorries. Your Lordships will recall that it was agreed during Committee stage that lorries could be diverted within up to a five-mile radius for further inspection in the event of there being a suspicion that that vehicle was badly

1555
maintained. Your Lordships will remember that the noble Baroness and I exchanged a wide variety of figures, none of which was really contested because we agreed that there were quite a large number of vehicles that were not well maintained.
I argued then that the increase in area would involve a very large number of vehicles being sent to testing stations for examination which were not defaulters. In fact, a mathematical genius has described to me that the catchment area of a one mile restriction is about 3·14 square miles; that of a five mile diversion is more likely to be a 78·53 square mile catchment area—an increase of some 25 times.
If one considers that in this increased catchment area much the same proportion of vehicles is going to be found defective out of the vastly increased number that are likely to be netted, I have arrived at a figure that suggests to me that if only double the number of vehicles were brought in for inspection—but feel that more likely 20 times as many might be brought in because the facility is that much easier for the examiner—something like 11,200, or possibly as many as 110,000 vehicles, may be sent to a testing station and found to be clear.
We described during the Committee stage the kinds of difficulties and expenses that might be involved. The noble Baroness in fact gave certain assurances that examiners would have set down in guidelines strictures advising them when they should send a vehicle to a testing station involved in the five mile diversion. I was not happy at that time with the answer, and I notice that in the House of Commons proceedings at Committee stage in March a similar Amendment to the one I have down was answered by the Under-Secretary of State who, in effect, said that he had sympathy with the intention behind the Amendment but was unable to accept it because there was a possibility that the Department might be sued.
I imagine that the expression "might be sued" could be construed in exactly the same way as we have talked about there being a claim for compensation. Surely, if a Department commits an error and a plaintiff feels it advisable to go to law and sues, that is fair and reasonable and there can be no way in which the Department of
1556
Transport can protect itself against it. However, the Under-Secretary did agree that he would give further consideration to it. My understanding is that the industry and the Department met and, to all intents and purposes, agreed a formula—agreed what common ground there was—and an Amendment was later tabled. However, that was not accepted by the Government, even though apparently the departmental advisers had suggested that it met their requirements. Instead, assurances were given.
That is all very well, and while in Committee we spent most of our time discussing those who infringe the regulation, this Amendment is designed to protect those who do not, and on the Government's figures there are more who do not than do infringe them. It seems only reasonable, therefore, that there should be incorporated in the Bill some protection for these people, and the Amendment merely provides that the examiner should first be satisfied there are good reasons to believe that the vehicle is not in a fit and serviceable condition.
As I should not like to debate exactly how one can determine whether or not an examiner is satisfied, I suggest that an Amendment of this kind puts an obligation on the examiner that a guideline does not put on him to think not once but twice before sending a vehicle on a five-mile diversion to a testing station. The Amendment could do no harm to anybody, though it could relieve what I believe will be some congestion at testing stations—and I remind your Lordships that there are only 70 of them—by ensuring that the examiner really satisfies himself that there is a defect which warrants further inspection. For these reasons—the protection of the innocent rather than providing any umbrella or cloak under which miscreants may crawl—I move the Amendment.
Lord MOTTISTONE: My Lords, the important factor to bear in mind here is the potentially greater number of vehicles that may be sent to testing stations and, as I see it, the Amendment underpins the assurance that vehicles will not be sent in except when the person authorised to send them in is really sure that he is doing something necessary. The difference between a one-mile and a 25-mile radius,

1557
as my noble friend showed through his arithmetic, is that the larger is 25 times as great. On a later Amendment we will return to a point which I raised in Committee and I can pursue it then. In the meantime, I suggest that, so far as one can gather, there could be a fair number of what one might call trivial faults capable of being repaired very quickly and easily but which could lead to lorries being sent to testing stations. I am not sure that, in order to protect the public and the rest, which is all very laudable, the Government have not worked themselves into a position of having too much power to send people away from their commercial routes without having sufficient restraint on those who exercise that power on their behalf. The Amendment would be useful in imposing that restraint.
8.44 p.m.
Baroness STEDMAN: My Lords, it would seem that in tabling the Amendment noble Lords opposite have accepted the need for goods vehicles to be diverted over distances greater than one mile to testing station for their mechanical condition to be inspected. The basic object of extending the power of diversion to testing stations is to strengthen the arrangements for enforcing the law on the mechanical condition of vehicles, and that object would be undermined if we insisted that before any diversion of more than one mile was ordered, the examiner or constable, as the case may be, should be satisfied there are good reasons to believe that the vehicle diverted is not in a sound condition.
The term "good reasons" is open to a diversity of interpretation and dispute, and in practice it is not realistic to insist in effect that before an examiner diverts a vehicle he must form a prima facie view on its fitness or unfitness. Some items or functions of a vehicle have to be properly tested before any view can be formed of their adequacy; for example, the condition of complex braking systems. The incorporation of any such formula in the statute could expose the examiner to the risk of proceedings on the grounds that he had not exercised his discretion reasonably. That possibility in turn might prove a significant deterrent to exercise of the powers at all.
Our intention is not to divert more
1558
vehicles to testing stations. What we are asking for is more flexibility and scope for manoeuvre in choosing which to divert and from where, because too many drivers are now wise to what are our checking points. It is not possible to define in the statute the considerations which would justify the examiner to order the diversion, but we have made clear our intention of issuing guidance to examiners on the use of powers to divert more than one mile. That guidance would be based on the principle of diverting vehicles where this is necessary because of conditions of weather or visibility or because of the examination thought to be necessary. And we would advise examiners that in deciding when an examination was necessary they must have in mind some factor or factors warranting further examination. A purely random diversion of vehicles would be wrong and would not be encouraged by the Department.
We certainly had some discussions and the offiicals had a suggestion for a formula with the road hauliers on the sort of criteria that might justify diversions, but having had further thoughts about it we have thought it better to do it by administrative rules and not by a formula in the Bill. We still think that all this can be best done by administrative guidance and not by inclusion in the statute. It is possible to say in an administrative note, "Don't divert a vehicle more than one mile, unless you have a suspicion that all may not be well with it", but that sort of thing cannot be converted into a statutory test and any attempt to do so would sterilise the use of the power.
The Government's view still is that it would be wrong to impose a statutory limitation of the kind proposed by the Amendment and, as we have emphasised before, the right way of securing the proper exercise of the new powers is, we think, by administrative guidance. We have already indicated the principles which would underlie that guidance and an undertaking has been given that Parliament would be told if it were proposed to depart from those principles; and we still think we have enough safeguards in those assurances.
Lord O'HAGAN: My Lords, my noble friend Lord Lucas of Chilworth, supported by my noble friend Lord Mottistone, has put forward a reasonable case

1559
and the noble Baroness, Lady Stedman, has given a reasonable answer. This is a subject on which it is possible for people with the best of intentions to hold differing views. There is an aspect of the matter, however, which causes me some anxiety. As I understand from what Lord Lucas said, at one point the Government were discussing with those most concerned the possibility of incorporating some rule in the legislation. Those being consulted presumed that there was at least a chance that this would happen. If such a course had been followed—whether it was right or wrong is irrelevant for the point I am making—it would have been discussed by Parliament: it would have been subject to detailed scrutiny; it would have been part of this Bill and we could have amended it or looked at it. What the noble Baroness is saying is that to do what my noble friend Lord Lucas of Chilworth wants to do is too restrictive. It is not flexible enough and it shifts the onus a bit too far away, although she appreciates the nature of his concern.
My noble friend has been forced to put forward his Amendment in this form because of what the noble Baroness has said seems to the Government to be the best procedure; that is, to do it by administrative means. That may well be fine for the Government but it is not very good for Parliament because "administrative means" means that Parliament cannot look at what the Government are going to do. That is something which, whenever it happens, one has to be anxious about because, however much administrative means can deal with a problem to the satisfaction of a Department, the use of that procedure does mean that it falls outside the purview of the Parliamentary procedures.
If my noble friend Lord Lucas of Chilworth withdraws his Amendment now, as I suspect might well he the best thing to do, he has no knowledge of what the Government are going to put in its place. He has had some expressions of hope that it will work out. Can the noble Baroness tell us whether the guidelines that she has been talking about are in a sufficiently advanced form of development and drafting to be sent to my noble friend so that he could study them before the Bill leaves Parliament? If that was the case, then I should have thought that
1560
most of these worries could he cleared up at least, because we could then see what was actually going to be applied by the inspectors in the particular case. Would the noble Baroness respond to that point?
Baroness STEDMAN: My Lords, we said at Second Reading that we would lay down certain principles of an administrative nature and that we would come back to Parliament if we proposed to depart from those principles. I am not in a position to say off-the-cuff just how far those concerned have got in working out what those principles will be. I will certainly make inquiries to see whether I can get any further details for the noble Lord, Lord Lucas, for the noble Lord, Lord O'Hagan, and the noble Lord, Lord Mottistone. Perhaps we have even got them. I understand we are still consulting with the road hauliers on the guidelines that we are going to put forward. They are not yet drafted, but if we have any indication of the sort of thing that is to be put in I will certainly let the noble Lords know before the next stage of the Bill.
Lord LUCAS of CHILWORTH: My Lords, time moves on, but there are one or two points which the noble Baroness mentioned, particularly this catchment area. There can be no doubt that if the catchment area is increased more motor vehicles will he stopped and, let us face it, this is something of a random exercise. Certainly the industry has a great spirit of camaraderie and it does not take very long before all and sundry know where the checking point is going to be. Quite honestly, my Lords, even if it is increased to 75 square miles it will not be too long before the knowledge filters through.
The point is that within the one-mile diversionary exercise some 5,800 vehicles last year were sent for testing for no good reason at all. Only 1,200—and these are the noble Baroness's own figures, which I have checked—out of the 7,000 that were sent were found to be defective. I do not think it is fair that 5,800 on last year's figures and an indeterminate number on next year's figures should be sent. The figure could be as high as 110,000; I do not think it is likely to be, but it could be. I suspect it could well be that some 38,000 vehicles will be sent. That is a huge

1561
number of vehicles being diverted, and it is only reasonable that when we are putting certain regulations into law we should tell the readers of those regulations exactly why things are going to happen and under what circumstances.
I am no great believer in guidelines. I do not wish flatly to contradict the noble Baroness, but certainly up to a very short while ago it was my understanding that the industry's conversations with the Department on the guidelines were at a stalemate. I do not think it is any good saying: "We are going to produce these guidelines and if we depart from them we will come and tell Parliament". I must press the noble Baroness to produce something that we can look at before the next stage, so that if it is not completely satisfactory then I would have the chance of reintroducing this protective Amendment at the later stage. Meanwhile, I beg leave to withdraw.
Amendment, by leave, withdrawn.
8.57 p.m.
Lord LUCAS of CHILWORTH Lord LUCAS of CHILWORTH moved Amendment No. 19:
Page 21, line 46, leave out from ("rates;") to end of line 47.
The noble Lord said: My Lords, I do not think I need keep your Lordships very long. This one deals with the matter that we raised at Committee when I asked about "and payment of the fee may be required to be made in advance". The noble Baroness did promise, in her response to my noble friend Lord O'Hagan, that she would write to me. She has indeed written to me and as I understand the position, payment in advance" means cash on delivery—cash being cash or an acceptable cheque. It does not mean and will not mean—and this is the question I ask—that a form will have to be filled in and payment made some days in advance. One can readily accept that if a driver arrives and he can be accommodated in an hour, or half an hour, or indeed in ten minutes, he may be required to complete a form and hand over some money. That is cash on delivery in my language, not cash in advance. If my understanding of what the noble Baroness has said in her letter to me is correct, then I shall be quite happy. I beg to move.
Baroness STEDMAN: My Lords, I can be very brief on this Amendment. "Payment in advance" means no more than that when a vehicle is presented, payment may be requested before the examination takes place—not days before, but when the vehicle is presented.
Lord LUCAS of CHILWORTH: My Lords, I thank the noble Baroness for that perfectly satisfactory answer. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord LUCAS of CHILWORTH Lord LUCAS of CHILWORTH moved Amendment No. 20:
Page 21, line 47, at end insert—
("Provided that such fees shall not exceed those prescribed for annual testing.").
The noble Lord said: My Lords, this Amendment again stems from questions raised during Committee stage about what were to be the prescribed fees. There had been no indication given, no linking the fees for a re-examination. Perhaps I should remind your Lordships that we are talking here not of the annual test or the plating test, but about a new measure, that fees shall be required on occasions when a motor lorry is the subject of a prohibition notice and it goes to the testing station with a view to having that notice removed.
My Amendment merely sets down the understanding which I have reached from the letter to which I referred earlier, that the fees will be those in line with—at any rate, certainly not exceeding—the fees charged for the annual test. I believe that if this is the case, it is quite fair because the examination for removing a GV 9 is exactly the same, and therefore a similar fee is payable. However, on the assumption that that understanding is correct, I cannot see why the amount in question, or an amount linking it to the annual test, cannot be included. Why has there to be the description of a "prescribed fee", which, it seems to me, would leave the matter open in such a way that the fee could be altered, by means of, I suppose, a Statutory Instrument or a regulation? I accept also what the noble Baroness says in her letter to the effect that it is not wished to make another punishment out of this provision; it is merely a fee for doing a job of work.

1563
There are two questions here: what is the fee to be; and why can the fee rate not be embodied in the Bill? I beg to move.
Baroness STEDMAN: My Lords, the Secretary of State has in mind that the fees prescribed for payment when a vehicle is required to be brought to a testing station with a view to the removal of a prohibition, shall be the same as those charged when a vehicle is presented for its annual test. No penal element would be included. The present level of fees is £12·50 for a motor vehicle, and £7 for a trailer; and if a re-test is needed, the figures are £7 and £4·50 respectively. We are disposed to accept the substance of the noble Lord's Amendment, but we wish to obtain further advice on the form of the Amendment. If in the light of legal advice which we are taking, an appropriate Government Amendment cannot be tabled at a later stage, I will certainly write and explain the circumstances to the noble Lord. We are looking at this question, and we are making our best endeavours to produce something for the next stage.
Lord LUCAS of CHILWORTH: My Lords, I am terribly thrilled by that kind of answer, and obviously it would be quite wrong for me to pursue any other course than to await with keen interest the response from the Government, which I hope will meet the requirement. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.3 p.m.
Lord LUCAS of CHILWORTH Lord LUCAS of CHILWORTH moved Amendment No. 21:
Page 22, line 12, at end insert ("(after the 31st December 1979, 1 mile).").
The noble Lord said: My Lords, this Amendment is a little more difficult, in that it deals with the question of vehicles diverted to a weighbridge or other suitable place for weighing on the suspicion that they may be overweight. Again I wish to use the Government's own figures. From what was said during Second Reading and reiterated at the Committee stage, it was established that last year one in four of 25,000 vehicles that were diverted were found to be overweight. This means that three out
1564
of four were not overweight. During the Committee stage I suggested that, for a variety of reasons, this particular measure was not necessary and would impose harshly upon another group of innocent hauliers.
I have been over that part of the argument in the case of the badly maintained vehicle. The same principle applies here with one distinction; namely, there has been developed the dynamic weighing machine. A number of these machines are used experimentally in the country at present, and I understand that there has been a considerable degree of acceptance of them by both the industry and the Department. It is my further understanding that as far back as 1975 the Department engaged in conversations with the industry regarding the use of these weighing machines, the idea being that up and down the country suitable lay-bys were to be constructed and connections made for a portable instrument to be plugged in so that the vehicle could be tested at the roadside. Currently examiners are very good in that they seem to have a "nose" for an over-weight vehicle, and they send it off to a weighbridge or testing station.
In Committee I described many of the difficulties regarding weighbridges, as well as many of the difficulties which hauliers face when they take vehicles off ships, not knowing exactly what the consigner had put on them elsewhere. It seems to me that if the Government are to pursue the use of the dynamic weighing machine—which, as I say, has received a wide degree of acceptance in the industry—the little pockets of objection could easily be removed, and then the five-mile diversion would not be needed.
The Amendment is intended to jog the Government to say two things: first, what they are to do about dynamic weighing machines; and, secondly—having established, as we probably will, that dynamic weighing machines are to be brought in—that there are 18 months in which to do this, from now until the end of 1979. I also hope it can be said that at that time, when there will be in various parts of the country a number of sites which can do the job, it will be no longer necessary for vehicles suspected of being overweight to be diverted in those cases

1565
for more than one mile. That is what lies behind the Amendment. I beg to move.
Baroness STEDMAN: My Lords, I accept the reasonable way in which the noble Lord has presented his Amendment, and I accept, too, his assertion that it is only a jogging Amendment. However, our need to extend to five miles the distance over which a vehicle may be diverted to a weighbridge without compensation cannot be considered as a temporary one—not at this stage; nor is it the kind of situation in which one needs a temporary trial of new arrangements before deciding whether to make them permanent. The extent of overloading and the lack of suitably sited weighbridges make it essential that the present powers should be extended.
It is true that we are in process of supplementing the facilities provided by our permanent weightbridges. We have indeed implemented a programme for the installation of transportable axle weighers. They have the following advantages. They can be established on prepared sites in very close proximity to important lorry routes, and so avoid the problems associated with diversions to weighbridges; they give a better indication than weighbridges of the axle weight actually transmitted to the road; the rate at which vehicles can be checked is higher than at weighbridges; the preparation of alternative sites enables the same equipment to be used at more than one location in response to changed traffic flows; and, perhaps even more important, they are cheaper than weighbridges.
The site preparation costs roughly £15,000 per installation, so the programme must be spread over several years. Fifty installations by 1983 will be used to plug the gaps in the present system, and we shall be concentrating first on the main ferry ports dealing with international traffic. Consequently, the main effort on enforcement weighing will have to continue to be based on weighbridges for some years to come. For this reason, a limitation of the extended power to a life of about one year, which the noble Lord is proposing, would at this point in time be totally unacceptable.
Lord LUCAS of CHILWORTH: My Lords, I quite appreciate that answer.
1566
It could not be good sense to impose a time limit. However, would the noble Baroness be prepared to say whether, on completion of the programme in 1983, which would supplement the weighbridges, it may be prudent at that time to reconsider the use of the weighbridge, which causes what I have always called the excessive diversionary power? Because if we move forward into what perhaps one might call an advanced technology in weighing, it seems rather odd to have running in tandem (or is it in parallel?) different criteria which could bear harshly on a certain section of the industry, while those surrounding, if you like, the ferry ports, who have the advantage of the dynamic weigher, are not so penalised. There must be some kind of equality. I wonder whether the noble Baroness could say anything at all about that aspect of the use of these two measures.
Baroness STEDMAN: My Lords, I am sure the noble Lord would not expect me to be in a position to commit whatever Party may be in Government in 1983. All I can say is that if my Party is in Government, as I confidently expect it will be, then, when we have reached saturation point with these weighbridges, obviously it is something we would be prepared to reconsider. But at this point of time I cannot commit either side to what will happen in 1983.
Lord LUCAS of CHILWORTH: My Lords, this is no time to conjecture upon that. Each of us has our own ideas as to what will happen and when it will happen. So far as the use of weighbridges and dynamic weighers are concerned, I think it would be best if I left the matter exactly as it is, and beg leave of the House to withdraw this Amendment.
Amendment, by leave, withdrawn.

UNIT TRUST MANAGEMENT CHARGES
9.11 p.m.
Lord TERRINGTON Lord TERRINGTON rose to ask Her Majesty's Government whether they will reconsider their recent decision to disallow an increase in permitted charges by unit trust managements bearing in mind the likely adverse implications for small private investors in British industry. The

1567
noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I think I ought to start by saying that I have a very small financial interest in this matter, as I am a member of a City partnership which manages its own "in-house" funds among its many investment activities. However, the main interest I should like to declare this evening is my membership of the Wider Share Ownership Council, and it is in that capacity that I put my Question to Her Majesty's Government.
My concern is of course for the small investor, whose traditional vehicle for investing in British industry is the unit trust movement; and I am not sure that the Government have fully reaslised the implications for him of their recent decision. As far as possible, I will avoid wearying the House with a mass of figures, but in order to present my case adequately I am afraid I must devote a certain amount of time to statistical evidence.
On 19th June last the Under-Secretary of State for Trade replied to a Question in another place from the honourable Member for Leek regarding unit trust management charges, and I should like to quote from column 14 of the Official Report:
"The evidence in my possession does not confirm the allegations that have been made by the hon. Gentleman. The evidence which is currently available overwhelmingly suggests that reasonable pre-tax profits have been made between 1970 and 1976. I do not see that the decision that I have made is in any way unfair".
My Lords, it is these pre-tax profits that I should like to discuss in a little more detail, as I am concerned as to exactly what matters are being taken into account when arriving at the evidence currently available.
I am sure that noble Lords are aware that management charges by unit trusts are restricted by the Department of Trade under the Prevention of Fraud (Investment) Act 1958. However, they may not be aware that there are two types of charge, the initial or preliminary charge and the annual management fee. These are restricted both separately and in conjunction, by which I mean that when taken together they must not exceed 13¼ per cent. Over 20 years; and within this limit the preliminary charge is restricted to 5 per cent. Of the price of the unit, while the annual charge is
1568
restricted to ½ per cent. of the value of the fund. This management charge system recognises the two distinct functions of the trust manager: one, the marketing of units; and, two, the management and administration of unit-holders' funds. This distinction is important because no manager is under any obligation to sell units but every manager has the fiduciary duty to manage the funds entrusted to him and to discharge his other obligations under the trust deed whether units are being sold or not. In my view, therefore, once a management company's trust funds have attained a reasonable size, the company should be able to provide a good service to its investors and make a fair profit quite independent of marketing or trading activities. These two activities are totally unrelated to the manager's fiduciary obligations.
Turning for a moment to some statistics, I am reliably informed that the profits and losses made by some representative companies between 1970 and 1976 on the basis of comparing revenue from annual charges attributable to each period with the expenses of management and administration are as follows: a rise from 0·035 per cent. in 1970 to 0·109 per cent. in 1973 and, thereafter, a decline to a loss of 0·047 per cent. in 1975 and a loss of 0·062 per cent. in 1976. The reason for this downtrend is, of course, that certain inescapable expenses have risen much more than income; but, if my information on these figures is correct, I find it difficult to square them with the Under-Secretary's statement unless there are some other factors in the equation which I have missed. It may be, of course, that the Department of Trade takes the view that as long as unit trusts managements are making profits in whatever way and by whatever means there is no reason to modify their restrictions and this brings me back to the question of marketing and trading activities.
I have already suggested that these activities should be excluded from the calculation of a fair profit and I believe that this is a sufficiently important aspect of the matter to spend a few minutes considering it. These activities are very properly divided into two parts: (a) profits derived from issuing new units and reselling existing units—that is, units which managers buy as they are statutorily obliged to do—from sellers; and (b) profits

1569
attributable from holding such units before resale due to rises in the market over the period. Now, so far as holding profits are concerned, these really must be considered as irrelevant because they are not assured and, in many instances, have resulted in losses. Furthermore, they are in any case profits arising from the management's investment of their own money on which they took the risk and which could equally well have been invested elsewhere. In the case of profits from trading activities, I am informed that these fluctuated between 1·39 per cent. of turnover in 1972–73 and 0·76 per cent. in 1975, with an overall percentage for the seven years of only 0·96 per cent.
Finally, I turn to what I believe are the most important set of figures which, I understand, have been agreed with the Department of Trade. These have been assembled from the records of 85 trusts representing over 50 per cent. of the industry and they show a sum of £4·66 per annum as being the cost of servicing a unit holder's account in 1976. Assuming that this sum is now, say, £5 (which is probably fair), it must be apparent that even on the maximum annual charge of ½ per cent., the minimum economic unit holding is, in fact, £1,000; even allowing for some degree of subsidy by the larger investor for the smaller, management companies cannot possibly maintain their minimum subscription at the £250 level or less—which has been fairly typical until now. Hence my concern for the small investor whose opportunities to invest directly in British industry has been steadily eroded over the years and to whom the unit trust movement has provided such an important outlet for part of his savings.
I do not think that I am being unduly alarmist in expressing my concern because, although, in fairness, I will admit that the average minimum subscription throughout the industry is still between £100 and £250, there is already evidence that this minimum is in the throes of being raised to £500. It is my belief that it will inevitably be raised still further with the object of eliminating the small and uneconomic unit holder altogether—unless of course the Government are prepared to make some concession over these charges in the fairly near future. Personally, and as a member of the Wider Share
1570
ownership Council, I view the prospect with sufficient dismay to draw attention to it this evening, and to ask the Government to reconsider their recent decision before the situation deteriorates further. I believe that a wide spread of share ownership is an important social matter in our mixed economy, as I emphasised during my noble friend Lord Baker's debate on enterprise two weeks ago. Just as on that occasion I appealed for encouragement through the tax system to bring the small investor directly into share ownership, so on this occasion I make my appeal for the indirect alternative. Having said this, I will conclude by making a positive suggestion which I believe would be acceptable to the unit trust movement and would at the same time tip the scales in favour of the small investor who is now faced with the prospect of substantial increases in minimum subscriptions.
My suggestion is that there should be no increase in the existing preliminary charge of 5 per cent., but that the limit on the annual charge should be raised from ½ per cent. to ¾ per cent., thus allowing the overall 20-year maximum to go up from 13¼ per cent. to 20 per cent. In addition, I suggest that the trustees' and the auditors' fees at present paid by the managers should be charged directly to the fund. I believe that these two suggestions are modest and reasonable, and in the best interests of the small investor. However, just in case any noble Lord takes the view that this is an excessive increase to ask for—despite a time-lag of 26 years—I should add that I am reliably informed that it is likely to take a considerable time to implement, mainly on account of the degree of competition between fund managers.
Before sitting down, perhaps I might just say this: although I have argued my case on behalf of the small investor, it is surely inequitable that the unit trust companies should uniquely be prevented from increasing revenue in the face of constantly rising costs because the scale of their charges is effectively frozen at a level set 26 years ago. I really do not think that the movement can be blamed after all this time if it now takes steps to eliminate the small and uneconomic investor; but it would be ironic indeed if a decision by the Department of Trade was to accelerate this process.
The Under-Secretary of State for Trade (at col. 14 of Hansard for 19th June), at the end of his reply in another place to the honourable member for Leek said:
"Of course, I shall consider carefully the further representations that have been made ".
I hope that the noble Baroness in her reply will be able to take us a stage further.
9.23 p.m.
Lord CULLEN of ASHBOURNE: My Lords, the House will be grateful to the noble Lord, Lord Terrington, for having raised this important subject this evening. The noble Lord has made an extremely strong case, and I trust the Government will find it as compelling as I do. Perhaps one of the most interesting observations that he made was that the unit trust charges have been frozen for 26 years. That was presumably possible for most of that time owing to the expansion that has taken place in the unit trust movement; but there is no doubt now that the rate of inflation of recent years has made it impossible to accommodate small investors if some rise in charges is not permitted.
Having spent many years as a stockbroker, I know full well how it has become progressively more difficult to be able to afford to give the service to which clients with small investments were accustomed. Noble Lords will be aware of the fact that it has proved necessary to impose minimum commissions on small bargains since the costs of administering small bargains are similar to those for large ones. The imposition of minimum commissions was imposed reluctantly. No firm wanted to increase commissions to a point where the effect was to lose part of their clientele, both from a social and an economic viewpoint. The son or daughter of an old client of the firm might become a large investor later in life, either as a result of his or her own successful efforts or from money inherited.
Let us take the case of a young person with £500 to invest. It would be unwise to invest it all in one ordinary share; yet to split the amount into, say, five different investments would be expensive, since the minimum commissions would operate harshly against him or her. The ideal way to obtain a satisfactory spread at reasonable cost has been to invest in units in a trust which itself invested in a
1572
wide variety of investments. There are a large number of quoted unit trusts from which to choose and many firms of stockbrokers have their own in-house choice. There is no doubt that for the small investor unit trusts have been a very popular investment medium over very many years.
I think at this stage I should perhaps mention, as did the noble Lord, Lord Terrington, that there is strong competition between various unit trusts. That has always been so and it explains what has always seemed rather strange to mathematically-minded noble Lords. As the noble Lord, Lord Terrington, said, the preliminary charge is restricted to 5 per cent., the annual charge to ½ per cent., and the total to 13¼ per cent. over 20 years. It is clear that if the 5 per cent. is added to ½ per cent. over 20 years, which comes to 10 per cent., the total would be 15 per cent. and thus would exceed the 13¼ per cent. permitted.
Most unit trusts do charge the 5 per cent. preliminary charge and charge only ⅜ per cent. annually, or 7½ per cent. over 20 years; so they are actually charging only 12½ per cent. overall. Others, in competing for business, drop the preliminary charge and make a slightly higher annual charge. This competition is an important point to bear in mind when considering the proposals we have just heard from the noble Lord, Lord Terrington, to which I shall refer in a moment.
It certainly seems surprising that the Government have not seen fit to permit a modest increase in unit trust charges. As the noble Lord, Lord Terrington, has pointed out, the effect is that the investor with less than £500 to invest will be shut out. Soon—perhaps very soon—the minimum will be raised to £1,000 and in due course to a higher figure, unless the out-dated charges are unfrozen. How does that accord with the Government's oft-repeated desire for investment in industry—or do they not care about the small investor? His only avenue for investment at acceptable cost will be to put his money on deposit, to invest in Government securities and in National Savings Certificates, and so on. We all know the experience of those who have relied on those forms of investment in recent inflationary times.

1573
It will not surprise the noble Baroness, Lady Birk, that we who have for long believed in a property-owning democracy have no sympathy for this attitude of the Government. Perhaps it was caused by a well-intentioned wish to protect the small investor from suspected profiteering by unit trusts. Unfortunately, all that is happening is that the opportunity for buying units is being effectively denied to the investor. It is no easier for unit trusts to overcome inflation than for any other enterprise, either in the private or in the public sector; so why should they be specially treated so that they are unable to perform the very function for which they were created? It requires no great stretch of the imagination to visualise a scene where the resources of small investors will be forced into Government securities and then perhaps channelled into the National Enterprise Board for politically selected investment in industry. This, I need hardly say, we would deplore.
I come now to the modest changes which the noble Lord, Lord Terrington, has put forward, and in case any noble Lord may think he has been painting an unduly gloomy picture, I should like to refer to the recent announcement that the well-known City house of Charterhouse Japhet arc getting out of the unit trust business altogether because the price structure is not conducive to making a profit—not, my Lords, a large profit or even a reasonable profit, but a profit. I must reinforce what the noble Lord, Lord Terrington, has said. The point of permitting an increase in charges is not so that unit trusts will make a handsome profit; the competition which I mentioned earlier will see to that. It is to prevent the small man from being unable to buy units.
Finally, the views that have been expressed by the noble Lord, Lord Terrington, which I have tried to reinforce, are shared by responsible and well-informed City editors who are well aware of the social and economic advantages of participation between investors and industry. The profit-sharing schemes in the 1978 Finance Bill appear to reflect such a philosophy and are, hopefully, a pointer to a change of mind by the Government. So I shall say no more, and look forward to hearing, the views of other noble Lords who will take part in this debate, particularly those of the noble Baroness.
9.31 p.m.
Earl GREY: My Lords, may I apologise to the House in advance for having to repeat what the noble Lord, Lord Cullen of Ashbourne, and the noble Lord, Lord Terrington, have already said this evening, much more eloquently than I, but I feel that certain points need emphasising. I have been looking into the reasons put by the unit trust managements for the need to raise their charges, and in most cases the problems arise because of inflation. I have been reading the Unit Trust Year Book for 1977 and under the heading "How a Unit Trust Works" it says:
"Running a trust involves managers in expenses. Staff has to he employed to carry out buying and selling operations, to value the fund, to prepare and send out half-yearly reports to unit holders, and of course to provide the necessary investment judgment to ensure that the fund invests in the right shares at the right time".
Other charges that have increased over the years have contributed to the dilemma of the Association. The rise in postal and telephone charges have also to he taken into account.
As has already been stated tonight, the management charge rate is restricted by the Department of Trade under the Prevention of Fraud (Investments) Act 1958 and, despite the increasing rise in inflation and higher costs, their charges are effectively frozen at a level that was set 20 years ago. The Unit Trust Association gives details of the charges that unit managers can make. First, there is an initial charge when units are purchased, which is limited to a maximum of 5 per cent. of the value of the units purchased; some charges are between 3½ and 5 per cent. Secondly, there is a yearly charge which must be fixed so that, when taken together, the initial charge and the other charges do not exceed 13½ per cent. over a period of 20 years. This means a maximum yearly charge of ½ per cent. The Association is pressing for the limit on the annual charge to be increased to ¾ per cent., resulting in the total charges over a 20-year period being 20 per cent.
The noble Lord, Lord Terrington, has forcefully mentioned the profits from 1970 to 1976, so I shall not repeat them. Because of increased costs over the years, the unit trust managers fear that the investment level of between £100 and £250 will have to be increased to a minimum of

1575
£500, and will eventually rise to £1,000. As unit trusts are designed for the smalller investor to place his money into ordinary shares, the situation is now arising where the people for whom the scheme was designed will become affected.
I have read with interest the Question that was asked on this matter in another place on 19th June. The Under-Secretary of State for Trade could not agree that profits for the years 1970 to 1976 were inadequate. Will the noble Baroness shed some light on this in her Answer? I was pleased to hear that Mr. Clinton Davis would consider again the representations that have been made, so I assume that the door has not been closed and that a further decision may be made. Will the noble Baroness also tell us whether a decision has been made on this point?
9.35 p.m.
Lord TRYON: My Lords, I, too, must thank the noble Lord, Lord Terrington, for asking this Question tonight. His recent dollar premium crusade is fresh in all our minds. It was very successful. I think that we owe the Government some thanks for that. I hope that his present crusade on this subject may also bear some fruit.
I think that the noble Lord, Lord Terrington, has very thoroughly covered the question of the small investor, but I should like to develop this debate a little further. I am a strong believer in the cause of wider share ownership; it is something which should be encouraged in any country that believes in having a successful mixed economy. Before I go too far, however, I have to declare an interest. I have been involved all my life in investment management. Several noble Lords have asked me this evening what is explosive about this; recently, I seem to have spoken to your Lordships only about firearms! However, I am also involved in investment management. I am the director of a major merchant bank, and I am fairly directly involved in the day-to-day management of the investment of some £60 million or £70 million in unit trusts. Before noble Lords think that this makes me a major figure in the unit trust industry, let me assure them that this is not so. The unit trusts with which I am concerned are not marketed
1576
to the general public. They are what are generally known as in-house funds. They tend to carry no initial charges and the management charges are well below the present permissible maxima. I hope, therefore, that your Lordships will see no special pleading in anything that I have to say.
The noble Lord, Lord Terrington, asked the Government to reconsider increasing the annual management charges rather than the initial charges. This plea I most strongly support. To increase the initial charges would encourage the extravagant promotion of funds and would benefit newspaper advertising departments more than anybody else. It would also tend to encourage the promotion of unit trusts at times when the stock markets were rather high. We have seen this in the past. It seems to be the time when unit trusts are easier to sell to the general public, and this is not something which should be encouraged.
If the Government relent and are prepared to reconsider, I, too, strongly believe that competitive pressures—and this is a very competitive industry—will prevent any rapid rise in charges to any new permitted maximum level. I believe that in the area of general funds—which is to say funds offering a general spread of investment in United Kingdom industry—the higher charges would be unlikely to stick. The competitive position would ensure that there were always plenty of unit trusts prepared to operate at not far above present levels. Where the higher permitted charges might stick—and this is where I slightly widen the debate beyond the small investor—is in the area of specialised funds and overseas funds.
Let us take, for example, a unit trust set up to give to people an opportunity to invest in the Japanese electronics industry. The cost of running such a scheme would clearly be very substantially greater than for a fund trying to invest in a broad range of United Kingdom equities. To run such a fund successfully, the managers would have to send people to Japan. They would have to spend a great deal on communications. In those instances, unit trusts also have an important part to play, in that if anybody wished to invest in the Japanese electronics industry—to use my example—I think that he would find it extremely hard to do so as a private

1577
individual. Professional management of some kind would be needed.
Overseas investment does not always receive general acclamation from all sides, but following the abolition of the dollar premium surrender, for which I have already expressed thanks, I believe that the Government may well now smile on it rather more than at times we thought they did before. The old maxim "if you can't beat 'em, join 'em" can be quite profitable.
Only this morning I was looking at the situation of a friend who in 1969 invested £2,500 in a unit trust designed entirely for investment in Japan. His holding today is worth about £16,000, something that sadly would have been very hard to achieve as a result of any investment in the United Kingdom stock market other than a few very fortunate situations. He is a very lucky man, but the country is quite lucky, too. Some time in the not too distant future he will sell that holding, the money will come back here to the general benefit of the United Kingdom, and indeed the Exchequer will get several thousands pounds in capital gains tax straight away that it might not otherwise have got. Overseas investment requires encouragement. The unit trusts have a part to play there; it is very expensive and this is an area where I think the higher charges (if they are allowed) will allow some expansion.
I have strayed some way from the exact wording of the Question, and I hope the noble Lord, Lord Terrington, will forgive me, and I hope indeed that the whole House will forgive me. But I join in hoping that the noble Baroness will give us some encouragement that the recent decision on charges will be reconsidered.
9.42 p.m.
Lord DAVIES of LEEK: My Lords, from this side of the House I should like to say that the origin of the unit trust system itself was more or less to encourage the small investor to invest—not to gamble but to invest—under the mangement of people who had the experience to put these small amounts of money to the best available investment for the investor, and originally when we looked
1578
at it we looked only at England. Since then we have joined the Common Market and it is quite obvious that this system is going to develop. We have had the concrete example from an expert speaking from the Cross-Benches of unit trusts going into Japan. I will not take any esoteric investment such as the electronic industry in Japan, but I am thinking of Third World countries that are producing agricultural and other products that are needed to feed Britain. I am thinking of the Common Market as we know it now exists, whatever attitude one might take to it. There is no doubt that as the Common Market develops so will the opportunity for the extension of the unit trust system develop within the Common Market.
When Mr. Clinton Davis answered in the other place there was, if I may use a colloquial phrase, a "spot of hope" about the answer. I think this is a worthy objective, and in these days of inflation it is common sense that if we are expanding into the Common Market it will need clerical assistance, it will need the ability to speak a couple of languages, neither of which can now be obtained at the old-fashioned prices. Consequently, there is a legitimate case for some improvement in the returns. I do not think I need delay the House for more than the one minute I intended to speak. I think I have made for my noble friend a case worthy of being looked at to see whether some type of favourable answer can be given to the House tonight.
9.45 p.m.
Baroness BIRK: My Lords, I am grateful to the noble Lord, Lord Terrington, for raising this question. It is a great pity we could not discuss unit trusts in the daylight and in daytime but that is not his fault; transport took precedence. It has been a useful discussion, and I am sure that my right honourable friend the Secretary of State for Trade will take note of the various points that have been raised. May I preface my remarks by making it clear that the Government are well aware of unit trust managers' concern about the effect on their profitability of the present restrictions on charges and are carefully considering the further representations that have been made. The Government must also, however, have regard to

1579
the interests of unit holders on whose behalf the controls on charges were instituted.
To set the background to the present situation, as the noble Lord, Lord Terrington, pointed out, the Department of Trade has discretionary power under the Prevention of Fraud (Investments) Act 1958 to authorise unit trust schemes. In the early 1950s, thinking that some managers were setting too high a price on their services, the Department made use of its powers to introduce controls on the initial charges and the annual charges they levied. In total these charges were not to exceed 13¼ per cent. over 20 years, and that remains the rule today. It is for this reason that my noble friend Lord Davies of Leek mentioned the interests of the small investors; it was in order to protect the small investors that these decisions were made.
From time to time since then unit trust managers have made representations about these restrictions. Throughout the exchanges which took place from 1971 to 1976 the question of costs and profits remained at the forefront of the Department of Trade's interest, and discussions over the last two years with the Association have focused particularly on this. It was agreed that if the industry was to substantiate its case a wide sample of management companies' accounts would need to be produced by the Association. On the basis of the survey covering the period 1970–76, produced in the second half of last year, the Association contended that it had a case for claiming an increase in charges that would permit managers to levy a total of 20 per cent. over 20 years—that is, a 50 per cent. increase on the 13¼ per cent. over 20 years at present allowed. I think it was the noble Lord, Lord Tryon, who said that competition would ensure the protection of investors. It may be true, but if this is so I find it a little strange that the UTA and their supporters are adamant that only an increase of 50 per cent. will suffice. In addition the Association revived an earlier request that trustees' and auditors' fees should no longer be borne by managers but should be charged against unit trust funds.
The Association's case was subject to careful examination by the Department of Trade, and I must say the assistance of the
1580
Association should be fully acknowledged here; they gave every assistance they could. In March 1978 my right honourable friend came to the view that, on the basis of the evidence supplied—and considering the activities of unit trust management overall—reasonable profits had been achieved, taking the review period as a whole. Central to this conclusion was the premise that profit arising from all forms of activity should be taken into account. He did not accept—and I imagine this is now common knowledge—the Unit Trust Association's argument that the annual charge alone should bring the managers adequate profits and that the profits which arise from the marketing of units should not be considered. He was also concerned about the magnitude—but not, I must hasten to say, the legality—of the discounts which many managers give to institutional purchasers of units, some of them associated life assurance companies. Substantial commissions are also apparently being given to those selling units as agents.
Given these views of the Secretary of State, he was not, at that stage, able to accept that a case existed to change the scale of managers' charges; nor did he agree that trustees' and auditors' fees should be charged against unit trust funds. However, the Association was invited to make further representations if it wished; it took up the offer and it is those representations which are currently being considered by the Department of Trade. Therefore, I should emphasise—and emphasise most strongly—that the door has by no means been finally closed; there are very complex issues here and a fresh look is being taken at the whole question without any preconceived views on the outcome.
It must be acknowledged that the present system of charging has proved to have one unforeseen defect: comparatively lean years will result for the managers in periods when steeply-rising inflation coincides with a slump in the value of securities held—the value, that is, on which the percentage charges on unit holders are based. The Department will be looking, among other things, into the method of assessing charges, bearing particularly in mind the need to recover costs. The possible impact on small investors of an increase in minimum unit

1581
holdings will also be taken into account. The aim is to ensure that the legitimate interests of both managers and unit holders are preserved by a system which aids the managers in bad years, but takes adequate account of good years. In fact, it is very difficult to get exactly the right balance here.
In his opening remarks the noble Lord, Lord Terrington, stated that managers have no obligation to sell units. It is very difficult to conceive a trust scheme operating effectively or in unit holders' best interests, if there is no marketing of its units. Indeed, the Department requires an assurance of active marketing intentions before authorising new unit trusts. So, this is part of the arrangements which have been made.
The noble Lord, Lord Terrington, also suggested, as, I think, did the noble Lord, Lord Cullen of Ashbourne, that charges have been effectively frozen for 26 years. I do not think that that is strictly accurate. The charges are levied on a percentage basis and the size of the funds under management and the level of the stock market prices have risen greatly in this time. Therefore, they have risen together.
The noble Lord, Lord Cullen of Ashbourne, commented that Charterhouse Japhet is getting out of unit trust management. I took him to be making the point that it is no longer a very profitable business to be in and therefore people are moving out of it. In fact, it is selling to another firm which presumably expects to be able to make a profit out of it, otherwise I do not think that it would have wanted to buy it. The Department of Trade has other applicants who wish to enter into unit trust management, and therefore we assume they have taken a hard look at the economics of the situation. The noble Lord did not exactly frighten me to death, but I do not think that he need be quite so worried or paint quite so horrendous a picture as he did of the future, with a general takeover and grabbing of unit trust holdings, which was the impression that I gained. I do not think that that is likely to happen.
The noble Lord, Lord Tryon, spoke about overseas funds and gave the example of Japan. My noble friend Lord Davies of Leek referred to the EEC. Overseas operations have flourished in recent years
1582
and it is not evident to the Government that the cost of setting up funds in Japan or North America has deterred their establishment. So far as the Common Market is concerned, we are actively participating in discussions there to harmonise unit trust regulations.
We expect the United Kingdom unit trust industry to be well-placed to compete when selling across frontiers becomes a practical proposition. This is, of course, when restrictions on capital movements are relaxed. It is impossible to divide one entirely from the other. I do not think that the noble Lord, Lord Terrington, or other noble Lords expected me to be able to give any definitive answer—certainly one that would have pleased them tonight. As I have said already, I hope I have made it clear that the door is not shut and that representations are being considered.
In conclusion, I should like to pay a tribute to the unit trust industry which has served investors and the nation well over the 40 years or more of its existence. The fact that it has in a way changed its character from dealing mainly with the small investment holders, the small unit holders, to the far larger institutions is part of the way in which so many aspects of our financial and economic structure have changed. The industry has played and still plays an important part in the national economy, but I recognise that it cannot, of course, live on altruism alone. The services of managers and of trustees must be adequately rewarded. Her Majesty's Government accept that, even though there may still be room for discussion as to what constitutes adequacy at any given time. This, of course, applies to so many things that it really is not saying anything new.

SHEFFIELD GENERAL CEMETERY BILL
  BRITISH RAILWAYS BILL
  Examiners Certificate that no further Standing Order is applicable: Ordered to lie on the Table.

  TAMAR BRIDGE BILL
  Brought from the Commons, read 1a and referred to the Examiners.
  ADOPTION BILL [H.L.]
  INTERPRETATION BILL [H.L.]
  NATIONAL HEALTH SERVICE (SCOTLAND) BILL [H.L.]
  Returned from the Commons agreed to.

  KENDAL MARKET BILL [H.L.]
  Returned from the Commons agreed to with Amendments; the said Amendments considered and agreed to.

  COUNTY OF MERSEYSIDE BILL [H.L.]
  Reported from the Select Committee appointed on 3rd July last with an Amendment.
  House adjourned at four minutes before ten o'clock.