Lords Sitting of 5 February 1979

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

CHEMICAL AND BIOLOGICAL WARFARE
Lord ELTON: 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 have received reports that units of the East German Army are being trained by the Russians in the offensive use of chemical and biological weapons, what are the nature and number of these weapons, and what steps they and our allies are taking to protect their military personnel and civilian population.
The LORD PRIVY SEAL (Lord Peart): My Lords, Her Majesty's Government are aware of the reports that have appeared in certain journals describing the training of the East German Army by the Soviet Union in chemical warfare. Noble Lords should not, however, accept these reports as wholly accurate. Your Lordships will understand that to indicate the errors in detail would involve the disclosure of classified information. As regards the protection of the civil population of the United Kingdom, we are keeping the position under review. In common with our allies, we have taken measures to protect military personnel against the use of biological and chemical weapons. All personnel in the British Army on the Rhine are equipped with individual protective kit including a respirator, and armoured vehicles have protection against biological and chemical attack where necessary. RAF forces tasked to operate in the Central Region of Europe are, similarly, fully equipped and trained to operate under conditions of chemical and biological warfare.
Lord ELTON: My Lords, I thank the noble Lord for his reply, from which I gather that the activities at Leipzig and Neubrandenburg may not be entirely as sinister as we suppose. Is he aware that, leaving aside any of the satellite countries' forces, upwards of 70,000 Russian troops are employed solely in the use of chemical weapons, and that in particular the stocks of sarin, soman, and VX held by the Soviet forces have been greatly increased, and that these are nerve gases which are persistent in the atmosphere and do not make any distinction between soldiers wearing respirators and civilians wearing none? Does not the noble Lord regard this as a very serious threat indeed?
Lord PEART: My Lords, I am well aware of the dangers of the use of weapons that have been described by the noble Lord. I accept that. But NATO is well aware of this. I cannot go into details. It would be wrong of me to mention classified figures, et cetera. We are well aware of this, and I would only say to the noble Lord that I cannot answer the specific charges for the reasons I gave in my original Answer.
Lord SHINWELL: My Lords, may I ask my noble friend whether he is aware—apart from not going into details, which I can understand—that the East Germans have the strongest conventional military force of any country in Europe? Is he aware of that? That has been well known to some of us for several years. Is it known to the Government? Have they any details? Is NATO taking effective steps in order to circumvent anything of the nature of conflict initiated by the East Germans?
Lord PEART: My Lords, of course Her Majesty's Government are well aware of this. I am too. That is why I believe it is important that we should make our position known with our allies in NATO. Of course we are well aware of it.
Lord HAILSHAM of SAINT MARY-LEBONE: My Lords, while I fully understand the difficulties of the Lord Privy Seal in this matter, is not his original Answer really a very terrible thing indeed? All these weapons are in fact forbidden by treaty, to which I think the Russians and East Germans are both parties, and

445
by international law. Is it not a very terrible thing indeed that the Russians, who are so sensitive to criticism of any kind, treating it always as anti-Soviet propaganda, should be doing that which causes Her Majesty's Government and our NATO allies to have to take protective measures against what ought never to have existed?
Lord PEART: My Lords, I agree with the noble and learned Lord. May I say that the United States and the USSR are currently engaged in bilateral talks aimed at reaching agreement on the elements of a multilateral convention to prohibit the development, production, and stock-piling of chemical weapons. Naturally these talks are confidential, but it is hoped that before long the two Powers will be able to transmit the results of their deliberations to the multilateral disarmament negotiating body in Geneva for the negotiation of such a convention.
Lord W1GG: My Lords, will the noble Lord the Leader of the House be kind enough to publish in the Official Report the treaties of which the noble and learned Lord, Lord Hailsham of Saint Marylebone, alleges the Soviet Union and the East Germans stand in breach? Will he be good enough to publish them in the Official Report so that we can see exactly what has happened and the extent to which these treaties have been broken without anyone being aware of it?
Lord PEART: My Lords, there are many treaties. I will see whether I can do this. For example, the 1972 Biological Weapons Convention, to which the United Kingdom is a party, prohibits our possession of an offensive biological warfare capability. Incidentally, the convention was signed by the previous Administration. I think that the noble Lord, Lord Home of the Hirsel, who was then Foreign Secretary, signed the convention. I think the noble and learned Lord, Lord Hailsham of Saint Marylebone, was quite right in his approach to it; it really is a terrible situation
Lord HANKEY: My Lords, arising out of the supplementary question asked by the noble Lord, Lord Elton, may I ask the Government to consider once more whether the time has come to restart
446
air raid precautions training? Is it not extraordinary, the extremely low level of ARP preparation that exists in this country?
Lord PEART: I do not think we are at that stage, my Lords, but obviously this matter should be carefully watched.
Lord ELTON: My Lords, will the noble Lord accept that we are glad that efforts continue, particularly through the United Nations Disarmament Committee, to find means of monitoring the control of disarmament in this field? We are anxious because this weapon, which is employed tactically, has in fact a major strategic effect which, so far as I can see, is left out of consideration when discussing the SALT balance. And can he not recall—I am sure he can—that in the last war it was quite clear that the reason chemical weapons were not used on either side was that the other thought there was a very strong counter-strike capability? That situation no longer persists, and the Soviet Union are in possession of a means of sidestepping the nuclear threshold with a weapon which does exactly what they said was wrong with the neutron bomb by destroying people and not property.
Lord PEART: My Lords, I hope the noble Lord will appreciate that I cannot answer that. I do not think he should be too pessimistic.

PRIVATE TENANTS: RENTS
2.45 p.m.
Lord JANNER: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper and, in doing so, I wish to indicate that I live in a flat of the type referred to in the Question and therefore have a personal interest.
The Question was as follows:
To ask Her Majesty's Government what steps they are taking to deal with the situation created by property speculators who refuse to let at a reasonable rent, thus creating a scarcity of flats and causing homelessness to tenants, even to those with over 30 years' occupation.
Baroness DAVID: My Lords, one purpose of the Rent Acts, to which the Government are strongly committed, is, by the system of fair rents, to protect private tenants against extortionate rent increases. The Government took a further step to help private tenants in 1975 when they introduced the phasing of rent increases over three years. All our evidence suggests that fair rents are substantially lower than market rents, particularly in Inner London. It is this system of fair rents that protects tenants against landlords who want to charge market rents. Where tenants have difficulty in paying a particular rent, there is a generous system of rent allowances to help them, with higher maximum levels in certain boroughs.
Lord JANNER: My Lords, may I compliment my noble friend on the new position she holds and on the very interesting reply she gave to my Question? May I also express my hope of forgiveness if I have to pursue the matter on rather different lines'? Is she aware that in the very flats that we occupy the landlords, who are Arabs, bought the property but have no registered office in this country? Is she aware that the property, which was offered at £13/4 million one and a half years ago, was sold to these people for £3 million, that they paid £500,000 to extend the lease, that they are now demanding an estimated £10 million for the property (apart from some of the flats which are not occupied) and that owners are charging as much as £500,000 for one flat? Is my noble friend further aware that the result is that people like, for example, one woman aged 93, who has lived there for 30 years, and who, having become a member of what are now known as the new poor—
Several noble Lords: Question!
Lord JANNER: I am doing my best.
Lord PEART: Do better.
Lord JANNER: I am doing the best I can, my Lords. Is my noble friend aware that this situation prevails and that the result will be exactly the same for the so-called new poor as it was when we were fighting for years to get the Leasehold Reform Act through Parliament? What
448
do the Government intend to do to meet the situation?
Baroness DAVID: My Lords, I wish at the outset to thank my noble friend for the kind things he said. So far as foreign buyers are concerned, I think it would be quite unreasonable to discriminate between landlords or anyone else on the grounds of race or nationality. Foreign landlords are subject to British law, including the rent and housing Acts, just like anybody else, and they are also subject to capital gains tax. The tenants of foreign landlords have the same protection as those of British landlords. Existing tenants have security of tenure and, as I have said, are protected against extortionate rent increases. Nevertheless, the Government do not approve of this form of speculation and that is one reason why we are studying ways of helping tenants to buy the freehold of their block collectively in certain circumstances. We are also looking at ways of giving tenants and leaseholders in mansion blocks more control over management, including the standard and cost of services.
Lord HAILSHAM of SAINT MARY-LEBONE: My Lords, has the noble Baroness thought of reporting the Arab landlord of the noble Lord, Lord Janner, to the Arab Boycott Committee for having too much to do with Israel?
Baroness DAVID: Actually, I have not, my Lords.
Lord SANDYS: My Lords, first may I congratulate the noble Baroness upon her masterly debut at the Dispatch Box? Are the Government aware that the remedy for the situation, described at some length by the noble Lord, Lord Janner, is quite simple; namely, to increase the supply of accommodation? Are the Government further aware that the reason that accommodation has dried up is very largely due to their own legislation, the Rent Act 1974?
Baroness DAVID: No, my Lords, I would not agree with the noble Lord.
Lord JANNER: My Lords, is the noble Baroness aware that the provision which was referred to in the latest Rent Acts—that scarcity value has to be taken into

449
consideration when fixing rents—is not being carried out? Is she also aware that the position is that scarcity values no longer maintain anything like an ascertainable amount, and that the whole position, according to the manner in which the matter is proceeding at present, creates a scarcity value which is almost practically 100 per cent. of the rent?
Baroness DAVID: My Lords, the rent officer is specifically told in the Rent Act that he may not take scarcity value into account and that he has to assume that the demand and supply for such accommodation are roughly in balance. It seems to me a little far-fetched to argue that the way to persuade more landlords to let accommodation, thus relieving scarcity, is to reduce their rent income. All our evidence suggests that market rents—that is, the rents which do exploit scarcity—would be significantly higher than current fair rent levels.
The Earl of KINNOULL: My Lords, does the noble Baroness agree that the Rent Acts are a particularly unkind subject for her to have to deal with on her first appearance at the Dispatch Box? Does she also agree that the fair rent system under the Acts at present is working satisfactorily, and that the fair rent officers interpret the law as it is intended? Furthermore, does the noble Baroness agree that the problem with Lord Janner's Question is that he is confusing those tenants outside the Rent Act, who do not have the protection of the Rent Act, with those who do? However, if the noble Lord is not, may I ask the noble Baroness how it is that a speculator can apparently charge an unreasonable rent, when in fact all the tenant has to do is refer the matter to the rent officer?
Baroness DAVID: My Lords, of course there are some tenants who do not have protection because the rateable value of the property they occupy is too high. This is a matter which is being looked at at the moment. There is a Rent Act review going on, and this is one of the matters that is being studied.
Lord PARGITER: My Lords, can my noble friend say to what extent rent officers ignore inflated capital values in fixing rents?
Baroness DAVID: I am sorry to say that that is something I do not know, my Lords. I will try to write to my noble friend with an answer.
Lord JANNER: My Lords, will the noble Baroness—
Several noble Lords: Oh, oh!
Lord JANNER: This is a terribly serious matter, my Lords. We are dealing with a problem in which thousands of people are to be put out of their homes—
Lord BOOTHBY: You are having a debate.
Lord JANNER: Will the noble Baroness—
Several noble Lords: Order, order!
Lord PEART: My Lords, I feel that my noble friend, whom I admire so much, is taking liberties. I think that it is the wish of the House that we proceed to my noble friend's next Question.

WAR CRIMES AND STATUTE OF LIMITATIONS
2.54 p.m.
Lord JANNER: My Lords, I beg leave to ask another important Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how they intend to prevent the proposed limitation of the period in which war criminals can be tried in West Germany.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, responsibility in the Federal Republic of Germany for the prosecution of war crimes and for the question of the application of the Statute of Limitations is a matter for the Government and the courts of the Federal Republic.
Lord JANNER: My Lords, I thank my noble friend for that Answer, but is he aware that Herr Schmidt, the head of the German set-up, has himself called

451
upon his neighbours, who include ourselves, to do all possible to stop the Statute coming into force? Does my noble friend agree that the Nazis themselves have utilised Nazi monies in order to protect people and enable them to hide themselves for years, and that as soon as this present prosecution is over, they will come out and increase violence in relation to supporting the neo-Nazi activities?
Lord GORONWY-ROBERTS: My Lords, the second part of my noble friend's supplementary question is of course a comment on the situation, and I doubt whether anyone here would strongly disagree with the merits of what he says. However, with regard to the question he poses, he knows—and I need not assure him—that Her Majesty's Government have consistently supported the view that there should be no time limit on the initiation of legal proceedings or imposition of penalties with respect to war crimes and crimes against humanity. There is no such time limit in the United Kingdom. However, it is the Government's view—properly so—that the whole question of the application of the Statute of Limitations is primarily an internal matter to be determined by individual Governments themselves.
Lord JANNER: My Lords, I thank my noble friend very much.

TANZANIA/UGANDA DISPUTE AND WHISKY EXPORTS
2.56 p.m.
Lord GLADWYN: 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 the President of Tanzania, who now appears to be at war with the dictator of Uganda, appreciates what this country is doing to sustain the morale of Amin and his entourage by the lavish exports of Scotch whisky.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Stedman): My Lords, I am
452
sure that the President of Tanzania is aware that United Kingdom policy on civil trade with Uganda remains as stated by my noble friend Lord Goronwy-Roberts in his reply to my noble friend Lord Brockway on 31st January. Total United Kingdom exports to Uganda in 1978 were £19 million, of which £0·3 million was alcoholic beverages—not all whisky.
Lord GLADWYN: My Lords, I understand what the noble Baroness has said and I should like to ask two supplementary questions. First, do Her Majesty's Government sympathise with the efforts which the President of Tanzania is apparently making to rid the Commonwealth of the appalling monster who now rules Uganda? Secondly, if they do so sympathise, would it not encourage, and be acceptable to, Mr. Julius Nyerere, if they were able to stop all trade between this country and Uganda, which, after all, would not cost this country very much?
Baroness STEDMAN: My Lords, if I may take first the second part of the noble Lord's supplementary question, I should say that we are not happy with the, view that it would be proper to terminate the trade at the moment. We need to keep the trade lines open for various other reasons. With regard to the President of Tanzania, we have always made it quite plain that we believe that the African disputes ought, where possible, to be settled in an African context, and we hope that the situation can be established where these two neighbouring countries can live at peace. Her Majesty's Government have made available to the Government of Tanzania programme aid amounting to about £1 million to be used, subject to the normal conditions attached to such aid, for civilian rehabilitation purposes in the Kagera region. This is additional to the £2·5 million programme which we made available recently for other purposes.
Lord BOOTHBY: My Lords, is the noble Baroness aware that nobody should ever attempt to prevent the export of Scotch whisky to anyone, even to cannibals, because it can have only a soothing and wholly beneficial effect?
Baroness STEDMAN: My Lords, I am sure that the House accepts the noble Lord's free gratis advertisement for the whisky of his homeland.
Lord BROCKWAY: My Lords, is the Minister aware that the President of Tanzania, with whom I discussed this issue only last month, denies that Tanzania is at war with Uganda? Will she consult her own Commission in Nairobi, which I think will inform her that the Ugandans who were found dead in Tanzania were killed by another Ugandan battalion, and that the only action which Tanzania has taken has been to reply by artillery when she has been invaded?
Baroness STEDMAN: My Lords, I note the noble Lord's comments, and I am quite sure that my colleague and noble friend Lord Goronwy-Roberts has also noted them, but they are not really tied up with this particular Question.
Lord HAWKE: My Lords, is the noble Baroness aware that President Amin is by no means unique as a monster in black Africa? There are other rulers who appear to be almost as bad.

ANTIQUITIES BILL [H.L.]
Lord A BINGER: My Lords, I beg to introduce a Bill to provide for the better protection of small antiquities discovered in the ground and elsewhere; to abolish treasure trove; and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(Lord Abinger.)
On Question, Bill read 1a, and to be printed.

ANCIENT MONUMENTS AND ARCHAEOLOGICAL AREAS BILL [H.L.]
3 p.m.
Baroness STEDMAN: My Lords, I beg to move that this Bill be now read a second time. My Lords, the first legislation in this country which began the process of safeguarding the physical survivals of our past was enacted in 1882, and the
454
principal Ancient Monuments Act dates from 1913. There have been amendments and additions in 1931, 1953 and 1972. The legislation is now fragmented and, if I may use the term in this context, is now in need of modernisation. This Bill consolidates, modifies and extends the present provisions, taking account particularly of the increased pace and scale of modern development and the destructive capacity of modern agricultural methods, which together have resulted in the loss of a large proportion of our archaeological inheritance. It also takes account of the great increase in recent years of public interest in monuments, which, welcome as it is, also brings with it new problems of management.
Perhaps I should explain that an ancient monument may be any man-made structure or other work, whether buried or upstanding, of archaeological, historical or architectural importance. In practice, the structures with which this legislation is concerned are usually ruinous, or at any rate no longer of much use for current social or economic purposes. That is the broad distinction between ancient monuments and buildings of special architectural or historic interest which are protected under the Town and Country Planning Acts. Ancient monuments range from pre-historic settlements and burial mounds, through the survivals of Roman military occupation to Norman castles and medieval abbeys. It may not be so well known that ancient monuments in State care also include a number of unoccupied and mostly ruinous country houses of the 16th and 19th centuries, as well as several industrial monuments and fortifications of the 18th to 19th centuries. This illustrates our policy of attempting to preserve a representative sample of our heritage.
In preparing this Bill we have taken account of changes in circumstances since its main predecessors of 1913 and 1931. Since opportunities for major legislation in this field occur very rarely, we have provided for needs which are already on the horizon and have not dealt only with matters that are already pressing. One example is the power to terminate guardianship in certain circumstances with the consent of the owner. So far as the preservation of monuments is concerned, with which Part I of the Bill deals,

455
we are retaining the fundamental principles of the present legislation. Part II, which is about rescue archaeology, breaks new ground.
Noble Lords may be interested to know that a copy of the notes on the clauses to the Bill will be deposited in the Printed Paper Office as soon as these are completed. I must here disclaim any personal credit for the Bill, since it awaited me when I took up my present post. My noble friend Lady Birk was in charge during its preparation and was responsible for the Consultative Document of March 1977 which set out the Government's proposals. The Bill reflects those proposals very closely. Some changes have been made in the light of representations and further examination of the subject, but these are mostly procedural.
My Lords, let us consider the main provisions of Part I. The first step towards preservation is to select and identify the monuments it is desired to protect. The process is generally known as "scheduling", because the first statutory list of ancient monuments—still in force—was the Schedule to the Ancient Monuments Act 1882. Each proposal to schedule is considered by the appropriate Ancient Monuments Board, and I should like to record our debt to the distinguished chairmen and members of these boards for the advice they give so devotedly from their unrivalled knowledge about archaeology and architectural history. There are now over 12,000 scheduled monuments in England, over 4,000 in Scotland and just under 3,000 in Wales. The Bill remodels the provisions dealing with scheduling, but the machinery is essentially the same.
The main effect of scheduling at present is that anyone proposing to do works affecting a scheduled monument must give notice to the Secretary of State. This gives an opportunity for advice and persuasion, and in a great many cases harm to the monument is avoided by this means. But if agreement cannot be reached, the Secretary of State has to invoke compulsory preservation powers. This procedure is cumbersome and, even worse, may create a situation of confrontation. The Bill provides, instead, for a consent procedure. This change is
456
similar to the one Parliament made in 1968 in respect of buildings of special architectural or historical interest, which has been generally recognised as beneficial. We believe that the consent procedure is no less desirable for ancient monuments and that it will be more effective and more flexible.
Where an application for consent appears unacceptable, the Department will explain the reasons to the applicant and will seek, if possible, to help him achieve his objective in ways which do not harm the monument. Where agreement cannot be reached and the Department feels obliged to maintain opposition to the proposed works, the applicant will have the chance to put his case to an independent person appointed for that purpose. There is provision for compensation for refusal of consent in certain circumstances, particularly in respect of restrictions upon cultivation.
However, legal protection is not enough; there must be positive means of securing preservation. These already exist, firstly in the giving of grants towards the cost of repairing and maintaining monuments and, secondly, in the assumption of responsibility for certain monuments of great importance by the State or a local authority by guardianship or outright acquisition. Guardianship enables the State to maintain and manage a monument while leaving its ownership undisturbed. The appeal of this device to our predecessors in 1913 is understandable. It sometimes complicates life for the guardian, but the device remains useful, so we are retaining it, along with the other provisions I have mentioned. There are now 398 monuments in State care under this legislation in England, 320 in Scotland and 121 in Wales.
Occasionally, the owner of a monument of great importance which is falling into decay will neither accept help in maintaining it nor offer it in guardianship. The only present means of preserving the monument in such cases is to take guardianship compulsorily. This seems to be a somewhat strange application of an arrangement which presupposes goodwill on both sides, and compulsory guardianship has not in fact proved satisfactory in some of the few cases where it has been found necessary. We propose to replace it by a power of

457
compulsory acquisition where that is necessary to secure the preservation of the monument. I hope noble Lords will note that limitation, because the power will not be available for any other purpose.
We have also thought it right to reinforce the present power to acquire land by agreement for the management of a monument—for example, for the provision of facilities for visitors—by a power of compulsory purchase for the same purpose. The background to this is that visiting on the scale experienced at many monuments has often raised serious problems. There is a need at such monuments for facilities for visitors in the interests of the locality no less than of the visitors, and these have to be most carefully sited. It may be found that only one site will be satisfactory. There is no problem at all if the owner is a willing seller, but if he is not, or if he is out to exploit his monopoly position, then the Secretary of State cannot at present discharge those responsibilities properly. We are accordingly seeking a compulsory power for the Secretary of State, who would, of course, exercise it only in relation to monuments in public ownership or guardianship. We have done this without eagerness and with no immediate intention of using the power, but we are satisfied that it should be there as a last resort. My Lords, those are the main changes in Part I.
Part II breaks new ground in the interests of rescue archaeology. Many of our cities and towns are situated where settlements have existed since Anglo-Saxon, Roman or even earlier periods. This continuity of settlement produces the superimposition of building remains and occupation material which in certain circumstances can be over 10 feet deep. Consequent rebuilding destroys as well as adds to the archaeological strata and the construction of deep basements from Victorian times onwards has been especially damaging to the archaeological evidence. Redevelopment, particularly comprehensive redevelopment, quickened the pace of destruction. Archaeologists have, in these circumstances, seen the need to concentrate their resources on the investigation and recording of a necessarily small proportion of sites of high archaeological potential before the information they contain is lost for ever. Archaeo-
458
logical evidence, like that from historical documents, enables us to understand how our present towns and countryside have evolved. With the rapid destruction of archaeological sites we have a wasting asset and there will increasingly be fewer sites from which our history can be reconstructed. This is not, as I have hinted, solely an urban crisis; there is a need for rescue excavation in the countryside; for example, where minerals are to be extracted or a new road built or where a site is being destroyed by cultivation.
During the last two decades, archaeologists and my Department have responded to this situation by moving from a piecemeal and unco-ordinated response to the establishment of full-time professional archaeological teams drawing upon local and amateur help. These teams or units have been ready to negotiate with local authorities and developers for opportunities to investigate sites before development or redevelopment takes place. They may be based on a university department or a museum or a local authority or an archaeological society or may take the form of an independent trust. The main source of funds of these archaeological teams or investigating bodies is the Exchequer, although substantial help is given in many areas by local authorities and some money is raised from private sources. My Department is able, through the Inspectorate of Ancient Monuments with the advice of the Ancient Monuments Boards, to direct much of this activity so that resources are concentrated on the sites which are likely to be most informative and contribute to a carefully considered research programme.
The need for statutory provisions arises from the fact that there is at present no certain way of ensuring that archaeologists get access to important sites for an adequate period, or indeed at all. Some developers will not give archaeologists access to their sites even for observation; others may be persuaded to do so but only for, say, a few weeks, when a worthwhile excavation would require at least two or three months. I am not attacking developers; many have been very cooperative and have even contributed to the costs of the archaeological excavation. Nor do I wish the archaeological bodies, often assisted by the local planning authority, to desist from seeking oppor-

459
tunities by negotiation. A voluntary agreement will often work better for both parties than a statutory right because of the inevitable rigidities of the latter.
The Government have, however, been persuaded that it is necessary to reinforce voluntary arrangements by providing a statutory right for the rescue archaeologist to have access for a limited period to selected areas of special importance. The first reason for this is that there is at present the risk that the developer will deny access to a site of great importance, with the inevitable consequent loss of rapidly diminishing evidence of the past. The second is that where the developer has been persuaded to allow access, the period is sometimes so limited that the work of the archaeologist is so restricted as to be hardly worth attempting or, if it is, does not give as good value as it should for the skills and money expended.
The new powers we are seeking would enable the Secretary of State to designate an area of archaeological importance. He would also be enabled to nominate an investigating authority for the area. This would normally be one of the archaeological bodies I have described. Once the designation of the area has been made after publication of the proposal and after a waiting period of six months before it comes into operation, anyone proposing to carry out operations which would disturb the ground within the area must give at least six weeks' notice to the local authority. The purpose of this notice is to enable the investigating authority to inspect the site and to consider what investigations, if any, it wishes to carry out before the operations take place and to discuss its requirements with the person who gave the notice, whom I will call "the developer".
If the investigating authority wishes to excavate, it may serve a notice on the developer and the local authority requiring access for the purpose for a period not exceeding 43/4 months starting from the end of the six-week period of the operations notice, or from the date when the site is cleared of any buildings which the developer intends to demolish. In short, the maximum delay for archaeological purposes is to be six months of which not less than 4½ months will be available for excavating.
460
In practice, I hope that archaeologists and developers will come to agreements to their mutual advantage. For example, it might be possible for the archaeologists to tackle, first, a part of the site which the developer needs as soon as possible and complete their investigation there in a month or two, while the developer might be willing to allow a longer period than is required by statute on another part. I do not expect the archaeologists to ask for the maximum period in every case; many digs need only two or three months and rescue archaeologists have a deserved reputation for achieving their purpose while impeding development as little as possible. Cases may, nevertheless, arise where the requirements of the investigating authority appear unduly to hold up urgently needed development. It will always be open to the developer and the local authority to make representations to the Secretary of State. He will have power to give directions to the investigating authority or to take away the authority's rights in respect of the whole or part of the site. There are supplementary provisions about access by the investigating authority to the site and to any buildings on it for the purposes of observation and recording before and during the development operations, but these contain no provision to hold up the work.
I must say a word about compensation. We take the view that where a site of high potential is to be developed in a manner which will destroy its archaeological value, it is right that the developer should allow an opportunity for rescue investigations and that he should not be paid anything in respect of the delay. In some countries he is required to meet the cost of the excavation, but we do not propose that. We have devised the arrangements in the Bill so as to give prospective developers full opportunity to take account of the archaeological requirement in drawing up their work programmes and thus to minimise extra costs. The archaeological excavation of a site sometimes makes the subsequent development works themselves more expensive. I believe this to be unusual but, where the site is damaged in that way, compensation will be obtainable from the Secretary of State.
There are certain forms of development which cannot readily be fitted into the

461
pattern I have described. These include large-scale mineral extraction which is programmed over years rather than months. We have undertaken to exempt such operations by order in return for adherence by the industry to an agreed code of practice which is now being prepared. There are also problems for authorities with powers of compulsory purchase in that for good reasons—for example, to minimise loss of agricultural production—they delay taking possession of land until work is about to begin and they have no right to give earlier access to the archaeologist in order that he may decide what investigation, if any, will be required. In such cases, where acquisition is in prospect under compulsory powers, we are providing that the investigating authority may have access at any reasonable time before the acquiring authority takes possession of the land, for purposes of inspection for a period of one month in order to assess what further investigation may be required before or during the carrying out of the works. Perhaps I should mention here that while the Crown will not be statutorily bound to give notice of Crown development in a designated area, the Crown will comply with the spirit of the legislation, subject to any overriding national needs.
I believe that many developers may be glad to have a statutory indication of what is expected of them to enable the archaeological heritage to be recorded before they destroy it, and that by enacting these provisions Parliament may in practice help to secure that even more is achieved by voluntary means. However, I hardly expect all developers to welcome what I must admit is a further complication and a possible cause of delay. Equally I shall be surprised if some archaeologists do not demand a good deal more than we are proposing here. We have tried to hold a balance. There is no perfect answer to a problem of this sort, and I shall be pleased to consider suggestions for improving our proposals.
I shall not detain the House long over Part III which well deserves its title "Miscellaneous and Supplemental", but some of its provisions are novel and require explanation. Clause 42 forbids the use of a metal detector without consent at protected monuments and archaeological sites. The need for this restriction arises
462
from the recent hobby of "treasure hunting" with the aid of electronic detectors. This can be an innocent pastime, but it can lead to irreparable damage and loss of knowledge. It is not, of course, the detector itself that is harmful but where the metal object it locates is below ground, the action of digging up that object is very likely to be harmful to an archaeological site. This is because the removal of the object from its context, that is the stratum of soil in which it was contained, destroys a relationship that would be significant to a scientific understanding of the site.
It has, since 1913, been an offence to damage a scheduled monument, and treasure hunting of this kind constitutes damage; but this sort of damage can be hard to prove. Licences are in fact required for another purpose by the Home Office but this has no bearing on the prevention of archaeological damage. Prosecution is anyway a poor substitute for prevention since the damage cannot be made good. It is for these reasons that we seek to control the use of metal detectors at the sites protected by this Bill.
Clause 54 enables an archaeologist who has made a find in the course of a statutory investigation or inspection to retain it for conservation and recording. This is necessary in order to extract the evidence the find may be capable of providing. The rights of the owner will not be permanently affected. Traditionally, owners of land who have agreed to an excavation further agree to donate any finds to a museum or similar institution where they may be held together with the records of the excavation for the benefit of scholars. This is an admirable tradition and I trust that your Lordships will join me in commending it. Our modest proposal is not to be seen as undermining the tradition but as a minimum precaution, necessary in particular in relation to the new powers involving what I may call the obligatory excavation in designated archaeological areas.
The Bill has also provided the opportunity to introduce some urgently needed historic building legislation. In 1975, as a result of the success of European Architectural Heritage Year, the Government promised to help finance our Architectural Heritage Fund which would

463
provide loans to local historic building preservation trusts and other bodies to enable them to renovate buildings of worth. This Fund has now been in operation for some time. Clause 49 regularises our contribution to it. We are also taking the opportunity to introduce in Clause 48 provisions which will enable grants made to historic buildings and conservation areas to be recovered in certain circumstances. Experience has shown that property is sometimes sold at a profit shortly after the grant has been made. It is desirable that the Secretary of State should have power to recover in such cases, although he would of course consider each one on its merits. My Lords, I commend this Bill as a most desirable strengthening of the means of protecting and preserving parts of our heritage, and ask the House to give it a Second Reading. I beg to move.
Moved, That the Bill be now read 2a.—(Baroness Stedman.)
3.26 p.m.
Lord MOWBRAY and STOURTON: My Lords, the noble Baroness has introduced this Bill to us in her usual admirable way and I am sure we are all most grateful to her. The preservation of our heritage for future generations is a duty that we all are agreed upon. Thus from our distant past we have the Iron Age fort at Figsbury, Wiltshire, the famous Broch of Mousa in Shetland; Wideford Hill—that famous cairn—in Orkney, and the Roman theatre at Verulam, and hundreds of other ancient monuments. But there have been some bad examples of ruthless operators damaging and even destroying ancient monuments which have got in their way. This Bill will strengthen the Secretary of State's hand in this sphere, and having all the legislation on ancient monuments, both old and new, all together in one Bill is to be welcomed. On the whole, Part I is unanimously acclaimed.
There are one or two points which I could mention, but as I see that my noble friend Lord Middleton is to speak, I shall leave the agricultural aspects for him to deal with. Clause 15, dealing with the compulsory acquisition of land round an ancient monument could cause
464
concern. I was going to ask the noble Baroness to reassure me that the power will be used sparingly, but she ha" already answered that question most admirably. I am very grateful to her for having done so.
I welcome the concept of the areas of archaeological importance set out in Part II of the Bill. When we consider ancient cities like Canterbury or Winchester, it would clearly be absurd to regard them as chance assemblages of individual archaeological sites and ancient monuments. They must be taken as a whole; they must be preserved as a whole. I wish to associate myself with the view of Professor Barry Cunliffe—whose great work at Fishbourne will be well known to all noble Lords—when he says that this Bill provides a proper framework for the study and management of our archaeological heritage for the benefit of generations to come.
There are only two general observations that I want to make. First, the increased popularity of archaeology in recent years is a very heartening development. At the end of the last war, fewer than 50 organisations were affiliated to the Council of British Archaeology. Today there are over 400. Archaeology is the fastest growing extramural course in our universities. Every year thousands of our young people assist as volunteers in archaeological digs and I think that we could all agree that this provides both healthy exercise in the open air and a unique insight into the rediscovery of the past.
However, this growth in interest in archaeology is not without its dangers. There can be no possible harm in archaeological work under proper control and supervision, but the activities of the ill-informed, who believe that archaeology consists merely of treasure hunting, can pose great dangers. In particular, the use of metal detectors can, as the noble Baroness said, threaten the very existence of crucial archaeological sites.
The Bill contains provisions to restrict the use of metal detectors in designated areas. I think it is probably impossible to go further than this in restricting their use, but I wonder whether or not the noble Baroness, perhaps in co-operation with the

465
Council for British Archaeology, could suggest methods of discouraging the use of metal detectors outside these areas by pointing out to their users the damage they might do. Obviously, some users of metal detectors are motivated purely by greed. They are concerned solely with finding something they can sell and have no interest whatsoever in the archaeological significance of any finds. For them archaeology is merely the handmaiden of cupidity.
Perhaps the Bill of my noble friend Lord Abinger will assist in this matter, but I am sure that the vast majority of those who use metal detectors would be quite horrified if they knew that their activities could pose a threat to our heritage. I am sure that they would be very happy to lend their energies to proper archaeological work, and it may very well be that organisations such as RESCUE could make good use of their services. I believe that there are in fact organisations of those who use metal detectors and I would hope that they could be persuaded to co-operate. I am sure they would have everything to gain from channelling the energies and enthusiasms of their members in helpful and responsible directions.
As I have said, Part II of this Bill gives the Department of the Environment a whole range of new statutory powers to control building and mining activity in archaeological areas. I have heard it argued by very reasonable and sensible people that in a large number of cases these powers are unnecessary, and that in most instances there is in fact a great deal of co-operation between county archaeological committees, officials from the noble Baroness's Department and any contractors involved. It has indeed been suggested to me that this cooperation might be impaired rather than enhanced by the introduction of these statutory powers. While I understand the anxieties of those who are sceptical of the value of new statutory powers, I think I would take the view that the Part II powers proposed in this Bill are justified and, indeed, that no responsible contractors or mineral extractors would have anything to fear from their operation. It has been put to me that the performance of the responsible operators was admirable and very good, and that they challenge anybody in the noble Baroness's Department to say "Nay." What a fine example.
466
However, it was put to me that the exemption from the application of this Bill to the Crown ought perhaps to be looked at because, in the opinion of some people who have spoken to me, this partly nullifies some of the good which would come about, because in the past certain semi-Crown bodies, such as the Post Office, have been bad co-operators with archaeologists. I should be grateful if we could have confirmation that the Minister's Department would be able to bring that home to the Post Office.
Also I should like to query the effects of designating areas on which works have already begun. Will arrangements be made for compensation for the delays which will ensue? I know the noble Baroness said that delays would not normally come into it, but I am referring to works which have already begun, which is a slightly different point. However, I think it is important, and I am sure the noble Baroness will agree with me on this, that where co-operation already exists the emphasis should always be on maintaining and strengthening it rather than resorting to the heavy hand of Statute. I am sure that in practice the departmental officials, who have hitherto conducted their activities on the basis of goodwill, will continue to do so, and I am sure that the noble Baroness can give us full assurance of this: indeed, she has already done so. Incidentally, I had a letter this morning from Professor Cunliffe, particularly commending Part II—and I quote:
"as being a most imaginative and helpful innovation".
Properly used, this Bill should do everything to encourage co-operation between all parties concerned and a responsible attitude towards the conservation of our heritage. I am sure that the noble Baroness will agree with me when I say that in most cases this responsible attitude exists already. Firms such as Lloyds Bank, Debenham, the Laing Group and the Amey Roadstone Corporation have been of great assistance to professional archaeologists and have in many cases been willing to go to some considerable inconvenience and expense to be so. Their attitude is an example to us all, and I am sure that the noble Baroness will join with me in commending it.
My Lords, in any modern society there is no doubt that economic growth and

467
archaeological heritage do not naturally co-exist. Methods have to be found to reconcile competing claims. Without new commercial and industrial development we face impoverishment, but if we neglect our heritage from the past we face a spiritual and cultural improverishment which is perhaps even more disabling. A morning's work with a bulldozer can destroy centuries of history. This Bill will help to control the bulldozers and lessen these risks. I commend the Bill to your Lordships and look forward to its Committee stage, after which we shall have a measure of which I hope we shall all be proud.
3.36 p.m.
Earl GREY: My Lords, we on these Benches also welcome a Bill which will help to preserve our ancient monuments and also ensure in this day and age, when progress demands that we have to designate more areas for dwellings and factories, that before this is carried out we are not destroying forever an historical monument or the remains of a past civilisation. I support the provisions in the Bill giving scope for archaeologists to investigate before any decision is made for work to be undertaken in places of archaeological interest. It is important to realise that urban and countryside areas are given the same consideration, and I am glad that this was emphasised by the noble Baroness in her speech. It has been asked of the Department of the Environment that protection of ancient trackways and green lanes of historical interest should also be incorporated into the Bill. While I believe in the safeguarding and welfare of hedges and ancient bridlepaths, I also believe that, because of the scope of operations involving maintenance and accessibility, they should be dealt with under a separate Bill.
There is great worry concerning the destruction and vandalising of ancient monuments. One has seen what has happened to Stonehenge and the measures that have had to be taken, with expense and inconvenience to the general public who have a genuine interest. An article in the Evening News of 1st February, pointed out the problems of increasing numbers of tourists causing these monuments to be eroded. The article men-
468
tioned Canterbury Cathedral, where 5-inch floors have apparently been worn down to an inch. Buildings such as the Tower of London, Tower Bridge and Canterbury Cathedral are a vital link with our national heritage and are also important to our economy. I believe they must be protected at any cost. I welcome the measures taken to ensure that private owners of protected monuments are responsible for and have an obligation to maintain and preserve any area that has an archaeological interest. The section in the Bill relating to grants should be an encouragement and an incentive.
I am also pleased that action will be taken regarding the misuse of metal detectors, although their use will be permitted. Too many times in the past, through ignorance and inexperience, amateurs have unwittingly destroyed valuable articles and traces of history. We on these Benches in the main support this Bill and look forward to its reaching the Statute Book.
3.39 p.m.
Lord MIDDLETON: My Lords, as the noble Baroness has said, this Bill consolidates existing law on ancient monuments and makes new provisions. Under the present rules I myself, through having an interest in the surface land, am responsible for the preservation of a number of ancient monuments and sites. I am periodically reminded by the Ancient Monuments Department of the DOE of my statutory duties in respect of a complex of prehistoric remains in the form of earthworks and burial places, and I am consulted when it is desired that a new find should be scheduled.
I am periodically reminded by the DOE of my obligation to preserve a Norman castle; but as it was built of wood and burned down in the early part of the 12th century, this particular burden imposed by the State is not too heavy. I am also a party, with the Secretary of State, to a deed of guardianship in respect of an ancient medieval village site; and, finally, I have a duty to keep in repair a ruined 13th century church. This liability is rather more expensive than the maintenance of the parish church which replaced it and which is in current use. I have therefore some experience of the existing rules. I find the Departments concerned

469
fair and reasonable and always helpful, and I believe that this is an experience shared by owners generally.
In regard to the Bill's new provisions, I shall be very brief in asking the noble Baroness whether she will in due course elucidate two matters. The first is the provision in Clause 10 which gives to the Secretary of State compulsory powers to acquire ancient monuments in order to preserve them. At present, as the noble Baroness has just said, the normal procedure is to enter into a guardianship agreement with the owner of the land. I referred just now to the agreement to which I myself am a party, and it works very well.
The Bill retains these arrangements by virtue of Clause 12 and, at present, as the noble Baroness has just reminded us, failing agreement with the owner, the Secretary of State can make a compulsory guardianship order when a preservation notice or order is in force and the monument is liable to fall into decay. The noble Baroness has told us that this is not working very well, but one is always reluctant to see the extension of compulsory purchase powers, as is provided in Clause 10, and, furthermore, it is difficult to reconcile this provision with the statement in the Financial Memorandum of the Bill that,
"Any increased expenditure with respect to ancient monuments is likely to be insignificant".
From what has been said by the noble Baroness, it seems that there have been cases where existing powers have been insufficient and the Government therefore feel that they must introduce compulsory acquisition. We may have to refer to this subject again at a later stage.
The second point that I have in mind relates to consent to carry out works under a general order made under Clause 3 and Clause 60. The Bill introduces a new procedure which is something like the planning procedure. Anyone who wants to do work affecting a scheduled monument would have to get the Secretary of State's consent if the proposed works could damage, destroy or demolish the monument, or if they are works of removal, repair, alteration or additional works of flooding or tipping. I think the noble Baroness reminded us that at present an owner has to give three
470
months' notice if he proposes to do any work that would affect a monument, in order to give the Secretary of State a chance to serve a preservation notice.
It appears that this procedure is ineffective; indeed, the noble Baroness has referred to damage by agricultural machinery. But there is a large number of scheduled monuments which lie underneath farm and forest land and which are in no way harmed by normal cultivations or by woodland management. It is important that the new procedure, if it is to be effective, should not be too restrictive. No farmer would wish to damage an ancient monument, but neither would he wish to have to get consent for every act of cultivation. Perhaps the noble Baroness can tell us what kinds of operation will be deemed to have consent under a general order made under Clause 3 and Clause 60.
Clause 35 deals with areas designated under the Bill as of archaeological importance. Clause 37 deals with exemption from offence under Clause 35. Perhaps the noble Baroness can also tell us what kinds of agricultural and forestry operations will be included in a general exemption order under Clause 37.
There is one other point that occurs to me, but I would not ask the noble Baroness to comment on it at this stage, because it is not in the Bill as we now see it. When a highway authority puts into motion the procedure under the National Parks Acts and the Countryside Acts, after a claim that certain footpaths should become public rights of way, then that claim can be opposed and a public inquiry called. If the paths cross a scheduled ancient monument and are likely to damage the sites and render control over the sites by the Ancient Monuments Department either difficult or impossible, then the owner and the department can say so at the inquiry. But the inspector, under present rules which are not altered by this Bill, is not allowed to take such matters into account. In deciding the case, he is restricted solely to consideration of whether the paths were, or were not, used by the general public over a specified period. If a site has recently been scheduled and enclosed and protected, he has to disregard that fact altogether. It is not a satisfactory state of affairs.

471
Subject to further information on the points that I have raised and to which we may refer again at a later stage, I am sure that a Bill which seeks to ensure, as this one does, the preservation of our ancient monuments and our archaeological remains must be as welcome to your Lordships as it is to me.
3.47 p.m.
Lord KENNET: My Lords, this is the last in a long series of Bills, a series which was promoted in the closing decades of the last century by the grandfather of the noble Lord, Lord Avebury, and I am delighted to see that the noble Lord is to speak in the debate this afternoon. For 20 years, Mr. Lubbock, as a Member of the House of Commons and then as Lord Avebury in the House of Lords, sought to promote legislation something like this, and failed, so deeply entrenched were feelings, especially in this House, about the sacred laws of property. When, at last, an Act of Parliament was passed in, I think, 1900 or 1901, it merely permitted the State and the owner of an ancient monument to enter into an agreement for the preservation of the ancient monument. It was one of those beneficial Acts of Parliament which permit people to behave well. It is always a good plan to permit people to behave well before you start punishing them for behaving badly.
However, in due course the attitude of the State toughened, and it was in 1913 that the first element of compulsion was introduced into the law for the protection of ancient monuments. It was done by means of the establishment of a class of persons called inspectors of ancient monuments, who had certain closely defined statutory duties and statutory powers which were quite pronounced and advanced. They were allowed to go and look at anything and were also allowed to recommend to the Ancient Monuments Boards that the remain, ruin or whatever it was should be scheduled, from which time State protection bit. These persons figured in the 1913 Act, as large as life. That Act said that the Minister, whoever it was in those days, shall appoint inspectors of ancient monuments.
The Bill before us today, besides providing for many good new things, contains repeal provisions, and one of the things
472
which it repeals is the corps of inspectors of ancient monuments. They are silently abolished in the Bill as drafted. Maybe that is a good thing; maybe it is not a good thing—I do not know. I was rather surprised when I saw that that was what was happening: that after 65 years of honourable and useful history there is no longer to be such a thing as an inspector of ancient monuments.
He had his statutory position. He operated directly under statute law himself. Nobody could stop him from doing what he thought was right. He reported to the Ancient Monuments Board and they then scheduled the ruin. The present Bill will have the effect of transferring those functions to the Secretary of State for the Environment, who is, of course, a rather busy man. How will he carry them out, and through what body of persons? He will no longer be bound by law even to employ qualified persons, I think, for this purpose. Will it not just all be lost in general Civil Service action? There could, of course, be a case for abolishing these specialised statutory creatures, but I think that that case ought to be examined by the House alongside the status of other specialised statutory inspectors.
Who are we thinking of? What is the statutory position of the Health and Safety Executive since the amalgamation of all the old health and safety inspectorates? And what is the statutory position of certain local officers? What classes of persons survive who are named in statute law as having certain powers and duties? And so long as any survive, why should we consider removing the inspectors of ancient monuments from that class of persons? Why should we abolish them? I do not say that it is wrong, but I think that we should go into it, and I hope that my noble friend will today give to the House that information so that we can consider it at the Committee stage.
Assuming that the inspectors are abolished and assuming that the House thinks that this is done with good reason, we have to turn to the question of scheduling itself. The power to schedule a ruin, or whatever it may be, rests, and has rested historically, with the Ancient Monuments Boards of England, Scotland and Wales. The Bill transfers away that power from the Ancient Monuments Boards and puts

473
it on to the already generously piled plate of the Secretary of State. What, then, will the Ancient Monuments Boards do in the future? Are they abolished, too, by this Bill? I am not quite clear whether or not the legislation setting them up is repealed. Perhaps my noble friend could explain that to us also. If the Boards are not abolished, what remaining functions will they have?
After speaking about the existence of the inspectors, perhaps it is only a point of detail to mention the power of access which they have at present. They can go on to the ground of any ancient monument anywhere and see how it is being maintained. What happens to that power of access if the statutory inspector is abolished? At present, the inspector has the power to inspect ancient monuments which are in State ownership and to see that the State itself is looking after the ancient monuments which it owns. Will that power continue and, if so, who will continue to exercise it, given that under the Bill there will be no more inspectors? All this needs to be clarified. There is a passage in the Bill which suggests that this power is being explicitly abolished. It is the passage which states that nobody shall have the power to go into a State owned ancient monument and see whether it is getting on all right.
So much for the inspectorate. There is another thing which makes my hair stand faintly on end, but perhaps my noble friend will tell us something which will cause it to sit down again; namely, the introduction of the power to terminate guardianship. My noble friend mentioned this point in her opening speech. Guardianship is not ownership. It is when the State takes over the maintenance of an ancient monument and becomes responsible for its upkeep but does not become the owner of the bricks and mortar. Nevertheless, it is virtually the same as ownership. It is all done with public money and it is all done by public employees.
Why should the State wish now, 65 years later, to take the power to terminate the guardianship of this monument or that? What kind of monuments does the Department have it in mind to dispose of? Why should the State be able to dispose of an ancient monument when the National Trust is not able to dispose of its houses
474
without coming to Parliament for a special Act in each case? What about the law as it governs national collections in museums? Why is it that ancient monuments are to be singled out for easy disposal when compared with National Trust property and museum property? Prima facie, it would seem that they should have at least the same degree of entrenched protection as do National Trust houses. When she comes to wind up the debate this afternoon, perhaps my noble friend could tell us why that has been put in.
My last point is one of curiosity regarding Section 49. My noble friend introduced Section 49 as being connected with historic buildings legislation, not ancient monuments legislation. The House will remember the difference between ancient monuments, which are almost all ruins, which are not very numerous and which are of immense and obvious value, and historic buildings, which are not ruins at all, which are very numerous and which vary in value from the immensely valuable right down to the merely interesting. Section 49 empowers the Secretary of State to make grants to something called the Architectural Heritage Fund which was established as a charity in 1960. Would I be displaying amazing ignorance if I said that I had not heard of it and that I did really not know what it was, and that when I was administering this branch of the law from the chair where my noble friend now sits in the late 1960s we never used it? We were never aware of the possibility of such a fund coming into play. I am all for empowering the State to make grants to everybody, but perhaps my noble friend could tell the House what this fund is, what are its terms of reference and who administers it. Then I feel sure that the House will welcome the proposals about it.
As to the rest of the Bill, I am as much in favour as earlier speakers have been of the powers it takes regarding archaeological sites. They are clearly overdue. It seems to me as though those powers have been quite rightly devised. Therefore, I wish the Bill an easy passage through the House, subject only to satisfying explanations on the one large and the one small point which I have raised.
3.57 p.m.
Viscount HANWORTH: My Lords, I rise primarily with the object of briefly

475
supporting this Bill, but first I must declare an interest. My wife is one of the new field monument wardens visiting scheduled monuments and reporting back to the Department of the Environment. Her parish covers most of Hampshire, the Isle of Wight and some of Berkshire. I immensely enjoy accompanying her, seeing the country and taking a non-active part, except for map reading and holding a levelling staff on what are sometimes the most exposed parts of the country.
Seriously, however, ancient monuments are a part of our national heritage which is being eroded in so many directions. Moreover, archaeology and the history which it records is very far from complete. There have been, and will be, very great improvements in the technology of excavation, and the information which can be obtained from modern excavation is vastly greater than it was even, say, 10 years ago. One might think that because, for example, several barrows in an area have already been dug there is no particular reason for preserving the others. But this is not the case because, if left to posterity, they may be able to learn a great deal more from them than we can, even with our modern techniques. We are only custodians of our heritage and we should not squander it. There may be just a few people who think that the study of the past is unimportant, but to those few I would simply say that, having considered the basic necessities of human life, this applies to almost all ! other human activities.
Returning to the Bill, as has already been said, it is a partial consolidation of all legislation since 1913, but there are differences and some points which I think might receive further consideration. It would seem that the status of the qualified Department of the Environment Inspectorate may have been downgraded in the Bill—I think that this has already been mentioned—in so far as there is now no provision for their opinions to be heard. Guardianship—which again has already been mentioned—is a scheme whereby an owner of, say, a castle can hand it over for the purposes of repair and surveillance in perpetuity. It now seems much more of a transitory nature than it originally was and apparently it could even be voided solely on the fiat of the local authority. It seems to me
476
whether one wants to reduce guardianship, or to make it possible for it not to continue, it certainly ought to be at the very highest level and definitely not with the local authority. It would also appear that any Government Department getting possession of a scheduled or listed site could similarly on its own fiat do what it likes. I think the Minister said this and I am quite sure that it really is a mistake, and it would seem that if we are taking these powers to deal with other owners of the land it really is rather bad to say: "Well, we don't trust them but of course no Government Department can ever do any wrong". For that reason alone I think it would be right not to exclude the Government Departments. I simply ask the Government seriously to consider these matters, particularly because the number of experts—and I am certainly not one—who may be available for the Committee stages of this Bill, here and elsewhere, is probably limited.
4.2 p.m.
Viscount MONCKTON of BRENCHLEY: My Lords, first, I must declare a double interest, in that I am an amateur archaeologist, a past president of the Kent Archaelogical Society and a small owner-occupier farmer, so in a matter like this my loyalties are slightly divided. We, the British, are in the state that our ancestors were in about 1,500 years ago and perhaps I may remind the noble Baroness, Lady Stedman, that the downfall of Rome came not by force of arms from outside; it arose from the minting of coins and over-taxation. That was the sole cause of the destruction of Rome; let us pray that our destruction is not achieved in the same way.
It is good that a Lord Avebury should be speaking later in this debate, because his grandfather—I suppose it was—used to come down to my part of the world in Kent to see the result of excavations, and yet one sees the damage that was done by puritanical people and by farmers in the areas where he did his main research and, indeed, round Stonehenge itself and many other megalithic tombs which were themselves originally holy sites and shrines but which were pulled out for religious reasons. The Roman Church, being more wise, usually consecrated the existing megalithic pagan sites to Church use, and many of the early village churches in this country have megaliths built into

477
them so that the spot remains sacred or at least undamaged.
Another general point which I should like to make is that excavation itself is for the most part total destruction, and one must be very careful not to push for excavation every time. Equally, the new methods of farming and of deep subsoiling are causing havoc with sites yet undiscovered. This is a problem which I believe comes under this Bill and I believe the Bill to be good.
I am not sure about the idea of altering the system of treasure trove. I have worked archaeologically in other countries where they have a similar system with the State owning everything found in the ground, but not everything found underground gets to the State; it is hidden away and often exported. Look at the case of the Elgin Marbles in London. Another suggestion made by the noble Baroness was that any finds should be given to museums. I would suggest that the word "offered" would be better; there is too much material in most museums. Not far from here, Samian ware pots which were put together from shards have been rebroken in order to be stored because there was not room for them when they were whole. It might be a good thing to put them on view near where they have been found. If churches were safe nowadays (which they are not) that might be a place to exhibit some of the best finds. National Trust houses and places such as Leeds Castle, which is now a separate foundation, could hold finds, but I suggest that for the most part the museums are cluttered up with prehistoric and Roman material.
However, finds by themselves are useless unless they are recorded. Equally, we must make it easy for the man who finds something to report it. As a farmer, I can see that, if I suddenly saw the footing of a Roman wall in my best field which grows the best crop every year, I might not report it. In fact, I should report it because I am very keen on such things, but my neighbour might not. I think it must be made easier for him so to do, even though the place then becomes a site. If he then wants to keep the thing that has been found and recorded and printed, well and good. On our own farm last year we discovered an early second century Roman burial—or, rather, cremation—and the
478
vessels that go with it. I then got the Kent Archaeological Rescue Unit with Mr. Brian Philp to come down and do a rescue excavation. He found two more glass vessels, a painted pot and a small poppyhead beaker and guessed rightly which field the occupation site would be in. I then dug a series of trenches with a miniature bulldozer (which was Japanese, I fear) because with that I could see and delineate the area to be excavated. That area is a minimum of two acres. We found over 1,500 shards of first and second century pottery on two acres, in a series of 20 trenches. That will be excavated by the Kent Archaeological Rescue Unit in April. It will take a year to complete—not four months and two weeks, which I think the Bill suggests.
On certain sites, an even longer time will be required. I hope this point can perhaps be looked at. I know it is against my farming interests but it is certainly in the interests of archaeology. The Roman level on our site is at about 3 ft. 6 inches, and it means that we have to move 10,000 tons of soil, mostly by hand, although the modern bulldozer used archaeologically under control is quite good at moving some of the topsoil. The Dover site on which the Rescue Unit have been working, where the famous painted house was found, is at a depth of 20 feet of soil which has to be removed over four acres. They have completed half within five years. Four months and two weeks would not have met that case very easily.
On the other hand, in Schedule I, Part I, paragraph 4, page 60, it says that the owner who wishes to get consent for a change goes to the inspector and he will give notice in due course. No period of time is specified and that is hard, particularly on a developer, as opposed to a farmer. A man is just about to develop a site in Dover and there is another site in the chalk pits at Darenth in Kent where work has been held up for a long time. There is no limit to the time the poor owner has to wait before the decision is given. The man with the Dover site has waited 11 months and the developer has already lost half a million pounds. In the case of the Darenth chalk pit site, the inquiry was held last April and that is a £2 million project. I should have thought that about 90 days would be sufficient if the inspectors were expert; if not, I should get new inspectors.

479
My Lords, I am keen on this Bill. I wish it well and I hope that some small amendments may make it better later on.
4.10 p.m.
Lord WILSON of HIGH WRAY: My Lords, I am not a professional archaeologist, but for some reason I have never been able to understand I was for three years President of the Cumberland and Westmorland Antiquarian and Archaeological Society and I was appointed a Fellow of the Society of Antiquaries of London, so I know a little bit about it. I should like to give this Bill my fullest support. I think it is a much needed and an excellent Bill, though possibly some of the modifications which have been suggested by other noble Lords should be made to it.
Your Lordships will be glad to hear that the noble Baroness, the noble Lord, Lord Mowbray and Stourton, and the noble Earl, Lord Grey, have in fact said everything I was going to say about Clause 42, which deals with metal detectors. I should like only to stress what the noble Lord, Lord Mowbray and Stourton, said. I regret that the provisions regarding getting permission for the use of metal detectors are confined to scheduled sites. I agree with him that it would be difficult to do otherwise. I live in the second largest and one of the most sparsely populated counties in the country, and there are a lot of people getting metal detectors and going round on unscheduled sites digging holes in fields. They appear to think that, if they get permission from the farmer who owns the field or from the tenant, they can do as they like. I believe also that very often they do not fill in the holes and that causes agricultural difficulties. There is no need for me to repeat what has already been said, and I wish the Bill well.
4.12 p.m.
Lord AVEBURY: My Lords, unlike the noble Lord who has just spoken, this is not a subject on which I have had occasion to inform myself in the past, nor would I normally have ventured to express an opinion to your Lordships but for the fact that, as the noble Lord, Lord Kennet, remarked, my grandfather was very persistent in seeking legislation
480
for the protection of ancient monuments. He started in 1873 with the introduction of a Private Member's Bill which called for the appointment of a National Monuments Commission which would have prepared a schedule of monuments over which it would have been possible to exercise powers of restraint. An owner who wanted to injure a monument would have had to serve a requisition on the Commission and it would then have had to either purchase the monument or consent to the injury. There was a right of appeal against that power to the courts. The Commission was also to be empowered to spend money on preserving scheduled monuments with the consent of the Treasury. I mention these historical details to show that sacred rights of property, as the noble Lord, Lord Kennet, called them, were not so universally respected in the 19th century as some people imagine, and that the Liberal Party, to which my grandfather also belonged, were not in the 19th century the arch exponents of laissez faire and preservation of individual rights, as they are sometimes painted; they did have regard to far wider interests, as this example shows.
My grandfather introduced his Bill no less than nine times before, finally, in 1882 it was taken over by the Government and was successful, but in a rather truncated form. In speaking about the Bill which he had introduced earlier, my grandfather mentioned as a particular example the threatened destruction of the great stone circle at Avebury. Among other acts of vandalism which spurred him on to continue his effort to secure legislation, he mentioned that in 1875 a large number of the stones were in fact broken up for the sake of a few shillings' profit. He wrote in the journal The Nineteenth Century of April 1877 of how a contractor had set bonfires around the stones and when they were sufficiently heated he threw cold water on them so that they were cracked; he then broke them up and used them as rubble for the construction of roads. Then a large part of the site was purchased by a building contractor who proposed to erect a housing estate on it. Fortunately, a rescue operation was mounted in time to prevent that particular act of desecration. My grandfather went on in this article

481
to enumerate many other works of outstanding national importance which had been obliterated by speculators for what he called paltry and trifling reasons.
My Lords, today, through such successive legislation, we have had a steady enhancement of the power to stop what I would call criminal acts of that kind, but at the same time the pressures of development have also increased. I do not think, from the speeches we have had so far, that anyone is likely to disagree with the general sense of the legislation which is now before the House. The replacement of existing provisions for giving notice of work on scheduled monuments, interim preservation notices, preservation orders, guardianship orders and agreements under the Field and Monuments Act 1972, which the noble Baroness rightly called cumbersome, by the scheduled monuments consents under Clauses 2 and 3, I have no doubt will be effective and will bring this procedure more into line with the listed buildings applications, except of course that an appeal against refusal is to a person appointed by the Secretary of State since he cannot determine appeals against himself.
On that subject, I may say that I do not like the principle which we find in so much legislation being brought forward now, where Secretaries of State appoint a person to act in a quasi-judicial manner in a cause where the Secretary of State is personally interested. We find that not only in the present Bill but in the immigration law, where the adjudicators are appointed by the Secretary of State for Home Affairs. I would suggest to the noble Baroness—although she may say this is a minor Committee point—that the persons who are to be appointed to hear appeals against decisions of the Secretary of State might perhaps be appointed by the Lord Chancellor instead of by the Secretary of State himself.
I should now like to turn for a few moments to the matters raised by the noble Lord, Lord Kennet, which I think are of great importance, and I hope that the noble Baroness will respond to the invitation which he gave her to explain some of these matters in somewhat greater detail before we proceed to discuss them at Committee stage. I do not think the noble Baroness mentioned the inspectors
482
at all in her speech, but it is a more remarkable innovation than even the noble Lord, Lord Kennet, made out, because inspectors have been part of the legislation ever since the first Act of 1882. If I am permitted to quote from the record of another place, this is from Hansard of 11th August 1882, column 1600, where my grandfather himself said:
"As regards the present Bill, while it is no doubt a step in the right direction, especially in providing for the appointment of an inspector …".
He obviously thought that was a very important provision, that the inspector, a corps of inspectors, was an absolutely essential provision, and successive Governments have continued to hold that view right up to the present day. There is no explanation in the Memorandum as to why they have disappeared, why Section 16 of the 1913 Act has been repealed, which mentioned inspectors specifically and gave them certain powers, which presumably they continue to exercise as employees of the Secretary of State, although we do not find any reference to that anywhere in the Bill.
There is the parallel matter which the noble Lord, Lord Kennet, also mentioned, that the act of scheduling has hitherto been the responsibility of the Board and this is now to be transferred to the Secretary of State. Those who have raised this matter with me have pointed out that it undermines, indeed eradicates, the principle of impartial professional judgment which has been enshrined in all the previous legislation. Moreover, it opens the way to the making of decisions by administrators on their own initiative and without any reference to the professions.
I am as anxious as the noble Lord, Lord Kennet, about the provisions as regards the Crown. The exemption of the Crown from entry or from any of the other provisions of the Bill is a rather serious matter because the Crown, of course, is one of the largest developers. The Property Services Agency also, so far as I can make out, has no obligations under the Bill. Although the noble Baroness said that the Crown would abide by the spirit of the provisions of the Bill and I suppose that her remarks extend to the Property Services Agency—I am glad to see her nodding her head—I am not sure that your Lordships would think it satisfactory to rely entirely on an assurance from the Minister, because we all

483
know that Governments can change and what a Minister says in either House has no statutory force and could not be tested in the courts. With the greatest respect, at some point during the Committee stage of the Bill, I suggest that we consider restoring an obligation to the Crown.
The noble Lord, Lord Kennet, criticised the provision for the withdrawal of guardianship of a monument and asked in respect of what classes of monuments the Government had it in mind to exercise these powers. I should like to know whether there have been any cases in the past where it has been desired to withdraw guardianship and, because of the lack of any such powers, the Government have been forced to continue acting in that capacity. For if we cannot point to any practical examples, I suggest that the Government have not had reason to come forward with this provision.
Before leaving the question of the inspectors I should like to make a tentative proposal to the Government for their consideration before the Committee stage. This is not a matter which I have discussed with any of the inspectors and therefore I am unable to say that it has their support. However, it occurred to me that, in order to preserve the independence of the profession, one solution which might be adopted would be for them to be employed not by the Secretary of State but by an independent body which could be either the Board or the Royal Commission. It struck me as an anomaly that we have these two parallel organisations: First, there is the Royal Commission—which, incidentally, is mentioned only once in the Bill, in, I think, Clause 40—-which has the function to record and measure monuments which may be liable to destruction through redevelopment, and to compile a national inventory of those monuments of national importance; and secondly, there is the Board, which has the function under the Bill—and this answers one of the questions raised by the noble Lord, Lord Kennet—to advise the Secretary of State in the exercise of any of his functions under the Bill.
Surely the body which collects all the information is in the best position to give the Secretary of State advice. There-
484
fore, my proposal is that, either we abolish the Board and transfer its functions to the Commission or, conversely, we abolish the Commission and transfer its functions to the Board, and that we then envisage transferring the inspectors, who are to continue, as I understand it, to be the employees of the Secretary of State, to either the Board or the Royal Commission, whichever continues to exist. In that way we would preserve the professional integrity of the corps of inspectors who have served this nation so well in the past.
Subject to those minor anxieties I join with the rest of those who have spoken in giving a general welcome to the Bill, and express the hope that it will enhance still further the powers that we have for preserving our national heritage.
4.25 p.m.
Lord ABINGER: My Lords, my intervention in this debate will be short, because there are only two matters to which I wish to refer. However, before doing so I should like to say that I also very much welcome the Bill and know, from conversations with them, that many professional archaeologists do so as well. It is clear that the first part of the Bill in effect consolidates and modernises existing ancient monument legislation. I do not think that that legislation was ever very controversial. It was accepted by most people as being sensible, if not necessary, and therefore it can hardly be called controversial now to consolidate legislation which already receives general acceptance. I certainly have no quarrel with Part I of the Bill and I welcome the effort to update the legislation concerned.
Part II of the Bill introduces the entirely new concept in Britain of the designated archaeological area. I welcome that idea too, but I wonder how that concept will work in practice. It is attractive to suggest that it will be possible to designate these areas in much the same way as areas of outstanding natural beauty can be designated under the Town and Country Planning Acts, but I am not sure that the comparison is valid. The trouble might first be how to identify areas of archaeological importance. Areas of outstanding natural beauty can be identified easily and if they are designated the pastoral scene presented by them continues; the

485
farming of the land continues without prejudice to the beauty of the area concerned; and industry can be kept away from the area. However, it seems to me that it will be often impossible to identify areas of archaeological importance in advance.
To begin with, in my view the majority of them lie beneath the surfaces of our ancient towns and cities—places like Colchester, York, Chester and even London. In the case of the smaller towns, I suppose that the intention, under the provisions offered by the Bill, might be to designate the whole of the town area; but how will that problem be approached in a large city like Edinburgh, Bristol or London itself? How are we to know what lies beneath the stones of our ancient towns or under which stones archaeological remains lie? The sites tend to be unearthed suddenly and unwittingly in the course of development in the towns. I am sure that archaeologists will welcome the provisions that give them a breathing space of four and a half months to examine the site if it has been designated, although very often I imagine that when these things happen the site will not have been designated at all.
I am not clear from reading the Bill how much notice of designation has to be given. If a site is unexpectedly turned up, is it too late to designate it, or can one, at the very last moment, through local agencies—perhaps local authorities—designate an area in a hurry? I could not make out from reading the Bill what was possible in that respect. It was mentioned earlier in the debate that any delay while the archaeological site is examined can be enormously expensive to the developer and also to a local authority, if a local authority is concerned with the matter at all. Delay could be very unfair to each. In the circumstances, perhaps the requirements of archaeology must take precedence. I do not know, but I think that great practical difficulties will arise from the implementation of that clause. What seems certain is that archaeological sites in towns can seldom expect permanent protection. In four and a half short months at the most they are likely to be buried again, possibly for centuries, possibly for ever.
Finally, what need not be lost for ever are the small archaeological artefacts
486
which are found on the sites. In that context I am not altogether happy about Clause 54 of the Bill; nor do I think that the professional archaeologist would be. Among other things, the clause empowers authorised experts to enter sites and designated areas and to take into temporary custody archaeological objects found in them. Of course, that will be of some benefit to archaeological science, but is it enough? Except in the rare instances where the law of treasure trove would apply, these objects must be returned to their owner, who is either the owner of the land or the owner of the property in which they have been found. It is that lack of real protection for the smaller objects and artefacts which worries archaeologists so much.
I should prefer Clause 54 to enable the local authority in whose area the site lies to acquire such objects at a fair price by compulsory purchase. I do not think that property owners would oppose such a provision. The noble Lord, Lord Middleton, who I think speaks for property owners, may disagree with me, but I do not believe that they would get very excited about a provision to acquire archaeological artefacts by compulsory purchase. Frequently these objects are of very small intrinsic worth, but they often have a high scientific value and importance. I agree that it would be absolutely fair that their present owners should receive some compensation if such objects are compulsorily acquired, as indeed I believe almost invariably the finders of treasure trove are now compensated. Those are the few points that I wish to make. In all other respects I welcome the Bill.
4.34 p.m.
Baroness STEDMAN: My Lords, I am very grateful for the interest which noble Lords have taken in this Bill by attending and by making such very well-informed contributions to the debate. I am especially indebted to the constructive approach that all noble Lords have taken in making their speeches on the Bill. It is a complex subject and involves conflicts of interest. The traditional policy of the Departments has been to try to resolve such conflicts by negotiation, and we shall try to continue this policy in the administration of the revised and extended powers under the Bill, if Parliament

487
enacts it. I can confidently assure the House that that will be so because it is well appreciated by the Inspectorate of Ancient Monuments and by its administrative colleagues that one gets more done by negotiation and co-operation than by compulsion. Nevertheless, those who are responsible for conserving our already very much diminished archaelogical heritage must have some reserve, reliable powers in order to carry out their job, if it is necessary.
The noble Lord, Lord Mowbray and Stourton, asked whether there would be any compensation for delay where works had begun before designation. The answer is: No. We shall have to publish the proposals, so there will be a period of warning and there will then be a further six months before the designation finally takes effect. In our view, this gives developers all the freedom from those provisions that is necessary at this time. Nothing can be retrospective. If works have started, then we must go through this process of designating the area, the further six months and so on, which ought to enable developers to co-operate with us.
The noble Lords, Lord Mowbray and Stourton, and Lord Wilson of High Wray, and, indeed, other noble Lords are concerned about metal detectors and their use, as we are. I can only refer all noble Lords to the first article of Treasure Hunting's code for thoughtful treasure-hunters, which has been published in its journal and which says:
"Do not interfere with archaeological sites or ancient monuments, but join your local archaeological society if you are interested in ancient history".
The Department is certainly willing to help as much as it can in the education of treasure-hunters, by giving advice or in any other way which is possible. However, we think it is very much better if an independent body, like the British Archaeological Council, would take the lead in this through its various organisations and branches.
This gives me an opportunity to stress a point which arises on the question of metal detectors. What I did not know until I started talking about the contents of the Bill is that the vendors of metal detectors have been asked by the Home Office to give purchasers a leaflet which
488
refers to the licensing requirements. The Home Office suspects that many vendors do not comply, and that many of the purchasers who receive the leaflets do not even apply for the licences. However, there are about 80,000 licences already in existence and we understand that about 8,000 applications are in hand at the Home Office at present—I suspect as a result of many Christmas presents in the past couple of months. However, the licensing does not do anything to ensure that detectors are not improperly used on archaeological sites. But it is a point to stress, that if one does have a metal detector, one is still supposed to have a licence before one operates it.
The noble Earl, Lord Grey, raised the question of trackways and green lanes, and I think quite suitably said that this was not something for this particular Bill, although I am sure that, in the light of his interest and that of the noble Lord, Lord Avebury, in the Ridgeway and other places, we have not heard the last of trackways and green lanes and may soon hear something about them. The noble Lord, Lord Middleton, spoke with real authority; he is one of those who suffers or enjoys, as the case may be, being surrounded by so many of our ancient monuments. I am very glad that his experience of co-operation from our Department has been a happy one.
We regard Clause 10, concerning compulsory acquisition powers for the Secretary of State, as only a reserve power. It is something which we believe we must have, but we would use it only where it was necessary for the preservation of the monument, and for no other purpose whatever. On the question of agricultural land and the difficulties which arise when scheduled monuments are on agricultural land, the archaeological objectives there are to prevent the cultivation of monuments, including buried sites, which have never been cultivated, or perhaps not in recent years.
As other noble Lords have said, the intensification of modern agriculture has destroyed many sites and remains a threat to others. We want to keep under observation monuments where cultivation has been tolerated; we want to control and perhaps be able to stop cultivation where there is reason to believe that archaeological damage is being done.

489
Cultivation of many scheduled monuments has traditionally been tolerated, but it is now known that in some cases, but not all, continued cultivation, even to the same depth, may be becoming increasingly harmful. For example, where the quantity of topsoil is decreasing by erosion or even from movement on a sloping site.
We are aware of these problems. The class consent will apply to all the monuments which are at present cultivated and have been cultivated in recent years. It will permit cultivation to a specified depth, and is intended to cover normal ploughing but not the exceptionally deep cultivation or drainage works. We are in touch with MAFF and with the NFU), and are having quite long consultations with them. We are reasonably confident that we are going to work out terms of consent in consultation with them that will be acceptable to the farming industry.
The noble Viscount, Lord Hanworth, was delighted to find one of our field management wardens. I understand they are an innovation. We think they are going to be of tremendous help to us. Thirty of them have just been appointed, and they have been given a certain number of monuments within an area to look after and keep an eye on; and I am delighted that the noble Viscount has been raked in by his wife to help in this. I shall certainly consider all the points he has raised and will write to him.
The noble Viscount, Lord Monckton of Brenchley, is a known enthusiast of many years' standing and we know of his deep and abiding interest in archaeology. I note his comments about finds being given or offered, and also that a longer time may be required in some cases to carry out the digs on the larger sites. We shall certainly have a look at that point to see whether we can suggest any strengthening of it, or any other means of negotiating for an extension of time where that is necessary. I will undertake to check on the other specific cases he raised, and will write to the noble Viscount before the next stage of the Bill.
The noble Lords, Lord Kennet and Lord Avebury, raised the question of the inspectorate. May I hastily assure your Lordships that the inspectorate is not to be abolished. The current approach is
490
that the Ministers employ whoever is needed to carry out their functions. In the ancient monument field architects are no less needed than inspectors. Section 16 of the 1913 Act gave the inspectors the duty to report on the condition of monuments and the best modes of preserving them. This is an advisory function. It is not comparable to the statutory officials who carry out the executive, or quasi-judicial, duties in their own name. We are maintaining the inspectorate.
The Ancient Monuments Boards are also to be kept. Their specific function is in scheduling certain ancient monuments. That is repealed, but they have the specific function to advise the Secretary of State on this and other key functions under the Bill. This is spelled out in Clause 22, and more generally the Secretary of State will continue to look to them as his principal independent advisers on all matters relating to ancient monuments and archaeology. They have served us very well over the years, and we anticipate that they are going to serve us just as well in the future.
The noble Lord, Lord Kennet, also asked whether we had possible examples of where we might want to introduce the termination of guardianship. One possible example is where one generation of a family owning an estate where there is an ancient monument was perhaps indifferent to the ancestral ruins and the State stepped in and looked after them, but the next generation might very well be as enthusiastic as the noble Viscount, Lord Monckton, and want to look after their own monuments as the noble Lord, Lord Middleton, does, and might want to run them. In that case it might be much better for the Secretary of State, and for the public, to be able to have the powers of termination of guardianship and let them look after them.
There is also the problem which we see arising in the future where the State may be pressed to preserve less enduring monuments than the traditional ones. It may not be possible to predict with any confidence for how long that is going to be practicable, and if the commitment is irrevocable then the State would have to refuse it because we should have to have various safeguards. But the safeguards at the moment are that the owner must agree to the termination. If the owner

491
does not agree to the termination of guardianship that is the end of it, and the Ancient Monuments Board must be consulted before we start any of the procedure for termination of guardianship.
I am delighted, as other noble Lords are, that Lord Avebury was able to be with us this afternoon to take part in this Second Reading debate, because his family must claim a great deal of credit for the ancient monuments work that has gone on throughout this century and before. I shall look at the point he raised about the appointment of persons to hear appeals. I know his feelings on this point from other aspects of government that we consulted, and I shall take advice as to whether this is perhaps a field in which those appointees might be appointed by the Lord Chancellor rather than by the Secretary of State. I shall write to him and other noble Lords about that.
The Crown will comply with the spirit of the Act. The present ancient monuments legislation does not bind Government Departments but they, including the PSA, always have good voluntary arrangements with my Department, not only to abide by the spirit of the legislation but, where possible, to do even more than may be statutorily required, as I understand they did on the excavations on the line of the M.3. I am sure this will continue, and it will be the earnest endeavour of my Department that it will do so.
The noble Lord, Lord Avebury, asked whether we had had any cases in the past where we would have wished to terminate guardianship. No, we have not had any cases up to this point of time; but the distinction with the National Trust is that the Trust can be, and is, ruthless in refusing offers in the first instance. The State comes under a different sort of pressure, and it may be right to accept a monument to save it for one or two generations even if permanent preservation may, in the end, prove to be too difficult or disproportionately costly for the maintenance of the monument. That is one of the respects in regard to which we would want to have these powers in reserve.
Lord AVEBURY: My Lords, if the noble Baroness is leaving the question of
492
the Crown, could she make a brief reference to the provisions of Clause 50, where it is provided that no power under the Act to enter on any land shall be exercisable in relation to Crown land? In particular, one thinks of the powers of recording and measurement which are provided in cases of development. While the noble Baroness says that the Crown is very ready to comply not only with the spirit but to go beyond the spirit of the Act, the existence of a clause such as this implies that there might be cases where the Crown is developing its land where it would exclude persons who had a legitimate wish to come in and record, or measure, ancient monuments that were in the process of demolition.
Baroness STEDMAN: My Lords, I think, and I hope, that the noble Lord is unduly fearful about this. There are instances in regard to Crown land, particularly where land is being used for defence, where perhaps we would not be able to allow this. We are expecting that the same degree of co-operation will continue. I shall have another look at this point before we come to the next stage of the Bill, but we are reasonably confident that we have the full co-operation of those people who have the right to build on Crown lands with the exception, in certain cases, of national safety or national security, where defence and such matters are concerned. I will have a look at that and see whether we can strengthen it at all before the next stage.
The noble Lord, Lord Abinger, asked about the designation of areas of archaeological importance. Where the actual remains are discovered during development in an area which is not yet designated, an unco-operative developer could, if necessary, be stopped by scheduling with immediate effect. Compensation would then be payable for any loss or damage. The designation procedure takes approximately nine months to become effective, and therefore this is not something that happens overnight.
On the question of the scheduling of the archaeological areas, we all know, or suspect, that our country is very rich in things under the soil from past ages, but in practice we are not going to be able to designate overnight every area where we think there are archaeological treasures.

493
The historians and the archaeologists at the moment do know and are able to advise us on the sort of areas in the town and countryside where they would expect to find something, and we know in advance where some major development is expected. We would be able then to designate in advance these areas so that we could safeguard what was still buried under the ground. But there will only be just a few areas a year, and it is not a question of wholesale designation of designated areas of archaelogical importance.
I note the noble Lord's comments on Clause 54 about the temporary custody of archaeological finds. I will have a look at that and consider it and write to him. When his Bill dealing with treasure trove and other things comes to us, I am sure that we are going to have many more complementary things to go with this Bill and with the others.
I hope I have covered most of the points raised. I will check with Hansard tomorrow. On those replies I have not given, or have not expounded in sufficient depth, I shall certainly take the opportunity of writing to noble Lords again, and will send copies to other noble Lords who have taken part, so that everybody knows where we have got to before we reach the Committee stage. My Lords, I beg to move that the Bill be now read a second time
On Question, Bill read 2a, and committed to a Committee of the Whole House.

PRICE COMMISSION (AMENDMENT) BILL
4.50 p.m.
Lord JACQUES: My Lords, I beg to move that this Bill be now read a second time. The basic purpose of the Bill is to amend the Price Commission Act 1977 to remove the provisions in Section 9 of that Act which guarantee companies a certain level of profitability during and following an investigation by the Price Commission into individual price increases, regardless of the Commission's findings. The Bill does not affect the safeguard provisions which apply following examinations by the Commission into whole sectors of industry, as opposed to individual firms. The safeguard provisions which the Bill seeks to abolish or amend were originally introduced into the Price Commission Act 1977 in response to
494
concern expressed by industry about the powers granted to the new Price Commission by that Act. The Government always maintained serious reservations about the necessity for such provisions and believed that the Price Commission would be fully able to make provision for the essential requirements of individual companies without needing to be constrained to do so by detailed regulations.
The Price Commission have now been in operation for 18 months and it can be confidently stated, looking at the Commission's record over that period, that those fears which led to the introduction of the safeguards were greatly exaggerated. The Commission have demonstrated in report after report their sensitivity to the particular circumstances of each individual case and to the need for industry overall to maintain a sufficient level of profitability to finance innovations and investment. In almost every report it will be found that the Commission devote a chapter or major part of a chapter to the cash flow position and financial outlook of the company. Often the Commission's conclusions have been strongly influenced by companies' impending requirements for finance to fund capital developments. There is therefore no evidence that the Commission are insensitive to industry's financial needs.
The Commission have, on the other hand, indicated plainly that the existence of the safeguard regulations has proved a considerable handicap on its ability to operate effectively. For example, the safeguards were invoked in 20 of the 31 investigations into pricing by individual enterprises which the Price Commission have now completed. In nine cases, the notified increases were fully safeguarded, while in 11 other cases the increases were partially covered by the safeguards. There is no doubt that the existence of a set of rules which enables prices to be increased automatically, whether or not that increase is justified in all the circumstances, runs counter to the basic principles of the prices policy enshrined in the 1977 Act. For such a policy to be effective, each price increase notified should be examined on its merits and the Commission's recommendations based solely on their findings. The existence of safeguards which guarantee firms certain levels of profitability during and following investigations regardless of the Commission's

495
findings about efficiency and competition, seriously narrows the scope for the Commission to make appropriate recommendations.
The passage of this Bill will not allow the Price Commission to restrain price increases indiscriminately with no regard to the company's profitability or plans for investment. The Commission will continue to be guided by the criteria in Section 2 of the 1977 Act in performing their functions. These criteria require the Commission to take account of a range of factors including the following: the need to recover costs; the desirability of making the best use of resources; the need to defray the cost of capital, including the compensation for risk element; the need to take into account changes in prices in determining the value of assets; and the need to finance innovation, improvement and expansion. One would almost have thought those guidelines had been prepared by the CBI, they are so generous and liberal.
The efficient company has nothing to fear from the Price Commission either now or after the passage of this legislation. What the passage of the Bill will secure is that it will no longer be possible for an inefficient company, using the automatic price increase that safeguards allow, to pass costs on to the consumer without even considering the possibility of absorbing some through greater efficiency. If the Bill helps to prevent this sort of action the consumer will benefit, and in the long term so will the company concerned, if, as a result of an investigation by the Price Commission, it is encouraged to adopt more efficient methods.
The Government have never argued that the work of the Price Commission would lead to a massive reduction in the rate of inflation. The work of the Price Commission has certainly made a contribution to the remarkable reduction in the rate of inflation which we saw last year, but it has never been expected that the Price Commission would have a quantifiable effect on the cost of living overall. The Price Commission operate on a selective basis; their role is to prevent unnecessary price increases, but not to act as an agency of control across the board. The Government are seeking through this Bill simply to make this selective control more effective.
496
I believe price control as we have it today is modelled on our needs. In our economy we have certain spheres where there is competition which goes a long way to controlling prices. In other spheres we have imperfect competition; we have many instances where the market is dominated by one or two market leaders and there is imperfect competition so far as price control is concerned, so that there is need for an agency. And of course we have, as a third category, absolute monopolies including State monopolies.
In such a mixed economy it is not necessary to have rigid controls across the board. That is costly to administer and is costly to industry. In such a mixed economy we require selective control, and that cannot be expected to have, and will not have, a fundamental influence on the retail price index; it cannot have. It is, alternatively, simply part of the monopoly legislation; it is part of the legislation which tries to prevent unnecessary price increases from being passed on to the consumer and is quite different from rigid, inflexible price control in its effect on the RPI. That is the kind of price control we have now and I should have thought that, because of the liberality behind it and because it is modelled to suit our economy, it would have had all-Party support.
I wish to draw attention to one factor which has been ignored by opponents of the Bill but which is of fundamental importance. This is the matter of the Price Commission's ability to allow price increases apart from the application of the automatic safeguards. While the removal of the automatic safeguards will prevent companies from putting up their prices, the Commission will continue to retain its discretionary power to allow interim increases during the course of an investigation and subsequently. Critics will argue that this is all very well but the Commission is not obliged to use its discretionary power and it is therefore unlikely that interim increases will be granted. To those critics I would merely point out that the Commission has already found that circumstances justified the exercise of this discretionary power on several occasions, and that was done in addition to the provision of the automatic safeguards. There are undoubtedly a number of cases where the discretionary power to grant

497
increases would have been used if the price increase under investigation has not been covered in whole or in part by the automatic safeguards. I am confident that the Commission will continue to use its discretion wherever appropriate. This will take more account of the public interest than is taken by the present automatic regulations, over which the Commission has no control.
The Bill has reached this House with the addition of a new clause which relates to the duration of the Bill. The Government accepted the clause, which will limit the life of the Bill to 12 months unless it is renewed annually by Order in Council preceded by an Affirmative Resolution of each House. My right honourable friend the Secretary of State made it perfectly clear in another place that the Government are not entirely happy about this clause. The Government believe that the increased powers which the Bill will give the Price Commission are right and necessary, and that ideally the Commission should be given these powers on a permanent basis. However, the Government are conscious of the support in Parliament for an annual review and have therefore agreed that this clause should be added to the Bill.
This, then, my Lords, is the Price Commission (Amendment) Bill. It has been suggested that the Bill will create a lack of confidence in industry and lead to a lack of investment and to greater unemployment. I believe, that because of the guidelines—the very generous and liberal guidelines—laid down in Section 2 of the 1977 Act it cannot possibly do so. I therefore reject the contention that it will create a lack of confidence, but I should add that if there is irresponsible, ill-informed, or exaggerated criticism of the Bill, that, rather than the Bill itself, will create a lack of confidence. The Price Commission has already shown in its reports that it is operating with distinction, common sense and judgment. The removal of the safeguard provisions will allow it to continue the task that it has begun so well, but with even greater benefit to the consumer and the economy as a whole. My Lords, I commend the Bill to the House, and I beg to move that it be read a second time.
Moved, That the Bill be now read 2a.—(Lord Jacques.)
5.3 p.m.
The Earl of GOWRIE: My Lords, for my part I am glad to welcome the noble Lord, Lord Jacques, back to the Government Front Bench, and I congratulate him upon the fighting spirit which he showed in presenting this invidious little Bill to the House. Since it has been publicised as the last plank in the Government's counter-inflation platform—the others having gone up in flames—it really should, in my view, have been presented by a Member of the Cabinet: say, the noble Lord the Leader of the House, or the noble and learned Lord the Lord Chancellor. But, as always, when there is a thoroughly nasty piece of work to do—it was just the same when we were in office—it is a case of, "Send for the Lords in Waiting." Like the boy in the poem, the noble Lord has stood on the burning deck whence all but he had fled, as I do not notice that any noble Lords from behind him have put down their names to support him this afternoon. Again like the boy in the poem, the noble Lord has acquitted himself with courage and tenacity. We are very glad to see him back, and we are only sorry that it is likely to be for such a short time.
It really is extraordinary that the Government should sandwich this supposedly most important remaining plank of their counter-inflation platform between the Ancient Monuments and Archaeological Areas Bill and the Arbitration Bill. This is surely a Freudian slip on the part of the Whips' Office.
My guess is that this Bill is the last piece of legislation on prices and incomes matters—legislation as against statements of intent, solemn and binding agreements, and the like—that the Government will in fact present to Parliament. It was rushed through the House of Commons entailing an all-night sitting for the Committee and following stages, with a great fanfare of urgency, suggesting that here was in fact a positive response to the industrial crisis and the inflationary consequences of the breakdown of the Government's 5 per cent. pay norm. And yet the Bill is by definition, and deliberately, entirely negative in its intentions. It is designed to remove the present safeguards—that is to say, the safeguards which the earlier Bill, the Government's own Price Commission

499
Bill, had contained—which guarantee a minimum level of profitability for companies subject to investigation by the Price Commission.
Your Lordships will be aware that there are two safeguards: one applies during the period of investigation by the Commission, and the other, which I think is less valuable, applies after the Commission has finished its inquiry. The present Bill seeks to abolish both. Yet nothing has changed since the Secretary of State agreed earlier to the safeguards. They were introduced because the CBI and others argued at the time of its passage that the Price Commission Act bestowed an undue amount of discretion on the Commission and on the Secretary of State. This was worrying because the Act contained potentially ruinous powers to freeze prices, even before the Commission had passed judgment on any particular proposed price increase. In view of the threat to profit, and the general uncertainty of this method, industry needed some assurance that there would be a limit to the extent to which the Commission would be able to depress profits. The Secretary of State himself accepted the argument and built in the safeguards.
Since then nothing has changed—or I may be wrong in saying that; if anything has changed, it has surely changed for the worse. Profitability in British industry is still critically low and needs to increase to finance more jobs and investment. The actual performance of the Commission to date has been a cause for concern in industry, so that the uncertainty about the system is as great as, if not greater than, before. I think therefore that the Bill is a real blow to industrial confidence, ! and it is so, even if its effects on prices are certain to be negligible, as I shall argue and as the noble Lord, Lord Jacques, acknowledged.
My real complaint, however, is that everything about this Bill is bogus. That is why it is a nasty piece of work and why it is distasteful even to have to debate it. In the past five years we have had many Bills—surely too many—which we have thought wrong in theory and damaging in practice, and we, and the Liberals, and the Cross Benchers, and sometimes even noble Lords who sit on the Back Benches
500
opposite, have tried, sometimes with success, to limit the damage by amending them in Committee. But most such legislation was portrayed by the Government as having some relevance to their counter-inflationary strategy. This I take to be the desire to seek the consent and I co-operation of the TUC in a policy of progressive wage restraints: 10 per cent. one year, 5 per cent. the next, and so on.
The present Bill is bogus in that there is no pretence that the Price Commission can materially affect the rate of inflation. The Secretary of State for Prices and Consumer Protection agreed with his shadow, my honourable friend Mrs. Oppenheim—and the shadow displays an altogether more elegant figure than the substance—in another place on 20th November last that the effect of the Price Commission over last year was to restrain prices by less than half of one per cent. He himself said that the Commission was not an agency for getting prices down. He himself, on the same occasion, as reported at column 890 of the Official Report, acknowledged that removing the safeguards, or changing them, would
"involve some penalties in terms of industrial confidence".
I hope that we shall not hear too much of the argument—it was set out by the noble Lord, Lord Jacques—that the object of the Commission is to encourage competition and to discourage monopoly within industry. The fair trading and anti-monopoly legislation does that, and if the Government wish to strengthen such legislation or its executive arms, let them do so directly. We are ourselves interested in doing so, and we might (who knows?) even support them.
The flurry and fanfare with which the Bill is being introduced is also bogus. If there were a desparate need for the Government to abolish their own safeguards for protecting a firm's profitability during its period of being investigated by the Commission, why was Parliament not recalled to perform this urgent amputation during the first fortnight in January? I do not, I believe, usually trade in gossip, but I believe that, for once, repetition of gossip at the Dispatch Box may be justified. If you spend any time in the lobbies or talking with lobby correspondents, you will discover that the common view within the Labour

501
Party is that this Bill is cosmetic, presentational and political. It is not about inflation; it is not even about prices. The Prime Minister himself has said that, where price rises are determined by wage-push, the costs must be passed on. He said it last Saturday: more than 10 per cent. (the officially allowed figure has doubled now, it seems) on the public sector manual workers' claims, and the burden must be taken by the ratepayers. The Prime Minister is quite right, of course. Only, if he believed in his 5 per cent. he should have stuck to it and insisted that costs over 5 per cent. be also passed on.
The Chancellor himself has said that wage increases averaging more than 5 per cent. (or has that figure now changed as well?) must be clawed back in higher prices caused by increased indirect taxes or by lower purchasing power caused by increased direct taxes—and for the ordinary person I think those two amount to the same thing. The Chancellor is quite right as well—if he sticks to it. Last, and surely least, the Secretary of State himself, the sponsor of the Bill, has made a nonsense of the provisions of his own Bill by freeing the road hauliers from price restraint. He is of course right to do so: costs in excess of a minimal level of ploughback profitability must be passed on to the consumer if the firm is not to go out of business; and if the consumer resists or finds an alternative, the firm may later go out of business in any case.
But, my Lords, what cynicism is being displayed here! Politics, surely, in the lowest, in the Tammany Hall sense of the word. The Government know very well, for instance, that, whatever the representations of Mr. Silkin, France and Germany are likely to win around a 2 per cent. increase in farm prices in the EEC Commission. That will put up food prices here. Can the Price Commission freeze these for three months—enough to get over the hump of a General Election, for instance? The motive can only be political, as the Government well know that they have no powers to reduce such price increases.
If the Bill is not about inflation and higher prices, what, then, is it about? It is about giving Labour Members of Parliament something to say in the constituencies. A Bill with "price" anywhere in it—and we on this side have
502
been guilty of this in our time—is always cosmetic. Price rises are a symptom of inflation, not a cause. You do not cure a cold by amputating the nose. The Bill is designed to produce the effect of having the Opposition vote against it so that my honourable and right honourable friends can be presented as friends of the bosses, of profiteers, of "them" against "us" in the ancient, damaging and wholly bogus language of class and confrontation. It is this kind of thing, this kind of language and legislation, not seemingly so important in itself, which so terrifyingly dents the confidence of our friends and allies and, above all, of our creditors abroad Were it not for North Sea oil coming on stream and the troubles of the dollar, the pound would probably be now back at S1·60 as a result of the recent crisis—its level when the Callaghan Administration came in.
I have myself been listening to the word from the marginal constituencies. Labour Members and candidates have been saying that the recent troubles—the strikes, the breakdown in services and the crisis—have been due to the combined votes of the Opposition Parties against the Government's proposed sanctions against employers who granted wage rises in excess of 5 per cent. What schizophrenia!, since the accumulation of the unions' negative or disruptive powers over the economy—which has been persistent under all Parties since the war but which the present Government and Mr. Wilson's Government after the miners' election accelerated—makes it impossible for employers to resist inflationary wage claims where they want to and governmental incomes policies, responding to such inflationary wage-push, make it impossible for employers to grant claims for wage increases even when, as in the Ford case, they are able to do so and want to do so. This same schizophrenia is at work in this Bill. Let us combine, it seems to say, the maximum damage to business confidence, and therefore to investment programmes and jobs, with the minimum effect on price increases, which we all know, and which the Bill's sponsor has admitted, will be the consequence of the Bill's becoming an Act. What nonsense this is, and how distasteful !
I do not object to the electoral or the Party argy-bargy. It is inevitable; it is a consequence of democracy. It is perhaps even a safety valve. But I do

503
object to its taking place, as it is at the moment, through the medium of legislation. That affects people who are not caught up in the Party argy-bargy but who have lives to get on with, jobs to keep and livings to earn. I do not know what my noble friends feel, or what the Liberal Benches feel, but I am tempted not to fall into the trap, and even to speed this scrap of paper, unamended, on its way to Royal Assent—though not, I hope, unshown-up. I really do not want to give Labour Members in another place the satisfaction of saying to their constituents that the House of Lords was holding up or tampering with a Bill to hold down prices. Not that I think that the constituents would be fooled. This is purely a Muppet Show of a Bill, with the Secretary of State King Canute as played by Miss Piggy. I am tempted to say, "Let him have his cosmetics, his eye-shadow and his false lashes, and much good may they do him".
The sad thing, though, is that we could do so much in Parliament at this time. There is a new spirit around in Britain at the moment. For the first time in years, I think, millions of people, whether Labour, Liberal or Conservative, or of no fixed political allegiance, whether unionised or not unionised, agree that this country's long slide from eminence towards irrelevance will accelerate unless something is done, and will be irrecoverable unless something is done. For the first time since the war there is general agreement that the something which has to be done concerns the labour unions—their freedom from legal restraints, their monopolistic tendencies, their inability to keep to the agreements they make, their economic isolationism and their failure to police their own ranks or to reform their own malpractices from within. If the Government would use this precious second of national consensus to give a lead and bring forward some reforms in this area, it could take industrial relations out of Party politics for the seven or eight years which we need for national recovery. It could restore the balance of power between management and labour, without which collective bargaining is either suicidally inflationary or suicidally destructive of jobs.
There is some evidence, even, that the Prime Minister would like to do this. If he would turn wishing into acting, then
504
he might go down in history as a great Prime Minister—and (who knows?) might even win a General Election. But this present and disreputable little Bill puts paid to such fantasies. About the best thing to be said for it is that, far from proving a plank in the Government's platform, it is likely to be a nail in their coffin.
Lord BRUCE of DONINGTON: My Lords, before the noble Earl sits down—I was unable to catch his eye because he was paying such close attention to his papers—would he tell the House what evidence he has in support of his assertion that Mr. Silkin would give way to the pressure from Germany and France for a 2 per cent. increase in agricultural prices in the EEC; and will he state whether his own Party in the European Parliament will be prepared to vote for such an increase when it comes to the point?
The Earl of GOWRIE: My Lords, whether Mr. Silkin gives way or not, such price increases will be agreed between France and Germany, in my view, and will inevitably find their way back here in any case.
Lord BRUCE of DONINGTON: My Lords, will the noble Earl—
Several noble Lords: Order, order!
5.21 p.m.
Baroness SEEAR: My Lords, when the Price Commission Act 1977 was going through Parliament, we on these Benches gave it very full and complete support. This was because it was part of a combined strategy of policy to control both prices and pay. Our support for it was given because it was two-handed, because it was put forward while the Government were operating a seemingly successful policy to control pay. It is a very different matter to ask for support over prices at a time when control over pay has become completely out of hand and is no longer a reality in any shape or form. This is why we here who believe in control over prices and pay are asking—we have repeatedly asked and now ask again—not for tampering with prices with this petty little Bill for but the establishment of a proper Prices and Incomes Board; a Board which

505
their predecessors set up and which the Tories in their unwisdom removed. This is the way to deal with the threat to prices; and not to put through at the present time a Bill which it is generally agreed cannot do more (as the noble Earl, Lord Gowrie, has said, as the Minister admitted, and as was admitted in another place) than affect 0·5 per cent. of the level of prices. Something far more thorough and effective to deal with prices is required than this little Bill which we are discussing here today.
When the Price Commission Bill was going through Parliament before it became an Act, we were aware that the safeguard clauses were a matter of great importance to industry—unaware as industry was of how the legislation was going to work, deeply anxious as it was about its ability to invest and about what could happen; and this is true still in many concerns—to their cash flow during the period while investigations are going on. Throughout all the negotiations which took place at that time, the emphasis of the employers on a requirement for safeguards was made very clear and was accepted by the Secretary of State. Of that, there can be no doubt. The assent of industry to this legislation was conditional upon the safeguards.
I can accept that the particular form of safeguards in the 1977 Act needs to be looked at again. For example, and perhaps in particular, the deadline date, the bench-mark date, of July 1977 becomes more and more meaningless as the months pass. It would not have been unreasonable of the Secretary of State to have gone back to industry and said: "While accepting the need for safeguards, the particular safeguards which are in this Act need to be reviewed"—and to have discussed again with industry what kind of safeguards would be appropriate to bring legislation up to date. This I could understand; but knowing, as the Government do, the importance attached to those safeguard clauses, surely it would have been better to try to revise the clauses rather than to abolish them.
The Minister says (and it was said in another place) that there is no need to have the safeguard clauses because the position for industry is safeguarded in two ways. It is safeguarded through Section 2 of the original Act—and the
506
Minister read the main items in Section 2. Of course, there are general directions to the Commission as to what they have to take into account when estimating whether or not a price increase is going to be excessive, but in every case this requires the judgment (at the end of the day, inevitably, the subjective judgment) of the Commission as to whether what is being asked by the enterprise is reasonable or not. Nowhere in the legislation, except in the safeguard clauses, is there anything at all of a quantifiable nature. It is purely a matter of the judgment of the Commission. The safeguard clauses give a quantifiable safeguard—and it is in this regard that they are different from Section 2 and give a kind of reliability to the undertaking which none of Section 2 can do.
Again, the Minister said: You can trust the Commission to act reasonably; they are all honourable men. I am not saying they are not all honourable men—and it is to the credit of the Government that they are not even all men. The fact remains that it relies on their judgment. And individuals change. How are we to know who will be on the Commission in a few months' time? All sorts of alterations can take place. It is not good enough in any legislation of this kind, in which the viability of undertakings—and, as a result of that, the existence of jobs—depends on these judgments, that there should be nothing built into the legislation as a safeguard and that it should be left to subjective judgment. This is the objection to the removal of specific safeguard clauses with quantifiable limitations on what the Commission are able to do. It is asking too much to expect people to be so happy with the judgment of any Quango, however honourable and well qualified—as, indeed, I believe they are—the members of this particular Quango at the present time appear to be.
With the noble Earl, Lord Gowrie, I do not believe that this little Bill has really anything to do with price control. I believe it is a sop to the trade unions at this particular moment when the Prime Minister was looking for Danegeld to pay in order to try to win them back into the paths of sanity. This is not good grounds for bringing in a Bill at the present time, and I suspect that the Secretary of State knows this perfectly well. The Secretary

507
of State is second to none in this country—and we know this and it is much to his credit—in his determination to try to hold down inflation. Nobody on either side of this House or of the other place has fought harder than he to try to hold down inflation. He cannot believe that this little Bill is going to do anything to hold down inflation.
In the longer run, what will hold down inflation is getting the employers and the unions and the Government together in a spirit of confidence to work out how these appalling problems that we face arc to be handled. If that is what you want, what an extraordinary moment to produce a Bill of this kind, to stick a knife into the employers at a time when they are having the most difficult period they have had since the three-day week—and perhaps it is even more difficult than then. At this moment many of them are not getting their raw materials; they are not able to meet delivery dates; they do not know what is going to happen to their pay bill. They are in a situation of great uncertainty, and if the Government really want to get both sides of industry together, then I say to them and to the Secretary of State—who I believe does want to see a successful solution—drop this shabby little Bill.
5.29 p.m.
Viscount TRENCHARD: My Lords, I have already, a fortnight ago, described this measure as madness in terms of the present crisis, and I do not want to repeat too much. However, 4 per cent. return on capital in inflation-proof terms is the all-industries statistic. One can argue it up to 5 per cent. If one takes oil out of it and looks at manufacturing industry only, currently it is certainly below 4 per cent. return on capital, return on investment, in real terms. What could be more inappropriate in an accumulated long-term crisis for British industry than to bring in an extra price control measure at this time? That 4 per cent. is half the current rate of inflation and, although we all regret it, that current rate is bound to rise. So industry is in a really disastrous position from a profitability and investment point of view. The cost of money is well above even the rate of inflation.
It has already been said by my noble friend and by the noble Baroness, Lady
508
Seear, that this is—if I may paraphrase them—an appeasement move. It can only be an appeasement of the trade union position and one gets very depressed about this when one considers a point that has also been discussed in the House in the past week: that the vast bulk of the funds of the Party opposite is supplied by the trade unions, and 130 Members and many Ministers are sponsored by the trade unions. I wish somehow that the moderate element of the Party opposite could disregard this situation, but I cannot see that it can.
A nicer word than "appeasement" which has been used before now is that this is a quid pro quo. If this phrase had only been heard once in a temporary measure lasting a year or two, it might have been all right; but, along with other industrialists, my classical education was not very good, and after 12 years industry is wondering whether the literal meaning of "quid for what?" is not a nearer description. What has happened over these 12 years of price control, dividend control and other things which have made it worthwhile? Almost nothing, my Lords. I personally do not agree with the line taken by the Liberal Party on the need for a permanent statutory incomes policy. I believe such policies can only be applicable on a short-term basis, and we have had this one, as I have said, for too long. The real answers lie—and the Government must know that they lie—in the kind of reforms to balance the bargaining position of which my noble friend Lord Gowrie has spoken.
My Lords, what about the effect of price control? The old style Commission claimed that at the peak, between April 1973 and May 1977, it had had a 3 to 4 per cent. effect on prices. My own feeling, with apologies to my noble friend Lord Cockfield (who is to speak in this debate), is that the effect is not really calculable, because one only knows, on the one hand, the notification for price increases and the actual price changes that take place. One never knows what the position would have been without price control and with the competition and market forces at work. A point which is often badly overlooked is the immense effect of 1 per cent. on the sales value or the retail price index. For British manufacturing industry as a whole, 1 per cent. on the retail price index is the equivalent

509
of 16 per cent. of profit. For many firms it is much higher than that: 20 per cent or a quarter. Thus delays—a matter to which I shall return in a moment—can easily knock a big chunk off the profitability and the ability to invest of important companies.
We need profitable companies. If we turn to the case for individual or selective control, we find we need such companies because they are usually the ones which are growing and investing, whether they are in such a position by their skill or by good fortune. And, my goodness, we need jobs! A lot has been said about price leadership and market dominance. I was for four years president of an organisaton called the Institute of Grocery Distribution, which was primarily concerned in research across the whole field of food, food manufacturing, food retailing and the things that go with it in most of the modern stores today. We could find no evidence that price leadership or market dominance where one firm was large weakened the force of competition.
I came very much to the conclusion that there is a great muddle in the minds of some economists and some academics today on the subject of perfect competition, or, as the noble Lord, Lord Jacques, said, imperfect competition. Most of the text books paint a picture of rows of barrow boys selling apples with prices moving a farthing every hour or two in the old-fashioned street markets. The fact that that could have been called cutthroat competition, with no resources for investment and no resources for development, does not ever seem to occur to the writers of these books. The fact that in modern economies the nature of the competition has changed to longer term, often to world wide competition; that it builds in to a much greater extent factors other than price, such as quality, convenience and service, and that the modern, busy housewife is not looking for changing prices by the hour (indeed, they would only confuse her to a very high degree)—these changes in the nature of competition in a modern economy do not mean that competition is any less fierce.
In my past experience I have been both a "big boy" in a market place, and a "small boy" in a market place. I have been in concentrated industries with few firms and in fragmented industries.
510
I have not been in a State monopoly; I agree that in terms of State monopolies the Monopolies Commission would seem to be the right agency to deal with the question of pricing where there is a need.
Since it is in the "big boy" areas that many neutral-minded people have criticism of the market place, let me take the case which the right honourable gentleman, in the debate on this subject in the other place, mentioned many times. First, let me declare a past interest. I am no longer a director of Unilever, but I was a director for 10 years. As those who have read Hansard know, the Lever Brothers company has been quoted by the right honourable gentleman on several occasions. Let me start by saying that I get just as irritated as anybody else with the soap advertisements that I see on the television, though I find from market research that, curiously enough, the mass market does not seem to get so irritated. Competition in that highly developed industry consists of some very big international firms: American and German; and Lever Brothers is the English firm. It is an industry where there are a few big advances in technology every now and then, and a great number of small advances which do not get noticed but which, if one looks back over the years, have changed to a major degree the quality and service that the products perform for the housewife.
However, in all my years in that company—and they ended at the beginning of 1977—we knew that if we were to stay in the battle with large American and even German companies, we had to earn in that industry some 8 to 10 per cent. on sales; otherwise one could not make the necessary amount of reinvestment in new methods, do the research and development or have the ability to launch new products in order to keep up with this very strong competition. If you are interested, your Lordships will find on page 31 of the Price Commission's investigation into this company, which was so much quoted by the right honourable gentleman, that between the years 1973 and 1977 the profit as a percentage of sales was reduced from 9·9 to 4·4. What could be the excuse—and he gave this company as an example—to hold up the price application of that company? I feel that many industrial leaders, apart

511
from much neutral opinion, have not really studied the mass market and do not have real experience of it. Competition has changed but it is as fierce as it ever was.
The noble Lord, Lord Jacques, has said that we have nothing to fear. The Government spokesmen in the other place have said much the same and that the opportunity to investigate before a price move takes place is the objective of the Bill before us. My noble friend Lord Gowrie has pointed out that both kinds of safeguards—the permanent as well as the temporary—are removed. Let us just take the temporary. First, there has to be 28 days' notification of a price increase, and then the investigations can last three months. It took all 630 staff, supported by many outside firms of accountants and consultants, to do 20 individual price investigations in, I think, 1978: I am not absolutely certain of the exact period. How, then, are they to discharge their work and how are they, if I heard the noble Lord correctly, to follow the purpose of the original legislation as he described it, and investigate each price application?
Lord JACQUES: My Lords, may I interrupt the noble Viscount? The Commission does not investigate each price increase application. The whole basis of the legislation is that it is selective. The Commission have full discretion to decide which they are going to investigate and, in point of fact, up to date they have completed investigations in only 31 cases.
Viscount TRENCHARD: My Lords, I thank the noble Lord for that intervention. I will read Hansard, and I trust he will also, because I think that at one stage he said the purpose had been to investigate each case. But obviously that is not possible and obviously they must be selective. As the noble Baroness, Lady Seear, said, it is a matter of judgment in selection and in how each new team, coming to each new company in different industries, interprets the situation. I cannot help feeling that there is a pretty high degree of arrogance in the assumption that perfect judgments, or even good judgments in the main, can be reached on highly complicated issues like this in the time available.
512
We are talking of a four-month delay in any event, and anyone with marketing experience knows jolly well that while price increases in some areas are frequent and in other areas only occasional, there comes a moment when there is a market opportunity, when the right thing to do is to move it, when you can indeed get your profitability nearer to a level at which investments can be found. And you can miss that market opportunity completely with this four months' delay and be unable to tackle it again for another year, during which time, if your return is as the average is at the present moment, or even if it is above average, your cash flow is going to look pretty silly.
The noble Lord, Lord Jacques, has said that the Government regret that this Amendment Bill will last for only a year; but it is a pretty "key" year, with inflationary pressures as they exist and with industry in many cases really on the rocks. The level of bankruptcies is already too high and the level of investments, as we all know, has been much too low. The effect of the dislocation and strikes that have taken place, also mentioned by the noble Baroness, means that there will be more bankruptcies; and now we have a power to delay at least for four months, which can be quite critical, price applications from companies making virtually no profit at all.
I wish I could fully agree with my noble friend that the effect of this measure will be really only cosmetic and therefore the best thing to do is to let the miserable scrap of paper go through, even though it has no relevance. I believe it is more than possible that it can do real harm, that it can add to the total of jobless and that it will do so unless some floor level—whether the old floors under the regulations in the Bill were correct or not is a matter for debate—is established in terms of profitability, to the position wherein a company can increase prices without waiting for a long investigation to take place. I would suggest that floor level should be put at the current rate of inflation, or perhaps at the rate of inflation and move with it; because if a return on capital on a current cost-accounting basis is below 8 per cent. at the moment, that company is already in a very bad way and there is a real risk that a four months' delay, in a year when

513
inflationary pressures are building up, could just make the difference.
Will the Commission, with the number of members it has and with the workload it has, be able to use its discretion correctly to let the price go up anyway in cases which are deemed to be really serious? I personally doubt it, and at this stage I should like to hear what the noble Lord has to say about it. I should have liked to give Notice of an Amendment to be raised at Committee stage to bring in a floor at this ridiculously low level, which would at least avoid the risk of causing more unemployment. I have been told that there is a possibility, owing to the rushed timetable and other technicalities which someone so amateur in the political world as I am does not really understand, that any Amendment passed by this House which would send the Bill back would mean that the Bill could not proceed. I do not know whether the noble Lord can explain this matter, perhaps in his winding-up speech today.
5.48 p.m.
Lord COCKFIELD: My Lords, I have been reluctant to address your Lordships before on the question of price control because I have always taken the view, in this and in other fields, that if one has had the responsibility for implementing a policy and then relinquishes that responsibility, one ought to leave one's successors to get on with the job without either fear or expectation of help or criticism from oneself. However, the present Bill does raise a point of constitutional importance, and Í adopt the phrase that was used by the noble and learned Lord, Lord Denning, in his judgment in the case of GEC v the Price Commission—a judgment, if I may say so, which is itself of great constitutional importance. That being so, I feel I must talk to your Lordships about this specific aspect of the matter. I wish to make it clear that I am not attempting at this stage to argue whether or not there ought to be a price control. The Bill in front of us deals with a very narrow issue: namely, the amendment of one particular section of the 1977 Act, and that is the matter to which I will address my remarks.
The control established by the 1973 Act has been the subject of a great deal of
514
criticism; indeed, I myself criticised it both during its currency and since Í left the Price Commission. But it did have one great merit, which was that the rights and obligations, both of the Price Commission and of the company which was the subject of the control, were clearly and specifically laid down. The effect of this was that if there was a disagreement between the Commission and the company as to what were their rights and obligations they could always have access to the courts, and indeed on a number of occasions cases were taken to the courts; one of them went as far as the House of Lords. Cases were similarly taken involving the old Pay Board. These judgments were of great assistance both to the companies concerned and to the Commission in interpreting their rights as well as their obligations.
The 1977 Act, however, marked a sharp break with that tradition. It was drafted in a way which made it almost impossible for an aggrieved company to have access to the courts. There are a large number of criteria laid down in Section 2 of the Act, but they are all expressed in the most general terms and—what is perhaps more important than that—the Act itself specifically provides that these considerations are to be taken into account only "so far as the Commission consider them relevant". Attempts to oust the jurisdiction of the courts are not always successful; nevertheless, it is difficult to escape the view that any attempt to go to the courts under this Act would be extremely difficult.
One will no doubt remember that, at the time when this Act was passed, the Government had suffered a series of reverses at the hands of the courts. There was the Jenkins case involving the TV licences, there was the Tameside case and there was the Laker case, and this Act was drafted to ensure that there would not be any more of them so far as this legislation was concerned. But there is another point that I wish to make. Not only, on the face of it, was the legislation written in the hope—I do not say the certainty; I shall be quite clear about that—of excluding the jurisdiction of the courts, but something else was done. The Prices Act 1974, which was an Act passed by a Labour Government, so its parentage is, presumably, beyond reproach, provided that in the case of an order to prevent or

515
restrict price increases the power could be exercisable only by Statutory Instrument, which of course was not only debatable in the House if the House so wished, but a vote could be taken on it. The 1977 Act provided, in general, for no such oversight or supervision by Parliament. Therefore, the position we have is that not only has the jurisdiction of the courts been largely excluded, but so has the supervision of Parliament as well.
There was, however, one single bulwark erected to protect a company, and that was the safeguard contained in Section 9 of the Act. This said that however much you held down a company, whatever you did, you could not go beyond a figure to be specified in regulations made by the Secretary of State and in due course approved by Parliament. It would have been a perfectly understandable course of action if the Government had said, "We have now come to the conclusion that the figures contained in those regulations are no longer appropriate, and we want to come along and amend them", which would have meant that we should have had a new set of figures which we could have debated and, if necessary, voted upon. But the Government have not done that. They have said instead, "We wish to sweep away altogether this one final protection which appeared in the 1977 Act."
The result is that the powers which are now possessed by the Price Commission are not only extremely wide, but, in the technical sense of the term, not subject to any constraint or any real control. I know it is argued, and probably correctly argued, that the Price Commission act reasonably and responsibly. It is argued that the Price Commission consists of people who are experienced and knowledgeable, and that their judgment can be relied upon. But from the point of view of the argument that I am putting forward, that is totally irrelevant. You cannot defend despotism on the ground that it is a benevolent despotism. You cannot defend dictatorship on the ground that it is an efficient dictatorship.
May I give your Lordships an example? What would be the reaction, not only in this House but in the country, if we did this kind of thing in the taxing Statutes? Let us suppose that we had a Finance Bill
516
which said that the rate of income tax shall be fixed by the Chancellor of the Exchequer after taking into account any of the following list of matters, to none of which he may pay any attention unless he thinks it is relevant. That is not a fanciful example. Your Lordships will be familiar with the case of Rex v.Hampden and the very grave consequences which flowed from that case.
It will, I know, be said that this is a very small Bill, that it is not the kind of thing which represents so major a breach in our traditions or practices that it really supports the kind of argument about the constitutional position, or the worries about the constitutional position, which I have put to your Lordships. But let us always remember that the erosion of our liberties comes not in one sudden cataclysm; it comes in the thousand-and-one small things which erode our liberties. The reduction in the sovereignty of Parliament comes not in one great measure, but in the thousand-and-one little ways which reduce its sovereignty. The reduction in the rule of law comes not in one great step; it comes by erosion over time in a thousand-and-one ways.
May I remind your Lordships of the words which were uttered nearly 200 years ago by Judge John Curran, in times which were just as turbulent and troublesome as they are at present. What he said was this:
"The condition upon which God hath given liberty to man is eternal vigilance, which condition, if he break, servitude is at once a consequence of his crime and the punishment of his guilt".
I commend those words to your Lordships.
5.59 p.m.
Lord MOTTISTONE: My Lords, it is indeed a privilege to follow my noble friend Lord Cockfield, whose views are always to be treated with respect, but on this occasion he has surpassed even himself in the skill with which he put his case. It is a real pleasure once again to find a Government Bill being introduced by the noble Lord, Lord Jacques. I have happy memories of that well-known partnership, Oram and Jacques, which used to keep us fully occupied into the middle of the night some 2½ years ago. But this is not such a happy occasion.

517
Apart from giving us memories which are happy, the noble Lord, Lord Jacques, is one of the very few members of the Government who has practical experience of the business world. I think that the Government are extremely lucky to have him to put their case. I therefore listened with particular care to his argument justifying the Bill, and I found it quite impossible to be convinced by his proposition that there is any real need for the Bill on the one hand and any real desire for it by the Price Commission on the other.
It is said that the Price Commissi honave felt frustrated that their decisions have had to be underpinned by the safeguards which are currently available under the Price Commission Act. However, it does not seem to me that when they have finally completed their investigations they have been in any way seriously incommoded by the fact that in some cases but not all, the firms concerned have invoked the safeguard clauses and enabled themselves to put up their prices in advance. It seems to me that the difference, if any, that there would have been if there had been no safeguard clauses would have been minimal.
With that in mind, I should like to turn to two points which were made by the noble Lord, Lord Jacques. The first is that the guidelines are general and liberal; therefore we can rely very well on Section 2 of the Act and be wholly confident that, applied by a wise and sensible, albeit perhaps dictatorial Price Commission, effectively the safeguards will be taken care of through that process. That is absolutely so, provided, of course, that the guidelines are applied in the way that we, as the recipients, might like them to be applied. But we cannot be sure of that.
It has been said that the Price Commission have been in existence for 18 months and that they have a great deal of experience. This may be so but, as the noble Baroness, Lady Seear, said, one cannot be sure that the Price Commission will stay exactly the same, even for a year—the present time limit of this amendment to the Act. So I question whether it is safe enough—and it was here that my noble friend Lord Cockfield made his point so very forcefully—to rely upon broad-brush guidance which can be interpreted by one person in one way and by another person in another. As again
518
has been said by my noble friend Lord Trenchard, I suspect that this is a singularly awkward and unfortunate moment to take off the further guidance that the safeguard clauses gave. This is a moment in time when the effects of the recent disturbances on raw material supplies and, hence, on raw material prices are quite beyond the wit of man to be sure about and when we find that the other great variable in the cost to companies—labour cost—is itself going wild in proportion to what the Government required, as from last August. Consequently, from the point of view of companies, this is a particularly unfortunate moment to remove the very reasonable extra guidelines which the safeguard clauses provided.
Turning to the Price Commission themselves, I wonder whether it is fair on the officials of the Price Commission who will have to conduct the investigations, make judgments and advise the Commission on what those judgments might be. When there were safeguards, at least they had some kind of guidelines of a positive nature. Those guidelines enabled them to make the right kind of recommendations to the Commission. Now, however, they will be, as it were, naked in the advising chamber; they will have nothing to rely upon except the very broad-brush requirements of Section 2 of the Act. I suggest that it is unfair not only on companies but also on the officials of the Price Commission.
This leads me to question yet again why it should be necessary to have the Bill. I am not going to suggest that we should go further than my noble friend Lord Gowrie advised and try to reject the Bill, but it seems to me, for practical reasons, to be totally unjustified. As has been said by many noble Lords, the Bill is not going to convince any of the trade union leaders or, more especially, the trade union members whom some people have suggested it is designed to placate. Therefore, I cannot see why the Government feel that it is so necessary to have this particularly measly little Bill and force it through Parliament so terribly fast, as though the results of it were going to be the complete answer to all the country's problems. It just does not make sense.
When he comes to reply, I hope that the noble Lord, Lord Jacques, will be able to give us a real reason. If anyone can give

519
us a real reason, if there is one, the noble Lord, Lord Jacques, can. If he cannot, I shall suspect that the Government have lost control—as we learn almost daily from the newspapers that they have—over their art of trying to run this country.
6.8 p.m.
Lord BOYD-CARPENTER: My Lords, I must begin by declaring something of an interest. A company of which I happen to be chairman, the Rugby Portland Cement Company, is at the moment under investigation by the Price Commission, although I am glad to say that the notification in respect of which the investigation is being made was submitted comfortably before 17th January. I declare this interest because noble Lords may feel, understandably, that that interest may bias the views which I seek to express to your Lordships. On the other hand, there is the compensating advantage of immediate and practical experience of what this means.
I am bound to say in that context that I thought the noble Lord, Lord Jacques, shrugged off rather lightheartedly the effect on any company of the mere mechanics of such an investigation. Substantial numbers of young accountants, hired from an outside firm of accountants, descend upon your company. They monopolise a great deal of the time of senior management which otherwise would be devoted to furthering the interests and developing the profitability of the company. They demonstrate an insatiable appetite for statistics, coupled with no very conspicuous indication of knowledge of the problems of this or, indeed, of any industry. Although these are things, like our climate, which fortitude enables one to endure, it is a little bit of a mistake to suggest, as did the noble Lord, that this is rather a nice thing to happen to one.
Having said that, may I say how much sympathy I have been feeling during the last hour and a half for the noble Lord. As he knows, noble Lords in all parts of the House have a great affection for him. Therefore, it must be very disagreeable for the noble Lord to have to sit there, without a word raised in his support, listening to noble Lords who speak not mainly with that ordinary spirit of Party bias and controversy, which is a very healthy thing in itself, but almost without exception with
520
direct authority and experience of the subject-matter of his Bill.
I was a Minister for a good many years and I know how lonely one feels when a legislative Chamber is almost unanimously—or, in this case so far, is unanimously—critical of one's measure. When that criticism comes, it comes from people like the noble Viscount, Lord Trenchard, the noble Lord, Lord Cockfield, with his unique experience in this area and others. It must be very uncomfortable for the noble Lord because, being a man of sensitivity and sense, he must have a sneaking feeling in his mind now that they are right and that his masters, who put this Bill into his hands, are wrong.
It is indeed a very curious time at which to bring forward this Bill, as has been pointed out. But, in defence of the noble Lord, I must say that his unhappy situation stirs my remaining flickers of chivalry. It is at least a Bill consistent with this policy of the Government of which he is a member. It is brought forward, as last summer was the Bill to restrict dividends, with no real belief that it will do any good, with no real belief that its consequences will be other than harmful to the economy, but because of the pathetic belief of Ministers that the loyalty and co-operation of the trade union leadership can be obtained by steps which, by imposing misery on the employers, reconcile the trade union leaders to the misery which the Government are inflicting on them. As I have said before in this House, I think that that underrates the wisdom and judgment of the trade union leadership, to think that they are really going to be affected or induced to co-operate by considerations of this sort.
Surely, as thinking men, their concern must be with the continued employment of their membership; surely they must be concerned with whether the companies for which they work will be profitable enough, not only to continue to employ them but to employ more of their members and to be profitable enough to offer a tempting target when the next wage demand comes along. They cannot really believe, any more than I think any noble Lord in this House believes, that a step of this sort taken at this moment will make any contribution whatever to the effective operation of the British economy.

521
It has been said before, and I will not weary the House by reiterating it, that it must discourage investment in British industry. Any noble Lord—and there are many here—with experience of investment decisions knows that this is made on a judgment as to the likely profitability of the particular investment: if you install new equipment or if you open a new plant, is it going to be profitable and make a profitable return? But if you induce into the calculation of the viability of an investment (difficult enough as it is) this further consideration that you may be subject to an outside interference by a strengthened Price Commission concerning the price which you calculate should be paid on the product of that investment, are you not simply going to mark that file "Bring forward six months hence" or "Bring forward a year hence"? Are you not going to add to the already excessively low level of investment in British industry and therefore continue to perpetuate the disheartening size of the unemployment total? That surely must be the practical and the consequential effect.
Of course, by taking away the safeguards, which the Bill seeks to do, it is argued that one only defers the price increase for three or four months and that the Commission, in its discretion, may not even grant that deferment. But, as has been said already, those three or four months may be crucial to the year's results of any company. Moreover, there is no certainty whatsoever that the Commission, freed, as it may regard itself, of the incubus of the safeguard provisions, even after three or four months will allow at least the price increase which a proper calculation of the safeguard provisions would cause them to apply. Several times the noble Lord said that it was left to the discretion of the Commission and these are wise, amiable, well disposed, public-spirited citizens. It may so be, but it is not the general policy in this country to rely solely on the amiable character of public functionaries and for that reason to exclude them from any check or control. As I understand it, the Commission, in deciding whether to allow an interim increase in prices during its investigation, acts wholly in its discretion. As I understand it, no Minister is responsible for what it does or does not do in that respect. It is insulated by the legislation from Parliamentary control.
522
That is not good enough. Ministers of the Crown are—or so the noble Lord will say—high-minded, public-spirited men of the highest character, and no doubt many of them are, but at their most arrogant they have never argued that for that reason they should not be subject to parliamentary control and questioning. Yet it is that kind of insulation from any measure of public control which this Bill proposes to confer on the Commission during at any rate the three or four months to which otherwise the safeguard provisions would have applied.
What is the significance of those three or four months? A glance at the calendar makes it only too painfully obvious that this is to give the impression, it is not?—and the noble Lord would say so if he was being frank with the House—to the electorate during the next few months, in the period leading up to the election, that price increases are being held. The fact that this is a purely temporary dam over which the waters will surge at the end of the four months will be as easily forgotten as was the real rate of inflation forgotten by Mr. Denis Healey during the election of October 1974 when he told the astonished electors that the rate of inflation was down to 8·5 per cent. That is the explanation of it, and if the noble Lord would only say that I think we would understand that there was a reason, however blatantly political, for this measure.
I want to follow up one aspect of this matter. I have told the House that my own company was subject to one of these examinations and for that reason I naturally regard it as being appropriate and proper to defer, until that operation is concluded, any observations I may desire to offer to this House on the working of the Price Commission. However, I do want to invite the attention of the House to the spirit in this respect in which the Minister in charge of this Bill in another place is bringing it forward. Mr. Hattersley, Secretary of State for Prices and Consumer Protection, in the course of the Second Reading in another place—and if noble Lords wish to look at the reference, it is column 1067 of the House of Commons Hansard of 29th January—was interrupted by one of his honourable friends who suggested to him that there existed cases of underhand price rigging.

523
Mr. Hattersley immediately responded, favourably to his honourable friend, by saying that that led him on to a particular case, and he proceeded to refer to the applications made a little time ago by what he described as "Associated Portland Cement"—but which in fact is now called Blue Circle, although Mr. Hattersley does not appear to know that—and by my own company, and he went on to appear to accept the insinuation that the applications put forward by these and other companies in the industry were connected with underhand price rigging.
That extraordinary ministerial observation is made the more extraordinary when I point out two things. First of all, as the Secretary of State apparently did not have time to mention, the common price agreement in the cement industry under which these applications were made has twice been before the Restrictive Practices Court and on both occasions was blessed by that court as being appropriate and in the public interest. I think that if a Minister in charge of this Bill in another place thought fit to cast aspersions in this connection on my own company and on Blue Circle, common fairness surely would have impelled him to point out that, whatever he might think about the arrangement, it had been subjected to impartial review by the body set up by Parliament to undertake that review, and on two occasions. Of course, it may be that Mr. Hattersley did not even know this; nothing in connection with his grasp of affairs would surprise me. But, if he did, I think the House will feel that he behaved extremely badly.
The second point which I think is of some significance is this. When the Price Commission has concluded its investigation it will report to him, if he is still in office, and observations of this sort made in the House of Commons at the moment when the investigation is beginning do not suggest that any report that the Price Commission may send to Mr. Hattersley will be viewed with the objective realism which any citizen is entitled to expect of a Minister of the Crown exercising functions conferred on him by Parliament. I think this particular episode, which I thought it right to mention to your Lordships, indicates, perhaps somewhat unpleasantly, the spirit
524
in which in certain circles—and I acquit the noble Lord, Lord Jacques, entirely—these proposals are being brought forward.
There is one other comment I would make, if I may, and it is this. I find the Government's new found enthusiasm for competition rather agreeable. It has all the vigorous freshness of Saint Paul arriving at Damascus. But I wonder if they are going to carry it into the public sector. Are they going to waive the Post Office monopoly and give that enormously overgrown organisation a little healthy competition? Are they going to allow competition in coal, steel, shipbuilding or water? How far does this conversion to the principle of competition go? Or is competition only for the private sector, while, of course, the Government's darlings in the public sector must be sheltered from that cold breeze?
I come back to the central point: the effect on investment, on the morale of industry, on that industrial confidence on which the industrial expansion and the recovery we all want to see in this country depends, will be, and must be, adverse. The fact that the Government have made it clear once again that they will seek to support their policies by knocking employers, by leaving the unions at liberty to do what they want but knocking the employers on the head, must be a discouragement. The prospect for employers of being crushed between the nether millstones of the Price Commission and the trade union movement is not one which is going to encourage investment or enterprise in this country. If I ever knew of an encouragement to invest anywhere but in this country, it is surely a measure of this sort. And worst than this, morally, though not perhaps in its long-term effect, this Bill is designed to cash in on the worries and anxieties of the housewife and the pensioner, who are desperately frightened of inflation, desperately scared of rising prices, and it seeks to prostitute their faith by a measure which the Government know cannot bring about the effects that are being suggested.
6.26 p.m.
Lord JACQUES: My Lords, first of all I want to thank the House for the goodwill which has been expressed, and I will try to be worthy of it. I thought

525
that the noble Earl, Lord Gowrie, spoke about anything except the Bill. I do not think the Bill has got any relevance whatever to the present crisis, none at all. I think that anybody on my side who pretended it had would be blind.
Lord BOYD-CARPENTER: My Lords, will the noble Lord allow me to intervene on that point? Can he explain why it was that the intention to introduce this Bill was announced by the Prime Minister in his Statement on the crisis in the House of Commons on 16th January?
Lord JACQUES: Well, my Lords, I know it was announced by the Prime Minister on 16th January, and it was done when he was making a Statement on the crisis. I still do not accept that it had anything to do with the crisis; quite frankly, it has nothing to do with the crisis at all. This Bill and the 1977 Act are part of the monopoly legislation, and all the evidence supports me on this. First of all, it is selective, it is not rigid across the board. Secondly, only the large firms have to submit their price increases, the people who are semi-monopolistic or could be semi-monopolistic.
Baroness SEEAR: My Lords, surely the noble Lord the Minister is not expecting us to believe that because you are large you are necessarily monopolistic?
Lord JACQUES: My Lords, I am not suggesting that because you are large you are necessarily monopolistic. What I am suggesting is that it is part of the monopolies legislation; monopolies are large, and therefore, because of that, only the large firms have to give notice. The noble Baroness is coming to conclusions which do not arise out of what I said.
Viscount TRENCHARD: My Lords—
Lord JACQUES: No, my Lords. When I am finished I will be prepared to answer the noble Viscount's question if I can, and if I cannot I will write to him.
Lord HAILSHAM of SAINT MARY-LEBONE: My Lords, if the noble Lord cannot answer he will not answer.
Lord JACQUES: Furthermore, if anyone looks at the cases which have been investigated by the Commission he will see that many of the firms involved are very large; there could be good grounds for a suspicion of imperfect competition or monopoly. I suggest that all the evidence is there to show that the Bill is part of the monopoly legislation and has nothing whatever to do with the crisis. I certainly would not like to have to use it as if it had something to do with the crisis.
The noble Baroness, Lady Seear, said that we should have a prices and incomes board. I was glad she admitted that we did have it under the 1964 to 1970 Labour Government, and that it was the Opposition when in office who abandoned it. She would like to see it back. I think there is a good deal to be said for what she has in mind. I take the view that so long as there are institutions, whether they be trade union or industrial organisations, who have power to extract monopoly value from the consumer we need institutions to safeguard the community. If it has to be a prices and incomes board, so be it. But I do not think that at the stage we have reached in this Parliament that kind of legislation could be contemplated. As was done in 1964, that is something to be done at the beginning of a Parliament.
The noble Viscount, Lord Trenchard, said that he had found that market leadership did not necessarily mean imperfect competition. That experience is different form mine, and I have been in distribution all my life. I found that the market leaders could afford the advertising necessary to gain the support of the public—to get the name across and to get the goodwill. However, their small competitors could not afford it. Consequently, the small competitors could not compete in advertising. The only way in which they could compete was to try to sell their commodities at a price lower than the advertised price of the market leaders. I know something about that because I was associated with the Co-operative Wholesale Society which had small-scale outputs as regards hundreds of items in competition with market leaders. Indeed, that is still so.
Viscount TRENCHARD: My Lords, does not that mean that the noble Lord did very well as a small man?
Lord JACQUES: My Lords, we did very well, but perhaps that was for the reason that ours was a co-operative organisation, and not for the reasons which the noble Viscount has in mind.
Lord BOYD-CARPENTER: My Lords, he did all right all the same!
Lord JACQUES: My Lords, I wish that your Lordships would let me finish my argument and not butt in. As I was saying, I found that the small man had only one way of competing with the market leader and that was by asking a lower price. It follows that immediately the market leader increases his price all the little people can follow suit whether it is justified or not. That is what I mean by imperfect competition and I challenge anyone to say that that is not the position in practice.
Viscount TRENCHARD: My Lords, may I?
Lord JACQUES: My Lords, in view of the words which I have used, yes.
Viscount TRENCHARD: My Lords, as regards price leadership, if the market leader puts his price up by too much—I have been a market leader and a small man—the small man, on quality as well as on price, will very often nibble his market share and the big man's price will come back. The history of the market place is littered with exactly that type of example.
Lord JACQUES: My Lords, it is so long since we had price reductions that I had forgotten that that ever happened. The noble Viscount, Lord Trenchard, also raised the question of interim increases where there is an investigation pending. As I said in my opening speech, the Commission not only has a discretion in making interim increases but it has shown in its reports that it is sensitive to this practice. For, in several cases, in addition to the automatic increases, it has awarded interim increases and if the automatic increases had not been available there would no doubt have been many more cases where it would have used its discretion.
The noble Lord, Lord Cockfield, raised a legal point which is rather out of my province. However, I am advised that the
528
Commission must have regard to the criteria in the section; that a discretion given to it must be exercised reasonably and that if the Commission does not do so the courts will intervene. Therefore, I would submit that, in spite of the wording of Section 2, it would be possible to challenge in the courts the way in which the Commission used the discretion.
Lord COCKFIELD: My Lords, I am sorry to interrupt the noble Lord, but I should like once again to read to him the actual words of the Section. Section 2(1)(a) says:
"to have regard to all matters which appear to the Commission … to be relevant",
and in Section 2(1)(b), it says:
"to have regard … to the matters mentioned … so far as the Commission consider them relevant".
Is the noble Lord suggesting that those words have no effect at all?
Lord JACQUES: My Lords, I am merely suggesting that the Commission must use its discretion reasonably and that if, in the opinion of the court, it had failed to do so, then the court would act not by submitting something different, but by causing the Commission to have another look to see if it could not use its discretion more reasonably.
The noble Lord, Lord Mottistone, raised the question of the automatic safeguards and the reason they should not be abandoned. The Government's view is that we have gone a long way to get rid of rigidity. The inflexible code of the Board has gone. Only one piece of rigidity is left—namely, the automatic safeguards. The Government are of the view that all rigidity should go and not just part of it. Therefore, they have come forward with this Bill.
Lord MOTTISTONE: My Lords, by the same argument, would the noble Lord think it more appropriate for ladies to bathe with no clothes on at all rather than just a bikini?
Lord JACQUES: My Lords, whether I would or would not, my judgment on that particular question has little relevance to the Government's view. If I were Mr "A" I would take one view and if I were Mr. "B" I would take another view. Therefore, I cannot see the relevance of that question.

529
The noble Lord, Lord Boyd-Carpenter, accused me of shrugging off the frustration and inconvenience of an investigation. I was not aware that I had done so. I am confident that I did not do so. However, if I did, I would sincerely apologise because I have suffered the inconvenience of that type of investigation and it can be frustrating and costly.
I think that I have covered the principal points raised. I have a note on the question of Royal Assent which might be of interest to the House. This matter was raised by the noble Viscount, Lord Trenchard. Under the existing law, the Price Commission must consider notification of price increases within 28 days. If it does not do so, the applicants may raise their prices. The 28 days expire on Tuesday next, 13th February. According to Press reports certain price increases, including beer and petrol, were notified just after the announcement of my right honourable friend the Prime Minister. The Price Commission meet on Wednesdays and thus would consider these price increases on Wednesday next, 7th February. For that reason we have been seeking to obtain Royal Assent by Thursday of this week to avoid uncertainty. That is much the best outcome. But, it would also be possible—and contingency arrangements have been made against delay in obtaining Royal Assent—for the Price Commission to consider these increases up to Tuesday, 13th February. That, I think, answers the point raised by the noble Viscount, Lord Trenchard.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

ARBITRATION BILL [H.L.]
6.39 p.m.
Report of Amendments received.
Clause 1 [Judicial review of arbitration awards]:
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 1:
Page 2, line 11, after ("applicant") insert ("paying into court the amount of the award and").
The noble Lord said: My Lords, I beg to move Amendment No. 1 and, with
530
the leave of the House, I shall speak to Amendment No. 2. The effect of this short Amendment is to strengthen the position of the High Court in respect of attaching conditions to granting leave to appeal. The object is to avoid frivolous appeals and, rather than leaving the payment of a sum awarded by an arbitrator as discretionary to the court, the proposed Amendment will make the payment mandatory.
It seems to a number of practitioners that the inclusion of this type of clause in the Bill will have a helpful effect in reducing the number of non-meritorious applications for leave to appeal in an award. No doubt the noble and learned Lord on the Woolsack will point out that, of course, the court has power to make such a condition for leave to appeal. But this is an area dealing with commercial matters and to include such an Amendment as I am moving would have, in practice, a useful effect. I beg to move.
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, in my submission, these Amendments are unnecessary and I rather apprehend that the noble Lord suspected that that might be my answer. As drafted, the Bill would enable a court to make any leave which it gives conditional upon the applicant paying into court the amount of the award. The High Court should be free to impose such conditions as it may think appropriate. A typical condition would be a requirement that the minimum sum due to the successful party should be paid over to him or that the sum in dispute should be secured.
If the noble Lord will permit me to say so, the difficulty is that an Amendment of this nature might cast doubt on other enactments which give power to the court to impose conditions. I hope that in the light of what I have said the noble Lord will not desire to press this Amendment.
Lord DIPLOCK: My Lords, there is also one other difficulty as regards this Amendment. As often as not the applicant to the court is the plaintiff in the arbitration, and to require him—indeed, to make it mandatory—to pay into court the money that he is claiming will not work.
Lord LLOYD of KILGERRAN: My Lords, I had anticipated what the noble and learned Lord upon the Woolsack would say, but I had not anticipated that the noble and learned Lord, Lord Diplock, would raise that point. We must introduce a certain amount of common sense into the situation arising, and to expect the plaintiff to pay an award into the court would, of course, be foolish. I should have thought that even with an Amendment tabled from these Benches on the Arbitration Bill we would not have heard a comment of that kind, if I may say so with the greatest possible respect.
However, we are dealing with a condition of a commercial arbitration. We are dealing with people who are not accustomed to come into the court. They do not know the rules of the court; they do not know what is within judges' discretion. I believe that if this Amendment were included in the Bill—that there should be payment into court of the amount of the award—that would probably help to reduce the number of frivolous and unmeritorious applications. Having regard to what the noble and learned Lord the Lord Chancellor has said, however, I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 2 not moved.]
6.42 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 3:
Page 2, line 13, at beginning insert ("Subject to subsection (5A) below").
The noble and learned Lord said: My Lords, it may be convenient for us to consider together Amendments Nos. 3, 4 and 5. They share a common purpose—namely, to ensure that the arbitrator has prior notice that the award is required to be reasoned and to make the notice a condition precedent of an order under Clause 1(5) requiring the arbitrator to give his reasons.
I hope noble Lords will think that this Amendment gives substantial effect to suggestions made during the Committee stage—particularly by the noble and learned Lord, Lord Diplock—that a request by a party to the arbitrator during the reference for reasons to be given should be a condition precedent to an order being
532
made under Clause 1(5) requiring an arbitrator to give his reasons. In giving effect to that proposal, the Amendment also introduces a degree of flexibility by enabling the court to make an order requiring reasons in the absence of such a request where there is a special reason why the request was not made. Examples of such special reasons would be where there was a genuine misunderstanding and a party relied on a trade practice that reasons are always given, or where he was led to believe, wrongly, that the other party had requested that reasons be given.
The Amendment of the noble Lord, Lord Lloyd of Kilgerran—Amendment No. 4—has a similar purpose to the Government Amendment, but I venture to submit that it is unacceptable: first, because it would often be impracticable to expect the parties to give notice that an appeal was likely, and what the area of law involved was likely to be before the arbitrator had made his award. Often it would not be until the award was made that any grounds for an appeal would become apparent, and it would be undesirable if the right to seek reasons were to be lost by default in such circumstances.
In addition, it would be contrary to principle for an arbitrator, who as such is exercising a quasi-judicial function, to be allowed to express an opinion on the worthiness of the appeal. I venture to submit that that should be a matter for the parties and the court. I beg to move.
Lord LLOYD of KILGERRAN: My Lords, as the noble and learned Lord upon the Woolsack indicated, Amendment No. 5 goes some way towards meeting the points which the noble and learned Lord, Lord Diplock, and I raised on the previous stage. However, as the noble and learned Lord the Lord Chancellor has referred to Amendment No. 4, with the leave of the House perhaps I may also speak to that Amendment and indicate the difference between my Amendment and Amendment No. 5. The main difference is that not only should the arbitrator give reasons, but he should give some views as to the law involved. In commercial arbitrations invariably the arbitrators give the reasons for their award. It should be required that the arbitrator be notified of the likelihood of an appeal and the area of law so concerned. This

533
would allow the arbitrator to draft his awards so that he covered as fully as possible the facts and the reasons which are relevant to the potential appeal, thus avoiding as far as possible the court ordering more reasons long after the hearing, as apparently is permitted under Clause 1(5).
The noble and learned Lords the Lord Chancellor and Lord Hailsham of Saint Marylebone, in Committee saw difficulties about my Amendment providing that notification should be given to the arbitrator of an appeal. However, I understand that in practice it is unlikely that such difficulties will occur as, by the end of the hearing, both parties should usually be well aware of the areas of law involved in the dispute. I understand that your Lordships will be well aware that under the present system of the special case it is virtually universal that the special case is requested before the end of the hearing, and the area of law involved is often clearly demarcated, albeit without exact detail, so that all relevant persons are cognisant of the position. It may be that the actual questions of law require to be further sharpened up after the hearing, but this in no way derogates from the usual practice of an arbitrator's knowing the area of law involved before the end of the hearing. If this has been the practice so far for many years, there seems to be no good reason why under the new proposed procedure, the arbitrator should not be informed of the area of law applicable before the end of the hearing.
These questions of appeal are of considerable commercial importance. May I draw your Lordships' attention, for example, to a letter I have received—and no doubt many other Members of this House have received—from the President of the London Maritime Arbitrators Association. Mr. Bishop, the President, has said:
".… we cannot over-emphasise the strength of feeling expressed unanimously by the Committee"
of this Association
"both in regard to the exclusion of London maritime arbitrations from those international cases to which contracting-out privileges at any time are granted by the Bill and also at the proposed appeal procedure which will make London arbitration awards still open to review by the Courts. Such review is not what so many foreign parties intend to have built into their arbitrations and it is this factor which in many
534
cases deters such foreign parties from agreeing to London arbitration of their contracts.
"We do feel that in so far as maritime arbitration is concerned the proposed appeal procedure provides no advantages whatsoever over the well-established and understood Special Case procedure under Section 21 of the 1950 Act and has a practical disadvantage in that it will lead to delays and more costly arbitrations".
I have also in my hand a letter from the director and secretary of the Institute of Arbitrators, Mr. V. W. Vigrass. He emphasises the importance of amendments to the proposed appeals procedure in the Act. He tells me that a Mr. Donald Davies referred to proposed amendments concerning the appeals procedure, which I have now moved and,
"Members of the Committee strongly supported an amendment on these lines which would eliminate the difficulties that are envisaged for arbitrators attempting to work within the provisions of the Bill as at present drafted".
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I do not want to say very much about this matter. I am grateful to the Lord Chancellor for having listened to the argument on Committee. I think that his proposal is a fair attempt to meet the point made by my noble and learned friend Lord Diplock, and it also to some extent meets a point which I made both on Second Reading and at Committee. I have been concerned throughout that these grandees would have it all their own way. A great number of arbitrations are very small and deal purely with quality, or matters of that kind, very largely by inspection. It is not really the practice in such cases to give reasons and to contemplate appeal at all. I feel that the Lord Chancellor's proposals to some extent meet this fact.
It could very well be that in cases where the respondent to an arbitration claim in a small matter wanted to avoid payment that he would go through the appeal procedure as a means of delay. I said this on Second Reading and I say it again now. But now that the Lord Chancellor has introduced his Amendment, I think that that danger is largely safeguarded against. Naturally enough one takes seriously what the maritime arbitrators and others have been saying about this Bill, but I would say two things about it: first, it is of course a matter of policy whether or not you include maritime arbitrations. My own feeling throughout has been that you will not get this piece of

535
legislation unless you stick pretty closely to Donaldson, because, as a predecessor of the Lord Chancellor said in the middle of the 19th century, law reform is either by consent or not at all. He was speaking from a lifetime of experience of both Houses (as I know the Lord Chancellor has) in trying to get legislation through. There is a means whereby the area of exclusion agreements can be added to by administrative means subject to the control of Parliament. I think we really ought to be content with that.
The only other thing I would say to them is that I think they have made a big mistake in thinking that the new procedure, whether it was superior or inferior to the old special case procedure which was being superseded, would make the courts more likely to interfere in arbitrations of any kind, whether commercial or not. My reading of the matter is the opposite: the courts will be discouraged from intervening, whereas under the reported authorities under the special case procedure they have tended perhaps to intervene too much. This is taken away from them and the boot, I think, will to some extent be on the other foot, now that the new procedure is being introduced. This is a matter of opinion evidently not shared by everybody, and therefore I put it forward with my customary diffidence.
The LORD CHANCELLOR: My Lords, I am grateful to the noble and learned Lord, Lord Hailsham, for having indicated that we have in the Bill sought to compromise the conflict of approach which has been identified by the noble Lord, Lord Lloyd of Kilgerran. I submit that what is proposed in my Amendments endeavours to meet a point of substance that was made at Committee stage, and it does so with a degree of flexibility. Accordingly, I maintain the first Amendment that I proposed.
On Question, Amendment agreed to.
6.56 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN had given Notice of his intention to move Amendment No. 4:
Page 2, line 17, after (''court") insert ("it shall be a condition precedent to the application to the court that the arbitrator or umpire shall
536
have been notified prior to the close of the hearing that his award is likely to be the subject of an appeal. In the event of the arbitrator or umpire being given notice that the award may be appealed on a point of law then he shall be notified of the area of law applicable and be permitted to state within his award whether or not he considers the appeal should be allowed. If")
The noble Lord said: My Lords, I shall be brief in this matter, as we have discussed the context of it. Having regard to the fact that the noble and learned Lord, Lord Hailsham, has referred to "grandees" so frequently in the course of these discussions, I wonder whether there is not a danger of looking at many of these matters from an ivory tower. The practitioners in this field have strong exceptions to certain parts of the Bill, particularly on appeal procedure. If, therefore, as we all agreed, the main object of this Bill is to attract arbitration to London, then the question of what should be done when the position is reached of a likelihood of an appeal is important in large cases.
The noble and learned Lord, Lord Hailsham, talked about arbitrations which are concerned with quality. There is usually no law involved in that at all; therefore it would be absurd to introduce mandatory clauses to deal with that kind of arbitration. But a person like myself is always in a difficulty about drafting in proper wording to cover all cases. I am concerned with those cases where there is a likelihood of appeal, where there is a likelihood of law being involved, and that an Amendment of this kind should be introduced. I am grateful to the Lord Chancellor for his Amendment No. 5 which goes some way to meeting the matter. In view of what he has already indicated, I shall not move this Amendment.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 5:
Page 2, line 23, at end insert—
(" (5A) The High Court shall not make an order under subsection (5) above unless it is satisfied—

(a) that before the award was made one of the parties to the reference gave notice to the arbitrator or umpire concerned that a reasoned award would be required; or

(b) that there is some special reason why such a notice was not given.").

On Question, Amendment agreed to.
6.59 p.m.
Lord HACKING Lord HACKING moved Amendment No. 6:
Page 2, line 34, at end insert—
(" (8) No appeal may be brought, nor application made, under this section, by a party to a reference under an arbitration agreement, which is not governed under English law, unless such appeal or application concerns a question or questions of English law.").
The noble Lord said: My Lords, Amendment No. 6 is one of three Amendments which concern foreign declaratory clauses. With your Lordships' approval I shall address the House on Amendments Nos. 6, 9 and 10 at the same time. In tabling these Amendments I am inviting the House to consider one of two ways of incorporating into this Bill foreign declaratory clauses. The first method that I am asking the House to consider is the pure declaratory clause which is set out in Amendment No. 10. This pure declaratory clause is the same in draft as the clause that I tabled in Committee and spoke upon in Committee except that I am not inviting the courts to give rulings when invited on points of foreign law. I have been frightened off by Lord Diplock's views about the Hamburg rules.
The other alternative method I am inviting your Lordships to consider is what I might describe as the restricted declaratory clause—Amendments Nos. 6 and 9—which deals only with a foreign law contract (which was the point raised by the noble and learned Lord, Lord Wilberforce) and which only concerns the specific right under the Bill to appeal under Clause 1 and to make an application under Clause 2.
I must begin by seeking to satisfy the House on the need for a foreign declaratory clause. I do so first on the basis that there is doubt overseas and that it would be of great assistance in the presentation of this measure abroad to clear the doubt. A number of noble Lords will have received a letter from Mr. Mark Littman, QC, a distinguished international arbitrator of immense experience, and will be aware of the argument which he puts in his letter to the noble and learned Lord the Lord Chancellor. Mr. Mark Littman supports without qualification the concept of a foreign declaratory clause and the concept that
538
such a clause should be included in the Bill.
As noble Lords will be aware, I have been talking to and seeking opinion of a number of American lawyers who are concerned with international arbitration and, with the leave of the House, I shall read extracts from two letters which support this need overseas for a foreign declaratory clause in the Bill. The first quotation is from a letter from the General Counsel of the American Arbitration Association. It says:
"I understand that, save in exceptional cases, contracts that are governed by a law other than English law would not usually come within this stated case procedure".
Of course, read for that the new appellate procedure—
"It is my further understanding that it is not intended that contracts governed by foreign law would come within the new appeal and reference procedures. It seems to me that from the United States presentational point of view, it would be very desirable that this be made clear in an express provision in the legislation. It is common for example for attorneys to provide for Swiss law to be applicable if the arbitration is to be held in London. Having an express provision in the legislation indicating that in this situation the reference and appellate procedure do not apply would be most helpful".
My second quotation comes from a letter by a very experienced American international arbitrator and a senior partner in a major firm in Washington DC, Mr. Lloyd Cutler:
"My suggestion is that in the course of the legislative process, it be made explicit that no appeal shall lie to a British court on every question of law that is not a question of United Kingdom law. I understand it to be the view of the draftsman that this is already true under existing arbitration Acts and that there is no need to say so explicitly in the Amendment. However, the point is not clear to many non-British lawyers, especially in cases where the governing law of the contract is international law, or Jamaican law, or Israeli law, or Australian law or some other law which is derived from and still has close connections to United Kingdom law. To avoid risk, these lawyers will still decline to arbitrate in England in cases where an opting-out provision does not exist and is not attainable. In our country, where we pay more attention to legislative history than to the words of the statute, the problem could be resolved by an explicit sentence in a committee report or by a Question on the Floor answered by an authoritative spokesman for the Bill. Under British law, which is less respectful of legislative history, some other solution may be required, even an explicit amendment of the Bill.".
Those are the views from overseas, but I should draw to your Lordships'

539
attention the fact that there is some doubt in this country. I have given notice to the noble and learned Lords the Lord Chancellor, Lord Hailsham of Saint Marylebone and Lord Diplock, of my intention to mention Oppenheimer v.Cattermole, which was heard by your Lordships' Judicial Committee in 1973, a case which may be familiar to some noble Lords. Lord Hailsham presided over that Judicial Committee and a then distinguished Member of the Bar, Sir Elwyn-Jones, Q.C., appeared for the taxpayer. I think I hear Lord Hailsham say "successfully", in which case we congratulate him.
Lord HAILSHAM of SAINT MARYLEBONE: Unsuccessfully, my Lords, but eloquently.
Lord HACKING: My Lords, can we retain the congratulations? That was a case which, among other things, was considering a foreign tax statute. The opinion of the Judicial Committee was delivered by the noble and learned Lord, Lord Cross of Chelsea, and on page 270 he said:
"The special commissioners preferred the views of Dr. Cohn on both points and since foreign law is a question of fact it might be argued that the view taken by the commissioners was binding on us even if we disagreed with it—unless indeed it was one which we thought no one could reasonably entertain. But in a case of this sort it would, I think, be unfortunate if we were obliged to give effect to a view as to the relevant foreign law which we thought to be wrong …".
Those lawyers from overseas who examine our case law authority may be gravely disturbed as to whether the law is beyond doubt in the United Kingdom.
I should like to recall the discussion thus far because we considered the matter in Committee. On the subject of the pure declaratory clause, there were two principal arguments against it, first that it was not necessary and against legislative practice and, secondly, (Lord Hailsham's point) that there was a danger of throwing doubt on the application of law in other areas. I am not sure that it is really unnecessary; one must remember, with respect, the counterbalance of the presentation advantage. Nor is there any real danger here, in my submission, of throwing doubt in other fields of law.
540
In any event, this can all be avoided if Amendments Nos. 6 and 9 are adopted and No. 10 is abandoned. Indeed, that is precisely what I am inviting your Lordships to do; that is, to drop what I have described as the pure declaratory clause in Amendment No. 10 and adopt the more limited form of the proper law contract declaratory clause in Amendments Nos. 6 and 9. These Amendments come twice over because they deal first with the appeal provisions in Clause 1 and secondly with the reference provisions in Clause 2.
Your Lordships will recall that there is still a difficulty here—namely, the difficulty that, even though it is a foreign proper law contract, there still may, in certain circumstances, be questions of English law which arise during the course of the reference; for example, an arbitrator's conclusion on foreign law as against the weight of the evidence or the presumption of English law when no foreign law is pleaded or there is no evidence on that foreign law. One can think of Renvoi and other examples.
I am told by men much more experienced in arbitrations than myself that these situations rarely arise and that nobody need be concerned. However, this is all answered in the form of my Amendments, which would still allow points of English law to be raised, and I need only read Amendment No. 6, because exactly the same concept is followed in Amendment No. 9:
"No appeal may be brought, nor application made, under this section, by a party to a reference under an arbitration agreement, which is not governed under English law, unless such appeal or application concerns a question or questions of English law".
I have received a copy of the letter which the noble and learned Lord wrote recently to the noble and learned Lord Lord Hailsham of Saint Marylebone, following the Committee debates, and I recognise that the other way of dealing with the matter is—to quote the noble and learned Lord—"by education and publicity". Indeed, the noble and learned Lord, Lord Hailsham, gave the flattering suggestion to me that I might write an article in the Harvard Law Review. I am not sure that I have the scholarship to match the scholarship of the editorial board of the Harvard Law Review, but this, in my submission, does not answer the problem.

541
We will all do our best to use such appropriate moments as arise for education and publicity, but we shall not be there at the crucial moment when, perhaps late at night in New York City, or in other places in the world, a contract is being negotiated and the lawyers and the parties to the negotiations come to consider the arbitration clause. But what will be there, if the Bill happily passes through both Houses of Parliament, will be the Act, and if that Act expressly states that matters of foreign law are not matters which will give rise to appeal or reference under the new procedures, then the matter will be put beyond any doubt whatsoever. That is precisely what I am seeking from your Lordships. I beg to move.
7.11 p.m.
Lord LLOYD of KILGERRAN: My Lords, I should like, briefly, to support the noble Lord, Lord Hacking, in the proposal that there should be included in the Bill a declaratory clause embodying the concept on foreign law in the way he has put forward. This kind of clause would be welcomed by commerce. The problem is essentially a marketing problem, and I should like to make the appeal that this is a matter considered from a marketing point of view, and not from the point of view of the ivory tower.
The LORD CHANCELLOR: My Lords, I am not sure that I accept the suggestion that I am existing in an ivory tower. We ran over this ground at the Committee stage, and I quite understand the eagerness of the noble Lord, Lord Hacking, that there should be a clear indication to American lawyers of the legal position. However, my experience of American lawyers is that they learn pretty fast, and I should have thought that the process of education which will follow the Bill when it becomes law, by way of the pronouncements of Lord Hacking and others, would soon alert our colleagues across the water to the position, though, with great respect, I should have thought that it was already fairly familiar ground to them.
I am afraid that I adhere to the view expressed at the Committee stage by the noble and learned Lord, Lord Hailsham of Saint Marylebone; namely, that the effect of inserting these clauses—the three
542
Amendments seek to achieve the same purpose of being declaratory in their effect—could well be to cast doubt in all other cases not governed by the Bill where there is no Statute containing a declaratory clause. Therefore I believe that there would be a risk of undermining the doctrine of the law in cases other than those in which the Statute applies.
I should have thought that not only is it a well-established principle of English law that questions of foreign law are questions of fact, but that if this is not already known to American lawyers, they would discover that it is the case when they endeavoured to examine the new arrangements for arbitration. I take the view that the potential injury and confusion of the Amendment would more than outweigh the benefits in presenting this package to America and would be too substantial. Therefore, while I share the eagerness of the noble Lord, Lord Hacking, to effect the best presentation of this package, I think that what he proposes would be too high a price to pay.
7.14 p.m.
Lord HAILSHAM of SATNT MARYLEBONE: My Lords, I must say, for the little it is worth, that I agree with the noble and learned Lord on the Woolsack in everything that he has said. There are two quite separate points here, and I think that he has dealt with only one of them. I was rather hoping that he would deal with both of them, and perhaps, by leave of the House, he will do so at a later stage. I have no doubts whatever that he is right about Amendment No. 10. I would say to the noble Lord, Lord Hacking, that we cannot alter the general law of England, which extends over every field, that foreign law is a question of fact, simply to please the New York Commercial Arbitration Panel. If the panel does not know this rule of English law, then I wonder what Lord Hacking is doing, living in New York and advising his American colleagues, if he cannot tell them that. It would also astonish me if that principle were not also American law, for although I am acting now on the presumption, which is very seldom true, that foreign law is the same as English law, I should be rather surprised if the law of Japan is not a question of fact in American law; and the noble Lord, Lord Hacking has certainly not told us to the contrary.

543
The noble Lord, Lord Lloyd of Kilgerran, has twice used the term the "ivory tower". The first occasion was when I ventured to say that I had some experience of small arbitrations, having lived in a humbler world than he. The ivory tower is usually associated with those who do not know the facts of life, but the fact is that as Lord Chancellor I played a very considerable part in trying to encourage, for instance, arbitration in the county court. That experience, apart from the fact that I have had many conversations at the Polytechnic of Central London with those who take part, for instance, in what is called the Small Claims Court, (which is in fact a form of arbitration) has convinced me of what I said then. This is not an ivory tower situation; it is based on a wider—not smaller—experience of the facts of life than has the noble Lord, Lord Lloyd of Kilgerran. In this particular Amendment—
Lord LLOYD of KILGERRAN: My Lords, again I am in the difficult position of not being able to use the precise words. An "ivory tower" may not be the right term, but what encouraged me to use it was the rather nonchalant way in which the noble and learned Lord dismissed all the arguments put forward by experienced arbitrators in the field (if that is the correct word). It may be that the noble and learned Lord has been a long time away from the real hurly-burly of arbitrations. I was merely emphasising that we are dealing with problems which many arbitrators have, and which many institutions have wished to be put forward to this House.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I was quite aware of what the noble Lord had in mind; I was merely pointing out that his experience ranged over only a limited class of arbitration. I was about to say that the second time the noble Lord used the term "ivory tower" it was about the noble and learned Lord the Lord Chancellor. It is a marketing problem, said the noble Lord, and apparently his contention there was that in order to market the Bill in the American market we have to fiddle about with its draftsmanship. I personally do not take this view at all. Drafting Bills is not an altogether simple matter, and I do not regard the draftsmanship of
544
English legislation as being a marketing problem at all. The marketing is done somewhere else, by other people.
I was a little disappointed that the noble and learned Lord the Lord Chancellor did not deal with the second and, to my mind, the far more important point raised by this series of Amendments; namely, the point about the foreign law of contracts and the English law of contracts. The noble and learned Lord, Lord Wilberforce, referred to this at the Committee stage, and the noble Lord, Lord Hacking, in proposing the Amendment under discussion, raised it with the considerable weight given to it by our quadripartite correspondence with Mr. Mark Littman. I was wondering whether, with the leave of the House, the noble and learned Lord might add a word about that.
The LORD CHANCELLOR: My Lords, what I feel about the two Amendments we are discussing now, Nos. 6 and 9, is that they really add nothing to the Bill but merely declare the effect of the Bill—that points of English law, however they arise, are appealable under the Bill. I do not think they have a greater effect than that, and I should have thought that that was not a necessary proposition to establish in this legislation.
Lord DIPLOCK: My Lords, like my noble and learned friend Lord Hailsham, I regret that your Lordships were unable to accept favourably the suggestion made at the Committee stage by my noble and learned friend Lord Wilberforce, supported by myself, which indeed carries out a recommendation of the Commercial Court Committee itself, that if a contract is expressed to be governed by foreign law, such as Swiss law, then there should be a right to exclude reference to the court. It is true that in such case where the proper law is a foreign law, it is only in rare cases that English law will be relevant.Renvoi is one of the obvious ones. But if parties to a contract have chosen Swiss law, then in the ordinary course of events, if they took the matter to the courts, they would be accepting the Swiss view of what the English law is; and if they choose to go to arbitration instead of to the courts, and accept an arbitrator whom they regard as being an appropriate arbitrator for Swiss law, the proper law of the contract, then there seems to me to be no reason

545
why they should not accept that Swiss view of what the law of England is, which they would be accepting if they had gone to the Swiss courts, which would have been the natural choice of curial law of the contract.
The Amendment moved by the noble Lord, Lord Hacking, does not deal with that position, which, I would remind your Lordships, was recommended by the Commercial Court Committee. What it would require is something of this kind—and I would invite the noble and learned Lord on the Woolsack to consider the possibility of this at the Third Reading stage. We want to strike out the last two lines, so that it would read (and I am reading from Amendment No. 6):
"No appeal may be brought, nor application made, under this section, by a party to a reference under an arbitration agreement contained in or relating to disputes arising under a contract which is expressed to be governed by a law which is not English law".
It would be of great assistance, I think, in the supranational contracts if a provision of that kind were included. It would very seldom have any effect because, as I say, it is only by such odd doctrines as Renvoi that English law would arise. But I would invite the noble and learned Lord on the Woolsack to consider that possibility, which has considerable support, at the Third Reading stage.
The LORD CHANCELLOR: My Lords, quite frankly, I found this a difficult matter, and I will not conceal that. I ventured to deal with this point in paragraph 8 of my letter to the noble and learned Lord, Lord Hailsham, which has been referred to, when I expressed the view that the Bill had got the dividing line about right by allowing points of English law, however they arise, to be appealed, but impliedly preventing appeals on foreign law. However, in the light of the view which has been expressed by the noble and learned Lords, Lord Diplock and Lord Wilberforce, I am certainly willing to look at it again. I am not sure that it touches directly upon the Amendments we are now discussing, but I should certainly be willing to look at that point and have further discussion on the matter.
Lord DIPLOCK: My Lords, I agree that it does not touch directly on the Amendments we are discussing, but I
546
thought it would be a good opportunity to get it in.
The LORD CHANCELLOR: My Lords, I thought I saw a mischievous look in the eyes of the noble and learned Lord, Lord Diplock. I shall willingly do that, but I am afraid that, as at present advised, I cannot meet the wishes of the noble Lord, Lord Hacking, in the wider context of declaratory provisions.
Lord HACKING: My Lords, in a moment I am going to ask your Lordships' leave to withdraw this Amendment, but before I do so I should like to pass a few comments. It is perfectly true that in support of my argument I used opinions which had been expressed to me in New York, for the very good reason that I work there and that I hear opinions expressed to me in New York. But I am not speaking for any sector in the international community; nor, indeed, for any sector in any community. I am just anxious that, where there is a doubt in the law of England, that doubt should be resolved in the clearest possible terms.
As I said in my first submissions to the House on this matter, the vehicle which I described as the pure declaratory clause is clearly not the appropriate vehicle, or at least has such resounding opposition to it as is sufficiently strong to give it no prospect of receiving the assent of this House. Perhaps I have been guilty of loose terminology, because my Amendments Nos. 6 and 9 are not really declaratory Amendments; they merely state the rights of the parties under, first of all, the appeal procedure and, secondly, the reference procedure in Clause 2. It is the rights of those parties that, in my submission to your Lordships' House, have been at least clouded by the decision of the judicial committee which I drew to your Lordships' attention. I find it somewhat surprising, if I may say so to your Lordships, that nobody sought to counter my argument there, when I read from one of the opinions, from the opinion of the noble and learned Lord, Lord Cross, who clearly crossed over, within those few sentences, the frontier between questions of fact and questions of foreign law.
Having made those comments to your Lordships' House, I hope that, in the light of what the noble and learned Lord,

547
Lord Diplock, has said, the noble and learned Lord the Lord Chancellor will give further thought to the concept contained in Amendments Nos. 6 and 9. I would never put myself before your Lordships' House as a drafter par excellence of any Parliamentary legislation. It is not my drafting, it is the concept, on which I am seeking to persuade. Having said those words, I beg the leave of the House to withdraw Amendment No. 6.
The LORD CHANCELLOR: My Lords, in response to what the noble Lord has said, I shall certainly look at Amendments Nos. 6 and 9 in the context, although it is a slightly different context, I think, of what the noble and learned Lord, Lord Diplock, has said.
Amendment, by leave, withdrawn.
7.30 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 7:
Page 2, line 34, at end insert—
(" (8) All appeals from awards relating to (a) intellectual property or (b) the Treaties or Community Treaties as defined in the European Communities Act 1972 or (c) Articles 85 or 86 of the Treaty of Rome shall be referred to the Patents Court.").
The noble Lord said: My Lords, this is in the nature of a probing Amendment. It is to the effect that all appeals from award relating, first of all, to intellectual property shall be referred to the Patents Court. It is not quite clear whether intellectual property matters would be referred directly to the Patents Court. It would be preferable, it seems to me, to have such matters referred to a specialist tribunal such as the Patents Court. The expression "intellectual property" covers not only patents, but also trade marks, confidential information, designs; and it is a broad term. It seems to me that it might be helpful if, in the Bill, there was a reference that these appeals would go to the Patents Court. The noble and learned Lord may feel that the problem does not arise in practice, but it would be helpful to have a declaration that intellectual property, as a whole, should go to the Patents Court.
Coming for a moment to the question of an ivory tower, I have been closely concerned over my life with patent
548
matters and I remember the great difficulty it was for members of the Patent Bar to get a Patent Judge. I remember the opposition that was made in high circles to the appointment of a Patent Judge. The late Mr. Justice Lloyd-Jacob was the first Patent Judge. We practitioners in this country were the envy of practitioners from all over the world in that at last we were able to put to a distinguished patent practitioner who had been made a Patent Judge these difficult matters of science and law. Therefore, on this aspect I would ask the noble and learned Lord to consider whether a declaratory statement as to intellectual property would not be helpful. As to the two other parts of my Amendment, (b) and (c), the noble and learned Lord has already written me about those matters and therefore I shall not press subparagraphs (b) and (c) in begging to move this Amendment.
The LORD CHANCELLOR: My Lords, to hear the noble Lord, Lord Lloyd of Kilgerran, speaking on patent law and the Patent Court is to be in the presence of an unqualified admirer of both. He and I, and noble and learned Lords who are in the House, achieved, I hope, considerable progress in the patents field in our Patents Act, which I remember so well from last year, having had to learn so much in order to try to understand it. What this Amendment proposes is that patent matters should necessarily be assigned to the Patents Court. The assignment of business within the High Court is usually, but not always, dealt with by Rules of Court. The Patents Court is a part of the Chancery Division and the assignment of business is expressly provided to be a matter for the Rules of Court. If a case was shown for assigning to the Patents Court questions of law arising out of arbitrations relating to intellectual property, the Rule Committee could assign such business to that court. But I think it is important to maintain flexibility in these matters and that it would not be desirable for the question to be determined finally and immutably in the Bill.
Even without any Rule of Court it would be open for an approprite case to be assigned to a Patent Judge sitting as a judge of the Chancery Division; and I think that is what in practice would happen. We now have strengthened the Patents Court and I think, in the new

549
situation in which we are, that what the noble Lord would seek to achieve will, in practice, be achieved.
Lord LLOYD of KILGERRAN: My Lords I am grateful to the noble and learned Lord for what he has said. In the circumstances, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 2 [Determination of preliminary point of law by court]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 8:
Page 2, line 36, leave out from ("Court") to ("with") in line 39 and insert ("made by any of the parties to a reference—

(a) with the consent of an arbitrator who has entered on the reference or, if an umpire has entered on the reference, with his consent, or

(b)").

The noble and learned Lord said: This Amendment is a response to the warning given by the noble and learned Lord, Lord Diplock, during the Committee stage that subparagraph (a) of Clause 2(1) could well be a dead letter, as arbitrators would be unwilling to incur the cost and trouble of applying to the High Court for the determination of a preliminary point of law. Accordingly, the Amendment would have the effect of enabling a party, with the arbitrator's consent, rather than the arbitrator himself, to apply to the High Court for the determination of a preliminary point of law. That seems to be the most senbile way of dealing with the matter. I beg to move.
Lord HAILSHAM of SAINT MARY-LEBONE: My Lords, I think that the noble and learned Lord has made an excellent response to my noble and learned friend Lord Diplock. There is only one short point I should like to draw to the attention of the House. If this Amendment is passed, as it will be, I think that perhaps the Rules Committee should be asked to state how the consent of the arbitrator should be signified.
The LORD CHANCELLOR: My Lords, I will see that that is done.
On Question, Amendment agreed to.
[Amendments Nos. 9 and 10 not moved.]
Clause 3 [Exclusion of rights under sections 1 and 2.]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 11:
Page 3, line 20, leave out ("the section") and insert ("this section and section (Exclusion agreements not to apply in certain cases unless entered into after commencement of arbitration)below").
The noble and learned Lord said: My Lords, with this Amendment, it may be convenient to consider Amendments Nos. 28 and 29. Clause 3, as your Lordships will have noticed, is already very lengthy. It consists of no less than nine subsections. The addition of the two further subsections which I propose to insert—Subsections (2A) and (5A)—would make it very unwieldy. Therefore, it is proposed to divide Clause 3 into two clauses in the way indicated at the natural break point after new Subsection (5A). These two minor Amendments which are set out are consequential upon that basic division. I beg to move.
On Question, Amendment agreed to.
Lord HACKING Lord HACKING moved Amendment No. 12:
Page 3, line 28, at end insert ("and
(d) subject to subsection (2) below, no application may be made under subsections 23(1) or 23(2) of the principal Act").
The noble Lord said: My Lords, I would ask your Lordships to consider together Amendments Nos. 12, 13, 14 and 15. Having said that, I would draw your Lordships' attention to this: the noble and learned Lord himself has tabled Amendment No. 17, which covers the same ground as my Amendment No. 13. Therefore, at this stage I do not intend to address the House on Amendment No. 13, although, as I have indicated, it is within the group of Amendments Nos. 12, 13, 14 and 15. Your Lordships will recall from the Committee stage that I have concern that there may be other vehicles of abuse available to the parties once the case-stated procedure, and the other rights to set aside an arbitration award on the grounds of errors of fact on the face of the award, arc abolished.
The purpose, therefore, in moving Amendments Nos. 12, 14 and 15 is to enable parties to international agreements

551
to exclude the operation of the misconduct provisions in Section 23(1) and (2) of the Arbitration Act 1950 except when the arbitrator has acted dishonestly, which is a very rare occasion. Mr. Justice Donaldson recalled only one case in 30 years of practice at the Bar or on the Bench. It covers such examples as the arbitrator's acceptance of a bribe. Even though these circumstances are so rare, there should be some power, when and if that occasion arises, to remove an arbitrator. The second exception is when an arbitrator has acted in breach of natural justice. I hope that the noble and learned Lord, Lord Hailsham, will note that the word "gross" has been removed from my Amendment. The third exception is when an arbitrator has acted in excess of his authority. What I am asking therefore is that the misconduct provisions contained in Section 23 should apply to international agreements only when: (1) the arbitrator has been dishonest; (2) he has acted in breach of natural justice; or (3) he has acted in excess of his authority.
So far as Amendment No. 14 is concerned, it is a tidying-up Amendment at the end and I need not address your Lordships on that. I accept again that the terms of my drafting may be found wanting. I am seeking agreement on the concept and not the terms of my draft. I accept also that, as drafted, my provisions affect domestic exclusion agreements made after the commencement of arbitration as well as to international exclusion agreements which are made at the time of the contract or thereafter. I believe this to be a real concern. There are very large sums of money at stake and experience has shown in recent years that parties will seek any means for abuse. Of greater importance, those who examine our law after the passage of this Bill will be looking through the Act, particularly Section 23, and they think that, at the time the contract is made, there is this power to abuse the system.
As the noble and learned Lord who sits on the Woolsack will be aware, I have support from Mr. Justice Donaldson and Lord Justice Megaw. These are two judges of eminent experience in the commercial field. I emphasise this time that I am not seeking generally to alter Section 23(1) and (2) or to disturb the
552
settled authorities which have come under those two sections. I am asking the House to fall into line with the practice of other jurisdictions.
It may be helpful for your Lordships to know how the United States Arbitration Act, Section 10, deals with the problem. It is entitled: "Same; Vacation; Grounds; Rehearing". It reads as follows:
"In either of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration—

(a) Where the award was procured by corruption, fraud, or undue means.

(b) Where there was evident partiality or corruption in the arbitrators, or either of them.

(c) Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.

(d) Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made …"

I could quote—but I shall not burden your Lordships—other jurisdictions which follow through on the same concept. I also submit that these Amendments are not out of line with practice in England. I refer to a lecture which Mr. Justice Donaldson gave to the Institute of Arbitrators last summer. This is what he said.
"All systems of law provide that the National Courts shall have a supervisory jurisdiction over arbitrations. This is clearly necessary and I doubt whether any arbitrator would have it otherwise. The biased or fraudulent arbitrator is almost unknown in this country. Certainly I have only heard of one in over 30 years of practice. But there must be some power to remove him when he does appear.
"This jurisdiction also extends so as to enable the Courts to intervene if an arbitrator acts in breach of the rules of natural justice. This is not as heinous an offence as it sounds. Indeed, on the rare occasions when it occurs, it arises largely as a result of mistake or ignorance. For example, an arbitrator may get himself in to the position in which he receives evidence from one side and, thinking that the other side know all about it, fails to give them any opportunity for answering it. These things can happen even in the best regulated arbitrations. And when they do, someone should be able to set the proceedings aside and let the parties start again.
"Finally, the Courts must have power to step in when an arbitrator exceeds his jurisdiction. This, too, sounds to be a heinous offence, but, of course, it is not. An arbitrator's jurisdiction depends upon the consent of the parties and this

553
is usually contained in the contract which has given rise to the dispute. Once the existence of that contract is in issue, so is the jurisdiction of the arbitrator and no one can determine his own jurisdiction. The arbitrator must therefore take a view on whether he has or has not jurisdiction. If he thinks that he has jurisdiction and is wrong, a Court must have power to set the award aside.
"So much for the supervisory jurisdiction of the Courts. No one has criticised it and I do not anticipate any changes. However, the Appellate or review jurisdiction of the Courts is a different matter. This has been under close study by the Commercial Court Committee."
On those two grounds—-that my Amendments are consistent with existing practice in England and that they are consistent with the practice in other jurisdiction—T commend them to your Lordships. I beg to move.
7.45 p.m.
The LORD CHANCELLOR: My Lords, in considering Amendments Nos. 12 to 15, it is at any rate pleasing to me that I have been able in regard to Amendment No. 13 at last to go a great deal of the way with the noble Lord. I wish I could have done it in other matters, too. We shall come to the fraud aspect of the matter in a moment and perhaps when I move Amendment No. 17. What remains is the variant, if I may so describe it, of the proposal that the noble Lord, Lord Hacking, made at the Committee stage to Amendments which would have enabled the parties to contract out of the misconduct jurisdiction altogether. Then a separate operation would have narrowed the scope of the jurisdiction generally. Now the Amendment seeks to safeguard the power of the court to intervene where—and I use the word "grosser" without being wedded to it—the grosser forms of misconduct are alleged but not otherwise.
The difficulty that the House must face is that the attempt to distinguish between the various forms of misconduct is inevitably a difficult one and an uncertain one in a field which is governed by a good deal of case law. In my view—and I have said this in my letter to the noble and learned Lord, Lord Hailsham of Saint Marylebone—changes in this area should be contemplated only after thorough consideration of the issues involved. Frankly, there has not been thorough consideration of this difficult field as yet either by the Donaldson Committee or by departments, and I am afraid that as we want to get this Bill on the Statute
554
Book there is not time for it now. In any event, the categories of misconduct which Lord Hacking's Amendment would preserve from the right to contract out leave a broad, uncertain and, I submit, potentially elastic field over which the court's jurisdiction would be maintained in any event. I feel that if exceptions of that breadth are needed, the usefulness of the Amendment to contracting parties is greatly reduced. They would leave the extent of the right to contract out far more uncertain than is the position under the Bill as it now stands.
In any event, is not Section 23 and its provision unlikely to prove an alternative source of delay as the court has power under subsection (3) of that section to order that all or part of the award be brought into court? I would have thought that that power should be sufficient to discourage spurious applications under the umbrella of misconduct. I hope accordingly, partly for the avoidance of long delay and further consideration of a very difficult field, that the noble Lord will not press these Amendments.
Lord HACKING: My Lords, I will not press these Amendments and in a moment I will withdraw them. May I say that I was not—I do emphasise this again—seeking to disturb as I did seek to disturb for very good reasons, as I like to think, the wording of Section 23. I was merely moving these Amendments, seeking to define the use of Section 23 as it refers to international agreements. The noble and learned Lord has raised various objections. I, if I may, would like to consider them and in the meantime I beg leave to withdraw the Amendments.
Amendments, by leave, withdrawn.
7.50 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 16:
Page 3, line 34, at end insert—
(" An agreement in writing shall include any agreement in the written or typed form but shall exclude all agreements in printed or clearly in standard form.")
The noble Lord said: My Lords, I beg to move Amendment No. 16 and, with the leave of the House, I should like to speak to Amendments Nos. 21 and 22 in order to try and save some time at this late hour. The effect of these Amendments to

555
Clause 3 would be that all international agreements and all domestic arbitrations in relation to intellectual property and EEC competition law will come within the proposed legislation, which allows parties to enter into an exclusion agreement at any time, so long as such an agreement is in the written or typed form.
The clause, as amended, will also allow the Secretary of State to extend the right of exclusion agreements to domestic arbitration if it becomes necessary or expedient, subject to the annulment provisions of Section 3(9). These are of profound significance, I submit, to commercial interests. It seems to me there is no logical case for distinguishing between supranational and special category disputes of an international character, as the Bill now stands. It would appear to me sensible that all international agreements should be treated in the same manner, particularly when the parties appoint the arbitrators and the arbitration proceeds on the usual ad hoc basis. The arbitrators who sit on the international special categories disputes tend to be of a very experienced kind. The noble and learned Lord, Lord Diplock, emphasised this when he gave his views on the appeals procedure during the Committee stage of the Bill. Indeed, he pointed out that he felt there were numbers of experienced arbitrators who would be able to give their views on appeals, which would be helpful.
During the Second Reading of the Bill, no speaker seemed to me to make a valid case for distinguishing between supranational and special category disputes. The only reason for distinguishing between the two came from the noble and learned Lord, Lord Diplock, who stated, as reported in Hansard on 12th December, col. 450:
"There are many branches, or at any rate several branches, of commerce in which it is impossible in practice to trade, or to enter into a transaction, except upon a standard form prepared by a trade association, customarily on the Baltic, or whatever it may be. If you want to enter into that kind of contract, that kind of transaction, at all, you are, for practical purposes, forced to contract upon the standard terms. The danger is that the standard terms will include an exclusion term to which the other party to the contract, or indeed neither party to the contract, has an opportunity of saying, ' No, we want to reserve our normal rights.' That was the reason why I, at any rate, took the view that the special category contract ought to be excluded for the time being."
The objection raised by the noble and learned Lord if, with great respect to him, it could be at all valid, could be removed, it seems to me, by the Amendment relating to type added clauses which ensures that the parties apply their minds to an exclusion agreement, as the noble and learned Lord would have wished.
In the Committee stage, the noble and learned Lord the Lord Chancellor said—I rather think it was more in jest than otherwise—that a party who wished to exclude the new right of appeal would merely have the standard contract typed or written out, if my Amendment were accepted. Again, with great respect, I think he may forget how contracts are negotiated in the commercial world, particularly in respect of international agreements. It is highly unlikely, in my experience and in that of many well-known arbitrators who have written to me, that parties will indulge in the manner suggested by the noble and learned Lord the Lord Chancellor.
In any event, I again find myself in a difficulty about the wording of any amendment and it is the principle, therefore, that I am trying to get across. In the event, my Amendment could be tightened up to take care of the point raised by the noble and learned Lord the Lord Chancellor by stipulating that an exclusion agreement had to be by way of a special addendum to the contract.
All that is necessary in order to deal with the point raised by the noble and learned Lord, Lord Diplock, is really to ensure somehow that the parties have had an opportunity of discussing the whole matter and that the standard form is not imposed directly. With great respect to the noble and learned Lord, I suggest that the Amendment I have put forward, possibly with a slight improvement in words that the noble and learned Lord the Lord Chancellor could no doubt introduce without any difficulty, would be a useful Amendment to introduce into the Bill.
Again, in addition to those points, it is perhaps worth remembering that the parties to all international agreements would only be given the freedom to contract out. There is no question of abolishing judicial review and that question of principle did affect the minds of certain noble and learned Lords during the

557
Committee stage. Many parties in the course of practice would not contract out of judicial review and there would be ample simple cases going to the courts to ensure the continuation of the development of English commercial law.
The fear was expressed to your Lordships that there might be built up a "closed shop", as it were, of law developed by arbitrators to the exclusion of the courts. That danger, in my submission, would not arise. However, there is a danger from another point of view: that if the shipping, insurance and commodity contracts—these are special categories—are not allowed to fall within the exclusion agreement provisions, the so-called supranational contracts may well be seriously affected because of those contracts having shipping, insurance or commodity aspects attaching to them, and they would not be brought to arbitration in this country.
It might well be, therefore, so I am advised, that the major aim of this Bill, to attract the supranational to London arbitration, would be lost because of the exclusion of special category international disputes from the special exclusion agreement provisions as at present in the Bill. Uncertainty would arise as to whether or not supranational agreements fall within the exclusion provisions, and thus many foreign organisations would be wary of agreeing to London arbitration for fear that a party might use shipping, insurance or commodity features of the contract in order to use the appeal procedure of judicial review. In this context, the present Bill refers to the "Admiralty jurisdiction of the High Court", rather than to shipping, and this jurisdiction is a very wide one. It covers virtually every aspect of shipping and matters incidental to shipping. Many large organisations which are prolific users of London commercial abritration have indicated that they want the freedom to contract out of judicial review at any time, and failure to give them this freedom would see London being used less and less as an arbitration centre in the future. My Lords, I beg to move.
8. p.m.
The LORD CHANCELLOR: My Lords, we covered some of this ground at the Committee stage. The aim of the
558
Amendment, as I understand it, is to prevent exclusion clauses from being forced on unwilling parties in standard form contracts. But I again venture to say what I said at an earlier stage, that the Amendment is impracticable, as the party wishing to exclude the new right of appeal would merely make such modifications to the standard form as were necessary to destroy the standard form of the contract, and would have the standard contract typed or written out with such modifications as were required.
Further, I am advised that while the Amendment appears to be aimed at standard form contracts, it is drafted so that it bites on standard form exclusion agreements. As a result, if an exclusion agreement in a standard form appears as a term of even a one-off contract which has been closely negotiated between the parties, it would still be ineffective. As it is likely that standard form exclusion agreements would be used even in such one-off contracts, the Amendment might have the result, for practical purposes, of rendering the right to exclude applications to the court under the Bill nugatory. In those circumstances, and in the light of those dangers, perhaps the noble Lord will reconsider the Amendment.
Lord HACKING: My Lords, before the noble Lord withdraws his Amendment or takes a different position upon it, I should like to give him support in one area. A likely consequence of the passing of this Bill—as we hope, it will be passed—into an Act, is that arbitration bodies will incorporate the exclusion clause into the rules of those arbitration bodies. That presents a real problem, which I think the noble Lord, Lord Lloyd, was focusing upon when he was moving this Amendment.
Lord DIPLOCK: My Lords, the Explanatory and Financial Memorandum to this Bill starts with the sentence:
"The Bill implements provisions of the report on arbitration by the Commercial Court Committee."
The question of special category disputes was discussed almost interminably in many fora. I myself would have made a slightly different dividing line between special category disputes and the others, though a much more elaborate one than my noble friend Lord Lloyd suggests in these Amendments. The Commercial

559
Court Committee, however, came to a different conclusion as to where the dividing line is to be. I accept their conclusion, because I am extremely anxious that a Bill to this effect should come into force as soon as possible, and to try to raise again these controversies, which went on and on, is an infallible recipe for losing the Bill.
Lord LLOYD of KILGERRAN: My Lords, before the noble and learned Lord sits down, may I say that he emphasised that there were interminable discussions upon this point in the Commercial Court Committee. I am advised—and perhaps he could help me on this matter—that the views of certain eminent arbitrators and institutions were not considered in the course of what the noble and learned Lord referred to as "interminable discussions". One of the reasons why I am presuming to raise these matters is that—
Lord HAILSHAM of SAINT MARY-LEBONE: My Lords, this is a second speech. It is the Report stage.
Lord LLOYD of KILGERRAN: My Lords, why I am presuming to interrupt the noble and learned Lord is because these are matters that were put to me, and I should be grateful for his comments.
Lord DIPLOCK: My Lords, I have been subject to the same lobbying as my noble friend Lord Lloyd of Kilgerran. The Commercial Court Committee has a composition which can easily be found, and all the relevant interests are represented there.
The LORD CHANCELLOR: My Lords, I hope that the noble Lord, Lord Lloyd of Kilgerran, will take note of that solemn warning which we have just heard from the noble and learned Lord, Lord Diplock.
Lord LLOYD of KILGERRAN: My Lords, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.7 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 17:
Page 3, line 41, at end insert—
(" ( ) In any case where—

(a) an arbitration agreement, other than a domestic arbitration agreement, provides for disputes between the parties to be referred to arbitration, and

(b) a dispute to which the agreement relates involves the question whether a party has been guilty of fraud, and

(c) the parties have entered into an exclusion agreement which is applicable to any award made on the reference of that dispute,

then, except in so far as the exclusion agreement otherwise provides, the High Court shall not exercise its powers under section 24(2) of the principal Act (to take steps necessary to enable the question to be determined by the High Court) in relation to that dispute.")
The noble and learned Lord said; My Lords, this Amendment would have the effect that where the parties had validly contracted out of the right to apply to the High Court under the Bill, the High Court's power to intervene and assume jurisdiction under Section 24(2) of the Arbitration Act in cases where fraud is alleged against a party would also be excluded, unless the parties otherwise agreed. There is no fundamental objection, as I submit, to allowing the parties to agree that their chosen tribunal should determine questions of fraud as between themselves, and this Amendment would have the advantage of allowing parties to block off that alternative avenue of delay. It is substantially the same as Amendment No. 12, which had been put down by the noble Lord, Lord Hacking, and I hope that it will receive the approval of your Lordships. My Lords, I beg to move.
Lord HACKING: My Lords, I rise to my feet only to express gratitude.
On Question, Amendment agreed to.
8.8 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 18:
Page 4, line 11, leave out from ("agreement") to ("unless") in line 12.
The noble and learned Lord said The noble and learned Lord said: My Lords, with this Amendment, it may be convenient to deal also with Amendments Nos. 19, 20, 30 and 31. The purpose of both my Amendment and the Amendment of the noble Lord, Lord Hacking, is to ensure that, for the purpose of the right

561
to contract out of applications to the court, the domestic or non-domestic character of an arbitration agreement should be determined once and for all at the time when the agreement is made. This Amendment repeats in substance the definition of a domestic arbitration agreement in Section 1(4) of the Arbitration Act 1975, save that it refers to "he time the agreement was entered into" rather than, as in Section 1(4) of the 1959 Act, "the time the proceedings are commenced".
The Amendment of the noble Lord, Lord Hacking, while aimed at the same purpose as my Amendment, would amend the definition of a domestic arbitration agreement in Section 1(4) of the 1950 Act itself. That definition was carefully tailored to enable the United Kingdom to accede to the New York Convention on the enforcement of arbitral awards, and should not therefore be amended for the collateral purpose of this Bill. I hope the noble Lord may think that my Amendment meets the point of substance that he himself was making. My Lords, I beg to move.
Lord DIPLOCK: My Lords, there is a point on Amendment No. 20. Although it meets the point that you can tell whether or not the agreement is an arbitration agreement for the purposes of deciding whether an exclusion agreement can be made, it does not meet the point about the mandatory refusal of a stay under Section 1 of the Arbitration Act 1975. It would be desirable, I suggest, that it should cover also the right to a mandatory stay where there is an exclusion agreement—that is to say, where the parties were foreign or non-foreign at the time that the agreement was made. I thought that I had found a way of doing it, but now that I look at it I am a little doubtful, because there are so many negatives in the definition. I believe that if one inserted:
"In this section ' domestic arbitration agreement ' means and in Section 1 of the Arbitration Act 1975 includes …"
we might get the answer, but I would not bet on it. However, there is a point about the mandatory stay which is not covered by Amendment No. 20 and would be covered by the other Amendments, but they have objections to them of a different kind.
Lord HACKING: My Lords, I should like to express gratitude to the noble and learned Lord for having taken up this matter. If my recollection is correct, this was the only Amendment which I moved during the Committee stage upon which I did not immediately get a cold shower from the noble and learned Lord. Therefore I am grateful to him for having moved this Amendment. There are two problems, one of which has been aired by the noble and learned Lord, Lord Diplock. The first is that the result of this Amendment will be that there will be two definitions of domestic arbitration agreements set at two different times: first, the definition in the 1975 Act—set at the time of commencement of proceedings—and the second under this Bill: set at the time that the contract was made. That is my terminology: the terminology of the noble and learned Lord is "entered into".
The second problem—and this is the point which the noble and learned Lord, Lord Diplock, made—is that this does not deal with the inherent weakness in Section 1(4) of the Arbitration Act 1975; namely, that at the time that the parties contract they do not know whether at a later time that contract will cease to be an international contract and become a domestic contract and that what was a mandatory power in the courts at the time that they made the agreement—namely, the mandatory power to stay any court proceedings once arbitration proceedings have been commenced—may go if the agreement becomes a domestic agreement. Hence, on this matter of stay as well as under this Bill, the parties do not have the assurance at the crucial time of making the contract. It is on those two grounds that I respectfully ask the noble and learned Lord to review this Amendment.
The LORD CHANCELLOR: My Lords, since it is a technical matter I am certainly willing to look at it again, in case we have not got it quite right. Accordingly, I beg leave to withdraw Amendment No. 18.
Amendment, by leave, withdrawn.
[Amendments Nos. 19, 20 and 21 not moved.]
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 22:
Page 4, line 16, leave out subsections (6) and (7).
The noble Lord said: My Lords, I beg to move Amendment No. 22. Its purpose is to omit subsections (6) and (7). I put forward my arguments in favour of deleting these two subsections when I spoke to Amendment No. 16. I indicated then that there was no logical case for distinguishing between supranational and special category cases of an international nature and that it appeared to be sensible that all international agreements should be treated in the same manner, in particular when the parties appoint the arbitrators and the arbitration proceeds on an ad hoc basis. I did not apprehend that the noble and learned Lord dealt with that point—he dealt very severely but charmingly with my Amendment No. 16. My only reason now for moving Amendment No. 22 is to give the noble and learned Lord an opportunity to pay some direct attention to it. I beg to move.
The LORD CHANCELLOR: My Lords, we have already covered this ground, which relates to one of the more controversial provisions in the Bill. The view that seemed to meet with the approval of the House was that the compromise in the Bill was the best that we could arrive at in order to secure its early passage. Those who attach importance to the uniform development of English commercial law and its contribution to international commercial law—they are the judges and, broadly speaking, the lawyers—favour the court's supervision over the kinds of dispute we are considering here (maritime, insurance and commodity contracts) at least until some experience of the working of the provisions contained in the Bill has been gained.
On the other hand, I appreciate that many interests within the business community wish to have the widest possible powers to exclude by agreement at any time the High Court's supervisory jurisdiction over arbitration. I draw attention to the provision in the Bill giving to the Secretary of State power by order to extend the right to contract out to the special category of disputes that we are speaking of now. I hope that in the circumstances this compromise arrangement will be acceptable so that we may
564
see how things work out. When they are shown to work satisfactorily, the matter can then be dealt with by order by the Secretary of State.
Lord HACKING: My Lords, I find this to be a difficult matter. There is absolutely no logic to the creation of the special category of disputes identified in the field of Admiralty, insurance and commodity. The shipping commercial communities feel strongly that the parties ought to be left to contract out of the judicial process, and they are, as recognised in the commercial court committee's report, almost always of "equal bargaining power." These provisions have also brought out criticism from the advisers on supranational contracts.
I have presented one side of my concern, but there are, on the other hand, views that these three categories of contracts have made a massive contribution to English commercial law. It is as a result of this massive contribution to English commercial law that, without any modesty, we can all reflect that this is the reason why so many countries wish to come to England for their arbitration and, indeed, to deal with their commercial disputes. It is because of the strength and experience of English commercial law and English commercial lawyers.
There is another matter which also causes me concern. To cut the bridge between the courts of arbitration and the courts of law could result in the development of an arbitration commercial law different from a court commercial law, as has been the experience in New York. Therefore, I venture to suggest to your Lordships that the question we have to ask ourselves is whether we have reached the right compromise. It is for that reason that I would earnestly ask the noble and learned Lord the Lord Chancellor to think very carefully about the matter.
The LORD CHANCELLOR: My Lords, if I may say so, I have already thought about it very carefully. This recommendation of the commercial court committee seems to be the realistic one to make at this point in time.
Lord HAILSHAM of SAINT MARY-LEBONE: My Lords, I believe that we must stick to the commercial court

565
committee or lose the Bill. I may be wrong about this; it is a pure political judgment which has nothing to do with law. However, my judgment of the matter is that we have a better chance of getting this Bill in its present form than in any other.
Lord LLOYD of KILGERRAN: My Lords, I am grateful for the support given to these Amendments by the noble Lord, Lord Hacking, and I fully appreciate the problem which has been adumbrated by the noble and learned Lord, Lord Hailsham. A great deal of information has been put to noble Lords about the practical commercial aspects in relation to these two classes of contracts and in particular relating to subsections (6) and (7). The noble and learned Lord, Lord Diplock, suggested that he had been subject to the same lobbying in these matters as I had been, and I fully appreciate that the noble and learned Lord, Lord Diplock, in referring to the lobbying was not introducing any derogatory atmosphere in relation to the word "lobbying".
Lord DIPLOCK: My Lords, I did not intend to. It is very proper that people should write and express their views to those of us who are Members of either House of Parliament, and are concerned with legislation.
Lord LLOYD of KILGERRAN: My Lords, I am much obliged to the noble and learned Lord for that explanation. But an attitude had been presented to me that the Commercial Court Committee had not been in a position, for a variety of reasons, fully to examine submissions made by eminent arbitrators and eminent institutions. But be that as it may, in these circumstances and having regard to the indications of the noble and learned Lord the Lord Chancellor, I beg leave to Withdraw the Amendment.
Amendment, by leave, withdrawn.
8.22 p.m.
Lord HACKING Lord HACKING moved Amendment No. 23:
Page 4, line 16 leave out ("an arbitration award or")
The noble Lord said: My Lords, in moving this Amendment, I also ask your Lordships to consider Amendment No. 24
566
at the same time. I believe that these two Amendments coupled together represent the right position of compromise upon this difficult matter of the special category disputes. The noble and learned Lord, Lord Hailsham, says, with great political experience behind him, that the sensible course is to adopt the Commercial Committee's report. The difficulty here is that this Bill goes one step further: it does not simply adopt the Commercial Committee's report. It creates a second form of judicial review in Clause 2.
Perhaps I may briefly trace the history of this matter because, in view of the comments made by the noble and learned Lord, Lord Hailsham, I believe it is important. The Commercial Court Committee recommended a new form of judicial review to replace the case stated procedure and of course the other common law right which granted the High Court the jurisdiction to set aside an award of arbitration on the ground of error of fact or law on the face of the award by, and only by, an appellate procedure based upon recent awards. That is Clause 1 of the Bill. The Commercial Court Committee recommended that parties to special category disputes—those are the ones under discussion; namely, Admiralty, Commodity and Insurance—should not be entitled to contract out of this judicial review on the grounds—and I am quoting from paragraph 48 of the report—that:
"there is no evidence of any very widespread desire to be able to contract out [and that the entrenched right to judicial review for the parties to these disputes is very important to the maintenance of English law as the first choice of law in international commerce."
The second, and if I may say so, wholly admirable form of judicial review is the reference procedure which is in Clause 2 of the Bill. This was introduced by the drafters of the Bill and I am certain that the noble and learned Lord, Lord Diplock, at the Second Reading, when he referred to the maintenance in this Bill of the case stated procedure, had this clause in mind because it is a modified and swifter and, if I may say so, a much more efficient form to enable, during the course of arbitration proceedings, reference to be made to the courts so that the arbitrator may be assisted when matters of difficulty on law come before him. The result therefore now is that there are now two points of access between English courts

567
and arbitrations in England from which the development of English law can continue to feed.
The difficulty is that there is strong opposition to the full judicial review. First, as has already been said in this debate, it comes from the shipping and commercial circles, but there is also strong opposition from the advisers to the so-called supranational contracts. They base their concern upon two grounds. First, they say that the definitions of the special category disputes are too broad. I shall read only very briefly because I have already read several extracts from letters that I have received, but I think it would be helpful. I read from another section of the letter that was sent to me by the General Council of the American Arbitration Association. It reads as follows:
"The first item concerns the three categories of contracts, Admiralty, Insurance or Commodity, to which foreign parties are not permitted to opt out of the new appeal and reference procedures at the time of contracting. This approach appears to add an unnecessary burden to major trading arrangements which, according to the Lord Chancellor quoting from Hansard, form a very large portion of the disputes arbitrated in London, England, each year."
Then he refers to the column in Hansard and the Hansard debate of 12th December, which was the Second Reading.
"The Lord Chancellor said it well when he indicated that the parties should be free to enter into exclusive agreements at the time of negotiating the contract, not only after disputes have arisen. It may be difficult to tell in which category the contracts fall into the three stated classes of exceptions. Take the case, for example, where a Romanian manufacturer of shoes ships them by a foreign vessel to an American purchaser and the shipment is insured and the contract calls for arbitration in London. Is it clear that the parties may avoid the case stated procedure"—
and again he is referring to the appellate procedures—
"by so indicating in their contract or may the Bill's language cause unnecessary litigation over the question of whether the section applies because there may be elements of insurance or Admiralty involved?"
I shall only cite from another letter a reflection of one strongly expressed view from the senior partner, Mr. Robert Clare, of the New York law firm of Shearman and Sterling, which has immense experience in these large supranational contracts. This is what Mr. Robert Clare said in his letter to me:
568
"I recognise that the elimination of Admiralty, Insurance and Commodity contracts must be a compromise because logically it cannot be justified. Certainly, the parties to these contracts are every bit as sophisticated as the parties to a pipeline construction contract which could be made subject to the Arbitration Act."
However, the most telling example that I can give your Lordships comes from arbitration proceedings of which the writer of another letter had special experience. This is what he says in reference to Clause 3(6) of the Bill:
"The proposed exclusion of the three special cases in Clause 3(6) might be more finely tuned. As an example of what I mean, I have just settled a very substantial arbitration that would have been held in London under ICC rules between an Asian seller and an American purchaser of sugar under a long-term supply contract. Although sugar is a commodity, regularly dealt with on a commodity market or exchange in England or Wales, this contract had no connection to such a market or exchange and made no reference to any English contractual form. It would seem that either the Bill itself or the order of the Secretary of State contemplated in Clause 3(8) should more narrowly define commodities contracts, as well as Admiralty or Insurance contracts, to encompass only such agreements as have a rational connection with the English forum. Otherwise the definition of 'special cases' in Clause 3(6) will sweep with too broad a brush."
That expresses the concern of those advising in supranational contracts on the grounds that the terms of subsection (6) are too broad.
There is another problem and that is the problem of related contracts. Here is an example which I can quote:
"A United States contractor in Saudi Arabia has a contract with a Saudi Royal Commission for the construction of a town and this contract has an arbitration agreement in it which contains an exclusion agreement. That contractor will in turn with his sub-contractors attempt to get backup agreements with each of the subcontractors".
Then it sets out in further detail how on major projects these large contracts are related to one another, and indeed one can have and often does have a large group of them. If, as part of this group of contracts, there are contracts that fall into the definition of commodity, admiralty or insurance, then difficulties, as I am sure your Lordships will find it plain to see, are bound to arise because of the different treatment which is proposed under this Bill for these separate but related contracts.
On the other hand, the reference procedure in Clause 2 has, in comments to me, been widely welcomed. The

569
view that has been expressed to me time and time again is how extremely helpful and useful it will be for parties to have an easy reference to the courts when, during the course of the reference, they or the arbitrator run into difficulties in the construction of a clause. So in these Amendments I am asking your Lordships to recognise the difficulties and to recognise that they can be narrowed and in the main resolved by use only of Clause 2, the reference procedure, and not the full appellate procedure. The fact of the matter is that it is going to be difficult, if not impossible in terms of definition, to resolve the definition problems on these contracts. I share with the noble and learned Lord, Lord Diplock, and others, abiding concern that we should find compromise, so that we can send this Bill to the other place when we are all agreed and when we are satisfied that the major worries of the customers have been met. It would be a tragedy if this Bill was lost because it was subject to excessive lobbying in the Commons. I beg to move.
The LORD CHANCELLOR: My Lords, I do not know what the concept of excessive lobbying is but I have no doubt the lobbying will go on. I repeat the plea that has been made earlier that in the light of the fact that the compromise that is contained in the Bill in regard to the treatment of special category disputes is one which the Commercial Court Committee came to after much consideration of this matter. Quite frankly, I do feel that if we now make substantial changes in the compromise there is a real risk that the thing will be shipwrecked. I think it is common ground that, despite the criticisms that have been made of Clause 3(6), the Bill as it stands will be of great value.
I hope, accordingly, that those who are concerned will be reassured by the provision in the Bill that the Secretary of State has power by order to remove the restrictions on the right of parties to special category disputes to exclude the courts' jurisdiction. The process of making the change by order could, therefore, be a speedy one. Whether it would be desirable to introduce and approve such an order could be judged fairly soon in the light of experience gained after the Bill has been implemented. So I hope that
570
not too tragic a view will be taken by those who criticise this provision, and I do appeal to noble Lords to let the matter proceed as it stands in the Bill.
Lord LLOYD of KILGERRAN: My Lords, I was intending to support the noble Lord, Lord Hacking, in trying to reach a compromise on this very difficult question of definition, but in view of the earnest appeal made from the Woolsack now I do not propose to press this matter any further at this stage.
Lord HACKING: My Lords, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 24 to 26 not moved.]
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 27:
Page 5, line 4, leave out ("either House") and insert ("both Houses").
The noble Lord said: My Lords, I beg to move this Amendment, very briefly. It is a probing Amendment. Is it politically or constitutionally expedient that at this time the annulment should be made by passing through both Houses rather than "either House", in regard to the Statutory Instrument introduced by the Secretary of State. I beg to move.
The LORD CHANCELLOR: My Lords, in my submission, this Amendment makes an unjustified departure from the normal provisions for parliamentary supervision, requiring both Houses to approve the Secretary of State's order. I have commended the provision in the Bill as a useful one so that in the event of experience showing that an order of that kind should be introduced it could be done pretty quickly. I do submit that to make this a requirement of both Houses having to approve would be an unnecessary obstruction to what might need to be done speedily.
Lord LLOYD of KILGERRAN: My Lords, in those circumstances, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 28:
Page 5, line 4, at end insert—

571
(" (10) In this section "exclusion agreement" has the same meaning as in section (Exclusion agreements affecting rights under sections 1 and 2) above.")
The noble and learned Lord said: My Lords, we have dealt with this Amendment already. It has been spoken to and approved. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 29:
That Clause 3 be divided into 2 clauses the first consisting of subsections (1) to (5A) (Exclusion agreements affecting rights under sections 1 and 2) and the second consisting of subsections (6) to (10) (Exclusion agreements not to apply in certain cases unless entered into after commencement of arbitration).
The noble and learned Lord said: My Lords, this Amendment was discussed at the same time. I beg to move.
On Question, Amendment agreed to.
Lord HACKING Lord HACKING had given Notice of his mention to move Amendments Nos. 30 and 31:
After Clause 3, to insert the following new clause:
Amendment of s. 1(4) of Arbitration Act 1975
(" . In subsection 1(4) of the Arbitration Act 1975 after "is a party" there shall be added the words "to the proceedings".")
After Clause 3, to insert the following new clause:
Amendment of s. 1(4) of Arbitration Act 1975
(" . After subsection 1(4) of the Arbitration Act 1975 there shall be added the words "or was a party to the arbitration agreement at the time the agreement was made".")
The noble Lord said: My Lords, we have discussed Amendments Nos. 30 and 31 and the noble and learned Lord has been kind enough to say that he will give the matter further consideration. In those circumstances I do not move these two Amendments.
[Amendments Nos. 30 and 31 not moved.]
Clause 5 [Minor amendments relating to awards and appointment of arbitrators and umpires]:
8.38 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 32:
Page 5, line 40, at beginning insert—
572
(" (1) In subsection (1) of section 8 of the principal Act (agreements where reference is to two arbitrators deemed to include provision that the arbitrators shall appoint an umpire immediately after their own appointment)—

(a) for the words "shall appoint an umpire immediately there shall be substituted the words" may appoint an umpire at any time"; and

(b) at the end there shall be added the words "and shall do so forthwith if they cannot agree".")

The noble and learned Lord said: My Lords, with this Amendment it is convenient to consider Amendment No. 33, which is proposed by my noble friend Lord Lloyd of Kilgerran. Both these Amendments are intended to ensure that an umpire is not appointed where the arbitrators agree on their award. We went over this ground earlier. As was pointed out during the Committee stage, when two arbitrators are appointed by the parties, Section 8(1) of the Arbitration Act 1950 imposes a duty on the arbitrators to appoint an umpire immediately. Discharge of their duty often results in wasted time and fees. Where the arbitrators eventually agree on an award obviously the umpire is never required to act. The Amendment of the noble Lord, Lord Lloyd of Kilgerran, is, I am advised, technically defective and its purpose is achieved by the Government Amendment which would give the arbitrators a discretion to appoint an umpire at any time but would impose the duty on them to do so where they disagreed. I hope the noble Lord, Lord Lloyd of Kilgerran, thinks that that effectively meets his point.
Lord LLOYD of KILGERRAN: My Lords, I am very grateful to the noble and learned Lord, the Lord Chancellor, for moving Amendment No. 32, which goes a long way towards meeting the point which I raised during the Committee stage and which, of course, had the support of the noble and learned Lord, Lord Denning. I am much obliged to the noble and learned Lord.
On Question, Amendment agreed to.
[Amendment No. 33 not moved.]
Lord HACKING Lord HACKING moved Amendment No. 34.
After Clause 3, to insert the following new clause:
Amendment of section 25 of the principal Act
(" . In section 25 of the principal Act leave out subsections (1) and (2) and insert—
"(1) Where an arbitrator or an umpire is or are removed by the High Court or where the authority of an arbitrator or umpire is revoked by leave of the High Court, any party to the reference may serve on the other parties to the reference, a written notice to appoint, or, as the case may be, to concur in appointing, an arbitrator or umpire in place of the arbitrator or umpire so removed, and if the appointment is not made within seven clear days after the service of the notice, the High Court or a Judge thereof may, on application by the party who gave the notice, appoint an arbitrator or umpire who shall have the like powers to act within the reference and make an award as had the arbitrator or umpire who has been removed or whose authority has been revoked.".")
The noble Lord said: My Lords, I beg to move Amendment No. 34. I can be brief about this matter. In Section 25 of the Arbitration Act 1950, which concerns the replacement powers granted to the court when an arbitrator or umpire is removed or the authorities revoked, there are certain extensive powers, including the power to replace a body of arbitrators by a single arbitrator and the power to order that an arbitration agreement shall cease to have effect. Those are much more extensive powers than the court reserves unto itself in other sections of the Arbitration Act.
I draw your Lordships' attention to Section 9 of the Arbitration Act 1950, as amended in Clause 5(3) of the Bill, and to Section 10 of the Arbitration Act 1950. This Amendment simply seeks to remove those more extensive powers of interference (in particular, the power in the court to order that the arbitration agreement shall cease to have effect) and brings the powers of the court directly into line with those two sections to which I have referred your
574
Lordships—namely, Section 9 of the Arbitration Act, as now proposed to be amended under the Bill, and Section 10 of the Arbitration Act 1950 as it now exists. I beg to move.
The LORD CHANCELLOR: My Lords, the effect of the Amendment would be to repeal Sections 25(1) and (2) of the Arbitration Act 1950 and insert in their place the new clause that is set out on the Order Paper. As I understand it, the effect would be that the High Court would no longer have power, on the application of a party to the arbitration agreement, to appoint an arbitrator or umpire in place of the person or persons removed by the court, until a party had served on the other parties a written notice to appoint the arbitrator or umpire, and the appointment was not made within seven days.
I am advised that little would be achieved by this Amendment, and in any case it seems logical that where the court has removed an arbitrator or umpire then the court should have an unfettered power, on the application of a party to the arbitration agreement, to appoint a person to act as arbitrator or umpire in place of the person or persons removed by the court. My advice is that the Amendment would achieve no helpful purpose.
Lord HACKING: My Lords, the hour is late. I have heard the reply of the noble and learned Lord and I am quite happy to rest upon his reply and to withdraw the Amendment.
Amendment, by leave, withdrawn.