Lords Sitting of 25 July 1979

Preamble
The House met at a quarter-past two of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Newcastle).
The LORD CHANCELLOR on the Wool-sack.

BARONESS JEGER
Lena May Jeger, widow of Dr. Santo Wayburn Jeger, having been created Baroness Jeger, of St. Pancras in Greater London, for life—Was, in her robes, introduced between the Baroness Llewelyn-Davies of Hastoe and the Lord Davies of Leek.

LORD ROSS OF MARNOCK
The Right Honourable William Ross, MBE, having been created Baron Ross of Marnock, of Kilmarnock in the District of Kilmarnock and Loudoun, for life—Was, in his robes, introduced between the Lord Hughes and the Lord Peart.
The Marquess of Lansdowne—Took the Oath.
The Viscount Chandos—Took the Oath.

OIL EXPLORATION LICENCES: ROYALTIES
2.37 p.m.
The Earl of LAUDERDALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will now revert to the practice which followed the first four rounds of offshore exploration licensing whereby royalties were determined on the wellhead value of production.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, the basis of calculating royalty for fifth and sixth round
1918
licences was determined before applications were invited: it is the landed value used for tax purposes of the petroleum produced. As to future licences, no decision has yet been made.
The Earl of LAUDERDALE: My Lords, in thanking my noble friend for the assurance that no decision has yet been made regarding future licences, may I ask whether he would agree that any disincentive to profit is in turn a disincentive to production and in turn to exploration, and therefore any disincentive to profit would be counter to the purposes of Her Majesty's Government's policy?
The Earl of GOWRIE: My Lords, I am not in any disagreement with the philosophy as expressed by my noble friend, but the Government do not consider that the present fiscal package is acting as a disincentive to new explorational development. Higher oil prices should stimulate exploration for new reserves, and the North Sea fiscal régime already contains features to assist the exploration of marginal fields.
Lord STRABOLGI: My Lords, may I ask the noble Earl to confirm that the Government will retain the Labour Government's ring fence on North Sea profits made by the multinationals?
The Earl of GOWRIE: My Lords, the noble Lord, Lord Strabolgi, is always asking me to confirm matters which are still under review. I will confirm them to him the moment I am able to do so.
Lord BALOGH: My Lords, does the noble Earl realise that intervention from the Benches opposite in this matter of the North Sea almost invariably implies an increase in private profit and a decrease in national advantage?
The Earl of GOWRIE: My Lords, I see no connection between high levels of profitability and national disadvantage.
The Earl of LAUDERDALE: My Lords, will my noble friend not accept that all over the world the wellhead price is the normal practice in determining royalties and that here the landed price is the exceptional practice, for which the last Government were responsible, and which has really done damage, not good?
The Earl of GOWRIE: My Lords, I will take into account what my noble friend says as we make our review.
Lord BALOGH: My Lords, does the noble Earl realise that his previous reply was totally misleading, as a very large part of the profit accrues to foreigners?
The Earl of GOWRIE: My Lords, as the noble Lord is well aware, oil is an international affair, and we gain considerably by our position internationally.
Lord STRABOLGI: My Lords, will the noble Earl not confirm that during the fourth round without the ring fence £1,000 million annually would have been lost to the balance of payments?
The Earl of GOWRIE: My Lords, I think that the ring fence was created in conditions different from those which obtained during the early rounds of explorations.
Lord HARMAR-NICHOLLS: My Lords, will my noble friend not allow the prejudices of the Benches opposite against profits to interfere with the successful exploitation and production of oil from within our boundaries?
The Earl of GOWRIE: My Lords, I am grateful to my noble friend; I have absolutely no intention of doing so.

NAMIBIA: SETTLEMENT NEGOTIATIONS
2.40 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will state the present position on negotiations over the future of Namibia.
The SECRETARY of STATE for FOREIGN and COMMONWEALTH AFFAIRS (Lord Carrington): My Lords, the five Governments announced earlier today the appointment of a senior British diplomat, Sir James Murray, as their
1920
envoy to explore with the South African Government the remaining problems relating to the implementation of the proposal for a Namibia settlement and the early arrival in Namibia of the United Nations' Transitional Assistance Group.
Lord BROCKWAY: My Lords, in welcoming the visit of Sir James Murray to Pretoria next month, may I ask whether there is not a danger of the situation deteriorating within Namibia, as illustrated by the decision yesterday of the Nationalist Party to oppose any end to racial discrimination? Could not the two points at issue be solved if the South African forces and the SWAPO forces were both restricted to their bases pending, and during, an election under United Nations' auspices?
Lord CARRINGTON: My Lords, I agree with the noble Lord that there is an urgency about this matter, and I am very glad that Sir James Murray is taking over as the envoy of the five, at any rate for the time being, and that he will soon be going to Pretoria. I think that he will canvass with the South African Government all the possible solutions to the difficulties.
Lord HATCH of LUSBY: My Lords, may I, too, welcome the visit of the British diplomat to Namibia and Pretoria, and ask the noble Lord whether Her Majesty's Government will pay particular attention during the transitional period to the somewhat indiscriminate extraction of minerals from Namibia, which may very well have a prejudicial effect on the future of that country after it becomes independent?
Lord CARRINGTON: My Lords, I think that is a different question.
Lord GLADWYN: My Lords, will Sir James Murray have power to negotiate with the South African Government, or is his mission simply for information?
Lord CARRINGTON: My Lords, he is the envoy of the five with powers, naturally, ad referendum, to find out what is going to happen.

RHODESIA: POLICY AT COMMONWEALTH CONFERENCE
2.43 p.m.
Lord HATCH of LUSBY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will state what policy in respect of the Zimbabwe-Rhodesia issue they will pursue at the Commonwealth Conference.
Lord CARRINGTON: My Lords, the Government's policy in relation to Rhodesia was set out in my speech of 10th July. The Commonwealth Heads of Government meeting at Lusaka will provide an opportunity for the Government to carry forward our consultations. When they have been completed it will be the Government's intention to put forward proposals designed to bring Rhodesia to legal independence with wide international acceptance.
Lord HATCH of LUSBY: My Lords, since the speech referred to by the noble Lord the Foreign Secretary, a number of things have happened and the situation has moved. May I ask him whether he would agree to three major propositions on which British Government policy should depend at Lusaka: first, that there is a serious erosion of Bishop Muzorewa's always somewhat tenuous authority; secondly, that the only real hope of peace in that country lies in negotiations between the internal regime and the Patriotic Front; and, thirdly, arising from the first two points, that British policy should therefore now concentrate on promoting a dialogue between the two sides in order to bring peace and provide an opportunity for the settlement which the noble Lord is attempting to reach?
Lord CARRINGTON: My Lords, the Government's policies and intentions remain as they were in my speech on 10th July.
Lord GLADWYN: My Lords, is it not clear that this is a matter which cannot be dealt with adequately by Question and Answer in this House?
Lord BROCKWAY: My Lords, did the Minister note the unanimous decision by the Organisation for African Unity, including the moderate Governments in Africa, that any recognition of this interim Government would be regarded as hostile action towards Africa as a whole, and will he bear that very much in mind when the Lusaka negotiations take place?
Lord CARRINGTON: My Lords, I noticed what happened at Monrovia.
Lord SHINWELL: My Lords, in order to be realistic about this issue, may I ask the noble Lord whether there is any indication that either of the leaders of the Patriotic Front, so-called, Mugabe and Nkomo, is moderating his attitude? Is there any indication that that is so?
Lord CARRINGTON: My Lords, I was asked a Question as to what our policy was in respect of the Zimbabwe-Rhodesia issue, and I have said that our policy, before we meet at Lusaka next week, was set out in my speech of 10th July, and I really do not think I want to go any further at the moment.
The LORD PRESIDENT of the COUNCIL (Lord Soames): My Lords, I suggest we move on to the next Question.
Lord HANKEY: My Lords, may I ask a question from the Cross-Benches?
Lord SOAMES: I am sorry; I did not see the noble Lord.
Lord HANKEY: I am much obliged to the noble Lord. My Lords, are the Government aware that many people are afraid that if we do not make progress on this question fairly soon Bishop Muzorewa will fall, and then there will be no hope for anything but chaos in Rhodesia, and probably a take-over by Cubans and East Germans?
Lord CARRINGTON: My Lords, I am aware that there are those who think that.

COMECON: UNITED KINGDOM AND OECD LOANS
2.46 p.m.
Lord ORR-EWING: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how much the Comecon countries currently owe to (a) the United Kingdom and (b) the OECD countries in respect of trade loans and whether they are satisfied that the repayments are in accordance with the repayment schedule.
Lord TREFGARNE: My Lords, there are no published details of Comecon countries' trade loans or of total indebtedness to the United Kingdom or the OECD countries. At the end of 1978 the Bank of International Settlement reported Comecon liabilities to Western commercial banks totalling about 50 billion dollars, of which about a quarter is owed to banks in the United Kingdom. The Comecon countries have maintained a sound payments record.
Lord ORR-EWING: My Lords, is it not true that the loan of £900 million made by Mr. Wilson in 1974 was made on quite exceptionally advantageous terms—terms which our own industrialists cannot now receive? Is it not also true that the United Kingdom has to accept in exchange goods which handicap our industrialists and distort our trading arrangements? Lastly, does it make sense for the Free World to go on lending these huge sums of money to the USSR, supplying goods and also transferring technology, thus unabling the USSR to continue with the biggest rearmament programme the world has ever seen while keeping their own people relatively happy?
Lord TREFGARNE: My Lords, if I may answer the last supplementary first, I think we have to trade in the real world. We certainly keep a close eye on what we export to the Soviet Union so that we do not unwittingly provide them with technology which we would rather they did not have. With regard to my noble friend's point on cheap interest rates, we have certainly vigorously supported international attempts to rationalise credit
1924
and interest rates for these countries, but if British industry is to remain competitive we must match the credit terms made available by our competitors.
Lord GORONWY-ROBERTS: My Lords, is the Minister aware that the policy of strictly scrutinising exports with a view to avoiding the export of strategic goods and services, so called, is being observed very stringently by a number of Western powers, and not least by this country? Can we take it that the present Government are as stringent about this as were their predecessors, and that this scrutiny includes not only the so-called Comecon countries but similar countries in other parts of the world?
Lord TREFGARNE: My Lords, we certainly scrutinise applications with the same diligence as the previous Administration, but we do not always apply the same criteria.
Lord ORR-EWING: My Lords, is my noble friend aware that the Brookings Institute has recently said that these very large debts now owed to the Free World will have to be rescheduled, and are Her Majesty's Government giving attention to this matter and taking an initiative, as they have in other spheres?
Lord TREFGARNE: My Lords, we are not aware that there will have to be a rescheduling. As I said before, the Comecon countries have thus far, at least, maintained a sound payments record.
Lord GORONWY-ROBERTS: My Lords, may I ask whether the noble Lord is aware that that part of his answer referring to his Government not applying strictly the same criteria as their predecessors is a somewhat cryptic statement? Can I take it that the variation to the criteria applied is not a variation of the strategic considerations borne in mind by the Government as a whole?
Lord TREFGARNE: My Lords, yes, you can.

PUBLIC EXPENDITURE REDUCTIONS
Lord MISHCON: My Lords, I beg leave to ask Her Majesty's Government a

1925
Question of which I have given Private Notice. The Question is as follows:
To ask Her Majesty's Government whether they will make a Statement on the further reductions in public expenditure agreed to by the Cabinet.
Lord DENHAM: My Lords, with the leave of the House, at a convenient moment after 3.30 my noble friend Lord Cockfield will be answering this Question in the form of a Statement.

REGIONAL DEVELOPMENT GRANTS (VARIATION OF PRESCRIBED PERCENTAGES) ORDER 1979
2.51 p.m.
Lord DENHAM: My Lords, I think it will be for the convenience of the House if I were now to inform your Lordships that the Government will not move the Regional Development Grants (Variation of Prescribed Percentages) Order 1979 this afternoon. This order was considered by the Joint Committee on Statutory Instruments yesterday afternoon and they drew attention to the fact that there was an error of one day in a date referred to in the order. This report is available, I am told, in the Printed Paper Office.
The chairman of the Joint Committee on Statutory Instruments raised this point in another place yesterday evening. As a result the Government decided to withdraw the order there and to replace it with a new order containing the correct date; and this is being laid today. The Motion for the approval of this new order will be moved in your Lordships' House tomorrow immediately before the Un-starred Question. Although the new order will be in a form which meets the criticism of the Joint Committee on Statutory Instruments, the order being laid today will not have been considered by the Joint Committee. My noble friend the Lord President will move the suspension of Standing Order 68 which requires that no Affirmative Instrument should be approved in this House until it has been reported on by the Joint Committee on Statutory Instruments.
My Lords, I very much regret the inconvenience which may be caused to your Lordships, and particularly to those noble Lords who have indicated their intention to speak on the order this afternoon.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, leaving aside the question of the inconvenience to those Members of your Lordships' House who were going to speak this afternoon, we on these Benches, and I am sure in other parts of the House, are really deeply shocked that Her Majesty's Government, who are moving a major reduction of aid to industry in areas where there is the highest unemployment, where they are putting thousands of jobs into jeopardy and causing a major disruption of industry itself during the course of it, should have put this through with such reckless speed that your Lordships' House is unable to consider it properly.
I am bound to tell Her Majesty's Government and the noble Lord himself that we on these Benches feel it to be symptomatic of the whole way in which this Administration is conducting its business. I wish formally to register the profound regret and the deepest disquiet of this House.
Viscount TRENCHARD: My Lords, since this is my Department, I should like to say to all your Lordships that I am very sorry. The only other comment that I will make is that the policy has not been rushed although the document may have been so. I apologise for the one date which was in error and for the undoubted inconvenience to all noble Lords, and particularly those who were to take part in the debate. I am very sorry indeed.
Lord HARMAR-NICHOLLS: My Lords, is there not an element of double talk in the comments made by the noble Baroness, when talking about business being rushed through this House without discussion, when she was responsible for leading the team which brought about the guillotine and allowed so much important legislation to be made into law without having been discussed by either House? That is an element of duplication which ought not to remain uncorrected.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, the previous Government have never got an order wrong twice—which is what the present Government have done. When we had to put through business quickly it was at the end of a long

1927
Session. This Government think—I hope, wrongly—that they have five years in front of them. The whole performance has been disgraceful!
Lord TAYLOR of GRYFE: My Lords, keeping in mind that those Members of this House most affected by the Regional Development Grants Order live out of town and try to get home to those regions at a reasonable hour on Thursday and Friday, would the noble Lord indicate when this debate might take place tomorrow?
Lord DENHAM: My Lords, it will be on the Order Paper immediately before the Unstarred Question. I think that I might, with a little thought, be able to give the noble Lord himself an indication of when this might be reached. It depends upon how long the business before it takes.
My Lords, I repeat my apologies for this and, particularly, for the inconvenience to your Lordships. As regards the comments by the noble Baroness on the order itself, I do not think that it would be proper for me to answer those this afternoon.
A noble Lord: You could not!

HILL LIVESTOCK (COMPENSATORY ALLOWANCES) (AMENDMENT) REGULATIONS 1979
2.58 p.m.
The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers): My Lords, I beg to move that the Hill Livestock (Compensatory Allowances) (Amendment) Regulations 1979, a draft of which was laid before this House on 5th July 1979, be approved. Your Lordships will know the important role which hill and upland farmers play in the livestock sector of our agriculture. The hills provide some 60 per cent. of the specialist beef cow population and 20 per cent. of the total breeding herd, while hill sheep constitute some 60 per cent. of the total breeding flock. The hills, therefore, play a fundamental part in the cycle of
1928
renewing the national breeding flock and the production of suckled calves and store lambs.
The special difficulties with which hill farmers have to contend have always been well recognised and we have a long tradition in this country of providing financial assistance to them in the form of annual headage payments on hill cattle and hill sheep. These used to be called the hill cow subsidies and the hill sheep subsidies. Nowadays these payments are made as hill livestock compensatory allowances under the provisions of the EEC Less-Favoured Areas Directive No. 75/268. They are fixed according to the severity of the permanent natural handicaps which affect farming activities in designated areas. In the United Kingdom these areas cover most of our traditional hill farming and livestock rearing land.
The rates of these allowances were reviewed last autumn in consultation with the farmers' unions. The outcome was that the previous Administration announced on 9th March that in the special circumstances of this year, and subject to Parliamentary approval, a supplementary payment of 50p would be added in 1979 only to the higher rate of allowance for hill sheep, which is £3.60 per ewe, thus making the rate for 1979, £4½10.
The regulations now before the House confirm the supplement of 50p on the higher rate of hill sheep allowance for 1979 which was announced in March. This will be worth £3 million to hill sheep farmers in the United Kingdom. In addition, the regulations implement a minor change in the maximum rate of allowance payable under the Less-Favoured Areas Directive. This rate, which is applied both to each livestock unit and to each hectare of eligible land, is increased from 53½50 to 53½70 units of account. That, translated into English, means an increase from £33½92p to £34½05p, an increase of 13p.
In the United Kingdom it will benefit, if only to a small extent, a comparatively small number of hill farmers who stock their land at a rate which is somewhat greater than one livestock unit—the equivalent of one head of cattle—per hectare. The change does not affect the rate of allowance paid on each hill

1929
cow. The Government are aware that the farming industry does not regard the increase made in these regulations as adequate. At the time we took office we realised that it was necessary to review the position of hill livestock producers in view of the very bad weather that they had earlier this year. A request was made by the farmers' unions for a number of specific measures of assistance and we gave this thorough consideration. But we had to couple our consideration with a recognition of the need for the maximum restraint in public expenditure.
We fully recognise that in many parts of the country hill farmers, and sheep farmers in particular, have been caused serious difficulties by the severe and prolonged winter. These included sharp increases in feed costs. The pattern of losses of sheep was uneven and, fortunately, serious losses were confined to only a minority of hill farmers. Both the sheep market and the cattle market are at present very firm and, while costs have been heavy, the prospects for recovery should not be underestimated. The prices which will be obtained in the autumn sales of store lambs and suckled calves will be an important factor in determining the financial position of hill livestock producers.
As my right honourable friend announced in another place on 5th July, we believe that a judgment on the need for further increases in compensatory allowances should be deferred until we can take account of the prices obtained during the main period of the autumn sales. At that stage we shall consider the level of support which is justified in the light of the prices which are then obtained, the increased costs, the problems of restoring flocks to their former size and general economic conditions. If an increase is justified, it will be paid with the allowances due at the beginning of 1980.
My Lords, the main provision in these regulations, the 50p increase, will provide a valuable measure of assistance for a hard-pressed sector of our livestock industry whose position will be reviewed again later this year in the manner I have outlined. I ask the House to support these regulations. I beg to move.
Moved, That the draft regulations, laid before the House on 5th July, be approved.—(Earl Ferrers.)
3.3 p.m.
Lord WALLACE of COSLANY: My Lords, on behalf of my colleagues, I should like to thank the noble Earl for his clear explanation of this order. Any increase of allowances to hill farmers is particularly welcome, bearing in mind the hard winter that they faced in late 1978 and early 1979. I think one must pay tribute to the toughest and hardworking section of the agricultural industry. We have at least one hill farmer among us, the noble Baroness, Lady Elliot of Harwood, and I think that the House will agree with me that in the nicest possible manner the noble Baroness herself is tough and hardworking.
What gives me concern is whether the increases keep step with inflation; and, in particular, I observe that the compensatory allowances in respect of ewes of an approved breed is payable for 1979 only. I doubt whether in point of fact the allowances are adequate, and I can well understand the industry making their complaint. I also note that the order covers all areas of the United Kingdom, which will bring some consolation to Wales.
No mention is made of the arrangements for winter keep. Will these arrangements continue or are they completely unaffected by this order? The explanatory note to the order refers to eligible land. What constitutes eligible land? What number of farmers are affected and are thus disqualified from claiming a full subsidy? Are there any alternative arrangements for them? Obviously, there is an increase in cost, but I make no point on this. The British housewife and the economy benefit from the productive efforts of this worthy section of the farming community.
I raise one complaint—which I may say has almost become traditional—and that is regarding the long delay in payments. Naturally, applications have to be made and vetted; but in the natural circumstances of the industry, and with the hard graft and risk involved, it is reasonable that there should be some anxiety over the prompt arrival of a cheque. Perhaps the noble Earl can now or later give some assurance on this point. Finally, on this side we welcome this order and pay our tribute to a hardworking and sturdy section of our community.
Lord MACKIE of BENSHIE: My Lords, of course I welcome this order. I should like the Minister to go into a little more detail regarding the Government's attitude to the production of store stock from the hills. It is my view that the production from the hills does not in any shape or form conic into the category of the production of over-produced food such as milk and other commodities. The production of lamb is in great need. We need more lamb; it is an expensive and much sought after commodity. Beef is really not in surplus in the world in any shape or form.
It appears to me also that on the hills when one sells a lamb or a suckled calf one is selling at something like a third or at least less than a half of its eventual selling price. In fact, the hills and uplands supply to the public this essential commodity, beef and mutton, which they desire and which is so much sought after. I should like to hear the Minister's attitude to the relief of this very hard pressed section of our industry in view of the fact that none of the strictures rightly made against the CAP applies to the production of the basic store stock from the hills. Of course, we welcome this order but I should very much like to hear the noble Earl's attitude to the general proposition that I have made regarding these producers of the basic stock.
3.7 p.m.
Baroness ELLIOT of HARWOOD: My Lords, I do not require to declare my interest since the noble Lord who spoke first from the Opposition has pointed out that I am in fact a fairly considerable hill farmer. While I realise that the noble Earl on the Government side is in the awkward position of having to economise in every possible way, there are some economies which are more valuable than others. An economy in which one could involve the lowering of production of what the noble Lord, Lord Mackie of Benshie, has pointed out is one of the essential foodstuffs and not over-produced at all in the EEC, is something which we ought to think twice about. We could still increase our production from the hills which would be an enormous advantage to the consumers in this country and an enormous advantage to everyone concerned.
1932
I can only reiterate what has been said over and over again: last winter was the very worst one I can ever remember—and I have been in farming for 40 years in the hills—and it was unbelievably cold. If it were to occur again, I do not know what would happen to our production. The weather was simply appalling. I should like to say " thank you very much " for the fact that one of the grants is increased by 50p; but I hope that when the Government look at the agricultural situation in the autumn they will realise that it takes two or three years on a farm that breeds store stock to recover from a winter such as the one we have just had. You cannot turn it over like that and say, " Next year is going to be all right ". It will not be all right because it is impossible; one cannot make up the numbers in that period of time. I urge the Government to look at this sympathetically. I must not in any way suggest that we are extravagant—we are not, we are highly economical—and what we are producing is something that the whole agricultural community wants. I hope that the Government will look very sympathetically on the hill farmers.
Lord GLENKINGLAS: My Lords, may I add one point to my noble friend in addition to those made by the noble Baroness? May I urge the Government to make up their minds rather soon? Most of us—my family have been hill sheep farming now for well over 50 years—realise that we kept our stock alive last winter entirely at the expense of the banks, because the cost of food rose to astronomical heights. I was buying hay from England at something over £100 a ton. It is not a very happy situation to be in in the spring. Certainly, if we get another year like that, there will be no chance of my bank continuing to support the operation at that level. The animals are alive because we were able to borrow money. We shall not be able to do it again if the Government take a long time to make up their minds.
Lord RAGLAN: My Lords, if the noble Earl does not mind taking on board one more question—he may or may not be able to answer it without notice—may I ask whether he is able to say what proportion of the total quantity of sheep meat and beef which comes into the national herd is in fact contributed by

1933
those farms which are classed as " marginal " and which are affected by this order?
Earl FERRERS: My Lords, I am grateful for the remarks which noble Lords have made and for the welcome which has been given to this order. The noble Lord, Lord Wallace of Coslany, said something which I should like to reiterate: he paid a tribute to the hardworking farmers who live on the hills. This is something which I share totally with him. They live in very difficult conditions and are often subjected to extremes of climate. Theirs is a very hardy profession indeed. I do not know whether that is necessarily why my noble friend Lady Elliot was described as being " tough "—a most ungentlemanly description to apply to my noble friend, I thought; but I think we know what the noble Lord meant. She is certainly well experienced in the business of sheep farming.
The noble Lord, Lord Wallace, also asked whether winter keep would be affected by this order, and the answer is that it is not. He also asked to what kind of farmers this order referred, and the answer is that it refers to those sheep which are kept in the less favoured areas and also to certain breeds of approved sheep. They will get the allowance of up to £4½10 and those other hill ewes—what one might call upland sheep as opposed to hill sheep—will get the allowance of £2½85, which is not in fact covered by this order. The noble Lord did say that there was a delay in making this payment. That is perfectly true, and some of the delay has been caused by the strike of computer operators, but I can assure him that it is the Government's intention to make this payment as soon as possible and by the end of September at the latest.
The noble Lord, Lord Mackie of Benshie, wanted to know the Government's view of hill sheep farming. I think that is a fairly extensive question and I would not really care to go into a great deal of detail now other than to say that we believe that the sheep which come from the hills of the country are in many ways the fundamental stock of the sheep farming industry. It is very often they who have produced the initial stock which are then crossed with others,
1934
leading to the fattening of sheep, which is in fact what the industry is about. Therefore, we consider that the production from the hill areas is of great importance.
My noble friend Lady Elliot said she hoped that we would review this in September and take account of the fact that it takes two or three years to replace stock lost through bad weather conditions. This we entirely accept. Of course, it would be erroneous to expect the Government to under-write all losses experienced by hill sheep farmers as a result of weather conditions. That is part of the nature of the business, but we will certainly take that factor into account when reviewing the whole situation. The important point is that we shall take into account the returns that sheep farmers get from the autumn sales, and it seems at the moment as if those returns might he quite reasonable.
My noble friend Lord Glenkinglas suggested that the Government should not take too long in making up their minds. That is a fair enough criticism to make. I think I can say that earlier on we were hearing rather the reverse criticism made—that the Government had been a bit too quick in making up their mind! I think there could possibly be another inference, but we were criticised for making up our minds too quickly. We shall certainly take the point and not take too long in coming to a decision.
Lastly, I was asked by the noble Lord, Lord Raglan, what proportion of the beef and sheep comes from the hills. As I said in my opening remarks, the hills provide some 60 per cent. of the specialist beef cow population and 20 per cent. of the total breeding herd; sheep constitute some 60 per cent. of the total breeding flock. My Lords, I hope that I have been able to deal with the majority of the questions. I am grateful to your Lordships for the welcome which has been given to the order.
Lord RAGLAN: My Lords, do the figures include Scotland?
Earl FERRERS: Yes, my Lords.
Lord RAGLAN: I thank the noble Lord.
On Question, Motion agreed to.

HOVERCRAFT (APPLICATION OF ENACTMENTS) (AMENDMENT) ORDER 1979
3.16 p.m.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON rose to move, That the draft order, laid before the House on 10th July, be approved. The noble Lord said: My Lords, I beg to move that the draft Hovercraft (Application of Enactments) (Amendment) Order 1979 be considered. The British Railways Board, as well as operating a substantial fleet of passenger ships, also operates hovercraft through its subsidiary company, British Rail Hovercraft Limited, on two routes across the English Channel. Events in recent years—in particular growing misbehaviour from football supporters travelling to and from Europe—have led the Railways Board to the view that it needs to strengthen its position in dealing with offences committed on its ships and hovercraft.
There is at present no comprehensive set of by-laws governing the Railways Board's ships and hovercraft comparable with the by-laws governing its railway undertaking. The only by-laws in operation are the remnants of those made by the pre-nationalisation railway companies, and they apply only to the Board's ferries. At present there are no by-laws relating to hovercraft. Accordingly, the Board proposes to make a set of joint by-laws, applicable to both their ships and hover-craft, covering such matters as travelling without a ticket, offensive behaviour, the conveyance of animals and so on.
The Railways Board has the power, under Section 67(2) of the Transport Act 1962, to make by-laws, subject to ministerial agreement, for ships which it operates, and paragraph 4(5) of Schedule 16 to the Transport Act 1968 extends this power to ships operated by the Board's subsidiary companies. However, the Board has no similar powers to make hovercraft by-laws. To extend their by-law-making powers to hovercraft, the Board needs an Order-in-Council made under Section 1(1)(h) of the Hovercraft Act 1968; and your Lordships have before you a draft of such an order, which must, by virtue of Section 1(4) of the 1968 Act, be approved by an Affirmative Resolution of each House before going to the Privy Council for
1936
ratification. This order seeks to amend the Hovercraft (Application of Enactments) Order 1972 by adding to it a reference to Section 67(2) of the Transport Act 1962 and to paragraph 4(5) of Schedule 16 to the Transport Act 1968, thus extending to hovercraft the Board's power to make shipping by-laws.
I think it is important to assist the Railways Board to deal effectively with offences of the kind to which its proposed shipping and hovercraft by-laws are intended to apply. And I think that there are strong arguments in favour of the Board's proposal to introduce a joint set of by-laws for ships and hovercraft: the general principle that the Board's powers in relation to ships and hovercraft should be the same has been conceded in earlier legislation. Moreover, there would be practical advantages in having identical rules governing traffic on the two types of craft. Extension of the Board's by-law making powers to hovercraft is an essential first step in the introduction of a joint set of by-laws for ships and hovercraft.
If this Order in Council is approved, the next step will be for the Board in due course to submit its draft by-laws to the Minister of Transport for his agreement. I will, of course, then place a copy of the draft hovercraft by-laws in the Library of this House. In my view, this is a sensible and, I hope, uncontroversial measure which will enable the Board to introduce a comprehensive set of by-laws covering a range of minor offences, comparable with the by-laws which the Board already has for the railways. Accordingly, my Lords, I ask for your approval of the draft Order in Council now before you.
Moved, That the draft order laid before the House on 10th July, be approved.—(Lord Mowbray and Stourton.)
Baroness STEDMAN: My Lords, on this side of the House, we can join with the noble Lord and tell him that his hopes are quite right, and we have no objection whatsoever to this order. We deplore the reasons and the behaviour of some people which have made it necessary to consider strengthening the by-laws. We think it is eminently sensible that ships and hover-craft should be treated alike, and we raise no objection whatever.
Baroness PHILLIPS: My Lords, I am in no way against the order, because, as my noble friend has just said, it is absolutely essential, but I find it very strange that there is a need to embody non-payment of fare. I am not clear how you can actually get on a hovercraft without having paid your fare. It is not like an Underground train. I wonder whether that is a little unnecessary in this instance.
Lord HAWKE: My Lords, may I ask my noble friend whether he can say what happens to hovercraft which are not owned by the Railways Board? Do they have by-laws already? Is this to apply to them, or are they to have new by-laws?
Lord BOYD-CARPENTER: My Lords, may I ask another question? As my noble friend knows, hovercraft are treated in law partly as ships and partly as aircraft. Is it the intention of the Railways Board, in making these by-laws, to consult in advance the Civil Aviation Authority so as to secure that there is no clash between the two jurisdictions?
Lord INGLEWOOD: My Lords, may I ask my noble friend one question before he replies generally? Can he say whether the British Transport police are entirely happy with these additional responsibilities which Parliament appears to be laying upon them? Also, will he bear in mind that the responsibilities of the transport police, when they start going to sea, are really very complicated?—because you can clash with the powers of the captain of the ship; you can be in our territorial waters; you can he on the high seas, and you are in French territorial waters before you get to the other side and can get rid of all your troublesome football supporters.
3.23 p.m.
Lord MOWBRAY and STOURTON: My Lords, I must thank your Lordships for the general welcome to this order, and particularly the noble Baroness, Lady Stedman. I have to confess that I am totally bowled over by the question of the noble Baroness, Lady Phillips, about how you get on a hovercraft without buying a ticket. In my wisdom, I never thought of asking that simple question.
Lord PAGET of NORTHAMPTON: My Lords, may I help on that? You get
1938
on with a car or a caravan. It is done quite often.
Lord MOWBRAY and STOURTON: My Lords, the noble Lord, Lord Paget, is very wise. I am told that this is a matter which can be considered when the by-law regulations themselves are considered. Ticket frauds do occur, so this does happen. I will write to the noble Baroness when I have more information.
Baroness PHILLIPS: My Lords, I thank the noble Lord. I am not in favour of ticket frauds.
Lord MOWBRAY and STOURTON: My Lords, I would never have suggested that the noble Baroness would be in favour of such a thing. The answer to my noble friend Lord Hawke is, no. This is not applying to other companies; it is purely a British Railways matter. British Railways have to have this set of regulations in their by-laws, and it is purely for them at this moment. My noble friend Lord Boyd-Carpenter asked about the Civil Aviation Authority being consulted. At the moment, I have no information on this point. I shall have to find out and write to my noble friend. I do not believe that it has been considered at the moment.
Lord BOYD-CARPENTER: It should be.
Lord MOWBRAY and STOURTON: My Lords, my noble friend Lord Inglewood asked about the transport police. My information is that the transport police wish to have these regulations. They will strengthen their hand. I hope that I have replied to the questions that I can answer. I apologise for those that I cannot answer, but I will let noble Lords know the answers in due course.
On Question, Motion agreed to.

DOCKS AND HARBOURS (RATEABLE VALUES) (SCOTLAND) ORDER 1979
3.25 p.m.
The MINISTER of STATE, SCOTTISH OFFICE (The Earl of Mansfield): My Lords, I beg to move that the draft Docks and Harbours (Rateable Values)

1939
(Scotland) Order 1979, which was laid before this House on 12th July this year, be approved. This order provides a method, or formula, for the determination of the rateable values of lands and buildings occupied by most dock and harbour undertakings in Scotland. It concerns those undertakings operated under powers conferred by statute or Statutory Instrument, and all the larger and most of the smaller Scottish docks and harbours are so operated.
The Secretary of State is empowered to prescribe, by order, formula valuation arrangements for certain undertakings where conventional valuation methods are unsatisfactory. Following a general review of the rating of public utilities started by the Scottish Office about two years ago, formula valuation orders were made last year for electricity, gas and other undertakings in Scotland. Statutory ports are also among the undertakings for which a formula may be prescribed, and the order now before your Lordships extends the application of formulae to such ports.
As I have said, formula valuation is appropriate where conventional valuation methods are found to be unsatisfactory, and I should explain in what respect conventional valuation methods have proved unsatisfactory for docks and harbours. Scottish dock and harbour undertakings are at present valued for rating on the " revenue " principle, which is long established but has certain weaknesses. Valuations at each revaluation are based on the average revenue of the undertaking over the preceding five years; a complex process and slow to reflect activity changes. Further, the method can produce low assessments for large undertakings with a substantial amount of business, where revenue only slightly exceeds deductible expenses; and, because loan charges are not a deductible expense, it can produce unduly high assessments for undertakings incurring heavy capital expenditure.
For these reasons, formula valuation of statutory docks and harbours was introduced in England and Wales some years ago; and the British Ports Association, believing that there would be advantage in extending a similar system to Scotland, invited the previous Government to consider the matter. The Scottish
1940
Office accordingly set up a Docks Working Group, which included representatives of the association and other port interests and of the Convention of Scottish Local Authorities. The group unanimously recommended adoption of formula valuation, generally on the lines of the arrangements in England and Wales. The draft order follows this recommendation.
As in England and Wales, the underlying object of formula valuation is that it should provide a more equitable method of arriving at port valuations and, while this will result in some redistribution of the rate burden among ports, it is not intended that formula valuation should alter significantly the overall share of the rate burden met by statutory ports in Scotland. This continuity is effected by Article 4(a) of the order, which provides that the rateable value of each statutory port for the first year of formula, 1979–80, will be 7½5 per cent. of the " relevant income " of the port for the preceding year: this particular percentage is adopted because it should produce valuations which in aggregate will be reasonably close to the aggregate of the existing valuations arrived at by conventional methods.
Noble Lords will observe that annual increases in the relevant income for any port for inflationary and other reasons will produce an increasing rateable value from year to year, whereas the rateable values of most other property is fixed for the quinquennium between revaluations, unless material changes cause an increase in values. I should explain that the fraction in Article 4(b) which is to be applied to the relevant income for future years to arrive at a valuation is intended to discount the effect of inflation which would otherwise be reflected twice in port rate-bills, once in the rateable value and again in the local rate poundage applied to it. This adjustment parallels a similar arrangement in England and Wales. The port and local authority interests directly concerned have been advised, through a consultation document issued last month, of the proposals in the order, and no substantial objection to the introduction of formula valuation has been received. I commend the order to the House, and I beg to move.
Moved, That the draft order, laid before the House on 12th July, be approved.—(The Earl of Mansfield.)
Lord STRABOLGI: My Lords, we on this side of the House are grateful to the noble Earl the Minister for explaining the purposes of this order. I understand that, as the noble Earl has said, these powers have already been used to provide formulae valuation for electricity, gas and railway undertakings in Scotland and also for the Post Office's Scottish telecommunications network. As the noble Earl has said, formulae valuation on broadly similar lines for docks and harbours has already been introduced in England and Wales and is, I understand, operating satisfactorily. I have no detailed points to raise on the order, and I hope that your Lordships will approve it.
On Question, Motion agreed to.

REGIONAL DEVELOPMENT GRANTS (VARIATION OF PRESCRIBED PERCENTAGES) ORDER 1979
Lord SANDYS: My Lords, on behalf of my noble friend Lord Trenchard, may I say that the order will not be moved this afternoon, for reasons which have been explained by my noble friend the Government Chief Whip.

EMPLOYMENT PROTECTION (HANDLING OF REDUNDANCIES) VARIATION ORDER 1979
3.32 p.m.
The Earl of GOWRIE The Earl of GOWRIE rose to move, That the draft order, laid before the House on 1st July, be approved. The noble Earl said: My Lords, with leave, I will speak to two draft orders, the Unfair Dismissal (Variation of Qualifying Period) Order 1979 and the Employment Protection (Handling of Redundancies) Variation Order 1979, both of which were laid before the House on 1st July in accordance with Section 149 of the Employment Protection Act 1978 and Section 106 of the Employment Protection Act 1975, respectively. It will be for the convenience of the House if we take the debate on both orders together, although I shall move them separately at the end.
Before describing the effects of the orders and the reasons for their introduction, I should like to place them in the
1942
general context of our economic policy, especially where it relates to issues of employment. As I believe I demonstrated to the House in the debates on the Budget Speech and on unemployment earlier this session, the prospects for employment at levels we are historically used to in this country are exceedingly bleak. Large firms need high investment and labour shedding in order to prosper in an increasingly competitive world outside and in a world where those in jobs, quite understandably, demand increasing wages inside.
The public sector, whether it is in services or in the nationalised industries, has outstripped the levels of tolerance for high taxation to support it, just as the public sector borrowing requirement has outstripped the levels of interest needed to sustain it. This effect is intensely damaging to wealth creation and to the creation of new jobs. In the words of the old song, " Something's got to give ", and in our case it is the ability of our economy to sustain, without the raging inflation which has the same job destroying effects in the end, the levels of employment to which we have become accustomed.
It is the Government's view that the only way out of this maze is to reduce the rate of inflation by the only practical means available to us—that is, by reducing the money supply, deflating demand and shifting resources from the public to the private sector. Both sides of the same path are stony and painful because, as all noble Lords are aware, we in this country have accustomed the electorate to a greater degree of mental and physical comfort than our national situation allows. But we have North Sea oil and a strong currency on our side, and I have no doubt that in two or three years the picture will be a lot more attractive. However, whether it is attractive or not, we shall still be depending on the private sector, and particularly on the smaller firm and the newer business enterprise, to take up the unemployment which the present inflation and switch in resources demands.
Accordingly, we believe that our best hope of creating more jobs lies in the smaller business sector, and it is therefore a major priority of the Government to stimulate the development of small businesses. One element of our policy is to examine the administrative and legislative

1943
burdens affecting small businesses, in particular the employment protection legislation. In doing so, we propose to continue the practice of consulting widely among organisations representing the interests of both sides of industry before reaching any firm conclusion.
I come now to the purpose of the orders. There are two measures, however, which the Government believe should be taken straight away, and these are the subject of the two orders which we are debating this afternoon. The purpose of the former is to raise the qualifying period of employment for making a complaint of unfair dismissal from its current level of 26 weeks to 52 weeks. The latter order is to reduce the minimum period required for consultation with the trade unions and notification to my right honourable friend the Secretary of State for Employment on redundancies of between 10 and 99 employees from 60 to 30 days.
It was a Conservative Government which introduced the concept of unfair dismissal into legislation in 1971. At the time, we set the qualifying period to complain of unfair dismissal at two years. The Labour Government reduced it to one year—that is to say, to the presently proposed 52 weeks—in 1974, and then to six months in 1975. We on this side of the House took the view that two years was about right, and I shall outline the reasons for our present modification of this period in a few moments.
Of the many representations that we have received from employers on the employment protection legislation, it is the unfair dismissal provisions, and the length of the qualifying period in particular, which have come in for most criticism. The message is that this legislation in its present form diverts management attention from the central task of running a business, and that the risk of a complaint of unfair dismissal acts as a positive disincentive to the recruitment of extra staff, particularly when they are likely to be needed for a short period only. Organisations representing small employers are virtually unanimous in their view that the unfair dismissal provisions deter firms from recruiting extra labour. Local authorities, and larger firms, also have similar difficulties, though of course to a less acute degree.
The unfair dismissal provisions in their present form act not only as a disincentive to recruitment; they also result in significant costs in management time involved in complying with the legislation, and in particular with the procedural requirements when a dismissal takes place. Additional costs, both in securing legal advice and in managerial time, arise from preparing for and attending an industrial tribunal. These costs are incurred whether or not the complaint is upheld, and they bear particularly harshly on the small employer who rarely has a full-time personnel manager.
There has recently been a wealth of research done into the effects of the employment protection legislation, including two surveys commissioned by the previous Administration and others by the Conservative Small Businesses Bureau, the Engineering Employers' Federation and several Chambers of Commerce, as well as the Wilson Committee. We could spend many hours discussing the relative merits of the surveys, any flaws in their methodology and the interpretation to be placed upon them. Research is useful, just as consultation is essential, but in the end the Government must themselves take a view and put their viewpoint to Parliament. Where the qualifying period of service for claims of unfair dismissal is concerned, the Government's view is that the present period of 26 weeks is simply not long enough for employers to assess the suitability of a new employee without the fear of a tribunal claim and that they therefore hesitate to recruit, especially where the extra labour is likely to be needed for a short period only. They are more ready to dismiss employees about whose suitability they are uncertain before 26 weeks have elapsed than to give them the benefit of the doubt.
These views have been widely endorsed in the course of our consultations on the proposals in the two draft orders. I have to confess that we have been widely criticised by employers' organisations for failing to extend the period to 104 weeks, or two years. However, in deference to the views expressed by the trade unions and by the party opposite, although I feel that their anxiety is quite misplaced and, indeed, a little artificial, we are not proposing at this stage to revert to two years. We shall, of course, not hesitate

1945
to lay further orders to do so should we become convinced of any need in the future.
I should like to say in conclusion on the Variation of Qualifying Period Order that, contrary to what may be stated by the party opposite, we are not dismantling the unfair dismissal provisions; we are merely making a change in the qualifying period of service. We believe that even so minor an adjustment will, however, have an impact on employers' confidence and on their willingness to take on more employees. There is also a useful side effect in that an increase in the qualifying period will bring savings in public expenditure and civil servants. It is estimated that an increase to 52 weeks will produce an annual saving of about £1½ million and a saving in staff of 140.
I come now to the second order, the Handling of Redundancies Order. The Employment Protection Act requires two things of an employer who proposes to make employees redundant: consultation with any appropriate recognised trade union and notification to the Secretary of State for Employment. The purpose of consultation is to allow the union to discuss the proposal and ways of reducing the redundancies or of mitigating their effects. Notification is required to allow the Manpower Services Commission to get to work with its employment and training services.
The Act says that consultation should start at the earliest opportunity, and we do not propose to change that, but for redundancies of between 10 and 99 employees in the same premises within 30 days the employer is required to begin consultations at least 60 days before the first dismissal is intended and that limit applies also to the notification requirement. In other words, the employer has to keep the employees in question on his payroll for 60 days after notification to the Secretary of State at the beginning of the consultation process. In our view, this length of time is a damaging burden, particularly for small firms, and we propose that it should be reduced to 30 days.
Small firms often cannot fulfil the obligations since their business horizon does not stretch to 60 days. So a firm is either forced to delay redundancies or risk the union seeking a protective
1946
award from an industrial tribunal of up to 60 days' wages, a period which we also propose should be reduced to 30 days. There is no doubt of course that even the 30-day interim period will prove burdensome for many firms in the difficult years that lie ahead of them, but at least we have lightened their load by half. I have heard it argued that the reduction in the period of consultation with the unions or activity by the employment and training services of the MSC cannot in fact be carried out in 30 days. But I am advised by the MSC itself that it will be able to act just as effectively in the shorter time scale.
As for consultation, I believe that with goodwill on both sides employers and unions will still be able to ensure that the full benefit of this process is made available to employees within the shorter period. I should add that the change we propose will be within the requirements of the EEC Directive on collective redundancies and will not put us out of step with other European countries. Indeed, I understand that our national provisions are usually more generous to the employees than obtains with our more successful competitors within the Community.
In conclusion, I would remind the House that what is at issue is not the right to redundancy payments or the requirement to consult and notify the Secretary of State, but merely the length of time between redundancies being proposed and their being able to be implemented. In laying these two orders the Government are taking a modest step—and I think some would say too modest—towards changing protectionist laws enacted by the previous Administration. Like so many good intentions, these enactments have paved the road to the very destination that they were designed to avoid. Far from protecting employment, they have actively discouraged its promotion. I commend the two amending orders to the House.
Lord STRABOLGI: My Lords, on a point of order, the noble Earl must move the first order; he cannot move both orders together. He must move the first order standing in his name, although the House gave him permission to speak to both.
The Earl of GOWRIE: My Lords, I have not yet moved the orders. At this stage I am commending them to the House. I shall move them at the end of the debate, if the House gives me leave.
3.46 p.m.
Lord McCARTHY: My Lords, those of us on these Benches find that we have to oppose both orders, and since the noble Earl has taken them together, we have to take them together from this side of the House. I should like to begin, as he did, with the Unfair Dismissal Variation Order. We should like to oppose this on two grounds: first, the variation order is a licence to dismiss unfairly. What is being suggested is that it is perfectly fair and perfectly proper that we should extend the period during which an employer can sack people without giving reasons, without saying that it is a matter of conduct or capacity or the need to improve their performance; he can in fact sack them even without facing them to explain why it is being done. This variation order is suggesting that we should extend the period in which we go back to the good old practice of British management—the note in the paypacket; the DCM: " Don't come Monday ". No explanation, no justification, not even the need to face people with the reasons for their dismissal.
I must say to noble Lords, as one who has suffered from this in the past—as one who has been dismissed with a note, " Don't come Monday " for, so far as I could see, doing nothing worse than working in a warehouse in carpet slippers—that this is unfair and at this stage of the game I see no reason why we should extend the period during which employers can dismiss people unfairly without giving reasons.
Lord DRUMALBYN: My Lords, before the noble Lord departs from that point, does he not agree that the situation which he has been outlining already applies, and applies within the first 26 weeks? Does he not agree that there is no change in principle here at all?
Lord McCARTHY: My Lords, I want to come on to that point in more detail, but at the moment I will say only that it is perfectly true that there is this period now.
1948
But it was always the position in the past, and it was certainly the position with the previous Government, that the period of exclusion related to the case load. There is no reason in logic, and it is not the case in many other economies with many other unfair dismissal provisions, why there should be any exclusion period at all. We began with a two-year exclusion period; we reduced it to a one-year exclusion period; it is now a 26-week exclusion period. There is no reason in logic except case load, and no argument is being put forward this afternoon on case load, as I understand the noble Earl, as to why there should be an extension of the exclusion period. It may not be a difference of principle, but the Government do not seem to me to be able to justify extending this period at this time.
The second reason is that all the arguments which have been put forward for this change are really arguments based on ignorance—pandering to the ignorance of small businessmen of the worst possible kind. What is being submitted from this side of the House is that it is the Government's responsibility to stand up to ignorance, to suggest reasons why ignorance should not be accepted, and in fact to explain the very real and very wide areas in which justifiable fair dismissal can be introduced under the provisions of the present Employment Protection Act.
One of the reasons—and I have mentioned it in answer to a question from the other side of the House—adduced, is that we have had longer periods before. We had this in 1971. We had a two-year period until 1974, we had a one-year period, and now we have a six-months period. My answer is that, as I have said, we had it before on the basis of case load, and that does not seem to me to be a justification now.
Another reason given is that the small employer cannot afford the legal costs. That is an argument which has been put forward from the other side of the House. That also is a case of ignorance. It is perfectly true that if the employer goes to law, if he uses solicitors, if he uses—as some employers do—barristers, he can get himself a bill of something like £2,000. But I have never met a chairman of an industrial disputes tribunal—and I have met quite a few—who believed that

1949
lawyers were of the remotest use on the other side of the table in an unfair dismissals case. What people need to do is either represent themselves, or get their trade union representative, or get their personnel manager to represent them, or just get the people involved in the dismissal to go to the industrial tribunal. If they do that, then these vast sums of money, which we are told small employers cannot afford, are not incurred; the whole process can be cheap and it can be speedy. Thirdly, we are told—I think this is probably behind a lot of it—that the British employer must have his right to probation. This again was behind much that was said from the other side of the House; that is, that the British employer must have a right to operate a probation period.
What the probation period means in effect is a licence to dismiss unfairly. What is being said is, " I must have more than six months. I must have nine or 11 or 12 months in which once again I can tell you Don't come Monday'—a longer period in which I do not have to give you reasons or say it has to do with capacity or to do with conduct." I have tried to explain to British managers, small managers and large, that in fact it is perfectly possible to operate the probation period within the Act. If you want to extend your probation period to nine months and you say at the end of six months, " We are not certain whether we want to dismiss this man: we want to extend the period to nine months ", and at the end of the nine months you operate the probation period, as long as you carry out correct procedures and as long as you respect natural justice, that is one of the best possible arguments to make before a tribunal, if you get to a tribunal, for fair dismissal. In fact, the probation period is perfectly well able to be fitted into this Employment Protection Act as it stands, and it is ignorance and prejudice to believe that it cannot be.
A great deal has been said—I am glad that not a lot has been said in this House about it: the noble Earl did not say a great deal, but he did say a little and a great deal has been said elsewhere—about surveys which have been done by the EEF, by the PSI and other surveys. The interesting aspect of these surveys, and it comes out very clearly in the PSI survey, is that the more people know about the operation of
1950
the Act the less fearsome they find the Act is. For example, personnel managers who have had day-to-day experience of the Act think that it is, on the whole, a good thing; they believe that it enables them to have a more systematic system of promotion, recruitment, discipline, and that it is a good thing. The people who do not like this Act are, on the whole, general managers who do not know the first thing about it.
In one of the surveys those involved were asked a number of simple factual questions about, for example, the period in regard to which the Act operates, both on the redundancy and on the unfair dismissal side. What we find so far as the general managers are concerned is that over 60 per cent. of those asked these questions cannot answer a simple factual query about the statutory provisions of the Act. In fact, most of these surveys indicate that those who know least about this Act, those who fear that you cannot dismiss anybody any more, are the people who oppose the provisions of the Employment Protection Act. There are in fact many small employers who believe that nobody is dismissed in British industry any more. In fact, the PSI survey shows that, although there has been a modest reduction in the number of dismissals, it is still the case that 1 per cent. are dismissed on grounds which would make them eligible for a claim for unfair dismissal. It also shows that 86 per cent. of those dismissed never make any formal complaint before a tribunal, and we know that the majority of those who make claims before the tribunals do not sustain those claims. So the chances are today that if you dismiss somebody, even in areas covered by the Act, you have a 95 per cent. chance of dismissing that person without having a decision go against you at the tribunal. If people were a little more careful, if they carried out the procedures and if they observed the elementary principles of natural justice, they would find that there are grounds under the Act now for fair dismissal on grounds of capacity, of qualification, of conduct or redundancy, or, as the Employment Protection Act says, some other substantial reason.
So for these reasons, so far as this particular variation order is concerned, we are saying that the case is not made out. We are saying that those who know

1951
most about the Act in this respect do not believe that it has the disadvantages which are put forward. We are saying that the opposition which small businessmen often feel to the Act is very largely based on ignorance, based on the fact that they do not know what the provisions of the Act are. They do not know that you can dismiss on grounds of qualifications or capability or conduct. Their opposition is to the very existence of the Act. They want to be excluded from the operation of the Act: what they require is a licence to dismiss.
Let me move on to the second variation order. We on this side of the House oppose this order on four grounds: first, the reduction from 60 days to 30 days seriously affects what can be done by unions and by the placement service—and I am not satisfied with the assurances which have come from the Manpower Services Commission on this point—for those who are declared redundant. We do not think that 30 days is long enough. Secondly, at this moment when the Government's policies are, quite deliberately and intentionally, raising the level of unemployment, as one of the ways of dealing with inflation, we think it is monstrous to reduce whatever protection there is for workers who are to be declared redundant. Thirdly, again we believe that these arguments feed upon prejudice and misunderstanding of the way the Act works by small businessmen. It is the function of Government to explain the way its legislation or the legislation of its predecessors works, rather than pandering to mis-information about it. Finally, we believe that it is a very poor beginning to a winter of industrial relations problems to select two groups covered by two aspects of the Act for this particularly mean and nasty attack. These are the four reasons, and I want briefly to say a word about each.
First of all, let me take the point about the serious effect upon the operation of the Act. At the moment the unions are given 60 days to ask about the reasons for redundancy, the numbers and grades involved, the principles of selection, the procedures for carrying it out. They then have to take this information to their members, decide what their policy is, consider alternatives and go back to the employers and put their position before
1952
them. Now, we are told, all within 30 days, the employers will have to consider their response and put their response to the unions. At the moment if this is not carried out within 60 days the unions can make a complaint to the industrial tribunal that the employer has not carried out the provisions of the Act; the employer then has to plead either special circumstances or that he has done all that is reasonably practicable, If he cannot prove either of those things the unions are able to get a protective award. In my experience this cannot effectively be done, in many circumstances, in 30 days.
I would fear—and I have made this point to the CBI but I do not get much percentage, I am bound to say—that the consequence of changing this Act in this way is that more tribunals will be asked by more unions to issue protective awards. Unions will say that the employer has not carried out all the provisions in 30 days, because often that is very difficult to do. Very often the employer will come forward and say that there are special circumstances or that he has done all that is reasonably practicable, and all that the Government will get, as a result of this legislation, is additional altercation and disputes before industrial tribunals.
The second point is that in a period of rising unemployment, when the Government are introducing a policy aimed at creating unemployment in order to deal with inflation, it seems to us to be quite fantastic that we should be introducing changes of this kind in the Employment Protection Act.
Thirdly, let me make a few comments about the so-called " psychological boost " to the ignorant and prejudiced employer who believes that the EPA is somehow affecting his ability to take on additional people. I do not know of any circumstance in which elementary manpower planning requires people to declare men redundant with less than 60 days' notice. It seems to me to be an indictment of any firm that it has to dismiss people with less than 60 days' notice. I sometimes feel that the problem with British employers is that none of them understand this part of the Act. They think that this 60 days means—I have heard this from employers at seminars—that at the end of the day, if they cannot reach an agreement with the

1953
union, the union can stop them dismissing anyone for 60 days. In other words, they do not think that it is a notification period; they think that it is a type of 60-day T and G veto. Indeed, I have heard it referred to as the 60-day T and G veto. Once again, that is ignorance and prejudice. We should not be basing our legislation upon the ignorance and prejudice of employers. We should be basing our legislation on the facts of life.
Finally, what a way to set a climate for the winter. What a way to begin the negotiations—because there will be negotiations—with the Trade Union Congress. We cannot say, of course, that either of these orders is directed to getting the trade union movement back into line. Any strong trade union—the miners for example—will never he affected by either of these provisions. The unfair dismissal provisions will affect, on the whole, the non-unionised. The redundancy payments provisions will affect the weakly organised—the half a dozen carpenters up the North End Road employed by a bucket shop employer, or labour only sub-contractors. If they are sacked instantly the UCATT can say, " No, you cannot do that, there is a law about it ". Those are the type of people who will he affected.
What a way to start the winter. The Government know, if they are honest, that the wage round is slowly escalating. One cannot get a settlement for 11 per cent. any more and even the moderate unions in ICI, on a ballot have rejected a proposal of 11 per cent. This is a time when claims being fed into the pipeline in Fords and elsewhere are in excess of 20 per cent. All the indications are that many employers in the private sector are getting ready to meet those claims. This is a time when the Government know that they are not out of the wood, for example, as regards the electricity supply industry and there is a real possibility of a major dispute because manual workers in the electricity industry want to follow the EMA agreement. What a time, what a climate and what a spirit, in which to introduce these two nasty mean instruments into this House.
Lord PAGET of NORTHAMPTON: My Lords, on a point of order, I wonder whether your Lordships could assist me by telling me what is the Question before
1954
the House to which we are speaking? As I understand it the procedure of your Lordships' House is to talk not at large, but to Questions before the House. On the Order Paper there are two Motions regarding two orders. However, neither of those Motions is before the House because neither has been moved. The House has agreed that they may be discussed together, but not in Vacuo when neither of them is before the House.
The Earl of GOWRIE: My Lords, that is not my understanding, but I am, of course, very ready to be corrected by the noble Lord, Lord Paget of Northampton, and by the House at large. As I understood it, I had leave from your Lordships to commend these orders in the form of a general debate on them, at the conclusion of which debate I would move them formally and we would take a view on them. If I did not have that permission, I apologise. However, I was under the clear impression that your Lordships had given me that permission.
Lord STRABOLGI: My Lords, the noble Earl was probably under a misapprehension. I have presented many of these orders from where the noble Earl is sitting now. The noble Earl has two orders in his name on the Order Paper. The House gave him permission to speak to both of the orders, and he very properly spoke to both of them. In fact, he spoke to them the other way round, but that is a small matter. However, at the end of his speech he should have moved the first order standing in his name. That would then be dealt with, and then he should move the second order formally if he wishes.
The Earl of COWRIE: My Lords, I am grateful to the noble Lord for that correction, although I must repeat, in fairness to myself, that I was of the opinion that the House had given me leave to proceed as I have done. However, if the House now wishes that I should proceed differently, I am, of course, at the disposal of your Lordships.
Lord PAGET of NORTHAMPTON: My Lords, it is not a question of the wish of the House to proceed in one way or another. It is the essence of our debating procedure that there must be a Question before the House before anyone can debate

1955
a matter. We have had a most interesting speech from my noble friend Lord McCarthy, but I am afraid that it is quite out of order.
The Earl of GOWRIE: My Lords, in that case I beg leave to move the first order standing in my name.
Moved, That the Employment Protection (Handling of Redundancies) Variation Order 1979 laid before the House on 1st July, be approved.—(The Earl of Gowrie.)
4.7 p.m.
Lord ROCHESTER: My Lords, whatever the procedural niceties which here apply, I understand that we are now talking to the first order—that is, the one dealing with the handling of redundancies, although with the leave of the House and, like the noble Earl, Lord Gowrie, and the noble Lord, Lord McCarthy, I shall, if I may, speak to both of them. We on these Benches would like to thank the noble Earl for the way in which he has explained to us the reasons why these orders are being introduced. He will not expect me to go along with all that he had to say—there was not very much—regarding the general point he was making at the start on the Government's economic policies. However, it may be that, on behalf of my noble friends, there will be more to be said about that by my noble friend Lady Seear, when we come to deal shortly with the Government's Statement on the economic policy.
I should make it plain from the outset on behalf of my noble friends that we are in sympathy with these orders. Your Lordships will know that we are very keen to do all that we can to assist the encouragement and establishment of small enterprises, especially those of an innovative kind. Having myself worked in a large company for many years until recently, it is quite plain to me at least that we cannot look to such firms to provide many new job opportunities. In order to remain internationally competitive they have somehow to continue improving productivity.
If they continue to be pressed by trade unions to grant increases in pay that are not matched by corresponding increases in productivity, there are only two courses
1956
open to them. The first is to incur the risk of prolonged strikes, bringing with them discontinuity of production that may result in a lasting loss of orders. The second is to reduce their labour forces to a greater extent than would otherwise be necessary. Those, as I see it, are the economic facts of life with which such firms must contend in order to survive. In the crazily inflationary conditions that now apply, they will simply have to go on shedding manpower, very possibly at an accelerating rate. All this means that it is only to small businesses that we can look for the provision of new job opportunities.
Last year, as chairman of one of the district manpower committees that have been set up in various parts of the country to advise the Manpower Services Commission on employment and training problems, I took part in a seminar which we organised in mid-Cheshire for small employers in order to make sure that they were aware—and this point has already been touched on by the noble Lord, Lord McCarthy—of the various resources available to them. There I learned at first-hand that under the shadow of various sections of the Employment Protection Acts 1975 and 1978 such enterprises were in some cases reluctant to take on more people because of possible difficulties involved in dismissing them if the need arose. It can be said—indeed the noble Lord, Lord McCarthy, with all his experience on these matters, has said it and, in degree, it may be true—that fears of this kind are sometimes exaggerated. But it seems to me at least to be sufficient that they are there, and in practice they have an adverse effect on employment generally.
We on these Benches are strongly in support of the concept that there should be adequate consultation with trade unions before employees are made redundant. But this is a matter on which a fair balance must be struck, and in our view at present that balance discriminates unduly against employers and, more particularly, small employers. We believe that a period of 30 days from the time consultation begins until dismissals begin to take effect is quite sufficient to meet the principle which is involved, and that anything more than that can very easily prejudice the creation of the additional job opportunities that are so badly needed.

1957
As to the other order, concerning unfair dismissals, we do not, of course, condone dismissals that are unfair, but I do not feel able to go along with all that the noble Lord, Lord McCarthy, had to say on this point, preferring rather the view already expressed by the noble Lord, Lord Drumalbyn, in an intervention. There is no distinction in principle between what is the case now and what the Government have in mind. In our view there is no doubt that employers—and, more especially, perhaps, small firms—are sometimes reluctant to take on more employees because of the difficulties which they may encounter if, after a period of only six months, they wish to dismiss one of those whom they have taken on. Here again, we believe that it is a matter of striking the right balance, and that to increase to 52 weeks the qualifying period for complaints of unfair dismissal to an industrial tribunal is likely overall to have a beneficial effect in providing for new job opportunities. This is a matter of balance; but, on balance, and for those reasons, we offer our support to the Government in the case of these two orders.
4.14 p.m.
Lord BOYD-CARPENTER: My Lords, in view of the very great knowledge of the noble Lord, Lord McCarthy, on these subjects, it is a little surprising that he made a most strenuous attempt to blow up the debate on the modest adjustments involved in these two orders into great issues of principle. As I see it, no question of principle arises. Let us take first the qualifying period. If one listened to some parts of the noble Lord's speech, the logical conclusion one would draw is that there should be no qualifying period at all. But, under the Government which he supported, the 26-week period operated and there was no suggestion at that time that there should be no qualifying period—the 26-week period was accepted.
Therefore, all that is involved in the order today is an adjustment between 26 and 52 weeks. I agree that opinions can differ on such adjustments, but this is very largely a technical change, which I hope and believe is based on some practical experience and inquiry into the needs of industry. The same applies to the other order which advocates a change from a 60-day to a 30-day period.
Lord McCARTHY: My Lords, the position is as follows. In the past the justification given for the exclusion period—whether it was two years, one year or 26 weeks—was a question of case load. The implication always was—certainly it was my belief and I believe it was right—that when the case load problem justified it, there would be no exclusion period. We are now being given a quite separate set of reasons for exclusion, based on the so-called needs of industry, which are the needs of industry to dismiss unfairly.
Lord BOYD-CARPENTER: My Lords, with respect, the noble Lord cannot duck the issue quite so blatantly as that. There was nothing to prevent the Government which he supported, if they thought all qualifying periods were wrong, legislating—in their habitual happy way, generally under the guillotine—to put through an amendment to the law. They very wisely did not do so, because in their day, if the noble Lord will allow me to say so, they were wiser in this matter than the noble Lord himself. The same applies in the change from a 60- to 30-day period, as I was saying when the noble Lord sought to assist me. That is a modest adjustment—some may think it is too modest—within the existing framework. I believe that there is a very good reason at least for making these two adjustments at this stage, although it may well be that experience will show that Her Majesty's Government ought to go further, certainly in respect of the qualifying period.
There is no doubt at all that the general provisions of the Employment Protection Acts are antipathetic to the provision of more employment. They are a factor which tends to aggravate the very high unemployment figures from which we suffer at present and which every noble Lord on all sides of the House immensely deplores. Undoubtedly, they work that way. They work that way for the reason that—and I think the noble Lord, Lord Rochester, with whose speech I wholly agree, indicated this—the main field for additional employment at present is with the smaller businesses. It is precisely those businesses which are most deterred from taking on additional labour by the general provisions of the Acts and by the two particular provisions to which these orders apply, yet that is the area which

1959
anyone who has studied the matter knows is the area which offers the best hope of immediate alleviation of our employment problems.
As the noble Lord, Lord McCarthy, said, it may be that some of the fears of these small employers are unfounded and that, if they had the advantage of employing the noble Lord, they would be so knowledgeable that they would be less deterred. I would not dispute that there might be such an element in their thinking, but it is only an element. However, with respect to the noble Lord, the House must face the fact that this is a deterrent to the provision of additional employment, and if the provisions of this Act doom even a dozen people to unnecessary unemployment, in my view it is incumbent on the Government to seek to modify its operation so as to take away that effect. There is—and I shall recall this to the noble Lord—an analogy to be found in the well-meaning provisions included by a whole variety of Governments in landlord and tenant legislation. The cumulative effect of that legislation was virtually to destroy the provision of rented accommodation by private owners. The amount of accommodation lost to people who needed it, as a result of that legislation, was—as those who, like myself, have had some concern in the property field know—very substantial indeed.
There is a warning under this newer legislation as to the effect on the now crucial question of unemployment. Therefore, I very much welcome these orders. I commend the energy which has caused the Government to bring them forward before the end of this Session. I hope your Lordships will accept them, and I hope and believe that they will make a contribution, however modest, to the problem that concerns us all—the employment of our people.
4.21 p.m.
Baroness SEEAR: My Lords, I do not in the least intend to disagree with the substance of what has been said by my noble friend Lord Rochester. I accept the reasons that lie behind these variations. But I want to underline what the noble Lord, Lord McCarthy, has said about the profound ignorance among many small employers because they are extremely busy,
1960
because they are occupied with a great many other matters, because the legislation is often quite difficult to follow, and not only the legislation but the procedures.
Those of us who are at all in close touch with the way industrial tribunals work know that again and again the small employer falls down on procedure. The Government are really moving these variations because so many people do not understand the extent to which it is perfectly possible to get dismissals where there is good ground for dismissal. There is a widespread belief, quite fallacious, that you cannot get rid of anybody. This is repeated up and down the country. If no counter action is taken and this belief continues as at present, then a great many employers will go on employing people that they really ought not to be employing, because it is deeply entrenched in their mind that you cannot get rid of people.
If the Government are going to take this action now in order to relieve the burden on the small employers, there ought to be concomitant action to try to get over to the small employer what can be done, and that in fact a great many people successfully get dismissals carried through where there are good grounds. This is not understood. I very much support the noble Lord, Lord McCarthy, on this. It is not understood by a great many people that this is in fact the position.
4.23 p.m.
Lord SPENS: My Lords, I welcome these orders and I also support the speeches made by the noble Lord, Lord Rochester, and the noble Baroness, Lady Seear, because I am speaking on behalf of small businesses. Just over a year ago I wrote a letter to The Times which said that, although there was the possibility of an improvement in the economy—that is rather surprising these days, but apparently it was the case then—the expansion of small businesses would be very limited because they would be unlikely to take on additional employees whom, once the boom was over, they would be unable to dismiss without making huge redundancy payments at a time when their cash flow would be squeezed by tax on their higher profits.
Unfortunately—or, perhaps, fortunately —I mixed up the provisions of the then Employment Protection Act and the

1961
Redundancy Payments Act and, sure enough, I received a public reproof from the then Minister at the Department of Employment, Mr. Harold Walker. I waited to see if any businessmen would come to my rescue. They did, and I want to quote from one of the letters printed. It was signed by five members of the Union of Independent Companies' Standing Committee on Employment, and it lists some of the legislation with which employers are required by law to be familiar and to obey.
In addition to the Redundancy Payments Act 1965, they are—and there is quite a long list which I will read out—the Disabled Persons Acts 1944 and 1958; Statistics of Trade Act 1947; Factories Act 1961; Training Act 1964; Race Relations Acts 1965 and 1968; Redundancy Rebates Act 1969; Industrial Relations Act 1971; Contract of Employment Act 1972; Employment and Training Act 1973; Social Security Act 1973; Health and Safety at Work Act 1974; Trade Union and Labour Relations Act 1974; Employment Protection Act 1975; Social Security Pensions Act 1975; Equal Pay Act 1975; and the Sex Discrimination Act 1975. Those are the Acts listed in that letter, which goes on to say that the authors do not find it surprising that even those responsible for scrutinising the legislation—which presumably was me—should be confused by its mass and complexity.
Dare I say that my confusion arose because we were about to pass the Employment Protection (Consolidation) Act 1978 which does include, in Part VI, a chapter on redundancy payments? This last Act has 191 pages, and one would have thought that a Consolidation Act would consolidate—but, as is demonstrated by these two orders, the first one refers to the Employment Protection Act 1975 and the second to the Employment Protection (Consolidation) Act 1978. The Employment Protection Act 1975 itself has 208 pages. In fact, the 1978 Act has repealed parts of the Redundancy Payments Act 1975; parts of the Employment Protection Act 1975; a part of the Social Security Act 1973; a part of the Employment and Training Act 1973; parts of the Trade Union and Labour Relations Act 1974; a part of the Race Relations Act 1976—which my businessmen had not
1962
picked up—and, thank goodness!, the whole of the Redundancy Rebates Act 1969.
How can we expect small businessmen to comprehend that amount of legislation? I am a member of the National Federation of Self-Employed and Small Businesses which publishes a monthly newspaper, First Voice. That Federation has recently carried out a survey among its members, the results of which are published in the July edition. Among the questions asked were:
"In the past five years have any particular pieces of legislation helped your business?"
Sixteen per cent. replied, Yes; 82 per cent., No. Of the 16 per cent., stock appreciation relief and raising the VAT threshold from £5,000 annual turnover to £10,000 were the two most popular subjects mentioned.
The next question was:
"In the past five years have any particular pieces of legislation damaged your business?"
Seventy-one per cent. replied, Yes; 26 per cent., No. Of the 71 per cent., Employment Protection was named by over 50 per cent., and VAT by 41 per cent. My Lords, until the Government can relieve the small businessmen of the mountain of restrictive legislation which weighs them down, we are not going to see the quick expansion in small businesses which is absolutely essential if we are to conquer unemployment.

PUBLIC EXPENDITURE REDUCTIONS
4.28 p.m.
The MINISTER of STATE, TREASURY (Lord Cockfield): My Lords, with the leave of the House, I will now repeat a Statement being made in another place in answer to a Private Notice Question on reductions in public expenditure. The Statement is as follows:
"Not at this stage, Sir. Decisions on the expenditure plans for 1979–80 were announced in the Budget. The normal annual review of the plans for 1980–81 and later years is now in process. This review is not yet complete but the Government hope to publish their decisions in the autumn."
That, my Lords, is the end of the Statement.
Lord MISHCON: My Lords, while thanking the Minister for his courtesy in repeating the Statement made by the Chancellor of the Exchequer in another place in answer to a Private Notice Question by my right honourable friend Mr. Healey, I cannot pretend to register any pleasure at the content of the reply itself, which is as brief as so many hope will be the life of this Government.
It says nothing; it talks about publishing decisions in the autumn. I wonder whether the Government truly realise the grave feelings of instability and disquiet which exist not only throughout the public sector—and in the private sector, which, let us make no mistake, is very much dependent in many ways on the successful conduct of the public sector—but in the homes of humble people throughout the land.
First, there is an announcement made only six weeks ago in the Budget of an economy cuts programme involving £3 billion. Now, only six weeks later, the figure appears to be £4 billion, a mere increase of 33⅓ per cent. Would the Minister account for the difference? Is it because of the rise in prices and inflation engendered by the Government's policies leading to an increase in the public sector borrowing requirement? The media reflect the public anxiety and mood. Rumours in the media are rampant about more and more slashing cuts and about splits in the Cabinet in regard to them. I do not need a reply that the Government cannot be responsible for the media. I have said this is the measure of public disquiet, and the reply given this afternoon will do nothing to relieve it.
We are not even told when in the autumn this Statement will be made; I trust that the Minister in his reply will try to tell us when. Has the noble Lord nothing to say before the Recess to relieve the anxiety in so many homes about more and more unemployment as a result of the Government's policies? Does he know—does he take into account?—the extent of the misery and despondency which these policies are creating, with the accompanying crippling programme of cutting the social services? Does he know that these swingeing cuts are indeed cutting our people into two? Perhaps I may be permitted to read an excerpt from the Financial Times which appeared this
1964
morning under the heading, "Spending 'cuts ' in context";
" Pensioners should not be impoverished because they are numerous, if at all possible; and welfare spending can be a useful built-in economic stabiliser. It is a little disturbing in this context that the Chancellor should have defended the cuts in relation to the borrowing requirement as well as to the demands on resources. The borrowing requirement tends to vary cyclically. Sound money and public preference demand economical management of the public purse. They do not demand a rule which would compel the Government to deflate more savagely in a recession than in a boom—an instability rule".
The Government seem to be falling into just that trap, deflating more savagely in a threatened recession than in a boom and perpetrating a rule for instability. The almost contemptuous Statement made this afternoon is as lacking in satisfaction as it is in humanity. We are left before the Recess with a Statement that means that the axe of Damocles continues to hang over this nation until some time in the autumn.
Lord BOYD-CARPENTER: The axe of Damocles?
Lord MISHCON: My Lords, if I am corrected by the noble Lord, Lord Boyd-Carpenter, I assure him that I know the noble thing for people to do is to have a sword applying to Damocles. This Government have decided to have an axe. The Statement made this afternoon is truly lamentable.
Baroness SEEAR: My Lords, we on these Benches thank the Minister for repeating the Statement made in another place, and of course if that is the Statement made by his right honourable friend, there is nothing he can do about it except repeat it. I am bound, however, to say that while one sympathises with the need for some cuts—and we are the first to agree that there is overmanning and that there are sections in which economies in labour have to be made—I must urge on the Minister, as some of us did in the House only yesterday, that if these things have to happen, the maximum amount of information and consultation is the only possible way to get them accepted. If we are given Statements of this kind when, as the noble Lord, Lord Mishcon, said, there is great anxiety in the country, it is bound to lead to misunderstanding and resistance to the changes that have to be made.

1965
Where cuts have to be made, we implore the Minister to see that they fall more on the administrative side, where there is abundant evidence of excessive manning, and less at the operational level. The Government should at the same time give major priority—I know this is becoming like King Charles' head, but 1 make no apology for it—to seeing that where people are being displaced, they are prepared and moved into those jobs where there is still a shortage of skilled labour. If we are to have increased unemployment, we must make it a prior obligation to see that somehow those vacancies are filled.
Lord COCKFIELD: My Lords, it is abundantly evident that the noble Lord, Lord Mishcon, is totally unaware of the economic plight to which the policies of the Government whom he supported brought this country. We found our-selves faced with a rising and accelerating rate of inflation; we found ourselves faced with a money supply which was at the top end and threatening to exceed the guidelines which they themselves had laid down; and we found a public sector borrowing requirement substantially in excess of the figures to which the then Chancellor of the Exchequer had committed himself. In those circumstances, it was absolutely essential that the Government should take action, and the Government took the action which was required. The only way we can safeguard the future of this country, the only way we can ensure a soundly based recovery and the only way we can ensure that in the long run we have jobs for our people is to squeeze out inflation, and that is what we are determined to do.
I turn to the Statement which I repeated and which dealt with a point raised in another place about reductions in Government expenditure. What we are concerned with are plans for the year 1980–81. These are clearly difficult and complex matters which require the most careful consideration. That consideration is not yet complete and decisions are not complete either. The House will be informed as soon as we have a complete statement of the plans about which to inform them, and we hope that will be soon after the House reassembles. I would remind noble Lords that the previous Government did not publish their Public Expenditure White Paper until after Christmas. We
1966
shall, in that and in other matters, be improving on the performance of the previous Administration. I am grateful to the noble Baronesss, Lady Seear, for what she said, which I felt was much more helpful and constructive. I hope that what I have said about the intentions of the Government to make a Statement about their plans as soon as possible after they have been completed will meet the difficulties she has in mind.
Lord KALDOR: My Lords, I should like to ask the Minister whether it is a correct interpretation of the remarks that he has just made that this Government regard further restrictive measures as the appropriate response to a deterioration of the economic situation—due to external causes, or to a fall of exports or a rise in imports, or arising from a deterioration of the world situation—thus making a larger proportion of our manpower resources and our industrial capacity idle? That is certainly the impression that he has given. All Governments since the war have been actuated by the desire that the public sector should act as a stabiliser of the economy, not as a destabiliser. Acting as a stabiliser means to restrict in time of overdue expansion and to expand in times of overdue restriction. But the present Government seem to be actuated by the motive that the public sector borrowing requirement must be reduced at all costs, even if the cause of a rise of the borrowing requirement is a fall in income and in consequence a fall in tax revenue, or a rise in expenditure due to higher unemployment. If this is the Government's policy, the more clearly it can be stated and the sooner it can be brought home to the people of this country, the more important it will be from a general point of view.
Lord BOYLE of HANDSWORTH: My Lords, may I put two questions to the noble Lord. First, does the postponement until the autumn of any further Statement mean that there will be further opportunity for consultation about the cuts with those providers of services most affected? Secondly, the noble Lord referred just now to plans for 1980–81 and 1981–82. Is he aware that it really is impossible for a body such as a university to plan for 1980–81 or 1981–82 when at the moment it has absolutely no idea of the extent to which future pay settlements will

1967
be taken into account by means of a revision of the cash limit? Until that aspect is clearer, it really is a mockery to talk about other people being able to plan for 1980 or 1981.
Lord COCKFIELD: My Lords, may I deal first with the points raised by the noble Lord, Lord Kaldor. The noble Lord is a well-known and very distinguished follower of the late Lord Keynes, who was ultimately responsible for the theory of fine tuning. As my right honourable friend the Chancellor of the Exchequer made clear in his Budget speech, we do not accept that the policy of fine tuning has been to the advantage of this country. Indeed we believe—and I explained this at great length in the speech that I made in your Lordships' House when we debated the Budget strategy—that its long-term effect has been to depress output, not to increase it, and therefore to create for the country greater, not fewer, difficulties. Nor do I accept the noble Lord's claim that our present difficulties are due primarily or largely to external causes. Our difficulties are primarily due to ourselves. We must get a higher level of output and productivity, and we must bear in mind that if we pay ourselves more than our level of productivity warrants, the result is inflation. The policies of Her Majesty's Government are directed primarily to squeezing out inflation, as we believe that this is the necessary pre-condition of a recovery in both output and employment.
With regard to the point raised by the noble Lord, Lord Boyle of Handsworth, we are in touch with local authorities and other spending authorities and we shall seek to ensure that they are aware of what is expected of them in sufficient time for them to make the necessary changes in 1980–81.
Baroness GAITSKELL: My Lords, as an absolute non-expert on this matter, may I ask the Minister how he is to convince people that he will stimulate the economy by creating unemployment? In this context I sympathise with the noble Baroness, Lady Seear, who brought a note of humainty into the argument. It seems to me that ever since the Government came into office words have had no meaning. We are back to Alice in
1968
Wonderland. Words mean whatever the Government want them to mean. One is reminded of Humpty Dumpty's reply to Alice. What the Government say cannot be understood by ordinary people who do not know the complicated economics of the argument.
Lord COCKFIELD: My Lords, we use words in their ordinary English meaning. We are just as concerned about the level of unemployment as is the noble Baroness, or indeed anybody else in the country. The present level of unemployment is a result of the kind of policies that have been followed in recent years, and if the level of unemployment regrettably goes up—and I emphasise the words " regrettably goes up "—it will be because of the necessity to take measures to deal with the situation.
Lord BERNSTEIN: My Lords, may I ask the noble Lord, Lord Cockfield, whether he has considered the effect of his Statement on working people in this country who do not know whether, or when, they are to be discharged? I suppose that one has to allow for party propaganda, and I have no doubt that the propaganda is the result of certain home-work done by the Conservative Party during the pre-election period. They have since had some time in which to work it out. They must have had some idea in mind. There have been leaks in the newspapers. Working-class people have done their best to do their jobs and now they are not sure what is to happen to them. They will have to wait until the autumn, after the Recess. Noble Lords are now to have two months' holiday in the South of France or wherever they are going. Ordinary people have to wait until noble Lords return in order to find out what is to happen to them.
Lord COCKFIELD: My Lords, under the noble Lord's Government people would have had to wait until after Christmas—
Lord BERNSTEIN: It was not my Government, my Lords; it was elected democratically.
Lord COCKFIELD: My Lords, I apologise for suggesting that the noble Lord had any degree of responsibility for the previous Administration. I was

1969
misled into assuming that he supported the Opposition by the fact that he is sitting on their Benches, but if he is now dissociating himself from them, it is a matter on which I would sympathise with him.
But so far as the Private Notice Question is concerned, I have repeated the Statement that has been made in another place. I have said that at the moment the plans are not complete. It is not possible to announce plans that have not been made. When the plans have been completed we shall announce them at the earliest possible date. We hope that it will be shortly after Parliament reassembles after the Recess, and that would represent a considerable improvement on the performance of the previous Administration.
Lord MISHCON: My Lords, I note that the Minister's tone is now more cheerful following the point I raised yesterday, and I should like to congratulate him upon that. Unfortunately, it has not made any of us on this side any more cheerful, but at least the Minister's spirit seems to have improved since yesterday.
The Minister said that he liked to use ordinary English, giving it its ordinary meaning. May I ask him whether the phrase " squeezing out inflation ", in its ordinary meaning to the ordinary Englishman, carries with it by inference an increase in VAT to 15 per cent., a borrowing rate for small businesses which is a very high rate indeed, and general policies which have sent prices up rather dismally since the present Government came into power? May I lastly ask him, again within the context of the use of ordinary English, whether he has not heard of a world recession; whether the economic pundits have not yet managed to reach his ear with their expression of foreboding as to how that world recession may in turn hit the economy of this country; and whether he thinks that, in such conditions, these slashes, this creation of unemployment, are in the slightest degree curative or whether, indeed, they are not deplorable?
Lord COCKFIELD: My Lords, I do not accept the noble Lord's analysis of the situation. The measures which have been taken by the Government were absolutely essential in the context of the
1970
situation as it existed following five years of a Labour Administration. There is only one way to get this country back on its feet, and that is to start—and I repeat the phrase—by squeezing out inflation. This entails taking measures which in themselves are unpleasant measures—there is no doubt about that at all—but the necessity to take them is absolutely clear and we have not flinched from taking them.
What we are doing is laying the foundations for the future growth and prosperity of this country. We are well aware of the deteriorating international situation. We have ourselves referred to it on more than one occasion. It will make the job that we face more difficult than it otherwise would have been, but it merely underlines the necessity for tackling the problems.
Lord WIGODER: My Lords, I do not know how long the last Liberal Administration took in preparing their plans, but may I ask the noble Lord whether, if the Government's plans are completed within the next three months, they will give serious consideration to recalling Parliament so that they can be presented and discussed?
Lord COCKFIELD: My Lords, if the noble Lord would care to calculate three months from the present day it would seem to take us approximately to the time when Parliament will be reassembling anyway.
Lord MISHCON: The noble Lord said " within ".

EMPLOYMENT PROTECTION (HANDLING OF REDUNDANCIES) VARIATION ORDER 1979
Debate resumed.
4.53 p.m.
Lord WEDDERBURN of CHARLTON: My Lords, if we may return to the debate upon the orders, at least we know where we are, and we must look at the orders we are asked to debate in that context. We are in a context of " squeezing out ", of " unpleasant measures "; and the Budget and the other statements made

1971
by the Government make it quite clear who is going to bear that unpleasantness. These orders are not simply, as the noble Lord, Lord Boyd-Carpenter, suggested, technical matters. Indeed, I am quite astonished that we are being asked to debate both of them at the same time. I have done my best to combine two different sets of remarks into one, but it seems to me an astonishing procedure to discuss two such different orders in the same debate. However, that is what your Lordships wish.
There is another preliminary point. Before the Statement from the Government Front Bench the debate had become a debate about small businesses. These orders are not orders about small businesses. They could have been. Taking the redundancy consultation order, under Section 106(4) of the Act of 1975 the noble Earl could have moved an order restricting the consultation rights of trade unions in small businesses, but he did not. The order which he is moving applies to all businesses, big and small. Under Section 149 of the Employment Protection (Consolidation) Act 1978, he could have moved an order varying the description of workers dealt with by way of different qualifying periods so as to apply special rules to small businesses. But he has not done that. He has put before us two orders which apply to those employed by businesses big and small—and I want to come back to the small business point later, if I may, in my remarks upon that.
To take first the unfair dismissal order, which we are asked to discuss with the other one, what the noble Earl is doing is asking us to agree that no worker shall be safe from unfair dismissal until he has worked one year for an employer. That, now, after the experience we have had of the six months' qualifying period, is an invitation to management to take less care about recruitment and personnel policies. I shall come to the surveys in a moment—and, really, your Lordships' House must not pass these surveys by with vague talk about " it is well known that … "—and I want to come to the actual figures. But all the surveys show that two things have come about partly by reason—and, of course, the law is only partly responsible for these things—of the employment legislation.
1972
First of all, the unfair dismissal laws, especially, have encouraged an improvement in management practices and procedures before the point of dismissal is reached. Secondly—and this is equally clear—an improvement has taken place in management practice in the way of taking care before recruiting a worker who might turn out to be unsuitable. It is now quite clear that the longer the qualifying period is made the less incentive there is, so far as the law is concerned, for good management practice on either point.
Of course, many good managements will go on with good policies, but why encourage the bad managements? Furthermore, of course, strongly unionised workers will not accept this reduction in their rights. A strong union, told that its workers are now going to be protected against unfair dismissal only after a year, when they have got used to the law providing protection after six months, will say, " All right; you alter your law. But you try to dismiss one of our workers after six months and we shall use our muscle;" and if there is more industrial strife arising from dismissals the Government will be responsible as a result of having moved this order in the House today.
There is no reason to encourage the bad employer. Indeed, in one of the surveys which I wish to cite later—the survey prepared by Mr. Daniel and Miss Stilgoe published by the Policy Studies Institute in 1978 as The Impact of Employment Protection Laws—there is a quotation which struck me very forcefully as I read it. It was from a manager who, speaking about the 26-week qualification period before unfair dismissal comes into play, said this—and I quote from page 71 of the publication:
"If you cannot find out within 26 weeks if a person is suitable for the job, then you cannot be much good. You should be able to assess a person's ability in that time ".
My Lords, it is also quite absurd to suggest that the employment protection laws in the form of the unfair dismissal provisions have brought about a situation where no-one can be dismissed. As my noble friend Lord McCarthy has suggested, there are simply legends about this legislation—promoted by the Conservative Party and certain other organisations—which are just untrue. To take 1977, only one-third of the applications

1973
reaching the industrial tribunals succeeded, and they included a very small number of actual dismissal cases. Secondly, the average compensation was only £400. Thirdly, only 200 out of the 4,200 awards made were for reinstatement. As my noble friend on the Front Bench has suggested, the risk of a case of unfair dismissal is very small, and yet this legend has been spread that industrial tribunals are there as some kind of institution prejudiced against the employer, especially the small employer.
In the Guardian of 21st August 1978, a top official who asked to remain anonymous is quoted as saying:
"There is a crazy theory that we are prejudiced in favour of workers ".
He added, summarising the work of the industrial tribunals—and I quote again:
" For heaven's sake do not say who told you this, but the most important thing we have done so far is to teach employers manners ".
We in this country were late in introducing unfair dismissal legislation. It was to have been introduced by the Labour Government in 1970 and it was taken up, to their credit—although part of a Statute which was disastrous in other respects—by the Conservative Party in 1971. Why we should now relieve employers from the necessity of good manners in dismissing, after 10 or 11 months, those who have only their labour to sell, I cannot see—except in the context of the Government's general policies; because the workers who will be hit worst will be those who are most weakly organised. They will be, as my noble friend Lord McCarthy said, the non-unionists; they will be the women workers, whom it is difficult for the unions to reach, and they will be the seasonal and casual workers who will find it hard to build up the weeks of qualification. The only merit that this order may have is that it may help increase trade union recruitment. It has no other virtue at all. It is not even just and fair in its transitional provisions.
Article 3 of the order gives the new qualification of 52 weeks for dismissals the effective date of termination after 1st October. A worker with 26 weeks' service whose dismissal takes effect on 30th September can sue for unfair dismissal and one who is dismissed a few days later cannot sue. Take the worker dismissed today who has 41 weeks' service
1974
behind him and who is given ten weeks' notice. That notice runs out on 3rd October and he is to have the right to sue for unfair dismissal until 1st October and not after; because then he will have only 51 weeks' notice. If the Government had an elementary concept of justice to the workers, they would have given a 26-week transitional period before the order came into effect.
Turning to the statistics which were very vaguely spoken of by the noble Earl—
The Earl of GOWRIE: My Lords, would the noble Lord be kind enough to give way? I was not bandying around any statistics.
Lord WEDDERBURN of CHARLTON: My Lords, in that case, the noble Earl had better listen to the statistics. It is often said—and I understood the noble Earl to be supporting this—that the employment laws are antipathetic to recruitment, and that the consultation redundancy period is also antipathetic to the recruitment of workers. This has been investigated by chambers of commerce and certain employers' organisations. But the only two independent investigations of this matter have been: first, the survey by Daniel and Stilgoe in 1978 of 301 firms employing from 50 to 50,000 workers; and, secondly, the Opinion Research Centre survey, also carried out in 1978, of 301 firms employing less than 50 workers. What did they find?
The Daniel and Stilgoe survey (on page 55) shows that only 12 firms out of 301 gave an answer suggesting that the consultation period for redundancies had any effect at all on their practices. Indeed, they had already adjusted their practices to the terms of the existing legislation. In the 1978 Opinion Research Centre survey on small firms only 1 per cent. of the firms surveyed claimed spontaneously that the laws about redundancy made them less likely to take on more staff. If the noble Earl does not have the statistics, they are in paragraph 21 of that survey.
The Earl of GOWRIE: My Lords, the noble Lord must not misrepresent me. I did not say that I did not have the statistics, but that I was cautious in my use of them.
Lord WEDDERBURN of CHARLTON: My Lords, the noble Earl will deal with that in his reply. I am saying that, as far as the statistics exist, they do not form any platform whatever for a change in the law.
Lord SPENS: My Lords, I quoted some statistics from the National Federation of the Self-Employed. Those statistics cover 1,000 members; and I think that that is a little larger than either of the statistics the noble Lord has quoted.
Lord WEDDERBURN of CHARLTON: My Lords, the two surveys I quoted were carried out by independent investigators and they covered some 600 firms.
Coming to the unfair dismissal investigation, the Daniel and Stilgoe survey ended by saying (on page 77):
"There was very little sign in our findings that employment legislation was inhibiting industrial recovery or contributing to the high level of unemployment by discouraging employers from taking on new people ".
Later they said:
" We can reject unequivocally the crude form of that criticism with regard to the sectors of employment that we studied ".
As far as small businesses are concerned with unfair dismissal, the Opinion Research Centre survey—with independent and severe standards of surveying—showed that only 4 per cent. of those approached mentioned unfair dismissal legislation as a Government measure that caused difficulties as against the 22 per cent. who suggested that their real difficulty lay with VAT. That was in 1978. If the Government want to help small businesses, then let them again look at VAT instead of introducing measures of this kind.
What has happened is that the Conservative Party and their associates have gone round the country saying to businessmen, " Look at all those terrible laws! " The noble Lord read out a list of them. " Look at that long list! Is it not terrible? Are you not worried? " Now, having stirred up the complaints and encouraged those complaints, they will not even discuss, it seems—although I hope the noble Earl in his reply will discuss—the statistics produced by independent surveys in 1978.
As far as the redundancy consultation measure is concerned, I am afraid that
1976
your Lordships are being misinformed if you think that this is merely a modest adjustment of the law. What the consultation order does is to alter a period which was very carefully thought out. As the noble Earl said in his introduction, it still requires the employer who dismisses 100 or more workers within 90 days to give 90 days' consultation. This order will reduce the period of consultation from 60 days to 30 days to an employer who is going to dismiss between 10 and 99 men. Do the Government think that 60 days was a figure conjured out of the air or imposed on the previous Government by the whim of some trade union? It was thought about very carefully. The reason it is there (and the noble Earl will deal with it in his reply, I hope) is because it forms an incentive against " salami tactics ", launching redundancies in smaller batches, when the employer is really thinking of a larger number.
May I give an example. An employer who wishes to dismiss 198 workers, if he dismisses them altogether, can expect consultations Day 1 to Day 90. Under the old law, if he dismissed 99 on Day 1, he would be in for a 60-days period of consultation; and the best (or the worst) that he could do would be to propose to dismiss the other 99 on Day 31—in which case he would be in for another 60-days period from Day 31 to Day 91. It would mean that between Days 31 and 61, he would have to discuss with the trade unions the redundancies as a whole; and he would be discussing both groups; so that although he would escape the 90-day period, he would still have to discuss the redundancies as a whole.
If this order is passed, all of that changes. If this order is passed, the rules about 90 days' consultation for 100 or more may remain; but if he wishes to dismiss 99 workers on Day 1, then he is in for 30 days consultation; and if he dismisses another 99 on Day 31, then he is in for another 30 days' consultation. It is quite clear that the employer who wishes—and many will not; but the bad employer is being encouraged to do so, if it suits him—may launch small batches or packages by " salami-type " tactics of redundancy which will effectively prevent real consultation on the matters mentioned by Lord McCarthy and which the Act of 1975 was meant to preserve.

1977
The noble Lords, on the Government Front Bench surely do not think that the trade union movement will regard this as a mere technical adjustment. It is a major incursion into the floor of rights of workers which was put on the statute book in 1975—just as is the variation of the unfair dismissal qualification period. The same applies—and this has not been mentioned before—to the notification to the Secretary of State; because the order reduces the period to 30 days for the notification to the Secretary of State; and so the same incentive is given to notify the Secretary of State in small batches of redundancies rather than the full number.
My Lords, there are three other matters that I wish to touch on briefly but which I should like to bring to the attention of the noble Earl to see what will be his replies. If he is really worried about small businesses, surely it is true that a large number of the difficulties of small businesses in connection with redundancy consultation are in many, many cases solved by Section 99(8) of the Employment Protection Act 1975, whereby if there are special circumstances the employer is absolved from his duty to consult within a certain number of days and must do what is reasonably practicable.
I was going to describe to your Lordships the case of Association of Pattern-makers v. Kirvin Limited [1978] Industrial Relations Law Reports, page 318. That was a case of a small firm which eventually was put into the hands of a receiver. But I am sure that the noble Earl, who likes statistics, knows of the case although he has not yet used it. That was a case where a small business went downhill and eventually was put into the hands of a receiver. The courts, which are leniently interpreting Section 99(8), said that enough had been done in the few talks with the unions to do all that was reasonably practicable, special circumstances applied and the employer was not in breach of the section. What I am saying is that the courts are not applying the law which is there now in any unreasonably way where there are special circumstances.
Next, the problem of the protected award. As the noble Lord, Lord McCarthy, suggested, if an employer is in default in not consulting properly with a union, the remedy, after a trade union has taken a case to the industrial
1978
tribunal, is for the individual employee to sue for a sum of compensation which can be measured by and up to the maximum number of days in the protected period. The order is quite straightforward in reducing that period from 30 to 60 days in this respect regarding consultation. Do the Government not realise that all experience so far shows that a short period of protected award of about 28 or 30 days leaves almost nothing of the compensatory protected compensation? That is because of Section 102 of the Act. Section 102 states that various sums must be set off against the compensation for lack of consultation. They include payments made to the employee under his contract of employment; damages or wages in lieu of dismissal, and any amount which the employee would not have been paid under the contract of employment for any part of the protected period.
Most workers who find they have a protected period of only 28 days find that their protected award compensation is reduced almost to zero. For these people, up to 100 workers being dismissed, the Government are also knocking out the possibility of a meaningful protected award. If this order is passed in this form as the unfair dismissal order, the reaction of the working people in Britain is likely to be very strong. The redundancy consultation order, as I have suggested, will not be accepted by strong unions, which will go on demanding and will get from good management—longer than 30 days' consultation on the proposed dismissal of 99 workers. Good management will place itself ahead of the squalid standards that this Government are going to put on the statute book.
So far as unfair dismissal is concerned, why is it necessary to give the employer the opportunity of forgetting even good manners in the second six months of a probationary period of employment? I suggest it has been made clear to us today why these orders are being passed: we know that there is going to be more unemployment; it has to be made easier for employers to dismiss. It has very little to do with small businesses. If it had to do with small businesses the noble Earl would be moving orders about small businesses. If he likes to suggest that he has not the power under the two sections of the two statutes that I have mentioned, no doubt he will say so in

1979
winding up. If he accepts that he has that power, if small businesses are the question, why has he not put small business orders on the Order Paper for your Lordships' House? It is not about small businesses. These orders are about employers of small and big businesses. They are about erasing basic certain rights which the 1975 and 1978 Acts established for workers in this country. They are a major step backwards; but they are necessary because of the general policies of the Government putting them forward, they knowing that they have to make it easier to dismiss in the period of rising unemployment which they are going to create.
5.15 p.m.
The EARL of GOWRIE: My Lords, we have had a fairly considerable debate on these orders and if your Lordships will give me leave, it is now time for me to make a few short remarks in winding up. We may then have to proceed to take a view about these matters. I thought, as I listened to the eloquence and indeed the passion of the noble Lord, Lord Wedderburn of Charlton, that " His Lordship did protest too much ". And looking for motives here I am aware that he is if, not the only begetter, at least a principal architect in the Labour legislation of the last Administration.
Lord WEDDERBURN of CHARLTON: My Lords, will the noble Earl allow me to get the record straight? We are discussing the Acts of 1975 and 1978 and I state publicly and for the record that I played a very small part in advising on those two statutes.
The Earl of GOWRIE: My Lords, the noble Lord is much too modest and I am sure that the House will pay attention to what he has said. But that is not the opinion of most of those on his own side who were concerned with the legislation. They paid tribute I think publicly on many occasions to the work he had done. Maybe they were wrong in so doing; but nevertheless that is all of course that I have to go on.
I have to confess that my feelings were a little hurt though I am reasonably robust and thick-skinned, as he pursued his diatribe against me because I think the
1980
noble Lord is very little aware of the enormous amount of pressure on this Government to reduce so much of this disruptive, over-protectionist legislation and throw it out altogether. What I am engaged in doing is modestly, as my noble friend Lord Boyd-Carpenter said in a remarkable contribution, restricting some of its effects within periods of time which were suggested by the initial Labour Government which brought in these measures. I mean by initial the last Wilson Administration.
Lord McCARTHY: My Lords, is the noble Lord saying that what these people say is what he believes, or is he saying he does not believe this and would like to take this occasion to say that what they are saying about the Employment Protection Act is quite wrong and grossly exaggerated?
The Earl of GOWRIE: My Lords, I am saying neither. We are presented with a large body of Labour law. As we said in Opposition, our aim is to try to get industrial legislation out altogether of the argy-bargy of party political debate. To do that means that we are looking for modest ways of amending of what we and many other people find to be the greatest enormities in the legislation passed at that time.
Why I said that my feelings were hurt is that in a way I am defending a lot of the law which noble Lords have thrown at us and about which there is widespread scepticism. Put it this way: It is not as if the economic record, the practical results of the legislation in this field of the last Government has been enormously successful in real terms. We are not facing, as my noble friend Lord Cockfield said when he made his Statement, a particularly rosy economic picture. Many of us feel that some of this legislation has had some connection with that.
I must say to the noble Lord, Lord McCarthy, who again gave a spirited and informed speech as one would expect from him from the Front Bench opposite on this subject, that it is irresponsible of him to try to relate the orders we are passing today to the wage round. The noble Lord is perfectly well aware, as is his noble friend Lord Wedderburn, that the statutory period of notice and con-

1981
sultation for redundancies of 100 or more employees, the larger firm, is 90 days and is not in any sense changed by these orders. It is not the smaller firm which sets the pace of claims in the wage round in the economy.
When the noble Lord, Lord McCarthy, opened his speech he was both emotional and emotive about the question that this would lead to the proliferation of dismissals. There are very clear dismissal procedures and redresses against unfair dismissal obtainable against all employees. In no sense do these orders which we are here debating alter these rights. They simply return the position to where it was under the Government led by Mr. Harold Wilson (as he then was) in 1974 and 1975 and now perhaps noble Lords may see why I was expecting less vigorous opposition on from the opposite side of the House than from my own side of the House. My Lords, I am sympathetic—
Lord WEDDERBURN of CHARLTON: My Lords—
The Earl of GOWRIE: My Lords, I think I have given way quite enough today and we must now proceed to taking a view. I was impressed by the doleful litany that the noble Lord, Lord Spens, outlined to us of the legislation burdening the smaller businessman: the noble Baroness, Lady Seear, made the same point. I would point out to the noble Lord, Lord Wedderburn, and others that, so far as I know the noble Lord, Lord Spens, is no Conservative. He certainly does not sit on these Benches, and since I have been working in this House he never has.
We believe, in short, that employment legislation is in many respects tilted too
much in favour of employees. We have said that we shall amend this legislation to redress the imbalance and to ensure that it does not act as a disincentive to employers to create more jobs. However, I would say that the whole point of the orders procedure is to make slight adjustments in the legislation as and when necessary. If some of the dire effects with which the noble Lord, Lord Wedderburn, has tried to frighten us this afternoon—and I think he is totally alarmist in so doing—should come to pass, we are entitled under the orders procedure to make amendments to the situation should we wish to do so. In the meantime, until such predictions come to pass, and I do not think they will, I beg to move the first order standing in my name on the Order Paper.
Lord McCARTHY: My Lords, before the noble Earl sits down, since he comes and poses to us—and I am glad he does—as a friend of the Employment Protection Act, will he assure us that this is all he intends to do to the Employment Protection Act, or are we going to see reductions in the individual parts of the Employment Protection Act when the House reassembles?
The Earl of GOWRIE: My Lords, I made it perfectly clear in my opening statement that we are reviewing all the workings of this legislation. I now beg to move the first order standing in my name on the Order Paper.
5.23 p.m.
On Question, Whether the said Motion shall be agreed to?
Their Lordships divided: Contents, 162; Not-Contents, 74.

CONTENTS

Alexander of Tunis, E.

Bessborough, E.

Craigavon, V.

Allen of Abbeydale, L.

Blake, L.

Craigmyle, L.

Alport, L.

Bourne, L.

Cranbrook, E.

Amherst of Hackney, L.

Boyd-Carpenter, L.

Crathorne, L.

Amory, V.

Boyle of Handsworth, L.

Cullen of Ashbourne, L.

Ampthill, L.

Byers, L.

Daventry, V.

Atholl, D.

Caithness, E.

Davidson, V.

Avebury, L.

Carr of Hadley, L.

de Clifford, L.

Avon, E.

Carrington, L.

De Freyne, L.

Balfour of Inchrye, L.

Cathcart, E.

De La Warr, E.

Banks, L.

Clancarty, E.

Denham, L. [Teller.]

Beaumont of Whitley, L.

Clifford of Chudleigh, L.

Digby, L.

Bellwin, L.

Clitheroe, L.

Drumalbyn, L.

Belstead, L.

Cockfield, L.

Dulverton, L.

Duncan-Sandys, L.

Inglewood, L.

Robbins, L.

Dundee, E.

Kemsley, V.

Rochdale, V.

Eccles, V.

Kimberley, E.

Rochester, L.

Effingham, E.

Kinnaird, L.

Romney, E.

Eldon, E.

Lauderdale, E.

Runciman of Doxford, V.

Elliot of Harwood, B.

Lindsey and Abingdon, E.

St. Davids, V.

Emmet of Amberley, B.

Lloyd of Kilgerran, L.

Sandys, L. [Teller.]

Evans of Claughton, L.

Long, V.

Seebohm, L.

Exeter, M.

Lucas of Chilworth, L.

Selkirk, E.

Faithfull, B.

Luke, L.

Sempill, Ly.

Ferrers, E.

Lyell, L.

Sharples, B.

Ferrier, L.

McFadzean, L.

Skelmersdale, L.

Forester, L.

Mackay of Clashfern, L.

Sligo, M.

Fortescue, E.

Macleod of Borve, B.

Soames, L. (L. President.)

Fraser of Kilmorack, L.

Mais, L.

Somers, L.

Gainford, L.

Mansfield, E.

Spens, L.

Galloway, E.

Marley, L.

Stamp, L.

Garner, L.

Merrivale, L.

Strathcarron, L.

Geoffrey-Lloyd, L.

Meston, L.

Strathclyde, L.

Glasgow, E.

Milverton, L.

Strathspey, L.

Glenarthur, L.

Monck, V.

Sudeley, L.

Glendevon, L.

Monk Bretton, L.

Suffield, L.

Glenkinglas, L.

Monson, L.

Tenby, V.

Godber of Willington, L.

Mowbray and Stourton, L.

Thomas, L.

Gowrie, E.

Moyne, L.

Thorneycroft, L.

Granville of Eye, L.

Netherthorpe, L.

Thurso, V.

Greenway, L.

Newall, L.

Torphichen, L.

Grey, E.

Norfolk, D.

Tranmire, L.

Gridley, L.

Northchurch, B.

Trefgarne, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Ogmore, L.

Vaux of Harrowden, L.

O'Hagan, L.

Vickers, B.

Hampton, L.

Orr-Ewing, L.

Wade, L.

Hankey, L.

Pender, L.

Wakefield of Kendal, L.

Harmar-Nicholls, L.

Pike, B.

Ward of North Tyneside, B.

Hawke, L.

Polwarth, L.

Ward of Whitley, V.

Henley, L.

Powis, E.

Westbury, L.

Home of the Hirsel, L.

Rankeillour, L.

Wigoder, L.

Hood, V.

Reilly, L.

Willoughby de Broke, L.

Hylton, L.

Richardson, L.

Wise, L.

Hylton-Foster, B.

Ridley, V.

Young, B.

Ilchester, E.

NOT-CONTENTS

Ardwick, L.

Galpern, L.

Pitt of Hampstead, L.

Aylestone, L.

Gardiner, L.

Ponsonby of Shulbrede, L.

Bacon, B.

Gordon-Walker, L.

Rhodes, L.

Bernstein, L.

Goronwy-Roberts, L.

Ritchie-Calder, L.

Blyton, L.

Gosford, E.

Sainsbury, L.

Boston of Faversham, L.

Hale, L.

Sefton of Garston, L.

Brimelow, L.

Hatch of Lusby, L.

Segal, L.

Brockway, L.

Henderson, L.

Stedman, B.

Brooks of Tremorfa, L.

Houghton of Sowerby, L.

Stewart of Alvechurch, B.

Burton of Coventry, B.

Howie of Troon, L.

Stewart of Fulham, L.

Campbell of Eskan, L.

Janner, L.

Stone, L.

Castle, L.

Kaldor, L.

Strabolgi, L.

Chitnis, L.

Leatherland, L.

Strauss, L.

Collison, L.

Lee of Newton, L.

Taylor of Gryfe, L.

Cooper of Stockton Heath, L.

Llewelyn-Davies of Hastoe, B.

Taylor of Mansfield, L.

Crook L.

Longford, E.

Thomson of Monifieth, L.

Darling of Hillsborough, L.

McCarthy, L.

Wallace of Coslany, L. [Teller.]

David B.

McGregor of Durris, L,

Davies of Leek, L.

Maelor, L.

Wedderburn of Charlton, L.

Diamond, L.

Melchett, L.

Wells-Pestell, L. [Teller.]

Donaldson of Kingsbridge. L.

Mishcon, L.

Whaddon, L.

Dowding, L.

Murray of Gravesend, L.

White, B.

Fisher of Camden, L.

Pannell, L.

Wigg, L.

Gaitskell, B.

Pargiter, L.

Wilson of Radcliffe, L.

Galloway, E.

Peart, L.

Wynne-Jones, L.

Resolved in the affirmative and the Motion agreed to accordingly.

UNFAIR DISMISSAL (VARIATION OF QUALIFYING PERIOD) ORDER 1979
5.33 p.m.
The Earl of GOWRIE: My Lords, I beg to move the second order standing in my name on the Order Paper.
Moved, That the draft order, laid before the House on 1st July, be approved.—(The Earl of Gowrie.)
On Question, Whether the said Motion shall be agreed to?
Their Lordships divided: Contents, 155; Not-Contents, 72.

CONTENTS

Alexander of Tunis, E.

Fraser of Kilmorack, L.

Norfolk, D.

Allen of Abbeydale, L.

Gainford, L.

Northchurch, B.

Alport, L.

Galloway, E.

Ogmore, L.

Amherst of Hackney, L.

Garner, L.

O'Hagan, L.

Amory, V.

Geoffrey-Lloyd, L.

O'Neill of the Maine, L.

Ampthill, L.

Glasgow, E.

Orr-Ewing, L.

Atholl, D.

Glenarthur, L.

Pike, B.

Avon, E.

Glendevon, L.

Polwarth, L.

Banks, L.

Glenkinglas, L.

Powis, E.

Beaumont of Whitley, L.

Godber of Willington, L.

Rankeillour, L.

Bellwin, L

Gowrie, E.

Rawlinson of Ewell, L.

Belstead, L.

Gridley, L.

Reilly, L.

Bessborough, F.

Hailsham of Saint Marylebone, L (L. Chancellor.)

Richardson, L.

Bethell, L.

Ridley, V.

Blake, L.

Hampton, L.

Robbins, L.

Bourne, L.

Hankey, L.

Rochdale, V.

Boyd-Carpenter, L.

Harmar-Nicholls, L.

Rochester, L.

Boyle of Hansworth, L.

Hawke, L.

Romney, E.

Byers, L.

Henley, L.

Runciman of Doxford, V.

Carr of Hadley, L.

Home of the Hirsel, L.

St. Davids, V.

Carrington, L.

Hood, V.

Sandys, L. [Teller.]

Cathcart, E.

Hornsby-Smith, B.

Seebohm, L.

Clitheroe, L,

Hylton, L.

Selkirk, E.

Cockfield, L.

Hylton-Foster, B.

Sempill, Ly.

Colwyn, L.

Inglewood, L.

Sharples, B.

Craigavon, V.

Kemsley, V.

Skelmersdale, L.

Craigmyle, L.

Kimberley, E.

Sligo, M.

Cranbrook, E.

Kinnaird, L.

Soames, L. (L. President.)

Crathorne, L.

Lauderdale, E.

Somers, L.

Cullen of Ashbourne, L.

Lindsey and Abingdon, E.

Spens, L.

Daventry, V.

Lloyd of Kilgerran, L.

Stamp, L.

Davidson, V.

Long, V.

Strathcarron, L.

de Clifford, L.

Lucas of Chilworth, L.

Strathclyde, L.

De Freyne, L.

Luke, L.

Strathspey, L.

De La Warr, E.

Lyell, L.

Sudeley, L.

Denham, L. [Teller.]

McFadzean, L.

Suffield, L.

Digby, L.

Mackay of Clashfern, L.

Tenby, V.

Drumalbyn, L.

Macleod of Borve, B.

Thomas, L.

Dulverton, L.

Mais, L.

Thorneycroft, L.

Duncan-Sandys, L.

Mansfield, E.

Thurso, V.

Dundee, E.

Marley, L.

Torphichen, L.

Eccles, V.

Merrivale, L.

Tranmire, L.

Effingham, E.

Meston, L.

Trefgarne, V.

Eldon, E.

Mills, V.

Vaux of Harrowden, L.

Elliot of Harwood, B.

Milverton, L.

Vickers, B.

Emmet of Amberley, B.

Monck, V.

Wade, L.

Exeter, M.

Monk Bretton, L.

Wakefield of Kendal, L.

Faithfull, B.

Monson, L.

Ward of North Tyneside, B.

Ferrers, E.

Mottistone, L.

Ward of Witley, V.

Ferrier, L.

Mowbray and Stourton, L.

Westbury, L.

Forester, L.

Moyne, L,

Wigoder, L.

Fortescue, E.

Netherthorpe, L.

Wise, L.

NOT-CONTENTS

Ardwick, L.

Brimelow, L.

Castle, L.

Aylestone, L.

Brockway, L.

Chitnis, L.

Bacon, B.

Brooks of Tremorfa, L.

Collison, L.

Blyton, L.

Burton of Coventry, B.

Cooper of Stockton Heath, L.

Boston of Faversham, L.

Campbell of Eskan, L.

Crook, L.

Darling of Hillsborough, L.

Leatherland, L.

Stewart of Alvechurch, B.

David, B.

Lee of Newton, L.

Stewart of Fulham, L.

Davies of Leek, L.

Longford, E.

Stone, L.

Diamond, L.

McCarthy, L.

Strabolgi, L.

Donaldson of Kingsbridge, L.

McGregor of Durris, L.

Strauss, L.

Dowding, L.

Maelor, L.

Taylor of Gryfe, L.

Fisher of Camden, L.

Melchett, L.

Taylor of Mansfield, L.

Gaitskell, B.

Mishcon, L.

Thomson of Monifieth, L.

Galpern, L.

Murray of Gravesend, L.

Wallace of Coslany, L. [Teller.]

Gardiner, L.

Pannell, L.

Gordon-Walker, L.

Pargiter, L.

Walston, L.

Goronwy-Roberts, L.

Peart, L.

Wedderburn of Charlton, L.

Gosford, E.

Pitt of Hampstead, L.

Wells-Pestell, L. [Teller.]

Hale, L.

Ponsonby of Shulbrede, L.

Whaddon, L.

Hatch of Lusby, L.

Rhodes, L.

White, B.

Henderson, L.

Ritchie-Calder, L.

Wigg, L.

Houghton of Sowerby, L.

Sainsbury, L.

Wilson of Radcliffe, L.

Howie of Troon, L.

Sefton of Garston, L.

Wynne-Jones, L.

Janner, L.

Segal, L.

Kaldor, L.

Stedman, B.

Resolved in the affirmative, and Motion agreed to accordingly.

GAMING (AMENDMENT) BILL [H.L.]
5.42 p.m.
Lord BIRKETT: My Lords, I beg to move that the Bill be now read a second time. In doing so, I hope to detain your Lordships for a very short time indeed. The Bill is, visibly, very short and I hope to persuade your Lordships that it is also both just and sensible. It hopes to amend one small section of the Gaming Act 1968. It hopes to amend in that Act what I was going to call " a tiny injustice ", but I think that that is far too dramatic a phrase; " a small anomaly " would be better.
One of the effects of the Gaming Act 1968, by its very arrangement, was to separate out bingo from the rest of the gaming world, to set limits upon it and to make rules for it. By and large, I think it is fair to say that since then they have worked extremely well. The Act also aimed to correct one or two things which had hitherto been regarded as excesses or abuses. One of them concerned linked games of bingo—that is to say, bingo played simultaneously by several clubs in different places, the prize money there-from being combined. Before the Gaming Act 1968 it had been possible so to arrange this that one could link practically every club in the country and make an absolutely enormous jackpot—almost an unlicensed national lottery. It was decided that this was too much and that it should not be allowed to continue.
1988
At the same time, it was clear that linked games of bingo should not be prohibited because, by its very nature, a very small club cannot make very large prize money, whereas a larger club can. If linked bingo had been abolished altogether, naturally, in an ordinary commercially competitive world, small clubs would have been eaten by larger ones.
Equally important, and especially important in view of the Bill today, is the fact that bingo—whatever noble Lords may think of it—unlike the rest of the gaming world, is a social, indeed, a sociable game. If the drift from small clubs to large were to continue, the drift from smaller places to larger would continue and the very nature of community life would obviously be eroded. It was therefore sensibly decided not to abolish linked bingo but to set limits upon it.
The limit set for the combined prizes available to linked bingo games in the 1968 Act was £1,000. Various other financial limits were set in the particular clause of this Act which the Bill before us today seeks to amend; namely, Clause 20. All the other financial limits—and they concern the stakes which might be played for and all the financial rules of the game—were made subject to the ability and power of the Secretary of State to amend those amounts. This was to make sure that they all kept pace both with inflation and with their relative value in relation to each other.
The only financial amount in that clause which was not subject to the power of the Secretary of State to amend was this limit of £1,000 upon linked bingo games. I have not been able to discover why this omission should have

1989
taken place. I hesitate to think that it was an oversight. I imagine that it must have been thought in those days that £1,000 was such a large and handsome sum that it did not need to be amended, but the last 10 years have taught us bitterly that what today seems like a large and handsome sum may by tomorrow seem to be quite an ordinary sum and by the day after tomorrow quite an inadequate one. Therefore, it is strange that while the other financial limits within Clause 20 have been varied several times—three or four in many cases—by the Secretary of State under his powers, the limit of £1,000 remains fixed.
The Bill before your Lordships today seeks to give to the Secretary of State exactly the same powers as those which he has in relation to all the other limits, and it does so by means of a clause taken from elsewhere in the Bill. It is, therefore, identical in wording to those already used in the Gaming Act 1968.
I hope to persuade your Lordships that this is only just and sensible. It may very well be that, if given these powers, the Secretary of State will not immediately use them. Indeed, the Royal Commission did not, a year ago, immediately suggest that the £1,000 limit needed to be altered. Equally, it made no objection whatever to the Secretary of State having the power to do so. Should the Secretary of State be given these powers, he will have available to him the advice of the Gaming Board. It is not one of those sections under which the Secretary of State is obliged to consult the Gaming Board but their advice is available to him.
In the circumstances, it seems to me to be only just and sensible to allow the Secretary of State to have these powers. I hope that your Lordships will consider that this Bill is, as I have said before, just, sensible and also non-controversial, in the sense that it does not really raise the issue of gambling in general or of bingo as a whole in particular—nor, indeed, the powers of the Secretary of State because he has them already elsewhere in the clause. It is therefore my pleasure to suggest to your Lordships that the Bill should be read a second time, without, I hope, a great deal of your Lordships' time being taken up with it. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Birkett.)
5.49 p.m.
Lord WIGG: My Lords, I find no difficulty in supporting the Bill. I think that it is just and reasonable and I should like to congratulate the noble Lord, Lord Birkett, on the way in which he has moved it. He has put a very clear argument before your Lordships and it would be patronage on my part to endorse it. However, I certainly do so, if the noble Lord will take it in the spirit in which it is offered.
Having given my support to the Bill, I want to say a word or two about the principles raised by the Bill. Rightly, in my judgment, according to the mood of the times, it removes from Parliament the principle enshrined in the Act that Parliament is to keep control over bingo. The amount that is spent on it is to be vested in the Secretary of State to do it by order. To those of us who are interested in keeping the legislation in this field up to date, clearly that is a step forward. Therefore, of course, in a form in which it does not run into conflict with social behaviour, which is a danger running through all these matters for those who, as it were, think with their hearts at the expense of their heads, it gives the Secretary of State powers to make an order. As the noble Lord, Lord Birkett, has said, it is probable that the Secretary of State, if he is a wise man—and I think the present Secretary of State is a wise man: he has given indications already of sagacity in his handling of some of these problems—will consult the Gaming Board. I think that is right, and that leads me on to say a word or two about gambling legislation as a whole.
I have never disguised from your Lordships my support of, nor when I was in another place did I cease to strive for, the legislation introduced by the Conservative Government after the 1959 election. I thought the noble Lord, Lord Butler of Saffron Walden, showed great courage in doing what he did. He decided that the social problems of our times must be tackled, and he did it in a far-reaching way which on the whole has been successful. Of course there are plenty of critics in all the fields today who

1991
can say that this is wrong and that is wrong, but that is after nearly 20 years, in what was, after all, a field which was virtually untried. He tried to remove the policeman's shadow from those who chose to spend some of their spare time either at bingo or in a betting shop, or even in the lush establishments of the West End casinos and the like. He sought to remove the shadow of the policeman and to bring in its place, eventually under the Labour Government, the discipline of Customs and Excise. That is far better.
The principle underlying the thinking of the noble Lord, Lord Butler, was this: " Here is a practice of our fellow countrymen and, whether we like it or not, they are going to have a bet. The fact that they will have a bet outside the law is a social danger. Therefore, let us redraft the law so that they may do it under the umbrella of the Government." In other words, there was to be control and not suppression. I think those words were the hallmark of the Butler legislation, and it worked. It enabled the Labour Government later on, if I may say so, with courage, to tax it; and again perhaps I may remind your Lordships that the revenue in 1963 right across the board was of the order of £33 million. It is now £400 million—a not inconsiderable sum. It is my belief that the whole of this expenditure is in fact deflationary, so that those who are concerned about financial probity will be delighted to think that it makes a contribution to the national well-being.
In doing this, over the passing of the years a number of factors have emerged which tend to divert. Take the Gaming Board Which, as the noble Lord, Lord Birkett, has said, the Home Secretary would doubtless consult in considering this matter. This is a hybrid instrument: its staff is appointed by the Home Office and it is borne on the Home Office vote. It exists with an umbilical cord tying it to the Home Office. I think the time may well have come when that cord should be broken and the Gaming Board should be given greater powers than it now has. From some more recent events, upon which I do not want to comment today, it looks as if that is necessary.
One thing is clear. If the Gaming Board is required to—I will not use the word
1992
"police" but to supervise, to make sure that the gaming or bingo is honestly run, it must be given the powers. I am a great admirer of, and have high admiration for, the present chairman of the Gaming Board—in my judgment a most successful and wise permanent Secretary of the Home Office. While he is there I am absolutely sure that the affairs of the Gaming Board will be conducted with wisdom and understanding, and with due regard to the much broader social forces which are at work in our society. It is quite wrong for Parliament to ask a man, even of the stature of the noble Lord, Lord Allen of Abbeydale, to carry through the operations on the basis of bluff. If Parliament wants the Gaming Board to do a job, Parliament should give the Gaming Board the powers with which to do it.
When we come to the operations of the Totalisator, it operates on quite a different plane. Goodness knows what the principle is, but the Home Secretary appoints the chairman, he appoints the members and then he is finished. Then the other place comes along and says that it is a nationalised industry and sets up a Select Committee to inquire into its operations—and not very successfully in my view. On the other hand, we have the Horserace Betting Levy Board. In the debates which took place it was made perfectly clear that the last word about expenditure and its operations was going to rest, quite properly in my judgment, in the hands of the Secretary of State.
I do not say that we should have a uniform procedure, but I do think that when the Home Secretary comes to consider the recommendations of the Royal Commission he must make up his mind. As I understand it the noble Lord, Lord Butler, having set up these boards, wanted to put the matter as far away as he could from the Home Office. When Mr. Callaghan was Home Secretary he brought it in without thinking what the consequences would be, and to my mind that, to a large extent, is the reason for the muddle, which expressed itself in the workings of the Lotteries Act, which cries to heaven to be put right.
I am sorry to have detained your Lordships but this particular subject we do not want to tackle piecemeal, having had the report of the Royal Commission for over

1993
a year—and it is no fault of the present Home Secretary that he has not yet been able to present a White Paper. We have had the Pool Competitions Act, and now we have this Bill. I am quite sure that it will have an unopposed Second Reading today and will go through to another place without a hitch. But it is no good tackling the problem little by little. That is not the way to do it. In my judgment the Home Secretary must look at this right across the board. I believe that he will, and, when he is satisfied, he should come to another place with a White Paper and seek the approval of Parliament to the way in which a great social problem should he tackled
As I have been privileged to occupy places where I could gain knowledge, it seems to me that I should not be performing my duty to your Lordships if I did not come along and say that while I support this Bill whole-heartedly, I still think that it raises important questions of principle which I am certainly not going to press the noble Lord, Lord Belstead, to answer today, but which, if he accepts, or even partially accepts, he will bring to the notice of his right honourable friend.
5.59 p.m.
The LORD BISHOP of LONDON: My Lords, I must apologise for not having put my name down on the list of those who wished to speak on this Bill, but finding myself in the House and having been very much concerned in recent years with the gaming legislation I hope that your Lordships will bear with me if I say one or two things. I agree with the noble Lord, Lord Birkett, that this is a Bill of minor importance and therefore I would not want to oppose it. My only comment is that it seems to be of such minor importance that I wonder whether it is worth while bringing it in at all. I agree with the noble Lord, Lord Wigg, that there are much greater issues involved in the whole question of the legislation on lotteries; and I think he speaks well when he suggests that there ought to be an overall examination of these issues rather than dealing with them piecemeal by small Bills such as this.
I hope that, in dealing with this Bill, the House will remember the important principle that was involved in the previous gaming legislation, which was that bingo was of a different character from what one might call hard gambling and therefore
1994
was to be contained in that way. We were to encourage family gambling on an innocent scale by allowing bingo under certain conditions; therefore, we had to watch the attempts which were being made to enlarge the scope of bingo.
The noble Lord has mentioned the question of linked bingo which would have made it a very big form of gambling. He may also remember that there was an attempt at one time to get permission for gaming rooms of a rather harder type of gambling attached to where bingo was allowed, with the presumed objective that those who came in innocently to play bingo might be enticed into the rather more serious form of bingo that was going on elsewhere. It is important that we should bear this principle in mind and continue to protect bingo as being an innocent and not extensive form of gambling, because there is some evidence, I think, that even in its present form gambling is becoming a quite oppressive habit with some people and that there are many people, even playing bingo, who do spend more money than they ought to on this form of gaming.
Therefore, my only doubt about this Bill is that it may induce those who are concerned with bingo to try to persuade the Minister of State to allow larger stakes to make it more and more attractive and, for that reason, therefore, to depart from the principle which was accepted in the gaming legislation that bingo stood by itself and that we should protect it so that it continues to be an innocent and unimportant form of gambling. I hope that in dealing with this Bill the House will remember what is, I think, an important principle.
6.2 p.m.
Lord HARMAR-NICHOLLS: My Lords, I do not know whether or not I have to declare an interest; I am chairman of a public company that might have—I do not think it has, but it might have—bingo attached to it, and a private hotel company with which I am connected might have, too; I do not think so, but in order to put it absolutely right I put that on the record for what it is worth.
I think the right reverend Prelate has raised this to dimensions which are not in keeping with the very modest proposal the noble Lord, Lord Birkett, is asking

1995
the House to accept. The reason I want to make a contribution is that I think we ought to try to keep our legislation as neat as we can. In this Gaming Act all of the other equivalent powers of this kind are capable of being dealt with by order, which means that the Gaming Board, who are the experts on this and have day-to-day contact with it, can take into account changed circumstances and bring about sensible changes, which they cannot do when it is enshrined as a rigid part of a whole block of legislation such as this.
The important proposal that the noble Lord is making is that this part of it, which lends itself to being looked at at regular intervals, will be capable of being changed by giving freedom to bring about such changes by order. For example, I do not know whether or not the £1,000 a week included in the main Act is right. If it was right 10 years ago when the Act was brought in, the question of inflation means that it cannot be right today. I think we have to remember the main principles which were behind it and not in any way infringe these principles—on that I am at one with the right reverend Prelate—and not make minor changes which would undermine the principles. But, nevertheless, we have to face the fact of inflation and without interfering with the main object of the legislation we can, by introducing this power to do things by order, bring it up-to-date, which seems rather a sensible thing to do. It could well be, when we get to Committee stage, that perhaps I would not agree entirely with the outcome of the figures the noble Lord has included; it may be that we would want to put some restriction on it, so that, whether or not it is £1,000 a week, there is something which would keep it within the boundaries described by the right reverend Prelate. But purely on the grounds of having sensible machinery and trying to make our legislation work in a way which takes into account changing times, over which none of us has any control, I think we would be using the parliamentary machine at its best and rather sensibly. It is on those grounds that I hope we do give this Bill a Second Reading without any adverse comment.
The PARLIAMENTARY UNDER-SECRETARY of STATE, HOME OFFICE (Lord Belstead): My Lords, the Government accept the principle of the noble Lord's Bill—I am extremely sorry.
6.6 p.m.
Lord BOSTON of FAVERSHAM: My Lords, I was looking forward to hearing the noble Lord, Lord Belstead, and my wish to hear him was coming even more rapidly than I had dared to hope. I should like to join with my noble friend Lord Wigg and the noble Lord, Lord Harmar-Nicholls, in thanking the noble Lord, Lord Birkett, for introducing this Bill and in congratulating him for doing so. I should like to thank him not only for introducing the Bill but for explaining the effect of the Bill and the need for the Bill with great clarity. He has, in my submission, shown a need for this modest measure, and it is good to hear the explanation that he has given. I feel sure that my noble friend Lord Wigg and the right reverend Prelate will forgive me for not venturing further into the interesting and important matters on a rather wider level that they have raised this afternoon. My noble friend Lord Wigg does, of course, speak with great experience of these matters, not only as the former chairman of the Horserace Betting Levy Board but in connection with other bodies as well. My purpose in intervening is to detain your Lordships for only so long as it takes to join in commending this Bill to your Lordships.
6.7 p.m.
Lord BELSTEAD: My Lords, I am most relieved that, even after the speech of the noble Lord, Lord Boston, I am still able to say that the Government accept the principle of Lord Birkett's Bill. I also was grateful for the noble Lord's clear explanation of both the background to and the intentions of the Bill. In the light of the very interesting remarks which the noble Lord, Lord Wigg, made, I ought to say that it would have been the intention of my right honourable friend the Home Secretary to implement, in due course, Recommendation 219 of the Report of the Royal Commission on Gambling, by including in general legislation in the future, when opportunity permits, a provision to vary by order the maximum prize permitted in respect of games of

1997
linked bingo. That is the intention of this Bill, and consequently it is not the Government's intention in any way to oppose the Bill.
I should like to make it clear, however, that the Government accepts Recommendation 219 in its entirety. That means that we share, with the right reverend Prelate the Bishop of London, the view, which was implicit in the Royal Commission's report, that the concept of bingo as a neighbourly form of gambling for reasonably modest prizes should be retained. If very large prizes were permitted for games played on a number of different premises it would change the nature of the game. My noble friend Lord Harmar-Nicholls said that he was not certain, speaking today in your Lordships' House, whether the maximum prize figure of £1,000 was right. The Royal Commission's judgment last year was that at the time of reporting the weekly maximum prize figure of £1,000 was about right. Accordingly, in considering any future adjustment of this figure—and it will be in consultation with the Gaming Board—close account will be taken of the Royal Commission's recommendation that the maximum should be increased only to protect its value against further inflation. No attempt should be made to restore the position in terms of 1968 values. On the understanding that that is the intention of the Government, the Government would not wish to impede the progress of the noble Lord's Bill.
6.10 p.m.
Lord BIRKETT: My Lords, I am most grateful to all noble Lords who have spoken in this short debate. Indeed, as it progressed I began to feel a little ashamed that I had not provided a rather larger Bill for your Lordships, but that might have given further excuse for raising matters that, in truth, would have been rather out of my depth, so perhaps I am not so regretful after all.
I am totally in awe of the authority and wisdom of the noble Lord, Lord Wigg, in this matter, and I shall look forward enormously to any of those larger issues which he launched forth upon coming up when the question of the powers of the Secretary of State, or indeed the powers of the Gaming Board, are enlarged upon.
1998
I cannot speak for the Gaming Board, but it is fair to say that the Gaming Board will be in no way unhappy to advise the Secretary of State upon these matters, should the Bill go through.
I recognise, very clearly, the dangers to which the right reverend Prelate the Bishop of London referred, and I can only say that I am glad to note that he, like I, did not find in this Bill any excuse for those dangers increasing. I can see that surrounding a Bill of this nature might be a danger—even a tiny one. However, as regards this Bill I do not believe that there is such a danger. It is merely an expansion of something that exists already in this section.
I was grateful to the noble Lord, Lord Harmar-Nicholls, for referring to the neatness of legislation which he hoped the Bill would bring about, because I think the same, but I did not like to say so. It will indeed make the operation neater. I am also most grateful to the noble Lord, Lord Boston of Faversham, and the noble Lord, Lord Belstead, for giving from opposing Benches such a marvellously harmonious consensus of opinion. In consequence, and not wishing to weary your Lordships any further with the matter, I can only hope that your Lordships will give the Bill a Second Reading.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

NATIONAL INDIAN BROTHERHOOD OF CANADA: VISIT
6.12 p.m.
Earl GREY Earl GREY rose to ask Her Majesty's Government why there was no official reception for the delegation of the National Indian Brotherhood of Canada. The noble Earl said: My Lords, I rise to ask the Question standing in my name on the Order Paper. In doing so I am aware of the difficulties involved for both the Canadian Government and the British Government. The National Indian Brotherhood of Canada represents approximately 280,000 Indians from 560 bands. The organisation was formed partly in order to protect hereditary rights, and,

1999
as a national unified body, to have a greater voice in achieving constitutional aims.
The Indians maintain that treaties made between Great Britain and themselves have not been honoured. In fact, the Royal Proclamation of 1763 stated that:
" No lands in this Continent owned and occupied by the Indians could be seized or claimed by immigrant peoples unless they had full agreement and consent of the aboriginal people ".
The Brotherhood claims that the Proclamation has been violated. A treaty, to an Indian, is sacred, the signings were solemn occasions and, when the wordings incorporated stated that these treaties would last,
" as long as the sun rises, the grasses grow, and the rivers flow ",
to them, it meant just that.
The Indian nation claims that, as these treaties were signed in the name of the Crown, it still holds the Crown in the highest esteem and this represents the highest honour. It is with that view in mind that a decision was made last year to send a delegation to this country to press their claims to the British Government. That was done with the help of Survival International, an organisation noted and respected for its stand on human rights throughout the world.
Those of us who met, spoke to and listened to the Indians, who came from every part of Canada, were deeply impressed and moved by their sincerity and the way in which they presented their cause. They arrived here on 1st July for one week in the hope of seeing the Queen and the Prime Minister, but unfortunately this was not achieved. The visit was not a failure. Publicity was given. Members of both Houses were asked to meet them, and did. Mr. Bruce George, the Member of Parliament, has taken a positive and active interest.
A complaint also made by the Indians is that they have petitioned the Canadian Government unsuccessfully for recognition as a legitimate participant in the constitutional discussions which are taking place. Chief Noel Starblanket, President of the National Indian Brotherhood, in his statement on 2nd July this year said:
" We have tried time and time again to take our rightful place at the constitutional tables. All
2000
we have been granted at these deliberations is observer status. ".
The Indians of Canada have appealed to Parliament because final legislative control over the constitution of Canada rests with Parliament. The claim for this goes back to the Royal Proclamation of 1763. While the Government of Canada assumed financial responsibility, the power and the ability to establish treaty relations with the Indian nations have continued to be with the Crown.
In 1876 the British North America Act was enacted, establishing the present constitutional structure for Canada. In that Act the power to negotiate treaties in the name of the Crown was passed to the Governor General of Canada. That provision, and the Royal Proclamation of 1763, have not been replaced.
The Canadian Federal Government have recently proposed to make changes and patriate the British North American Act of 1867 concerning the status and position of the Indians. In its petition to the British Government, the delegation stated its reasons for not wanting the British North American Act to be patriated, as it is felt that there is a grave danger that the special rights and status of the original owners of the lands may be further eroded. The Indians are concerned that, if this Act is patriated, decisions made regarding their status and welfare will be made without their full participation and control. While it remains in this country, an obligation is placed upon the British Government.
The Canadian Government feel that the problem is an internal one, and should he handled by themselves and the Indians. One must have sympathy with this attitude. It is not an easy matter to resolve, but we have a situation where the original inhabitants of Canada—their forefathers—signed binding treaties and agreements with the designated represenatives of the Crown, and historical and legal importance of this is emphasised by the Indian nation. The Indians are not asking the British or the Canadian Government to allow them to secede from Canada and form a new independent State, as has been hoped for by French influences. There is a problem that needs solving and the British Government are involved. I am not advocating confrontation between the two Governments. Nothing of value would be

2001
achieved by that—only harm—and nobody would be satisfied. That would not be advisable or prudent. I would rather the Canadian Government reached a satisfactory arrangement with the Indians. But, if the British Government, who have a legal obligation to be involved, can help in any way, I believe that a better understanding can be reached.
Ever since Canada was discovered, the Indians have been trying to adjust to new ways of life. It has been a struggle in many ways and hard to adapt when their customs and means of survival have been taken from them. It was not until 1960—less than 20 years ago—that they were given the right to vote. Also it was only at this time that the Department of Indian and Northern Affairs began to cede to the Indian bands the responsibility for using the administrative funds that had been set aside for them.
A major conflict for the Indian revolves round his ability to adapt to modern society. His values sometimes hinder this ability. The unemployment rate is extremely high at 53 per cent. I recognise that the Canadian Government have made moves in certain areas to help and encourage the Indian nation. For the year 1977–78, 595 million dollars have been spent on Indian and Eskimo affairs. I believe that awareness of the Indian problem is growing in Canada today.
I am asking the Question because I think that the British Government should have met and discussed their problems at first hand with the Indians, and should have listened to their reasons for being here. I look forward with interest to hearing what the noble Lord, Lord Trefgarne, has to say.
6.19 p.m.
Lord DE FREYNE: My Lords, I wish to support the noble Earl in this important matter and in this very full House. While I am certain that we all take great pleasure from watching members of our Royal Family being made honorary chiefs of various Canadian tribes, with their highly colourful headdresses and traditions, we must bear in mind that this is not a tourist " peepshow ", but a serious part of their history and heritage of which they are rightly proud.
They are members of the Commonwealth. I believe that we must not lose
2002
sight of our responsibilities. These Canadian Indians have fought long for their rights and, as members of the Commonwealth, should be treated in a fair and equal manner, which at present does not seem to be the situation. I believe that this is a matter which should be looked into as soon as possible. I consider that we should treat all our citizens of the Commonwealth equally, and therefore the Canadian Indians should not be an exception. Minorities count just as much as majorities.
6.21 p.m.
Lord PONSONBY of SHULBREDE: My Lords, I had not intended to say anything on this Unstarred Question, but having listened to the noble Earl, Lord Grey, introduce this Question, and to the noble Lord, Lord De Freyne, suggesting that it might have tourist features, I believe that it is almost implicit that I should rise and add some remarks to this short debate. I shall read with very great interest in Hansard tomorrow what the noble Earl has said. He has posed a matter which we should all consider and examine. I certainly believe that the point made by the noble Lord, Lord De Freyne, that there should be reciprocal arrangements, as he put it, for the tourist features of Indian chief-making in Canada, should be considered. I shall listen with great interest to the reply of the noble Lord, Lord Trefgarne.
6.22 p.m.
Lord TREFGARNE: My Lords, I think that your Lordships will appreciate as much as I do the Unstarred Question of the noble Earl, Lord Grey, which gives me an opportunity to explain the Government's attitude to the recent visit to London by the National Indian Brotherhood of Canada. It is true that during the visit the delegation was not received by any Minister. On the other hand, although we had known for some weeks that the Brotherhood was planning to send a delegation to London, and subsequently heard that they were hoping, while here, to meet my right honourable friend the Prime Minister and my noble friend the Foreign and Commonwealth Secretary, the Government received no approach from the Brotherhood or anyone representing them, requesting such a meeting, until very shortly before their arrival in this country on 1st July.

2003
By the time that such requests were made I am afraid that it was too late to fit them in to any Minister's programme. A small group was, however, received as a courtesy and at a senior official level, by a deputy to the Permanent Under-Secretary in the Foreign and Commonwealth Office. At that meeting representatives of the National Indian Brotherhood, accompanied by their legal advisers, were able to explain their concern about their position and to leave documents giving more details of their case. So it is not true to say that they were not received by the Government.
I believe that what I have said shows that the Indian delegation were received by the United Kingdom Government in the best possible manner in the circumstances. Even if, however, they had been received at a more exalted level, the fact of the matter is that it could have made no difference. The United Kingdom Government are simply in no constitutional position to intervene in matters of this sort. The central point is that although the Indians rightly look to the Queen as their Sovereign in any matter affecting them, it is the Canadian Government and not the Government of the United Kingdom which must advise the Queen. The position is, however, rather more complicated than that, and perhaps this is a good moment for me to elaborate.
Canada is an independent sovereign nation within the Commonwealth. Executive power is vested in the Queen acting through the Governor-General and on the advice of Her Canadian Ministers. The Canadian constitution is principally contained in the British North America Act of 1867, as subsequently amended, This Act established a federal system of Government in Canada and set out the powers of the Federal Parliament and the Provincial legislatures. While each Province was given jurisdiction to amend its own constitution, the British North America Act, the constitution of the Federation, can in certain important respects be amended only by Act of the United Kingdom Parliament. Over the years since 1867, the constitution has been amended 14 times by the United Kingdom Parliament. On each occasion this has been at the request of the Canadians. No Act of the United Kingdom Parliament affecting Canada has been passed unless Canada has requested and consented to its
2004
enactment. Indeed, Section 4 of the Statute of Westminster of 1931 provides that no law made by the Parliament of the United Kingdom shall extend to any Dominion otherwise than at the request and with the consent of that Dominion. This reflects the agreements reached at the Imperial Conference of 1930. Although no clearly-defined procedure for amendment was laid down in the British North America Act, the practice has grown up over the years that Canadian requests for amendment are submitted by means of a formal Address to the Crown from both Canadian Houses of Parliament.
The former Canadian Prime Minister expressed publicly the desire of the Canadians that the power of amendment of the constitution should be a matter of Canadian competence and should no longer be exercisable by the United Kingdom Parliament—that is, that the constitution should be "patriated" to Canada.
In a series of Federal-Provincial conferences, the Canadians have sought to reach agreement on an amending formula which would become part of the law of Canada and transfer to the Canadian Parliament exclusive power to amend the British North America Act. So far the Provinces have failed to reach unanimous agreement with the Federal Government. But this is, of course, a matter for the Canadians themselves to resolve.
The United Kingdom Government's position is that if a request to effect such a change were to be received from the Parliament of Canada it would be in accordance with precedent for the Government to introduce in Parliament, and for Parliament to enact, appropriate legislation in compliance with the request. No such request has yet been received, and with the change of Government in Canada it seems unlikely that such a request will appear in the very near future. The new Prime Minister of Canada, Mr. Clark, has however said that he proposes to continue to work towards constitutional change, but he has emphasised that he was not working to any particular timescale.
As I understand it, the National Indian Brotherhood is anxious to play a fuller part in the consideration of constitutional revision between the Federal and Provincial authorities. This is a matter for the

2005
Canadians themselves, and is not a matter in which the United Kingdom Government can intervene, or would wish to do so. As a result of Canada's full and sovereign independence, attained if not in 1867 with the British North America Act, then as a result of the Statute of Westminster of 1931, any residual powers or duties of the United Kingdom passed to the Canadian Government. The Statute of Westminster reserves to the United Kingdom Parliament a purely technical role in relation to the British North America Act.
I must, therefore, emphasise again to the House that the United Kingdom Parliament's power over the Canadian Constitution is strictly limited. If Parliament were, in spite of constitutional precedent, to decline to act on a request from the Canadian Government, we would lay outselves open to charges of interference in Canadian domestic politics. Even to query whether there was internal support in Canada for a request to patriate the constitution would be tantamount to questioning the authority of the Canadian Parliament or Government to make it. Further, for the United Kingdom Parliament to purport to legislate otherwise than at the request and with the consent of the Canadian Government would conflict with the agreements reached with the Dominions at the Imperial Conference of 1930 and the Statute of Westminster of 1931, to which I have already referred. The Federal Government is the sole representative of Canada in international relations. We cannot be the arbiters of the correct balance of the case presented to us: this must be the sole responsibility of the Canadian Government.
My Lords, we do not underestimate the depth and sincerity of feeling in this matter—but the constitutional position is clear, even if complex. I hope your Lordships will agree that we have adopted the proper course.
6.29 p.m.
Lord GORONWY-ROBERTS: My Lords, I am sure that the noble Earl, Lord Grey, will allow me to intervene in the form of putting one or two questions for confirmation to the Minister. May I say at the outset that Her Majesty's Opposition entirely agree with the state-
2006
ment of the position that we have just heard. It is an important matter, partly because it is part of the agreement which we have, stemming largely from the 1931 agreement with the former Colonies and Dominions—self-governing and, indeed, independent countries within the Common-wealth. It also applies to the question of minority status and rights, which nowadays seems to appear in almost every country in one degree or another, or in one form or another, ourselves not excluded. Therefore, what the noble Lord has said is central to the continuing and firm policy of this country in relation to the internal administration and policy of equal and independent sovereign members of the Commonwealth, and indeed in relation to independent countries everywhere and not only in the Commonwealth.
The fact, however, that Canada, like so many Commonwealth countries, has the same monarchial Head of State as we have—a fact of gracious life that we rejoice in—occasionally raises questions of right of access, of petition. In case I did not quite hear what the noble Lord said, my first question is that although the Queen of the United Kingdom is the Queen of Canada nevertheless, first, she is bound by the advice that her Ministers in Canada proffer to her about everything which it is suggested to her she should do, and, secondly, she is represented in Canada by a Governor-General who is vice-regal in his status and his functions. If there is a question—this is the point of confirmation I wanted the noble Lord to assist me with—of access and petition, it is not here that it would lie but in Ottawa, to the vice-regal personage who, in fact, represents the Queen in Canada. I hope I have that right. I wonder whether our good friends, the National Indian Brotherhood, have quite understood that. As Canadians, if there is a right of petition, they have their very own at home.
The 1867 Act which created the confederation, among other things specifically transferred totally from the United Kingdom Government to the new Federal Government in Ottawa every vestige of responsibility over this and every other minority—indeed the majority as well—of the citizens in the new Dominion. Indeed, the word " dominion " was not invented but introduced to Canada for the first time in relation to territories of this kind because somebody quoted

2007
the Bible. I will not say it was an innovation, but perhaps a practice that latter day politicians and statesmen might seek to revive:
" and he shall have dominion from sea to sea ".
There you have it: the Pacific and the Atlantic; the Dominion of Canada; the transfer of these responsibilities entirely from this country to the new Federal Government. There it stands. They have revised it of course in 1951, 1955, and 1972. It is not for us to question or indeed discuss that.
That brings me to my final point. I think it should be said that the Canadian Government and people have given ample evidence of their deep sympathy for the Indians in Canada and of their practical concern for their welfare. They have made available to them very extensive territories indeed in the form of reservations within which the Indian communities enjoy quite special privileges not extended to other Canadian citizens. One does not want to go into this. They have also been financially generous to them by grants; and I am sure the noble Lord and I, and the rest of us, would like our Canadian brothers—the whole Canadian people is a brotherhood with us—to know that we appreciate from our side what they have done, and are doing, for our Indian friends. I think a word of commendation for a sister country in the Commonwealth for the way in which it deals with a minority within its borders is very much in order nowadays. I am grateful to the noble Lord for his statement, and I am sure that he need only nod to say that he confirms the two or three questions I have put to him.
Lord TREFGARNE: My Lords, just before I sit down, perhaps I may confirm one rather important point which the noble Lord mentioned. Certainly the 1867 Act transferred to the Government of Canada, with their sovereign I should say, all the principal effects of government in Canada, including most importantly the administration of the treaties to which the noble Earl referred. That was the British North America Act 1867.
The noble Lord referred to the position of the Governor-General in Canada, who represents the Queen in Ottawa, as he said. It is open to the Indians to approach the
2008
Governor-General there, who will no doubt act as the Queen would act, in accordance with the advice of Canadian Ministers. I think those are the two principal points. The noble Lord also described what the Canadian Government had done for the Indian community in Canada. It is not for me to comment on what the Canadian Government do for other Canadians, but I take note of what the noble Lord says.

CYPRUS POLICY
6.36 p.m.
Lord NEWALL Lord NEWALL rose to ask Her Majesty's Government whether they will outline their new policy regarding Cyprus in view of their commitments to all Cypriots as a Guarantor Power. The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper regarding the Government's new policy on Cyprus. I worded this particularly hoping that, by using the expression " new policy ", we might get some indication of a change of heart, in that there would be some action where I feel there has not been enough before. Perhaps it is only fair to your Lordships to mention that this Question is put down as a result of a visit I made to Cyprus in February and March of this year. I have given a report of my visit to my noble friends.
At this late hour I shall not weary your Lordships with a long history which is easily obtainable in other places. I just want to mention that it is a country of partition and of many refugees. I feel that Great Britain, as a Guarantor Power, should feel obliged to fulfil certain obligations which were undertaken some years ago. Among them perhaps I may mention that we agreed to prohibit partition. We also agreed to protect fundamental human rights. In the case of a breach of any of the agreements that were made, it was agreed that we should consult the Greek Government and the Turkish Government.
Anybody who has been watching Cyprus and the going on there will know that the current talks have stalled. There are many arguments and counter-arguments. There has been a virtual slanging match,

2009
which is now continuing, as it was before, in the local newspapers, one side against the other. I believe that, although the Government and my noble friend may disagree, the time is now absolutely right for the Government to fulfil their obligations and take some initiative before it is too late.
In discussions I have had with various people it seems evident that if the present situation continues there is a distinct possibility that the Turkish Cypriots could be persuaded to declare some sort of independence. I think there are enormous numbers of Turkish Cypriots in this country who are becoming increasingly worried by the present situation and by the lack of any progress. In being brief, I should like to make one or two possible recommendations that could be considered. I shall not put it more strongly than that.
I believe that the time is right for Great Britain to encourage informal talks—especially informal talks without publicity—regarding having a chairman or arbitrator for the talks so that they will not go on splitting hairs over words—words such as "Varosha", " security " and " inter-zonal ". The ground has been covered many times before and those words should not cause the breakdown of talks any more.
Secondly, I suggest that the Government should encourage the other two Guarantor Powers, Greece and Turkey, to renew the talks between the Greek Cypriots and the Turkish Cypriots which have broken down, The de facto situation is obviously not the best one and it could easily get worse; it does not help anybody. But one of the factors I noticed particularly during my visit—and I remain totally neutral—is the lack of help that the Turkish Cypriots are getting from the outside world. It could be said they are suffering a lack of human rights. They should have more assistance from the EEC, from this and many other countries. All the aid is going to the Government of Cyprus, which is the Greek Cypriot side in the South, who are not passing it on.
I am not suggesting that the Turkish Cypriots deserve a great deal, but, as citizens of Cyprus, they must not be deprived of what they are being deprived of at the moment. I should like to hope
2010
that international assistance could be encouraged to the deprived people of Cyprus, who are of course mainly Turkish Cypriots in the north. Aid is extremely difficult and I am glad to say that the Save the Children Fund has been persuaded since our visit to send quite a large amount of blankets, toys and other articles to help one of the very deprived schools in the Turkish Cypriot part.
I am certainly not asking the Government to recognise the Turkish Federated State in any way whatever. I realise that that would be impossible and I think it is not right even to think of that possibility. But if we are to consider the future and consider that some form of independence declaration could be made, the current Heads of State of the two sides—call them what you will—who are clearly antagonistic against one another, need some help in forming a proper agreement and a basis on which to continue the talks.
The island itself needs a great deal of help and I firmly believe, after talking to all degrees of people, from Ministers and Members of Parliament on both sides of the island to many other people in less fortunate positions, that the United Kingdom is looked to by nearly all of them to give some assistance. We have a position of strength and integrity, which is believed in by most Cypriots, with which to help the whole country, and surely the time is ripe, in case it gets worse, which it may do very soon, for some leadership from this country.
6.43 p.m.
Lord BROCKWAY: My Lords, I am sure the whole House will wish to thank the noble Lord, Lord Newall, for opening this discussion and, more particularly, for the speech which he has delivered. It is of the greatest importance that Members of this House should be visiting other countries with concern to try to find a solution to their problems. The noble Lord's speech indicates that, and the proposals he made should be considered by the Ministers and the whole House.
My association with Cyprus began in the years before the war when there was no division between the two communities, those who were ethnically Greek and those who were ethnically Turkish. In the heat of the day in the villages one could see the

2011
families of both communities resting together in the shade of the trees and their children playing around them. The war came and Mr. Winston Churchill, as he then was, made the promise that, because of their help, Cyprus would obtain its independence. After the war the Greek Cypriot population took that literally and we had the disastrous conflict. It was in that conflict that the division between the Turkish and Greek Cypriots began. Partly there was a quite deliberate policy in the war situation of seeking " divide and rule ", and the conflict arose largely because so many of the Greek Cypriots were demanding Enosis, unity with Greece.
Following the war there was the Zurich agreement and one hoped that would be a solution. I want to acknowledge that I think President Makarios, for whom I had great admiration, used that situation somewhat unfairly towards the Turkish population. Then we had the attempted coup, then the Turkish invasion and the occupation by the Turks, although they are only 20 per cent. of the population, of 40 per cent. of the land, and nearly one-third of the Cypriot people became refugees. We should recognise that in that situation it was not only the Greek Cypriots who suffered but large numbers of the Turkish population as well.
There have been many resolutions by the United Nations on this subject, the most recent being in November of last year, by both the General Assembly and the Security Council. It is worth mentioning what the General Assembly resolutions included. The first was the sovereignty, independence, territorial integrity and non-alignment of Cyprus; I emphasise " non-alignment " because I shall be making reference to that later. The second was the withdrawal of all foreign troops, and the third was the voluntary return of the refugees. The General Assembly authorised negotiations under its Secretary-General between the two communities.
It is important to note that the Security Council, meeting within three weeks, called on the parties in Cyprus to comply with the implementation of the United Nations resolution within a specified time frame. Discussions began between President Makarios and Mr. Denktash, representing the Turkish Cypriots, and I
2012
want to refer only to what has occurred in the most recent discussions. On 19th May there was agreement on 10 points between President Kyprianou, who followed President Makarios, and Mr. Denktash. Those 10 points included, first, respect for fundamental freedoms of all citizens and, secondly, that the discussions should cover all territorial and constitutional aspects.
Priority was given in those 10 points to a resettlement of Varosha, the suburb of Famagusta which had become a ghost town, and the solution of that problem was to be implemented before a general settlement. I do not know whether the Minister is able to give any information as to how far that agreement about Famagusta has been carried out. Next there was agreement that there should be a demilitarisation of Cyprus; and, very importantly—and I emphasise it—the 10 points included the assertion that,
"The independence, sovereignty, territorial integrity and non-alignment of the Republic should be adequately guaranteed against union, in whole or in part, with any other country and against any form of partition or secession ".
I emphasise the assertion for non-alignment and against any form of partition.
Unfortunately, disagreement has occurred in those discussions. It has occurred on the issue of whether in the future Cyprus should be divided on a bi-zonal basis or on a bi-regional basis—confederation or federation. I understand that the Turkish representatives are making what they call bi-zonal division a condition, although even in the earlier discussions with President Makarios Mr. Denktash had accepted a central federal Government. I believe that the Greek Cypriots are prepared to continue discussions even on the bi-zonal proposal. The difference between confederation and federation is marginal, and I would urge Her Majesty's Government to do everything possible to influence a continuation of the discussions on practical issues rather than the philosophic issue of confederation or federation.
Lastly, I want to turn to the question of non-alignment, which has been accepted by both the Turkish and the Greek Cypriots, and in all the United Nations resolutions, as well as in the discussions that have taken place. There has been some evidence that there is a concern by

2013
influential leaders in America, Europe, and even in this country that Cyprus should not remain unaligned, but should become an instrument of NATO. It was first proposed by General Aitchison in America in his memorandum of the 'sixties. The loss of Iran as a base for monitoring the Soviet Union, and the refusal by Turkey to allow monitoring planes to be used in its air space are adding to the pressure that Cyprus should be made a section of the NATO Alliance. General Alexander Haig and his NATO staff in Brussels are known to have turned their eyes on Cyprus in this situation as an alternative. The Daily Telegraph of 21st May stated that,
" American ' spy planes ' have been deployed in the island for over a year surveying the region ",
and British bases are still in Cyprus—
Lord TREFGARNE: I am much obliged to the noble Lord for allowing me to intervene. I wonder whether he can clarify that point about American planes. He said that they had been deployed in Cyprus—but for what purpose? I did not quite hear.
Lord BROCKWAY: I was quoting from the Daily Telegraph which, on 21st May, stated that,
" American ' spy planes ' have been deployed in the island for over a year surveying the region ".
That is a quotation from an article by the defence correspondent of the Daily Telegraph.
I submit that it will be a crime if diplomatic, economic, or aid pressure is exerted to impose on the people of Cyprus the sacrifice of their dedication regarding the alignment question, which has been repeatedly recognised by the United Nations and in the discussions between the two communities. It is not only the Greek Cypriots who insist on non-alignment: the Turkish Cypriots do, too. In the earlier discussions between Mr. Denktash and President Makarios non-alignment was accepted in their agreement, and it has been accepted in all the subsequent discussions with President Kyprianou.
The delay in a settlement of the Cypriot problem is causing terrible suffering, not merely to thousands of Greek Cypriot refugees, but also to many in the Turkish population, and one seeks the earliest
2014
possible solution of the problem. But the pressure of the unaligned countries in the world, of the great majority of the nations in the United Nations, of the progressive forces in all the countries of the West, and of world opinion will in the long run bring about a solution of the problem on the lines of the United Nations resolution. We are working the noble Lord, Lord Trefgarne, very hard these days. I am absolutely astonished by the ability of Members of the Front Benches on both sides of the House to do their homework, undoubtedly with the skilled assistance of the Civil Service. I hope that in his speech this evening the noble Lord will be able to assure us that the British Government will be on the right side in bringing about a solution of the problem.
6.57 p.m.
Lord HYLTON: My Lords, I am grateful to my noble friend Lord Newall for raising this question this evening. I hope that he will be successful in prodding the Government into being perhaps a little more active and certainly much more successful than their predecessors on the question of Cyprus. It would not be using excessive language to say that the Cyprus question has been festering for far too long. The drift—one can only call it that—of events has had the most unfortunate consequences: first, for the island itself; secondly, for the relationships, complicated as they already are, between Greece and Turkey; and thirdly, for NATO. I will not follow the noble Lord, Lord Brockway, into all the intricacies of non-alignment. I think it enough to note the fact that NATO has suffered because this question has been for so long unresolved.
I share with my noble friend Lord Newall his disillusionment about the inter-communal talks. In spite of this, one must also admit that inter-communal talks are very important because in so small an island there cannot be a satisfactory outcome unless the parties can be brought to agreement. Our hopes were raised in May when the latest round of inter-communal talks began; and one could be forgiven for hoping that the issue of Varosha could be taken first and resolved, and that this might lead on to a greater measure of success with the other outstanding issues. But within a week our

2015
hopes were totally disappointed, and I should like to ask the Government: what do they think is the next step following that unfortunate result? Do they know what is in the mind of the Secretary-General of the United Nations, who had convened the last round, and previous rounds, of inter-communal talks?
I come now to the question of the treaty of 1960. I cannot myself take any line other than a minimalist one. The treaty in itself, I think I am right in saying—I am sure I will be corrected if I am wrong—imposed no legal obligations on anybody. It simply gave the three powers a legal right, first of all, to consult among themselves and, secondly, to take whatever steps they saw lit to restore the status quo of 1960 to 1963 in the event of that being disturbed or upset. The only ray of hope that I can now see stemming from the treaty is that there should be concerted action—and here I agree with my noble friend Lord Newall—between the three Guarantor Powers to draw up a common plan of action.
I can see very great difficulties in the way of drawing up a common plan, and I can see very great difficulties in the way of putting a plan, once established, into practice. But I would ask Her Majesty's Government whether they will at least make the attempt to achieve some concerted action. This, I believe, would he of far greater worth than any number of United Nations resolutions and, indeed, perhaps, of even greater worth than the UN peace-keeping force, though one is bound to admit that it has obviously saved some lives over the course of the years.
My Lords, may I also mention the great influence which the European Economic Community can bring to bear on Cyprus? Access to the markets of the Nine is of prime importance for Cypriot vegetables, fruit and wine, and for their newer industries, such as textiles and footwear. Therefore, the EEC can exercise some leverage. My noble friend Lord Newall mentioned the question of EEC loans and technical aid. This also has an important bearing on the matter, and I agree with him entirely that we should ask for even-handed help from the EEC so that the North as well as the South receives aid from that quarter.
2016
May I now make a long-term suggestion that could possibly improve the situation? It is common knowledge that Cyprus has no university of its own. Therefore, students from that country have to go overseas for undergraduate and post-graduate studies. This is unsatisfactory in itself, and it has the further drawback that it tends to aggravate the existing divisions between the communities. Would the Government take an initiative in trying to get agreement, perhaps in the EEC, perhaps also between the existing universities of Europe and maybe also between the universities of Turkey and of the Commonwealth, in an attempt to found a university in Cyprus? If such a thing could be done, and if the language of instruction were to be English, I believe such a university could be a bridge and a centre of reconciliation. It could be a place where both Greeks and Turks would go for their studies and where students from other countries could be attracted, in such a way that friendships would be formed and some small assistance would be given to the growth of a common culture throughout the island.
I have one other short-term point to put forward, and that concerns the issue of compensation. I personally know a Turk who formerly had a market-stall in Paphos. He now finds himself in the northern sector picking and selling the fruit which belongs to Greek landowners. I know of Greeks from the Famagusta area who are growing crops on the land of a Turkish landowner near Limassol. These are just instances of the problems; and one has to add those of the British residents and former residents who lost their houses and property in 1974. None of these categories of people has so far had any compensation. What I think all are entitled to is either, if that is possible, restitution and free access to their property, or, failing that, compensation. Here I would ask the Government whether they would try to initiate an independent international compensation assessment body which could begin to assess and value these very considerable property losses. If that could be started, then one would need as well, I realise, a mechanism for collecting compensation monies and paying them out again; but, if a start could be made, I think it would take a lot of the animosity out of the situation.

2017
The last point I wish to make is perhaps more fundamental than anything I have touched on so far, and it is this. A major and very fundamental change of heart is, I believe, needed among both Greek Cypriots and Turkish Cypriots. I think the noble Lord, Lord Goronwy-Roberts, referred in a previous debate to " fundamental nationalistic animosities ". That is what we are up against. There is a need for real conversion of mind and heart, for a turning round and an abandonment of the old ways, and for a firm resolve to live in unison and harmony. This is something which we can all both work for and pray for. It is desperately needed.
7.8 p.m.
Lord SPENS: My Lords, I thank the noble Lord, Lord Newall, for asking this Question. I accompanied him to Turkish Cyprus in February and March, and we spent the best part of a week there together. We saw as much as we could, I think, of the whole of the Turkish-Cypriot economy. I did not go into the Greek sector because to do that at the moment one has to fly into the Greek sector first and then come across to the Turkish sector, in order to comply with the rules and regulations of the Government of Cyprus. I was not prepared to do that, so I flew into Ercan, the airport on the Turkish side, and therefore I had to stay on the Turkish side.
My Lords, it is very sad that the inter-communal talks have broken down, and they seem to have broken down without having regard to one of the points that was agreed between Kyprianou and Denktash a month earlier. I think it was Point 9, which said:
"The inter-communal talks will be carried out in a continuing and sustained manner, avoiding any delay ".
That has not happened. I believe the reason why they have broken down is a disagreement on Point 2 of the ten points, which was:
"The basis for the talks will be the Makarios-Denktash guidelines of the 12th February, 1977 ".
In the first of those guidelines, there is a disagreement about the wording. Kyprianou may not know the exact wording for he was not present at that meeting, but Denktash was present and so was the Secretary-General of UNO. They ought
2018
to be able between them to produce the right wording for that particular point. I see that when I spoke about this in your Lordships' House on an Unstarred Question on 8th March last year, I made as the first point a quotation from the daily news sheet of the Turkish Federated State which ran:
"We are seeking an independent, nonaligned bi-communal federal republic ".
I understand that Denktash is trying to turn that into " bi-zonal " and that Kyprianou is disagreeing. I do not know the rights or wrongs of that at all; but that is one of the blocking points. The other point of the 10 that was agreed to in May was that Varosha should be given priority; but I understand in the mind of Denktash that priority cannot be given until this first point has been settled. I believe that as soon as this first point of " bi-zonal " or " bi-communal " is settled, priority will be given to the handing back of Varosha. That is something for which we must wait and see.
I received a letter a short time ago from the Minister of State for Defence, the noble Lord, Lord Strathcona, which answered a request that I made in my speech on the Address that Her Majesty's Government would confirm that they still accept a special responsibility as a guarantor under the 1960 Treaty. The letter stated:
"I can confirm that the British Government, as a signatory of the 1960 Treaties, fully accept a special responsibility towards Cyprus ".
The noble Lord, Lord Hylton, was not quite certain what that involved. The guarantee given by Her Majesty's Government under the 1960 Treaties was specifically stated in Article II of the Treaty of Guarantee, which reads as follows:
" Greece, Turkey and the United Kingdom, taking note of the undertakings of the Republic of Cyprus set out in Article I of the present Treaty, recognise and guarantee the independence, territorial integrity and security of the Republic of Cyprus and also the state of affairs established by the basic articles of its constitution. ".
The noble Lord, Lord Hylton, was doubtful whether there was anything legal in that. I believe that there is; and I believe that Her Majesty's Governments—and I say " Governments "—have failed significantly to carry out the second part of that guarantee, which was to preserve the basic rights of both communities under the 1960 Constitution.
Lord HYLTON: My Lords, is not the problem how to put back the clock 15 or 16 years?
Lord SPENS: My Lords, one cannot put the clock back, but unfortunately the people in Cyprus on both sides have fairly long memories. They are still, I believe, living very much in the past. Somehow, I think we must bring them forward into the present.
On 15th June the Guardian published an interesting article headed:
" Handouts widen gap between rich and poor in Cyprus ".
I do not know whether your Lordships saw that article. I should like to quote from it:
" The tiny and relatively wealthy society of Greek Cyprus must rank as one of the most heavily subsidised nations in the world. With only half a million people, it receives about £22 million a year in aid from Greece, the USA, the United Nations, Britain, Germany and other countries. In a typical year it gets another £5 million or so in soft loans. Loans and aid together approach a fifth of the annual Government revenue ".
It goes on to say that the Greek Cypriot economy also benefits from the presence of United Nations forces and the two British bases. It estimates that the per capita income figure for Greek Cyprus is £13,500 as compared with the figure of only £425 per person in the Turkish sector. Those two figures are so different in their comparison that they really set out the difference between the two zones.
While there is this huge difference in the prosperity of the two areas, and while Greek Cyprus is fully recognised internationally but Turkish Cyprus is not recognised at all, is there any incentive for the Greek Cypriots to come to an agreement with the Turkish Cypriots which would involve a degree of recognition of Turkish Cyprus and probably a variation in that huge difference of economic prosperity? I think it is very good that our Government accept their special responsibility under the 1960 Treaties. I hope that we shall now see them exercise that responsibility because I do not believe that any previous British Government have really done so.
There is an early opportunity, I believe, for the Government to take action. I
2020
presume that Mr. Kyprianou will be attending the Commonwealth Prime Ministers' Conference; and that, surely, must give our Foreign Secretary a chance to talk to him quietly and to urge him to get back to the conference table. I believe that he should do that and that we should see a resumption of the talks as quickly as possible.
7.19 p.m.
Lord GORONWY-ROBERTS: My Lords, if I may intervene again on what is again a matter of the satisfying of the rights and aspirations of minorities within a single State, I hope that this debate will not in any way convey to the Cypriots, of whatever ethnic and linguistic nature, any indication that we regard this difficult problem from the point of view of being either pro-Turk or pro-Greek. We are all pro-Cypriot. Indeed as my noble friend Lord Brockway, who has this remarkable experience of international affairs, reminded us, a relatively short time ago there was not this strained dichotomy in this beautiful island with a population amounting to hardly more than 650,000. They live together and enjoy life together, the 78 per cent. who are Greek, the 18 per cent. or so who are Turkish and the other 4 per cent. who are Armenian, British and of other nationalities.
We live in an age of exaggerated nationalisms. As the world grows technically closer together it seems that it is determined to become psychologically more separate, more particularist. Our duty in Cyprus is clear. With others—not alone—we signed the two agreements of 1960; we set our hand to those documents. It is easy to ignore or to break an agreement unilaterally; it is impossible to guarantee it unilaterally. When I hear complaints of the behaviour of this country in regard to commitments which it entered into in good faith with others, I hope that we realise that not even this country can single-handed and unilaterally put into effect guarantees, commitments, which were clearly multilateral in intention and in conception.
I wish the Government every success. The Question refers to a new policy towards Cyprus and if they have a new approach to this vexed question I wish them every

2021
success. I am sure we all feel that Cyprus must of course be maintained as an independent State with territorial integrity and make its choice as to its continued partnership in the Commonwealth or indeed whatever alignment it feels is best for it. It is very much a member of the Commonwealth and I would think that it is very much part of the Western World. One talks to Cypriots of all kinds and this is the way that they feel; this is the way they react. Therefore, whatever alignments they may or may not adopt, it is entirely for them to decide.
Regarding the solution, it is nothing new to say that this can only come about by agreement among Cypriots of all races, languages and religious through inter-communal talks, which have been stalled of course since April 1977. I join with the noble Lord, Lord Hylton, regarding the 10 points which brought this matter very close to what we thought might be settlement. I believe that this was a very strong point made by the noble Lord, Lord Brockway, too. That has stalled and flagged as so many initiatives have done in Cyprus; but, nevertheless, one felt very hopeful when the 10 points were agreed between the two sections of the population and their representatives. I think that the noble Lord, Lord Hylton, and my noble friend have a point here: that it could be that the revival of these 10 points, possibly with adjustment in the light of what has happened since, provides a basis for a new departure. The suggestion was also made that the two communities might be brought closer together through institutional co-operation. The suggestion of a university was made; this is an attractive suggestion. No doubt the Government will be looking at this with other Governments concerned and with the people of Cyprus. None of this turns entirely on either the obligation or the capacity of the United Kingdom.
Finally, there is a point that is perhaps peculiar to the United Kingdom. When I was responsible for answering on the other side of the House, I was asked more than once about the progress of the talks about compensation, in our case to British nationals, for loss of property and the sequestration of property, a point which the noble Lord raised this evening. We would welcome any information that the Minister can give us about that point tonight.
7.25 p.m.
Lord TREFGARNE: My Lords, Lord Newall's interest in this matter is well known and much to be admired. His recent visit to Cyprus clearly gave him an opportunity to gain first-hand knowledge on this important subject. I am very pleased to have a chance of putting the Government's view before your Lordships tonight.
The Question refers, first, to Her Majesty's Government's new policy regarding Cyprus. It would be misleading to suggest that there were going to be any great changes in policy. This is one of the areas of foreign policy where there will be broad continuity. The Government continue to work for a just and lasting settlement of the Cyprus problem. We acknowledge that Britain has a special position in relation to that problem. And we believe it important to maintain a position of even-handed friendship even when that means attracting criticism from both sides. We take the view that the best way to achieve a lasting political settlement in Cyprus is by means of direct negotiations between the two communities under the auspices of the Secretary-General of the United Nations. We do not believe that a settlement can be imposed from outside, or indeed that the responsibility should be removed from those who properly bear it: the parties themselves.
For this reason, we very much welcomed the agreement reached on 19th May between President Kyprianou and Mr. Denktash, providing for the resumption of the intercommunal negotiations under Dr. Waldheim's auspices on 15th June. Those negotiations are now in suspense after four meetings; the United Nations are attempting to find a way round the first set of problems that have arisen. These relate in the first place to the concepts of bi-zonality and security and I am hopeful that, with United Nations assistance, an accommodation will be reached and the negotiating process actively resumed. Both parties will, I hope, have very much in mind their agreement on 19th May to carry out the inter-communal talks in a continuing and sustained manner, avoiding any delay.
I understand—and indeed sympathise with—the view that Britain, in view of its

2023
status as a Guarantor Power and signatory to the 1960 agreements, should be doing more to help achieve a solution to the Cyprus problem. My noble friend has referred to the Government's commitments. These derive from the treaties and also from Britain's special historical, cultural and commercial links with Cyprus. The sustained interest of British Governments of both parties in the Cyprus problem since trouble erupted in 1963 bears witness to British concern. There is no diminution of that interest and sympathy. The question is however whether some new and well-intentioned initiative by Britain, or indeed by any other outside Power, would really be helpful in present circumstances. One lesson which should have been learned from the sorry history of Cyprus over the past 16 years is that the timing of any outside initiative is almost as important as its substance.
At present the parties are engaged—albeit fitfully—in a negotiating process under United Nations auspices, We have made it clear to them and to Dr. Waldheim that we are ready to help in any way they would find useful. Our European partners have spoken likewise. We are also in close touch with the other Guarantor Powers, Greece and Turkey. We do of course ask them to use their influence with the parties to persuade them to adopt a constructive attitude in the negotiations.
I have little doubt that the best way to fulfil our responsibilities at present is by giving encouragement and support in these ways to United Nations efforts to maintain a continuous and productive negotiating process. In addition, British influence with the parties themselves, in our regular diplomatic contacts with them, is of course used to press the view that it is in the interests of both the communities—indeed, in the interests of Cyprus as a whole—to show statesmanship and a spirit of compromise in negotiation. There is no doubt that, if a solution is to be reached, great flexibility will be required. Hard compromises will have to be accepted by both sides. Mutual confidence will have to be restored. What has so far been lacking is the will actively to seek the sort of solution which would make that possible.
The Question refers to the Government's commitments to all Cypriots. We fully
2024
acknowledge that our responsibilities are to members of all communities in Cyprus. At the same time, the formal position, in accordance with our obligations under the 1960 Treaties, is that Britain recognises only one Government in Cyprus—that of the Republic of Cyprus under President Kyprianou. There can be no question, in the present situation in Cyprus, of recognition of any other Administration.
That is not to say, however, that we do not recognise the rights and interests of the Turkish Cypriot community. It is a firm requirement of our technical co-operation programme in Cyprus, for instance, that it be used to benefit the island as a whole and, as a result, there is a flourishing programme of officially sponsored English language teaching and other educational assistance in the northern part of the island. Similar stipulations are made over other forms of bilateral assistance and aid channelled through multilateral organisations, such as our contributions to the office of the United Nations High Commission for Refugees for relief work in Cyprus.
Furthermore, it is not Government policy to discourage or prevent commercial or other contacts between British companies and organisations and the Turkish Cypriot community. The British High Commission in Nicosia takes great pains to keep in touch with opinion amongst the Turkish Cypriot community. The diplomatic task in the present situation is not entirely straightforward. I hope that noble Lords will not assume that something apparently desirable is neglected merely because its accomplishment is not advertised.
Perhaps I can now turn to some of the points that have been made in the debate. First, the noble Lord, Lord Brockway, asked about the resettlement of Varosha. I am advised that no settlement has yet been reached on this matter, but no doubt it will be high on the list when these talks resume, as we hope and believe they will, before too long. The noble Lord also asked me about " spy " flights. We are aware of periodic Press reports to this effect, but I am advised that there is no truth in the report that flights of the type mentioned are conducted from Cyprus.

2025
My noble friend Lord Hylton mentioned a number of points and I shall try to deal with as many of them as I can. He asked, first, what would be the next step after the failure of the inter-communal talks. My Lords, we do not accept that there has been failure: we think it altogether premature to talk of the failure of the talks. The United Nations are working hard to keep the negotiating process going, and they certainly have our full support. My noble friend also asked whether Her Majesty's Government would attempt to co-ordinate the plans between Britain, Turkey and Greece, the Guarantor Powers. We do not agree, as I said before, that any attempt to impose a settlement from our side can be a successful substitute for a settlement negotiated freely between the two communities. We would hope, however, that the other Guarantor Powers would use their influence with the parties to encourage a constructive attitude in these negotiations.
I was asked by both my noble friends Lord Hylton and Lord Newall about the position of the EEC in these matters. We have kept in close touch with our partners in the Nine who, like ourselves, are doing all they can to support the United Nations' efforts. The EEC Presidency maintains a regular contact with Dr. Waldheim and the parties, to ensure that no opportunity for the EEC to use its influence to help is missed. We certainly wish to ensure that the benefits of association with the EEC are enjoyed by members of both the communities in Cyprus. The EEC Commission are in touch with representatives of both communities to this end.
My noble friend Lord Hylton and the noble Lord, Lord Goronwy-Roberts, referred to the possibility of a university being established. We would be prepared to consider the possibility of British assistance for the establishment of a university in Cyprus and I would certainly hope that such a university would benefit both Cypriot communities. However, the question of the language of instruction to which my noble friend referred would have to be the subject of agreement with the Cypriots themselves.
My noble friend Lord Hylton also mentioned the question of compensation. The British Government's first concern in
2026
this matter must be for the interests of British property owners. We are in communication with the authorities in Cyprus who are concerned with this problem, and we hope that progress can soon be made with both the evaluation and payment of claims by British nationals. I have no evidence to suggest that the Cypriots would be willing to accept the sort of international compensation body suggested by my noble friend. I am sorry to say that I cannot report any significant progress tonight and I certainly recall that the noble Lord, Lord Goronwy-Roberts, was asked about this same subject during the life of the previous Administration.
May I now touch on just one point made by the noble Lord, Lord Spens. He asked me about aid and gave some figures about the disparity of aid, as he saw it, which was paid to the two communities. A good deal of aid has gone to both sides since 1974 particularly on refugee relief. The Turkish Cypriot side is by no means neglected, especially over English language teaching. Of course they need more, but there are strict limits to what Britain can reasonably be expected to do, and I must tell the noble Lord that the prospect for expanding aid is not good: rather the reverse.
Lord DRUMALBYN: My Lords, before my noble friend leaves that point, he has not really said anything about trading possibilities, or at least has made only one slight reference to it, and of course on this must depend to a large extent the comparative wealth of the two communities. I know this is a very delicate point, and my noble friend has indicated that steps are being taken, as I think he said, to put commercial interests in touch with the commercial interests in the North of the island. How far is that being successful in stimulating trade between this country and the northern part of the island and indeed between the northern part of the island and other parts of the European Community?
Lord TREFGARNE: My Lords, as I said earlier in my speech, there is no question at this stage of recognising the Government of the northern part of the island as an independent entity, and while that situation continues there will be difficulties still in the way of promoting trade. However, this is certainly a matter we are keeping very much in mind.

2027
It remains for me to stress once again the Government's firm commitment to the achievement of a just and lasting peace in Cyprus, to put an end to the human suffering and uncertainty with which the people of that troubled island have had to live for so long. This pursuit of such a settlement is in the interests not only of the people of both communities in Cyprus, but of the security and stability of the eastern Mediterranean; it is therefore an important British interest and an important Western interest. We shall therefore continue, in the way I have described, to lend all possible support to the efforts of the United Nations and of the parties, on whom the main responsibility must continue to fall, to bring the negotiations to a successful conclusion.
The Government are always glad to have an opportunity to explain their policies and tonight is no exception. I therefore welcome my noble friend's initiative in raising this matter tonight.