Lords Sitting of 6 March 1979

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

LORD PERRY OF WALTON
Sir Walter Laing Macdonald Perry, Knight, OBE, having been created Baron Perry of Walton, of Walton in the County of Buckinghamshire, for life—Was, in his robes, introduced between the Lord Boyle of Handsworth and the Baroness Lee of Asheridge.

VEHICLE EXCISE DUTY: ABOLITION
2.47 p.m.
Lord SANDYS: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what savings in manpower and bureaucracy are expected at the Swansea Vehicle Licensing Centre to arise from
2
the replacement of vehicle excise duty by increased petrol tax.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Stedman): My Lords, the abolition of vehicle excise duty on petrol driven vehicles will save over 2,000 Civil Service posts. About 800 of these will be at the Driver and Vehicle Licensing Centre. The financial saving will be some £20 million annually.
Lord SANDYS: My Lords, I thank the noble Baroness for that reply. Can the Government tell us whether they intend proceeding with this proposal?
Baroness STEDMAN: My Lords, consultations are going on with all the relevant bodies at the moment. When we have finished our consultations, then the necessary enactment will be put into force.
The Earl of LAUDERDALE: My Lords, can the noble Baroness suggest which relevant bodies are being consulted? Do they include the motoring associations?
Baroness STEDMAN: My Lords, we are consulting the motorists; the trades unions representing the staff concerned; the Post Office, as they are involved because they may act as agents in the issuing of the licences; and we are consulting all the people who might be

3
affected, before we come to any firm decision on the date of implementation.
The Earl of LAUDERDALE: My Lords, can the noble Baroness say whether one of the purposes of this proposition is to reduce squandermania in the matter of petrol, seeing that last year's motorists' rate of consumption was 1 million tons or nearly 6 per cent. more than in the previous year?
Baroness STEDMAN: My Lords, the question of how much petrol people use when it gets to the new price will be for the people concerned. Whether it will lead to a reduced use of petrol because the price will be higher, or whether motorists will continue to use as much, is a matter for the individuals and not for the Government.
Lord LEATHERLAND: My Lords, does my noble friend agree that the increased use of petrol last year was only reflecting the increased prosperity of the nation under Labour rule?
Baroness STEDMAN: My Lords, I do not think I need to answer that one.
Baroness EMMET of AMBERLEY: My Lords, as motor-cars will still have to be registered, and I imagine therefore that the log book will have to go to Swansea, may I ask where the economy in manpower is coming from?
Baroness STEDMAN: My Lords, there will be 800 jobs fewer at Swansea. There will still have to be some form of registration system because we shall still need to know which vehicles remain in use, what is the insurance position of the vehicles, information regarding their MOT tests, whether any criminal records are attached to them, and so on. There will still have to be a form of registration, but at this point of time we anticipate that the savings overall in the Swansea staff will number 800.
Lord ALLERTON: My Lords, may I ask the noble Baroness whether, in the event of this legislation going through, it would cut out the work now done by the local councils?
Baroness STEDMAN: My Lords, I regret I did not hear the last part of the noble Lord's question.
Lord ALLERTON: My Lords, would it cut out the work done by the local councils in connection with licences?
Baroness STEDMAN: My Lords, the licensing was taken away from the county councils after the reorganisation. In many cases it is now done by local registration offices, and there will be some 1,200 fewer people employed in the local offices, apart from the 800 fewer at Swansea.

DENIED BOARDING COMPENSATION SCHEME
2.51 p.m.
Baroness BURTON of COVENTRY: 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 make a Statement upon the decision reached by the Association of European Airlines on the introduction of a common denied boarding compensation scheme throughout Europe and whether this scheme, if agreed and adopted, would cover inward and outward flights from the countries concerned.
Lord JACQUES: My Lords, I am advised that nearly all members of the Association of European Airlines voted to accept the proposed denied boarding compensation scheme. The scheme is intended to apply to all scheduled flights between countries whose airlines are members of the Association and whose Governments approve the scheme; and on outward flights to other countries.
Baroness BURTON of COVENTRY: My Lords, after listening to that catalogue of pleasant news, may I ask my noble friend whether he is aware that the necessary applications have been filed with the Governments concerned and that all the airlines wish to start implementation on 1st April? Can he therefore say when the British Government will be sending a reply?
Lord JACQUES: My Lords, recommendations arising from the scheme are being made to a meeting of the European Directors-General of Civil Aviation on 20th and 21st March; I think action by any Government is likely to be taken after that meeting. So far as this Government are concerned, they are very anxious to proceed with the European scheme on 1st April, provided the balance of advantage is in favour of the consumer as compared with the present United Kingdom scheme.
Baroness BURTON of COVENTRY: My Lords, as there is no doubt about the latter part of the question, may I ask my noble friend whether he will ask his right honourable friend to ensure that action is taken on behalf of this Government before 1st April so that the scheme can be implemented?
Lord JACQUES: We are the least affected, my Lords; we already have a scheme and the question is whether our scheme is better than the proposed scheme. That is the only consideration that is likely to arise so far as this Government are concerned.
Lord WYNNE-JONES: My Lords, does my noble friend mean there is a choice between the least common denied boarding compensation or the highest common denied boarding compensation?
Lord JACQUES: First of all, my Lords, the European scheme is based on the United Kingdom scheme. The differences are relatively small and they are not in the amount of compensation, to the best of my knowledge; there are other more technical points.
Baroness BURTON of COVENTRY: My Lords, cannot my noble friend say something good about the airlines in Europe having agreed that this compensation should apply to outward and inward flights of all the airlines concerned, something for which we have been battling for over two years?
Lord JACQUES: Certainly, my Lords, this is something for which this Government have been battling for some years. It was on our initiative that we have the possibility of a European scheme; we
6
should have preferred a worldwide scheme.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, does not some of the credit belong to the noble Baroness, Lady Burton of Coventry?
Lord JACQUES: My Lords, I think that if one goes back a little further one finds that perhaps it all belongs to her.

NHS: ROYAL COMMISSION REPORT
2.54 p.m.
Lord SEGAL: 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 the work of the Royal Commission on the National Health Service is progressing, and when its report is likely to be issued.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of HEALTH and SOCIAL SECURITY (Lord Wells-Pestell): My Lords, I understand that the Royal Commission on the National Health Service is making good progress with its work and expects its report to be ready within the next few months.
Lord SEGAL: My Lords, I thank my noble friend for that not very illuminating reply. In view of the enormous amount of ground that has had to be covered by the Royal Commission since it was first appointed over three years ago, would it be possible to consider issuing an interim report dealing at least with some of the more urgent problems facing the National Health Service, such as the situation in our hospitals?
Lord WELLS-PESTELL: My Lords, bearing in mind that the Commission expects to have its report ready in the next few months, it would seem that in the circumstances we should wait for the full report rather than attempt to do something meanwhile by way of an interim report or a small report on any particular aspect.

THE THAMES FLOOD BARRIER
2.56 p.m.
Lord BRUCE of DONINGTON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they propose to take to expedite the completion of the Woolwich flood barrier.
Lord STRABOLGI: My Lords, the Government have recently given their support to measures designed specifically to bring forward effective completion of this important project to December 1982. They have also, jointly with the Greater London Council, appointed an advisory team to consider how progress can be further improved.
Lord BRUCE of DONINGTON: My Lords, while thanking my noble friend for that reply, may I ask whether he is aware that, although the final legal responsibility for the scheme lies with the GLC, the ultimate responsibility for the safety of the capital city undoubtedly lies with Her Majesty's Government? Is he aware that it needs only a series of freak weather conditions in the North Sea combined with tides at certain times of the year to produce flooding conditions in London? Is he aware, for example, that a rise in tide of some nine inches over the existing banks would cascade 30,000 billion cubic feet of water on to London and would possibly cause £2,500 million worth of damage, with a possible loss of life? With those circumstances in mind, will he ask his right honourable friend whether the Government will take complete responsibility for the speeding up of this whole scheme?
Lord STRABOLGI: My Lords, the improvements to flood defences on the Thames carried out in 1971–72 significantly reduced the flood risk in Central London, but I agree with much of what my noble friend has said and the long-term solution lies in the completion of the Thames barrier and associated defences.
Viscount ST. DAVIDS: My Lords, is there any way it is possible to over-emphasise the extreme importance of this
8
flood barrier, without which, I am afraid, we shall all of us here be a washout instead of just Her Majesty's Government?
Lord STRABOLGI: My Lords, I do not think it is possible to over-emphasise the importance of this barrier, and, in this connection, but not in anything else, I agree with the noble Viscount. My right honourable friend Mr. Silkin, whose own constituency of Deptford is in a flood danger area, has visited the site and he has had frequent consultations with the GLC, and the advisory team, which he has appointed and to which I referred in my original Answer, is starting work this week. The team and its terms of reference have been agreed with the contractor and the unions.

CAPITAL GAINS TAX BILL [H.L.]
2.59 p.m.
Read 3a, and passed, and sent to the Commons.

PROSECUTION OF OFFENCES BILL [H.L.]
3 p.m.
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I beg to move that this Bill be now read a second time. This Bill consolidates, without amendments, provisions about the Director of Public Prosecutions and about consents to the institution of criminal proceedings in England and Wales. It also repeals certain obsolete enactments relating to prosecutions by the Director. The provisions about the Director which are consolidated or repealed are at present contained in the Prosecution of Offences Act 1879, the Prosecution of Offences Act 1884, and the Prosecution of Offences Act 1908. The provisions about consents to the institution of criminal proceedings are at present contained in Section 34 of the Criminal Justice Act 1925 and Section 12 of the Criminal Jurisdiction Act 1975. The latter provision extends to Scotland and Northern Ireland, but is consolidated by the Bill only for England and Wales. If the Bill is read a second time, it will be referred to the Joint Committee on Consolidation Bills in the usual way. My Lords, I beg to move.
Moved, That the Bill be read 2a.—(The Lord Chancellor.)
On Question, Bill read 2a and referred to the Joint Committee on Consolidation Bills.

COUNTRYSIDE (AMENDMENT) (SCOTLAND) BILL [H.L.]
Lord HUGHES: My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Countryside (Amendment) (Scotland) Bill, has consented to place Her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Read 3a, an Amendment (privilege) made; Bill passed, and sent to the Commons.

PUBLIC LENDING RIGHT BILL
3.3 p.m.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Lord Donaldson of Kingsbridge): My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill he now read 3a.—(Lord Donaldson of Kingsbridge.)
Viscount ECCLES: My Lords, I had expected that my noble friend Lord Amory was to say a few words about Clause 4 of the Bill which affects the local authorities. At the Committee stage I moved to delete the part of the clause which provides for penalties. The noble Lord, Lord Donaldson of Kingsbridge, made a reply which interested me very much, and he has kindly since sent me a full explanation of the legal position. I am convinced by the Minister's arguments, and I hope that the local authorities will now be reassured.
Some critical remarks which I made on Second Reading led to a very interesting correspondence which has made me even more doubtful as to whether we should agree to the Third Reading of the Bill. I received no letter in favour of the scheme proposed in the Bill. One letter was refreshingly blunt. I had deprecated the
10
fact that a lorry driver can in three months earn as much money as many well-known authors can earn in a year or more. A lorry driver took me up on this. He wrote to say that there was nothing unfair in the relative rates of reward. He said that his job was dirty and exhausting, and he was in charge of a lethal weapon. What chance had he of ever hearing his work praised by a friend—he underlined the word "friend"—on the BBC? Authors, he said, had quiet, clean, safe jobs, and, except for the most famous, he did not see why they should be paid any more than he was himself. There is a point there. I do not happen to agree with it, but it shows that subsidising culture is not universally popular and that any scheme which we have before us ought to be effective and worthwhile, and the cost ought to be reasonable. I am sorry that it is not so in the Bill.
The other letters were from authors who rejected the principle of the Bill; that is to say, a borrowing-based scheme. They wanted either tax reliefs on their royalties or a purchase-based scheme. The merits of those two alternatives we can leave for discussion when the White Paper is published. But I wonder how typical are these objections to the Bill as it stands. The concerned public, if asked, does not always support a bad Bill thrust upon it by a Government in political trouble. What Cabinet Ministers who sit for Welsh constituencies thought was good for Wales, the Welsh people rejected out of hand. In the campaign for the public lending right is it not likely that the Writers' Action Group played the part of the Welsh Nationalists? If we could ask 100,000 authors what they thought about the Bill, which does them so little good and which costs so much, I believe that a large majority would tell us to devise something better; and this we could do if we wished.
In a few minutes the Bill will become law because the two Front Benches are agreed to let it through. This consensus depresses me, but I console myself with the fact that better times are coming. After the Election common sense and a real regard for public expenditure will once more be in fashion.
3.7 p.m.
Viscount AMORY: My Lords, before the Bill receives its Third Reading there

11
is one question that I should like to ask the noble Lord, Lord Donaldson of Kingsbridge. At an earlier stage in our debates some of us raised the question regarding reference books which are not lent but are used, and we said that we thought that in fairness the authors of the reference books ought to be covered. The noble Lord, Lord Donaldson, said that while that would not be possible to start with, he held out hope, I think, that perhaps later a way might be found to do it. Afterwards I raised the question with him. I said that it looked to me as if under the Bill the limit would apply to books which were lent and therefore it would not be possible to cover reference books which are not lent. The noble Lord was kind enough to write to me about this and to say that that was the position, and that if reference books were to be covered later an amendment to the Act, or a new Act, would be required. I thought it might be worthwhile asking the noble Lord whether he would confirm that, so that it can be on the record.
3.9 p.m.
Lord WILLIS: My Lords, I do not want to drive with the noble Viscount, Lord Eccles, along with the lorry drivers. I, too, think that there is a point here. I do not see why lorry drivers should not be paid as much as authors; equally, I do not see why authors should not be paid as much as lorry drivers, or even managing directors. I certainly think it unfair that the vast majority should be paid less. I am not surprised that the noble Viscount should have received one or two—or perhaps several—letters of opposition to the present scheme, bearing in mind that he opposed it in his last speech.
I have received several letters, too—all favouring the scheme. Over six or seven years of actively campaigning for the Bill I have received hundreds of letters of support, and not one in opposition. Moreover, I consider that I am in a position to say that I mix with more authors than does almost anyone else in this House. I am president of the Writers' Guild of Great Britain, and therefore I declare an interest, and I am an active member of the Writers' Action Group, and I can assure the House and the noble Viscount that if one was to take a poll of
12
authors in this country, as he suggested, one would find that the overwhelming majority of them would be in favour of public lending right and of this particular scheme. It would be nothing like what happened in the devolution votes last week.
3.10 p.m.
Lord SNOW: My Lords, may I support my noble friend Lord Willis for just a few minutes. Surely we have had enough of this. These various schemes have been debated, to my certain knowledge, for the last 15 years. None of them is entirely satisfactory. The purchase scheme has elements of gross unfairness—much more than anything we have managed to concoct in this Bill. I myself have heard no single writer gravely disapproving of the present scheme: it is the best of a bad lot. When I hear that it is seriously thought that tax exemption would be tolerable to our present Chancellor or to any other Chancellor I can imagine, then I think we are going into elements of sheer fantasy. Only two days ago I was talking to an accountant who manages a great many literary estates in this country. We were totting up the rough cost of tax exemption in the case of royalties to authors in this country. The minimum would be £50 million per year: the maximum probably something like double that. The cost of this scheme —far too low, in my opinion—is £2 million. Does anyone think that that makes it even worth discussion across the Floor of this House?
Lord DONALDSON of KINGS-BRIDGE: My Lords, perhaps I may begin by telling the noble Viscount, Lord Amory, that he is correct in his assumption. I expressed the view, which I express again, that, as this scheme develops, there should be—and I hope there will be—arrangements made to consider bringing in reference books, but it is very difficult. The problem is entirely different from anything which is in the Bill. So the noble Viscount is right in saying that this could not be done under the Bill. But this is no reason why, in due course. it should not be done.
May I next say to the noble Viscount, Lord Eccles, that he is quite right in saying that subsidising culture is not altogether popular. I do not know

13
what that has got to do with it, because we in this House—my Government and his Government—have always stood for the fact that, popular or not, we were going to subsidise culture; and I am very proud to get up and say this here without the slightest question of anybody in my Government differing from me, and I think it very unlikely that anybody on the Front Bench opposite would differ on this point. We have one major and very important new element, which is that I see from the newspapers that the Chief Whip of the Opposition has now joined the writers' league, and we can therefore suppose that he is going to help us get this Bill through.
My Lords, it has been a long and difficult time. The Bill is not satisfactory chiefly because it does not involve enough money, in my opinion. I do not think there is anything very much wrong with it except that, but that is not a thing we can put right today. I am grateful for the support of my noble friends on both sides of me; and I hope your Lordships will now agree that this Bill should be read a third time.
On Question, Bill read 3a.
3.12 p.m.
Lord DONALDSON of KINGS-BRIDGE: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Donaldson of Kingsbridge.)
Lord WILLIS: My Lords, I hope your Lordships will not mind if I intervene very briefly at what I regard as a rather exciting moment. It is the custom in my profession of writing to pay a great deal of attention to what we call the credits. This campaign has been waged for 30 years, and I think I should like to place on record some credits for the people who have helped public lending right to come into law. I should like to thank my right honourable friend the Prime Minister, who has always shown a very great personal interest in this problem. I should also like to thank my right honourable friend Michael Foot, who found the time and the energy, among his other duties, to push through public lending right. Then, among a host of other Members of Parliament, I should like to thank three in particular: Andrew
14
Faulds, Jo Richardson and the right honourable Hugh Jenkins, coupled, as they say, with the name of Norman St. John-Stevas, who has always helped us in this particular cause. I must also thank, of course, the present Minister for the Arts, my noble friend Lord Donaldson, for the amount of help he has given us over the years; coupled with the legions of foot soldiers in the Writers' Action Group and the Writers' Guild, who have done so much.
My Lords, as I have said, this is the culmination of 30 years of work by the authors, starting with John Brophy, who asked for the author's penny, and going on to A. P. Herbert, who helped in the campaign. This day, as I found when I looked it up in my diary, has no particular name; it is not St. Crispin's Day, or anything like that. But henceforth, my Lords, I can assure your Lordships that in the writers' calendar it will be known as "Bruffy Day". That is a combination of the names of Bridget Brophy and Maureen Duffy, the two people who have contributed most to the writers' cause and who have carried our banner. Nothing ever deterred them, nothing put them off. They made friends and enemies; but what they have achieved in justice for writers will long be remembered. I turn finally, my Lords, to my own feelings, and they can be expressed only in Shakespeare's words:
"O wonderful, wonderful and most wonderful wonderful!
And yet again wonderful, and after that, out of all whooping!"
Lord DONALDSON of KINGS-BRIDGE: My Lords, I cannot but be grateful for that tribute to all of us who have worked to get this through. May I, in a few very brief words, say this: I know that many of the librarians—not all, incidentally, but many of them—have been unhappy about this Bill. I have discussed it at length with them; I have tried to meet them in various ways; and they have always assured me that they would oppose the Bill until it was law, and when it was law they would do their best to operate it properly. This is what we expect in this country, and what I am absolutely certain we shall get from them.
I should like also to say that this is a Bill about authors, not about librarians; and, in so far as there are any sanctions

15
against abusing the provisions of the Bill, they are directed at authors and not at librarians. My Lords, I think enough has been said on this Bill, and I hope the House will now pass it.
On Question, Bill passed.

SOCIAL SECURITY BILL
3.18 p.m.
Report received.
Clause 4 [Amendment of provisions relating to earnings after retirement age]:
Lord CULLEN of ASHBOURNE Lord CULLEN of ASHBOURNE moved Amendment No. 1:
Page 4, line 9, at end insert—
(" (4) Section 30 of the principal Act shall cease to have effect on 5th April 1984 and all references to that section in that Act or in any other enactment shall then likewise cease to have effect.")
The noble Lord said: My Lords, I make no apology for retabling this Amendment, which was moved in Committee, to abolish the earnings rule. We did not press this Amendment then, partly because the Committee was thinly attended—it was just before the Recess—and partly because we wished to reflect on the arguments that had been put forward by those who argued an opposite view. We are convinced that the case put forward by the Conservative Party for many years, and on which I elaborated last month, is correct; and I shall be dealing with the points which were raised in Committee. Unless the Government can bring forward conclusive new evidence or concede our Amendment. we intend to divide the House.
I do not intend to go through the arguments contained in my speech of 22nd February, rebutting the Government's position. We have concluded that there is no real cost involved in abolishing the earnings rule; and this Amendment, which allows five years to elapse before abolition, will give the Government plenty of time to make the necessary arrangements. I will just confine myself to answering the two new points which were raised in Committee. The noble Lord, Lord Wells-Pestell, said that the Government Actuary's figures on the cost of
16
abolishing the earnings rule should be taken on trust because he is an independent person. The noble Lord chided me for questioning these figures. No one is saying that the Actuary is deliberately misleading the House. That is nonsense. But to accept what he says without close examination is surely wrong. I put it to the noble Lord that the mistakes made in 1977 over the cost of abolishing the earnings rule, which the Government admitted, were made by the Actuary himself. As a result of these mistakes, the Government published a 15-page paper in 1977 and, when we queried much that was in it, we were told by a Minister in another place that the Government Actuary's Department remained firmly of the view that the estimates contained in the Government's memorandum are the most reliable possible.
However, we know from the Official Report published in October 1978 that even these figures were wrong; and we now have a third set of estimates in that report. The late Lord Platt had this to say about the Actuary when we last debated the earnings rule:
"Why must we accept the facts just because actuaries are independent of Party? If they have made a mistake, they have made a mistake. Top consultants can be wrong; we all know that".
But I am glad to say that the Actuary has now accepted most of the arguments put forward by the Conservative Party. The only remaining area of difference is the effect that the abolition of the earnings rule would have on the number of working pensioners.
This brings me to the point raised by my noble friend Lord Boyd-Carpenter who argued that if retired people took jobs it would lead to higher unemployment among the young. I am grateful to my noble friend for having raised this point. He was Minister of Pensions and National Insurance in 1962 and, although it may seem a long time ago, he has great knowledge in this area. Of course, the world of social security has changed greatly since then. but much has remained unchanged.
This issue was also raised by the noble Lord, Lord Pargiter; and I should like to make three points. First, it does not necessarily follow that a job vacated by an older worker will be taken by a young unemployed person. There are many

17
reasons for this. Sometimes, the pay is too low for a young man with a wife and child; sometimes the job requires a training which the young unemployed do not possess. Many engineering firms are complaining about the shortage of skilled labour and would benefit if older workers continued in employment. Secondly, there were some 700,000 job vacancies in the United Kingdom last month, according to official Government estimates. The figure that I gave in Committee of pensioners continuing in work represents less than 5 per cent. of that total. And, as I explained, many of them are, anyway, doing work which the young would not take on.
Thirdly, overhanging this whole question is the mistaken assumption that there is only a fixed amount of employment in the economy and that if one person, whatever his age, accepts a job then it means that someone else must lose a job. This question was tackled head-on during a BBC programme on retirement by Mr. Rogally of the Financial Times. He pointed out that there is nothing immutable about our present level of employment and he denounced such arguments as an "economic fallacy"—his words, not mine. Indeed, he could have pointed out that in West Germany there is a higher average retirement age than in Britain and yet there is a lower unemployment rate.
At a time when we have so many unfilled vacancies, can we afford to put difficulties in the way of people who are able and willing to work; and is there really any conflict over jobs between young and old people? Many jobs are better done by one and many by the other. I believe, with respect to those who take a contrary view, that this is a "red herring" since even the Government's policy is to abolish the earnings rule as soon as resources permit. The Liberal Party has consistently opposed the rule; and it is our policy to phase it out by 1984.
I hope that the House will agree to this Amendment, which passes a death sentence on the earnings rule. It would give incentive to many people with skills and long experience in every walk of life, many of whom are doing key jobs in factories, shops and offices; and, furthermore, it would encourage the pensioners
18
who have given up work to fill some of the huge number of jobs which do not attract their juniors. I beg to move.
3.26 p.m.
Lord WELLS-PESTELL: My Lords, I think it is clearly understood that the intention of this Amendment is to ensure that the retirement pensioners' earnings rule is abolished in April 1984. Noble Lords will recall that the noble Lord, Lord Cullen of Ashbourne, spoke to a similar Amendment during the Committee stage of the Bill. The noble Lord considers that five years is an adequate time over which to abolish the earnings rule because he is of the opinion that the cost of abolition is less than that estimate set out in the Report on the Earnings Rule which my right honourable friend the Secretary of State for Social Services laid before Parliament last October—when he said that it would cost between £64 million and £124 million depending upon what assumptions are made.
I do not wish to take up more of your Lordships' time than is necessary with a detailed consideration of costs. They have been given a pretty good run in this House: they were debated at sonic length during the passage of the Social Security (Miscellaneous Provisions) Bill in 1977, and last October we published the report to which I have referred and which closely examines the various costs. The published estimates were the most sophisticated that it has so far been possible to make. I know that the noble Lord is not prepared to accept the opinions of independent persons in this matter. He relies upon his argument, if I may say so kindly, that they have been wrong once and that, therefore. it follows that they must be wrong every time. I would not accept that, and I should be surprised if any noble Lord would accept that argument.
I think it is also patently clear that it is doubtful whether the noble Lord wants to accept arguments which may destroy his own case. This I can understand. Nevertheless, there was one point made by the noble Lord in the debate that we had at the Committee stage—and which he has touched on this afternoon, but not to any great extent—which I think invites comment. I ask your Lordships

19
to consider this because it really is important. When one begins to analyse what I want to say there is no real validity in one of the arguments that has been put forward by the noble Lord, Lord Cullen of Ashbourne, in respect of pensioners who would work if the retirement pension limitation, the earnings rule, was abolished. The noble Lord estimated that the cost of abolishing the earnings rule could be offset, so he said at the Committee stage, by up to £50 million a year by way of extra tax revenue resulting from pensioners who do not now work because, by taking up work with average earnings, that amount of money could be recovered by normal taxation.
The noble Lord, Lord Cullen of Ashbourne, mentioned a figure of some 35,000 pensioners who are not now working because they object to the earnings rule limit of £45. Remove that and, the noble Lord says, they would all go out to work and we would recover that amount that is needed, something like £50 million. Leaving aside the question of the availability of employment for these pensioners —and although I am prepared to leave it aside, let me say frankly that I do not believe it would be all that easy for them to find work which would yield that amount by way of taxation—I do not understand the noble Lord's reasons for thinking that 35,000 pensioners who at present can collect their retirement pension and still do a job, provided it does not exceed £45 a week, but who choose not to work when they could do so, would go out to work. The noble Lord says that because of the earnings rule of £45 a week, they choose quite deliberately not to go out to work. I find it very difficult to believe that if the earnings rule was abolished they would immediately take up full-time employment with average earnings—I think he used the phrase "average earnings"—which today amount to something like £95 a week. One would have thought that if they wanted to work and if work was available to them—and I doubt it—they would already be earning in the region of £45 a week.
So we are far from convinced that the alternative estimates challenging our own are based on sound evidence. It would serve no purpose of ours to put forward figures that were unnecessarily high. We too welcome low figures if they can be
20
justified. The Government remain quite satisfied that the cost of abolishing the earnings rule is formidably high, and, even if resources became available which would enable us to make some step towards the abolition of powers conferred by Clause 4, I have no doubt that the cost of the final abolition at the end of the five-year period would still be a very considerable sum.
I know your Lordships well enough to know that if I say that we have gone into this matter really carefully you will accept that. There is no great merit in asking your Lordships not to accept an Amendment it' there is a great deal of merit in the Amendment. There is a great deal of merit in the Amendment so far as it goes—and that is the principle of abolition; but not automatically at the end of five years. I was heartened—and noble Lords will expect me to have been heartened—at the support that was given in the debate by the noble Lord, Lord Boyd-Carpenter, who, as I recall, accepted the Government's estimates. He spoke, if I may be permitted to say so, with considerable experience in this field. In this particular field I for one would be prepared to accept—although we may not agree on a number of other things—whatever he chose to say. He in fact doubted whether it was good priority for expenditure to give this additional money to people over pensionable age who were fortunate enough to be able to continue in employment.
However, as I have endeavoured to make clear, all this depends on what resources are available. This Amendment takes no account of what the economic climate will be in the next five years. I am surprised that the noble Lord, Lord Cullen of Ashbourne, is prepared to commit a Government in five years' time. Noble Lords opposite have a very strong feeling that they might then be sitting on this side of the House. Is it wise now to commit a future Government when we really cannot see clearly what the situation is going to be?
Apart from all this, the Amendment would not effectively deal with the situation arising from abolition of the earnings rule. As I endeavoured to make clear to your Lordships in Committee, the earnings rule is part and parcel of the retirement condition which makes the pension a retirement pension. Let us pause and

21
look at that for a moment. The whole point of the retirement pension is to mark a period in one's life when one can retire. Section 27 of the Social Security Act sets it out clearly. If one does away with the earnings rule, one has to do away with the retirement condition. This means a significant structural alteration of the Acts with major consequential Amendments, because we should be changing the basic nature of the pension. In fact, while Clause 4 will enable us to reduce the age at which the earnings rule ceases to apply, thus phasing out the earnings rule, the final step of abolishing it would have to be by an amending Act because of these major consequential Amendments which would be necessary.
I ask your Lordships to think, as I know you will, of all the implications involved in this. We do not want to preserve the earnings rule for the sake of preserving it; there is no difference on any side in your Lordships' House about getting rid of the earnings rule. However, what we want to do is to do it gradually and not be committed to do it within five years regardless of what the position may be then. Notwithstanding the fact that the noble Lord has intimated that he intends to divide the House, I ask him to think again. I do not know whether I can persuade him that the Government's view of this matter is, after all, a very realistic, reasonable view; but I ask your Lordships to consider it carefully because I think that it would be unwise for this Amendment to be taken into the Bill.
3.39 p.m.
Lord DRUMALBYN: My Lords, what this Amendment appears to be doing, as my noble friend says, is to pass the death sentence on the earnings rule. It often seems a surprisingly long time in real life before a death sentence is carried out; but it is very rare for a death sentence to be postponed for five years. For that reason alone, I agree with the Minister that it would be wise for us to consider very carefully whether we should accept this Amendment today.
One of the difficulties of something like the earnings rule is that it seems so deceptively simple. The Minister in his short speech has made it clear that it is in fact very complicated. I do not for a moment intend to go into all the complica-
22
tions of it, but I think I am right in saying that Section 30 of the principal Act that we are being asked to say shall cease to have effect has two separate legs, so to speak. There are in fact two earnings rules. One of them restricts the amount that a male retirement pensioner who is between the ages of 65 and 70 may earn and the amount that females between 60 and 65 may earn, without losing part or all of their retirement pension. The other restricts the amount that a retirement or invalidity pensioner's dependent wife may earn, without affecting the wife's part of the married rate of the pension. I hope I have got that right! I shall say it again: it restricts the amount that a retirement or invalidity pensioner's dependent wife may earn without affecting the wife's part of the married rate of pension. That is known as the test of dependency.
As to the latter, the report states that the Government see no possibility of its abolition, since it would not be reasonable to pay a married pensioner an increase for his dependent wife without any regard to the amount of her earnings—that is, without regard to whether in fact she was a dependant or whether or not the husband was dependent upon her. Personally, I find this a convincing argument, and I hope that the noble Lord will be able to tell us that the effect of this Amendment will be to get rid of both of these legs in five year's time.
May I, for clarification, put one or two other questions to the Minister, who I am sure will be permitted to speak again at this stage of the Bill. In fact, the noble Lord has already answered a question I was going to put—namely, whether this Amendment as it stands would affect the retirement condition: that is, the condition that a person must have left his or her full-time regular employment. I agree with the Minister, and I am sure that my noble friend Lord Boyd-Carpenter would also agree, that whether or not this Amendment is accepted in the light of the conditions of the time—and it could of course be altered later—it would radically change the whole of the retirement side of the National Insurance scheme.
Now that the earnings limit beyond which the retirement pension is progressively reduced has reached £45 and is to be revised each year in relation to average earnings, I wonder whether the noble

23
Lord has any later information than is given in the report as to how many men and women are currently having their pensions reduced because their earnings exceed the limit. Appendix 2 of the report put the figure at 2,600 for men and 1,000 for women in April 1978. It indicated that the number had been reduced to a total for men and women of 3,600, as against 14,500 in September 1974, as the earnings limit had been progressively increased from £13 to £45. I understand that the extra cost of abolishing the earnings rule there would be between £3 million and £4 million. I do not know whether that is correct, but of course the major part of the cost would come from what is likely to be the choice of those who come up to retirement age as to whether they take the pension or defer taking it.
As I understand it, if 40 per cent. defer taking the pension, then the cost to the National Insurance Fund will be £117 million. If nobody defers taking the pension, it will be just on £200 million. If I read Section 1 of the principal Act correctly, all payments out of the Fund have to come from contributions to the Fund. Therefore, it follows so far as taxation is concerned that whatever might be the overall saving by people earning more, that additional amount would have to be found from the National Insurance Fund. It is out of the question for the Government to find that money because they already pay 18 per cent. as their contribution to the Fund. It would have to come from contributions. I do not know what the extra contributions would have to be, but it is worth considering whether for this particular purpose it would be, so to say, worth the money.
I think it is important to recall to your Lordships what the report says on this matter. As regards the cost arising directly from the abolition of the earnings rule, as distinct from that arising indirectly through deferment of taking the pension, the report says this:
"Only a very small proportion—£2 million, after allowing for tax—of the additional expenditure that would result from abolishing the earnings rule would go as additional benefit to retirement pensioners whose pensions are being reduced because of their earnings. Nearly all of it would go to those in employment with earnings in excess of —45 a week—the majority of them in employment—and to their wives. It
24
must be questioned whether additional expenditure on this group of people can be held to warrant any priority in the present economic situation when there are so many categories—the disabled, the unemployed, one-parent families—whose needs appear greater".
On the far greater expenditure that is involved in connection with those who defer retirement from employment or indeed cease working if they are self-employed, here again most of those concerned will be those in the comparatively high income brackets. They will be those who are earning £100 per week. £200 per week, or possibly even £500 a week. Those are the people who would be getting their pension in addition, although they were still capable of working. I must remind your Lordships that the whole purpose of making the pension a retirement pension was to ensure, with as much flexibility as possible, that those who are no longer capable of working full-time because of their age can, if they like, retire and, subject to the earnings rule, get their full pension at 65, although at 70 they will get their full pension whether or not they have retired.
The whole purpose of the National Insurance scheme was to ensure that when you were unemployed, sick or old and when you were not capable of working, you should have something coming in. It was in support of this that the earnings rule was established. One cannot possibly argue that after 30 years the same conditions should necessarily pertain, but what one can say is that this is a matter that would have to be looked at exceedingly carefully, from time to time, by whatever Government were in power, and I suggest to your Lordships that it was not very wise in those circumstances to say exactly what should be done five years from now.
Lord LEATHERLAND: My Lords, I shall not prolong this debate. I merely want to ask my noble friend a question, so that we see the matter in its proper perspective. Is it a fact that the earnings rule, with the embargo it imposes, ceases at the age of 70 and that people over 70 can earn as much as they like without their pension being interfered with?
3.51 p.m.
Lord BANKS: My Lords, perhaps I may make a very brief comment. The Bill makes provision, as we know, for

25
ending the earnings rule. It is clear that the Government have accepted the principle, the noble Lord has said that he has accepted the principle and the Opposition Front Bench have accepted the principle. Yet some of the arguments which are being put, particularly by the noble Lord, Lord Drumalbyn, are questioning that and they want to go back into the argument about the principle itself. But if we were to do that, and to take up the points which the noble Lord, Lord Drumalbyn, has raised, I think we should have to consider the fact that people who have unearned income are not in any way curtailed from taking their full pension, it' they wish to do so and are entitled to draw it.
It seems to me that there is very general agreement on the principle, and that the only thing that stops the Government from applying the principle is the question of expense. But if we take the figure that the noble Lord says is the cost and spread that over live years, and remember that £10,000 million is what is spent out of the National Insurance Fund, I wonder whether we are really saying that this is an impossible burden to place upon that Fund? I do not believe that it is. I think that it all depends on how much we want to get rid of the earnings rule and all that it implies, and some reference has been made to that. If we want to do it, we have the opportunity to do it and we could carry it over the five-year term; so my inclination is to support the Amendment.
3.53 p.m.
Lord BOYD-CARPENTER: My Lords, I must apologise to your Lordships for the fact that business commitments prevented me from being present at the beginning of this debate. I must particularly apologise to my noble friend on the Opposition Front Bench, for the fact that I did not have the pleasure and privilege of hearing his speech. But as the noble Lord the Minister has indicated, I took part in the discussion which your Lordships had in Committee, and I am bound to say that nothing that I have heard this afternoon has altered the view which I then expressed.
Briefly, there seem to me to be two objections to my noble friend's Amendment. First, there is the impact on the
26
retirement principle. Whatever your-Lordships may think of the retirement principle, it has stood the experience of 30 years of operation; and I suggest, particularly in your Lordships' House, that a rule which has stood up to that test should not be lightly thrown away. In other words, the onus of proof is on those who would establish that it now served no useful purpose. I am bound to say that I have heard nothing at the earlier stages of this Bill, or since I returned this afternoon, to suggest that that onus has been discharged.
Secondly, I take the practical point of view, which was expressed by my noble friend Lord Drumalbyn and which, I think, is likely to be expressed by anybody who, like him and myself, has had responsibility for the administration of these services, as to whether the payment of pensions to those who, as a matter of definition, are in full-time and reasonably well-paid work, should have a very high priority in the expenditure of funds from the National Insurance Fund. Those of us who have been responsible for these schemes know that one receives many heart-searching demands for additional payments, all over our social security scheme, from those who are in real need and who could he helped were even a few million additional pounds available. It is difficult to set against those demands—and the noble Lord, Lord Wells-Pestell, is in a better position than any of us today to describe them—the understandable desire of those who, having attained the age of 65 as men, or 60 as women, are lucky enough to be in good health and full-time work, to have a pension as well, ahead of all the other a priori more compelling demands that the Minister concerned has to face.
Therefore, I am sorry to say that I find it impossible to support my noble friend's Amendment. It may be that by the time we come to 1984—perhaps a rather significant Orwellian year—the country will be in so prosperous a condition that the limited number of millions of pounds involved may not be an excessive demand on the National Insurance Fund. We do not know. But I find it a little difficult to say now, in 1979, that we are so certain that that will be the position in 1984 that we ought to provide for the earnings rule automatically to end in that year. I am

27
left with at least a lingering doubt that, whoever carries out the responsibilities of the noble Lord the Minister in that year, may be quite likely to have stronger demands on merits put to him for expenditure from that Fund, rather than to pay it to supplement the good earnings of those in good work.
Therefore, I am sorry to have to tell my noble friend that I find it impossible to support him. In the light of the arguments which have been addressed to him, particularly those addressed to him with great authority by my noble friend Lord Drumalbyn, as well as by the Minister, I hope that he will not feel it necessary to press this Amendment to a Division. If, unhappily, he does, then I must with equal unhappiness tell him that I shall be in the Government Lobby.
3.58 p.m.
Lord INGLEWOOD: My Lords, may I in a very few sentences support every word that my noble friend Lord Boyd-Carpenter has just said, not only because I was his Parliamentary Secretary when he was Minister of Pensions and National Insurance, but because he has put forward all the most convincing arguments on this question and has done it so very clearly. I feel it extremely difficult to imagine the position of the Minister of Pensions and National Insurance, or whatever the title may then be, in 1984, if he should come into office and find this provision on the Statute Book and something which he has to make fresh arrangements to meet.
There is one other argument which I should like to mention, and if it was referred to when I was not in your Lordships' House I apologise. I have always understood that in the days of the Beveridge inquiries it was decided that it was a much better way of dividing the funds available for those of retiring age to give the benefit to those who were no longer able to work, rather than to spread them over a large number of people and bring into the calculations many of those who were able to earn quite substantial incomes. I have always found that argument convincing and I think that it still is. I am very sorry that I cannot support my noble friend if he should ask me to go into the Lobby, but I feel that this is a very important issue and it is one where
28
emotion very often clouds the real facts. If it comes to a Division, I hope that we think of the basic principles behind the retirement pension in this country, rather than the emotions which we know move a great many people.
4 p.m.
Lord PARGITER: My Lords, I intervened briefly during the Committee stage. Nothing that I have heard today alters the view that I then expressed. First, it is undesirable to use a relatively minor Act of Parliament to alter a major Act of Parliament. I think that this is a fundamental weakness which is dividing us at this stage. It may be necessary to do it, but there are all kinds of factors to be considered. Very few occupational pensions were in existence when the Act was passed, but now they are almost universal. Also, we have the additional accruing pension as a result of the amendments to the Act. This brings other factors into a situation which is far different from that which we knew in 1948. These are the kind of things which ought to be considered, and they should not be considered briefly on an Amendment of this kind. They deserve to be properly examined.
I do not want to go into the argument as to whether or not we should abolish the earnings rule, or how we should distribute the money that is available. However, I believe that we should have a thorough examination of this matter, just as we had Beveridge to begin with. We are now considering matters which are as vital as those which came to the House of Commons from the Beveridge Commission. Although I am not advocating at this stage that there should be a Commission, it seems to me that there should be a wide-ranging examination of the situation before we contemplate a change of this kind.
4.2 p.m.
Baroness YOUNG: My Lords, I think that the debate has shifted right away from the Amendment moved by my noble friend Lord Cullen of Ashbourne. We are not discussing his Amendment. We are discussing instead the entire principle of the earnings rule. If I may echo what was said by the noble Lord, Lord Banks, from the Liberal Benches, both the Government, ourselves and the Liberal

29
Party are absolutely agreed on the principle that the earnings rule should go. There is no disagreement on that point. May I say to my noble friend Lord Boyd-Carpenter, who I acknowledge has had a very great deal of experience of this matter, and also to my noble friend Lord Drumalbyn—to both of whom I have listened with very great care, as is only right since they are speaking with very considerable knowledge—that they are arguing the principle of this case, to which they object. They are, of course, absolutely entitled to their opinions, but that is not the issue which is before the House, because everybody is agreed on the principle.
May I also say to the noble Lord, Lord Pargiter, that when we debated this subject during the passage of a miscellaneous Bill on social security, we on this side of the House moved an Amendment to have a report on the working of the earnings rule. As a result, the whole question has been looked at. There is a report upon it, and it is upon that basis that I am quite certain that the noble Lord, Lord Wells-Pestell, and his advisers have reached their conclusions on the Amendments which they have placed before us; they are agreed that the principle of the earnings rule should go. If one looks at paragraph 4.2 on page 14 of the report, one sees that the Government remain committed to phasing out the earnings rule when resources allow. So I do not think that there is any dis-agreement on the principle, which I believe has been looked at.
When my noble friend Lord Boyd-Carpenter was a Minister in 1962, I believe that the situation in the country was very different. That was nearly 20 years ago. There are now far more retirement pensioners; people are living longer; our attitude to the elderly and to the retired has changed. Apart from the financial considerations, to which I shall turn in a minute, there are very many important social questions which deserve to be given equal weight in the argument. From my own experience in the social services, I know that thousands of elderly people are much happier if they can work and have independence than if they are simply retired, although they are capable of working but are prevented from doing so and are doing nothing. This a very important point in the argument and it should not be forgotten.
30
When we debated the problems of the retired some time ago in your Lordships' House, there was general assent from all parts that it is very important for elderly people to be allowed to retain their independence and their dignity. They are, on the whole, fitter and better as a result, provided that they choose to work. Nobody has got to do any of these things. The choice is theirs. It seems to me that it should be our job to increase the element of choice for the elderly as well as for other members of the population.
Lord BOYD-CARPENTER: My Lords, I wonder whether my noble friend would allow me to intervene. Is she aware that under the present position, which the Amendment proposes to disturb, there is nothing whatever to prevent their freedom of choice, including earning up to £45 a week?
Baroness YOUNG: My Lords, I am absolutely aware of that point. It was as a result of activities of the Conservative Party in another place that the earnings rule now stands at £45 a week, which is highly desirable. All I am saying is that now we are discussing not the principle, because that has been agreed, but whether or not it should be abolished altogether.
If I may turn to the detailed arguments which were set out by the noble Lord, Lord Wells-Pestell, he used two principal arguments against my noble friend Lord Cullen of Ashbourne. The first point that he made was that our calculations may not be accurate and that they have taken an independent point of view which we should look at. May I say that in any remarks that we make today or, indeed, on any other occasion nobody wishes to criticise the Government Actuary. We are not in a position to do so, nor would it be right to do so. What we have said, and what has been borne out by the facts, is that his figures have not proved to be accurate, as we have discussed this argument on each occasion, and that some of the basic assumptions—and they must be only assumptions—on which he has based his figures have not proved to be correct. Therefore we feel confident that we can go ahead on the basis of the calculations that we have made. We think that that is right. As I say, this is not a criticism of the Government Actuary.

31
The second argument—and it is the argument which my noble friend set out during the Committee stage at col. 1948—is this: how do we know that 35,000 pensioners would take up work and that we would get the money from the taxation of their earnings? The noble Lord did not say that we knew that that number would take up work; but what we do know from the surveys that have been made is that four out of 10 pensioners would like to work and that very many are deterred because they do not know about the £45 rule and therefore are put off. We have every reason to think that more pensioners would work were it made absolutely clear that there was no rule at all and that they could retain their pensions. This is the important point. Because it is a very confused and complicated world, people do not understand and are deterred from working. We have no reason to think that the numbers of retired people wishing to work would not increase if the earnings rule were abolished.
I believe that this has become a technical argument on timing, because all of the main Parties are agreed on the principle. We on this side of the House have taken a great interest in this matter over a number of years. In another place we pressed for the Amendments which increased the earnings rule up to £45 a week. We have committed ourselves publicly to the principle of the abolition of the earnings rule. We believe that this is right and we have no reason to doubt the figures that we have produced upon it. We believe that we have the support of thousands of people in the country, and certainly it is the wish of my right honourable friend Mr. Jenkin in another place. When he has heard the arguments, I hope very much that my noble friend will press this matter because it will give an opportunity to the other place to have a look at it. After all, this is not the end of the passage of the Bill.
In conclusion, may I say that any piece of legislation which comes before your Lordships' House is important. I do not think that we should ever be deterred from doing what we believe to be right, even if it is not the most important piece of legislation that has ever come before your Lordships' House. What is suggested here will help many people, and I believe that it is the right thing to do.
4.10 p.m.
Lord WELLS-PESTELL: My Lords, this is the Report stage and the rules of the House are very clear as to how often one may speak, which is once, except for the mover; but I believe that as Minister I may ask your Lordships for permission to speak again. However, I want to make it quite clear that I have no intention of trying to make another speech to convince your Lordships. It would be improper of me to take advantage of my position to do that, but I think I ought to try to answer specific questions which have been put to me as Minister. If your Lordships will allow me, I will do that and nothing more.
The noble Lord, Lord Drumalbyn, raised the question of the effect. All I want to say is that Section 30 of the Social Security Act relates only to the retirement pensions earnings rule; the dependency earnings rule is in Section 45(3) of the Social Security Act, so the Amendment does not affect the dependency earnings rule. Lord Drumalbyn also asked how many pensioners are having their pensions reduced because of the earnings rule. The latest figure the Government have is the figure for 1977 which is given in the report; namely, that 5,000 pensioners are in fact affected by the earnings rule. But the figure of 5,000 has to be seen in the context of 2 million pensioners who were in the age bands, were working, and therefore affected by the earnings rule. I was asked whether the earnings rule applied to those over the age of 70. The short answer is that it applies only to those retired pensioners who are between the ages of 65 and 70.
Lord CULLEN of ASHBOURNE: My Lords, we have had a long debate on this subject, a great deal of which seemed to me to be not about my Amendment but about the principle whether or not the earnings rule should be abolished. I do not propose to go through what I said before, so without any further ado I should like to test the opinion of the House.
4.13 p.m.
On Question, Whether the said Amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 108: Not-Contents, 71.

CONTENTS

Addison, V.

Elton, L.

Nunburnholme, L.

Airedale, L.

Emmet of Amberley, B.

O'Hagan, L.

Alexander of Tunis, E.

Exeter, M.

Onslow, E.

Allan of Kilmahew, L.

Falkland, V.

Penrhyn, L.

Allerton, L.

Foot, L.

Polwarth, L.

Alport, L.

Fraser of Kilmorack, L.

Porritt, L.

Amherst, E.

Gainford, L.

Rankeillour, L.

Ampthill, L.

Geoffrey-Lloyd, L.

Rawlinson of Ewell, L.

Amulree, L.

Gladwyn, L.

Redesdale, L.

Arran, E.

Glasgow, E.

Reigate, L.

Atholl, D.

Glenarthur, L.

Romney, E.

Auckland, L.

Gray, L.

St. Davids, V.

Avon, E.

Gridley, L.

St. Helens, L.

Banks, L.

Hailsham of Saint Marylebone, L.

Saint Oswald, L.

Belstead, L.

Sandys, L.

Berkeley, B.

Hampton, L.

Seear, B.

Bessborough, E.

Harmar-Nicholls, L.

Selkirk, E.

Bethell, L.

Jeffreys, L.

Skelmersdale, L.

Birdwood, L.

Kimberley, E.

Sligo, M.

Byers, L.

Kinnoull, E.

Smith, L.

Caithness, E.

Kintore, E.

Stanley of Alderley, L.

Campbell of Croy, L.

Lloyd of Kilgerran, L.

Strathspey, L.

Cathcart, E.

Long, V.

Stuart of Findhorn, V.

Clwyd, L.

Luke, L.

Swaythling, L.

Cockfield, L.

Lyell, L.

Swinfen, L.

Cottesloe, L.

Macleod of Borve, B.

Swinton, E.

Cullen of Ashbourne, L.

Margadale, L.

Tenby, V.

Daventry, V.

Massereene and Ferrard, V.

Teviot, L.

Davidson, V.

Melville, V.

Thurlow, L.

de Clifford, L.

Merrivale, L.

Ullswater, V.

De Freyne, L.

Mills, V.

Vernon, L.

Denham, L. [Teller.]

Molson, L.

Vickers, B.

Digby, L.

Mowbray and Stourton, L. [Teller.]

Vivian, L.

Donegall, M.

Westbury, L.

Ebbisham, L.

Netherthorpe, L.

Wolverton, L.

Elles, B.

Northchurch, B.

Young, B.

Elliot of Harwood, B.

Nugent of Guildford, L.

NOT-CONTENTS

Annan, L.

Greenwood of Rossendale, L.

Pannell, L.

Aylestone, L.

Hale, L.

Pargiter, L.

Bacon, B.

Hamnett, L.

Parry, L.

Blease, L.

Henderson, L.

Peart, L. (L. Privy Seal.)

Blyton, L.

Houghton of Sowerby, L.

Rochdale, V.

Boyd-Carpenter, L.

Howie of Troon, L.

Runciman of Doxford, V.

Brockway, L.

Hunt, L.

Segal, L.

Bruce of Donington, L.

Hylton-Foster, B.

Shinwell, L.

Clancarty, E.

Ilchester, E.

Snow, L.

Collison, L.

Inglewood, L.

Soper, L.

Craigavon, V.

Jacques, L.

Stewart of Alvechurch, B.

Darling of Hillsborough, L.

Janner, L.

Stone, L.

David, B.

Jessel, L.

Strabolgi, L.

Davies of Leek, L.

Kinloss, Ly.

Taylor of Blackburn, L.

Derwent, L.

Kinross, L.

Taylor of Mansfield, L.

Donaldson of Kingsbridge, L.

Leatherland, L.

Wallace of Coslany, L. [Teller.]

Douglas of Barloch, L.

Lee of Newton, L.

Drumalbyn, L.

Leonard, L. [Teller.]

Ward of North Tyneside, B.

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

Listowel, E.

Wedderburn of Charlton, L.

Energlyn, L.

Loudoun, C.

Wells-Pestall, L.

Fisher of Camden, L.

McCluskey, L.

Whaddon, L.

Gaitskell, B.

Mishcon, L.

White, B.

Gosford, E.

Oram, L.

Willis, L.

Greenway, L.

Paget of Northampton, L.

Wise, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
4.22 p.m.
Clause 11 [Increase of official pensions]:
Lord HOUGHTON of SOWERBY Lord HOUGHTON of SOWERBY moved Amendment No. 2:
Page 7, line 29, after ("in") insert ("subsections (1)(b), (2)(a), (3)(a) and (3)(b) for the words complete months' wherever they occur there is substituted the word 'days', and in").
The noble Lord said: My Lords, I beg to move Amendment No. 2. Amendment No. 3 can be taken for the purpose of the discussion in the same scope as Amendment No. 2. This may be regarded as a minor matter, even a niggling point. But my noble friend has heard rumblings on this subject on two previous occasions; firstly, when the noble Lord, Lord Banks, made reference to it in his speech on the Second Reading of the Bill, in column 936 of the Official Report of 8th February; then on the Committee stage of the Bill, my noble friend Lord Leatherland raised the matter on the Question that the clause stand part, and his comments and the Minister's reply are to be found in columns 1960–1 of the Official Report of 22nd February. What I said a moment ago about this Amendment was underlined, I think, by the concluding words of my noble friend, who, when replying to my noble friend Lord Leatherland, said:
"Although on the face of it there seems to be a point here, in practice there is nothing of any consequence at all ".—[Col. 1961.]
Well, my Lords, it is strange that on a matter which is of no consequence at all there has been so much correspondence from various organisations and public service pensioners. Before going any further, I think I had better declare that I have an interest in this Amendment, because I am on a pension which is related strictly to Civil Service conditions; so I am an injured party as well as one advocating a change.
What this Amendment tries to do is to remedy a small injustice which has occurred as a result of the harmonisation of the conditions of Civil Service and public service pensioners and State pensioners as regards pension increase and the effective dates of granting it. This harmonisation really takes place in this Bill. To that extent, it is, I think, a satisfactory ending to a very long saga of discontent about adjustment of Civil Service and public service pensions. This is, so to speak, the final tidying-up of discrepancies and difficulties both of principle and of administration which have arisen over past years.
In future the public service pensioners will have their pension increase calculated on the same basis as that of the State pensioners and it will be effective from
36
the same date, which is 12th November in each year. Hitherto the public service pensioners have, under earlier legislation, had their pension increase dating from 1st December. Under the clause—what is now Clause 11 in the Bill—the public service pensioners will have the effective date of their pension increase brought forward from 1st December to 12th November; that is three weeks earlier than they get it now.
Unfortunately, however, in making this change they come up against the treatment of broken months. Under a subsequent subsection, subsection (3) of the same Clause 11, which we find on page 8 of the Bill, it is provided that:
"Where … it is necessary to calculate the number of complete months in any period an incomplete month shall be treated as a complete month if it consists of at least 16 days".
By bringing forward the effective date of the pension increase from 1st December in 1979 to 12th November in 1979, the public service pensioners have a broken month which is less than 16 days. The result is that in 1979 they will receive eleven-twelfths of the increase for the year instead of twelve-twelfths, and this means that they will get a smaller pension increase than otherwise.
My noble friend the Minister on 22nd February said: "Ah, but they are getting it three weeks earlier, and in any case the difference here is, on average, only 5p a week, and that is a small enough margin of error in any calculation of this kind which tries to adjust pension increases to an increase in the cost of living". So he said, "There may seem to be a point here, but in practice it is of no consequence at all". The issue is: is it, or is it not, of any consequence at all?
It is true that in 1979 public service pensioners will have their pensions increased on 12th November instead of on 1st December but, as against that, they will receive eleven-twelfths of the increase instead of a full year's increase. Of course, in subsequent years this deprivation of the benefit for a full year will continue and there will be a permanent slight disadvantage. Why are they making such a fuss about this? There are two reasons.
The first is that it is claimed by the Public Service Pensioners' Council that there has

37
been no consultation with them about this particular change, and that the consultation which they did have with Ministers and officials on the original Clause 10 of the Bill was on a different version from that which appeared when the Bill was printed. The second point that is raised is that during the Committee stage in another place the Minister assured the Committee that there had been adequate consultation with the Public Service Pensioner's Council and that they were fully aware of it. On the basis of that assurance, the Members of another place in the Committee, who were disposed to sympathise with the Amendment, thought that there was no need for them to continue to support it, so they withdrew it. It is said that that was due to a misunderstanding.
There seems to be something to clear up here. Was it adequately discussed? Was it discussed in the terms in which the Bill eventually appeared? Was the Amendment withdrawn in another place on an assurance by a Minister based upon a misundertanding? Those are the questions I ask. I cannot answer them. I can only say that the representation made to me and to other noble Lords asserts that there is a sense of grievance here.
Of course, it may be in the minds of many of us that one need not be too meticulous in these matters and that fastidiousness can be carried too far; that on the whole public service pensioners are getting a pretty good deal; that their index-linked pensions are secure and that the effective date from which they will receive them is established. In my experience and in the experience of the noble Lord, Lord Boyd-Carpenter, all those are things that they failed to secure over many years of agitation. We went over this ground year after year. Now that we have reached the present position, the situation is satisfactory.
Yet there is this fly in the ointment. I suggest to your Lordships that, first, we should ask my noble friend the Minister to explain the points that I have raised, answer the questions that I have asked and see whether there is still something that needs to be rectified before the Bill passes its final stages in your Lordships' House. I do not think that at the end of the day it would be fair for me to ask
38
your Lordships to divide on this Amendment. I do not propose to do so. At the end of the debate on this Amendment I shall ask leave to withdraw it in order that we may consider the matter further before we reach the next stage of the Bill. If necessary, there can be consultation with those concerned to discover their ultimate feelings when my noble friend the Minister has had a greater opportunity than he had before to deploy the Government's case on Clause 11 as it now stands. However, I cannot give your Lordships any calculations as to what it means to me, because the truth of the matter is that it only dawned on me as I sat on these Benches a little while ago that I was involved in this at all. But, on reflection, I discover that I am. In those circumstances, we want to try to get the matter straight. We do not want this large number of public service pensioners to feel at the end of the day that there is just this niggling, irritating point which leads them to believe that they are receiving less than full justice.
In conclusion, I have only a sentence or two to say on administration. On 22nd January my noble friend the Minister said that this would be a late stage at which to change the basis of computation from months, which is obviously easier, to days, which is obviously more difficult; and that if they were calculating the number of days, people would need ready reckoners of a different kind from those they would need if they were calculating the number of months, especially when a month does not count unless it has at least 16 days within it. In those circumstances, there is undoubtedly some point as regards administration. However, I doubt whether that would be strongly urged against doing proper justice to the case, if justice there was found to be. Therefore, I hope that more adequate attention can be given to this matter than was possible when it was raised by the noble Lord, Lord Banks, on Second Reading, and very adequately included in the clause stand part debate—which I welcomed—by my noble friend Lord Leatherland. However, at that moment, the Minister was obviously in a mood to brush the matter aside in order to proceed with the rest of the Bill. I am sure that he will thank me for giving him a further opportunity to deploy his case more fully. I beg to move.
4.38 p.m.
Lord WELLS-PESTELL: My Lords, I would agree with my noble friend that if there is a doubt in any of your Lordships' minds at any time when we are considering the passage of a Bill, it is right and proper for those doubts to be raised with a view to getting a satisfactory explanation. I do not take exception in any way to this matter being raised, as my noble friend is raising it, by using the Amendment procedure. It is quite right and proper that we should do this. Whether or not I shall succeed in satisfying him is entirely another matter; but before I proceed to try to do so, perhaps I may dispose of the question of consultation.
My understanding of the position is that the arrangement for the 1979 increase was discussed with my right honourable friend the Minister of State and the Civil Service Department in the autumn of 1977. Since that time there have been three Further meetings with officials and at all those meetings this issue has been discussed. As soon as the Bill was announced to Parliament full details of it were sent to the Public Service Pensioners' Council, and at their request a further meeting with officials took place. I think that the Government are entitled to say that the views of the Public Service Pensioners' Council were very clearly known to the Departments concerned well before the Bill was prepared and were, in fact, taken fully into account after the Bill had been prepared. I want to say that because I think it would be a mistake if your Lordships felt that there had not been consultations, when my understanding of the situation is that there have been.
We touched on this matter—and I will not put it higher than that—at the Committee stage, but perhaps it will assist noble Lords to judge this matter if I remind your Lordships once again of the background; namely, that under the existing provisions of Section 2 of the Pensions (Increase) Act 1971, official pensions have been increased annually in December in line with the movement of prices. Section 59 of the Pensions Act provides that official pensions shall from 1979 be increased at the same time, and by the same percentage, as the earnings-related additional component of State retirement pensions, which will also be increased in line with the movement of
40
prices. In this way, the Pensions Act integrates the two different systems of uprating State pensions and public service pensions. Clause 11 has been included in this Bill to eliminate some of the teething problems which have come to light during the preparations to put these integrated arrangements into practice.
Under the Pensions (Increase) Act 1971, each year was divided into two, six-month, blocks —January to June, and July to December. All those who retired in the same six-month block received the same increase. The Pensions Act, as at present drafted, both changes and improves the position by dividing the year into twelve, namely monthly blocks, so that the first increase which a pensioner would receive will now reflect far more precisely than before the date of his retirement. The new Bill also provides for rounding-up where a period after retirement falls just short of a complete number of months. But the Amendments which the noble Lord has tabled go considerably further by providing for an even greater refinement, to individual days.
As some noble Lords will know, the Public Service Pensioners' Council claim that the legislation will penalise existing pensioners because they will receive only 11 months' worth of inflation, and not 11 months and 11 days' worth in 1979, to compensate for price increases from 1st December 1978 to 12th November 1979. The Amendments before us would overcome this, I was going to say, theoretical problem, but I think the House will wish to consider whether this really is an "injustice" that merits a solution of this kind.
Although the change may seem a simple one, as I explained in Committee its effect on those who have to pay the pensions would be considerable and the amount of extra work involved would be extensive. In addition, problems arise particularly for the pensions of those who leave public service employment with a preserved pension which may come into payment as many as 30 years later. And this will affect 10,000 civil servants each year. At present, with six-monthly blocks in each year, there are two different multipliers for each of the last 30 odd years which may be applicable when a preserved pension comes into payment. With increases based on months, there will be

41
12 a year, and if these Amendments were passed there would be 365 a year. After 30 years that would mean that the clerical staff doing the work would have almost 11,000 different numbers in use instead of the 360 as the legislation now stands. The burden on them would therefore be very much heavier, and their instructions would, I think everyone would agree, have to be considerably complex. In short, the practical problems cannot be lightly dismissed and it is necessary to consider whether even more civil and public servants should be employed in order to deal with what is at most, I think it is fair to say, a minor discrepancy in the legislation, and may not be a discrepancy at all.
As officials have explained to the Council on a number of occasions, both before and after the introduction of this Bill, even if it could be accepted that prices rise uniformly over the course of the year (and I agree this is clearly not the case) index-linking to cover the missing 11 days might benefit the average pensioner by about 5p a week. The House must therefore consider whether this minor discrepancy is really sufficient to justify a major operation to re-programme the computers, and a permanent increase in the number of civil and public servants employed to pay public service pensions. Your Lordships have often, in debates in this House, argued strongly that we have already enough civil and public servants. There is no doubt at all that we should have to take on yet more staff in the Paymaster General's Office and elsewhere to be ready to deal with what may, and probably will, turn out to be a non-problem. At a time when there are so many calls on public resources is it really right to increase public expenditure to achieve so insignificant an object as this one? I am sorry to use what seem to be rather strong words, but one must take a realistic view of this matter.
Honourable Members in another place considered it, and I do not think that anyone would doubt for one moment that they considered it very carefully. They concluded that the existing arrangements in the Bill should not be changed. I think that that conclusion was the right one. Even though, so far as my noble friend is concerned, I may not have given a completely satisfactory answer, I hope he will feel that there has been a reasonable
42
explanation of the Government's action in this matter, and that it was not in an attempt to introduce what was an injustice to individuals but to try to meet a situation which was full of complexity.
4.48 p.m.
Lord LEATHERLAND: My Lords, my noble friend Lord Houghton mentioned that I had raised this question on 22nd January. I have been listening today to see whether the Minister had any satisfactory reply to make to what was said on that occasion and this afternoon. I am sorry to say that I do not find that there has been a satisfactory reply. The public servants, rightly or wrongly, feel that they have a grievance. It may be more psychological than financial; it may be only a question of pence and not of hundreds of pounds, but they feel that they have this grievance. In the present unsettled state of the country and the public service, do we really want to give them an added grievance and to stir the matter up?
My noble friend has some objection to incorporating the number of days on which the pension is reckoned instead of the number of months. I do not see any great objection to using the term "days". The term "days" figures scores of times in every piece of social service legislation. If you go along to the Labour Exchange and ask for unemployment pay, days are then reckoned up just as they are in every other branch of the social services. My noble friend has spoken about the administrative difficulties. I do not think he ought to exaggerate them. We are not living in the days when civil servants sat on high stools and wielded quill pens; we are speaking in the days of computers. If a computer can settle the complicated calculations of ERNIE every month, I fail to see that the computers would be bunkered by a calculation which they have to make in respect of this matter.
We are speaking of those who had increases on 1st December 1978. On 12th November of this year they will receive eleven-twelfths of the cost of living increase from November 1978 to November 1979; this is not keeping up with the increase in the cost of living for the full period of 11 months and 11 days which will have elapsed by 12th November 1979. They will have only 11 months'

43
increase in pay, whereas the increase in the cost of living that has taken place has been that which refers to 11 months and 11 days, so there is a loss of 11 days of increase or possible increase in the cost of living index figure, and that will be perpetuated throughout the lives of the civil servants in question. What we are saying is very simple indeed; instead of stipulating in the Bill the word "months", we suggest stipulating "days", and then those civil servants will have the full and exact amount of increase due to them because of the increase in the cost of living, and they will have no grievance left. I hope the Department and the Minister will look at this again because it is not a difficult problem for them to solve.
Lord BANKS: My Lords, I support what the noble Lord, Lord Leatherland, said. The principle of the matter has been put clearly by both previous speakers, that there will be a smaller pension increase than otherwise because of the way this has been drawn up, and while it is true that this increase will come earlier and therefore give that amount of advantage to the individual concerned, nevertheless we shall end up with a lower figure than if he had been able to wait that extra month to make it 12 months from the previous increase. This will be perpetuated because the loss of 11 days' pension will mean a lower pension this year, and then the percentage increase will be on a lower pension the following year, so every year there will be a build-up of this loss of pension.
The noble Lord, Lord Wells-Pestell, said this amounted to only 5p per week, but I suppose that was an average figure because it must depend on the amount of the individual's pension. That presumably would be the level at which it would start. Clearly, because of the acceleration, it would not remain at that level. And are we sure that in using this figure of 5p we have got at the correct average starting figure that would be involved, and have we any estimate of what it might rise to? I agree it would probably still be a fairly small figure; but it is sufficient, I should have thought, to give people a feeling of grievance. It might be well in those circumstances to look at the matter again.
Lord HOUGHTON of SOWERBY: My Lords, I am obliged to the Minister for his explanation. We now have it fully on the record, and we also have the lucid comments on my noble friend's speech from my noble friend Lord Leatherland and from the noble Lord, Lord Banks. I will confine myself to saying that it seems fairly obvious that administrative considerations have triumphed over the justice of the matter because it is believed that the justice of the matter is too insignificant to justify the additional administrative costs and difficulties involved.
We must of course bear in mind that we are dealing with a large number of public service pensioners who spent their lives in meticulous calculations to remove the grievances of the public who might otherwise think they are being cheated out of 5p a week; and if enough people feel they are being cheated out of 5p a week then Government and the Civil Service apply their minds to the remedy, which is usually to give it to them even at the cost of some administrative difficulties.
I think now that it is for those directly concerned to consider the matter as it stands at the conclusion of the debate on this Amendment. If they feel, and wish to represent their feelings, that they are still at significant disadvantage, one which justifies your Lordships in trying to apply a remedy, notwithstanding the discouragement of the Government, then that can be done at a subsequent stage of the Bill. I am prepared to leave it at that and, with permission, withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 3 not Moved.]
Clause 21 [Short title, etc.]:
4.56 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 4:
Page 12, line 31, leave out from beginning to ("this") in line 32 and insert ("Section 3(3) of ").
The noble Lord said: My Lords, with permission I shall speak to Amendments Nos. 4 and 5 together. They are both minor technical Amendments relating to the commencement of provisions concerning, respectively, mobility alowances

45
and the excusal of the reference of consolidation regulations to the Occupational Pensions Board. These Amendments have been approved by the chairman of that board, so what we are doing is with its consent.
On Question, Amendment agreed to.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 5:
Page 12, line 40, leave out ("14 to 23") and insert ("14 to 20, 22, 23").
On Question, Amendment agreed to.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 6:
Page 13, line 4, leave out ("paragraph 12") and insert ("paragraphs 3 and 12").
The noble Lord said: My Lords, this is a drafting Amendment the purpose of which is to ensure that the Amendment to Section 68(1) of the Social Security Act 1973, which is at paragraph 3 of Schedule 3 to the Bill, applies, like the section itself, to Northern Ireland.
On Question, Amendment agreed to.
Schedule 1 [Amendment of principal Act, Pensions Act and Act of 1977]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 7:
Page 16, line 5, leave out ("that") and insert ("the deceased").
The noble Lord said: My Lords, this is a drafting Amendment to make it clear that the reference at this point is to the deceased spouse and not to the surviving one.
On Question, Amendment agreed to.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 8:
Page 18, line 6, after ("Section 17") insert ("(which is superseded by paragraphs 10 and 13 above)").
The noble Lord said: My Lords, with permission I will speak to Amendment No. 9 at the same time. These are drafting Amendments to make quite minor corrections. Amendment No. 8 inserts words of explanation and Amendment No. 9 makes a correction giving a full description, as can be seen from the words of that Amendment.
On Question, Amendment agreed to.
Schedule 3 [Minor and consequential amendments]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No.9:
Page 22, line 23, leave out ("the said Part I") and insert ("Part I of Schedule 4 to the principal Act").
On Question, Amendment agreed to.

LICENSED PREMISES (EXCLUSION OF CERTAIN PERSONS) BILL
Brought from the Commons; read 1a, and to be printed.
CONFIRMATION TO SMALL ESTATES (SCOTLAND) BILL
Brought from the Commons; read 1a, and to be printed.

BANKING BILL
5.1 p.m.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, I beg to move that this Bill be now read a second time. I believe that, in view of the general welcome that the Bill has received, particularly in its present form, and in view also of the considerable consultation that preceded its introduction and the improvements made to it in the course of its progress through another place, I can attempt to explain the background to it quite briefly. In this country we have never had a comprehensive system of authorisation for banks and deposit-taking institutions. The primary banking sector has traditionally accepted the authority of the Bank of England, and has been supervised by the Bank on an informal, non-statutory basis. However, in more recent times —and I am thinking of the last two decades—a fringe of deposit-taking institutions grew up outside the primary banking sector. These institutions were not subject to the informal authority of the Bank or to any analogous supervision, and although the Protection of Depositors Act was passed in 1963 to provide certain safeguards for their depositors, the crisis in secondary banking some ten years later indicated that it was

47
time to review in a comprehensive basis the regulatory framework for institutions taking deposits from the public.
The Banking Bill is designed to preserve as much as possible of the flexible approach which the Bank of England has brought over the years to the supervision of the primary banking sector. In placing on the Bank the responsibility for operating the system set up by the Bill, we are taking a deliberate decision in favour of flexibility and against regimentation. This approach has been welcomed not only by those concerned in the banking industry, but in the financial Press, and more generally. Coincidentally, the European Economic Community were considering harmonising rules of banking at the time when we were reviewing our arrangements for supervision. In the event, the first EEC Directive on credit institutions, which was adopted in December, 1977, reflects a good deal of our approach. Its provisions will be implemented by the legislation now before us.
The Bill has three main Parts. First of all, it sets up a system of authorisation for deposit-taking institutions which will be administered by the Bank of England. Authorisation may take the form either of recognition as a bank, or of the granting of a licence to take deposits. In each case, statutory criteria set out in Schedule 2 to the Bill will have to be fulfilled. Authorisation may be withdrawn if the Bank is no longer satisfied in the course of its supervision that these criteria continue to be met. Although the criteria for recognition as a bank are much more demanding than those for a licence to take deposits, the system is designed to ensure that all institutions taking deposits from the public meet and maintain satisfactory standards of honesty and competence. Progression from the licensed to the recognised sector, as an institution builds up its reputation and develops its banking characteristics, is of course possible. The Bill allows institutions which may be aggrieved by a decision of the Bank to appeal to the Chancellor of the Exchequer, who is required to refer all such appeals to an indendent tribunal. I should mention also that the Bank will make an annual report to the Chancellor on the exercise of its supervisory functions, and this will be laid before Parliament.
48
The second Part of the Bill sets up the Deposit Protection Scheme. It has been argued that if the system of supervision works effectively, then all failures of supervised institutions ought to be precluded. The Government do not accept this. We hope of course that any failures will be very few and far between. The history of the British banking system encourages us in this hope, as does the long experience of the Bank of England in supervision of banks. However, any system of supervision that sought to rule out altogether the possibility of failure would be unacceptably interventionist, and would necessarily have a stifling effect on the commercial judgment of those directors and managers responsible for running the institutions. Consequently, since the very occasional failure must be contemplated, the Government believe that it would be wrong to leave the smaller depositor with no protection for his money. The scheme, while deliberately not removing all element of risk from the depositor, gives him the assurance that he will receive back 75 per cent. of the first £10,000 of his sterling deposit in the event of an insolvency. The scheme will be financed by contributions from recognised banks and licensed institutions, and consist of a small cash fund, plus a system of back-up guarantees. This should combine the flexibility to deal with any small failures from the cash fund, while keeping in reserve larger resources should the need ever arise. The Bill now provides, in response to representations, that all contributions to the scheme will be tax-deductible.
Part III has proved to be the most controversial Part of this generally welcomed Bill. Essentially, it confines the use of banking names and descriptions to institutions recognised as banks under the Bill. This policy is a natural concomitant of the two-tier system which is set up under Part I of the Bill, and which largely reflects the existing division between the primary banking sector and other deposit-taking institutions. In general, only institutions in the primary banking sector may at present have such words as "bank" in their titles. However, this policy on the use of banking names has been largely undermined by the uncontrolled use of banking descriptions such as "bankers" immediately after the name. This has given rise to much

49
confusion among the general public, and has been suggested as a contributory factor in the secondary banking crisis in 1973–74. So, far from clarifying the position, it would perpetuate the confusion if institutions which had not gained recognition as a bank under this Bill were nevertheless able to represent themselves as banks.
Some uneasiness was shown in the passage of the Bill through the other place at these provisions in Part III. Consequently, the relevant clause as it now stands differs somewhat from the clause as originally introduced. The main difference is that licensed institutions, notwithstanding the prohibition on holding themselves out to be banks or bankers, may nevertheless use the phrase "banking services" in relation to themselves, except in certain defined circumstances. The Government believe that this should meet the substance of the case put forward by licensed institutions who feared unnecessary damage to their business. However, we do not feel it possible to go further without undermining the policy itself. I should also mention that the position of foreign institutions licensed to carry on a deposit-taking business here through a branch caused some concern. It had originally been proposed that all such institutions would be allowed the use of any banking name that they had in their country of origin, providing that this was qualified in this country by an explanatory phrase. It was suggested that this gave an advantage to foreign licensed institutions over their domestic counterparts. Because of a provision in the EEC Banking Directive, it is not possible to deny EEC-based institutions the use of any banking name they may have in their country of origin. But the clause as now drafted confines this privilege to EEC institutions, and requires that their status as licensed deposit-takers should always be made clear when the name is used in this country.
The Bill has been generally welcomed, both inside Parliament and outside. I am sure that this is in no small measure due to the fact that the Bill places responsibility for administering the system of authorisation and supervision upon the Bank of England. We have every confidence in the impartiality, expertise and care which the Bank can be expected to show in administering this system, as it has
50
hitherto done in conducting its traditional supervision of banks. The Bill passed through the other place in an atmosphere of constructive co-operation. The Government accept that because of this it is a better Bill than when introduced. I commend it to the House, and I beg to move.
Moved, That the Bill be now read 2a.—(Lord McCluskey.)
5.10 p.m.
Lord REDESDALE: My Lords, first, we are most grateful to the noble and learned Lord, Lord McCluskey, for such a clear exposition of the Bill. I thought also that he was particularly fair in taking the points which had been put in another place and which I think have improved the Bill. We of course believe that it can be improved still further. Next, my Lords, I must declare an interest. I am employed by the Chase Manhattan Bank, a major American bank established here and authorised for many years. So this Bill does not pose any problems for the Chase or for other United States banks in this country. Consequently, I believe that my declared interest is an advantage, as it has helped me to become better informed about the Bill and yet I can still remain completely objective.
From these Benches we welcome the concept of the Bill, especially Part I, which statutorily regulates and defines banks, although the two-tier system and some other aspects of it create some unfair situations. Although welcoming a scheme to protect depositors, we have some reservations about the implementation of the fund and the board. In Part III there are a number of points with which we shall want to take issue. Since this Bill is the first piece of major bank legislation this century, we believe it provides us with a very good opportunity to widen its scope to cover some points of banking law reform—a daunting subject for a layman to raise, especially with such a distinguished lawyer as the noble and learned Lord on the Bench opposite taking charge of the Bill.
However, looking at the Bill as a whole, the July 1978 White Paper states:
"One of the purposes of this legislation is to assure the health of the financial system generally".
That is very laudable, but does it have that effect? I think it is doubtful. Let

51
us look at the 1973–74 secondary bank crisis, to which the noble and learned Lord has already alluded. No depositor—and I stress the word "depositor" —actually lost any money. In fact, I cannot find a case in which a depositor has lost money in a British bank. I raise this matter because in another place the Minister took exception to this claim, and at Report stage said that he did not want to hear any more about it. I have to confess that I have looked into this a little more fully, and I gather that the case that he quoted as an example was rather strange. It turned out to be Gwili Farmers, a Carmarthenshire farmers' cooperative operating as corn and seed merchants—hardly, I think, a bank. It happened 15 years ago, so it was pre the 1967 Companies Act and the well-known Section 123, which has of course since been repealed. Therefore, it was not a bank, I believe, under the DTI terms; nor was it a bank under any other terms. I am sorry to take up your Lordships' time on this point, but it was raised in the other place and I think it is important. I do not think that anybody has lost any money as a depositor—and this concerns a depositor—in a bank, and certainly not a bank recognised by the Bank of England. Perhaps the noble and learned Lord can come up with a better example than a farmers' co-operative.
Returning to the 1973–74 crisis, not only did no depositor lose any money but only one secondary bank actually went into liquidation. The proposed fund would not in fact have been called on. However, I accept that if Part I of this Bill had been in operation then perhaps some of the Section 123 banks which got into trouble would not have been granted licences in the first place. I accept that point. What was required, however, was a lifeboat of cruise-liner proportions. In fact, it had a displacement of no less than £1,200 million, and 80 per cent. of that was put up by the clearers. This is evidence of their strength, and that strength is very necessary. They must be strong, because a lifeboat is the surest way to protect depositors. I believe it is a much surer way than a fund which pays out only when a bank actually goes into liquidation, and then only on 75 per cent. of a maximum up to £10,000.
52
So let us look at the fund. The noble and learned Lord sounded very plausible in his explanation of this, but I am not quite clear why not less than £5 million and not more than £6 million was the sum chosen. Just to look at it in a little more detail, the latter figure—that is, the £6 million—is enough to cover 800 depositors each over £10,000; that is the maximum on a call of 75 per cent. Taking the fund with borrowings up to its maximum—that is, with the doubling and everything added in, the Bank of England's borrowing—we get up to a figure of some £300 million, which would cover 40,000 accounts of over £10,000.
I do not want to confuse the issue as between what is an account and what is a customer, because it gets extremely complicated and figures are very hard to come by, but I tried to quantify this and I found out that one clearer alone has over 20,000 accounts of over £10,000, which would be a call of £150 million. Very well; that is the first call that we talk about, which is at £140 million, give or take the odd £10 million, which could be borrowed by the Bank of England. It is estimated that the call of the smaller depositors—that is, those under the £10,000—would bring this total that I have mentioned, of £150 million, to well over £1,000 million. I make this point to show that if a clearer collapsed the whole financial system would probably collapse. As I have said, the clearers are strong, and thank goodness they are! It is therefore highly unlikely that a clearer could or would collapse.
My Lords, the point I am trying to make is that, as the clearers are going to have to pay the lion's share of covering the fund, this is a little unfair; and a point which I am sure the noble Lord, Lord Polwarth, will raise is that, proportionately, because the minimum has been lowered and there is a ceiling of £300,000 on the contributions, then in fact the people who are going to be hit the hardest, probably. in terms of contributions are going to be the Scottish banks—a point which might come home to the noble and learned Lord. So on this basis the safest have to pay most. I am sure the noble and learned Lord is a very careful driver, and I do not think he would be very happy if this principle was applied to his no-claim bonus.

53
The other point I should like to make is that the fund could really be a potential drain on the much more important issue of a stand-by lifeboat. However, accepting that we are going to have a fund, even if it is of somewhat doubtful value—and I say "doubtful value" because, let us hope, the regulations as carried out by the Bank of England will make any failures extremely unlikely—let us at least, at this stage, dispense with the doubling of a 0·3 per cent. of deposits call to a 0·6 per cent. I say this not to make a Party point, or anything else, but because I have tried to show that in the event of a major collapse in that sort of area we would he in the throes of a full-scale banking crisis of really mammoth proportions, and it would need a lot more than an Affirmative Order—which, after all, as your Lordships know, cannot be varied; it can only be accepted or rejected. That situation would require very full debate and, I believe, primary legislation.
Next, I should like to come on to the question of the Giro. The Giro, of course, are guaranteed by the Government and are therefore totally safe; but I have tried to show that the clearers are totally safe. Her Majesty's Government say that the Giro will make a comparable contribution to the Treasury. I do not think there is much force in that point. I think it would be much better if that contribution was paid into the fund, to reduce the overall contributions. After all, the Giro do hide their accounts within the Post Office. When I say "hide", they are part of those accounts and therefore it is harder for them to pull it out. Even so, the accounts in 1977 (under Note 13) had an auditors' qualification—something which, if it happened to a clearer, would have caused a major scandal.
What about deposits as a whole? There was an excellent article in the Economist on 18th February last year which contained a chart showing how the deposit cake was made up. Two periods, 1962 and 1977 were taken. Back in 1962, the building societies had only 20 per cent. of that cake. Now, they have 40 per cent. The clearers had 45 per cent. and they have dropped to 29 per cent. This shows the great growth that there has been in the building societies. The share of the other areas such as the Scottish banks, Giro, the Post Office Savings Bank et al
54
has in fact gone down as has that of the clearers; but other banks have gone up from 2 per cent. to 12 per cent.
The point that I am making is that the funds are there to cover 12 per cent. of the deposits, let alone the building societies. When it comes to the Building Societies, they, with their massive 40 per cent. have also a higher proportion of the smaller deposits—that is, those of people depositing under £10,000—and, therefore, although they are supervised (as the banking system will be by the Bank of England) it seems fair that they should be brought within a comparable scheme and should then compete on all fours with the clearers and the other banks. I think it is only fair to do this. Although the Government have said that the building societies are going to be encouraged to have a scheme, I think that they ought to be encouraged with a rather more cogent incentive. I believe that the incentive should be that they should have 18 months during which they are excluded (as they are at the moment) from the Bill covering deposit takers, but that, within 18 months of this Bill becoming law, they would have to come into the scheme or have a comparable scheme actually in operation and approved by the Chancellor of the Exchequer. I think that 18 months is fair and that it would get things moving on that front.
That brings me to the Trustee Savings Banks. I accept the argument that they cannot come into the scheme at the moment although they would like to do so and are prepared to make a contribution when that time comes. But they will require a certain amount of Government assistance on legislation and other matters. I hope that the noble and learned Lord may come on to that when he winds up. I believe that the Government should be encouraged to get that date brought nearer rather than further away. I believe that a similar clause should be inserted which would bring us to the beginning of 1981, which is a date that the Trustees Savings Banks think is a realistic date for them to come into the scheme. Therefore I hope that this point will be accepted by Her Majesty's Government.
My Lords, while on fairness, I should like to touch on Clauses 11 and 13 which were discussed in the other place. They

55
concern appeals. At the moment appeals can be heard only by the courts on matters of law. I believe that this should be extended to matters of fact, as well.
Clause 16 covers the need for a definition of "accountants". It mentions the word "accountant" and an accountant can be anybody who calls himself an accountant; whereas only solicitors can call themselves solicitors. Although the Government criticised as being too long the definition that was put up in one Amendment—and I have sympathy with that criticism because it was too long—the definition could be brought within an Amendment based on Section 161(1)(a) of the Companies Act 1948. When it comes to the definition of "proper accounts" this could be done with an Amendment based on a modified form of the way it appears in the Companies Act 1976.
Clause 19 comes to the question of the public interest and the widening of the Bank of England's powers in determining what is the public interest. This was debated in another place. Surely the public interest can be determined only by either Parliament or the courts, and not by a central bank. The Minister was adamant on this point; but in order to cite an example he had to go back to 1924 and to a case which involved somebody who had been trading with the enemy in the First World War. This seems a very long time to which to have to go back for an example. I should like to raise this point along with the other questions of disclosure to the Treasury and overseas central banks. I believe that we should look at this very carefully; otherwise there are real dangers in so reducing the basics of confidentiality in banking as to harm the image of London as a major financial centre.
I come now to the vexed question of Part III, Clause 36 and banking names. The noble and learned Lord has talked about this. There are several unfair aspects of this Part of the Bill. I accept that it is very difficult. Life is unfair, but in this Bill let us at least try to reduce this inherent unfairness. The noble and learned Lord talked about the EEC banks. I will not elaborate on this point, other than to say that they have an unfair advantage. The reason why I raise this unfair advantage is that the criteria by
56
which the parents are judged differs throughout the EEC. Some of those criteria are far less severe than the criteria by which banks will be judged in this country. It is something which bears consideration.
Next there is the problem of the finance houses, many of whom offer a range of banking services. I appreciate the changes that have been made to allow these companies that provide banking services to claim in law that they are banks, but they will be prohibited by law from saying that they carry out banking business. This is a long and involved subject but I hope that we can persuade the Minister at a later stage to go a little further. I have a suggestion along the lines that, if you describe these services more accurately and also in a more limited fashion, then this might be more acceptable. I would suggest that they ought to be allowed to use words on the lines of, "Licensed for limited banking services". This is something which is worth consideration.
On the question on investment banking, the Minister in another place poo-poohed this. All that I would say at this stage is that it is an accepted term in North America; we cannot ignore the outside world and the English organisations will be at a grave disadvantage if they can call themselves investment bankers only when they are describing themselves overseas; but they cannot do so here. Perhaps the answer is that, if they become licensed institutions, they might be allowed a little more leeway on this matter. I next come to the question of management companies and an absurdity whereby two of the clearers, Barclays and Lloyds, are going to be hampered in their rather imaginative developments of using management companies to be responsible for the United Kingdom banking subsidiaries of the holding companies. The clearers are going to pay the lion's share of the fund for which their customers and shareholders will receive very little; and, at the same time, they are going to have to submit to, I think, some petty regulations which will prevent them using the names that they would like to use and which insist that these management companies call themselves by rather unwieldly names like "Lloyds Bank UK Management Limited". This management company would bear the responsibility if anything

57
went wrong with Lloyds Bank United Kingdom operations so that it would be sensible (even if it is not a trading company) to call itself by the United Kingdom Bank branch name of "Lloyds Bank UK Limited". This would allow the holding company the important advantage of using the full footings of the bank when dealing overseas by being known as "Lloyds Bank Limited".
Finally—and I see I am speaking for rather longer than I intended—I should like to raise two points: this Bill gives us the opportunity of widening the banking legislation in this country. I shall have to cut my speech much shorter than I intended, but there are two Acts which ought to be brought into the Bill. I believe this can be done because the Long Title of the Bill says:
"to repeal certain enactments relating to banks and banking".
The first concerns the Consumer Credit Act 1974. I shall not go through the full argument that I wished to make; but I should like to draw attention to a particularly good piece of pleading on this subject which appeared in the Trustee Savings Bank's case which was presented to the Wilson Committee, paragraph 8.3. It speaks of the highly complex nature of the legislation, the increased costs it would involve and reduction of services. It ends:
"The resultant additional protection is in any case likely to be minimal. Above all the Act is concerned with the imposition of rigid rules in the granting of consumer credit at a time when the banking industry is trying to develop greater flexibility in the services it offers".
I believe that the removal from the Act of those recognised banks which provide a substantial part of their banking services in current account and overdraft facilities can only be beneficial by clearing away some of the problems preventing implementation of parts of the 1974 Act. After all, a third of that Act, as the noble Lord, Lord Jacques, knows because he is quoted at some length in that debate, is not yet implemented.
The other point I wanted to raise briefly is a subject on which a layman should be careful especially with as learned a noble Lord as the noble and learned Lord, Lord McCluskey, sitting opposite. It is the effect of the Torts (Interference with Goods) Act 1977. At a later date we should like to put down an Amendment
58
on this because the onus on the banks in this country is far greater than it is in any other EEC country. We have a different concept of conversion to any other country apart from perhaps the old ex-colonies which work from our law. I believe that we could rectify a situation which has developed whereby the fraudulent conversion of cheques now bears very heavily on the banks, far more so than it actually should do. It has crept in probably more by mistake than by intention. I hope that we can have a look at that point in some depth later. My Lords, let us hope that with a little co-operation from Her Majesty's Government we shall be able to improve this Bill still further in this House.
5.34 p.m.
Lord SEEBOHM: My Lords, after spending nearly 50 years in the business of banking, I must naturally declare my own interest in the Banking Bill. However, let me say straight away that I and my colleagues in the clearing banks on the whole welcome this Bill. My object in speaking today is to draw attention to certain aspects which in our view need amendment. I do not propose to go into great detail this evening as there will be a further opportunity in the Committee stage. The noble Lord, Lord Redesdale, has mentioned most of the points that I wish to make. I shall therefore cut my speech very short; but I want to underline from the point of view of the clearing banks one or two of the matters to which the noble Lord referred.
First of all, there is no doubt that they would like to see the whole of Part II of the Bill removed. If, on the other hand, it is to be adopted, then, like the noble Lord, Lord Redesdale, we see no reason why the National Giro bank should be excluded just because it is Government-owned. It has been generally accepted that none of the British clearing banks is likely to fail. They are only brought in in order that a sufficient sum should be available to bail out their weaker brethren. The same argument must surely apply to the National Giro bank. In order to retain equality of competition, as the noble Lord, Lord Redesdale, pointed out, it has been agreed by the Government that an equivalent sum should be paid not into the fund but to the Treasury. Can anything be more absurd than this, my

59
Lords? As at present envisaged in the Bill, two-thirds of the entire insurance contributions will come from the clearing banks. Surely the same rules should apply to all competitors in the same game whoever are the ultimate proprietors.
My second objection to Part II is that the building societies and the Trustee Savings Bank are excluded under Schedule 1. In so far as the building societies are concerned, it must be remembered that their deposits now considerably exceed those of the clearing banks. As they already have considerable competitive advantage over the banks in tax concessions there seems little reason why they should receive yet further benefits. In the case of the Trustee Savings Bank, the Government have agreed that they will come entirely within legislation at the appropriate stage of their development. Why should they not come in now as they are very anxious to take their place in the private sector as soon as possible? Alternatively, the whole of Part II could await the inclusion of the building societies and the Trustee Savings Bank.
Finally, on Part II, the Banks feel most strongly that the Treasury should not be given the power to increase the Bank's contributions from 0.3 per cent. to 0.6 per cent. at their discretion. This power is equivalent to increasing the sum involved at present deposit levels from £140 million to £280 million—a vast sum indeed. As the premium is expressed in percentage terms, it is, of course, inflation indexed. Surely Parliamentary scrutiny should be preserved for sums of this order.
In Part III I am sure that all will agree that the name "bank" in the title of a financial institution must be used with care. I do not however believe that it is unreasonable to allow the use of the name "bank" by a wholly-owned subsidiary of a recognised bank, and Clause 36 should certainly be amended to include wholly—owned non-trading subsidiaries. This applies at present to two of the clearing banks, as the noble Lord pointed out, but could affect more if they wished to adopt a divisional basis of management as have Barclays and Lloyds Banks. If the main object of the Act is to protect depositors, who can possibly object to such management subsidiaries, which will not be taking deposits anyway?
60
My Lords, there is one further matter to which I wish to call your attention. It is the possibility of using this Bill to correct a severe disadvantage that arises from the Consumer Credit Act 1974. It will be recalled that that Act was introduced so as to protect consumers from some of the worst aspects of those who lend money at excessive rates of interest, or with inadequate safeguards. It was never really intended to apply to ordinary bank lending on overdraft. Indeed, it has always been recognised that overdrafts represent one of the cheapest and most convenient forms of credit.
During the passage of the Consumer Credit Bill through this House in 1974, I and other noble Lords pointed out the disadvantages to consumers that would occur as a result of the legislation, almost accidentally, being drafted to cover bank overdrafts. It has in fact taken a long time for the Act to be implemented but now we are beginning to see the adverse consequences. Regulations are now about to be made in respect of advertising, and are expected before long in respect of the provision of interest rate quotations. The requirements under these regulations will involve the banks in expensive extra computer equipment and in heavy costs of employing additional staff. I am not making a special plea on behalf of the banks: the case I am making is that these regulations, so far as they apply to overdrafts, will be of no benefit at all to consumers. The additional information that will be supplied to the ordinary bank customer taking out an overdraft will not assist him in any way; but the effect will either be to put up the cost of overdrafts or to force the banks to move out of their business into personal loans. And either way the result will be that the consumer will have to pay a higher cost.
All this we predicted when the Consumer Credit Bill was under consideration in this House five years ago. At that time we were told it would not be possible to exclude the banks because no definition of a bank existed. Now, however, with the advent of the Banking Bill, that hurdle is removed. One of the main purposes of the Bill that we are discussing today is to provide a statutory definition of a recognised Bank. And, indeed, one of the criteria for recognition as a bank is that overdraft or loan facilities shall be offered

61
to members of the public. This is in Schedule 2, page 55, of the Bill.
I very much hope that when we come to the Committee stage we can agree on an Amendment which will have the effect of exempting ordinary overdraft lending from the Consumer Credit Act. It has already been mentioned in fact that in the Long Title of the Bill this is probably in order. I should make it clear that I am not suggesting that all bank lending should be exempted from the Consumer Credit Act. Personal loans and other lending on fixed terms should clearly stay within the Act, and this is accepted by the banks. It is only a question of overdrafts, where the balance outstanding and the rate of interest charged often vary from day to day, and where the application of rigid regulations designed for a completely different purpose looks like making the whole system much more difficult to operate. This is, I am sure, the most important change we can make to the Bill and it is one which will provide real benefit to something approaching 20 million consumers—many of them small businessmen and some of them perhaps even Members of your Lordships' House—who have bank accounts and may at any time need to run up an overdraft, and who wish to be able to continue to do as cheaply and as easily as at present.
5.41 p.m.
Lord POLWARTH: My Lords, I must start with an apology to the noble and learned Lord, Lord McCluskey, for not being in my place during his opening speech. I can only attribute my absence to an unfortunate failure of communications. I, also, must declare my interest, as a director and former Governor of the Bank of Scotland. Certainly the noble and learned Lord, Lord McCluskey, needs no information from me on the role of the Scottish clearing banks. Their origins are ancient. The Bank of Scotland, I might remind your Lordships, was constituted under an Act of the Scots Parliament, although founded by an Englishman, in 1695–one year after the Bank of England was founded, of course, by a Scotsman! The other two Scottish clearing banks as constituted today were founded in 1727 and 1836 respectively.—
Lord COBBOLD: My Lords, if I might interrupt the noble Lord, I think the
62
Englishman who founded the Bank of Scotland lasted for a little longer than the Scotsman who founded the English Bank!
Lord POLWARTH: My Lords, the noble Lord the former Governor of the Bank of England is absolutely correct. So, although we are quite a bit smaller than our English colleagues— on average some 10 per cent. of their size—we do enjoy, I think, the same confidence in the community and have been pioneers in some respects, notably in the system of finance through overdrafts and, more recently, in the introduction of computer technology in banking. Also, we have always been subject to the same degree of supervision as our English colleagues.
Subject to what I shall say later, I would say that I, and, I know, the Scottish clearing banks, broadly welcome this Bill and its intentions. If this debate appears to be somewhat dominated by bankers, I hope that will not arouse any undue suspicions because I think the first interest of both a reputable banker and his customers must be a mutual one. The relations between a bank and its customers must be based on confidence. It is in the best interests of the bank that the customer has confidence that his money will be there when he wants it, and so we welcome anything that will give him the assurance that this will be so.
All of us in banking and finance were very shaken by the events of the fringe bank crisis of 1973–74. We shall welcome anything that will prevent a recurrence of anything like that. Confidence is not important merely in the home role of the banks but also in their role overseas. I would remind your Lordships that British banks, in the last year for which figures are available (1977), brought net earnings to this country from overseas of over £250 million. The maintenance of confidence in the British banking system abroad is every bit as important as at home. The Bill also, as we have heard, ensures the meeting of our obligations in respect of the EEC in this field, and that is to be welcomed too.
I believe that Part I, which provides for control and supervision by the Bank of England, is absolutely right. The Bank of England are the right body for this purpose. They already have a close, intimate and continuing relationship with

63
the traditional banks and they know what to look out for. I would only say of my own experience that when I was Governor of our Bank, and dealing with the then Governor of the Bank of England—Sir Leslie and now the noble Lord, Lord O'Brien—it was brought home to me that there was a relationship between the Bank of England and the banks based on fairness, mutual respect and trust but with, I can assure your Lordships, no "soft touches". I have every reason to think that those relations are the same today. I think it is absolutely right that the powers of the Bank of England should be extended in the way they are in this Bill to the whole of this sector.
Turning to Part II, I would say that I have the same reservations about it as the two previous speakers and therefore I will not go into this at any great length. I would simply quote the evidence and the representations put forward by the Committee of Scottish Clearing Bankers:
"The Scottish banks strongly endorse the view that there should be no need for a deposit protection scheme if the supervisory and control functions of the Bank of England operate as intended. To introduce a scheme on the proposed scale can only imply doubts about the exercise of the Bank's statutory powers".
I am all for the reasonable protection of depositors but, as has been pointed out, this scheme can only operate when an institution has already come to grief. It will only cover deposits of under £10,000 in size, and then only as to 75 per cent. of their amount. We have also heard that it was not the withdrawal of these small deposits which brought down the failed fringe banks or at least brought them to the verge of failure; it was the withdrawal of the large deposits. By the time this has happened, there could indeed be monumental calls on the fund. We have been into maritime metaphor already this afternoon and so I would say that the wreck could be more like the "Titanic" than the "Hesperus" and the lifeboat would have to be of a phenomenal capacity, if indeed it could be launched at all.
There are a number of questions over this operation, and I suspect that the proposed scheme is largely cosmetic. But if, as seems clear, the Government are determined to go ahead with the Fund, there are also questions of equity in its constitution. I find it hard to believe that
64
the undoubtedly sound financial institutions whose reputations have never been called into doubt should have to contribute in the way that they do. I will not go on about the Trustee Savings Banks and the building societies. Let us hope they may be brought into the ambit of this scheme or into a similar one reasonably soon. However, I cannot leave the National Giro unmentioned. It seems a rather remarkable conjuring trick that this equivalent sum in proportion—presumably £300,000 maximum at first call: I do not know—will be spirited away into the funds of the Treasury. Somehow I doubt whether that rabbit will ever return! If there is indeed good reason why that sum should not be paid into the Fund but into the Treasury, will not the Government give an undertaking that, in the event of a call on the Fund, the Treasury will then "ante-up" its share in proportion to the other banks? I can see no valid reason why they should not at least give an undertaking to that effect.
There is one other element of inequity in relation to the Fund. This is possibly where I may part company, though I hope not seriously, with my noble friend who has just spoken, from the point of view of the English banks. This relates to the relative size of contribution and was touched on briefly by the noble Lord, Lord Redesdale. In the initial call at the top end there is a cut-off or ceiling of £300,000 for any one institution. Obviously that will apply to the four London clearing banks, and I think that, at the time, it was brought in in reasonable recognition of their contention of their indubitably sound status.
At the bottom end, as we have heard, there was originally to be a minimum contribution by the smallest institutions of £5,000; I believe to recognise the risks of the smaller scale operation, perhaps partly as an entrance fee to the club to help cover administrative costs and perhaps partly to deter frivolous applications—all, I think, quite good reasons. Even at that time, the Scottish banks pointed out that on the best estimates available—and it is very difficult to work this out until the full supervision system is in operation—of the deposit base this provision, together with the upper limit of £300,000, would result in all the banks in between, the institutions between the

65
very smallest and the very biggest, paying on a percentage basis, which could result in their contribution being considerably in excess of what was fair in relation to the largest. At that time, it was thought that for the Scottish banks it might be between one-third and one-half of the comparable London clearing banks.
But that was not the end, because in another place in Committee stage strong pleas were made on behalf of the very small institutions that the £5,000 was excessive and, after a long debate, the Minister magnanimously conceded the point and agreed to reduce the minimum to £2,500 apiece. I know from experience on the other side of the House how tempting it is to concede a point to one's opponents, especially if it seems of minimal importance. It always helps to throw a dog a bone in order to keep him happy. But in this case I do not think that the Minister appreciated the consequences, because with a ceiling on the larger banks and a fixed sum to be raised, a reduction in the many minimum contributions can be made good only by an increase in the contributions by the institutions in between; in other words, the middle-sized ones. This does not include only the Scottish banks, because I think that there will be a number of others. It makes their contributions still more out of proportion to those of their larger brethren. So that in throwing a bone to the little dogs, the Minister was, in fact, taking it away from the middle-size dogs.
Although the figures are bound to be the subject of some conjecture, we were given information by the Bank of England only last week which, added to our own calculations, suggests that in the case of one Scottish bank their contribution, initially, could well be of the order of £200,000, compared with the maximum of one of the clearing banks of £300,000, and yet we are only about one-tenth of their size in deposits. This may seem something of a Committee point, but I think it is right that it should be aired now, so that the Government can look into the possible justice of our case before the next stage and endeavour to rectify it.
I shall not go into any further detail, particularly on Part III. I would simply conclude by saying that we want to see a strong and dependable banking system commanding confidence for our customers,
66
whether at home or abroad, and in this I say that there is no conflict between bankers and their depositors. Generally, we North of the Border welcome the intentions of the Bill, particularly the provisions for licensing and control, with the reservations I have already expressed about the deposit protection scheme. With those words, I strongly support the Second Reading of the Bill.
5.54 p.m.
Lord SELSDON: My Lords, I feel that I, too, should declare an interest as I work in one of the clearing bank groups. It often embarrasses me in your Lordships' House that banking groups have such wide interests that there are very few subjects upon which one can speak without declaring some interest. Thus, I suppose that as a banker I should give a qualified welcome to this Bill. But my own inclinations are not to welcome it at all, for I have a secret fear that if, as one of the freest banking nations in the world, we begin to introduce legislation bit by bit, then, however slightly, our competitiveness in the world may be eroded. We should bear in mind that one of the reasons why the United Kingdom, in London, is perhaps the pre-eminent centre of the international banking world is that we have not had restrictive legislation.
Most of the American banks—and I am sure the bank of my noble friend Lord Redesdale—set up here for international business, often associated with the Euro-currency market, because of legislation back in the United States. One particular type of legislation, the interest equalisation tax, or IET, encouraged people to set up and work outside America and, logically, they came to London. It was interesting that when that tax was amended the banks did not take their business back to the United States. So that in looking at this Bill, I ask myself: Will it have any effect on our international position?
I think that at the moment there are something like 199 foreign banks with branches over here, a further 100 or so with representative offices and some 86 full partners in consortia. Every time a foreign bank wishes to set up in London, it goes and asks permission of the Bank of England. Those outside the banking world, and they included myself for many

67
years, often failed to understand the remarkably close relationship which there was between the Bank of England and every bank in London, whether British of foreign. It was a strange informal relationship with people coming together to support each other in difficulty. Almost by a process of osmosis, rules or codes were laid down which were respected the world over.
I should like to ask the noble and learned Lord, Lord McCluskey, what the Bank of England feels about this legislation as it stands. Does it support it completely as it stands? Does it look at the need for amendments? What does it feel about the need for a protection scheme? I should like to ask him, too, if he will reply to the question of my noble friend Lord Redesdale, whether anybody lost any deposits during the secondary banking crisis? It is a point that should be cleared up. I understand that they did not. We should remember that that secondary banking crisis started initially not in London but in Germany. Someone reminded me the other day that a few hundred years ago a banking crisis, or a financial crisis, took a year to blow up. Then, as communications improved, it took a matter of a day and now, since the South-East Asian markets open early in the morning, you can, within a matter of five minutes, get an idea of which way the currencies of the world will move on that day. Crises are based upon a lack of confidence. Confidence is often based upon respect for prudent banking.
I was once asked a question by a Frenchman who was coming to live over here. Unlike so many people who wish to leave the country, he thought that this was a wonderful place to be, and he brought all his money with him. He said "I should like to deposit it somewhere". We were having lunch together with an elderly and very distinguished banker, and the Frenchman asked him "Where should I deposit my money? I do not understand the banking system. What is a bank and what is not a bank? "He said" I have heard about merchant banks. Are they safe places?" The elderly banker said "Yes, many merchant banks are accepting houses, and they have the Bank of England behind them." Then the Frenchman asked "What about the clearing banks?" The banker said "Ah,
68
clearing banks are undoubted." "Then I suppose" said the Frenchman, "clearing banks stand behind the Bank of England." There are times when you have a crisis, like the lifeboat with cruise liner proportions, as my noble friend Lord Redesdale said, but, however big and terrible that crisis was, it was probably resolved—perhaps the noble and learned Lord, Lord McCluskey, would confirm this—with nobody losing his deposits. Certainly, investors lost money.
We must bear in mind that, as the banking world, or the financial world, seeks deposits, there are those who will inevitably offer a higher return than others. That higher return is almost always associated with higher risk. Sometimes that risk may pay off, but, when there is a flood of money which can often come with a property boom, or a boom in other areas, that money can move in and out with frightening rapidity. It is not usually the individual, the man in the street, if I may use that phrase, who causes the crisis; it is the institutions, people doing their jobs, protecting their own employers, hedging et cetera.
We often forget, the way in which the individual is involved in the banking system. Only half of the adults in the United Kingdom have bank accounts. Others use other types of financial institutions, which they often regard as banks. This Bill could tell some people that organisations which they regard as banks are no longer banks, and with it confidence may erode. The two-tier system proposed is an invidious one. While I understand the desirability of trying to keep out—I do not mean to insult our American cousins —the cowboys and the hustlers in the financial world, it may unwillingly upset honest, respectable, highly successful bodies in the financial community which regard themselves as banks and which would take considerable exception to this. Representations have already been made to the Government.
Much has been said about Part II of the Bill, the deposit protection scheme. All I would say is that I can think of a better solution, and I am sure that many other people can, too. I hope that many Amendments will be put down relating to Part II of the Bill. Ideally, I think that Part II should be removed entirely, but I am sure that it will not be. During the

69
time that I have been in your Lordships' House I have become more and more depressed about the way in which we have legislation pushed upon us, legislation which is neither clear, nor concise, nor even fair. I feel that it is its fairness which is the most important issue of all. Our normand cousins across the water often say that all good legislation requires three phases: conceptualisation and realisation, and in between a good bit of animation. In this Bill, the animation is missing.
6.2 p.m.
Lord O'BRIEN of LOTHBURY: My Lords, although I did not put down my name on the list of speakers, I hope that I may take advantage of the convention of your Lordships' House whereby if a noble Lord feels he must speak he is allowed to do so. I do not want your Lordships to think that just because I am sitting next to my noble friend Lord Cobbold I am seeking protection, or that he will pull my jacket if I go wrong. We just happen to be sitting together. I do not want to upstage my noble friend Lord Seebohm, but I have been in banking for 52 years. He may say that for most of that time I was not a proper banker, anyway. That is a matter of opinion, of course. Certainly, for 46½ years I was in the Bank of England and was Governor between 1966 and 1973, a period which has some relevance to the legislation which we are now considering.
Since then, I have become a sort of commercial banker, for I am the director of one bank—the Saudi International Bank —and adviser to two others, Morgan Grenfell and Morgan Guaranty. I should not like to say that the great success of all those banks is entirely due to my advice, particularly in the presence of Lord Taylor of Gryfe who is a far more effective adviser to Morgan Grenfell than I am. I am also the President of the British Bankers' Association and am therefore in some sense a spokesman for over 300 of the principal banks in this market. But even though I am a kind of commercial banker now, and a representative of those banks, I cannot be expected to forget my lifetime in central banking. Therefore, I am in something of two minds in approaching this legislation.
As I say, I spent a long time in the Bank of England, and seven years as Governor,
70
when the conditions which helped to bring about this legislation were being created. I remember the Radcliffe Committee Report of 1959. In their report they showed that they were aware of the fact that, partly due to the extreme restraints which were placed upon the banking system proper from time to time as we went through successive crises, the fringe institutions were growing up. The committee decided that although that was so, it would not be right or worth while to extend control to them. Whether they would have thought the same 10 years later is perhaps open to doubt. Certainly they would not think the same now.
I am convinced that this legislation, or legislation of this kind, is absolutely imperative. It is imperative because we have to comply with our obligations to the European Economic Community. But it is not only for that reason that I think that legislation is absolutely imperative. I believe that Lord Cobbold would be only too ready to agree with me that for many generations the Bank of England were rightly proud of the very light-handed regulation with which they managed to keep the banking system of the United Kingdom under proper control. But the banking system of the United Kingdom now is very different indeed from what it was even 20 years ago, and I believe that we need a framework of legislation.
I was most grateful to the noble and learned Lord for the manner in which he outlined what that legislation would be and the thought behind it: the desire for flexibility and the desire to bring about the very minimum change to the arrangements which have served us so well over so many years. It is entirely right that the Bank of England should be at the centre and should be the implementer of this legislation: the continued controller of the banking system. I think that the banking system would be very shocked indeed if that were not so.
I do not think that the noble Lord, Lord Selsdon, needs to worry about the degree of change in the method of controlling the banking system which this legislation will bring about, so long as the Bank of England is there to implement it. I believe that the philosophy which has actuated us over hundreds of years will continue and that the advantages enjoyed by banks in this market will also continue.

71
I say, therefore, that the legislation is necessary. Also I say that I do not think that it is a bad Bill. That may sound a bit grudging, but if a Bill is not bad it is beginning to be good—which is more than I would say for the Consumer Credit Act. I think that is a very bad Act, and I have great sympathy with what my noble friend Lord Seebohm said about the inclusion in it of ordinary bank lending. I, like him, very much hope that this opportunity will be taken to change that, to the great advantage of all those who use banks.
I have great sympathy, also, with those who are unhappy about the deposit protection scheme. This subject is being considered in Europe where it is thought at the present time that they should seek in the Commission to co-ordinate the separate deposit protection schemes of the individual countries. Their further thought is that those schemes should rest entirely upon guarantees, not upon cash subscriptions which I should have thought would be entirely adequate. Cash guaranteed by a leading British bank is as good as money. Also, I sympathise with the views of people who feel that others, such as the Giro Bank and the Trustee Savings Banks, should be brought in.
I do not intend, however, to go in detail into all of the objections that have been made. The Committee stage will come and then we shall have a chance to look at the Amendments and debate them in detail. For my part, I welcome the legislation and the spirit in which it is put forward. I look forward to it being administered in a way which will be satisfactory both to the authorities and to the banking system.
6.8 p.m.
Lord McCLUSKEY: My Lords, if all the speeches this evening had been as welcoming as the speech of the noble Lord, Lord O'Brien of Lothbury, was modest in its recitation of his contribution to and experience of banking, I should have a much easier task both now and at the Committee stage, which will prove to be rather more interesting than I had hoped or, indeed, feared.
The Bill has received this evening a more muted welcome than I had expected from some sources, but that may simply
72
be a question of emphasis because most speakers, while extending a general welcome to the legislation, have concentrated upon its supposed defects. However, most of the points which have been taken are ones which we can properly look at and examine in detail in Committee. I need not take up your Lordships' time in going through them all at present. However, there are some which I must answer. In some ways, the most important of them, and certainly the easiest for me to answer, was that asked by the noble Lord, Lord Selsdon; namely, what is the view of the Bank of England? Does it support the Bill and the scheme? The answer to both parts of the noble Lord's question is, Yes.
I was asked by the noble Lord, Lord Selsdon, and by the noble Lord, Lord Redesdale, about depositors losing money in the 1973–74 crisis. As a lawyer, I was always brought up never to ask a question unless I knew the answer, and it was plain from the smugness with which the question was put across this Table that the answer was well known. The 1973–74 crisis in secondary banking led, as noble Lords are well aware, to the creation of the lifeboat. The intention of this operation was to avert a crisis of confidence in the banking system. The immediate objective was to provide liquidity support to those institutions which were experiencing rapid and substantial withdrawals of deposits. In the event, a number of these companies turned out to have deeper-rooted problems of solvency, and these have been run down in an orderly fashion.
As a result of the lifeboat, however, no depositors who were not connected with the institutions lost money. So in short the answer is, none. Of course, connected depositors —and the noble Lord Redesdale, was particularly careful to phrase his question exactly —are not protected by this Bill, and they were the ones who lost in that situation. A sum of £l·2 billion was mentioned, and that indeed was the sum committed to the lifeboat at its peak, but the final losses of those who suffered losses will be very much less.
The deposit protection scheme is directed towards the same kind of depositor who was protected under the lifeboat but who did not in fact lose. It excludes from protection the directors, controllers

73
and managers of a failed company and their immediate relatives, and it gives the Deposit Protection Board discretion to exclude from protection other depositors who appear to the Board to have had responsibility for, or to have profited directly or indirectly from, the difficulties of the institution.
There are, of course, differences between the 1973–74 lifeboat operation and the present matter. In particular, we are only concerned here with what protection is required when insolvency actually occurs. I was also asked about the arbitrary size of the fund—not less than £5 million and not more than £6 million—but, of course, in a Bill one cannot just say that we will have a sum of money and when the Government pick any sum of money it is bound to be said to be arbitrary. So really in a sense one cannot avoid an arbitrary figure. What we have here is a cash fund which is small. Although I understand the particular point raised by the noble Lord, Lord Polwarth, and I shall have to deal with that in due course, it does not make excessive demands upon the institutions which are called upon to contribute, particularly when one recognises that now all the contributions are—as I said in my opening speech—tax deductible. So the contributions are relatively modest. Therefore, one ends up with a cash fund which is limited in size but which should be available to deal with the relatively small failure; and indeed one hopes that with the system of supervision that is introduced by Part I of the Bill and that working, as one would expect it to work, under the supervision of the bank, that we shall not have to face any other type of crisis but that type of crisis. Accordingly, we are creating a cash fund which gives credibility to the scheme in the eyes of the public and enables these relatively small matters to be dealt with without too much difficulty.
In relation to Giro a number of noble Lords mentioned the position. It is exempt, of course, because ultimately it is responsible to Ministers and I do not think that the criticism was in relation to its exemption. But it is already subject to a system of supervision very like that which will be carried out by the bank under this Bill, and I do not think there is any suggestion that in that respect it enjoys a "soft option." The main point, however, was that it was excluded from contributing
74
to the deposit protection scheme and that was thought to be unfair. I think noble Lords recognise that there is no unfairness, in that it makes a similar contribution to the Treasury. The point is that that money which it contributes ought to be available to the fund or indeed to help to bail out someone when there is a failure. I think the noble Lord, Lord Redesdale, wishes to intervene.
Lord REDESDALE: My Lords, the noble and learned Lord is most kind. The only point on that is that their contribution would then reduce the fund and therefore it would be a more equitable fund, especially covering the point raised by the noble Lord, Lord Polwarth.
Lord McCLUSKEY: My Lords, merely to give figures would not answer the point on equity, but a contribution to the initial cash fund by the Giro bank would amount to some £40,000. This would not materially reduce the contribution of the Big Four London clearers who are already contributing at their maximum of some £300,000 and clearly a contribution by Giro of that figure—which I am advised is the correct figure—would not have a very noticeable effect upon the other contributions to the whole fund, given the size of the fund that I have mentioned. But I think there is a difference here between the private investor and the role of the Giro bank. However, no doubt this is a matter which noble Lords will feel constrained to pursue at a later stage, and I see from the look of amazement on the face of the noble Lord, Lord Redesdale, that he does not believe my figures. I do not think I can improve upon them at the moment, but if I am wrong I shall hasten to eat humble pie on another occasion.
The noble Lord, Lord Redesdale, mentioned the matter of public interest and felt that only the courts and Parliament should be able to judge the public interest. Of course in certain circumstances it is right that Parliament should be the judge of the public interest, and in certain limited categories of matter no doubt the courts can make a judgment upon the public interest. But in a matter of this kind it cannot be wrong to say that the Bank, and ultimately the Treasury or the Chancellor—the Chancellor himself being answerable to Parliament for

75
his judgments—and others than the courts and Parliament, have a role to play in assessing the public interest. It arises only in a very limited matter in relation to the disclosure of information here, and if that matter is raised in Committee no doubt we can pursue it further.
The position of the Trustee Savings Banks and the building societies has been mentioned. Perhaps I may just say a word about each of them. So far as the building societies are concerned, the council of the Building Societies Association is discussing with the chief registrar the feasibility of establishing a deposit protection scheme for building societies and the terms on which it might be set up. It is expected that the building societies would agree to establish such a scheme. I do not know that it would be proper to put such a time limit on it as was proposed by the noble Lord, Lord Seebohm, in relation to that matter, but doubtless that again can be pursued if it is raised at the Committee stage.
As your Lordships will be well aware the Trustee Savings Banks are now moving from the public to the private sector, and it is expected that within a few years they will have developed sufficiently to bring them within the supervisory system established by the Bill. At that point they will automatically become contributors to the deposit protection scheme. So that is the position with regard to them at the present time.
A small point was raised by the noble Lord, Lord Redesdale—small in relation to the whole Bill, although no doubt it is important for those involved. It was the case of the management subsidiaries of Lloyds and Barclays. The Bill as framed already allows for a wholly-owned subsidiary of a recognised bank to use the name of its parent bank in its own title, in two sets of circumstances: where the subsidiary is itself a deposit taker, then the Bill in Clause 36 specifically provides for the use of the parent's name and where the subsidiary is not a deposit taker, so long as its title makes plain the nature of its activities it would not come within the scope of the prohibition in the clause at all. So, for example, it can call itself "XYZ Bank Computer Services" or "XYZ Bank Management Limited", and the Government are not persuaded—
76
although of course they would listen with interest to any further representations on the matter—that there is a case for allowing for total exemption from the prohibition in the clause to a company which does not in fact carry on a banking business.
I think one can make the general point that the prohibition on the use of a banking name must extend beyond deposit-taking institutions in order to cover the case of, for example, foreign exchange bureaux, which frequently describe themselves as "banks"; in any case it would be absurd to constrain the use of banking names and descriptions in relation to licensed institutions which may provide some banking services and allow them to institutions which provide none.
Some criticism has been made of the Consumer Credit Act, and as a mere lawyer who has had to look at it I must express some sympathy with what has been said. We shall have to see what Amendments are tabled, but, on the face of it, it would appear that the Amendments which perhaps the noble Lord, Lord Seebohm, had in mind might not be within the Long Title. However, we must suspend judgment on that until we see what is brought forward.
I should like to thank the noble Lord, Lord Polwarth, for giving me notice at this stage and not expecting a reply in relation to the position of the Scottish Bankers. I think I may say in general to the point he made that one cannot construct a scheme which provides perfect justice for everyone. If one has a perfect sliding scale from the lowest to the highest, then I think the major clearing banks would complain that they were making a quite unduly large contribution towards the initial fund. So if one does place the kind of limit that the Bill does in relation to the contribution by such banks, one begins to create what the noble Lord would describe as unfairness in relation to the banks which do not quite reach the limit. Of course one can make the same point at the other end of the scale. So whenever you adjust things a little in order to satisfy one person you immediately expose another to the cold winds. So far the Government have sought to achieve, and thought they had achieved, a compromise which would be acceptable, but it may be that this matter will have to be pursued a little further.

77
Mention was made of my familiarity as a lawyer with the concept of torts. As a Scottish lawyer I have no such familiarity. The same applies to conversion, which is not known to Scottish lawyers. However, I am aware of the representations made to the Government which I understand will be pursued at Committee stage. These matters are certainly going to be considered, but we see real difficulties in giving effect to those representations as put to us in this Bill at this time. I think there are more problems that may arise than envisaged in the submission that was sent to me and other Ministers.
My Lords, I thank all noble Lords for their contributions, particularly for making it clear what hurdles we will endeavour to cross in the Committee stage. I hope at that stage I will be able to give more satisfactory answers to the points of detail than I have been able to offer today.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

ESTATE AGENTS BILL
6.22 p.m.
Lord WALLACE of COSLANY: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(Lord Wallace of Coslany.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL of LISTOWEL in the Chair.]
Clause 1 (Estate Agency work):
The Earl of KINNOULL The Earl of KINNOULL moved Amendment No. 1:
Page 1, line 11, leave out ("residential").
The noble Earl said: Those of us who have read the proceedings on the Second Reading of this Bill in another place will know that it is fair to say that the Government took some credit for introducing a Bill which had had a record of some 90 years of unfortunate lack of success. I think there have been 14 attempts to get
78
a Bill such as this through Parliament. The Government took credit because at last they had produced a Government Bill which was primarily to protect consumers' interests in relation to estate agents.
The noble Lord who is replying on behalf of the Government will understand that there is considerable disappointment, not only in this House but also within the professions—and I believe that there will eventually be disappointment among the consumers—that this Bill is really a mouse purporting to be a lion. Its protection is limited to the point of what some might be inclined to call castration. It relies heavily on future ministerial regulations which many of us feel should be written into the Bill. It includes very wide-ranging— some might say draconian—powers which the Director General of Fair Trading will have, and, perhaps worst (and here I come to the first Amendment) its protection covers only a proportion of the consumers. I believe that proportion which it does not cover have a right to expect to have protection under this Bill.
The first Amendment would widen the scope of protection from the purely residential case which the Bill at present covers to those transactions which estate agents carry out in commercial and industrial property deals. This is an Amendment which was the subject of discussion in another place, but I do not apologise for repeating the point because it is very important. The Government in another place said that it was really now too difficult to widen the scope, and indeed possibly to rewrite the Bill, to cover the commercial work of estate agents. They went on to argue that the commercial consumers were well able to look after themselves. If that is really the argument, I would suggest, with great deference to the noble Lord, Lord Wallace of Coslany, that it is a very ill-informed argument.
There are literally hundreds and thousands of shop-owners and small businesses which will not have the protection of this Bill because there is no residential content in their premises. Up and down the country they purchase properties for their businesses. They save, they scrimp, some may say they even gamble with a lot of mortgage debts

79
round their necks, second mortgages on their houses with their banks. Their skill, as the noble Lord knows, is not in the property but in their business. They rely on the estate agent for their protection. Why should they not be protected under this Bill. Why is the house-owner singled out, after 90 years, to be the only favoured son under this Bill? Why will the commercial consumers not have the protection of the deposits provided under Clause 16? Why will they not have the protection of competency under Clause 22? And perhaps just as important, why will they not have the protection of disclosure of interest of estate agents under Clause 21?
I think there is a case for including commercial properties and premises under this Bill. I think it is a strong case and it is undoubtedly a consumer case. It is certainly a case which the professional bodies wish to see written into the Bill. So I hope that tonight the noble Lord will be able to indicate a change of mind by the Government. I would add that this Amendment does, of course, lead to a number of consequential Amendments, which the Chairman will have seen and which would, of course, reduce the length of our Committee proceedings if accepted. I beg to move.
Lord GISBOROUGH: Although the Bill has been described as a consumer protection measure, there are many cases outside the realms of residential property where protection is just as important. It has been stated that business premises will come within the terms of the Act if they contain a substantial element of residential property—for example, the high street shop with living accommodation above. However, the limitation to residential property is too restrictive in that it does not bring within control other transactions involving commercial property where protection is needed, such as the activities of business transfer agents, where there is no residential element in the property. We are not talking about ICI, we are talking about small business, about the man who buys a shop without living accommodation above. It is just as important that he should be protected as the residential owner.
The Earl of CAITHNESS: In rising to support my noble friend, I should like
80
first of all to apologise to the Committee for not being present at the Second Reading, and at the same time to declare an interest as a practising estate agent. I know that one aspect of the Government's reply to this Amendment is going to be the question of finance and public expenditure. I would ask the noble Lord who will reply for the Government what is going to be the extra cost involved if the ambit of this Bill is widened to include commercial property and business transfer agents, as the Amendment would require the Bill to do.
Lord SWINFEN: I should also like to rise to support my noble friend Lord Kinnoull on this Amendment. However, at the same time I must declare an interest as I too am an estate agent. As drafted, the Bill provides protection for commercial property when combined with residential property, but in modern planning practice more and more commercial and industrial property is divorced from residential property. The small business man needs the protection of this Bill whereas the large conglomerate, such as ICI, has its own experts. The small businessman relies, and must rely, on estate agents to give him good advice.
Lord WALLACE of COSLANY: I take it that in moving Amendment No. 1 the noble Earl will deal with Amendments Nos. 2 to 5 subsequently?
The Earl of KINNOULL: Yes.
6.31 p.m.
Lord WALLACE of COSLANY: First, this is a consumer protection measure—I want to emphasis that. I do not want to get involved in another Second Reading speech because, in point of fact, the noble Earl tended to give some indication of devoting himself to a Second Reading speech. However, in relation to this Amendment, which would extend control to wholly and substantially business premises, I should perhaps make it clear that, as it stands, the Bill covers broking activity in relation to certain mixed properties. These are essentially properties bought by the individual as a home in which business is carried on such as a house with a smallholding, a flat above a shop, a building designed or converted into a number of small flats, a guest house

81
and residential property with a business element. These are properties where in the same transaction there is a capital transfer relating to the business assets, goodwill, et cetera, and the property is let at a rack rent. This approach is consistent with the main aim of the Bill to protect the individual buying or selling his home.
There has been an interest in extending control to cover all types of property on the grounds that limitation of control would appear to license those not covered to misbehave. It has also been argued that control in the Bill should be extended to protect at least the individual sinking his capital in the small wholly commercial property—for example, a small corner shop.
The main beneficiary of the wide extension proposed would be the businessman or industrialist who is well able to look after himself. A recent survey has shown that a majority of businessmen are well satisfied with the work of the agents they employ, and extension of control under the Bill would seem to be control for control's sake. However, extension to cover the small businessman only has been considered, but no satisfactory definition could be found to meet the narrow area which did not mean that the wider one was also caught. I would emphasise that it has been considered, but no satisfactory definition has been found. For that reason, the Government are regrettably unable to accept the Amendment. That is all I can say on the Amendment at this stage.
The noble Earl, Lord Caithness, raised the question how much it would cost to extend the cover. Of course. that is a very difficult question to answer but I shall hazard a guess, backed by a certain amount of support from behind. Roughly, it would cost about £l million.
The Earl of CAITHNESS: I thank the noble Lord for that answer. Can he also tell me what the extra manpower required would be, or is that too difficult a question at this stage?
Lord WALLACE of COSLANY: Quite honestly, with the enormous number of Amendments presented to me in a matter of a few hours, it is both physically and
82
mentally impossible to answer that. However, I shall certainly make some inquiries in order to obtain an estimate, and then I shall write to the noble Earl and keep him fully informed. I would hope to get that information before the Report stage.
Lord HARMAR-NICHOLLS: I think that the noble Lord, Lord Wallace of Coslany, has given a very disappointing reply. He has just hinted that a great many Amendments have been given to him at a minute's notice. The word "yes" is just as easy and quick to say as the word "no". I should have thought that, in order to start off the discussions on the Bill in the right sort of spirit, this is one area where the noble Lord could have given an undertaking to look at the matter again. He has said that the Bill is a consumer protection measure. You are a consumer if you deal with business premises just as much as if you deal with a house, and that consumer is just as entitled to have the law pay attention to his needs as anyone dealing with a house in which he lives.
On behalf of the Government the noble Lord is introducing legislation which will hit the Government on the back of the neck unless they look at this sort of Amendment more carefully. If there is one sort of protection for a private house and no protection at all or a different sort for business premises, then confusion will be created as to where people stand vis å vis their estate agent and their general advisers. If there is any need at all for protection, I should have thought that it was needed where most of the business is done; that is, in relation to business premises as well as with residential property.
The noble Lord said that the people who would benefit if we introduced premises other than residential premises are usually the large conglomerates which can look after themselves. Most people who have residential properties can look after themselves; indeed, often they are much more able to do so because they are concentrating upon their property. If protection is needed, it should not be for any one section of the community: it should be for all sections. If, even though because of the terrific number of Amendments with which he has to deal, the noble Lord has had to give this rather disappointing,

83
negative reply now, he could on second thoughts say that before the next stage he will look at the matter again to see whether we cannot deal with the whole field instead of with a part of it—which is the proper thing to do—it would be much more satisfactory from his point of view as well as from the point of view of this Committee.
Lord AIREDALE: If the Rent Acts were capable of separating small dwellings from larger dwellings and treating the smaller dwellings differently, surely it is not beyond the wit of man to single out small businesses and treat them differently from large businesses. Does the Minister remember that the Trade Descriptions Act was to be called the Consumer Protection Act?—but the title was changed largely because it was realised that the Act protected the small businessman just as much as it protected the customer on the other side of the counter.
Lord JANNER: I was rather amused when the noble Lord, Lord Harmar-Nicholls, referred in the manner in which he did, to the distinction between residential properties and business premises. I see the noble Earl, Lord Kinnoull, smiling. He will probably remember that in the various Acts that have been passed year after year—and I am sure that the noble Lord, Lord Harmar-Nicholls, who was in the other place at the time, will also remember—this distinction has been quite inevitable. I would suggest that, if the noble Lord has any leisure time at all, he should sit down and look at some of the rent Acts, the leasehold reform Acts, land Acts et cetera. He will see that what he is at present driving at has been found to be impossible in other contexts.
Lord DARLING of HILLSBOROUGH: Before my noble friend replies, may I, through him, correct a statement that has just been made by the noble Lord, Lord Airedale? The Trade Descriptions Act does not distinguish between large and small businesses— it protects the lot.
Lord SWINFEN: The distinction has been made between large and small businesses. This Bill is designed to ensure the honesty of estate agents. Is it not important that estate agents act honestly
84
towards their larger clients, or customers, as well as their smaller ones? The larger clients may well have their own advisers who can help them: but if their advisers are not as good as they should be, they can have a very much larger fall than the small persons and possibly bring down a large number of shareholders at the same time.
6.41 p.m.
Lord SANDYS: Before the noble Lord replies, I should remind him of what occurred in another place. His right honourable friend the Minister of State for Prices and Consumer Protection was clearly in a serious dilemma over this. We on these Benches fully recognise what a difficult dilemma it was; hence my noble friend's Amendment. It is interesting to see what the noble Lord's right honourable friend said. I refer to column 31 of the report of Standing Committee E. He said:
"We attempted to find a precise definition of what was residential property and what was not, but we found it impossible to achieve any worthwhile result".
A little further on he said:
"In the end, therefore, we resorted to a definition of residential property which contained the words' wholly or substantially'".
So much of Clause 2, on which Clause 1 hangs, depends on those vital words "wholly or substantially". The Minister in another place conceived those two words in the wider context to mean small shops with residential premises, and the type of premises known as a mixed hereditament, which all my noble friends on this side of the House are anxious to ensure are included. We have had assurances in another place that they are included, but alas! it does not necessarily depend upon what the Minister has assured another place but upon the interpretation of the courts.
To the layman—and I am a layman—the words "wholly or substantially" appear to be an unsafe base on which to concern oneself with a wide number of different types of property. I believe that the Government's dilemma is much greater than they are willing to admit, because the Minister also said something—and I refer to an earlier statement of his at column 6 in Standing Committee E—which reveals his true difficulty. He said this:

85
"I am anxious to keep the limits to the sale of property because that is the area where we have a consultative document and discussions with the professions".
That may well be, but of course the consultative document, as we heard on Second Reading, has really been set aside. At this stage I hope that the Government will listen carefully to the case for the Amendment.
Lord WALLACE of COSLANY: With the leave of the Committee perhaps I might reply comparatively briefly. I would repeat that this is a small Bill for the small consumer. It is not the Bill that some people had in mind. It is a Bill heartily supported by the Consumers' Association; it is a Bill supported strongly by the National Association of Estate Agents. In the main, the Bill is popular except in those circles where those concerned want to bring in the question of business protection.
As I have already said, the matter has been considered but no satisfactory definition could be found to meet this narrow area of the small businessman, which I believe is what noble Lords have in mind. I think it would be readily accepted that the large business people, ICI and people like that, are quite capable of looking after themselves. If business premises have a substantial residential element, there is no doubt whatever that they are included. I do not quite know what noble Lords are after, except that they want big business organisations to come in. If it is a question of a small business purchased, then of course that is a question of definition. So far we have been unable to find a definition. That is the point. I hope that we shall not have unnecessary delay on this because, as noble Lords will remember, it was the wish of those on all sides in another place that this Bill should receive a speedy passage in your Lordships' House.
Lord SKELMERSDALE: The noble Lord said that no satisfactory definition of small business has been found, or that it was beyond the wit of his Department.
Could he say whether some sort of scope in terms of turnover would do? If we are talking basically of very small businesses, corner shops, I should have thought that a turnover figure would have been more easily arrived at than some form of technical phraseology.
Lord WALLACE of COSLANY: It is difficult to jump up and down in Committee, but I cannot say any more than I have already said. If noble Lords can find a definition to meet the little man, then of course we must consider it. Perhaps the noble Earl might bear that in mind for another stage.
The Earl of KINNOULL: If it would help the noble Lord, he is in fact allowed in a Committee stage to speak as many times as he likes, and there is no question of him having to apologise to the Committee for speaking two or three times. I am unhappy with the noble Lord's reply. I should like to thank all those who have supported this Amendment. My noble friend Lord Harmar-Nicholls talked about confusion. I think that that is exactly what it will cause if we have a split responsibility under this consumers Bill. My noble friend Lord Swinfen talked about the honesty of estate agents. That is another bull point argument. The noble Lord, Lord Wallace, did not bother to consider Lord Airedale's comment which really was: Could we not define small businesses by rateable value? I think that is an excellent idea. I was hoping that the noble Lord would say that he would look at this again, but he has not. It is all very well for the noble Lord to argue that we need this Bill and that it needs a speedy passage, but we must get it right. I should like to leave to the Committee the decision on this Amendment.
6.48 p.m.
Their Lordships divided: Contents, 55; Not-Contents, 38.

CONTENTS

Ailesbury, M.

Caithness, E.

Drumalbyn, L.

Airedale, L.

Cathcart, E.

Ebbisham, L.

Allan of Kilmahew, L.

Colville of Culross, V.

Elliot of Harwood, B.

Amherst of Hackney, L.

de Clifford, L.

Falkland, V.

Amory, V.

Denham, L.

Falmouth, V.

Gisborough, L. [Teller.]

Long, V.

Somers, L.

Glenarthur, L.

Lyell, L.

Strathclyde, L.

Gowrie, E.

Macleod of Borve, B.

Strathcona and Mount Royale, L.

Gray, L.

Mottistone, L.

Greenway, L.

O'Neill of the Maine, L.

Stuart of Findhorn, V.

Harmar-Nicholls, L.

Penrhyn, L.

Swansea, L.

Harvington, L.

Rankeillour, L.

Swinfen, L.

Hornsby-Smith, B.

Redesdale, L.

Vernon, L.

Hunt of Fawley, L.

Rochdale, V.

Vickers, B.

Inglewood, L.

Runciman of Doxford, V.

Ward of North Tyneside, B.

Killearn, L.

St. Aldwyn, E.

Windlesham, L.

Kimberley, E.

Sandys, L.

Winstanley, L.

Kinnoull, E. [Teller.]

Selkirk, E.

Young, B.

Kinross, L.

Skelmersdale, L.

NOT-CONTENTS

Bacon, B.

Kirkhill, L.

Snow, L.

Blease, L.

Lee of Newton, L.

Stewart of Alvechurch, B.

Collison, L.

Leonard, L.

Stone, L.

Darling of Hillsborough, L.

Lovell-Davis, L.

Strabolgi, L. [Teller.]

David, B. [Teller.]

Noel-Baker, L.

Taylor of Blackburn, L.

Davies of Leek, L.

Paget of Northampton, L.

Taylor of Gryfe, L.

Gaitskell, B.

Peart, L. (L. Privy Seal.)

Taylor of Mansfield, L.

Glenamara, L.

Phillips, B.

Wallace of Coslany, L.

Hale, L.

Pitt of Hampstead, L.

Whaddon, L.

Hamnett, L.

Ponsonby of Shulbrede, L.

White, B.

Harris of Greenwich, L.

Raglan, L.

Willis, L.

Hatch of Lusby, L.

Rhodes, L.

Wynne-Jones, L.

Janner, L.

Ritchie-Calder, L.

Moved accordingly, and, on Question, Motion agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
6.56 p.m.
Lord WALLACE of COSLANY: Before we move to the next Amendment I should perhaps make it clear that a number of consequential Amendments will have to be accepted following Amendment No.1 having been carried, and the noble Lord, Lord Sandys, has a copy of the list. In saying they will have to be accepted, I wish to make it clear that we accept them under the strongest protest. We are resolutely opposed to the Amendment that has been carried and I must register my protest so that the Committee knows how we feel on the issue.
Lord SANDYS: It may be for the convenience of the Committee if I read out the range of Amendments which are consequential upon Amendment No. 1 having been carried, and I am grateful to the noble Lord, Lord Wallace, for furnishing me with a list of those Amendments, which we have not had time to circulate among members of the Committee. The consequential Amendments which follow on the Division which has just taken place are Nos.11, 13, 14, 15, 16, 40, 41, 42, 43, 45, 47, 53, 54, 55, 63, 64, 65, 66, 67, 79, 80 and 81.
Lord WALLACE of COSLANY: I thank the noble Lord for reading out that list and I confirm that that is the position. As I said, we accept those Amendments but with the proviso that we are resolutely opposed to them and wish to register our strong protest.
6.59 p.m.
Lord GISBOROUGH Lord GISBOROUGH moved Amendment No. 2:
Page 1, line 14, after ("acquire") insert ("let, rent, license").
The noble Lord said: I apologise to the Minister for having tabled this Amendment so late: the Committee stage has followed quickly on the Second Reading and, living 250 miles away, the post takes a long time to reach me and return. I shall, with permission, speak at the same time to Amendments Nos. 3, 4 and 5. In Committee in another place strong representations were made that the Bill should cover rentals and leases. The Minister of State promised to reconsider the position, but in the event no Government Amendment was tabled on Report.
Deposit taking by letting agents is an area where abuses can all too frequently occur and the sums involved can be considerable. Attention is drawn to the fact that the upper end of the furnished

89
letting market is largely outside current legislative control in that the majority of properties involved have rateable values higher than those covered by the Rent Acts. Rents of such properties, particularly in London, vary from £60 to £200 or more a week. Deposits asked are often a minimum of 10 weeks rent in advance, and this amount at the end of the tenancy is often dissipated by dilapidations charges. I am advised that this is a problem, and that these abuses are not controlled elsewhere; and the Bill provides an ideal opportunity to regulate the situation. I beg to move.
Lord HARMAR-NICHOLLS: I should have thought that there is much force in this point. The opening words of the Explanatory and Financial Memorandum of the Bill state:
"The purpose of the Bill is to impose a measure of control on certain activities of estate agents with a view to affording protection to users of their services".
I maintain that a person involved in letting or in arranging a licence or a rent is more in the hands of the estate agent than when he is acquiring a property, which is the point that the Government have already accepted. Generally speaking, such a person when acquiring a property has the extra protection of the solicitor who is handling the conveyance, but there are many instances in which questions of rent and the arranging of a licence do not go to the solicitor but are left more or less subject to the advice of, and within the control of, the estate agent. If we really want to give protection from people who are not capable of giving advice, it is more essential to make certain that this is done on the renting and the licensing than even on the acquiring, because in matters to do with the rent and the licence the normal protection afforded by a solicitor does not seem to be present. Perhaps the noble Lord opposite already has this matter in mind. I can almost see the glint in his eye. Perhaps he is going to look at the matter again with a view to conceding some of the points that my noble friend has made.
Lord WALLACE of COSLANY: There is indeed a glint in my eye, but it is not connected with what the noble Lord had in mind—rather very much the opposite. Amendments Nos. 2 to 5
90
seek to extend the control to broking activities in relation to letting, renting, and licensing of residential property. The Government made some investigation about the possibility of extensions to this area as a result of discussions in the other place. Extension would alter the nature of the Bill, which aims essentially to protect the consumer. First, the known abuses are abuses by the landlord, and not by the agent, and existing legislation for which the Department of the Environment is reponsible provides for action against landlords. Secondly, the member of the public buying his house does not have the opportunity to choose the agent or middleman with whom he deals and who also acts for the vendor. Whereas in the field of letting, renting, et cetera the agent is not a middleman of this kind, there is no thought but that he is acting for, and under the control of, the landlord.
When we come to Amendment No.39, relating to Clause 12, to be moved by the noble Earl, Lord Caithness, I shall be explaining why extension of control to protect money in this field would also change the nature of the Bill as a whole. As was the case with the previous Amendment, to amend the Bill to include this provision—as is requested in the Amendment—would mean a considerable addition to manpower and would put demands on Government resources, particularly at local level where the main burden of enforcement falls. Apart from anything else, the moment is not propitious for adding to public expenditure, as I am sure noble Lords will agree. In any event this is not a case where the estate agent is mainly responsible. He is the agent of the landlord, and it is the landlord who is responsible, and there is already provision for dealing with landlords. Therefore, I reject the Amendment.
The Earl of KINNOULL: I wish to ask the noble Lord about one point. The value of the Amendment lies in the question of bonding. I have in mind the kind of case in which a tenant is asked to lay down a fairly hefty deposit. Deposits are governed by law, as I think the noble Lord has explained. In some cases there are very large deposits, and they are held by the agent as, I imagine, agent for the landlord. They are held on the basis of the argument that subsequently there may

91
be dilapidations, or telephone or electricity bills may arise which, when the tenant disappears, the landlord has to pay.
That is the situation on one side. On the other side the agent holds the rentals on behalf of the landlord and perhaps does not hand them over very quickly. In the Bill we are looking for protection for the consumer, and the consumer is both the landlord and the tenant. I believe that there is an argument here that the matter should be looked at again. I should at the very beginning have disclosed my interest professionally as a surveyor. I apologise for not having done so, though I have disclosed the interest on previous occasions.
Lord SANDYS: From these Benches I wish to agree entirely with the point made by the noble Lord, Lord Wallace of Coslany, and to say that we are anxious to make a positive contribution to the Bill, and to improve it where we can so that it will pass to another place in a better condition. It is our contention that the centre of the Bill consists of Clauses 12 and 16. It is consumer protection. It protects the client's money. However, the Government, in examining the construction of the Bill, have not really found the solution to the dilemma to which I referred earlier. I believe that the issue raised in the Amendment should have further consideration. I hope that at this stage my noble friend might think fit to withdraw the Amendment, while the Government for their part might feel willing to look at it in greater detail.
Lord GISBOROUGH: The noble Lord, Lord Harmar-Nicholls, hit on the point here when he said that in this kind of transaction there are no solicitors to look after the lessees. Very often the lettings are made to people who arrive in a town either from abroad or from another town far away. They may come to London from Newcastle or wherever, and when they return, having been stung, it is very difficult for them to proceed against the agent or whoever they feel has taken their down payment unfairly. I hope that the noble Lord will consider looking at the Amendment again. I should like to withdraw it at this stage, but I may well raise it on Report—
Lord HARMAR-NICHOLLS: Before my noble friend withdraws the Amendment perhaps the noble Lord opposite will give an undertaking that he will look at it again. In view of the arguments which have been put, the noble Lord may feel that he is in a position to do that, and that may be helpful to the Committee.
Lord WALLACE of COSLANY: The noble Lord has a very mischievous character, as I know only too well.
Incidentally, we shall be dealing with the question of bonding later, and so we need not raise it at this stage. In the case of an estate agent who collects rents on behalf of a landlord, if he hops-off" —to use the phrase—with the money, it is the landlord whom he has robbed, and it is the landlord who is responsible. Furthermore, if the landlord himself acts in an anti-social manner, that is covered by the Department of the Environment legislation. That is the position. Certainly we can have another look at this matter, but I do not hold out much hope. In fact we can all have a look at it, and we shall see what happens at the next stage.
The Earl of KINNOULL: Will the noble Lord deal with the position where a tenant offers a deposit which the agent holds? I understand about the rent, but what about the deposit?
Lord WALLACE of COSLANY: Is the noble Earl talking about the deposit on buying a house?
The Earl of KINNOULL: The case occurs where you take furnished premises and you pay a month's deposit, usually, which is held by the agent in lieu of possible future dilapidations or electricity bills, telephone bills and so on.
Lord WALLACE of COSLANY: As I understand the Bill on the question of clients' monies, there is a provision in a subsequent clause of the Bill that a register is to be kept of clients' monies and that there must be a separate account. There is that degree of protection; so when we are talking about clients' monies I think that money in the sense that the noble Earl has suggested would certainly be covered.
Lord HARMAR-NICHOLLS: The noble Lord reiterates that it is only the

93
landlord and he does not matter all that much. That is what he seemed to suggest in terms of him not getting his rent. Of course the landlord matters. He is just as much entitled to the protection of the law as is a tenant. But it is not only the landlord who is affected by this. I beg of the noble Lord to read the first paragraph of the Explanatory Memorandum. Apart from the collection of rent and all the technical things that they have to deal with, one of the objects—indeed, the thing that makes me interested in the Bill at all—is that we are trying to see to it that we do not have any "phoney" estate agents about the place, and that people who carry the title of estate agents are reputable people who can be trusted. As my noble friend has said, certainly on renting and letting generally, new people come into a town, and they are not themselves in a position to know of the reputation of somebody whom they may entrust with the job of negotiating for them or of working out whether or not the terms of a rental agreement are right or whether they are having obligations put on them which they ought not to have put on them. If we are going to start giving protection at all, they are the people who need the protection of the law, if we are going to make it a law, to see that the people who set themselves up to give that sort of advice have passed the test, as far as the law can make it a test, of being bona fide people who can be trusted. I am saying that it is needed more in renting and letting than in acquiring, for the very reasons I have put forward.
I should like to feel that the noble Lord is going to be enthusiastic when he says that he will look at it again, because when, in your Lordships' House, as in another place, we use the term "we will look at it again", we do not necessarily mean that we as individuals will look at it again—there would not be much purpose in that—but that the Government, who have all the advice behind them, can invariably, if they have the enthusiasm, find an answer to these sort of things. I believe that the noble Lord is interpreting this Bill much too narrowly. If it is going to be effective at all, it has got to be a little wider than the noble Lord is at present describing it. This particular Amendment may look small, but I believe that more problems will arise from renting and letting than
94
from actually acquiring. That is why the noble Lord should enthusiastically look at it again, and get some return from the advisers whom we pay to give that sort of advice to the Government.
Lord SWINFEN: Is the noble Lord not aware that the "cowboys" in the estage agency world operate basically in the sphere of letting furnished and unfurnished accommodation to young people who cannot afford to lose their money and who are just beginning to make their way in the world? They are very often people who have just left school and have just left home for the first time.
Lord RAGLAN: I wonder whether I may say something on this, apologising for the fact that I was not here for the discussion on the first Amendment, so that my point may have already been made. It seems to me that the Title of this Bill (which, of course, is something which we discuss normally at the very end of the matter) leads one to believe that the Bill contains much more than in fact it does. The noble Earl, Lord Kinnoull, and the noble Lord, Lord Gisborough, are talking about matters which are normally within the competence and purview of estate agents, broadly speaking; that is, property without its being residential property, and looking after letting, renting, licensing and so forth. What the Government are trying to achieve in this Bill is merely the regulation of house agents, and not the regulation of estate agents. If I may say so, I think many of the Amendments to this Bill which have been put down by the Party opposite would probably be of enormous relevance to a Bill which dealt with estate agents broadly, but not to one dealing with house agents. I am wondering whether my noble friend on the Front Bench could have another look at this with a view to explaining that this Bill really is to do with house agency, and not at all with estate agency as landowners, landlords and so forth generally agree it to be.
Lord WALLACE of COSLANY: That is the purpose of the Bill. The noble Lord opposite has spoken at great length. I have already given an indication that we will look at this. But I want to repeat that, generally, money held by estate agents for landlords is landlords' money—nobody, I think, will dispute that—and

95
there is no stakeholder relationship there. It is the main object of the Bill to protect stakeholders' money. Furthermore, the purpose of the Bill is to protect money entrusted by the public to estate agents, not to protect landlords against commercial risks associated with their agents. That is the main point we are arguing about. As I have said, certainly one can look at it again, but I say again quite definitely that there is very little hope of being able to do much about it.
Lord GISBOROUGH: Before I withdraw this Amendment—and I am grateful that the noble Lord has offered to look at it again—I should like to put the picture of somebody who comes over from abroad to take premises at, say, £100 a week rental, and is asked £1,000, perhaps, as a deposit. If the tenant is going to go away at all, then at the end of the tenancy the £1,000 is not owed to the landlord; it is owed back to the tenant less any dilapidations. This is the point. Now, if the agent then declares that the dilapidations are £800, the poor tenant goes away with only £200, whereas probably the dilapidations were only, perhaps, £100 or whatever. So I think that it is the case for the lessee rather than the owner of the property. At any rate, I withdraw the Amendment.
Lord AIREDALE: Before the noble Lord withdraws his Amendment, the noble Lord, Lord Harmar-Nicholls, drew attention to the Explanatory Memorandum. It is curious and interesting that paragraph I not only refers to
"prospective buyers and sellers of residential property",
but, in line 2, refers to
"certain activities of estate agents with a view to affording protection to users of their services".
Of course, landlords and tenants are just as much users of their services as are buyers and sellers.
Amendment, by leave, withdrawn.
[Amendments Nos. 3. 4 and 5 not moved.]
7.18 p.m.
The Earl of KINNOULL The Earl of KINNOULL moved Amendment No. 6:
Page 1, line 23, leave out paragraph (a).
The noble Earl said: This Amendment deals with, I think, a very important
96
aspect of the Bill, and I think it will win the heart of the noble Lord, Lord Raglan. What the Bill does under Clause 1(2),as the noble Lord will know, is to define those people practising as estate agents or doing estate agency work who will not come within the scope of the Bill. The three categories are mentioned in subsection (2) (a), (b) and (c). Subsection (2) (a) refers to solicitors; subsection (2)(b) to credit brokers and subsection (2)(c) to insurance brokers. I think it would be true to say that there has been universal disquiet in the professional world—and not only in the professional world; I think in the estate agency world, too—that it is very odd that you should get a Bill which is protecting the consumer in relation to estate agency work and then, suddenly, that part of the operation should be excluded from the Bill.
The two obvious things which are lost, from the consumer's point of view, are, one, "bonding" and the other, under Clause 22, "Standards of competency" I would direct attention to the standards of competency. In Scotland, as the noble Lord, Lord Wallace of Coslany, with a name like his, would know, the Scottish Law Society actively encourage their members to practise as solicitors and estate agents—and, indeed, to put up a board saying so. It is not done in the South, perhaps to the detriment of the Law Society here. It would be fair to say that in Scotland the majority of residential sales are handled by lawyers and solicitors. It is possible for an honourable young solicitor to set up his practice in, say, the fair city of Perth, to have all the right probity, integrity and ethics; but not to have professional experience, or even experience, in house sales.
I think there is a grave gap in this Bill with the exclusion of solicitors. I can understand the bonding argument because they are automatically bonded by their own membership rules. But there is this important Clause 22 which talks about standards of competency. The same applies to credit brokers and insurance brokers; indeed, more so, because these two bodies have less experience in property than solicitors. I would hope that the noble Lord will not be adamant on this because there is a good case to include them in the Bill.
Lord JANNER: I hope it is not necessary for me to declare an interest in this matter. I am about to complete 60 years as a solicitor, and I am really amazed at the suggestion that has been made here, which implies that the rules which are utilised by the Law Society for law purposes will lead to the kind of confusion that the noble Earl was suggesting. I know, of course, that one can get the wrong ideas about some professional regulations but the noble Earl does know a fair amount about this subject—certainly sufficient to be able to try to convince us, and, sometimes, to convince us, that he is right. He knows as well as I know that the restrictions which exist at present so far as solicitors are concerned are much more stringent than the regulations that are being imposed or (shall I say?) being introduced for his profession. Just imagine! You will have two sets of disciplinary regulations instead of having one.
Let me ask a question that he will perhaps answer. Would the noble Earl prefer to have the solicitors' restrictions as a whole rather than the ones which are being proposed for his own profession? If he will answer it without prejudice (let me put it that way) I am sure that his answer to that must be, of course, that that would be absurd. He has raised one or two points. The question of the Scottish solicitors has nothing to do with this at all. This is not concerned with Scottish solicitors at all.
Lord SANDYS: I hesitate to interrupt the noble Lord, Lord Janner, but may I respectfully point out that this is a United Kingdom Bill and that it applies to Scotland. Hence, as Scottish solicitors do handle property, it could easily concern a great many Scottish solicitors.
Lord JANNER: I do not think you will find it covers the solicitors' profession as far as Scotland is concerned. Solicitors at present are, anyway, under strict regulation in Scotland as well as in England. In my view it would be entirely wrong that you should have two separate sets. This is a profession which has existed for years and against which nobody can find any real complaints. Of course, there are complaints, and those who have been in the other place hear many of them; but that is not the point. The point is
98
that they cannot find any flaws in the disciplinary provisions.
Secondly, with regard to Scotland, it is an entirely different kind of business. Those who know solicitors at all, anyone in this House who has gone to a solicitor, will know this. Sometimes some untoward circumstances arise. For instance, sometimes a client asks his solicitor to sell a place or to advise him, and the solicitor may have another client who wants to buy it. But these are rare occasions. They are not the kind that the estate agents deal with. The main feature of a solicitor's job is to carry on with solicitors' work. That is what they do. I hope that the noble Lord will withdraw this. He must see the disadvantages of having two separate sets of regulations.
Lord HALE: I would have not intervened at this point to make this look like a Law Society "do", or something like that, were it not for the fact that I do not quite know where we have got to.
The Bill certainly applies to Scotland, and certainly it was implicit in all the discussions that there were practices in relation to estate agency conducted by Scottish solicitors and, as I understand it, it was implicit in the negotiations that Scottish solicitors were not to be inferfered with in that activity. That I thought was a clear position. Now as I read the noble Lord's Amendment today—and unfortunately I, like many others, did not see it on the Marshalled List today—it seemed a measure which, as far as England was concerned, was really designed to bring solicitors into some of the restrictive propositions of the Bill and without extending it.
On the other hand, the noble Lord, Lord Gisborough, on Second Reading specifically said in the course of the discussion that he was satisfied about what had been said about solicitors; and I thought that the matter had been disposed of. So I came in in some difficulty. I have listened to the discussion and I was greatly impressed by what was said on Amendment No.1,and I am not without sympathy. Sometimes, perhaps, I vote for the Government too often. On this question, one has to reconsider from time to time. Certainly I already regret one vote I have given today, but not on that.

99
So far as this Amendment is concerned, if the noble Lord looks carefully I am sure he will see that this is going right outside the negotiations. So far as English solicitors are concerned, when they are acting in direct connection with a client they are subject to the most rigid provisions. Incidentally, they have in the course of the past 20 years, I think, by judicial decision, been subjected to an action for negligence in respect of almost every single activity which they carry on in the course of their profession. They contribute to the insurance fund which was demanded by the Law Society. It is fair to the Law Society to say—and I do not often go out of my way to say such things—that as an ex-member who gets a free newspaper from them (which is a very good one indeed) and some very nice courtesies, everyone who has dealt with the Law Society in this matter knows that they have been completely enlightened and generally quite unbiased in the matter. They are there to protect the interests of solicitors to a certain extent they often protect them by suggesting they should remedy grievances; and, indeed, they have done that over the years.
The clear meaning of the Amendment, as I understand it, as my noble friend Lord Janner has said, catches solicitors under a dual discipline. As the Law Society themselves say, it can get them almost by mistake because a solicitor, in carrying on his wide activities, is not always talking to a client about a lease, a tenancy or a disposal of property. When he has finished dealing with his client in respect of one transaction the client almost invariably stops and wants to talk about something else if he is a regular business client dealing with conveyancing. He may say: "Have you any money to lend on mortgage? I have a friend who wants some property, do you know anything about it?" He may want to talk about some building. In areas such as the place in which I live, he may realise that the special laws of the Dulwich College Estate, and so on, involve certain obligations on which he may have special knowledge and he may be perfectly happy to discuss these issues. The same applies to almost every one of the leasehold estates.
So one is going to have a solicitor subject by statute to a form of restriction and
100
discipline which arises specially because he has done something in an Act which was not intended to apply to solicitors and which has the word "solicitor" and the words "Scots solicitor" in because it is found that some rare practices come within the purview of the Act. During the course of discussion, the noble Lord, Lord Harmar-Nicholls, was saying how valuable it might be sometimes with an inefficient or unreliable agent that the client would have the services of solicitors in due course to deal with conveyancing matters following a sale.
I am getting confused about this. I am telling the Committee the absolute truth when I say that the Law Society rarely troubled me and perhaps only sent out a speedy letter. But I could tell from the letter that they sent that it was strong enough to make me look at it and realise they had, as I thought, a point. It might be tragic if an Amendment of this kind was carried under a misunderstanding because it would really undermine the practice of the measure.
Lord SWINFEN: This Bill is for consumer protection. Under Clause 22, standards of competence can be laid down not as a solicitor or any other profession but as an estate agent. Why therefore should solicitors, and those professions covered in paragraphs (b) and (c) of this clause, be exempt from complying with the provisions of this Act? If they are going to act as estate agents they should have the standards of competence that can be expected of an estate agent by the general public. It is a disservice to the public as a whole to exempt people from this Act because they are members of other professions not necessarily akin to that of estate agency at all. I must therefore support—
Lord JANNER: Will the noble Lord permit me? Will he be good enough to say what real differences of a strong nature are not imposed upon solicitors already which are not covered by this Bill? Why is it not realised that in the main it is because of the help that solicitors have given that the Act has been produced? It is because of the fact that for years and years the solicitors' profession has carried on in a way which has practically a complete control of its members. Why does he want to confuse the position?
Lord SWINFEN: I am not trying to confuse the position, I am trying to simplify it. Solicitors, as are the professional institutions dealing with the land, are well able to control the honesty of their own members. But at the moment estate agencies can be started by anyone at any time without any qualifications. Under the provisions of this Bill, minimum standards of competence in estate agency can be laid down by the Minister. Solicitors are not trained in estate agency as such. Very often matters of planning and other uses have to be considered when advising a client on property matters, and estate agents should be competent in this; but solicitors I am afraid not necessarily so. They are competent in the legal aspects but not in the planning aspects.
Lord HALE: So far as North of the Border is concerned, I understood that it had virtually already been agreed that the existing practice should continue. I know nothing about North of the Border. I do not know the reasons for their decision on the referendum. I do not know the reasons why we are now told that it is still being discussed after being clearly rejected. I do not know the reasons why we are being told that the Government might rely on some support if they decide to try—and I am quite sure they will not—to betray the undertaking as contained in that Act. It is all very complicated and I cannot speak for Scotland; but the noble Lord can speak for Scotland, and so far as Scotland and so far as family solicitors were concerned I understood it was agreed. The Law Society agreed that it is not the practice in England; they do not want to lay down arbitrary rules because there is the same difficulty in the arbitrary rules. They have no intention of going into this. The noble Lord can hardly mean that if a solicitor is sitting in his office and every now and again takes a step or procedure which would bring him within the general ambit of Clause I of the Bill, he should then be brought under some educative training.
Quite frankly, it really does not make sense at all. Solicitors at the moment are trying to familiarise themselves with the law of the Common Market, with the disposal of property abroad, with company law abroad and so on, and they are going through a tremendous re-educative process. I forgot to mention—I must—apolo-
102
gise to the noble Lord—that they are at the moment under investigation as to their competence in everything, as it were. There is a Royal Commission sitting to consider the whole question of the services of the two branches of the law. I think it is implicit that, with questions arising as to the fusion of two branches of the profession, the noble Earl's Amendment might in due course catch barristers. I do beg him in the circumstances to say that he will not press this Amendment.
Lord GISBOROUGH: The exemption for solicitors was for the benefit of Scottish solicitors who deal in estate agency work. This has been extended to the whole of the United Kingdom by this Bill. Solicitors are covered by their account rules, and that is why I said what I did at Second Reading. Since then, I have come to think that perhaps they are not subject to a declaration of interest, rules of interest on clients' accounts and rules of competence. For this reason, there is probably no justification for their exemption. In Scotland, the title of "solicitor and estate agent", which was mentioned, is now often adopted; but there is no reason why English solicitors should not gradually take over this same function and advertise themselves as solicitors and estate agents.
The duties and requirements of a good estate agency go far beyond a solicitor's rules of good professional conduct. One may take the case of a young solicitor who is fully versed in the law, has an impeccable accounting system and is fully trained, perhaps even fully trained in estate agency if that comes into his course. But I am advised that the experience of estate agents is enormously important and it is just not good enough to know the theory that so many bedrooms in such and such a place are worth so much. The experience of what the market is doing is of enormous importance, and very often a solicitor may not be aware of this, particularly if he is buying and selling houses outside his own particular area.
Lord WALLACE of COSLANY: I have a sneaking feeling that somewhere in the drafting of this Amendment there has been a degree of professional jealousy involved, and I am not necessarily referring to solicitors. To meet the point of the

103
noble Lord, Lord Swinfen, the Government have never accepted that the function of merely transferring residential property requires any qualification other than basic honesty and probity. Generally speaking, my noble friends behind me have really put the case: solicitors acting in the course of their profession and their employees have been excluded from control under the Bill because the consumer is already protected by the full disciplinary control provided by the legislation which applies to solicitors in England, Wales, Northern Ireland and Scotland. In these circumstances, to subject the same person to comparable controls for the same work would be unreasonable, wasteful of resources, and, finally, would create a legislative absurdity.
In England, Wales and Northern Ireland, a solicitor acting in the course of his profession may be involved in arranging the sale and purchase of residential property only incidentally to his work as a solicitor (for example, when acting as an executor in probate); and solicitors and their employees who engage in estate agency work in the course of another business are caught by the Bill. In Scotland, where estate agents have begun to operate only in comparatively recent years, solicitors continue their traditional function of carrying on business as an estate agent. The area in which the two parallel sets of control will bite is therefore limited at present.
If it were justified, the fear that differences between the two sets of control would put estate agents at a competitive disadvantage as compared with solicitors would certainly weigh heavily with the Government. It is, however, difficult to assess whether in practice the resultant balance favours one side more than the other. To take some examples, the hurdles on entry to the profession which apply to solicitors do not apply to estate agents and would be inappropriate to the type of activity covered by the Bill. The requirements placed on estate agents under the Bill to state their charges in advance do not apply to solicitors, but an estate agent can make scale charges, however much or little work he does, whereas a solicitor's charges must be reasonable and can be taxed by the taxing master.
104
Where competence is concerned, the Bill permits the introduction of minimum standards applicable in the case of a partnership to a minimum number of partners only, by reference to practical experience and, in addition and as a substitute, by reference to professional and academic qualifications. By contrast, solicitors are required to have both experience and professional qualifications of a much higher standard than the minimum level envisaged under the Bill and every member of the firm must be qualified; like estate agents, they can have unqualified employees. It is also worth noting that a solicitor struck off or suspended by the Law Society for reasons relating to property transactions could, under Clause 3 of the Bill, in certain circumstances be banned by the Director from starting up as an estate agent. None of this suggests that estate agents will be at a particular disadvantage, even if at some future date the prohibition on solicitors in England, Wales and Northern Ireland engaging in estate agency work proper were to be lifted. These considerations apart, the time and place for changing the control of solicitors by the Law Society would be in any amendment to the solicitors' legislation and not in the Estate Agents Bill. In any case, as has already been pointed out, there is a Royal Commission on the legal profession which is currently sitting, and it would consequently be premature to make any changes at present.
To sum up, quite apart from objections of principle to changing the controls exercised over solicitors by the Law Society in an estate agents Bill, acceptance of these Amendments would result in a dual control on solicitors, would not help the consumer, and would be of little, if any, advantage to the estate agent, I strongly urge the Committee to reject these Amendments. I am speaking to Amendment No. 10 as well as to Amendment No. 6.
The Earl of KINNOULL: I expected that one would arouse the wrath of solicitors in this House over this Amendment. If I may say so, though perhaps it is discourteous to suggest it, this was professional jealousy or perhaps just a subtle red herring by the noble Lord who is speaking on behalf of the Government. One has, of course, enormous respect for the Law

105
Societies of Scotland and England. From the consumer's point of view, they have done a tremendous service, and indeed their members also do a tremendous service. But what they are not qualified for, quite frankly, is to be valuers. That is the simple argument. I do not intend to press this case on solicitors tonight, but I would ask your Lordships to look carefully at this when we reach Amendment No. 8 and to see whether credit brokers and insurance brokers have the same protection. I think the noble Lord, Lord Janner, would support me on that.
I would add one final point. I think it is a little unfair to say that if the solicitors were brought into this Bill there would be two sets of regulations for them: so there would be for the professional bodies acting as estate agents. We have nothing to fear and I do not think that the solicitors would have anything to fear; but I do not intend to extend the argument any further. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
The DEPUTY CHAIRMAN of COMMITTEES (Earl Cathcart): In calling Amendment No. 7, I should advise your Lordships that if it is agreed I obviously cannot call Amendment No. 8.
7.50 p.m.
Lord GISBOROUGH Lord GISBOROUGH moved Amendment No. 7:
Page 2, leave out lines 1 to 10.
The noble Lord said: The Government have not been prepared to make any concession on the exclusion from the scope of the Bill of work done by credit brokers, insurance brokers, surveyors and valuers. It is important that the Bill should apply with full force to surveyors and surveys for valuation. Surveyors and valuers should be obliged to give information to clients of prospective liability and to declare a personal interest, and they should be subject to minimum standards of competence. Incompetent advice from surveyors who are not members of the RICS or the ISVA is a serious problem, which sometimes reflects badly on the estate agency profession as a whole. The object of this Amendment is to ensure that where insurance brokers, surveyors or valuers are involved with their aspects of estate agency, they should be as subject
106
to adequate standards of competence, personal interest rules and disclosure of interest as are estate agents themselves. They should also be obliged to disclose the nature of their fees. Surely, it would be preferable to strengthen the Bill by applying it to all sections of the community, than to discriminate against one small section of society; that is, estate agents. I beg to move
Lord WALLACE of COSLANY: If I may be permitted, I should like to speak to Amendments Nos. 7, 8 and 9, which are all related. The first two Amendments, Nos. 7 and 8, would bring into control credit brokerage and insurance brokerage where there are already similar controls under other legislation. As in the case of Amendments Nos. 6 and 10 in relation to solicitors, these Amendments would impose a dual control on the same person in relation to a particular type of work, without any additional benefit to the consumer. They would merely impose additional and, perhaps, incompatible obligations on their activities. From the estate agent's point of view, there are, in my view, no grounds for considering that their exclusion puts the estate agent at a competitive disadvantage where the credit or insurance broker concerned might, in the course of his business, carry out estate agency work as defined in the Bill.
Amendment No. 7 would also extend control to survey and valuation work done under a different contract from that relating to estate agency. It would, in fact, bring under control the separate structural survey or valuation carried out by the estate agent for a fee, as distinct from the work done in the course of estates broking where the work involved in surveying amounts to the measuring up et cetera of rooms and making a judgment as to a price at which a house is to be advertised. The Amendment would bring under control professional work provided as a separate service from estate agency activity caught by the Bill. The activities raise entirely separate issues from those subject to control under the Bill.
In relation to the last Amendment, No. 9, the Bill is intended to apply only to active participation in the process of introduction. The exclusion under subsection (4) relates merely to the publication of an advertisement; for example, by a newspaper, or similar dissemination of

107
information. I am sure that extension of control to this kind of case would be unrealistic. I hope that your Lordships will accept that these Amendments are ill-considered and should be rejected on the grounds that they could not benefit either consumer or estate agent.
The Earl of KINNOULL: I find that reply extremely disappointing. I should like to save the time of the Committee because, in a way, the noble Lord has taken a broad brush to these Amendments which we are discussing. I should like specifically to talk about credit brokers and insurance brokers. I have nothing at all against them. I am sure that they are extremely skilled and honourable in their line of work. But to say that, from the consumer's point of view, they are really qualified as estate agents, when, from the consumer's point of view, they are setting out as insurance brokers, is very confusing. They do not have the same strong case that the Law Society had, and I genuinely hope that the noble Lord will look at this again. He said that they are covered under other legislation and I assume that he means by bonding. But I am not talking about bonding. I am talking about Clause 22 which ensures a standard of competence, and that is what the consumers will want to see.
Lord SANDYS: We return once again to the problem of how this Bill is to apply, and we have been told that all those involved in insurance brokerage and credit brokerage are specifically excluded —just like that. There is a very serious fault which lies quite a long way back. I refer to the consultative document, which aimed initially to promote a system of licensing for estate agents. As I understand it, the thinking on that did not comprehend either credit brokerage or insurance brokerage, but I shall have to refresh my memory on that document. When the document was set aside and the Government adopted this Bill, which is very largely the Private Member's Bill promoted in the last Session, considera-ations made earlier were again set aside. My noble friends have brought out very real arguments here. There is a problem in the application of Clause 22, and it would be very much to the benefit of the Committee if the Government would agree
108
to look a little more closely at this important Amendment.
Lord WALLACE of COSLANY: There are no grounds on which I can justify saying this, but, on the other hand, I wish to be reasonable and I do not want to take up the time of the Committee unnecessarily. I do not think there is any point in giving an undertaking on this Amendment. The Bill is quite specific on the subject and, at this time, I cannot hold out any hope of reconsideration. It could happen that, between now and Report stage, we might be in a position to have further thoughts, though I rather doubt it. I do not want to be too hopeful on this. The advice that I have just received is that credit brokers are controlled by the Consumer Credit Act 1974. I understand that noble Lords will appreciate this point. They are subject to licensing by the Director-General of Fair Trading, which can be a more severe control than control under the Bill. That is an incidental point. There is a problem with dual control of solicitors and credit brokers. But if it will help the Committee, I shall certainly say that we could look at the Amendment, but I should not be honest if I said otherwise than that I do not think there is much hope of it.
Lord SWINFEN: I wonder whether the noble Lord could answer one question. There are a number of credit brokers and insurance brokers who also carry out the business of estate agency at the moment, and advertise themselves as carrying out the two businesses. If they stop advertising the estate agency side of their business, and just call themselves credit brokers or insurance brokers but carry on with the business of estate agency, will they be exempt from the provisions of the Bill?
Lord WALLACE of COSLANY: I cannot readily answer that question on the spot. I should think that if they ran an estate agency as well as doing the other work, they would have a separate department and the same man would not be both a credit broker and a mortgage arranger, as well as being an estate agent.
Lord SWINFEN: In very small firms, the same individuals would probably do both kinds of work.
Lord WALLACE of COSLANY: I cannot give to the noble Lord an im-

109
mediate answer to that question. It is a rather difficult point. However, I shall certainly get an answer to him.
Lord GISBOROUGH: I am grateful to the noble Lord for saying that at least he will look at this point again. Before I withdraw the Amendment, however, may I say that those surveyors who are not members of the Surveyors Society—and there are a great many of them—are quite capable of inflicting extremely heavy losses on a purchaser. I am thinking in particular of advice which is ill given regarding subsidence. A house can be perfectly all right one moment and then subsidence can destroy it. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8 p.m.
The Earl of KINNOULL The Earl of KINNOULL moved Amendment No. 8:
Page 2, leave out lines 1 to 6.
The noble Earl said: This Amendment gives me an opportunity to ask the noble Lord to have a look at the two cases which we have discussed, for they are very important. The noble Lord said that the Director-General of Fair Trading issues his licence to these two bodies under the Consumer Credit Act. What I presume he means by that is, that if there is a complaint from a consumer on an estate agency matter, it will come within the remit of withdrawing a licence. If that is so, I do not have an objection; but I am advised that it is not so. If the noble Lord could look at that point and be a little sympathetic towards our very real concern over trying to make the Estate Agents Bill a little better, I should be grateful. I beg to move.
Lord WALLACE of COSLANY: The noble Lord has raised a certain point, which will be looked into; he will not expect me to give an on-the-spot reply. I shall look into it and, if possible, will advise him before the Report stage. Apart from that, I have already spoken on this Amendment.
The Earl of KINNOULL: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord GISBOROUGH Lord GISBOROUGH moved Amendment No. 9:
Page 2, line 27, leave out subsection (4).
The noble Lord said: In carrying property advertisements, newspapers are duplicating some of the most important functions of estate agents. This is an area in which abuses are far too common. It is important that tests of competence should be applied to advertising representatives who assist vendors over the wording of advertisements, for this is an area in which skill and experience are required. I am advised that there are many cases of misleading advertisements. They cause a great number of people to visit houses, and those people are then biterly disappointed by the inaccurate description of the houses.
Lord WALLACE of COSLANY: I dealt earlier with this point. I am conscious of the fact that noble Lords are working at a very late hour. I cannot go beyond what I have already said.
Lord GISBOROUGH: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
The Earl of KINNOULL The Earl of KINNOULL moved Amendment No.10:
Page 2, line 31, leave out paragraph (a).
The noble Earl said: This Amendment is consequential on the first Amendment. I beg to move.
On Question, Whether Clause 1, as amended, shall stand part of the Bill?
Lord SANDYS: I wonder whether it would be for the convenience of the Committee if I asked the Government at this stage what is their prospective programme. We have been sitting in Committee for nearly two hours. I believe that I am the only person who has been fortunate enough to be furnished with a copy of the grouped Amendments. We have completed Clause 1 but we have a substantial way to go before we reach the end of the Schedules. With 36 clauses in all before those Schedules, I am wondering whether the Government intend this evening to proceed to a certain stage, or until a certain time, or whether they intend to have an intermission, or what?
Lord WALLACE of COSLANY: This is surprising. Noble Lords will know that I received an enormous number of Amendments at very short notice. I have almost literally been sweating blood in the process of trying to get adequate answers at short notice. Now noble Lords want to pack up early. Somebody indicated that I have got Scots blood in my veins. In that case, I can be a very determined character. I cannot indicate how late we are likely to sit, but I shall try to have consultations. We shall go as far as we possibly can and then perhaps we will reconsider the matter. It is now five minutes past eight. Shall we say that when we reach nine o'clock and have got halfway through the Bill we will reconsider the position?
Lord AIREDALE: I believe that we are entitled to some consideration. Is it not the case that the Social Security Bill, which appeared on the Minutes that are available to us only today, was put before this Bill? Until today we expected that the Committee stage of the Estate Agents Bill would be taken very much earlier. We really must put a stop to the situation which seems to obtain, that anything which is labelled "consumer protection" comes on late at night.
Lord WALLACE of COSLANY: My heart beats very sympathetically with noble Lords, but the point is that the spokesmen on the Opposition Front Bench and I do not arrange the business. There is another medium, known as "the usual channels", which arranges the business. I have nothing to do with it. The Second Reading of this Bill was taken very late in the day, but there it is. Perhaps those who arrange the business were over-generous in their estimation of the enthusiastic support for the Bill which emanated in another place but which does not exist here. I am sorry.
Lord SANDYS: I take issue with the noble Lord. Clearly there is enthusiasm for the Bill in this House. I hesitate to repeat what I said earlier; namely, that we on this side of the Committee are using every endeavour to assist the Government to produce a better Bill. Our view on this side of the House is that if the Government can promote a programme which will facilitate the better management of business it will benefit everybody.
112
I do not know whether or not my noble friends will be satisfied. If, however, the Government are to reconsider the matter at approximately nine o'clock, all I can say is that I have asked the question and they have given an answer.
Clause 1, as amended, agreed to.
Clause 2 [Interests in residential property]:
8.8 p.m.
The DEPUTY CHAIRMAN of COMMITTEES (Lord Amherst of Hackney): I must tell the Committee that if Amendment No. 11 is carried, I cannot call Amendment No. 12.
The Earl of KINNOULL: Amendment No. 11 is not moved.
The Earl of CAITHNESS: Amendment No. 12 is not moved. I understand that as Amendment No. 11 is consequential upon Amendment No. 1, I cannot say what I wanted to say on this Amendment.
Lord WALLACE of COSLANY: I thought that the noble Earl was moving Amendment No. 12.
The Earl of CAITHNESS: Yes.
The DEPUTY CHAIRMAN of COMMITTEES: Amendment No. 11 was not moved. I called Amendment No. 12.
The Earl of KINNOULL: There has been a slight muddle. I should have withdrawn Amendment No. 10 which dealt with solicitors. I apologise to the Committee. Paragraph (a) should have been left in the Bill instead of being withdrawn. I should have said that Amendment No. 11 was consequential. My problem is that I did not take a note of the long list which my noble friend read out. I do not have a note and it would be very helpful if I had one. It is quite difficult at this late hour always to be totally alert.
Lord WALLACE of COSLANY: I am sorry about the list, but I had to get it out at very short notice. A copy was addressed to the noble Viscount, Lord Long, who passed it on to the noble Lord, Lord Sandys. As soon as possible we shall get a photostat copy. Time did not permit because the whole thing has been rushed. I am sorry about it.
The Earl of KINNOULL The Earl of KINNOULL moved Amendment No. 11:
Page 2, line 40, leave out subsection (1).
The noble Earl said: I beg to move.
[Amendment No. 12 not moved.]
The Earl of KINNOULL The Earl of KINNOULL moved Amendments Nos. 13 to 16:
Page 3, line 2, leave out ("residential")
Page 3, line 15, leave out ("residential")
Page 3, line 19, leave out ("residential")
Page 3, line 25, leave out ("residential").
The noble Earl said: I beg to move.
On Question, Whether Clause 2, as amended, shall stand part of the Bill?
The Earl of CAITHNESS: Perhaps this is an opportune moment to bring forward some of the points I intended to mention on Amendment No. 12. From what the noble Lord, Lord Wallace of Coslany, said earlier, if Amendment No. 1 is rescinded in another place, Clause 2(1) will come back into the Bill. Therefore, if it is appropriate, I should like the noble Lord to tell us exactly what the Government mean by the word "land". It can be argued that a farm is land which is enjoyed or occupied with a house, particularly if that land is in hand. Therefore, this Bill could extend to a 500 acre in hand farm. Whether or not that was the intention of the Government, I do not know. Similarly, if a landlord has to sell off an agricultural cottage that is subject to an agricultural usage as decreed by the Council, he might well have to sell off some land with it to make occupation of that cottage a viable exercise and therefore to contract the sale. Is this what the Government want or, as I believe is the case, do they want to limit it to a definition similar to that in Section 29(1)(b) of the Finance Act 1965?
Lord WALLACE of COSLANY: I am grateful to the noble Earl because he wrote to me about this and I have been able to try to get a more detailed answer for him because, as he is fully aware, in the Bill itself the words are:
"any land which is, or is intended to be, occupied and enjoyed with a dwelling shall be treated as part of the dwelling".
114
Those are just simple words, but the noble Earl has a more complicated point in mind. The answer, so far as I can give it to the noble Earl, is that the issue is essentially how much land there has to be with a dwelling before it ceases to be property of the kind to which the Bill applies. Section 29(1)(b) of the Finance Act 1965 lays down one acre or such larger amount as is required for the reasonable enjoyment of the property. The context is the exemption from capital gains tax for an individual's only or main residence.
The Bill lays down no hard and fast rule. Each case must be considered on its particular facts. The amount of land which would normally be occupied and enjoyed with a castle in Scotland is far greater than, for instance, with a flat in central London. In practice, the fact that the edges are blurred is unlikely to be significant. In the case of capital gains tax the issue would be whether relief was available or not. In this case nobody would suffer if, in a doubtful case, the agent concerned complied with the rules laid down in the Bill. The reputable and conscientious agent is unlikely to find that the Bill impinges on him very much anyway. I hope that meets the point raised by the noble Earl.
The Earl of CAITHNESS: I am grateful to the noble Lord for that reply but I fear that we may have to come back to this at a later stage.
Clause 2, as amended, agreed to.
Clause 3 [Orders prohibiting unfit persons from doing estate agency work]:
Lord GISBOROUGH Lord GISBOROUGH moved Amendment No. 17:
Page 3, line 40, leave out ("or violence").
The noble Lord said: It seems strange that it should have been thought right to specify conviction of an offence involving violence as grounds for an order declaring an agent unfit. At best, the issue is an irrelevant one; at worst, it seems to be particularly insulting to the estate agency profession that it should be included. I beg to move.
Lord WALLACE of COSLANY: In replying to the noble Lord, I should like to speak also to Amendments Nos. 18 and

115
19, which are related Amendments, if that is acceptable to the Committee. This is all part of the mysterious list that the noble Earl, Lord Kinnoull, has not yet received. A basic intention of the Bill, is that the Director should by reference to clearly specified grounds be able to consider whether it is in the interests of house buyers and sellers that the estate agent should be able to continue in practice. In doing so, he will be able to look in the round at the fitness of the estate agent and consider whether the public can properly put their trust in him.
The view that it is wrong to punish a person who has already suffered a conviction by removing his livelihood is not one which can be sustained where in the public interest the aim is to ensure that only those fit to engage in estate agency work should do so. Double jeopardy in this sense is a fact of life, for instance, where professions are controlled. There are examples in the field of liquor, gaming, betting, consumer credit and the law, to name but a few.
If the first Amendment, No. 17, were accepted and carried, the Director could not, for instance, consider acting against an estate agent who was convicted of rape or housebreaking. It can be argued that an offence of violence goes to the character of a person and that those convicted of certain offences should not be allowed in the course of business to enter other people's private houses. It is in my view right—indeed, I would say that it is essential—for the Director to be put in a position to act in the event of a conviction for violence. The Director is, however, under no duty to act because there has been a conviction and I can assure your Lordships that there will be no question of the issue of a banning order for an offence of violence which cannot be regarded as indicative of a character deficiency.
Where sex or race discrimination are concerned (Amendment No. 18), complaints about estate agents are by no means unknown and, indeed, the Commission for Racial Equality is in the course of investigating a number of cases. Should there be resultant findings, it would be anomalous for the Director not to be in a position to consider whether the estate agent was fit to continue in practice. I would argue that it is important that
116
discrimination should stand as a trigger event if the public is to have reasonable protection. From the estate agents' point of view, provisions in the Bill as it stands will make it easier for estate agents to withstand pressure from their clients to discriminate as they will be able to indicate that such action could lead to the loss of their livelihood.
Amendment No. 19 is unnecessary as Clause 30 already requires my right honourable friend to consult with representative bodies before making an order specifying practices as undesirable. I hope that the Committee will reject the first two Amendments, Nos. 17 and 18, as undermining the necessary protection for the consumer, and the third Amendment, No. 19, as superfluous.
The Earl of KINNOULL: We are dealing with a very serious clause in this Bill, the clause where the Director-General may issue an order taking away the livelihood If a professional person. I must admit I did not quite follow the noble Lord when he said that the Director would not do this in the case of violence if he considered it was a character deficiency; I thought that was what the noble Lord said. There is a grave worry about this. This was a subject which was discussed in another place and I do not think all the points were satisfactorily answered.
The kind of case we are going to be dealing with must be a complaint to the Director by a consumer against an estate agent who has done something right outside the sphere of his professional responsibility. What I do not understand, and I hope the noble Lord can reply to this specifically, is whether that complaint about something right outside the professional capacity of the estate agent be construed as something the Director should look into and might act upon. If that was the case, I think that would be monstrously unfair. In small communities you get jealousies and complaints, and this weapon could be used against an estate agent. When I say "weapon" I do not mean that strongly. I understand that, if a case of violence was reported to the Director, it could trigger off the Director's use of this power. What I do not know is whether such a complaint would be a reason for withdrawing the licence of the estate agent.

117
Turning to the Second Amendment, which is dealing with discrimination, I think this is also a very worrying matter to include in this clause. We already have two Acts, so far as I know, which deal with discrimination, the one on sexual equality and the other one. It strikes one that this is a totally unnecessary duplication of a power which is already in legislation, and one really wonders why it should be included in this clause. This is a subject which could be quite volatile. One might have a perfectly genuine case of misunderstanding by someone who has come to our shores, who is not British, and who learns from his solicitor that he has power to complain to the Director. It might be found that in fact it was not the estate agent who was displaying any discrimination, but it was his client. I think this question of discrimination is something we ought to look at again, if not tonight at another stage. It is a very worrying power in a fairly worrying clause.
Lord SANDYS: I share the anxieties and the beliefs of my noble friend Lord Kinnoull. Here we are at a formative stage of a piece of legislation. It is very interesting to look at what the Parliamentary Commissioner has to say in his report for 1978, reporting on matters in other spheres, admittedly, but in the broad field of what has happened over legislative practices and how Bills have become, as it were, part of the tapestry of life in this country. He has some very interesting comments to make at page 8 of this report. My noble friend Lord Kinnoull may have already seen this. He says in paragraph 27:
"It may be of interest to describe some of the basic causes of maladministration as I have found them. Naturally, in any large organisation—and each major Department is in itself a large organisation, let alone the Civil Service as a whole—there is bound to be individual error …"
Then he goes on to say in paragraph 28:
"With some notable exceptions, however, I have found that the more serious cases I have had to deal with have had deeper roots. It is either that there have been changes in administrative systems, arising perhaps from new legislation, which have been ill-prepared, or that systems have become so complicated as to baffle not only the public but sometimes the officials as well".
Lord AIREDALE: I am surprised I must confess at the expression used in paragraph (b) "has committed discrimination in the course of estate agency
118
work", as if that was in itself an offence or some quasi-offence. To begin with, exercising discrimination in some circumstances could not possibly be regarded as unworthy. If two prospective purchasers come along and the seller asks the agent's advice, "Who do you advice me to deal with?", the agent might say, "Well, I should say A is perhaps financially stronger than B, so I would favour A"; or he might say, "A is a British subject living here and B is from abroad, so I would tend to favour A". Well, there is discrimination, but nobody could suggest that there was anything improper in the agent giving that advice.
What does (b) really mean—" committed discrimination"? There is no qualifying adjective—"unfair discrimination", which would lead one along the road as to what is intended. If what is intended is discrimination which is referred to and made an offence in other recent Acts of Parliament, I would have thought those acts of discrimination should be stated in (b) by reference to the Acts of Parliament concerned. But simply to say "has committed discrimination", as if that was some kind of offence, I should have thought really quite extraordinary
Lord WALLACE of COSLANY: To reply to the noble Lord, Lord Airedale, straight away, I would draw his attention to the fact that "discrimination" is defined in Schedule 1. The word "discrimination" used in the Bill is a convenient handle, if I may put it that way. I would also add that the Director would not in law decide that an estate agent was unfit on the basis of an offence which was not relevant. I accept that this is a very sensitive matter, because we all hold the view that nobody should be kicked down because of something they have done. But, of course, there are times when, in the case of a certain offence and a conviction, it might be in the public interest that the question of whether or not the person should be allowed to continue to practise should be decided.
I would also repeat what I said earlier, that it is now common in the fields of betting, gaming, liquor, and consumer credit to impose a positive licensing system. In effect, society is saying that to carry on a given activity and to make a profit out of it is a privilege which we only grant to a fit and proper person.

119
In such cases, a recent criminal conviction would always be a relevant factor to be taken into consideration, although by no means always conclusive.
The same principles apply to the Bill, but instead of a positive licensing system, the Bill imposes a negative licensing system—in other words, people are fit until they are found to be unfit—a power to prohibit rather than a power to permit. The basis of the Bill is an appreciation of the fact that the social consequences of malpractice in estate agency work are such that it should be done only by fit and proper persons. I do not think that any noble Lord would disagree with that. Therefore, there is no double jeopardy. The Director's powers are not powers to impose a further penalty for the same offence, but powers which enable him to ensure that only those fit to engage in estate agency work should do so.
The fitness of someone convicted of violence to enter people's homes and of those who have discriminated to do estate agency work must inevitably be in question. However, there is nothing in the Bill that makes a debarral following a conviction or a finding automatic. Where a particular criminal conviction does not indicate unfitness to continue to engage in estate agency work, it would be quite wrong for the Director to make an order. The two things are different sides of the same coin and each illustrates that the Director's order is not a penalty but a decision based on the person's character as a whole. I know that this is a very difficult field, which I accept will have to be exercised with care, but the care is laid down in the Bill. It is a very difficult but a very necessary area.
Lord AIREDALE: I apologise for not having spotted the definition of "discrimination" in Schedule 1. I looked in this clause and in the general interpretation clause, but I did not think of looking in Schedule 1. I may not be the only person to miss this, so at the next stage may we please have a drafting Amendment which will say:
"… has committed a discrimination within the meaning assigned to it in Schedule 1".
Then people will find it.
The Earl of KINNOULL: I do not want to labour this point about the test of
120
fitness, but should there not be written into the Bill somewhere the lines upon which the Director would be asked to consider a test of fitness? At the moment we might have two or three different Directors, or perhaps his assistants, who give totally different views and it would be very confusing. When we are introducing a brand new concept into this profession—I am not saying that the noble Lord has quoted other cases—as a matter of justice, those who may be considered by this test should know in this Bill what the test really implies. I do not know whether the noble Lord could look at that before the next stage.
Lord WALLACE of COSLANY: That could be done. I accept that it is a very difficult point and if any form of words would give a further explanation and safeguard, certainly it should be considered. At this stage it is very difficult to think of such words. The noble Lord, Lord Airedale, has already fired a shot across my bows so I have had warning. Certainly, it is a matter that could be considered. However, in saying that I mean that it should be given consideration by both sides.
Lord GISBOROUGH: I was rather taken by surprise there because I spoke to Amendment No. 17 and did not realise that we were also dealing with Amendments Nos. 18 and 19. Perhaps, for the record I could say a word on Amendment No. 18. In another place the Secretary of State appeared to express some sympathy for the argument that discrimination should be left to the Commission for Racial Equality or the Equal Opportunities Commission. However, he rejected that approach largely on the narrow ground that the Consumer Credit Act contains a similar clause, but the precedent does not seem to be a good one as the Consumer Credit Act and the Estate Agents Bill are not properly analogous measures. This Bill seeks to regulate a long-recognised independent profession. In practice I think it would be very difficult to find this discrimination which, as has been mentioned, may well be insisted upon by the purchaser. There will be no obligation even on a vendor to accept the top price. I think that the totting up process within the Bill, which may lead to loss of livelihood, may become a worry to estate agents.

121
One of the important questions—and perhaps the noble Lord would answer this—concerns the various assurances that he has given and which were given in another place. Are those assurances binding on successive Administrations? —because it is all very well having an assurance now, but what happens in five years' time when we have perhaps a totally different Secretary of State with a different outlook who may ignore them?
Lord WALLACE of COSLANY: That is a very difficult question to answer. I can answer for my side of the Committee, but I cannot answer if the other side of the Committee came over to this side. This is something which I should not like to forecast. The noble Earl probably knows his own Party better than I do.
Lord GISBOROUGH: I am grateful to the noble Lord. I think he has told me that the assurance covers his own side. I think that this side of the Committee will also stand by their assurances. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord GISBOROUGH Lord GISBOROUGH had given Notice of his intention to move Amendment No.18:
Page 4, leave out lines 3 and 4.
The noble Lord said: In the circumstances, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 19 not moved.]
Clause 3 agreed to.
Clause 4 agreed to.
Clause 5 [Supplementary provisions as to orders under sections 3 and 4]:
Lord WALLACE of COSLANY: With the permission of the noble Lord, Lord Swinfen, as noble Lords do not have the marked list, although the two Front Benches do have it, it is hoped that we can deal with Amendments Nos. 20, 21 and 22 together.
Lord SWINFEN Lord SWINFEN moved Amendment No. 20:
122
Page 6, line 19, after ("against") insert ("a body corporate, unincorporated association or").
The noble Lord said: I should like to speak also to Amendments Nos. 21 and 22 because they are consequential upon Amendment No. 20. By my reading of the Bill, this particular clause refers only to partnerships. Today there are a number of estate agencies that are either operating as limited companies or as unlimited companies. I think that the wording which I have suggested, which I have taken from Clause 22(3)(c) should include companies both limited and unlimited. I beg to move.
Lord WALLACE of COSLANY: I am by no means unsympathetic to the purpose of this Amendment. When a company is banned it would be absurd if the true malefactor could set up again straight away on his own or through the medium of another company. All of us who are concerned with consumer affairs know that numerous complaints relate to just this sort of thing. The problem was much in our minds in drawing up the Bill. That was why we provided in Clause 1(1) that the controls applied equally to those employed in a business. Similarly, in Clause 3(3) we have provided for a measure of vicarious liability. The reason for the special provision in relation to partnerships is that the relationship of partners to one another and to the partnership is not that of employee/ employer. It might well happen that something was done or omitted to be done in the name of a firm for which one of the partners was morally responsible, but which could not be ascribed to him. However, although I think that the clause works as intended, frankly, I must admit that I am not entirely happy with it. I have listened to the noble Lord and I give the undertaking that, if he will withdraw his Amendment, I should like to look again to see that all is well and that it is satisfactory.
Lord SANDYS: That is one of the most reassuring answers that the noble Lord has given this evening. It is clear from reading the clause that it is considerably more complicated than it perhaps appears. This marks a stage in our discussions, and I am particularly glad that the Government have thought fit to support the suggestions made by my noble friend Lord Swinfen.
Lord SWINFEN: I thank the noble Minister for his reply. On his undertaking to reconsider the clause, I withdraw my Amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 21 and 22 not moved.] Clause 5 agreed to.
Clause 6 [Revocation and variation of orders under sections 3 and 4]:
The DEPUTY CHAIRMAN of COMMITTEES: If Amendment No. 23 is carried then 1 cannot call Amendment No.24.
8.41 p.m.
Lord GISBOROUGH Lord GISBOROUGH moved Amendment No. 23:
Page 7, line 30, leave out paragraph (b).
The noble Lord said: It is wrong in principle that the Director-General of Fair Trading should be given powers to speculate about an appellant's possible future course of action, he should be concerned only with points of fact. Sufficient powers exist under paragraph (a) above for the Director to be able to refuse applications from unfit agents. I beg to move.
Lord WALLACE of COSLANY: I really cannot accept this Amendment. The Amendment proposed would have the effect of leaving the Director free to apply his own criteria in deciding whether or net to grant a variation or revocation of a warning order.
Under Clause 4 the Director will have made up his mind whether a person would be unfit to carry on estate agency work if he were to continue to engage in the specified practice. Therefore, where a person is seeking variation or revocation if no guidance were given to the Director he would again be able to consider only a person's unfitness if he were to repeat the offence (which is something he has already decided) without reference to the question whether he is likely to do so. The effect of Clause 6(4)(b) is that in judging whether to grant the application or not, the Director will consider whether he is likely to engage again in the practice and he will obviously look again for evidence of improvement. If he finds such evidence he will revoke the order. Thus Clause 6(4)(b) is of benefit to
124
the estate agent. It enables a warning order to be lifted if there are signs of improvement. The Amendment would have just the opposite effect.
In the case of refusal or more limited variation than was sought, the applicant would in any case have the right to make representations, have a hearing and make an appeal. Therefore, I emphatically ask the Committee to reject the Amendment.
Lord AIREDALE: Would it not be an improvement if, instead of merely "he considers"—that is, the Director considers—it were to say:
"considers upon reasonable grounds, or has reasonable grounds to suppose that the applicant may again engage in the practice…".
I see that the next clause provides for appeals to the Secretary of State against the decision of the Director, and if the criterion is merely whether the Director-General considered, the Secretary of State has not got much room for manoeuvre; but if you insert in this paragraph "considers upon reasonable grounds", then there is something to appeal about to the Secretary of State. You can go to him and argue that the Director misdirected himself because he really had no reasonable grounds upon which to come to this consideration. I would urge that consideration be given to strenghtening the paragraph by inserting "on reasonable grounds", or words to that effect.
Lord WALLACE of COSLANY: In reply to the noble Lord, Lord Airedale, I would remind him that all statutory discretion must be exercised reasonably under common law.
The Earl of KINNOULL: The noble Lord in his reply ended by saying that this helps estate agents. I assume that this warning order under Clause 4 would be entered on the register under Clause 8, which is a register which is open to public inspection, and indeed is a damaging piece of evidence that the estate agent is possibly about to lose his licence, or could lose his licence. If the estate agent finds himself in this position with a warning order, and he then applies to get it revoked, as the noble Lord says he has an appeal under Clause 7. I do not understand how it can help him that the Director-General of Fair Trading can take a speculative view, which is really

125
the wording of this clause, that at some time in the future he is likely to go back to his bad old ways. I do not understand the wording of this subsection, and I hope that the noble Lord will look at it again and try to improve on the wording. I think that this is what the Committee is asking.
Lord WALLACE of COSLANY: In point of fact, subject to the noble Lord withdrawing this particular Amendment, I am to move Amendments Nos. 24, 25 and 26 which I think will cover his point.
The Earl of KINNOULL: Would the noble Lord answer the point about the register? Does he know whether a warning order will be subject to being put on the register under Clause 8?
Lord WALLACE of COSLANY: Not offhand, I must admit. As noble Lords know, work on this has been considerably rushed and I cannot give an immediate answer on that point.
The Earl of KINNOULL: Would the noble Lord be able to find out before we get to Clause 8?
Lord WALLACE of COSLANY: I shall do my best.
Lord GISBOROUGH: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.48 p.m.
Lord WALLACE of COSLANY Lord WALLACE of COSLANY moved Amendments Nos. 24, 25 and 26:
Page 7, line 31, after ("may") insert ("again fail to comply with a relevant statutory obligation, or as the case may be")
Page 7, line 42, after ("likely") insert ("to fail to comply with a relevant statutory obligation or")
Page 8,line 9, at end insert—
("(7) In this section "relevant statutory obligation" has the meaning assigned to it by section 4(1)a) above.")
The noble Lord said. With the leave of Committee, I should like to take Amendments Nos. 24, 25 and 26 together. These are Amendments arising from Amendments to Clause 4 at Report stage in the Commons, and related Amendments. These Amendments are consequential on an Amendment accepted in the other place
126
which made it possible for the Director to issue a preliminary warning order under Clause 4 in the event of failure to meet one of those statutory obligations which do not attract a criminal penalty; they are at Clauses 15 and 18 to 21 of the Bill. As a result of these Amendments the Director will be able to consider whether an applicant for variation or revocation of such a warning order has shown sufficient evidence of reform to justify the lifting of the warning order or its variation in a way favourable to the applicant. I beg to move.
The Earl of KINNOULL: There is one small point which possibly the noble Lord, Lord Airedale, would have made, that under Amendment No. 26 the noble Lord is suggesting an interpretation of the words "relevant statutory obligation". Should that be put into the relevant Schedule so that all looking at this Bill will be able to see that interpretation?
Lord WALLACE of COSLANY: I shall have to look into that. I might mention that warning orders will go on the register while they are in force.
Clause 6, as amended, agreed to.
Clause 7 [Appeals]:
8.51 p.m.
Lord SANDYS Lord SANDYS moved Amendment No. 27:
Page 8, line 17, leave out ("Secretary of State") and insert ("court").
The noble Lord said: We now enter the important part of the Bill which relates to the appeals procedure. Anxieties have already been expressed about the powers of the Director-General of Fair Trading. The Bill proposes that the Director shall be awarded and charged with the use of very wide powers, and the anxieties that have been expressed must be justified unless the appeals procedure under which someone who presents himself as a charged person to plead his innocence enables him do so in circumstances where he believes he may obtain justice.
The Government proposal is to set up a tribunal. The Director-General will be placed in the position that those who come within his jurisdiction will have to seek

127
to place their case before a tribunal set up by the Secretary of State. Presumably the tribunal will consist of one or more people drawn from a panel, and in this case the suggestion is very similar to what might be done in a planning situation. It is our contention, however, that the situation is totally different, and a number of those who will be presenting appeals will have their livelihood at stake. My noble friend Lord Kinnoull earlier described situations in which nothing less than the livelihood of the appellant would be at stake.
It is interesting to note what Mr. John Fraser, the noble Lord's right honourable friend, said in another place; it is clear that the Government are satisfied that the appeals procedure proposed in the Bill will be staisfactory, but we believe that it falls far short of the desired result. In Standing Committee E, the Minister said at column 78:
"Thirdly—this is perhaps the most important reason—the courts in general show a reluctance to substitute their judgments for that of a tribunal or, in this case, for that of the Director-General of Fair Trading. There would be a tendency, if the appeal lay direct from the Director-General to the courts, for the courts not to involve themselves too much in the judgments of practice which had been reached by the Director-General, whereas the tribunal would be better qualified to do so than a court of law".
I believe that is a serious misappraisal by the noble Lord's right honourable friend and it is our intention in tabling this Amendment to redress the situation. I beg to move.
Lord GISBOROUGH: Clause 3 gives wide powers to the Director General of Fair Trading, and in extreme cases the ability to deprive a person of his livelihood. In these circumstances, the rights of the individual must be fully protected and this can be done effectively only by ensuring that appeal against an order of the Director-General of Fair Trading lies not to the Secretary of State but to the court on matters both of law and of fact. Clause 7(1) should be amended by deleting the worlds "Secretary of State" and substituting the word "court".
Lord WALLACE of COSLANY: Are we dealing at the same time with Amendments Nos. 31 and 32?
Lord SANDYS: No, I moved only Amendment No. 27.
Lord WALLACE of COSLANY: As the Committee wishes, though I think it would have been better to deal with those Amendments too. I can fully appreciate the concern which noble Lords have expressed about cases where an individual could be deprived of his livelihood, and their anxiety that arrangements for appeal against the Director's decision should ensure not only that the appellant has a proper opportunity to put his case but also that he can be assured of just treatment. The Government have had these considerations much in mind when drawing up the system of appeal written into the clause and are of the opinion that it has advantages for the appellant as compared with the more formal procedures of the courts.
Amendment No. 27, by allowing an appeal from the Director's decision direct to the courts, would mean that the appellant had only two opportunities to make his case. The system written into the Bill allows him, first, a full administrative hearing by the Director; secondly, a subsequent appeal to the Secretary of State, who can consider the case on administrative grounds before deciding whether to uphold, withdraw or vary the Director's decision; and, thirdly, he can appeal to the courts on a point of law, and this includes the case where it is held that the verdict of the tribunal was against the weight of evidence. The system of the Bill therefore gives the agent three opportunities to state his case. I could give examples of further advantages, but I think those remarks cover the point. There is a chance to go to the court and, in the circumstances, the opportunities for appeal are greater here.
The Earl of KINNOULL: Although the Minister referred to three opportunities, in fairness to the Committee it should be said that they are really only two, and they are on the narrow point of law as to whether one could appeal to the court. It is also fair to say, if one is looking at the position where an estate agent has appealed either against a warning order or against having been struck off under Clause 3, that the case needs to be dealt with very quickly; we do not want a long

129
drawn-out case which is costly and time-consuming during the three phases which the noble Lord mentioned. I suggest that there would be very few estate agents who, having lost their earnings and their business, would have the money behind them to fight in such a situation.
If the Government are not able to accept my noble friend's persuasive arguments, then perhaps it should not be the court to which appeal should be made but a High Court judge; certainly it should be to someone other than the Secretary of State because he will basically be responsible for the Director-General of Fair Trading—he will have appointed him, so far as I know—and the matter is too close. I am not saying that the Secretary of State would act unfairly, but he could be seen to be acting unfairly or the applicant might not feel that his case had been dealt with fairly. If there is a parallel, perhaps one might mention the case of a member of Her Majesty's Services; if he is asked to leave the Service he has roughly the same procedure open to him, in that he can appeal to the Secretary of State for Defence and subsequently, on a point of law, to the court. I do not think it has been over-proved that this kind of situation is very satisfactory. I know that the professional bodies feel very strongly about this matter. Indeed, I believe that all those practicing in estate agency feel very strongly about it. What they want is simply a fair and quick procedure of appeal, and a hearing which is independent of the Government. At the moment, one is not getting this from what is written into the Bill, as my noble friend has said and as has been argued in another place. I hope that the noble Lord will be prepared to look at this again.
The Earl of CAITHNESS: If I understood the noble Lord, Lord Wallace of Coslany, correctly, it would seem that, if the appellant feels that the weight of evidence is on his side yet the tribunal rules against him, he can go to the courts even at that stage. Therefore, is this not duplicating a procedure, and would it not be better to cut out the appeal altogether and go straight from the Secretary of State to the courts, rather than involve the tribunal?
Lord WALLACE of COSLANY: That is a very attractive point. I had intended
130
to add to my opening remarks and to say that there are a number of real advantages for the agent in putting his case to a tribunal headed by a legally qualified chairman which will advise the Secretary of State, instead of to the courts. The tribunal can exercise a greater discretion than the courts. It cannot impose a sanction more severe than the Director has proposed. Its administrative approach will mean that its procedures are less formal than the adversarial procedures of the courts, and the appellant will in consequence find it easier to make his case and to put forward all the circumstances surrounding his work which appear to him relevant. The tribunal will be less expensive for him than the court hearing. The experience of someone involved in estate agency work will contribute to the assessments made by the tribunals of cases where a knowledge of what goes on in estate agency work is of relevance to a judgment.
Lastly, the courts show a general reluctance to substitute their judgment for that of a tribunal or of the Director. If the appeal were direct to the courts from the Director's decision, it is unlikely that the courts would involve themselves in the Director's judgments on the question of practice as the tribunal advising my honourable friend would be in a position to do. In brief, there is no reason why the appellant should be at a disadvantage under the appeals system of the Bill. Quite frankly, in many cases it will by virtue of the system operating be cheaper and better for the appeal, unless there are some points which force the agent to go to the courts, which he is fully entitled to do.
Lord AIREDALE: Did the noble Lord say that the chairman of the tribunal would be, or might be, a legally qualified person?
Lord WALLACE of COSLANY: I said that he would be a legally qualified person.
Lord AIREDALE: The Minister said something on those lines, I thought.
Lord WALLACE of COSLANY: I shall repeat my words slowly. There are, as I have indicated, a number of very real advantages for the agent in putting his case to a tribunal headed by a legally

131
qualified chairman which would advise the Secretary of State, instead of to the courts. The chairman of the tribunal will be legally qualified.
Lord SWINFEN: Will the noble Lord indicate the standing of the legally qualified chairman? Is he thinking of a judge or a barrister—or what would be the level?
Lord WALLACE of COSLANY: Personally, I am not thinking of anyone, because I am not qualified to reach a decision on the question of legal standing. I cannot deal with that point at this stage. All I can say is that he, or she—after all, we have sex equality—will be legally qualified. I shall not try to answer tonight on what the legal qualifications would be.
Lord SANDYS: On such an important question we cannot leave the matter there. Clearly, the Council on Tribunals will be instrumental in making certain administrative arrangements. The Government cannot at this stage say the degree of qualification or eminence of the legally qualified person, which we most certainly desire to know as a matter of practice, and which would be helpful to our discussion. For the benefit of the noble Lord I should be prepared to withdraw the Amendment at this stage if the Government will investigate and see what practices and procedures they are going to adopt in appointing the tribunal, so that we can have a much better discussion at the Report stage.
Lord WALLACE of COSLANY: I accept that.
Lord SANDYS: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
The DEPUTY CHAIRMAN of COMMITTEES: If Amendment No. 28 is carried, I cannot call Amendments Nos. 29 to 32.
9.6 p.m.
Lord GISBOROUGH Lord GISBOROUGH moved Amendment No. 28:
Page 8, line 22, leave out subsection (3).
The noble Lord said: The purpose of the Amendment is to press the Govern-
132
ment to include the regulations for appeals in the Bill. It is quite unacceptable for the regulations to be made by Statutory Instruments in the way specified in the clause. Estate agents have a right to know where they stand, and Parliament must be able to examine the Government's proposals in order to ensure that there are adequate provisions for consultations with the representative bodies on the composition of appeals panels and so on. The Bill should contain more positive requirements as to the hearing of appeals. The Secretary of State has said that regulations under Clause 7(3) would provide for an appeal to be heard by a panel and that the experience of those engaged in estate agency work would be of great importance in assessing the criteria of appeals, as has already been mentioned by the noble Lord. If such a system were to be contemplated, there should be a positive requirement on the part of the Secretary of State to make regulations under Clause 7(3), and the Bill itself, and not the regulations, should set out the appeals procedure. I beg to move.
Lord WALLACE of COSLANY: The Amendment would remove the power to make appeals regulations. There would be no power to lay down the time limit, the process, or the system of appeals. There is an established distinction between substantive and procedural law. The right of appeal is part of substantive law, and it would be wrong to put it anywhere but in the Bill itself. The time and manner for appeal is a matter of procedure which is entirely appropriate for regulations. The intention is to follow closely the regulations made for consumer credit appeals. The Government cannot accept the Amendment.
Lord GISBOROUGH.I think this is an important point for some of the bodies involved, and I should like to come back to it at Report stage and also when one has seen what has happened to the previous Amendment. I therefore beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
The Earl of KINNOULL The Earl of KINNOULL moved Amendment No. 29:
Page 8, line 22,leave out ("may") and insert ("must within six months of the passing of this Act").
The noble Earl said: This, in a sense, is on the same point. The purpose of my Amendment is to put into the Bill a provision imposing on the Government a duty to bring these regulations into effect within six months of the passing of the Bill. I think that is a very reasonable request, and I think it is in fact an important request by Parliament. I think that all Secretaries of State tend to let things lie because of the pressure of work on their officials, and so on. Indeed, one is sometimes aghast at the number of Acts of Parliament which are passed in relation to which one finds that parts of the Acts have never come into force at all. I therefore think that on this particular point, when one is dealing with appeals, about which estate agents themselves are feeling very sensitive, it is only right that the Government should indicate in the Bill a time within which they will bring in the regulations. I beg to move.
Lord WALLACE of COSLANY: There is another Amendment to leave out "may" and insert "shall". Shall we take that now?
Lord SANDYS: I think it would be for the benefit of the Committee if both were taken together.
Lord WALLACE of COSLANY: There are two Amendments which would impose on my right honourable friend a duty to issue regulations about arrangements for appeals. It might be convenient, if it is agreeable—and this has already been indicated—that we take them together. The Amendments appear to be based upon an apprehension that the provisions of the Bill will be implemented without the provision of proper and publicised arrangements for the hearing of appeals by my right honourable friend against a decision of the Director to issue a warning or banning order. Any such fear is without grounds. The appeals arrangements are an integral part of the control system. The Bill itself, in Clause 7(1), provides a right of appeal. It would be unthinkable, and arguably illegal, for the Director's powers to make orders to be brought into force without bringing into force the right of appeal. The absence of regulations about their timing, conduct and so on, would not mean that there was no right of appeal, but the arrangements could not work as intended.
134
On the question of timing, it will have been noted that Clause 36 provides for the Bill to come into force when my right honourable friend, by statutory instrument, appoints a day, and allows him to appoint different days for different provisions and different purposes. This approach was adopted so as to enable my right honourable friend to make proper administrative arrangements at central and local authority level; to carry out consultations (including, for instance, with the estate agents' organisations about the make-up of the panel from which will be drawn tribunal members to advise my right honourable friend on appeals); to ensure sufficient prior publicity to allow estate agents to prepare for the necessary changes in their working arrangements, and so on. I can assure your Lordships that it is the intention to lay orders introducing the main provisions implementing control by the Director together with the appeals regulations at the earliest possible date. Certain other provisions, such as those relating to clients' money, where some agents will need time to arrange cover, will follow later.
Thus, the appeals regulations, which will be on lines similar to the Consumer Credit Licensing (Appeals) Regulations 1976, will inevitably be introduced at the first stage of the introduction of the control and, for the reasons I have mentioned, it would be unrealistic to put a time limit on the date for introduction. Furthermore, it would, as I have no doubt your Lordships will accept, be constitutionally indefensible to lay a duty on the Minister to make regulations, as a decision in such matters lies with a future Parliament.
Lord AIREDALE: Leaving aside the six months, I shall be astonished if the Government resist Amendment No. 30, when we get to that. What possible sense is there in saying that the Secretary of State "may" make provisions by regulations, instead of "shall", when at the end of the subsection it says:
"… such regulations shall be made by statutory instrument which shall be subject to annulment"
by Parliament? We have got to have these regulations, and we have got to have this appeals procedure. Like it or not, the Secretary of State has got to face up to making the regulations in order to make the Bill workable; and to say that

135
he "may" make provisions by regulation seems to be really quite ridiculous.
Lord SWINFEN: This is a very unusual year in that there must be a General Election; and this could be used as an excuse for delaying the making of these provisions. I should like to support my noble friend's Amendment and ensure that the Secretary of State does make provisions within six months—no matter what Party. Otherwise the matter could be allowed to drag on for a very long time. As I understand it, under the Bill the Director would have a duty to make orders under certain circumstances. If there are no provisions for appeal, there will be a very pretty mess and a number of individuals could lose their livelihood and be put into an exceedingly awkward situation.
Lord WALLACE of COSLANY: Do not ask me to start getting involved in speculations about a General Election. That is not within my duties tonight, anyway. I can appreciate the points made by noble Lords. Amendment No. 29 is constitutionally indefensible because it would require the making of regulations within six months. I sincerely hope that that would not happen because it could be that my right honourable friend would be unable to comply with the duty laid upon him because, even though the regulations were laid, there was no Parliamentary majority for any proposals. How could he comply with his duty in that case?
Generally the Amendments achieve nothing. It is not the regulations which give the right of appeal; it is Clause 7(1). If my right honourable friend were so minded—which I hasten to assure your Lordships he is not—he could make regulations without bringing into force the substantive provisions about the Director's orders and appeals from them. I can assure your Lordships that there will be no undue delay; but if there was any danger of that this Amendment would not prevent it. I would ask the noble Lord, Lord Sandys, whether he is very concerned about this Amendment and whether he wishes to press it.
Lord SANDYS: On the constitutional point, I was very surprised that the
136
Government have said that it would be constitutionally impossible or constitutionally inconvenient for this Amendment to be written into the Bill; because I can recall—and I am sure that many of my noble friends can recall—occasions when the noble Lord's noble and learned friend Lord Gardiner has criticised many Acts of Parliament which have not included implementation clauses with a time limit. This is a fact in drafting which has had very serious affects on certain Acts of Parliament. If we do choose to withdraw this Amendment, we would do so only with the greatest reluctance and at this late hour. I see that it is now long past the moment when the noble Lord was going to tell us his time-table for the rest of the evening. Subject to any further suggestions which my noble friend Lord Kinnoull might make, I believe it would be for the convenience of the Committee if at this stage I were to withdraw this Amendment.
Lord AIREDALE: Before the noble Lord does so, coming back to what we were discussing just now—the question of a legally-qualified chairman of the tribunal—if the situation is that the Secretary of State "may" make provisions as to the persons by whom appeals are to be heard—and it is only an enabling provision—and he does not make the provisions, then it is not much good talking about there having to be a legally-qualified chairman; because unless the Secretary of State has to make provisions, how do we know that we are going to get a legally-qualified chairman?
Lord WALLACE of COSLANY: I have already indicated that the chairman of the tribunal will be legally-qualified. I do not think I need go further than that.
Lord AIREDALE: He will not be so until the Secretary of State makes the provisions; and if the Secretary of State does not have to make the provisions, it will not occur.
Lord Wallace of COSLANY: There will be no tribunal until the Secretary of State lays down the order.
Lord AIREDALE: That is why we want "shall".
Lord WALLACE of COSLANY: I think there is a little misunderstanding here. I am dealing with the question of whether we are withdrawing the Amendment of the noble Earl, Lord Kinnoull.
The Earl of KINNOULL: I am tempted not to take any action until my noble friend's specific question, about how long we are going to discuss this Bill, is answered. I see that the Chief Whip is not here. Perhaps she has gone off to a dinner. I wonder whether the noble Lord has a reply to that question.
Lord WALLACE of COSLANY: The Chief Whip is away on Government business in another country warmer than this country at the present time. The Deputy Chief Whip, the noble Lord, Lord Strabolgi, is about. We are quite content to continue for quite a while yet. That is the position.
9.20 p.m.
Lord SANDYS: I really must express dissatisfaction with that reply. Not only have the Government put us in a difficulty—and we have been over this earlier—with the grouping of amendments, but, further, they have set no particular programme on how far progress shall go. It was a very real point of comment made by the noble Lord, Lord Airedale, that consumer legislation should come on so very late at night. We are concerned here with a very important clause at the heart of a Bill. I ask the Government to consider very seriously what the programme should be. From our point of view, of course we will continue until a sensible and desirable moment; but it appears to us that the Government have no particular programme.
Lord JANNER: May I intervene? I do not understand what is happening. So far as I understand procedure in this Committee and in the other place, there is an arrangement between the people who are really important and know everything on both sides of the House as to what procedure shall be adopted. Why blame the Government? Blame your own people. Go and see them, have a talk to them and find out why they have misled you, if they have done so. You cannot put blame on what we are trying to do. I am not very keen about the situation myself;
138
I should prefer to be home. But that is not the point. The point is that this is an arrangement and you cannot blame one side or the other. You should blame yourself as well.
Lord SANDYS: What would satisfy us at this stage, notwithstanding what the noble Lord, Lord Janner, has said—with which I do not agree—is that we should like to know what the programme is for the evening.
Lord WALLACE of COSLANY: I cannot give the answer immediately. I do not take these decisions; this is a matter for other people. I have passed a message to my noble friend to get a decision later. In the meantime, I must repeat the point that noble Lords at very short notice have put down 82 Amendments. I am sure that they want them properly debated. While I can understand that, in point of fact we have not had much opportunity to get the job satisfactorily settled. The "usual channels" have decided to take this Bill at the end of the day. I cannot help that. My responsibility is to get the Committee stage of the Bill through. If noble Lords have put down 82 Amendments, they must accept the responsibility for debating them, even if they lose their sleep.
Lord SANDYS: Of course everybody accepts responsbility for the Amendments; but the point is that we want to debate those important Amendments in an orderly and satisfactory manner. We would, I am sure, accept what the noble Lord, Lord Strabolgi, who is acting Chief Whip for the Government, has to say. If he has been able to reach a decision it would please us very much.
Lord GISBOROUGH: Is the noble Lord aware that one of the reasons why this is happening is because this, along with many other Bills, is being rushed through? In fact most of these Amendments were put down as soon as they could be received and as soon as the postal service would allow. I am responsible for many Amendents. The time taken of a week for preparation with the responsible bodies and then about a week for the post to get the Amendments in, has meant that it has not been possible to do it earlier.
Lord DARLING of HILLSBOROUGH: This is not quite correct, is it? Many of these Amendments were tabled, discussed and disposed of in another place. It is not fair now to suggest or try to give the impression that these are new Amendments. These are not new Amendments that have been brought forward for the purpose, as the noble Lord, Lord Sandys, has said, of improving the Bill. To suggest that the other place did not deal with the Bill correctly I think is entirely wrong. Most of these Amendments have already been dealt with by the elected representatives of the people:
Lord AIREDALE: But that is very odd, because the Minister was complaining that he had had so little time in which to consider these Amendments.
Lord STRABOLGI: Perhaps I might say a word here. I should like to say initially that no one has approached me to suggest that we should adjourn at nine o'clock or at some slightly later hour. Nobody came to make any representations about that and I gave no undertakings. So far as I am concerned, I think the arrangement was that we should finish the Committee stage tonight. It does not seem to me, by the standards of another place, that it is very late; it is only half-past nine. As my noble friend Lord Wallace has said, a great many Amendments were put down last night. I think we ought to consider them and make some progress. I suggest that we carry on and see how we go, and perhaps review the situation a little later on. I hope that would be the wish of the Committee.
Lord GISBOROUGH: I should not have thought that was the wish of the Committee at all. I should have thought that the majority, if it came to a decision, would consider that we should adjourn. I wonder whether it would be in order to propose that: I do not know. I do not think that people work at their best if they are short of sustenance.
The Earl of KINNOULL: I think that one of the troubles—and I am sure it was quite inadvertent—was that the noble Lord, Lord Wallace, indicated that at about nine o'clock we would adjourn. However, what he said will be on the record.
Lord STRABOLGI: I am sorry, but I must interrupt the noble Earl. As acting Chief Whip, I can say that no representations have been made to me that we should adjourn at nine o'clock. I gave no undertaking. In fact the matter has not arisen at ail before now. I must make that clear.
Baroness YOUNG: I hesitate to intervene as I have not been in the Chamber during the Committee proceedings, but I think there seems to have been some quite genuine misunderstanding about the arrangements that had been arrived at. Clearly we are going on until a very late hour if we finish the Committee stage. I think there is nothing against the Rules of the House in people putting down Amendments at the last minute, although I appreciate this makes matters more difficult for Government spokesmen. The noble Lord, Lord Strabolgi, has said that he will look at this point again in the interests of everybody working in the House, apart from anything else. Perhaps he would consider what would be a reasonable hour at which we might adjourn. The other point I should like to raise is this: I do not know whether we have a quorum at the moment. If not, we are in a very difficult position in Committee, should we wish to press any of the Amendments.
The Earl of KINNOULL: Coming back to Amendment No. 29, there is one point I should like to ask the noble Lord; it is a very serious point. We have heard that it is constitutionally indefensible. We have had, as I understand it, an undertaking from him that the Secretary of State would not introduce by regulations Clauses 3, 4, 6 or 8 until he had produced regulations to cover the whole package. I would accept that as a very sensible arrangement and I hope the noble Lord will confirm that that is what he said. However, what I think we would like to know tonight is just how far the discussions with the Secretary of State and all his advisers have got as regards the appeal procedures. In essence they are, of course, spelt out in Clause 7, but not in detail. I think it would be reassuring, since there are many regulations in this Bill—some may say too many—if the noble Lord could advise the Committee how far the discussions have got. I think that that is a fair point, and I hope that the noble Lord will be able to reply.
Lord WALLACE of COSLANY: I cannot really do that at the moment, for reasons which I think the noble Earl will accept. But I can say something to sweeten everybody. If the noble Earl will withdraw his Amendment, 1 am prepared to consider accepting the Amendment of the noble Lord, Lord Sandys.
The Earl of KINNOULL: That is a very sweet pill indeed, and I am delighted that my noble friend's Amendment should be the first successful Amendment to be accepted by the Government. It is a very substantial one, and on those grounds I am happy to withdraw this Amendment, on the understanding that we may have to look at it again at the next stage.
Amendment, by leave, withdrawn.
9.31 p.m.
Lord SANDYS Lord SANDYS moved Amendment No.30:
Page 8, line 22, leave out ("may") and insert ("shall").
The noble Lord said: I am delighted to hear that the noble Lord, Lord Wallace, is prepared to accept this Amendment. I think that the speech made by the noble Lord, Lord Airedale, on this Amendment was most persuasive, and there is no doubt that this will be an improvement to the Bill. I beg to move.
Lord SANDYS Lord SANDYS moved Amendment No. 31:
Page 8, line 27, after ("Secretary of State") insert ("such persons to be chosen in consultation with professional bodies concerned with the practice of estate agency").
The noble Lord said: We now come to that part of the appeal procedure which relates to the task with which the Secretary of State has been charged; that is, appointing and consulting with professional bodies. At this stage, it may not be particularly beneficial if I speak at great length, because we earlier had the assurance from the Government that they are to discover what procedures they will use, and how they will set up this tribunal. I prefer to regard this as a probing Amendment, and to ask the Government whether they intend to follow the sense of the Amendment by consulting with the professional bodies concerned. I beg to move.
Lord WALLACE of COSLANY: In answer to the noble Lord, it is clear that my right honourable friend will need accountants and lawyers, as well as estate agents among his advisers. Experience may show that it is necessary to draw upon knowledge in other fields. It is a requirement to consult with one or even a number of professions, and this is written into the Bill. It may be interpreted as excluding consultation with others. I am sure your Lordships will accept that to ensure the proper handling of individual appeals, my right honourable friend must be able to draw on individuals who have the knowledge and experience relevant to a particular case. In any case, it would arguably be a breach of natural justice to give the professional bodies any formal or other role in deciding by whom a case should be heard. Once the list of those on the panel is drawn up, on which, as I have said, there will be consultation, it is essential that in each case the tribunal should be, and should be seen to be, absolutely impartial. There will be consultations before the formation of the tribunal.
Lord SANDYS: With those assurances, I shall with great pleasure beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 32 not moved.]
Clause 7, as amended, agreed to.
Clause 8 [Register of orders, etc.]:
9.34 p.m.
Lord SANDYS Lord SANDYS moved Amendment No. 33:
Page 9, line 28, leave out ("it comes to the attention of the Director that").
The noble Lord said: We now come on to the register. Under Clause 8, the Director is charged with the task of establishing and maintaining a register. Under this Amendment, we think it would be a good plan to adopt a fail-safe procedure. As it stands at the moment, subsection (4) reads as follows:
"If it comes to the attention of the Director that any order of which particulars appear in the register is no longer in operation, he shall remove those particulars from the register".

143
We believe that a better procedure would be to remove the words set out in the Amendment and to say that any order of which particulars appear in the register is no longer in operation if the Director shall remove those particulars. It is a simple but nevertheless, we believe, an improved procedure to adopt. I beg to move.
Lord WALLACE of COSLANY: I shall make reference also to Amendment No.34. At first glance, it appears only fair to the estate agent that the Director should be required to correct the register when a banning or warning order ceases to operate. Unfortunately, such a requirement would not be practicable, as the Director will not in all cases know the date when the order ceases to be effective.
In the majority of cases, the Director will, of course, have sufficient information to amend the register immediately. Where he revokes an order himself, there is no problem. Similarly, where, for instance, a finding of discrimination which gave rise to the order ceases to have effect by virtue of Clause 3(5), he will know the relevant date and be able to amend the register accordingly. More generally, it is one of the purposes of the duty placed under Clause 9(5) and (6) upon the courts and upon the relevant discrimination commissions to inform the Director of convictions, judgments, findings and so on relevant to his functions under the Bill to ensure that the Director is fully aware of what is happening. However, circumstances will inevitably arise in which the Director cannot possibly know, for example, when a conviction becomes spent. Cases which spring to mind are those where an agent has committed another crime and the time limit under the rehabilitation of offenders legislation is in consequence automatically extended, or where the agent dies before the time limit is spent.
These Amendments would impose a duty on the Director which could not be fulfilled. It would be rare that he would not know of something, but it is by no means impossible and it is only right to make suitable provision. May I add that it was even the case not so long ago that another place was not certain whether or not one of its Members was still a Member? Just consider the effect of such Amendments as these on that case.
144
From the estate agent's viewpoint, the fact that an order remains on the register does not mean that the agent is subject to it if, in fact, it has ceased to have effect. The register is not conclusive evidence that the agent is banned or the subject of a warning. Clause 8(6) makes express provision for overturning the presumption raised by an entry on the Register. The agent can, as necessary, seek to prove that the register is incorrect and will no doubt not be slow in drawing the Director's attention to the fact where an order against him has ceased to be operative.
In brief, the Director could not, in the nature of things, fulfil a duty to correct the register when an order ceases to operate. However, I can safely say that he will be able to do so in most cases, and, where he knows of something, he is under a duty to act. Where he cannot know of something, I would maintain that it is no great burden to expect the agent to draw the Director's attention to the fact that an order against him is no longer effective. That is the position. It is because of that that I cannot accept the Amendment.
Lord SANDYS: I am grateful to the noble Lord for giving us that information because this Amendment has been discussed for the first time. I think a comment was made earlier that there were no new Amendments. There are a large number of new Amendments and this is one of them, and it is most definitely the function of your Lordships' House to examine this Bill in greater depth. We shall look with care at what the noble Lord, Lord Wallace of Coslany, has told us about this Amendment but meanwhile I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendment No. 34 not moved.]
9.41 p.m.
Lord GISBOROUGH Lord GISBOROUGH moved Amendment No.35:
Page 10, line 4, leave out ("unless the contrary is proved").
The noble Lord said: Clause 8(6) seems to be ambiguous as it stands. It is not clear whether the words,
"and shall be presumed, unless the contrary is proved, to be correct",

145
refer only to the situation in Scotland or whether they have a more general relevance. It may be that this concerns an obscure point of Scots law but, if not, it seems to be a denial of natural justice to place the onus of proof on the estate agent to show that the particulars contained in an order made against him by the Director General of Fair Trading are incorrect. It should be for the Director General to prove his case. I beg to move.
Lord WALLACE of COSLANY: This Amendment raises similar issues to those raised by Amendments Nos. 33 and 34, which we have just considered and which have been withdrawn. I do not think I can say very much more. I have explained how it may happen that an entry may not be removed from the register when the order has lapsed. It would be quite wrong for the redundant entry to be presumed to be correct. The agent must have a right to show that the order has lapsed. We have virtually discussed this, and I cannot accept the Amendment.
The Earl of KINNOULL: I think what my noble friend was asking for was an explanation of the use of those words and I am not sure that the noble Lord has really replied to it. What he has said is that he has dealt with it in previous Amendments, and that is that. Can he in fact address himself to these precise words and explain to the Committee what they really mean? I took it that when he referred to Scottish law what he was saying was that you must prove yourself to be not guilty rather than the other way round. I may be entirely wrong and it would be helpful if the noble Lord could explain the use of these words.
Lord WALLACE of COSLANY: We have really discussed this and perhaps the noble Earl will care to check in Hansard tomorrow. The words apply to evidence in England as they would in Scotland; it is all conclusive. There is very little that I can add to what I have already said. This has to be considered. The noble Lord, Lord Sandys, has withdrawn his Amendments but the Amendment tabled by the noble Lord is very relevant and I ask him to withdraw it at this stage.
Lord DRUMALBYN: Perhaps I can help my noble friend. This is a very common formula which crops up in all
146
the Acts: when evidence is referred to in England, it is referred to as "sufficient evidence" in Scotland.
Lord GISBOROUGH: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 8 shall stand part of the Bill?
The Earl of KINNOULL: Clause 8, as we know, deals with the register. As I read it, the register will be entered and in fact the names will not be withdrawn. They will be available; if any member of the public wishes to pay a fee to the Director he will be able to do so and these names will be on the record. What I should like to know is this: if an estate agent should go to appeal and should win the appeal, will the record then be withdrawn and will there thereafter be no reference to this charge? Will the action taken by the Director not be on the record? It is only a matter of clarification, which I hope the noble Lord can answer.
Lord WALLACE of COSLANY: I think this is a matter we had better go into a little further. The noble Earl is trying to ensure that the name of an estate agent is not besmirched by a wrongful entry or an entry that has remained. I cannot give any reassurance on this. We have already dealt with it in some detail. I hope I will now be able to give the noble Earl an assurance. After an appeal, the register will be brought up to date.
Clause 8 agreed to.
Clauses 9 and 10 agreed to.
Clause 11 [Powers of entry and inspection]:
9.46 p.m.
The Earl of CAITHNESS The Earl of CAITHNESS moved Amendment No.36:
Page 12, line 18, leave out ("if required, of his credentials") and insert ("of a warrant either from a Justice of the Peace or from a Sheriff").
The noble Earl said: This is one of the most important Amendments that we have put forward from the estate agent's viewpoint, and one that concerns the

147
Royal Institution of Chartered Surveyors to a great extent. It is, I am afraid, another of the Amendments which were discussed in another place, but the noble Lord has had due warning of it. I hope he will be a little more sympathetic to this one than to most of the others. I read with great care the comments made in another place and although I believe those points to be valid I will not take up your Lordships' time by repeating them tonight. I would, however, like to stress my main concern about the clause as it stands.
If a duly authorised officer of an enforcement authority enters an agent's premises to ascertain whether an offence has been committed the reputation of the agent could be damaged for ever by the innuendo of suspicion even though he has done nothing wrong. Word will get around and rumours will be rife that the office of XYZ and partners were visited last week by the authority and as a result their business will suffer. Indeed in a close knit community it will be practically impossible for that firm to continue trading. The purpose of this legislation is to control the rogue agents, and this has support throughout my profession. But control must also be exercised on the authorised officer. Reasonable cause in the mind of that officer in suspecting that an offence has been committed is not an adequate protection for the honest agent. If he has reason to believe that an agent is conducting his business improperly, it is imperative that he should apply for a warrant. I understand that, if there is sufficient evidence for one, it can be obtained quickly and there is no significant delay.
There will always be a section of the community who feel that an agent is not conducting himself properly, and this will be due in the main to lack of understanding of an agent's position and the work that he carries out. Sadly, although this Bill helps in many respects to alter this position it only serves to confuse the individual on other points. This is a matter your Lordships have already discussed. It is, therefore, very important to give the honest agent the adequate protection he needs in this matter.
I would ask the Minister what remedy an agent has, when his premises have
148
been entered and he is proved innocent, but as a result of the duly authorised officer entering the premises his trade suffers and he possibly loses his livelihood as a result. A check must be made on the powers of the officer and this is the best way of doing it; in that he has to obtain a warrant from either a justice of the peace or a sheriff, this would mean that a third party would have to be satisfied that the authorised officer has reasonable cause for requiring the same. I beg to move.
Lord DARLING of HILLSBOROUGH: I think I ought to declare my interest again in this; I am president of the Institute of Trading Standards Administration, the professional body of the officers to whom the noble Earl has referred. I am very glad to be supported this evening by one of the vice-presidents of the Institute, who is sitting on the Benches opposite, the noble Lord, Lord Drumalbyn. If I may say so, the noble Earl, Lord Caithness, is living in a realm of fantasy if he thinks that the enforcement officers, as he calls them, going on routine visits not only to the premises of estate agents but to all kinds of premises, will get the businessmen whom they visit into any trouble whatever.
I had intended to make a rather prepared and much longer defence of the members of my Institute and the way in which they behave than I shall inflict on the Committee at this time of night. In fact, I was going to give a great many figures to prove my point. Let me take up one aspect of the noble Earl's approach to this. He is under the impression—a completely mistaken impression—that any publicity would be given to the visit of an officer to the office of an estate agent. I have been looking at the annual report of the chief trading standards officer of the county of South Yorkshire. Last year in the period covered by the report his department made over 20,000 visits to business premises. Not only did he do no harm to anybody who was innocent of any offence but in the course of making those visits the officers did something which is implicit in this legislation—legislation which has a very long history and which is part of our traditions. The inspectors go round giving advice and help. The last thing they want to do is to unearth anything that leads to a prosecution.

149
In fact, I was going to develop another argument, which I believe is very sound indeed; that the tradition of giving free access to business premises to these officers—a tradition that goes back 100 years—gains the admiration of people engaged in similar legislation and administration in Europe. I call it a British way of doing things. I was chairman of a Council of Europe Committee that was investigating similar methods of administration in other European countries as well as in Britain. I can assure noble Lords that my Continental colleagues on that Committee expressed a great deal of admiration for the way in which we, in this country, in the same service, have combined giving advice with enforcement.
Because of the tradition that has been built up—because the effect of this clause appears in the whole of our consumer protection legislation (this is not an innovation)—the effect of the clause is to put much greater emphasis on prevention of offences rather than to use, as some of the Continental countries do, prosecutions as a deterrent. I am sure that the noble Lord who disagrees with me about this would agree that the prevention of offences is a very important part of the work of the Trading Standards Officer, the Consumer Protection Officer, the Enforcement Officer or whatever we care to call him.
One argument which the noble Lord put forward on Second Reading was that, although this clause appears in other legislation, that legislation is concerned with the sale of goods; that this is an innovation. It is not concerned with the sale of goods. This is quite wrong. It is not an innovation because the Trade Descriptions Act deals with services. In fact, when we were preparing the Bill for that Act there was a great discussion within the Department as to whether we should cover the sale of properties in the Trade Descriptions Act. The Consumer Credit Act also covers services.
I do not want to prolong this discussion. I merely want to make one further point. I said that in South Yorkshire, for example, there were about 20,000 visits to business premises. Nine thousand of those were in response to complaints made by customers. In point of fact they had received nearly 40,000 complaints, but they whittled these down to something like 9,000 serious complaints. Those noble Lords who have
150
put forward these Amendments have a question to consider; whether they would prefer an estate agent who has had a complaint made against him—which, if these Amendments are carried, the officer has now to treat as prima facie evidence of an offence having been committed—visited by an officer flourishing a warrant (I do not know whether you can keep warrants secret) and looking like a chap from the Fraud Squad; or whether they would have an inspector, an officer with whom possibly he has already developed friendly relations, as happens with the people who are trying to prevent crime rather than seek out prosecutions, going in quietly, without any fuss, without any publicity, and finding out whether there is any substance in the complaint. Not using it as prima facie evidence of an offence being committed, but trying to find out not only whether there is any substance in it but whether, if there is substance in it, the matter can be dealt with without a prosecution.
I said that there were 9,000 serious complaints in South Yorkshire. Because of the way that it is dealt with, which I have tried briefly to describe, out of those complaints there were in fact 101 prosecutions, and most of those dealt with the sale of motor cars. If these Amendments are not carried your Lordships will give to the estate agent's operations the same kind of service that is given to other traders; giving greater importance to the prevention of offences rather than going and seeking prosecutions, going on fishing expeditions. We do not want any of that. It is quite wrong.
Finally, I would call in aid the quotation that the noble Lord, Lord Sandys, gave a little while ago from the Ombudsmen. In effect, he said that when you have some good established administration do not change it. I do not think that we should alter our established administration in this regard. The changes proposed in these Amendments would be very much for the worse.
Lord JANNER: I hope not to detain the Committee for long. What I cannot understand, with the greatest respect, is how unrealistic people are when they put forward proposals of this sort. My noble friend adduced a number of the arguments I would have used, and he gave instances of cases. Imagine if in each

151
one of those cases one had to go to a magistrate or court, produce evidence or make a statement as to why he has found it reasonable for there to be suspicion of some kind. The overburdened magistrates of this country have enough on their hands without having to wait for every complainant to come along to try to prove his case.
That is not good enough and it is not real. What is real in these matters is the fact that we have responsible officers; they have been checked and they can get into very serious trouble if they act improperly. It is all very well to ask what will happen if the fellow is proved innocent; but imagine the situation if a person were proved innocent, without the prosecutor or whoever the person might be, being able to show reasonable cause. I wish certain noble Lords who are here today had been with me in the other place over the years; they would have had an opportunity to ascertain what the average person does and how he does it.
I can understand the object here, and 1 suppose I should declare my interest in that I am a vice-president of the Association of Municipal Authorities. They feel, I believe rightly, that people in this position should not be put to the difficulty, trouble and delay that would arise, because one must remember that it is not always possible to obtain a magistrate. It seems that some people live in realms where they do not know what is happening in these matters. Is it practicable to get hold of a magistrate and make a full application for a warrant and the rest of it and go to court? Delays would be bound to happen and red tape is ridiculous in a case of this description.
My noble friend explained how many cases were ultimately proved. Imagine what would happen if, to that number, we added a considerable influx; and that number would probably follow statistically the same numbers given by my noble friend. What a silly thing it would be to try to enforce such a proposal. I urge noble Lords to have a chat with their magisterial friends before tabling Amendments of this kind again. I hope this one will be withdrawn.
Lord SANDYS: Although I have listened to both noble Lords, Lord Darling
152
and Lord Janner, I remain totally unconvinced by their arguments. My noble friend has a very real point and I attempted, perhaps not convincingly so far as Lord Janner is concerned, to set out on Second Reading the number of Statutes in existence; I mentioned seven Statutes containing powers parallel, if not precisely parallel, to those in Clause 11. In addition, the noble Lord, Lord Houghton of Sowerby, quoted the Finance Act 1976 which contains two instances of wide powers of inspection. If there are more Acts which give powers of entry and inspection and which are similar to those in Clause 11, that is part of one very large wedge.
Lord Darling said we were living in a world of fantasy. I believe that that world exists, and it was well portrayed in an article by Mr. Patrick Hutber which was quoted in Standing Committee E in another place. Some of us have seen that article, which related to a visit by VAT inspectors to a Chinese restaurant. I will not enter into the details of the case. There are other cases of similar parallel of inspectors visiting premises to the great embarrassment of the management, and subsequently their visits have proved groundless. I believe that there is a very real point of substance here. If a group of Acts of Parliament permit power of entry, we hope that the powers will be used with discretion, but that has not always proved to be the case, and—
Lord DARLING of HILLSBOROUGH: I must interrupt the noble Lord, if I may. He refers to VAT inspectors. We are not concerned with VAT inspectors. Trading standards officers are employed by local authorities, and I should be very glad if he could produce any cases at all of these officers abusing their authority.
Lord SANDYS: The noble Lord makes a point which is most germane to what we are discussing. I am really discussing the broad powers of entry granted in a group of Acts of Parliament which do not necessarily refer specifically to trading standards officers. We believe that the Government should prove their case here, because under Clause 11(1)(d) powers are granted to an officer to seize books and documents, and to
"require any person having authority to do so to break open any container and, if that person does not comply, to break it open himself".

153
These are very wide powers. They are reflected in other Acts of Parliament, but we believe that there is a point here which bears much further investigation.
Lord WALLACE of COSLANY: At the moment we are dealing only with the Amendment of the noble Earl, Lord Caithness. Another Amendment is to come forward from the noble Lord, Lord Airedale, and I have a very shrewd suspicion that that will take some time. Therefore, let us deal first with the Amendment of the noble Earl. Quite frankly, I am somewhat amazed by the heavy weather being made of this issue, because all this was discussed when we were considering the Consumer Safety Bill, though then there was a difference because the noble Lord, Lord Mottistone, rejected the suggestions of the noble Lord, Lord Airedale. I was assisting because the Government had a benevolent interest. At that time the opposition to the noble Lord, Lord Airedale, came from the Benches opposite. I just do not understand what they are getting at.
However, with regard to the present drafting of the Amendment of the noble Earl, Lord Caithness, I would ask, how can the trading standards officer obtain a warrant? How can the justices be satisfied? How, unless he goes in and looks, can the enforcement officer know whether, for instance, an agent banned from estate broking and dealing in residential property is ignoring the ban? My noble friend Lord Darling of Hillsborough made a considerable contribution on this point, but because of the hour I do not intend to develop that theme. We cannot accept the Amendment of the noble Earl, Lord Caithness, and I believe that the case has been made out very fully by my noble friend Lord Darling.
Lord AIREDALE: The Minister draws a parallel with the battle we had last summer when we were discussing the Consumer Safety Bill. Consider the circumstances. In that case, enforcement officers were in search of unsafe goods, and it made some sense to say, let the officer go into a warehouse and look around in case he finds unsafe goods, although he had no suspicion when he entered. But I remind the Minister that here the difference is that estate agents do not keep their goods on the premises.
154
What estate agents keep on the premises is their documents; and if the Minister will look at Clause 11(1)(b), he will find that before the enforcement officer is entitled to examine documents he has to have reasonable grounds for suspicion that an offence is being or has been committed. But in paragraph (a), which I am going to discuss when my Amendment is called, no such suspicion has to be aroused for the officer to enter the premises. So the situation is that a model clause, taken from other legislation enacted for other purposes, is jerked into this Bill, to which it has very little relevance indeed. There is no parallel between these two cases, and any suggestion of a parallel is quite illusory.
Lord WALLACE of COSLANY: I made a terrible mistake when I referred to the Consumer Safety Bill and brought in the noble Lord, Lord Airedale, because 1 was going to confine my remarks to the noble Earl, Lord Caithness. However, there it is. The position is that we can break off at this stage if the noble Earl will withdraw his Amendment, because we are going to have a very detailed debate on the Amendment to be moved by the noble Lord, Lord Airedale—but not tonight if we can avoid it.
The Earl of CAITHNESS: In view of what the Minister has said, I will withdraw my Amendment. I remain totally unconvinced by the arguments put forward by the Government, and I shall come back to the matter on Report. I do not believe the Government have satisfied any of the fears felt by this side of the Committee. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord STRABOLGI: I gave an undertaking that we would review the position at this time. We seem to have made some further progress, and I am sure it is the wish of the Committee, which has been sitting for nearly four hours, that we should now halt the Committee stage and adjourn it to another day. I therefore beg to move that the House do now resume.
House resumed.