Lords Sitting of 26 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 Bradford.

FOREIGN BOYCOTTS BILL: RECOMMENDATIONS
2.36 p.m.
Lord JANNER: 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 have taken to implement the recommendations in the report of the Select Committee of last Session on the Foreign Boycotts Bill [H.L.] (H.L. 265, 1977–78).
Lord JACQUES: My Lords, I would refer the noble Lord to the speech of my noble friend Lord Goronwy-Roberts in the debate on the report of the Select Committee on 1st February. He gave the Government's response to the Select Committee's recommendations and described the steps they were taking. The noble Lord, however, will be interested to learn that today the Government have issued a new note on the Arab Boycott for the guidance of firms; copies will be available in the Library and also in the Printed Paper Office.
Lord JANNER: My Lords, while thanking my noble friend for that reply, may I ask whether he is aware that at the present time diplomats and trade missions are sending round notes encouraging trading with countries which are boycotting, and which contain information about the requirements of the boycotters that is contrary to the provisions of the Treaty of Rome? Is he aware that people are very anxious that the Government should not continue to authenticate any documents, negative affidavits and so on, which are being produced for the
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purpose of encouraging the boycotts? In those circumstances, will the Government take very much stronger action to help to carry out the action to which his noble friend referred at the time he made the speech in the House condoning the boycott?
Lord JACQUES: My Lords, of the matters mentioned by my noble friend the only one of which I have any knowledge is the question of authenticating signatures. As explained by my noble friend Lord Goronwy-Roberts, the Government intend to consider further the desirability and practicability of ceasing to authenticate the signatures on negative certificates. Before coming to any final decision they wish to consult with industrial and commercial organisations most affected, and at the present time they are doing so. There is a difficult point of principle involved and there could be some risk to our exports. Nevertheless, the Government recognise the importance that the Select Committee attached to the making of a gesture of this kind, which in their view would have substantial presentational value, and it is a matter which will be seriously considered once the inquiries have been completed.
Lord JANNER: My Lords, may I thank my noble friend for the reply he has just given and urge him to realise—
The LORD PRIVY SEAL (Lord Peart): Ask him a question!
Lord JANNER: I am asking my noble friend whether he is prepared to accept my urging that this kind of action with regard to authenticating negative certificates of origin is very much against the interests not only of the trading community but of the community as a whole. Will he please say what steps he is taking with the EEC and other nations in order to help this fight against the vicious and atrocious methods which are being used?
Lord JACQUES: My Lords, it would appear to me that two issues have been raised. The first is the negative certificates, and we are doing what we can on that. With regard to the EEC, my right honourable friend made the Government's position on that issue perfectly clear. He gave evidence in writing to the Select

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Committee. The Select Committee printed his reply, which is available for everybody to see. I cannot add to that reply; I could only repeat it.
Lord BYERS: My Lords, I wonder whether I could ask the noble Lord when the consultations on negative certificates of origin are likely to be completed? Is there any chance of them being completed by Wednesday night?
Lord JACQUES: My Lords, I would guess that this is extremely unlikely, but perhaps it does not matter.
Lord SHINWELL: My Lords, does not my noble friend realise that merely to consult business organisations about what they are going to do or not going to do is of no value, and that, unless drastic action is taken, those people—I do not want to mention who they are—who are only too willing to destroy the possibility of peace between Egypt and Israel, will be encouraged to take further action? It is of the utmost importance that the Government should take the step of bringing this stupid and unnecessary boycott to an end.
Lord JACQUES: My Lords, I think I should remind the House that certificates of origin are the normal international practice, but not negative ones. The normal procedure with the boycott is that the negative certificate is confirmed by the local chamber of trade, stamped by them, and that is the end of the matter. That is the normal procedure. But in some cases the exporter goes to a notary and, in effect, gives an affidavit, and in that case some of the countries connected with the boycott do require authentication by the Foreign Office. We are trying to put an end to that. I am sure that the House would agree that first we must consult with the chamber of trade which does practically all the authentication.
Lord BYERS: My Lords, I should like to follow up what I asked previously. Surely it is the position of the Government that the negative certificate discriminates against a State with which we have friendly relations? Surely the noble Lord is not moving from that position? It is discrimination because it is a negative discriminatory certificate.
Lord JACQUES: My Lords, all that the Foreign Office does is to authenticate the signature of the notary.
Lord ELTON: My Lords, if the noble Lord, Lord Jacques, accepts the argument of the noble Lord, Lord Byers, that this is discriminating against friendly States, does he not also accept that, where chambers of commerce and trade already authenticate signatures perfectly satisfactorily, for the Government to do the same thing is merely to endorse their approval of a procedure which, in fact, we all detest.
Lord JACQUES: My Lords, what we would like to do—and I am keeping within the bounds of practicability—is to have the matter ended once the chamber of trade has authenticated. We want that to be the beginning and the end, and that is what we are moving towards. Surely we must be given an opportunity of consulting with the National Chamber of Trade on the issue and that is what we are doing.
Lord REDCLIFFE-MAUD: My Lords, I appreciate that the Foreign Secretary was good enough to let the Select Committee know exactly what he thought at the time he gave evidence in writing to the Select Committee. However, would it be right to say that, besides a frank admission by the Foreign Secretary that it is he who is raising this matter in the European Economic Community—which we appreciate he would not wish to do—there are other diplomatic ways indicated by the Committee in their report which are perhaps being followed up and which may, if not before Wednesday evening, at least render it possible to develop a consensus within the European Economic Community in relation to the boycott?
Lord JACQUES: My Lords, I do not understand all the concern about Wednesday evening. My right honourable friend is fully aware of the points which have been made by the noble Lord and I am quite sure that, as he is as much against the boycott as anyone else, he has done what he can to try to get it raised without raising it himself.

THE CIVIL SERVICE: CONDITIONS OF SERVICE
2.46 p.m.
Lord GRIDLEY: 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 as a matter of urgency when they propose to reform the conditions of service of civil servants in order to protect the Government's ability to govern in a democratic society.
Lord PEART: My Lords, Her Majesty's Government have no such proposals at present. Civil servants are already subject to conditions of service which require them to serve loyally the Government of the day.
Lord GRIDLEY: My Lords, while thanking the noble Lord the Leader of the House for that Answer, may I ask whether, in the present negotiations between Her Majesty's Government and the civil servants, attention has been drawn to the fact that the first duty of civil servants is to the State—or this country—before any gain they may hope to make for themselves out of the present negotiations? Secondly, as regards sensitive areas such as foreign affairs, defence and possibly taxation, should it not be a condition of their service that in no circumstances will they withdraw their service, when by doing so they might endanger the safety of this country?
Lord PEART: My Lords, I note carefully what the noble Lord has said and I should hope that the Civil Service would behave responsibly. I know that the sensitive areas which have been mentioned by the noble Lord have created difficulties, and I regret that. I, as spokesman for the Government, and my right honourable friends the Secretary of State for Prices and Consumer Protection and the Minister of State for the Civil Service met the national staff side this morning to open substantive negotiations. We are anxious that we should bring these negotiations to a final conclusion. We told them that the Government would implement the pay research settlement being negotiated between the
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two sides in two stages: the first stage of 7 per cent. will be payable from 1st April 1979 and the final stage from 1st April 1980. The full pay research rate is to be paid in the second stage which will be used for pension purposes from 1st April 1979. The Government stand ready to continue the negotiations at any time. Therefore, we are now negotiating and I hope that we can achieve something.
Lord CAMPBELL of CROY: My Lords, is the noble Lord aware of a report, at about 1 o'clock today, that the negotiations had broken down? Will the noble Lord comment on that? Does he agree that, however good the case of the Civil Service, selected strikes, carefully aimed at particular areas of Civil Service work are to be deplored—for example, the many ordinary rights of people in Scotland have been injured, as well as their purses, by the crippling of the Scottish courts of justice?
Lord PEART: My Lords, I agree with the noble Lord and I entirely accept his point of view on the matter. I thought that I had informed noble Lords that we have been negotiating this morning. It is true that we have only just started negotiations. There are reports, I understand, of talks being withdrawn, but I am anxious that we can get on with this matter and there is no reason why we should not.
Lord ROCHESTER: My Lords, does the noble Lord not agree that, on the question of the pay and conditions of civil servants there is an exceptional case—and all the more so in the light of the information which he has just given the House—for consultation with Opposition parties with a view to finding a common approach in circumstances where, in the last resort, the security of the State itself may be at stake?
Lord PEART: My Lords, I think that on behalf of the Government I must accept responsibility for negotiations with the Civil Service. I am anxious that the talks which have been interrupted (if I may use that term) will continue. It is in the interests of the Civil Service that it should have meaningful relations and discussions with the Government. Therefore, to bring in other people who are not in the Government would not be appropriate at this stage.
Lord ORR-EWING; My Lords, is the noble Lord aware that the Pay Research Unit Board was specifically set up so that people outside Government could express an opinion about recommended settlements and the actuarial basis on which they were justified? The noble Lord has announced to Parliament the recommendation of this morning's meeting. Is that to be submitted to the Pay Research Unit Board? Did that board meet to consider it before the noble Lord made his statement?
Lord PEART: My Lords, of course, the Pay Research Unit Board has reported. The discussion that we are now having with the Civil Service unions is on how to apply pay research. When a final conclusion is reached there will certainly be a statement.
Baroness EMMET of AMBERLEY: My Lords, surely, at present, hope is not enough; discussions are not enough. What is needed is action. If the present Government cannot govern, they had better go.
Lord PEART: My Lords, that is not the right approach to this. A Right-Wing approach cannot be right in this case. I am rather surprised that the noble Baroness has said that. After all, we all want an honourable settlement, based on pay research findings.
Viscount TRENCHARD: My Lords, has the noble Lord brought the many apparently helpful statements in the document called Concordat—or nicknamed Concordat—to the attention of the union leaders with whom he has been negotiating? In particular I have in mind the paragraphs which suggest that maximum efforts must be taken to avoid the need for strike or industrial action in this kind of area; and also the paragraphs which say that agreements should be honoured—and I understand that the current agreement still has some way to go—before any industrial action takes place; and the points made about recourse to ballots and to arbitration before strike action. Can the noble Lord tell us whether there is any sign of those statements in the Concordat having any noticeable effect on those with whom he is negotiating?
Lord PEART: My Lords, the noble Viscount, Lord Trenchard, will remember that when I addressed the House on the White Paper I laid great emphasis on the need for civil servants and other trade unionists to bear in mind that strike action should be taken only in the last resort. At that time I deplored that there should be threatened strike action—and there was—before negotiations had started. Therefore, I very much agree with the noble Viscount.
The Earl of LAUDERDALE: My Lords, referring to the noble Lord's original Answer when he said that it was the duty of civil servants to serve loyally, can he tell the House whether all civil servants take an oath of loyalty when they commence work?
Lord PEART: My Lords, I do not think they specifically take an oath, but it is accepted that they should be loyal to the Government in power, which is quite right. I would expect that, whatever Government are in power.
The Earl of LAUDERDALE: My Lords, are civil servants classed as being on a par with the Armed Forces or, if I may use the phrase, are they on a more liberal par? Are they as tightly bound by oath as the members of the Armed Services or less tightly bound?
Lord PEART: My Lords, no; and I think the noble Earl knows that.

COMMON AGRICULTURAL POLICY: PER CAPITA COST
2.54 p.m.
Viscount TRENCHARD: 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 where, after deducting the monetary compensatory amount food import subsidies, the United Kingdom ranked in order of net contribution per capita to the cost of the Common Agricultural Policy in 1978.
Lord WALLACE of COSLANY: My Lords, information for 1978 is not yet

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available, but for 1977 we would rank as a small net recipient under the Common Agricultural Policy if the monetary compensatory amounts paid on our imports from other member States were regarded as our receipts. However, the Government consider that these amounts should properly be regarded as the receipts of the exporting countries in which they were paid out, and on that basis we were the second largest net contributor per head to the cost of the CAP.
Viscount TRENCHARD: My Lords, I thank the noble Lord for that Answer. In view of that Answer, can he say whether statements about the cost of the EEC to this country which are being made in the Press and occasionally in Government circles are not greatly exaggerated? Even allowing that estimates suggest that in 1978 there might be a net deficit after MCAs—which I believe are receipts to the importer and therefore of direct benefit in paying for cheaper imports of food into this country—of around £200 million, does the noble Lord not agree that that is a vastly lower cost than the cost of deficiency payments if they were revalued at 1977 prices, based on the last year of that scheme, which—and I hope he can confirm this—would have been over £1,000 million?
Lord WALLACE of COSLANY: My Lords, I shall be as brief as I can. I cannot agree with the noble Viscount. The main reason the Government are concerned—and naturally they are concerned on behalf of the Britsh people, particularly the housewives and others—is not merely because of the outflow of funds through the EEC budget on account of the Common Agricultural Policy, but because of its total economic cost. That cost comprises a net budgetary contribution plus the balance of payments cost of importing food from other member States at CAP determined prices—that is, compared with the world prices at which we could import if the CAP did not exist.
Even after allowing for the MCAs—which are the monetary compensation amounts—these import prices are well above world prices. Therefore, the extra cost of imports in 1977 was something over £200 million. Our contribution through the budget, therefore, understates the full cost of the CAP by that
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amount. That being so, it is most misleading to make the budgetary cost even lower by attributing another £490 million to our receipts.
Lord PAGET of NORTHAMPTON: My Lords, am I correct in thinking that the point made by the noble Viscount, Lord Trenchard, is that we are paying £200 million for nothing and ought to consider ourselves jolly lucky that we are not paying £1,000 million?
Lord WALLACE of COSLANY: My Lords, as regards our membership of the EEC, there are swings and roundabouts. On the one hand, we gain benefits from regional grants; on the other hand, there is this vitally important question of food costs. Above all, there is the serious and ridiculous spectacle of butter mountains and mountains of other food which have to be disposed of at great costs to the EEC. We believe that that policy is downright ridiculous and needs alteration.
Lord SANDYS: My Lords, that may well be so, but what is not included in the Government's costing is the Regional Fund. I should like to know why the Regional Fund has not been mentioned in the Goverment's White Paper Farming and the Nation—a subject about which the noble Lord the Leader of the House waxed eloquent 10 days ago when discussing EEC negotiations.
Lord WALLACE of COSLANY: My Lords, I shall not wax eloquent because, with all due respect to the noble Lord—with whom I have extremely friendly relations—his supplementary question is nothing to do with the Question under discussion.
Lord SANDYS: My Lords, it has everything to do with the Question because it is part of the total price mix.
Lord WALLACE of COSLANY: My Lords, I can only repeat that we are now dealing with the CAP question, about which the Government are seriously concerned—I understand that the Opposition is also, but in a more gentlemanly fashion.
Lord LEATHERLAND: My Lords, as my noble friend mentioned the butter

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mountain, can he tell us whether some of that surplus butter can be used to reduce the price of butter in Britain which, during the last few weeks, has increased by about 10p per half pound?
Lord WALLACE of COSLANY: My Lords, it is a question of the law of supply and demand. If more butter was put into circulation the price would come down. But of course some producers might not get such benefit.
Baroness ELLES: My Lords, I wonder whether the Minister could answer two questions. First of all, he referred to world prices. Could the Minister assure the House that if the United Kingdom were to try to buy on the world market the products that they now get from the Community, they would be able to buy at the same price as now obtains on world markets? In fact, is the total amount available that we need to import into this country? Secondly, would the Minister confirm that, if the Minister of Agriculture so wished, the surplus butter in this country could be given to old age pensioners, as it used to be before this Government came into office?
Lord WALLACE of COSLANY: My Lords, so far as the disposal of butter is concerned, this is a matter for the EEC. The Government feel that there should be a change in the Common Agricultural Policy to bring general benefit all over the area, and not in one hand to give it away as a sort of donation from charity, which I do not think meets the point. So far as world prices are concerned, my information is—and I accept that this is dependent upon supplies being available outside the Market—they are in fact lower than the present price we are paying through CAP.
Lord ORR-EWING: My Lords, would the noble Lord come back to the question of regional grants? Why are Her Majesty's Government opposing regional grants when we, in the United Kingdom, put in 18 per cent. and get out 27 per cent.? Is it not therefore worth while having these regional grants, which incidentally help the regions and help agriculture in the regions?
Lord WALLACE of COSLANY: My Lords, I would not disagree with the noble Lord. But in point of fact, of course, with
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all due respect to him, this is nothing whatever to do with this Question.
Viscount TRENCHARD: My Lords—
Lord PEART: My Lords, we have had some time on this Question. I hope that the noble Viscount will appreciate that there is a general desire to go on. We have had 25 minutes on Questions.

EXCHANGE EQUALISATION ACCOUNT BILL [H.L.]
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I understand that no Amendments have been put down either to this Bill or to the next two consolidation Bills in my name on the Order Paper and that no noble Lord has indicated a wish to move a manuscript Amendment or to speak in Committee on any of these Bills. Therefore, unless any noble Lord objects, I propose to move that the Order of Recommitment in respect of each of these three Bills be discharged. In respect of the first, I now beg to move.
Moved, That the Order of Recommitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

INTERNATIONAL MONETARY FUND BILL [H.L.]
The LORD CHANCELLOR: My Lords, I beg to move that the Order of Recommitment be discharged.
Moved, That the Order of Recommitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

PROSECUTION OF OFFENCES BILL [H.L.]
The LORD CHANCELLOR: My Lords, I beg to move that the Order of Recommitment be discharged.
Moved, That the Order of Recommitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

CONFIRMATION TO SMALL ESTATES (SCOTLAND) BILL
The Earl of SELKIRK: My Lords, I understand that no Amendments have been put down to this Bill. I do not know of any noble Lord who wishes to move a manuscript Amendment, or indeed to speak. Unless there are any noble Lords who wish to object, I beg to move that the Order of Commitment be discharged.
Moved. That the Order of Commitment be discharged.—(The Earl of Selkirk.)
On Question, Motion agreed to.

INDUSTRY BILL
3.5 p.m.
Lord JACQUES: My Lords, I beg to move that the Industry Bill 1979 be now read a second time. The principal purpose of the Bill is to increase the financial limits of the National Enterprise Board and the Scottish and Welsh Development Agencies. There is, however, a secondary purpose; that is, to amend the law so that all money borrowed by all subsidiaries should count against the financial limit of the parent, the parent being the National Enterprise Board in England, in Wales the Welsh Development Board, and in Scotland the Scottish Development Board.
At the present time all monies borrowed by wholly-owned subsidiaries count against the financial limit. In the case of other subsidiaries—that is, those not wholly owned—only loans made or guaranteed by the parent count against the financial limit; that is to say, if commercial loans which are made to subsidiaries which are not fully owned are not guaranteed by the parent body, then they do not count against the financial limit. We feel that these loans are so important that they should count against the financial limit. The necessary technical changes in the law are embodied in the Bill.
The change will not enhance the commercial standing of the subsidiary, nor will it enhance the security enjoyed by the creditors of the subsidiary, but it will mean that all loans made to subsidiaries will count against the financial limits and that the picture will be all the clearer.
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Linked with this Bill is the intention of the Government to bring forward an order in council to increase the financial limit of the Northern Ireland Development Agency. If and when this Bill reaches the Statute Book, that will be done.
At the present time under Section 8 of the Industry Act 1975 the financial limit of the National Enterprise Board is £1,000 million. At the end of February £830 million of this was either charged or committed, leaving a balance of only £170 million. This is known to be less than the requirements of BL and Rolls-Royce in the near future. Consequently, that limit will be reached shortly after this Bill reaches the Statute Book. When
fixing the financial limits of public corporations, it is usual to look ahead five years, and that is what is done in this Bill.
The Bill proposes to increase the financial limit for the National Enterprise Board from £1,000 million to £4,500 million. That is an increase of £3,500 million, which is made up as follows: first, the technical change which I have explained; that is, that all borrowings of all subsidiaries shall count against the financial limit, which will account for £1,500 million. Of the increase of £3,500 million that leaves £2,000 million. The current public expenditure provision is £275 million, so that for five years that would be £1,375 million which, when deducted from the £2,000 million, gives a balance of £625 million. Against that £625 million there is expected to be about £50 million for loans which would be guaranteed by the parent body. That leaves a contingency balance of £575 million. That looks a huge sum as a contingency balance, but it is, in fact, only 3 per cent. of the consolidated turnover of the subsidiaries concerned in the next five years. The increase from £1,000 million to £4,500 million will be staggered. The immediate increase authorised by the Bill is from £1,000 million to £3,000 million. The Bill then goes on to propose that by an Affirmative Order confirmed by a Resolution of the House of Commons the limit of £3,000 million could, if need be, be increased to £4,500 million.
Before leaving the National Enterprise Board I should deal with some of its

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aspects. It is of course a State holding company with no compulsory powers whatever. Its duties are to promote efficiency, international competitiveness and to provide and maintain productive employment. It is a source of risk capital for new investment; 95 per cent. of the consolidated capital now employed by the NEB is in companies which were transferred to it at its birth by the Department of Industry. These companies are British Leyland, Rolls-Royce, Ferranti, ICL and Herberts. They use 95 per cent. of the consolidated capital of the NEB.
Other than British Leyland and Rolls-Royce, the NEB has a target of 15 to 20 per cent, profit by 1981. In 1977 its profit as a percentage of capital employed was 11·7 and it is expected to be approximately the same for 1978. I will deal separately with British Leyland and Rolls-Royce. British Leyland is of course the largest of NEB's subsidiaries; its sales exceed £3,000 million, and £910 million of that is exports. In consequence, British Leyland is our largest net earner of foreign currency in manufacturing industry. Despite the reduction in workforce which has taken place as a result of rationalisation, it still employs 160,000 people and at least as many again in other firms which are dependent on British Leyland. It is therefore of very great significance to our economy.
Last year, the trading profit before the charge of interest was £71 million. That compared with £56 million in the preceding year. After charging interest, the profit was £15 million compared with £3 million in the preceding year. However, during the year there have been exceptional costs, first in unusual staff reductions—12,000—and in the closure of plants due to the reconstruction. In consequence, there were costs of £38 million because of those extraordinary circumstances with the result that after all costs and taxes, there was a loss at British Leyland of £37 million, but that was substantially less than the loss of the preceding year, which was £51 million. The House will be pleased to learn that there were also fewer industrial disputes; man hours lost as a percentage of the total man hours available were 3·5 per cent. compared with 6 per cent. in the preceding year.
So far as future commitments are concerned, the Government are in principle
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committed to provide the remainder of the funding required by the Ryder Plan, provided performance and prospects show that to be justified. The amount outstanding on the Ryder Plan is £400 million, so that to that extent the Government are committed to a further funding of £400 million, provided performance and prospects justify it. The Government are considering the National Enterprise Board's report on BL's 1979 corporate plan and my right honourable friend hopes to make an announcement on future funding before Easter—in spite of Wednesday.
I come to Rolls-Royce, which has had a very significant year. Its RB.211 engine was chosen, despite very severe competition, to power the Lockheed TriStar for PAN-AM, and that was a great breakthrough. Furthermore, the RB.211/535 was used as the launch engine for Boeing's new 757, which has been ordered by British Airways and Eastern Airlines. The Government appreciate that the development of the 535 engine and the further improvements in the RB.211 will involve substantial expenditure in the next few years; funding arrangements for that are under consideration at the present time.
As for results, the 1978 results are not available but I will give a comparison of 1977 with 1976. The trading profit before interest in 1977 was £31 million and in 1976 there was a trading loss of £15 million. The trading profit after interest in 1977 was £20 million compared with a trading loss after interest of £25 million in 1976. So there was substantial improvement in 1977 over 1976, and in the final analysis in 1977 there was a profit retained of £14–6 million. Although the 1978 figures are not yet availble, I understand it is expected that Rolls-Royce will just about break even. The NEB has of course found it advisable to sell some of its investments, usually very small ones, and on some of these there have been losses which have received rather unusual publicity. I can say that of the small investments sold, the losses exceeded the profits, so there was in fact a net profit.
Several noble Lords: Oh?
Lord JACQUES: Did I say something wrong, my Lords?
Lord BOYD-CARPENTER: My Lords, I think the noble Lord got it the wrong way round.
Lord JACQUES: To avoid confusion I will repeat that sentence. On the sale of some of the smaller investments there were losses in some cases and profits in others. I can assure the House that in total there was a net profit; profits exceeded losses. I apologise if I reversed it. It is interesting to note that some of the shares held by the NEB are worth substantially more than the cost; for example, the Ferranti shares are now worth five times the original cost, and the ICL shares are worth more than three times the original cost; so there is accumulating a capital profit.
I come now to the agencies. In Scotland and Wales the agencies have powers as a source of finance very similar to what the National Enterprise Board has in England, but in addition the agencies have duties to undertake environmental improvement schemes, to clear derelict land, build factories, engage in industrial promotion, provide loans and give advisory services to small firms. The Scottish Development Agency has equity invested in 35 companies throughout Scottish industry. It has made a large number of loans and has given special help to small firms. It has built or converted 1½ million square feet of factory space. It is estimated that 35 jobs depend directly or indirectly on the work of the agency. The financial limit of the Scottish Agency is £200 million. It has spent or committed £170 million. Looking ahead five years, the Bill provides for the limit to be increased to £500 million immediately and, if need be, to £800 million by an affirmative order.
Finally, I turn to the Welsh Agency, which is somewhat similar to the Scottish Agency. It is co-ordinating and financing a substantial programme of land reclamation in a part of the United Kingdom where it is most essential. It is forming a land bank of industrial development sites in strategic locations throughout the Principality. It has a successful programme of factory building. Its small business unit is providing loans and giving advisory services to the many small firms within the Principality. Its financial limit is £150 million. Looking ahead five years, the Bill proposes to increase
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this financial limit to £250 million immediately, and to £400 million, if need be, by affirmative order. With that story to tell, my Lords, I have pleasure in commending the Bill to the House. I beg to move.
Moved, That the Bill be now read 2*.—(Lord Jacques.)
3.22 p.m.
Lord CAMPBELL of CROY: My Lords, we are grateful to the noble Lord, Lord Jacques, for explaining the purpose of the Bill and for giving us an account of the activities of the three bodies to which it relates. It has been certified as a Money Bill, and therefore we can undertake no detailed examination of it with a view to amending it. However, there is today the opportunity to inquire about the three bodies: The National Enterprise Board, and the Scottish and Welsh Development Agencies. We can also make some general remarks on their place in the present industrial scene.
As the noble Lord reminded us, the Bill raises the financial limits for all three bodies. However, I must point out that within the Government's own programme of published expenditure it is most unlikely that those levels can be reached within the foreseeable future. Indeed, it is inadvisable that the level should be reached where the National Enterprise Board is concerned. The National Enterprise Board is carrying out three tasks which some agency, I suggest, would probably be doing anyway, as they are useful activities. First, it is acting as a State holding company for major investments acquired for national reasons, such as Rolls-Royce, but with a return to the private sector as an objective. Secondly, it assists companies in temporary financial difficulties; and, thirdly, it initiates rationalisation in sectors where it is requested.
As regards the NEB's other, wider powers, it cannot be a substitute for promoting a healthy climate in industry. This requires reform of the taxation system by restoring incentives for business enterprise and invididual effort throughout the economy. It requires also monetary stability and improved systems of pay bargaining. The NEB can be no substitute for those. If I may refer to what might happen on Wednesday evening in relation to the Motion of no confidence

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to be debated in another place, I would say that the prospect draws nearer of achieving a new climate of that kind.
I should like to put two questions to the noble Lord in the hope that he can deal with them when he winds up. The first relates to the NEB's activities in industrial areas of England where there is high unemployment and where industrial revival is needed. The NEB has offices in Newcastle and Liverpool. However, from studying its records it appears that only a small part of its investment has gone into those areas. Can the noble Lord explain this or tell us more about it?
In this context there have been suggestions—though not from these Benches—that there should be an English Development Agency to match the Scottish and Welsh Agencies which we are discussing today. What is the Government's reaction to that? Do they regard the NEB as already fulfilling the functions that such an agency would carry out, particularly in the areas I have mentioned where unemployment is high? My second question is on the relationship between the NEB and the Scottish and Welsh Agencies. How much has the NEB done in Scotland and Wales itself, outside of course its function as a holding company for the concerns which it owns and helps which are of a major national interest, such as Rolls-Royce and British Leyland? Are the two agencies acting in Scotland and Wales—as was originally intended when the Bills went through your Lordships' House—as agents for the NEB, or does the NEB carry out its own activities north of the Border and in Wales?
Our main criticism from these Benches of the NEB as it is now established is its power to acquire innocent private companies, which are healthy and successful, large or small, without warning, provocation, or need. I hope that the board will exercise restraint. It should not set forth on pillaging forays through the sector of profitable private enterprise. This is unsettling for British industry. Successful firms are likely to do less well after such takeovers than they would have been doing before. Consequently, this is bad for the United Kingdom's economy, and it is a blow to confidence.
The role of the NEB should be limited. It should be made clear that it is not hostile
1426
or voracious in its appetite for devouring neighbours and rivals in industry. However, under the present arrangements the NEB is being asked by the Government to provide a certain return on capital, and this means that it may have to own a proportion of profitable companies in order to balance the loss makers taken over for remedial action. It is a worthy exercise that a target should be set for a return, but clearly this whole situation should be thought out again with a view to the NEB not taking over for no purpose private industry which is already successful and is doing well. What is needed by British industry, and can now be perceived on the horizon with a General Election coming this year, is a new propitious climate in which British industry can flourish and prosper by its own efforts.
3.29 p.m.
Lord ROCHESTER: My Lords, we on these Benches wish to join in the thanks extended to the noble Lord, Lord Jacques, for the clear way in which he has explained the content of the Bill. As the noble Lord, Lord Campbell of Croy, said, the Bill is a Money Bill, and therefore it is not within our power to do more than say what we think about it; but as the noble Lord also said, the debate gives us the opportunity generally to review the operations of the National Enterprise Board and the Scottish and Welsh Development Agencies, to consider the extent to which they should continue to receive money from taxpayers, and so on.
I should like to begin, if I may, by making it plain that we start with a feeling of sympathy for the chairman and members of the NEB, and for what they are trying to do, as regards the major interests of the board in both British Leyland and Rolls-Royce, provided that realistic targets relating to return on capital and productivity are met, and also as to other activities of a more entrepreneurial kind. We sympathise, too, with interventions such as those mentioned by the noble Lord, Lord Jacques, in firms such as Ferranti and ICI. Indeed, our only criticism—and it is a major one—concerning the board's holdings in those two companies is that apparently there is no prospect of those holdings eventually becoming available in a liquid form for

1427
the continuing work of the NEB. Our main desire is that the board should be able to do its work in such a way that its operations can be maintained stable and on a broadly agreed basis, irrespective of the political complexion of the particular Government in power at any time. I know that at present that may seem a rather forlorn hope, given that the Left-wing of the Labour Party would like to see the activities of the board greatly extended and the Right-Wing of the Conservative Party might like to see those activities altogether abolished.
In this connection, I think I should say that I was sorry to read what it was that the main Conservative Opposition speaker had to say in another place at the Report stage of this Bill: that he felt the board would probably prove extremely harmful. That contrasted with what I thought was the more moderate approach of the noble Lord, Lord Campbell of Croy, this afternoon, and it is certainly in marked contrast to the more positive and balanced view expressed by Sir John Methven the other day, when he said that the CBI did not want things pulled down and set up simply for reasons of political dogma, and that they saw a continuing need for the NEB—and, for that matter, also for the Pay Comparabilities Commission, albeit with some modifications in each case. It must be most demoralising for people employed by the NEB to feel that, if there is a change of Government, their employment might be in jeopardy. We on these Benches have often deplored the way in which first the Prices and Incomes Board and then the Relativities Board were set up by Labour and Conservative Governments in turn, and then demolished by their successors; and we very much hope that the same thing will not overtake the NEB should there soon be a Conservative Government. What I believe industry badly needs from Parliament now—and I speak with some practical experience—is continuity and stability of policy.
That brings me to the content of the Bill before us. It is precisely because, in our view, it is so framed as to be a destabilising influence that in certain respects we are unhappy about it. There are a number of reasons for our misgivings, and perhaps I may briefly spell them out. First, we do not think that
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the Government have given enough information to Parliament to enable it to form an adequate judgment as to whether these enormous increases in statutory financial limits which are now asked for should be granted. I can see that there are problems regarding the extent to which such information should be published in the case of, for example, a company like Rolls-Royce, which is subject to very severe international competition. I acknowledge, too, that it would be quite inappropriate for Parliament to seek to interfere with the day-to-day commercial decisions of companies in which the NEB has a stake. But surely, when financial provision of the magnitude provided for in this Bill is sought for the NEB, it is quite wrong, assuming that the audited report and accounts of the board for 1978 will be published at approximately the same time as they were last year, that we should be having this debate now, only a few days, it may be, before that publication, before, as the noble Lord, Lord Jacques, has just reminded us, our corporate plan for 1979 has been approved, and also before the announcement to which he referred, relating to future funding, has been made. Anyway, in the absence, as we see it, of adequate information from the Government, all that Parliament can now do is to make the best estimate it can of the likely future requirements of the board.
That brings me to the second point I want briefly to mention, relating to the amounts of the increased statutory financial limits contained in this Bill. This is the position, as I understand it—and I have read carefully, as no doubt have other noble Lords who are taking part in this debate, what was said in another place as the Bill went through all its stages there, and I have also listened carefully to what the noble Lord, Lord Jacques, has said to us this afternoon. Taking the NEB's own figures, they will not need all the money now sought for at least 3½ to 4 years. On the Government's showing of the total amounts in the Bill, £575 million, no less, is now required for contingencies alone, at a rate of £115 million per annum over a period as long as five years. At a time when inflation is again beginning to rise, and when money set aside for the purposes of this Bill is clearly not going to be available for the hard-pressed private sector of industry or to effect the reductions which are so badly needed in the present

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high levels of personal taxation, our feeling, I must say, is that those amounts are far too high. Indeed, when the noble Lord, Lord Jacques, comes to reply (and I am extremely sorry that I have failed to give him notice of this, so I shall quite understand if he can respond only at a later stage) I would be grateful if he could give some indication of the extent to which the amounts now asked for exceed the recommendations of the National Enterprise Board itself in this regard.
The third and last point I want to make really follows from the first two. If Parliament is to be asked, on the basis of information which in our view is both inadequate and out of date, to authorise this enormous additional expenditure—which will be used, incidentally, as the noble Lord, Lord Jacques, has himself said, for different purposes as between the NEB and the Development Agency—then, in our view, this should be done only on a basis which necessitates periodic debate and legislation at intervals of not longer than, say, a year at a time, so that a more thorough parliamentary scrutiny can be exercised than occurs under the Affirmative Resolution procedure, to which he has referred. I am sorry, therefore, to have to say that, in bringing forward this Bill in the way that they have, the Government have in our view acted against the future interests of the National Enterprise Board itself, not to mention those of the economy as a whole, and in these circumstances we on these Benches are not able to give it our support.
3.40 p.m.
Lord BOYD-CARPENTER: My Lords, the fact that, as has been mentioned by the two noble Lords who immediately preceded me, this is a Money Bill does not of course deprive this House of the duty, when confronted with proposals for the allocation of such very large sums of public money, to debate and analyse those proposals. Indeed, the powers of this House theoretically go even a little further than that. As I understand the constitutional position—and I am subject to the noble Lord's correction if I am wrong—under the various Parliament Acts this House does in fact have the power (of no great significance in normal times) to delay a Money Bill for the period of one month. As Sir Harold Wilson once observed, "A week is a long time
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in politics". Today, a month is quite a period.
I am surprised, as was the noble Lord, Lord Rochester, at the timing of the introduction of this measure, with its provision for a very large sum of public money to be allocated for purposes of which we have insufficient details and—and I shall come to this at the end of my speech—spent subject to quite inadequate Parliamentary supervision. It seems a little extraordinary that in, what are undoubtedly—whatever view one takes of the events of this week—the last months of a dying Parliament, a provision should be introduced to make very large financial allocations (which, according to the noble Lord, Lord Jacques, are adequate to last for nearly five years) to a highly controversial body. If the noble Lord had come forward and said, "We desire to preserve the status quo for a little and are therefore proposing a modest increase to deal with immediate demands", that would have been understandable. But to come forward with a proposal to provide up to £4,500 million of public money for this not uncontroversial body at this stage of a Parliament is a very extraordinary proceeding.
Equally extraordinary is the nomenclature. This is called the Industry Bill. That is a complete misnomer. It is not designed to help the profitable industry on which this country lives. Profitable industry in this country—and there is still a bit of it—can get on perfectly well without the National Enterprise Board. This is designed simply to provide funds for this creature of the Government—and I use that phrase deliberately.
Your Lordships may recall that the Secretary of State for Industry in another place drew attention to the fact that the setting up of this body was an essential feature of industrial policies put forward by the Labour Party Manifesto in 1974. When it was introduced, as the Labour Party had won that Election, that was a perfectly proper proceeding, but to make this massive endowment for the future of this Labour Party creature at a time when the whole political outlook is uncertain seems to be lacking in a measure of elementary decency. It is curious, this nomenclature: the Industry Bill, the National Enterprise Board—the Government almost seem to be adopting the technique of the

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Government forecast by George Orwell in 1984 when all the Departments were given agreeable names which contrasted markedly with their functions. For example, the Government Department responsible for the suppression of resistance to the Government was called "The Ministry of Love". It is using rather the same technique to refer in this context to the National Enterprise Board.
What is its function? What is the philosophy behind it? I think that the Government are facing in this a dilemma on which I should be interested to hear the noble Lord speak when he comes to reply. Either these large sums of money are to be made available to the NEB to acquire profitable concerns—something to which my noble friend on the Front Bench referred—and what is the purpose of that, other than to extend the Socialist theory of nationalisation? What other practical advantage has it? Alternatively, it is to acquire and prop up unprofitable concerns. It is certainly the fact that in the NEB's present portfolio there are a considerable number of these. Do not blame the NFB for that! It acquired them from the Government which took the step of acquiring them.
In this respect, it is now an instrument for carrying out what I think is the false economic philosophy of the Government: the policy of propping up unprofitable concerns. I do not want to get into an extreme dogmatic position. There can be cases in which temporary help is needed for an industry of significant importance—perhaps, as in the case of Rolls-Royce, from the point of view of defence—where it is right for the Government to come to the rescue. But, as a general policy, to provide financial support for companies that get into trouble seems to me an extremely dangerous and harmful process. If a company is unprofitable for a while but is soundly managed and has sound prospects, it can go to the market. The Wilson Committee has not so far suggested that the financial facilities of the City of London are inadequate for that purpose. If the company has not good prospects and is unprofitable, then, on any ordinary analysis, it is producing something for which the consumer is not prepared to pay the cost of production; and the resources
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and labour in it ought to be redeployed elsewhere.
I do not ask the House—and still less the Minister—to accept that approach from me. I ask them to accept that approach from their own principal economic adviser. Your Lordships will be aware of the leak which on 23rd February, took place in, of all respectable organs of opinion, the Guardian, when there was quoted a letter from Sir Douglas Wass, Permanent Secretary to the Treasury, to Sir Peter Carey, his opposite number at the Department of Industry, forwarding a report of the Public Sector Incomes Group. The covering letter from Sir Douglas to Sir Peter contained the words:
"The startling and disturbing conclusion is that we have been accumulating prospective losses of real resources at a rate faster than the growth of the national income".
Those are words from the head of the Treasury. I have served in the Treasury and I know that they are not given to overstatement. Those are words which, now that we know them, all thinking people, whatever their political views, ought to take with desperate seriousness. Yet we do not have a word of reassurance from the noble Lord on the Government Front Bench when he is asking this House to consider proposals for the use of a very large amount of public money, inter alia, for just the purposes that Sir Douglas Wass condemned.
If I may go back 2,000 years before Sir Douglas Wass, some noble Lords may remember the Roman poet who wrote: "Victoria causa deis placuit; sed victa Catoni"—which, were I in the House of Commons, I should feel it necessary to translate and which, were I in the House of Commons, I should simply translate as "Cato backed losers". But the policy of backing losers, condemned so devastatingly by the Government's own principal adviser in these matters, must be a singularly dangerous one for this country. The money and the resources for this purpose are obtained by borrowings, with the aid of Government credit, on the London market—very large sums indeed which will be borrowed, if this Bill becomes law, with the aid of that credit. That money will therefore cease to be available for borrowings by profitable private industry on its own credit. The sum total of capital available for borrowing will be reduced. This, apparently, is

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to be the effect of a so-called Industry Bill. This cannot be right. Indeed, there are many people who feel that the whole policy of backing losers, of propping up the unprofitable, is one of the reasons why the standard of life of the worker in this country has fallen to a quite dramatic degree compared with that of his opposite number on the continent of Europe, where other philosophies exist. This Bill is an instrument for the continuance of that purpose, which, despite the warning from their own principal financial adviser, the Government have not yet repudiated.
Let me take another point: the noble Lord the Minister said that some of the investments which the NEB had made had been profitable and some had not. Why is not the money that it invests in companies that are successful recycled? Why are not the profitable investments sold and the capital then used for whatever purposes that this Bill may require? Why is it necessary to add so substantially to the borrowing powers? What is the purpose of retaining shares and holdings in companies that do not require help, other than the Government's doctrinal desire to have industry in public hands? Therefore, one of the objections that I put to the House to providing this large additional sum of money is that such good work as the NEB may think they are able to do can perfectly well be financed by the sale of investments that they already hold. Will not the release of additional capital which the board will otherwise have to borrow be in the general interest of the national economy?
It is curious—and I am going to say only a word about them—that the development agencies should be included in this Bill, because their purposes are very largely different. Indeed, much of the work that they do is of an environmental character like that which the Scottish Development Agency is seeking to do in the reconstruction of the terrible housing in East Glasgow. Why has it been necessary to lump together these different bodies which, though they give some support to industry, are not entirely industry-orientated, with the massive provision for the NEB? The purpose is so different that the linking of them in the same Bill is difficult to understand unless it be thought for reasons almost too indelicate for me to mention particularly
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desirable at this moment to show generosity to agencies which spend money in Scotland and Wales.
I have one final point—I referred to this at the beginning of my remarks—regarding the lack of Parliamentary control and supervision over the spending of these large sums of money. As the noble Lord and the House know the Public Accounts Committee in another place recommended that the Comptroller and Auditor General should be able to audit the books of the NEB, and that the NEB's doings should be available for investigation by the Public Accounts Committee. When I raised this question in this House a little time ago, another Minister—I think it was the noble Baroness, Lady Birk—dismissed the Public Accounts Committee's suggestion on the ground that it would inhibit the commercial enterprise of the NEB. If I were in another place, I should say that that was a pack of codswallop. I have had some experience of being within the ambit of the Public Accounts Committee, since the Civil Aviation Authority, of which I was chairman, had its accounts examined by that Committee. I can assure your Lordships that we were not inhibited to any degree whatever in our commercial enterprise by the knowledge that that was so. On the contrary, we found the report of the Comptroller and Auditor General helpful to us in our work.
These are large sums of public money. I am made the more nervous of their being excluded from the ambit of the PAC by the observation which was made by the present chairman of the NEB, Sir Leslie Murphy, when he was examined on this point by the PAC. He sought to argue before that committee—I do not think successfully—that because he was accountable to the Secretary of State, that was the same as being accountable to Parliament. If that is the doctrine of the man responsible for the administration of these large sums of public money, I frankly find it alarming. If Parliament is to be asked to authorise public money to be used in ways which, as we have seen in other organisations, can give rise to troubles of one sort and another, I should have thought that the minimum safeguard we could ask for is that the spending of it should be thoroughly investigated by the Public Accounts Committee.

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I know that the Minister said in another place that the role of the Comptroller and Auditor General would be reviewed. The possibility was trotted out that he might be let in on this. It is not good enough to ask for the money now and say that one will consider the supervision later, just as it is very odd, as the noble Lord, Lord Rochester, said, to ask for this money within a matter of a few days of the accounts of the NEB itself, with whatever defects they may have, becoming available.
I am extremely unhappy about this proposal, not only because it involves a large sum of money but also because it indicates an extraordinary unwillingness
on the part of the Government to realise the dangers to our whole economy and standard of life of the continuance of the policy which this Bill will support—a policy which in the past four years has brought nothing but disaster upon the British people.
3.58 p.m.
Lord HALE: My Lords, I apologise to the House for making a brief comment. I rise because reference was made to the firm of Ferranti. The noble Lord did not go into much detail but it might be desirable at this time to say something about it. The firm of Ferranti was known and recognised as a pioneer of good employment under the original Mr. de Ferranti. They were outstanding in those early days for providing services which were offered in very few companies throughout the land. They were not only successful but also succeeded in developing new processes and making highly-skilled products for which few other companies could contract. They came in for a very heavy liquidity crisis at a time when liquidity crisis was becoming a rapidly-spreading industrial disease, and the National Enterprise Board stepped in and thought it suitable for investment. There is one thing about Ferranti: the workers responded and with a loyalty that was particularly characteristic of the Oldham area, where of course the firm was founded and where it still has three or four works. Of course, it has now spread to other parts of England and Scotland. The recovery was an extraordinarily rapid one in the circumstances. The freedom from strife in the Oldham area is very remarkable and I believe it still continues.
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The time came when I found it possible to attend union meetings if I wanted to, and the workers would come to me and say, "This is a problem we share with the bosses and we have arranged for you to have lunch with the directors while you are there." That was something which is worth studying because, so far as I know, under two excellent Members of Parliament, that freedom from industrial strife has continued. In my 25 years it was a particularly good thing and, as a non-classical scholar dabbling in Latin, I would say:
"Quortum pars parva fui".
I am quite sure none of your Lordships needs to translate that; it means, "of which I was just a little bit".
The noble Lord said that the Government were retaining, I think, 49 per cent.
of the shares and he stated their worth on the open market—because Ferranti have become public to a certain extent, although I do not know completely about that, and although my relations with the two brothers were always extremely friendly I have not had any connection with them since 1968 when I retired, and I rather regret that I did not take the opportunity that they did offer. Could the noble Lord say whether it is the intention of the board to retain those shares?—because I had understood from a possibly wholly unreliable source that some arrangement had been made which would represent a happy termination of this. Perhaps if we are to get freedom from industrial strife we might consider what is done by good employment in the days when this had an effect in maintaining our freedom in some areas from threats which are now becoming very grave and very serious.
4.3 p.m.
Lord STRATHCLYDE: My Lords, I rise, first, to thank the noble Lord who has just spoken for what he has said. I was completely surprised—indeed astonished—over what happened to Ferranti, who were well known not only in their own area but throughout the world as one of the most go-ahead firms in the advancement of electrical use, and also of labour relations; they were absolutely in the forefront of everything and they were people to be encouraged rather than to have their complete freedom taken away from them. Apart from that, I was

1437
fascinated by the ease with which the noble Lord opened the debate, when these figures in hundreds and indeed thousands of millions rolled off his tongue. As a Scotsman, it terrified me! I was brought up to value a bawbee, and now we are dealing with thousands of millions just as though they were nothing at all. God knows when we are going to get them back!
I should like to ask the noble Lord if he can possibly give me one figure which I may have missed while he was speaking: what return are we getting from the money we have paid out on these firms at the present time? What return are we getting in percentage terms, and what do we expect to get out of the other £4,000 million or so that seemingly we are going to spend on them? There is one other matter I should like to refer to before I sit down, and I am sure it is something for which your Lordships are all very grateful; that is, the extraordinary speech we have just listened to from my noble friend Lord Boyd-Carpenter. He went right to the heart of the whole business. We are making idiots of ourselves in this country. I do not know whether we have gone daft, deaf, dumb or what, but we still put our faith on one side of this House in nationalisation, which has been nothing but a dreadful blow to the whole economy of Great Britain.
Lord MORRIS: My Lords, like the noble Lord who has just spoken, I must beg your indulgence for intervening in this debate without first having put down my name. However, I have given notice to the noble Lord opposite, and I wish to ask for two points of clarification arising out of his remarks. The first is that he stressed, if I recall correctly, "lost hours" at British Leyland as a percentage of the hours available. I wonder whether he would be good enough to let me know the basis of the calculation of the hours available. My other point which needs clarification is this. In his attempt to justify the increase in the financial limits available to the National Enterprise Board, the Minister expressed the increase as a percentage ratio to five years' estimated future turnover. Would the noble Lord be good enough to say what is the relevance, and indeed the meaning, of this ratio? I could understand it if he were to measure the increase against
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increase in profitability since the inception of the funding scheme, but I cannot see the relevance of expressing it as a ratio to super-turnover for five years hence.
4.7 p.m.
Lord JACQUES: My Lords, I thank the noble Lords who have taken part. They have not all stated the point of view I should have liked them to state, but that is the way debates go, and that is where we land. It is true that a small part of the activities of the NEB are in the North, but I can assure the noble Lord, Lord Campbell, that the regional boards are doing their best to encourage the expansion of locally-based companies with sound projects which can make a worthwhile contribution to prosperity in those regions. So far as the NEB is concerned, there is no limit within any of these total budgets to the funds available for good regional development.
My theory is that such excellent grants are available in those areas that the NEB is not required. The developments that do take place are of two kinds. There is the smal firm, which gets so much assistance from the State, quite apart from the NEB, that it has no great difficulty in raising a commercial loan with the bank. The second is that much of the development is by branches or subsidiaries of existing firms which are profitably engaged elsewhere. They are enticed to have their subsidiary or branch in the development area because of the grants that are available. That is the kind of company which does not usually need the NEB. The National Enterprise Board, I think, is required in two cases. The first is where a company of great importance is failing; and the preceding Government found it necessary to take action in regard to Rolls-Royce. The money we are asking for today is not for some creature of the Government: it is for such things as that. A substantial part of it will finance Rolls-Royce, which was taken over by the last Administration.
Lord BOYD-CARPENTER: My Lords, will the noble Lord allow me to intervene? The money is being asked for for a creature of the Government—to wit, the NEB. The fact that the NEB uses some part of that Government money for the support of Rolls-Royce, which I

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went out of my way in my speech to say was an exception to the general rule and which I personally would accept, is no justification whatever for using the NEB. It could be done as the last Government did it, direct from the Government.
Lord JACQUES: My Lords, I submit that the way in which it has now been done is a proper and sensible way to do it. Originally, there was merely Rolls-Royce, but now there are others, and I suggest that if the problems at British Leyland had come along during the time of the Conservative Government, they would have been forced to do very much what this Government have done. The example of Rolls-Royce shows that that is what would have happened, so it is no good the noble Lord shaking his head. Let us be absolutely frank. Let us have all the cards on the table. I suggest that Rolls-Royce and British Leyland would have been taken over publicly, no matter what Government had been in office at that point of time, and the evidence is in my favour.
Lord BOYD-CARPENTER: My Lords, as the noble Lord referred to my head, perhaps he would be good enough to resume his seat for a second. I made the case of Rolls-Royce, where there are obvious and overwhelming defence considerations. Whether and in what way, had we had the good fortune to have a Conservative Government, the real problems of British Leyland would have been handled, I do not know. But I do know this. They could not have been handled as badly as they have been.
Lord JACQUES: My Lords, I do not think that the facts support the remark which the noble Lord has made. I again point out that the action which was taken by the last Administration, in the case of Rolls-Royce, indicates that if they had had the problems of this Administration, particularly those connected with BL, they would have done very much the same thing and I stand by that. Furthermore, I say that if I had anything to do with the NEB there would be no question of selling the profit-making organisations—not the slightest question. Then we should have had only the loss-making organisations. Then we should have had to come to both Houses and ask for money to cover these losses. Not at all. When we have made
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something profitable for the public sector, let us keep it in the public sector so that we have profits available to set off against the losses. That would certainly be my policy and I should have no hesitation about it.
On the question of whether the NEB is fulfilling the functions of the agencies, with two minor exceptions all the NEB investments on its own account have been in England. The major NEB companies with plants in Scotland and Wales, such as BL, Rolls-Royce and Ferranti, are the NEB's principal contributions to the Scottish and Welsh economies. The National Enterprise Board is working in very close co-operation with the Scottish and Welsh Agencies. They are not, in any case, overlapping, nor is one acting as the agency of the other. They are acting with a close understanding and we are quite happy with the way things are going. There is no overlapping and that suits us.
The Government have no intention of the NEB becoming merely an English body, with wider powers matching those of the agencies. They are content that in England the other powers, which in Scotland rest with the agency, should, as they do at present, rest with the local authorities and the English Industrial Estates Corporation, which deals with some of the problems handled by the agencies in Scotland and Wales. So that we have no plans for making the kind of change which the noble Lord queried.
I have some sympathy with the timing difficulties, which were raised by the noble Lord, Lord Rochester. Timing is very difficult, but this Bill had to come forward at the present time because it was required. It could not wait until the annual accounts were available, and the annual accounts could not be done properly in the time which had been available. So that, regrettably, the lack of time was unavoidable.
I was asked whether the amounts were recommended by the NEB. There is no question of a recommendation. The amounts in the Bill are the amounts recommended by the Government after consultation with the NEB, but there is no question of a recommendation being either accepted or rejected. So far as Ferranti is concerned, I can say that the

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50 per cent. shareholding which the NEB has will be retained. I was asked what was the amount of return that we were getting on "these enormous amounts of capital". I think we ought to be clear what we mean by "these enormous amounts of capital". It seems to be readily assumed by the House that, when we speak of £4,500 million, it means that £4,500 million of public funds paid by the taxpayer is to be made available. That is not so. As I explained earlier, at the present time the financial limits include all the money borrowed by fully-owned subsidiaries of the NEB, or the agencies. So that if British Leyland had been a fully-owned subsidiary and had borrowed from the bank, as it has done, then that would have counted against the financial limits, although it was not money provided by the taxpayer; it was money owned by the bank and lent to British Leyland. British Leyland, however, is not a wholly-owned subsidiary and its commercial loans, not guaranteed by the NEB, would not have been counted against the financial limits. But in the future, because of this Bill, they will be counted against the financial limits. So, if British Leyland goes to the bank and gets a loan of a substantial amount—perhaps, some millions of pounds—which is eventually repaid to the bank, until it repays the bank that money will count against the financial limits. But it is no charge against the State, and no charge against the taxpayer. So do not let us think that these amounts are monies provided by the Exchequer for the subsidiaries of the NEB, because that is not so.
Lord STRATHCLYDE: My Lords, but surely the noble Lord has told us that money is advanced by someone to the NEB. That being so, I should like to know what is the return being received for that money.
Lord JACQUES: My Lords, as regards the money which is advanced by the NEB, which will be only part of the cash limit, I gave the figures in my opening speech and they are as follows. Other than Rolls-Royce and BL, the NEB is expected to get a return of 15 to 20 per cent. on capital employed, as from 1981. In the last complete year for which we have accounts, it made 11.4 per cent. on capital and it is expected that in the year which has just passed, for which the accounts
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are not yet available, the return will be the same—about 11·4 per cent. So, excluding Rolls-Royce and BL, it is 11·4 per cent. So far as Rolls-Royce and BL are concerned, I gave the latest figures. I think I also mentioned that the NEB is expecting from both of those concerns a return equal to 10 per cent. on capital, as from 1981. So far as British Leyland and hours available are concerned, I did not prepare the statistics; I picked them up from information released by British Leyland when they published their accounts. All I can say is that it was explained as the hours lost as a ratio of the hours that were available, and I should imagine that the hours available would be taken at the rate of the ordinary shift.
Noble Lords asked why I took the contingency reserve as a percentage of turnover. If I have to show a relationship in order to demonstrate that this is not exceptional, I have to take it against something. Investments in a company are often financed from the profits and I thought that one of the best ways would be to take investments in relation to turnover, in the same way as profits are taken in relation to turnover. If I showed that this reserve was only something like 3 per cent. of turnover, it would show that it was not as big as it seemed to be. That was the thinking behind it.
I think that I have answered most of the specific questions which were put to me. There is a difference of philosophy on the two sides of the House, and I am quite pleased that there is. There is no reason why there should not be. I am very glad to have the National Enterprise Board. I would rather have the National Enterprise Board and its flexibility than something which was kept separate and nationalised. As I said earlier, the National Enterprise Board has sold some of its investments at a net profit. Therefore it has not held all its investments. I should prefer to have the National Enterprise Board rather than nationalisation. To those who are on the Right Wing of the Conservative Party I would say that they should not be against all public control, for that is the way to drive people to Communism. They must have a little tolerance. I hope that we have a little tolerance; I believe that we do. Therefore, I ask noble Lords opposite to show the same kind of tolerance.
Lord LLOYD: My Lords, before the noble Lord sits down, may I reiterate a question which was asked by my noble friend Lord Boyd-Carpenter about public accountability. When there is the power to spend these very large sums of money it seems to me to be enormously important that accountability therefor should be made available to the Public Accounts Committee. I do not think that the noble Lord covered that important point in his reply.
Lord JACQUES: My Lords, I am afraid that I did not reply to this question, which is very fair, and I apologise to the noble Lord for not having answered it. The Public Accounts Committee has access to the National Enterprise Board papers, and the Chairman of the NEB has given evidence on six occasions. The Government do not believe it to be desirable that the Exchequer and Audit Department should inquire in detail into the books because of the effect that this would have upon the entrepreneurial initiative of the National Enterprise Board. Once we create a public concern it has to have a little freedom, and it should be judged upon results in the same way as private enterprise is judged upon results.
Lord ROBBINS: My Lords, may I ask the noble Lord a question which is not based, I think, upon conflicting philosophies. What rate of inflation in the next few years is assumed in compiling these colossal sums that we are asked to comment on this afternoon?
Lord JACQUES: My Lords, I am unable to give precise figures. However, if this Government survive they will certainly insist upon inflation in single figures, both for this purpose and for any other purpose.
Lord HOUGHTON of SOWERBY: My Lords, I apologise for intervening in the debate at this stage, but perhaps I may be permitted—
Lord STRABOLGI: My Lords, I am sorry to interrupt my noble friend, but it is most unusual for a noble Lord to intervene and make a speech after the Government spokesman has replied and before my noble and learned friend has put the Question.
Lord HOUGHTON of SOWERBY: My Lords, I thought that there were no rules of order in this House.
Lord STRABOLGI: My Lords, there are.
Lord HOUGHTON of SOWERBY: My Lords, there may be conventions—
Several noble Lords: Order, order!
Lord JACQUES: My Lords, may I point out to the noble Lord that there is a misunderstanding. If the noble Lord did not put down his name, although he wished to speak, by the custom of this House he ought to have spoken before I replied. He ought to have given notice that he wished to speak in what is known as "the gap". Unfortunately, on this occasion the noble Lord is too late, but on another occasion I hope that he will be in time.
Lord HOUGHTON of SOWERBY: My Lords, with great respect, the custom of this House cannot be used to suppress the right of free speech in your Lordships' House. Am I out of order?
Several noble Lords: Yes!
Lord HOUGHTON of SOWERBY: My Lords, who says so?
Lord STRABOLGI: My Lords, the House says so.
Lord HOUGHTON of SOWERBY: My Lords, then the House is suppressing my right to express myself, is it?
Lord JACQUES: Yes, my Lords, because the noble Lord is out of order.
Lord HOUGHTON of SOWERBY: My Lords, I wish to add a short postscript to this debate.
Lord STRABOLGI: My Lords, this is a matter which was discussed and recommended by the Procedure Committee, a recommendation which was passed by this House. It is therefore a Rule of the House, and my noble friend is out of order.
Lord HOUGHTON of SOWERBY: My Lords, all I can say, then, is that it is time

1445
that the customs of this House were changed to permit noble Lords to express a point of view, if they have one.
Lord DERWENT: My Lords, the customs of this House have not been changed. I have been in this House for 20 or more years, and I should like to protest. This matter has come up before, and those who are fairly new to this House have always taken the advice of the Leader of the House or of the Front Bench about what is the custom of the House. There is no reason why somebody who has come here recently should try to alter the customs of the House.
Lord HOUGHTON of SOWERBY: My Lords, all right, then I will—
Several noble Lords: Order, order!
Bill read 2a: Committee negatived.
ANGLIAN WATER AUTHORITY CONSTITUTION (AMENDMENT) ORDER 1979
NORTHUMBRIAN WATER AUTHORITY CONSTITUTION (AMENDMENT) ORDER 1979
NORTH WEST WATER AUTHORITY CONSTITUTION (AMENDMENT) ORDER 1979
SEVERN-TRENT WATER AUTHORITY CONSTITUTION (AMENDMENT) ORDER 1979
SOUTHERN WATER AUTHORITY CONSTITUTION (AMENDMENT) ORDER 1979
SOUTH WEST WATER AUTHORITY CONSTITUTION (AMENDMENT) ORDER 1979
THAMES WATER AUTHORITY CONSTITUTION (AMENDMENT) ORDER 1979
WESSEX WATER AUTHORITY CONSTITUTION (AMENDMENT) ORDER 1979
YORKSHIRE WATER AUTHORITY CONSTITUTION (AMENDMENT) ORDER 1979
4.28 p.m.
Baroness DAVID Baroness DAVID rose to move, That the draft orders laid before the House
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on 6th March, be approved. The noble Baroness said: My Lords, I beg to move the nine Water Authority Constitution Orders en bloc. These nine orders concerning membership of water authorities seem, on the face of it, fairly complicated, but I think this is one case where the form of subordinate legislation is more daunting than its substance. I hope to persuade the House that these are proposals which are not only rational, but will go some way to improving democratic accountability at local level in the water industry and, moreover, command a wide measure of support.
Noble Lords will recall that, under the reorganisation carried out by the Water Act 1973, water authorities have a constitution rather different from that of other bodies in the public sector. A majority of the members are appointed by local authorities in the area; the rest are appointed by Ministers. This may sound like a recipe for divided loyalties and general confusion; but in fact the evidence is that it has worked well and has helped to provide continuity from the pre-1973 days when water was largely a local authority function.
The members appointed by local authorities are, as I have said, in the majority, but at the moment it is only a majority of one in most cases. And, despite the fact that water authorities have relatively large numbers of members compared with some other public bodies, the members nominated by local authorities are spread fairly thin. So, for example, on the Anglian Water Authority, Essex (with 14 districts and a population of nearly 1½ million) has only two local authority representatives: one nominated by the county council and one by all the district councils together The existing local authority members do an important job on water authorities. They know something of the particular needs of the areas so far as water services are concerned. And they will always be conscious of the effect on consumers of decisions taken by the water authority—particularly so far as the level of charges is concerned.
Having looked at the level and balance of water authority membership as part of the review of the water industry, the Government decided that the level of local authority membership of water authorities in England should be increased. We

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announced our proposals in the White Paper (Cmnd. 6876) published in July 1977. In deciding how the additional seats should be allocated, we took careful account of the views of the local authority associations and the water authorities. The package which is before the House for approval has their agreement.
We decided on two criteria. It seemed right that large cities, including several like Manchester and Birmingham which had previously had responsibility for their own water supply undertakings, should be guaranteed a member on the appropriate water authority And we also decided that it would be fair to give an additional seat where there were a large number of districts in one county, as in the case of Essex which I have already mentioned. The increases which the draft orders will bring about reflect these criteria. My Lords, nine separate orders have been drafted so that if there are objections to one, it can be held back without delaying the others. But I hope that will not need to happen. The local authority associations, as I have said, are anxious to see the orders made. The extra seats will become available on 1st June. The associations feel, as I do, that this increase is amply justified, and I hope the House will agree. I beg to move.
Moved, That the draft orders laid before the House on 6th March, be approved.—(Baroness David.)
4.33 p.m.
The Earl of AVON: My Lords, we on this side of the House welcome these nine draft orders in the general sense. The noble Baroness has given us an excellent résumé of the reasons for these orders and we fully understand them. The only point which makes me hold back a little from wholehearted support is that I am always nervous of committees of any nature increasing in size. I have an anathema to this, just as others have an anathema about school classes growing in numbers. The reasons are similar: the smaller the committee, the more effective and positive its actions.
Having said that, we recognise that the wide geographical spread of the authorities means that regional representation, particularly from the point of view of the
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district councils, is very meagre. For that particular reason of the wider representation, we welcome these orders. On this point I understand that the county council, too, would have preferred their own representation to be increased. It is generous of them to give way to the district councils. Here perhaps we should utter a word of warning. While these orders are acceptable and justified, we hope that this is not a "foot in the door" and that there will not be a rush of applications for increased representation.
The noble Baroness has made the position clear but I should like to ask her to comment on one or two general points. Do the Government consider that the authorities are effective in management and that they are in touch with the public? In particular I have the feeling that there could be a closer relationship with the consumer. The noble Baroness mentioned accountability; is she happy with the accountability upwards of these authorities? My Lords, having said that, we are pleased to support these orders.
Lord DE RAMSEY: My Lords, the noble Earl, Lord Avon, has explained that broadly speaking he is entirely in favour of these orders and he has given his reasons, with one caveat. I personally am entirely opposed to them and think that they are wholly unnecessary. Going back to the bad old days where local authorities appointed members to water bodies, such as catchment and river authorities, the person chosen was someone who could be relied upon to keep down the rates, and for no other reason. I am glad to say that those days are past and that today both the appointed members and the district council members work extremely well together. I am not convinced that the proportion is wrong. On the contrary, I think that the present proportion is a fair one. I do not wish to make a pun, but the result of these orders will be to water down the expertise on these bodies.
The Secretary of State appoints members with special knowledge. The Minister of Agriculture, Fisheries and Food does the same. They are not elected and subject to change; they learn their job and they are valuable from the technical point of view, if from no other. Therefore, since it has worked so satisfactorily I think it is a

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case where change is not necessary. Indeed, it is necessary not to change and I must entirely oppose this alteration which amounts to a watering down of the expertise.
Baroness DAVID: My Lords, I agree with the noble Earl, Lord Avon, that committees can easily be too big, but I think these are very modest increases. In almost every case, except for the Thames Water Authority, it is only one member, so I do not think it will make a very great difference. Perhaps I may reply at the same time to the noble Lord, Lord De Ramsey: the expertise will remain the same. The ministerial appointments will not be cut down; they will remain exactly as they are and I think that one on a body of between 30 and 40 will not really take away from the expert advice which will be available.
A point was raised about the consumers. On four authorities already members have been appointed specifically to represent the consumer, and as vacancies become available on the other authorities a definite consumer representative will be put on the boards. The noble Earl also asked about accountability. The bodies themselves, with their local authority representation, are accountable to the public through those members, and will be more so, of course, when we have the consumer member in every case. With regard to upward accountability, the chairman of each board is on the National Water Council, so that the accountability moves in that direction as well. I hope I have answered the main questions which have been raised.
On Question, Motion agreed to.

MEAT AND LIVESTOCK COMMISSION LEVY SCHEME (CONFIRMATION) ORDER 1979
4.40 p.m.
Lord LEONARD: My Lords, I beg to move that the Meat and Livestock Commission Levy Scheme (Confirmation) Order 1979, a draft of which was laid before the House on 6th March, be approved.
My Lords, this scheme revokes and replaces the Meat and Livestock Commission Levy Scheme 1968, consolidating
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various amendments. It thus provides for the continuation of the system under which the Commission is enabled to impose charges to meet its expenses and to recover such charges. At the same time, the scheme makes two changes to the existing provisions. These are an increase in the maximum charge leviable in respect of each head of sheep from 8p to 16p; and an extension of the leviable charges to exports of livestock (excluding pure-bred breeding cattle).
We must remember that it is four years since the statutory maximum rates of levy were last increased. It is to the credit of the Commission that it has been able for so long to work within the present limits, while maintaining and developing a wide range of services to the industry. I should like to say something briefly about these services before discussing the changes in the levy scheme.
The Meat and Livestock Commission was set up in 1968 because the Government believed that it was needed to further the development of the livestock and livestock products industries to the benefit of producers and consumers. This belief has proved to be well justified. The Commission provides a range of services to the industry which have brought substantial improvements. Among these services were the livestock improvement work, marketing and economic services, fatstock certification, weighing and classification services and support for scientific projects. All these have played essential roles in the industry's progress and development.
Fresh ground has been broken since 1975 in several important areas. For example, there has been the start of the Retail Meat Price Reporting Service. The Meat Industry Development and Advisory Service, operated in conjunction with the Meat Research Institute, has been launched. It deals with a wide range of technical inquiries from the industry and ensures that these are handled by the most appropriate person in either organisation. And perhaps of most significance, the Meat Promotion Executive, launched nearly four years ago, has steadily developed its role as a powerful stimulus to the demand for British meat.
Carcase classification schemes for cattle, sheep and pigs have continued as a major

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element in the Commission's programme. The pig scheme has maintained its success, with nearly 80 per cent. of clean pigs slaughtered being covered in the year 1977/78, but the numbers classified under the other two schemes have been at a much lower level. Nevertheless, these schemes remain important and their significance is underlined by the prospect of an EEC classification scheme for beef and, possibly, one for sheep. The Government and Commission believe that the development of British schemes should make a positive contribution to the introduction of any EEC schemes.
There has been one further development since 1975 which should perhaps be mentioned. Consultation with the industry is of paramount importance to the success of the Commission's activities. The consultative committees provided for in the Agriculture Act 1967 failed to meet this need satisfactorily. Following a review, they were replaced by a system for direct consultation of organisations representing the production and distribution sector of the industry. The Consumer's Committee was, however, retained. As part of these changes a widely-based Industry Forum was set up, which is now the body which the Commission customarily consults on matters of interest to the industry.
My Lords, the Commission's report for the year ending 31st March 1978, which was laid before Parliament, shows in considerable detail the wide range of the Commission's activities. For this reason I do not propose to dwell on them further. I would like, however, to commend the chairman and the other commissioners on the way in which they have discharged their statutory duties.
I now turn to the crucial issue of the Commission's financial position. Like everyone else, it is beset by inflationary pressures which place a severe strain on its resources. During recent months it has accordingly made a rigorous examination of its level of expenditure on levy-funded activities and has made a number of cuts in its budget for the financial year 1978/79. Despite this, it is estimated that there will be a deficit for the year of some £450,000. It has further estimated that in default of increased levy income it will incur deficits of £530,000
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in 1979/80 and of £850,000 in 1980/81, making a total of £1,830,000. These deficits must be met by increased income from levies; the present state of affairs obviously cannot be allowed to continue.
The Commission therefore proposed to raise the levies as follows. Under the draft order now before the House, the levy on sheep would be increased from 8p to 16p and half of the revenue from this increase would go for meat promotion. The levy on cattle will be increased under existing statutory powers from 78p to the statutory maximum of 90p—a rise of 12p. In addition, the Commission intends to raise the pig levy by 8p for meat promotion purposes. The increase on pigs can, like that on cattle, be contained within the existing statutory maximum.
My Lords, it may be asked why the sheep sector should be the only one to bear an increase in the maximum rate of levy. The reason is that over recent years much more levy money has been spent on the sheep industry than the sheep levy income has contributed. This step should restore the balance between the sectors, which I hope your Lordships will agree is reasonable.
These proposed increases, and indeed the level of the Commission's levy-funded activities, have been the subject of very thorough consultation with the industry during recent months. There is a wide measure of agreement on the proposed increases to cover expenditure on meat promotion. There has, however, been criticism from some sectors of the industry both on the general level of the Commission's activities and on the size of the proposed increase on the maximum rate for sheep. The Government appreciate the force of these criticisms, coming as they do from sectors of the industry who are themselves under economic pressure, but believe it is essential that the Commission should be given the means to get its financial resources back into equilibrium. The search for economies will continue, and I welcome the Commission's resolve in this matter.
I turn now to the other new provision in the levy scheme: the proposal to extend the levy to exports of live animals. Quite simply, this is being introduced because

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the Commission and the industry believe that exporters who benefit from the Commission's various services in much the same way as do those engaged exclusively in the home market should bear the levy on an equal basis. So this is a measure to restore equity in the raising of revenue from the industry.
There is one exception to this provision. Exporters of dairy cattle intended for breeding do not benefit from the work of the Commission and it would be inequitable for them to bear the levy. For practicality of administration it is proposed that the exemption should apply to all pure-bred breeding cattle. It will not, however, apply to breeding pigs and sheep, whose breeders benefit extensively from the work of the Commission. Exporters of livestock may regard this levy as something of a disincentive, but I think that it should be placed in proper perspective. The levy will represent a tiny fraction of the value of the animal. A charge of the order proposed is not unreasonable, bearing in mind the desirability of treating all trade on an equitable basis.
It is understandable that in a period of economic difficulty for the meat and livestock industry—who, after all, are the Commission's paymasters—there should be considerable pressure on the Commission to reduce its level of expenditure substantially. But I believe all sectors of the industry recognise that such a body is required and that it must have the resources needed to do its job. I believe also that the Commission is very conscious of the need for economy, consistent with an adequate level of services. This order will enable it to recover its financial balance, so to speak, and thus enable it to continue its task of promoting the efficiency of the meat and livestock industry in this country. I beg to move.
Moved, That the Meat and Livestock Commission Levy Scheme (Confirmation) Order 1979, a draft of which was laid before the House on 6th March, be approved.—(Lord Leonard.)
4.50 p.m.
Lord LYELL: My Lords, before we comment on this order, I believe that this is the first occasion on which the noble Lord, Lord Leonard, has made a contribution of some length from the Dispatch
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Box, and for that reason I should like to congratulate him on the very clear way in which he has gone through the order. As he has pointed out to us, this is a very complicated matter. Expert help has just arrived in the form of the noble Lord the Leader of the House, but it is most interesting that the noble Lord, Lord Leonard, had no need of that special help on his first solo flight.
All of us on these Benches would wish to thank the noble Lord for his very full explanation of this rather complicated order and especially for the reasons for which it is required. It appears that the level of the maximum amount of levy is the result, as he has pointed out, of long negotiations between the industry and the Commission and, from what I have understood, those negotiations have been fruitful, although at some stages they have become quite harsh. Nevertheless, it seems that they have been concluded amicably. For my part, I must add that I have a minute interest in the workings of this order, in that I am, when away from your Lordships' House, a livestock producer. Also, I note that the Commission carries out very valuable work in researching market trends and especially in promoting the sale of meat. For that reason I think that the nation must be grateful for the boost to the agricultural industry which is given by the committee.
As the noble Lord, Lord Leonard, has pointed out, the change in the maximum permitted levy will, first of all, affect sheep; but it will also affect livestock which are being exported. I should think that the case for such an increase could not be dismissed as unjustifiable. The Commission has compromised with the producers and, for that reason, we would consider the provisions of the order are, so far as possible, fair. For that reason we give it out support.
4.53 p.m.
Lord BALERNO: My Lords, may I, as a superannuated livestock producer, make a few comments about what we have heard. I think that we have not been given a sufficiently proper picture of the industry to which the order applies. One would not have gathered from the Government's statement that the estimate of the turnover for the British meat industry for the current year is £5,000 million. That is

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quite a considerable sum of money by any standards. The meat industry is the biggest sector of the food industry in Britain. Of this levy, which is expected to yield approximately £6 million, £3·5 million will go for the organisation of the industry, the grading of the meat and for research and development. I repeat, £3·5 million for an industry with a turnover of £5,000 million. It is a ridiculously small amount. There is not the slightest need to apologise for any increase. In fact I would rather criticise the powers-that-be for not having applied for this sooner, in view of the deficit which has been piling up.
I wish to make two points. The first concerns meat promotion to which £2·5 million of the levy will go. I wish to give an example. Anyone who has examined the pig industry in this country—particularly the bacon industry—realises that the bacon industry produces every bit as high a quality as our old competitor Denmark. There used to be a substantial difference between the quality of Danish bacon and the lower quality of British bacon. That has all disappeared. However, what remains is a big price differential and that cannot be put right without more being given to the promotion of British bacon and that is one thing that the levy will do.
Secondly, I should like to make a point regarding research and development. The Meat Research Institute is the last of the major agricultural institutes to be set up. It took steady agitation, starting from the end of the last war, with Government after Government to get anything done about it. One of the pleas was that there was no money available for the purpose. But, as the noble Lord, Lord Peart, will well remember—because he was responsible for the Agriculture (Miscellaneous Provisions) Bill—the funding of the Meat Research Institute was to be included in the levy on the Meat and Livestock Commission. Therefore, it had responsibility for raising money for the Meat Research Institute; the funds for other agricultural research institutes are to a very great extent raised by the taxpayer.
What I find somewhat depressing is that the Meat Research Institute, which is administered by the Agricultural Research Council, was funded for 1977–78 at £290,000 and for 1978–79 is funded for
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precisely the same sum. I point out to the noble Lord, Lord Leonard, that there is not the slightest need for him to apologise for any increase in the levy, therefore necessitating the order. On the contrary, I should be inclined to criticise the powers-that-be—and by that I do not mean only the Government—for failing to bring in the order sooner and for failing to make it for a larger sum than has been put forward.
4.59 p.m.
Lord LEONARD: My Lords, I am very pleased to hear the compliments which have been paid to me by the noble Lord, Lord Lyell, and I am thankful to him and have noted the points which he has made. I have also listened to the noble Lord, Lord Balerno, and it gives me great pleasure to know that he supports the increase.
As the noble Lord, Lord Lyell, has said, I have behind me a very big gun from the agricultural world. I did not want to be like the inspector who went to Wales on an agricultural visit, and who looked at the cows in the field and asked the farmer, "What are those cows without horns in the other field?" "Well", he answered, "They are horses".
Being a city dweller, I am not too well versed in the agricultural world. Nevertheless, as I indicated in my opening remarks, in common with everyone else, the Commission is faced with inflationary pressure on its finances. These new levy rates which it proposes to introduce next month are, in its estimation, the minimum necessary to combat that pressure. Neither the Commission nor anyone else can foretell how long these rates will last, but the support which has been expressed today for the Commission and for the order will, I am sure, be an encouragement to the Commission and its staff as they seek to maintain a high standard of service to our meat and livestock industry.
On Question, Motion agreed to.

VAN DIEMEN'S LAND COMPANY BILL [H.L.]
Reported from the Unopposed Bill Committee with Amendments.