Lords Sitting of 24 April 1980

Preamble
The House met at Three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Carlisle):
The LORD CHANCELLOR on the Woolsack.

CHEMICAL WEAPONS DEVELOPMENT
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are considering the development of chemical weapons for use by the armed forces.
The MINISTER of STATE, MINISTRY of DEFENCE (Lord Strathcona and Mount Royal): My Lords, what we are considering is the Soviet chemical warfare threat and our ability to meet it. The United Kingdom already occupies a leading position in the field of defensive equipment designed to withstand a chemical warfare attack. We have no plans for acquiring an offensive capability, but it would be wrong for the West to ignore the massive Soviet stocks of chemical weapons and the issues these raise.
Lord BROCKWAY: My Lords, I thank the Minister for that reply. Is not this a little precipitate and a little insensitive to international discussions which are taking place in two spheres? Is it not the case that at this moment discussions are taking place between the powers to make chemical weapons outlawed, just as biological weapons have already been outlawed? Is it not the case that the Geneva Committee, set up by the United Nations with the support of all Governments, including our own, is considering this very question?
Lord STRATHCONA and MOUNT ROYAL: My Lords, to use the noble Lord's word, I do not think that it is a little "precipitate". We continue to believe that with chemical weapons the proper thing to do is to outlaw them
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altogether. But in order to make that credible, we must have a credible system of verification. It is even more difficult in the case of chemical weapons to have a credible system of verification than it is for nuclear weapons. So we believe that we have to live in the real world where the Soviet Union has a capability which the West does not possess.
Lord SHINWELL: My Lords, if we decide not to proceed with the development of chemical weapons, is there any indication that the Soviet Union would follow suit? Further, can the noble Lord say whether the subject has been dealt with by the NATO countries, either collectively or individually, and with what result?
Lord STRATHCONA and MOUNT ROYAL: My Lords, I do not know the exact formal position relating to the second part of the noble Lord's question, but certainly negotiations are taking place. However, I think that I had better write to him, because he asked a very specific question which requires a fully accurate answer. I am not sure whether it is NATO as NATO which is carrying out the negotiations. Unquestionably, negotiations are underway. Dealing with the first part of his question, I am grateful for it because of its implications. The plain fact is that we do not have this capability, and the Soviet Union has it, and has shown no signs whatever of giving it up. If anything, if I may say so, I think that it has shown the reverse.
Lord HALE: My Lords, in a reply by the Under-Secretary of State for the Royal Navy in another place on 7th February to an Adjournment Motion on this question, he said that this Government were signatory to the Geneva Treaty of 1925. After a dissertation on the various forms of poison gases that have been used, or could be used, in warfare—and we can remember sufferers from mustard gas—he went on, in a very fair statement, to suggest that the matter was fully under consideration at this moment. Indeed, the latest American gas—the nerve gas—was said to be much more lethal than anything that had been discussed up to then.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am not wholly clear what question the noble Lord is

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asking me. I cannot believe that my right honourable friend gave any indication that we had a capability, because that is not the case. Undoubtedly, it is true that the Americans did have some chemical weapons some years ago, but these are now very old. The plain fact is that the West has nothing comparable to the capability possessed by the Soviet Union at the present time.
Earl CATHCART: My Lords, will my noble friend not agree that the original Question would have been much more appropriate if it had also inquired about our ability to improve not only our defensive equipment but the training of our troops in defensive effects against chemical warfare, to counter the ever-increasing offensive capability of the Soviet forces?
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am grateful to my noble friend. The fact is that among NATO forces the British forces probably have the best defensive equipment of all our allies. But, equally, the fact remains that given a battlefield situation, if we are threatened by an enemy who has a chemical-warfare attack capability and we have to take precautions—such as shutting down all our vehicles or wearing what are affectionately known as "Noddy" suits—then we are operating at a disadvantage from there on in if the enemy does not feel so threatened and does not have to dress up and shutdown in a similar manner.
Lord BALOGH: My Lords, is it not the case that reports that the Soviets used chemical warfare in Afghanistan were proven premature?
Lord STRATHCONA and MOUNT ROYAL: My Lords, obviously I have seen those reports, but I cannot make any comment upon them.
Lord PARGITER: My Lords, is it the intention of Her Majesty's Government to proceed in isolation on this matter, or only in conjunction with our allies?
Lord STRATHCONA and MOUNT ROYAL: My Lords, we should certainly wish to consult our allies before we proceeded in any very positive manner on this issue.
Lord BROCKWAY: My Lords, although I recognise the great difficulties about verification, because chemical weapons can be produced under cover so easily, is that not also true of biological weapons, which we have agreed to outlaw? When charges are made against the Soviet Union, are they not obviously sometimes exaggerated? Has the noble Lord seen the report by the correspondent in The Times—although it may be the Guardian, because I read both newspapers—that there is no evidence whatever for the charge by the United States that poison gas has been used in Afghanistan? Therefore, we must be careful about these charges.
Lord STRATHCONA and MOUNT ROYAL: My Lords, obviously we shall be cautious in assessing any reports which appear in the Press or elsewhere. I have already said that I cannot comment in an authoritative manner on the reports that there have been so far. But the fact is that at the present time Soviet Russia possesses this capability in considerable detail and down to quite a low level in its forces. There is no dispute about this question. It is manifestly a very unsatisfactory situation for the West to find itself in, when a potential enemy possesses a capability in which we are totally lacking. I agree with the noble Lord that, naturally, we would wish them to give it up, but we have not in any way threatened them. All we have done is to take defensive measures against a capability which the Soviet Union possesses; and it has shown no signs whatever of wishing to do the same.
Lord GISBOROUGH: My Lords, is the noble Lord aware that in the same article that has just been quoted it was stated fairly authoritatively that, while poison gas was not used, debilitating gas was used, and while this gas was used the people it was used against were unable to defend themselves?
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am sure that the House will be grateful for that further information, but again I cannot comment upon it.
Lord GORONWY-ROBERTS: My Lords, will the Minister tell us what is the status of the British draft treaty to

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ban chemical warfare and chemical weapons? Does he recall that this having been put to the Geneva Disarmament Committee—CCD as it then was—it was then taken up by the two super powers, the United States and the Soviet Union, with a view to their coming to basic agreement and then bringing it back to the Geneva Committee? What has happened since, because the rest of that committee, representing the world, is waiting for the two super powers to do something about a perfectly workable draft treaty?
Lord STRATHCONA and MOUNT ROYAL: My Lords, the noble Lord will of course remember the situation which took place when the last Government were in office. In 1976 the United Kingdom tabled a draft text in the Committee on Disarmament which was intended to assist in negotiations to proscribe, not just the use in war of chemical weapons but also their very possession. We have supported the bilateral negotiations between the Soviet Union and the United States, and we shall be playing an active part in discussions in a working group on chemical warfare which is currently being formed in the Geneva Committee on Disarmament.

NHS STAFF: CLEGG RECOMMENDATIONS
3.12 p.m.
Baroness MASHAM of ILTON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are aware of the considerable concern, indignation and frustration of physiotherapists and speech therapists as a result of the recommendations of the Clegg Committee on their rates of pay and conditions of service.
Lord CULLEN of ASHBOURNE: My Lords, the Government are well aware of the strong reactions of the NHS staff concerned to certain aspects of the Clegg Report on the Professions Supplementary to Medicine Pay Group. How-
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ever, full agreement on the basis of implementation of the Clegg award was reached yesterday within the Professional and Technical 'A' Whitley Council, which is the negotiating body for these professions. Fresh discussions will begin on 15th May within the Whitley Council on the further pay settlement due to this group for the current year.
Baroness MASHAM of ILTON: My Lords, I thank the Minister for that reply. Would he not agree that this is only part of the problem? Can he give an assurance that the status of physiotherapists and speech therapists and others will not be diminished by this unfortunate report? Does he agree that rehabilitation services could be damaged in the National Health Service if morale is low among therapists?
Lord CULLEN of ASHBOURNE: My Lords, the noble Baroness and I, certainly, are well aware of the magnificent job which these professions do. Only yesterday I received a letter from my noble friend Lord Rankeillour, who, as some of your Lordships may know, recently had a serious accident, to say what wonderful work the physiotherapists were doing both in Inverness and Fort William in giving him remedial treatment.
Lord BYERS: My Lords, may I ask the noble Lord whether he is aware that what has really offended the occupational therapists, for whom I speak, and other professions for whom the noble Baroness speaks, is the total lack of appreciation in this report of the magnificent contribution which these professions make to the rehabilitation of very serious cases of injury and handicap? May I ask the noble Lord whether the Government will recognise this as a pretty shoddy piece of workmanship on the part of Clegg?
Lord CULLEN of ASHBOURNE: My Lords, I do not think that I should really comment on the Clegg Report. As the House will know, the terms of reference were agreed by the Whitley Council and the last Government. The last Government agreed to accept the findings of the report, and there was really nothing we could do other than to agree.
The Earl of HALSBURY: My Lords, does the noble Lord recall how, only five years ago, the Whitley Council system having broken down, two bodies under my chairmanship managed to bring order out of chaos and align all these salaries with one another to the satisfaction of everyone, and that the consequence of it being handled piecemeal ever after has been that it has got back into the mess it was in? Have the Government any proposals for reimposing unity through a unified command over this structure?
Lord CULLEN of ASHBOURNE: My Lords, the whole House will know of the part the noble Earl played in these negotiations years ago. Certainly what he has said will be looked at with interest by my right honourable friend.
Lord ROSS of MARNOCK: My Lords, will the noble Lord appreciate that there has been a continuing concern? The hopes of the professions supplementary to medicine were raised, thinking that Professor Clegg would produce some long-term solution to the question of their status and relationship to other professions within the medical field. Will he not be deceived by the fact that they are reasonable people? They have agreed to co-operate so far as is possible, but further negotiations are continuing into the next pay round, and it really is not satisfactory that the situation for these people should carry on like this year after year.
Lord CULLEN of ASHBOURNE: My Lords, I do not quite know how to reply to that. What the future will be I am unable to say, but I am well aware of the dissatisfaction that has been created in many quarters by some of the Clegg findings. I do know that the future is under consideration and that there may be some changes.
Lord AUCKLAND: My Lords, has my noble friend's attention been drawn to paragraph 47 of the report, which seems to imply that physiotherapists need no special training and no special skills even although, as my noble friend will be aware, they have to undergo three years of training for which many of them receive no pay? Will he convey to his right honourable friend the disgust
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which many people in this House and elsewhere will feel at what is a slur on a distinguished and hard-working profession? Will he ask the usual channels whether the question of a much fuller debate on this vital matter can be taken up?
Lord CULLEN of ASHBOURNE: My Lords, I shall certainly pass on to my right honourable friend what the noble Lord has said. If he wishes to suggest that we have a debate on this subject, I have no doubt that he will put the suggestion forward and it will be considered.

THE BRITISH EMBASSY CLUB, WARSAW
3.17 p.m.
Lord WHADDON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how much they expect to save in a full year from the closure of catering facilities at the British Embassy Club in Warsaw.
Lord TREFGARNE: My Lords, the only saving accruing to Her Majesty's Government as a result of this change is a modest reduction in the cost of utilities, for example electricity. Unfortunately, the cost of preparing this Answer has now dissipated the saving.
Lord WHADDON: My Lords, is the noble Lord aware of the extensive use of the facilities which has been made over many years by British exporters in Poland? Can he tell the House what discussions were held with those commercial interests before this important saving was effected?
Lord TREFGARNE: My Lords, "frequent use" hardly describes the use that was made of these facilities. The club has recently been running at a net loss on account of a falling off in demand for its cooked meals, and the committee therefore decided to withdraw facilities for these after 31st March last.

TANKS: DESIGN COLLABORATION IN NATO
3.19 p.m.
Lord GISBOROUGH: 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 are the prospects of the next generation of main battle tanks being based on a collaborative project with our NATO allies.
Lord STRATHCONA and MOUNT ROYAL: My Lords, it has not proved possible to collaborate with any of our NATO allies on the design of a complete tank. We are however keeping in close touch with their plans and we shall take these fully into account when making decisions on future main battle tanks.
Lord GISBOROUGH: My Lords, I thank the noble Lord for that Answer. Can he say whether the Government will take this present opportunity to introduce the Challenger, and with it the policy, as is carried out by America and Germany, of replacing half the tank fleet every so often, rather than the whole of it every 20 years or so?
Lord STRATHCONA and MOUNT ROYAL: My Lords, those two propositions are not necessarily one and the same. The possibility of introducing a new tank has of course arisen as a result of the cancellation of the Persian order for the tanks which were specially designed for use by the Persians. In the light of the growing threat from the Warsaw Pact countries, we are considering the possibility of strengthening our existing armoured capability, and the purchase of additional and replacement tanks is under consideration at the present time. These might well be, and indeed probably will be, modified versions of the so-called Shir II tank. The prospect of having a quarter fleet or a half fleet is one of the issues currently being discussed, and the noble Lord is perfectly right: there are attractions in going for the half fleet replacement policy.
Lord PEART: My Lords, the noble Lord discussed this matter yesterday in a
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debate on supplies and weaponry. I think that the main point which should be emphasised is that we must co-operate fully with our NATO allies.
Lord STRATHCONA and MOUNT ROYAL: That is perfectly true, my Lords, and I very much wish to do more than pay lip service to that; we have tried very hard. With regard to the particular issue of tanks, it has perhaps the worst track record of any attempt at collaboration among any that I can think of, in that we spent seven years trying to work out a collaborative venture, with the result that our new replacement main battle tank is now too far ahead in front of us for comfort.
Earl CATHCART: My Lords, following on the question of the noble Lord the Leader of the Opposition, might not our prospects of a common project in NATO for this type of weapon be improved if we were to include in the pool all types of armoured vehicles, such as armoured reconnaissance vehicles, armoured cars, and armoured personnel vehicles? Perhaps we might get one of these if we did it that way.
Lord STRATHCONA and MOUNT ROYAL: My Lords, with the greatest respect to my noble friend, I rather doubt it. The technology involved in armoured fighting vehicles and in armoured personnel carriers is of a very different level from that in main battle tanks. The package idea of one nation concentrating on a particular area is being explored for guided missiles, for example. But so far as main battle tanks are concerned, I think that probably the best prospect for collaboration is to try to pick out various parts of the tanks, such as the gun, or the turret, or the engine, or the transmission, or the suspension unit. This is the line which looks most promising at present.
Lord SHINWELL: My Lords, is the noble Lord aware that while recognisant of the problems associated with the subject of standardisation, I wonder whether this would not be a useful opportunity, when we are proposing either the construction of a new battle tank, or a modification of the existing tank, to seek co-operation with NATO in general, collectively, or with some of the individual countries?
Lord STRATHCONA and MOUNT ROYAL: My Lords, that co-operation has been sought, and is actively being sought. It has been sought for seven years, but so far not successfully. However, we, like many of our allies, remain undeterred by this lack of success so far, and we are at present continuing with our allies a very active exploration of the possibilities, despite the disappointments in the past.
Lord DUNCAN-SANDYS: My Lords, following upon the question of the noble Lord, Lord Shinwell, may I ask whether the Minister agrees that it is really highly disgraceful and frustrating that after so much lip service has been paid to the principle of standardisation, of inter-operability, so little progress has been made? Will Her Majesty's Government consider really giving a lead to the other countries in NATO, to work out a longterm policy? The Question refers to the next generation of tanks, but it may well be the next generation but one that we must consider, since research and development start a long time ahead. We really must make up our minds to press our allies to work out a long-term programme which will cover not only tanks but, as has been said, the whole range of weapons required for the Alliance.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I can assure the noble Lord that the political will exists to achieve that aim, and I dare say that I am not the first Minister to have arrived in the department and said that it appears to be an affront that we have had so little success. The fact remains that the political will is strong, but some of the industrial lobbies so far have proved stronger.

SAUDI ARABIA
3.25 p.m.
Lord GORONWY-ROBERTS: My Lords, I beg leave to ask the Foreign Secretary the Question of which I have given Private Notice to him, relating to our relations with Saudi Arabia.
The SECRETARY of STATE for FOREIGN and COMMONWEALTH AFFAIRS (Lord Carrington): My
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Lords, Her Majesty's Ambassador has been asked to leave by the Saudi authorities, as a direct result of the damage caused to the relationship between our two Governments by the film "Death of a Princess", which was shown by ATV on 9th April. It might be helpful to your Lordships for me to set out the course of events which led to the Saudi request that our Ambassador should return home.
On 3rd April, the Saudi Foreign Minister summoned our chargé d'affaires in Jeddah to tell him of his Government's concern about the film and to warn of the very serious consequences which could ensue for our relations. In the light of this message, our Ambassador, Mr. James Craig, was recalled from leave, and he returned to Saudi Arabia with messages from the Lord Privy Seal and myself. We stressed that the British Government would regret it deeply if our close relations with the Kingdom were damaged by an event for which neither Government was responsible. I should like to take this opportunity to reiterate that expression of regret.
After the film was shown there was considerable Press comment, and the Saudi Embassy in London issued a statement which was highly critical of the film and ATV. There has been widespread protest from all over the Arab and Muslim worlds, and attention has been focussed on plans to show the film in other Western countries. Yesterday the Saudi Foreign Minister told our Ambassador that his Government had re-evaluated Anglo-Saudi relations, and decided that it was not proper to maintain them at their present level. They would therefore not proceed with the despatch of their Ambassador Designate to London, and they would have to ask our Ambassador to leave for the time being. The Saudi authorities have also made it clear that a visit by the Select Committee on Foreign Affairs, which had been planned for 30th April, would no longer be appropriate, and other high level visits have been cancelled.
I should like to stress once again that the Government attach a very great importance to our relations with Saudi Arabia, and we regret that they should have been damaged in this way by an incident outside our control. We have a

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close political and economic relationship, from which we both benefit. There is a community of about 30,000 British people working in Saudi Arabia. We share a common concern that the vital Gulf area should develop in stability and peace without interference from outside powers. In view of present external threats to the area, we should be drawing closer, not drifting apart.
The Government hope, and believe, that with good will on both sides the present misunderstanding can be overcome and the normal course of relations resumed. The wide range of bilateral contacts will not be interrupted on our side, and I hope British citizens working in Saudi Arabia, and British business visitors, will not be deterred by these events. We wish to see the minimum disruption in our relations and a speedy return to the friendship which has characterised them in the past.
Lord GORONWY-ROBERTS: My Lords, in thanking the noble Lord for making that Statement, may I ask whether he will continue to assure the Royal House and the people of the Kingdom of Saudi Arabia of the widespread and genuine understanding and respect there is in this country at this time for Saudi Arabian feelings, and that we very greatly value the long-standing friendship between our two countries, tested in peace and in war? It is a friendship which has brought considerable political and economic benefit to both countries, as the noble Lord reminded us. Will the noble Lord also assure Saudi Arabia that we greatly hope that our relationship will very soon be fully restored, so that our two countries may continue together to do everything in our power to ensure the stability and the security of the Middle and Near East, particularly the Gulf area?
Lord WIGODER: My Lords, would the noble Lord the Foreign Secretary not agree that in this extremely unhappy situation the matter is perhaps best left to diplomatic channels and that public debate is unlikely to serve any very constructive purpose? Would the noble Lord also not agree that this is not the first time in recent months that very serious misunderstandings have arisen as a result of the tendency of some television
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companies to present programmes which are deliberately designed to give the impression of being documentary programmes based on fact, whereas the reality is that in substance they are no more than fictional reconstructions?
Lord CARRINGTON: My Lords, I readily give the assurance that the noble Lord, Lord Goronwy-Roberts, asked me to give. Of course we shall continue to do that; and I agree very much with what he said in the latter part of his remarks. I agree, too, with the noble Lord who has just spoken from the Liberal Benches. I hope that, on the whole, the less said the soonest mended, because we have made our position abundantly plain to the Saudi Arabian Government. With regard to the second question which he raised, I think that in the light of what has happened and in the light of the previous examples which the noble Lord has quoted, it might be as well for those who are producing these programmes to have a good look at the consequences of what they are doing.
Lord BOOTHBY: My Lords, may I ask the noble Lord whether he is aware that if the late Lord Reith had still been in charge of radio and television in this country nobody would have dared even to mention, still less to show him, the film Death of a Princess? Does he not think, in all the circumstances, that there is something to be said for looking for somebody similar to him, preferably a Scotsman, of whom there are plenty, who could be relied upon to discharge his duties at a time of international crisis with the responsibility with which Lord Reith discharged them, without any necessity for Government legislation?
Lord CARRINGTON: My Lords, I have no doubt that what the noble Lord says is true, that if Lord Reith had been there it would not have happened, but my imagination does not go so far as to think of Lord Reith as chairman of a commercial television station.
Lord JACQUES: My Lords, in view of the changes in the media over the last decade or so, has the time not come that, when you have a film which is so against our national interest, its display should be prohibited by a Resolution of the House of Commons, confirmed by this House?
Lord CARRINGTON: My Lords, I think we have got to be very careful in what we do about the freedom of expression in this country.
Lord HANKEY: My Lords, may we at least ask the Government to consider informing any others who may wish to produce films of this sort, which may very well be even worse, of the consequences of their action, in the hope that they will thereby be dissuaded from producing them?
Lord CARRINGTON: My Lords, I am confident that television producers read the newspapers.
Lord BOYD-CARPENTER: My Lords, have Her Majesty's Government or the Government of Saudi Arabia received any expression of regret from the television company concerned?
Lord CARRINGTON: No, my Lords.
Lord TAYLOR of BLACKBURN: My Lords, in view of what has gone on I think we would be stupid to go on discussing this. I intervened yesterday in another debate, and the Foreign Secretary said certain things about my intervention; but I think it would be stupid for us to carry on in this way. I think we should leave it with the people who are discussing it at the present time, rather than go on in this way.
Lord PARGITER: My Lords, may I finally ask the Foreign Secretary whether or not representations will be made to the company to suggest that the film should not be shown in any other countries, thus not to harm relations further than has already happened?
Lord CARRINGTON: My Lords, I do not think it is the business of Her Majesty's Government to decide what should be done in other countries.
Lord ARDWICK: My Lords, is the noble Lord aware that not all of us on this side of the House stand for the kind of censorship which has been suggested? On the other hand, those of us who are veterans of the media deplore a modern tendency towards what is called "faction"; that is, towards the treatment of fact as if it were fictional.
Lord CARRINGTON: My Lords, if I may say so, that seems to be a nicely balanced supplementary with which we can all go along.
The Earl of ONSLOW: My Lords, would not Richard III have objected just as much to Shakespeare's treatment of him?
The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers): My Lords, your Lordships may consider that, important though this subject is, it might be more appropriate if we moved on to the next business.

COUNCIL OF MINISTERS (AGRICULTURE) MEETING
Lord SANDYS: My Lords, with the leave of the House, at a convenient moment after 4 p.m. my noble friend Lord Ferrers will repeat a Statement being made in another place on the Council of Agricultural Ministers.

BRITISH AEROSPACE BILL
3.36 p.m.
Read 3a, with the amendments.
Clause 1 [Vesting of property, etc., of British Aerospace in a company nominated by the Secretary of State]:
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 1:
Page 3, line 13, at end insert—
("; and
(c) any reference in this Act to obligations shall also include the obligation to formulate at regular intervals programmes of research and development in relation to aircraft and all aerospace activities and to exploit as far as is practicable and subject to such security conditions as are applicable the results of such research and development for the benefit of the economy of the United Kingdom.").
The noble Lord said: My Lords, I beg to move Amendment No. 1, which stands in my name and that of the noble Lord, Lord Wynne-Jones, and with the leave of the House I should like to speak to the related amendments, Nos. 3, 4 and 5. When I discussed the scope of this amendment with Lord Wynne-Jones a couple of days ago, it was agreed that he would

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present this amendment to your Lordships. I am sure your Lordships will be unhappy to know that he is unwell and so is unable to repeat the persuasive speech he made at Report stage, that an amendment on these lines should be included in this aerospace Bill.
The main object of this amendment is to try as far as possible to ensure that we have an efficient, active aerospace industry in this country, having regard to the action proposed by the Government that there should be the sale of shares in the aerospace organisation, which at present has been doing so well. In my view, and in the view of the noble Lord, Lord Wynne-Jones, and many others, the industry could so easily become a second-grade industry in this country. Lord Wynne-Jones eloquently explained at Report stage that the industry could easily become an industry acting merely as a supplier to other countries. Of course, it is not for a moment the intention of the Government that the sale of the assets of this organisation should lead to that position. The Minister dealing with the matter at Report stage said it was unthinkable that this organisation, once sold, would not carry on great research in the aerospace field.
We have had for years an aerospace industry of which we have been proud; and, with the leave of the House, perhaps I may repeat what Lord Wynne-Jones said on 14th April, at Report stage. At col. 41 he said:
"It has been the triumph of our British aerospace industry that they have carried out research on a very large scale, and much of this has been financed by Government. In regard to military aircraft a large amount of the expenditure comes from Government. We do not know how much because these details are never fully divulged. But in the civil field as well a very large amount of the cost of research has been borne by Government";
and then he gave instances of famous inventions and developments of which we are proud.
When commercial aspects are introduced into the composition of an institution such as the one we are discussing in this aerospace Bill, factors must arise which we cannot predicate for the future. We in this country have had a magnificent history in regard to aerospace developments. I do not want to go on in detail
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about it, but with Sir Frank Whittle's ideas the whole aricraft industry was revolutionised by jet propulsion. There were the great inventions of that pioneer company, De Havilland; and the development of the Comet after the war—and I am delighted to see in this place the noble Lord, Lord Kings Norton, who has made so great a contribution to aeronautical research and development in this country. It was largely because of the efforts of the noble Lord, Lord Brabazon, that the Cornet became a first-class aircraft—a little too early. Then we had the tragedy of the smash-up of three Comets.
What happened? After those Cornet disasters there had to be an inquiry into this great jet aircraft. I remember clearly the noble and learned Lord, Lord Cohen, who was the chairman of that commission, and also the Attorney-General at that inquiry, Sir Lionel Heald (one of the greatest patent lawyers of the century) expressing anxiety that the result of the inquiry would mean the disclosure to foreign countries, and particularly to the American countries, of the secrets and know-how associated with that great aircraft which, however, had failed so disastrously. Lord Shawcross, as he now is, was counsel for the De Havilland Company, and I had the privilege of appearing for a large complex then known as AEI. At that inquiry a large amount of confidential information had to be disclosed and was caught up by the American manufacturers who produced their version of the Cornet.
Against that background of success and history, I move this amendment which says:
"any reference in this Act to obligations [to be assumed by the successor corporation to the present aerospace institution] shall also include the obligation to formulate at regular intervals programmes of research and development in relation to aircraft and all aerospace activities and to exploit as far as is practicable and subject to such security conditions as are applicable the results of such research and development for the benefit of the economy of the United Kingdom".
I have in my hand the latest British Aerospace News and I should like to congratulate Dr. Austin Pearce on becoming chairman of one of the largest aerospace companies in the world. He says: "Of course, we will design things for the aerospace industry". He is then quoted as saying:

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"Whatever happens in the future with regard to share ownership, the group which designs, manufactures and sells our aircraft and missiles is to be kept together and have the job of producing the competitive products which the customer wants to buy".
Dr. Pearce is at this stage, no doubt, deciding to continue with the research and development associated with the past history of this successful organisation. Therefore, if the Ministry says that it is unthinkable that there should be any change in this attitude, then I am sure they would not wish to oppose this amendment, which merely inserts this further obligation that programmes for research should he prepared and submitted at regular intervals.
When the noble Lord, Lord Wynne-Jones, proposed an amendment at the Report stage of the Bill, he introduced it in relation to the form of the memorandum and articles of association of the company which is now to be formed. The Minister pointed out that there would be no authority whatever by merely amending the memorandum and articles of association. After discussion with Lord Wynne-Jones, we prepared this amendment which would put into Clause 1 of the Bill a further obligation about formulating research programmes at regular intervals.
In my submission this is an important amendment which could be of great assistance to the economy of this country. Its form may be capable of improvement, but the basic theme of the amendment seems to me to be of great consequence to the aircraft industry of this country. I beg to move.
Lord BALFOUR of INCHRYE: My Lords, may I ask the mover of the amendment to clarify one point? As I read the amendment, it has two purposes: first, that a programme of research and development should be formulated and be made known; and, secondly, that the results of that research and development, subject, rightly, to security, should be made known. But, surely, mere formulation of a programme of research and development may contain such security items as should not be made known. Surely, the same security that the amendment throws over making known the results should cover also the making known of the research programmes, as well.
Lord LLOYD of KILGERRAN: My Lords, I am obliged to the noble Lord, Lord Balfour, for raising this point. With his great experience of this matter, he realises the problems of administration and security that may arise. But, with respect, it seems to me that this amendment puts an obligation that they should formulate at regular intervals programmes of research but always subject to security restrictions.
Lord CULLEN of ASHBOURNE: My Lords, if I may remind the House, the noble Lord is not entitled to speak again without asking leave of the House.
Lord BALFOUR of INCHRYE: My Lords, I am grateful to the mover for making this clear.
3.46 p.m.
Lord TREFGARNE: My Lords, may I remind the House that this is a Third Reading debate and that, unlike when we are in Committee, when we have more freedom, we are therefore required to speak only once upon each amendment. With the two substantive amendments in this group—the one to Clause 1 and the new clause—we return to a subject which has been discussed by your Lordships on two previous occasions at least during the Committee and Report stages. I believe it came up at Second Reading as well. The noble Lord, Lord Wynne Jones—and I am sorry that he is not well and is unable to be with us—moved a new clause on Report similar to the one now before the House, and on that occasion your Lordships chose to reject the amendment. I mention those two previous debates to make the point that your Lordships have already devoted a not inconsiderable amount of time to the subject of these amendments and have expressed an opinion on the principle at issue.
I understand the interest that the noble Lord, Lord Wynne-Jones, has in research and development in the aerospace industry, and I also appreciate the interest shown by the noble Lord, Lord Lloyd of Kilgerran. As your Lordships may know, I, too, have an interest in aircraft and in flying. May I therefore say that I share the wish of the noble Lords, Lord Wynne-Jones and Lord Lloyd of Kilgerran, to see a strong and healthy aerospace indus-

899
try in this country, and one which has a vigorous and forward-looking programme of research and development. But that, I fear, is the limit of the common ground between us on this matter.
The amendments which the noble Lord has moved seek to impose statutory duties upon the successor company. At the moment, as your Lordships will be aware, the only duty imposed by the Bill on the successor company is that contained in Clause 10 relating to the vesting in itself of the undertaking. This duty is a purely administrative one to ensure that any small tasks of tidying up that are required following vesting are achieved satisfactorily. But that is all it is; it does not amount to a duty that dictates how the successor company should run the business itself. Indeed, the Bill does not contain any provisions of that kind, and your Lordships are aware that this is the deliberate policy of the Government.
While there will be complete continuity between the statutory corporation and the successor company in so far as the business, workforce and management are concerned, there will be a complete break between the former nationalised industry status of the corporation and the Companies Act status of the company. I have, on a previous occasion, explained to the House that the major difference will be that, whereas the statutory corporation has specific duties to perform and was subject to control by Government, the company will be free to follow its commercial interests subject only to the general law and to the provisions of its memorandum and articles of association. It is no part of the Government's policy that the company should be dictated to on the way in which it should conduct its business.
We therefore do not accept the philosophy of imposing on the company a duty to formulate a research and development programme. I must make this point of principal crystal clear. But equally I must make clear that the Government believe the amendments are both unnecessary and ineffective. They are unnecessary because the best possible guarantee already exists to require the company actually to perform research and development. I refer of course to the commercial reality that compels any business devoted to new
900
projects to do research and development. It is this—not some statutory duty—that compels companies like BP, ICI, Racal and Plessey to carry out such programmes, and the same will apply to British Aerospace Limited. How else would a company whose business lies in the development of new aircraft—both civil and military—of new missiles, and of new weapon systems survive?
To believe the idea that British Aerospace—already spending in one year £1·27 million on research and a further £39·1 million on launching costs—will cease to do research without the stimulus of a statutory duty is to live in Cloud Cuckoo-land. I have argued that the amendments are unnecessary. I must also point out that they would be ineffective in obtaining what the noble Lord, Lord Lloyd of Kilgerran, and the Government both seek; namely, a company carrying out research and development on a scale appropriate for the new company. The amendments would require no more than the formulation of programmes, and the exploitation of their results. It would be open to the company to formulate minimal programmes—small expenditure, few qualified technologists, restricted facilities.
I am confident this will not happen, but I wish to point out merely that it could happen under the terms of these amendments. The safeguard against this lies not in legislation, but in the underlying reality of the industry and the business. The safeguard in legislation proposed by the noble Lord would be a paper requirement. I must tell your Lordships that the Government are opposed to such cosmetic devices, which obscure, but add nothing to, the real demands on the future company. I hope that the noble Lord will not press his amendment.
3.55 p.m.
Lord PONSONBY of SHULBREDE: My Lords, I should like to support the amendment as moved by the noble Lord, Lord Lloyd of Kilgerran. I am very sorry that because of poor health my noble friend Lord Wynne-Jones is unable to be with us today. The amendment, as it stands, is an eminently sensible one and the fact that the Government have resisted it—as they have resisted previous amendments to this Bill—points to one of

901
the great difficulties which we have had throughout our debates on this Bill: the unwillingness of the Government to include in the Bill anything other than the setting up of the skeleton of the new company, and being unwilling to include in the Bill additional duties for the company.
It is clear, as has already been said, that both the noble Lord, Lord Wynne-Jones, and the noble Lord, Lord Trefgarne, at an earlier stage of this Bill agreed that it would be fatal to the company if programmes of research and development were not carried out. This was accepted by the noble Lord, Lord Trefgarne. What is at issue here is whether this should be included within the Bill. Despite the remarks made by the noble Lord, Lord Trefgarne, this afternoon, my view is that it should still be included within the Bill.
Lord RENTON: My Lords, with respect to the noble Lord, Lord Ponsonby of Shulbrede, I would have said that one is bound to agree with my noble friend Lord Trefgarne that this amendment is unnecessary. It attempts to do two things: first, to insist that the successor company should formulate proposals. But it is unthinkable that the successor company could carry on without formulating proposals for research and development—quite unthinkable in the very nature of its obligations under this Bill. Therefore, to that extent the amendment is unnecessary.
Then it goes on to say that the successor company shall exploit so far as practicable the proposals that it has formulated. Having had to formulate proposals, it would be very strange if it did not attempt to exploit them. Therefore, one has to consider the effect of the words "so far as practicable". I think it necessarily follows that those words must mean "if they have the money available". The only thing about which I am uncertain is whether they themselves will he the sole raisers and providers of money. If they are to get the money from the market or to be self-financing by charging the consumer for whatever it is they may be selling, then they alone command the situation and will know what is practicable. But because of the enormous cost and the national interest involved in research and development, they may have to go to the
902
Treasury, which they will also have power to do. Therefore, it would appear that these words "so far as practicable" merely relate to financial circumstances which are in themselves inherently plain in the situation in which the successor company will find itself. Therefore I feel obliged to support my noble friend on this matter.
Lord LLOYD of KILGERRAN: My Lords, I am sure that your Lordships will agree that we are fortunate this afternoon to have had as a Minister dealing with this matter the noble Lord, Lord Trefgarne, with his great experience in aeronautic matters. May I say how surprised I am that he should say of me that in regard to this matter I am living in Cloud Cuckoo-land. This is the first time that charming phrase has been directed to anything that I have been doing professionally. Therefore, at least it is a unique occasion for me. He used extreme language and, with great respect, he was very positive in reading his brief, and the emphasis that he gave to certain aspects indicates quite clearly to me that he himself may not be in conformity with the brief.
He says that the Government desire a complete break between nationalised industry and its successor. He said that the Government wish this successor to follow its commercial interests. Those who have had anything to do with commercial interests in scientific matters, in know-how and patents and that field of realistic commercial activities for the creation of wealth, know how commercial interests can be modified.
I am grateful to the noble Lord, Lord Renton, for his intervention. He was quite right when he referred to that aspect of my amendment which refers to whether it is practicable and also in relation to the money available. Of course, with this great industry in the hands of some commercial enterprise, the question of money and development will he of great importance, but what again would be of great importance is the question: where are they to get that money? In my submission, the successor company, the new commercial company, could so divide its interests after a period of years—because I am not talking about the immediate future—that other foreign countries, with their large billions of dollars and perhaps of marks available to them, would

903
come over here and buy up aspects of this company. If that happened, this country would lose the great aerospace industry of which we have boasted and of which we are so proud.
The noble Lord, Lord Renton, is probably quite right in his support of the noble Lord, Lord Trefgarne, in the short term but we here, in my view, must look at the long term. Therefore this obligation which is introduced is to me of very great importance for the future.
Again, the noble Lord the Minister has mentioned the word "unthinkable". He also said something about the nature of the obligations under this Bill; and that my amendment was unnecessary. Such an argument is totally unfounded because there are no obligations in the Bill at the present time for the commercial successor to the nationalised industry to proceed with aerospace research. He says it is "unthinkable", having regard to the way the organisation is now constructed, that they will not continue in this way.
The noble Lord, Lord Renton, put his finger on the matter when he said that
the question of money will arise in the future; and money may lead to this aerospace commercial company becoming a sub-contractor or even a part of some foreign organisation, because there would be money available there which is not made available from sources in this country.
I am grateful to the noble Lord, Lord Ponsonby of Shulbrede, for his support and in these circumstances I am sure that your Lordships will realise that we are dealing with the transfer of assets in an industry of great importance to the economy of this country. It seems to me highly desirable that we should try to safeguard the future of the company by putting upon it an obligation to undertake research and development along the general lines I have indicated.
4.4 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 72; Not-Contents, 95.

CONTENTS

Airedale, L

Hall, V.

Ritchie-Calder, L.

Amherst, E.

Henderson, L.

Rochester, L.

Amulree, L.

Houghton of Sowerby, L.

Sainsbury, L.

Ardwick, L.

Hylton-Foster, B.

Sefton of Garston, L.

Aylestone, L.

Irving of Dartford, L.

Shinwell, L.

Banks, L.

Jacobson, L.

Snow, L.

Barrington, V.

Jacques, L.

Spens, L.

Birk, B.

Janner, L.

Stewart of Alvechurch, B.

Boston of Faversham, L.

Kaldor, L.

Stewart of Fulham, L.

Bourne, L.

Kearton, L.

Stone, L.

Brockway, L.

Kilbracken, L.

Strauss, L.

Bruce of Donington, L.

Leatherland, L.

Tanlaw, L.

Clancarty, E.

Listowel, E.

Underhill, L.

Cledwyn of Penrhos, L.

Llewelyn-Davies of Hastoe, B.

Wade, L.

Collison, L.

Lloyd of Hampstead, L.

Wallace of Coslany, L.

Cooper of Stockton Heath, L.

Lloyd of Kilgerran, L. [Teller.]

Wedderburn of Charlton, L.

David, B.

Lovell-Davis, L.

Wells-Pestell, L.

Elwyn-Jones, L.

McCarthy, L.

Whaddon, L.

Evans of Hungershall, L.

Mishcon, L.

White, B.

Fisher of Rednal, B.

Morris of Grasmere, L.

Wigoder, L.

Gaitskell, B.

Oram, L.

Wootton of Abinger, B.

Gordon-Walker, L.

Peart, L.

Goronwy-Roberts, L.

Piercy, L.

Gosford, E.

Ponsonby of Shulbrede, L. [Teller.]

Granville of Eye, L.

Hale, L.

Rathcreedan, L.

NOT-CONTENTS

Alexander of Tunis, E.

Bolton, L.

Crathorne, L.

Amory, V.

Buckinghamshire, E.

Cullen of Ashbourne, L.

Armstrong, L.

Campbell of Croy, L.

Daventry, V.

Balfour of Inchrye, L.

Cathcart, E.

De Freyne, L.

Bellwin, L.

Clwyd, L.

De La Warr, E.

Berkeley, B.

Cottesloe, L.

Drumalbyn, L.

Bessborough, E.

Craigavon, V.

Dulverton, L.

Ebbisham, L.

Kings Norton, L.

Redmayne, L.

Eccles, V.

Linlithgow, M.

Reigate, L.

Effingham, E.

Long, V.

Renton, L.

Elliot of Harwood, B.

Lothian, M.

Robbins, L.

Erne, E.

Lucas of Chilworth, L.

St. Aldwyn, E.

Ferrers, E.

Lyell, L. [Teller.]

St. Davids, V.

Fortescue, E.

Macleod of Borve, B.

St. Just, L.

Fraser of Kilmorack, L.

Macpherson of Drumochter, L.

Saint Oswald, L.

Gainford, L.

Malmesbury, E.

Sandys, L. [Teller.

Galloway, E.

Mancroft, L.

Sligo, M.

Gisborough, L.

Mansfield, E.

Stamp, L.

Glenarthur, L.

Marley, L.

Strathclyde, L.

Godber of Willington, L.

Massereene and Ferrard, V.

Strathcona and Mount Royal, L.

Gormanston, V.

Montagu of Beaulieu, L.

Strathspey, L.

Gridley, L.

Morris, L.

Swansea, L.

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

Mowbray and Stourton, L.

Swinton, E.

Murton of Lindisfarne, L.

Teviot, L.

Hankey, L.

Newall, L.

Trefgarne, L.

Harvington, L.

Norfolk, D.

Trenchard, V.

Hemphill, L.

Northchurch, B.

Trumpington, B.

Henley, L.

Nugent of Guildford, L.

Vaux of Harrowden, L.

Holderness, L.

Onslow, E.

Vivian, L.

Hornsby-Smith, B.

Orr-Ewing, L.

Wakefield of Kendal, L.

Jellicoe, E.

Pender, L.

Willoughby de Broke, L.

Killearn, L.

Polwarth, L.

Wise, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.12 p.m.
Clause 7 [Target investment limit for Government shareholding under sections 3 and 5]:
Lord PONSONBY of SHULBREDE Lord PONSONBY of SHULBREDE moved Amendment No. 2:
Page 7, line 21, leave out ("is reasonably practicable") and insert ("it is expedient to do so.").
The noble Lord said: My Lords, we now return to Amendment No. 2, which we discussed in a different form at Committee and Report stages. At Report stage, the noble Lord, Lord Cullen of Ashbourne, promised to look again at the final words of this clause. He has now written to me and I should like to take this opportunity of thanking him very much for his very full letter concerning the wording of this clause. I understand that copies of his letter have also gone to the noble Lords, Lord Lloyd of Kilgerran and Lord Robbins.
The question was when, and how quickly, the Secretary of State should have thrust upon him a duty to get rid of any surplus shareholding over the target investment limit. The parameter placed in the clause is that he should get rid of this holding "as soon … as is reasonably practicable". I attempted at the Committee stage to add that he should also
906
have regard to the price which he would obtain for his surplus shareholding. My argument did not meet with the favour of the Committee and at Report stage I used the terminology "as appropriate"; that is, that the Secretary of State would have to consider what was the appropriate time to get rid of his surplus shareholding. My amendment on this occasion would make the subsection read, "as soon … as it is expedient to do so".
The point here is that there seems to be a need for an element of flexibility. There should be two considerations which the Secretary of State should have in mind when he has to get rid of his surplus shareholding. The first is that he has to do it as soon as possible; but, secondly, he must not be rushed into doing it in such a way that he gets a lower price for the shares than he might otherwise do.
If I may read from the letter which I received from the noble Lord, Lord Cullen of Ashbourne, that states:
"I entirely agree with you that a degree of flexibility is essential and this is what the Bill's wording is intended to achieve, while not detracting from the Secretary of State's basic duty to comply with the target investment limit. The phrase 'as soon after that time as is reasonably practicable' was deliberately preferred to alternatives such as "as soon … as possible' because it allowed greater flexibility".
He went on to say:
"The limits of what is 'reasonably practicable' could only be decided in the light of the circumstances at the time. For example, the Secretary of State would be entitled to wait until the immediate effect on the price of the shares brought

907
about by the issue of new shares or the conversion of stock into shares had worn off; exactly how long this took could only be judged at the time".
Then he went on:
"Thus while, as I said at Committee stage, I doubt whether the delay would be more than a month, I cannot rule out the possibility. What the wording will not permit, however, is that the Secretary of State should hold on to his shares indefinitely in the hope that the factors which have nothing to do with the circumstances in which the target investment limit was exceeded might enable him to get a better price".
I am not seeking by this amendment to impose on the Secretary of State a duty to hold on to the surplus shares indefinitely. What I am seeking is an element of flexibility, so that he can also take this into account when disposing of the surplus shares. One could have a situation where British Aerospace with many overseas contracts, some of a particularly valuable nature, finds that because of changes in international circumstances the price of its shares suddenly drops. There may he a disturbance of some political character in the Middle East, which has the effect that a long-hoped-for order is lost and it may take some time for the situation to right itself.
Therefore, I should have thought there was no reason why the Government could not accept the new amendment which I have placed on the Marshalled List, which adds a degree of flexibility into the timing of the disposal which is not there at the present time, according to the explanation of the wording which the noble Lord, Lord Cullen of Ashbourne, gave at the Committee stage. If we are clear that the present wording allows a greater element of flexibility than appears to be the case from the previous explanation, then I shall certainly consider withdrawing this amendment. However, if the interpretation is as has been stated previously, then I shall press it. My Lords, I beg to move.
4.18 p.m.
Lord TREFGARNE: My Lords, during the Report stage of the Bill, the noble Lord, Lord Ponsonby, pressed my noble friend Lord Cullen to reconsider the wording of Clause 7(6), which provides that if the Government shareholding at any time exceeds the target investment limit, it shall be the duty of the Secretary of State to dispose of the excess shares "as soon after that time as is reasonably
908
practicable". We have looked at the matter carefully, but remain convinced that the present wording is the best that can be devised. My noble friend Lord Cullen wrote to the noble Lord explaining our reason for this conclusion, and I apologise if the letter arrived after the noble Lord had tabled the present amendment. There is nothing in this amendment which leads us to change our view about the present wording of the Bill being preferable. Indeed, rather the reverse, for I think that, together with the other versions suggested by the noble Lord, it illustrates the difficulties of alternative approaches.
I should like first to emphasise that the scale of the problem that we are talking about is very small. There are no circumstances in which the Government could be required to dispose urgently of a very large number of shares, which I think is what noble Lords are particularly concerned about. The subsection applies only where shares held by the Government, by virtue of the provisions of this Bill, exceed the target investment limit. This could arise only if the Government, as shareholder, had exercised a right open to them and to others to an extent that had not been matched by the others on, for example, a rights issue or the conversion of loan stock into equity.
Even on a rights issue, it is inconceivable in practice that a breach of the target investment limit could occur, since any issue would almost certainly be underwritten and all the shares would therefore be held by someone. It is more likely that a breach could occur as a result of a conversion of loan stock. To maintain a given proportion of shareholding, the Government might convert loan stock into equity on the assumption that all other holders of that stock would do the same. If some other holders did not convert, the target investment limit might be marginally exceeded, but I think your Lordships will agree that in these circumstances the excess Government shareholding would be only small.
There are circumstances in which the Government might wish to dispose of a larger number of shares or might find that their total holdings significantly exceeded the target investment limit, but such a case would not in practice be covered by Clause 7(6). The case most likely to occur is a Government decision, as a matter of

909
deliberate policy, that their initial proportionate shareholding, or some lower proportion that they subsequently reached, should be reduced. In this case, the Government would dispose of their shares first and would then consider whether to make a corresponding reduction in the target investment limit. They would not be compelled to do so. There would be no question of first lowering the limit and then selling. To do so would create a totally unnecessary difficulty, quite contrary to the Government's interests.
Secondly, it is conceivable that the Government's shareholding might increase well above the target investment limit if the company fell into financial difficulties and was given assistance by the Government's acquiring some of their equity under Section 8 of the Industry Act 1972. This would be the broad equivalent but not the precise equivalent of the way in which the Bank of England acquired shares in BP as a result of aiding Burmah—the example which the noble Lord, Lord Ponsonby of Shulbrede, referred to in his speech on Report. But in these circumstances the target investment limit would not bite. Under Clause 7(1) it is fixed in relation to the shares for the time being held in that company by the Secretary of State or his nominees by virtue of any provision of this Act. Shares acquired under any other Act do not count against the limit. Thus, the Secretary of State would be under no obligation to dispose of shares acquired under Section 8 of the Industry Act 1972, and if he subsequently chose to do so he could sell them in his own time.
Having tried to set out the context, I now turn to the drafting. I believe that the wording now proposed is open to the same objection as the version which the noble Lord put forward on Report. It holds open the possibility that the Secretary of State could delay the disposal of shares for so long as to frustrate the effectiveness of the target investment limit. It would introduce an element of doubt because it leaves open to interpretation what criteria could be taken to determine what is expedient. Indeed, it is not hard to imagine some Secretaries of State who might never find it expedient.
The Bill as it stands is clearly narrower since it lays down a single criterion— that of reasonable practicability—to guide
910
the Secretary of State in deciding when to dispose of shares in order to comply with the target investment limit. There is no dispute between us on the need for a degree of flexibility, and that is what the Bill's wording is intended to achieve. However, there must be no detraction from the Secretary of State's basic duty to comply with the target investment limit, which is the main purpose of Clause 7(6).
When we discussed this matter at Committee stage, my noble friend Lord Cullen of Ashbourne suggested that the Secretary of State might have up to a month in which to sell the excess shares after it had become clear that the target investment limit had been breached. This seems to me to be about the measure of it, but I must stress that the permissible period of delay must vary from case to case. The limits of what is "reasonably practicable" could be decided only in the light of the circumstances at the time. For example, the Secretary of State would be entitled to wait until the immediate effect on the price of the shares brought about by the issue of new shares or the conversion of stock into shares had worn off. Exactly how long this took could be judged only at the time. The timing could also be affected by minor factors such as public holidays. Thus, while, as my noble friend said at the Committee stage, I doubt whether the delay could be more than a. month, I cannot rule out the possibility. What the wording will not permit, however, is that the Secretary of State should hold on to his shares indefinitely in the hope that factors which have nothing to do with the circumstances in which the target investment limit was exceeded might enable him to get a better price. I am sure that this is right. To allow such flexibility would be contrary to the principle of the target investment limit.
In the light of what I have said, I hope your Lordships will agree that there is no question of the Secretary of State having to sell a large number of shares very quickly and that the present wording of Clause 7(6) gives sufficient flexibility for the small disposals that may be necessary. I hope that the noble Lord will not press his amendment.
4.27 p.m.
Lord ROBBINS: My Lords, I ought to say a word, having intervened at the

911
Report stage. I must confess that the letter from the noble Lord, Lord Cullen of Ashbourne, reached me only as I was leaving home. Although I perused it, I was not able to give it the attention that it deserved. Although the position is not ideal, in the light of the elucidations which have been given by the noble Lord, Lord Trefgarne, I personally would not feel inclined to go into the Lobby against it.
Lord LLOYD of KILGERRAN: My Lords, I am very grateful to the noble Lord, Lord Cullen of Ashbourne, for sending me this very long letter upon this highly technical matter. I am glad to hear that the Government are still agreeable that there should be a certain element of flexibility in the way that the noble Lord, Lord Ponsonby of Shulbrede, has indicated. Therefore, the question is whether the words "is reasonably practicable" give appropriate flexibility as compared with the words in this amendment: whether it is expedient so to do.
It seems to me that the word "practicability" is an unhappy word. What is meant by being practicable in this matter? Is it, as I indicated at Report, whether it is practicable for somebody to get at once some kind of interview with his broker? What is it?
The only reason why the Government do not like the wording of the amendment moved by the noble Lord, Lord Ponsonby of Shulbrede, is that it allows for flexibility. The Government agree that the proposed amendment does give a little more flexibility, but they say that that
flexibility would be contrary—contrary to what? Not contrary to something practicable but contrary to the principle of the target investment limit. And that, it seems to me, is already a vague matter.
Nothing, therefore, seems to me to support the arguments of the Government. Therefore, with great respect I would support the wording proposed by the noble Lord, Lord Ponsonby of Shulbrede, as being the kind of expression that one would expect to find incorporated—I am so sorry. I thought that the noble Lord wished to interrupt; I thought that he was making an observation from a sedentary position, and I should be delighted if he could make the matter clearer than, unfortunately, it is following Lord Cullen's letter. I would support the amendment proposed by the noble Lord, Lord Ponsonby of Shulbrede.
Lord PONSONBY of SHULBREDE: My Lords, I am sorry that the noble Lord, Lord Trefgarne, in responding to this amendment, did not in fact go any further than in the letter which I received from the noble Lord, Lord Cullen of Ashbourne. I am heartened by the renewed support of the noble Lord, Lord Lloyd of Kilgerran, on this and I should have thought that the word "expedient" was a better word to be in the Bill than the word "practicable". Therefore I must press the amendment.
4.30 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 61; Not-Contents, 93.

CONTENTS

Airedale, L.

Henderson, L.

Ritchie-Calder, L.

Amulree, L.

Houghton of Sowerby, L.

Rochester, L.

Ardwick, L.

Jacobson, L.

Sainsbury, L.

Aylestone, L.

Jacques, L.

Sefton of Garston, L.

Beswick, L.

Janner, L.

Segal, L.

Birk, B.

Jeger, B.

Shinwell, L.

Boston of Faversham, L.

Kaldor, L.

Stewart of Alvechurch, B.

Brockway, L.

Kilbracken, L.

Stewart of Fulham, L.

Bruce of Donington, L.

Leatherland, L.

Stone, L.

Cledwyn of Penrhos, L.

Listowel, E.

Tanlaw, L.

Collison, L.

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

Underhill, L.

Cooper of Stockton Heath, L.

Wade, L.

David, B.

Lloyd of Hampstead, L.

Walston, L.

Elwyn-Jones, L.

Lloyd of Kilgerran, L.

Wedderburn of Charlton, L.

Evans of Hungershall, L.

Lovell-Davis, L.

Wells-Pestell, L.

Fisher of Rednal, B.

McCarthy, L.

Whaddon, L.

Gaitskell, B.

Mishcon, L.

White, B.

Gordon-Walker, L.

Oram, L.

Wigg, L.

Gosford, E.

Peart, L.

Wigoder, L.

Hale, L.

Ponsonby of Shulbrede, L. [Teller.]

Willis, L.

Hall, V.

Wootton of Abinger, B.

NOT-CONTENTS

Ailesbury, M.

Gisborough, L.

Newall, L.

Alexander of Tunis, E.

Glenarthur, L.

Norfolk, D.

Alport, L.

Godber of Willington, L.

Northchurch, B.

Amory, V.

Gridley, L.

Nugent of Guildford, L.

Armstrong, L.

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

Orr-Ewing, L.

Auckland, L.

Pender, L.

Balfour of Inchrye, L.

Hankey, L.

Polwarth, L.

Bellwin, L.

Harvington, L.

Rathcreedan, L.

Berkeley, B.

Hemphill, L.

Rawlinson of Ewell, L.

Bessborough, E.

Henley, L.

Redmayne, L.

Bolton, L.

Holderness, L.

Reigate, L.

Caithness, E.

Hornsby-Smith, B.

Renton, L.

Campbell of Croy, L.

Hylton-Foster, B.

St. Aldwyn, E.

Cathcart, E.

Jellicoe, E.

St. Davids, V.

Cawley, L.

Killearn, L.

St. Just, L.

Chesham, L.

Linlithgow, M.

Sandys, L. [Teller.]

Craigavon, V.

Long, V.

Sempill, Ly.

Crathorne, L.

Lothian, M.

Stamp, L.

Cullen of Ashbourne, L.

Lucas of Chilworth, L.

Strathclyde, L.

Daventry, V.

Lyell, L.

Strathcona and Mount Royal, L.

De Freyne, L.

Macleod of Borve, B.

Strathspey, L.

Ebbisham, L.

Macpherson of Drumochter, L.

Swansea, L.

Eccles, V.

Malmesbury, E.

Swinton, E.

Effingham, E.

Mansfield, E.

Teviot, L.

Elliot of Harwood, B.

Marley, L.

Trefgarne, L.

Erne, E.

Massereene and Ferrard, V.

Trenchard, V.

Ferrers, E.

Merrivale, L.

Trumpington, B.

Ferrier, L.

Morris, L.

Vaux of Harrowden, L.

Forester, L.

Mowbray and Stourton, L. [Teller.]

Vivian, L.

Fortescue, E.

Wakefield of Kendal, L.

Fraser of Kilmorack, L.

Moyne, L.

Wise, L.

Gainford, L.

Murton of Lindisfarne, L.

Resolved in the negative and amendment disagreed to accordingly.
[Amendments 3, 4 and 5 not moved.]

COUNCIL OF MINISTERS (AGRICULTURE) MEETING
4.40 p.m.
Earl FERRERS: My Lords, I wonder whether it would be for the convenience of your Lordships if I now repeat a Statement being made in another place by my right honourable Friend, the Minister of Agriculture. The Statement is as follows:
"With permission, Mr, Speaker, I should like to make a Statement about the meeting of the Council of Ministers (Agriculture) in Brussels on 21st to 24th April, at which I represented the United Kingdom and was accompanied by my honourable friend the Minister of State.
"After two days of inconclusive discussion of the milk surplus, the Council spent its final sessions in agreeing a report for the European Council on the principles which should underlie this year's prices settlement. This
914
statement contains no commitment as to price levels, though it records that a large majority of member States is in favour of larger increases than have been proposed by the Commission. I repeated the view of Her Majesty's Government that there should be no price increases on those items in surplus and that price increases elsewhere should be within the limits imposed by the Commission.
"On co-responsibility levies for milk, there was a consensus that the cost of disposing of additional future production should be borne by producers themselves, by means of a flat rate levy of not less than the 1.5 per cent. level agreed last year and a further levy designed to put additional pressure upon further increases in milk production. There is, however, no agreement as to the form of this further levy. Some member States make their acceptance of the principle conditional upon its being implemented by means of a levy on products going into intervention, and others on its incorporating an lement of discrimination whereby the rate of levy would be lower for certain classes of producers. We were supported by

915
other delegations in our view that there should be no discrimination. Finally the report refers to the decision of the Economic and Finance Council that substantial savings must he made in agricultural expenditure.
"There was virtually no discussion of sheepmeat, but the French Minister and I each circulated a statement of our respective positions, and these will be further considered by the appropriate institutions.
"The marketing years for commodities due to end next week were extended to the end of May. Finally, the Council adopted a proposal by the Commission on the treatment of variable positive monetary compensatory amounts. Under this arrangement, during the two months that this proposal operates Britain will be on the same basis as the other members of the Community with regard to both positive and negative compensatory amounts. I made it clear that I accepted this only subject to thorough consideration of the whole issue on a Community basis during the coming weeks.
My Lords, that concludes the Statement.
4.44 p.m.
Lord PEART: My Lords, I am grateful to the noble Earl for repeating this Statement. May I say, reading it very quickly, that in many ways nothing has happened? It seems to me the most remarkable meeting that I have ever known, and I have followed many price reviews in the Community. Nothing at all has been decided in a big way. I thought the Government were going to make a great fight, certainly with the French on milk. As the Statement says, there was virtually no discussion of sheep-meat, which is one of the crucial issues which affect our own industry; indeed not just ours but others such as New Zealand. I find that rather strange. After all, the Minister has a free hand on this. I thought there was no partisanship on this because both Opposition and Government have condemned the attitude of the French. I hope the noble Earl can expand on it.
On the question of co-responsibility levies on milk, I know this is a difficult question. It is said that,
916
"the cost of disposing of future additional production should he borne by producers themselves",
on a flat rate levy
"of not less than the 1·5 per cent. level agreed last year".
May I ask the noble Earl whether the National Farmers' Union support this, because there have always been difficulties over it'? I think the levy on products going into intervention seems sensible but I should like to know if it has the blessing of the producers in this country. That is really all I wish to say. I am surprised at the weakness of what has happened. I hope the noble Earl can assure us that all our interests have really been safeguarded.
4.47 p.m.
Lord TANLAW: My Lords, we, too, are grateful for the noble Earl's Statement on behalf of the Government. I think we might take up the point made by the noble Lord, Lord Peart, that after two days of inconclusive discussion no conclusions were reached. The Statement goes on to say that there must be substantial savings in agricultural expenditure. My view is that it is rather a waste of money if they are going to sit for two days and come to no conclusion. While my noble friend Lord Mackie of Benshie will be able to advise noble Lords on the non-decisions taken on the milk price, perhaps the noble Earl will confirm that there will he no price increases on those items in surplus to encourage yet further surpluses in the Common Market.
I want to take up and emphasise only one other point. The Statement says there was virtually no discussion of sheep-meat, but
"the French Minister and I each circulated a statement of our respective positions, and these will he further considered by the appropriate institutions".
I am sure I do not need to remind the noble Earl that this is just the end of the lambing season and there is very deep concern in the farming industry among those who are producing sheepmeat in the form of lambs, as to how sales will go this year. It has been an exceptionally good lambing, but there are fears of surplus and no price support. Just merely to say that there will be further consideration at some later date is not going to alleviate the many worries in the industry, in hill

917
farming in Scotland in particular. Perhaps the noble Earl will be able to tell us that there will be some definite statement about the position on sales of sheepmeat into the Common Market by August of this year.
Earl FERRERS: My Lords, I am grateful to the two noble Lords who have spoken. If the noble Lord, Lord Peart, was a little disappointed at this Statement, I would merely repeat the words he used when he said that nothing had happened and it was a most remarkable meeting. I think if my right honourable friend were here he would say the noble Lord was quite right. This was a very frustrating meeting. The noble Lord knows perfectly well that trying to get a consensus of agreement over EEC prices is one of the most difficult things imaginable. We wish to sec those agreements made as soon as possible. It was a very long meeting; I think I am right in saying that my noble friend left at three o'clock this morning to come hack to London. The fact is that there was no agreement.
When the noble Lord, Lord Tanlaw, asks for an assurance that there will be no price increases for products in structural surplus, I can assure him that that is my right honourable friend's line. He does not believe and we do not believe there should he increases in those commodities which are in structural surplus. But at the moment we have not carried our Common Market partners with us.
When the noble Lord, Lord Peart, asked whether our interests were being safeguarded, he indicated that there was a degree of weakness on the part of my right honourable friend. I can assure him that there is no such weakness; my right honourable friend has been absolutely determined to push the point.
Lord PEART: My Lords, I did not intend to say that the Minister was being weak at all; I do not think he has been.
Earl FERRERS: My Lords, in that case I apologise for misrepresenting the noble Lord; I thought I recalled him using that word. I would merely stress that my right honourable friend of all the Common Market Ministers is the one who is determined to say that there should he no
918
increases for those commodities in structural surplus and that the increases for other commodities should not exceed the Commission's proposals. So I think I can tell your Lordships that our interests are being safeguarded. I can only reiterate the sorrow, if that is the right word, of both noble Lords, that there has not yet been a conclusion.
Lord BRUCE of DONINGTON: My Lords, can the noble Lord inform the House whether the reports in both The Times and the Telegraph as regards this meeting have come to his attention, wherein it is stated that the French Government have taken up the position that they want the Farm Price Review in some way linked with the discussions that have taken place over a long period of time concerning Britain's net contribution to the European Budget? Will the noble Lord assure the House that the pledge already given by the Prime Minister in another place, that the question of Britain's net contribution should be considered as an item on its own and not part of a package, still stands; and will he tell us whether, therefore, the attitude taken by the Minister at the adjourned meeting of the Agriculture Ministers will be precisely in conformity with his previous undertaking that he will not agree to any price increase on items in structural surplus?
Earl FERRERS: My Lords, the final result of the negotiations will be one which must accord with the agreements arranged with the Ministers. I have explained that the line which our Minister has taken is that there should be no such increase. As regards the Press reports, it is of course evident that the French would have liked a cut and dried paper on common agricultural prices to go before the European Council, on the basis of which the European Council could then take decisions. But, in the Agricultural Council it was clear that there were substantive differences of opinion on many issues between almost all Member States and not just between France and the United Kingdom.
So, it is not the case that Britain is being asked to come into line with something with which all other members of the Community are in agreement. We accept, of course, that other Community

919
Governments have their problems, and we wish to be as co-operative as possible in examining them. But the Prime Minister has made it clear that any decisions which the European Council might reach on Common Agricultural Policy prices, or other issues, must be taken separately on their merits.

BRITISH AEROSPACE BILL
4.53 p.m.
Lord TREFGARNE: My Lords, a few moments ago we passed the Third Reading of the British Aerospace Bill, and I therefore now rise to move, That the Bill do now pass.
The Bill before your Lordships today is an important one. In one sense the change that it will permit is simple: a company, British Aerospace Limited, incorporated under the Companies Act, will succeed the present statutory corporation, British Aerospace. But the implications of this change are fundamental. The transfer from nationalised industry to limited company represents the ending of the potential for interference from Government which is always such an inhibiting and is so often such a damaging feature of nationalised industries.
This Bill, and the changes which flow from it, will liberate the business to operate according to commercial needs, pressures and interests; to respond to customer demands; and to be subject to the disciplines of the market. The responsibility for this proud and major industry will then lie where it should lie—in the hands of those who manage and work in it. I am confident that they will respond to that challenge.
Your Lordships will not wish me to rehearse the arguments of principles and of detail which we have had in the course of our debates. But there is one matter to which I should draw your Lordships' attention and it is a matter of some importance. As we made clear on Second Reading, the Government intend to make special arrangements to enable employees to acquire shares in the successor company. The Government have been, and remain, totally committed to promoting a signicant employee shareholding in the new company.
920
In his Budget Statement my right honourable friend the Chancellor of the Exchequer announced measures to widen and make more attractive the existing provisions of the Finance Act 1978 by which shares acquired by employees and held in trust enjoy tax advantages. I can now give your Lordships some further information about the arrangement the Government have decided to introduce in relation to British Aerospace, to take advantage of the new arrangements. On the initial floatation the Government will be prepared, within financial limits, to make available free shares for those employees who purchase their own shares, and lodge the shares—those purchased and those given by Government to match the purchase—in a trust established under the Finance Act provisions.
I recognise that these may appear complex arrangements. It may help your Lordships if I say that there is a precedent for this in the recent BP sale. It may help even more if I say that what is proposed may be described simply as a "limited offer", for I repeat, there will be financial limits, of two for the price of one, with tax advantages on top of that. In addition to this—on which we have decided—we are also considering whether we can and should go beyond this proposal by providing in addition shares for those employees who do not themselves contribute as my noble friend Lord Cullen of Ashbourne explained in Committee. This, I should make clear, is still subject to further consideration and decision.
The steps which I have announced are intended to promote a small but significant initial shareholding for employees. They relate, of course, only to the initial floatation. Thereafter, it will be for the company to decide what continuing scheme to adopt. This will require careful consideration, but not Government decree. I am confident that the start and the impetus that the Government are giving to the initial floatation will be carried forward by the company in future years to bring about a substantial and growing employee stake in the new company.
I have never concealed my own involvement in a personal capacity in the industry with which we are concerned today. I hope, therefore, that your Lordships will excuse me if I find this an important moment. I have a sense of pride in

921
having contributed to a Bill which will prevent this unique and important industry from being subject to what my noble friends and I consider to be the wrong influences. The dead hand of nationalisation lies heavy on any industry. The opportunity of freeing one such from these harmful and pervasive effects is, therefore, to be welcomed. I beg to move.
Moved, That the Bill do now pass.—(Lord Trefgarne.)
On Question, Bill passed, and returned to the Commons.

TRANSPORT BILL
4.58 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin): My Lords, I beg to move that this Bill be now read a second time. It is with some temerity that I rise to address your Lordships, being conscious of the weight of experience and knowledge around me. This is my first Bill, and one which I am proud to present this afternoon. It is perhaps not as generally familiar a subject as some others which have come and will shortly come before your Lordships, but its provisions are of great importance for the transport industry, and for the considerable number of people who use the services it provides. I look forward to a stimulating debate.
It may be helpful if I begin with a brief description of the Bill as a whole. It deals with three separate subjects. Part I contains the first major reform of bus licensing in 50 years. "Long overdue" is certainly the right phrase. The bus industry has declined steadily since 1950, within an unchanged licensing straitjacket. In 1950 there were about 17,000 million passenger journeys made by bus; in 1979 there were only 7,000 million bus journeys made. Protection has been the key note; there has been little place for such old-fashioned virtues as innovation and enterprise.
Part II deals with the National Freight Corporation, a nationalised conglomerate of road haulage and other businesses, some similar, some not, whose place in the public sector really cannot be justified. Even noble Lords opposite will, I suspect,
922
have a struggle to explain it. There is no reason why the company should not be returned to private hands, and Part II prepared the ground for this.
Part III is rather different in nature and is one of the most complex provisions which your Lordships have before you this Session. It concerns the arrangements for funding the deficiencies which have arisen in the British Rail and National Freight Corporation pension schemes, as a result of certain obligations incurred in the past. The present statutory arrangements for funding these obligations by means of lump sum payments by the Government to the pension funds have proved exceedingly costly and have attracted criticism from the Public Accounts Committee. Part III sets out a more satisfactory means of providing equivalent support to the board, corporation and pensioners concerned.
So in its different parts, the Bill encapsulates several of the Government's main aims—the need to make the best use of resources, especially energy; the need to increase consumer choice and service levels; our determination to contain public expenditure and to reduce the activities of the public sector in fields where private enterprise can make a greater contribution than it does at present; and our overall objective of eliminating wasteful bureaucracy and all that flows from that. Our approach is to take away unnecessary constraints, to reward effort and ingenuity, and to keep the hand of central Government out of areas where it is doing no good.
The lion's share of the Bill is taken by the bus licensing reforms of Part I. To understand our proposals, I must take your Lordships back to 1930, and to a very different world—a world in which the motor car was a luxury, a world of the boneshaker village bus, the charabanc outing, the so-called "pirate" bus companies, racing for custom down the high street. A world in which the railway still dominated long-distance travel. Traffic was growing fast but a statutory framework to ensure disciplined behaviour on the roads was yet to evolve. Safety standards for buses were set locally; they were haphazard, inadequate, sometimes non-existent. In towns, competition between bus companies was intense. There were plenty of passengers, there were good profits to be made.

923
It was for that world that bus licensing was devised. The historians may dispute just how the system emerged, but the result was, and remains, plain. In return for complying with strict safety standards, the bus companies were effectively guaranteed protection on their existing routes. Every vehicle and every service had to be licensed by traffic commissioners. There have been some small changes, some shifts of emphasis since 1930, but essentially the two systems of vehicle and road service licensing then devised remain in operation today.
So how relevant is this system for the transport problems we face today? The bus industry has been declining for about the last 30 years. Car ownership has ensured that. Yet the bus is still essential to those who have no access to a car, and particularly for the journey to work and school. In rural areas, the bus may be the lifeline for a village; but how can it now be provided at a price people can afford? The bus industry has had to cope not just with the declining and scattered demands, but also with sharply rising costs.
In the last dozen years, we have seen greatly increased public support for the local bus networks, through revenue support, fuel duty rebate and new bus grants—an enormous subsidy, without any fresh policies to back it up. We simply cannot go on assuming a bottomless purse: we must now work urgently at how to provide a real incentive for bus operators to provide the most efficient services, to re-examine their pattern of services, or to seek alternative ways of providing the buses the public wants.
Let me take an example. Operators in urban areas in particular, find their costs largely determined by the need to meet peak hour demand. They keep on large fleets and staff, just for the rush hour traffic. Yet it is ironical that these operators, who might be expected to welcome some competition at peak hours, to take the burden off them, have persisted in adopting a traditional protectionist approach, which I believe licensing has done much to foster. It is surely time for a shake-up—time to open the field to more competition and to let the private operator prove his worth, and show, on the ground. what he can do.
924
So in Part I, we grasp the nettle of reform. For the convenience of the reader, I should explain straightaway that these clauses include a restatement of many of the provisions of the Road Traffic Act 1960, and subsequent adjustments to the licensing system. This makes it a little difficult to distinguish the new and the old, but the draftsman has helped us by setting out in Clause 1 of the Bill what Part I really does. First, it redefines and reclassifies public service vehicles; that is, broadly, vehicles carrying passengers for hire and reward, but not taxis or hire cars. What we have done here is to remove the present out-dated restrictions on private car-sharing. In future, the private motorist who wants to make better use of his car to offer lifts, in return for some payment to cover costs, will be free to do so and to advertise his journeys. Provided he does not charge more than his costs, and arranges the journeys beforehand, he will be outside the licensing system altogether.
At present, the law is complicated and not well understood. Car-sharing was a subject which, I understand, noble Lords debated at some length in 1978, in the course of the proceedings on the then Transport Bill. Encouragement for car-sharing was generally welcomed, although some doubts were expressed about the insurance position and the undertaking given by the Motor Conference. I can assure your Lordships that that undertaking has given rise to no problems during the two years or so it has been operating, and that the Motor Conference has assured us that the removal of restrictions on advertising by this Bill will not affect its policy.
Our message to the motorists is this: if you offer lifts in your car and charge enough to cover your costs, but no more, you will be covered by your normal Insurance policy. It will not make any difference if you advertise. It does not matter that you take people on a regular basis: indeed, sharing journeys to work is something we hope the Bill will encourage. What you must not do is to set up in business, seek to make a profit, or go round the streets touting for custom, stopping at bus queues or the like.
The second major reform is to remove long-distance bus services from the restrictions of route licensing. These are

925
the regular express services and excursions and tours, where all the passengers travel at least 30 miles, as defined in Clause 3. These services are a small part of the total bus network and can operate commercially. No public subsidy is involved.
It may be argued that these services contribute to the overall viability of operators, who also run unprofitable local buses and should be protected for that reason—"cross subsidisation" is the trade's term. Not only is there little evidence that this is so, but in the long-run it is not in anybody's interest to protect services against competition in an inherently profitable market at the expense of the passengers.
It may also be argued that operators who undertake to run scheduled services, whether or not the bus is full, should be guaranteed what traffic there is. But in practice the operator who advertises a regular service, guarantees that it will run, and honours his commitment, will gain and hold custom as a result; he does not need protection. I should emphasise that the operators of long-distance services will, of course, remain subject to all the safety requirements to which I shall be referring in a moment.
Clauses 4 to 11 of the Bill set out the details of the road service licensing which we have decided to retain. Local bus services will still require a licence from the traffic commissioners, but whereas at present it is up to the applicant to prove his case against objections from those already in the field, under Clause 5 it will be for the objector to demonstrate that the grant of a licence would be against the interests of the public. Only if that can be shown will a licence be refused.
There are those who might well ask why we have not removed quantity licensing altogether. It is here that we come to the thorny question of cross-subsidy and the so-called "network" argument. There are, understandably, those who work in the bus industry—private as well as public sector—who believe sincerely that cross-subsidisation is in the public interest. They argue that profits made on some routes enable services on other routes to be kept going, at fares which people can afford. They believe that protection by licensing is necessary if this is to continue and that without licensing, many services
926
would have to be withdrawn, or provided at much higher fares, or supported from public funds.
I think it is incumbent upon any who believe that competition is better than control, and that the market knows better than the traffic commissioners to look very sceptically at arguments like this. We have done just that, and our conclusion is that while cross-subsidisation may indeed bring benefits to some bus passengers and that some licensing system may well be necessary for it, nevertheless it also has important disadvantages.
It means that passengers on profitable routes, probably the larger number of passengers, and quite possibly the poorer passengers, are paying more than the cost of providing that particular service, in order to benefit others. This may be right in some cases, but it needs examination, and will have to be argued before the traffic commissioners, before they grant licensing protection in any particular case. I expect great weight to be given to the voices of county councils—many of whom have given a great deal of consideration to this. Indeed, the Bill goes further, and will allow county councils, where consideration has led them to conclude that the disadvantages of protected cross-subsidisation outweigh its benefits. to abandon it altogether.
This is what Clauses 12 to 14 are all about. These contain powers for the Minister to designate certain trial areas, in which route licensing will be abandoned for all services. But trial areas can only be set up on the application of the county council, the transport planning authority for the area concerned. It is an option the Bill gives to counties, if, but I stress only if, they want to pick it up. A trial area will be a real test of what happens where licensing is removed.
Before leaving road service licensing, I should draw attention to Clause 7, which ends the present routine traffic commissioner control over fares and puts in its place, what is essentially a reserve power. Given the degree of protection which licensing will continue to afford, some means of preventing exploitation of the public is needed, but we see no reason to maintain the present expensive and time-consuming process of case-by-case examination of each and every fare change,

927
particularly when fare levels are so often already subject to the approval of the local authority.
Most of the remaining clauses of Part I are about what I shall call "quality controls"; those requirements which ensure that public buses are only run by reputable, competent and financially viable operators, and that the vehicles they put on the road are of an acceptable standard, properly maintained and competently driven. Here we certainly propose no relaxation. The reforms here are designed to simplify the present arrangements, and to concentrate the efforts of the traffic commissioners and of the department's examiners, on what really matters—the fitness of the operator and the state of his vehicles.
At the moment, each vehicle has an individual licence, which has to be renewed every year. This may not be especially burdensome or inappropriate for the small operator owning only a handful of buses, but think what it means for an undertaking the size of London Transport. Every time a new vehicle is acquired, a licence must be obtained—this may provide employment for clerks, but I am not sure what else it achieves. Clauses 18 to 25 provide instead for a new system of public service vehicle operator licensing. Rather than licensing each vehicle each year, the operator will apply for one licence, normally lasting for five years to cover the use of a maximum number of vehicles. The traffic commissioners will be responsible for granting licences and for disciplinary action against those who are failing to meet the required standards.
The traffic commissioners can only grant a licence, if the applicant satisfies them that he is of good repute, that he has appropriate financial standing for the business he intends to operate and is professionally competent. These are requirements of an EEC Directive on Access to the Profession, but their purpose and effect is very similar to the requirement we have had in this country since 1930, that operators must be "fit persons". In addition, operators here must satisfy the commissioners that they have the facilities, or have made arrangements for adequate maintenance of the vehicles they propose to use. Along with these
928
licensing requirements, go disciplinary powers for the commissioners to suspend, revoke, or curtail licences, on grounds set out in Clause 22. There are also new powers for examiners to prohibit the driving of unfit vehicles.
Part I contains a number of other provisions, some of which provide the nuts and bolts needed to produce a workable licensing system. I will leave the details for Committee stage, but I should draw your Lordships' attention to four particular matters. In Clause 28, we have provided an appeal to the Minister, for bus operators in London who wish to operate local services, but who have been refused the necessary agreement by London Transport. Buses in London are subject to a different statutory régime from the rest of the country, London Transport being effectively guaranteed a monopoly. This clause will ensure some means of outside examination of their use of that monopoly power to exclude other operators.
Clause 29 abolishes conductor licensing, a curious survival, which now finds few to defend it. We see no reason why this particular group of employees, among many who serve the public in various ways, should be singled out by a licensing system. Clauses 27 and 30 were added to the Bill in another place. Clause 27 paves the way for the annual testing of public service vehicles—and indeed of all large passenger vehicles—a provision required by the EEC, but welcomed by us. This formal annual testing will begin in 1982. Clause 30 enables a young driver, between the ages of 18 and 21, to drive public service vehicles on regular local bus services, provided that he holds a public service vehicle driver's licence. Training must also be supervised by a PSV driver, under the overall authority of a licensed operator. This slight relaxation in requirements is designed to help the bus industry in the not easy task of recruiting drivers, particularly in our cities.
Before I leave the subject of buses, I should tell the House of two particular amendments which I propose to move at Committee stage. These are both part of our policy of seeking to open up as many ways as possible of meeting people's varied transport needs. The first amendment will give a new power to local education authorities to carry fare-paying

929
adults on their own school buses, where they have spare capacity. I stress that this does not, of course, affect at all their duty to provide free transport for school children living outside the statutory walking distances. All we are concerned with here is finding another way in which some transport might be provided to help meet the needs of rural communities. At present, buses provided on contract to education authorities may pick up adults, and charge them, but in the small number of cases where the authorities themselves own the vehicle, they have no powers to take fare paying adults. We intend to give them this additional option. The second amendment is probably of more importance to urban communities. Here we intend to provide a limited power for certain voluntary and similar bodies, designated under the Minibus Act 1977, to run larger buses to meet certain community needs, without having to go through all the licensing hoops. This is a very similar idea to that of the Minibus Act, but for the larger vehicles, the normal PSV safety standards will be required.
I turn now to the clauses which deal with the National Freight Corporation. The National Freight Corporation is a public corporation, operating in the business of road haulage and certain related fields. The corporation takes the form of a holding company, controlling some 50 subsidiary companies, some of whose names are familiar to us all, such as Pickfords, British Road Services, and National Carriers. The nature of certain of these subsidiaries might well arouse one's curiosity. Why, for example, is the State running a removals company like Pickfords? Why should it own a travel business like Pickfords Travel? What are the Government doing operating a cold storage business like Tempco?
There can be no justification for this. No one can say that the NFC is the sole provider of an essential public utility; it has no vital function in relation to national defence or foreign policy. It merely represents one small part—around 10 per cent. of an industry dominated by the private sector. It is indeed in the private sector that the NFC belongs, hence the intention in this Bill to transfer control of the corporation firmly into private hands.
What the Bill does is simply this: It
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provides for the NFC's legal form to be changed into that of a normal Companies Act company, with an appropriate capital structure, including shares which can be sold to private investors. The general objective is to sell a controlling interest in the company to private investors, as quickly as market conditions allow. If any shareholding is retained by the Government, it will certainly be no more than a small one.
Let me put all this in the context of the clauses in the Bill before your Lordships. Clause 37 provides for the undertaking of the NFC to be transferred, on a day to be appointed, to a successor company, formed and nominated for this purpose by the Minister. It also provides for the extinguishment, immediately before the appointed day, of the NFC's existing debt to the Minister of Transport. This debt will be replaced by the shares or other securities which the successor company will be required to issue to the Minister, under Clause 38. Clause 39 includes a number of transitional provisions relating to the treatment of reserves and dividends by the successor company. Clause 40 provides for the formal dissolution of the NFC, upon the transfer of its undertaking to the successor company.
I should add here that Clause 55 provides for the abolition of the Freight Integration Council. This is a so-called Quango which does not serve any genuinely useful purpose. It last met in 1971, and I suspect that its passing will not be much mourned. Clause 55 also formally repeals that part of the Transport Act 1968 which provides for the setting up of a special authorisation procedure for regulating the use of large goods vehicles. These provisions would have required an army of bureaucrats to administer them, and it is hardly surprising that they have never been implemented.
I turn now to Part III of the Bill, which deals with certain obligations which the British Railways Board and the National Freight Corporation owe to their pension schemes. The draftsman has called them the "relevant pension obligations", but I shall call them the "historic obligations", This is, I submit, a more expressive term, and the term by which they have come to be known by all those concerned.

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Much of Part III is technical, and your Lordships would not thank me if I were to try to expound it in detail. What I will try to do is to summarise the main changes which the Bill makes in the arrangements for providing Government support for the historic obligations. I will also try to summarise the wider context within which Part III of the Bill stands to be considered. If, however, any particular points are raised on Part III, I will endeavour to deal with them when I reply to the debate.
The pensions arrangements made by the British Railways Board, the National Freight Corporation, and their various predecessors, are extremely complex, but they have in common the fact that they are now all based on funded schemes. The schemes are, in a sense, separate from the board and the corporation. Trustees hold the assets and manage the schemes' investments, collect and invest contributions from employees and employers, and, in due course, pay out pensions.
The problems have arisen because there are substantial deficiencies in railway pension schemes, which the board and the corporation are obliged to make good. They, or their predecessors, incurred these obligations in the past; that is why they are called the historic obligations. I need not go into the details of these obligations; they are matters of history. Our problem now is how to deal with them. The deficiencies corresponding to the historic obligations have been compounded by inflation. The obligations include obligations to pay indexation of pensions corresponding to periods of service when adequate contributions were not paid and invested.
The starting point for Part III is the existing legislation which it is to replace; that is, the pensions provisions of the Railways Act 1974 and of the Transport Act 1978. The pensions provisions of the 1974 Act were part of the general reconstruction of the board's finances which that Act brought about. The Act preserved the "arm's length" relationship between the railways and Government. The responsibility for running the railway and for the associated obligations was to remain with the board. However, among other financial provisions, the board were to be given cash to help meet their pension
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obligations. The pensions provisions of the 1978 Act were also part of a general reconstruction of the corporation's finances.
The essence of the 1974 and 1978 Acts was that the Government were to fund the historic obligations. The deficiencies were to be assessed once and for all, and then eliminated by lump sum payments. Even though payments were to be spread over a number of years, the cost would have been astronomical. So far about £578 million has been paid under the Railways Act 1974, and a further £1¼ billion stood to be paid over the next seven years under the interim funding orders. Furthermore, the board have argued that even this would have had to be substantially increased to fund the deficiencies fully.
This part of the Bill reflects three main considerations. First, it preserves the principle of support for the historic pensions obligations of the board and of the corporation. This principle has not come under criticism. The Bill is designed to provide support which, so far as the board, the corporation, and the schemes are concerned, will be fully equivalent to that which would have been provided under the present legislation. My Lords, it is no more, and it is no less!
Secondly, the Bill is designed to meet the objections to the 1974 Act that were raised in another place by the Public Accounts Committee. Thirdly, the Bill will secure significant public expenditure savings in the years immediately ahead. The savings will be about £73 million a year, at November 1978 prices.
Part III terminates funding under the Acts of 1974 and 1978. In its place it provides for support for the emerging costs of the historic deficiencies. An actuarial assessment will be made of each scheme for which historic obligations exist. This will show what proportion of the pensions liabilities of the scheme can be met out of its existing assets. That proportion will continue to be the responsibility of the board, or of the corporation. Support payments to cover the remaining proportion, the unfunded proportion, will he made by the Minister, as and when the pensions concerned stand to be paid; that is, a "pay as you go" system. The total liabilities of each scheme will thus

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be fully covered; in part by the assets of the scheme, and in part by support payments. This is the objective that the Acts of 1974 and 1978 were designed to achieve, though by a different route.
In conclusion on Part III, I should like to emphasise the point that the Bill does not at all affect the entitlement of pensioners to pensions from British Rail or NFC pension schemes. Nor will it require higher contributions to be paid. Nor does it remove or reduce the obligations of the schemes and of the board and of the corporation to secure that pensions are paid. My right honourable friend has repeatedly made clear, and I now repeat the assurance in this House, that it is no part of the Government's policy to worsen the position of members or pensioners of the various railway pension schemes.
The Bill is about relaxation and opportunities, and incentives and improvements, but above all it is about setting out to give better services for bus transport users, and better value. We have before us a long-overdue, complex and, in parts, a somewhat controversial, but essentially a bold and purposeful Bill. I hope that your Lordships will give it a Second Reading. I beg to move.
Moved, That the Bill be now read 2a—(Lord Bellwin.)
5.30 p.m.
Lord UNDERHILL: My Lords, may I first thank the noble Lord, Lord Bellwin, for his very clear and comprehensive review of the contents of this Bill? May I also add the hope, as a fellow first-timer, that I may be as successful in demolishing his arguments as he was in putting them up? In our view, this Bill will have grave consequences for the future of our public bus services; and it would seem that, in their enthusiasm for relaxation of licensing and their desire for free-for-all competition, the Government are ignoring the serious effects of some of their proposals. It would seem that the attack on bureaucracy which the noble Lord, Lord Bellwin, has mentioned is an excuse for all sorts of things which should not be put forward. At the committee stage we shall seek to ensure that the worst features of this Bill are removed or amended.
When all the clauses in Part I are put together they will have a drastic effect on
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licensing procedure and the future of the public bus services. No one in the industry asked for what in effect is deregulation of the bus services. No operator of any consequence has asked for this. On the contrary, the Confederation of British Road Passenger Transport is opposed to the general principles of the Bill. The confederation, the CPT, is representative of the national networks and the public and independent operators. My Lords, 95 per cent. of the operators are in the confederation, and they cover some 98 per cent. of all the buses in this country. The various units which make up the CPT sometimes have their differences, as may be expected, but on these issues they have a unanimity of view. So we have at least 98 per cent. of the bus industry supporting the existing licensing system, despite what the noble Lord has said about the effects of the licensing system. Why do the Government not take heed of this unanimous view of the bus operators, both private and public?
The theory behind the Bill is that the new provisions will open the bus and coach industry to more competition. There may be more competitition in some areas, but that will not add to the benefit of the travelling public. Where is the evidence that there is a waiting list of new operators anxious to set up new services? Where is the evidence that the Bill will bring in new operators, so that those areas with few or no bus services will be covered? I have looked through the annual reports of the Traffic Commissioners for the last two years. In every one of the 11 traffic areas I find that, each year, only a handful of applications were refused. In fact, in Great Britain as a whole in 1977–78 only 94 applications were refused; and in 1978–79 the number of refusals was only 60. I would remind your Lordships that the total number of service licences granted annually is over 10,000; yet, in two years, only 154 applications were refused.
The noble Lord, Lord Bellwin, referred to the fact that between 1974 and 1977 passenger journeys by bus fell by nearly 10 per cent. But your Lordships should also know that in the same period the number of operators increased by just over 1 per cent. Where, then, is the evidence that the present system hampers initiative? If new operators come in, will they not move into the more profitable

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services? Does the Minister really expect that new operators will put in capital to run services on unremunerative routes? If he does not expect that to happen, then where will he the new services to assist the public? If other operators do come into the profitable routes, that will be of no help whatever to the rural areas. On the contrary, it will make things much worse. If existing operators find that because of competition their revenues from the more popular routes fall, then they will be compelled to consider whether or not they can continue to maintain unprofitable services.
Operators carry out what is known as cross-subsidisation; that is, they run unprofitable routes from surpluses derived from the more profitable services. The noble Lord, Lord Bellwin, seemed to imply—and I hope I am not quoting him unfairly—that this does not happen to any great extent, or that, if it does, it does not have a great deal of effect. But the Minister must know only too well that cross-subsidisation is often part of a complex agreement to provide a network of services to take in the unprofitable routes. Is it not the case that the National Bus Company and the Scottish Transport Group were set up for the purpose of developing a network system of which cross-subsidisation is an absolutely essential feature? Is not this, together with supplementary grants to be paid where necessary, the only effective way to assist the rural areas? It just cannot be dealt with by the free play of market forces, which appears to be the aim behind the Government's Bill.
Clauses 2 and 3, which deal with the definition and classification of public service vehicles, may at first seem very innocuous, but the proposals are worrying the bus industry and they will have an adverse effect so far as the travelling public is concerned. Public service licence requirements will continue, as Lord Bell-win has said, for most of the stage carriage network; that is, for the local bus services. But the intention of the Government is that competition on express and contract services shall be unfettered. This free-for-all will make existing operators extremely vulnerable as a result of such deregulation. One feature is that if a service covers less than 30 miles it will be a stage carriage service requiring licensing;
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but if it covers 30 miles or more and every passenger is set down at not less than 30 miles from where he was picked up it will be an express service not requiring a road service licence. What is there to prevent any operator extending his route by a few miles in order to be free of licensing? Where is the logic, the common sense or the fairness in a proposal under which some operators, quite properly, will be subject to licensing, with any consequential conditions, but others with express services travelling through the same area, picking up and setting down passengers, will be free from licensing and able to do as they please? That seems a nonsense.
The delicensing of contract services may also have unfortunate consequences. Under the Bill a contract operator will be able to take advantage of a profitable end-to-end route which may be operated by a normal stage service operator, for which, of course, a licence is necessary. The contract operator will be free to run when he considers it profitable, maybe only at peak hours. He will cream off the best; but the stage carriage operator will have to suffer the consequences of any loss of revenue, which may affect the ability to cross-subsidise for other unremunerative services, as I have already explained in another connection.
Although operators of express and contract services will not be required to have a road service licence, they will be required to send information to the Traffic Commissioners. It may be that, in looking through the Bill, I have missed something, but I can see nothing in the Bill to indicate that any action will be taken should an operator not adhere to the information supplied; for instance, running a service just when it suits him. This relaxation will affect existing bus operators. This uncontrolled and unregulated competition will have an unfortunate spin-off. For instance, the National Bus Company has stated that it has some £5½ million of revenue at stake in these services. They will be compelled to fight off competition and to concentrate on the profitable inter-urban routes, possibly at the expense of other socially-based services which they now run through cross-subsidisation. All operators will be forced into a harsh commercial attitude by the "free for all" encouraged by this Bill. Also, it must

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not be overlooked that once a service is taken out it is very difficult to get it replaced.
The Bill also proposes, as the noble Lord, Lord Bellwin, explained, to change drastically the criteria for granting road licences, with the balance shifting in favour of the applicant. I find it difficult to understand how the commissioners will be expected to interpret the vague criteria that they will grant unless they are satisfied that to do so would not be in the public interest. We shall have to see how this works out.
The Government hope, apparently, that new operators will come along, but, as I have asked earlier, what may be the effect on present operators who run services on unremunerative routes? It cannot be argued that the present system deters new applicants, unless some would-he applicants are frightened away because of the possible conditions that the commissioners may wish to lay down. Do the Government wish to see all conditions relaxed eventually?
The noble Lord referred to pirate buses. I am certain that many of your Lordships will share my recollections of pirate buses in London before there was any regulation. Surely, we do not want to return to that dangerous foolishness. I hope that we shall get an understanding from the Minister about that. What will happen if we have unregulated competition is that we shall return to that dangerous situation of pirate buses in London. It will be argued that circumstances have changed since 1938. Of course, they have. But so has the way that the Traffic Commissioners have considered the various applications. In 1930, as the noble Lord, Lord Bellwin, has said, there were few cars and a general demand for bus services. As he said, the problem is different today. Today the problem is how to cover uneconomic routes. I read an article commenting upon the Bill in Transport, the official journal of the Chartered Institute of Transport. This well expresses our view. It reads:
"Benefits are less certain as regards a scheduled express network with competition on profitable trunk sectors threatening to reduce the ability to cross-subsidise and thus maintain an extensive network of secondary services. There is also the danger of instability with new operators running for a very short period against reputable firms at unrealistically low fares".
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Then the Bill provides for relaxation on fares. Conditions relating to fares are to be imposed only in limited circumstances. Further, the commissioners are placed under a duty to remove all fare conditions when requested to do so by a licence-holder unless they are satisfied that it is still in the interests of the public to maintain them. Surely, to maintain all conditions on fares would be in the interests of the public. This view, I understand, is supported by the AMA.
May I briefly deal with the question of the relaxation of control of small vehicles of the minibus type and the encouragement of further car sharing. It may be that these and other unconventional experiments may play a part in supplementing conventional bus services, but they cannot provide an adequate substitute. It would appear, not only from what the noble Lord has said but from reading reports of debates in another place, that the Government are relying far too much on the possible results of car sharing, The journal, Transport, to which I referred, in the same article contains the following:
"The danger of car sharing is that very few means exist to selectively encourage car sharing where it might be useful, or discourage it elsewhere. If existing car users were encouraged to share their vehicles at peak times, car occupancy rates might increase. This would raise both energy efficiency and traffic congestion. However, an effect of the Bill might equally well be to encourage existing car drivers to continue using their vehicles at peak periods, taking former public transport passengers at a nominal 'fare' to reduce their own costs. Outside peak times, further car sharing could be most harmful, especially in low-density rural areas taking traffic away from marginally-viable public transport services, which might then be withdrawn".
This view is supported in a leading article in the same journal, and generally I can say it represents the view of this side of the House. Car sharing and the use of minibuses are supposed to be non-commercial operations and the noble Lord, Lord Bellwin, has explained the conditions that obtain for this.
Frankly, it appears to me that these conditions would be absolutely unenforceable. It is something that one aspires to but will not be able to enforce. Therefore, there is the obvious danger that the "wide boys" will come in and will run what, in effect, will be commercial services. Although not permitted under the Bill, it may be difficult to prove such illegal operations. We believe in maintaining

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the essential safeguards of a licensing system. We are unable to support the use of the acceptable principle of car sharing to justify the Government's plan for large-scale removal of licensing requirements. Surely, there should have been a longer period of evaluation of unconventional services before dashing in with the proposed relaxation of part of the licensing system.
In Committee, we shall wish to deal with the decision whereby no longer will a public service vehicle have to display an individual licence. This has grave dangers. One can see a benefit in not having to submit 75,000 vehicle licences each year, but the problem can be that by supplying in the way intended just one particular licence a person could put on the road more vehicles than his licence allocates. We would wish to deal with this matter in Committee.
I was pleased to hear the noble Lord, Lord Bellwin, refer to annual testing. This is something for which we shall have to wait until 1982, but annual testing is something that we believe in. This should be in the hands of impartial, non-commercially-motivated engineers and it is desirable that each vehicle should carry a certification of such an annual inspection.
May I say a few words on the trial areas. In these areas, all licensing controls are going to be lifted and there will be a general "free for all". Much comment has been made of a number of counties being reportedly interested in trial area status. However, the journal, Surveyor, of 29th November 1979, published a list of 10 such counties. It is significant that eight of the 10 are characterised by exceptionally low spending on public transport. That is why they are interested in this matter. It is also imperative that a county council that makes application for a trial area should do so in consultation with any district council which might be affected. Otherwise we could find a trial area status covering a large district authority which does not wish to have it. That would be a tragedy, as I am sure the noble Lord, Lord Bellwin, would readily agree. Before embarking on new trial areas, it would be best fully to evaluate the results of the trial areas from the 1977 Act and also the RUTEX experiments. If things
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should go wrong in any trial area, there is no safety valve for a scheme to be discontinued. An order may designate a trial area but it may not be revoked before the end of a three-year period. That, I submit, is not good enough.
May I refer to a report in the Guardian? Devon is stated to be interested in a trial area status. The Guardian of 26th March says that as the Torquay peak holiday period coincides with the period when buses used on school transport will be standing idle in their depots, the Newport, Gwent, district council is to send six of these buses to Torquay to compete with local operators. Is this the type of thing the Government wish to encourage? It is certainly an indication of what will take place by the "free for all" as provided in the Bill.
May I refer to the National Freight Corporation? The Minister has said that there is no justification for a State-run road transport business, nor for State-run companies engaged in the cold storage and travel agency businesses. He had better look at some of the Conservative-run seaside towns and see the things they engage in. They will bitterly resent any suggestion that they are wrong to do so. The justification for the continued existence of the Freight Corporation is its record. With 10 per cent. of the road haulage market, it is the largest operator in the industry. It is generally admitted to be a well-run concern. Do not take this from me—look at the annual report which is in the Library; it makes good reading.
Secondly, reference to reports of the debates in another place and reports of the Standing Committee on the Bill include praise from all sides on the achievements of the National Freight Corporation. It is said to be well managed and strong on professional standards, with forward-looking ideas and imaginative management. There is general agreement that it is playing a pace-setting role in the industry. Why then take steps that destroy a worthwhile and go-ahead organisation which frankly defies what the noble Lord, Lord Bellwin, said about the dead hand of nationalisation? Everybody admits that it is a first-class organisation.
Lord BELLWIN: My Lords, just on a point of order, I do not recall using that term myself.
Lord UNDERHILL: I hope that the noble Lord did not, my Lords. It shows the achievements of a publicly owned industry.
Having set out briefly the Opposition's view on the success of this undertaking and referred to our own opposition to the Government's policy to denationalise the National Freight Corporation, as the other place has decided a policy on this matter on a Division it will not be our objective to reverse the decision, as much as we regret it, but in Committee we shall seek to make amendments to ensure that the best possible function of the new company is achieved in the interests of both the country and its employees.
The noble Lord referred in some detail (for which I am grateful) to the pensions position of employees in the National Freight Corporation. As I believe the Minister is aware, there is considerable apprehension—despite the assurances given—regarding the employees of the Corporation and any heavy liability that may possibly fall on the Railways Board which it might not be in a position to meet. Time will not permit me to go deeply into this question, but my noble friend Lord Mishcon has agreed that he will cover it when he speaks later in the debate. In Committee I hope your Lordships will give this matter the most serious and sympathetic consideration. It is not a party political issue; it is one that concerns fair and proper treatment for those who work in the Corporation whose future is not of their own seeking.
May I, in conclusion, revert to the first part of my remarks. We are concerned that the relaxation of the licensing system will have drastic effects on the public bus services. We are concerned also that the Bill does little towards a co-ordinated transport policy. There is nothing in the Bill that assists fuel savings and nothing really practical for the rural areas. Tinkering with the licensing system is, in our view, no solution to the problems with which we are faced. Many countries are deeply envious of the extent of our national bus network; and, in our view, this will be put in peril by some of the features of this Bill. We shall endeavour to put those right in the Committee stage.
5.55 p.m.
Lord LLOYD of KILGERRAN: My
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Lords, may I first of all join with the noble Lord, Lord Underhill, in congratulating the Minister on the cogent way in which he has introduced his Bill. I should also like to say how fortunate the House is in having a Minister like the noble Lord, Lord Bellwin, to introduce this Transport Bill because of his wide experience and expertise in local affairs arising out of his well-known activities in one of our largest cities: namely, Leeds. He knows personally, at first hand, the intense transport problems of large cities. He also is aware of the greater understanding and study of transport problems which have arisen in recent years, and particularly some interesting experiments in his own city of Leeds and in Yorkshire which do not at present have the force of statutory regulation.
This Bill gives one the impression of having been introduced in something of a rush. Surprisingly, the Minister did not mention anything about the EEC. It seems that the Bill has been introduced without the adequate consideration of the researches and thinking which are associated with developments in EEC countries. It seems clear that this Bill offers a great deal more flexibility for dealing with certain problems in rural and urban areas.
My first general point is that the Bill in its present form may affect certain recent new and successful transport operations now taking place, particularly in some urban areas. As I have said, there has been a greater understanding of the needs of some rural and urban areas in recent years. In some of these areas successful developments are being carried out by county council transportation committees who have achieved greater co-operation with local bus operators. There have been what has been referred to by the noble Lord, Lord Underhill, and the Minister as cross-subsidisation of routes, and also many experiments by local bus operators themselves. I cite as examples what has taken place in the Isle of Wight and in parts of the Lake District—two areas I know well. I get the impression however—perhaps wrongly—that this Bill may adversely affect such helpful arrangements now in practice in such areas. No doubt the Minister can assure me that I am wrong.
The second general point which I wish

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to raise relates to the problems which may arise from the practice of cross-subsidisation in the following circumstances—and this is a real problem. In many counties with a large tourist industry, such as the West of England, parts of Wales, the Isle of Wight and, to a lesser extent, the Lake District, many operators survive on the lucrative trade for about three months in the summer taking visitors to seaside resorts and places of interest. This business also comes at a time when there is no need for local school transport. At present, long distance coaches which flood into an area bringing tourists to stay are not allowed to operate journeys over 30 miles in that area unless they have a licence. These coaches are often hired for a few days or a week and stay in the place where they have brought the tourists. Local operators in some areas are now worried that these visiting coaches—which usually remain sedentary—could ply for hire locally and thus undercut local services. I note with pleasure that the noble Lord, Lord Underhill, is nodding with agreement that this is a real problem. If my analysis of the situation is right, this is certainly a matter which I am sure the Government will look into.
As to the Bill itself, Part I appears to introduce greater freedom of operation, as the Minister has explained. There is a vital need for flexibility and local autonomy in dealing with the identification of the needs of society at all levels. In so far as the Bill moves towards this position, we on these Benches welcome it. However, I am not clear about the scope of Clause 5, which deals with the grant of road service licences. It sets out in subsection (3)(a) that the commissioners shall have regard to—and I quote:
"the transport requirements of the area as a whole".
I should like to ask the Minister this: Would that enable the commissioners, for example, to grant one profitable licence on condition that the operator runs another service which is less profitable? There may be conflicts between the transport requirements of an area as a whole and local authority plans. Thus, it is conceivable that the county councils may want to make the smallest loss, and therefore will not plan to meet the acute local transport problems which may exist. Again, Clause 7(3) says this:
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"The traffic commissioners shall not exercise their powers"—
that is, to attach conditions on the grant of licences—
"unless satisfied that the proposed exercise of those powers in that case is essential in the interests of the public".
Such a general expression is always rather vague; it always causes trouble. It is always difficult to interpret in local areas, county areas and so forth. I should like to ask, although I have not given notice of this to the Minister and I realise that he may not be able to give me an answer tonight: what does he understand to be the scope of the words:
"essential in the interests of the public"?
I think, with great respect, that some guidance could be included in the Bill as to what is meant by that phrase.
Another matter on which I am not clear—and this is an important matter from a public relations point of view—is this: What is the scope for appeals and objections by the public, as set out particularly in Clause 27, which amends the Transport (London) Act 1969? I know that in the Minister's city of Leeds there have been successful arrangements for dealing with objections and inquiries from the public, but not on a statutory basis. I am sure therefore, that he appreciates the importance of these matters of appeals by the public and also the need for better public relations. I hope that the noble Lord the Minister can give me some assurances particularly about appeals under Clause 27.
We welcome Clauses 15 to 18, dealing with the fitness of public service vehicles. There is a great need, as your Lordships will all agree, to tighten up on maintenance and repair in the interests of safety.
Part II of the Bill dealing with the transfer of the undertaking of the National Freight Corporation has caused me some anxiety. I agree with the noble Lord, Lord Underhill, that the corporation in recent years has struggled into profitability. It has set high standards and produced imaginative ideas such as trailer and track rental, BR rescue services, Pickfords, heavy haulage, route management and other specialised services. But, in my view, the Government would be wrong to allow the corporation to be split up as was first intended. I should have thought this was a case where the Government

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should give careful consideration as to whether they should not keep at least 51 per cent. control instead of allowing the control to go into purely commercial hands. However, we shall consider carefully the Minister's observations on this matter before the next stage of the Bill.
Also, there appears to be no mention in the Bill about the priority for employee participation in shares. The Minister in another place has said that employees will be given opportunities to purchase shares in the new successor corporation. However, it is not clear to me under what conditions that will be done and whether discounts will be granted to employees. In my view, employees should be given a direct and personal interest in the successor company by share participation. This would be a great opportunity for the Government to display in practice their further support for employee participation in ownership.
We welcome the provision for the relaxation of transport licensing laws, particularly those about car-sharing and the operation of mini-buses. Our reason for such support is that these are steps helping to reduce the cost and inconvenience of present commuter travel. However, we see little effective sign of plans to promote an integrated public service system linking bus and rail services. An eminent trade union leader, Ray Buckton, said recently on television in the course of Robin Day's "Question Time" programme:
"This kind of integration is the best way to reduce the present high fares".
Perhaps, obscurely, within the clauses of this technical Bill it may be possible to hammer out some sign that the Government have in mind steps to reduce the cost of fares by some integrated transport system linking bus and rail services.
In conclusion, I am afraid I do not share the Minister's optimism about the success of the Bill, but I agree that it gives scope for improving the present transport facilities for people in rural and urban areas. The cost of transport, in my view, still requires an element of public financial support, particularly if the quality of life within the cities, large towns and rural areas is to be improved. It is well known that the astronomical increase in petrol and maintenance costs has had a serious effect on the standard of living of people,
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particularly in rural areas. De-population in areas of West Wales, such as Dyfed, with which I am so familiar and where I am going tomorrow, is proceeding at an alarming rate, with increasing damage to the agricultural industries and the social life of those areas. We on these Benches will study the speech of the noble Lord, Lord Bellwin, and listen with interest and attention to the Government's reply. We support the Second Reading of this Bill.
6.9 p.m.
Lord LUCAS of CHILWORTH: My Lords, may I at the outset offer congratulations to my noble friend the Minister on his first presentation of a major Bill from the Dispatch Box. At the same time, it would be ungracious of me not to offer congratulations also to the noble Lord, Lord Underhill, on the other side of the House, although I cannot say that I am going to follow him too closely in his arguments. Although he certainly deployed an argument he did not in any way, I thought, demolish that of my noble friend from this side of the House.
The noble Lord, Lord Underhill, spent some little time in his opening remarks in putting forward the view of the bus operator. He told us that 98 per cent. belong to the Confederation, and asked why the Government did not take note of the bus industry. He then gave a number of figures. I suggest to him that Her Majesty's Government have taken note of the industry in one respect, but have taken far greater note of the industry's customers who are patently disillusioned, disappointed and overcharged in so many areas and in so many cases.
I have one major regret about this Bill. When we in this House discuss transport, one or other of us always complains of a notable omission. The notable omission in 1980 is that Her Majesty's Government have taken no opportunity to implement the provisions of Blennerhassett, when it is well-known that the incidence of drink in relation to fatal and serious motor accidents is on the increase. I believe that the figure is now about 40 per cent. and such a measure is long overdue.
The other omission is that highlighted by the noble Lord, Lord Lloyd, about attempting to draw together the road and rail interests. I was very encouraged to hear what he had to say. At this juncture,

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it may be opportune to give muted congratulations to British Rail on the production of their 1979 report and the results contained therein, excepting, of course, the reservations which the board themselves make about the report. There was a report some short while ago that British Rail were to withdraw some of their rail services in favour of road transport, and, if there is an opportunity, the Minister may like to comment upon that. Certainly, since I have been in your Lordships' House, I have noted a great narrowing of the views of the two lobbies, road and rail. They are complementary. There are many road undertakings which are very dependent on certain aspects of rail, and vice versa. If we can encourage a greater participation in what is, after all, a common interest—that of moving freight and moving people—this could be to our advantage.
The Bill, to which I give a general welcome, progresses the principle of Her Majesty's Government of offering further freedom of opportunity and enterprise, and the additional element of competition. Transport is one of those services which does not quite follow the usual laws of free enterprise. After all, if one buys a shop and puts some goods in it and makes a success, then one will probably move on, buy another and build up generally, and everybody will be totally happy. However, if one fails, the shop becomes empty and nobody is too hard done by.
But transport is a different kettle of fish. There may well be a major drawback in encouraging a very much freer entry into passenger transport, because there may be those who, for one reason or another, by accident or by design, may not quite have the staying power to provide the stability of service that one requires in transport. I do not propose to make a Committee stage point, but the principle that I wish to raise in Committee is that the licensing provisions are invariably too easy. This Bill follows in many respects the licensing requirements pertaining to haulage, but there have been some notable failures in the haulage industry as a result of the licensing rules.
For example, who is to say who is of good repute? Exactly what do the words "of good repute" mean? Then there are
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the words "of appropriate financial standing". Somebody who has never been in the transport industry may have no financial standing there. Exactly what do those words mean? I fear that it may well be that we shall get people coming into the business not on their own account, but on the account of somebody else who is very much smarter and who may be coming into the industry under the cover of other activities.
If I may now turn specifically to certain clauses in the Bill, may I say first, in response to my noble friend's fairly pointed comment about insurance and car sharing, that I am not reassured? But rather than go now into all the arguments that I deployed during that rather hot summer of June and July 1978, I shall wait for the Committee stage. It is perhaps sufficient for me to tell my noble friend that an amendment will be put down, and that I shall seek the support of your Lordships in that.
One of the futile expressions which appears in Clause 2(4) on page 3 is the running costs". I shall not read out the whole clause, but paragraph (a) reads:
"… does not exceed the amount of the running costs of the vehicle for the journey".
As a professional engineer, I could produce several tables of running costs. Whose is to be right? Will the department from time to time issue tables of running costs? Having established some kind of base for these, it would be quite impracticable for an enforcement officer to gather the necessary proof to bring any kind of case, let alone get a conviction, in the courts. If we agree with that kind of thinking, it is better to score the line out of the Bill, because it is meaningless.
Clause 5 deals with licensing, upon which I have already touched. However, I wonder whether the commissioners will have to take into account the base from which an applicant proposes to work. I could not find it in the Bill, but there is already general pressure on freight transport in regard to the parking of lorries and vans, and I can see even greater pressure about the parking of minibuses—l6-seaters, 20-seaters and even 30, 40 and 50-seaters. Where are they going to park? Where is the provision which states that a suitable operating base must be found? It cannot be on a lay-by at the edge of a housing estate, or on a bit of waste land behind

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some other residential area. I have a certain sympathy with what is popularly called the environmental lobby, in their arguments about haulage and haulage vehicles, and this will certainly give them even more ammunition against the passenger transport people, unless we take adequate steps early enough.
Clause 10 is worth mentioning. It deals with the revocation and suspension of road service licences. Clause 10(1) gives to the traffic commissioners the power to revoke or suspend a licence. Subsection (2) virtually takes it away again. Clause 22 deals with the revocation and suspension of PSV operators' licences. I think it would be as well if we looked very closely at those powers during the course of our Committee stage.
The noble Lord, Lord Bellwin, made some imporant remarks—as did, indeed, the noble Lord, Lord Lloyd of Kilgerran about the safety aspects. I was disappointed that the noble Lord, Lord Lloyd of Kilgerran, said that he welcomed the provisions to tighten up and improve the safety aspects. In the short time that I have been in your Lordships' House I have participated in the debates on a number of Transport Bills, and I have found that that phrase always comes out. Yet the passenger mile or tonne mile accident rate in the areas of both passenger transport and freight transport has been progressively reduced over the years. Maintenance is generally of a high order. This does not mean to say that I agree that we should just leave the matter there, and Clause 15 does make provision for inspection, but it is surprising that when a bus or, indeed, an aeroplane or a railway train becomes involved in an accident it always hits the headlines.
In the Explanatory Memorandum it is suggested that the present HGV testing stations might be used—Clause 15. I am worried about sending buses to these stations because the flexibility of operation of a passenger vehicle is not quite so great as that of a lorry. The flexibility of the testing station appears to be almost nil, and it is my understanding that testing stations are restricted to the number of axles that they can examine per day. And whatever the time of day may be—2.30, or 3.45—the testing station closes, and that is that. I understand, further,
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that they have staffing difficulties. This additional burden may put that inspection into some jeopardy, so again we may have to look at alternatives.
If I may turn to a very small matter—Clause 30, the reduction of the minimum age for drivers of public service vehicles—I am sure that this is to be welcomed. I see that safeguards are provided in the Bill. If drivers are going to drive 60 people, or even 10 people, around in a bus from one city to another they have to be alert and well trained. This is a splendid opportunity for our young people to take up a new and what will be a growing job opportunity.
May I comment very briefly on the transfer of the National Freight Corporation. Naturally, I welcome this. Indeed, it is my understanding that the board of the NFC also welcome it. I believe that they may very well do better when the full constraints of natural competition are borne in upon them. However, it seems to me to be unlikely that Her Majesty's Government will find it easy to dispose of those shares in the very near future at the price at which they might like to dispose of them.
I am not going to read it, but may I draw my noble friend's attention to an article which on Monday of this week appeared in the Financial Times. Under the heading "Fleet Transport Maintenance", a rather dismal picture was drawn. When one remembers that the NFC have 10 per cent. of the total freight business, it is not unfair to say outright, "I am not surprised; because of the price cutting that BRS engage in, they deserve to have that amount of business". I believe that it is at Poole where freight is being offered traction at only 50p a mile. Anybody in the business knows that one can hardly make both ends meet at '75p a mile. Without the invisible net of Government support, the NFC may have to clip their wings in that direction, and this will be no bad thing for the industry.
In conclusion, because it is almost at the end of the Bill, I turn to Clause 55. It deals with the abolition of the Freight Integration Council which has not done anything for about nine or 10 years. It deals with the abolition of the special authorisation provisions which have never been invoked. Would that Ministers and

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parliamentary draftsmen looked at every Bill, found things that have never been used or have no great merit today (although they might another day further on) and removed them. It is those dead hands that lie behind so many aspects of today's transport which curtail activities and restrict the number of applicants who come forward into a growth industry. People look at the whole of the transport industry and think, "I would like to buy two lorries, or one bus. This is the job I would like to do, but oh, my goodness! look at the number of rules, restrictions, laws and conditions! No, I think I will go and do something else". So let us get rid of as many of these provisions as we can. And if during the Committee stage we can find anything else that is unnecessary in this complicated Bill, let us get rid of that, too.
6.27 p.m.
Baroness FISHER of REDNAL: My Lords, after the previous speaker my comments are not perhaps going to be so clever. Nor shall I speak with the same experience, because I do not have the engineering qualifications of the previous speaker. However, I can speak as a traveller—and an extensive traveller at that—on public transport.
If I understood the noble Lord correctly when he introduced the Bill, he mentioned that the main aim of the Bill is to increase the freedom of choice for the public. One part of the Bill aims at providing for the public a better range of transport services from which to choose. I have always thought this to be a very indecisive way of going on. If you live in a certain area, you have no choice. Even if you live in a large city, as I do in Birmingham, there is a bus route or a train service that goes through the area. Therefore, where-ever you live, whether in a rural area or in a large city area, there is a limit, and the general public accept that there must be a limit upon the choice. It would be fine if at every bus stop there were a taxi, or a mini-bus, or an express service or, perhaps, a PTA bus from which one could choose. I suppose the passenger would get on to the first bus to come along the road that went to his destination.
We have been given an outline of what the express service is going to do. All
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I hope is that there will not be more express services chuntering down the motorways. What with juggernauts on the one side of him and express bus services on the other, the motorist is very often caught in the wind channel between the two.
Although he has left the Chamber, I should like to support what the noble Lord on the Liberal Benches said regarding what might happen as a result of the Bill. He said that the clause which deals with bus operators operating from perhaps urban areas to seaside areas might, unfortunately, cause a little bit of a traffic war, if they are the people who are going to take you to the fairy grotto or whatever it might be and lose the local traffic. I think that is something to which the noble Lord, Lord Bellwin, might give us an answer, if not today then perhaps at the Committee stage.
When we speak of car-sharing that sounds absolutely ideal, and I am not suggesting that we on these Benches are against car-sharing. But it is all right if in the road that you live in there are three other people wanting to go to the same destination practically every day of the week. So to a certain extent car-sharing does not need the Government to tell people how to do it. Any car-sharing that is done is done by neighbours, more often than not, going by car to the station and then catching a train. Normally car-sharing is not done by means of paying, but by the method that I use my car one day and my neighbour next door uses his the next day, and we give each other lifts. I really cannot see much extension in car-sharing.
I am always a little concerned when people criticise public transport quite severely. We have to recognise that public transport is a service that operates from morning to night, and I should have said that anybody—even the last speaker—would find it easy to make a profit if he carried passengers only at peak periods. Those would be the periods when you are taking factory workers to large factories or from the rural areas into the towns in the mornings and at night taking them home again. One could see that that might quite easily be a paying proposition. In fact, I would imagine that the Tube trains that operate in the London area, if they operated only at certain times when travelling

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in them is so difficult and when you are all packed like sardines during the peak hours, no doubt would show a profit.
We have to recognise, however, that that is not what public transport is all about, and anyway one could not employ men and women to operate services for two hours in the evening and perhaps two hours in the morning, and possibly half an hour during the afternoon to take the children home from school. Therefore there must be a work pattern for the people employed in the public transport service. I speak here with some knowledge of the services operated in the Birmingham area, especially before the reorganisation of local government, when perhaps we prided ourselves on our navy and cream buses as being far superior to those of the noble Lord who came from Leeds. We thought that we had the best.
What happened in those days—and happens now to a certain extent because Birmingham still influences the West Midlands—was that first thing in the morning the buses were taking away the night shift workers from the factories, then they moved on to taking the day shift workers in to the factories, then they moved on to taking the schoolchildren back and forth. Then they knew that there was a lull during the day time. So to encourage the travelling public they started to reduce the fares by giving concessionary fares after half past nine in the morning, when there was a slackening off. I must say to your Lordships that Birmingham was the first local authority to give entirely free travel to its old-age pensioners, which started at 10 o'clock in the morning and went on until four o'clock in the afternoon. So there was a use made of the public transport services. At some periods people were contributing more than at others, but there was a proper use of the vehicles and of the manpower employed.
When one is considering transport I think one should also have longer talks with the Department of Trade and Industry. "Flexi-hours" in industry and commerce would do a lot to help the transport problems with which we are faced in large urban areas. Like other noble Lords who have spoken, if we look at past legislation we find that it was keen to ensure that public transport was
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safe, that it was properly maintained and properly manned.
The noble Lord, Lord Lucas of Chilworth, referred to the fact that whether there was an accident in the air, on the rail or by public transport on the roads, obviously it was news. It is news because the public travelling in public transport, whether it is a bus, a train or an aircraft, feel that they have a right to demand the very best in safety. I listened intently to what the noble Lord, Lord Bellwin, said when he introduced the Bill, but I want to emphasise this aspect of safety, especially in public transport and in what are called the "express" services. During the past two or three years there have been some quite serious road accidents in which express services have been involved, and the people examining the vehicles afterwards have said that there had been a mechanical defect which should have been noticed before they left the garage. To me, safety is one of the most important aspects, as also is the question of the control of persons driving the vehicles.
The safety of the drivers is most important because if we are going to have a lot of people who will be able to use their eight-seater cars or their 10-seater minibuses or 16-seater mini-buses, we must make quite sure that the people who are driving those vehicles have not been farming all morning or lambing all night and are then driving the vehicle during the day. No doubt it could be quite lucrative for them, but we must make quite sure that the people who are to do the driving are not coming on to the job tired. If lorry drivers have to conform with certain hours of work and hours of rest, that means that the hours of work driving a bus or a farm tractor, or whatever it may be, must be taken into consideration as well.
Of course one has to be interested in the plight of people living in the rural areas. Obviously the bus service is of much more serious import to those people than it is to those of us living in the large urban areas. But nobody this afternoon has mentioned the closure of the village shop. In the other place it was referred to frequently, because if one did not have the village shop and did not have the bus one would most likely starve. Why did the village shop close? It was not because the Labour Party Conference said to the Co-operative movement: "Go into that village and

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open a new Co-op shop and shut down that little village shop". It closed because there was no money in it; it was unprofitable to keep the village shop open.
As the noble Lord said, if it was profitable private enterprise would operate. I do not disagree with that. If I were the owner of the little village shop and the people in the village—whether it was the original little village or the extended village—thought that I was overcharging them, or that I was not providing the right kind of things that they wanted to buy, and so they did not use my shop, I should close it down. I do not see why the little village shop should subsidise the village.
In the other place during the Second Reading debate one Member mentioned that there is no money in rural transport. That is the reality of the situation. No doubt the noble Lord, Lord Bellwin, feels that there is going to be some money in it for somebody; no doubt it will be the little woman who closed the village shop. I do not know. It might be the little man; I expect the little woman will have greater difficulty in getting permission or subsidies from the local authority.
My knowledge of rural transport is confined to that part of South Wales in the Pembrokeshire area. When I am down there I always find, when I am travelling the six miles into Pembroke, that I pass, all along that road, people thumbing lifts. These are people trying to get to work in the morning. They walk a mile at a time; they keep walking and keep thumbing, hoping of course that in the first 100 yards they will get a lift. I was quite surprised during the Easter holidays, when I was down there, I was giving a man a lift, he was going to work in Pembroke. He said that was the way he got to work every morning, by thumbing lifts. There is a bus that runs, but he said that you did not know whether it was coming so you started making your way. But, he said, "I always offer the fare to anybody who gives me a lift, the same as if I had gone on the bus", and I thanked him for that offer. I do not know whether that would conform in the future to the price that I could have asked for if I was running my car as a public service vehicle giving people lifts. He was just such good company, and I thought, "You can go free."
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My knowledge of the urban area transport is confined to the West Midlands, the West Midlands PTA and the Birmingham area in particular. I must say that so far as has been possible, and perhaps to a certain extent successfully, the West Midlands PTA has tried quite extensively to spread its bus routes into what one would call the more far flung areas of the districts it covers, because much of the new housing in the area has been on the periphery of the district councils. I am not suggesting there is a perfect bus service; the people V, ho stand in the bus queue, especially when it is raining, complain bitterly that it is a very bad service; it only runs every 10 minutes. But they have tried. They have changed many of the routes and made them much more comprehensive and much more circular, instead of back from the city centres out to the peripheries.
If the noble Lord comes to Birmingham he should go on the cross city line between Litchfield and Longbridge—there is no need for me to explain where Longbridge is; everybody knows that is the place where we build the biggest and best cars in the country; the cross city line from Litchfield to Longbridge was inaugurated only about 18 months ago. It has proved extremely successful. The previous Minister came to the city, and the plaque is at the University Station commemorating this great enterprise of taking people from one city across to the other, an innovation of the PTA working with British Rail, and extremely successfully.
It is the integration of road and rail that I think we have to consider. If you have public bodies like public transport and railways, obviously you can get greater intermarrying of their services, greater integration, than with Bill Smith who decides to run his minibus when it suits his convenience because he wants to make a profit, rather than linking up the travel services. When you are a traveller the most important thing is that, when you move from that bus, you do not want to wait too long to move on to your next destination, to catch the train. That is what public transport is all about. That co-operation and integration arises much more keenly if there are public bodies.
Though we have heard figures showing how bus passengers have gone down, we

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did not hear figures relating to British Rail travellers on their local services. Anybody who goes around the country and sees the local services of British Rail and sees the hundreds of people coming out of them at suburban railway stations is absolutely amazed, and those local services link up with the main line services of the inter-city network. I will close, because I see my noble friend Lord Mishcon looking round.
Lord MISHCON: I was interested, my Lords.
Baroness FISHER of REDNAL: My Lords, I thank my noble friend. I thought he was admiring my good looks.
Lord MISHCON: That too, my Lords.
Baroness FISHER of REDNAL: My Lords, I was interested when the noble Lord introducing the Bill said that of course the market knows best. Well, of course, the Government recognise the argument for a relaxed bus licensing system. When they say it will lead to dramatic improvements, that is really based upon a hypothetical basis. I do not criticise them for trying. But I remember that when I entered politics, a very long time ago, a worthy colleague of mine on the Birmingham City Council, who came from Lancashire, said, "Don't forget when you are discussing people that there's nowt so strange as folk".
When the noble Lord says the market knows best, I would say this. The Department of Energy have what they call the Save It campaign, to save any kind of fuel; the Department of the Environment have responsibility for control of the pollution of the atmosphere, which is most essential, especially in large areas; in London itself the GLC have a responsibility to keep the traffic moving. If one read the Evening Standard of Monday, 21st April (I suppose I should not advertise), one learnt that the GLC, trying in its way to help the Save It campaign and the pollution of the atmosphere campaign and to keep the traffic moving, had decided upon a three-year programme of providing car parks at main line stations and some of the other stations. They embarked on this three-year programme at terrific cost, obviously thinking that now there was car sharing all these people coming in
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would be able to put their cars in the new car parks and catch either buses or tubes into the centre. But there is nothing so queer as folk. The GLC have decided to abandon their scheme because nobody wants to use the three car parks they have provided.
Lord LUCAS of CHILWORTH: Because it is so expensive.
Baroness FISHER of REDNAL: Well, my Lords, it did not say anything about being expensive. If you have a car I suppose you have to pay to park it. But the article said it was because of lack of use. I think it is as cheap to park your car as to waste petrol coming in 15 or 20 miles through London.
With regard to reducing the age, I have nothing against youth, far from it; I would encourage youth. I am not so sure that it will recruit drivers. The noble Lord who introduced the Bill mentioned particularly the recruitment of drivers in the city areas. Everyone who lives in large cities knows that there is a real problem with public transport, especially the evening services when vandalism and hooliganism and in some cases even terrorism takes place on those buses. I am not suggesting that young people would not be able to cope with it as well as the middle aged, but it may be that that deters recruitment more than the age limit.
I have spoken longer than I should have done. I apologise to your Lordships. I have contented myself with speaking on one aspect of the Bill, but I do support what other noble Lords have said, especially my noble friend Lord Underhill, who mentioned our objections to various aspects of the Bill while not decrying the noble Lord who introduced the debate on the other side. I think that both came in as first-timers, and if one were giving marks I would give 10 out of 10 to my noble friend Lord Underhill and perhaps nine out of 10 to the noble Lord on the other side.
Therefore, I support my noble friend Lord Underhill who raised the opposition that we feel on this side of the House to the selling off of valuable public assets which must create greater problems regarding transport integration. I find very little in the Bill that will help those

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thousands of people who depend upon public transport to get them back and forth to the shops, to work, to hospital or wherever. I find little in the Bill that will help that big band of the general public.
6.51 p.m.
Lord TEVIOT: My Lords, it is indeed difficult to follow such a witty speech as that made by the noble Baroness, Lady Fisher of Rednal, and I shall not attempt to do so. But, like other noble Lords, I am most grateful to my noble friend Lord Bellwin for the excellent, clear and precise way in which he has explained the somewhat complex piece of legislation that we have before us today. Also, like other noble Lords, I should like to congratulate the noble Lord, Lord Underhill, on his maiden Front Bench speech. I think that perhaps I can put the record straight and say that the remark that he attributed to my noble friend Lord Bellwin on the nationalised industries could, in fact, be attributed to my noble friend Lord Trefgarne on the Question, "That the Bill do now pass" on the British Aerospace Bill!
I hope that my intervention will be a traditional type of Second Reading speech, but confined to Part I of the Bill that concerns passenger road transport in general terms. Frankly, while welcoming some of the proposals, I would say that there are others about which I feel there are forebodings and "unknowns" which must be discussed at a later stage of the Bill, and in depth and with extreme caution.
Let us take the good parts first. Like some other noble Lords I welcome the Government's intention to cut out bureaucracy. As regards that one can only welcome those parts with which one can safely say there will be a reduction in "red tape" but not those where one feels that deterioration and chaos could ensue. Apart from one or two minor but important details, the industry welcomes the new form of operator licensing and safety regulations. There is much sense in granting a licence to an operator for his fleet, rather than granting him a separate licence for each vehicle. Rightly, the safety of each vehicle will be looked at separately while the ability of the operator to maintain a certain number of vehicles and his capacity to run them in public
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service will be considered as a separate issue and will be the subject of an operator or "O" licence.
For the purposes of this debate I should like to mention in passing that one would like to see a system of licence discs rather than a reliance on lettering painted on the vehicle by the operator, which would be wholly unenforceable. Another good point in the Bill is the encouragement of car-sharing. However, I should like here to quote from an article from Traffic Engineering and Control by Mr. Peter Bonsai] of the Institute of Transport Studies of the University of Leeds, summing up a symposium on this subject organised by the university. He said:
"It is now known that the impacts of car-sharing are, at the system-wide scale, likely to be very marginal. It is important that this message be well publicised if we are to avoid the depression and recriminations which follow when a policy instrument is seen to have been oversold".
Those seem to me to be words of wisdom.
I have mentioned forebodings and my prime foreboding is the new proposed system of road service licensing. One can appreciate the desires of the Government and a Minister of Transport in wishing to look anew at a complex subject like this in a rapidly changing world. The Ministry of Transport recently enjoyed its diamond jubilee. It was first going to be called the Ministry of Ways and Communications and the name was rightly changed in Committee in the House of Commons.
Road service licensing in the 1920s was haphazard and granted by the local authorities. The 1930 Act changed all this. The right honourable gentleman the Minister of Transport in another place—and also my noble friend—said that the present system was 50 years old. However, I must inform your Lordships that this system was reviewed and reenacted in 1960 and since then there has been a great deal of legislation aimed at giving the public the best possible level of service in changing circumstances. Therefore, with great respect I think that it is wrong to say that the present law is 50 years old.
The answer cannot be found by opening up transport services to market forces. This is a matter with which other noble Lords have dealt. Your Lordships may think that this is a sweeping statement, but I want to give a little background and spell

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out certain dangers. For a moment I ask your Lordships to look at the situation that has developed in the United States of America. Your Lordships will be aware that there is no country that is more keen on free competition. Yet the President is greatly concerned to re-establish, and indeed to revitalise public transport in his country, which has fallen into a much worse decline than here in the United Kingdom. Mr. Alfred Kahn when chairman of the Civil Aeronautics Board, recognised that, where there was only enough passenger traffic to justify a single operator on a route, the only sensible form of competition was a threat to withdraw the operator's licence and give it to someone else. Indeed, in other words the public interest is served by a licensing system.
Mr. Kahn is an arch-exponent of free competition, but many of his arguments go to prove that it is not the answer—certainly not for Britain's buses. He even tells the story of North Central Airlines, a relatively small regional carrier, where, in order to remain competitive with some of the larger opposition, they imposed on their staff a 15 per cent. reduction in pay and a substantial liberalisation of their work rules. Does the Minister really think that, for example the National Bus Company should ask its staff to accept a 15 per cent. pay reduction? I hardly think so.
Your Lordships, may be wondering why I am discussing air traffic when the question of buses is in hand, but there is a distinct parallel and experience to be gained on what is happening in their licensing system. Therefore, one has to mention that British Airways had to relinquish no less than 26 domestic routes in order to remain competitive over the Atlantic. Our network may come in for criticism, hut it is still about the best in the world and it will be placed in jeopardy by delicensing.
Regarding safety, I would quote the Economist of 18th August last. They asked:
"Is there a price to be paid for the increase in competition between airlines? Certainly there is in obvious ways for the passenger".
Then after outlining certain defects the article goes on to say:
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"… fewer flights now leave or arrive on time. But there is a more important and much less obvious price: a decline in safety standards".
The Bill provides a modified form of road service licensing, but actually Schedule 1, in particular, undermines its own provisions. Here, to amplify this point I must quote the right honourable Member, Mr. Kenneth Clarke, Parliamentary Secretary, Ministry of Transport, who told the Press:
"When we have changed the law, workers and employers will be able to enter into contracts for services from bus operators which will not require a road service licence at all".
There is a real danger that these services will take passengers from the licensed services even to the extent that some will soon have to be withdrawn. That is a real danger of the Bill because competition means concentration on the better bus and coach routes and—as I said with regard to British Airways—withdrawal of marginal services supported by the network as a whole. Moreover, at the end of the day, the losers in the competition for trunk routes are likely to be the small operators, as the noble Baroness, Lady Fisher of Rednal, has mentioned. After all, who won the high street war—the corner shop or the supermarket?
Delicensing is taken to the extreme in trial areas. In respect of these areas I would comment that the time is not ripe; we should, first, see how the present relaxations work; there have been too many changes in the licensing law in the past few years. Moreover, there should be a safety valve in case it should become apparent that the trial area is damaging the public interest. As it is, the Bill will require trial areas to go on quite regardless of their success for not less than two years and up to five years. That is not sensible. It has already become apparent that local authorities are seeing problems with this proposal, and are cooling off towards it. So I would ask the Minister of Transport to indicate that he will in no way pressurise local authorities to accept his ideas for total delicensing.
In conclusion, I have little to add to what I have already said, except that your Lordships will be aware that I have been in touch with the industry, which views the outcome of some of the provisions of this Bill with reservations, as was much more strongly expressed by the noble

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Lord, Lord Underhill. After all, its concern, like ours, is to see the highest possible level of service for the travelling public. In present times the industry does not have an easy path to hoe, and there are still many members of the public who depend on it. That is what we must keep in the forefront of our minds as we continue our consideration of this Bill.
7.2 p.m.
Lord HALE: My Lords, when I found out that so few people had put their names down to speak on this Bill, I thought that I could break my long vow of silence and say a few words. Whether at this time of the night more than a very few would be welcome, I doubt. In his absence, may I congratulate the Minister on 31 minutes of quite clear, detailed exposition—it was as clear as it could possibly be in the circumstances—said at a very high speed. I should also like to congratulate my noble friend Lord Underhill for performing the more difficult task of making the opening speech in response, and taking what I thought was a rather gloomy view of the Bill. Having heard the other speeches, including a very charming one from my noble friend Lady Fisher of Rednal, I think that I may be permitted a few minutes' exercise in personal nostalgia, and then take the advice of all three leaders and say that everything that matters will be discussed in Committee.
I hope that I have paid due credit to the two experts—the noble Lord, Lord Teviot, and the noble Lord, Lord Lucas of Chilworth, who I know has a socialist forbear—who spoke with considerable expertise on the other side. I was greatly touched by some of the points that were raised in opening this debate, because the history of transport legislation has been rather a sad one. The story of the arrival of transport in the villages of Leicestershire, where I was living then, was a very moving one. This was a world of many villages where the inhabitants had never been further from their homes than a long walk. In the village of Coleorton, which has a good deal of literacy history embedded in it, which is the home of poets and a place of singular beauty, the old customs have survived. Each house made its homemade wine, but walking was the method of transport. Ashby-de-la-Zouch,
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which is about four miles away, was a place that some of the older people had never seen.
Then we had this astonishing transformation. Many things were known and seen before they reached the villages, but in the years up to the Royal Commission of 1929 the flood of buses and lorries transformed the life of the average person. The motorcycle became something which added to the opportunities of the good young man in seeing Britain at its best and of the bad young man in doing many of the things he had never done near home. I believe it was Mr. Vernon Hartshorn in the Labour Government of 1930 who introduced this considerable measure of regulation.
When I was young I was fortunate enough to belong to a family which owned a Singer car that had a back axle which broke about once every 500 or 600 miles. I was able to join the Desford Air Club and try for my pilot's licence. I was able to take part in founding a small gliding club in the days when the only motive power to get one off the ground was an enormously long piece of elastic and a team of, what one might call, tug-of-war champions pulling it and then letting you go. All this, in a world in which the speed of transport had not altered for about two thousand years, up to the time of the invention of the railway and the bicycle.
One thing that was wrong in that era was that every new movement became the prey of the entrepreneur. Men who were out of work from the pits could buy a lorry by the payment of a single item of hire-purchase, and could embark on a business career, which sounds a very nice idea, but which was fraught with some trouble and danger to the community and, indeed, to the solicitor who was advising on many of these matters. Dud insurance companies came from many countries, offering cover on policies which were fraudulently-worded, and often they did not meet their claims.
The introduction of the traffic commission was something almost new to those of us who had practised only under the old laws. I cannot remember when Mr. Hore-Belisha came into the matter, but he was turning out legislation at a speed which meant that anyone in charge

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of a motor vehicle was liable to be brought up before the courts on a charge of doing something which he did not know was an offence and which his solicitor did not know until the day before. These things happened.
May I say one thing that is perhaps slightly out of order. In 1929 I fought a parliamentary election as a Liberal candidate on the Lloyd George programme—without any marked success in the number of votes I obtained. But this was at least a programme, if it were practicable, which could have reformed England. The Labour Party missed a great chance indeed in not co-operating in the programme which would have built roads then, and which would have made an effective system of transport. It was a detailed programme of reform. I believe that I have the booklet still. In particular it would have put us in an infinitely stronger position in the case of war, because the organisation of transport is the essence of war.
We shall go into Committee, and we shall put down our amendments—or I hope someone will do it for me—and we shall discuss these issues. I want to say one thing and I say this as a purely personal contribution, and my last: the noble Baroness, Lady Seear, a few days ago made a considerable speech, as she usually does. I am quoting from memory, but she said that the problem of today is to defeat inflation. The present Government have said that they are committed to that policy. They are going to do it. If we do not embark on a programme that will defeat inflation, this country is ruined beyond all hope. A petty bourgeois like me, who now sees nothing of transport—the longest journey I have travelled by train in the last three or four years is less than 10 miles—has not seen a first-class carriage since Lord Beeching introduced his reforms. It seemed to me that they concentrated on the well-to-do; but I had a great liking for Lord Beeching, whom I was fortunate enough to meet in other spheres. I wish he would come back here now and take part in this debate.
Secondly, of course, the world problem now is that of oil. Whatever we do in the way of reform we will have to reduce oil consumption throughout the world, and we will have to look for substitutes.
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In the meantime, we shall let this Bill go into Committee and see whether we can improve it. With that, I apologise for having taken two minutes more than I intended.
7.14 p.m.
Lord NUGENT of GUILDFORD: My Lords, it is always a pleasure to follow the noble Lord, Lord Hale, because whenever he speaks he says something which nobody else could have said and no one else could have expected. I greatly enjoyed listening to his nostalgic ruminations talking about village life, which I know something about. I think we all enjoyed his contribution. I should like to congratulate my noble friend Lord Bellwin on his admirable and comprehensive speech introducing this large-scale Bill covering a big range and three important topics.
My mind goes back—and some noble Lords in the Chamber will remember it—to the 1968 Transport Act, which really was the Act to finalise all Transport Acts. It was introduced by Mrs. Barbara Castle in the other place, and conducted here by the noble Lord, Lord Shepherd, who I saw come in for old times' sake at the beginning of this debate. This Bill, which the noble Lord, Lord Underhill, lucidly complained was a revolutionary measure, really is mild stuff compared with the 1968 Act, which Barbara Castle proclaimed was to extend nationalisation in every sort and kind of way in the world of transport.
It set up the National Freight Council, the National Bus Company and, among other things, it set up something which is to be abolished by this Bill, the Freight Integration Council with the special authorisation procedure for heavy vehicles. Some noble Lords may remember that I was leading for the Opposition on transport in those days, and I predicted that that procedure would never be used, and my word, I was right. It did not need anyone with great foresight to see that it never could have been used. Anyhow, if we bury it by this Bill we shall have done at least one good thing.
To deal with the first and most important part of the Bill, it proposes to change the system which has been operating, as we have been told, for the last half century, and which was designed to develop and maintain a comprehensive transport sys-

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tern, road and rail. Of course, rail was much more important in those days for passenger transport. The licensing system was structured and designed to key in with it, and the traffic commissioners were the operative characters in this picture. I believe that they have done well. They have served us well. Through the earlier years it was not too difficult, as many have said, and even in the post-war years the traffic commissioners have functioned well to provide a comprehensive passenger transport system. But progressively they have been forced into a restrictive policy trying to protect the existing services, and attaching to the profitable services the condition of operating the unprofitable, of course particularly the rural services.
I may say to the noble Lord, Lord Underhill, that I have far more often defended this system than I have attacked it. Over 20 years ago I was Parliamentary Secretary in the Ministry of Transport, and therefore I well understand the mechanics and indeed the philosophy of the system. May I say to the noble Lord that I have never heard a better defence of the system than he gave this evening. It certainly has virtues, and it certainly has served us well.
What the Bill does is to challenge us here in the House of Lords, and indeed in Parliament generally, to take a radical look at the situation in the country today. My noble friends Lord Teviot and Lord Lucas of Chilworth—both with knowledge of road passenger transport—have uttered warning sounds. I feel they are well justified. This is a major step indeed. But the Bill requires us to focus our minds on the scene that we see today, with the ever increasing number of private cars (despite petrol problems, everybody still wants to have a car); the ever decreasing number of passengers, therefore; the ever increasing cost of operation, and the ever increasing cost of subsidies.
Inevitably every year this situation makes more routes unprofitable, and even the profitable routes are made less profitable, so that progressively the unprofitable routes are being shed. It so happens that at the moment in my own village there is a proposition that the bus service should be abandoned. It is not used a great deal, though it is used morning and evening,
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and is very useful to a number of people: and how to cater for them if the service goes would be a great problem.
This is the scene that we have before us, and I believe that my noble friend Lord Bellwin and indeed my right honourable friends in the Government are right to take a fresh look at it and see whether the time has not now come to change the philosophy of the system. This is what Clause 5 seeks to do, in terms of changing the balance to favour the new operator as against the existing operator. I think that this is a correct appreciation—I say that I think it is. I think that there is more to gain than to lose by making the change, combined of course with the important supporting measures with regard to the private car, going up to the 8-seater minibus with no restriction, and the trial areas, which I think are very interesting. I hope that, despite some of the cold water that has been poured on these trial areas, there will be some county councils brave enough to take them on. Let us see what happens where there is a free-for-all.
I am sure that meanwhile over the major part of the country the private car arrangement will cater for some of the need; I hope all of it. I hope also that the 8-seater mini-bus will also help meet the need, and I should like to see at least one, possibly two, popping up in my village. You never know, my Lords, what youngster might come along and say, Well, this is worth having a go", and he might work it in with other things that he is doing. He could run a service for the morning and evening shifts, for people going into the local towns.
These are valuable supports to this major change which is here being proposed, but I confess that I share the noble Lord's major anxiety about the stage carriage services. So many hundreds of thousands of people depend on these services in their working lives and in their social lives, and we must see that, one way or another, they are continued. I am not concerned about the express services; I think that they will shape out all right. However, my right honourable friend the Minister of Transport must watch this situation very closely. If, and when, Parliament puts this Bill on the statute book, he must watch it and see how it is all developing, and ensure that, broadly speaking, the networks of services are

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really functioning satisfactorily, and that there are new, and small, operators who wish to come in and have a go.
I notice that in the debate in the other place an honourable friend of mine related conditions in Cornwall, where a large number of small operators operate and evidently find it possible to do so. Of course it is a fact that small operators can operate certain services at certain times of the day, work in these services with other things they do, charge a reasonable fare, give a valuable service, and help to cover a gap. So it can work out all right. We have reached the time when the loss of existing services is so serious that one just cannot sit back and watch it happening, with an ever-rising cost of subsidy at the same time. So I salute the courage of my noble and right honourable friends, and hope that they are right.
I should like to add a few words on road safety in this context. The position regarding the PSV certificate of fitness must be watched even more carefully than it has been in the past, with an annual inspection. It really must be done 100 per cent. When we are inviting a number of new operators—as has been rightly said by the noble Lord, Lord Lucas of Chilworth—without perhaps a track record behind them, to come into the business, we must ensure that their vehicles are really safe and sound.
I was interested to hear the noble Lord, Lord Lucas, casting doubts on whether the insurance situation was adequate for the carrying of passengers in private cars. I, too, was wondering about that, and I look forward with interest to the Committee stage to see the noble Lord's amendment and see how my noble friend deals with it. It is important that this situation be made safe and sound, especially when as many as eight passengers are carried in a mini-bus.
The second purpose of the Bill, to denationalise the National Freight Corporation, is I believe correct. I feel that the only justification for the nationalisation of an industry is where there is a basic technological gain to the nation, and here there certainly is not. It covers only 10 per cent. of the national picture in an industry which is notoriously competitive, quick moving, quick changing, and therefore completely unsuitable to
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contain a chunk of Government-run service. Yes, of course, I pay my respects to Sir Daniel Pettit. I think that he has made a very good show of an extremely difficult business. It is a very odd collection of transport units, anyhow. They came together quite by accident—and in a minute I shall have a word to say about their disposal. My view is that it is better to dispose of them.
The point has not been made, and I think I should make it, that this corporation probably now stands as a cost to the taxpayer of £150 million, and would be likely to cost more as the years go by, as more capital has to be written off. It really is not justified to put up public money on that kind of scale in order to participate in a scene which can be adequately and efficiently covered by private enterprise on a highly competitive basis.
With regard to disposal in this connection, I hope that my noble friend will ensure that he has adequate flexibility to dispose of the corporation. Certainly he should sell the whole thing. One noble Lord—I think it was the noble Lord, Lord Underhill—suggested that 51 per cent. be retained. I should be entirely against that. There should be complete disposal. I should have thought that the prospects of disposal—although I know that the Bill does not provide for this—would be infinitely better if the corporation was broken up into the various units. There are some quite attractive units which would be saleable. I am not sure that many private businesses would want to take on in its entirety this extraordinary conglomeration of transport interests. I put out this point for consideration by my noble friend.
Finally, I wish to mention very quickly a matter which is not in the Bill, but which ought to be; namely, provisions for road safety. I simply do not believe that any Minister of Transport ought to come to Parliament today without putting into his Transport Bill some provisions for improving road safety. Annual casualty figures total 350,000, including 6,800 people killed. That gigantic casualty list challenges every Minister of Transport.
There are three measures waiting to be acted upon. The first concerns seat belts, which everyone knows about. Then there

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is the point about motorcyclists: training should be undertaken before licences are granted. There are now hundreds of centres in the country, and this could quite easily be made mandatory. The third point relates to drink and driving, and the Blennerhassett Report.
Here are three measures which Parliament could be ready to consider, but none of them is in the Bill. This is not the responsibility of my noble friend Lord Bellwin, but it is the responsibility of my right honourable friend Mr. Fowler. Here I have to declare an interest as Deputy President of the Royal Society for the Prevention of Accidents. I believe that all Ministers of Transport must forever be striving to try to improve road safety. We have a pretty good record in this country, but, my word!, there is room to improve it. This Bill says nothing about it, and this is a deficiency which my noble friend ought to listen to and my right honourable friend in another place ought to do something about.
7.30 p.m.
Lord MORRIS: My Lords, first it is my great pleasure to congratulate, if I may, with the greatest respect, my noble friend Lord Bellwin on introducing this Bill with such eminent clarity; and, indeed, to congratulate the noble Lord, Lord Underhill. When one considers that he has not the army of skills and experience of a Government department behind him, I think he did a superb job, and I look forward to reading his speech with the greatest care at least once tomorrow.
My Lords, it appears to me that this Bill illustrates very well that Her Majesty's Government are dealing with matters fundamental to the life of the nation, in that they are asking and answering basic questions, such as: What is the role of Government? Of course, other questions must and do flow from that inquiry, such as: Is it the business of Government to be in business? Or, again: Is control and regulation by Government conducive to efficiency and economy in the provision of a service to the public? The answer to both questions as reflected in this Bill is, of course, a resounding "No", and, good Conservative that I am, I welcome most warmly the philosophy lying at the heart of this Bill.
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For the past 35 years Governments of all colours and flavours have brought nothing but disrespect upon their own heads—and, worse, upon the head of Parliament—by inflicting upon a subject people a political philosophy through the vehicle of legislation. I believe this to be an abuse of the law arising out of a misunderstanding of the function of the law. This has led directly to multiplicity of law, to bad law, to an unnecessary complication of the lives of our people and to the erosion of the dignity of and respect for the law, the legislators and the practitioners of the law. One has only to take a tape measure into the Library and hold it against the statutes at large and the statutory instruments to take my point.
My Lords, what I welcome more than any other point underlying this Bill is that Her Majesty's Government are getting out of being in business. They are deregulating, relaxing and simplifying licensing procedures. They are uncomplicating people's lives. However, I am concerned at the whole picture of the law affecting public service vehicles. The law will now be spread further over a multiplicity of statutes, which I shall not enumerate. Indeed Clause 1(3) of the Bill reads, in part:
"This Part and the 1960 Act shall be construed and have effect as if this Part (except so far as it textually amends any enactment) were contained in Part III of that Act",
et cetera.
While this is technically necessary, it is fundamentally a cry from the draftsman's heart for consolidation. May I ask the Minister whether this cry has been heeded, whether a consolidation measure dealing with public service vehicles is contemplated and when it might see the light of day?
From a drafting style point of view, I regret the practice of presenting what are at least three Bills in the guise of one. In easier parliamentary times, I suppose, one could expect better. However, I believe that this practice should be discouraged vehemently. I welcome wholeheartedly the device seen in Clause 1, setting out the scope of Part I of the Bill at the beginning of that Part. However, may I ask the Minister why the opportunity to utilise the happy device of placing the construction, operation and inter-

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pretation of the Bill, as well as the scope of the Bill, at the beginning of the relevant Part, as was done in the Matrimonial Homes (Co-ownership) Bill, was missed on this occasion?
My Lords, I feel one should never tire of stressing the importance of the bus industry in this country. To illustrate this point, in 1978, 52,000 million passenger kilometres were travelled by bus and coach in this country, as opposed to a mere 35,000 million passenger kilometres by rail. I was interested to learn that, other than Greece, the United Kingdom is the only country in Europe in which road passenger transport by bus and coach has gone down in terms of passenger miles. However, I believe that, as with all statistics, they can be read in more than one way. Our colleagues in Europe are only now appreciating the value of a viable national bus service, and are attempting to match our standards.
Perhaps I may weary your Lordships with one more statistic, which I believe to be very important; indeed, it runs to the heart of this Bill. Despite the fact that the total of road passenger transport kilometres, measured in millions of kilometres, has gone down from 10,200-odd in 1968 to some 7,300 in 1978, of all the types of operators there is only one whose total has consistently gone up in the 10 years between 1968 and 1978, and I believe that my noble friend will be interested to learn that it is that of the private operators. I am just casting a small doubt on the point made by the noble Lord, Lord Underhill, about the pirate operators. It appears to me that this important and most interesting statistic proves that somebody other than the municipal operators or the National Bus Company is doing a rather better job—or, rather, is doing the job which the public want at the price they want and in the style they want rather better than they might he doing it.
The other point that I should like to raise is a point which arose on Second Reading in the other place, and which I think needs clarification. My noble friend's right honourable friend I do not think confused the issue but certainly confused me, because he stated that in 1959 there were 14,000 million passenger journeys by coach and bus, and that in 1979 that figure was 7,000 million. He
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then went on to state, using that figure as an illustration, that bus use had halved since 1959, while in the same period the mileage of all forms of transport had doubled. I believe that this is a little unfair, because he was not comparing like with like. He used passenger journeys in one context and he used passenger miles in another context. I should like to put the record absolutely straight—and these figures come from Transport Statistics of Great Britain—1968 to 1978. The passenger kilometre figures in thousand million kilometres were: in 1958, 243, which doubled in 1978 to 483. So far as buses and coaches are concerned, they most certainly were not halved. They moved down from 71 to 52, which I think reflects the position rather more accurately than was done during the Second Reading in another place; and I should be very much obliged for my noble friend's view on that point.
There are other points about which I have certain doubts—and the trial area is one of them—as I believe have the Government. One of the indicators of that lies in one of the clauses dealing with the trial areas, which states that any trial area proposed must go through the Affirmative Resolution procedure of both Houses of Parliament. These matters are fundamentally Committee points and I believe it would be a mistake to speak to them at this time. May I close by again thanking my noble friend for introducing the Bill with such clarity and sweet reason and by congratulating the noble Lord, Lord Underhill, on his splendid maiden speech as Opposition spokesman.
7.41 p.m.
Lord MISHCON: My Lords, the noble Lord, Lord Bellwin, has got a felicity and clarity of phrase which makes local government the poorer and national government the richer when he assumes responsibilities as he has this evening. If only words could move mountains, and, indeed, if only words could move transport and people, the noble Lord, Lord Bellwin, would be possibly one of the most effective in this century of those who have dealt with Transport Bills in this House. But, unfortunately, one needs more than words, and from this side of the House when dealing with this Bill we have, with some regret, to say that we find it doctrinaire, we find it muddle-headed, and, as the noble Lord, Lord Lloyd of

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Kilgerran, has said, we find it rushed and, as I hope to show your Lordships in a moment when dealing with Part III of the Bill, we find it inequitable.
When one deals with transport, one is dealing with the third largest item in the family budget of the nation; one is dealing with (as far as industry and trade are concerned) literally the blood circulation of the national body; one is dealing with matters that affect the tourist trade and, as the noble Baroness, Lady Fisher, illustrated, one is dealing with the lives of people, the customer, the passenger. In rural areas, one is dealing with the problems of the young and of the old as well as of the ordinary inhabitants of the rural areas. So one has to take very seriously matters that come by way of revolution in a Bill such as we have tonight.
The noble Lord, Lord Nugent of Guildford, in his usual quiet and reasonable manner, showed some misgivings (as did other noble Lords not on these Benches) in regard to Part I of the Bill: the dropping of licensing procedures, the alteration of licensing procedures, the changing of onus, the exclusion of various parts of transport from the licensing procedures. The noble Lord, Lord Nugent, said, "Well, I suppose the Minister will have to watch this experiment with great care".
Is it proper in a matter such as transport for one to deal in what one assumes to be permanent legislation with an experiment? I could have heard with some amount of tolerance a suggestion that there should be a couple of trial areas where the whole alteration of these licensing procedures could be tried out, so that one saw as a result whether the unprofitable routes were, in fact, still covered, whether the operators came forward who were prepared to share their profits so that there was the cross-subsidisation, so that one could see whether the essential routes were covered. But there is to be no experiment here. When these operators come in with their licences or when they operate without them, it is going to be an extraordinary bit of legislation that ushers them out again, an extraordinary bit of legislation which can alter what one has done to the vital transport of this country.
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I move to only one other item of Part I because your Lordships have shown great patience until now and I do not want to trespass upon it too much in this winding-up speech. I said that this Bill was not properly thought out. May I take an example which your Lordships have already been discussing, the example of car-sharing? It is national policy to try to conserve fuel. In another part of the great administration of the Ministry of Transport there is the problem—certainly one shared in the capital cities by the local authorities—of urban areas being crowded with cars. Here is a Bill which now invites people to afford cars which they possibly could not have done before because, in some magical way, they are able by some computer inside them to assess the cost that the car bears and then decide to pass it on to members of the public to whom they are going to give lifts. Can one imagine the congestion, the extra congestion, in the urban areas?
Can one regard as sensible the peculiar arithmetical saving of fuel when you have got a vehicle that normally carries 40 passengers and you then get (since the vehicles now to be exempted here and to be encouraged in the car-sharing are to have up to eight seats) five vehicles to carry those 40 passengers? There will be extra consumption of fuel at a time of national shortage and economy in fuel—quite apart from the muddle-headed thinking, which other noble Lords have drawn attention to, when you consider this formula for the charge to members of the public of what the driver computes to be his charges for maintaining the car. It is muddle-headed, it is dangerous and it is doctrinaire.
But never is the Bill more doctrinaire than when it passes to its second Part and deals with the National Freight Corporation. To do away with a national corporation of this kind, a nationalised undertaking, may be a favourite pastime for members of the Government who appear to get great joy in doing it. I am sure that they believe in this quite sincerely, but sometimes one has to ask them to consider what is the national well-being as well as the carrying out of a party manifesto. It is the national well-being to which this House, I hope, is universally committed.

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It has been said—and the noble Lord who opened this debate said it very well—that this corporation dealt with an odd admixture of activities. He talked about cold storage, about Pickfords and about other things that he felt were odd, peculiar things, things that ought obviously never to have been in this corporation. May I he allowed to quote to him—only so that we can get our own minds clear; if the Government may not be unitedly clear on this—the speech of the Minister (and I am quoting from column 1243 of the House of Commons Hansard) on 27th November 1979:
We believe that the corporation makes sense as a whole. We are therefore selling it as a corporation and we are resisting pressure to sell off Pickfords and so on".
Then he said—and he had been asked whether he could guarantee that what was to Lord Belstead's mind a most peculiar, unjustified and unjustifiable conglomeration of activities would not, when sold to the private sector, be broken up—" If I am being asked to say that as a private sector company we can guarantee that for all time it will keep its present shape, we cannot".
I would have expected the Minister, if he thought anything like the noble Lord, Lord Belstead, to say that this was such an odd mixed bag of activities that he could not envisage any purchaser in the private sector keeping it as it was for one moment without splitting it up and selling it off in little bits.
That is not the only consideration in regard to the sale of this great business, which has had very fine management, has been praised—as has been said earlier in this debate—in so many places and by so many people who are much more expert than I shall ever be on this subject. It is proper on Second Reading to give an indication, obviously, as to how the Opposition will behave, and my noble friend Lord Underhill has already given that indication. The voice of democracy has spoken in another place, and while we have made it perfectly clear that we regret any possible sale of the assets of this corporation, and the breaking up of this business, it is proper that what we try to do in this House—and I hope without too much party political differences if we see that there is sense in an amendment at Committee stage—is to behave as sensibly
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as we possibly can in the interests of the nation, having to take it for granted that the policy has been decided in regard to its major aspects.
I am sure that it would be proper for amendments to come before this House and I am confident that the Opposition will he moving them. I hope to find that other Members of your Lordships' House will either be moving the amendments, possibly with different words, or supporting our amendments; but it would be to see first of all, as the noble Lord who sits on the Liberal Benches said, that control is kept by the Government and that possibly 51 per cent. still remains, or that there is complete safeguard in regard to where the assets of this company go, who takes over and what is broken up and what is to happen to the employees of this corporation.
I can only quote—only so that again I can show how much mixed thinking there is on the Government side—if your Lordships will permit it in this context, the eloquent words of Mr. Higgins at col. 1199 of the Commons Hansard for 27th November 1979. Mr. Higgins said that it is right not to break up the National Freight Corporation. He said that if broken up it would
"have had a traumatic effect on the morale and discouraged senior management. The NFC would not have been given a fair chance. The Minister"—
this is obviously what this very experienced Member of another place said—
"has the right approach".
He said that the employees were concerned about their long-term job prospects.
My Lords, we must safeguard these things sensibly by amendments at the Committee stage. I hope that your Lordships will, as usual, think in terms of the national interest and not in any narrow party sense when we come to deal with these matters. I hope that the Minister, when dealing with those amendments, will adopt precisely the same approach if he is convinced that sensible things are being said, even though the item of major policy has been decided.
In the minutes that remain at my disposal, I turn to the inequitable side of things—that is, Part III of the Bill. That is the last thing I am going to burden your Lordships with in this winding-up speech.

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I talked about the clarity of language of the noble Lord, Lord Belstead. He was dealing with a very complicated matter—
Several noble Lords: Lord Bellwin!
Lord MISHCON: Lord Bellwin! I do apologise! Maybe I hoped that it would be "Bell-lose" on this occasion that made me get his name wrong! He knows that I have enough affection for him whatever his name may be. My Lords, in regard to Part III, the matter was put very clearly—and possibly your Lordships will find it a simple issue that I try to put now. The history of British Rail and, to some extent, that of the National Freight Corporation, was a mixed-up mess by way of a provision of funds in order that pensions might be payable. It was a mix-up before nationalisation, and the mix-up was continued after nationalisation by virtue of the fact that the British Rail pensions people were required to pay monies into the British Rail Board and, before then, to the British Rail companies, for use by those companies at very low rates of interest.
Between the 1950s and the 1960s financial conditions were such that there was no chance of repaying those monies, and one found when one came to 1974 that the funds were in a mess compared with the responsibilities that they had to the pensioners. That, as the noble Lord, Lord Bellwin, said, was confused even further by the advent of inflation and by the need for index linking. In 1974 consideration was given to this matter. By the Act of 1975 the Government said fairly, squarely and clearly: "What we have to do is to value the assets in the pension fund; value the liabilities in the pension fund; see what is required to put the funding right, and that will be the capital cash commitment of the Government".
As the noble Lord, Lord Bellwin, said, it was a frightening capital commitment. The figures he mentioned—the figures I recollect without looking at notes—were £585 million already paid in by this year, and £1 ¼ billion still to be paid under the funding orders over the next seven years. It is perfectly sensible—and nobody quarrels about that—that a new look should be taken at this commitment. The new look that was taken by the Government
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was this: "Instead of having to find that capital sum, what we will do is to get hold of a valuation now of the assets and the liabilities. We will see how much is covered of the pension liabilities by the funds that have already been paid in and already exist, and that will be the proportion of the liability for the future which will be borne by British Rail. So far as the unfunded proportion is concerned, that will be the proportion that will be borne by the Government."
There is only one thing wrong with that—and that is where the very definite complaint comes in. The Government are saying at this moment: "It is our Actuary who will decide what that proportion is and what the liabilities are. It will be our Actuary who will forecast over the next 20 years the rate of inflation and what the dividends are likely to be and what the rates of interest are likely to be. If we happen to be inaccurate, then, awfully sorry, pensions funds of British Rail, but it will have to be your liability if there is a deficit. If, on the other hand, there happens to be an advantage to you because we have undervalued the liabilities, in those circumstances your pension funds will benefit".
That is a wrong way in which to conduct this matter, and the obvious thing one has to do is to put that right, otherwise British Rail may well be faced with a huge liability. I shall not trouble your Lordships at this time with a quotation which I have here from the Economist, but the January 1980 issue of that magazine belabours the Government in this regard and points out that if this forecast is wrong the liability on British Rail—and heaven only knows where they are going to get the money from—could be terrific. It could go literally into hundreds of millions of pounds.
The only fair way of dealing with it at this stage is to say: "1981 is to be the start of this. Let us see in five years' time whether the Government Actuary was right. If there is a deficit because the assessment and the valuation were wrong, then at that time we will put it right, and we will put it right for all time." If they value in 1981 in a way which benefits the pension funds, quite obviously the Government, in regard to that reassessment, will be the beneficiary in regard to the year-by-year proportion it will have to bear,

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because the proportions again will be revalued. That is the fair way of dealing with it, but they would not even consent to that, although the 1974 and 1975 arrangement was based on an agreement between British Rail and the pension funds represented by the Government. They would not even submit in another place to a suggestion that there must be agreement between the pension fund and British Rail. Certainly they would not agree to the idea of reassessing it in five years, even if the formula for reassessment was based upon the fact that one only looked at the faults in the figures that arose out of the Actuary being wrong in his forecasts, and not figures which became bad figures because the railway pension fund trustees had made mistakes in investments and so on.
We have to put this right at the Committee stage, and I give notice of this completely non-political point now at Second Reading. In the meantime, I would ask the Minister to think this out very carefully, because when this House of all Houses—if I can put it in this way—knows it is facing a Government commitment and dealing with historic pensioners who have relied upon this and with a pension fund that has relied on compliance with a 1974 obligation, I am perfectly sure that the House will see to it that there is fairness in the administration of these funds and in the alternative suggestion the Government now wish to put forward.
Lord MORRIS: My Lords, may I just intervene to ask the noble Lord, as a point for clarification and elucidation: does he feel from the legal point of view that there is an element of retrospective legislation in this aspect of the Bill?
Lord MISHCON: My Lords, I do not want to put it on the academic basis that it is a question of retrospective legislation. I should prefer to put it on this basis, because I believe this is the practical way, although I know that the noble Lord, Lord Morris's, advice to me was intended to be helpful to my point and therefore I do not push aside his assistance discourteously.
I feel that this is a national problem. The bill that the nation has to face under the 1975 Act is a pretty heavy bill, and we have to think of an alternative. The Opposition do not face the situation
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by saying that that obligation must literally be carried out. All that the Opposition are saying, and what I hope that all Members of this House will say, is that we have to act fairly, we have to act justly and honestly. We do not want to act arbitrarily and say: "The Government Actuary is the right one; he will be the prophet, he will be the person who is bound to be right and we are not going to have a review or even to think in terms of an arbitrator, as it were, if the two actuaries on either side disagree."
At this hour, I think I have tested your Lordships' patience well. May I close by saying that, if we do have to accept the philosophy of this Bill, let us, please, at the Committee stage see that we try and turn out this Bill with as little damage to the transport of this nation as we can possibly mete out and with the greatest advantage for the transport of this nation that we can possibly procure.
8.6 p.m.
Lord BELLWIN: My Lords, may I begin by saying how very grateful I am to everyone who has spoken for the kind things they have said—I of course include Lord Underhill, who did not have the opportunity of saying this. When I first arrived in your Lordships' House everyone told me that this was a place where, among other things, the standard of debating would be very high and that Members were very kind. After an initial reservation as to that, I am very happy to say that has been proven to me to be absolutely so—and, if I may say so, never more so than today.
I will try, if I can, to cover as many as possible of the points that have been raised. As I anticipated, we have had a very stimulating debate during these past few hours. It has been very wide-ranging and I hope that your Lordships will forgive me if in fact I do not deal with all the issues raised. In any case, perhaps the majority of them are rather more appropriate for the Committee stage and later stages of the Bill. I think that is generally agreed.
To begin with, I have to say that I am disappointed by the (shall I say?) negative approach which the Opposition have made to public transport this evening. The stark reality is that, for all the talk we have heard here and in another

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place on this Bill of networks and integration, it has failed to bring any more buses on to the streets. What people want are better, more reliable services at a price which is reasonable. That has not been, and will not be, achieved by a policy of protection and fear of anything new.
Reference was made to discussions during the Committee stage in another place. On that I would only say—and I too read the proceedings very carefully—that I feel the discussion there further revealed the Opposition's failure to come up with new ideas on bus licensing. The amendments put down seemed to be designed to place obstacles in the way of new services, to bolster the monopoly position of existing operators. What we want to do is to give priority in our policies to the needs of bus passengers and to the long-term future of the industry, private and public.
The noble Lord, Lord Underhill, and indeed other speakers today, suggested that we were throwing over the best of our public bus services. I thought some of the detailed points made by the noble Lord revealed a lack of understanding of what we are seeking to do. He mentioned the lack of control on contract carriage services. Although we are making some changes here, these services are not, of course, regulated by road service licensing now, and never have been. This is precisely the part of the market which has grown in recent years. Since 1965, contract and private hire operators have increased by about 5 per cent., and this is entirely a growth in private enterprise. The share of public operators in the contract market has fallen from about 30 to 20 per cent. Is there not some lesson to be learned here? Where they have not been thwarted by restriction, private operators have shown how responsive they can be to public demand.
The noble Lord, Lord Underhill, also suggested that the Bill would take us back to the days of the dangerous and unregulated London pirate buses. I do not think so. I would say, far from it. We are not removing the safety standards which are necessary to protect passengers and road users. We are not removing road service licensing willy-nilly. We are changing its emphasis. We are reducing its rigidity. We are not removing London
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Transport's powers to control bus operators within the London area. All we are doing is to provide a means of appeal against their decisions. Hardly a free for all.
Again, I fear that the noble Lord has misunderstood what we are doing in the new definition of "express services". It is not on the length of route that the status of a service, stage or express, depends. It is on the minimum length of journey by any passenger. By the way, may I say en passant that this is a point which I myself found very difficult to absorb when I was ploughing through the whole subject in the first instance. I do not wish to be misunderstood. It was a very understandable error of thinking—
Lord UNDERHILL: My Lords, if the noble Lord reads the report tomorrow, he will find that I referred to both the minimum distance and the minimum passenger journey.
Lord BELLWIN: Yes, my Lords. I certainly will read the report tomorrow, and if part of what I said applies, then fair enough. We shall call it one each, shall we, on that point? But I submit that a bus service on which every passenger travels at least 30 miles is quite different from the local bus services that we all know and love. It will not be possible for an operator to disguise a stage carriage service as an express one.
I also felt that the noble Lord has somewhat misrepresented what I said about cross-subsidisation. It is only in the context of cross-subsidy from long distance to local services that I would submit that there is little evidence of its importance. Cross-subsidy has been at the heart of our debate this afternoon. I feel that this is, in many ways, the kernel of the whole of this part of the Bill. It is really here that the Government's philosophy and that of the Opposition diverge most clearly. Their vision of the future is an ever-increasing amount of public provision of goods and services, subsidised in such a way that no one ever knows the real cost of what they are providing or consuming. Our vision is of a world in which people choose for themselves what they do with their money, and pay the real cost of what they choose, and where subsidies are only provided directly, to produce particular effects.

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Some may argue that our course in this Bill should therefore have been to remove all protective licensing entirely, straight away. The result would, indeed, have been a close alignment of costs and fares. But it would also have been an isolated act, which could not have been matched in all parts of the country with appropriate new policies on subsidy. Given the fragile state of much of the bus industry and the instability of its costs, we must take seriously the argument that total abolition of licensing could bring with it a loss of unprofitable services in some areas. We need, first, to know more about how cross-subsidy between services would work in a competitive market, and how far it would survive, because it is genuinely a reflection of operational efficiency.
The experience of the trial areas, to which I shall refer again in a moment, and the relaxations in road service licensing, should give us a far more solid basis on which to assess the future need for protection to remain. We do not know how many private operators will come in. This is a point which was also raised by the noble Lord. if we did know, life would indeed be easy. But quoting figures about the number of licences refused by the commissioners proves nothing. Operators know how the system works. If an existing operator objects to a licence application, what chance does the applicant have?—very little. We see the Government's task as one of creating the right conditions for public and private operators to take their own decisions, to fight their own battles and to get on with the day-to-day running of their businesses, without interference. These are the conditions that we are trying to create with these licensing changes.
I should like to turn to some of the interesting points raised by the noble Lord, Lord Lloyd; and may I thank him, also, for the very kind things he said, which, as I said earlier, I appreciated. He asked just what "the interests of the public" would mean in the context of the road service licensing clauses. The interests of the public are not spelled out in the Bill and to have done so, I suggest, would have been impossible. These interests differ from case to case, and perhaps even over time. They are frequently a matter of balance—a better service here, but perhaps a worsening of
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one elsewhere; lower fares somewhere, but perhaps an increased subsidy bill.
These matters will, I expect, be argued out before the traffic commissioners, and perhaps will eventually have to be decided by the Minister on appeal. The important point is that the interests are those of the public, not the interests of a particular section, such as the operators or—dare I be so bold as to say?—even of the workers in the industry, important though they are.
Clause 7 does not mention only the interests of the public. It uses the word "essential". That means that the commissioners will be able to regulate fares only when they are convinced that it is essential, not just desirable or even convenient. The whole drift of the clause is against fares control, which we believe is intrinsically as undesirable as any form of price control, and only justified at all by the existence of the licensing system.
The observations which the noble Lord made on the National Freight Corporation I should like to deal with when I come to some general observations on the corporation in a few moments. But the noble Lord, Lord Lloyd, also referred to the developments and initiatives which bus operators, county councils and voluntary organisations have undertaken. I, too, welcome many of these. The Bill recognises the importance of county transport planning, and will ensure that traffic commissioners pay attention to it in granting licences. I am sure that they will look favourably on new initiatives which counties sponsor.
This is particularly important in our rural areas, which were touched upon by my noble friend Lord Nugent, who spoke so eloquently; and may I thank my noble friend for his very kind remarks and support of the general tenor of the Bill. It is most appreciated. We are all acutely aware of the needs of rural communities, and it would be foolish of me to pretend that this Bill will solve all their transport problems. Of course it will not. But what we hope it will do is to remove any obstacles which licensing may now, perhaps inadvertently, place in the way of new initiatives.
It is in the rural areas that just one new service can make all the difference to the life of a village. It is there that some

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small operational saving could mean the survival of a service which would otherwise go under. And let us not pretend that licensing protection will save rural services if the costs are just too high. Operators and local authorities simply have to examine every option in their search for efficient ways of maintaining a lifeline to our villages. As my noble friend Lord Nugent of Guildford pointed out, that may mean car-sharing. It may mean more voluntary effort: whether to run a community bus or a social car scheme. It may mean more use of taxis and hire cars. It may mean making better use of spare seats on school buses. Wherever we can see obstacles, surely it must be right that we should remove them.
If I may turn to the speech of my noble friend Lord Lucas of Chilworth, may I thank him, too, for his support generally and for his thoughtful speech, which ranged over a number of detailed areas. I am sure that we shall return to many of them in Committee, but perhaps I may pick up just two of the points which he made. I believe, also—though I do not recollect who mentioned it—that the Blennerhassett Report was mentioned. I was asked why the Government have not taken the opportunity to react to it. The Government felt that it was important to seek up-to-date views on this report before legislation. Therefore, we issued a consultation document in December 1979. We are now evaluating the results of that consultation with a view to legislation, and I hope that noble Lords will feel pleased about that.
I should also like to comment tonight on another point which was raised by the noble Lord; namely, the operator licensing clauses in the Bill. I was asked whether the traffic commissioners should pay attention to the parking facilities at operators' premises. I recognise that this will be of concern to somebody who lives near a bus station.
This is not an area in which the commissioners have previously been involved. This has been—and we believe should continue to be—a matter for the local authorities who have adequate planning powers to control such matters.
In an interesting and thoughtful speech, my noble friend Lord Teviot expressed
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concern about the provisions for trial areas. The same concern was expressed by noble Lords on the other side—indeed, if I recollect correctly, by almost everybody who spoke. It may be helpful, therefore, briefly to spell out the Government's thinking. The same licensing régime has been with us for 50 years. The same arguments about the need to protect local services have been deployed for 50 years, and they are by no means unrespectable arguments. But how long is it since their validity was tested? In the last 30 years we have seen a persistent decline in services, enormous increases in the subsidy needed to keep services going and a new recognition of the role of county councils as authorities responsible for the maintenance of public transport. The time has come when some of these counties wish to examine more radical ideas for public transport in the future. Some wonder whether, in their areas, the licensing system is any longer of benefit at all. It certainly has not provided the answer to declining bus services. Perhaps the answer is to remove all restrictions on competition and see what happens. Let us see what the entrepreneur can do. A bold step, yes—but, I emphasise, a step to be taken by those who know the conditions in their areas.
A trial area (that is, I repeat, an area where road service licences will no longer be required), I would stress as emphatically as I am able, can only be and will only be designated where the county council itself applies to the Minister. There is absolutely no question of central Government imposing trials on unwilling counties. Trial areas will happen only where the county council believes that licensing is a negative, not a positive force, and that the public would be better served by abolishing it altogether.
My noble friend Lord Nugent of Guildford and, again, just about everybody else who spoke, were concerned about safety—and right they were so to be. May I say again that the intention of the Bill is precisely to ensure that safety standards are fully maintained. It is vital that we ensure that more competition does not mean cutting corners and delaying maintenance. That is why we have provided a rigorous operator licensing system for all operators, with full powers for vehicle examiners to inspect vehicles, wherever they are, and to prohibit unfit

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vehicles from being driven on the road. I have no doubt that at later stages of the Bill we shall be talking at much greater length on this whole aspect of safety—and, I say again, rightly so.
May I also thank my noble friend Lord Morris for his very kind observations. He stressed the Conservative philosophy that runs through the Bill. Yes, I do not so much admit as I gladly acknowledge that that is so. First, my noble friend referred to the state of transport law. I am sure that nobody would disagree with his description of the hideous length and complexity of the many Acts which have piled up over the years affecting the law on highways, railways, public service vehicles, road traffic restrictions and so on. The task of consolidation is never a quick and easy one, and I offer no immediate remedies for transport law as a whole; but it would not be out of order for me to indicate to the House that work on the consolidation of the law relating to public service vehicles is now in hand. Indeed, Part I of the Bill has to some extent been drafted with the coming consolidation in mind.
Before I leave the other points that my noble friend Lord Lucas of Chilworth made—I am told that it is absolutely in order for one to flit about a little when responding to a Second Reading debate, so noble Lords will please make allowances for that—I cannot resist commenting on what lie said about his approval of the abolition of the Freight Integration Council. He hoped that we would look to see whether we could remove other "dead hands" in statutes. I would commend to him the forthcoming Local Government Planning and Land Bill which will be arriving here, where he will see some 300 "dead hands" being removed. Whether or not my noble friend will like everything else that he and other noble Lords will see in the Bill remains to be seen. But this I promise him, and on this I am sure that I shall not be letting him down. My noble friend Lord Morris touched also on other passages in the Bill but, if he will allow me, I shall, in the interests of time, return to most of his other points at the Committee stage. I shall certainly look carefully at the figures which he quoted. Suffice it to say now that bus travel has indeed declined, and substantially, since 1950.
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I want also to say a very special "thank you" to the noble Lord, Lord Mishcon, who was so kind in what he said, at least in his introductory remarks—and certainly about me. I am very grateful for that. The noble Lord made various points and I would comment on just two or three of them. He referred specifically to the National Freight Corporation, as did the noble Lord, Lord Lloyd of Kilgerran, and others. So let me say just a few things about that.
The Government have made it quite clear in another place that they have no intention of selling off the NFC piecemeal. The organisation as it now stands is already that of a holding company, with day-to-day operations conducted by a substantial number of subisidary companies. The corporation is making a profit, industrial relations are good and we see no merit in breaking it up. This is why the Bill provides for the shares to be vested in a new holding company which will continue to maintain the businesses of the NFC as it now exists. The suggestion has been made that the Government should retain a majority of the securities. We on this side would reject such attempts to shackle the corporation, as it will be in its new form. The sale is not in the same category as those of British Aerospace and British Airways, where different considerations applied in order to safeguard interests involving military aircraft and the national flag carrier in an international market.
Such limitations might deter some subscribers for shares and result in the offer not being fully taken up. I see no reason why the taxpayer should risk getting a poorer return in this way. However, it must, in fairness, be said that there can be no guarantee that the organisation will remain fixed and unchangeable for all time. That would be equally true whether it were to remain in the public sector or be sold to private enterprise. Its prosperity in the future, and therefore that of its employees, will, in our view, best be safeguarded by allowing the company the freedom to adapt itself to the prevailing conditions and opportunities in this field of competitive enterprise.
Lord MISHCON: My Lords, I wonder whether the noble Lord will give way for one moment before he leaves the subject of the National Freight Corporation. A

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question was asked which I hope he will deal with at Second Reading, because I think it will help the confidence of the employees of the National Freight Corporation as well as helping those of us who want to table amendments. Have the Government in mind the type of purchaser that they prefer in order to safeguard the future of the various entities that make up the National Freight Corporation if it is not to be one unified corporation or the Corporation itself? If the Minister will be good enough to give that indication it may help those who want to frame amendments in order to protect a position which in fact they may not have to protect.
Lord BELLWIN: My Lords, I think the best way that I can deal with the point is to write to the noble Lord. I could give a view now and I think it would be the right one, but I feel it might be better if I were to write to the noble Lord and I will do it quickly, certainly, in order to allow the noble Lord all the time that he needs for drafting the amendments.
Lord MISHCON: My Lords, I would not wish to be discourteous to the noble Lord, tonight of all nights, but I think that writing to me, however courteous that may be on his part, would not afford the information at Second Reading to the rest of the House. I think it might be better if he were able to give that information now to the whole House.
Lord BELLWIN: My Lords, I could give a view, but I am not sure that that is what in fact I ought to do. What I will do however is to think about the point made by the noble Lord—that is, enabling the information to be available on a wider basis. I undertake to do that as a matter of some urgency in view of the relative proximity to the Committee stage. Perhaps I may try to deal with it in that way.
Lord LLOYD of KILGERRAN: My Lords, I am sorry to interrupt the noble Lord but, as the noble Lord the Minister has referred to me as having spoken to this matter generally, perhaps he will be good enough to notify me as well as the noble Lord, Lord Mishcon.
Lord BELLWIN: Indeed, my Lords, of course that goes without saying. I will make a special point of that. I think I have just about covered that point and I
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am coming to a close: the hour is now advancing, but I think I should refer to yet another point mentioned by the noble Lord before he referred to the pensions, and that was in connection with car sharing, which has been referred to by many speakers tonight.
I find it difficult to know just what is the Opposition's view on car sharing. In 1978 it was they who made significant relaxations in the licensing restrictions which had hung over car sharing for so many years. Our complaint is that they just failed to finish the job. What they left, in our view, was a quite inappropriate restriction on advertising and some obscurity about when car sharing is of such a kind that it constitutes the business of carrying passengers and is thus caught by licensing requirements. What we are doing in this Bill is to remove what we think are the rather silly bars on advertising and to ensure that the motorist who is not seeking to make a profit out of giving lifts can be quite sure that he is not breaking any rules. Far from being vague, the Bill is much clearer than the present legislation.
As to the very important points on the actuarial assumptions on the historic obligations for the pensions, I accept that there is bound to be a measure of uncertainty about the actuarial assumptions but this is not a new or special risk introduced by the Bill. The 1974 Act depended upon actuarial assumptions: so indeed does every funded pension scheme. The amount of funding debt that would have been created under the 1974 Act would have depended upon the actuarial assumptions used. It might have turned out to be too little. The contributions which are payable under any ordinary contributory scheme are determined by the actuary. They may turn out to be too little to support the benefits but in either event the members and pensioners would probably look to the employer to make good the deficiency. That is the position that the board and the corporation would have been in under the 1974 and the 1978 Acts and I stress that this Bill does not change the position. It has been suggested that members and pensioners will be—or might be—worse off under the Bill than under the 1974 Act on account of this point, but I feel satisfied about it.
Lord MISHCON: My Lords, the Minister is very kind to give way again

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and I promise him that I shall trouble him no further with interruptions. I think that the noble Lord, Lord Bellwin, has unintentionally misled the House if his last two sentences are supposed to give any confidence to the pension fund and the pensioners. Is the Minister not aware that, when the negotiations took place in 1974 and the obligation was entered into, that was done on the basis of agreement being reached between all parties? Under this Bill the Minister now seeks to have a unilateral right to decide the amount without agreement, even though he may be endeavouring to seek it. It is that about which I complained, it is that about which the pension fund complains, and the liability that may be left with British Rail is so substantial that one really must take this matter in hand and grasp it in the same way that the noble Lord the Minister wanted to grasp the nettle of transport generally.
Lord BELLWIN: My Lords, first I must say that, of course, there is no intention to mislead the House, at this or any other time, past or future. I think that goes without saying. But many things are said which can lead to various assumptions. Perhaps I may just say this about the actuarial assumptions. In the first place, it is not true that there would necessarily have been agreement under the 1974 Act. If I may say with equal respect—no less—the noble Lord, Lord Mishcon, is not misleading the House. I think that is far too strong a way to put it. Of course we might disagree, we might give a wrong view but that is not misleading. I think you only mislead if you set out to do so and clearly no one is trying to do that. But first there is the formal position.
Under the Act the Minister was to determine the amount of funding debt that was to be created. He did not have to obtain the agreement of anybody else and the position was the same under the Bill as it was introduced. But in another place my right honourable friend the Minister wrote into the Bill a requirement that there should be consultation with the parties before the unfunded proportions were determined. He will have to consult with the managing committee of the scheme concerned and with the board or the corporation as the case may be.
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Secondly, there is the extra-statutory position. I believe that it was the intention of the previous Administration to seek to reach agreement on the actuarial assumptions to be used by the board, the corporation and the pension schemes. It takes two to make an agreement. It is certainly our intention to seek to reach agreement on the actuarial assumptions. My right honourable friend the Minister has given that undertaking in another place and I repeat that same undertaking in this House. But I cannot undertake that in the event agreement will he reached. At the end of the day the decision has to be taken by someone; I may say that we shall not be seeking to drive the hardest possible bargain. We shall he looking for a solution that is equitable as between the pension schemes and the board, on the one hand, and the taxpayer, on the other.
Before I close, I feel that I should refer to one or two of the points raised by the noble Baroness, Lady Fisher of Rednal. I so liked her analogy of the village shop in the rural areas and I loved her suggestion that perhaps the lady who closed the village shop would have done well to go into the business of providing transport for the local people. That is a fascinating thought.
The noble Baroness said that the buses in Birmingham were better than the buses in Leeds, but she knows that I would never agree with that, despite the reservations I have about the bus service in Leeds! I would put it, if I may, not that "there's nowt so strange as folk" but that "there's nowt so queer as folk", and, if I may say so, the expression comes from my part of the world. She referred to recruitment of drivers, what deterred them. That is a fascinating point, a most interesting one. If she has any bright suggestions she could make in any form, writing or anything else, I know I should not be the only one who would be glad to hear them. She said car-sharing does not need the Government. I can assure her it will not get the Government. It will get the Government's approval of a scheme and then they are on their own.
I think I have covered most of the points. It has been said that there is no certainty, no guarantee that the Bill's proposals will achieve the specified aims

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and objectives. We have heard today much scepticism from the other side of the House. It has to be said that, as with any radical proposals, there is never a guarantee, and brave indeed are those who would profess certainty. But is that an excuse to do nothing? Is that a reason to allow the present deteriorating scene to continue? Noble Lords on the other side would appear to be content to go on happily meandering—
Several noble Lords: No!
Lord BELLWIN: Well then, unhappily if you like, while bus use goes on steadily falling, and of that there can be no argument. Their only amelioration would be to pay more in subsidies. May I remind the House of these staggering figures: it was £23 million in 1969, not all that long ago; £291 million in 1978. I think those are staggering figures, and still the service and its use declines.
I am singularly unimpressed, and I am confident that the great majority of my noble friends will be unimpressed, by the, I have to say, unhelpful approach to this Bill. The car-sharing proposals, the trial areas, the ending of licensing of express services, the change in emphasis of licensing new operators within the State service limits, the switching of licensing from vehicles to operators, the moving of the NFC to the private sector, the sensible new way of dealing with the historic obligations of the pensions fund; these and the other progressive changes can indeed make this a major reforming Bill, one which gives me much pride in presenting it and to which I earnestly hope your Lordships will give a Second Reading tonight.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

GREATER MANCHESTER BILL [H.L.]
Reported from the Select Committee on opposed provisions with amendments.

LABORATORY ANIMALS PROTECTION BILL [H.L.]
Report from the Select Committee (together with the Minutes of Evidence and proceedings of the Committee) made and to be printed; Bill reported with amendments and recommitted to a Committee
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of the Whole House; Bill to be printed as amended.