Lords Sitting of 7 August 1980

Preamble
(Sitting in the Royal Gallery)
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Chester.

MESSAGE FROM THE QUEEN
The Earl of WESTMORLAND: My Lords, I have the honour to present to your Lordships a Message from Her Majesty the Queen signed by her own hand. The Message is as follows:
"I thank you most sincerely for your loyal and dutiful Address on the occasion of the 80th Birthday of Her Majesty Queen Elizabeth the Queen Mother.
"I am deeply moved by your wish to be associated with the congratulations offered to Her Majesty Queen Elizabeth the Queen Mother on this happy occasion and by the warmth of your tributes to her".

MESSAGE FROM THE QUEEN MOTHER
The LORD CHANCELLOR (Lord Hailsham of Saint Marylebone): My Lords, I have to inform your Lordships that, together with the most reverend Primate the Archbishop of Canterbury, the Lord President, the Lord Aberdare, the Lord Byers, the Baroness Hylton-Foster, and the Lord Peart, I, pursuant to the Order of the House, waited upon Her Majesty Queen Elizabeth the Queen Mother on Tuesday last with the Message of this House of 4th August, and that Her Majesty made the following reply:
"My Lords and Members of the House of Commons:
"I thank you for your messages of congratulations on my 80th birthday and I am deeply touched by the very kind sentiments that you have expressed.
"Eight decades is certainly a considerable span. During this time a
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great deal of history has unfolded and in many ways our lives have been transformed. New discoveries, new inventions, new outlooks continually challenge the established order. But I am happy to feel that there is one constant factor: the good sense, loyalty and patriotism of the people of our land.
"During the war The King and I, on our visits round the country, were sustained and inspired by the steadfastness, courage and compassion shown by our people. It is encouraging to find today that in our schools and universities and among the younger generation these same qualities live on.
"I feel deeply grateful to have been given the opportunity to serve our beloved country in some small way and through the years, in peace and in war, I have been always helped and uplifted by the love of my family, the loyalty and understanding of our people, and by my faith in Almighty God.
"Once again, may I thank you all from my heart for your very kind messages on my birthday."
Signed, Elizabeth Regina.

A.33: HOCKLEY CROSSROADS IMPROVEMENT
3.11 p.m.
Lord MONTAGU of BEAULIEU: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will give top priority consideration to the construction of a flyover at the traffic light controlled crossroads on the A.33 Winchester by-pass to avoid even greater and continuing congestion following the completion of the M.3 extension, the much welcomed benefits of which will be nullified unless this bottleneck is eliminated en route to the major port of Southampton.
Lord MOWBRAY and STOURTON: My Lords, my right honourable friend the Minister of Transport recognises the urgent need for relief at the signal-

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controlled crossroads on the Winchester by-pass at Hockley. He will shortly be promoting an improvement scheme within the existing highway boundaries. This will provide extra capacity to alleviate the present problem and the traffic conditions that will arise when the planned M.3 motorway extension from Popham southwards to Bar End is in use. This interim improvement will not take the form of a flyover. The possibility of providing a flyover in a new permanent junction will be very carefully considered in the fresh study that is to be made of possible schemes for further improving the trunk route south of Bar End.
Lord MONTAGU of BEAULIEU: My Lords, I thank my noble friend for that reply. Is he aware that this bottleneck has been a problem for many years, and is quite separate from the extension of the motorway? In the meantime, could my noble friend also look into the possibility of a better phasing of the lights while this work is being done?
Lord MOWBRAY and STOURTON: My Lords, better phasing of the lights is, of course, a matter for the appropriate authorities, in this case the Department of Transport and the police, and it will certainly be considered as and when appropriate. At the moment, there are two "Ahead" and one "Right turn" lanes in each direction. In the next two years there may be four "Ahead" lanes in each direction and one "Right turn". When that happens, the phasing of the lights will become much more appropriate, and will be done.
Lord MAYBRAY-KING: My Lords, when the noble. Lord is considering this matter, will he remember that open, free-and-easy access to the important port of Southampton from all over England, leading to Europe, is a vital matter, both for England and for Southampton?
Lord MOWBRAY and STOURTON: My Lords, I can assure the noble Lord, Lord Maybray-King, that not only the M.25 but the London-Southampton Road is of the utmost importance to this country, and that they both have the highest priority that this Government give to road building.

THE RENTON REPORT: RECOMMENDATIONS 13 AND 15
3.14 p.m.
Lord RENTON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will now request Parliamentary Counsel to act upon Recommendations (13) and (15), dealing with statements of principle and of purpose respectively, of the report of the Committee on The Preparation of Legislation (Cmnd. 6053), with a view to better expressing the intentions of Parliament and the better understanding of statutes.
The LORD CHANCELLOR: My Lords, Parliamentary Counsel are well aware of these recommendations, and, subject to drafting instructions by responsible Ministers, will act on them.
Lord RENTON: My Lords, may I thank my noble and learned friend for that very encouraging and satisfactory reply.
Lord HARMAR-NICHOLLS: My Lords, does not this Question and the Answer confirm the impression that some have, that we are either having too much legislation or there are too few draftsmen to deal with it? Will that be kept in mind and perhaps something done about it?
The LORD CHANCELLOR: My Lords, I cannot resist reminding my noble friend of the words of Edward Gibbon, who was faced perhaps in his time with problems not dissimilar to these. He said:
"The experience of an abuse from which our own age and country are not perfectly exempt may sometimes provoke a generous indignation, and extort the hasty wish of exchanging our elaborate jurisprudence for the simple and summary decrees of a Turkish cadhi. Our calmer reflection will suggest that such forms and delays are necessary to guard the person and the property of the citizen; that the discretion of the judge is the first engine of tyranny; and that the laws of a free people should foresee and determine every question that may probably arise in the exercise of power and the transactions of industry. But the government of Justinian united the evils of liberty and servitude, and the Romans were oppressed at the same time by the multiplicity of their laws and the arbitrary will of their master".
Lord ELWYN-JONES: My Lords, while thanking the noble and learned Lord for that admirable dissertation, may I ask him whether it was before or after Edward Gibbon wrote Decline and Fall? My Lords, in spite of the noble and learned Lord's acceptance of the purport of the Question, may I ask whether, if reliance is placed in Acts of Parliament on statements of purpose, there may not be a temptation, as indeed was said by First Parliamentary Counsel in his evidence to the Renton Committee, to call for something which is no more than a manifesto and which may obscure what is otherwise precise and exact?
The LORD CHANCELLOR: My Lords, the same view was expressed even more succinctly by our joint predecessor, Lord Bacon, who said:
"Quantum fieri potest tamen, prologi evitentur, et lex incipiat a jussione".
Lord BYERS: My Lords, may I ask the noble and learned Lord how he obtained the intelligence that these two supplementary questions were going to be asked?
The LORD CHANCELLOR: My Lords, I just guessed.
Lord ELWYN-JONES: My Lords, may I respond to the noble and learned Lord the Lord Chancellor in this vernacular, "Diolch", and refer him to the laws of Howell DDA.
Lord RENTON: My Lords, is my noble and learned friend aware that the more the detail that has to be written into a Bill the more desirable it is to define the purpose underlying that detail so that it may be better understood?
The LORD CHANCELLOR: Yes, my Lords; but this would give rise, of course, to the same dispute as we had the other day. The thing will ultimately depend upon our laws of interpretation. The literalists have won what is virtually a complete triumph, and the purposivists have been in retreat for 300 years.

COMPANY LAW: EEC DIRECTIVE
3.19 p.m.
Lord BOYD-CARPENTER: 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 action they propose to take in respect of the EEC Fifth Directive on company law.
Lord TREFGARNE: My Lords, the draft European Community Fifth Directive on company law is at present before the European Parliament. The next step is for the European Parliament to give its opinion on the draft directive. Only then will the Commission make a formal proposal to the Council of Ministers. This is not expected for some considerable time, and I cannot predict what action may be needed until the terms of the proposed directive are known.
Lord BOYD-CARPENTER: My Lords, while thanking my noble friend for that reply, may I ask whether the Government appreciate that the introduction of anything on these lines through Community legislation into the company law of this country would have drastic and difficult consequences including, inter alia, the revival of the discredited Bullock recommendation?
Lord TREFGARNE: My Lords, we shall ensure that our preference for the voluntarist approach in this matter is conveyed to those preparing the directive.
Lord BRUCE of DONINGTON: My Lords, is the noble Lord aware that, notwithstanding the fact that this draft has still to be considered by the European Parliament, it has been found in practice that after emerging from that examination it very rarely differs substantially from the original draft? Will the noble Lord give the House the assurance that detailed discussions will be held with all those affected in the United Kingdom, including not only the legal and accounting professions, but industry itself?
Lord TREFGARNE: My Lords, the Government will take steps to ensure that

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they are acquainted with the views of those who may be affected by the directive and will take into account those views when forming their own views to present to the Council of Ministers.

COUNTER-INFLATIONARY POLICY: BORROWING LEVEL
3.21 p.m.
Lord MORRIS: 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 criteria are used to determine a level of borrowing in the private sector compatible with their counter-inflationary policy.
The MINISTER of STATE, TREASURY (Lord Cockfield): My Lords, the achievement of the Government's target for money supply growth is central to their policies for bringing down the rate of inflation. While no target is set for bank lending as such, growth in bank lending to the private sector is one of the factors influencing money supply growth. Accordingly, the Government's interest rate and other policies are directed at ensuring that such growth is compatible with the money supply target.
Lord MORRIS: My Lords, I thank my noble friend for that Answer. While I assume that my noble friend agrees with his right honourable friend when she stated the other day that we will be able to reduce the interest rate when fewer people, including the Government, are living on credit, may I ask the Minister whether he can reconcile that view with the unfortunate practice of the clearing banks of continually, energetically and expensively exhorting people, and particularly the young, to pledge their credit as hard as they can go, bearing in mind the unfortunate economic and social ills that must flow from that practice?
Lord COCKFIELD: My Lords, I appreciate the important point that has been raised by my noble friend. The directional guidance issued by the Bank of England to the clearing banks enjoins
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strict control over advances to individuals to ensure that the needs of priority customers are met. The need for caution was also underlined by my right honourable and learned friend in his Budget Statement on 26th March.
Lord BRUCE of DONINGTON: My Lords, is the noble Lord aware that the events of the last few days, including the publication of the figures, show clearly that Her Majesty's Government have no control over the money supply and, in the words of the Financial Times of yesterday,
"… the Government's complete monetary policy is in a mess"?
Does he also realise that this is further underlined by the fact that only yesterday the Bank of England had to inject a further £500 million into the banking system? When will the Government admit that the whole of their policy in respect to monetary affairs lies in complete shambles?
Lord COCKFIELD: My Lords, not even the noble Lord is entitled to draw such a conclusion. The corset control was imposed by Mr. Healey in June 1978. It greatly obfuscated the position. This now has been swept away and we can see what the true position is. If the noble Lord is interested in pursuing the question of the faults in the Financial Times from which he quoted, I might draw his attention to what appeared in their leader of the same day. It read:
"What has been revealed is not a new horror but a past error. The real economy shows clearly that whatever happened last year restraint is now a fact".
I commend that thought to the noble Lord.
Lord BRUCE of DONINGTON: My Lords, arising out of that reply in which the noble Lord admits that the Government have been labouring under some illusions for, at any rate, the last six months, will he give an undertaking that during the very welcome Recess he and his colleagues will do a bit of homework and get their figures right?
Lord COCKFIELD: My Lords, unlike the previous Government, this Government do not labour under illusions, or for that matter, delusions. It is well-

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known that the money supply growth figures published in the lifetime of the Labour Government were, in fact, substantially understated because of the leakage as the result of the corset control. We were aware of the existence of that leakage and it was one of the factors taken into account in setting the money targets.
Lord ORR-EWING: My Lords, will my noble friend arrange with Hansard to have an asterisk put to the first supplementary which came from the noble Lord, Lord Bruce, because he appears to have kicked the ball through his own goal?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, is the noble Lord aware that, whereas the House expects from him in answer to every question put to him an analysis of the work of the last 18 months of the previous Government, it would greatly appreciate a more constructive and very much lighter approach from him in answer to questions?
Lord COCKFIELD: My Lords, the Government have a constructive policy which I have endeavoured to explain to noble Lords opposite on a large number of occasions and I would recommend the noble Baroness to read what I have said because it sets out the position with great clarity. The Government have a clear policy and they propose to pursue it to success.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, is the noble Lord aware that it is bad enough to have to listen to it?
Lord AVEBURY: My Lords, would the Minister admit that extortionate interest rates are one of the main causes of the large numbers of liquidations in private industry and that in the long run it will be inflationary if domestic companies are supplanted in the home markets by foreign competitors whose prices are not under the control of the Government?
Lord COCKFIELD: My Lords, I do not accept the noble Lord's analysis of the situation. We have made it clear repeatedly that if, for example, there are excessive wage settlements, these result in
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both liquidations and insolvencies on the part of companies and unemployment on the part of the workers who demand these excessive increases. We have no desire whatsoever to see these effects. They are the regrettable consequence of the paramount need to bring down the rate of inflation.
Lord MISHCON: My Lords, is the noble Lord aware that political irony is not acceptable to this House as a substitute for proper, informed replies to questions? Is he further aware—and, if not, would he consult the Equal Opportunities Commission—that controls are not exercised formidably by corsets in these days; and if he is in any doubt about the effectiveness of corsets as a method of control, would he kindly consult his right honourable friend the Prime Minister?
Lord COCKFIELD: My Lords, I have not the slightest doubt that the noble Lord is a greater authority on corsets than I am.
Lord WHADDON: My Lords, is the noble Lord aware that the Government's smugness and self-satisfaction are not shared by Britain's export industries—in which I must declare an interest—since these industries constantly have to fight against an artificially high exchange rate caused by the Government's savagely high interest rates at home?
Lord COCKFIELD: My Lords, the Government are very fully aware of the problems that are faced by export industries. The performance of such industries reflects very great credit on them and they have succeeded in holding their own to a remarkable degree. But I think that it is valid and important to point out to the noble Lord that the greater part of the rise in costs from which the export industries suffer is due to the rise in labour costs.
Lord BESWICK: My Lords, would the noble Lord now be good enough to say in the present situation by what means the issue of credit is to be controlled? If he tells the House that it is by the high interest rates, will he bear in mind that the useful export earning industries cannot afford that high interest rate and it is tending to be the non-useful, the speculative interests, that afford that high interest rate?
Lord COCKFIELD: My Lords, I do not accept this analysis. The important aspect so far as British industry as a whole is concerned, and export industry in particular, is that it should restrain the rise in its costs, and particularly the rise in its labour costs. If this is done it will greatly improve its competitive position.
Lord BESWICK: My Lords, would the noble Lord now be good enough to answer the first part of my question? Will he say, now the corset has gone, what powers the Government have to restrain the issue of credit by the banking system?
Lord COCKFIELD: My Lords, there are various ways that credit is restrained and the most important is the rate of interest which in effect rations the available money to the demand for it. The most important point of all is to bring down the rate of inflation. If we were to bring down the rate of interest prematurely, it would merely result in a further upsurge in inflation. As soon as it is clear that the monetary aggregates are under proper control, reductions in the rates of interest will follow.
Lord LEATHERLAND: My Lords, is the noble Lord aware that I agree with everything he has said in the last answer? But may I also ask him to tell us by what percentage inflation has risen since the present Government came into office? Is it not about 20 per cent.?
Lord COCKFIELD: No, my Lords, it is not. The rate of inflation was on a steeply rising path at the time that this Government took office in May of last year. This is amply demonstrated by the fact that if one compares an annualised six-month figure it is substantially higher than the 12-month figure. The rate of inflation has already begun to fall and we anticipate that it will fall further.
The LORD PRESIDENT of the COUNCIL (Lord Soames): My Lords, we have had a good run on this Question and perhaps it is important, in the interests of the House, that Questions do not turn into a matter of debate.

CIVIL DEFENCE
Lord DENHAM: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m. this afternoon, my noble friend Lord Belstead will repeat a Statement that is to be made in another place on civil defence.

BUSINESS OF THE HOUSE
Lord DENHAM: My Lords, on behalf of my noble friend the Leader of the House, I beg to move the Motion standing in his name on the Order Paper. The purpose of this Motion is to enable the House to consider the Commons reasons and amendments to the Housing Bill in the order in which amendments were taken in this House at the earlier stages. I am sure that the House will wish to proceed in this way. I beg to move.
Moved, That if the Housing Bill is returned from the Commons with amendments and reasons any amendment to Schedule 1 or any amendment proposed in lieu thereof be taken first on the consideration of those amendments and reasons. —(Lord Denham.)
On Question, Motion agreed to.

LOCAL GOVERNMENT, PLANNING AND LAND (No. 2) BILL
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin): My Lords, I beg to move the Motion which stands in my name on the Order Paper.
Moved, That it be an Instruction to the Committee of the Whole House to whom the Local Government, Planning and Land (No. 2) Bill has been committed that they consider the Bill in the following Order, vizt.:

Clause 1

Schedules 1 to 6

Clauses 2 to 46

Schedule 7

Clauses 47 and 48

Schedule 8

Clauses 49 to 62

Schedule 9

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Clauses 63 to 72

Schedule 10

Clauses 73 to 78

Schedule 11

Clause 79

Schedule 12

Clauses 80 to 82

Schedule 13

Clauses 83 to 90

Schedule 14

Clause 91

Schedule 15

Clause 92

Schedule 16

Clause 93

Schedule 17

Clause 94

Schedule 18

Clauses 95 to 98

Schedule 19

Clauses 99 to 106

Schedule 20

Clauses 107 to 109

Schedule 21

Clauses 110 to 121

Schedule 22

Clauses 122 and 123

Schedule 23

Clauses 124 to 131

Schedule 24

Clauses 132 to 134

Schedules 25 and 26

Clauses 135 to 144

Schedule 27

Clauses 145 to 153

Schedule 28

Clauses 154 to 162

Schedule 29

Clause 163

Schedule 30

Clauses 164 to 166.

—(Lord Bellwin.)
On Question, Motion agreed to.

PIER AND HARBOUR ORDER (GREAT YARMOUTH WELLINGTON PIER) CONFIRMATION BILL
Read 3ª.
Lord MOWBRAY and STOURTON: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Mowbray and Stourton.)
Lord ELWYN-JONES: My Lords, may I ask whether the noble Lord will take advantage of the Recess to visit personally some of the threatened seaside piers that he has recently been praising in the House but failing to provide any finance to safeguard?
Lord MOWBRAY and STOURTON: My Lords, during the summer months it is a custom among us that we take ourselves to seaside resorts; and I, like others of your Lordships, will be doing precisely that. Piers are a prime attraction at such seaside resorts. I can assure the noble and learned Lord that I shall be doing my bit as a private individual, putting my hand in my pocket, buying ice-creams and all the rest. If private individuals will help to keep the piers going, all will be well.
On Question, Bill passed.

HOUSING BILL
Returned from the Commons earlier this day with certain Lords Amendments agreed to; with one other Lords Amendment agreed to with an amendment; with certain other Lords Amendments disagreed to but amendments proposed in lieu thereof and with a consequential amendment to the Bill and with the remaining Lords Amendments disagreed to with reasons for such disagreement; the said amendments and Reasons printed pursuant to Standing Order No. 47.
3.36 p.m.
Lord BELLWIN: My Lords, I beg to move that the Commons reasons and amendments be considered forthwith.
Moved, that the Commons reasons and amendments be considered forthwith.—(Lord Bellwin.)
On Question, Motion agreed to.

COMMONS REASONS FOR DISAGREEING TO CERTAIN LORDS AMENDMENTS, COMMONS AMENDMENTS IN LIEU OF CERTAIN OTHER LORDS AMENDMENTS, COMMONS AMENDMENT TO ONE OF THE LORDS AMENDMENTS AND A COMMONS CONSEQUENTIAL AMENDMENT TO THE BILL
[References are to Bill (280) as first printed for the Lords: the Commons Reasons and Amendments are printed in italics.]

LORDS AMENDMENT
1 Schedule 1, page 95, line 19, leave out from ("dwelling-house") to end of line 23 and insert ("it is designed or specially adapted to make it suitable for occupation by persons of pensionable age, and which it is the practice of the landlord to let for occupation by persons of pensionable age")
The Commons disagreed to the above amendment but proposed the following amendment in lieu thereof:
Schedule 1
2 Page 95, line 23, at end insert—
("5. The landlord has, within six weeks of the service on it of a notice claiming to exercise the right to buy the dwelling-house, applied to the Secretary of State for a determination under this paragraph, and the Secretary of State has determined that the right to buy is not to be capable of being exercised with respect to the dwelling-house; and he shall so determine if satisfied—

(a) that the dwelling-house is designed or specially adapted for occupation by persons of pensionable age; and

(b) that it is the practice of the landlord to let it only for occupation by such persons.")

Lord BELLWIN: My Lords, I beg to move that this House do not insist on their Amendment No. 1 and agree with the Commons in their Amendment No. 2 proposed in lieu thereof.
This brings us back to the question of the right to buy and its application to elderly persons' dwellings. This issue has been thoroughly debated in your Lordships' House at every stage of the Bill. Peers from all parts of the House have been concerned to preserve an adequate stock of housing for elderly people. The Commons Amendment No. 2 on the list of amendments shows that the Government share that concern, and that they have now been prepared to go almost all the way to meet the views expressed in your Lordships' House.
The amendment which my right honourable friend tabled in manuscript yesterday, in lieu of the amendment which was made in this House, has the same effect as that amendment with one important change, and one fairly minor change of wording. The major change which is introduced by the amendment which was passed last night in another place is that, in respect of the new category of old persons' dwellings covered by the amendment, the exclusion from the right to buy will follow the service of a notice claiming to
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exercise the right, and a determination to that effect by the Secretary of State.
I emphasise the words "the new category of old persons' dwellings", because I want to make it quite clear that the effect of disagreeing with Amendment No. I and accepting Amendment No. 2 in lieu would be to reinstate the form of exclusion in paragraph 4 of Schedule 1 to the Bill, as it was before we passed our amendment, as well as to add a new paragraph to the Schedule. In other words, put simply, sheltered housing would be excluded automatically, and other old people's housing would be excluded only following a determination by my right honourable friend.
There is no mystery about the reason for introducing the requirement for a determination before a dwelling is to be treated as exempt. It is intended to remove the scope for reluctant local authorities to exploit the exclusion, by seeking to deny the right to buy, to a large number of elderly persons on specious grounds, when dwellings do not actually fall within the terms of the definition given.
It is also to prevent a reluctant authority from dragging its feet that a time limit is contained within the new paragraph. A local authority will have to make up its mind and apply to the Secretary of State within six weeks of service of the right to buy notice if it wants an exemption under this provision. That is, I suggest, a reasonable time. It gives the local authority sufficient time to establish the facts and apply; and it defines a period which, even though it may be unwelcome to the tenant who wishes to buy, is perhaps not unreasonable.
However, just as conditions are placed on the way in which the local authority must operate, so there is a clear obligation placed upon the Secretary of State. It will not be possible for the Secretary of State to withhold giving a determination if he is satisfied that the application relates to a dwelling which falls within the terms of the paragraph. The amendment provides that in those circumstances he shall so determine; the provision is mandatory upon him. The Government place this obligation upon themselves in order to demonstrate their clear intention as to the manner in which the exclusion shall operate.

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Your Lordships will wish to know what sort of dwelling is likely to be covered by this provision. The paragraph will apply to any dwelling-house which is designed or specially adapted for occupation by persons of pensionable age and which it is the practice of the landlord to let only for occupation by such persons. That definition is taken from the amendment made in this House, with the addition of the word "only" in the second leg of the test which has to be applied.
That addition is the minor change of wording to which I have already referred. It is based on an amendment to our amendment, proposed in another place by Mr. Robin Maxwell-Hyslop and others. A considerable amount of discussion late late night was devoted to this change in wording. It was suggested that the addition of this word meant that it would be significantly more difficult to exclude dwellings intended for old people from the right to buy, and that it would provide my right honourable friend with a ready pretext for declining to make a determination in a significant number of cases. My right honourable friend expressed the view that such an interpretation did not place enough emphasis on the word "practice". He also made it quite clear that it would not be his intention to operate these arrangements in such a way, and I am sure that in the light of the assurances which he gave your Lordships will not wish to pursue this point this afternoon.
For those with some expert knowledge of these matters, it may help if I say that the kind of accommodation which will be covered by Amendment No. 2 will be what is known as Category 1 accommodation. It is the sort of specially designed accommodation which has been the cause of the concern expressed so eloquently in this House and elsewhere. It has been clear for some time that this concern would lead my right honourable and honourable friends in another place to go a considerable way towards meeting the amendment which was made at Report stage in this House. In the course of yesterday they decided to go even further. I do not think I can usefully add much more. I think your Lordships will have the tenor, the feeling of all that has taken place, some of it quite traumatically, in he last day or so. I beg to move.
Moved, That this House doth not insist on their Amendment No. 1 and agree to the Commons Amendment No. 2 proposed in lieu thereof.—(Lord Bellwin.)
3.45 p.m.
Baroness BIRK: My Lords, this is a very happy day for the Lords, and, between ourselves, I am feeling very happy, too. I think we are celebrating the collective good sense of this House, because all the way through the debate on this very long and complicated Bill, from Second Reading until today, the concern about the elderly cut right across party lines. It really is a great pity that the Government were so obdurate for so long, and it was really their own fault that their conversion came so late; but at least it came, and we welcome it. In saying this, I certainly do not blame the noble Lord, Lord Bellwin, who, I should like to think, as today I am feeling rather starry-eyed, was secretly on the side of the angels. If he was not, do not tell me; let me live with my illusions.
The reason so many of us in this House and outside will be so delighted about this amendment is that there is today a terrible danger for old people if anything is done, as would have happened with the Bill as it was before, to erode the housing provision made for them. Under the Bill as it was originally drafted, 199,000 sheltered houses were exempted; now, under this new exclusion, 221,000 more will also be excluded. As the Minister so rightly pointed out, the sheltered housing will be taken within the other housing. Since another place's Select Committee on the sale of council houses has estimated that between five and 10 houses would have to be sold in order to be able to build one replacement, one can see the very great importance of preserving elderly people's dwellings. Within the last week or so we saw an article in The Times—it was followed by a letter—which pointed out the great importance of trying to keep elderly people in their own homes and using day centres and other means in order to keep them out of residential care. I feel that this is going to go a long way towards stopping the reversal of what we are trying to do now.
The Minister referred to the change following the amendment—the change between the Government's amendment

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and the amendment which I moved on Report. Quite frankly, I would have preferred the decision to be left with the local authorities and housing associations. I do not believe that in this instance either local authorities or housing associations would use housing for the elderly in order to push a coach and horses, as the Government evidently felt they would do, through the right-to-buy provisions. I believe that both Conservative and Labour councils feel strongly about the need for housing for old people, are concerned that they have not sufficient housing and are trying to find ways of producing more, and I do not believe that they will behave in this way in this instance. But, since the Secretary of State, in his original Statement yesterday, confirmed that the Government were endorsing the will of this House, and since when I heard him speaking much later, on the occasion when the amendment was debated, he spelt out, in what I felt were extremely generous and sympathetic terms, his intention to honour the letter and spirit of the amendment, I shall certainly accept his assurances. I shall keep an eye on him, of course, to see how it works.
It is now up to local authorities to apply to the Secretary of State when they want the determination for exclusion to be exercised, and I do believe that, with the concern of all authorities, the concession will be widely welcomed. I know that the local authority organisations welcome this, as indeed do the voluntary bodies. I have received, as I suppose have many noble Lords, many letters about the proposed pre-emption clause which the Government had intended to move instead. It was a Conservative Back-Bencher who pointed out during the debate in another place last night that, if the exemption clause had been passed, he believed there would have been no further building of houses for the elderly for a considerable time.
Many amendments were moved in this House, and certain ones which we shall be discussing later were won on Report. If I may speak personally for a moment, this one seemed to me to be the most important. I am particularly pleased that the Government have included in the body of the amendment the criteria that I, my friends and other Members of the House supported on Report. I think this is an area which, as I said then, is not
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within party political territory. It is something that is a social as well as an economic necessity. What happened last night and what we are, I hope, confirming today, demonstrates the importance and the necessity of a second Chamber which takes its function of revising very seriously indeed.
Several noble Lords: Hear, hear!
Baroness BIRK: What has happened is the result of the dedication to this of so many Members of this House, my noble friends behind me, the Liberals, the Cross-Benchers and indeed many Members sitting opposite, who, while they may have believed, as I am sure they do believe, in the Government's Bill and in their manifesto promises on the right to buy, felt strongly enough about this particular exclusion to support us. Therefore it is with great pleasure that I accept the amendment as moved in the Commons.
3.51 p.m.
Lord WIGODER: My Lords, I have been asked specifically by the National Executive Committee of the Liberal Party to say how very greatly they appreciate the vital role played by your Lordships' House in the introduction of this amendment. They particularly asked me to say how impressed they were with the high standard of debate both on this amendment and on the later one moved by my noble friend Lord Banks in relation to option mortgages. They are full of admiration for the fact that on those amendments many of your Lordships found it possible to vote according to the merits of the argument, quite irrespective of narrow party political considerations. They entirely accept that as a result of this amendment and a later one there are going to be substantial safeguards for the elderly in our society.
They recognise too, of course, that had there been in existence the sort of one-chamber government which they have been advocating for the last few years, the assistance that is now going to be given to the elderly and the disadvantages would simply not have been possible. In those circumstances they join with my noble friends on the Liberal Benches who have jointly sponsored this amendment from the beginning in commending it to your Lordships.
Lord HYLTON: My Lords, as I moved an amendment in Committee and also wrote to The Times on this point, I am very happy indeed that the Government have had second thoughts. I think we all have to be grateful to some ingenious and vociferous friends of the noble Baroness in another place for giving the Government that extra nudge. I was sorry my noble friend the Minister felt obliged to talk about local authorities exploiting spurious grounds in relation to the amendment carried in this House.
When we come to Amendment No. 2, I feel that this complicated procedure involving the Secretary of State is perhaps something of a fig leaf to cover his retreat. It seems to me very bureaucratic that the tenant has to serve a notice and that then the local authority has to apply to the Secretary of State. Could it be just jobs for the boys in Marsham Street, I wonder? I also notice that there is no time limit for the Secretary of State to give his reply, whereas there is a time limit on the local authority. I think that is most unsatisfactory.
3.55 p.m.
Baroness DENINGTON: My Lords, as one who was also concerned with an amendment on this particular matter, I want to say how very happy I am at the outcome and that Lady Birk's amendment was infinitely superior to mine. Your Lordships may remember that when I spoke in the Second Reading debate I did support Lady Birk. I am still sad that the Secretary of State seems to be unduly suspicious of local authorities. I think it would be for the good of local government if he could get over that very heavy dose of suspicion. Of course, local authorities that do not share his political philosophy find some of his policies very difficult. I suppose that, basically, they find them so not because of deep party antagonisms, which I think is what the Secretary of State believes, but because those local authority members who disagree with the Secretary of State's policies feel that they are inimical to the interests of the citizens they represent. That is a perfectly proper and understandable point of view for them to take. I hope that the Secretary of State will, as time goes on, be able to realise that his partners in Government—for the local authorities are his partners—
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are not nearly so bad as he still seems to think they are.
I am delighted, as many of your Lordships here this afternoon are delighted, that the Government have revised their views on this matter. I would say that I have been quite astounded myself at the number of telephone calls I had late last night and this morning from outside, from individuals, from housing associations, from organisations and from all kinds of people saying, "What a relief, what a joy!" So I am certain that the decision finally arrived at is giving very widespread satisfaction to people concerned with housing. To me the decision represents the triumph of right and the recognition of national needs over party political considerations. I think that is something of which we all ought to be very proud indeed.
It has been absolutely necessary to safeguard this accommodation at a time when we have an ageing population and when local authorities and housing associations have been worried over the last months, and especially over the last weeks, that they would not be able to fulfil their duties to those who look to them for housing. The outcome finally, as I say, is one of rejoicing for many people and many organisations up and down this country.
Viscount HANWORTH: My Lords, I do not want to spoil the euphoria on this amendment but I think there are some things which we might consider in the future as a result of this. I am afraid I am going to refer to three; it will take me only about two minutes to do it. The first is that I deplore, as I said before, the somewhat doctrinal legislation that the Government have put forward not only in this Bill but again in the agricultural orders and elsewhere. What I think they ought to realise is that unless they are quite certain of making a substantial improvement by the legislation it will take a very long time before any improvement arrives and therefore they should not do it. I also think they have lost a sense of pragmatism. Finally, I would ask them to consider whether, in the present state of the nation, some of their legislation—we are all agreed that there is too much legislation—is too detailed to be acceptable. Is it not simply fiddling while Rome burns?
4 p.m.
The Lord Bishop of GUILDFORD: My Lords, I speak not only on my own behalf but on behalf of my right reverend friend the Lord Bishop of London, who asked me to present his apologies to the House; his name was associated with the amendment when it was debated at the Report stage. Both he and I would like to express our thanks to the noble Lord, Lord Bellwin, for his courtesy in speaking with the bishop about this matter, and also to the Government for having accepted the principle of the Lords' amendment and bringing it to this House today.
I am sure that this decision will be much welcomed by those who have the concern of the aged in their minds, particularly in those areas of the country where the public housing stock is below average. May I say simply that I welcome this change within the Bill because I believe that it sets over against the right to buy the other consideration, that a just society can only be built not just on absolute freedom but when the rights and responsibilities of the whole society are seen in context together as matching each other. I welcome this recognition that society has a responsibility to provide housing for those who are vulnerable in our society and who cannot themselves find the personal resources to achieve the heights of home ownership.
Lord ROSS of MARNOCK: My Lords, it would be churlish of me not to express my delight, as a Scot, that this change has been accepted by the Government. I cannot thank your Lordships very much. You will remember that exactly the same amendment for the people who need the same protection was turned down when we came to the Scottish Bill. To my mind, it was an exceedingly foolish thing to do. The same protection is needed in Scotland as was recognised and accepted for England in this House. I am grateful that as a result of what has happened in another place and indeed, starting with the acceptance of the principle of the amendment we are now discussing for England and Wales, that the Government have thought again and have made a promise that the same protection will be incorporated, not into the Scottish Bill—alas! we cannot do that—but into the new legislation.
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I do not know whether the Government are going to make any statement on what they propose to do about this, but I understand that in the overspill period we are to have a special one-clause Bill to deal with it. I am gratified for my colleagues and all those who took up the cause of the elderly in the Housing Bill. They have every justification for being delighted, as indeed have those who are interested in the future of this House. For myself, my pleasure is deferred but I will support this proposal.
The Earl of MANSFIELD: My Lords, I wonder whether I might just respond to the noble Lord, Lord Ross of Marnock. It would not, of course, be proper for me to comment in any way on the Tenants' Rights, Etc. (Scotland) Bill, which is still before another place. But what I can do is to direct the noble Lord's attention to the Official Report for another place in which my right honourable friend the Leader of the House and my right honourable friend the Secretary of State for the Environment both said their piece. I would also commend to the noble Lord, Lord Ross, tomorrow's Official Report in which I anticipate he may see what my right honourable friend the Secretary of State for Scotland has said.
Lord SANDFORD: My Lords, may I, on behalf of the 330 housing associations that make up the Association of District Councils, say how grateful they are that more than they had hoped for in respect of housing for the elderly has been achieved without their president having to take any active part in the defeat of his right honourable friend on the Front Bench?
Lord HATCH of LUSBY: My Lords, as one of those who participated in drawing the attention of the House to the danger to old people in the context of this Bill, I only want to ask the Minister about one point which disturbs me in the amendment which he has proposed. I join in the general congratulations—well-merited congratulations—to my noble friend Lady Birk and her assistants in representing not just this side of the House but the whole of the House in pushing through this amendment against the will of the Government. I would still have preferred the text of her amendment: in particular paragraph(b),

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to which the noble Lord referred, seems to me to contain some dangers.
I shall be grateful to him if in his reply he will repeat the assurance given by his right honourable friend in another place concerning the inclusion of the word "only", so that the clause which now reads:
"… it is the practice of the landlord to let it only for occupation by such persons.",
will not restrict the operation of the power of the Secretary of State in disallowing what I still consider to be the compulsion to sell rather than the right to buy. As we could not hear very well exactly what assurance he gave, I shall be grateful if he will repeat it to make sure that the inclusion of the word "only" is not going to restrict the exemptions contained in the clause.
Lord SHINWELL: My Lords, is there nobody present who will say a kind word on behalf of the Minister? After all, he has been the most eloquent speaker addressing your Lordships' House on this subject. He has made a most eloquent speech today, advising your Lordships' House to accept a decision which your Lordships made the other day; but the other day he made a quite different speech, just as eloquent, but to the contrary of the speech he has made this afternoon. A Minister who can achieve such a feat is a Minister worthwhile.
It is all very well to extol the virtues of my noble friend Lady Birk in respect of her endeavour in this connection. She deserves the highest credit and our gratitude; and of course we shall not forget that this was a victory for your Lordships' House. Indeed, if I may venture to take the matter a little further, there have been two momentous events in the course of this week: one was our delight in congratulating the Queen Mother on her 80th birthday, and the other was a victory for your Lordships' House against the Government. This really is a momentous item in the history of this country.
Anyhow, I speak on behalf of the Minister: he made a very good job of it. I preferred his speech today to that which he made last week, but that does not matter. You must never look a gift horse in the mouth!
Lord FOOT: My Lords, before the Minister replies, I wonder whether I might be allowed to intervene for one moment simply to say this: I am sure that my brother Michael would be very glad to be associated with all the tributes that have been paid to the virtue of this House this afternoon.
4.9 p.m.
Lord BELLWIN: My Lords, I am not sure that I ought to say very much more; nor do I intend to. I tried, when making my remarks, to do so as clearly and as slowly as I could because I felt that the matter was of sufficient importance that it should be put very, very carefully, and that each word should be so registered as to be understood. Therefore, perhaps the noble Lord, Lord Hatch, will excuse me if I refer him to Hansard for the detail of what I said. I am not sure how to respond to the noble Lord, Lord Shinwell, who I felt meant to be kind, although what he said could have been taken in all kinds of ways. But I accept it in the way that I feel he meant it to be taken.
Other than that, I do not feel that there is anything to add. We are dealing here with the will of Parliament, as it has come to its decision, and we accept that, as I said earlier. What has gone before in debate was always said sincerely, whether on the contrary belief or in favour, and those who spoke against the amendment meant it for the best of the people, as they saw it. It is the will of the majority and so be it. It is not really necessary for me to say any more than that, so I hope the amendment will be accepted.
On Question, Motion agreed to.

LORDS AMENDMENT
3 Clause 15, page 13, line 39, after ("price") insert ("that price to be determined by adding half the difference between the value of the dwelling-house at the time of completion of the transaction and the value at the time the notice exercising the right to buy was served.")
The Commons disagreed to the above amendment for the following reason:
4 Because it would provide for an increase in the purchase price and thereby destroy the purpose of the clause.
4.11 p.m.
Lord BELLWIN: My Lords, I beg to move that this House doth not insist

1611
on their Amendment No. 3, to which the Commons have disagreed for the reason numbered 4.
Amendment No. 23, as Amendment No. 3 was numbered in another context, would increase the price which a tenant, whose circumstances entitled him under Clause 15 to delay completion, would have to pay. On top of the price based on the value of his home when his notice claiming the right to buy was served, he would have to pay half of the difference between its value then, and its value on the date when the transaction was completed.
The provisions included in the Bill for deferred completion were intended to give extra help to tenants who wanted to move from renting to home-ownership, but whose finances at the time when they served their notices did not give them the right to a mortgage that would cover the purchase price. We felt strongly that people in this position should be shown a little extra consideration, if that would help them to get a foot onto the first rung of the home-ownership ladder. It was a tightly-drawn provision, available —and I must stress that—only where the circumstances of the tenant demonstrated that there was a case for it. No tenant whose income entitled him to a mortgage which covered the purchase price could simply choose to delay his purchase, with the benefit of a frozen price.
For these tenants, who, by definition, in view of their financial circumstances, are on the very edge of being able to buy, delayed completion must provide two things, if it is to be of any value. First, it must provide a definite price, on the basis of which the tenant can lay his plans and make his calculations. The finances of those who qualified would require them to plan ahead very carefully, and it would be impossible for them to plan with certainty, if they did not have a definite target at which to aim. The revaluation and adjustment of the purchase price, called for by Amendment No. 23, would take place only at the end of the process. In the meantime, the tenant would not know what the final price would be, and whether he would be able to afford it. That could mean up to two years of anxiety and uncertainty for the tenant.
Secondly, at the end of the period of delayed completion, and after the revaluation
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which would be required by Amendment No. 23, the tenant may find that, after all his careful planning, the price has once again been pushed beyond his reach. Taken all in all, a provision of that kind could hardly be regarded as being in the tenant's interests. If the principle of delayed completion is to be of any value, the Bill must provide for a fixed price. Anything else would nullify any benefit that the tenant might otherwise have received from such a provision.
Even before the Bill was drafted, the Government's position on this matter was absolutely clear. The principle of delayed completion at a fixed price appeared in the manifesto on the basis of which we came to power. The Bill contained a provision putting our commitment into practice, when it was given a Second Reading both in another place and in your Lordships' House. I do not underrate the strength of feeling of those noble Lords who voted for these amendments on Report, nor the pride that this House rightly takes in its efforts to make improvements, as it sees them, in legislation which comes before us. On very many other matters we have just been discussing your Lordships' view has been accepted. But on this particular issue I must ask the House to accept that Amendment No. 23 would much devalue a provision for which the Government have the clearest possible mandate. I urge your Lordships not to insist on this amendment. I entirely understand the points made on this amendment, but it was narrowly decided in a certain way. In the context of all that is going on, your Lordships may feel able not to insist on your amendment. My Lords, I beg to move.
Moved, That the House doth not insist on their Amendment No. 3, to which the Commons have disagreed for the reason numbered 4.—(Lord Bellwin.)
Baroness BIRK: My Lords, I shall not insist on the amendment, and I put the Minister's mind at rest about that. But I must just comment on this amendment. Again, I shall not rehearse all the arguments that we have gone through, but the amendment which was introduced into this House on Report was quite different from any of the other amendments that were moved in regard to the option. The Minister was quite right when he said

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that there has been strong feeling about this matter, and not only on this side of the House. We feel that, in addition to the discount, the option will give a financial advantage which is quite unwarranted, and will put the purchaser of a council house very far ahead in financial terms of the purchaser of any private property.
What this amendment does is to say that the profit should be split between the purchaser and the local authority, the landlord, which seems to me very moderate. It is really a halfway house. I can only express sorrow that the Government did not see fit to accept our amendment. But I do not think they will go back on their manifesto promise about the option, which would have made the whole matter very much fairer.
On Question, Motion agreed to.

LORDS AMENDMENT
5 Clause 18, page 14, line 44, at beginning insert (" the local authority with the consent of ")
The Commons disagreed to the above amendment for the following reason:
6 Because it would be inappropriate for orders to be made by local authorities rather than by the Secretary of State.
4.17 p.m.
Lord BELLWIN: My Lords, I beg to move that this House doth not insist on their Amendment No. 5, to which the Commons have disagreed for the reason numbered 6.
Amendment No. 29, which is now numbered 5, would allow local authorities to make orders designating areas, in addition to national parks and areas of outstanding natural beauty, within which the restrictions on resale provided in Clause 19 of the Bill would apply. Previously, the Bill was drafted to allow the Secretary of State to designate such additional areas by order, though, in practice, if a local authority feels that an order should be made in respect of all or part of its area, the Government expect it to take the initiative, and tell my right honourable friend why.
The amendment would not add significantly to the Bill, since the order of the local authority would still be subject to the Secretary of State's consent. Further, it would have a detrimental effect, because
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it would complicate administrative procedures and blur lines of responsibility for the operation of the safeguards provided for rural areas by the clause. First, while an order made by a local authority was being put to the Secretary of State, tenants who wished to buy in the area affected would not know whether they were to be able to buy on normal terms or on the special terms provided in the clause. This could deter tenants from applying, or even cast doubt on the status of the applications of those who did apply. To complicate matters yet further, it would still be for the Secretary of State, rather than the landlord, to designate the regions from which future purchasers must come where a locality covenant was to be imposed on right to buy sales. He would also still have to give or withhold consent, where a landlord wished to impose a pre-emption condition rather than a locality covenant.
The amendment would also give rise to confusion, because the orders made by local authorities would not, of course, be statutory instruments, as they would be if they were made by the Secretary of State. This raises a constitutional point, which I do not propose to stress, but it would also mean that there would be no authoritative source readily available outside the local authority, in which an interested third party could check precise boundaries within which a restriction on resale could be imposed.
This clause gives no genuine new element of discretion to local authorities, and I submit succeeds rather in muddying the waters. I would suggest, on administrative grounds alone, that the other place was right in disagreeing with it. I hope your Lordships will accept this explanation, and I beg to move.
Moved, That this House doth not insist on the said amendment to which the Commons have disagreed for the reason numbered 6.—(Lord Bellwin.)
Baroness BIRK: My Lords, I personally disagree with it enormously, but again I am not going to press my disagreement. I disagree with the reason: that it would be inappropriate for orders to be made by local authorities rather than by the Secretary of State. Our amendment, however, says "the local

1615
authority with the consent of the Secretary of State". Therefore, the local authority would not make an order on its own.
I will not rehearse all the arguments which have been used before—that again this is taking away the autonomy of local authorities, and that the Secretary of State would have the last word on it. In fact, if the amendment were accepted, a local authority would be in the same position as in the amendment which the Government have put forward on housing for the elderly, where the local authority takes the initiative and the Secretary of State determines. That is exactly what should happen here. It should not be, as the Government keep on talking about, a question of the local authority being able to take the initiative. But that initiative should be written into the Bill, so that the local authority can have very much more of a say and be very much more of an equal partner with the Secretary of State than it is. However, we have been through this many times before, so I shall not delay the House any further.
Lord HYLTON: My Lords, I listened very carefully to what my noble friend the Minister said about the technical considerations. I suppose that these may explain the single word "inappropriate" in Reason No. 6. By itself, it looks hardly adequate to have just one adjective as the reason for refusing an amendment. I should like to ask when the Secretary of State will publish criteria by which special rural areas are to be defined. Will these criteria be circulated in draft for comment by interested parties? And when do the Government expect that everybody will know where the areas are and what is to happen? This is going to have quite a considerable effect on the rights of individual, would-be purchasers.
Lord HATCH of LUSBY: My Lords, I heartily agree with the noble Lord, Lord Hylton. I am somewhat puzzled by the Minister's speech in support of the rejection of this amendment, because it is quite different from the reasons which he gave in speaking against the amendment when we were debating it. This amendment was carried by this House because there are many Members of this House who are desperately anxious about
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the preservation of the rural areas of this country and the facilities within those areas. As the noble Lord, Lord Hylton, has pointed out, just to say that our amendment is inappropriate is almost contemptuous of the debate which took place in this House. It is very weak to suggest that the reason for it being inappropriate is that orders should be made by the Secretary of State rather than by local authorities. Nobody has questioned this. The orders will, according to the amendment, be made by the Secretary of State, but on the advice of and at the request of the local authorities, who surely know more about their own areas and their own needs than does the Secretary of State.
As one who has been fighting, all the way through the Bill, for the rights of rural areas, may I ask the Minister once again a question which he has never answered, right from Second Reading onwards: What are the criteria that are going to be used to define a rural area as distinct from a place of natural beauty and the national parks? I hope that since our last encounter the noble Lord has taken the opportunity to visit the Worth Valley which I mentioned to him and which is only 10 miles away from Leeds, where he would have seen exactly what I have been trying to impress upon him: that there are very many areas in this country which could be defined by one person as rural and by another person as urban. May I ask the noble Lord to respond to the request of his noble friend Lord Hylton and to say how the criteria are going to be settled and when they are going to be published.
Lord BELLWIN: My Lords, could I say, first, that I wonder what the noble Lord, Lord Hatch of Lusby, thinks I have been doing since we had the debate to which he refers. If I had had the opportunity to visit my own home or the areas surrounding it I should have been pleased indeed, and I look forward to that pleasure before too long. So I have to tell the noble Lord that I have been unable to take advantage of the suggestion which he made, but that I certainly undertake so to do. I am sure that I shall then concur with him about the pleasantness which I shall see there.
Other than that, I feel as unable to answer some of the other observations

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which the noble Lord has made as I am to answer my noble friend Lord Hylton. However, I will certainly write to my noble friend and, if the noble Lord, Lord Hatch of Lusby, is interested, I will gladly send a copy to him. I have to say, however, that I understand that it is not for me in this House, at least on this occasion, even were I able—which I have said I am not—to go behind the reasons produced by the Committee which deals with reasons in another place, or even to try to give details of their arguments. Certainly at this stage I am in no position to do so. Having said that, I will try to get all the information I can and to send it both to my noble friend and to the noble Lord.
Before I sit down—I do not think we want a long debate—may I say that I understand entirely that this, like other points which have been made, is one of the areas where we disagree. However, as I said earlier and repeat again, we have accepted a great number of amendments. The ones which we did not accept we fought over and then came to a conclusion upon. What we are now dealing with is the residue of that which went to the other place. I hope that in the interests of moving on with the business and knowing that many of these matters were pretty tightly decided at the end of the day—I am not sure that this was one of them; I suspect that it was not—your Lordships will not insist on the amendment.
On Question, Motion agreed to.

CIVIL DEFENCE
4.29 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, HOME OFFICE (Lord Belstead): My Lords, with the leave of the House, I will now repeat a Statement being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a Statement on civil defence.
"On taking office last year, the Government decided to accord high priority to the defence of the nation; and a review of civil preparedness for home defence was set in train so that this
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important element of our defence strategy could be considered as part of the improvement of our general defence effort. The review has been wide-ranging, embracing the responsibilities of many of my right honourable friends as well as my own. As a result I am now able to announce certain immediate steps which the Government judge to be necessary; these will extend as appropriate to Scotland, and my right honourable friend the Secretary of State for Scotland will be responsible for them there. I will also refer to parts of the review which are still continuing.
"I begin by emphasising that, despite the difficulties of the present international situation, the Government does not regard armed conflict with the Warsaw Pact countries as probable, let alone inevitable or imminent, provided that we maintain, as we intend, a firm commitment to peace while ensuring that our defence forces remain balanced and effective. We believe that to be seen to be prepared at home, as well as capable of military deterrence and defence, will make war less likely. Nevertheless, I would remind the House of what my right honourable friend said in paragraph 110 of his Statement on the Defence Estimates 1980. He said that Soviet strategists hold that any war in Europe is likely to escalate into a nuclear exchange, though it might start with conventional warfare, and that the warning time we might receive could be very little. This period of warning might, we believe, be measured in days rather than weeks.
"Against this background the Government consider that an expanded civil defence programme is both prudent and necessary to achieve an appropriate balance in our defence capability. To this end we propose to take the following immediate steps.
"First, with regard to the United Kingdom Warning and Monitoring Organisation, which exists to give the public warning of air attack and, in the event of a nuclear attack, to give warning of the approach of radioactive fallout and subsequently to monitor the intensity of fallout radiation: the organisation will now modernise its communications, replace certain obsolescent

1619
equipment and improve the allowances paid to the volunteers of the Royal Observer Corps who play a vital part in maintaining the warning and monitoring systems. There will also be additional expenditure on the completion of the organisation's administrative headquarters and the sub-regional headquarters for decentralised government. Extra expenditure will be incurred on the associated communications network, and on improvements to the arrangements for the wartime broadcasting service which, if the need ever arose, would be established to ensure the continuation of public broadcasting facilities even after large scale attack.
"A great deal of civil defence work must be done at local level, and the Government propose to double the money available for this purpose. We will consult the local authority associations about the allocation of additional resources for local planning and for training, and for the adaptation of premises by district councils to complete the pattern of local authority wartime administrative headquarters and communications. Effective civil defence arrangements depend upon co-operation between central and local government. I know that some concern has been expressed about variations in civil defence arrangements in different parts of the country. I am satisfied that the Government have adequate powers to ensure that proper standards of protection are provided throughout the country, and it will naturally be our aim with the local authorities to see that that is done.
"We recognise that many county and regional councils at present lack the resources to plan for community involvement in civil defence below district level. The Government are ready to make more money available to meet this need and will discuss with the associations the most effective ways of doing so. We are anxious in particular to enable local emergency planners to maximise the contribution made by the large number of citizens, both individuals and members of organisations, who wish to add their efforts to civil defence planning on a voluntary basis. Many individual volunteers are
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already active in the civil defence field and certain voluntary organisations are keen to play a fuller part. The harnessing of volunteer effort will be an important feature of our plans and I intend to make a special appointment of a person of high standing for this purpose. There will be a separate appointment in Scotland.
"At the same time there will be greater involvement in civil defence planning and training on the part of central Government departments, the emergency services, the Post Office and the National Health Service. There will be an increase in central training facilities for the senior staff at local and other authorities, including an expansion of the Home Defence College at Easing-wold. There will also be improvements in the arrangements for the operation of emergency port facilities. The stock of emergency fire appliances is being refurbished this year.
"The total additional cost of these immediate measures over the next three years will be about £45 million, and by 1983–84 expenditure on civil defence will have risen from £27 million a year before the review to £45 million a year, an increase of over 60 per cent. The additional costs will be covered by a reallocation of resources within existing programmes and without adding to the total of public expenditure.
"I turn now to certain general policy matters and further studies which are still in progress.
"In the face of an attack, dispersal is not a practicable policy, and in any event no part of the country could be regarded as safe from both direct and indirect effects of nuclear weapons. A study is being made of domestic or family shelters, and advice will be available to the public later this year on a range of structures which would provide improved protection at relatively low cost. This guidance will consist of design outlines for five different types of shelter, and the degree of protection provided by each. We propose that, additionally, a survey of existing structures suitable for communal shelter purposes should be conducted, and we will discuss with the local authority associations how best to do this.

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"We have also decided that it is right for information about civil defence and the likely effects of a future war involving the United Kingdom to be made generally available in peacetime. The public has a right to knowledge of these matters. We have already published Protect and Survive, and we will be examining ways of making more information available.
"The Government will also be studying the role and closer involvement of industry in defence planning.
"Finally, the review has emphasised the need to promote effective coordination at all levels and between all those with responsibility for civil defence. Ministers will be attending some of the conferences already planned in various parts of the country for this purpose.
"Mr. Speaker, the measures I have announced today are an important contribution to improving our civil preparedness: they are positive and cost effective. The Government are confident that they will be widely supported in this House and in the country."
My Lords, that is the Statement of my right honourable friend the Home Secretary.
4.38 p.m.
Lord BOSTON of FAVERSHAM: My Lords, I should like to thank the Minister, the noble Lord, Lord Belstead, for repeating this Statement, and I certainly welcome the review which has been carried out. It was right to carry out a thorough review. The Statement raises a large number of matters which perhaps we could return to on another occasion, so as to go into them in rather more detail.
I would ask the noble Lord, first, would he accept that the preambulary passages in the Statement, that the Government do not regard armed conflict with the Warsaw Pact countries as probable, let alone inevitable or imminent, are significant because they help to put this whole matter in perspective? So, while it would be quite wrong to be alarmist, it is indeed quite right to be prepared. I would ask the noble Lord whether he recalls the words of the noble and gallant Lord, Lord Carver, that in the event of
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a thermo-nuclear attack designed to knock out this country, no civil defence organisation could really achieve much, if anything worthwhile. So the context in which we are talking about the need for effective civil defence here is to limit the harm from the effects of attack, nuclear or conventional, less than that, assuming that is possible and sensible given the possibilities of escalation.
It is right to emphasise the great value of civil defence organisations and the role of voluntary organisations, and I would like to join in the tribute to them, and also to welcome the proposed appointment of a person of high standing to co-ordinate their activities.
I should like to ask the noble Lord, Lord Belstead about the public expenditure aspects of the Statement. He spoke of an increase in the amount, and I am wondering how this compares in real terms with what has been spent previously. The noble Lord the Minister said in your Lordships' debate on 5th March this year that home defence expenditure of £22 million at that time was not high, and it was a third of that in 1968 when civil defence was put on a care and maintenance basis by the previous Government. I am wondering how the new figures compare in real terms with that. Also, are the Government satisfied that the proposed expenditure is in fact sufficient? After all, if the Government consider that this is something which is not only worthwhile but indeed essential, and part of the necessary measures for the defence of the realm, then they should commit the necessary expenditure.
As to measures that people might be encouraged to take for themselves, it is true that there is some room here for self-help, but there is a danger in too much of a do-it-yourself exercise. After all, everyone has equal right to the minimum protection considered to be essential, but there is a danger that if left to themselves those who could least afford it or could least attend to it—and I am thinking of those in poor health, the elderly people, the infirm and the disabled—might be either left out or left with inadequate protection. I am wondering what steps the Government propose to take to ensure that the needy are not left out. Can the Minister give an assurance that the Government are satisfied about that aspect?

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I note that dispersal policy is not dealt with in the Statement. That will come as quite a surprise to many of your Lordships who expressed concern about this matter in the debate in March, and I am wondering whether it is simply that the Government have accepted that no part of the country is safe. I would certainly agree that the fullest possible information should be made available for people generally. The noble Lord, Lord Belstead, has referred to the booklet, Protect and Survive. I wonder whether the Government might consider distribution of a cheaper, leaflet version of that. Also in the debate in March the noble Lord, Lord Belstead, referred to the consideration the Government were giving to up-dating that booklet itself, and I wonder whether that is in fact still in hand. So far as the distribution of a cheaper leaflet version is concerned, I would mention that the GLC and the relevant London boroughs did in fact a few years ago embark on an exercise of this kind, warning people about the measures to be taken and the dangers from flooding. These things need to be done in good time. So far as that exercise is concerned, it is only now, if it is not wholly inappropriate to say so, that the information is beginning to sink in.
The only other point I would put to the noble Lord is whether the Government might consider a regular review of these matters. They are clearly very important. They clearly need to be up-dated from time to time. I am thinking of the example of the Defence Review and whether it might perhaps be appropriate to do a regular review of civil home defence as well, perhaps as part of that, or at any rate every so often.
Lord HOOSON: My Lords, I also think it was sensible of the Government to undertake this review, and particularly I would commend and approve the decision of the Government to modernise and improve the warning and monitoring facilities, if only for the fact that if we are all to be blown to smithereens it will be a comfort to your Lordships and to other people in this country to have at least a little warning of it. Can the Minister say whether the £45 million, which he says will be the annual expenditure after certain steps have been taken, includes expenditure
1624
on this warning and monitoring system, or whether that is not covered by a different Vote? The second matter about which I should like to ask the Minister is this. He quite rightly said that the public have a right to know about these things. Would he not confirm that no shelter exists that gives any adequate protection from the direct hit of a nuclear bomb, and no shelter exists whereby there can be any sustained protection from the indirect results of a nuclear bomb? It is important that people do not get the illusion that there are shelters or something that enables one to avoid the consequences of nuclear war.
4.46 p.m.
Lord BELSTEAD: My Lords, I am grateful to both noble Lords for the reception they have given to my right honourable friend's Statement. The noble Lord, Lord Boston, asked me about the defence assumptions and mentioned certain words which were spoken in your Lordships' House by the noble and gallant Lord, Lord Carver. Military defence planning is, of course, already based on the assumptions set out in the Defence Estimates for this year, and I would think from what both noble Lords have just said that they agree it is time civil defence planning came in line with those assumptions and those plans; this is what we are endeavouring to achieve in this Statement.
The noble Lord asked me about the total expenditure on civil defence. That in 1983–84 will reach £45 million, a 60 per cent. increase compared with the level of spending before the review was started. The noble Lord, Lord Boston, referred to future plans, wondering whether expenditure was going to be sufficient for future plans. Certainly the last part of my right honourable friend's Statement refers to the future and matters which we are continuing to plan and keep under review. With those plans, of course, we shall continue to keep under review the level of public spending.
The noble Lord then asked me specifically about the position of those who are disabled or old or needy in the event of attack. I think it is right that I should again draw attention to what was said in the Statement about the scope for voluntary efforts in civil defence, which the Government believe is very great. Of

1625
course, in addition to the national voluntary organisations—I particularly have in mind the British Red Cross, St. John Ambulance, and the Women's Royal Voluntary Services, which of course as well as being national operate at local level—we also have volunteers who are working in the field at county level, such as the Devon Emergency Volunteers and Wiltshire County Councils' Community Advisers. It is those organisations and those volunteers who, among others, we believe will particularly help the sort of people the noble Lord has in mind in the event of nuclear attack, in addition of course to other functions which volunteers will be able to discharge. The House might be interested to know something which was not in the Statement, which is that within the money doubled for local authorities—a point which was in the Statement—there will be £1 million extra for the organisation and training of volunteers.
The noble Lord, Lord Boston, asked me about dispersal policy. I think it has to be accepted that no part of the country could be considered safe from both the direct effects of muclear weapons and the result of radioactive fall-out, and this clearly is a serious impediment to mass dispersal schemes. But, of course, that is one of the main reasons why we believe that an expanded civil defence programme is both prudent and necessary.
Finally, the noble Lord asked me about two matters which I am grateful to him for raising. First, he asked about a leaflet version of Protect and Survive which, incidentally, was updated before it was brought out again. He also raised the question of regular reviews. I shall draw both those matters to the attention of my right honourable friend.
The noble Lord, Lord Hooson, asked me specific questions about the ability of shelters to protect those who are in them. I would aske the noble Lord, if he would not mind, to wait until a little later this year when, as the Statement said, we intend to make advice available to the public on a range of structures which could provide improved protection at a relatively low cost. I think that it will be at that moment that one will want to look at the details of shelter design.
Lord CHALFONT: My Lords, I should like to join other noble Lords in
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thanking the Minister for repeating the very comprehensive and important Statement, which I think deserves, before any protracted debate, the closest possible study. Also, I think that it is extremely appropriate that the Minister of State for Defence should be sitting on the Front Bench at this moment, because this is, of course, a matter of national defence. Indeed, there are some who believe that the liaison between the Home Office and the Ministry of Defence on these matters ought to be even closer and better integrated.
I should like to ask the Minister whether he is aware that the Defence Study Group of your Lordships' House recently held a seminar on this subject and that the minutes of that seminar are available in the Library of the House? He may find them illuminating. I should also like to ask the Minister two questions. First, would he not agree that perhaps there is a little too much emphasis on the volunteer aspect of this problem? Home defence, like other forms of national defence, is a highly professional matter, especially in the face of a possible air attack whether conventional or nuclear, upon this country. I wonder whether a sum of £45 million a year, which I understand from the Minister is what we might be spending by 1984, is thought to be really an adequate amount to spend on the defence of these islands, when we are spending something like £9,000 million a year on the rest of our defence budget.
I should like to ask one rather more important question. Would the noble Lord the Minister not agree that there is some danger in talking in such terms as "no civil defence programme can be effective in the case of a nuclear attack" and "no form of shelter can be a sufficient protection against nuclear attack"? Would the Minister not agree that the whole point of having a home defence programme is as a part of our integrated defence policy? Would he not agree that there is no sense in spending £5,000 million a year on a Trident missile, if we cannot ensure the protection of our own population?
Finally, will he take very careful note of the proposal put forward by the noble Lord, Lord Boston of Faversham, in respect of having a regular review of home defence? It seems that that is something

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that ought to be considered in consultation with the Ministry of Defence. I wonder whether the noble Lord can assure us that we may in future have a regular review of home and civil defence to go alongside the regular review of our national defence policy?
Lord BELSTEAD: My Lords, I should like quickly to reply to the points which have been put to me by the noble Lord, Lord Chalfont. Again I am grateful to him for his recognition of the importance of this Statement. I should like to pick up one of the points which he made in the middle of his remarks. The increase in expenditure which is now committed by the Government, by this Statement, is an increase of 60 per cent. by the financial year 1983–84. In the present economic climate that is a significant sum of money, and I think it shows a significant commitment by the Government and, when I say "the Government", I am, of course, speaking for all the Government departments not least the Ministry of Defence.
The noble Lord referred to too much emphasis upon volunteers. I point out to your Lordships that the scope for voluntary effort in civil defence is very great and, in addition to the voluntary organisations which I ventured to mention a few minutes ago, let us not forget that the whole of the United Kingdom warning and monitoring organisation is, so far as the Royal Observer Corps is concerned—the men actually in the field—manned by volunteers. The local authorities who, of course, are charged with a statutory duty under the regulations as regards civil defence responsibilities, are advised by scientific advisers who give their services in a voluntary capacity.
Finally, when the noble Lord said that the defence policy of this country should be an integrated policy, I think that he speaks to the converted when speaking in your Lordships' House. Certainly on behalf of the Government I acknowledge to the noble Lord that we realise—and it lies behind this statement—that to have a credible defence policy it is necessary to have a practical civil defence policy.
Baroness VICKERS: My Lords, from these Benches I should like to thank my
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noble friend for what he has said. Having worked in shelters during the last war I realise what a great benefit they can be. I should like to ask two questions. First, my noble friend has not mentioned anything about deep shelters. Will there be any fortification of deep shelters, which were, particularly in the undergrounds, very advantageous in the last war? Secondly, I was very grateful to him for mentioning the volunteers, and especially Wiltshire where there are already over 2,000 trained volunteers. Will he state that we can have a debate in the near future on this matter, because at present the House is rather thin on the ground and I think that it would be advantageous to hear the views of others and also perhaps get something more in the press which would give more confidence to the general public?
Lord BELSTEAD: My Lords, my noble friend Lady Vickers has raised the very important subject of shelter design to which the Statement does refer, and your Lordships may like to look at the relevant paragraphs. However, my answer to the specific point which my noble friend raised about deep shelters is that, of course, those should certainly form part of the discussions with the local authority associations which the Government have proposed to carry forward in order to see whether existing structures suitable for communal shelter purposes can be repaired. Clearly the point which my noble friend makes should form part of that.
As regards my noble friend's question about a debate, I think that that is a matter for the usual channels.
Lord BROCKWAY: My Lords, would not the Minister agree that his Statement has been more a survey of what can be done, than of what is to be done? Does he really believe that there is any safeguard for the great majority of the population of this country if a nuclear war occurred? Yesterday, the anniversary of Hiroshima was celebrated throughout the world. Has the noble Lord seen the statement of scientists in The Times that missiles carrying warheads could now be one hundred to a thousand times more destructive than the bomb which fell on Hiroshima?

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So far as plans are concerned, is it not the case that in the last world war deep offices were arranged for members of the Government and the Civil Service in London? I went down them and I was astonished by the equipment and the air-conditioning of those offices under Whitehall. Is it not the case that those plans are now being extended outside London? While they might save the occupants for a period, radioactive elements would continue and it would be very unsafe for the occupants to come up for many weeks. What would happen to the administration of the rest of the country? I am asking the noble Lord to appreciate that the solution to this problem is not to concentrate on civil defence, but to concentrate on preventing a nuclear war occurring.
Lord DENHAM: My Lords, before my noble friend replies to the noble Lord, Lord Brockway, may I say that I think we are getting a little out of order over this particular Statement. I do not want to stop short any noble Lord who wishes to ask questions, but if we could keep such questions to questions for elucidation, as is the custom of this House, rather than almost coming to a debate, I think that it would be a very great help.
Lord BELSTEAD: My Lords, if I may reply to the noble Lord, Lord Brockway—
Lord SHINWELL: My Lords, I want to make an observation on what the Chief Whip has just said. It is a mistake, particularly at the latter end of the Session, to begin to discuss what, in the future, may be the most important topic to the people of this country. Obviously, there must be a debate on the Government's review, even if it means the submission, the exposure, of intimate details. There is a tendency on the part of some people to complain that if details are furnished, our potential aggressors may be too well informed. I think we have to take that risk. The next point I want to make—
Lord DENHAM: Question!
Lord SHINWELL: My Lords, the whole purpose of our defence, which was raised by my noble friend Lord Brockway—
Lord DENHAM: My Lords, I do not want to stop the noble Lord, Lord Shinwell, but I wonder whether he would put his comments in the form of a question, because the Rules of Order carefully say that we do not debate on these occasions; we ask questions for elucidation.
Lord SHINWELL: My Lords, I am trying to put a question to the Chief Whip, because it seems to me that it is a mistake to begin with to discuss the matter at this stage. I think that the matter should be adjourned after until the Recess, when we will not only have this review before us, but also the investigations that have been undertaken by the Defence Group of your Lordships' House and by some private organisations outside. These matters must be dealt with. I suggest that rather than delving too deeply into the subject at this stage, we should adjourn it until we return after the Recess, when there should be a full debate on every aspect of the subject.
Lord DENHAM: My Lords, the noble Lord, Lord Shinwell is making exactly the point that I was making, only, of course, he did so with much more skill than I was capable of. This is not the occasion for a debate. No doubt the usual channels will be able to agree a time for a debate after the Recess. But in the meantime it is customary to allow noble Lords to ask questions for elucidation only. I should not like to deprive your Lordships, who need to know one or two points that are not quite clear, of that right. But if they could be as short as possible, we can get on with the very long day's business before us.
Lord PEART: My Lords, on behalf of the Opposition, may I say that I am certain it would be right and proper for us to debate this when we return after the Recess, at a time agreed through the usual channels. We have already had a debate on this and I see no reason why we should not have one later, and so make progress now.
Lord BELSTEAD: My Lords, under the circumstances, perhaps I could reply in only one sentence to the noble Lord, Lord Brockway, I would draw the attention of the noble Lord to a sentence which came quite early in the Statement where my right honourable friend said:

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"We believe that to be seen to be prepared at home, as well as capable of military deterrence and defence, will make war less likely".
Lord DE CLIFFORD: My Lords, may I point out to the noble Lord that the subject of refugees appears to have been omitted from the Statement. In areas on the edge of this subject there is great worry. Perhaps at some future date the noble Lord could elucidate on it. Secondly, in any further matters put forward, will he please include elucidation on how farmers should handle their animals and whether contaminated animals can be milked et cetera. It would be nice to hear that in the form of a Statement.
Lord BELSTEAD: My Lords, this is precisely the sort of matter into which we can look into in more detail if we have a debate when we return after the Recess. The Statement was at pains to point out that these matters cover almost all the Government departments, as many of your Lordships know. I think that the noble Lord will find that we can look into this when we come back after the Recess, as, indeed, we can look into the first point which he put to me to which I think the increased spending by local authorities and voluntary organisations has some relevance.
Baroness HYLTON-FOSTER: My Lords, can the noble Lord say just a few words about what is expected of the three voluntary aid organisations? We understand that we are to man the first-aid posts. However, we have not the remotest idea how many there are throughout the country or their locations. Will the noble Lord be bringing any pressure to bear on local authorities and whatever the appropriate authority in the health service now is to encourage them to tell us what to do?
Lord BELSTEAD: My Lords, I think that it is most important—and I welcome the opportunity to say this in reply to the last question—that the role of the coordinator, whom my right honourable friend will be appointing—which I think will be an extremely important post—is to harness voluntary effort to best effect. I think that that is how I can best answer
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the important question which the noble Baroness has asked me.
Lord DENHAM: My Lords, even at the risk of doing something of which I was accused a few weeks ago, of stopping the noble Lord, Lord Leatherland, in his prime, I can only try to interpret the feeling of your Lordships' House. From where I sit the feeling of your Lordships' House seems to be that we have probably given this matter enough consideration at the moment, so perhaps we could carry on with the business of the day.

HOUSING BILL
5.7 p.m.
Consideration of Commons reasons and amendments resumed.

LORDS AMENDMENT
7 Clause 22, page 18, line 1, after ("so") insert ("and of his reasons for doing so")
The Commons disagreed to the above amendment for the following reason:
8 Because the reasons for intervening are set out sufficiently in subsection (1).
Lord BELLWIN: My Lords, I beg to move that this House doth not insist on their Amendment No. 7, to which the Commons have disagreed for the reason numbered 8.
This amendment would come into play when a landlord had failed in its duty under the Bill towards a tenant who wished to exercise the right to buy, to such an extent that the Secretary of State had decided to serve a notice under Clause 22 invoking his powers to intervene in the sale. The events we are concerned with are therefore in the realm of hypothesis, and I sincerely hope and trust that responsible and proper conduct on the part of landlords will ensure that they remain there. The amendment would require the Secretary of State's notice to include a statement of the reasons for his intervention.
My Lords, what, in fact, would the effect of this requirement be? It would not inform landlords of anything that they did not already know. The reasons for the intervention would lie in the policies which they themselves had been following. They would have received prior notice of the Secretary of State's

1633
intention, and before that the relevant details of the individual case would normally have been canvassed between the local authority and my right honourable friend's department in the course of his preliminary inquiries.
It was rightly suggested at Committee stage that a statement of reasons would not be so necessary if (as will for all practical purposes be the case) there had been consultation beforehand. In fact, the only likely purpose that a statement of reasons would serve for a landlord seeking to deny the right to buy would be to provide a further procedural peg on which it could hang a challenge to the Secretary of State's action, either in further discussion with my right honourable friend's department, who would be acting on his behalf, or in the courts.
My right honourable friend will be anything but eager to use his powers under this clause. There is no question of his doing so arbitrarily, or in any case where there are no strong grounds for believing that the landlord has failed in its duty towards a person validly seeking to exercise his statutory right to buy. If his powers should ever have to be used, we owe it to the tenants concerned to ensure that they have a prompt and effective remedy on which to rely. This amendment would add nothing to the effect of the Bill as it would work in practice, and it would prejudice the interests of the tenant, who would already have suffered delay and frustration enough, without the further difficulties of challenge to, or litigation over the exercise of the Secretary of State's intervention powers.
I ask your Lordships to accept that reserve powers of this kind—unwelcome though their presence in the Bill may be in some quarters—must be capable of prompt and effective use, if they are to serve the purpose for which they are designed. That purpose is simply to ensure that tenants cannot be denied the rights which Parliament has given them in this Bill. That principle has been upheld once again by the disagreement of the Commons with this amendment. In the circumstances, I wonder whether I could urge your Lordships to accept the judgment of the other place in this matter.
Moved, That this House doth not insist on their Amendment No. 7 to which
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the Commons have disagreed for the Reason No. 8.—(Lord Bellwin.)
Baroness BIRK: My Lords, I do not intend to insist on this amendment, but I cannot let the opportunity go by without again registering my feeling about this whole clause and the fact that the Government have been so obstinate about quite a simple amendment. All it does is ask the Secretary of State to state his reasons. I shall not rehearse all that I have said before and the Minister has said in reply, but it still seems to me to be important if the local authorities want to challenge what the Secretary of State said in the courts, then, by having his reasons given in writing, they have something to go on. I feel that this is a case of extreme obstinacy. It really is not a matter of principle, but at this point there is obviously not going to be any way of pursuing it further.
On Question, Motion agreed to.
5.11 p.m.

LORDS AMENDMENT
9 After Clause 109, insert the following new clause:
Housing subsidies
("—(1) The provisions of section 24(1)(B) of the Housing Subsidies Act 1967 shall have effect where a person borrows, or two or more persons borrow jointly, from a qualifying lender on the security of a freehold or leasehold estate of the borrower, or of one or more of the borrowers (including an estate held jointly or in common by the borrower, or one or more of the borrowers and one or more other persons) in land in Great Britain, and the following conditions are satisfied:—

(a) that the loan is or was made as part of a scheme under which not less than nine tenths of the proceeds of the loan are or were applied to the purchase by the person or persons to whom it was made of an Annuity ending with his life or with the life of the survivor of two or more persons (in this section referred to as "the Annuitants") who include the person or persons to whom the loan is made;

(b)that at the time the loan is made the person to whom it is made or each of the Annuitants had attained the age of 65 years; and

(c)that the person or persons to whom the loan is made or each of the Annuitants uses the land on which it is secured as his own residence.

(2)The borrower or borrowers may by notice in writing to the lender in such form as the Ministry may direct (in this section referred to as an "Option

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Mortgage") elect that the loan shall be subsidised in accordance with the provisions of Part II of the Housing Subsidies Act 1967 and the Option Notice shall be treated for all purposes as if it were an Option Notice made under the provisions of section 24 of the said Act.")
The Commons disagreed to the above amendment but proposed the following amendment in lieu thereof:
10 After Clause 109, insert the following new clause:
Subsidised loans—further application of Part II of 1967 Act
(" .—(1)In relation to a loan which satisfies the two conditions stated in subsections (2) and (3) below Part II of the Housing Subsidies Act 1967 shall have effect as if the loan were for or in connection with one or more of the purposes specified in section 24(1)(b) of that Act.
(2)The first condition is that the loan—

(a)is made part of a scheme under which not less than nine-tenths of the proceeds of the loan are applied to the purchase by the person or persons to whom it is made of an annuity—

(i)ending, if the loan is made to one person, with his life or with the life of the survivor of two or more persons who include that person, and

(ii)ending, if the loan is made to more than one person, with the life of the survivor of two or more persons who include the persons to whom the loan is made; or

(b)was made under such a scheme before the commencement of this section.

(3)The second condition is that each of the persons mentioned in subsection (2) above has attained the age of sixty-five years at the time the loan is made (or, if the loan was made before the commencement of this section, had attained that age at the time the loan was made).")
They have made the following consequential Amendment to the Bill:
5.12 p.m.
Lord BELLWIN: My Lords, I beg to move that this House doth not insist on their Amendment No. 9 but accept in lieu thereof Amendment No. 10 proposed by the Commons, together with consequential Amendment No. 11, which has the effect of applying this provision to Scotland.
My Lords, as the House knows, I announced on 29th July in answer to a Question from my noble friend Lady Faithfull that the Government had agreed that the option mortgage scheme should be extended, in the way proposed in the amendment passed by this House, to provide additional income to elderly non-taxpaying owner-occupiers who buy an annuity on the security of their home.
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As the sponsors of the amendment intended, this will help elderly people to remain longer in their own home.
But the amendment passed by your Lordships is incompatible with the statutory framework of the option mortgage scheme. The amendment proposed by the Commons remedies this defect, but fulfils the intention of your Lordships' amendment. I should like to pay tribute to noble Lords from all parts of this House who have argued so forcefully for this concession, and in particular to the noble Lord, Lord Banks, who in the last few months alone, has argued the case for this amendment on four occasions before your Lordships.
The Bill requires a number of detailed amendments to be made to the option mortgage scheme; we shall need to ensure that proper accounting arrangements are made. I cannot yet say exactly when we shall be able to implement the new clause, but I can assure your Lordships that it is our intention to do so as soon as possible. I beg to move.
Moved, That this House doth not insist on their Amendment No. 9, but agree to the Commons Amendment No. 10 proposed in lieu thereof.—(Lord Bellwin.)
Lord BANKS: My Lords, I should like to thank the noble Lord, Lord Bellwin, for his explanation of the new Government amendment and also for his kind reference to myself. I should like also to thank the Government for accepting the intention of the amendment which I moved at the Report stage in this House and which this House approved. The decision by the Government and the approval obtained in another place yesterday for this new amendment has given much satisfaction to all who have wanted to see this reform introduced, both organisations and individuals.
Of course the greatest satisfaction will be felt by those elderly non-taxpaying home owners who will now be helped to secure a modest increase in income, as the noble Lord, Lord Bellwin, pointed out, which will allow many of them to go on living in their own home, as they would wish to do. I am glad that the noble Lord, Lord Bellwin, said that it was the intention of the Government to see that this provision is in operation as soon as possible.

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In conclusion, I should like to thank all noble Lords in all parts of the House who have supported the introduction of this reform.
On Question, Motion agreed to.
Clause 144
11 Page 94, line 25, after ("109") insert ("to")
Lord BELLWIN: My Lords, I beg to move Amendment No. 11 as a consequential amendment.
Moved, That this House doth agree with the Commons in their consequential Amendment No. 11. —(Lord Bellwin.)
On Question, Motion agreed to.

LORDS AMENDMENT
12 After Schedule 22, insert the following new Schedule—
SCHEDULE B

  HOUSES IN MULTIPLE OCCUPATION: MEANS OF ESCAPE FROM FIRE
  Exercise of powers of local authority
  1. If it appears to a local authority that a house which is occupied by persons who do not form a single household is not provided with such means of escape from fire as the local authority considers necessary the local authority may exercise such of its powers under this Schedule as appear to it most appropriate; and it shall do so if the house is of such description or occupied in such manner as the Secretary of State may by order specify.
  Powers available to local authority
  2. —(1) The local authority may serve a notice on any person on whom a notice may be served under section 15 of the Housing Act 1961 specifying the works which in the opinion of the local authority are required to provide the necessary means of escape from fire and requiring the person on whom the notice is served to execute those works within such period, not less than twenty-one days from the service of the notice, as may be specified in the notice.
  (2) The period specified in the notice may from time to time be extended by the local authority.
  (3) Where the local authority serves a notice on any person under this paragraph it shall inform any other person who to its knowledge is an owner, lessee or mortgagee of the house of the fact that the notice has been served.
  3. If it appears to the local authority that the means of escape from fire would be adequate if part of the house were not used for human habitation the local authority may secure that that part is not so used.
  4. The local authority may secure that part of the house is not used for human
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  habitation and serve a notice under paragraph 2 above specifying such works only as in the opinion of the authority are required to provide the means of escape from fire which will be necessary if that part is not so used.
  5. For the purpose of securing that a part of the house is not used for human habitation the local authority may, if after consultation with any owner or mortgagee it thinks fit to do so, accept an undertaking from him that that part will not be used for human habitation without the permission of the local authority.
  6. If the local authority does not accept an undertaking under paragraph 5 above with respect to a part of the house, or if, in a case where it has accepted such an undertaking, that part of the house is at any time used in contravention of the undertaking, the local authority may make a closing order with respect to that part of the house.
  Enforcement
  7. Any person who, knowing that an undertaking has been accepted under paragraph 5 above, uses the part of the house to which the undertaking relates in contravention of the undertaking, or permits that part of the house to be so used, shall be guilty of an offence and liable on summary conviction to a fine not exceeding £50 and to a further fine of £5 for every day, or part of a day, on which he so uses it or permits it to be so used after conviction.
  Consultation with fire authority
  8. A local authority shall, before serving a notice, accepting an undertaking or making a closing order under this Schedule, consult with the fire authority concerned.
  Exclusion of Rent Act protection
  9. Nothing in the 1977 Act shall prevent possession being obtained of any part of a house which, in accordance with any undertaking in pursuance of this Schedule, cannot for the time being be used for human habitation.
  Interpretation
  10. In this Schedule expressions defined in the 1957 Act have the same meanings as in that Act.
  Application and amendment of enactments
  11. Part II of the 1957 Act shall apply to a closing order made under this Schedule as it applies to a closing order under section 18(1) of that Act, but the ground on which, under section 27(2) of that Act, the local authority is required to determine the order shall be that it is satisfied that the means of escape from fire with which the house is provided is adequate (owing to a change of circumstances) and will remain adequate if the part of the house with respect to which the order was made is again used for human habitation.
  12. In section 17(1) of the Housing Act 1961 for the words "either of the two last foregoing sections" there are substituted the words "section 15 of this Act or

  1639
  Schedule B to the Housing Act 1980"and for the words from "in the case of a notice" to "that section" there are substituted the words "in the case of a notice under that Schedule, that the notice, is not justified by the terms of that Schedule".
  13. In section 18(1) of the Housing Act 1961 for the words "section fourteen, section fifteen or section sixteen of this Act" there are substituted the words "section 14 or 15 of this Act or Schedule B to the Housing Act 1980".
  14. In section 61 of the 1969 Act for the words "section 14, 15 or 16 of the Housing Act 1961"there are substituted the words "section 14 or 15 of the Housing Act 1961 or Schedule B to the Housing Act 1980".
  15. In section 29(7) of the Land Compensation Act 1973 for the words "section 60 of the Housing Act 1969 "there are substituted the words "Schedule B to the Housing Act 1980"and for the words "section 60(2) of the said Act of 1969" the words "paragraph 5 of the said Schedule B.".")
  The Commons agreed to the above amendment and proposed the following amendment thereto:
  13 Leave out paragraphs 12 to 14 and insert—
  ("12. Any reference in the provisions relating to houses in multiple occupation (that is to say Part II of the Housing Act 1961, Part IV of the Housing Act 1964 and Part IV of the 1969 Act) to section 16 or Part II of the Housing Act 1961 shall be construed as a reference to this Schedule; but the functions of a local authority under this Schedule shall not be among those referred to in section 70 of the 1969 Act (review of housing conditions by local authorities).")
  Lord BELLWIN: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 13 to the Lords' Amendment No. 12.
  My Lords, you will notice that the new schedule that appears on the Order Paper as Amendment 12 is in fact something that your Lordships agreed at Report stage in this House; what is now for discussion is Amendment No. 13, which is a Commons amendment to that schedule. This is a simplifying and tidying amendment which seeks to ensure that, for the purposes of local authorities' various supplementary powers regarding the service of notices, appeal procedures, enforcement, and so on, the new schedule may be read as an integral part of the main body of HMO legislation in the Acts of 1961, 1964 and 1969. I beg to move.
  Moved, That this House doth agree with the Commons in their Amendment No. 13
  1640
  to the Lords' Amendment No. 12.—(Lord Bellwin.)
  Lord HYLTON: My Lords, I think I should say on behalf of my noble friend Lady Vickers and the right reverend Prelate the Bishop of London that we have made some progress in this matter of hostels and houses in multiple occupation. I should like to ask my noble friend the Minister why we have to have the last sentence in Amendment No. 13, which reads:
  "but the functions of a local authority under this Schedule shall not be among those [that come under] section 70 of the 1969 Act".
  It seems very odd, because that section is a comprehensive section laying a duty on local authorities to inspect the housing conditions in their districts and to make appropriate plans.
  I should have thought that the question of hostels and houses in multiple occupation was very much part of their functions and something where great human suffering can arise and occur. It seems to me strange that this should be taken out. I should like to ask the Minister why this is.
  Lord BELLWIN: My Lords, my noble friend Lady Vickers raised this point at the Third Reading and I explained then, and still stand by my explanation, that we should not be happy with the imposition on local authorities of a double duty. The Government have made it quite clear that we shall be giving consideration as to how my right honourable friend will exercise his order-making power under the new schedule. Any duty laid on local authorities by such an order would be additional to the duty to inspect laid by Section 70, and I therefore cannot see that the latter duty should be imposed.
  Quite rightly, we spoke at some length on this before, because it is a matter of considerable concern. My noble friends Lady Vickers and Lord Hylton are right to be concerned, because this is a matter which, potentially, is fraught with many possible dangers and problems that can arise from what might happen. In saying this now, I hope that I said so with equal concern when it was raised in the earlier stages of the Bill. In the discussions we are having with local authorities through their associations on this matter, there

  1641
  are many aspects of this which it is simply not that easy to deal with. When you are talking about the kind of duties my noble friend suggests we impose as a duty, you are talking about something that has enormous implications. While I am not saying at the moment that that is something that does not have to take place at some time in the future—nor am I saying that it must—I am trying to make clear that one does not go into that kind of situation without the most careful consultation, discussion and consideration. That is the best answer I can give my noble friend.
  Lord HYLTON: My Lords, I am grateful to my noble friend for what he has said, but it seems that the amendment reduces the existing duties of local authorities, and that is what we want to avoid if we possibly can.
  On Question, Motion agreed to.

  CIVIL AVIATION BILL
  5.21 p.m.
  Lord TREFGARNE: My Lords, I beg to move that the Bill be now read a second time. This Bill is in two Parts. Part I gives effect to the policy outlined in another place on 20th July last year regarding the introduction of a private sector shareholding in British Airways Part II gives effect to a number of other aviation policies, the most important of which reflects the change in the basis of the future relationship between Government and the Civil Aviation Authority. I shall start by looking at the Government's proposal to sell shares in British Airways. In doing so, I will seek to define both our long-term objectives and the part which the Bill plays in helping us to meet those objectives.
  Some people talk about the Government selling off state assets as though this were going to be some sort of unsavoury auction or bazaar, with items going to the highest bidder without regard for the future of the industries concerned or their contribution to the economy. Nothing could be further from the truth. Our proposals in respect of British Airways recognise the fact that our national airline has to operate on a fully commercial basis if it is to succeed in an increasingly
  1642
  competitive international aviation market. We therefore plan to put BA on a proper commercial footing so that it can shape its own future, and to substitute the disciplines of the commercial and financial markets for the existing regime of Government control which is applied to nationalised industries. We shall do this by changing the status of BA from a public sector nationalised industry to a private sector company incorporated under the Companies Acts in which a proportion of the shares will be offered to the public. I should make it quite clear that there will be no separate disposal of any part of BA's operations and it will remain our premier national airline.
  It is our firm belief that British Airways will benefit from being given independence from the Government in this way. There may in the past have been good reasons for Governments of the day involving themselves very closely in the affairs of our major airlines; when Imperial Airways was developing an Empire-wide network of air routes, when BOAC was helping the war effort by transporting troops and supplies, when BEA and BOAC were pioneering the use of jet passenger aircraft. In those days it may have been right for the Government to stand in loco parentis. However, British Airways has grown up; indeed, it is now the world's largest international scheduled operator, and I believe it will be well able to stand on its own feet.
  The international airline industry faces perhaps the most difficult and challenging time in its history and I do not pretend for one moment that life for a private sector British Airways Limited is going to be easy. However, I am quite convinced that its success is best assured by being free to respond to the pressures of the market, rather than to the diktats of Whitehall standing in judgement over how the business is run—the amounts it may invest, what aircraft it should buy and the amounts it may borrow.
  I turn to the provisions of the Bill designed to enable us to pursue the policy I have described, and in doing so will outline the Government's views on certain related questions not specifically covered in the Bill. Your Lordships will have noted that there is one provision in Part I of the Bill that is not related to the sale

  1643
  of shares. This is Clause 1, which reduces the public dividend capital of the British Airways Board by £160 million, thereby implementing the undertaking given by the previous Administration in February 1979. The provision completes the new financing arrangements for Concorde which have been agreed with British Airways and which have already been reflected in the airline's accounts.
  Your Lordships will recall that a joint review group was set up in 1978 to consider British Airways' financial structure and concluded that the results of the airline's Concorde operations are not sufficient to cover amortisation of the supersonic fleet or pay a dividend to the Government on the capital used to acquire the aircraft. I do not think it necessary to dwell on this provision at length, since copies of the Review Group's report which explains more fully the need for this reduction in public dividend capital are in the Library. However, I should just make the point that this provision relates solely to the affairs of the British Airways Board and is in no way related to our intention to sell shares in the airline.
  However, the remaining clauses in Part I of the Bill are directly related to that intention. In this respect, our aim is to create a company in which the Government will initially retain a majority shareholding, but with other investors such as individuals, pension funds and other institutional investors, and employees of the airline, holding the remainder of the shares. The Bill contains the framework for the achievement of that aim by providing in Clause 2 that on an appointed day, all property, rights, liabilities and obligations of the British Airways Board shall become those of the successor company, which will be incorporated under the Companies Acts in the ordinary way.
  Clause 3 provides for the share capital of that company to be issued to persons who will hold the shares on behalf of the Crown. Clause 4 provides that the total amount of share capital to be issued on vesting day shall be equal to the amount of public dividend capital held by the British Airways Board immediately before that day, but apart from this the financial structure of the airline will he unchanged.
  1644
  At this stage British Airways will have been transformed from a statutory corporation, governed in all its actions by an Act of Parliament, to a limited liability company. The next stage will be for the Government to offer shares in the company for sale. Clause 3 provides that those who hold shares on behalf of the Crown may deal with them—which means dispose of them—on such terms and in such manner as the Secretary of State, acting with the consent of the Treasury, may direct. Our intention is to offer a substantial minority of the shares for sale, but there is no undertaking that the Government will continue to maintain a majority holding. Such a commitment would oblige the Government to take up a certain proportion of any future rights issues, and it would be unwise to bind ourselves or our successors in this respect or to a restriction on the number of shares which might ultimately be sold.
  Clause 5 enables the Secretary of State subsequently to acquire ordinary voting shares in the successor company or rights or securities which carry entitlement to or may be converted into such shares. This power would facilitate the taking up of rights issues or the acquisition of voting shares in the market. It is subject to the target investment limit described in Clause 6 which is to be set at the level of voting rights exercisable immediately after the initial flotation. But because, as I have said, the Government intend initially to sell a substantial minority of the shares, it follows that the target investment limit will be set at a majority level. Thus, if the Government's shareholding should ever be reduced for whatever reason, they will be able, should they wish to do so, to restore a majority shareholding in British Airways.
  The reason for this power is to provide a longstop provision. During debates in the other place fears were expressed that the successor company could fall into foreign hands, or be taken over by another company with malign intent. The Government consider those possibilities unlikely, but in the event of any such danger the Government could use their powers to restore a majority holding. I might add that there will also be provitions in the articles of the successor company limiting the voting rights of foreign-held shares. Incidentally, copies of the draft articles are available in the Library.

  1645
  So we shall have belt and braces to guard against a foreign takeover.
  The remaining Clauses in Part I are purely technical. Clause 7 deals with transitional provisions and the eventual dissolution of the British Airways Board. Clause 8 provides that British Airways shall be deemed to comply with the requirements of part of the Trustee Investments Act 1961 for the purposes of the initial flotation. Clause 9 gives interpretations of certain terms used in Part I.
  I turn now to consider the wider questions which are not specifically addressed in Part I of the Bill, but which will I hope amplify the general policy and the considerations which lie behind it. First, let me say a word about timing. Part I of the Bill itself incorporates no timetable for the flotation, but merely the legislative framework for the change of status on an appointed day and a subsequent sale of shares. That omission is quite deliberate because we wish to have complete flexibility in choosing our time. The sale of shares will take place when we consider the time is right, taking into account the need for a successful flotation and the interests of all concerned.
  The Government are fully aware that the international civil aviation industry is at present going through a difficult time, due largely to the rapid increase in fuel prices over the last year or so, together with some falling off in demand for air travel. British Airways have shared these problems, as their results for 1979–80, which were announced last week, demonstrated. Your Lordships will also have seen reports that British Airways continues to face problems in the current year, and the board has initiated a plan of action to maximise profits and maintain its competitive position.
  These are problems which face the airline industry worldwide, and we welcome the action which BA management are taking to ensure that they get back on to the right track as soon as possible. Its results can certainly stand comparison with those of many foreign carriers. The industry has faced similar problems before in the mid-1970s, and British Airways showed its ability to recover then. It can, I believe, do so again. Meanwhile I emphasise that, bearing in mind that this Bill has yet to complete its full parliamentary
  1646
  passage, it is too early to take any decisions on a date for a sale of shares. We have no commitment to any particular date, and we shall continue to preserve flexibility, so that we can choose the right date in due course.
  With regard to the shareholding that the Government are to maintain, your Lordships will wish to hear something about the relationship between the Government and the successor company. Our intention in establishing British Airways as a limited company is to ensure the maintenance of a strong and competitive business that will stand entirely on its own feet. Although the Government for the present will retain at least a substantial shareholding, the company will not be the creature of the Government; we do not intend to control the company. It will stand or fall by its own efforts, and this must be recognised by all concerned.
  Our objective will be to appoint initially an experienced and independent board of directors, who will in future determine business policy and assure the continuity of management at both board and lower levels. The Government will. not thereafter wish to intervene in the commercial decisions of the company, and circumstances are not readily foreseen in which the Government would seek to mobilise their shareholding in opposition to the board of directors.
  We wish British Airways to be a perfectly ordinary private sector company. We do not want the existing paraphernalia of controls over the airline's capital expenditure; we do not want their borrowings to be governed by cash limits; we do not want power to guarantee those borrowings or to make loans to the company; we do not wish to take any action that might lay the Government open to allegations of influencing the commercial decisions of the company. We intend that British Airways should be quite independent of the Government, and we believe that is where its best interests lie. We do not propose that there should be specifically appointed Government directors on the board of the new company.
  There is one further matter which is not covered in Part 1 of the Bill, but which is an important element in the policy. It concerns the undertaking given

  1647
  by my right honourable friend the Secretary of State in another place on 20th July last year that
  "special arrangements will be made to enable employees of British Airways to take up shares in the enterprise should they wish to participate in its future and share in its growth."—[Official Report, Commons, 20/7/79; col. 2183.]
  We believe that the employees of British Airways should also be given the opportunity to acquire a tangible stake in the company and that they should be able to do so on favourable terms.
  We do not subscribe to the view that there must necessarily be opposition between the interests of shareholders and employees, and we certainly do not wish to preserve such an adversary relationship where it may be considered to exist. As a general principle, a greater degree of share ownership by employees in the company for which they work is an important step towards breaking the dangerous and damaging "them and us" syndrome in British industry.
  The Government intend to set a good example in this respect by offering shares to British Airways employees on favourable terms at the time of the flotation. A number of possible arrangements are under consideration, including an offer of two shares for the price of one, with exemption from income tax on the free share, as provided for in Clause 46 of the recent Finance Act; a share option scheme; a straightforward, if modest, give away of shares; and priority allotment of shares for employees at the full price. Full details of the arrangements which are eventually decided will be announced in good time for the share sale.
  I turn now to Part II of the Bill. This Part contains a number of provisions amending the law relating to civil aviation, and I shall comment on all the more important of these during the course of this speech. However, there is no doubt that the most significant clauses in Part II are Clauses 11 and 12, and therefore I propose to deal with these in some detail before proceeding to comment upon the remainder.
  Clause 11 effects four major changes in the Civil Aviation Act 1971. First, it amends Section 3 of the 1971 Act, which sets out the general objectives of the Civil Aviation Authority, by removing the
  1648
  current objectives of the authority to secure that at least one major British airline not controlled by the British Airways Board has the opportunity to provide air transport services and to encourage the contribution of the civil aviation industry to the United Kingdom's balance of payments and national prosperity. The former objective is being removed because it is no longer necessary or desirable to distinguish between British Airways and other airlines following the change in status of British Airways proposed by Part I of this Bill. Moreover, there is an outstanding need to change this objective in Section 3(1) (b) following the decision of the Court of Appeal in the case of Laker Airways Limited v. The Department of Trade, when the Appeal Court decided that this subsection and paragraph had a rather different meaning from that which had been widely understood by both the industry and the then Government.
  The effect of the removal of this objective will be simply that in future all British airlines will be able to offer to provide any service. It will then be for the Civil Aviation Authority to decide which airline or airlines should provide those services in the light of the objectives which it is the authority's duty to pursue under the Act of 1971, as amended by this Bill.
  The objective of encouraging the aviation industry to contribute to the balance of payments and to national prosperity is being deleted because it is an automatic consequence of the other objectives of the authority. If the Civil Aviation Authority properly addresses itself to its duty under Section 3(1)(a) of the 1971 Act, to secure that British airlines provide services at the lowest charges consistent with a high standard of safety and an economic return to the efficient operator, and to secure the sound development of the United Kingdom civil air transport industry, then the authority can hardly fail to encourage the industry to contribute to the balance of payments and to national prosperity. Since Clause 11 is concerned with the setting out of the CAA's objectives in a proper manner, it is therefore appropriate that we now dispense with this unnecessary provision.
  Subsection (1) also has the important effect of putting the CAA's duty to further the reasonable interests of users of air transport services on an equal footing with

  1649
  the authority's other objectives, instead of being a subordinate duty as it is at present. This reflects the Government's intention in this Bill to ensure that the consumers' interests will in future carry at least as much weight as the airline industry's interests when the CAA is exercising its air transport licensing and other functions. I am sure your Lordships will agree that this amendment establishes the proper balance between the general objectives which it is the CAA's duty to pursue.
  The second major change effected by Clause 11 is the abolition of the Secretary of State's power to give guidance to the Civil Aviation Authority. The 1971 Civil Aviation Act, which established the CAA, adopted the unusual method of regulating a statutory undertaking by means of the issue of written guidance. At the time this was an understandable decision: the CAA was an entirely new body, and the extent of the areas in which it would become involved was not and could not be known. Unfortunately, experience of the guidance has shown that it is a flawed mechanism. The most cursory examination of the guidance issued in 1972 and 1976 reveals that much of the guidance serves to do no more than encourage the CAA to behave itself and to use its common sense when carrying out various detailed aspects of its functions; and where the guidance attempted to do more than this by going beyond the terms of the 1971 Act, it has run the risk of being overturned by the courts. This was the fate of paragraphs 7 and 8 of the 1976 guidance, which set out the objectives for the licensing of long-haul routes and established a sphere of interest for British Caledonian Airways, since the Court of Appeal held, in the case of Laker Airways Limited v. Department of Trade, that these paragraphs were ultra vires and consequently invalid.
  The essential problem with the power to give guidance is that either it says nothing useful or it is in danger of being judged to be ultra vires by the courts. It follows that the proper manner of regulating the activities of the CAA is for Parliament to set out the authority's objectives fully in primary legislation. This is what the remainder of Clause 11 achieves. The abolition of the power to give guidance does not mean that undue power is being handed to the authority. It means,
  1650
  rather, that the objectives and duties of the authority will in future be contained in the appropriate Act of Parliament. I hope your Lordships will agree, therefore, that this Bill represents an improvement in the constitutional propriety of the legislation.
  The third major change in existing legislation made by Clause 11 is the introduction into the Civil Aviation Act of 1971 of a new Section 3A, which imposes on the CAA a duty, subordinate to its other duties in Section 3, to have regard to environmental factors in exercising its aerodrome licensing functions in respect of aerodromes specified by the Secretary of State. Subsection (4) of the clause imposes a similar environmental duty on the CAA in respect of the authority's exercise of its air transport licensing functions. These provisions therefore impose upon the authority specific statutory duties when exercising its relevant functions which replace the general environmental duties which are imposed on the authority by the policy guidance. In the case of the CAA's aerodrome licensing functions, the duty will apply only where the Secretary of State specifies a particular aerodrome, as it is hoped that local consultation and action will be sufficient in most cases to ensure that proper care is taken of environmental considerations. Where this is not the case, however, then the Secretary of State will be able to specify the aerodrome concerned for the purposes of Section 3A.
  The fourth major change to existing legislation is made by subsection (4) of Clause 11, which inserts into the Act of 1971 a new Section 23A. This new section sets out those considerations to which the CAA shall have regard when exercising its air transport licensing functions. The section takes up several of the CAA's existing duties, which are currently contained in the policy guidance. I will not therefore dwell on these restated duties, but will draw the attention of noble Lords to subsection (2) of the new Section 23A. It lays down that the CAA, when considering whether to grant an air transport licence, and when weighing up the effects of granting a licence on existing services, shall have regard in particular to the benefits which may arise from licensing two or more operators to provide the services in question.

  1651
  The Government took the opportunity of introducing this new provision into the Bill in another place because of an uncertainty expressed in certain quarters as to the ability of the CAA to take proper account of the advantages to consumers which may arise from a due measure of competition. The purpose of this provision is to establish that the authority can and indeed should take account of these benefits, and to ensure that the interests of the airline passenger have a prominent place among the CAA's objectives. I am sure that I need not remind your Lordships how significantly the consumer may benefit from competition. The revolution in the level of fares on the North Atlantic route and in the variety of services on offer to passengers followed directly from the introduction of a proper measure of competition. It is the Government's hope that a similar change will come about on the London to Hong Kong route, and, indeed, I believe that the variety of fares and services which are already available on that route suggest that such a change is already in train. In the future it is the Government's intention that the CAA will take the initiative in identifying opportunities where the opening of a route to competition would enable a much wider public to have access to air travel.
  I turn now to Clause 12 of the Bill. When consultations took place last year on the proposed legislation, several respondents were of the view that it would be helpful for the CAA, in the absence of the policy guidance, to publish an account of the manner in which it proposed to apply the duties and objectives set out in the 1971 Act as amended. This was a sensible suggestion, and Clause 12 therefore requires the CAA to publish a statement of its air transport licensing policies within six months of this Bill receiving Royal Assent. It also provides for the CAA to carry out appropriate consultations with representatives of the air transport industry and with users of the industry's services before publishing its statement. Finally, subsection (3) of the clause empowers the Secretary of State to require the CAA to publish a statement of the policy it intends to adopt in respect of any particular matter relating to its air transport licensing functions. This establishes a mechanism whereby expressions of concern
  1652
  as to the CAA's exercise of its functions may, if the Secretary of State agrees, be resolved.
  Part II of this Bill contains a number of other clauses relating to civil aviation law. I will not weary your Lordships by detailing the purpose of each of the less important clauses, which I think are adequately described by the Explanatory Memorandum. However, I would draw your Lordships' attention to the following clauses as making changes of import in the law. Clause 10 confers on the Secretary of State powers to require British air transport businesses to place at his disposal the whole or the relevant parts of their undertakings in time of war, actual or imminent, or in the event of a great national emergency. In the past, the Secretary of State has exercised such powers only in respect of British Airways, but, of course, the change in status of British Airways proposed in Part I of this Bill would make it inappropriate for BA to continue to be singled out in this way. Equally important is the increased need for access to back-up for the country's military forces in the light of recent world developments, and Clause 10 therefore extends the Secretary of State's emergency powers to cover all United Kingdom air transport businesses.
  Clause 13 sets out in a more straightforward manner the borrowing powers of the Civil Aviation Authority, and provides for an increase in the CAA's borrowing limit from £125 million to £200 million in order to cover the major investment programmes planned by the authority over the next few years. The CAA's current outstanding debt is £102 million, of which £81 million was borrowed, through the Secretary of State, from the National Loan Fund, with the rest being raised from the European Investment Bank and on the international money markets. It is likely that the CAA's future borrowing needs will continue to be met from a variety of sources, with an increasing proportion of those needs being provided for by loans in US dollars from international money market sources. This will permit the CAA to match its dollar income against an appropriate dollar debt, so mitigating the effect of exchange rate movements on the authority's trading results.

  1653
  Clause 17 abolishes certain Government controls over the CAA which were appropriate when the authority was dependent on grant in aid but are no longer relevant now that grant in aid covers less than 20 per cent. of the authority's expenditure. Clause 17 will enable the CAA to employ such staff and pay them such salaries as the authority considers proper and it will also terminate Government control over the CAA's pension scheme.
  Finally, I would draw attention to Clause 24 which enables the British Airports Authority to acquire land by agreement. This provision will apply generally to all the authority's airports but its immediate effect will be to enable the BAA to purchase property in the wider area of 2,500 acres sround Stansted airport which will not be the subject of a formal planning application or a compulsory purchase order until such time as a need is established for its future development. It will allow the BAA to alleviate the hardship of those with property within this area who, because of the uncertainty of the situation, would have difficulty selling on the open market and who would be unable to benefit from the statutory blight provisions which apply when land is the subject of a compulsory purchase order. This Clause fulfils the commitment made by my right honourable friend the Secretary of State in his Statement in another place on 17th December last year and which I repeated to your Lordships.
  This Bill is designed to secure the sound development of British Airways as a normally-constituted private sector limited company and to establish on a firm legislative basis the objectives and duties which it is the Civil Aviation Authority's duty to pursue. I now commend the Bill to your Lordships.
  Moved, That the Bill be now read 2ª.—(Lord Trefgarne.)
  5.52 p.m.
  Earl AMHERST: My Lords, I think the whole House will be indebted and grateful to the noble Lord for his detailed and clear exposition of this Bill. I should like to start by saying that we on these Benches welcome the proposals to provide participation of the workforce of British Airways in the new shareholding and to give them certain preferential treatment in the buying of shares and, I
  1654
  believe, also in the disposal of shares to a certain limit. We shall look forward to be told the precise details of these when the parties concerned have agreed.
  For some time now the airline business has been in recession, and is likely to go on being in recession. It is not surprising that the latest financial report of British Airways shows a less happy picture than it did a year ago. Despite the amalgamation of BEA and BOAC which took place eight years ago, the reverberations of the staff difficulties that resulted have still not finally settled. The airline is in process of slimming down its fleet of aircraft and subsequently the disposal of the resulting surplus. Taken together, it does not seem to be a propitious moment to contemplate drawing up a prospectus for launching a new company. I understand that the complications involved are not likely to be ironed out before the summer of next year, that is, in 1981. It is possible that by that time the financial horizon may have become more encouraging. That time may be right; but is there ever a right time?
  The Bill says that one of its objectives is to free this new company from Government interference and to get the Treasury off its back. It will no longer have to seek ministerial approval for the purchase of new equipment and it will be free to go to the market for new finance. So far so good. But does this not also mean that the Government now get off the financial hook to provide new funding? I am not clear from the Bill what the resulting Government holding will be when the Secretary of State has disposed of its shares to public ownership. We on these Benches hope that it will not be allowed to be lower than 51 per cent.—if only to preserve the company from being taken over by interests which may not be British as well as seriously prejudicing the ownership and control attaching to the designation of an airline to a particular international route.
  I understand from what the noble Lord has said that if there was a danger of interference in the company's control, the Government would step in; but he did not tell us how this will be done. If I remember correctly, a somewhat similar argument arose when we debated the denationalisation of Aerospace. I think the point was brushed aside by its being

  1655
  said that the articles of association could be relied upon to take care of all that. As I said at the time, but to no avail, it is unwise to rely on articles of association as these can be changed at any time by a board resolution. I hope that if and when it is necessary for the Government to take action in the matter they will not rely on articles of association. I hope that the noble Lord when he comes to reply will be able to tell me of this.
  This brings me to the question of board membership. The Bill says that the Secretary of State will not appoint Government directors but will select members from outside the Government orbit. But, whether the Government's final shareholding will be more or less than a majority holding, the shares still will be Government shares and will be the property of the general public. Should there not be at least one Government board member to represent this interest? Presumably there will be a considerable gap in time between this Bill becoming law and the issue of shares to the general public. In the meantime, all the shares will be owned by the Secretary of State. Presumably there will be an interim board to be selected by the Minister. What then will be the status of this board vis-à-vis these shares and the pressures of Government policy?
  I turn now to the Civil Aviation Authority, or that part of it which deals with the functions relative to the granting of licenses to airline operators. I imagine that it is well realised that these licenses are a big asset, if not the most important asset, of any airline. All the skills, sophisticated equipment and hard work are of no avail if the operator does not have a licence to operate and use them; so that if an airline company has any cancellation, modification or other alteration of its licence, this can cause great damage to the value of its main asset and to its equity value. I suggest that the Bill as it now stands requires quite a lot of clarification and definition of the functions and obligations of the CAA in this connection and provision for them should be made clear by inclusion in the Bill.
  When an operator is granted a licence, it is required to make suitable provision for finance, equipment and staff to meet the obligations of that licence. It seems
  1656
  proper that the operator should have some protection against any sudden withdrawal or modification of its licence. There should be established therefore a minimum period of validity for these licences. It should be made incumbent upon the CAA if and when it decides upon a cancellation or a modification of a licence to make a full public statement of its reasons for doing so; and there should be proper time provided for prior discussions, the preparation of adequate defence, the right of appeal and, if appropriate, opportunities for arbitration. Such provisions should be incorporated in the Bill.
  Recently we were confronted with somewhat startling action by the Secretary of State who, apparently without new evidence, save possibly the expression of opinion by an interested party, within a few weeks of the granting of a licence by the Civil Aviation Authority overruled the CAA and seriously modified the licence. If this is to be the order of the day, these CAA operating licences will be rendered valueless. Surely, there should be some provision for protection against such ministerial U-turns. Meantime, on these Benches we shall be happy to support the Second Reading of this Bill.
  6 p.m.
  Baroness BURTON of COVENTRY: My Lords, I hope that my remarks today will be able to stand up to the scrutiny of the most knowledgeable and distinguished speakers who follow me. A long time ago, in July 1971, we had the Second Reading of the then Civil Aviation Bill. In that debate I remember raising three main points: the structure of international air fares; charter flights; the proposed Civil Aviation Authority and consumer affairs. Obviously much has happened since then, but at that time I asked for a major reappraisal by all Governments of the whole balance of air transport effort. I think that most speakers in that debate felt the same. Today Governments are doing just this. They have had to, my Lords. Charter flights; cheaper scheduled flights, particularly in Europe; the position of IATA; the attitude of IATA and membership of IATA have all made reappraisal necessary.
  But I suggest that we have a major new problem to take into account, it may be throughout the world but

  1657
  certainly in this country, and that is the problem of airports. While considering whether we have new airports or new terminals, whether we manage with expansion of existing facilities, to my mind one question comes more and more to the fore, and that is: Are passengers made for airports or airports for passengers? On short distance flights today from London to Paris or London to Brussels, we spend more time getting to airports and from airports, and we spend more time on the ground than we do in the air.
  Since 1971—reverting to my three main points—we have made considerable progress on the fares front and on charters. But where are we on consumer affairs? Today, as in 1971, I deliberately avoid using the words "consumer complaints". There are many consumer matters affecting travellers which are not complaints and the sooner everyone leaves behind that old fashioned concept, the better.
  Today I want to speak on one aspect only, one better discussed on Second Reading than in Committee. What I really want is to find out the general attitude of the Government in the area concerned. I have so informed the Minister. In 1971 I was by no means the only speaker in the debate who criticised the Bill and the apparent attitude towards the consumer. Indeed, my noble friend Lord Beswick asked, if we were to be given so much detail, why could reference not be made to the function of the authority as custodian of the consumer interest? Lord Beaumont of Whitley, speaking from the Liberal Benches, felt that the failure of the Bill we were then discussing was that there was virtually no mention of the duties of the consumer. So the House will not be surprised that what I want to talk about today is the position of the air traveller.
  When this new Bill first appeared, I felt encouraged and I trust that I will feel the same when we hear what the Minister has to say when he comes to reply. The encouragement was derived from the fact that in 1979 the Secretary of State for Trade obviously felt the same as many of us had felt in 1971. As the House will have noted, the draft new Bill which appeared in October last suggested the repeal of sub-paragraphs (b) and (c) in the old Section 3 so that "the furtherance of the reasonable interests of
  1658
  users of air transport services" now ranks equally with sub-paragraph (a). That has already been mentioned by the noble Lord, Lord Trefgarne, in his speech today.
  Mr. Nott reinforced this attitude during the Second Reading of the present Bill when he said, at col. 49 of Hansard of the other place on 19th November, 1979:
  "The whole emphasis of the task to which the CAA was charged in 1971 was to put the airlines first and to promote the British civil aviation industry. The airline users' interest was not the first consideration".
  This change is to be found in the new Clause 11(1), and airline users thank the Secretary of State.
  Airline users need such official encouragement. The House will remember that it took us two years until July 1973 before the Airline Users' Committee was established, and if it had not been for this House we should not have had that body. Neither the industry nor Government wanted it. During those past six years I believe that the Airline Users' Committee has been useful both to the travelling public and to the airlines, but it has been severely handicapped. As a statutory body we could have accomplished much more, and I should like to explain why. At the moment there are far too many committees with the resultant demarcation arguments. Any air traveller, if he has problems, wants the matter dealt with. He does not want passing from committee to committee. Neither does he want to hear the various committees arguing as to which part of the whole they are responsible.
  Among other things, I spent my six years on the Airline Users' Committee asking for it to be made statutory or, if not the AUC, one other body. At Second Reading in another place many references were made to the additional powers being given to the Civil Aviation Authority. Does this mean that the Government intend to continue the practice by which the industry consumer body is appointed and financed by the authority responsible for the civil aviation industry? However fair the Civil Aviation Authority may be, and whatever its intentions, that seems to me to be the wrong approach.

  1659
  The House will remember the many occasions on which independent statutory powers have been sought for the Airline Users' Committee. I am sure that Members will remember the last Government admitting that they recognised the Airline Users' Committee as the consumer body,
  "specifically promoting the interests of all air travellers".
  Furthermore, of all the committees so recognised by the Government, only the Airline Users' Committee was not to be given statutory status in the then pending legislation. In other words, only the air traveller was not to have his affairs dealt with by a statutory body which, most importantly, would have given it the
  "corollary right of advance information and consultation on the relevant consumer aspects affecting air travellers by the industry concerned".
  That is a quote of course from statutory committees. I should be glad to have the thinking of the Government on this aspect irrespective of the date on which it is intended to change British Airways from a public corporation into a Companies Act company. The noble Lord mentioned that, and I gather that it is not before the autumn of next year at the earliest.
  In the past the Airline Users' Committee had the misfortune of being a hybrid creature under the disposition of the Department of Trade and the Department of Consumer Protection. This provided endless opportunities for those responsible to say that nothing could be done. Dating back to 1973, there has been deep and entrenched opposition to the Airline Users' Committee being made statutory. Most of this came through the Department of Trade. I regret that for so long a period the department gave precedence, approval and backing to this entrenched opposition rather than to the users of air transport. We now have new faces at the department, and I am hoping that the Ministers concerned will feel able to look at this matter again.
  If there were to be this new willingness, how could the matter be approached? During Second Reading in another place, references were made to the environment and the necessary environmental considerations to be taken into account in all these matters; and, indeed, the noble Lord,
  1660
  Lord Trefgarne, referred to these matters in his opening remarks today. I did try to pursue further both the environmental point and the problem of too many committees, as far back as 1975. Indeed, the report of the Select Committee on Nationalised Industries for the Session 1975–76 did print, at Appendix 11, a paper of mine, at page 117. This was titled, Airline Users' Committee: Terms of Reference. The paper had been prepared for the Airline Users' Committee and was reproduced by permission. I need not weary the House with much detail on this, but I should like to comment on the environmental aspect.
  Difficulties have frequently arisen from the overlapping of the Airline Users' Committee and the British Airports Authority. There is little real identity between the airport committees and the airline user. As an example, whereas an airline traveller is the concern of the airline with which he has booked, in fact, for a time he is the responsibility of an airport authority. He has no ticket from the airport authority and indeed he probably knows nothing of this divided responsibility; but it exists.
  As the passenger is concerned with handling at various airports, to get into the air, and numerous authorities are therefore involved, I maintain that some form of organisation is needed so that passengers may know where they stand. To me, it is quite clear that air travellers will not be looked after adequately until there is one statutory committee charged with this work. The airport consultative committees have a dual function, representing the interests of users and people living in the vicinity. But these are quite divided interests. It would appear that the arrangements would be much more effective if there were airport committees representing the interests of only the people in the vicinity of each airport, and one statutory committee representing the interests of air travellers generally. Obviously such a change would greatly hearten the environmentalists, who have many problems today when new airports, new terminals and even new runways are being discussed.
  It is not only the user who is affected—indeed, I would say it is not mainly the user who is affected—environmentally on these matters, but rather the people

  1661
  who live round the suggested airports, terminals and runways. What an opportunity, it seems to me, is thus offered to airport committees; that surely should be their function. After all—I think I should quote this—the terms of reference of the airport consultative committees set up by the British Airports Authority are:
  "In the management and administration of any aerodrome, the Authority shall provide for the users of the aerodrome, for the local authorities in whose area the aerodrome or any part thereof is situated, or other local authorities whose areas are in the neighbourhood of the aerodrome, and for other organistions representing the interests of the persons concerned with the locality in which the aerodrome is situated, adequate facilities for consultation with respect to matters affecting their interests, and shall in doing so give effect to any direction given to it by the Minister".
  If Ministers are willing to consider this matter, I am convinced that progress could be made. In the past this willingness has not been apparent.
  Now I come back to the Civil Aviation Authority. However fair such a body may be, I think it is indisputable that the consumer function of an organisation such as the Civil Aviation Authority is different from that of an independent Airline Users' Committee. I think it is wrong fundamentally—and always have—that the Airline Users' Committee should be financed by and appointed by the Civil Aviation Authority. If I am told that the Airline Users' Committee is independent, I would merely state that its members and its chairman are appointed by the Civil Aviation Authority. I feel that I am entitled to add here how glad I am that Mr. Clinton Davis, now in Opposition, agrees with me. It would not be in order to quote his exact words, but during the 20th sitting of the Committee in another place, at column 1031, Mr. Davis made clear that he now regarded the close association of the Airline Users' Committee with the Civil Aviation Authority as a drawback to the Airline Users' Committee.
  My suggestions were reproduced in a report made four years ago—to be exact, on 5th February 1976—and referred to previously. But I am glad to be able to call in aid a more recent one, again from the Select Committee on Nationalised Industries, for the session 1978–79, and made on 2nd April 1979. In this later report, at paragraph 56, and following a recommendation of the National Consumar
  1662
  Council, the Select Committee recommended:
  "That the Government should examine whether consumer representation in the field of air transport might be improved, perhaps through extending the remit of the Airline Users' Committee to include airports, through giving the Airline Users' Committee statutory status, or through setting up a consumer body to consider air safety."
  So I ask the Government to consider giving the Airline Users' Committee statutory status and giving the airport consultative committees more scope by asking them to take on all environmental issues.
  I was encouraged by the fact that Mr. Norman Tebbit, the Minister responsible in Committee, stressed during the 15th sitting, at column 744, his concern for the interests of the residents near airfields, who might or might not be consumers of air transport services, adding that the provisions put into the Bill were to increase rather than to decrease the importance given to environmental considerations. Subsequently, a member of the Committee asked who should have a look at and be responsible for environmental problems. I have just made a suggestion—namely, that the airport consultative committees should do the job. I should think that this suggestion would have added force because of the remarks made by the chairman of the Civil Aviation Authority, Sir Nigel Foulkes, and reported in The Times on 30th July. Sir Nigel was criticising a section of this new Civil Aviation Bill which proposed environmental responsibilities for the authority in air transport licensing, which was also mentioned by the noble Lord, Lord Trefgarne. Sir Nigel went on to say:
  "The Authority is a specialised organisation, trained and equipped to serve civil aviation. It is hard to see how a non-governmental body like ours could resolve the often incompatible claims of the aeroplane and the environmental objector".
  Recalling how this House, from all sides, has reacted over past years, I have no doubt that agreement exists that airline travellers must have some organisation to speak for them. Arising from this, I have for the Minister four questions of which I have given notice.
  It was stated in Committee that at present the right of access to information is only discretionary so far as the organisations representing users are concerned, whereas the airline industry in all its aspects has statutory rights. Is that

  1663
  correct? The previous Secretary of State expressed fears that, after the Bill became an Act, all that MPs would be able to do —and I include this House—would be to write polite letters to the Civil Aviation Authority asking it to change its views on certain aspects. Is this correct? Or may we take as correct the statement made by Mr. Tebbit, when he said during the 14th sitting, at column 738:
  "There are still enormous numbers of opportunities for the posing of parliamentary Questions".
  I hope that is so. Such opportunities will certainly not be overlooked in this House, on both sides of this House.
  My last question concerns the obvious necessity of having an organisation to speak for air travellers. if we cite problems well known to this House such as the West London Air Terminal, the bus services to Heathrow, taxis from the Victoria terminal and indeed their cost from anywhere, and a realisation that passengers actually have luggage, I think it must be accepted that we cannot leave such matters to people who control the organisations producing these problems. Can the Minister comment on this?
  Finally—and I am sorry to have taken up so much time but it is essential that the background is on record in this battle which we have not yet won—whether or not the Government feel able to accept any legislative amendment in this spill-over period, they must, I think, agree that the present situation is not satisfactory. If making the Airline Users' Committee a statutory body requires legislation, would it not be possible as an interim action to consider changing the terms of reference of the relevant committees—something I put forward as long ago as 1975? That would help, otherwise I assure the Minister that demarcation problems will remain to the detriment of air travellers.
  That is for the short term. For the long term—I do not know whether the Minister can say how long that will be—I realise that the whole position of consumers and the nationalised industries is under review by the Minister of State for Consumer Affairs and that we shall eventually have a Green Paper on this. May we have an assurance from the Minister that consumers of air travel will
  1664
  be included in this review, as both the Civil Aviation Authority and the British Airports Authority come into the category of nationalised industries? So I ask for the interim measure of amending the terms of reference and the longer-term one of including the air traveller in the review of the future position. These are two modest requests. The Secretary of State wishes to enhance consideration of consumer interests. The Under-Secretary of State, Mr. Tebbit, said in another place during the Second Reading, at col. 164:
  "We shall put the passengers further up in the pecking order. We believe that airlines exist for passengers."
  I have maintained, always, that without passengers there would be no airlines. Apparently, the Government agree. What do they intend to do?
  6.23 p.m.
  Lord BOYD-CARPENTER: My Lords, a major Civil Aviation Bill comes before Parliament generally only about once in a decade. When it does, it is a matter of very great public importance for it involves the regulation and control of a major and a highly successful British industry. It is not always fully appreciated that we in this country have the second largest civil aviation industry in the free world. I have to use that qualification "the free world" since the cloud of military security hangs over the civil aviation activities as it often hangs over the accident records, of the communist world. But after the United States, though a long way after, of course, British civil aviation is the second in the free world. It is a major industry. In connection and in partnership with our tourist industry, the two are the biggest earners of foreign exchange. It is also an industry in which we are highly efficient. Indeed, it is an industry that includes the only British nationalised industry which is at the same time fully exposed to world competition and makes a profit.
  Lord BESWICK: Question.
  Lord BOYD-CARPENTER: I know what my noble friend has in mind. He has in mind the industry over which he presided with such great distinction, but he will also recall the limitations of the competition to which it was exposed with its built-in purchaser in the shape of

  1665
  the British Government. I am sure the last thing my noble friend wants to do is to diminish in any way the remarkable achievement of British Airways in one of the most competitive businesses in the world, making a profit year after year. Now I will certainly give way. No? I am very glad if I appear to have satisfied. I was only going to say "my noble friend," because in many ways he is.
  Therefore, the theme of what I am beginning to say is that a Bill of this sort is a matter of major importance which I hope the House will examine carefully not only tonight, when perhaps, somewhat unhappily, it comes on at the tail end of exhausting parliamentary sittings, but also very carefully in Committee when we come back to it during the spill-over, because it really is important to get it right. This is an industry in which, as I say, we as a country are successful. Our airlines, public and private, have the highest reputation. They are highly competitive. Both the public and private sectors are leaders in the move for international cheap fares, and technically safety-wise the skill of their pilots and the admirable service given by their cabin crews are the highest in the world. It is therefore owing to this industry that we should get it right.
  I feel that the form—I am not talking about the substance at the moment—of Part II of this Bill is somewhat unfortunate. As noble Lords will see, it proceeds by seeking to amend large parts of the Act of 1971 and, indeed, to write into it certain entirely new provisions. That is a very confusing way of legislating from the point of view of those who have to carry out the legislation. I should have thought that a more workmanlike way of doing it would have been to repeal the 1971 Act in toto and to have re-enacted it with these amendments. We would then have had the whole of the relevant legislation in one statute.
  If that be at this stage impossible, I must ask my noble friend why we cannot have what used to be called in another place Keeling schedules; that is to say, a schedule to the Bill setting out how the 1971 Act sections would look if the provisions in this Bill were put into them. As it is, if one is to judge what the effect of a good deal of Part II of this Bill will be, one has to do some sort of paper
  1666
  and scissors work with the 1971 Act. That really is an extremely inconvenient way to legislate. I would ask my noble friend to consider whether Parliament is being treated very fairly and very well by legislation being in this form.
  Coming now to the substance, I begin that with a reference to Part I. I personally welcome the transformation of British Airways from a state corporation into a company under the Companies Act. I welcome it particularly because of the opportunity which it gives to introduce employee shareholding. For some reason which I do not understand this provision seems to have caused a certain irritation to the Opposition in another place. It seems to me a wholly admirable provision, particularly in an organisation like British Airways, which in the past has suffered from industrial trouble and in which employee shareholding may very well help to weld together all who work in it with a sense not only of common purpose but of common interest. I very much hope the employee shareholding provisions will be a success.
  As some of your Lordships know, I speak on this aspect of things with a little knowledge inasmuch as the company of which I happen to be chairman today was one of the leaders in this country in introducing employee shareholding and in which today over 90 per cent. of our United Kingdom workforce hold shares. I therefore see the benefits of employee shareholding very close up, and I am absolutely delighted that British Airways is to have a similar advantage.
  On the other hand, I am a little puzzled by what my noble friend said about arrangements for the board. If the British Government, on behalf of the British taxpayer, are to remain a majority shareholder in the new company they cannot, as I see it, divorce themselves from responsibility for at any rate a large number of board appointments. To do so surely would be really to fail to discharge the duty which falls on shareholders, who have a responsibility in the ultimate for seeing that their board is properly composed. If the British Government, whether as a majority shareholder or merely the largest shareholder—I understand they may he either—simply wash their hands of board appointments, that would be an abdication which would seem to go against the whole

  1667
  spirit of today and against the way in which the Companies Act is operated. I hope that my noble friend will be able to clarify this and be able to tell us that the Government—not as Government but as shareholders—are intending to exercise proper influence in board appointments.
  My noble friend said something to the effect, before the changeover takes place, of equipping British Airways with a new but adequate board. I should like to hear a little more from him as to how he proposes to do that, and I should like also to take up a related point. My understanding is that the present very able chairman of British Airways, Mr. Ross Stainton, is due to retire in November. We have had no intimation as to who his successor might be and we are already in the month of August. British Airways are facing another major transition as well as the constant competitive struggle in which they are involved, and I am not sure that it is treating them terribly well to leave the question of the succession to the chairmanship over so long. I should like my noble friend to give some indication that an early announcement will be made.
  I pass now to Part 11. I welcome the abolition of the guidance. As your Lordships know, I lived under two successive guidances for five years and I never thought they were a satisfactory instrument. They were neither legislation nor straight administration, and they sought to influence the decisions of the authority without actually clearly instructing it to do something or clearly leaving it to the authority; and, as the event proved, they were subject to abuse.
  I was very surprised to hear my noble friend's reference to the Court of Appeal decision in Laker against the Department of Trade when he said that it gave what was "to the industry" a surprising interpretation of Clause 3(1)(b) of the 1971 Act. I can only tell him, having at that time access to legal advice which appears to have been of somewhat higher quality than that which was then available to the Department of Trade, that it came as no surprise to me. And it seems to me now, re-reading the decision, that the Court of Appeal came to the perfectly obvious conclusion that the second guidance was plain contrary to the terms
  1668
  of the 1971 statute and, as the guidance plainly could not override the statute, was invalid. My noble friend's indication (almost a suggestion) that he was among those in his then capacity who was surprised by the Court of Appeal's decision, surprises me. If it does not sound too Irish, my Lords, I am surprised that he was surprised!
  The object of removing the guidance, as I understand was said in another place, was to strengthen the independence and authority of the Civil Aviation Authority. I welcome that. Your Lordships may feel, and perhaps it is true, that I have to admit to a certain bias in view of my past connection with that body; but I think it is commonsense that if you hive off a great deal of responsibility for civil aviation from Government to an outside body, the sensible thing is to leave the fullest responsibility with that body. There is an old saying:
  "There is no point in keeping a dog and barking yourself."
  It seems to me the greatest mistake for Government to duplicate the administration of civil aviation and maintain both a statutory independent authority and at the same time retain a good deal of power with Government themselves.
  I welcome very much this decision to strengthen the independence of the authority; but here again there is a "puzzlement", reference to which has already been made. While this Bill with, inter alia, this purpose was going through Parliament, the Secretary of State, for the first time since the authority was set up, allowed, and allowed somewhat dramatically—I think the noble Earl, Lord Amherst, referred to it as a "startling" decision—the appeal on the Hong Kong route.
  I shall not comment on the merits of the Secretary of State's decision, but I think the procedure followed merits examination, and it may well be that noble Lords may point to some amendment to this Bill which should come at Committee stage. The authority, at a public hearing and acting quasi-judicially, heard all the evidence and heard it cross-examined; and it came to the conclusion, right or wrong, that there was only sufficient traffic on the route for two airlines. The Secretary of State did not

  1669
  hear any evidence. He had, of course, the shorthand note of the evidence which was given before the authority, but one does not know what other information or advice he had. One does not know, though one may suspect, whether he had representations from the Government of Hong Kong, possibly through the Foreign and Commonwealth Office.
  Lord TREFGARNE: My Lords, I am greatly obliged to my noble friend for giving way. I am sure my noble friend will recall, when I remind him, that the appeal procedure to the 1971 Act provides specifically that the Secretary of State, in considering an appeal, may only take into account those matters which were taken into account at the original licence hearing.
  Lord BOYD-CARPENTER: My Lords, I do recall those provisions. I do not, of course, know how the Secretary of State acted or what information he had. It was certainly indicated in Hong Kong that strong representations were being made to Her Majesty's Government, and I cannot believe that the Secretary of State was wholly unaware of those. But I am obliged to my noble friend for touching on a point I was going to make. Were a Secretary of State, in considering an appeal, to take into account anything other than what was on the shorthand note of evidence, it would mean that he was hearing views, sound or unsound, which had not been given, as the evidence at the hearing had, before the other parties and was liable to be cross-examined, but which had come to him direct.
  If, as could be the case, other considerations were taken into account, I think this is a matter against which at the Committee stage of this Bill we might consider taking legislative precautions. If my noble friend assures us when he has had a chance to make inquiries, because I realise he does not serve in the particular department concerned, that no such matters were taken into account, I, for one, would find it most reassuring; but that would not necessarily mean that one ought not, when legislating, to take precautions against possible actions in the future of a Secretary of State who was less conscientious.
  For the Secretary of State to allow an appeal, which he is legally entitled to do,
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  has very unfortunate consequences. When the authority has granted a licence, the airline in question knows, or thinks it knows, that it has the right to operate and the ambience, the competition in which it is going to operate. If, months later, the decision of the authority is altered on appeal, then the value of the licence and the incentive to get on and operate it are both very much diminished. I should like to hear from my noble friend—I cannot expect him just to say that this was an aberration of the Secretary of State, because if he did say that he might find himself translated to some other appointment—whether this was a very exceptional action of the Secretary of State and that that dignitary, hopefully, does not intend to do it very often again.
  This was, after all—I hope that I am not making heavy weather of this—the first time it had happened in the eight years of the authority's operation, and there is some heavy onus on a Minister who, from his desk, overrides the result, not of a decision of the authority itself, but of a decision quasi-judicially arrived at, subject to rules which could be enforced by the High Court and carried out in a way inspected by the Council on Tribunals, but with none of those safeguards operating against himself. I very much hope that we may hear a good deal more of this, either tonight or during the later stages of the Bill.
  I welcome very much the addition which was put in in another place at the Report stage—my noble friend, with his usual tact, slightly brushed over the fact that it appeared only at the Report stage—which puts into the new Section 23A, which is being put into the 1971 Act, an instruction to the authority to bear in mind the benefits which competition may bring. As the Bill was introduced with what one might call the British Caledonian clause of the 1971 Act taken out, the Bill looked as if it was beamed at being rather restrictive of competition. But I think that the balance has been very much restored by this amendment which has been put in in another place, and I should like to say how much I welcome it.
  I come now to the duty in the new Sections 3A and 23A, which is imposed on the Civil Aviation Authority to take account of environmental considerations. It is my impression—and the quotation

  1671
  which the noble Baroness opposite gave from the speech of Sir Nigel Foulkes the other day confirms this—that the authority is not over-enthusiastic about taking on this new responsibility. I can understand this, but, on the whole, it is probably right that responsibility for taking into account environmental considerations should lie where the main decisions are made. On the whole, I am more on the side of the Government than of my successor on that point.
  But having taken this step to transfer this environmental responsibility to the authority, logically the Government might well go further. They might transfer, in particular, one of the most important of the environmental restrictions on aviation, the night curfews at certain major airports —my noble friend in his previous capacity suffered from these at Gatwick—which are imposed at the moment by the Department of Trade. They are rather unusual restrictions in some sense, in as much as they fall only on aviation.
  No one interferes with or restricts the night operation of railways, though railways operate, as the House knows, through the centres of big cities, through residential areas and through the otherwise quiet countryside. There is no night limitation on heavy trucks, bumping and vibrating their way through small country villages. Only aircraft are restricted in this way, and this can have very serious consequences for the viability of airline operations. As the former chairman of Air New Zealand once pointed out to me, aircraft earn money only when they are in the air, and Air New Zealand was at one time the most profitable airline in the world, because its aircraft averaged 14 hours of the 24 in the air.
  British airlines, and all airlines operating into our major airports, are very restricted by these night schedule restrictions and they have grown with the years. They have moved forward in the morning and backward in the evening, until they constitute quite a considerable handicap for aviation. It seems to me that there is everything to be said for handing over their operation to the body which is responsible for the wellbeing of the airline industry; that is, the Civil Aviation Authority.
  1672
  In case noble Lords think I have exaggerated their impact, I should like to give the House one positive example of the way, as at present framed and as at present administered, they operate. On the night of 28th July 1979, just over a year ago, four fully loaded British Airways 747s failed, for a variety of reasons, to get off before the night curfew came down. The British Airports Authority informed them that no flexibility could be allowed. They simply were not allowed to depart, though they were ready to depart; each of them, as it so happened, with 400 passengers. Your Lordships can well understand the difficulties and unpleasantness that this caused.
  British Airways, by Herculean efforts, got three of the batches of 400 passengers into hotels that night, though they had in one case to go as far as the Tower Hotel in the City of London, which is a long way from Heathrow, to get accommodation. They simply could not find accommodation for the passengers in the fourth aircraft, who simply spent the night in the departure lounge at Heathrow. There was nothing, except those curfews and the inflexibility of their administration, which prevented all these passengers from being safely and comfortably on their way. The unfairness is that most of those passengers will hold that as a grievance against British Airways, who not only had no responsibility for what happened, but were, of course, in financial terms—having to pay for the hotel accommodation—major sufferers from the happening itself.
  Passing quickly from that, I welcome very much Clause 17 to which my noble friend referred. Clause 17 abolishes the control by the Government over the pay, remuneration and pensions of the Civil Aviation Authority staff. There is a history of this, of which my noble friend is aware, but the House probably is not. These provisions were put in the 1971 Act, in order to protect the interests of a large number of civil servants, who at that time were being transferred from the Civil Service to the Civil Aviation Authority. My noble friend Lord Glenkinglas—with whom I have discussed the matter in the last 24 hours, and who authorises me to say that he agrees with me—then in the House of Commons, gave assurances that this condition of Government approval of CAA salaries was inserted simply to

  1673
  protect those transferred civil servants from being paid less by the Civil Aviation Authority than they were getting as civil servants: a natural and proper protection for civil servants compulsorily transferred.
  But my own experience was that the Government of the day, and in particular the Civil Service Department, used these powers for the exactly opposite purpose, to restrict and restrain increases in the pay of the authority's staff. It is not that when we started as an authority we were anxious to be lavish or extravagant. It simply was, as many of your Lordships will know, that when you are moving from a Civil Service-based system to a commercial system, as we were indeed ordered by Parliament to do, you very often want to pay a number of people quite a lot to do the job which several people have been doing before. This is the way to get a streamlined and efficient organisation. But for years the Civil Service Department blocked our efforts to improve the pay of certain of our staff, using the powers which Clause 17, I am delighted to see, now abolishes.
  I was told, among other reasons, when I argued this—noble Lords who know me will appreciate that I did argue this—that one of the things which the Civil Service was frightened of was that if we paid more than Civil Service rates we might have an advantage in recruiting high-grade staff, as compared with the Civil Service itself. It was a real abuse of power. To give credit where it is due, I failed to get any substantial alleviation of this during the Government of Mr. Heath, but the administration of Sir Harold Wilson—though I did not trouble Sir Harold personally with this—proved more helpful and a breakthrough was established after a year or two. But, again, this is a power which can be abused and which I am really delighted to see being eliminated.
  Finally, I welcome, as did the noble Baroness who preceded me, the elevation of the interests of consumers, the airline passengers, to the same level of importance in the authority's consideration as the interests of the airlines. If I may say so, if any single individual has been responsible for that change it is the noble Baroness, who by her utter determination—she will not mind my saying her ruthless determination—succeeded eventually in
  1674
  persuading the Government of the day to take this very important and very justifiable step.
  I do not wholly go along with her—she will not expect me to—about the Airline Users' Committee. Whether it would have benefited from statutory powers I do not know. I do not think that any statutory powers that it had had would have been anything like as big a contribution to its efficacy as was the appointment to it, for which I can claim responsibility, of both the noble Baroness on that side and my noble friend Lady Trumpington on this side. If noble Lords were to ask me whether statutory powers or two noble Baronesses are the more effective, I would come down on the side of the noble Baronesses.
  I agree very much with what the noble Baroness, Lady Burton of Coventry, said about the extension of the powers of the Airline Users' Committee, whether statutory or not, to cover the treatment and handling of passengers at airports. It is indeed, as I think she will agree with me, at airports that most of the problems of passengers arise. On the whole, once safely in the air their troubles are over.
  The Airline Users' Committee found, as the Civil Aviation Authority found, that the British Airports Authority's attitude—that this was their matter and the concern only of their airport consultative committees—very much diminished the value of the work which the Airline Users' Committee did for the airline passenger. The British Airports Authority's story has always been that they have their own airport consultative committees, but, as the noble Baroness has said, they are not orientated to the passenger. They are very largely recruited from the adjoining local authorities. Their concern is the very proper and important one of noise, nuisance and pollution, and the interests of the passengers are of no particular concern.
  The noble Baroness indicated that she might consider putting down an amendment in Committee, and I think it might be a good idea if an amendment could be drafted to secure that in respect of passengers and their handling the jurisdiction of the Airline Users' Committee should be extended from the airlines, which it already covers, to whichever is the airport authority concerned. I think that this is a very important Committee point.

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  There are innumerable other points which someone with my past experience would feel tempted to inflict on the House. However, I am very conscious of the fact that we are near the end of an exhaustive and exhausting Session, so all I will do at this stage is to say that on the whole I welcome the Bill. I think that in general it marks a considerable march forward. It merits quite close examination in Committee to make it even better so that when it emerges it will help forward the progress of one of our greatest industries, an industry upon which this country and its economic progress is becoming increasingly dependent.
  6.54 p.m.
  Lord BESWICK: My Lords, I am delighted to follow the noble Lord, Lord Boyd-Carpenter, for three reasons. First, I see that he is sporting a tie which matches mine. Secondly, it gives me an opportunity to fill a gap in his knowledge with regard to the competitive character of British Aerospace. If the noble Lord remembers the circumstances under which British Airways insisted on buying all-American aircraft, and if he will refresh his memory of our last report, which showed that over 60 per cent. of what we sold earned foreign currency overseas, I am sure he will not wish in any way to denigrate the efforts which were made. Thirdly, I am delighted to follow the noble Lord because in other respects I am going to agree with much of what he said.
  Lord BOYD-CARPENTER: My Lords, if the noble Lord will allow me to say so at this early stage, I agree with very much of what he has said. Indeed, I can claim the credential that I was a member of the British Cabinet which in the early 1960s over-ruled the determination of British Airways to cancel their order for the VC.10 and made them take the VC.10, and therefore was entitled to great credit not only for the good that did the British aircraft industry, but for the good that did British Airways to have what was then the most comfortable aeroplane in the world.
  Lord BESWICK: My Lords, I am bound to tell the noble Lord that the situation has changed a good deal since those palmy days.
  Lord BOYD-CARPENTER: I fear so, my Lords.
  Lord BESWICK: It is not my purpose to contest the principle behind the proposal to establish British Airways Limited. However, as the noble Earl, Lord Amherst, and the noble Lord, Lord Boyd-Carpenter, have said, I am concerned with the procedure and the mechanism which is involved in this change.
  I make this general point: what British industry needs at present, in my view, is a sense of continuity. That goes for British Airways. With the amortisation of aircraft spreading over anything from five to 15 years, it manifestly damages the British effort if the structure and ownership of an organisation is to be changed with each new Parliament. British Airways seems to me today to be under a board and a management team as good as and probably better than in any recent period. The board members together now constitute a formidable body of airline experience, and for my part I think that it is a pity that changes are proposed. I should have liked to see the present team left to prove themselves.
  The questions that I want to put relate to the uncertain character of certain aspects of the proposed changes. First, the Bill refers to a target investment limit. I should like the noble Lord to tell me a little more about this. How is that target to be expressed? Is it to be expressed in a number of shares, or in a percentage of shares? Or is it to be expressed as a percentage of whatever is the share capital at any one time?
  Will the noble Lord the Minister say something more about the proposed relationship between the company and the Government? My personal view—again, like that of the noble Lord, it is based on a certain amount of experience—is that those working for British Airways are as important, in their way, as the customer. I am sure that my noble friend Lady Burton of Coventry will agree with me. Together they make up the business. For them the company structure could—and I emphasise the word "could"—be as satisfactory, or satisfying, a corporate form as a statutory corporation. Certainly if the company remained wholly Government-owned, or partly employee-owned, if you like, then

  1677
  I would venture the opinion that it would be more satisfactory than the existing formula of a statutory corporation, with all that that implies in terms of Treasury intervention. But it is precisely this issue of relationship which is so clouded.
  I understand that various ministerial spokesmen have said that the company will operate like a normal company. I believe that is what the noble Lord himself said. That is fine, or it could be fine. But then the noble Lord goes on to say that board members will be independent. As far as I understand him, he is implying that the Government will not be nominating board members. Now what exactly is this independence? Although the noble Lord emphasises that it will be a normal company, how does one reconcile the operations of a normal limited liability company with a body in which the board members are independent of the largest shareholder? I am bound to say that I do not know of any other normal company in which the majority shareholder deliberately, as a matter of policy, says that they will leave the appointment of directors to a minority interest. I feel that we shall have to look at this much more carefully, and I am reinforced in that view by what the noble Lord, Lord Boyd-Carpenter, has had to say. I should also like the noble Lord to say something about the position of the present board members of British Airways in two situations—the initial situation in which the company is wholly Government-owned and the situation which will arise after the sale, if any, of a proportion of the shares.
  I understand that the appointments of present board members were all extended until November, but what is going to happen in December and onwards? I have already paid my tribute to the dedication of the executives now responsible for British Airways, but it would seem to me that the Government are imposing upon that dedication in the present situation. Of course, there will be uncertainties about the future but could not the noble Lord be a little more helpful so far as timing is concerned? The appointed day will be one for Government decision. Can the noble Lord not tell us when it is intended that the statutory corporation will hand over, as the Bill provides, to the new company? What
  1678
  day will that be? More difficult, I appreciate, but still I should have thought the Government would have some idea—what sort of time have they in mind so far as the sale of shares is concerned? The noble Lord used the magic word "flexible", but managers have to manage; they have to take decisions; they want to know something about the future, and I should have thought he could have been a little more helpful than that.
  Then may I ask the noble Lord what procedure will be followed for this sale? Will the issue be underwritten? If so, will the underwriters decide when, or is the variable factor going to be the price, the date being fixed by the Government and the underwriters saying at what price they think they can dispose of the shares?
  I have only one other and more detailed question on the first part of the Bill and that relates to the proposed powers to be taken in Clause 10. In a time of great national emergency and with the onetime great resources of RAF Transport Command now a matter of history, I should have thought that the powers proposed to be taken are reasonable; but can the noble Lord say whether they apply to personnel? Reference is made in the Bill to "persons managing that business" but what about the other individuals—pilots, for example? Are they to be subject to the same powers and to the same penalties? Probably the noble Lord can inform us on that point.
  Turning to Part II of the Bill, I accept the basic doctrine which I understood lay behind Clause 11. The memory of the noble Lord, Lord Boyd-Carpenter, goes back some distance, but I think probably mine goes back the same length of time. It is almost exactly 36 years since I put forward the proposal that there should be an authoritative body outside a Government department responsible for air transport licensing functions as well as other aviation responsibilities. I recall discussing the problems enjoyably and I hope constructively, with the late Ronald Edwards, whose Committee made such a valuable contribution to later developments.
  I have seen, sometimes from afar and sometimes from quite near, the growth in the responsibility and the effectiveness of

  1679
  the licensing body from the original Air Transport Advisory Council to the Air Transport Licensing Board, through the successful formative period under the distinguished chairmanship, if I may say so, of the noble Lord, Lord Boyd-Carpenter, to the present authority, which has come to deserve a well-merited reputation for careful work and sound judgment.
  Given that reputation, built up over the years, it was, as others have said, all the more surprising that the Secretary of State should overturn the CAA decision on the Hong Kong route. It is difficult—and most informed observers would say impossible—to see how the Secretary of State was in a better position than the CAA to assess the traffic potential. If he has better analysts or researchers at his disposal, or if he has superior advisers, then I suggest they be given the job of licensing—they should take it over—but, if the Civil Aviation Authority is to be responsible, I should have thought action of that kind was unwise. Despite what the noble Lord himself said in an intervention, most people would say that it was an exercise in appeasement; appeasing the surprisingly influential interests in Hong Kong. If that is so, it will not be the first time, within my certain knowledge, that the Hong Kong tail has wagged the United Kingdom dog.
  Be that as it may, the important thing now is to re-establish the authority of the authority. We need to restore the confidence of industry in that when they have a decision in their favour an operator can plan accordingly, invest accordingly and not see—40 days before a service is due to start—that the decision has been changed by the Secretary of State. Conceivably we might find an appropriate amendment which would give a clearer understanding of the circumstances—exceptional circumstances, one would expect—under which the Secretary of State would see fit to override the CAA. At present the Secretary of State—and this was emphasised by the noble Lord—cannot consider evidence not available at the hearing. But, of course, that rule makes it all the more difficult to understand his action in regard to the Hong Kong decision. But it is known in our legal processes for new evidence to come to light and for exceptional procedures to be provided.
  1680
  I suggest that there could be such occasions when, properly, the Secretary of State should look again at a given decision, or he might be in a better position to assess the national interest outside the purview of the authority. Or, of course, we have provision in other fields where an appeal will lie on a point of law. I accept that in a democratic country there should be a possibility of appeal in certain circumstances, but I am inviting the Minister to consider defining the limits within which an appeal would be heard.
  Perhaps I might add this. We might all have confidence in the discretion of the present ministerial team at the Department of Trade, but ministerial reshuffles are not unknown and indeed sometimes there are things called elections and it is not entirely impossible to conceive a less reliable incumbent in the ministerial office in that department. I hope the noble Lord will be able to say that he will consider an amendment; or at least would it be possible to have a carefully considered statement at Committee stage, after consultation with industry, which would do a little more to restore the structure undermined by the Hong Kong decision?
  On the question of fare structures, I would pay a tribute to the efforts made by the Secretary of State to get more imagination and enterprise in the European fares structure. So far, however, the success seems to be limited. In these matters I would suggest that a more indirect approach and a wider dialogue can very often assist in the development of a policy. At some point I hope the noble Lord will tell us what is being done, or what can be done, to stimulate discussion in European circles.
  I believe there has been too much protectionism over fares in the past. On occasions the cartels have certainly appeared over-strong. However, I hope that we are not now going to lurch over to the other extreme. A complete free-for-all or a dramatic price cutting will not necessarily help the air traveller of the future. In my view, one cannot properly apply the economics of the street market to air transport. The recent spectacle of operators bidding against each other for the North Atlantic standby passenger resembled nothing more than the barkers at a fairground, and that is

  1681
  not, in my view, consistent with the dignity or indeed the efficiency of this industry.
  I add this. The economy and the comfort of air travel since the war has importantly, and probably most importantly, been advanced by improvements in equipment both on the ground and in the air. The wide-bodied aircraft and the high bypass ratio engine have probably been more significant as contributions towards the wellbeing of the passenger than any fare cutting. But if that kind of equipment is to be developed, then there must be sound customers able to invest hundreds of millions of pounds. The ability of an operator to raise capital for modern equipment is in the real interest of the traveller, and when we hear arguments about fares in the future I hope that point can be borne a little more in mind.
  At Committee stage I hope we can look more closely at the provisions relating to the environment. I, for my part, would take for granted that if there was an application to operate a shuttle service from Heathrow in the early hours of the morning using 707s, or dare I say VC.10s, the authority would have some questions to ask about noise factors. I followed as carefully as I could what the noble Lord, Lord Trefgarne, had to say on this point, but are these provisions intended to make the CAA the authority on environmental matters? Are they really the body for that? Have they the staff? If it is going to cost them more money, are the Government going to provide that finance or will it have to go in airport charges? I would ask the noble Lord, are the questions involved really for technical consideration or are they not more a matter for political judgment? I am sure the ideas which my noble friend Lady Burton put forward deserve study, and I hope we can consider them at Committee stage. But my view at the moment is that the sort of problem that will have to be faced is one in which the Minister responsible should be seen to be taking responsibility.
  Like other noble Lords, I have a certain number of other questions, but I have my eye on the clock. I look forward with confidence to the noble Lord, when he comes to reply, giving me just a little more information and satisfying me on
  1682
  some of the points I have ventured to raise. I hope that that may well help us to have an even more constructive Committee stage.
  7.14 p.m.
  Lord MORRIS: My Lords, I should like to say at the outset that in general I welcome this Bill wholeheartedly. However, I wish to restrict my observations to that part of the Bill that deals with the new set of objectives set for the Civil Aviation Authority and in particular those objectives in respect of the environment. By virtue of Section 3(2) of the Civil Aviation Act 1971, the authority has the duty to perform its functions in such a manner as it considers is in accordance with guidance given by the Secretary of State after approval by each House of Parliament. The current guidance provides that:
  "in exercising its functions the authority should take full account of the need to minimise disturbance caused to the public from noise, vibration and pollution arising from aircraft operations and should advise the Government on operational and economic aspects of achieving this objective. It should co-operate in Government policies designed to protect the environment, encourage airline and airport operators to adopt such policies, and generally assist the Government in implementing those policies".
  Read as a whole the guidance appears clearly to envisage that with regard to the environment the Civil Aviation Authority's main duty is to advise and co-operate with the Government. Together with the powers exercised by the Secretary of State under Section 29 of the Act of 1971, the provisions of the guidance on environmental matters—as interpreted and acted upon by the Civil Aviation Authority—have to date worked very well. In particular, the Civil Aviation Authority has been able to avoid any significant conflict between its duty to secure the provision of air services of a satisfactory standard and its obligations (as distinct from specific statutory duties) under the guidance.
  My Lords, as your Lordships are aware, it is now proposed in this Bill to amend Section 3 of the Act so as, inter alin, to revoke the Secretary of State's power to give guidance to the authority. On environmental matters, that which is little more than earnest exhortation is to be replaced by a specific statutory duty placed upon the Civil Aviation Authority
  "to have regard to the need to minimise as far as reasonably practicable"

  1683
  the whole series of items affecting the environment which are within the body of the Bill, and I will not weary your Lordships with them.
  I believe it is objectionable to impose on the Civil Aviation Authority by order a statutory duty to take account of additional and more far-reaching factors than those pertaining to the Secretary of State's own statutory powers in respect of these matters. Furthermore, I believe it would be quite wrong to impose upon the Civil Aviation Authority a duty
  "to secure that British airlines provide air transport services which satisfy all substantial categories of public demand…"
  together with the conflicting duty to minimise adverse effects on the environment and disturbance to the public.
  The judgments that would be required in respect of"specified"aerodromes are essentially political judgments. The Civil Aviation Authority is not constituted to make judgments of that nature. It is motivated and professionally dedicated to the support, encouragement and development of civil aviation and would certainly be seen in that light by the environmentalists, or indeed any other kind of protestational neurotic. The judgments required concern the delicate balance between conflicting legitimate interests. Such judgments are for governments and not for a body corporate that is not the servant or agent of the Crown, not directly accountable to Parliament.
  With regard to the provision of services by British airlines, and the reasonable interests of users of air transport services, the Civil Aviation Authority has, and would retain, specific statutory duties to which its environmental duties would be subordinate. In effect this would afford to airlines a measure of protection that would not be available to, say, air taxi operators and private aviation. I believe it to be questionable that the Secretary of State should have virtually unfettered power arbitrarily to "specify" aerodromes without prior consultation of any sort. Mind you, I cannot envisage any Secretary of State so doing. However, he has no obligation to consult. Furthermore, the Bill makes no provision as to the particular matters that may or may not be taken into account by the Civil Aviation Authority in relation to the
  1684
  licensing of "specified" aerodromes; nor does the Bill deal in any way with the conditions that could be attached to an aerodrome licence for environmental reasons. Section 29 of the Act of 1971, dealing with the Secretary of State's powers and duties, does set bounds and imposes requirements.
  In order that it could be seen to have discharged its statutory duty fully, the Civil Aviation Authority would be obliged, in considering the licence of a"specified"aerodrome, to establish machinery for obtaining and considering the views and claims of the licensee, the users of the aerodrome and those who claim to be adversely affected by its operation. It might well be necessary to have public hearings on the lines of those for some air transport licences.
  Again, no provision is made for appeal against Civil Aviation Authority decisions reached after taking into account, as would be required by the Bill, environmental matters. Nor is there any provision for procedures to be followed by the Civil Aviation Authority in considering, for example, a request to revoke or substantially restrict the licence of a "specified" aerodrome.
  It would no doubt be necessary to amend the Civil Aviation Authority Regulations so as to provide for appeal against Civil Aviation Authority decisions, and it is difficult to contemplate any arrangement other than an appeal to the Secretary of State. It seems to follow that any Civil Aviation Authority decision with regard to a "specified" aerodrome, would be the subject of appeal either by aircraft operators who felt that they were unduly restricted, or—more likely—by those aggrieved by continued disturbance. As the Secretary of State would have to take the decision in the second instance he might just as well take it in the first. It would save a lot of unnecessary complication and work.
  I would suggest, with respect, that it seems absurd to give the Secretary of State power to impose on the Civil Aviation Authority, by order, a duty to do things which he himself is already specifically empowered to do by virtue of Section 29 of the Act of 1971, and will presumably continue to do in respect of the four aerodromes already designated; namely,

  1685
  Heathrow, Gatwick, Stansted and Prestwick.
  As your Lordships are aware, there are 130 aerodromes currently licensed by the Civil Aviation Authority, a large number of which could generate environmental complaints, with the consequent temptation for officials in the Department of Trade to offload the problem of dealing with the complainants by urging that the aerodromes be "specified", thus passing the buck to the Civil Aviation Authority. News travels fast and it would soon become known to the environmentalists that, instead of a situation whereby the Department of Trade had managed to contain environmental action to four major aerodromes, there was machinery by which pressure on the department would result in "specification" and access to an appeal machinery which had not existed previously, and which had not been needed previously, so far as I am aware.
  Make no mistake about it; in this respect Her Majesty's Government are abrogating their duty to govern. They are passing on to the Civil Aviation Authority—a body corporate, not the servant nor the agent of the Crown—nor answerable to Parliament—a duty to take political decisions. In so doing I believe that they are making a rod for their own back, for any person aggrieved at Civil Aviation Authority decisions will, by whatever means are at his disposal, be they foul or fair, inevitably appeal to Government for satisfaction, and meanwhile place a spanner in the smooth working of the Civil Aviation Authority.
  7.26 p.m.
  Lord ENERGLYN: My Lords, first, I should like to pay a tribute and extend my thanks to the noble Lord, Lord Trefgarne, for the clarity of his presentation of the Bill in your Lordships' House. Equally, or rather superiorly, I should like to extend my thanks to the noble Lord, Lord Boyd-Carpenter, for giving us the benefit of his incomparable knowledge of this interesting aspect of British life.
  So far, we have heard speeches dominated by our fear for the future of passenger air traffic. But I should like to fulfil a duty, and that is, to help to
  1686
  emphasise the point made by the noble Lord, Lord Boyd-Carpenter, that this is an extremely important Bill and it is vital for the future of this country. Therefore, I should like to turn from air passenger traffic to air cargo.
  Since the war we have been accustomed to thinking of commerce without paying due regard to the units of energy involved in the production of various commodities —that is because we have had cheap oil and we have had cheap coal. But now the reality of life has been enforced upon the trading countries of the world that certain countries can hold them to ransom because they—and they only—contain these supplies of fossil fuels. So, the units of energy come very much into the cost evaluation of our international trade routes. We now find that technologists are concerned with the criticism of the fuel efficiency of engines. I forecast that we shall see technologists producing new types of engines—engines which will reduce the usage of fuels of a conventional type. However, I do not want to develop a kind of Jules Verne pattern of talk; I should like to stay with the facts as I understand them.
  The pessimists, of course, will say that they see the future of the internal combustion engine coming to an end because of the exhaustion of our liquid hydrocarbon fuels; in other words, the combustion engine is a wasting asset. We find, on the other hand, that supplementary or remedial measures are being taken by countries like Japan, by adding sails to ships to increase their speed and to reduce fuel costs. The traditional propeller of a ship will soon be completely changed and we shall see the use of plastics in driving ships through the seas —something that we have never thought of before. We shall see the hulls of ships lined with silicones that will reduce the friction and the buoyancy of the ships and so reduce the amount of fuel used for sea transport. And so, too, it will be in the air.
  I was fortunate, after the war, to be in contact with Professor Andre Houberechts, a Belgian professor, who, to keep sane in a prisoner-of-war camp, worked out the mathematics of the thermo-dynamics of jet propulsion. That brought me into contact, naturally, with Whittle. As an interesting aside, if your Lordships wish

  1687
  to see the first Whittle engine you must go to the University of Louvain, and Professor Houberechts' department, where Whittle gave him an engine as a memento of the vast amount of mathematics he carried out as a prisoner of war.
  So, in those early days I was educated by these masterminds into looking at jet propulsion. They were, in their brilliant way, instructing me on the value of bubbles and gases and how one day we would be not just driving an engine through the sky with hydrocarbons, but driving it through the sky with mixtures of hydrocarbons and water. We are already beginning to see that happen. We know that we can get the same energy out of mixtures of hydrocarbons and water as we can out of straight hydrocarbons. But the driving force of water is far superior to hydrocarbons. One has only to think of gazing at the fantastic performance of Old Faithful in Yellowstone Park to appreciate the enormous power of a steam jet. One has only to go into a power station to see a steam turbine at work to appreciate what happens if we could convert, effectively, water into a stream of gas. So we shall see all these things happen.
  But I do not want to bore your Lordships with these anecdotes; rather, I want to draw to your attention, or to place on record, the growth in this country and in other countries of air cargo. Again, the orthodox mind will say:"Ali, yes, it is quite all right to fly expensive commodities like flowers from Nairobi to Frankfurt, perfumes or whatever, but only the specialist commodities can be economically transferred from A to B by air". But when one looks at the scene as it is at the moment, when one looks at every sophisticated and industrialised country in the world, what does one see? The basic industries are becoming more and more indigenous and less and less viable as exporters of the old gross products of industry, for example, iron and steel and motorcars. On the trade routes of the world of tomorrow or even today we shall see the sophisticated products that the world wants—for example, chemicals, which will not stand up to the rigours of sea and road travel but which must get from A to B fast and safely.
  1688
  Therefore, in this debate I should like to underline the importance in the growth of our air freight industry. It has some exciting potentials for Britain. Let me give your Lordships one example of how this could not only work to the benefit of the world trade routes, but also how it has a significant effect upon the politics and social behaviours of countries in which at one time we had a parental interest.
  Let us take, for example, Zambia, Uganda or Zimbabwe. They are all land-locked countries, throttled, by one disturbance or another, and so unable to export their products and, therefore, their economies are stifled. If we could import into these countries the ability, for example, to process their metals and fly the metals out—not the gross minerals—we would then create trade routes which would make air transport viable. I have had the privilege of discussing this with President Kaunda, and so to illustrate my point let us take the case of the Copper Belt. There there are waste tips of enormous size containing considerable percentages of copper, and particularly cobalt and selenium. The new revolution in the extraction of metals will be away from the use of heat for smelting metals. We now have compounds which, if you want a new word in your list of chemical jargon, are called "chelates". These compounds suck metals onto one end and throw the wasted part out at the other end; they are scavengers. They can isolate metals and purify them without the use of heat. I have explained to the people in Zambia that we make those chemicals; that we could fly them in and fly the cobalt out.
  What I am talking about? Cobalt is fetching about £20,000 a tonne. I am talking about an annual trade between Zambia and Britain of £80 million per annum. If somebody tries to tell me that this is not a viable prospect for air transport, then I shall wonder what has happened to my mental reasoning. Therefore, I give that example simply to emphasise the point that at the moment probably only about 20 per cent.—and I defer to correction here—of our air traffic is devoted to cargo.
  Just as the cargo ships of old produced the passenger ships, so the improvement of cargo airships will increase the available money for improving the conditions for

  1689
  the passengers for whom the noble Baronesses are pleading. I am also excited by this prospect of reverting to airships. I know that many people are allergic to airships after the R101, but to me they make sense because an airship is like a helicopter—it can land anywhere and can lift greater tonnages than an aircraft. I was immensely cheered to read in the press and to see on television that a company in the Isle of Man is building airships. This was triggered off by a company called—and noble Lords will see that I do not have to declare an interest because I am not sure of its name—Redcoat Cargo Limited. This company has been in business flying freight from here to Africa. It is interested in these airships that have been built which are capable of carrying 60 or 70 tonnes of freight at about 80 miles per hour. That is a viable possibility. In an article published in the Daily Mail on 4th August the managing director, Mr. Owen, of Redcoat Cargo said:
  "If we were able to introduce the airship into service today, we would be able to reduce all our freight prices by 25 per cent."
  Therefore, I thought that it was my duty to place on record in this Second Reading debate these remarks which may be helpful when it comes to the Committee stage in ensuring—as the noble Lord, Lord Boyd-Carpenter, said—that we must get the Bill right; therefore, we must not have in the Bill any obstacle to the development of the distribution of merchandise around the world by means of airships or aircraft.
  7.37 p.m.
  The Earl of KINNOULL: My Lords, I think that one could truthfully describe some of the noble Lords who have so far taken part in this debate as godfathers of aviation. The standard may now drop a little in experience, but not in enthusiasm. My noble friend Lord Boyd-Carpenter described our civil aviation industry as the second largest of the free world. I would venture to add that it comes first when one looks at the influence of aviation in the free world; when one looks at the innovations, the development of markets and the fact that we have been able to bring air travel to many people; when one looks at the standards of service of our airlines and, above all, at the standard of our safety record. It is a
  1690
  20th century industry at which I think we excel. Therefore, any civil aviation Bill which comes before Parliament, as other noble Lords have said, is of great importance. It must foster and maintain our market share and, indeed, make our industry continue to thrive.
  I hope that this Bill will achieve that, although I do not quite share the obvious enthusiasm of my noble friend Lord Boyd-Carpenter for the considerably increased independence of the Civil Aviation Authority on licensing in the future. However annoying policy guidelines have been to the Civil Aviation Authority in the past, they were a direct line between the Minister and the authority and, indeed, between Parliament and the authority. I now wonder, although I am sure that my noble friend will reassure us later, whether there is some severance of that link.
  The decision to transform British Airways from a nationalised body into a mixed economy body is something I certainly support. Its twin objectives of employee participation in the equity and a mixed economy vehicle are, I am sure, good ones. It is of course a testing time for the private sector's nerves to take a share in British Airways when the market is in somewhat of a recession, costs are rising, profits are falling, and the capital needs are simply vast. But I have little doubt that the challenge will be taken up.
  As other noble Lords have said, and indeed as the noble Baroness said, one would like to add one's tribute to the past management and staff of British Airways and wish them well in the future. Anyone who has seen the dedication of service of Mr. Ross Stainton or Mr. Roy Watts and their team will know of their enormous achievements in steering British Airways to the size and influence it enjoys today. It is truly a giant among international airlines, with a great and much envied reputation.
  Turning to Part II of the Bill, civil aviation's increased independence is certainly a matter to which I hope we shall return in Committee. It is certainly a matter which most British airlines watch with, I would almost say, considerable apprehension: how the appeals structure will operate; what grounds of appeal will be allowed to the appellants. These, as

  1691
  the noble Lord, Lord Beswick, said, are points which I hope we shall clarify later.
  There is one particular issue on the existing appeals structure of which I have given notice to my noble friend and which I should like to raise briefly tonight. It concerns the helicopters for North Sea oil. It concerns particularly Class 7 licences, which my noble friend Lord Boyd-Carpenter was instrumental in introducing in, I think, 1973. The House will know that Class 7 licences were designed to combine maintaining opportunities for competition among British operators with a degree of protection for our industry against unfair foreign competition. It is a policy followed avidly throughout the world by no less than Canada, the United States of America and even Norway.
  The North Sea helicopters service is a vast, vital connection to our rigs. It carries something over 100,000 passengers a month going to and from the rigs. As the House will know, they often operate in appalling conditions. The spin-off benefit of this industry for the helicopter industry itself is that with the support and enthusiasm of British Airways one is now seeing the development of what is known as the WG31, the new Westland helicopter, which is likely to be due to come into service in 1982.
  There was a recent case of a Class 7 application by the Helicopter Hire Company. I do not wish to discuss the merits of this case, but it went to appeal. It was contested by two of the main British operators in the North Sea. The opposers' case was principally that the applicant was a small British company which in all commercial reality was owned by a large American company with large interests in Mexican Gulf operations. In other words, this was foreign competition coming in through the back door.
  At the application stage the financial information regarding that company was quite rightly not available to the opposers, on the grounds of commercial confidentiality. But when it came to appeal the financial aspects of this company were obviously an important matter, and indeed it was necessary to know whether its financial strength could meet its commit
  1692
  ments. The publication of the Minister's decision came in this form. The Minister said:
  "The authority"—
  that is, the Civil Aviation Authority—
  "is empowered to decide not to disclose certain information supplied to it in confidence about the finances of applicants for air transport licences. It was mainly on the basis of undisclosed information that the authority satisfied itself on the fitness and financial control of Helicopter Hire Limited."
  The Minister then went on to say:
  "The confidential information on which the authority relied was not before the Secretary of State in his consideration of the appeal."
  That is a seemingly unsatisfactory situation because it seems that the Minister, in judging the merits of the appeal, was not privy to certain salient facts. That may be incorrect, but I would ask my noble friend why the financial information was not before the Minister. Does he indeed have the power to call for that financial information, or is there a gap in his powers? Is the original purpose of the Class 7 licence being undermined by this case? I hope that my noble friend will have time to reply to those points tonight, but if not we can of course come to them at Committee stage.
  My last point is that the popularity of the Civil Aviation Authority among British airlines at the present time is, when it comes to the level of charges, an acute matter. My noble friend knows this well. This relates to charges for the use of airports, security checks, navigation services, and so on. But my noble friend may not know that a recent survey throughout the world showed that if an airline was carrying a passenger from New York to Washington, the charges were £1·47p per passenger; New York to Montreal cost £2·73; London to Glasgow cost £17·87; and London to Paris cost £13·19. These are staggering figures, and I would ask my noble friend whether he endorses the view that the charging policies of the Civil Aviation Authority should encompass much more public accountability. Finally, I should like to wish this Bill success, wish its objectives success, wish the Civil Aviation Authority success in their new and undoubted responsibilities and indeed wish the industry success.
  7.47 p.m.
  Baroness TRUMPINGTON: My Lords, you have already heard that I was brought into this particular world by my noble friend Lord Boyd-Carpenter and nurtured by the noble Baroness, Lady Burton of Coventry. With parents like these, plus the fact that I am at present chairman of the Air Transport Users' Committee, it would be unusual if I did not have a special interest in today's debate. The noble Baroness, Lady Burton, will recognise that, while I agree with many of her views, I shall disagree with others. Unfortunately there has been no collusion between us, so I trust your Lordships will forgive a certain amount of brief but necessary repetition.
  As the noble Baroness said, the Air Transport Users' Committee was formed in 1973 by the Civil Aviation Authority. Its membership consists of regular air travellers drawn from all over the United Kingdom, among whom are several with long and specialist experience of civil aviation from every point of view. The last time we needed new members we advertised. Well over 400 replies were received, and the present excellent, in my view, committee is largely based on the pick of that bunch.
  The terms of reference of the Air Transport Users' Committee are:
  "To make reports and recommendations to the CAA for furthering the interests of air transport users, including the investigation of complaints against the suppliers of air transport services; to co-operate with any airport consultative committees which are charged by airport proprietors with furthering the interests of air transport users inside their airports."
  It is in discharging the latter part of our terms of reference that we undergo considerable difficulties.
  It is the view of the Air Transport Users' Committee that a person becomes an airline user the moment they buy their ticket. From then on their welfare becomes our concern. But during the time a passenger is inside an airport until he boards his aeroplane his interests lie in the hands of the airport consultative committee. The moment he leaves the airport to board his plane he reverts to the care of the AUC. Your Lordships will appreciate that I am, in the main, referring to the airport consultative committees of Heathrow and Gatwick.
  1694
  Let me turn for a moment to the terms of reference set out for the airport consultative committees. As the noble Baroness, Lady Burton, and my noble friend Lord Boyd-Carpenter said, their terms of reference deal mainly with noise abatement and problems concerning the communities adjacent to the relevant airports. However, what neither of them mentioned was their terms of reference under the headings,"Passengers' Services Sub-committee". The airport consultative committees are required:
  "(a) to consider, on their own initiative or by direction of the Consultative Committee, any question in connection with the airports affecting passenger-user interests; (b) to act as an advisory body to the Consultative Committee on such matters; and (c) to report to the Consultative Committee on their consideration with, where appropriate, recommendations."
  Thus, to give the simplest kind of example, when a passenger writes to the Air Transport Users' Committee complaining first, that there were no trolleys at Heathrow and, secondly, that somebody smoked incessantly in the non-smoker part of the aeroplane, the Air Transport Users' Committee can deal only with the latter part of the complaint and is compelled to refer the complainant to the consultative committee for action with regard to the complaint about trolleys.
  This is not only difficult for the public to understand but is time-wasting and inefficient. It is also difficult for the AUC to understand. I have had conversations with the two relevant Ministers in another place concerning the present ridiculous situation. So far, neither of those conversations has borne fruit, but I am always hopeful.
  I am therefore asking my noble friend whether he would consider adding a short paragraph to the Bill amending the terms of reference of both the Air Transport Users' Committee and the airports consultative committees in such a way as to make the Air Transport Users' Committee responsible for the care of the passenger from the moment he buys his ticket right through to the end of his journey. I realise there are difficulties involved in what I am asking, but I can see no other way to resolve the anomaly which exists at present. The Air Transport Users' Committee has neither sufficient funds nor members to take up places which might be offered them to sit

  1695
  as members of the various consultative committees.
  The noble Baroness, Lady Burton, recommends that we should become a statutory body. She will not mind my saying that she has always held a one-woman minority view on this point, even from the days when she was a member of the Airline Users Committee. But the Air Transport Users Committee members do not wish to become a statutory body. They fear that, by so doing, first their powers of action might be curtailed and, secondly, that membership by category might be forced upon them. Further, the committee gains immense advantage through its close but independent association with the CAA. The closeness of that association has never muzzled the views of the committee; they have felt entirely free to bite the hand that feeds them, and have done so.
  The other side of the coin is that through our close association with the CAA we have ready access to information, research and advice when we call for such things. All these advantages save money, apart from being really positive advantages which we might lose if we lost that close contact. We members of the AUC, unlike members of statutory bodies, are unpaid. A further point made by my committee is that we would cost the taxpayer a great deal more money should we become a statutory body. I agree that the appointment of members and the chairman by the CAA could be seen as a weakness, but no appointment nowadays is made without full consultation with, and agreement by, the entire committee, and I do not think the board of the CAA would act against the committee's wishes. I have no idea how members of statutory bodies are appointed, so I must leave that question in the air.
  With deference, having discarded the statutory body angle, the only remaining possibility seems to be—and I am supported in my view both by the British Tourist Board and the Scottish Consumer Council —to take the action I have already suggested, which is to re-write the various terms of reference of the AUC and the consultative committees, and I would most emphatically seek the aid of my noble friend to include such a paragraph in the final version of the Bill.
  1696
  Regarding Clause 15 of the Bill, in the view of the Air Transport Users Committee this is virtually a repetition of Section 36 of the Act, with the single exception that the authority replaces the Secretary of State as the person empowered to disclose information. We have strongly represented for a very long time our view that the user of air transport suffers, principally but by no means exclusively, in the matter of air fares because operators in Europe, which include the United Kingdom, are not required to publish regularly and promptly meaningful operational data such as is legally imposed on United States airlines in America, and indeed on British airlines when they land in the United States.
  My committee believes that the transference of the responsibility from the Secretary of State to the authority for determining what, if any, operations information shall be capable of being disclosed is altogether too feeble an amendment. The conditions which have to be satisfied can be laborious and time-consuming. We therefore strongly urge that Clause 15 of the Bill should adopt a bolder and more positive approach to this real problem. We should like to see a revised amendment to Section (36)(1) of the Act as set out in Clause 15 of the Bill, but deleting subsections (1)(b) to (d) inclusive and substituting the following subsection (1)(b):
  "(b) the Authority determines to disclose the information".
  That would give the authority the power to disclose without the ramifications of receiving representations from the persons affected. I wish the Minister all good fortune with the Bill and I look forward to hearing his comments on the many points that have been raised this evening.
  7.57 p.m.
  Lord PONSONBY of SHULBREDE: My Lords, I wish at the outset to welcome the noble Lord, Lord Trefgarne, back from his extended tour of South America. We note how quickly he has been put back into harness in having to move the Second Reading of a major Bill so soon after his return. We have had a number of fascinating and erudite speeches this evening, but I am afraid I must bring your Lordships back to the hard reality of the major purpose of the Bill, which in Part I is designed to make British Airways

  1697
  into a normally constituted company. I do not think the proposals in the Bill will actually make British Airways a normally constituted company.
  It is ironic that the Bill should be brought to this House for Second Reading so soon after British Airways announced a sharp fall in their profitability, with the announcement that their retained profit for the year ending March 1979 was down from £62 million to £4 million. It is ironic because the Government's open-skies policy, which is of immediate benefit to the consumer, has undermined and will continue to undermine the profitability of British Airways, though I agree there are many other factors which have caused this undermining of the profitability of British Airways.
  The ability of the Government to ensure the success of any public issue of shares will depend very much on timing. That will be crucial to the marketing of shares, and the noble Lord, Lord Trefgarne, pointed out that the Government were retaining flexibility as to when in fact they will market shares in British Airways Limited. It is clear that for an issue to be successful, British Airways should be able to show itself to be in a strong business situation in a favourable international climate. I think that that is unlikely to be the case for some time. Indeed, it could well be that a Government of a different political hue will be in power by the time that it is expedient to proceed with the sale of these public assets. Furthermore, it could well be that the sale will never take place; and I should regard that as a very satisfactory result to this Bill.
  One wonders what is the reason behind the proposals in the Bill. In moving the Second Reading of the Bill the noble Lord stressed the need to give British Airways more freedom of management control; freedom from the diktats of Whitehall, he said. Yet it is of course always within the power of Government, of any particular Government, to give British Airways as it now stands that freedom. It is not necessary to have a Bill of this nature in order to give British Airways the particular freedoms that the noble Lord talks about. It may be that the noble Lord wishes to ease the pressure on the public sector borrowing requirement by taking British Airways outside
  1698
  it. That could possibly be a reason for the Bill. However, I believe that the truth is, as we all recognise, that we have the Bill before us today because it is a part of the dogma of the Government that public assets should be sold off. I believe that this is misguided and that it will do nothing for the industry.
  I fear that with this Bill we shall be in the same difficulties as we were in with the British Aerospace Bill, which we debated earlier this Session. We do not know how much of the shareholding the Government intend to keep. The Government's current policy apparently is to retain a 51 per cent. shareholding, but that policy may change, and Parliament as a whole does not have the faintest idea whether eventually the Government will sell 10 per cent. or 90 per cent. of the shareholding, if indeed they ever sell any shares at all. Certainly I agree with the view expressed by the noble Earl, Lord Amherst, that it should not drop below 51 per cent.; and of course this is the Government's current policy.
  However, if this is the Government's current policy, one is amazed that, as the major shareholder of British Airways Limited, they do not wish even to appoint a single director to the board to look after their majority shareholding. Surely there should be watchdogs to look after the public interest at British Airways. I cannot end my comments on Part I of the Bill without joining other noble Lords in paying tribute to the high quality of service provided by British Airways as well as the dedication of British Airways staff, all of which I hope to enjoy tomorrow.
  I now wish to turn to Part II of the Bill. We have heard very authoritatively —particularly from the noble Lord, Lord Boyd-Carpenter—about the work of the Civil Aviation Authority. Certainly our view would be that the Civil Aviation Authority should operate within parameters laid down by the Secretary of State and should be accountable to Parliament. Until recently the Government's view appeared to be that the Civil Aviation Authority should be a totally autonomous non-governmental organisation, but with the Hong Kong decision that appears no longer to be so. Thus, if this situation is to be repeated, the Civil Aviation Authority could find

  1699
  itself becoming a show body, with arbitrary decisions being made elsewhere by the Secretary of State.
  The noble Lord, Lord Boyd-Carpenter, very forcefully underlined the difficulty for airlines caused by the kind of action that has been taken in the past by the Secretary of State. My noble friend Lord Beswick, with whom I would agree, also underlined that point. It is important that the authority of the Civil Aviation Authority should be re-established so that airlines will know that once they have a decision from the CAA, they can go ahead and plan on that basis.
  While speaking about Part II of the Bill, I should also like to raise the question of the charging policies of the British Airports Authority. As noble Lords will be aware, I have always been concerned about the vitality of the British tourist industry. In my view, to some extent this depends on the maintenance of the predominant position of London's airports in the European travel market. It is not beyond the bounds of possibility that if airport costs are too high, this could persuade airlines to switch to other, less expensive European airports. The current charging policies of the British Airports Authority, which are based on the need to finance future developments, are I believe open to question. I think that one should question whether it is right to ask present users to pay for services which will be used by future users. I believe that this is a point that your Lordships should question when we come to the Committee stage of the Bill.
  The debate is taking place a little later than I had expected and I do not wish to detain the House further, other than to say that I am sure that your Lordships will give the Bill a Second Reading. I think that I have underlined the fact that we are against the major purpose of the Bill, and we shall scrutinise it in great detail in Committee.
  8.7 p.m.
  Lord TREFGARNE: My Lords, I have been posed with a considerable task this evening: to answer the very many points that have been raised. Therefore, perhaps your Lordships will forgive me if I reduce to the very minimum the opening general remarks of my reply and
  1700
  then deal with as many points as possible in the time remaining. If there are any points which inadvertently I fail to touch upon, perhaps your Lordships will forgive me and allow me subsequently to pick them up from Hansard and deal with them in correspondence with those of your Lordships concerned.
  We have had a wide-ranging and constructive debate upon this important Bill. Dealing first with Part I, I should like to take this opportunity once again to stress two important points in connection with the change in the status of British Airways. First, it is the whole of the undertaking of the British Airways Board that is being vested. There is no question—as I think the noble Lord, Lord Ponsonby of Shulbrede, suggested—of any part being sold separately, hived off, flogged off, asset stripped, or whatever one may call it, under the provisions of the Bill. Secondly, the undertaking will be vested in a Companies Act company, but that company must be one in which all the shares on vesting day are owned by the Crown. Thus, there is no question of the undertaking being vested in a company that has connections with any other existing company or organisation. We are convinced that British Airways Limited should be a normal private sector Companies Act company not some kind of hybrid, quasi-nationalised industry.
  Turning now to Part II, I must make it clear that in no sense is the Bill intended to bring about what has become known as an "open skies" regime. Regulation by Governments is currently a pervasive feature of the civil air transport scene. This country cannot, acting alone, force other countries to dispense at one fell swoop with the regulatory mechanisms that have been created over a long period. Therefore, the Bill seeks to ensure that where competition will be beneficial, and where the United Kingdom has the power to bring it about, it will be the duty of the Civil Aviation Authority to see that that competition is introduced.
  Let me now turn to the large number of points that have been raised, which I shall try to deal with as succinctly as I can. First, the noble Earl, Lord Amherst, speaking from the Liberal Benches, mentioned Government provision of funds for British Airways. In fact, the Government do not provide loan finance for

  1701
  British Airways. British Airways borrow in the market, mainly from banks in the United States—and they do so in dollars—to finance their capital programme. It is true that this is currently with Treasury guarantees, which will not be available to the successor company, but this will be the only change.
  The noble Earl also asked what would be the status of the successor company and its relationship with the Government when 100 per cent. of the shares were owned by the Government prior to the flotation. Our thinking on this is that the change of status should take place fairly near the time of the flotation, when the date is known. This would restrict to a relatively short period the existence of the successor company with 100 per cent. Government ownership. Meanwhile, British Airways would of course continue as a nationalised industry.
  The noble Earl also asked me about foreign shareholders. He again raised the fears, which have indeed been expressed in debates in the other place, that the successor company could fall into foreign hands or be taken over by another company, perhaps with malign intent. Although as I indicated in my opening speech the Government consider these possibilities remote, there are belt and braces, to which I briefly referred, which act as a safeguard against such a possibility. First, the belt. There will be provisions in the articles of the successor company, a draft copy of which is in the Library, to provide that foreign-held shares carry only one-tenth of the voting rights; and linked to these will be transparency provisions to ensure that the company will be able to determine the nationality of the beneficial ownership of all shares. Any shareholder not being able to satisfy the company of his nationality will be treated as foreign, and the voting power of his shares reduced accordingly. However, we recognise that certain rights of investment may be available to nationals of other Community states. Such rights as exist are protected by the proposed articles of the company.
  However, there are other provisions, which I might call the braces, under Clauses 5 and 6 of the Bill, whereby the Government have the power to acquire British Airways Limited shares in the market if it should ever be considered
  1702
  desirable or necessary to restore the level of the Government's holding at the level which they held immediately after the initial sale of shares; in other words, a majority shareholding. Thus there will be a long-stop which could be used in the event of any takeover or control from an unwelcome source.
  My Lords, may I turn now to the questions put to me by the noble Baroness, Lady Burton? She queried whether this Bill would affect the ability of Members of Parliament to ask Questions about civil aviation policy and about the CAA's exercise of its functions. The simple answer is that it will have no such effect. This Bill is removing the Secretary of State's power to give guidance, which I have already explained is a flawed power, and is instead setting out the authority's objectives and duties in primary legislation. It does not alter the Secretary of State's overriding responsibility for civil aviation matters. Therefore, the ability to question the Secretary of State on civil aviation matters remains unimpaired. Of course, in future it will not be possible to frame Questions which refer to the power to give guidance, but it will, for example, be possible to query whether the CAA's policies are sound in relation to the objectives laid on the authority by the 1971 Civil Aviation Act as amended by this Bill. So I hope your Lordships will agree that there is no question of this Bill changing the ability of Members of the other place or of your Lordships' House to ask Questions relating to civil aviation policy.
  My Lords, the noble Baroness also asked whether it was true that the right of access to information was only discretionary as regards the consumer organisations, whereas of course the airline industry has statutory rights. The statement which was made in Committee in another place was made strictly in the context of air transport licensing, and the reference related to certain rights which are conferred by the Civil Aviation Authority Regulations 1972 upon such persons as the holder of an air transport licence, the holder of an aerodrome licence and the holder of a road service licence. The Government accepted that there is a need for greater disclosure of economic information, and to this end accepted a proposal for the insertion of a new clause,

  1703
  now Clause 16 of the Bill. This clause confers upon the Civil Aviation Authority greater ability to publish economic and statistical information relating to air transport licensing, and it is thought that this will meet the needs of those consumer organisations which seek more information about air transport licensing matters.
  The noble Baroness also asked, as I think did my noble friend Lady Trumping-ton, at least by implication, whether there was not an obvious necessity for a single organisation to speak for air travellers. Primary responsibility for looking after the needs of air travellers rests, of course, with the Civil Aviation Authority. The authority, in order to cope more successfully with this task, has set up the Air Transport Users' Committee, which the noble Baroness knows well since she was herself a distinguished member until September last year. This body is completely independent minded, and is by no means under the control of the organisations which she has in mind. If the noble Baroness has any positive suggestions as to ways in which the committee's service to the public could be improved, I am certain that the present chairman, my noble friend Lady Trumpington, would be more than happy to consider them.
  My Lords, my noble friend Lord Boyd-Carpenter criticised the form of Part II of the Bill. He was concerned about the fact that this Bill will of course have to be read in conjunction with the 1971 Act, and I confirm that that, for the moment, is the case. However, I am hoping at a later stage in these proceedings to bring forward certain technical pre-consolidation amendments in the hope that it will be possible in the near future to bring forward general civil aviation consolidating legislation, which I agree with my noble friend is much needed.
  My noble friend Lord Boyd-Carpenter also asked about the possibility of a new chairman for British Airways. The Government are urgently considering the chairmanship of British Airways in the light of the fact that, as my noble friend said, Mr. Stainton's term of appointment expires towards the end of this year. Your Lordships will not expect me to speculate on the question, but I can give an
  1704
  assurance that it is a matter to which the Government attach great importance and that an announcement will be made as soon as a decision is taken.
  My noble friend Lord Boyd-Carpenter, and also, I think, the noble Lord, Lord Beswick, asked me about the general position of Government directors in the future company. As I said in my opening speech, it is not our intention to appoint special Government directors to the board of British Airways Limited on a continuing basis. Of course, the initial board of British Airways, as it will appear in the prospectus for the sale of the shares, will be one to which all the members have been specifically appointed by the Government as promoters of the scheme. Since at that time the Government will own 100 per cent. of the shares, it is natural that they will appoint all the directors as promoters of the company. However, these directors will not be chosen as the agents of Government but as individuals who are considered best able to run the airline successfully as a fully commercial enterprise.
  It will be the duty of those directors, as of any other director of a company, to act in the best interests of the company itself, and not to promote any extraneous interest, be it that of the Government or of anybody else. Therefore, the initiative as regards changes in board membership will lie primarily with the board itself, as in the case of any normal company. However, the appointment by the board of any new directors during the year—for example, to fill a vacancy arising—and the reappointment of directors retiring by rotation will be subject to the approval of the shareholders at the following annual general meeting. Like any other shareholder, the Government will be empowered to vote in respect of resolutions proposed by the board relating to membership of the board. I do not readily foresee circumstances in which the Government would use their majority vote to veto the proposals of the board in this respect, but should this occur the Government's prime consideration in deciding how to exercise their rights will be what is in the best interest of the company.
  The essential point is that the company will be run by directors in whom the shareholders, including the Government,

  1705
  have confidence. The Government will not interfere in the day-to-day management of the airline by its directors. There is no place in the successor company to British Airways for directors appointed by the Government to do the Government's bidding or ensure that Government policy is followed in cases where the real interests of the company as a company dictate otherwise.
  Lord BESWICK: My Lords, I am most grateful to the noble Lord for giving way. The noble Lord said that there would be no question of the majority Government shareholder veto-ing any appointment to the board. Can he not be a little more positive than this? In the first place, there will presumably be a short-term appointment in the wholly-owned Government company. Is there to be no security offered to the executives who accept appointment to that board—an assurance from the majority Government shareholder that they will be appointed to the successor company?
  Lord TREFGARNE: My Lords, it is certainly the intention that the successor company will at the outset enjoy the services of the directors of all the corporation at the time of vesting; but thereafter the directors will enjoy the same employment protection arrangements as do the directors of any other company of this nature.
  The noble Lord, Lord Beswick, also asked me about the target investment limit. I can do no better than draw to the noble Lord's attention Clause 6(2)—page 6, line 22—where the target investment limit is defined. It

  "(a) shall be expressed as a proportion of the voting rights exercisable at general meetings of the successor company; and

  (b) shall he equal to the proportion of those voting rights which is carried by the Government shareholding at the time when the order fixing the limit is made."

  I hope that is what the noble Lord had in mind.
  Lord BESWICK: My Lords, this is not a Committee stage, of course, but I would direct the noble Lord's attention to Clause 5, which refers to the need for purchase of securities. Is the cost of those securities within the target limit or not?
  Lord TREFGARNE: My Lords, I shall have to take advice on that. Perhaps I may write to the noble Lord. The noble Lords, Lord Ponsonby and Lord Beswick, raised the question of the timing of the vesting and the sale of shares. I can only reiterate what I said in my opening speech. Part I of the Bill incorporates no timetable but is only the legislative framework. The Government have made it clear that no decisions have been reached on timing. We wish to maintain complete flexibility to choose the best time. Sale of shares will take place when we consider the time is right, taking into account the need for a successful flotation and the interests of all concerned. The earliest possible time for a flotation would be, I suppose, the summer of 1981; but I must emphasise that it is too early to take any decision at this time.
  The noble Lord, Lord Beswick, asked about the Government's relationship with the successor company. As I said in my opening remarks, we wish British Airways to be a perfectly ordinary private sector company. We intend that it should be independent of the Government. Although, after the initial sale of shares, the Government will have a majority holding in the successor company, we shall stand right back from the running of the company and not interfere with any aspect of its commercial and financial operations. These matters will be entirely in the hands of the board of directors.
  The noble Lord, Lord Beswick, also asked whether the powers in Clause 10 could be used in relation to the staff of an airline other than the managers. The answer is, yes, indirectly. The power to give direction to the management presupposes that the management in the company have the necessary internal control to be able to run the airline in question, including, for example, to require a pilot to fly aircraft from point "A" to point "B". I hope that that satisfies the query in the noble Lord's mind.
  The noble Lord, Lord Beswick, and my noble friend Lord Morris asked about the environment duties which will be conferred upon the CAA in certain circumstances. As an all-embracing duty, it may, on the face of it, sound attractive; but it could have serious disadvantages. With such a broad statutory obligation,

  1707
  the authority could not be confident of taking any steps without laying itself open to litigation on the charge of failure to carry out its environmental duties. A more satisfactory solution is to attach this duty to the specific functions of the authority where environmental questions may arise. Two such areas which will be left uncovered by the abolition of the power to give guidance are aerodrome licensing and air transport licensing, both of which are therefore covered by the environmental duty imposed on the CAA by Clause 11 of the Bill.
  I turn now to the question raised by several noble Lords, by the noble Lord, Lord Beswick, and, I think, by my noble friend Lord Boyd-Carpenter, relating to the recent appeal decision in connection with the Hong Kong service. It has been claimed that the decision was at variance with the purpose of this Bill—that is, to give greater scope and responsibility to the Civil Aviation Authority. I submit that that is not so. It is desirable to have a licensing procedure so that an independent body can examine all the relevant facts and take a decision accordingly; but an appeal mechanism is also desirable since, in the end, aviation policy must be subject to judgment by the Government of the day on the basis of the criteria laid down in the Act. My noble friend Lord Boyd-Carpenter asked specifically whether this recent decision heralded some new departure in appeals procedure. I can assure him that it does not. The circumstances on the Hong Kong route were very exceptional. As my noble friend pointed out, this is the first time since the CAA became responsible for these matters that the Secretary of State, any Secretary of State, has overturned a decision of the authority and I fancy that it will be a good while before he does so again.
  Lord BOYD-CARPENTER: My Lords, before leaving the point, can my noble friend tell the House what was so exceptional about this case?
  Lord TREFGARNE: My Lords, I would refer my noble friend to the remarks of my right honourable friend and his right honourable friend, the Secretary of State, when he made the announcement on this matter in another place on
  1708
  17th June. He indicated very clearly the criteria which he had taken into account in this matter. The reference is column 1359 of the Hansard of the other place on 17th June. I would refer my noble friend to that.
  Lord BESWICK: My Lords, that reference was to the assessment of the traffic potential on this route. If the Secretary of State is going to take a judgment on traffic potential, he can take that judgment on almost any application that is made.
  Lord TREFGARNE: My Lords, think that there were four applicants before the Civil Aviation Authority and that it was very exceptional indeed for there to be such wide disparity in the traffic forecasts which came before the authority on that occasion. My right honourable friend, as he said at the time, preferred the estimate of Laker when he arrived at his decision.
  Lord BOYD-CARPENTER: My Lords, my noble friend has said—and I have read the Statement of my right honourable friend and his right honourable friend—that what was exceptional was the difference in the traffic forecasts. Surely, there has hardly ever been a licensing case before the authority where there has not been a dispute over traffic forecasts. That is what all these cases are about. What his right honourable friend did not explain was what, in this case, in relation to the traffic forecasts, was so unusual that it could not be said to arise in any other case whatever. The problem is that his right honourable friend was putting his judgment, which in the nature of things is less instructed against that of the professional authority who are weighing traffic forecasts every day of their working life.
  Lord TREFGARNE: My Lords, my right honourable friend, as the Secretary of State, is charged with considering these matters; and he did so. I am prepared to back his judgment in this case against that of the authority.
  The noble Lord, Lord Beswick, and the noble Lord, Lord Boyd-Carpenter, referred to the general position regarding the duty of the Secretary of State when considering appeals. I should explain that Section

  1709
  24(6) of the Civil Aviation Act 1971 (which provides that the Secretary of State shall make regulations conferring the right of appeal to him from decisions of the Civil Aviation Authority with respect to air transport licences) also lays down that the Secretary of State, in considering appeals shall have regard to the duties laid upon the Civil Aviation Authority by Section 3 of the 1971 Act. It is the Secretary of State's duty when deciding appeal cases to have regard to exactly the same criteria as the Civil Aviation Authority must employ when deciding licensing applications. This will continue to be the case in future. The only change to Section 24/6) of the 1971 Act which this Bill makes is to add a reference to the new Section 23(a) inserted in the 1971 Act by Clause 11. This new section sets out the duties of the authority in respect of air transport licensing and it is therefore appropriate that the Secretary of State should, when considering appeals, have regard to the general objectives of the Civil Aviation Authority as laid down in Section 3 of the 1971 Act, as amended by this Bill, and to particular decisions of the Civil Aviation Authority when exercising their air transport licensing functions as laid down in the new Section 23(a).
  My noble friend Lord Kinnoull raised the question about the information available to the Secretary of State in connection with an appeal, particularly where there was some confidential information which had been made available to the Civil Aviation Authority in confidence and which was not subsequently made available to that Minister when the appeal came to him. My right honourable friend regards this situation as unsatisfactory, and consideration is being given to amending the regulations relating to the appeal procedure to overcome the difficulty. I hope that clears up the point.
  My noble friend and also the noble Lord, Lord Ponsonby, raised the question of the British Airports Authority and Civil Aviation Authority charges. BAA charges fall outside the scope of the Bill, but I think the principle is the same as I will enunciate now for Civil Aviation Authority charges, which is that the CAA has been charged with making its finances work out correctly. Progressively over the years, with one or two hiccups, it has improved the situation.
  1710
  If my memory serves me rightly, it is now virtually breaking even.
  My noble friend drew comparison between charges levied in this country and elsewhere. The principal explanation—no doubt there are some differences in costs—is that in other countries they do not seek to recover all the costs in the same way as we do.
  My noble friend Lady Trumpington seemed to be somewhat at variance with the noble Baronesss, Lady Burton of Coventry, about the status of the Air Transport Users' Committee. I would not wish to put myself between the two noble Baronesses in their discussion on this matter. I will take note of both their views. The point raised by the noble Baroness, Lady Burton, is one that we shall wish to consider, and we shall consider. I would not wish to make any commitment on the outcome of that at the present time.
  My noble friend Lady Trumpington drew attention to the different terms of reference of the Air Transport Users' Committee, on the one hand, and the airport consultative committees, on the other. Again, it is a matter that I am prepared to look at. There is some benefit in having the separate bodies. They perform separate functions. The AUC, for example, is a centralised body, while the consultative committees of course relate to specific airports. I will consider what the noble Baroness says and see if there are any suggestions that I can put to her.
  Baroness BURTON of COVENTRY: My Lords, I have had a good innings, and I will not take up the time of the House, but I asked the Minister about the terms of reference of the relevant committees. I said I had put this forward in 1975. I wonder whether it could be considered as a short-term measure, and a letter would not suffice for that. I asked the Minister something which I think is important: Whether the position of the air traveller could be considered in the review being conducted by his right honourable friend the Minister of State for Consumer Affairs on which we are to have a Green Paper. Is it possible for him to give an answer on that?
  Lord TREFGARNE: My Lords, I cannot give an answer to that without

  1711
  consideration. I should have been better informed about that than I am. I apologise to the noble Baroness for that omission. I will certainly consider the question of the terms of reference of the two committees to which she referred, although without commitment at this point. Time is short and we have another debate to follow. I do not think there is any particular point that I will try to deal with now. I hope that your Lordships will give this Bill a Second Reading.
  On Question, Bill read 2a, and committed to a Committee of the Whole House.

  MARRIED WOMEN'S POLICIES OF ASSURANCE (SCOTLAND) (AMENDMENT) BILL
  8.34 p.m.
  Lord WYNNE-JONES: My Lords, I beg leave to move that this Bill be now read a second time. The Bill is a small—
  Lord TREFGARNE: My Lords, if the noble Lord would speak into the microphone there would be an improvement in audibility.
  Lord WYNNE-JONES: My Lords, this Bill is a small, non-contentious one. It was introduced into another place as a Private Member's Bill, and I was asked to take it over in your Lordships' House by an honourable friend, Mr. McKelvey, Member for Kilmarnock, who introduced it into the Commons. In introducing this Bill, I want to make it clear that it has a very simple purpose: to put women in Scotland on the particular issue of assurance policies in the same position as is applied by the law of this country.
  The Scottish Law Commission looked at this matter some time ago and they stated:
  "We have received from more than one source proposals that the Married Women's Policies of Assurance (Scotland) Act of 1880 should be amended."
  The Council of the Law Society of Scotland proposed to the Commission that the 1880 Act should be brought into line with the Married Women's Property Act 1882, which applies to England and Wales. That is the purpose of the Bill:
  Assurance (Amendment) Bill
  1712
  to bring the Scottish law into line with the law which applies to England and Wales.
  The difference is an odd one. According to the 1880 Act it was only possible for a married man to have an assurance policy for the benefit of his wife and children; it was not possible for a married woman to have a similar assurance policy. The English Act allows this.
  It is perfectly clear that we would not wish to have any discrimination between women north of the Border and women south of the Border except in so far as they may be fairer in one part than in the other. But not surely in terms of assurance policies. I was reminded by my noble friend Lord Ross of Marnock that Robert Burns had a comment on this in which he referred to the rights of women. He said that the rights of women merit some attention. I am sure that your Lordships' House would not wish that this discrimination, which has continued for so many years, should remain. As it is an entirely non-contentious Bill, I hope that your Lordships will accept it without further discussion. I beg to move.
  Moved, That the Bill be now read 2a.—(Lord Wynne-Jones.)
  8.39 p.m.
  Lord ROSS of MARNOCK: My Lords, I gladly follow my noble friend. I will not inflict upon your Lordships the full Burns quotation, although it is short:
  "When Europe's eye is fixed on mighty things,
  The fate of empires and the fall of kings;
  While quacks of state must needs produce a plan,
  And even children lisp the rights of man;
  Amid the mighty fuss just let me mention,
  The rights of women merit some attention."
  There is more of it, but that is enough, my Lords. I think my noble friend put the case beautifully and wonderfully. It was my successor in Kilmarnock who had the good fortune to introduce this Bill into Parliament. I have been preoccupied with other things, and I could not have done as good a job as the noble Lord, Lord Wynne-Jones, has done in this House. The Bill merits the attention and the support of this House, and I gladly support it.
  8.40 p.m.
  Lord LYELL: My Lords, I hope it would be fitting that we on these Benches

  1713
  should say one or two words on behalf of the Government about how grateful we are to the noble Lord, Lord Wynne-Jones, for outlining so very cogently the purpose of this Bill. He has my particular sympathy, since it was three years ago that I, too, did what he is doing and assisted rather complicated Scottish legislation through your Lordships' House. I think the House would agree that the noble Lord has made a very great success of piloting this Bill through your Lordships' House tonight. We on the Government Benches welcome this Bill as a modest but an overdue measure to remedy an anomaly which has existed since the Victorian era. As we have heard from the noble Lord, it is a slight but nevertheless valuable fruit of various deliberations which have gone on in Scotland, especially, as I am told, of the Scottish Law Commission. Certainly since its inception in 1965 the commission has examined other more weighty, more interesting and possibly more important matters, but nevertheless this particular Bill is very desirable. We see that it is necessary that minor deficiencies in the law be corrected, and this is what the Bill seeks to do.
  We believe that the Bill is in tune with our times. It extends to the women of Scotland a right which their menfolk have enjoyed for a century. The Bill may not be regarded by the women's movement as a particularly significant advance, but we on these Benches, and especially I, as a spokesman for various Scottish affairs, welcome it as a major step forward in the right direction. It secures for women in Scotland the same right as has existed since 1881 for women in England and Wales. At last, when I find this happy acronym of MWPA, I shall know that I am acutely right. I always used to get it down as the Married Women's Property Act. I was told, "No, you've got it wrong; that's the English Act". When I was doing my training in Scotland—no doubt the noble Lord, Lord Ross, would concur—I used to get nought in my exams, but now I think this Bill is going to correct me. We are very grateful to the noble Lord, Lord Wynne-Jones, for putting it forward, and we support it.
  On Question, Bill read 2ª, and committed to a Committee of the Whole House.

  OVERSEAS AID AND THE BRITISH ECONOMY
  8.43 p.m.
  Lord HATCH of LUSBY Lord HATCH of LUSBY rose to ask Her Majesty's Government what part the promotion of increased purchasing power in the developing countries plays in their strategy for reviving the British economy.
  The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, first of all may I welcome back the Minister who is to reply, hoping that during his tours he has been able to see something of the peoples that we are talking about tonight and the way in which they live. At the same time, I would extend to him my sincere sympathy. Not only has he to take two debates running, but, quite frankly, without any personal affront to him, I do not believe that he is the man who should be on the Front Bench answering this debate. This debate is an economic debate, and it is not the responsibility of the Foreign Office to answer for economic policy. I hope also that, following the various exchanges we have had between each other, I can make it quite clear at the beginning of the debate that I am talking about economics, economic policy and their consequences for this country and the rest of the world; I am not talking about aid, although aid will also come into it.
  We are holding this debate in a world situation which has been described by two notable economic reports in the past few months in these terms. First, the Brandt Commission Report stated that the 1980s could witness even greater catastrophes than the 1930s. Secondly, the Commonwealth committee of experts set up by the Commonwealth Conference in Lusaka last year has reported in similar terms:
  "There is anxious questioning whether we are on the brink of an economic disaster comparable to the great depression of the 1930s".
  It is in that context that I want to put the Question that is on the Order Paper in my name. At the moment we see one stark, central fact in the world economy. It is that there are in the industrial world about 20 million people unemployed—calculated by the OECD to rise to 23 million by 1981—whereas, on the

  1715
  other hand, 15 million people in the third world are dying every year from nothing more than lack of food. This is an horrific commentary on the state to which we have brought human society.
  I am asking the Government what part their economic strategy has to offer for the rest of this century to the British position in this situation. So far as I can summarise it—and I would be happy to be corrected if I am wrong—the present Government's policy is based upon what they call the control of the money supply in order to cure inflation; and they always put the cure of inflation as their first objective. It would appear that, in order to do so, their strategy is to move resources to the rich, as we saw in the first Budget they introduced last year, in the hope that the rich will invest in British industry. At the same time, of course, this had to be paid for, and was paid for principally through the raising of VAT.
  Secondly, the Government appear to believe that in order to control the money supply they must maintain high interest rates; that sterling must remain expensive in the world money markets; that public service prices should be increased; that the power of labour, through the trade unions and through industrial relations, should be reduced; that wherever possible Goverment should be withdrawn from the economy, except, of course, when it comes to increasing armaments; and that if the consequence of this is, as it has been over the past 12 months, rapidly increasing bankruptcies and unemployment, that is part of the price that must be paid. And even if, as, again, has been seen during the past 12 months—it is now forecast to increase over the next 12 months—this policy is to reduce industrial production in this country, and the public services, then that is also a part of the price that has to be paid.
  Of course, there are hiccups. We have seen recently Government money allocated to firms like Dunlop, and, I believe, Bowaters, the paper people. We have seen the subsidies to Inmos, and we have seen the establishment of enterprise zones, all of which brings the Government and Government money into industry. What basically I am asking is: if this is a fair summary of the Government's economic policy, what then? What reason is there
  1716
  to suppose that after this policy has been followed through to its ultimate this is going to lead the British economy into any fixed state of recovery? Indeed, at what point in this continuing policy are the Government going to say, "We have now done what we set out to do; now we can see a recovery in growth in industry, in exports and in the economy as a whole"? That is the question which I never heard answered. I have put it to a number of economic Ministers and I have seen no rational answer to the question of why this policy should lead to economic recovery. But in the meantime it certainly has effects on trade and on our exports.
  We have seen only this week the announcement that the British Overseas Trade Board is going to have its resources so reduced that next year Britain will have only a half of the trade missions sent abroad that it has had in 1980. The employers' organisation, the CBI, has forecast a 3½ per cent. drop in production this year. Again, as I have emphasised so often from these Benches, the money that has been released to the rich does not normally go into British industry; as we saw in the years 1970–72, it leaves the country. Since the exchange controls were lifted last October £3½ billion have left this country. The Government often say that that is investment abroad and that we get some returns from it. It is not wealth-producing. Much of this money goes into the property market in the United States and on the Continent. Most of this money always goes to the developed countries, not the developing countries, as has been our historic experience since the 19th century.
  So we are to see our industry quite deliberately decimated. We are to see real economic growth deliberately cut. Again the CBI is forecasting that economic growth will be cut by 5 per cent. by next year. Do we not see in this the insidious beginnings of the demand for protectionism to defend our industries and our industrial workers against the competition from abroad? Protectionism is the death knell of Britain as a trading nation and the opportunities which I shall mention later on which are open to us. Again, surely the Government have seen by now that, however much money they may release to the rich sectors of our

  1717
  community, that money is not put into risk capital.
  The risk capital in this country today comes very largely from the multinational companies who can move their money about and who, for example, in microelectronics have already begun to get a monopoly control of the market. I give you the example of titanium which, noble Lords will remember, we were talking about a few weeks ago. The Government had to put money into the production of titanium because it was at risk on Teesside and no private company would go into it. But when it comes to the larger area of micro-electronics we there see a shrinking number of large multinational companies taking control of it. So we are to see, apparently, as a result of this policy, an ever increasing small hold over the vital development areas of our industry and the future industries of this country, the risk industries, depending on a Government that are not prepared to subsidise them.
  There have been alternatives offered to this scenario. The Brandt Commission was one and the Commonwealth experts' report was another, but the Government have continued to display the same attitude in international economics as they are displaying in domestic economics in this country. For example, in their reply to the Brandt Commission they say that the international capital markets can continue to play the primary role in recycling OPEC surpluses, dead against everything that the Brandt Commission has analysed. After all, the Brandt Commission was composed of some very distinguished people in the world who, I would think, know as much as, if not a great deal more than, the Government's economic advisers.
  The Government say further in their memorandum:
  "The Government believes strongly in the merits of the present economic system".
  They showed that belief at the Venice conference when, along with the Americans, they blocked the consideration of the Brandt Commission Report, which was supposed to be and which was announced by the Germans as being one of the principal objectives of that conference. In this Government reply, which was published and which came from the Foreign Office, there is a completely
  1718
  negative attitude to everything suggested or analysed in the Brandt Commission Report. It has been described in the words of the Observer as a "miserable document", "mean", "callous", "short-sighted", "pompous", "mealy-mouthed". It has been described by the Sunday Times as one of the shoddiest documents ever produced by a British Government with fatuous bromides about keeping faith in the needs of the present world economic system.
  If the Government believe, as they state in this document, in the present international economic institutions, then two-thirds of the world's population are doomed to a very bitter future. In the developing countries we have already seen the mounting debt that is inevitably built up among the non-oil-producing developing countries as the price of oil rises and as the price of manufactured imports rises, too. Let us have no doubts about this: much of that debt is owed to commercial banks in Europe and in North America. Let us not forget what happened when banks began to default at the end of the 1920s and the consequences for the world throughout the 1930s. It is by no means unlikely that, unless either the present international institutions are reformed or replaced by more relevant ones, then we shall begin to see the defaulting of commercial banks on the same scale as we saw at the end of the 1920s.
  Have the developing countries to rely on the IMF as it is at present constituted and as it at present operates? If they have, then they are doomed to a policy of deflation, which means immediately that they are unable to sustain their purchases of imports from this country and from the rest of the industrial world. They are also doomed to massive unemployment. Remember, my Lords, that between now and the end of the century, 2,000 million more people will be living in this world and 80 per cent. of them will be living in the third world. Already—and this figure means almost nothing—there are 59 million registered unemployed in the poor world. That is only the tip of the iceberg of the massive unemployment that one knows exists in every one of the developing countries.
  What does that lead to? What did it lead to in the 1930s? What arose then

  1719
  from the starvation and monetary collapse that we saw at the end of the 1920s?— violence of every kind: civil, internal violence, and eventually international violence. And it is this policy which has led some of the developing countries to begin to talk about what is known in technical terms as "de-coupling". All that "de-coupling" means is that there is a strong movement among some developing countries to break away from their interdependence with the industrial world, to break away from that world and to go it alone. It is not very far from the attitude that has been taken by OPEC already, and there are other countries producing commodities like copper, tin and rubber, who are looking for the same kind of solution as the oil-producing countries have done. I do not believe that is going to help them, but I am certain it is not going to help us.
  I want to put briefly, and finally, an alternative; and I admit fully at the beginning that I am not here trying to provide a panacea for all the economic ills of the world. I am suggesting a part—I believe an important and indeed a crucial part—of what can be done in these circumstances in order to revive not just our economy but the world economy, and the British economy as a part of that world economy.
  We have to open the bridge between the growing number of unemployed in this country and those who are starving in the third world. We have to set our minds against indiscriminate protection. I admit there can be a case made out for a measure of protection for certain sectors of our industry as they change from one stage to another; but that must be discriminatory protection, always keeping the door open to the third world countries.
  I will give one example, in order to dispel a myth. It is normally very widely considered that our textile industry in this country is being undermined by competition from the third world. The average British family spends £250 a year on clothes. Of that £250, £190 is spent on clothes made in Britain, £35 is spent on clothes made in the developed world —mainly Europe, Japan and North America—and only £25 out of the £250 is spent on clothes made in third world countries. So let us get rid of that myth.
  1720
  The real competition which industry faces in this country comes from the developed world, the industrialised world in Europe, North America and Japan, and not from the third world.
  I would suggest that we might consider tonight—I hope the Government will consider it—that there is a special responsibility on Government to give a lead in a new economic direction, and I would base my plea on the authority of the former leader and Prime Minister of the Conservative Party. I would ask the Minister who is to reply—I should like to ask the Members behind him, but they do not appear to be very interested in this subject—whether or not the party opposite are repudiating what Mr. Heath said in the speech he made in another place on the Brandt Commisson Report. All the way through that 37-minute speech was the emphasis: "This cannot be left to the private sector: this is Government responsibility".
  What is Government responsibility? It is, first, to increase the resources and techniques of the research and development sectors of our industry in order to discover how our ageing, traditional industries can be transformed into industries which can supply the kind of goods that are desperately needed and can be sold in the third world. Secondly, it is to provide the risk capital which is essential for new technological development which is relevant to the needs of the third world; and to invest and to use what we set up—the National Enterprise Board—in order to take the risks that, in the short term, are essential if a long-term trading policy is to be developed.
  I would suggest very seriously—indeed, I hold both parties responsible for the lack of such a policy in the past, although I believe that we were getting towards it in the latter years of the last Parliament—that the Government get together with employers and the TUC and work out a strategy of retraining so that, instead of trying to maintain industries which are doomed in the next 10 years, we find the means of retraining workers to take part in industries which have some prospect of success. I suggest that we imitate some of our industrial competitors, by giving interest-free loans for exports which can produce the kind of trade resurgence for which I am asking. I ask that it be con-

  1721
  sidered whether tax concessions can be granted to export-oriented industries.
  I also ask that the Government recognise, as is seen all the way through the Brandt Commission's Report and the Commonwealth committee report, that the industrialised world must sit down around the table with the OPEC countries—and remember, my Lords, that we are now an oil-producing country—and, indeed, with the Eastern European or communist countries, to look at this world situation and see how we can get a stable, though undoubtedly increasing, price for our energy, without damaging the third world and providing the third world, from the profits of the oil-producing countries, with the wherewithal for their economic health to enable them not just to thrive, but to buy our goods.
  Above all, I ask the Minister to respond to the specific proposal made in the Brandt Commission's Report that there should be a small—and I emphasise "small"—summit meeting early next year, because from what knowledge I have, and the contacts I have had, that summit will take place. It will take place either with British co-operation or without Britain being represented.
  I said at the beginning that this was not a debate about aid, but that aid must come into it. As we know, aid has been cut by this Government. All I would say about aid is that it is already providing the workers of this country with about 40,000 jobs per year, but that—and I emphasise this point to the noble Lord, as I have done so many times before—if aid is linked with trade and with industrial development, it becomes much more valuable both to the third world peoples and to ourselves. Certainly, it is a much greater safeguard for the future of the people of this country than the monies spent on cruise or Trident.
  There is a great opportunity here, if only we have the imagination to see it, for a world that is at present outside the market, a world which consists of virtually two-thirds of the human race. I believe that in this year of 1980 we, as a human race, are standing on a precipice. We have two choices. We can go forward and as a human race fall on to the rocks below, or we can turn around in time to plough the land that is now untilled.
  9.11 p.m.
  Lord GLADWYN: My Lords,
  "As I was coming up the stair,
  I met a man who wasn't there.
  He wasn't there again today,
  I wish, I wish he'd go away."
  The man who was not there is the ex-Chancellor of Germany, Herr Willy Brandt, and I am afraid that he is going to be there for a long time to come. In fact, as they used to say about the poor in the old days, I greatly fear that he will be always with us. So I make no apologies for restricting my brief remarks to the Brandt Report. I know that we have had one debate about it, but I want to regard it tonight from a slightly different angle from that employed by the noble Lord, Lord Hatch. More especially, also, I should like to end up with what I hope will be a constructive suggestion which I trust will appeal to the Government, though I must say I doubt it.
  I think we might concentrate for a moment on what I might call the anti-Brandt movement which is, I fear, becoming increasingly popular in this country. This seems to me to be two-fold. First, there is the right wing or true blue assault, which we might call anti-Brandt "A". This contends broadly, if my interpretation is right, that there is no need for the West, or the richer or the "industrially developed" countries to do anything to assist the poorer ones, more especially those in Africa and in the Indian sub-continent. If those countries are over-populated and poor, it is chiefly their own fault. Other Third World countries, such as Taiwan, South Korea, Singapore, Hong Kong and so on, have made the grade by their own efforts, so why should not the rest? More especially, India is usually singled out. If she would only rid herself of her cows and her corrupt administration, she might profitably follow the example of China, which has never received any aid at all, beyond a little from Russia in the late 'forties, but, nevertheless, has at least succeeded in feeding her 1,000 million people adequately and is now organising herself industrially on what seem to be profitable lines.
  In any case, the great bulk of the poorer countries—I am still explaining the anti-Brandt "A" thesis—are now run by dictators, usually soldiers, who know how to put aid to their personal advantage

  1723
  and who deal with any uprising on the part of their starving subjects by purely military means. So why should we transfer resources on a huge scale to these people, who will only pour them down the drain or use them for prestige undertakings, or even for tribal wars, or wars against a neighbouring country? Why, in other words, should we lower our own standard of living without effectively raising that which, in the modern jargon, is known as the under-privileged third of the human race? They were much happier when they were ruled by the West; now that they have chucked us out, it is up to them to face the consequences; they have got to trade with us, anyhow. That is the hard-boiled, anti-Brandt "A" thesis.
  What I call the anti-Brandt "B" thesis is rather different. It is that of the extreme Left, as I understand it. This denounces the authors of the report as conscious, or unconscious, capitalist promoters of industrialism and, hence, of wage slavery for the masses in the developing lands which should, theoretically, hermetically seal themselves off from all corrupting Western influence and concentrate on pulling themselves up by their own bootlaces. Mainly agricultural communities should also, no doubt, make arrangements for disposing of their raw materials by barter means, in economies run by the equivalent of the Chinese "Gang of Four".
  I rather doubt whether the anti-Brandters of all tendencies have really absorbed the report's central message. That there are, and that there have been, many abuses in the administration of aid is certain. That it invariably has a qualitative effect is questionable. That the inhabitants of many new "liberated" nations were, from a purely material point of view, better off under colonial rule is demonstrable. That the West, by introducing modern hygiene and discouraging tribal wars and such practices as suttee were, with the best intentions, responsible for the population explosion is undoubted.
  But, irrespective of aid, the unfortunate thing—the thing that will not go away—is that, as things are, some thousand million people will by the end of the century probably be both starving and under leaders controlling areas of great interest to the industrialised West by reason of
  1724
  their possession of vital raw materials essential to the development of the West's economy. And what happens if, long before then, they repudiate the debts to the West by means of which, up to now, world trade has been largely financed? What happens to our own exports then? Will not a slump be upon us, compared with which the present recession will be looked back upon as a period of great prosperity? Unless the fully industrialised States propose to reconstitute their old empires by physical means, which is not, I think, actually suggested by even the most hard-boiled anti-Brandters, there is a real problem which must be faced, somehow.
  But if we reject both anti-Brandt "A" and anti-Brandt "B", it is still clear that the general application of the Brandt remedies, the remedies as proposed in the Brandt report, will be extremely difficult. That is no doubt why the Government in their commentary, if not damning the report with faint praise certainly praise it with faint damns, fully accepting hardly any of its major proposals, or at least only those which, they say, have already been substantially adopted. For even in the event of the major thesis—that is, the really massive transfer of resources—appealing to the industrialised West, which seems quite unlikely, it will also necessarily involve, for its success, the willing co-operation of those former third world but now extremely rich countries, the members of OPEC.
  A widely held view in these countries, unless I am wrong, is that since the war the immense increase in the gross national product of the industrialised States in OECD—the "Western miracle" as it has been called—has been largely the result of very cheap energy supplied by them under contracts entered into when they were still exploited, as they would say, by the imperial powers and their agents, the big oil companies. Now they are, perhaps not unnaturally, intent upon getting back some of the money to which they feel they were previously entitled. And, of course, at the back of their minds is also the thought of what they are going to do when the oil runs out or, conceivably, is replaced by other forms of energy.
  Obviously, despite this, the best solution, which I think can hardly be denied from the point of view of everybody, would be

  1725
  so to recycle the colossal sums accruing annually to the OPEC countries in the shape of petro-dollars that the poorer third of humanity will be able to continue to provide the industrialised states with the raw materials they need—no doubt at a profit which will enable them in their turn to develop some kind of industry—and the industrialised countries will thus be enabled to keep their factories going in order to turn out the goods and services that many of the OPEC and other countries need and can only get in this way. After all, what is the point of accumulating huge surpluses if you cannot get the things you want and more especially if, owing to the effect of a world slump, in many currencies you are not sure for how long your investments will retain their intrinsic value?
  For a few years after 1973, at the beginning of the crisis, this recycling worked to some extent owing to the admirable activities of the private banks but now, for various reasons which I need not go into, it is becoming increasingly difficult. In fact, this broad objective, if acceptable, can probably now only be achieved—and I hope the Government will accept this thesis—by some high level negotiated settlement between the three broad groups involved in the OECD, OPEC and the poorer and developing countries.
  The other point that I wish to emphasise is that successful negotiations would clearly have to involve concessions by all three groups. In other words, as I see it, the West will have to content itself with less growth and hence with a somewhat reduced standard of living; the oil countries will have to be prepared to reduce their present enormous profits from oil and to moderate at least to some extent their instinct to conserve, and the poorer developing countries, whether they like it or not, will have to forgo many of their original ideas about industrialisation and be largely content with labour-intensive projects involving the continued maintenance of their vast and increasing populations on the land. To that extent there may even be something in what I have called "anti-Brandt B". Here the example of China is one which might well be followed. After all, China contains about two-thirds of all those people in the world enjoying an income of less than about 300 dollars a year. Naturally,
  1726
  in such a reorganisation of the trading systems of the entire non-Communist world the great multinational companies will have to be brought in and will have to play a major role.
  Whether all this is possible is another matter. The example of UNCTAD, where after many years of discussion there has been no agreement on some new world trading arrangements under which the poorer countries could find a more profitable market for their goods, is not encouraging, to say the least, although perhaps Lomé may have pointed the way. At a moment when the West has simultaneously to cope with unemployment and inflation and I am afraid that on the whole OPEC seem to be after what they can get, such a conference might indeed be impossible to organise. It would certainly be worse than useless to summon it unless there was a reasonable chance of success. Even at this distance of time we might be warned by what happened at the World Economic Conference summoned by Mr. Ramsay Macdonald in London in 1933, although at the same time we can hardly disguise the fact that the failure of this conference was followed after a few years by World War II.
  So perhaps things will have to get worse before all concerned are forced to consider the concessions that all will have to make and in the meantime we can only continue with the aid that we are contributing, however inadequate that may be. Aid by OPEC countries, already considerable, may perhaps be stepped up—we can only hope it will be—and the Fund and the Bank, as the Government point out, will no doubt expand their activities even more, and of course I agree with the noble Lord, Lord Hatch, that trade is much more important than aid. So we shall go on, although I greatly fear that we may be overtaken by events. In that case the great beneficiary will of course be the Soviet Union. There are many more potential Cubas on the horizon besides Nicaragua, and the Russians will certainly know how to exploit them in order to increase their already great power and influence in the world.
  What then can we do to prepare people in this country for what is likely to happen to us, whatever Government may be in power? I think it should be

  1727
  continually emphasised that nobody owes us a living and that, in spite of North Sea oil, hard times are ahead. We obviously cannot, so to speak, buy ourselves out of a world slump by paying ourselves more money, and, in emphasising this, the Government—whatever may be thought of their techniques—are clearly right. But we might, I think, encourage all concerned to agree that a streamlined and efficient British industry, perhaps running with the emphasis on new rather than on old-established lines, is necessary if we are going to survive as an independent nation. Nor is there any reason to doubt that the EEC, if it had the sense, would with the aid of the European Parliament, approve great schemes for rationalising production of certain goods for which there is a world market, such as aircraft. That, I think, would help us to weather the storm.
  What is rather depressing is the way we seem to be preparing, as a nation, for the difficulties that obviously lie ahead. You would have thought, for instance, that one of our chief objectives since the war would have been to build up a body of competent technicians in all branches of industry who would, under good management, have been able to get things moving and the most capable of whom would occasionally have been able to move up into management itself. Maybe I am misinformed, but, as I believe, the Germans and certainly the Russians have been far more successful in this line of business than we have been. Perhaps it is our fault; perhaps it is our whole system of education that is at fault. Certainly some experts seem to think so, alleging that we are producing an elite of arts graduates, higher mathematicians and scientists on the one hand and a mass of nearly unemployable illiterates on the other.
  My Lords, I have strayed a little, I fear, from the central theme of the Motion moved by the noble Lord, Lord Hatch, but I think I am justified. For, unless we can organise ourselves better we shall be less able—in spite of North Sea oil—to withstand the shock to our social system which will be administered by the threatened super-slump, always supposing that we cannot solve the major triangular equation to which I have already referred. So, to sum up, I would not myself accuse the Government of being ill-intentioned,
  1728
  they will be delighted to hear. I suspect that their intentions are entirely good. I listened to Mr. Hurd giving evidence to the House of Commons Select Committee the other day, and of course he was impressive, a very impressive man. But what I fear is that they have not the imagination to see that existing international structures, established in very different circumstances nearly 40 years ago, are probably incapable, unless reinforced and greatly strengthened, of containing the new forces now abroad in the world, which, unless harnessed, may produce—will produce, I am sure—some kind of explosion.
  I do not say that other governments in the highly industrialised states are much more imaginative than Her Majesty's Government. In all democracies governments cannot go very much ahead of public opinion, which has certainly not as yet come to the conclusion that hard times, in the present condition of the world, are inevitable, and holds, rather, that increased prosperity is only just around the corner if only the Government pursue the right kind of policy.
  My Lords, the issues raised by the Brandt Report are so grave and so fundamental that I wonder whether the Government might not find it useful to have them considered by some all-party Parliamentary body. It might be some joint permanent commission of Lords and Commons—I think that might appeal to the noble Lord, Lord Peart—which could consider this fundamental set of questions, taking the advice of experts of every political complexion and reporting periodically.
  Many of the difficulties raised by the Government in their paper may be insuperable—I admit that—but on other points perhaps their opinion might become less negative when studying the periodical findings of a body such as I have described. Is this a foolish suggestion? The Minister who is to wind up this debate will no doubt tell me that it is! I am quite used to the rejection of my bright ideas. But I have been told by responsible parliamentarians that it might be a starter.
  It will be seen that, while I entirely recognise the difficulties of the Government—or indeed of any British Government—when confronted with Brandt, I suspect that they are so daunting as to promote a strong desire to brush the whole

  1729
  thing firmly under the carpet. For instance, I can well imagine a Government Whip, pestered by a young man eager to reform the world along with that rather doubtful monetarist, Mr. Edward Heath, having recourse to the immortal words of the old song:
  "Can't you see your mother doesn't like it?
  Wotcha wanta talk about it for?"
  That is an attitude, a state of mind, which I feel might at least be modified, if not reversed, were my proposal for an all-party re-examination of Brandt to be by any chance adopted—although I must say that I doubt whether it will be.
  9.32 p.m.
  Lord SOPER: My Lords, the House will be grateful I am sure for the opportunity to discuss a matter of such vital importance as that which has been introduced in this particular Unstarred Question by my noble friend Lord Hatch of Lusby. Earlier today it was reported that the noble Lord, Lord Carrington, speaking in Mexico, said that the economic situation in the world dwarfs every other consideration, even that of Afghanistan. I believe that the significance of this Motion will be judged in relation to the words of the noble Lord, Lord Carrington, rather than by the number of people engaging in this debate in your Lordships' House at this comparatively late hour.
  I would presume to begin at a point which has not as yet, I think, been stressed, but for me it is the right beginning. Perhaps owing to the ministrations of television, certainly because of the publicity which these matters have aroused, there are millions of people in the world today who are acutely conscious of the deprivations of life and livelihood, of the sheer poverty and destitution, of millions of our fellow creatures. It is from that standpoint that I believe the ultimate virtue of a debate of this kind can emerge.
  I would break a gentle lance with my noble friend Lord Hatch. We are really talking about aid; what we are not talking about is alms. The strictly Islamic concept of alms, as a moral obligation in a static relationship to poverty, which alleviates the suffering of those who are impoverished and spiritually blesses those who engage in this Godly activity, is to me, no answer—in some senses it is a contempt—for the real problem which must
  1730
  be seen, I believe, in a dynamic situation in which aid is an ongoing process, which not only benefits those who receive it, but progressively, by a geometrical progression almost, increases the viability and the welfare of those who exercise it. That is the thrust of the Brandt Commission's Report to which I shall continue to refer.
  It relieves, it seems to me, a great many people from the dreadful sense that there is nothing that can be done except the provision of alms, of charity. However, the Brandt Commission, perhaps for the first time, sets forth in conclusive language, at least to me, that the benefit which can accrue from raising the standards of living among those who are impoverished is itself a contribution to the welfare of those who discharge this responsibility. That seems to me to be the point of departure for such a debate as that in which we are now engaged.
  My trouble is that I do not believe that, even if the Government have carefully read the Brandt Commission Report, they have assessed its true significance. At least the debate in the other place—as far as I was able to understand it—revealed that they were talking in terms of a continuation of a situation to which they had been committed, rather than accepting the revoluntionary concepts of the commission, which indicated beyond all peradvanture that we were now living in a revolutionary age, in a different kind of society, and that the traditional methods— whether they be monetaristic, which I abominate; whether they be laissez-faire; whether they be the traditional uses of IMF and the World Bank—are no longer competent to deal with an ongoing situation in which the real problem requires an entirely different approach to world poverty.
  It is this which commands my attention, and I would presume to say a little more about it from the standpoint of the Brandt Commission. We must encourage people to believe that a Government must do more than Governments have traditionally been able to do—you cannot make people good by Act of Parliament, but you can make it much more difficult to be bad. What is so much more required today is the promotion of a sense that ordinary people, through their governmental authority and power, can in fact do something about the terrible consequences

  1731
  of this poverty and, to me, the insufferable conditions which are portrayed on the television screen and against which, even hardened as I am, from time to time I feel compelled to close my eyes. To me this is the point of departure. For I believe it is possible, if the Brandt Commission's recommendations are put into operation, that through governmental activity we can in fact satisfy that increasing sense of obligation on the part of millions of decent people throughout this world to do something practical about the poverty and destitution which is such a terrible curse, and an avoidable one at that.
  The Brandt Commission and, indeed, Mr. Edward Heath are quite convinced that individual action from a monetaristic or traditional standpoint will certainly not meet the case. I should have thought that those who have read the commission's report with assiduity would be left in no doubt that that is so. It demands Government activity, and the very processes whereby the Brandt Commission proposes that we should embark upon such activity are the absolute contrary to those processes which are now being advocated in the present Government as the solution of our own domestic troubles. Those troubles will not be solved until we see, as the Brandt Commission suggest, that we live in one world, and whatever may be the programmes which are envisaged and put into practice in one place, they must correspond in essence with the programmes which are universally applicable, or they will certainly not survive the test and the opportunity to succeed. Therefore, the Brandt Commission proposes—and not with particular precision—that there should be an attempt to create a world conservation of energy and a world development fund, as it could be, in such a way as to increase the capacity of those who are now impoverished not only to benefit themselves, but, as they benefit themselves, to produce an increase in the trading facilities upon which we depend.
  To me this is an absolutely important and fundamental issue, and I hope that it will be sufficiently recognised by a Government, of whatever colour, that the Brandt Commission was not some Socialist gathering committed to some kind of Cloud Cuckoo Land of promise
  1732
  and Utopia, but a very practical and in many cases a conservative one which, when confronted with the evidence, was honest enough to recognise that, whatever its preconceived notions, the evidence was more important.
  I would venture to make one or two other remarks. One of the troubles of the present situation, as is advertised in the report of the Brandt Commission, is that if you stimulate the capacity of underdeveloped countries to produce and, therefore, to purchase from the developed countries, the outcome all depends on what you persuade them to purchase. Unless there is a radical reduction in the whole arms business over this planet, these underdeveloped countries will be encouraged to use their resources, and their increasing resources, not to feed their hungry but to provide the weapons ultimately of their own destruction and everybody else's.
  Therefore, into this debate I believe the whole question of disarmament naturally must flow. For unless we can provide an opportunity of stimulating trade in those things which are peaceable and required, rather than in this hectic and calamitous rush to impoverish those who are already poverty stricken by the added burdens of an increasing arms race, we shall indeed have developed the capacity of some of these underdeveloped countries to require our commodities. They will require the means of death, and will not survive in any cataclysm in which they and we are involved.
  Finally, the Brandt Commission recommends that there should be a world conference. It seems to me that this is at least the simplest and the basic requirement. I am well aware, quoting again the noble Lord, Lord Carrington, that an exchange of rhetoric is no substitute for a real approach to the problem that confronts us. But I believe that there is an increasing willingness—and in this I would include even the Soviet Union—to recognise, perhaps belatedly, that the kind of world in which we now live does not permit, even with modifications, the application of the traditional concepts of world finance, and that that act of beneficence, which has so often been regarded as "alms and charity", can now itself be a means of progress. To that end I commend to the Government the strength

  1733
  and the swing of this particular Brandt Commission Report as it affects the particular notion to which we are invited to pay our attention today. Our good and our benefit ultimately depend on sharing with others, and as we increase their capacity to live, so we ourselves are blessed.
  9.42 p.m.
  Lord RITCHIE-CALDER: My Lords, I always find it very difficult to follow my noble friend Lord Donald Soper because I feel so totally inadequate. But I want to take up from him where he left off. Beyond any question whatever, as Lord Carrington pointed out in Mexico, the situation we are facing throughout the world in economic terms is much more serious than our anxieties, which we may be able to avert, about the situation in Iran or the situation in Afghanistan. This lemming-like process towards an economic collapse is visible and clear. All the time we are saying, "When and how?". It is not a question of "Now or if"; it is, "when and how".
  The answers we have to find. The answers we are discussing here in this Unstarred Question tonight are quite clear. They are what my noble friend Lord Hatch said: this is an economic question. May we just stick with the emphasis on what are the economic issues involved. Let me be quite clear: the situation in which we see the world today is a confrontation—and this is quite clearly the reason why we had the Brandt Report—between the haves and the have-nots, between the so-called North and the so-called South, and between the third world and the highly-developed world.
  Over the last years, as many of my noble friends may have done, I have sat in on many discussions on the New World Order. It is what in fact the Brandt Report is trying seriously to rationalise. Implicit in the Brandt Report is the acceptance of the arguments of the New World Order. The old world order is not standing up. It cannot do so, and all the patching and applications of Band-aid that we are using in the present situation are not staunching the haemorrhages of the world economy.
  This is something I have lived with in a positive way for the past 30 years. As
  1734
  I have previously told your Lordships, I have travelled many millions of miles in consideration of the problems involved in the development of the developing world. From the word "go" it was clear that any idea that we could impose our self-evident wisdom on the developing world was quite wrong. With the best intentions we tried to do it; we tried to transfer our preconceived ideas of what would be good for them without asking them what they really wanted. Over those 30 years we have seen genuine, decent and proper attempts by the aid systems of the world—by the United Nations agencies and all the other aid means—to try to stimulate the capacity of people to help themselves.
  That is the essential point, and that should appeal to the party opposite. While we have been trying to do that, let us remember that we are talking about a situation—we know this to be true—where there is a vast bog of world poverty in which people are submerged. I remember that we talked glibly about what we called a leap across the centuries. It was the developed world's intention to help. We committed ourselves to help them, as Truman did when he committed the American people in what was known as Point Four. We all wanted to help to make a great advance from the past into the present-day and into prosperity.
  But if you are going to leap, you must have solid ground to leap from. I am talking—indeed, we are still talking—about an impossible bog of poverty throughout the world, a bog from which they cannot leap. At least we—the United Nations and its agencies and others —have been trying over the years to put down not a bridge between the past and the future, but the planks and duckboards on that bog so that the peoples themselves could struggle out. The trouble is that we have taken away the duckboards. The present Government are cuttng down the United Nations development programme to one-half, and it is the UN programme that I am specifically talking about: trying to put the infrastructure into the developing countries in ways that those countries cannot do in terms of capital and expertise. They are trying to put that infrastructure in to enable the peoples concerned to help themselves, yet we are depriving them of that opportunity.

  1735
  The Government have spurned the Brandt Report. As I say, they have sneered at the New World Order, which I assure noble Lords with all the passion at my disposal is no longer rhetoric; the New World Order is a force in the world. It is the working creed of the third world and it will presently become, if we leave it, an instrument of OPEC, and we see OPEC trying to take over. As I say, this Government have diminished the functional capacities of the United Nations and its specialised agencies. And while the phrase we used to use was "a great leap across the centuries", we have tripped them up on the way.
  We hoped in those days, and I still believe—I shall continue so to hope and believe during the life I have left to me—that we can, with the help of the well-off and technologically advanced countries, give the developing countries (without imposing ideas on them or putting on what we call technological fixes, and without delivering them over to the multinational corporations) the capacity to help themselves. They can come into the 21st century, and the Brandt Report has shown us positively how they can do so.
  This is incredible. This country of Britain had an Empire and a Commonwealth on which the sun never set. It was a Commonwealth embracing every race, colour, and creed; every geographical feature in the world; every geological resource. It was a colonial Empire that fed our factories with materials and our people with food, and which provided our commercial empire and bought our goods. That great dispersed area, which is now co-terminous with a great part of the third world, was the basis of our authority, our prosperity and our wealth. It also gave us an experience of dealing with people, of understanding their needs and aspirations. They are no longer our subject peoples, but we must never
  1736
  disown them. We need the help of the third world peoples and they need our help.
  I say with all deference to, and affection for, my noble friend Lord Soper that what I am talking about is not charity, not even alms, because the beggars' thanks is almost invariably the beggars' curse. People do not like to be beholden. It is not charity. What we are talking about tonight is positive, enlightened self-interest. It is investment in our industrial future, as we once invested overseas in our industrial past.
  Why on earth cannot the present Government see that the clear and indicative role of Britain in this world today is to be as we were in the 19th century, the positive leaders. Think of how we did it. Think of how we capitalistically exploited the world in the 19th century. We in our factories, in our industries, in our steelworks, built the railways of Latin America, and from Latin America we got our frozen meat. We exploited the countries in this sense by providing the means by which our factories could produce their goods. I believe that this is still true. I am not talking about capitalist exploitation. I am talking about the positive lead of this country to find its outlets, real outlets, in a creative way, which we are capable of doing.
  Every one of us who has been in the developing field knows that every situation in the developing world is a new situation. One has to think about how things can be developed, and one has to improvise to meet them. We have that capacity. We have the insight of our colonial experience. We know what we ought to be doing about the situation, yet we are throwing it all away in a most ridiculous way. It is ridiculous that we are not using the wasted resources of our country today to develop the kind of appropriate technology by which these people can in fact help themselves.
  9.54 p.m.
  Lord BROCKWAY: My Lords, at this late hour I hope to speak briefly. I believe that I shall be able to do so following the series of excellent speeches that we have already heard. I want to express gratitude to my noble friend Lord Hatch of Lusby, not only for initiating the debate, but also for the very thorough and constructive contribution that he has made. I was shocked to read the White Paper which the Government issued in comment upon the Brandt Commission's Report. It rejected entirely the basis of the report's recommendations, and made very incidental and superficial suggestions about how probably the greatest problem in the world today, the poverty of the majority of people on this earth, can be solved. I find it difficult to believe that the noble Lord, Lord Carrington, endorsed that. Indeed, the speeches which he has delivered on the same subject have been so different in their approach and in their spirit to the terms of that Paper as to amount almost to an official repudiation of it.
  There are two reasons why all Governments must now face this problem. The first is the fact that we are living on a planet where a third of the population are existing in hunger. I often find it difficult to tolerate in one's own personal life conditions of comfort, and sometimes of luxury, when one knows that so many millions of people on earth are facing starvation. Only this morning The Times states that in the sub-Sahara area of Africa, from Gambia to Somalia, a thousand people are dying every day from hunger. The Times reports that, according to the United Nations Food Council, at least 60 million people are suffering from food shortages in the world at the present time. This is in contrast to the extraordinary fact that the technical methods of production of food and all that is necessary for life have now reached a stage which has never previously been approached in the history of man. We have become more technically efficient, and yet more people are hungry.
  As I have said, there are two reasons why our Government and all Governments have to face this issue with a new urgency. One is the fact, which I have already stressed, of the hunger in the world. I
  1738
  ask the Government to look at this related subject for one moment. The Governments of the world are spending their millions of pounds every day in preparation for the destruction of life. A mere fragment of what we spend on military expenditure in the world, according to the Brandt Report, could end hunger and poverty within a decade; and the most urgent issue in all political life today is to seek to transform the money which we spend on preparation for death to the cause of the cultivation of life.
  I want to make one particular appeal to members of the unaligned nations of the world. It is to the OPEC countries. Some of them are contributing considerably in policies to end hunger in Africa and parts of Asia. They are doing so mostly to those territories which have Moslem populations. But if my voice could possibly reach them, I would say that the millions which they are now making because of their control of oil supplies in the world they should be devoting to their fellow unaligned nations to end the poverty which exists in those countries. I just hope that some echo of my voice tonight may reach the unaligned nations of Western Asia.
  The second reason why we have to deal with this problem so urgently is the fact that there is no way out of the world recession and unemployment, no way out of dealing with unemployment in our own territories, except by increasing the purchasing power of the masses of people in the world. I was a Member of another place in the early 1930s when we passed through a similar recession to that which we have today. It was then admitted that the cause of the recession in the world was the diminished purchasing power of the peoples of Africa, Asia and Latin America. I am not saying tonight that that was the cause of the present recession in the world. But I am saying, emphatically, that there will be no way out of world recession unless we succeed in increasing the purchasing power of the majority of the population of the earth which is in Africa, Asia and South America.
  These are the two reasons why we are asking the Government tonight to reconsider their policy. Their Paper on the

  1739
  Brandt Report is something of which every person of human feeling ought to feel ashamed. I hope that the appeals which have been made in this House tonight—not only in the presence of the noble Lord, Lord Trefgarne, but, I am quite sure, reaching the eyes if not the ears of the noble Lord, Lord Carrington—will cause the Foreign Secretary to think again and seek to make the contribution which many of us believe he is seeking to make within the Cabinet of this country for a policy which shall be more realistic and shall be more humane.
  10.3 p.m.
  Lord BIRDWOOD: My Lords, the last thing I expected when I came to the House late this afternoon was that I would find myself on my feet making this, almost the last day of our Session, even longer; but I saw how may people on my party Benches were prepared to contribute to a debate which, albeit a short one, I consider to be in its quiet and very unfashionable way, on one of the most important topics raised in this House in the last few months. I am not going to say I am ashamed of my party—of course I am not. It seems extraordinary to me that I speak on this topic from the Government Benches of, let us say, the seventh most important industrial power in the world. I am not going to keep noble Lords very long.
  Listening to people speak, I was puzzled that noble Lords—except for the last speaker—did not concentrate on what seemed to be the core issue of Lord Hatch's Question, which was increased purchasing power. That is the central issue. I cannot help but be reminded of a conversation that I had with Herman Kahn a short time ago. I am sure everyone knows he is from the Hudson Institute. He said to me—and he said it as vehemently as he knew how—that it is far more destructive to watch while world trade withers to nothing than it is difficult to rebuild after a war. That is exactly what we are doing. We are watching while protectionist barriers go up again in a way that historians can only know about from reading archives of the 1860s.
  I also recall in this House, I believe 10 years ago, I reminded noble Lords that
  1740
  the ratio in terms of value added was that we in this country were exporting engineered products with a value of £600 a tonne and importing at £3,000 a tonne which—to use Lord Ritchie-Calder's words—from the point of view of enlightened self-interest was complete madness as regards the ultimate industrial health of this country. Nothing has changed. I should imagine that we can now extrapolate those figures. It is no harm that we are exporting products with a low value added ratio because we are exporting them to countries which, with any luck, will start to make those products and remove our markets altogether.
  If I leave your Lordships' House tonight with a single point it is that this country must continue to crank up its technology —our value adding must be higher and higher—because if we do not we shall have no markets. We have very little else to offer a developing world—and offer we must.
  10.9 p.m.
  Lord ORAM: My Lords, I am glad to follow the noble Lord, Lord Birdwood, and compliment him on having briefly filled a noticeable gap in the list of speakers with which we have been provided. We listened to his words with appreciation, coming from the only Conservative Back-Bencher to have joined in this debate.
  Like other noble Lords, I very much appreciate the initiative which my noble friend Lord Hatch of Lusby has taken in asking this Question tonight. During my time in your Lordships' House I cannot recall an Unstarred Question which was more pertinent or more important, as others have said, than the Question which is before us tonight. It points directly to the essential message of the Brandt Commission Report, namely, the interdependence of the economies of the developing and the developed nations to a degree, which is a critical degree, which has never been the case before today. I hope that when the Minister replies he will be able to produce evidence that the Government have at last taken that message to heart, because I must say that there is little, if any, evidence to that effect in the Government's

  1741
  memorandum commenting on the Brandt Report. As other noble Lords have said, the Government's White Paper is most disappointing.
  The Brandt Report analysed in a masterly fashion the whole series of economic and social problems which face the peoples and Governments of the world. It pointed both to the enormity and the urgency of those problems, and for that reason much of it made depressing, even frightening, reading about the future. Yet, despite that, it is a document of hope. It puts forward a whole series of positive proposals, aimed not only at the economic development of poor countries of the world, as so many reports and proposals have been in the past, but at avoiding in the rich nations the economic calamities which face us all if nothing adequate is done. For example, something must be done about the vast debts owing to us, a problem to which the noble Lord, Lord Gladwyn, drew our attention; something must be done about the arms race, which devours our resources; something must be done about the energy crisis, which affects us all; something must be done about the hungry millions in today's world and the many more hungry millions threatened for tomorrow's world. These are no longer only the problems of the Southern Hemisphere; we are now all involved.
  There was a time, not so many years ago, when it was possible to say, as did the official recently quoted in The Sunday Times, "They have their problems and we have ours". But how sadly wrong he is in today's world. It was once possible, for example, to look at India, to see the millions there without jobs or with only seasonal jobs, and say, "Mass unemployment is India's problem; ours are the more sophisticated problems of affluence". But today we know only too well that their problem is our problem, too. Not so long ago we looked at the countries of South America, and it was scarcely believable that the so-called banana republics—again, not so very many years ago—should be suffering from inflation rates and interest rates of the order of 20 per cent. That struck us almost as comic. That was the problem from which we thought we were mercifully immune. But, indeed, things are different now. We could look at the countries of
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  Africa and pity them for their stagnant economies, low growth, low productivity, lack of energy resources. Those were their problems; ours were different. But, again, is it not true to say that today our problems are the same as theirs?
  What my noble friend Lord Hatch has done by asking his Question this evening is not just to point out that economic problems are now global and not sectoral, but to show that we cannot overcome our problems unless we overcome the problems of the developing world as well. We need their markets if our people are to have jobs. We need to sell to them if our industrial life is to revive. At the same time they can only be real markets if the international monetary system is reformed in the way in which the Brandt Commission proposes, and only if there is the substantial increase in the transfer of resources for which the commission calls.
  That is why I found, as my noble friends have repeated, that this Government's White Paper is a bleak and disappointing document. Far from facing up to the need for a new approach to development finance, we are told that the Government believe strongly in the merits of the present world economic system. Far from recognising the need for increased aid programmes in the interests of our economy as much as that of the developing world, the Government bluntly refuse to accept the targets of 0.7 per cent. of GNP by 1985 and 1 per cent. by 2000 AD.
  Indeed, one reads this White Paper in vain to discover what positive steps the Government propose to take either in the home economy or abroad in response to the challenge of Brandt. The only answer that I can discern is that the Government propose to remain complacent and to be satisfied with what is already being done, or rather is not being done. In paragraph after paragraph one reads that the Government are already doing this, that or the other thing, apparently ignorant of the fact that current policies are leading us to doomsday and that the Brandt Commission has spelled out with great clarity the need for a change in direction and a fundamental change in the relationship between the nations of the North and the nations of the South.

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  In the paragraphs which summarise or purport to summarise what the Government are doing—and I have read them with great care—I can detect nothing that was not being done already or would not in all probability have been done if the Brandt Commission had never been formed and had never met. The Brandt Commission has made no impact upon the thinking of Government Ministers. The only passages which strike a note of confidence are those in which the Government are urging someone else to do something. "Let the developing countries adopt different policies", our Government say. "Let private investment be the means of development. Let the multinationals serve the interests of the underdeveloped world. Let the private banks provide more finance. Let OPEC come to the rescue. Let other people do things", say the British Government, "but please include us out". We are too busy perhaps turning Britain into an underdeveloped country to be able to do much for the rest of the world.
  If all this was motivated by good old-fashioned selfishness, there might be something to be said for it. If it served the interests of the British economy one could at least understand, if not accept, that we should be asked to eschew altruism. But the truth is that the policies that are being pursued are in the interests of neither Britain nor the third world. And I suggest that my noble friend has done well this evening in calling attention to the interdependence of both sets of interests which, as I have said, is the central and urgent message of the Brandt Report.
  I invite the Minister, in answering my noble friend's Question, to point to any change in Her Majesty's Government's policies which has arisen from the two years' work of Herr Brandt, Mr. Edward Heath and their colleagues. I do not believe that he can point to any such change or any such result but, if I am wrong, then I shall be delighted to be contradicted.
  10.21 p.m.
  Lord TREFGARNE: My Lords, I want to start by thanking the noble
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  Lord, Lord Hatch, for his understanding in connection with the timing of this debate. As the noble Lord knows, it was not possible for me to answer him on the day he originally selected, and although I know he regards me as second best on this occasion I very much appreciate his agreement to postpone his Question until today. I welcome this debate. We have considered today a number of ideas for improving the conditions of the developing countries and how these might relate to our own economic policies. Many noble Lords have referred to the ideas in the report of the Brandt Commission. I can therefore take this opportunity to repeat the Government's concern about the troubled prospects for the world economy over the coming years and about the dangers which this creates for developing countries in particular. I made clear our concern in the debate in your Lordships' House in March this year; I reaffirm it today.
  Furthermore, the Government fully subscribe to the view set out in the Brandt Commission Report that all countries, rich and poor alike, will benefit from progress in dealing with these problems. As my noble friend the Secretary of State said in Brasilia a week ago:
  "We face a common challenge. It is to ensure that the world economic system adapts and evolves so that it works efficiently to the benefit of all".
  The noble Lord, Lord Hatch of Lusby, has asked Her Majesty's Government:
  "what part the promotion of increased purchasing power in the developing countries plays in [our] strategy for reviving the British economy".
  The Government strongly subscribe to the view that one of the most potent forces for increasing economic growth, whether in Britain, other developed countries or the developing world, is by the increase of international trade. If we buy more from developing countries, that increases their export earnings and gives them greater purchasing power, enabling them to buy more from us and others. We have always relied on developing countries for the supply of many raw materials and increasingly they are sending us their exports of manufactures. Developing countries, in turn, are important markets for our capital goods and for our financial and other services.

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  The Brandt Commission have made this point well on page 68 of their report, where they say:
  "There is ample historical evidence that expansion of trade is and has always been one of the mainsprings of the world economy. For most countries, balanced trade expansion is a less inflationary form of raising the level of economic activity than stimulation through increases in domestic public expenditure".
  The Government have always participated actively in international negotiations designed to remove obstacles to world trade, to increase the volume of flows in both directions, and thus to enlarge the purchasing power of developing countries and of our own citizens. I will mention four sets of recent negotiations which are relevant. The first are the multilateral trade negotiations concluded in 1979 in the GATT, which will come into operation during the 1980s. These negotiations not only brought about a reduction in tariff levels, as earlier GATT rounds have done; they also made important progress in reducing non-tariff barriers which inhibit trade flows.
  The second is the conclusion in 1979 of the Lomé Convention between the Community and its member states and 58 countries of Africa, the Caribbean and the Pacific. We hope that this convention will enter into force later this year. It will provide for duty-free entry to the Community market for the 58 countries concerned for virtually all their trade, both in manufactures and in agricultural products. The convention also has an important aid element. The third area concerns the European Community's Generalised Scheme of Preferences, which provides preferential access to Community markets for manufactures and certain processed primary products from developing countries. The Community is currently reviewing the structure of this scheme, and we shall be active in discussion with our partners in seeking ways of directing its benefits more effectively to the poorer developing countries, while limiting preferences for the better-off and most competitive beneficiaries. Fourthly, we welcome the conclusion at the end of June of the negotiations to set up a Common Fund for commodities.
  All these events will benefit developing countries, by helping them to increase their purchasing power through higher trade flows. They will also benefit us.
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  This fits in with the pursuit of mutual advantage advocated in the report of the Brandt Commission. In this context, I should recall that the Government have been criticised for defending the existing world economic system and reliance on market forces. But the advantages which I have mentioned have been gained by adapting the existing economic system, as the Government favour, and not by overthrowing it. Furthermore, the benefits have largely been achieved by a reduction of barriers to trade, for the most part erected by Governments, and allowing greater freedom for the market to operate.
  These benefits have been achieved, furthermore, at a time of great economic difficulty for many countries, including the United Kingdom. At such times, pressures for protectionism increase. But the Government have always made clear their determination to continue to resist protectionist pressures to the maximum extent possible and to maintain the open trading system. Some sectors of the British economy are in serious trouble and need some temporary help. But our objective is to limit such special arrangements to the minimum.
  Some progress has been made, but I readily admit that there is room for more. We could do more to promote increased purchasing power in developing countries in one very simple way—if we created a larger market for their exports. If the British economy grew faster, we would help the developing countries as well as helping ourselves. The Government are determined to revive the British economy so as to achieve more durable levels of growth. But we must control inflation first. Inflation not only infects our own economy; there is a further penalty which directly affects the developing countries. Inflation drives up the price of the goods which they need to buy from developed countries, and shifts the terms of trade against them. The developed countries have often been reproached, with justice, for not bringing inflation under control. The overriding objective of the Government's strategy has therefore been, and remains, to reduce the rate of inflation. Without such a reduction there can be no prospects of restoring the confidence and stability essential for investment to flourish so that Britain's long-run economic decline can

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  be reversed. This kind of approach is very much in line with that of other industrialised countries. As the Venice Summit Communiqué said "inflation stifles growth" and the Communiqué stressed the need for
  "determined fiscal and monetary restraint … to break inflationary expectations".
  The Government's economic strategy is a strategy for the medium-term. Our intention is progressively to reduce the growth of the money stock to about 6 per cent. a year by 1983–84, and we shall pursue the policies necessary to achieve this aim. A key element in this strategy is a reduction in public expenditure. The plans announced in the public expenditure White Paper show a reduction of 4 per cent. in the volume of public expenditure between 1979–80 and 1983–84. This will allow a progressive reduction in the PSBR as a percentage of GDP from 5 per cent. in 1979–80 to about 1½ per cent. in 1983–84.
  Inevitably the period ahead will be a pretty painful one. There will be a temporary loss of output and jobs as the economy adjusts to a lower rate of inflation, and this, coupled with the impact of world recession and worsening competitiveness, will squeeze both demand for our goods and profits. But attempts to relax fiscal and monetary policy would quickly be revealed as self-defeating, leading not to sustainable increase in output but to extra inflation and a worse long-term problem.
  The most important single factor governing our competitiveness, and so the outlook for profits, output and jobs, is the level of pay settlements. Over the past year—partly reflecting the backlash of the previous Government's rigid pay policy—pay settlements have been much greater than the country can afford. But we do not have to go on in that way; the quicker wage negotiators recognise that excessive pay increases lead not to high pay but to fewer jobs, the less painful the process of adjustment will be.
  There are growing signs of realism in pay settlements. CBI figures indicate that half the workers in manufacturing are settling for 15 per cent. or less, and another CBI report recently told of many single figure settlements in the West
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  Midlands. People are realising that excessive pay increases mean lost jobs, and they have taken the sensible course and lowered their sights. In the engineering industry and the textile industry there are numerous examples of low settlements which have been influenced by concern about lost markets and redundancies. So people are beginning to put jobs before pay increases by concluding realistic settlements.
  Another sign that the Government strategy is working is the slowdown in the rate of inflation. The increase in the retail price index has peaked and there will be a big fall in the July figure. The Government's strategy for the revival of the British economy is clear and it is working. It will lay the economic foundations for the sustainable increase in economic growth that we all want. But I have not concealed that it will be difficult and painful.
  But some noble Lords have argued that we could short-circuit this painful process. It is suggested that we could restore growth without fuelling inflation and escape from recession by massive transfers to developing countries. These transfers would enable the developing countries to purchase additional goods from us, which will provide work for unused capacity in our countries. This would be of advantage to the developing countries, by increasing their purchasing power, but also to developed countries, like the United Kingdom, by reducing unemployment and surplus capacity. Noble Lords have argued that this is a further example of the mutual advantage which the Brandt Commission Report recommends. This is an attractive suggestion. I wish I could follow it without hesitation. But it is, I fear, like the pot of gold at the foot of the rainbow. The closer you get the further it recedes.
  There is no doubt that extra transfers, provided they are put to productive use, would be extremely helpful to developing countries, especially the poorer countries without access to private finance. But there is great uncertainty about the impact on developed countries. The fundamental question is this: what would be the origins of this massive transfer? It would chiefly be, as I understand it, official finance. This is additional public spending. How would this additional public spending

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  be financed? There are only two ways. This additional public spending could only be financed either by increasing the burden of taxation or by extra public borrowing. This could jeopardise the slow-down in monetary growth which is essential if inflation is to be lowered. There is no guarantee that extra public spending on aid by the United Kingdom would lead to higher output and employment in this country. There is a risk instead that it would lead merely to depreciation of the exchange rate and higher inflation.
  The Government are already committed to a substantial aid programme. Of course, the economies we have made in public spending, to which I have referred, have obliged us to make cuts in that programme. But of the seven summit countries, we gave in 1979 the second largest share of our GNP in aid. When health has been restored to the British economy, the Government hope that aid will increase again. The restoration of the economy will also mean the revival of an active private sector in Britain, which is the driving force for economic growth. It is very largely the private sector which imports and exports, for the benefit of developing countries. Furthermore, that same private sector will also be free to invest overseas for the benefit of developing countries, particularly since the Government have removed restrictions on outward investment.
  What I have said about aid policy, my Lords, refers to Britain and reflects the very severe inflationary constraints upon us. When other countries, whose economies are stronger than ours, can increase their aid spending, we welcome and applaud their actions most warmly. The German Government, for example, have recently decided on a substantial increase in their official aid. This amounted in 1979 to 0·44 per cent. of GNP, a lower proportion than for Britain, which contributed 0·52 per cent.
  Lord HATCH of LUSBY: My Lords, will the noble Lord allow me? I think this is a very important point which should be got over to the public. The figure which the noble Lord has just given—and I am sure he does not want to deceive anybody—is a figure which has been changed at its basis since the election. As I understand it, and as the noble Lord's
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  right honourable friend in another place has indicated, the present percentage of GNP calculated by the Government as official aid includes promissory notes, whereas before it did not do so. Consequently, the figures which the noble Lord is now giving should not be compared with the figures that were given by the previous Administration, because they are based on different criteria.
  Lord TREFGARNE: That may well be, my Lords, but I was using the figures as a basis of comparison between ourselves and West Germany. Since Germany was last year the second largest western aid donor after the United States, this increase makes an important contribution to meeting the needs of developing countries. But the German Government are enabled to take this action because their inflation is only at 6 per cent.
  We have also supported increases in the resources available to the international financial institutions, notably the increase in the capital of the World Bank, by an extra 40,000 million dollars (no less), and the replenishment of the International Development Association by 12,000 million dollars, to which Britain will contribute 10 per cent.
  I turn now to the various points (or as many of them as I can manage) that have been raised during the debate this evening. In his opening speech the noble Lord, Lord Hatch, said that overseas investment went chiefly to the developed countries. I understand that figures are not available for the period since the removal of exchange controls, but direct investment by British firms in developing countries has risen from £359 million in 1975 to £800 million in 1978.
  The noble Lord, Lord Hatch, also asked about the Government's attitude to a possible North-South summit. May I answer him by quoting the words of my noble friend Lord Carrington, speaking in Caracas earlier this week, when my noble friend said:
  "A 21-nation summit meeting to consider the world's economic problem has been proposed. The problem certainly justifies discussion at the very highest level. My Government would give its full support to a summit designed to inject impetus and co-ordinate realistic action towards a solution of the many difficulties I have described, but such a summit must be prepared carefully and should not be the occasion merely for a further exchange of rhetoric".

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  I fancy that every noble Lord would agree with those sentiments, and I certainly think that our reception of that proposal is not the cool one which has been described. In parenthesis, may I recall that the noble Lord, Lord Gladwyn, on that particular point, reminded the House that the late Mr. Ramsay Macdonald had mounted such a conference in the 1930s, followed swiftly by World War II. I hope the noble Lord was not seeking to draw any comparison between then and now.
  The noble Lord, Lord Gladwyn, also asked if the Government would consider setting up a joint commission of both Houses to examine the issues raised in the Brandt Commission Report, Perhaps I may reflect upon the noble Lord's proposal, but in another place the Foreign Affairs Committee has already begun consideration of this subject and has held a session with a Foreign Office Minister, to which the noble Lord referred, and we would certainly not wish to complicate that committee's work.
  Lord GLADWYN: My Lords, if I may explain my proposal a little further, I quite realise that the Brandt Report is being examined by that House of Commons Committee. My proposal for a joint commission would be to examine the longer-term issues and to report periodically over a period of a year or two.
  Lord TREFGARNE: My Lords, I am obliged to the noble Lord for that further clarification. As I said, I will consider what the noble Lord has said, and write to him in due course.
  The noble Lord, Lord Soper, I think supported by the noble Lord, Lord Brockway, stressed the contribution which disarmament could make to the development of the poorer countries. The Government recognise the disparity between defence spending and aid. We are, furthermore, committed to the pursuit of measures of arms control and disarmament by international agreement. But arms control must be balanced and disarmament measures must have verification provisions. The massive military spending of the Warsaw Pact obliges us to insist upon this.
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  I would not wish it to be thought that the Government are being unreasonable or unthinking in their response to the proposal for massive transfers, while others are ready to subscribe to it. This is not the case. I would like to quote to you a passage from the report of the Group of Independent Experts from Commonwealth countries on the world economic crises which was published during July. The relevant passage is as follows:
  "The view that what the industrialised countries are at present suffering from is a deficiency of aggregate effective demand in the Keynesian sense is strongly disputed by many knowledgeable observers. On their view, additional aid would certainly be inflationary unless it was financed by additional taxation. Advocates of a greater aid effort would need to prove their point that more aid, whether financed from taxation or from expansion of money supply, is preferable to more domestic government expenditure. In other words, in the short-run the case for a larger aid effort must rest on public expenditure priorities; it derives little if any support from macroeconomic demand management considerations except under conditions of deep depression".
  Lord GLADWYN: My Lords, if I may intervene for one moment, is it not a fact that the report says that this project for a transfer of resources should be largely based on taxation, for instance, on armaments expenditure, or even on certain forms of trade?
  Lord TREFGARNE: My Lords, I think, with respect, that that is another point.
  I would sum up the Government's position in the following terms. We have examined with care the proposals for massive transfers which have been proposed and expounded by noble Lords this evening. We doubt that, in our present economic circumstances, we can benefit from them. The control of inflation must be the first priority of our economic policy. We are now achieving this. The restoration of the British economy to health is the best contribution that we can make to improving conditions for the developing countries. If the United Kingdom becomes a growing market, the purchasing power of developing countries will be increased by their expanding sales to us. My Lords, I yield to no one in my confirmation of the assiduity of the noble Lord, Lord Hatch, in this and related matters, but I hope the noble Lord will agree on reflection (and having

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  regard to what I have said) that our policy is the right one.
  Baroness RYDER of WARSAW: My Lords, before the noble Lord sits down, could there please be a further debate on this vital Brandt Commission Report, which affects all mankind, in the next Session of Parliament?
  Lord TREFGARNE: My Lords, there have been two such debates, I think, in your Lordships' House and others in another place. I cannot think that there will not be more.

  DUNDEE PORT AUTHORITY ORDER CONFIRMATION BILL
  Returned from the Commons with the amendment agreed to.
  EASTBOURNE HARBOUR BILL
  Returned from the Commons agreed to with an amendment; the said amendment considered and agreed to.