Lords Sitting of 4 February 1980

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

AIR FARES WITHIN THE EEC
Lord LUCAS of CHILWORTH: My Lords, I beg leave to ask the Question which stands in the name of the noble Lord, Lord Greenway, on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a statement on progress in negotiation with Member countries of the European Community to reduce air fares within the Community and increase competition.
Lord TREFGARNE: My Lords, we have consistently advocated that air fares should be as low as possible while at the same time providing for the economic well-being of the airlines. In consultation with the Civil Aviation Authority, we shall continue to refuse unjustified increases and to press for the introduction of lower fares and new excursion fares where appropriate. This policy has already achieved considerable success.

CHARITIES AND THE CHARITY COMMISSIONERS: RECOMMENDATIONS
2.38 p.m.
The LORD BISHOP of LONDON: 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 when they expect to give their views on the recommendations of the Goodman Committee on Charity Law and Voluntary Organisations, and of the Expendi-
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ture Committee of the House of Commons on the Charity Commissioners and their Accountability.
The PARLIAMENTARY UNDERSECRETARY of STATE, HOME OFFICE (Lord Belstead): My Lords, I must apologise for a long reply to the right reverend Prelate. On 24th January my right honourable friend the Home Secretary made the following announcement in reply to a Question in another place:
"The Government have considered the report by the Expenditure Committee on the Charity Commissioners and their Accountability published in September 1975 and have also taken into account the conclusions reached by Lord Goodman's Committee on Charity Law and Voluntary Organisations, which was set up by the National Council of Social Service and reported in December 1976.
"The Government appreciate the useful work done by both committees in examining a wide range of issues relating to charity law and administration. It is now over four years since the Expenditure Committee reported and three years since the Goodman Committee reported. Their proposals need to be viewed in the light of the Government's current policies.
"The Government recognise that charitable trusts occupy a special position in our law and that special privileges attach to charitable status. We believe that the concept of charity in the legal sense remains valid and useful since it both reflects and encourages a spirit of benefaction and public service whose continuance is of great importance to society. The Government do not consider that there is at present a need for changes in the law on charitable status or in the administrative practices relating to charities. We do, however, set great value on the contribution made by voluntary organisations and volunteers to the provisions of a wide range of services and facilities that are essential to the well-being of society. We are considering how best we may, within the present financial restraints, encourage the development of the voluntary sector as a whole, and in that context we are paying particular

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attention to the Goodman Committee's recommendations relating to fiscal matters."
The LORD BISHOP of LONDON:
My Lords, while I thank the noble Lord for his Answer, does he appreciate that it will cause very great disappointment to the charities and to the Churches which are looking forward to the implementation of the recommendations of these two committees; and will he, in particular, note the very clear and unambiguous recommendation on the subject of political activities in pursuit of charitable objects and try to clarify the situation, since there is grave difficulty in the way of well-known, extensive charities because it is suggested that they are indulging in political activities?
Lord BELSTEAD: My Lords, the right reverend Prelate did not mention the precise recommendations on which the Government had not announced particular action. If the right reverend Prelate had in mind fiscal matters, then, so far as the Goodman Committee recommendations on these are concerned, the Government are considering these and other proposals, including those put forward by a recent working party of the National Council of Social Service. So far as political activities by charities are concerned, in their annual report the Charity Commissioners have given guidance on the extent to which charities may engage in political activities; and the great majority of charities experienced no difficulty. I must say at this point that the Government do not believe that any legislation is required on that particular subject.
The LORD BISHOP of LONDON: My Lords, is the noble Lord aware that the Methodist conference at its last meeting in 1979 passed a resolution expressing concern at the Inland Revenue's reported refusal to allow covenant-giving to be used for the purpose of world development?
Lord BELSTEAD: My Lords, I was not aware of that. I should like to look at that point; and, if I feel that I ought to do so, to write to the right reverend Prelate about it.
Lord AVEBURY: My Lords, is the noble Lord not aware—he must be—that
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many organisations engaging in social welfare work find inevitably that there is a political aspect to their findings? To mention one such organisation, there is the Child Poverty Action Group. If one is concerned with case-work on behalf of families less well off than the average family, this must lead one to requests for political action which fall outside the allowed limits of charitable organisations. Is the noble Lord also aware that, conversely, organisations that are engaged in mostly political activities have found it possible, within the existing law, to form charitable bodies of an educational nature to fulfil part of their functions, and that in that manner a great deal of intellectual effort goes into finding ways around the present charity law—effort which might be diverted to more useful purposes if the Government had not a closed mind to changes of the kind that the right reverend Prelate has described?
Lord BELSTEAD: My Lords, if the Government have a closed mind they are in good company, for charities law in its present form has existed since 1601. The Government do not believe that any change in the scope of charities as a legal concept is needed at the present time.
Lord CRAIGTON: My Lords, is the Minister aware that charities are having a very difficult time and there is one recommendation in the Goodman Report that I feel sure could be acted upon very easily: that is the shortening of the periods of covenants in order to give relief from taxation? That would be a very simple thing that the Chancellor of the Exchequer could do in another place.
Lord BELSTEAD: My Lords, I am aware of what my noble friend said. It was for that reason, among others, that in reply to the right reverend Prelate I said that the Government are considering not only the Goodman Committee's recommendations but other proposals, including those put forward by a recent working party of the National Council of Social Service.
Lord BROCKWAY: My Lords, is not this problem largely one of the developing countries in Africa and Indo-China as well as immigrant populations in this country? Is it not extraordinarily difficult to draw a margin between what

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the Charity Commissioners consider charity and what others consider as political action? Will the Government reconsider the decision they have made?
Lord BELSTEAD: My Lords, I honestly do not know what the noble Lord is referring to. As a general reply, if the noble Lord has a particular case in mind and cares to draw it to the attention of the House now, or to my attention in writing, I shall look into it as urgently as possible.
Lord BROCKWAY: My Lords, the particular cases I have in mind are Oxfam, War on Want, and the Joint Council for the Welfare of Immigrants, all of whom are having some difficulties in these respects.
Lord BELSTEAD: My Lords, all I can say in reply is that the scope of charity is wide and my right honourable friend does not have the responsibility for the Charity Commissioners' handling of the individual cases. That makes it sound as though I believe the status quo is absolutely right. I believe that it is right, if I may say so, hearing in mind that the four heads for charitable purposes are very wide indeed.

ELECTORAL LAW AND PROCEDURES: REVIEW
2.45 p.m.
Lord UNDERHILL: 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 propose to introduce any amendments to the Representation of the People Acts and whether it is proposed to convene a meeting of the Home Office Electoral Advisory Committee.
Lord BELSTEAD: My Lords, the Government are conducting a general review of electoral law and procedures on the basis of which we shall consider what changes are needed and how best to proceed. Although the Electoral Advisory Committee, which last met in 1973, has been abolished as part of the Government's review of non-departmental public
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bodies, we intend to provide ample opportunity for public discussion of any proposals to emerge from the review of electoral law.
Lord UNDERHILL: My Lords, I thank the noble Lord for that Answer. In view of the general agreement—and there seemed to be sympathy in this House when I expressed this view only a few weeks ago—as to the usefulness and value of the Electoral Advisory Committee, is it not unwise to abolish it, particularly as it was only called together as required? Would it not be better to leave it to be called together because it has proved to be a most useful body for the widest possible consultation?
Lord BELSTEAD: My Lords, I read the noble Lord's speech with interest. Bearing in mind that the committee to which the noble Lord is referring had not met since 1973, it is perfectly reasonable for the Government to say that the Home Office will continue to consult the political parties, the local authority associations and the returning officers who mainly comprise the Electoral Advisory Committee. If I may give a concrete instance of what I mean, to show that the intentions of the Government are genuine in this matter, a Bill recently went through your Lordship's House that was sponsored by the noble Lord, Lord Lloyd of Kilgerran, and it was sponsored in another place by my honourable friend Mr. Cranley Onslow. It was called the Representation of the People Bill. It made two important alterations to electoral law. The Government are committed to consulting the political parties and the local authority associations on a draft set of regulations under that particular Act. So we intend to do what I have been saying to the noble Lord; namely, to consult, but on a basis of when needed rather than preserving a standing committee.
Lord BOSTON of FAVERSHAM: My Lords, does not the fact that some consultation process is envisaged by the noble Lord, Lord Belstead, in the answer that he has just given suggest that some machinery is in fact needed to carry out that consultation process? Would he say to the House that if, in the course of these consultations which the Government envisage having, it emerges, as my noble friend Lord Underhill has suggested, that

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the committee is still needed, the Government will at least keep an open mind about this?
Lord BELSTEAD: My Lords, I do not think that the Government's mind will be absolutely closed, particularly when the noble Lord from the Opposition Front Bench puts the point to me in such eloquent terms. The state of play is that at the moment the committee has been abolished. It had not met since 1973 and we believe similar consultations can be conducted on an ad hoc basis.
Lord ALPORT: My Lords, may I ask my noble friend whether the introduction of proportional representation is among the amendments being considered at the moment?
Lord BELSTEAD: My Lords, the review, as I think I said in my reply—or I was going to say—is wide-ranging and thorough. I can assure my noble friend that is is wide-ranging and thorough.
Lord UNDERHILL: My Lords, as the noble Lord stated that the body had not met since 1973 and had only been called together as required, would it not be best to leave it to be called together as required? Would he not agree that there is a great difference in consulting political parties or local authority representatives and calling together the conference where they can have the most valuable interchange of opinions?
Lord BELSTEAD: My Lords, we think not. Frankly, the number of nongovernmental or quasi-governmental organisations which had grown up caused a list which was costing a great deal of money. In some cases it appeared to be fulfilling no particular current function. This particular committee was one of those. When it met it did extremely valuable work and had on it people like the noble Lord who had great experience. But it is possible, may I repeat, to conduct those consultations once again, but in an ad hoc manner.
Baroness BACON: My Lords, since the committee last met in 1973, will the noble Lord say whether or not the object of closing it clown was financial? Would he
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not agree that, if it has not met since 1973, it has not cost much money?
Lord BELSTEAD: My Lords, that action was in pursuance of good management practices.
Lord HARRIS of GREENWICH: My Lords, is the noble Lord aware that many of us take the view that one of the most unsatisfactory situations at the moment is the disenfranchisement of British subjects resident in the European Community who are not members of the Armed Forces? Is this one of the issues that will be taken into account, and will there be a White or Green Paper?
Lord BELSTEAD: My Lords, I cannot say whether there will be a Government document. But when I said to my noble friend Lord Alport that we are, as I said in my original reply, conducting a general review of electoral law and procedures, on the basis of which we shall consider what changes are needed and how best to proceed, that was the literal truth.
Lord JACQUES: My Lords, is the Minister aware that, when management has an instrument which does not cost anything and is admitted to be useful, it is bad management practice to throw it away?
Lord BELSTEAD: My Lords, it was not currently useful even though it had great ornaments sitting upon it.
Lord UNDERHILL: My Lords, may I put one further question? As in Section 24 of the Report on Non-Departmental Bodies there are four questions about their use, if I put down a Question for Written Answer—because I know the noble Lord cannot answer this afternoon—will he tell us exactly how these four questions do not fall into line with the value of this body in past years?
Lord BELSTEAD: My Lords, if the noble Lord puts down a Question for Written Answer, of course I shall be replying to him.
Lord BANKS: My Lords—
The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers): My Lords, I

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wonder whether your Lordships would not think that we have let this particular Question run far enough.

INDUSTRIAL DISPUTES: AUTHORITATIVE STATEMENTS
2.53 p.m.
Lord BYERS: 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 when major industrial disputes occur they will issue at the earliest practicable moment an authoritative statement of the relevant facts involved in terms which can easily be understood by the public.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, it is doubtful whether such statements could be prepared, since the facts relevant to a particular dispute are usually complex and often involve subjective judgments. Statements by the Government or other bodies not directly involved in the dispute tend to exacerbate the difficulties and make it harder for them to be resolved.
Lord BYERS: My Lords, while thanking the noble Earl for that Answer, may I ask him whether the Government would not reconsider this matter in view of the vital importance of the public's being properly informed of the facts in any major dispute? How many people know that a process worker in the steel industry today has a basic pay of £112 per week or nearly £6,000 a year? How can we find out what could be earned by the new productivity agreement? How can we find out what difference a new productivity agreement in such a dispute, if fully implemented, will make to the reduction of costs in the industry? Is it not about time that the Government did something to make the public aware of what is really at stake?
The Earl of GOWRIE: My Lords, I am in very considerable sympathy with what the noble Lord says, and I think it is particularly regrettable that we are tending to think of wages at the moment only in percentage terms—which are not always
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very meaningful—and not in money terms, which is the sensible way to proceed. Nevertheless, I still have some hesitation as to whether the Government is the appropriate body here. It could easily be represented that the Government were parties to the dispute or had direct interests in the dispute, and that, as I said in my original Answer, could exacerbate the situation.
Lord BYERS: My Lords, if the Government are not prepared to take the responsibility, would it not be possible to ask ACAS to do this so that we could get an independent and authoritative view?
The Earl of GOWRIE: My Lords, I will certainly consider that. However, ACAS might be in the same difficulty in that they have a vital function as arbitrators and it might be thought that they were coming down with some subjective interpretation of the situation. But I have said to the noble Lord that his point will be taken most seriously. I will see what can be done.
Lord AVEBURY: My Lords, where there is a difference of opinion about the value of a particular offer so that the interpretation of it is, as the noble Earl said in his original reply, subjective, would it not be possible either for the Government or for ACAS to publish the estimates both of the employers and of the trade unions, with a very short statement giving the reasons for reaching such conclusions, so that the public could evaluate the offer for themselves?
The Earl of GOWRIE: My Lords, there is much in what the noble Lord has to say. I see no reason, on the face of it, why employers or unions should shrink from publishing or releasing to the Press the information themselves. My only query is as to whether ACAS or the Government directly should be involved in that process.
Lord AIREDALE: My Lords, should not the Government at least urge the parties to a dispute to come together and themselves issue an agreed prepared statement on the dispute?
The Earl of GOWRIE: My Lords, the Government have an enormous interest in

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getting the parties in any dispute together and that is what we are continually seeking to do; so I take the noble Lord's point.

THE STEEL STRIKE
Lord PEART: My Lords, I beg to ask Her Majesty's Government a Question of which I have given Private Notice. The Question is as follows:
To ask Her Majesty's Government whether they will make a statement on the effects of the extended dispute in the steel industry.
Lord DENHAM: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m., my noble friend Lord Trenchard will be answering this Question in the form of a Statement.

DEACONESSES AND LAY WORKERS (PENSIONS) MEASUKE
2.57 p.m.
The Lord Bishop of LONDON: My Lords, I beg to move, That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Deaconesses and Lay Workers (Pensions) Measure be presented to Her Majesty for Royal Assent. This is a very simple and entirely non-controversial Measure since it passed through all its stages in the General Synod without a single voice being raised in opposition or criticism of it. Indeed, I have some embarrassment in asking your Lordships to spend some time upon consideration of it. I have, however, to do so for this reason. The Church Commissioners are only permitted to disburse their funds in accordance with the directions of Parliament. Therefore, if they see a reasonable cause to which they should make their contribution they have to seek parliamentary approval to give them power to make such a contribution.
As things stand at the moment, the Church Commissioners have, under the Clergy Pensions Measure 1961, the power to make contributions to the Pensions Board, through whom pensions are paid to the ordained clergy. But as things stand at the moment the Church Commissioners
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have no power to make a financial contribution to the Church Workers Pensions Fund which is administered by the Pensions Board and is solely for the benefit of deaconesses and licensed layworkers. Therefore, the Pensions Board has no funds other than the very small and meagre funds available for paying the pensions of deaconesses and licensed layworkers.
There are at the present time some 600 deaconesses and lay workers in active service and about 350 deaconesses and lay workers who are in retirement, and after a lifetime of service to the Church they only receive a minimal pension. Therefore, it is the will of the General Synod and of the Church Commissioners that they should be empowered to make a suitablecontribution to the Pensions Board, and the Pensions Board will therefore be able to pay a proper pension to deaconesses and licensed lay workers. It is hoped that they should be put on the same standing and status as the clergy, which would mean they would receive a pension of £54 per annum for every year of service, with a maximum of 37 years; so that if a deaconess or licensed lay worker had served 37 years, they would receive a pension of about £2,000 a year.
Similarly, they would be entitled to a lump sum on retirement, and again the similar figure is £86 for each year of service, subject to a maximum of 37 years. So if a deaconess or licensed lay worker has served for 37 years they would be entitled also to a lump sum of something in the region of £3,000. These figures are, in these days, small enough, but they are a great improvement on the position as it affects deaconesses and lay workers at the present time because they are on a descending scale and there are some very old and senior retired deaconesses who are receiving little more than £1 per week as a pension.
This will cost the General Fund of the Church Commissioners approximately £600,000 per annum, but they believe that it is right and proper that the Church should be able to use its funds in this way in order to provide a reasonable pension for deaconesses and licensed lay workers who have served the Church so faithfully before their retirement. I therefore beg to move that this Motion be agreed to.

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Moved, That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Deaconesses and Lay Workers (Pensions) Measure be presented to Her Majesty for the Royal Assent.£(The Lord Bishop of London.)
On Question, Motion agreed to.

NEW HEBRIDES BILL [H.L.]
3.1 p.m.
Lord TREFGARNE: My Lords, I beg to move that the New Hebrides Bill, now before the House, be now read a second time. The essential purpose of this Bill, in the words of the Long Title, is to:
"… make provision in connection with the attainment by the New Hebrides of independence within the Commonwealth".
Before I describe the contents of the Bill, I should like to trace briefly the history of the New Hebrides and the developments leading up to its introduction. The New Hebrides is unique in its status as a condominium. It is administered jointly by Britain and France under a series of international agreements beginning with the protocol of 1914 which established the condominium. An archipelago of about 70 islands, the New Hebrides is situated in the South Pacific, roughly half-way between Australia and Fiji. The total population is about 120,000 of whom 115,000 are Melanesian in origin. There are long-standing political divisions between the Anglophone, mainly Protestant supporters of the Vanuaaku Party and the Francophone, mainly Roman Catholic supporters of a group of parties which have come to be known as the Moderates.
In July 1977, British and French Ministers announced a joint programme leading to independence for the New Hebrides in 1980. After a number of setbacks, the first major step in this direction was made in December 1978 with the formation of a Government of national unity upon which both sides of the political divide were equally represented. By the middle of last year, this new Government, assisted by a broadly based constitutional committee, had made considerable progress with the task of drawing up an independence constitution.
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A constitutional conference was held in Vila, the capital, in September under the joint chairmanship of my honourable friend, Mr. Blaker, the Minister of State, and his French counterpart, M. Dijoud, the French Secretary of State for Overseas Departments and Territories. The conference agreed a constitution, and it was confirmed that the New Hebrides should achieve independence in 1980. The conference also fixed 14th November, 1979 as the date for fresh elections to the Representative Assembly.
The constitution was formally adopted, and the decision to grant independence in 1980 established by an exchange of Notes between the British and French Governments, to which the independence constitution was annexed. These were laid before Parliament on 29th January as Cmnd. 7808.
The victors in the November elections proved to be the Vanuaaku Pati, which formed a new Government led by Father Walter Lini. At the first meeting of the newly elected Assembly, Father Lini and his cabinet were empowered by the Assembly to propose a date for independence during the period May to July 1980. The date is expected to be announced shortly. The Council of Ministers has since decided to recommend to the Representative Assembly that the new republic should apply for Commonweath membership.
I now come to the provisions of the Bill itself. It is not what might be termed the usual independence Bill in that it does not provide for the grant of independence. This is because the present status of the New Hebrides was established by international agreement and must therefore be terminated in the same way. This will be achieved by the exchange of Notes to which I have referred. The exact date of independence, when agreed with the French and New Hebrides Governments, will be appointed by Order in Council, to be made under this Bill.
As the Long Title suggests, this Bill contains, in the main, provisions consequent upon the intention of the New Hebrides to attain independence within the Commonwealth. Clause 1 modifies the British Nationality Act 1948 so as to confer the status of British subject and Commonwealth citizen on the citizens

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of the New Hebrides, with effect from independence. Clause 2(1) and Schedule 2 provide for the modification of certain United Kingdom enactments consequential upon the attainment by the New Hebrides of independence within the Commonwealth. Clause 2(2) and Schedule 2 provide for the repeal of a number of measures relating to the New Hebrides as a consequence of the change in its status. Clause 3 enables Her Majesty, by Order in Council, to make provisions regarding any appeals from New Hebrides courts which may be pending before the Judicial Committee of the Privy Council at independence. Clause 4 gives the Short Title, and provides that the modifications and repeals effected by the Bill will come into force at independence.
I should now like to turn to more general matters not covered by the Bill. The New Hebrides will, on independence, become a republic with an elected President as Head of State. The new republic will have a unicameral legislature, to be known as Parliament, and a Council of Ministers responsible to it, headed by a Prime Minister. The independence constitution provides, among other things, for the protection of fundamental rights and freedoms of the individual—citizenship, the judicature, and the public service.
The New Hebrides economy will depend for some time on external aid donors. The process of unifying the parallel British and French national administrations is now well advanced, but we and the French Government are aware of the heavy administrative burden which will be imposed upon the independent New Hebrides during the period when unification is taking place. We shall be sympathetic to their needs. A British aid mission is currently in the New Hebrides to discuss British aid after independence.
My Lords, in the past two years Parliament has granted independence to three British territories in the South Pacific—Solomon Islands, Tuvalu, formerly the Ellice Islands, and Kiribati, formerly the Gilbert Islands. When the New Hebrides becomes independent, the only remaining colonial responsibility we shall have in the Pacific will be Pitcairn, with its population of 65, so this Bill ushers in the end of an era. As with other parts of the Empire,
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our motives in acquiring territory were mixed: rivalry between European powers, the need to stop "blackbirding"—the raids on Pacific Islands for labour on plantations in Queensland and elsewhere—and the desire to propagate the Gospel, to mention a few. But Britain has never sought to make a profit from her Pacific dependencies. In the New Hebrides, in particular, we are providing aid at a level of about £6 million a year.
The condominium has posed unusual difficulties along the road to independence in the New Hebrides. I am sure your Lordships will wish to join me in congratulating the people and the Government of the New Hebrides on the considerable progress which has been made since the decision in 1977 that the territory should become independent this year. I am sure that our long association with the country will continue for many years to come.
I am pleased that it will be as fellow members of the Commonwealth that we shall have the prospect of continuing the close ties which already exist between ourselves and the people of the New Hebrides. I beg to move.
Moved, That the Bill be now read 2a—(Lord Trefgarne.)
3.10 p.m.
Lord GORON WY-ROBERTS: My Lords, we are all grateful to the noble Lord for explaining the contents of this Bill so fully. As he said, what makes this territory—and the Bill—unique is that for many years the New Hebrides have been a condominium administered by France and ourselves and, on the whole, very happily. The population of about 120,000, divided as it is linguistically and religiously as to about 55 per cent. Anglo-Protestant and about 45 per cent. French-speaking Roman Catholic, has on the whole proved amenable to compromise and co-operation. But, as the noble Lord said, the progress through the various stages of self-government and on to independence has not been easy. I was myself concerned with this for some years as Minister of State dealing with M. Dijoud and his predecessor M. Olivier. It is therefore the more interesting that this territory as a whole will on independence achieve that status within the Commonwealth.

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I have one question to put to the Minister which perhaps he may be able to answer at the end of this short debate. Is it the intention of the new State to apply also for membership of the French Union? In that case, would consequential provisions relating to citizenship be enacted in France so that the citizens of the new New Hebrides become not only British subjects and citizens of the Commonwealth as provided for by this Bill but also French subjects and French citizens? Perhaps the noble Lord may be able to clarify the position. It all arises from the unique situation of the condominium administration which has, has it not?, been going on for more than 60 years.
I was delighted to hear the date of independence confirmed by the noble Lord as being some time this summer. That is an assumption. It is no more a matter of negotiation—this will happen at some time between May and July, and therefore it is of the utmost importance that nothing should be allowed to happen on those islands between now and then to inhibit the smooth passage of the New Hebrides from its present status of self-government with a Chief Minister to full independence under a Prime Minister.
That brings me to one or two questions that I should like to put to the noble Lord. First, he referred to the entrenchment in the constitution of fundamental rights. I remember those negotiations, which I am glad came to fruition late last year under the present Minister of State, Mr. Blaker. Is there any specific reference to the position of the French language in the entrenching clauses? I am not urging that there should be if it is not there already. It is simply a question of information as to whether it was asked for—and I am sure that, if it was asked for, it was granted—or whether it was not asked for because there is total confidence among the French-speaking community on the islands that their position linguistically as well as in every other humane particular is firmly protected.
I thought from the start that much of the reservations expressed by our French compatriots in the New Hebrides arose from the fact that there was, not an extensive minority but definitely a minority with a strong feeling about their language and permanent concern lest somehow it
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might be eroded, officially and otherwise, by the omniverous presence of the English language, as we would put it in Wales. So I have sympathy with them, and nothing is lost by reassuring people about the status and the future of their own language. Indeed, a language is so personal a thing that often in negotiations of this kind, it takes precedence over even economics. Perhaps the noble Lord will be able to reassure us on this point. I am sure he can.
I pass now at once to ask for a similar reassurance about the position in the islands at the present moment. These days one hears reports and rumours about disturbances on one or two islands. Let me hasten to say that, like everybody else who has been concerned with this question, I feel a deep admiration for the democratic sophistication with which all elements in the New Hebrides, despite their differences of language, religion and, it may be, social interest, play their part in fair and free elections. When the results were announced—results which gave a decisive victory to the Vanuaaku party, as we have heard—they were accepted loyally in the traditional democratic manner. No doubt the influence of France and of this country in the New Hebrides accounts for this, to some degree, but I also think that the natural tolerance of these attractive people fed that tradition even before the French and the British ever touched their soil.
So we admire the way in which the elections were held and the way in which those who lost the elections accepted the results and co-operated loyally with Father Lini, who of course is the Chief Minister. All, that is, with one exception and I wish that I did not have to mention this exception. I refer to an individual—a Mr. Jimmy Stevens—who for many years has agitated for the secession of the Isle of Santo. It would be inaccurate, to say the least, to describe Mr. Stevens as a high-minded dissident concerned about the rights of his people. He is in fact an agent—some might say a tool—of adventurers who derive more from San Francisco than from Santo and who want to separate Santo from the rest of the New Hebrides in order to exploit it for their own dubious purposes. I am not saying anything more than the responsible leaders of the New Hebridean peoples have been saying for years, but I am bound

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to refer to it in order to ask whether, since the election results were announced, Mr. Stevens has created disturbances in Santo.
One hears that there have been such disturbances, that over the past few days his followers have set upon a Minister in Father Lini's Government and have also taken over official buildings in Santo, and that indeed Mr. Stevens has announced on behalf of his minuscule party, Na Griamel, his intention to secede—to separate unilaterally the Isle of Santo from the rest of the New Hebrides if and when, as he puts it, independence comes about. Of course, this cannot be allowed to develop. One of the great problems and great threats to the stability of the Pacific is that the new States emerging are archipelagos: they are groups of islands.
It is fatally easy to work up any number of particular, localised secessive movements in such aggregations of islands. We saw it in the Gilberts, and we have seen it in other parts of the Pacific as well. All Governments of this country have set their faces against encouraging in any way fragmentation of these new emerging States. We owe it to them. So with our friends and allies the French, I hope that Mr. Stevens' activities will not be allowed to develop so as to create a situation of disturbance, still less of secession in the time between now and the actual date of independence, and that we will act closely and completely with the French Government in taking any steps necessary to assure to the newly and democratically elected Government of the New Hebrides their right of tenure and of operation, and to assist them effectively to make it impossible for secessive movements, such as those again threatened by this individual, to succeed.
3.25 p.m.
Lord McNAIR: My Lords, we are talking this afternoon about a far-away country of which we know little, and that fact alone ought to put us on our guard. I am not playing the historical analogies game, which I believe to be more often than not misleading. I use those sadly unforgettable words quite literally. The New Hebrides are very far away from here and far removed from the present foci of international attention and tension, and if we are to judge only by the astonishing brevity of the speakers' list it does appear
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that we know very little about them. I hope we can show that however little we know we care more.
On 22nd November last year the noble Lord, Lord Trefgarne, in one of those protean performances that have won the sincere admiration of the House and I hope of the Government, found himself answering a Private Notice Question concerning some trouble on Santo island, trouble which I am informed is continuing to this day. In my brief contribution, I put this question to him:
"Does he agree that the granting of independence to the New Hebrides is a political process for which there are few, if any, precedents and that it will inevitably be a very difficult operation, much more difficult than the granting of independence to any of our own colonies?"—[Official Report, 22/11/79, Col. 296].
His answer to that question was:
"I can only say again that we really do not anticipate any great difficulty … because we shall be working in full co-operation and agreement with our French colleagues".—[Col. 297].
My first question to the noble Lord, therefore, is: Has that prophecy of full co-operation and agreement been fulfilled?
Before I come to my other questions, may I take a few moments to describe this condominium as I see it. I see it as a farce, and I read that a New Hebridean, accepting that definition, remarked, "This farce is our tragedy". My case for the word "farce" may seem to some of your Lordships exaggerated. Let us look at what we have given to the 120,000 Melanesians who happen to live in the New Hebrides, who in the first place, I imagine, did not ask us to give them anything and are not asking us to get out of the way and give them independence.
We have given them our two languages, English and French. We have given them as least two religions or denominations. We have given them two educational systems, Anglophone and Francophone, two legal systems, two police forces, two currencies. I may have misled the House in saying that we gave them two legal systems. It is in fact, I think, three; one for the French, one for the British and one for the indigenous population. Some of these divisive gifts should be examined in a slightly more detailed way. Our educationists and missionaries have seen to it that every little New Hebridean born into

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this world alive quickly learns that he is either a good little Catholic who speaks French or a bonny wee Presbyterian who speaks English, and, moreover, that those of his compatriots who have been denied the benefits bestowed on him are not altogether to be trusted.
The tensions arising from this cultural schism are very real, and, I believe, dangerous. They divide families, they divide the population, they distinguish the political parties one from the other. The two currencies are perhaps the least of their worries, perhaps no more than an irritant in daily life. As I understand it, goods are priced in the shops both in Australian dollars and in New Hebridean francs, and if you pay in one currency and are given your change in the other, you inevitably suspect that you have not been given enough, and you are very often right.
I have dealt, not I hope at undue length, with the linguistic, religious, educational and even financial legacies of the schism we are leaving behind. Even more potentially dangerous, it seems to me, is our failure to provide them before independence with either a unified administrative structure, a unified legal system or a unified police force owing clear allegiance to the Government of the New Hebrides and to no other. There are, I believe, two small armed and mobile police forces, one, of course, Francophone under French officers and one British. In the matter of the law, attempts have been made, as I am informed, to unify the legal codes. On the criminal side there is a document known as the Wallace-Mouredièn Report, which I only heard about too late to obtain a copy, but which I believe was not found acceptable by the New Hebridean Government. On the civil side, we have not even made that much progress.
Against this muddled and messy background, I now turn to the internal security situation, present and future. We heard about the rebellion of Mr. Jimmy Stevens in November, and I hope I can save some time of the House by bringing this affair up-to-date in the form of a series of questions. Is it a fact that Jimmy Stevens on the Island of Santo is still defying the Government of the New Hebrides? Am I right in thinking that he and his backers are seeking to further the interests of
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some large and non-indigenous landowners? Is it a fact—the noble Lord, Lord Goronwv-Roberts, referred to this—that his supporters are physically assaulting their opponents, driving them off the island, thereby altering the electoral role in Mr. Stevens' favour, while he pursues petitions for fresh elections, having lost the last one? Is it a fact that he is still operating an illegal radio transmitter? Am I right in suspecting that the reason why nothing has been done effectively about Mr. Stevens is that the two mobile police forces were unable to agree, and the British force was unwilling to act alone?
Highly relevant to that last question is my next. Is it the case that Mr. Stevens is a British citizen, subject to British jurisdiction and, if so, would not the British Resident have the power to deport him, after due process of law, if he felt that to be in the best interests of the territory?
I come to my last question on the distressing subject of Mr. Stevens. Is there really nothing that Her Majesty's Government can do—nothing more than what I am sure they have already done—to bring even greater powers of persuasion to bear on the people on the spot, to make a determined effort to bring this squalid bit of criminality to an end and so ensure that, when Mr. Lini assumes full responsibility, he will at least be spared this unnecessary problem?
I turn now to the future internal security of the territory. I fear that, even after the condominial settlement of Mr. Stevens' hash, for which I hope, it may happen that Mr. Lini and his Government may sooner or later find themselves in a situation in which they may need external help to preserve the peace and integrity of their country. I hope that that will not happen. but if it should it would clearly bedisastrous if such outside help were to be either British or French, as it would automatically alienate at least half of the population. I have been wondering whether Her Majesty's Government have considered, or would consider, the possibility of discreetly promoting some kind of understanding between the New Hebridean Government and our friends in Papua New Guinea. It may be that it would be reassuring for Mr. Lini if he could feel that, in an emergency, help would be on

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call from his fellow Melanesians in Papua New Guinea. I hope that the Government will give some thought to that suggestion, if—and, of course, only if—it commends itself first to Mr. Lini.
I should like to say a word or two about the territorial integrity of theNew Hebrides on which again the noble Lord, Lord Goronwy-Roberts, touched in his speech. The House will remember that in the Kiribati Bill there was, in Clause 7, a definition which said:
"'Kiribati ' means the territories which immediately before Independence Day constitute the colony of the Gilbert Islands".
Indeed, some noble Lords made extremely eloquent speeches in an attempt to have that definition altered. However, there is no such definition in the New Hebrides Bill. I appreciate, of course, that this is a very different type of Bill. Perhaps no similar definition is needed. However, I think that we should seek from Her Majesty's Government a clear and firm declaration that they will permit no fragmentation of the New Hebrides before independence. Whether that should be written into the Bill at the Committee stage is a matter of law and draftsmanship on which I would have to take advice. But, if it is necessary or desirable, I feel that it would come very much better from the Government.
My penultimate point concerns our financial and technical aid for the New Hebrides after independence. The noble Lord, Lord Trefgarne, has referred to this matter, but not in any detail. I should like to put this point to him. Normally, when we grant independence to a colony, we have already, before independence, provided it with what one might call the infrastructure of autonomous viability. In this case, as I have been trying to indicate, throughout my speech we have been unable to do that. Therefore, may I beg the Government to recognise this fact, and when considering our future aid policy towards the New Hebrides, to be more generous than usual for that reason.
Your Lordships will be relieved to hear that I now come to my final point: that is. what do we do about this Bill? My first feelings were that we ought to try to postpone independence for a short time, to have one more attempt to do some of those things which we have left undone.
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But. on further reflection, I arrived at the sombre conclusion that we have made such a mess of it that no matter how long we take, we are unlikely—for various reasons, some of which are perhaps best left unstated—to do very much better. Therefore, I conclude that the best thing that we can do—a poor best, Heavens knows!—is to get out as quickly as they want us to, and leave the New Hebrideans to face the daunting task of creating a nation almost from scratch. It will be a daunting task, but I am sure that they will face it with courage and ingenuity. From these Benches we wish them well. But if I was right to come to that sad conclusion—and I fear that I was—then what a terrible confession of failure it is.

THE STEEL STRIKE
3.37 p.m.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard): My Lords, with the leave of the House I shall now repeat a Statement being made in another place in answer to a Private Notice Question on the steel industry dispute. In reply to the Question,
"To ask the Secretary of State for Industry if he will make a statement on the effects of the extended dispute in the steel industry",
my right honourable friend replied as follows:
"The employees of the private steel companies have now been brought into the steel dispute although they have no quarrel with their employers. The loss of business arising from this action and from the continuing dispute in BSC is putting steel firms and the jobs in them at risk. So far steel users generally have been little affected by the dispute, but production and employment will be threatened on a much wider scale if and when steel supplies run out. It is in the interest of all who depend on steel for their livelihood that the BSC and the unions should end this self-destructive dispute quickly on terms which the industry can afford".
My Lords, that concludes the Statement.
Lord PEART: My Lords, I thank the noble Viscount, Lord Trenchard, for repeating the Statement. First, I should like to ask the Minister whether he can give an assessment, his best assessment, of the value of production lost as a result of this dispute? As regards that, the Government have responsibility as well as those employed in the steel industry. It has been suggested that there has been a conspiracy of silence with the CBI and the

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British Steel Corporation. Is that true? I should like to know and I think that the public would like to know what is really the situation.
As regards the contraction of steel demand, that is partly due to Government policy in other areas. In today's edition of The Times it mentions:
"Prospects for Britain's engineering industries have dipped alarmingly in recent months, to the extent that new orders this year could be as much as 20 per cent. down on 1979".
That is due to the Government's policy. I should like to know whether the Government are anxious to do something about that.
On a previous occasion when a Statement was made I raised the whole question of the effect of a cutback in production as a result of the strike, especially in our shipyards and as regards defence matters. This is a very important part of the argument. Engineering is one example and defence is another. However, we now hear that Her Majesty's Government have rejected £70 million worth of aid from the EEC, aid which was to help people who were being phased out of their jobs. Why are the Government so doctrinaire about this? After all, they must take some responsibility. More than that, Ministers must not act like Pontius Pilates, washing their hands. We want to know what they are doing. So far they are doing nothing; they are just waiting.
What about ACAS? The noble Lord, Lord Byers, Leader of the Liberal Party, today asked what I thought was an excellent Question. It referred to the need to inform the public. What is being done about the public? Are they being informed? What about ACAS?—which was set up to solve these disputes. Are the Government interefering or helping? So far nothing has happened; there has simply been a desire by some to let the strike go on and on until, as we have so often said, many of our industrial areas will be deserts.
Lord BYERS: My Lords, I must tell the Government that we on this Bench have very similar misgivings. Does the noble Lord think that the time has come for the Government to do something to get this dispute settled? Surely we cannot continue with this dialogue of the deaf for very many more weeks when we can see
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the fatal damage that is being inflicted on the economy of the nation. Do the Government intend to take any action in this dispute? Secondly, at the same time, do they intend to bring forward the necessary amendments to the Employment Bill in order to change the law on strikes so that this type of thing cannot happen again?
Viscount TRENCHARD: My Lords, on the last occasion when a Statement was made we nearly ran into a full-length debate, and I shall try very hard to avoid doing so today. The assessment of the value of lost production within BSC has been suggested by BSC as being of the order of £10 million sterling per week. That is an estimate because it depends on the second point which the noble Lord the Leader of the Opposition raised, namely, the level and the contraction of demand. However, that is BSC's estimate. Outside BSC, as yet the loss is extremely small, and as the Statement says, steel users have not yet felt any appreciable loss at all. Nevertheless, my right honourable friend has made it clear that very severe repercussions will develop in the future if the dispute continues.
On the noble Lord's point about Government policies being responsible for the contraction of demand, that argument will not stand up, and I shall reply to it only very briefly. The estimates of demand made by our predecessors as well as by ourselves are not very different and the amount of steel called for in the last two years is consistent with the policies that BSC is following in relation to demand. I am not well briefed on what the noble Lord called a refusal of aid, except that I an quite sure that we have not refused aid as such; we have taken decisions relating to the EEC which are to the overall benefit of the industry and the country.
Both noble Lords asked what we are doing and whether the time has come to intervene. We do not believe that Government can make a greater contribution here than the one they have already made on behalf of taxpayers. These terms—"Would we intervene, interfere or do something to get the dispute settled?" are euphemisms for "Would we give more cash from the taxpayer to settle this dispute and deny the use of that cash for other purposes?" Of course, that does not merely reflect the issues within the steel

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industry. If more tax is to be raised and given to areas of this kind rather than to other major and deserving areas, it will not only be in steel that the demand will arise.
The noble Lord, Lord Byers, raised a point about the employment laws. A number of opportunities to discuss this will arise fairly soon, but at this stage I would prefer to say that it is a matter for my right honourable friend the Secretary of State for Employment. Noble Lords will have seen his statements over the weekend. They seem to indicate that our position allows events to take place which, in my personal experience, do not and cannot take place in other industrial countries.
Lord PEART: My Lords, I want to raise a very short point. In view of what the Minister said, that he is not sure about certain matters, I would add that the question of aid from the Community was revealed in a Parliamentary Answer by Mr. Lester who is a Parliamentary Under-Secretary of State for Employment. I am rather surprised that the noble Viscount has not been briefed on this. It was an Answer on behalf of the Government.
Lord STRABOLGI: My Lords, the noble Viscount answers for the whole Government.
Viscount TRENCHARD: My Lords, I shall attend to my omissions here and communicate with the Leader of the Opposition.
Baroness BACON: My Lords, referring to the Minister's statement that the Government cannot afford to spend taxpayers' money on the steel industry, can the noble Lord tell us how much of the taxpayers' money will be spent and wasted if this strike continues for an interminable time?
Viscount TRENCHARD: My Lords, I cannot answer that question because it is hypothetical, but in relation to unemployment benefit and supplementary benefit within the industry, and taking into account people outside the industry altogether—some figures have already been mentioned—the bill will continue to rise. However, British Steel is now equipped
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with £2,000 million worth of modern capital equipment, and a further £2,000 million has been invested in it in the last four years to help it develop that capital equipment. That is the area of importance, and with that equipment there is no reason why the industry should not be able to stand on its own feet and pay much higher wages. It can be done. The stories about the port in Scotland and its use, and the stories of Llanwern, the new plant and its use, are known to the House.
I want to raise one other matter, because I failed to answer it earlier. I am not suggesting that these sums are large, because our salary and wage levels in this country are far too low, but we are dealing with a situation where last year the average wage of steel workers was £112 a week. We are talking about an increase, which has been on the table, and could probably be exceeded if productivity is improved and these new facilities were used, which would bring that average up to around the £130 mark. I understand that the two sides are in contact with one another; ACAS is still in contact with them; and the craft unions in the industry have had constructive talks. I suggest that it is the duty of the House to encourage them all to get back and settle as soon as possible within the budget which the taxpayer has given them.
Lord DAVIES of LEEK: My Lords, is the noble Lord aware that from today some of the private firms have suggested—and some are already doing this—that they withhold their contributions of VAT, et cetera, to the tune of £500,000 a week? That situation is getting uglier and uglier. The fact is that this non-militant steel union, which for 50 years has not caused trouble, said that what they wanted was a portion of the money that could be granted to increase productivity with the new tools and technology that are already within the firms and within the steelworks. Surely to God the Government cannot sit back and do nothing in a position like this!
Viscount TRENCHARD: My Lords, I think the noble Lord has mentioned two points. The second point I believe I have already fully answered, and I have nothing further to add. In relation

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to VAT, I too have heard the stories via the news media, whether they are correct or not. As I understand it, we are here dealing with an employer's threat that if their employees are going to be dragged out when they have no dispute with those companies at all, then VAT should be withheld. I am not, from this Dispatch Box, going to countenance law breaking of any kind, but I understand the emotions, and I have sympathy with the expressions of those employers that they are being dragged into a dispute which is none of their business.

NEW HEBRIDES BILL [H.L.]
Second Reading debate resumed.
3.51 p.m.
Lord TREFGARNE: My Lords, perhaps I may now conclude our debate on the New Hebrides Bill. I should like to begin by thanking the noble Lord, Lord Goronwy-Roberts, for what he said in his remarks, which were, as always, helpful. I am sorry that the noble Lord, Lord McNair, greeted this measure with less enthusiasm. I hope I may be able to allay his worst fears during the course of my short remarks now. Both noble Lords raised, quite properly, the question of internal security in the New Hebrides, and I shall comment on that.
Since the elections of November 1979 there have been sporadic acts of defiance of the New Hebrides Government on the islands of Santo and, to a lesser extent, Tana. The latest of these acts took place on the 28th January, when members of the Na Griamel movement on Santo led by Jimmy Stevens occupied the office of the representative of the central Government in Santo Town. Latest reports indicate that the situation is now calm, but the Customs movements on the islands continue to present some threat to law and order.
British and French Ministers, when they met in Paris on 8th January, reaffirmed their entire support for the New Hebrides Government which, on their side, expressed their intention to enter into a dialogue with the leaders of the Customs movements. I am pleased to say that the Chief Minister, Father Lini, has already had exchanges with Jimmy Stevens. And
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has expressed in a broadcast his conviction that the solution to the problem of the New Hebrides was peaceful negotiation until agreement was reached all round. This is the traditional Pacific way of resolving differences, and we and the French are doing all that we can to encourage both sides along that way.
The noble Lord, Lord GoronwyRoberts, asked me about the position of languages in the new nation. I can say that both French and English are to be official languages in the New Hebrides—in the "new New Hebrides", as the noble Lord called them—along with Bislama which is the local pidgin dialect. These languages will be entrenched for the purposes of education and general use. The noble Lord, Lord McNair, put a number of points to me. First of all, he asked me about our co-operation with the French, and reminded the House quite properly of remarks that I made when I made a Statement to your Lordships I think just before Christmas. We and the French are committed to bringing the New Hebrides to independence in peace and unity. When my honourable friend Mr. Blaker and his French counterpart M. Dijoud met Father Lini in Paris last month they reaffirmed their commitment and determination to counter all the threats to the unity of the new country. I hope that meets those points put by the noble Lord, Lord McNair.
The noble Lord also raised the question of the control of the mobile units both in the present and in the future. We and the French will retain ultimate responsibility for internal security until independence. Control of the police mobile units will remain in the hands of two resident commissioners who act jointly in such matters. The two units will be handed over to the New Hebrides Government on independence. Thereafter it will be for the New Hebrides Government to decide whether or not it wishes to retain the services of the expatriate British and French policemen who currently command the mobile units, or indeed the New Hebridean members. I hope that that satisfies the noble Lord, Lord McNair, at least on that point.
One other point that the noble Lord, Lord Goronwy-Roberts, put to me concerned the question of nationality. It may well he. and indeed we expect, that

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the new nation will apply for membership of the French organisation which is roughly equivalent to the British Commonwealth although very much narrower in scope. But I am advised that membership of that organisation has no implication for citizenship within French law, and thus the answer to the question specifically put to me by the noble Lord, as to whether they would be entitled to apply for French citizenship is, I think, no, they would not.
I think those are all the important points that have been put to me. There are two further points which the noble Lord, Lord NcMair, raised about the illegal radio station. I am afraid that that station is still transmitting. It is illegal in so far as it is unlicensed, and we are in close consultation with our French colleagues to decide how best to proceed about that. With regard to the position of Mr. Stevens' nationality, I am advised that he has on at least one occasion endeavoured to travel upon a passport that he issued himself. Beyond that I am sorry to tell your Lordships that his precise national status is not clear. I can say, however, that the question of his nationality is not one that need exercise us in connection with the question of whether or not he can be proceeded against if the necessity arose in the islands, because like everyone in the islands he is subject to the local laws. I think that that covers the points that have been put to me. I am obliged to some of your Lordships at least for your reception of this measure, and I hope that the House will now give the Bill a Second Reading.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

COMPETITION BILL
3.58 p.m.
Viscount TRENCHARD: My Lords, I beg to move that this Bill be now read a second time. The Bill, with its four main elements, is an essential component of the Government's overall economic strategy. Its very Title indicates not only the central features of the Bill but also the importance attached by the Government to a strong and effective competition policy. We believe in competition rather than control.
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I want to place competition policy in this Bill in the wider context of the economic policies of the Government as well as described in the Bill.
The importance we attach to competition is fundamental, and this is because we take the view that the free choices of the citizens should determine the pattern of economic activity. But choice and competition are the two sides of the same coin. Consumers are not free to choose unless suppliers compete. This means that economic freedom itself rests on competition, and monopoly is of course the denial of choice. We want to increase the citizen's choice, and the Bill will do that. Other legislation, for example on housing and employment, is also concerned with extending the citizen's freedom of economic choice.
Nowhere is competition more important than in the control of inflation. Previous Governments have put their faith in controls—statutory controls on prices, voluntary controls on pay and sometimes in various methods to enforce the voluntary controls. I have argued many times in the House that price controls, high personal taxation and the erosion of differentials have been adopted not really because Governments believed in them but because they were trying to placate or win favour from some sections of opinion in the trade union movement or on the Left Wings. Their reason for doing that was to try to make a pay policy acceptable and make it stick. It never stuck where it was meant to stick, and in the end it came unstuck altogether.
There is plenty of evidence for the assertion that price control, progressive taxation and the erosion of differentials were seen by Governments only as a means to an end; admissions that the effect on the RPI was negligible, agreements that taxes were too high but of course that it was never the right moment to alter them, and statements stressing the importance of paying attention to differentials which also, in the same paragraph, had statements pointing out the need to increase the pay of the low paid. Contradictions there were.
So the wealth-creating sector of the economy has been bludgeoned by all these means and gradually near strangled, and the start-up rate of new business, as

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we noted in the House the other day, has been reduced to probably half the levels of competitor countries, and all of that was in vain. The pay policy did not stick and inflation continued and prices more than doubled in the period of office of the last Administration. It will take time to correct all that, but we have started on a different track and this is one of the important measures along that track.
In my opinion, price control was actually worse than useless because it positively broke down competition; it changed the orientation of business from the market place, from new products and new designs, to one which at times reached near collusion to beat off the assaults of the Price Commission. The Price Commission, with its 500 staff and consultants to support it, was capable of asking enough questions to keep the minds of tens of thousands of managers away from wealth-creating in the sector that used so to create. So we are left with the inescapability of a very tough time and a long haul. Realism—I say this in the middle of the steel strike—aided by our yet very mild trade union reform, together with the correct control of the money supply and control of Government expenditure in the non-wealth creating sectors, are the necessary pre-conditions for the re-establishment of a healthy, wealth-creating, private enterprise-led economy. The re-creation of this economy must be along the lines of competition and freedom of choice, and the Bill is designed to strengthen those important elements.
The four main elements of the Bill are these: First, it strengthens the power of the Director General of Fair Trading and the Monopolies and Mergers Commission to deal with practices which restrict or limit competition in both the public and private sectors; secondly, it gives a new power to the Secretary of State to refer nationalised industries and other public bodies to the Monopolies and Mergers Commission to investigate their efficiency, costs and service provided to consumers and the possible abuse of monopoly power; thirdly, it creates a new procedure to enable the Secretary of State to ask the Director General to investigate prices of major public concern; and fourthly, it abolishes the Price Com-
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mission and repeals the associated legislation. That process is started in Clause 1.
The powers in Clauses 2 to 10 represent a significant strengthening of the powers to deal effectively and swiftly with anticompetitive behaviour, wherever it may occur, in the public or private sectors. The approach in the Bill represents an extension of the approach towards monopoly embodied in the Fair Trading Act. At the heart of this approach is the broad definition of an anti-competitive practice contained in Clause 2. This is coupled with a speedy, selective form of investigation.
The Director General of Fair Trading, who is already largely responsible for the selection of monopoly investigations under the Fair Trading Act, will have under Clause 3 the responsibility of carrying out a quick preliminary investigation where he thinks there may be an anti-competitive practice in operation. His task will be to see whether there is prima facie evidence of limited or distorted competition and, if so, to say whether it is appropriate for him to refer it to the Commission for a full-scale investigation. Where the Director General's own preliminary investigation reveals no cause for concern, the expense and trouble of a full-scale investigation by the Commission is avoided.
The Bill thus provides for a two-stage investigation of suspected anti-competitive practices, and I will put this in, so to speak, chronological order. Clause 3 provides for a short investigation and report by the Director General of Fair Trading, to make a preliminary finding as to whether an anti-competitive practice is in operation. Clause 5 then provides, in appropriate cases, for a reference to the Commission, but before we get to that stage there is a four-week period after the preliminary report in which the firm or firms concerned can propose undertakings to the Director General. There is then an eight-week period—a maximum of eight weeks—during which these proposed undertakings can be discussed. If satisfactory, the matter can end at that point, but if not satisfactory or if no undertakings are proposed, then Clause 5 provides for reference of such practice to be known as a competition reference to the Monopolies and Mergers Commission.

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The Commission is required by Clause 6 to ascertain whether the firm referred is indeed engaging in the practice referred to them, whether that amounts to an anticompetitive practice and, if so, whether it operates against the public interest. Next, the Commission is required by Clause 8 to report to the Secretary of State, who is to publish the report. Where there are adverse findings, the Secretary of State may, under Clause 9, ask the Director General to seek an undertaking from the firm concerned or he may, under Clause 10, make an order prohibiting the firm from engaging in the practice concerned or otherwise remedying its adverse effects.
What is new, therefore, is the fact that for the first time an individual practice by an individual firm can be throroughly investigated and stopped where it has anti-competitive effects and is found to be against the public interest, without involving every firm in the industry, without needing to find that there is a monopoly situation, and one must add again, without the delay of a full Monopolies and Mergers Commission investigation. Also new is the fact that the public and private sectors are treated exactly alike.
The definition of anti-competitive practice is in Clause 2, which refers to a course of conduct which
"has or is intended to have or is likely to have the effect of restricting, distorting or preventing competition …"
This definition has its antecedents in the 1965 Monopolies and Mergers Act and in the 1973 Fair Trading Act which replaced it. The Fair Trading Act defines uncompetitive practices as
"practices having the effect of preventing, restricting or distorting competition in connection with any commercial activities in the United Kingdom".
Similar words are used in the Treaty of Rome.
Clause 2 also provides exceptions and the power for the Secretary of State to make by order exceptions from the definition of anti-competitive practices. In particular, subsection (4) allows the Secretary of State to exempt businesses by reference to size. The intention here is to allow small businesses to be exempt from investigation. The Secretary of State has mentioned that he has it in mind to exempt businesses with a turnover of
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less than £5 million per annum unless they have more than a 25 per cent. share of a particular market. In addition, there is a general power to make exceptions, but the Government have made it clear that they intend to use this power very sparingly. They have indicated, however, that the most likely ground for exemption would be for areas involving questions of international jurisdiction—notably, for example, international shipping services.
We intend to bring forward amendments in Committee to ensure that car parks and holiday caravan sites are within the scope of this part of the Bill and that local authority purchasing, whether or not in the course of business, is within the scope of this part of the Bill.
The Bill is also concerned with the encouragement of competition in both public and private sectors. The investigation of anti-competitive practices will thus apply to both sectors. But in the public sector there is often little effective competition, and even where the body concerned does not have a monopoly, it is not subject to the full rigours of the market place. It is not liable to take-over or liquidation. Clauses 11 and 12 therefore provide a mechanism for scrutinising the performance of public bodies. The Secretary of State will be able to refer to the Monopolies and Mergers Commission for investigation any question concerning the efficiency and costs of, the service provided by, or any possible abuse of, monopoly power in a wide range of public sector bodies.
Under the new provisions the Monopolies and Mergers Commission may be asked either to make a factual investigation, or, in addition, to advise whether the body is pursuing a course of conduct which operates against the public interest. Where the Commission makes art adverse finding, Clause 12 provides powers to take corrective action. These include a power for Ministers to require an investigated body to prepare a plan for remedying or preventing the adverse effects which they consider arise from a course of conduct criticised by the Commission. Additionally, in consequence of an adverse report by the Commission, the Secretary of State may use the powers set out in Part I of Schedule 8 to the Fair Trading Act 1973, other than the power to control prices.

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These provisions are intended to improve our ability to scrutinise the effectiveness of the public sector within the overall framework established for it by broader policy considerations. However, the Bill provides that the Commission may not criticise the appropriateness of any financial obligations or objectives set by Ministers or under statute. These include financial targets in terms of profitability, guidance as to price levels, and external financing limits.
The Government believe that these new powers will mean a significant improvement in the scrutiny and accountability of the public sector, and they intend to make full use of them after Royal Assent. They have already referred the London letter post under the Fair Trading Act and have announced their intention of referring British Rail's London and South-East Commuter services under Clause 11, when enacted.
I have mentioned our views regarding the Price Commission and its abolition, but I should also mention that under Clause 13 the Government recognise that on occasion there may be a great public concern over particular price increases and in such cases there could be value in an independent and public scrutiny of the underlying reasons. The Government have therefore included a reserve power in Clause 13 allowing the Secretary of State to require the Director General of Fair Trading—and it is in that order—to investigate questions relating to prices and charges. I must emphasise that the Government do not intend to use this power in any but the most exceptional circumstances. The Bill accordingly provides that the Secretary of State may refer a price to the Director General only if he considers it to be of major public concern, and he must particularly consider whether the supply, or acquisition, of goods or services in question are of general economic importance, or the price is of special significance to consumers. No powers of control are attached to the procedure, since, as the Government have said on many occasions, we believe that prices are best contained, not by detailed controls, but by firm economic policies, complemented by an effective competition policy.
In conclusion, I repeat that there are four principal components of the Bill,
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and in addition there are a number of supplementary provisions and amendments to existing legislation in the later; clauses. The Bill therefore removes the ineffective and damaging price controls, and introduces new and useful complementary provisions aimed at curbing abuse of market power in both private and public sectors, as well as new means of investigation of questions of efficiency and standard of service in the public sector. My Lords, I beg to move.
Moved, That the Bill be now read 2a.—(Viscount Trenchard).
4.18 p.m.
Lord PONSONBY of SHULBREDE: My Lords, I should like to thank the noble Viscount, Lord Trenchard, for explaining the constructive parts of the Bill. If it were not for the fact that Clause 1 was included in the Bill, I could welcome it, but Clause 1 abolishes the Price Commission without proposing that its powers, responsibilities, investigative techniques and ability to act quickly be transferred to any other body, and the reserve powers under Clause 13, to which the noble Viscount referred, seem to be quite inadequate. That is most regrettable, particularly at a time of rising inflation. When the Second Reading of the Bill took place at the other end of this building the rate of inflation was 11·4 per cent. Today, it is edging up to 20 per cent.
The noble Lord has said that it is a central point of Government strategy to abolish the Price Commission and, by doing so, to do away with any form of price control. Inflation, as noble Lords know, is an enemy of full employment and an enemy of our competitiveness. It is an enemy of social stability itself. There is, indeed, no single cure for inflation, nor any single cause of inflation. A lot of it, such as oil price rises, is outside our control. But one area where the Government have some responsibility is that of price control, and that is the area which the Government are choosing to abandon. I would say that any hope of a pay policy working in the future will depend on some measure of control over prices.
My Lords, I am the first to acknowledge that the value of the Price Commission cannot be measured only by the yardstick of the specific prices which it froze. The mere existence of the Commission has had

1117
two overwhelming advantages. The first advantage was that its power to investigate prices acted as a deterrent. Firms did not apply for price increases as they did not want to be held publicly to account. There was a value in the number of times the Commission did not in fact have to use its powers. The second advantage was that the existence of the Commission demonstrated the Government's concern about prices and the fact that they were prepared to do something about them. However, the Government are choosing to abandon that responsibility, and are so abandoning any hope of controlling wages. In passing, one should note that the Commission staff was 536 last May, of whom 351 were directly employed, the remainder being civil servants on secondment. A resettlement unit has found jobs for 113, leaving, on my reckoning, something over 200 employees without a job to which to look forward. I hope the Government are concerned about this new area of unemployment which they have created.
My Lords, I indicated at the start of my remarks that one could welcome this Bill if it were not for Clause 1; and, certainly, in so far as it follows the recommendations of the interdepartmental group of senior civil servants under the chairmanship of Mr. Hans Liesner, it is to be welcomed, although I believe it could be, and can be, improved. Currently, of course, a monopoly situation exists where one quarter of goods or services are in the hands of the same person, so that no reference can be made to the Monopolies and Mergers Commission in respect, for example, of domestic television rentals, where the six leading firms control some 58 per cent. of the market and do not behave in a competitive way; or of footwear, where, according to the Price Commission, the British Shoe Corporation controls some 20 per cent. of the market; or of tea blending, where four firms possess some 85 per cent. of the market. However, under the proposals in the Bill such anti-competitive non-registrable practices can be referred to the Commission by the Director General of Fair Trading with a competition reference, and this, indeed, is to be welcomed. Likewise, the fact that a manufacturer refuses to supply a retailer with television sets because he knows that the retailer will undercut the price at which he is selling the goods in his own shops
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can also be investigated; and this, too, is to be welcomed.
However, I believe that the scope of Clause 2 is not wide enough. Competition references can be made by the Director General only; ministerial initiative is excluded. The ability of a Minister to make such references directly or via the Director General should be included. It is I think ironic that, although the Secretary of State cannot make a reference, financial objectives imposed by a Minister, however expressed, cannot be investigated. The noble Viscount, in explaining the Bill, talked about the private and public sectors now being treated equally. but then, later in his speech, referred to the fact that if a Minister imposed a particular financial directive on an industry that was not something which could be investigated by the Director General. So the fact that the Minister has imposed a directive on the energy-producing industries and has said that the prices of gas and electricity shall increase at such and such a rate is not something which the Director General will be able to investigate. Apparently, this does not constitute an anti-competitive practice. This seems a typical example of double-talk: on the one hand, we are saying that we are treating both sides of industry equally; on the other hand, we are excluding certain references from the Director General's orbit.
The present wording of Clause 2 would also seem to preclude a reference being made in respect of anti-competition practices being followed by a group of persons such as, for example, estate agents or solicitors in respect of their charges, and obviously it would be right that such practices should also be referable. I was glad to hear the noble Viscount say. when explaining and introducing the Bill, that the Government in fact intend to come forward with amendments which will make local authority purchasing an area which is referable. I hope that the amendment will also include hospital purchasing, and that that will be treated in the same way as local authority purchasing, because, of course, as we are aware, there is a considerable amount of purchasing done, by tender, by local health authorities, and that is another matter which we would certainly wish to see included in the Bill. There are,

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indeed, a number of points, as I have indicated.
Lord ROBBINS: My Lords, would the noble Lord confirm my impression that there are wide sections of restrictive practices which do not fall under the definitions in this Bill, and would he say whether or not he regrets their omission?
Lord PONSONBY of SHULBREDE: My Lords, the noble Lord, Lord Robbins, is quite right in saying that there are areas which are not included. I have indicated some of the areas which, in my view, have not been included in the Bill. I regret their omission, and, in fact, I hope that when we come to the Committee stage these areas will be included in the Bill. Indeed, the noble Viscount opposite has given a specific example of where he proposes to come forward with amendments, and I shall come forward with others.
Lord ROBBINS: My Lords, do I understand the noble Lord to say that he wishes all restrictive practices to be brought under this Bill?
Lord PONSONBY of SHULBREDE: My Lords, I think it will undoubtedly depend what particular restrictive practices the noble Lord is referring to, but certainly I would wish to see all restrictive commercial practices brought under the Bill.
My final point, my Lords—and it is the matter which we always appear to leave to the end of the Committee stage—is the question of the Title of this Bill. I do not think that it is a very descriptive Title. A number of noble Lords have asked me what the Bill is about and some noble Lords, I believe, have the impression that it was about pools, crossword puzzles, "Spot the Ball" and so on. I think that the Government could do better and think of a better Title than that which is given to the Bill at the present time.
I would say that for many years I was secretary of the Fabian Society and I spent a considerable amount of time arguing with authors of pamphlets about the descriptive nature of the titles of their pamphlets. I can remember that on one occasion I argued with the noble Lord, Lord Vaizey, who then supported a
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different political party to that which he now supports. He wished to call a pamplet of his, The Queen and her Horses Reign. It was about education in the class society; and I told him that that was not a descriptive title; it did not tell anybody what it was about. The title eventually came out as, Education in a Class Society. Perhaps I may give noble Lords opposite some suggestions about the Title of this Bill: Competition and Trade Practices; Price Competition; or, perhaps, to be absolutely realistic, The Abolition of the Price Commission and Related Matters. I hope that when we proceed into Committee stage we shall be able to amend the Bill; but, for our part, we very much object to the proposal to abolish the Price Commission.
4.32 p.m.
Baroness SEEAR: My Lords, we on these Benches give general approval to the objectives behind this Bill. My Party has a longer and more consistent tradition of opposing monopoly, wherever it is found, than can be claimed by any other party in this House. It is not surprising that a Bill which is intended to attack monopoly is one which meets with our general support. Unlike the Labour Party, we are perfectly prepared in certain circumstances to see the abolition of the Price Commission. At the time that the Price Commission Bill was going through this House, we suggested from these Benches that a prefereable procedure would have been to introduce a very much strengthened Monopolies Commission. We did not see any very great virtue—although we went along with it in the event—in having a Price Commission, a Monopolies Commission, the Restrictive Practices Court and the work of the Director General of Fair Trading. This seemed to be too much machinery to deal with problems which had a great deal in common and which would be better dealt with together by a smaller number of adequately-equipped and powerful institutions. The actual abolition of the Price Commission is not something which, in itself, we regret.
We also welcome the much wider definition of an anti-competitive practice which is given in Clause 2. I accept the point that has been made: that there are still some matters which are not covered by that definition. It would be our

1121
intention to see that that definition is sufficiently enlarged to have a much wider coverage than is at present apparent in the wording of the clause. Whether, when this is done, it will cover the point which is in the mind of the noble Lord, Lord Robbins, I have yet to discover. We also welcome the fact that, for the first time, the public sector is to be subject to investigation; although we would go along with the criticism made from the Labour Benches that the ministerial directive to the nationalised industries should not be excluded from the investigatory powers of the Monopolies Commission.
So far as the objectives are concerned, we would give our support to the Government and to this Bill. So far so good; but not very much further; because we do not believe that this Bill as it stands is going to be adequate to achieve the objectives which the Government declare that they wish to pursue. We believe it is inadequate because in our view it is based on false assumptions about how the system works, and it is not sufficiently extensive or sufficiently powerful in the procedures that it proposes to adopt. By "false assumptions" I mean—and this was said at the Committee stage in another place and said again here by the noble Viscount, Lord Trenchard—that the Government are entirely confident that they can get rid of monopolies, that they can control price increase, by competition through the measures which they propose in this Bill.
This seems to me to imply a somewhat naive view of the way in which monopolies operate in this country at the present time. The Government are totally converted to Adam Smith and to the free market. I am second to none in my admiration for Adam Smith; but I must say that the Government's attitude towards Adam Smith reminds me of Queen Victoria's attitude towards her late lamented husband. In neither case does it seem to have occurred to them that the beloved object, the beloved mentor, might as time went on have developed his ideas or even changed his mind. Adam Smith lived 200 years ago when the economy was far less complex than it is today. Monopoly had not developed, oligopoly had not developed. There are now a hundred and one ways in which competition is restricted by devices
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difficult to get at through any procedural inquiry. All this makes it a very much more difficult matter to control price through competition plus Government economic policy than the Government apparently are prepared to agree.
Therefore, we do not believe it is adequate just to leave it to the kind of investigation, and the control over investigation, which is proposed in this Bill. Nor, do we think, are the Government paying sufficient attention to the political and social importance of price increases which may occur, for example, through a quite small local monopoly which might not be the kind of thing which would attract attention—and which certainly would not come under the definition in Clause 13 of something "of major public concern"—and which in a particular area or region could be a matter of very great concern to a considerable number of people. Therefore, because of the extremely sensitive, political nature of price rises, even if they cover only a relatively small part of the country, we believe that it is very important that Parliament and Members of Parliament should be able to raise price issues which are of great concern to their constituents.
What we do not like about the Bill is the great difficulty of control over what goes on in the work of the Director General of Fair Trading and in the activities of the Secretary of State. We think that there should be more opportunities for Members of Parliament to challenge what is going on in the whole field of prices. It is not enough to say that you can merely leave it to market forces plus the work of the Monopolies Commission. There will be cases of price rises which cause great concern and which it ought to be possible for elected representatives to challenge and to get proper explanations or to demand that investigation take place. There is nothing in the Bill which makes it possible for a Member of Parliament who is greatly dissatisfied with what is happening over a particular issue in a particular part of the country to see that an investigation takes place.
Further, we are not happy about the procedure when the Director General of Fair Trading has extracted an undertaking from an organisation which, it has been shown, is conducting an anti-competitive practice. An undertaking has been given,

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and an organisation would be well advised to give an undertaking and thus avoid a competition reference. I have no doubt that will be the line which will be followed in the great majority of cases where an investigation is undertaken.
We believe that where there is a report which leads to an undertaking, that should be made public and that it should be possible for questions to be asked in Parliament about the progress of that undertaking. It is left to the Director General to follow up the undertaking. There are slight sanctions: the sanction I suppose ultimately is a competition reference. Even with the speed-up in the procedure in the Monopolies Commission that can be a pretty long-drawn-out business. We believe that much more publicity should be given to the outcome of undertakings and that there is a strong case for the possibility of action against people who breach their undertakings, and it should cost them something in terms of penalties. A middle way has been discussed between a criminal and civil liability. This is a matter for the lawyers to look into. It was put forward in the Committee stage in another place, and I believe that there should be undesirable consequences for people who treat their undertakings lightly.
If the Government really mean business about getting rid of monopoly and getting rid of uncompetitive practices, I wonder whether they think it is convincing to reduce the number of people employed in this whole area of work. May be it is reasonable to have some reduction in the numbers of people employed in the Price Commission: but I gather there is to be a saving of something between 400 and 500 people. Reference is made to this in the Financial Memorandum. If the Government really want this work done with all the complexity and difficulty of finding cases, of investigating cases, of following up undertakings—which is of the first importance—are the manpower and resources which are being devoted really adequate to this important and complicated work that has to be done? It suggests that the Government believe that it is a relatively uncomplicated matter. In our view, it is a complicated matter and one in which the cutting down of resources for dealing with it is a very false economy indeed.
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We are glad that it is proposed that procedures under the Monopolies Commission can be speeded up. That is a long overdue reform. We believe that, while the intentions of this legislation are excellent, it will be a pretty ineffective instrument. In another place, in Committee, again and again the Minister said that this was only a first stage in the Government's anti-monopoly policy and that a further instalment will come later. This, I suppose, can be regarded as something of a confession that the Government themselves recognise the inadequacy of the proposals which are put before us today.
May I ask the Minister when it is intended that the second stage will emerge? Is he going to tell us that we will wait and see how this Act develops, and only when it has been proved to be inadequate will they consider a second stage? Had the Minister some clear plan in mind when she stated repeatedly in another place that this was only a first instalment? If it is the only instalment, then regretfully I do not think it will get us very far.
4.45 p.m.
Lord TEVIOT: My Lords, Adam Smith or no Adam Smith, I fully endorse the principle behind this Bill, in that competition in general is the essential part of a thriving economy. I can understand also that it is an important safeguard for consumers and that the strengthening of competition policy will benefit many smaller businesses. In the context of business generally, all this is laudable. My brief intervention is to spell out certain misgivings that I have regarding the bus industry. In that context, it seems to me that this Bill, with respect, has been drafted without consideration of the practical need—and indeed the statutory duty—to provide services to the public in that the machinery will become more costly and in some ways counter-productive.
I refer particularly to the duty already imposed on the local government authorities and transport operators to provide a co-ordinated and efficient system of public passenger transport. This duty is imposed by the Transport Acts of 1968 and 1978 and it carries with it the need for agreements and arrangements between county councils, district councils and public

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passenger transport service operators. As the Bill is worded at present, all such arrangements could be subject to investigation by the Director General of Fair Trading and the Monopolies and Mergers Commission, although the Bill does make provision for the exclusion of a course of conduct, for the purposes of this legislation, by order made by the Secretary of State for Trade. My first question is therefore to ask whether the Government intend to exclude, by this means, all arrangements or agreements made under the Transport Acts 1968 and 1978 for the co-ordination and efficient running of public passenger transport services. That machinery, so far as I can gather, appears to be working adequately.
I should now like to draw attention to a broader issue concerning public road passenger transport. In Clause 11 the Bill provides that the Secretary of State may refer to the Monopolies and Mergers Commission any specified question relating to the activities of any body corporate which provides a bus service. My understanding of the Government's intention was that the larger bus undertakings in the public sector were to be included. As matters stand, any limited liability company or other body corporate which provides a bus service is included (and, as a matter of interest, a partnership which provides a bus service would not be included, I believe). Apparently the net has been cast wider than the Government's original intention. In any case, for reasons which I will give, bus undertakings seem to be out of place in this legislation.
Operators of bus services are already subject to a considerable degree of control. Except for the London Transport Executive (which is responsible to the Greater London Council), they are all subject to investigation by the Traffic Commissioners in the interests of the public, and they will continue to be subject to that control under the new legislation which the Government is debating in another place. In that legislation—namely, the Transport Bill—the Traffic Commissioners will be empowered in Clause 7(3) to attach fares conditions to road service licences—

"(a) to protect the public from unreasonable use by the holder of the licence of his position as such; or

(b) to regulate the terms of competition between stage carriage services on a route or routes".

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Each undertaking is also subject to control by its appropriate authority—the passenger transport executives have their passenger transport authorities, the district council undertakings have their councils in terms of the legislation by which they were established and they all, including the independent operators, are subject to "the control of the market place", in that they are subject to competition from other forms of public and private transport. All shire county councils prepare a county public transport plan annually. I have reiterated rather a lot of indigestible sentences and that makes it clear that all the machinery for this Bill makes it even more weighty. Therefore, in all the circumstances, it is illogical and burdensome that bus undertakings should be rendered liable to a further layer of control—particularly bearing in mind the Government's policy of reducing the burden of administration. I therefore ask my noble friend for some assurance that this additional weight will be removed from the shoulders of this vital and energy-efficient industry and that he will look into it again.
I have one final point; that is, that in any case where the competition policy impinges on transport policy it seems right that the consent of the Minister of Transport should be required before any investigation of road passenger transport services is undertaken. As the Bill stands at present, the "relevant Minister" is only brought into the picture after an adverse report has been made by the Monopolies and Mergers Commission. By then much time and effort will have been expended by the Director General of Fair Trading, the Monopolies and Mergers Commission and representatives of the industry in investigating something which, as I have already made clear, seems to be subject to adequate control. Surely the right course is to bring the Minister of Transport into the picture when the Director General of Fair Trading gives the Secretary of State notice of his proposed investigation.
4.52 p.m.
Baroness HORNSBY-SMITH: My Lords, I should like to join in thanking the Minister for the very clear and detailed exposition he gave of the Bill. Overall, I firmly support him in the intention under

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lying that Bill, but this afternoon I should like to outline some of the real fears of the retail trade—not so much in what we believe the Bill seeks to do, but regarding the manner in which some of the phraseology contained in certain clauses could be interpreted, to the detriment of reasonable trade.
I must confess I have the privilege of being a member of the all-party parliamentary group of the Retail Consortium. The trade, generally, warmly welcomes the abolition of the Price Commission which, as the noble Viscount, Lord Trenchard, said, was largely irrelevant and certainly ineffective in keeping down prices. That, as I say, is warmly welcomed.
At a time of rising costs and reduced sales, the retail trade really does not require at this time when many chains and stores are fighting for their existence, any spurs to be driven in to make it competitive. It has probably never been more competitive in trying to seek additional trade. Nevertheless, it is at one with the Government in its desire to seek and stamp out abuses, and it certainly agrees with anti-competitive practices being subject to control. As I understand it, this Bill seeks to fill the gap and to legislate for anti-competitive practices which are not at the moment covered by the Restrictive Trade Practices Act, the Fair Trading Act 1973 and the Resale Prices Act.
However, in relation to this Bill, there is very real concern over the lack of precision in the very, very woolly definition in Clause 2. I have repeatedly said in this House that I am no lawyer; but highly trained legal brains have studied this particular clause and have had quite a field day in suggesting what operations could be caught under it, which I do not think is the Government's intention or indeed would be in the public interest. I believe it is absolutely vital that industry, trade and the public should know what constitutes breaking the law, particularly for the hundreds of smaller trade groups, already overburdened by bureaucracy, who have neither lawyers nor accountants on their payrolls to sort out this latest governmental (as we think in paragraph 2) "lawyers' paradise."
May we take the phrase "restricting, distorting or preventing competition."
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Under that definition any firm of the permitted size closing down a branch is restricting competition. Within my memory, the International Stores and Woolworths, both of whom started with comparatively small shops when what they sold was more limited than today, over the past 10 years have, as a matter of policy, closed down those original small shops and have gone into larger shops with a larger area, and of course they cover far more brands and commodities among their sales.
If one of those branches is in a village where there is one other shop selling the same type of goods—say, two grocers or two butchers—and if a chain which is within the limits laid down by the Minister closes down one shop, it is not only reducing competition but, by leaving only one village shop, it is positively preventing competition. Under the clause, as we read it, closing a shop for whatever reason could be held to be preventing or limiting competition. Being monopolies, I suppose that British Rail, if they close down a station, or the Post Office, if they close a village sub-post office, would escape this scourge because they do not have any competition anyway.
Also, as Clause 2 reads at present, we believe that it could involve advertising. A firm that advertises could be held to be taking unfair advantage over the firm that does not advertise; at least, that is how we read it. Then there is, for instance, the fabulous sales bargain for which strong-minded men and women will sit up all night outside Selfridges to buy their own or their wife's first-ever fur coat—a fur coat being sold way below its cost. Selling below cost is unfair trading, according to Clause 2.
I now come to the promotion of sales for a new store or a new product. That would be unfair competition. I am old enough to remember that every time Woolworths opened a new store, all its first-day customers who spent a minimum of five shillings (and the maximum then was sixpence for everything) got a free galvanised bucket. I can remember seeing ladies pouring out of Woolworths when they first opened in East Sheen, all with their galvanised buckets and their purchases inside them. That, under this Bill, is unfair trading.

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Further, in another sphere—and I refer now to something which the women Members of your Lordships' House will know better than the gentlemen—one cannot go into the cosmetic department of a store or a sizeable chemist's shop where you will not see special offers. There are hundreds of items in cosmetics, pharmacy and household promotions which market a special introductory offer, where you buy an established product you know and at the same time take advantage of a trial offer for a new product, which is thrown in. Many firms think that this method of giving an item to the customer to try as a free sample is better than spending hundreds of thousands of pounds on advertising on the media or on television. Under this clause, those promotion samples, aligned to an established product for which one pays the full price, would be unfair competition according to our reading of this clause. But no one—not even the noble Baroness, Lady Seear—would say that such offers are not to the advantage of the consumer in being able to try something before deciding to buy it.
Going from the sublime to the ridiculous, if little Jimmy goes along to collect his mother's substantial grocery order from the village shop and Mr. Bloggs gives the likely lad an apple or a lollipop, is that unfair competition?—since the child might then be lured to say, "I will go and buy it at Mr. Bloggs' shop, mum".
May I now refer to the question of sales. As your Lordships well know, I am also involved in the textile trade, where fashion is a very wayward mistress. If you over-manufacture or over-buy for stock in the shops and the fashion changes, you cannot recycle the goods. You either clear them out below cost or you shoulder a total capital loss. The demise of the mini-skirt is a classic example. When skirt hems dropped dramatically, the garment industry was lumbered with millions of coats, dresses and slips, all of which were then unacceptably short. As they were prudent traders, these garments were sold, often below cost, as fast as they could be sold.
As I understand Clause 2, sales below cost would be unfair competition. May I therefore beg the Government to take
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another look at this clause. Could we have some definition. May the trade know when and how they are going to be "hooked" for breaking the law—if necessary, by an appendix to the Bill which sets out what constitutes an unlawful and uncompetitive practice.
Another aspect of the Bill which is somewhat alarming is the apparently unchallengeable power of the Director General of Fair Trading who, following a preliminary investigation, can order a competition reference which may involve the defending company in enormous expense without the Director General of Fair Trading having to show reasonable grounds as to why he believes the uncompetitive practice to be contrary to the public interest. If one is charged and brought before the courts, one has to know what the charges are. Is it justifiable that a company should have to go through all the problems of this investigation without clearly knowing what is alleged to be the uncompetitive practice? We feel that the Director General should be required to state the grounds upon which he is making the reference.
Also in Clause 2, the Government appear to be reintroducing the price control which both the noble Lord and I were so pleased to see abolished by the demise of the Price Commission. The Bill gives to the Secretary of State the power to make an order following a finding by the Monopolies and Mergers Commission prohibiting the offending practice. It is acceptable for him to prohibit the practice, but he is also given the power, by virtue of paragraphs 8 to 11 of Schedule 8 to the Fair Trading Act 1973, to put a control on the price. If the abuse is removed, we believe that prices should then be left to find their natural level. The introduction by the back door, as it were, of price control would, we believe, distort the free market economy and appears to be contrary to the declared policy of this Government.
Finally, may I refer to the practice by which our courts frequently endeavour to relieve persons wrongfully charged of the burden of their legal costs. Under this legislation, an investigation may involve highly-paid staff in weeks of work and, possibly, even in expensive legal representation. If at the end of the day the undertaking is absolved from having

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operated any uncompetitive practice, we consider it to be grossly unfair that the innocent party should have to bear the cost as well as the waste of time of this operation.
The retail trade therefore believes in the aim that the noble Viscount, Lord Trenchard, has set out in the Bill; namely, to curb abuses, but it is concerned with the interpretations which it believes could be put upon Clause 2 and which, in its opinion, could bedevil legitimate and prudent trading. I hope that, before we come to the Committee stage, the noble Viscount will study these points and see whether we can have something more definitive about what Clause 2 really means.
5.5 p.m.
Lord MOTTISTONE: My Lords, I must apologise for only just getting here in time to address your Lordships. I shall not keep the House long. I have just one point to make in relation to the Bill. First, may I thank the Government for the very understanding way in which they have listened to representations while the Bill has gone through another place in relation to one particular point; namely, the need for an opportunity to be given to those companies which are being investigated at various levels of the Bill, whether by the Director General of Fair Trading or by the Monopolies and Mergers Commission, to see the reports before they are made public. I think that this point has been taken care of in a very satisfactory way by an amendment that was made in another place just before the Bill left it so far as the Monopolies and Mergers Commission is concerned and so far as reports which are laid before Parliament are concerned.
What does concern us, however—and this is based upon experience with the Price Commision—is that when any public bodies like the Price Commission, the Director General of Fair Trading or the Monopolies and Mergers Commission have to investigate a company in any way, they obviously find it very difficult, in a relatively short period of time, to get a real grasp of how the company works. They were certainly required by the Price Commission legislation and, by implication, they are required by this Bill—although time is not specifically mentioned
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—to carry out these investigations quickly so as not to keep companies waiting, thus putting them in the position of not knowing what is going to happen for too long. If, however, they carry out these investigations quickly, they do not have time really to understand what is going on.
I am not concerned in this case with companies which are trying deliberately to adopt an anti-competitive measure. I am concerned with companies that on the whole are trying to do the right thing but which, for one reason or another, become subject to this inquiry system. It is very easy for the investigating body to jump to wrong conclusions when they are trying to carry out these investigations quickly, conclusions which people who have been working with the company for years can see at once are wrong. In the case of the Price Commission, to my certain knowledge this happened on more than one occasion. Therefore, we are concerned to find out whether it would be possible further to amend the Bill in order to give opportunities for companies to see reports that are made about them before they are passed on to the next stage.
I hope that there will be an opportunity to suggest amendments along these lines when the Bill reaches its next stage. If we find a reasonable way of putting forward our proposals, I trust that when it comes to that point the Government will be as understanding about them as they have been about representations during the earlier stages of this Bill in another place.
5.9 p.m.
Lord WALLACE of COSLANY: My Lords, the noble Lord, Lord Mottistone, robbed me of a little personal pleasure in that he robbed me of the opportunity of following the noble Baroness, Lady Hornsby-Smith. Members of this House may know that in the past we were very old rivals. She kicked me out of Chislehurst. Now we are together again. We are very good friends, apart from the fact that we do not agree politically except on the question of bargain offers. We ought to do something about the ridiculous situation which exists over bargain offers.
I welcome the fact that the noble Lord, Lord Trefgarne, is to wind up in his usual very efficient manner. The noble Lord bobs up in every conceivable debate and I am seriously wondering whether

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we shall have to refer this fact to the Monopolies Commission!
In winding up the debate for the Opposition, I speak as a consumer who has no direct involvement in investment or otherwise with any large company that is concerned with price fixing. I feel that I should declare my interest as one member of a large section of the population with a very modest income to whom the Government's income tax cuts are irritating and to whom rising prices, costs of services and cuts in social services constitute a constant factor of concern and anxiety. To us, the Prime Minister's election pledge to put more money into the pockets of people to spend as they choose is just a sick joke. To the average housewife the price of essentials—food, clothing, fuel, transport, social benefits and services—is the battleground of balancing the family budget and in abolishing the Price Commission the Government have committed a serious psychological error in their attempts to reduce inflation. I said "reduce inflation" whereas in fact their financial policies so far are adding to inflation.
The Price Commission was in fact set up by a Tory Government and was used by a Labour Government to provide a check and deterrent against price increases in a period of wage restraint. VAT was introduced by a Tory Government and by doubling the rate to 15 per cent. the present Government wilfully inflated a wide range of prices. So, my Lords, we have a situation where a Government pledged to reduce inflation virtually abolish any semblance of price control without a mandate to do so. True, there was a pledge to review the work of the Price Commission. In fact there was no review, only a short sharp statement by the Prime Minister shortly after the election, during the debate on the Queen's Speech.
Similarly with VAT, Labour's claim during the election that the Tories would double VAT was strongly denied by the Member who became the Chancellor of the Exchequer. The truth is that they came quite close to doubling VAT. Labour's legacy of 8 per cent. VAT was not multiplied by two but by one and seven-eighths—a pretty close call.
If I may, I should like to give a simple example of consumer choice. We talk
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about freedom and competition and the consumer deciding, but I want to talk about the question of VAT. Just before Christmas my wife and I went Christmas shopping in Woolwich High Street. It was rather cold at the time so we decided that before we started shopping we would have a cup of coffee. The only emporium available was one of those widely advertised on television—I will not mention the name—and we went inside. It was all very hygienic, neat, orderly and very attractive. I went up to the counter and I said "Two cups of coffee, please". The girl looked at me and she said "Are you drinking it outside?" I said "I beg your pardon? "She said "Well, if you drinks it here you pays VAT; if you drinks it outside, you don't".The difference was that the cost was 20p inside and 17p out, amounting to 6p extra for the two of us. My Lords, hearing in mind the necessity for main-taming the dignity of your Lordships' House and considering the spectacle of a noble Lord sitting on the pavement out-side to drink his coffee in order to save 3p. we gave up that idea and we preserved the dignity of the House. It is a small matter but it is six pence for two small cups of coffee—talk about consumer choice! You drink it here or you drink it there. It is a ridiculous situation and that applies in many other fields as well.
The main purpose of this Bill is the abolition of price controls. The only reference to the Government's capacity to control unjustified price increases appears in Clause 13. That gives powers to the Secretary of State to refer to the Director General of Fair Trading an unjustified price increase which he may investigate. But this is hedged about with qualifications. It has to be a matter of major public concern. It must be of general economic importance; an easy way out for the Secretary of State to avoid a reference, if I may say so. Even if he did decide to make a reference, there is little he can do if an unjustified price increase is discovered. True, publicity would be given to the finding of the Director General but in fact any power of the Government to control unjustified price increases is wiped out to a great extent.
What is more revealing—and here I touch on a point made by the noble

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Baroness, Lady Seear—is the statement of the Minister for Consumer Affairs at the end of the Third Reading of the Bill in another place. She stated:
"As a result of the abolition of the Price Commission, the distribution of responsibility among Ministers for issues concerning prices is affected".—[Official Report, Commons, 22/1/80; col. 355.]
She further stated that it meant that her right honourable friend had no responsibility for prices in future and she added—
"Prices issues will normally be handled by the Ministers responsible for the policies to which they relate".
What an admission! What do we want a Minister of Consumer Affairs for? Responsibility for issues—who is going to decide? Where is the poor Member of Parliament, duly elected by the people, to find out who to challenge in the House on a question of a price increase? Responsibility for price issues is so widespread that the puzzle will be to ascertain who does what and who is responsible for what. Now, my Lords, we know why it is called the Competition Bill.
In abolishing the Price Commission for doctrinaire reasons, the Government claim that prices can be magically controlled by returning to competition within an unbridled free market economy. They claim that price control is irrelevant in the battle against inflation. What has competition within a free market economy achieved as regards the growth of monopoly? In 1950 the top 100 manufacturing companies in this country represented about 20 per cent. of the output. Twenty years later the top one hundred manufacturing companies represented about half of the output and the trend is increasing. There is also a deliberate price fixing mechanism within companies and groups of companies. We all know this without having any association in any way with big business, and the Bill will have little effect on that situation.
The Government's monetary policy is fuelling inflation. High interest rates, penal VAT, deliberately inflated gas prices, increased prices for school meals and school transport, abandonment of price control and many other acts all increase inflationary pressures and wage demands. That view, in a general way, is held by no less a person than President Carter, because in his 1980 economic
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report to Congress he confirms my view. I quote from the Guardian of 31st January:
"The British economy is heading for a sharp and bitter recession, with a 2 per cent. drop in gross domestic product according to the forecast. This will be the worst performance among the Western industrial economies and is even more damaging in that inflation is forecast at least 15.5 per cent.—the worst in the West with the exception of Italy".
He continues:
"Blame for Britain's sharp recession is put fairly and squarely on the tight financial policy being pursued by Mrs. Thatcher and Sir Geoffrey Howe. The report says: 'The UK's fall in output does not derive principally from the rise in oil prices but from the very sharp shift towards restrictive monetary and fiscal policies instituted by the new government'."
It is a good job that Mrs. Thatcher has friends!
The Government place absolute faith in what they term the benefits of competition and its effect on reducing inflation but frankly admit that there will be no short-term effect—and, my Lords, short-term effects are urgently needed if we are to survive economically. Even if we had full, free and unfettered competition in industry, nationally and internationally, which we have not in the modern world, competition in a shortage situation leads to massive price increases. Furthermore, as I know full well from past experience, speculation in commodities for import into Britain is involved in the selling of shipping documents time and time again before even the ship arrives in this country, each time a margin of profit taken, not necessarily even in a time of shortage.
No, my Lords, this Bill enshrines a sacred cow of very doubtful parentage. In accordance with the customary practice of this House, we shall not call for a Division on Second Reading, but will deal with points of principle in Committee and at Report stage, when opportunities will arise to examine vigorously and in detail the Government's proposals. We shall, of course, when we feel it necessary, divide the House, possibly in a forlorn hope due to the overwhelming majority of Government supporters here, but nevertheless, a gesture of principle will be made, because we must preserve the right of the housewife to have some degree of protection. Under this Bill she has not.
5.22 p.m.
Lord TREFGARNE: My Lords, I was intending to open my remarks by saying

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that the quality of all the speeches in your Lordships' House tonight has reflected the importance of the Bill before us. I must confess, on reflection, that I liked some more than others. As my noble friend Lord Trenchard said earlier, this Bill lies at the heart of our proposals for restoring the health of British industry and hence the wellbeing of our economy. It cannot be stressed too strongly that improvement in social services and improvement in wage levels and standards of living, to which this Government are, of course, fully committed, depend absolutely for the fulfilment upon the success, the profitability, of British industry. There is simply no other way of finding the necessary resources. Our predecessors apparently took the view that unlimited public expenditure could be financed by borrowing on any scale and that the inevitable inflation which followed could be contained by policies which proved to be about as effective as those of King Canute in relation to the waves of the sea.
I had hoped, and indeed expected, that noble Lords opposite, and indeed noble Lords and Ladies speaking from the Liberal Benches, would have exhibited a little more humility today, having regard to the appalling legacy which we were bequeathed last year, but instead we have had a catalogue of complaints, which I will deal with in a moment, but which will not, I think, dissuade your Lordships from giving this Bill a Second Reading. I must confess that I remember only too well when the Price Commission legislation was going through your Lordships' House my noble friend Lord Mansfield was then leading from that Dispatch Box and I was assisting him—we did not enjoy the support of the Liberal Benches on those occasions. The Lib-Lab pact was in full cry, and indeed the majority which the noble Lord, Lord Wallace of Coslany, derided so strongly just now did not exist on those occasions, and we were unable to persuade your Lordships of the merit of our proposals. But Heaven knows! we have been proved right.
Let me now come to some of the points that have been put to me. First of all, on the general principles of price control, I think it is naïve to imagine that competition is of no account in relation to prices and profits. The truth of the matter is that both here and elsewhere
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in the world profits are a good deal lower just now than they need to be for industrial and commercial health, and I think in some cases this is very much in the consumers' interests, but in the long term adequate profits are absolutely essential. Although it is true that Adam Smith was with us 200 years ago at least, I do not think that his arguments have been entirely disproved by the passage of all those years.
Turning now to the Bill itself and to some of the points that have been put to me, I want first, if I may, to deal with an important point put to me by the noble Baroness, Lady Hornsby-Smith, which goes to the heart of some of the criticisms of other noble Lords about the question of anti-competitive practices and how in general we seek to deal with them. There are two main possible lines of approach to this question. On the one hand, one can attempt a legal definition of particular practices which are felt to be normally both anti-competitive and against the public interest, and we could prohibit them. Resale price maintenance is a practice of that sort, which is prohibited except in carefully defined circumstances by the Resale Price Act, and enforcement of such prohibition is then essentially a matter for the courts. The central arguments are legal ones as to whether the practice being followed is in fact a prohibited one. Some other systems of competition legislation, for example the French, allow firms to be fined for breaches of the prohibition. Such an approach is acceptable if you are reasonably certain that the practice is normally, or indeed invariably, harmful. The approach in this Bill, however, following the pattern set by the monopoly provisions of the Fair Trading Act, does not assume that any named practice is invariably harmful, that is to say, that it is both anti-competitive and against the public interest.
This is the double test in the legislation. Whether any particular practice is harmful will depend upon the circumstances in which it is practised, and the example given by my noble friend Lady Hornsby-Smith, about the little boy who gets a lollipop when he buys groceries at a shop for his mother, is one which I would say was clearly not harmful. These circumstances will vary from case to case and will depend upon the economic,

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as opposed to the legal, effect or intention of the practice. The approach in the Bill is thus essentially agnostic a priori about any particular practice; the effect of a practice will tend to depend on whether the firm who pursues it has real market power. This requires a case by case approach, the corollary of which is that there should be no sanction against a firm for having in the past pursued a harmful course of conduct. On the other hand, it is right that, following an appropriate report from the Commission, it should be required to stop a practice or otherwise to remedy the adverse effects.
It is obviously inconsistent with this approach to set out in the Bill a list of anti-competitive practices, as I think my noble friend was suggesting, since whether they are anti-competitive will depend on the circumstances in which they operate. But the sort of conduct which the Director General might be expected to investigate is conduct designed to raise, or which has the effect of raising, barriers to new entrants to markets. Powerful firms may try to exploit their power by, for example, insisting that wholesalers or retailers stock the full range of their products, which may mean that the wholesaler is unable to afford to stock some rival product; a manufacturer might try to insist that a stockist does not sell the products of a competing manufacturer; a manufacturer or importer may not allow a retailer to advertise his products except at a minimum price specified by the manufacturers. It will be up to the Director General to decide what practices to investigate, and anyone who feels that their interests, whether as businessmen or consumers, are adversely affected by what they regard as anti-competitive behaviour will be able to take their complaint to the Director General.
The noble Lord, Lord Ponsonby of Shulbrede, asked me about the people who would be displaced from their jobs as a result of running down the Price Commission. It is true that 200 of the former staff have not so far been found jobs through the Commission's resettlement unit, but that is not to say that they are still unemployed, for a good many of them have in fact found jobs through other channels. Lord Ponsonby also asked me about estate agents and he was disappointed that they were not covered by the provisions of the Bill. I can tell
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him that that is unnecessary because the difficulties of which he complained can be remedied by means of a monopoly reference under the Fair Trading Act. I can also say that the anti-competitive practice powers do apply equally to both the private and public sectors.
The noble Lord, Lord Ponsonby, and the noble Lord, Lord Wallace of Coslany, were highly critical of the present rate of inflation. However, I do not think that the situation is quite as black as they painted it. I think that the noble Lord, Lord Ponsonby, said that it was pushing 20 per cent.—it is actually 17.2 per cent. We inherited a rate of 14 per cent. and the once and for all increase in VAT added 3.5 per cent. to that. So, inflation—while I do not for one moment want to be—complacent—is in fact—
Lord WALLACE of COSLANY: My Lords, forgive me for interrupting, but did the noble Lord say that the Government inherited a rate of 14 per cent.?
Lord TREFGARNE: I did, indeed, my Lords. The figure in front of me is 13 per cent. to 14 per cent. If the noble Lord wishes I shall take the lower figure of 13 per cent. but certainly not the 8 per cent. or 9 per cent. that was bandied about at the time.
I turn to the speech of the noble Baroness, Lady Seear. I fancy that the tone changed somewhat with the demise of the Lib-Lab pact. I do not complain of that; I am grateful for it. However, the noble Baroness asked me some important points to which I shall endeavour to reply. She was particularly anxious about the undertakings that are a feature of the Act and about why there are no sanctions, for example, for a breach of an undertaking. There will be a sanction in the sense that, if an undertaking is broken, the firm can, of course, be quickly referred to the Monopolies and Mergers Commission. However, we think that to impose any other penalty for the breach of a purely voluntary undertaking would be going too far, especially as there would not at that stage be any finding that the practice is against the public interest. Undertakings will be published—and that is provided for under Clause 4(4)(a) of the Bill—so that any default can quickly be identified.

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I was also asked about whether there was to be a further phase in our competition policy. I can say quite clearly that the main bulk of our policy is contained in this Bill and there is certainly no intention of producing any further major alterations to the framework in this important measure. Various inquiries and consultations will, of course, continue and your Lordships will no doubt be asking and hearing about those in due course.
I should perhaps have referred earlier to another point mentioned by the noble Baroness, Lady Hornsby-Smith. However, I did deal, at some length, with the point she raised earlier. She was asking whether a number of practices, which she outlined, would be unlawful under the Bill. As has already been stated, and as your Lordships will have seen from the Bill, it is our intention to provide an exemption for small firms. We are also considering exemptions for areas such as international shipping where investigations under the Bill might raise problems of extra-territorial jurisdiction. But, in general, bearing in mind that the procedures under the Bill will be selective, and that investigations can be vetoed by the Government, we do not believe that there will be a need for extensive exemptions.
My noble friend Lord Teviot raised some points about the bus industry. I can say that the industry, as was intended, will not be exempt from investigation because there are a number of local areas where some firms have a monopoly, or near monopoly, and it is certainly our intention that those operations should be subject to scrutiny, if necessary. However, I can also say that we do not intend to use those powers particularly widely.
Those, I think, are all the important points that have been put to me. I shall certainly study Hansard and take up with noble Lords any points which I have failed to cover at this stage. But I wish to say finally that the last Government sought to contain inflation by trying to impose an iron grip on prices, at the same time ignoring the rise in costs, particularly wages. In other words, they sought to treat the symptoms of the disease without regard for the cause. This Bill, by contrast, strikes at the roots of our industrial
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malaise in the way described by my noble friend. Of course, the Bill will not by itself restore prosperity and success, but it is a vital and urgent step and I commend it to your Lordships with confidence.
Lord WELLS-PESTELL: My Lords, before the noble Lord sits down, will he allow me to make the following observation? If he were to look at the tape in the hallway this afternoon he would see that it says that the Retail Price Index has increased by 17.2 per cent. over the last 12 months, compared with a figure of 10.3 per cent. when the present Government took over.
Lord TREFGARNE: My Lords, I do not think that the noble Lord is comparing like figures with like. However, I shall certainly look at what has been said and if it will satisfy the noble Lord I shall write to him with some adjusted figure. As I have said, the fact of the matter is that the increase in inflation, since we took office, has been largely caused by the once and for all increase in the VAT rate.
On Question, Bill read 2a, and committed to a Committee of the Whole House.