Lords Sitting of 21 February 1980

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Rochester.

ISRAEL: BOYCOTT
Lord JANNER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what further steps they are prepared to take to combat the boycott of Israel by certain States.
Lord TREFGARNE: My Lords, Her Majesty's Government have on a number of occasions stated their opposition to the boycott and the willingness of our posts overseas and the Department of Trade to give all the help and advice they can to British exporters. The boycott has been the subject of a searching examination by a Select Committee of this House and the Government and their predecessor have responded as positively as they have felt able to its recommendations. No further action is contemplated, at least for the present.
Lord JANNER: My Lords, I was wondering whether to thank the noble Lord for that Answer. Is he satisfied that we are really dealing fairly with a friendly nation which is being attacked in the economic and other fields in a way which is disgraceful, particularly in view of the fact that Israel traded with us and took more by way of imports by far than her exports to us for years? Does he not think it might be an idea for him to have a word with the American authorities and the Netherlands about this? Is he aware that the Netherlands are now passing an Act to deal with the position, that they are not succumbing to this "blackmoil", and would he be good enough to see what they are doing with a view to trying to help in a similar direction?
Lord TREFGARNE: Dealing first with the Dutch position, my Lords; we are
892
aware of resolutions passed by the Dutch Parliament, which we understand the Dutch Government are considering, but there is no question of legislation in Holland yet. The matters raised there—namely, negative certificates of origin, export credit and discrimination against persons—were matters which were considered by the Select Committee to which I referred in my Answer and on which this Government and their predecessors have given their views. In regard to trade with Israel, another point raised by the noble Lord, it is true that the value of United Kingdom exports to Israel fell in 1978, but they recovered in 1979 by 11 per cent. and have almost regained their 1977 level.
Lord JANNER: My Lords, while thanking the Minister for that reply, may I ask whether he is aware that I was referring to the fact that we have been trading with Israel for very many years and that throughout that period she has been an excellent customer of ours? is it not a disgrace that we should be succumbing to the "blackmoil" to which I referred by treating a friendly nation in that way? Will he please reconsider the Netherlands position?—because they are introducing a Competition Bill to protect the country and anyone in the country from violating the moral duties of that country towards friendly nations.
Lord TREFGARNE: My Lords, I am afraid I cannot answer for what happens in the Dutch Parliament. However, I can tell the noble Lord that, so far, it is not a question of legislation but a question of resolutions, and as your Lordships will know that is a very different matter. On the question of our exports to Israel, I sought to make the point that despite the apparent handicaps that our exporters to that country are placed under, we have none the less succeeded in increasing our exports to them.
Lord BYERS: My Lords, how many, if any, of the recommendations of the Select Committee have the Government adopted?
Lord TREFGARNE: The committee made a large number of recommendations, my Lords, as the noble Lord will know. I should need notice to count up which ones we have adopted, but he will remember

893
that I announced two or three months ago that we were modifying our process of the certification of negative certificates of origin.

EEC SURPLUSES: COST TO UK
3.12 p.m.
Baroness ELLIOT of HARWOOD: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the percentage share paid by the United Kingdom of the overall cost of disposal of surplus EEC agricultural commodities.
The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers): My Lords, the United Kingdom contributes towards the cost of the European Community budget as a whole and not to individual elements separately. In percentage terms, the contribution to the budget is about 20 per cent.
Baroness ELLIOT of HARWOOD: My Lords, while thanking the noble Earl for that reply, may I ask whether it would be possible for Her Majesty's Government to suggest to the EEC that they might think of ways of disposing of the surpluses in a more lucrative and better manner? Apparently, they have no idea of selling agencies of any kind, and it seems that all they can do is give away the surpluses. If there could be some proposals made for selling the surpluses would he agree that that would benefit everyone?
Earl FERRERS: My Lords, I quite understand my noble friend's point of view; the elimination of the surpluses is one of the great problems presenting itself to the Common Agricultural Policy. At the moment the view is that if there is a surplus, the best thing to do is to eliminate it in order to get back to regularity of supply. It is our intention at the moment to press for conditions where surplus food is not produced.
Lord SHINWELL: My Lords, can the noble Earl tell me and Members of your Lordships' House what we get by way of benefit for the 7 per cent. that it costs us?
Earl FERRERS: My Lords, I think that the noble Lord, Lord Shinwell, misheard. Probably it was my fault, due to bad articulation, but it is 20 per cent., not 7 per cent., which is our contribution to the Community budget as a whole, of which about 75 per cent. goes to the Common Agricultural Policy. I think the noble Lord's question was, what do we get for that? I can tell him that what we get is a united Europe which is trying to find a way to deal with the problems which we recognise as confronting it.
Lord BRUCE of DONINGTON: My Lords, is the noble Earl aware that the disposal costs for the purposes of the Community budget are included in the storage costs under Title No. 6, and that for the year 1980 the total storage costs, including costs of disposal of surplus food products, are £1,000 million, of which, on the noble Earl's calculation, the United Kingdom is due to bear some £200 million? In view of the observations that have been made from time to time on the necessity to reduce public expenditure, will Her Majesty's Government take the most energetic steps to see that the United Kingdom is rid of this waste of money?
Earl FERRERS: My Lords, I think that there is nothing very much between us because precisely the concern which the noble Lord, Lord Bruce of Donington, has expressed is one which is shared by Her Majesty's Government—that our contribution to the Community is at the moment too great. I should like to give the noble Lord the following information, in which he might be interested. According to the figures provided by the Commission for the Dublin Summit last year, in 1980 the net contributions or receipts of Member States will be such as will result in the Netherlands having the benefit of £379 million, France of having £205 million, Germany having a net deficit of £278 million, and we ourselves having a net deficit of £1,170 million; and it is that that we consider is far too great.
Lord MACKIE of BENSHIE: My Lords, is the noble Earl aware that we accepted the terms on joining the Community? We accepted the fact that instead of paying probably £500 million in deficiency payments, we would pay it into the Common Market directly in levies, and that for this we receive the benefits of the Community in both political and economic terms, and that our exports to Europe have doubled in this time? If you take the amount that we would have paid in deficiency payments and the amount that the public will collect in benefit, it is not a bad buy.
Earl FERRERS: My Lords, I accept the point of view of the noble Lord, Lord Mackie of Benshie, which is one that we share. It is that when we joined the Community, we joined it for considerably greater purposes than just the purely fiscal ones. But I am bound to tell the noble Lord that, when we joined, the price of oil in the world took off, and we are now in a position of contributing sums of money which at that time were never envisaged. If my figures are correct, I think I can tell the noble Lord, Lord Mackie, that we are now contributing four times that which was contributed in 1973—and that is a figure that was never expected then.
Lord GORONWY-ROBERTS: My Lords, may I join the noble Lord in asserting that for very many people on both sides of the House the political priority activated our desire to join the Market? I say once more than unless and until the economics of the Market are drastically overhauled, and the obvious enormous unfairness to this country is put right, that very priority of political co-operation and unity will be imperilled.
Earl FERRERS: My Lords, the noble Lord, Lord Goronwy-Roberts, is entirely right. The political opportunities and advantages arising from our membership of the Community are enormous: and it is our desire also to see that the financial contribution is fair. We can do that only through co-operation, discussion and agreement with the other eight Members of the Community—and that is what we want to try to achieve.
Baroness VICKERS: My Lords, may I ask the noble Earl, in view of the fact
896
that we have this surplus, whether consideration has been given to contacting the International Red Cross to see whether they might take some of it to help people who are starving in various countries?
Earl FERRERS: My Lords, I shall certainly take note of my noble friend's observation and let her know what the position is. The difficulty in all these matters is that if you have a surplus and if you have to dispose of it, somebody has to pay for it. It is easy enough to get rid of it if you do not make any charge, but all that does is to increase the sum of money which the Community itself has to bear.
Lord ROSS of MARNOCK: My Lords, can the noble Earl tell us the extent to which our agricultural production contributes towards this surplus? Many of us feel that this has not been a very good decision for the country and that it is a very high price for suicide.
Earl FERRERS: My Lords, of course our position is that we are a net importer of food and that we are not a contributor to the surplus. One of the reasons why my right honourable friend is at the moment placing on record his objection to the proposals of the Community is that in milk, sugar and butter, in regard to which we are not contributors to the surplus, we are in fact becoming the hardest hit under the Commission's present proposals; and that is what we think is unfair.
Lord CAMPBELL of CROY: My Lords, could my noble friend tell us why the financial mechanism which was specially negotiated in 1975, before the referendum took place, has apparently not been effective?
Earl FERRERS: My Lords, I think that that negotiation was done by people other than ourselves, by the party opposite when they were in power, and it may he that they are the ones who ought to answer that question; but I think in fairness I would say that in all these negotiations one can negotiate only on the basis of what one believes at the time to be something right for the future. When conditions for the future change—and they have changed considerably since we have been members of the Community—then one very often finds that things which are

897
agreed in fairness at the time prove to be not quite as equitable as one had anticipated.
Lord KALDOR: My Lords, in view of the widespread resentment which is felt—and not only in this country—concerning the disposal of these surpluses and the countries which receive them at very favourable prices, would it not be possible for Her Majesty's Government to promote a scheme in Brussels by which the surpluses could be disposed of in ways that benefit the poor or the unemployed, or the people on supplementary benefits, who are in the Member countries of the EEC, and not those outside?
Earl FERRERS: My Lords, that is an idea which we certainly would consider. Again, the difficulty is that if you give subsidised food within the Community all you do is exacerbate the problem of dealing with the surplus. But, having said that, the noble Lord will recall that we have in fact a butter subsidy which is 100 per cent. subsidised by FEOGA. Under the Commission's present proposals that subsidy is to go, and again we think that that is unfair.
Lord ROBBINS: My Lords, would the noble Lord not agree with me that the attitude of Her Majesty's Government would be substantially reinforced if the precise figures for which the noble Baroness asked in her original Question could be made available to the House in some sort of synoptic form—year by year since joining the Community, for instance?
Earl FERRERS: My Lords, it is not in fact very easy to give the breakdown of the figures. What I will do is give these figures to the noble Lord, Lord Robbins, which he may find a little difficult to digest at the moment but which he may be able to digest a little later. The total provision for expenditure on farm price support in 1979 was about £7,000 million. Of this, some 45 per cent. was for export subsidies and a further 20 per cent. for various subsidised sales within the Community. At least 65 per cent., therefore, could be said to go on disposing of surplus production. A further 10 per cent. went on purchases into intervention and on storage costs.
898
I think the noble Lord may find that that is helpful, even if he cannot digest it all now.
The Marquis of HEADFORT: My Lords, would the noble Earl the Deputy Leader of the House not agree that, after Afghanistan—
Several noble Lords: Order! Order!
Lord DERWENT: My Lords, would my noble friend agree that sixteen minutes is quite enough for two Questions?
Earl FERRERS: My Lords, I do not know whether it is enough for two Questions, but I fancy that certainly it is enough for one. I hesitated to suggest that your Lordships might move on because I thought your Lordships might think that I was not wishing to answer any more questions; but, if you were to think that it might be suitable to move on to the next Question, perhaps your Lordships will be good enough to cease asking me any more.

LUNCHEON VOUCHERS
3.25 p.m.
The Earl of KINNOULL: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will review in the coming Budget the luncheon voucher concession of 15p in view of its current purchasing power; and what corresponding value it now has compared with 1959 when it was last raised.
The MINISTER of STATE, TREASURY (Lord Cockfield): My Lords, I have noted the suggestion of my noble friend, but the general preference of Her Majesty's Government is to concentrate on tax reductions across the board, which would help everybody, rather than to extend selective reliefs of this kind. The corresponding value of the concession compared with 1959 would be about 75p.
The Earl of KINNOULL: My Lords, I thank my noble friend for that reply.

899
Is he aware that, if he were today to exchange a luncheon voucher for a ham sandwich, he would find that that sandwich had no ham in it? Would my noble friend say what it would cost the Treasury if they were to double the present value?
Lord COCKFIELD: My Lords, the original intention of the concession was not to provide complete meals, or perhaps even complete ham sandwiches, but to give a relief which was equivalent to the subsidy given in the industrial canteen. Recent inquiries suggest that while the average subsidy is somewhat above the present figure for the luncheon voucher, it is not all that much in excess. The present concession costs about fl 2 million per annum, and to double it would therefore cost another £12 million.
Lord WALLACE of COSLANY: My Lords, would the noble Lord bear in mind that if the noble Earl, Lord Kinnoull, went into a cafe and bought a diminished sandwich, and if he took it outside and ate it in the nearest churchyard, it would be cheaper than if he ate it inside, because of the imposition of the penal rate of VAT at 15 per cent.? So the extent to which a luncheon voucher is diminished in value depends entirely on whether you eat out or eat in. It is a rather silly situation.
Lord COCKFIELD: My Lords, this is a well-known point. The VAT does apply to restaurant meals but it does not apply to food which is taken away, and this reflects the general policy, not only of the present Government but, of course, of their predecessors, of relieving expenditure on food as such from VAT.
Lord WALLACE of COSLANY: But, my Lords, I would point out in reply—
Several Noble Lords: No! No!
Lord WALLACE of COSLANY: My Lords, I would ask the noble Lord whether he is aware that his Government doubled VAT and the previous Government did not.
Lord COCKFIELD: No, my Lords, the Government did not double VAT. The standard rate went up from 8 per cent. to
900
15 per cent., and the higher rate went up from 12 1/2 per cent. to 15 per cent. At the same time, very substantial reductions were made in income tax, which would no doubt enable noble Lords opposite to buy sandwiches with ham in them.

THEATRE TICKETS AND VAT
3.28 p.m.
The Earl of KINNOULL: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will now consider a reduction in VAT on theatre tickets in the very near future.
Lord COCKFIELD: My Lords, the Government recognise the contribution which the theatre makes to our national life and are aware of the situation which it is facing at present. I am afraid, however, that it would be invidious to single out the theatre from the numerous other claimants for especially favourable VAT treatment. Our support for the theatre, as for other deserving causes, must be limited to what the country can afford.
The Earl of KINNOULL: My Lords, I thank my noble friend for that reply. Would he place on record, again, what it would cost the Treasury to zero-rate theatre tickets?
Lord COCKFIELD: My Lords, the cost of zero-rating theatre tickets would be of the order of £20 million per annum; but the real point is that if a concession of this kind were made to the theatre—and, incidentally, there are, of course, EEC problems in relation to the extension of zero-rating—it would be quite impossible not to extend it to all sorts of other deserving causes where very strong representations are also made.
Lord ELWYN-JONES: My Lords, is the noble Lord aware that our theatres are being pauperised by the increase in VAT—and I will be precise in the particulars—from 8 per cent. to 15 per cent., and also by the cuts in the Arts Council grant, and that an increasing number of theatres are in peril of being lost? Is

901
there not a powerful case in regard to this great national institution—our theatres are acknowledged to be the best in the world—for zero-rating theatres for the purposes of VAT or, at the very least, doing what most European countries do now, allowing them to be preferentially treated?—otherwise this fine national institution will go to the wall.
Lord COCKFIELD: My Lords, I join the noble and learned Lord in his tribute to the national theatre but I do not share his gloomy prognostications for the future. The fact of the matter is that the theatre has been hit much harder by declining audiences due to the spread of television than it has ever been hit by the VAT. As far as the Arts Council is concerned, the grant-in-aid this year is £61 million, which is substantially greater than the £49 million actually issued last year. About two-thirds of the total of the grant goes to the performing arts. It is the view of the Government, as it was the view of the previous Government, that this is the best way in which assistance to the performing arts can be given.
Lord GLADWYN: My Lords, will the Government agree that the maintenance of VAT on theatres at its present high rate will certainly result in a considerable diminution in the numbers of plays and their performances in London, and consequently in a considerable reduction in the number of tourists visiting this country; and, therefore, that the Treasury are likely to lose more on the swings than they gain on the roundabouts?
Lord COCKFIELD: My Lords, I do not accept these arguments. We agree that the theatre is going through a difficult time at present. But we believe that it will show great resilience in the future as it has in the past. It is also a very valid point that, at the time the VAT was put up, income tax was reduced substantially. People have therefore more money in their pockets to spend. I hope that the noble Lord is not suggesting that because they now have more control over their own expenditure they are less willing to spend it on going to the theatre.
Lord NUGENT of GUILDFORD: My Lords, is my noble friend aware that, in regard to his concern not to set a precedent,
902
the live theatre has a special case to argue because the live theatre is the source of all entertainment across the board, television as well; and if he made a concession on the VAT rate for the live theatre only he would be making a concession in a field which nothing else could match?
Lord COCKFIELDs: My Lords, I have said that we recognise the immense importance of the live theatre, but we take the view that it would be quite impossible to hold the relief at the live theatre, if it were given.
Lord MILES: My Lords, is the noble Lord aware that the opinion of those in, I think, all fields of artistic endeavour would be that, in general, for the past 50 years we have been governed by barbarians? is he further aware that the British theatre particularly, and ballet and opera, are activities different from anything else which is taxed? This is the cutting edge of England and Great Britain as provided by Shakespeare and by Purcell and by the Royal Ballet. Would he agree that there is something confused about this situation, and that the theatre provides a very different kind of spectrum for the whole argument that we are honoured throughout the world, not for motor cars and Rolls-Royces but by our theatre having a unique and imperishable place in the English heritage? It is part of our real and unquestionable heritage. Is it not quite outrageous that the theatre should not be zero-rated? Should not every effort be made by this House, and the other place, to see that it becomes zero-rated, in order to relieve it of this intolerable burden and so that it may expand to greater efforts, which would do honour to this country, honour which can be done in no other way?
Lord COCKFIELD: My Lords, the noble Lord occupies a unique position in this field and he puts his case with immense persuasiveness. We recognise the unique position of the British theatre. If I did not have noble Lords continually to draw my attention to it, my attention to it is so drawn at home as well. Nevertheless, the position remains that we believe the right way to channel help to the arts is through the grants to the Arts Council. Over the last decade these grants have increased very substantially indeed in real terms.
Lord KALDOR: My Lords, the noble Lord's case against exempting the living theatre is that it will be impossible to hold the line there without extending the concession to a wider class of cases. I wonder whether the noble Lord is aware that there were some other taxes on the statute book, within living memory, from which at some stage the live theatre was exempted without thereby opening the floodgates to other exemptions?
Lord COCKFIELD: My Lords, I do not think that the noble Lord's historical recollection is entirely correct. It is true that the living theatre was at one time charged half-rate on entertainment tax and then relieved altogether from it. Shortly afterwards the cinema was relieved on the same argument, and a few years afterwards the whole of the tax collapsed.
Lord KALDOR: My Lords, I was referring to selective employment tax.
Lord MISHCON: My Lords, in suggesting that the arts, in the form of David, seem to be facing in the Minister a Goliath, will he take it for granted that I am not necessarily calling him a philistine? Will the Minister not agree that a very special case exists with the subsidised theatre as against the theatre as a whole? Is he aware—and here I declare an interest as a member of the board of the National Theatre—that the subsidised theatre is contributing so much to our national, cultural heritage and is being severely handicapped at the moment by this heavy VAT?
Lord COCKFIELD: My Lords, we recognise the unique contribution that the subsidised theatre makes to the cultural life of this country. This is why it is the subject of considerable grants from the Arts Council, and this, we believe, is the correct channel for providing support rather than through tax relief.
Earl FERRERS: My Lords, I wonder whether we might move on. It seems hours ago when my noble friend Lord Dement said that we had spent 16 minutes on the first two Questions. If one looks at the digital clock, we see we spent only four minutes on the second two, but I think the digital clock has got stuck. While this is a not unimportant issue, if
904
noble Lords feel strongly about it we might have an Unstarred Question on it; but I would suggest that we move on.

HOUSING: PUBLIC INVESTMENT PROGRAMME
Lord DENHAM: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m., my noble friend Lord Bellwin will be repeating a Statement made in the other place on the housing investment programmes.

WATER (SCOTLAND) BILL [H.L.]
The LORD ADVOCATE (Lord Mackay of Clashfern): My Lords, I beg to introduce a Bill to consolidate the enactments relating to water in Scotland. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(Lord Mackay of Clashfern.)
On Question, Bill read 1a, and to be printed.

CANE HILL CEMETERY BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
SLAUGHTER OF ANIMALS (SCOTLAND) BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

SEA FISH INDUSTRY ACT 1970 (INCREASE IN RATE OF LEVY) ORDER 1980
3.40 p.m.
Earl FERRERS Earl FERRERS rose to move, That the draft order laid before the House on 28th January 1980 be approved. The noble Earl said: This order is one of two instruments which are needed to enable the White Fish Authority to raise the rate of its general levy, from which it obtains most of its income. The levy is at present at the ceiling authorised by the parent Act, the Sea Fish Industry

905
Act 1970, and this ceiling must therefore be raised. This is the purpose of the present draft order which requires the affirmative resolution of both Houses of Parliament. The second stage is then to set the new rate of levy to be charged. This new rate will be authorised by a second instrument which will be laid before the House.
The White Fish Authority is seeking to raise the rate of its levy to 1·6p per stone of fish, from the present rate of 0·8p. Without the increased income that this would produce the authority would have to cut back considerably on the extent of its services to the industry. These services include research and development, advisory work, training of fishermen and administration of the Government's grant and loan scheme for fishing vessels.
The cause of the authority's financial difficulties is that its costs have been rising with the general price level, but its income has not. The levy is fixed in terms of pence per stone of fish and the income from it has not therefore risen with prices. The present level of the levy was set in 1974, and I am sure your Lordships will agree that the authority has done well to live within its means for so long. Now however there is a considerable gap between expected income and expenditure. The scale of the imbalance is such that it is impractical to expect what one might call ordinary housekeeping savings to balance the accounts. Nor can the financial reserves of the authority be drawn on much further; a certain level of working capital is needed to enable the authority to continue to function. The options open to the Government were, therefore, either to approve the increase in the levy or, in effect, to impose precipitate cuts in the authority's functions.
We felt that it would be wrong to impose substantial cuts in the authority's services without a clearer statement from the industry that that was their preferred course. The Government have recently announced that the authority and the Herring Industry Board should be replaced by a single new authority for the Sea Fishing Industry. This will require new legislation; and we intend very shortly to begin full consultations with the industry on the functions that they wish to see a new authority retain.
In the nature of things however this procedure must take some time and we consider that the authority's present financial situation is so urgent that it would be wrong to delay the raising of additional finance until the consultations were concluded. To give an example of the scale of the proposed increase in the levy, it would add another three-quarters of one penny to the cost of a stone of fish worth £3 at the quayside.
The Government accept, of course, without hesitation the need to keep any additional cost to the fishing industry at this time to the absolute minimum. We have undertaken to look again at the possibility of raising the levy by some smaller amount than that which was originally intended by the authority, and if a smaller increase is feasible we will certainly wish to adopt it. The White Fish Authority is no less aware of the need to restrain its costs. It is already seeking ways to save £200,000 and will now be considering the scope for further cuts.
I should re-emphasise that whatever level of increase the Government finally decide is unavoidable must be confirmed by a separate instrument to be laid before Parliament at a later date. The order before us today clears the way for the increase in the levy by raising the ceiling in the parent legislation. Since the present levy is very close to that limit, this order will be needed regardless of the precise level to which the levy is eventually raised.
I therefore commend this draft order to the House. I beg to move.
Moved, that the draft order laid before the House on 28th January 1980, be approved.—(Earl Ferrers.)
3.46 p.m.
Lord STRABOLGI: My Lords, we on this side of the House are grateful to the noble Earl for moving this order and for explaining its purposes. I understand that it passed through another place yesterday and we certainly do not intend to oppose it. I accept the reasons for it. I should like to raise one or two points arising out of it. Is it a fact that for the year ended 31st March 1979 the authority's accounts were still in surplus to the extent of £100,000. while the accumulated surplus of income and expenditure account at

907
that date was over £1 million, and the authority now except a deficit of something like £3 million in the current year? The surplus will become insufficient to finance fixed assets and stock to provide working capital. If that is so, it is a reflection on the times in which we live.
I understand that there have been further difficulties since there is a substantial rent revision contemplated for the Edinburgh offices. Is it possible for that to go to appeal or do the authority have to pay what they are asked by the landlords? Perhaps the noble Earl could enlighten us. I believe that one of the authority's largest and most valuable overseas contracts came to an end at the beginning of this year, a contract which they have no prospect of being able to replace; and that legal opinion has recently confirmed that they are no longer empowered to receive levy on transshipped fish such as mackerel. I wonder whether the noble Earl is able to tell me—and I will not press him if the matter is sub judice—what the legal opinion is and whether such opinion is going to appeal.
Earl FERRERS: My Lords, I am grateful to the noble Lord, Lord Strabolgi, for those comments. He asked about the cash position of the White Fish Authority. In general, he is correct. In March 1979 there was a total surplus of £600,000. There was a deficit during the year 1979–80 of £300,000 which left therefore a surplus, a balance of £300,000. During 1980–81 there is likely to be a further deficit of £700,000 which will in fact create an overall deficit. That is the reason why, if we do not take action during the year beginning March 1980, there will be an overall deficit at the end of the year.
The noble Lord also referred to the rent on the premises. He is quite right, there is a rent review there. It is proposed that the rent will be increased, and I understand from the authority that the rent on their headquarters is to rise from £20,000 to £60,000 next year, with an increase in rates also expected. The noble Lord asked what the position was with regard to the transhipment of fish. I think I can best explain this to the noble Lord by saying that, as he will realise, when fish are landed at the quayside there
908
is a levy upon them. It was expected that when fish were transhipped at sea, instead of being landed at the quayside, a levy would be paid, just as if they had been landed at the quayside. For the last few years the White Fish Authority have raised that levy and had understood that they had the powers to do so.
The interpretation of the powers provided by the Act was queried by the industry early in 1979, and since then the levy on transhipped fish has not been collected. Whether the White Fish Authority have powers to refund any levy which they collected in good faith is apparently uncertain. I understand that a claim for recovery may shortly lead to litigation. New primary legislation is now needed if the power to levy on transhipped fish is to be obtained. My Lords, I think I have answered the points raised by the noble Lord and I am grateful to him for his observations.
On Question, Motion agreed to.

PROTECTION OF TRADING INTERESTS BILL
3.52 p.m.
Report received.
Clause 1 [Overseas measures affecting United Kingdom trading interests]:
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 1:
Page 2, line 4, leave out from ("above") to end of line 6.
The noble and learned Lord said: My Lords, I beg to move this amendment, which is put forward in response to the point raised by the noble Lord, Lord Renton, as to whether a foreign law requiring registration of a contract was covered by the subsection. Rather than start listing examples of requirements which can be dealt with by this subsection, and thereby possibly limiting the scope of the clause by implication, we have, on consideration, decided that the best way of removing doubt would be to remove the examples that we have given. I am very grateful to the noble Lord, Lord Renton, who is unfortunately not here today, for I having raised this point. I beg to move.
Lord ELWYN-JONES: My Lords, I am sure that the House will indeed be

909
grateful to the noble and learned Lord for meeting the point made by the noble Lord, Lord Renton. I think it certainly improves the Bill and runs the risk of diminution rather than inclusion, as the Bill already stood.
On Question, amendment agreed to.
Clause 2 [Documents and information required by overseas courts and authorities]:
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN had given Notice of his intention to move Amendment No. 2.:
Page 2, line 33, after ("authority") insert ("or to summon any person to give oral or written evidence relating to any such document or information")
The noble Lord said: My Lords, in view of Amendment No. 3 put down by the Government and the very helpful discussions I have had with the legal advisers to the Secretary of State, Mr. Ayling and his team, this amendment is not moved.
3.54 p.m.
Lord MACKAY of CLASH FERN Lord MACKAY of CLASH FERN moved Amendment No. 3:
Page 3, line 10, leave out paragraph (b) and insert—
("(b) if it requires a person to state what documents relevant to any such proccedings are or have been in his possession, custody or power or to produce for the purposes of any such proceedings any documents other than particular documents specified in the requirement.")'
The noble and learned Lord said: My Lords, this amendment deals among other matters with a point which was raised first on Second Reading and then in Committee by the noble Lord, Lord Mishcon, about this particular clause. We were also in doubt in considering the point that the noble Lord raised as to whether the provision adequately included persons in the United Kingdom who were the subject of a requirement from abroad but who were not parties to litigation in the overseas country. This amendment is a re-draft of the provisions and it now more closely reflects the wording used in Section 2(4) of the Evidence (Proceedings in other Jurisdictions) Act 1975. I hope it will satisfy the noble Lord. Lord Mishcon, but in any event I believe it clarifies the power we seek to confer on the Secretary of State. I beg to move.
Lord MISHCON: My Lords, may I thank the noble and learned Lord not only for his courtesy but for the clarification which now appears, which I find eminently satisfactory.
Lord HACKING: My Lords, I stand to oppose this amendment, and I do so in what I hope will be a helpful stance. I stand also to ask the noble and learned Lord the Lord Advocate whether he would consider keeping the clause as it was originally drafted—the clause which, by means of this amendment, he now seeks to replace by the new clause. I do so because I am concerned that the amended clause opens the door to pre-trial discovery, which is known particularly in the United States of America and which is the subject of the greatest concern in this country. Indeed, US discovery procedures was a major factor in causing the Government to bring this Bill before Parliament.
I would ask your Lordships to look at the original draft of Clause 2(3) (b). Your Lordships will see that it is inadmissible. Perhaps I had better go a step further back, because the matter is somewhat complicated. The Secretary of State has power to prohibit the production of documents if they come into the admissible categories which are set out in subsections (2) and (3). In Clause 2(3) (b), as it is, the Bill provides that when a requirement from a foreign court is
"made wholly or mainly for the purpose of obtaining discovery of documents in any such proceedings"
and that refers to civil and criminal proceedings, there is an "inadmissible" requirement which will enable the Secretary of State to make the appropriate direction. As drafted, that covers, in its entirety, pretrial discovery, because it is not couched in the same language as paragraph (a) which concerns preceedings which have actually been instituted.
Your Lordships will see from the amendment that in the case of listed documents —and I will not develop the argument further in any detail—those documents can be required during the pre-trial discovery stage. The extent of United States pre-trial discovery is really quite mind-boggling to those who are familiar with the discovery procedures in our own country. There are rights

911
without identification—and I accept, of course, that the amendment makes reference to "particular documents"—to go into the files not only of another party but of persons or parties who are not connected with the action; and then the party under a United States discovery order has the right to open every drawer and every file, not only of other parties in the action but of third parties as well.
This amendment does seek to restrict that discovery to:
"particular documents specified in the requirement".
I suggest that in fact is not going to be very much of a limitation upon discovery procedures, as used in the United States of America.
How are the documents to be described? Are they to be described by particular identification? That is far too onerous on the person who is seeking discovery and as, for example, in English notices to produce documents you are entitled to use a more general route in order to identify the documents. Then, using that more general route, a request for documents "relating to Subject X" or "Person Y" or "Board Minutes," for example, could quickly open the door widely to pre-trial discovery.
There are other considerations of concern. The next one, I suggest, is: what is the definition of civil proceedings? Does that cover foreign Government agency investigations? In the United States, as your Lordships will know, there are a number of very active, very large and very powerful Government agencies—the Federal Trade Commission, the Federal Maritime Commission, the Securities Exchange Commission and the Commodities Federal Trade Commission. Each of these agencies has the most extensive investigatory powers. They have the capacity, sometimes, almost to paralyse major corporations which are under the full thrust of their investigations.
Let me cite one example. The right of the Federal Trade Commission to carry out investigations is vested in Section 6 of the Federal Trade Commission Act, which reads in this manner:
"To gather and compile information concerning and to investigate from time to time the organisation, business conduct, practices and management of any corporation engaged in commerce,
912
excepting banks and common carriers, and its relation to other corporations and to individuals, associations and partnerships."
If your Lordships pause for a moment at those words, you will realise quite how extensive these powers are. These investigations are carried on extensively throughout the United States of America and the size of each of these bodies is tremendous. The number of lawyers in the Anti-Trust Division alone of the Department of Justice is more than 300. If those proceedings fall into the category of civil proceedings, your Lordships will see the extent to which the Government are—and, I suggest, unwittingly—opening the door to the very worry that this Bill has been designed to deal with.
There is another point that I would make in passing, because I have addressed your Lordships for some time on this proposed amendment of the Government. This matter is more concerned with paragraph (a) than with paragraph (b). When do these investigations by foreign Government agencies begin? Is it when the resolution is passed, or when is it?
The only other matter to which I would draw your Lordships' attention, and which again is wholly germane to my argument, is another device that is used. It is set out in, I think, the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, but my source may not be accurate. Let me tell your Lordships what creature I am talking about. I am talking about civil investigative demands. These are issued by the Department of Justice. Once again, they are a means of discovery, a means of production of documents. It was the use of civil investigative demands by the Department of Justice, in the area of North Atlantic shipping, that caused Mr. Stanley Clinton Davis, who was then Under-Secretary of State for Trade in the former Government, to say in the House of Commons in November, 1978:
"The disclosure of documents sought under CIDs from British companies would constitute an infringement of the jurisdiction which under international law belongs to the United Kingdom."
I apologise for speaking at length to your Lordships, but this is a matter of great concern. I shall be very grateful if the noble and learned Lord the Lord Advocate can consider more at leisure the points that I have made.
4.4 p.m.
Lord MACKAY of CLASHFERN: My Lords, I am grateful for the opportunity of leisure to consider these matters, but my immediate answer is that I would think that the clause as amended is satisfactory to deal with the matters to which the noble Lord has referred. For example, I should have thought that a broad description such as "all documents relating to X or Y" or "board minutes" would not satisfy the terms of the amendment where it refers to,
"other than particular documents specified in the requirement."
I should think that general descriptions, such as those the noble Lord quoted, are just the antithesis of what is there set out.
So far as what one might call preliminary proceedings are concerned, I would think that a good number of these—indeed, I believe all of these—are excluded in the terms of Clause 2(3)(a) already, and of course there is the more general power in subsection (2) with its very general discretion. So I believe that the points that the noble Lord has raised are adequately covered, although I am greatly obliged to him for bringing these to our attention.
Lord ELWYN-JONES: My Lords, I am bound to say that I, too, was pondering as to what thoughts the noble Lord, Lord Hacking, himself might have to deal with the mischiefs which he was describing. He has given us the benefit of his criticism. I wonder whether he, also, would use such leisure as he may possess to bring forward suggestions as to how these mischiefs which he so vividly painted, should be dealt with.
Lord LLOYD of KILGERRAN: My Lords, I also am familiar with pre-trial discovery proceedings in America, but not so familiar as the noble Lord, Lord Hacking. But having regard to what the noble and learned Lord the Lord Advocate has indicated, I should have thought that this amendment was an improvement in relation to the Bill. I myself have had this point in mind about giving greater protection to United Kingdom firms and persons from the really outrageous actions that happen in pre-trial discovery in America, and I thought that my Amendment No. 2, which suggested that there should be powers to prevent the person
914
involved from going out of the country, would be helpful. But as I indicated earlier, I had some help from the legal advisers of the Secretary of State that it would be very difficult, and perhaps unsatisfactory from a constitutional point of view, to stop a person from going out of jurisdiction so that he might not be dealt with in America. I support this amendment.
On Question, amendment agreed to.

HOUSING: PUBLIC INVESTMENT PROGRAMME
4.7 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin): My Lords, with your Lordships' permission, I should like to repeat a Statement now being made in another place by my right honourable friend the Secretary of State for the Environment on housing public expenditure.
"The background to the decision I am announcing today is well-known to the House. This Government face the task of setting public expenditure at levels which the nation can afford. If we fail, the problem with which we are all familiar will continue—a public sector consuming a disproportionate share of the nation's resources, high interest rates and declining investment in the private sector.
"The harmful effects of the policies of recent years can be clearly seen in housing. By 1979, for the average new council house, taxpayers and ratepayers were contributing towards a subsidy of £30 per week. Council rents had fallen to an average of 6.4 per cent. of income—despite a commitment in the last Government's Green Paper to increase rents in line with earnings.
"The net result of Labour's housing policy was to make new building for local authorities so expensive that in every year after 1976 local authorities of both political complexions responded by reducing their programmes. And the rent policies of the last Government have been a major factor in the inability of local authorities adequately to meet housing costs, finance investment and maintain their stock.

915
"Against this background, we have reassessed our housing policy. The Government's expenditure plans for 1980–81 and later years will be published in a White Paper next month, but the local authorities, the Housing Corporation and the New Towns need to settle their programmes now. For these reasons, this year, I am, exceptionally, making an oral statement.
"Our reassessment of objectives must recognise the significant general improvement of housing conditions in the last 30 years. Home ownership has grown from 31 per cent. to 55 per cent. over that period, and we recognise the desire of most people to own their own home. In national terms, the supply of housing and demand are in better balance. Needs and problems have become increasingly specific and local. The emphasis of public sector housing policy now must be to meet particular needs, such as those of the elderly and the handicapped. We have to concentrate on modernising, improving and making better use of the existing stock, rather than on the general provision of new houses, and we must encourage home ownership and the private rented sector.
"We need therefore to adopt new priorities—priorities which are reflected in the Housing Bill and which are critical given the economic background.
"I come now to the programme for 1980–81. The housing investment programes for local authorities in 1980–81 will be allocated £2,199 million at expected outturn prices. The Housing Corporation will be allocated £420 million for the work of housing associations. And the New Towns building for rent programme will be £151 million. In new town development, the proportion of owner occupation is below the national average, yet the demand is high. In future, growth must be based increasingly on the private sector and homes for sale. Taken together, these three housing capital allocations for 1980–81 will in real terms, at 1979 survey prices, be about £540 million or 21 per cent. lower than the forecast outturn for 1979–80. These figures are for England. My Scottish and Welsh colleagues are making separate announcements.
916
"In the new circumstances, it is even more important that local authorities should use available resources in the most effective way to meet local needs. In order to encourage this, the housing allocation to each authority from April 1980 will be in a single block and they will have much greater ability to decide their own priorities. They will also have the new opportunities opened up by the Housing Bill.
"There is a range of ways to promote low-cost home ownership—selling council houses; securing land release for builders; encouraging starter homes; low-cost building for sale, especially for tenants and those on the waiting lists; schemes for improving and selling houses such as acquisition, improvement and sale (AIMS) and homesteading; promoting shared ownership; and by helping priority home buyers with mortgages. In these ways people can be helped to become owners. Full details are in the allocation letter to authorities, copies of which are in the Printed Paper Office.
"The priorities now must be value for money and concentration, under the more flexible arrangement, on the problem areas. In the private sector, the introduction of shortholds and the other provisions in the Housing Bill will improve the availability of rented accommodation without additional public expenditure.
"Exchequer subsidy to local authorities for housing last year amounted to £ 1,148 million in 1979 survey prices. The rent levels of recent years have not only prejudiced the abilities of local authorities to maintain adequately their housing stock but have contributed to the enormous burden of public expenditure. I have therefore concluded that it would be right to issue a supplementary rent increase guideline of 60p a week on average over the second half of 1980–81.
"Mr. Speaker, I have announced today a reappraisal which reflects our assessment of national economic and housing priorities. This is a necessary response to a situation in which the scale of housing subsidies increased under the previous Government to levels far beyond those the nation could

917
afford. From now on we shall concentrate resources where they are needed; and I have today set out realistically what the nation can afford."
My Lords, that is the end of the Statement.
4.14 p.m.
Baroness BIRK: My Lords, may I thank the Minister for that Statement, which we have at last had. But even more eagerly than we have awaited it have the local authorities been waiting to find out how they can plan for the coming year. The cut, because of the single block arrangement, has now been gathered together and referred to in the Statement as a cut which is 21 per cent. lower than the forecast outturn compared with last year. However, the £3,200 million spent, converted into 1980–81 prices, shows a cut of £1,000 million over last year, which is almost one-third. Local authorities also asked for £4,650 million for this coming year; so the cut really is one half. In fact, the cut is very much more severe than the Statement indicates.
I should like to ask the Minister how many new starts he anticipates there will be. It is true that because the figures are given in a single block it does not show up there, but the department must certainly have worked this out. Does the Minister also believe that sales will now outnumber starts?
On the question of cutting down in the public sector, may I remind the Minister of what his right honourable friend the Secretary of State said in June? In a Press release then he referred to the need for a healthy public sector as well which would deal with those people who are in need. The chairman of the AMA, who was on the "Today" programme this morning, was asked about the advantages of the single block. He said that this was fine but that there was not much point in having freedom of choice if there was so little to choose from. That is exactly the situation in which local authorities are landed today.
The Statement also refers to council rents. That is despite a commitment in the last Government's Green Paper to increase council rents in line with earnings. The Green Paper said:
918
"The Government consider that over a run of years rents should keep broadly in line with changes in money incomes."
It did not say that in a time of high inflation and very high unemployment rents should go up.
According to the Statement, growth must be based increasingly on the private sector and homes for sale. Yesterday the Department of the Environment published a document which shows that the public housing sector in the fourth quarter was down 13 per cent. on the previous quarter and 27 per cent. down on the corresponding quarter a year earlier. Orders in 1979 were 28 per cent. lower than in 1978. Private housing orders in that quarter—we are talking here not about the time of the last Government but about the time of this Government—were 14 per cent. lower than in the third quarter and four per cent. lower than in the fourth quarter of 1978. And in the year as a whole they were down 9 per cent. on 1978. Does the Minister not agree that when the public sector contracts the private sector contracts also?
May I now turn to that part of the Statement which deals with all the "goodies" which are to be available to people in the future—the range of ways in which to promote low cost home ownership, the sale of council houses, and so on. I find it difficult to understand, unless we are talking about a hopeful, very far future, how this is going to help the 1 million people who are on the housing waiting list and the 3 million families who are living in badly-kept houses which need rehabilitation. That is on top of an inflation rate of over 18 per cent., a 15 per cent. mortgage rate, unemployment up, and going up, children being taken into care because families are homeless, and families in the street because the homeless families Act cannot operate because local authorities do not have the accommodation. And where are old people to go? They are unable to go to old people's homes because those also are being closed as part of the public expenditure cuts.
Since the home is the cornerstone of family life, all this must mean an increasing burden on the welfare services, had results in education from children who are separated from their parents or who are living in bad accommodation, and a

919
further breakdown in marriages. We know very well that one of the big causes of such breakdowns is that couples have to share a home instead of having one of their own. How, with unemployment and with inflation rising as it is, even young people who have lived for three years in a council house are going to be able to buy their own house under the Government scheme, even at a third discount, is just not possible. I believe that this is not an economy in any true sense of the word; it is an economic and social disaster.
4.20 p.m.
Lord AVEBURY: My Lords, while thanking the Minister for repeating the Statement I should like to ask how the Government expect local authorities to make housing expenditure plans for the year beginning 5th April when only now, six weeks before the start of that financial year, are they being told how much money is available. Secondly, with regard to the costs of local authority building, mentioned in the Statement, can the Minister say what is the increase in the cost of an average three-bedroom semidetached Parker-Morris house which has been brought about by the rise in interest rates since the Conservatives came into office? How are people going to buy the houses offered for sale by the local authorities when these cuts are likely to add to the mortgage famine? Does not the initial 60p rent rise mentioned come on top of the £2 increase which has already been imposed by the Government, and does not the Minister consider that this will be likely to fuel inflationary wage demands even beyond those of the order of 20 per cent. that we have already seen?
Have the Government made any estimate of the proportion of this £2,200 million which will have been committed already by the local authorities, and whether they will have anything left over for new mortgages or for renovations? Do the Government realise that if local authorities, as a result of these cuts, have to cancel schemes on which they may already have embarked or, at the minimum, on which they may have paid fees, we shall get even worse value for money out of the housing programme than we have done in the past? Have the Government
920
calculated what additional unemployment this reduction will cause in the construction industry, and the amount of the additional unemployment benefit which is payable to the workers in those industries, offsetting the so-called £540 million saving? Finally, have the Government worked out what additional bed and breakfast charges will be incurred by the local authorities in respect of the homeless as a result of the cuts in the housing programme brought about by these reductions?
4.22 p.m.
Lord BELLWIN: My Lords, first, to deal with the points raised by the noble Baroness, Lady Birk, she referred to the cut in fact being a larger one than the figures I quoted, using a basis different from the likely out-turn. If I were to quote exactly the same figures using the out-turn figures on the basis as did the previous Administration, it is perhaps interesting to note that we should then have been talking about a reduction from £4.2 billion in 1974–5 to £2.16 billion in 1978–9. In other words, the previous Government in fact halved over four years the actual total housing capital allocation. It was an annual average reduction of £500 million. I think that helps to put things slightly into perspective. If one wanted to make the case even stronger one would have to quote the fact that in the year 1975–6 the reduction was £900 million. So let us by all means be concerned at what I said, but at the same time let us keep it in perspective.
The noble Baroness asked how many new starts there would he. Because the system is changing, because there will be the one block system, it will be up to each authority itself to decide how many building starts it wishes to make. It will no longer be told what it has to do; it will be for it to decide whether its priority in its area, depending on local circumstances, shall be for new building rather than repair and improvement, rather than for mortgage money, or whatever. That will be for the local authorities to decide. Therefore I cannot make a "guestimate" as to what new starts there would be. I should have thought that with all the "guestimates" taking place time and time again over the years as to how many new dwellings would be built, it would not advance us a great deal to be making further suppositions at this time.

921
The next point made by the noble Baroness was a reference that the AMA have referred to as regards the single block, saying, "Yes, it is a help, but not so much if it is not much of a block in total". That is quite right, but of course we are talking about a block to them of £2,199 million. I should have thought that was a fairly substantial total.
In regard to new starts there has been an enormous local authority "under-spend"—some 28 per cent. in fact from the allocations last year; so clearly their assessment as to what the spending on new building should be is perhaps not quite the same as some might have thought.
The noble Baroness asked what happened when private sector contracts as well were contracted. I will only say on that, that what has to be done to help the private sector is what we are proposing in the Bill; namely, to make land more available, to help with planning procedures and with planning attitudes generally. I hope that will help and encourage the private sector. The noble Baroness also asked how all this would help the families on the waiting list and those needing repairs to their houses. I must repeat that the point on repair is the same as I made on new buildings: each authority itself will have to decide. The need for repair, for improvement and so on, varies considerably from one authority to another. In some authorities there is a greater need for new building than in others where here may be a far greater need for improvement or repair. Therefore, giving the extra flexibility of the one block is a significant contribution towards the totality of improvement in housing.
That covers most of the points mentioned by the noble Baroness, but if I have missed any, and if she would like me to do so, I should be glad to write to her with more details. The noble Lord, Lord Avebury, asked me what would be the cost of a three-bedroom Parker-Morris type dwelling in the future.
Lord AVEBURYMy Lords, I did not say that. I asked what the increase in the cost of an average three-bedroomed semi-detached Parker-Morris house would be as a result of the increase in interest
922
rates which has occurred since the Tories came into office.
Lord BELLWIN: My Lords, with respect I suggest that the question is slightly academic because under the Bill being brought forward Parker-Morris, as such, will no longer be a requisite upon local authorities—it will not be required. Clearly I have not a calculation at the moment as to what it might be if it were to go on in that way, but perhaps, again, I could come back to the noble Lord on that later.
The noble Lord asked me how these cuts would add to the mortgage famine and I must give him the same answer as I gave to the noble Baroness, Lady Birk. It will for be an authority to decide within its block allocation whether, in the light of the local circumstances, it should give more money to mortgages than to some other form of housing subsidy. I know at least one authority that certainly will be doing that in the future.
The noble Lord asked whether the 60p increase on rents would fuel wage demands. Of course, only time will tell as to that, but perhaps the best indication that we might have of that is to look at what has happened as regards earnings in relation to rents. The fact is that earnings have gone up relative to rents since 1974–75 in this ratio: rents have risen by 70 per cent., while earnings have risen by over 110 per cent. So, although the noble Lord may have a case, there again only time will tell; but the figures may give some indication. As to extra unemployment, I do not think he needs me to answer that, because once again it would depend upon how the money was spent. As for the homeless, the same thing applies again. I think what we are saying is that we are moving towards spending what we believe we can afford, not what we feel we ought to be able to afford. I think there is a difference.
4.31 p.m.
Lord HALE: My Lords, if the noble Lord wants to refer to what we can afford, will he apply his mind to the problem of overcrowding in lower middle-class houses or working-class houses—I dislike the term—which is increasing? In London an appalling situation is developing.

923
When he refers to the problems of councils and so on, does not he realise that there have been borough councils, in Lancashire for example, for whom housing was an absolute priority problem from the start? We were building what council houses we could in a town like Oldham long before the war. Many of those houses are still let. When he talks about the problems of maintenance and repairs, in connection with that sort of thing there is a problem. I am very concerned about the position. The last Labour Government did at least apply some control in favour of the occupancy of houses that had been once the homes of families and now were divided up. This protection was largely removed by the Court of Appeal. Now we have young girls, students and working-class, sharing a single room, with a lavatory, at £60 a week between four of them. This is not something that is rare; it is commonplace. When the noble Lord talks about the availability of houses, there are more and more stately houses being bought, more often than not, not by British nationals, and there are blocks of flats that to my knowledge have changed hands five and six times in the last few years. I know we are talking about council houses, and I know we are talking about the Government allocation, but the noble Lord himself asked us to apply our minds to the general perspective of the housing situation. It is a dreadful perspective, and the result of all this may be increasing tragedy.
4.33 p.m.
Lord BELLWIN: My Lords, the noble Lord will forgive me if I am not absolutely clear as to what answer he wants from me on the particular points he has made. Perhaps I could say that, as regards the housing situation in London, I should have thought that the proposals we are making in the Bill as regards shorthold might very well, and hopefully will, have a significant impact on the availability of accommodation in the private rented sector. Within the inner London area that, I would think, would be a major contribution, if it turns out as we expect.
As to the noble Lord's other observations, he will have to forgive me if I do not quite follow the question he was wanting to put. Everyone has to be concerned about housing; it is indeed a basic fundamental. But I do not think
924
we help the debate by assuming that the proposals made in the Statement today are going to result in what the noble Baroness, Lady Birk, referred to as economic and social disaster, as the noble Lord, Lord Hale, intimated similarly. You have to look at what happened in 1975–76, when a cut of double this size was made in the programme. It did not have that effect, and I do not think it will this time. Indeed, if the one block proposal achieves only a part of what we hope, I think it will be a major contribution to helping generally by giving more flexibility to the totality of the housing scene.
Lord DENHAM: My Lords, I know the noble Lord, Lord Ross, wants to ask a question. I think your Lordships may feel that when he has done that, and when my noble friend has replied, it might be time to carry on with the business.
Lord ROSS of MARNOCK: My Lords, I do not think I will delay your Lordships long and I do not think the noble Lord needs to reply. I just want to ask the noble Lord whether he appreciates that this is a United Kingdom Parliament. I certainly should have liked to hear what the Statement was in respect of Scotland, because from the point of view of housing undoubtedly we have a very much worse position, particularly in our older cities.
Is there any reason for me to believe that the Statement in regard to future housing in Scotland is any more palatable than that which has already been delivered? Local authority housing in Scotland means far more than it does in England and Wales. Can the noble Lord tell me that the hope is in respect of that? Can he tell me whether he expects, or whether anyone else expects, that persuading anyone in Scotland to buy a council house is going to provide another house? It just means taking one out of the available stock. Mortgage rates are the same in Scotland as they are down here, and in some cases, for example in Aberdeen, the cost of houses is even higher. Bearing in mind that at the present time house building is lower than it has been for over 30 years, are the Government intending to improve the position in Scotland by the Statement that, unfortunately, I have not been provided with?
Lord LLOYD of KILGERRAN: My Lords, may I ask a very short question? The noble Lord said that his Scottish and Welsh colleagues are making separate announcements. May I ask whether, so far as Wales is concerned, the announcement will be made in the House?
Lord BELLWIN: My Lords, there will he separate Statements, written Statements, in both Houses on the position in Scotland and in Wales. So, hopefully, the information noble Lords require will be available either now or very soon. Perhaps I may make one last comment on the point that the noble Lord, Lord Ross, made as regards the position in Scotland. As it happens, I do know a little of the position in Scotland from another incarnation, and so on. Yes I am inclined to agree with him that in some parts of Scotland the housing position is indeed very bad and requires a great deal of work and help. I cannot tell him what the Statement is as regards Scotland because I do not have it with me. However, on one point I would have to differ with him. I do not accept that when you sell a council house you take it out of the stock. I have said this before and doubtless will say it again when we come to the Housing Bill. The person who occupies a house as a tenant and then buys it, thereby becoming the owner, continues to occupy the same house. He makes it neither more nor less available than before because he continues to occupy it in exactly the same way.
Viscount MASSEREENE and FERRARD: My Lords, in order to decrease pressure on housing, is it the Government's intention to amend the Rent Act so that it does not give tenure for life? As my noble friend will know, there are tens of thousands of houses in the country which are empty because the landlords are frightened to let them; they might get a bad tenant, and, of course, he is there for life.
Lord BELLWIN: My Lords, as I think I answered not long ago on this same point, I would refer my noble friend to the short-hold proposals in the forthcoming Bill, which we shall be seeing fairly soon. Again, only time will tell, but I at least hope that this will be a major contribution towards making landlords feel that there is greater security for them in renting. There is no doubt that the successive
926
Acts, with their restrictions, have been a major factor—and the figures show that this is so—in reducing the availability of private sector accommodation to rent.
Baroness BIRK: My Lords, I wish to refer to two points. First, I think that it is very easy for figures to become confusing when they are thrown across the Chamber. I still maintain that the cut is much greater than it appears to be. I should be grateful if the Minister could write to me to that I can see the figures set out.
Secondly, I should like to press him—and he may like to write to me about this as well—on the question of new starts. Frankly, I find it very hard to believe that the Government do not have, and do not intend to have, some idea of how many new houses will be built and of what sort of increase there will be in our housing stock. I do not think that it makes sense to answer in the way that the noble Lord has answered.
Lord BELLWIN: My Lords, I am sorry that the noble Baroness feels that my answer did not make sense to her. The fact is that I can only repeat what I said previously. There has been far too great a willingness to make such forecasts in the past which have invariably been proven wrong, not least in the last year when local authorities alone had an "underspend" of some 28 per cent. on their proposals. Clearly it would not help at all to make such guesses. However, in any case the one-block position makes all the difference: every authority will decide for itself what it will do in its own area.

PROTECTION OF TRADING INTERESTS BILL
4.42 p.m.
Consideration on Report resumed.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 4:
Page 3, line 31, after ("to") insert ("or in the possession of").
The noble Lord said: My Lords, I beg to move Amendment No. 4. This is a short and simple amendment intended further to protect the interests of British

927
firms and their personnel, and thus increase or clarify the scope of the protection given in the Bill to United Kingdom firms.
At present the scope of the protection to be found in Clause 2(6) relates to:
"a document or information relating to a business of any description."
The question is: what is the scope of "relating to a business of any description"?
My amendment seeks to extend the protection given not only to information relating to a business, but information in the possession of a business. There may be documents in the possession of a company which do not relate to any business of any description. During the Committee stage I gave the example of a patent specification. The patent may have lapsed and it will be just a piece of worthless paper, not likely ever to be used in any business. However, on that patent specification—which is in the possession of the firm, but not relating to its business—there may be the names of certain inventors and there may also be names in the body of the specification. If it is held that that is not a document relating to a business, then it would be possible—particularly in the very wide pre-trial discovery proceedings in America—to ask for some information relating to the matters in that document, which is in the possession of the company but does not relate to any business whatsoever. I beg to move.
Lord MACKAY of CLASHFERN: My Lords, I undertook during the Committee stage to consider this matter. I have tried to do so and the department has done so, in a sense, independently. The situation is that the kind of document that the noble Lord, Lord Lloyd of Kilgerran, has mentioned as an example would, I think, fall within the definition. Although it is not a document which may be currently used in the business, it is presumably kept by the business because of a possible connection with the business either in the past or in the future—for instance, we know that solicitors are notable for keeping matters that were connected with their past business.
However, "relating to a business" is a very wide expression. As I pointed out at the Committee stage, the amendment proposed by the noble Lord, Lord Lloyd,
928
would have the effect of covering private documents which happened to be in the possession of a business—for example a solicitor's business—for purposes of safekeeping, or in connection with someone else's private affairs.
Therefore, I take the view—and I am confirmed in that view by the independent review which the department itself carried out—that the phrase in the Bill as drafted is sufficiently wide to cover all that we are likely to need to cover, and I hope the noble Lord will see his way to accept that point of view.
Lord LLOYD of K1LGERRAN: My Lords, if the noble and learned Lord had confined his reply to the last couple of sentences I should be much happier, because the reason that he gave in relation to patent specifications was, if I may say so, a little unrealistic to a practitioner like myself in this area. It often happens that patent specifications are kept in the possession of a company for no reason whatever: they just happen to be there. However, in view of the fact that the noble and learned Lord has indicated that he feels that my particular example does fall within the scope of the Bill as it is, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 5 [Restriction on enforcement of certain overseas judgments]:
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 5:
Page 5, line 4, leave out ("or").
The noble and learned Lord said: My Lords, I beg to move Amendment No. 5. I should like to seek to explain Amendments Nos. 5 and 6 together. The purpose of these amendments is to deal with the point raised during the Committee stage by the noble Lord, Lord Hacking. These amendments introduced a third class of overseas judgment which shall be unenforceable in the United Kingdom—namely, a judgment on a claim for contribution in respect of damages awarded by a judgment which is currently unenforceable under Clause 5, apart from the amendment.
My view had been that such a judgment would probably be covered already by the terms of Clause 5. But, having considered

929
the point again in the light of the noble Lord's support for his amendment, I agree that the matter is not entirely free from doubt and, to avoid doubt for the future, I now move the amendment to cover judgments of this character. I beg to move.
Lord HACKING: My Lords, I too should like to address the House on Amendments Nos. 5 and 6 and in so doing express my warm thanks to the noble and learned Lord the Lord Advocate for moving this amendment. I also express my gratitude that he has chosen to do so at this time, for he is just in time! On 27th February last year in the United States Eighth Circuit in a case called Professional Beauty Supply Inc. v. National Beauty Supply Inc. the Court of Appeals ruled that contribution was available in private anti-trust suits. And only today in a telex from New York I have received this message:
"A Bill (No. 1468) has recently been introduced into Congress for the purpose of permitting contribution and set off under certain conditions".
I am very grateful to the noble and learned Lord.
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 6:
Page 5, line 7, at end insert ("; or
(c) a judgment on a claim for contribution in respect of damages awarded by a judgment falling within paragraph (a) or (b) above.").
On Question, amendment agreed to.
4.49 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 7:
Page 5, line 7, at end insert ("; or
(c) a judgment or order for recovery of any sum in so far as the said sum shall have been increased by allegations or claims relating to multiple damages pursued in the course of proceedings before the said court.").
The noble Lord said: My Lords, I beg to move Amendment No. 7. The purpose of this amendment is again to try to increase the protection for a United Kingdom firm against having to pay not only when there is a judgment for multiple damages issued against it but in, for example, proceedings in the United States of America, where the final judgment or order is for any sum, and where in the
930
course of those proceedings claims have been pressed in relation to anti-trust although the final judgment does not say that there is a judgment in respect of multiple damages for anti-trust.
I should like to take a typical example. A patent action may be started in the United States and a counter-claim or separate proceedings in relation to this anti-trust proceedings may be taken by the American firm. Eventually—and sometimes these cases take years—the case may be settled or it may be lost by the United Kingdom company in the United States of America, and a large sum awarded by the courts or the authorities against the United Kingdom firm. There mayalso follow, as a direct result of the way in which those proceedings have been conducted—although there is no final judgment saying that there is anything contrary to the anti-trust law of the country—other expensive legal proceedings for example, involving the United Kingdom's other licensees in America, their Canadian licensees or even licensees in other countries who have read the transcripts of the proceedings in the United States of America.
All that vast expense will have been put on the United Kingdom interests by the United States firms and, because of the tough line taken by Americans in relation to these anti-trust proceedings, it may follow that in awarding a sum against the United Kingdom firm, the court will have in mind all these matters of anti-trust, and that the sum awarded will have been very considerably increased as a result of the way in which the proceedings have been conducted by the United Kingdom firm.
Therefore, the intention behind my amendment is that protection should be given to the United Kingdom against having to pay not only in judgments which directly result in an order about anti-trust, but in:
"… a judgment or order for recovery of any sum in so far as the said sum shall have been increased by allegations or claims relating to multiple damages pursued in the course of proceedings before the said court"
or the said authority. I submit to your Lordships a realistic position for a United Kingdom firm when it is dealing with its intellectual property activities in the United States. In my submission, it would be

931
very helpful to certain branches of industry if some help, in the discretion of the Secretary of State, could be given in those circumstances. I beg to move.
Lord MACKAY of CLASHFERN: My Lords, I am very much obliged to the noble Lord, Lord Lloyd of Kilgerran, for raising this matter again and also for the benefit of a discussion with him about the problem. The difficulty here is to identify in a way which is suitable for the purposes of such an enactment as we seek to produce, the situation with which he is dealing. As I think I mentioned in Committee, the difficulty of putting rights on allegations or claims which are not established is quite a real one. However, if this problem can be identified more closely as time develops, it may be that the discretion which the Secretary of State has under sub-section (2)(b) could be used to cover it, because the discretion there given is quite wide—it might be used to cover this situation. However, for the reasons which I have given, I do not think that the amendment as proposed is very satisfactory, and certainly we have been unable to identify with sufficient precision for this purpose the situations which the noble Lord has in mind. Therefore, I invite the noble Lord to withdraw this amendment.
Lord LLOYD of KILGERRAN: My Lords, I thank the noble and learned Lord in particular for allowing me to have a discussion with him about this broad matter. Frankly, I had not considered the position of the Secretary of State under Clause 2(1)(b)—I understand that that was the reference which the noble and learned Lord made.
Lord MACKAY of CLASHFERN: My Lords, Clause 5(2)(b).
Lord LLOYD of KILGERRAN: My Lords, I should like to consider the position arising under Clause 5(2)(b) and be allowed to raise this matter at a later stage. In those circumstances, while thanking the noble and learned Lord, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.55 p.m.
Lord HACKING Lord HACKING moved Amendment No. 8:
Page 5, line 7, at end insert ("; or
(c) a judgment for punitive or exemplary damages; or
(d) a judgment given in proceedings in respect of which the Secretary of State had given directions under section 1(3) above or under section 2(1) above.").
The noble Lord said: My Lords, as your Lordships will remember, the noble Lord, Lord Renton, moved similar amendments at the Committee stage, and I have tabled the same amendments as he tabled, with a slight adjustment in what has been described in the Marshalled List as paragraph (d). That adjustment is to remove some of the words which the noble Lord, Lord Renton, had in his amendment, and to include reference to Section 2(1) as well as reference to Section 1(3).
These amendments seek to add to the categories of foreign judgments which under this Bill are to be unenforceable in England. There are, in fact, three parts to this amendment: first, foreign judgments which have a punitive or exemplary damages element; secondly, foreign judgments concerning which there have been in the United Kingdom directions from the Secretary of State for Trade under the powers of Clause 1(3) of the Bill; or, thirdly, under Clause 2(1). However, as a matter of convenience for drafting I have grouped them all together in one amendment. Therefore, if one of the three finds favour during the course of the Report stage in this House, I would move that one at Third Reading. If they all find favour before your Lordships at the Report stage, then I shall have the greatest of pleasure in pressing my amendment before your Lordships now during the Report stage!
Your Lordships may recall some of the arguments that were used by the noble Lord, Lord Renton, about punitive damages. Your Lordships may also recall how I had some hesitation about whether it was appropriate to make unenforceable a foreign punitive damage award when we, in this country, in certain circumstances have punitive damages. Having heard the noble Lord. Lord Renton, I came to the conclusion that it was not a case of like with like; that the award of punitive damages in this country is extremely rare and usually for the most moderate sums.
That is not so in the United States of America. Your Lordships may have

933
heard, for example, of the famous, or perhaps I should say infamous, 1978 Ford Motor Car Company case—the Ford Pinto case—in which punitive damages of 125 million dollars were awarded. Your Lordships may also recall that in Committee the noble Lord, Lord Renton, drew attention to another case in which the plaintiff recovered 350,000 dollars as compensatory damages, but 10 million dollars in punitive damages.
The awarding of punitive damages in the United States of America is causing some concern. Recently a report was issued by the Department of Commerce in Washington which drew attention to some areas of concern. As your Lordships may know, the jury is used much more extensively in the United States of America than in this country, and it is the enthusiasm of some juries in the United States that has driven the awards to such high levels. It is causing concern on a number of fronts in the United States, and that is why it is not inappropriate for us to consider the matter in your Lordships' House. For example, the damages are so high that medical insurance is becoming a major problem; also many insurance companies will not now insure motorists because of the high punitive element of damages which have driven the damages awarded so high in motor-car injury cases. There is also concern about the element of combining both civil and criminal proceedings into one proceedings in which the defendant does not have the same safeguards as he would have if he was solely in criminal proceedings.
Therefore, I suggest to your Lordships that this is a matter of very serious concern. It is a matter that principally arises in the area of products liability, and is one that is causing British traders in the United States of America real worry. It is no good for anybody in your Lordships' House—I will not suggest that the Lord Advocate is going to produce this argument—to say, "Well, the problems are mainly in the anti-trust field, and therefore we need not concern ourselves about it". Of course punitive damages do not arise in the anti-trust field. Antitrust has its own system of damages; the triple damages which this Bill deals with in other parts. It follows therefore, that subsection (2)(a), which is the one which will protect us from the enforcement of
934
the multiple damages anti-trust, will not be of any assistance.
But this is a matter for trade. This Bill is entitled the Protection of Trading Interests Bill, and this directly concerns trade because any manufacturer in England who either exports into the United States of America, because he has a manufacturing base by a subsidiary in the United States of America which produces goods, is exposed to product liability law in the United States of America, and is also exposed to these enormous punitive damages. For that reason I urge the noble and learned Lord to consider again this amendment, and to consider the argument that I have now added to the argument of the noble Lord, Lord Renton.
The level of United Kingdom trade into the United States of America is of colossal proportions. What is not commonly known the world round is that Britain has been the biggest investor into the United States of America for many years. Even in United States terms Britain is an important trader. There is one other argument as part of my submissions, and that is the public policy argument; the argument that foreign punitive damages awards would not be enforced in England because it is against public policy. I am not going to argue that out. I recognise that there is strength in that argument.
But there is another important aspect to look at, and that is the presentation of the Bill. As has been expressed, both in another place and in your Lordships' House, nobody really expects the provisions of the Bill to be used. This Bill is a stand by the United Kingdom; a statement almost in international law by the United Kingdom in protection of United Kingdom interests. It is therefore of supreme importance that we state our law and our position clearly on the face of the Act, rather than just leave it to the knowledge of English lawyers, "That will be all right. It falls under the field of public policy. It will not be enforced". I strongly urge on this House that the Bill states in terms that we will not enforce punitive damages if that is the decision of this House, and that is the decision that I am seeking from this House.
After that strong peroration on punitive damages, let me come to the other two

935
categories of foreign judgment that I am asking your Lordships to bring into the unenforceable group. Both of these refer back to directions that the Secretary of State will have discretionary power to give directions under Clause 1(3) and Clause 2(1). Under Clause 1(3) the Secretary of State has power to give directions to persons in the United Kingdom against complying with foreign measures which are damaging to British trading interests. Under Clause 2(1) the Secretary of State has power to give directions to persons in the United Kingdom concerning complying with unacceptable foreign discovery orders. What the latter two parts of my amendment do is to say that if a foreign judgment has been obtained either by the route of unacceptable foreign measures because they are damaging to the interests of British trading, or because unacceptable foreign discovery procedures have been used, then the judgment itself should be unenforceable.
At the Committee stage I cited an example. I shall cite the same example briefly now. In the early 1970s the English company, Beechams, was concerned in an anti-trust litigation which was tried in Washington under Judge Sirica. During the course of the trial there was an order to Beechams to produce a large number of documents. Beechams objected to producing those documents and sought protection under the Shipping Contracts and Commercial Documents Act 1964. They were given protection by the Secretary of State, who ordered that they should not be compelled to produce a large number of documents that they had been ordered to produce by the court in Washington.
What Judge Sirica then did was to make findings of fact against Beechams in all areas where they had not produced the documents. If that had gone through—it did not in this particular case—as a foreign judgment, then the foreign judgment would have been obtained adverse to directions made by the Secretary of State. It is for that reason that I have urged on your Lordships that these two further categories of foreign judgments should not be enforceable under Clause 5.
5.7 p.m.
Lord MACKAY of CLASHFERN: My
936
Lords, I perfectly understand and sympathise with the noble Lord's desire to ensure that punitive or exemplary damages given by foreign courts should not be enforceable in the United Kingdom. However, although it is true that that might well affect the trading interests of the United Kingdom, it would go beyond that. It would affect the rights of people who had obtained such awards, for example, who might not be traders at all. The situation therefore appears to be one which should be covered, if it is to be covered, in a statute dealing with the enforcement of foreign judgments generally rather than in a statute of this sort.
Accordingly, this is a matter for consideration by the noble and learned Lord the Lord Chancellor, who has responsibility in England and Wales for this matter, and the Lord Advocate has that responsibility in relation to the law of Scotland. While understanding the noble Lord's desire in the matter, I would suggest that this is not an appropriate place in which to give effect to it.
With regard to the second matter, again I accept the logic of the argument which has been forcefully put. However, as I said in Committee—and I shall not repeat the arguments now—this amendment could only apply to civil monetary judgments, and these currently only exist, so far as we are aware, under the United States anti-trust legislation, and that is already covered. We would therefore prefer to stay with the situation as it exists, with powers of course for the Secretary of State under the provision I referred to earlier in this clause, subsection (2)(b), to deal with any development. I would therefore invite the noble Lord to withdraw this amendment.
Lord HACKING: My Lords, it is my intention to withdraw the amendment. There is nothing to be gained by dividing the House. Your Lordships have heard the arguments; the Lord Advocate has heard the arguments. May I leave it on the pages of Hansard—and there is always the Third Reading.
Amendment, by leave, withdrawn.
5.10 p.m.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No' 9:
Page 5, line 17, after ("restrain") insert (",distort").
The noble and learned Lord said: My Lords, this amendment gives effect to a point raised by the noble Lord, Lord Lloyd of Kilgerran, in Committee, and, as he pointed out then, the definition in the amendment is recognised by Article 85 of the Treaty of Rome and conforms with the definition in the current Competition Bill which your Lordships were considering in Committee so recently. I am extremely grateful to the noble Lord for raising the point and happy to be able to accede to his suggestion.
Lord LLOYD of KILGERRAN: My Lords, I take it as a great tribute to myself that I find my name so closely associated with that of such a distinguished noble and learned Lord. It seems this afternoon that the Celtic fringe is in harmony not only between themselves but in the context of the Treaty of Rome, from parts of which many of us have suffered in the last few years.
Lord ELWYN-JONES: My Lords, it also adds a superfluity of verbs, which is also characteristic of the race of my noble friend and myself.
On Question, amendment agreed to.
Clause 6 [Recovery of awards of multiple damages]:
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 10:
Page 5, line 43, leave out ("by virtue of any enactment or rule of law").
The noble and learned Lord said: Perhaps I could explain at the same time this amendment and Amendment No. 19. The purpose of these amendments is to ensure that any right of contribution that might arise from a contractual relationship would not be covered by the provisions of Clauses 5 and 6, and they are consequential on amendments which we made to Clause 6 to cover contributions. It seems right that anyone who freely enters into a contract which contains provisions relating to a right of contribution would not need protection such as is afforded here, and therefore the effect of these amendments is to exclude such contractual rights of contribution from the protection.
On Question, amendment agreed to.
5.12 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 11:
Page 6, line 3, after ("given") insert ("or from any associate or subsidiary or permitted user of trade marks or exclusive licensee of any intellectual property of that party carrying on business of any description in the United Kingdom").
The noble Lord said: May I, my Lords, in speaking to this amendment, speak at the same time to Amendment No. 18 relating to the definition clause? The purpose of this amendment is to strengthen the hand of a United Kingdom firm which has been subjected to an order of, say, the American courts to pay large sums—to assist the firm in trying to recover some of that money which they have been forced to pay in multiple damages proceedings concluded against them—and it seems to me important that industry should feel that this Bill will work, particularly in regard to this matter.
If the United States company has no assets in this country, then the Bill is entirely nugatory, as it seems to me; it is no help whatever to the United Kingdom firm. Often the American company has over here, as a United Kingdom company, an associated company or a subsidiary company or a licensee under its patents or trade marks or designs, and the purpose of the amendment is to submit that the United Kingdom firm could claim first of all against the American associated company or its subsidiary company in the United Kingdom, provided the shareholding of the American company in the United Kingdom company is 50 per cent. or more.
I am fully aware that this matter came up in the other place, and the Attorney-General dealing with the matter on 6th December in Standing Committee F indicated that he had great sympathy for putting the United Kingdom firm into the position of being able to claim against a subsidiary or associated company of the United States firm which was in this country. He went on to give his reasons why he did not feel the matter should be pressed in so far as a subsidiary or associated company of the American company was concerned.
My amendment goes a little further than the amendment which was considered in the other place because I am limiting the associated company and subsidiary

939
companies of the American company to a company in the United Kingdom which has 50 per cent. or more of its shares owned by the American company. If I may be permitted to take up a little of your Lordships' time, the argument of the Attorney-General was:
"In this country we require that a company carrying on business within the jurisdiction has itself to carry on business. It will not be enough that it has an ownership of shares in a subsidiary. That exactly was the point made by the honourable and learned Member for Abertillery. I have great sympathy for it, but it is a matter of how far down the line we shall go. We do not like what the United States courts are doing".
Perhaps I might interpose here that under United States law they find that interference and claims can be made against subsidiary companies with only 25 per cent. of the shareholding by the main company. The Attorney-General continued:
"Are we ourselves then going to do exactly the same because we think that it is unfair? The United States will claim jurisdiction on these grounds. We do not think that it is something that we ought to do here. It is a question of balance. Although I have the greatest sympathy for it, I think that the argument against two blacks is one that one should bear in mind".—(Official Report, Commons, Standing Committee F, 6/12/79, col. 68.)
My amendment relates to specific kinds of subsidiaries where the shareholding of the American company is 50 per cent. or more. That is one aspect of the amendment.
The second aspect of the amendment relates to where the subsidiary company or associated company is, say, the exclusive licensee of the American company in respect of certain intellectual property rights; that is to say, patent rights, design rights and copyright rights. Under British law, the exclusive licensee of a patent—and I apologise for being so technical, but these are extremely important and realistic matters in modern industry—is for certain circumstances considered to be the owner of that patent. He can sue as the owner, and therefore in my submission, if the subsidiary company in the United Kingdom is not only one which is owned as to over 50 per cent. by the American company and is an exclusive licensee of the patent, then the British company should be allowed to claim against that subsidiary of the American company. That is the second limb of my case.
As far as trade marks are concerned, a very special circumstance arises under British law in that regard, and that is that if company A is the owner of a trade mark, it can licence another company, company B, under the trade mark, but you do not refer to that company as the licensee; you refer to it as the registered user or permitted user because that kind of licence must be approved by a limb of the Secretary of State for Industry, the Patent Office. The Registrar of Trade Marks must approve the licence granted, and called the registered user agreement, between firms A and B.
Therefore it can often happen that in this country there is a British company over 50 per cent. owned by the American company and the British company is the registered user or permitted user, having the permission of the Secretary of State to use that trade mark. But another unique factor, arising only because we are dealing with trade marks, is that use by the British company—because it is the permitted user or registered user—is to be considered use by the parent American company for all purposes including purposes at common law.
The third limb of my submission to your Lordships is that where the American company has in the United Kingdom a subsidiary company of which it owns over 50 per cent. of the shares, and has made arrangements by permission of the Registrar of Trade Marks—it comes under the control of the Secretary of State—the British company that has paid these vast sums of money should have the right to claim against that company. I apologise for the technicailties involved. As the noble and learned Lord, Lord Elwyn-Jones, indicated when he interrupted me in the flow of my speech at the Committee stage, there is nothing simple about any matters in relation to intellectual property. However, the instance that I have given is a commonplace for those of us in industry who are concerned with these important matters of trade marks. I beg to move.
Lord HACKING: My Lords, I rise to support the noble Lord, Lord Lloyd of Kilgerran, on the amendment that he has just put before your Lordships. I will not follow him in his detailed argument on intellectual property. May I

941
put it to your Lordships that he presented the matter persuasively, and I am absolutely sure that his argument is right. I want to turn to the larger point that the noble Lord raised in his submissions to the House; namely, regarding the effectiveness of Clause 6 of the Bill. Indeed, if my recollection is right—I was not present in your Lordships' House, but I have read Hansard—the noble and learned Lord, Lord Elwyn-Jones, raised this point during the Second Reading debate. The fact at the moment is that the clawback—to use that rather unattractive phrase—provision of Clause 6 is a clawback only to the foreign judgment creditor. I know that the noble and learned Lord the Lord Advocate has an amendment to widen the scope, but at this point it is a clawback only to the foreign judgment creditor. After the noble and learned Lord the Lord Advocate has moved his amendment it will be extended only to the assignee of the original foreign judgment creditor.
Since, (as the noble Lord, Lord Lloyd of Kilgerran, said) the foreign judgment creditor is most likely to be outside the jurisdiction of the United Kingdom—or to put it the other way round, is most unlikely to be inside the jurisdiction of the United Kingdom—then as currently drafted, the clause will have little effect. Since this is a novel Bill which in Clause 6 sets out new provisions which have never been used before, and sets out the stand of the United Kingdom on matters of international law concerning its trading rights, one is troubled that Clause 6 is left in its present form. For that reason, even though it may be a very late stage in the Bill, I ask the noble and learned Lord the Lord Advocate to consider this matter again. With great respect to the argument of the Attorney-General, it is not a question of two blacks; it is a question of one force meeting another. At the moment Clause 6 is not a substantial force, a balancing force from the United Kingdom, and as such I submit that the clause is too weak and hence not sufficiently effective. It is for that reason that I support the noble Lord, Lord Lloyd of Kilgerran.
5.24 p.m.
Lord MACKAY of CLASHFERN:My Lords, like my right honourable friend the Attorney-General, I have every
942
sympathy with the arguments which have been put forward. In justifying this Bill not only to your Lordships but internationally, we have sought to take our stand on principle, and it is therefore necessary to be sure that what we put forward is in accordance with principle as we understand it. Clause 6 as it stands is a novel clause—I do not think that anyone has before tried this particular method of recovery—and it may be wise to proceed with caution. So at present our view is that, while there is much substance in the arguments which have been put forward, it is wise not to give effect to them.
This is of course a developing situation. As the Bill becomes law—as we hope it will shortly—the situation may well develop, and I think that I can give your Lordships an assurance that Her Majesty's Government will be paying very close attention to how the situation develops and will consider bringing forward in future further legisaltion in this field, if it should prove to be necessary. But at the moment our view is that it is wise to be cautious and to proceed within the principles which we sought to set out and which have international validity. So while I sympathise very much with what the noble Lord is seeking to do, I invite him to withdraw his amendment.
Lord ELWYN-JONES: My Lords, that gives me the impression that in this matter the Government—to coin a phrase—are willing to wound, yet afraid to strike, if in present conditions I dare mention the last verb. I see the anxiety that we do not want to build up a protective Bill into a great diplomatic issue between ourselves and the United States. However, I was a little disturbed to hear the noble Lord, Lord Hacking, say a few minutes ago that there was really no serious intention of enforcing the Bill. I do not know whether he meant that. I am sure that the noble and learned Lord the Lord Advocate would not like that message to emerge from our proceedings in this House. I confess that I share the concern of the noble Lords, Lord Lloyd of Kilgerran and Lord Hacking, that as the Bill will stand it will anchor a good deal of the effectiveness, but I understand the anxiety of the Government in this situation. In view of the assurance we have had that this is not going to be the

943
end of the matter, but that it will be under the watchful eye of those who are responsible in this field, perhaps it may not be desirable to press the matter to a Division.
Lord LLOYD of KILGERRAN: My Lords, the noble and learned Lord the Lord Advocate said that the Bill was prepared in order to stand on principle. He then went on to say—and I agree with him—that this clause is a novel clause. However, I should like to urge upon the noble and learned Lord and his department that a little more commercial realism should be put into the clause. I am grateful to the noble Lord, Lord Hacking, for supporting the amendment. It seems to me that the whole intention of the Government in relation to the Bill is to have a diplomatic flag called an Act of Parliament, which they can wave at some kind of convention or meeting, and that in so far as British industry is concerned, Clause 6 has no effect whatsoever from the point of view of realistic commercial sense.
I was disappointed that the noble and learned Lord did not make any reply whatsoever to my specific submissions in relation to a United States company having a United Kingdom subsidiary in circumstances where the subsidiary was a registered user of the trade marks. Not many people know how valuable trade marks are in the commercial life of so many companies. Some of the trade marks with which one is concerned are worth £50 million or £100 million. They are not simple, everyday chattels that are worthless. The value of trade marks to British industry is extremely great. Therefore, where a British company has been subjected to multiple damages in the United States of America and has had to pay vast sums, it should be entitled to a greater scope in its attempts to collect something back from those vast sums. Although, as the noble Lord, Lord Hacking, said a few minutes ago, it is hardly worth while dividing the House on this matter, I should like to have heard more from the noble and learned Lord in regard to the specific matter involving trade marks which I mentioned. Subject to the fact that I may raise this at a later stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.30 p.m.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 12:
Page 6, line 4, leave out ("which") and insert ("attributable to compensation; and that part shall be taken to be such part of the amount as").
The noble and learned Lord said: My Lords, some comment was made upon the drafting of this clause when the amendment which I proposed in Committee was under consideration. I think that the noble and learned Lord, Lord Elwyn-Jones, particularly, criticised the drafting, or at least called for us to consider whether we could improve it. This amendment is designed to break the clause and to make it clear what is proposed as the clause proceeds. I hope your Lordships will find it clarifying, and that it meets, at least to some extent, the point which was made by the noble and learned Lord. I beg to move.
Lord ELWYN-JONES: My Lords, the amendment allows a breathing space in the breathless process of reading this subsection, and to that extent I think it is a slight improvement. I welcome it, and am grateful to the draftsman for having applied his ingenious mind to improving the matter, as I think he has done.
On Question, amendment agreed to.
Lord HACKING Lord HACKING had given Notice of his intention to move Amendment No. 13:
Page 6, line 8, at end insert—
("( ) In subsection (2) above where the party is a body corporate, the qualifying defendant shall be entitled to recover so much of the amount, to which the said subsection (2) refers, from any associated, affiliated or subsidiary body corporate of the party.").
The noble Lord said: My Lords, in a moment I intend to withdraw this amendment because the noble and learned Lord the Lord Advocate spoke on the principle of it when he was speaking on the principle of the amendment moved by the noble Lord, Lord Lloyd of Kilgerran, No. 11. But I rise to my feet chiefly because this is a convenient moment at which to make a comment, again on Clause 6, and to comment in the light of the remarks made by the noble and learned Lord, Lord Elwyn-Jones. What I said to your Lordships earlier in the Report stage was that I did not expect this Bill to be enforced, in the sense that I did not expect the Bill to be challenged in many areas by those from overseas. I had in mind, for example,

945
that there are several powers in the Shipping Contracts and Commercial Documents Act 1964 which have never been exercised by the Secretary of State. It was in that sense that I was intimating that I did not expect it to be enforced, not in the sense that I anticipated any lack of willingness on behalf of Her Majesty's Government, of whatever political complexion.
Having made that observation, I would merely add that this is a matter of serious concern—so serious a concern, of course, that the Secretary of State thought it right in the first place to introduce the Bill in Parliament. The noble and learned Lord the Lord Advocate has stated, if I heard him correctly, that the Government will keep the position under review, and that if British companies continue to find themselves at a grave disadvantage under multiple damages awards (or possibly punitive damages awards, if I ever persuade the Government to include that provision in the Bill) then, if I heard the noble and learned Lord correctly, at the first opportunity the Government will bring provisions before Parliament in order to strengthen the Bill. Those provisions, I would anticipate, will be in Clause 6, because there lies the weak area.
Your Lordships should know—and I state this—that in the United States of America, as referred to by the noble Lord, Lord Lloyd, there are considerable powers to exercise rights against subsidiary companies when there is only a very small holding by the parent company in that subsidiary company. One has to go only to recent legislation in the United States of America to find how extensive those powers are. For example, the foreign boycott amendment, which was another one, in 1977. I have not got the chapter and verse before me, so I will not waste your Lordships' time searching for it in my papers; but there is another example where proceedings can be taken against a foreign subsidiary in the search for information needed for the enforcement of the foreign boycott provisions. Having addressed your Lordships to this extent, will resume my place and hear whether the noble and learned Lord the Lord Advocate wishes to say anything.
The DEPUTY SPEAKER. (Baroness Wootton of Abinger): My Lords, do I
946
understand that the noble Lord does not wish to move this amendment?
Lord HACKING: My Lords, I have intimated my intention to withdraw it.
Baroness WOOTTON of ABINGER: My Lords, the noble Lord cannot withdraw a Motion which is not before the House. He must now move it and then subsequently withdraw it.
Lord HACKING: Then I will indeed move it formally, my Lords. I beg to move.
Lord MACKAY of CLASHFERN: My Lords, I have already endeavoured to explain the Government's position with regard to the principle of this, as the noble Lord, Lord Hacking, has said. This gives me an opportunity, which I should like to take, to make some reference to the trade marks position. I did not mean to pass that over as something of no importance; I meant to deal with it as part of the general principle on which we stood. We certainly appreciate the importance of these matters, and certainly it looks an area to which legislation could possibly at some stage properly extend. But at present, as I have said, we have tried to take our stand on the principle of the matter.
So far as enforcement is concerned, I had understood the noble Lord, Lord Hacking, at the earlier stage, to refer to enforcement in the way that he has done. The intention of Her Majesty's Government, of course, is that this Bill should be enforced on all appropriate occasions. Of course, the very existence of the Bill as an Act, when it comes to be legislation, may well make it unnecessary to take formal action under the provisions in some cases, as has happened under the older Act, to which the noble Lord, Lord Hacking, referred. But it is certainly the intention of the Government to use these powers to the full, and to hope that industry also, where appropriate, will use the powers of Clause 6 to protect their interests; because although I agree it is possible to extend Clause 6, we must not forget that it goes quite a long distance already, and I believe that that is an effective initial attack on the problem.
Lord LLOYD of KILGERRAN: My Lords, perhaps I may quite shortly thank the noble and learned Lord for coming back to the trade mark question, which he omitted to refer to earlier.
Lord HACKING: My Lords, at this stage may I formally withdraw the amendent.
Amendment, by leave, withdrawn.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 14:
Page 6, line 26, at end insert ("; and references in that subsection and subsection (2) above to the party in whose favour the judgment was given or to a party entitled to contribution include references to any person in whom the rights of any such party have become vested by succession or assignment or otherwsie.").
The noble and learned Lord said: The purpose of this amendment is to cover the situation where a judgment has been assigned to another party. This point was raised by the noble Lord, Lord Mishcon, on Second Reading, and again, I think, by the noble Lord, Lord Hacking, when the Bill was before your Lordships in Committee. We undertook to consider the situation and I hope that this amendment deals with the matter satisfactorily and covers the situation where the judgment creditor assigns his rights. I beg to move.
Lord ELWYN-JONES: My Lords, we are grateful to the noble and learned Lord the Lord Advocate for meeting the point that was raised about assignees. My noble friend Lord Mishcon, who regrets his absence, has suggested to me that the drafting might be improved if there was a deeming provision included—"shall be 'deemed' to include references to any person", et cetera. I am not myself a lover of "deeming", I must say, but if the noble and learned Lord would care to look at that point I submit it as it was mentioned to me by my noble friend.
Lord MACKAY of CLASHFERN: My Lords, certainly I shall be very happy to look to see whether we can improve the situation still further.
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 15:
Page 6, line 26, at end insert—
("( ) This section shall, with the necessary
948
modifications, apply also in relation to any order which is made by a tribunal or authority of an overseas country and would, if that tribunal or authority were a court, be a judgment for multiple damages within the meaning of section 5(3) above.").
The noble and learned Lord said: My Lords, the purpose of this amendment is to extend Clause 6 to cover the situation where a foreign tribunal—such as, for example, the Federal Maritime Commission in the United States—acting either judicially or inquisitorially, orders the payment of multiple damages. It has been brought to our attention that in some circumstances it may be possible for a tribunal or authority of an overseas country to order the payment of multiple damages, and that that tribunal or authority might not properly be regarded as a court. Therefore, it seems wise to make this extension; and, of course, Amendment No. 16 is consequential. I beg to move.
Lord HACKING: My Lords, I stand to thank and support the noble and learned Lord.
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 16:
Page 6, line 27, after ("given") insert ("or order made").
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 17:
After Clause 6, insert the following new clause:
Enforcement of overseas judgment under provision corresponding to s. 6.
".—(1) If it appears to Her Majesty that the law of an overseas country provides or will provide for the enforcement in that country of judgments given under section 6 above, Her Majesty may by Order in Council provide for the enforcement in the United Kingdom of judgments given under any provision of the law of that country corresponding to that section.
(2) An Order under this section may apply, with or without modification, any of the provisions of the Foreign Judgments (Reciprocal Enforcement) Act 1933".
The noble and learned Lord said: My Lords, this Amendment is intended to introduce a new clause. There have been recently discussions at official level with several other countries relating to the provisions of this Bill with regard to the problems that they also encounter in the

949
same areas. It is clear that several other countries are considering following our example and legislating in this area. It has been suggested, therefore, that it might be helpful if there were provisions for mutual or reciprocal enforcement of such judgments. That is another reason for trying to march according to principle under a clause of this sort. I commend this clause to your Lordships as giving to the Secretary of State an enabling power which would be exercised by Her Majesty by Order-in-Council. This is a power which we think might be of considerable value in the future in this area. I beg to move.
Lord ELWYN-JONES: My Lords, this is an unprecedented provision. I do not remember having come across it before, but that does not necessarily mean that it should be disapproved. That would be a remarkable posture from this side of the House. Perhaps the noble and learned Lord the Lord Advocate will comment on it.
Lord LLOYD of KILGERRAN: My Lords, the noble and learned Lord referred to having discussions with other countries in regard to the content of this Bill and having regard to impressions from other countries in using their laws extra-territorially. Would it not be appropriate to ask the noble and learned Lord whether in his discussions with other countries it would be possible for the Government to issue lists from time to time of foreign laws which are likely to produce difficulties for firms when they are exploiting their products and trading abroad? At the Committee stage, I suggested that Clause 1 was rather cumbersome in the way it was drafted and that it seemed to be commercially undesirable that a company should have to wait until the danger point was reached before having to go to the Secretary of State to obtain relief as now envisaged under the present Clause 1.
Will the noble and learned Lord give consideration to the issue by his department of lists of foreign enactments which would interfere, distort and restrict the trading rights of British companies so that they can be helped in respect of their exploitation abroad and would be able to enter into foreign commercial agree-
950
ments more freely than they are sometimes able to do at the present time?
Lord MACKAY of CLASHFERN: My Lords, with regard to the last point, Her Majesty's Government are always axious to be helpful to companies from the United Kingdom trading abroad. The Foreign Office services are always available in that regard also. We will certainly consider the suggestion that the noble Lord has been good enough to make. So far as precedent is concerned, as the noble and learned Lord, Lord Elwyn-Jones, will appreciate, the clause is very much modelled upon reciprocal judgment clauses and there is a somewhat similar provision in the Nuclear Installations Act 1965. Although it is perhaps novel in concept, it is not a complete departure from a principle which is reasonably familiar.
On Question, amendment agreed to.
Clause 7 [Short title, interpretation, repeals and extent]:
5.44 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 18:
Page 6, line 34, at end insert—
(" "measures" shall include any regulatory provision, rule, regulation, direction, order, licence, permit, consent, judgment or court proceedings or any other executive, legislative or judicial act whatsoever made under the law of an overseas country.
"Associate Company" and "subsidiary Company" means any United Kingdom company in which 50 per cent. or more of the shareholding is owned by the party referred to in Clause 6(1);
"permitted user" has the meaning assigned to it by subsection (1) of section 28 of the Trade Marks Act 1938.").
The noble Lord said: My Lords, may I speak to the word "measures". It has been indicated that the word "measures" in Clause 1 is not very clear and may be ambiguous. The only part of this amendment to which I shall speak is the definition of the word "measures". I realise that there are difficulties in delineating the scope of the meaning of a word by breaking it down into a number of other parts. In doing this, you may miss out some factor and, in the case of interpretation, that may cause difficulties. The definition of "measures" is a little wider than the definition of "measures"

951
considered in another place and for which a certain amount of sympathy was expressed by the Secretary of State. I beg to move this amendment in so far as the word "measures" is concerned. The other parts of the amendment have been dealt with and have now lapsed because of the way the House has dealt with former amendment.
Lord ELWYN-JONES: My Lords, there is a long list of words and I wonder whether, even now, they are all-embracing. This is the difficulty of defining the use of the word "measures". I am slightly inclined not to clutter up the statute book with a long list of what might be conceivably sufficient to exclude any omissions. On the whole, subject to what the noble and learned Lord the Lord Advocate thinks, I am not enamoured of this vast extension and this long list.
Lord MACKAY of CLASHFERN: My Lords, I am grateful to the noble Lord, Lord Lloyd, for raising this matter. It is an important question. I am also grateful to the noble and learned Lord, Lord Elwyn-Jones, for encouraging me in what I am going to say. The concern that this clause should be as effective as possible is understood and appreciated. The view we have taken is that that object is more effectively attained without a specific definition of the word "measures". Indeed, the lengthy list that the noble Lord puts forward lends some strength to that feeling. The word "measures" was used in the 1964 Act and, so far as we know, has not given rise to any problems. It is intentionally wide but we think it does not need to go quite so far, possibly, as the noble Lord's definitions; because, generally speaking, a judgment or something of that sort would be given under something which could be properly described as a measure. Certainly, it is something that would lie behind the judgment that we would have in mind. While appreciating this suggestion, on the whole we are inclined to the view of the noble and learned Lord, Lord Elwyn-Jones, and would like to adopt the situation existing in the Bill as it stands.
This is the last occasion I have to say anything of any consequence. May I express my gratitude to all noble Lords who participated with suggestions for
952
improvement of the Bill. I think that I can claim that every noble Lord who has put forward a suggestion in regard to improvement has had some suggestion incorporated in the Bill—although, of course, not every suggestion that every noble Lord has made. For that we are grateful and I should like to record that gratitude.
Lord ELWYN-JONES: My Lords, I should like to reciprocate that attitude to the noble and learned Lord the Lord Advocate, but this is not the time to say farewell. We have yet another stage and I cannot give an absolute guarantee that noble Lords who are not here will not come to raise new points. Therefore, while I am grateful to the noble and learned Lord the Lord Advocate for favours already shown, it may be that, like Oliver, we shall in due course ask him for some more.
Lord Lloyd of KILGERRAN: My Lords, may I add my thanks to the noble and learned Lord for his kind words and for his sympathetic approach to so many of the amendments I put forward, particularly in the field of intellectual property. I endeavour to introduce a certain amount of commercial realism into any amendments I produce for a Bill of this kind—and in particular, into this amendment before us. It may not be all-embracing but it endeavours to clarify certain general ambiguous matters in the Bill. As the noble Lord, Lord Hacking, said earlier, it is all very well for lawyers sitting in a Government establishment to say, "Well, perhaps it is all right"; sometimes it is a good thing to be more explicit in relation to the definitions of terms that you use in a novel Bill of this kind. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord MACKAY of CLASH FERN Lord MACKAY of CLASH FERN moved Amendment No. 19:
Page 6, line 38, at end insert—
(" ( ) References in this Act to a claim for, or to entitlement to, contribution are references to a claim or entitlement based on an enactment or rule of law.").
The noble and learned Lord said: My Lords, I explained this amendment in relation to Amendment No. 9. I beg to move.
On Question, amendment agreed to.

ALEXANDRA PARK AND PALACE BILL [H.L.]
Read 2a, and committed to a Select Committee.
BANGOR MARKET BILL [H.L.]
Read 2a, and referred to the Examiners.

DERBYSHIRE BILL [H.L.]
5.53 p.m.
The CHAIRMAN of COMMITTEES (Lord Aberdare): My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill be read now 2a.—(Lord Aberdare.)
The DUKE of DEVONSHIRE: My Lords, I very much hesitate to intervene in the Second Reading of this Bill because I am aware that it has the support of the Derbyshire County Council and indeed in particular district councils as well. However, there are two clauses which I look upon with very considerable doubt. I would not dream of intervening unless citizens of the town of Buxton (which is closely concerned with Clauses 15 and 16) had not been to see me and say that they were seriously concerned. I must also at this early stage declare an interest in that my family has had a long connection with Buxton and we still have interests—smaller, alas! than they were—in the town. I hope that your Lordships will not think that I am in any way speaking from my pocket. I speak because I also have some interest in that many years ago I was Mayor of Buxton for two years.
The two clauses in the Bill with which I and other noble Lords are concerned are Clauses 15 and 16. Clause 15 is a very delicate one for me because it allows the introduction of a casino in Buxton. In those distant years of my youth, and the not quite so distant years of my middle age, I have been known to frequent casinos. It would be very improper for me to oppose a casino being built in Buxton on moral grounds and so I will not pursue that other than to say that there are senior citizens of Buxton whose opinion carries great weight in the town who are very much concerned over this issue.
954
On Clause 16, I am in some ways on stronger ground and in some ways on weaker ground in that this concerns the possibility of a bottling factory for Buxton mineral water. I recommend Buxton mineral water very highly; it is extremely good. The factory is in the environs of the Crescent. My close connection here is that my forebear—in spite of having to pay his wife's vast gambling debts—built the Crescent. Without wishing to be a northern chauvinist, it is as fine a group of buildings as anything Bath can produce. They are really splendid. It would be very damaging if a project—however desirable for commercial reasons—was allowed in any way to alter the appearance of the Crescent and its immediate surroundings. Here I feel on strong ground. I hope that it will be possible for the Select Committee to look at both Clauses 15 and 16, although I am aware that I may be speaking against the interests of the elected members of the High Peak District Council.
Lord SANDFORD: My Lords, I do not know why, when Derbyshire has had so many eloquent spokesmen of their own they should ask a southerner to speak for them; but in fact the county council have asked me to say a few words and so I will do so. I have also been asked to put a point by the Buxton Civic Society, and I also find myself speaking as a vice-president of the Association of District Councils, so I have to choose my words rather carefully.
The first thing I should like to say is that the Bill as a whole has to be welcomed. The part which has to be welcomed most is Part VIII, dealing with economic development. The county council quite rightly feels that in the absence of any Bill conferring the necessary general powers on county councils emanating from the Department of the Environment, they must take the powers themselves by private Bill to promote economic development in the county. They do so in a number of ways; the most valuable measures I think are those of being able to have the power to confer loans on people wishing to build on land other than that which the county council own, and to give loans to people for things other than buildings—say, for machinery and equipment— in factories which they wish to put up in order to start a new business. That

955
is all very desirable and very much to be welcomed.
If one then takes the concept of economic development and applies it to the town of Buxton, a resort and spa of great historic importance, one has to say—I certainly feel—every source of economic development ought to be considered and, if possible, tapped. I would not have any objections—moral or otherwise — to establishing a casino in a spa and a resort, because I think if we have casinos at all this is the kind of place to have them. Nor would I have thought that it was inappropriate in a spa of all places to bottle the waters, so I do not object to Clause 16, either.
What I want to say is that Buxton is an outstanding conservation area. If these things are to be done, they must be done with very great sensitivity and care for the historic character and nature of the place. It would not be necessary to stress this were it not for the rather ominous fact that the Buxton Civic Society has not so far managed to get into negotiation or discussion with the borough council. I must say that I deplore that. That makes it all the more agreeable to learn how—at a rather late stage—the county council have taken the initiative to bring about a meeting of the parties on I believe the 29th of this month. It should have happened long ago. I am glad it is going to happen before this Bill gets very much further. Those are the observations that I seek to make at this stage of the Bill. I hope very much that the Committee will give very careful attention to those particular points.
Lord SOPER: My Lords, had it been my privilege to have preceded the noble Duke who introduced this discussion, I would have endeavoured to say with the cogency which he commanded very much what I will now say in brief in order not to delay your Lordships. There were slight variations of course. I confess and claim no interest and I have no commitment to casinos, not that that gives me any holier position but merely that I have escaped that particular occupation. Therefore I have no interest in them. I am concerned about Clauses 15 and 16. Had Clause 16 been concerned with the production and distribution of Holy
956
Water, it might have somewhat altered my attitude to it; but I believe that both Clauses 16 and 15 break amenity law. It is for that reason that I would encourage your Lordships in this early stage to take an adverse view of those two clauses and I hope they will be removed from a Bill which otherwise may be tolerable—in fact may be quite good.
I believe that the amenities of the particular area called the Pavilion Gardens in Buxton (with which I am not unacquainted) is an amenity which would be impaired if industrial concerns took the place or even were combined with the other activities which I believe are of an artistic and cultural nature. If the "cultural colour" is, so to speak, an "art" shade I believe that industrialisation, even on a minor scale, would produce in that area a more glaring and perhaps a more damaging hue. But it is upon the question of the casino that I have been reminded, having had the opportunity to listen to the observations of a number of citizens who have presented a petition to the Home Office, that there are considerable dangers in destroying the true amenities of that area of Buxton if a casino were there. It would breach—and this is a point that I think is worth mentioning—Section 44 of the Gaming Act 1968, which provides, and I quote:
"(1) no local authority shall maintain, or contribute towards the maintenance of, any premises in respect of which a licence under this Act is for the time being in force."
Is it not a reasonable thing to say that the said council is asking for a dispensation from the provisions of Section 44 of the Gaming Act? If this Clause 15 were enacted, would it not put the High Peak Borough Council in a privileged position vis-à-vis other local authorities?
May I finish by saying that the amenities and cultural opportunities of a place like Buxton would, I think, in all fairness, to some extent be impaired if the various activities associated with a casino were to appear there and play a part within that very delectable and rural scene—an artistic scene as well. Would it not be a danger to the general amenities of Buxton itself if industrial questions were mixed up and industrial features coexisted in a place which I think is essentially one for recreation, for the cultivation of the arts, as it has been, and for the

957
preservation of those blessings which belong to a world where gambling is not practised and indeed where industrialisation is not to be found?
Lord VERNON: My Lords, as a resident of Derbyshire, I should like to add a few words in support of what has been said by my two noble friends and the noble Lord, Lord Soper. There is very little more that I can say, except that Derbyshire is not so rich in its buildings, and particularly in its town buildings, that it can afford to damage an exceptionally beautiful town centre such as Buxton has. I very much hope, therefore, in view of what has been said, and in view of the attitude of the Buxton Civic Association—a charitable body with a very keen interest in conservation—that second thoughts will be given to Clause 16.
Lord ABERDARE: My Lords, I am very grateful to all your Lordships who have taken part in commenting on this Bill. It makes a change from the usual run of Private Bills which go through without any comment at all. All those who have spoken—the noble Duke and the noble Lords, Lord Sandford, Lord Soper and Lord Vernon—have drawn attention to two clauses in particular: Clauses 15 and 16. I can tell your Lordships that there are petitions against both clauses: they are both opposed clauses and they will therefore go to a Select Committee. At the Select Committee, the promoters of the Bill and the petitioners will be given every chance to put forward their arguments for and against the various provisions of those clauses.
The noble Lord, Lord Sandford, also commented on the clauses promoting economic development. I would say straight away that these are clauses which give us a great deal of difficulty because they should indeed really be in public general legislation and it is very difficult to deal with them individually in private Bills. However, there is emerging between the two Houses, as a result of a number of county councils Bills we have already been through, a sort of consensus of what powers are appropriate to county councils; and I am sure the promoters of this Bill will have regard to what has been allowed on previous county council Bills when they bring their final Bill before the appropriate committee. If your Lordships will
958
be good enough to give this Bill a Second Reading now, I will ensure that the words which have been spoken in the House today are drawn to the attention of the Select Committee when it comes to consider these clauses.
On Question, Bill read 2a, and committed to Select Committees.

EASTBOURNE HARBOUR BILL [H.L.]
Lord ABERDARE: My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read 2a. —(Lord Aberdare.)
The Duke of DEVONSHIRE: My Lords, I hesitate to get to my feet yet again, because I am sure the House has heard enough from me. I do so only because I am anxious to do what is correct. Until I came down to the House this evening I had no idea that the Second Reading of this Bill was coming before the House tonight; but as I am in the Chamber and as the Bill is receiving its Second Reading, I wish to make it quite clear that I have a very substantial interest in this Bill. As I am present, I feel it is only right to declare it.
Lord ABERDARE: My Lords, I am very grateful to the noble Duke. I was wondering whether he was perhaps once Mayor of Eastbourne!
The Duke of DEVONSHIRE: My Lords, I was once invited!
On Question, Bill read 2a, and referred to the Examiners.

THE HORSERACE TOTALISATOR BOARD AND THE AGLIONBY REPORT
6.7 p.m.
Lord WIGG Lord WIGG rose to ask Her Majesty's Government whether they have any comments to make on the accounts of the Horserace Totalisator Board and the Aglionby Report. The noble Lord said: My Lords, my interest in racing and the betting industry is of long standing, and as the details are well known I am not

959
going to stay long on that point. I must declare an interest. I am Life President of the Betting Office Licensees Association and I became a member of the Horserace Totalisator Board on its formation in 1961, having previously been a member of the Racecourse Betting Control Board.
Tonight, as on every occasion when I have addressed your Lordships on similar matters, the views I express are my own and I speak for nobody but myself. It may help your Lordships if I point out that the history of the Tote and its methods of operation are set out in Chapter 8, pages 62 to 74 of the Royal Commission on Gambling, and in the Second Report of the Select Committee on Nationalised Industries, which reported in House of Commons Paper 344. The Home Office submitted its observations in Cmnd. 7216.
In July last, the Home Secretary appointed Mr. F. J. Aglionby, a Recorder of the Crown Court, to hold an inquiry into the Tote's procedures for the inclusion in its on-course pools of bets made off the course. The Home Secretary said the findings would be published, and on 4th February last the Home Secretary was asked in another place whether he would publish the findings of the inquiry and make a statement. He did neither. He published Mr. Aglionby's conclusion but gave no intimation of the findings of fact and he said nothing, about this own view.
Mr. Aglionby's conclusion was that the Tote's transmission procedures did not involve any breach of any statutory provision or of the common law. I do not stress the question of a breach of the common law, although it should be noted that opinions contrary to those of Mr. Aglionby have been expressed by leading counsel and it is also felt by many that the procedures breached the Theft Act. I shall not pursue these matters, but I am of the opinion that they should be referred to the Law Officers of the Crown for their advice.
However, when it comes to Mr. Aglionby's conclusion that there have been no breaches of any statutory provision, which means breaches of Section 14 of the Betting, Gaming and Lotteries Act 1963, I hold the contrary view very
960
firmly. My judgment is influenced by what happened in 1976, when I reached the conclusion that the Tote Board had not been complying with the provisions of Section 14, and I invited the then Home Secretary's attention to what had happened. He did no more than express his concern.
My interest in the matter led to legal opinions being sought and copies of these opinions were sent to the Home Secretary and to the Tote Board. This led to the Tote amending their rules and to an admission by the Tote that their actions had been ultra vires Section 14(3) of the 1963 Act. Subsequently, the Select Committee of the House of Commons questioned the chairman of the Tote Board on the calculation of pool dividends, and this is referred to in paragraphs 60 to 69 of the report. In answer to a question, the spokesman for the Tote admitted that when the Tote consulted their legal advisers it led to the spokesman saying,
"We discovered during the course of this that the Tote had never been doing what it ought to have been doing absolutely correctly about pools."
The Home Office, when it published its observations on the Select Committee's report, stated in paragraph 35:
"It is generally accepted that the way in which the Tote now calculates its dividends is in accordance with statutory requirements ",
and in paragraph 36 the Home Office said:
"The Government is confident that the Tote will, in future, do everything in its power to keep the public fully informed."
It is against that background that Mr. Aglionby's findings, that there has been no breach of Section 14, must be judged.
I invite your Lordships' attention to an answer given by the chairman of the Tote Board to the Select Committee, when asked about the way in which the Tote odds are calculated. He said that he was going to ask his deputy chief executive to make a statement because,
"It is almost in the realm of senior wranglers as to how this is worked out."
The average punter is not a senior wrangler, but he is entitled to know how the dividend is calculated and what deductions the Tote makes. These should be predetermined and the details should be made known to the public. Indeed, the Select Committee asserted in paragraph 64 of their report,

961
"that the basic principle must be to observe that the punters have a right to know at all times the basis on which they are wagering their money.
The Tote is, however, under a statutory obligation to distribute the whole of the balance among those who have made winning bets, for Section 14(3)(b) states that the Totalisator Board shall,
"cause the whole of the remainder of that amount to be distributed among the persons making such of those bets as are winning bets."
This provision was most certainly breached for bets, according to Mr. Aglionby, were included in winning pools which bore no relation to bets made by winning clients and which were inserted into the pool to reduce the dividend artificially. One thing is sure. It is most certainly ultra vires Section 14(3) for an individual, be he the chairman of the Tote Board or an official, to alter dividends on the basis of his personal decision.
Although Mr. Aglionby decided that the Tote's procedures did not breach the provision of Section 14, he described the omitting of losing money from the pool as a malpractice, and the procedure of transmitting to the pool further bets which bore no relation to the bets received from clients, and which were intended to reduce the dividend artificially, as an improper practice. Mr. Aglionby also found that the chairman and members of the Board, the chief executive and other senior officials were ignorant of the abuses that occurred. I do not dissent from this view, but what, then, becomes of the Totalisator Board's responsibility—and I repeat that it is mandatory—for carrying out the provisions of Section 14 of the Betting, Gaming and Lotteries Act?
In my judgment, at this point the Home Secretary becomes responsible, for the Aglionby Report establishes that what happened in 1976 had most certainly been repeated in 1979. It was for this reason that I put to Her Majesty's Government the question of whether they would seek the opinion of the Law Officers of the Crown. I got a dusty answer. That did not surprise me, for the attitude of the Home Secretary and, for that matter, of his predecessor, in, relation to the operation of the Betting, Gaming and Lotteries Act and related legislation is to see nowt, hear nowt and know nowt, in the fond hope and belief that eventually all will be forgiven and forgotten.
The responsibility of the Home Secretary for the affairs of the Tote is limited to appointing the chairman and members of the board, and to receiving through the Levy Board the Totalisator Board's report and accounts, which he lays before each House of Parliament. The Select Committee, in paragraphs 44 and 127 of their report, recommended that this practice should be discontinued and that the Tote's annual report and accounts should be submitted direct to the Home Secretary. The Home Office, in paragraph 30 of its observation, accepted this recommendation and undertook to introduce amending legislation. Nothing has been done.
The Select Committee also recommended, in paragraphs 36 and 127, that the accounts of the Tote's subsidiary companies should be shown separately from the board's accounts, in accordance with current Companies Act procedures. Moreover, in paragraph 90 of their report, the Select Committee also recommended that a careful check should be kept on the board's report and accounts over the next five years. This was in 1976. The Government agreed, in paragraphs 32 and 33 of their observations, and said that a careful check should be kept on the board's report and accounts, but asserted that there would be presentational problems in showing the accounts of the subsidiary companies separately, and pointed out that these accounts are available at Companies House.
It is agreed that the problems associated with the accounts would be comparatelively easy to understand if the accounts for the four subsidiary companies were available at Companies House. But the accounts to 31st March, 1977, were not filed until 4th August, 1978, and the accounts to 31st March, 1978, were not filed until 6th June, 1979. The accounts up to 31st March, 1979, had not up till last week yet been filed.
In this connection, I invite attention to paragraph 46 of the Select Committee's report, in which they said:
"We are concerned at the apparent indifference with which the Home Office regards the element of risk inherent in the Tote Board's operation, and particularly in its necessary but very heavy investment programme over the next five years."
I share this view, for it underlines the failure of Her Majesty's Government and, for

963
that matter, their predecessor, to show any sign of understanding the importance of the Select Committee's recommendations, and I invite attention to the Tote's investment programme in connection with its mechanisation plan.
The original investigations started in 1973–74; contracts were placed in 1976, the estimate of the project then being £2 million, and it was planned that the new betting terminals should be operational by midsummer 1977. In 1976–77 the cost of the system was found to be underestimated and a figure of £2,959,000 became the new estimated total. Then it was found that the time-table for field trials had proved to be inaccurate and trials would begin at the end of 1978. In 1978–79 the estimated total of the scheme had increased to £3,504,000 and the annual report for 1978–79 stated that all the hardware necessary had been assembled, but serious difficulties with the software continued to delay the starting date. No indication has been given as to when the scheme will be put on trial and when it will become operational.
It should also be noted that the Tote Board took the decision not to depreciate or write off any of the expenditure until the situation had come to light. It is very important to note that in recent years technology has undergone great changes so that obsolescence and significant cost reductions should surely have been taken into account and a cautionary depreciation charge should have been made. This has not been done. In order to meet the cost of on-course mechanisation, the board negotiated the sale of freehold property, which I presume was the Euston Road offices which had been purchased out of the pennies saved from revenue by the old Racecourse Betting Control Board, of which I had a been member. It produced a sum, after taxation, of £1,301,000.
Turning from mechanisation to the question of Tote profits, a subject of some propaganda and details of which are shown in Table 8.1 of the Report of the Royal Commission, the highest real profit made by the Tote since its establishment in 1961, before levy and tax deductions, was in 1963–64 which, at current prices, was £4.4 million. The highest real profit, after levy and taxation, was in 1961–62 which, at current prices, was £1.97 million.
964
As the accounts for the subsidiary companies are not fully available at Company House, it is not possible to understand the more recent accounts. It can be stated, however, that the net profits before taxation of the off-course operation was, in 1975–76, a profit of 0.3 per cent. In 1976–77, it was a loss of 1.1 per cent., and in 1977–78 the profit was 0.6 per cent. These figures can be compared with the average profits of betting offices right across the board of 2 per cent., and these figures are based on Table 6.7 of the Royal Commission's Report. An examination of the last filed accounts of Tote Course Limited at Companies House show that for the year ended 31st March 1978 the Tote made a loss on-course of £106,447.
The Tote's accounts, and its subsidiaries, at 31st March 1979 showed an income from interest of £164,000. In addition, the acquisition of betting shops cost £1.9 million, which was met by a bank loan of £1.2 million, repayable by instalments over seven years. Bank overdrafts at the end of March 1979 amounted to £700,000. There will therefore be a considerable impact caused by the move from interest receivable to interest payable and this, of course, will be made the harsher by the current high interest rates.
I have already pointed out that the property in Euston Road has been sold to help meet the cost of mechanisation, but in addition to this the Tote's property in New Bridge Street, Bridewell Place and Bride Lane which originally belonged to Tote Investors, which was purchased by the Tote when Sir Alexander Sim was chairman, has been pledged to Lloyds Bank.
So the Tote's accounts, as I understand them—and I stress I am not an accountant —is a picture of a switch in emphasis from sponsored pool operations, operating in accordance with the Betting, Gaming and Lotteries Act, to bookmaking operations carried on through four subsidiary companies, the accounts of which are not submitted to Parliament. A mechanisation programme has been undertaken without an allowance for depreciation. Properties have either been sold or pledged to the Tote's bankers and the Board has moved from a position where it receives income from interest on investments to a point where it is paying heavy interest charges on an overdraft.
I believe the Tote's policy to be basically unsound, and in my opinion the Home Office is unwise not to take notice of the Select Committee's observations in paragraph 46 that the Government would be required to shoulder financial responsibility should the Tote Board's policies not work out in practice.
I do not press the Government to say anything tonight or, indeed, to do anything. The Tote's history and the changes in policy which followed the passing of the 1972 Act are fully dealt with in chapter 8 of the Report of the Royal Commision on Gambling and the Report of the Select Committee. The Home Secretary has chosen to put the Report of the Royal Commission on the shelf, at least for the time being, but I thought your Lordships might be interested to note that, followiing a debate in the House of Commons on 29th October, Lord Rothschild, the distinguished chairman of the Royal Commission on Gambling, wrote in somewhat bitter terms to The Times, on 5th December 1979, when he said:
"The Royal Commission on Gambling recently had conferred on it a great honour—a debate in the House of Commons lasting no less than six hours—to polish off our two years' work and 304 recommendations, none of which, needless to say, have been implemented though a number were quickly rejected ".
After reading the debate Lord Rothschild wrote,
"I imagined a conversation between two civil servants in the Home Office, the sponsoring department. 'George,' said one, 'I think it would be useful to have a brief debate about gambling in the House, opened of course by the Home Secretary; after which we can bury the subject almost indefinitely. We can arrange for him to make some nice noises about the Commission and the debate itself will placate those baying for action. We shall, of course, be able to use pressure of legislative time and public expenditure restrictions as reasons for what I might call postponing consideration of the commission's undesirably large number of recommendations ' ".
My Lords, when Lord Rothschild mentioned "George" he was not referring to me, but I agree wholeheartedly with what he said, and it is for that reason that I trouble your Lordships tonight.
6.30 p.m.
Lord TREVETHIN and OAKSEY: My Lords, I find myself both relieved and a little puzzled because I had not
966
expected that the noble Lord had come to praise the Tote; I expected him to attempt its burial in a rather different manner. However, as I am afraid many of your Lordships know all too well, I am myself a deplorably inaccurate forecaster of the future and, happily, the noble Lord, Lord Wigg, can occasionally be almost as inaccurate himself. On at least one occasion in the past he has seemed to know almost as little about the health and potential future of the Tote as I do about the likely winner of the 2.30 at Kempton Park tomorrow.
Less than two years ago the noble Lord told your Lordships as, in different words, he has told you tonight, that the Tote would shortly be bankrupt.
"Under their present direction"—
he said—
"the only place they can possibly can up is Carey Street".
What had aroused his ire on that occasion was the Tote's purchase of a group of betting shops called Benfield, and the noble Lord asked:
"What chance can the Tote have if they cannot make a profit out of pool betting, where you cannot lose? What chance can they have competing with bookmakers when they buy a chain of betting shops for a price which none of the big four are prepared to pay?"
Of course there must have been an element of truth in that, because when two people want something it is not all that unusual for one to outbid the other. The question is whether or not the successful bidder has paid too much; and that, with respect, was where the noble Lord's predictions, like so many of my own, came unstuck.
Let us look briefly at the figures in the next comparable financial period after the Tote bought the Benfield Group, for, I believe, £1·8 million. Whether that was very much more than the big bookmakers were prepared to pay or a little more, I do not know; but the question is, of course, whether the highest bidder paid too much. Since under the Tote the turnover rose by 25·68 per cent. and the profit by 132 per cent., giving a return on investment of 24 per cent., I do not think there can be any doubt that the Tote on that occasion made a wise investment. Indeed, there may be many on both sides of the House who would wish that some other nationalised industries would get on the same path to bankruptcy.

967
Of course, I cannot follow the noble Lord through the pathways he has trodden so ably. I certainly do not know the immediate future of the Tote's mechanisation plans. I know that they ran into snags and I know, as he has said, that they are going to be extremely expensive. But what I do know is that with one exception, which I will come to presently, the Tote has prospered since its present chairman took over the management. I think your Lordships will hear the full figures later, but with that one sad exception it has prospered.
I said that I wished other nationalised industries would follow its example. Someone might well have said, "Yes, but other nationalised industries do not cheat; they do not fix the books ". Well, no one can deny that the recent past has been a traumatic and tragic period for the Tote. No one can deny, and no one should attempt to minimise, the seriousness of the malpractices which Mr. Aglionby revealed; and no one, incidentally, should deny credit to the Sporting Life and its tireless bloodhound, John McCririck. His cry may be somewhat shrill for some tastes and I believe that quite often he overruns the line, but there is no doubt that he has done a service to racing and particularly to the punter; and although I do not suppose he would figure too high on the list of beneficiaries in Woodrow Wyatt's will at the moment, I believe that in the long run he has also done a service to the Tote. But, as I said, he and the Tote's other assailants do tend to overrun the line, and I believe that their reaction to the Aglionby Report is a good example of that.
I do not minimise the seriousness of what Mr. Aglionby discovered, but they were only a small proportion of malpractices in the transmission of bets which controlled—and in these 14 cases depressed—the dividend. I say "a small proportion". I know there are those who say that this is only the tip of the iceberg. With respect, that argument is nonsense and does no credit to Mr. Aglionby, who not only had all the evidence he wanted—and no doubt a lot that he did not want—but his ears were open throughout and the criteria under which he decided which pools
968
should be examined in detail by his accountants were sensible, clear and, in my opinion at any rate, perfectly adequate. So I do not believe that the "tip of the iceberg" argument has any strength.
He found that there had been no offence against the statutory law or against the common law. One might well find that surprising, but so far as I can remember from my days of long ago, of doing Part I of the Bar exams, I do not believe that your Lordships would wish or be able to overturn his finding at the moment, and I certainly accept it.
I also accept as being more important his finding that neither the chairman nor the board nor the chief executive knew what was going on. Your Lordships might well ask: "Does that prove incompetence?" I do not believe it does —nothing like it. There was no reason why they should know what was going on. Certainly they did know, and should perhaps have been aware, of the danger; they did know the system of transmission which gave Tote Credit, the bookmaking branch of the Tote, the opportunity which some of its employees took through, as Mr. Aglionby found, misplaced enthusiasm. They did not gain; they merely wished to prove that they were doing a good professional job in those cases.
The reason why the Tote Board could not possibly have recognised those 14 cases was that they did not produce exceptional dividends. The depression was not exceptionally low; certainly the starting prices in the forecasts had been high, but the dividends were still higher than the bookmakers' computer straight forecast dividends—which are incidentally computed by a method which I could not explain to your Lordships even if I knew it—after the results. The fixed dividends of the Tote were always higher than those bookmakers dividends. So that seems to me to be a strong reason why the executive could not possibly have recognised what was going on.
In the chairman's case, he certainly would not have understood or appreciated the motive of those who were depressing the dividends, because from the first, since he took over the Tote, he, like any other pool operator, has longed for what I everybody, from Littlewoods to an old

969
lady running a bazaar for the Women's Institute wishes, which is for someone to win a great deal for a little. That is the point of Totes and pools, and Woodrow Wyatt had from the start wanted the big bonanza dividend. He would not have understood the motives of those who depressed the dividends to make it seem that they were doing a better job as bookmakers. He would not have understood and if he had known he would have required their guts for garters. Well, now he does know, and the transmission system under which those malpractices took place has been corrected. It is in that sense that I believe the whole dismal episode will have done good for the Tote.
The chairman has been accused of other things, one of them a happy one, getting 50 to 1 about Troy seven months before he won the Derby. I am sure there are some of your Lordships who, like me, have been "mug" punters and "mug" ante-post punters, and you will know that in the seven months before a Derby or indeed in the seven days before a Derby, or sometimes in the seven minutes before a Derby, there is many a slip, at least 50 slips, betwixt your bet and the winning post. The chairman of the Tote thought it right that he should bet, and the Tote and its board are certainly allowed to bet; I think it is open to argument whether it is advisable for them to do so, but the chairman believes that he serves a useful purpose by his small bets because they help him to know his job and to learn the requirements of his customers. They give him ideas, including a very good one called the "placepot". Unable, as he found, to get the jackpot, in which you need to name all six winners, he thought of the idea of trying to name six horses for a place, and that in itself is quite difficult enough. But it was a good idae and betting gave it to him. So although the propriety of the board betting is, in my opinion, questionable, they have decided that they should bet and can bet, and if you can bet there is absolutely nothing against you asking on behalf of a friend what price the tote is laying against Troy and taking it.
The other accusation against the chairman, as he admits, is that he fixed several dividends at Royal Ascot in 1976; well, in fact, he did raise one
970
dividend because, horrified by the deplorable results which the Tote was producing compared with starting price, he felt that, with Royal Ascot being the most important shop window of the racing year, it was vital that it should be better. I would not pronounce on whether he made a good business decision that day, but it was only a business decision. It is within the powers of the Tote to increase or reduce the deduction they take from the pool at any time. He reduced it, and thereby increased the dividend.
I am not sure of the effect of that action on bookmakers who had been taking bets off course. Yes, I am sure; it lost them money. But there is a legal loophole in the authority they sign which relieves the Tote of responsibility for that. Nevertheless, I feel that it was a mistake. believe that the chairman probably feels now that it was a mistake. Happily, having revised the system of deductions from the pool and made it now a flat-rate deduction, which the punters do know—the noble Lord seemed to me to suggest that the punters do not know the rate of deductions from the pools; they are known, and they are now a flat-rate which is not varied up and down by senior wranglers—there will never be the need to make adjustments to the pool again, and it will certainly never be adjusted wilfully by employees of the Tote.
Therefore, I hope that your Lordships will be able not only to forgive but also to forget the unhappy episode through which the Tote has passed, because in every other respect I believe—and here I suppose I differ from the noble Lord—that it is healthier, stronger and more helpful to racing than ever before. On course it is supplying a priceless service, because there are many people who hate the hurly-burly of the silver ring and far prefer to bet with the Tote. I hope the noble Lord is wrong in his pessimistic predictions of the cost and effect of the mechanisation programme. I hope it will go through quickly, and I certainly hope that those who have used the recent distressing episode as an excuse to bay for blood, in particular the blood of the Tote's present chairman, will stop baying and will congratulate him on the fine job he has done in reviving and inspiring what had begun to look like a moribund nannygoat.
Lord WIGG: My Lords, I understand the noble Lord referred to me in relation to Benfield. May I just put him right. The purchase price was not £1·8 million; it was £l·9 million. I would have been only too happy to go into the details of Benfield, but I did not want to trouble the House with particular cases. But on that, like so many other things he said, he is quite wrong.
6.47 p.m.
Lord AIREDALE: My Lords, I am very pleased that the noble Lord, Lord Trevethin and Oaksey, has so eloquently emphasised the credit side of this matter we are discussing, because of course when there is a pretty serious debit side it is only right that the other half of the picture should be eloquently presented, and the noble Lord has done that so well.
Before embarking on the not too long speech that I had prepared I should like to come in on almost the last words that the noble Lord, Lord Trevethin and Oaksey, spoke, and say that, in the light of yesterday's Committee stage of the Competition Bill, which was all about unfair compeition, it seems to me quite extraordinary that the chairman of a Totalisator Board could contemplate studying bookmakers starting prices and decide to declare a Tote dividend which did not represent the dividend as it would otherwise have been worked out but was to be a dividend which would compete with the announced starting price of the bookmakers. What the chairman ought surely to have borne in mind on an occasion like this was that it is not open to the bookmakers to withhold their starting price until they can discover what the Tote dividend is going to be and then adjust their starting price so as to compete with the Tote. If ever there was an example of unfair competition, there, my Lords, you have one.
I had not intended to refer to that matter at all. I had proposed to start by saying to your Lordships that a bet with the Tote has one of the features of an insurance contract. It is a contract of utmost faith. What I mean by that is that if you go into the hurly-burly, as the noble Lord calls it, of the ring, and you strike a bet with a bookmaker, you know at that moment what you stand to win. But,
972
if you are perhaps an occasional race-goer, or indeed if you are a woman, you may not enjoy the hurly-burly of the ring, and you may much prefer the calmer atmosphere of the windows at the Tote. When you place your bet with the Tote you are reposing your utmost faith in the integrity of the Tote. They calculate your winnings behind closed doors. They announce what your winnings are, they pay you that sum and that is that.
There are two quite obvious temptations to anybody running any kind of a pool. The first is to withhold losing bets from the pool. The second is to make bogus winning bets and put them into the pool. It really is very distressing indeed to find that Mr. Aglionby has found that this public monopoly, under the supervision of the Home Office, has been permitting—in the sense of not preventing—its employees, not once, but on a number of occasions, to yield to both of these temptations; both withholding losing money from the pool and putting bogus winning bets into the pool.
We have been directed by the noble Lord, Lord Wigg, particularly to the accounts. There is one item of the accounts which I would like to mention, because it highlights an aspect of this matter which I do not think, so far, has been generally understood. The Tote, in exchange for fees from bookmakers, give bookmakers authority to bet with any of their clients who wish the facility, to bet with their bookmakers at Tote prices. I understand that the annual revenue that the Tote is receiving in fees for granting this facility to bookmakers is in the region of £387,000 a year. That must indicate a very strong and widespread desire among the clients of bookmakers to bet with the bookmakers at Tote prices. I have no doubt that the bookmakers contrive to pass on the £387,000 a year to their clients.
It must surely be an implied condition in this bargain with the Tote that the Tote will ensure that the pools are run straightly and honestly and that the dividends declared are proper dividends; because otherwise when these malpractices arise, on which Mr. Aglionby has been reporting, not only has the Tote been unjustly enriching itself at the expense of its own clients, but bookmakers all over the country have been unjustly enriched at the

973
expense of their clients. So, these dishonest practices by Tote employees have had ramifications far beyond the Tote itself and its own organisation.
There has been a most lamentable and distressing lack of vigilance on the part of the Totalisator Board. There is no escape from that fact. One has to ask oneself: What happens in cases like this in the harsh world of private enterprise? Supposing a food canning company allowed a tin of baked beans containing a bath-plug to get into the hands of a housewife? Does it avail the board of directors to say, "We did not know that this practice could happen"? The offence is lack of vigilance—failure to see that it does not happen. If you fail in that regard you are prosecuted, quite properly under the Food and Drugs Acts.
The DUKE of DEVONSHIRE: My Lords, I should like to interrupt the noble Lord. He has made a very strong statement talking about dishonest practices. I am a member of the Tote Board and I challenge him to repeat what he has said in the unprivileged parts outside this House.
Lord AIREDALE: My Lords, I do not think that the noble Duke really understood what I was saying. I was talking about lack of vigilance. There is no question at all of the Tote Board itself having any knowledge of dishonest practices, just as there is no question of the food canners' board of directors having any dishonest knowledge at all. I am talking about lack of vigilance. I am saying that, if the food canner in the private enterprise sector, is to be prosecuted for lack of vigilance in a case like that, what is to be done with the Totalisator Board?
It is then said on behalf of the Tote Board, and quite properly said, "We have strenuously sought to recompense all those who were cheated by these dishonest practices of our employees and no harm has been done." The food canner can say, "We replaced that tin of baked beans with a more hygenic specimen and no harm has been done ". However, that will not enable them to escape a prosecution under the Food and Drugs Acts.
This country leads the world in rather fewer fields than perhaps it once did. But
974
when it comes to horseracing, I do not know that I can quite say that we lead the world, but in Royal Ascot we have something which cannot be matched anywhere else in the world. If something irregular occurred with the Tote at Royal Ascot that would seem to me to be a very sad affair. This is really a rather serious matter, I should have thought, for the Home Office. The Home Secretary appoints a board which fails to exercise proper vigilance. What is the Home Secretary going to do about it?
As to the lack of vigilance, a sidelight upon that matter is thrown up by paragraph 7 of Mr. Aglionby's findings where one reads:
"The abuses arose out of misplaced enthusiasm by some employees of Tote Credit Limited who took improper advantage of opportunities presented to them believing that it was in the Tote's interest to depress dividends. High Forecast Pool dividends are in the Tote's interest but this was not appreciated by those employees who were all experienced in starting price betting practices and applied them to pool betting."—[Official Report, Commons, WA, 4/2/80; col. 2.]
For heaven's sake! how long did you have to work for the Tote in the money transmission department before the board got around to having it explained to you what practices were in the Tote's best interests?
As regards the Home Secretary's attitude to this matter, I refer your Lordships to his Written Answer on 4th February 1980. Having set out Mr. Aglionby's findings, the Home Secretary says:
"The Chairman of the board has also assured me that all necessary steps have been taken to ensure that the staff adhere to the new procedures." —[Col. 3.]
Is that all that the right honourable gentleman is going to do? Having been badly let down by your appointees on one occasion, is that all that you are going to do? Is there no other security department at the disposal of the Home Office to go in, not once, but from time to time, and make absolutely certain, from an independent point of view, that the Tote's new procedures are being properly observed?
My final point is this. Unless the Home Secretary is seen to be taking this matter very seriously indeed, people will start asking: If the Home Office cannot even appoint members to a board to exercise proper vigilance, how clever are the Home Office at supervising some of their other responsibilities over other bodies over which they have jurisdiction?—such as ensuring that laboratory animals are

975
properly protected from cruel experiments. There may be absolutely no suggestion that anything like that could be the case, but unless the Home Secretary is seen to be acting with the utmost firmness in a scandal of this kind, people will ask those questions.
7.1 p.m.
Lord HARRIS of GREENWICH: My Lords, it would be right for me to begin by declaring an interest. It is all the more proper to do so on a day when the noble Duke, the Duke of Devonshire, managed to do so on no fewer than three occasions in a period of five minutes. Therefore, I do so. The chairman of the Tote, Mr. Wyatt, has been a friend of mine for 20 years. It is right to say this because Mr. Wyatt, and his record as chairman, is central to the debate today and also to a great deal of the campaign which has taken place outside this House.
The noble Lord, Lord Wigg, who introduced this brief debate today, has always demonstrated a very keen interest in the racing industry. His knowledge is certainly a great deal more profound than mine, as I recognised during a debate we had in the course of the Committee stage of the Welsh devolution Bill, when I had the less than attractive task, sitting where the noble Lord. Lord Belstead, now sits, of defending the then Government's proposals for betting in Wales against the criticisms of the noble Lord, Lord Wigg. It is only fair for me to say that, to put the matter as generously as possible to me, I do not think that I got exactly the better of that argument.
Again today the noble Lord, Lord Wigg, has demonstrated his detailed knowledge of the industry, and he has very properly declared his interest in and his personal involvement with bookmaking. It is very proper for him to have done so, for the position of the bookmakers is highly relevant. There are, of course, the competitors of the Tote. As the noble Lord indicated, today he spoke entirely for himself. In the past the bookmakers have rather been able to patronise the Tote; it was not even remotely in their league. With the arrival of Mr. Wyatt as chairman in 1976, it is right to recognise—and this again lies at the back of some of the argument which we have heard in the last few months—that the situation changed quite substantially.
976
In 1977, his first year as chairman, the profits of the Tote amounted to a mere £207,000; in 1978 they rose to over £1 million; and in 1979 to £1,335,000. When he became chairman the Tote's total contribution to racing was £500,801. The next year it was £625,000; in 1978–79 it was £988,000 and in 1979–80 it is estimated to be in the region of £1.3 million. During the same period the number of people employed at the Tote's Head Office and on the racecourse declined from 486 to 239, over a 50 per cent. reduction. I very much wish—and this echoes a point made by the noble Lord, Lord Trevethin and Oaksey—that other areas of our public affairs had been conducted with anything approaching the same degree of high ability.
It is fair to say—and I think one had a slight hint of this from the speech of the noble Lord, Lord Wigg—that he has not altogether been a total and unqualified admirer of the Tote during this particular period. Indeed, I remember the exchange that we had in 1978, which I am sure is very fresh in the mind of the noble Lord, Lord Wigg, because the noble Lord Lord Trevethin and Oaksey, referred to it. Perhaps I could refresh the noble Lord, Lord Wigg's memory. It shows that even he can sometimes get it wrong. In an exchange that we had during the debate on gambling the noble Lord, Lord Wigg, said at columns 584 and 585 of the Official Report of 13th December, 1978:
" I forecast that sooner or later, as a result of the policies they are adopting, the Tote cannot fail to end up in Carey Street,"—
Lord WIGG: My Lords, if I may interrupt the noble Lord?
Lord HARRIS of GREENWICH: My Lords, I should not like the noble Lord, Lord Wigg, to interrupt his own speech, because it is only right that the whole House should have the opportunity of being reminded of what he said on that occasion. I will begin the sentence again:
"… the Tote cannot fail to end up in Carey Street, because, if they cannot run pool betting, in which they take no risks but simply take a cut out of the pool—in other words, they cannot lose —and make a profit under the present dispensation, what are their chances of running the business of bookmakers when they are paying betting shop prices that none of the Big Four would pay?"
Lord WIGG: My Lords, I did not want to interrupt the noble Lord so that the House would not hear my remarks; I wanted to help him. What I said then, I say now. What I said is absolutely correct and my analysis shows it. What the noble Lord has done is to make a comparison on a basis which is utterly and completely false. He relates profit without taking other things into account, including money invested, the investment and, in fact, the interest charges that have been paid on it.
Lord HARRIS of GREENWICH: My Lords, I am glad that the noble Lord maintains his position—rather, I would not say that I am glad that he maintains it, because I regret to say that he maintains it against all the evidence. Nevertheless, I note that he maintains the position which he adopted in 1978. It is quite interesting to study what happened in relation to these betting shop acquisitions. Again, the noble Lord, Lord Trevethin and Oaksey, alluded to this and I should like to do so also. When the present chairman began acquiring betting shops there were, I think, 125. Now there are 243, but as the noble Lord indicated, the return on capital is 25 per cent. gross.
Lord WIGG: My Lords, no.
Lord HARRIS of GREENWICH: My Lords, I wish that the noble Lord, Lord Wigg, who was heard without interruption, could sometimes manage to control himself rather more successfully and not interrupt others from a seated position. I should like to continue. In the year that Mr. Wyatt became chairman of the Tote, those betting shops, to which I referred a few moments ago, were making a loss of some £250,000 before Head Office expenses. The comparable figure now is a profit in the region of £1 million.
The headline following this in the Sporting Life, referring, of course, to the speech made by the noble Lord, Lord Wigg, was:
"Tote will end in Carey Street, says Wigg".
As the noble Lord, Lord Trevethin and Oaksey, again reminded us and as I indicated a few moments ago, it is indeed unfortunate that other elements of our public life have not ended up in Carey Street in the same rather satisfactory fashion as has the Tote. As I think I have
978
indicated, at the beginning of his speech the noble Lord, Lord Wigg, said something to the effect that the figures of profits and so on were part of propaganda put out by the Tote. Certainly there is a fair degree of counter-propaganda, if I may say so, which has been put out outside this House by the representatives of the bookmaking interest, who are very powerful and, if I may say, who have apparently some quite close friends working on the staff of the Sporting Life. I think it is right to remind the House of those facts before we come to the question of the Aglionby Report.
The noble Lord, Lord Oaksey, referred in his speech to malpractices. Certainly that report indicated that there had indeed been malpractices. He found that some employees of Tote Credit Limited took action designed to reduce artificially the dividend. This "improper practice", as it was described, occurred in 15 out of 697 Forecast Pools. In addition, bets laid off by outside bookmakers for inclusion in the pool were placed with Tote Credit Limited for onward transmission to the course after the results of the race. This opportunity, Mr. Aglionby concluded, was misused because not all losing bets were put into the pool. This in fact was done in six out of 995 win pools examined.
Mr. Aglionby also pointed out—and this has been referred to—that there was no question of personal corruption being involved. He said that none of the various malpractices arose from a desire for personal financial gain, and no individual in the Tote benefited as a result. He added—and again this has been pointed out—that the chairman and the members of the board and the chief executive were unaware of these improprieties, and part of the reason for that was again explained by the noble Lord, Lord Oaksey, in his speech.
However, I do not think it is possible, or desirable, in any way to minimise the seriousness of this matter. I think that there has indeed been damage done to the Tote as a result of these acts of folly, disinterested though they may have been, by its employees. Its reputation has undoubtedly been damaged, and this inevitably has not caused too much grief among some of the great bookmaking firms, particularly at a time when the

979
activities of some of their employees in their casino divisions have received spectacular publicity in the Press as a result of court proceedings. Not, I may say, spectacular publicity in the columns of the Sporting Life—a matter in which at some stage, I suspect, the senior management of the International Publishing Corporation would perhaps like to take a rather careful interest, given, I am sure, their desire to maintain the highest standards in one of their own publications.
I think that to most reasonable people the Aglionby Report should have been an end of the matter. May I say with great respect to the noble Lord, Lord Airedale, that if this had been in the form of private business, given the fact that there was no breech of the law—a matter touched on by Mr. Aglionby—there would have been no such report or inquiry in the first instance. A Crown Court Recorder appointed by the right honourable gentleman the Home Secretary has examined the evidence, and his conclusions have been published. Why then, I wonder, does this debate continue?
Many of the critics—although indeed it is only fair to say not the noble Lord, Lord Wigg, today—have said, "That is all very well, but why shouldn't the whole of this report now be published?" There have indeed been demands for this to be done. But of course we all know precisely why it has not all been published. Let the Sporting Life, which has campaigned so assiduously and, in my view, perfectly properly for such an inquiry, provide the answer. Just a week after the right honourable gentleman the Home Secretary had announced that there would be an inquiry it published a report headlined:
"Tote Inquiry: Fear of Repercussions ".
I quote from the report in the Sporting Life:
"A number of Tote employees, wishing to appear, are holding off for fear of having their names revealed."
It is quite clear in that situation what would have been said by the Sporting Life, and possibly perfectly reasonably by others, if in fact there had not been a guarantee of confidentiality. The critics would have said, "Well, the whole inquiry is absolutely worthless;" that, of course, members of the Tote staff,
980
who possessed detailed and possibly damaging information, had not come forward because they feared that if they had done so their careers at the Tote would have been jeopardised. That being so, it seems to me wholly sensible that the guarantee of confidentiality should have been given.
As a result of it a number of people came forward and gave evidence which it is possible some of them would not have been prepared to do if that guarantee had not been given. Now it is suggested, again by some of the critics though, I repeat, not by Lord Wigg, that this guarantee should be breached. Why? Why should a commitment given by an eminent barrister be disregarded? I believe that it would be totally dishonourable to do any such thing. But it would not only be dishonourable, it would also be entirely self-defeating, because if such a guarantee was torn up after an inquiry of this character as a worthless piece of paper, would anyone ever again believe any similar guarantees given by those conducting future inquiries into other areas of our public life?
What did the noble Lord, Lord Wigg, say in his speech this afternoon in addition to the point I have referred to? He had, of course, some rather disobliging things to say about the record of the chairman of the Tote, Mr. Wyatt, although he did not mention him by name—and of course there was no obligation on him to do so. He did not think much of his record—which is a little surprising, as virtually everybody else seems to have a high regard of his record as chairman; but it is fair to say (and this is again part of the reason for some at least of the commotion that continues) that Mr. Wyatt does indeed possess a substantial number of critics, and not only in relation to his racing activities. He is a man of strong opinions. A few of those coincide, just to take an obvious example, with those of the noble Lord, Lord Wigg. He is a vigorous, outspoken, argumentative and sometimes rather tiresome person—particularly, if I may say so, when he disagrees with me. He is cordially disliked by the Left; and that is hardly surprising in view of his vigorous campaign to root out communist corruption in the Electrical Trades Union.
As I indicated at the beginning of my

981
speech, I have known him for 20 years. Therefore, I think I can speak with some authority about him. He is not a good hater. He is a man of decency and honour. That is why I find some of the more scurrilous attacks made upon him, particularly in the columns of the Sporting Life, particularly objectionable and offensive. I think that this debate would have achieved some purpose if it brings this increasingly pointless argument to an end. Mr. Aglionby has conducted his inquiry, and we should now accept his findings and pass on to other matters.
In one of the very few conversations I had the good fortune to have with the late Lord Attlee, I recall him saying that one of the features of public life in Britain which distinguished it from that of many other countries was not only a deep sense of fairness but also a willingness to accept that the decision of the umpire was final. Things have, I fear, deteriorated rather sharply in this country since the passing of Lord Attlee, but on one element of his judgment his words still hold good; when an inquiry has been held, after prolonged and often entirely justified pressure, there is nothing more silly than to attempt to reopen the argument all over again. If a man of independence of judgment and professional skill has examined the evidence, we should, I believe, accept his conclusions unless there is overwhelming evidence that he was mistaken. No such evidence exists in this case. Mr. Aglionby was appointed by the Home Secretary as the umpire; we should now accept his decision as final.
Lord AIREDALE: My Lords, as the noble Lord, Lord Harris of Greenwich, briefly referred to me, perhaps he would answer a question. He asks why the commotion continues. Has he studied the 1974 decision of the House of Lords in Scott v. the Metropolitan Police Commissioner? I think therein lies the answer to the question why the commotion continues.
Lord HARRIS of GREENWICH: Without having read that judgment, my Lords, I foreshadowed why some of the commotion continues; I think there are other explanations for at least some of it.
The DUKE of DEVONSHIRE: My Lords, I had not intended to intervene
982
other than to refute a charge of my colleagues and I being criminally negligent; when we look at Hansard I think we shall find that that is the charge made against us by the noble Lord. I intervene—and I do so without the permission of my chairman, whose beady eye I sec upon me—to refer to one particular aspect of the speech of the noble Lord, Lord Wigg, a sensitive one with the Tote Board at the moment, and that is the delay and rising cost of mechanisation. It is a sad story and I will not weary the House with it. In recent months we have spent many hours of anxious discussion, and I am giving away no secrets when I say that this is a very difficult and troublesome problem which has caused the chairman, all our colleagues and senior executives very great anxiety. We hope, come the spring, to begin an embryo scheme and we hope that in future it will develop, but there have been problems and we are very conscious of them.
Since the Eastbourne Harbour Bill was given its Second Reading earlier—it may possibly involve me in a large sum of money—I might remind the noble Lord that costs escalate. The original cost of the Brighton marina was £7 million: the last figure I heard was £120 million; so the escalation in the costs of mechanisation, though regrettable, is not unique. I assure the noble Lord that the board is very conscious of this and is giving it top priority to getting it sorted out and getting it going as soon as possible.
Lord WIGG: My Lords, I am much obliged to the noble Duke for those comments. I have all the sympathy in the world with the project and, after all, in my day we went through that process on a smaller scale. The point I am making—and perhaps the noble Duke will take it back to his board—is that there should have been a cautionary depreciation. Perhaps I am being tendentious, but the reason it was not done was that the Tote has changed its priorities. It is no longer a public service as the first priority; what it is now engaged in is profit, profit, profit, as part of a public relations exercise.
7.23 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, HOME OFFICE (Lord Belstead): My Lords, I am glad to have the opportunity to add a

983
word on behalf of the Government to the speeches which have been made by noble Lords this evening on this Unstarred Question. I shall not ask again to be forgiven if I say things of which your Lordships are well aware, so for the first and last time I apologise if this is very familiar to noble Lords, but let me remind the House of the Home Secretary's responsibilities for the Tote. They are of a limited nature. My right honourable friend appoints the chairman and members of the board, but he is not responsible for their staff. The board's annual report and accounts are submitted to the Secretary of State through the Horserace Betting Levy Board and my right honourable friend is required to lay them before each House of Parliament. The Home Secretary is empowered to determine the levy scheme in the case of a dispute between the Tote and the levy boards over the terms of the scheme. Finally, the approval of the Home Secretary would be required if the Tote Board wish to exercise certain powers under the Horserace Totalisator Betting Levy Boards Act 1972 to extend the types of events on which the Tote may take bets.
Thus, the Tote Board is free to regulate its affairs within the requirements of the law, and of course Section 14 of the 1963 Act regulates the functions of the Tote with respect to betting on horseracing. The terms of Section 14(3) of that Act are very wide and really go to the heart of that section, and I must make it clear—I have done so before in correspondence but I do so again now—that the Home Office does not accept the view of the noble Lord, Lord Wigg, that the Tote have on any occasion been in breach of Section 14. Mr. Aglionby found no breach, and we agree with him.
I will not say anything, despite the fact that it forms the first half of the noble Lord's Motion, about the accounts of the Tote because the noble Lords, Lord Harris of Greenwich and Lord Trevethin and Oaksey, have done so far better than I possibly could. I thought it was most valuable that my noble friend the Duke of Devonshire said a word at the end about the mechanisation plans of the Tote and put into context therefore what are some of the hopes of the Tote Board. The only point I would add is that when, last year, the Tote made a contribution to
984
racing of nearly £990,000 and paid £510,000 in tax, it was able to achieve those results after some difficult times in recent years, as the noble Lord, Lord Harris of Greenwich, reminded us, by not only operating its traditional pool betting operations but also through its fixed odds betting activities under the 1972 Act.
It is worth saying, as we have this opportunity. that the fixed odds betting operations of the Tote were something which the Select Committee on Nationalised Industries, which considered the Tote in the 1976–77 Session, was clear that the Tote should be enabled to do, and that was a view with which the previous and present Home Secretary and the Royal Commission on gambling all agreed. The noble Lord, Lord Wigg, said, as I understood him, that the matters with regard to Mr. Aglionby's Report should be put into the hands of the Law Officers.
Lord WIGG: I did not say that, my Lords, and I did not ask that question. I said that the question whether there has been a breach of Section 14 should be referred to the Law Officers for their opinion. I said that if they agreed with the Home Office, then that would be me finished. If only on the basis of what the noble Lord, Lord Trevethin and Oaksey, said tonight, that the chairman arbitrarily, for commercial reasons, took a personal decision to alter it, then that in itself is a breach. Thus, if the noble Lord, Lord Belstead, would say to me that having listened to this debate he will put that squarely to the Law Officers, then if they say No, I am finished. On the other hand, if they say Yes, then all it does is to establish as a question of fact that there has been a breach now, as there was for precisely the same reasons in 1976. On that occasion the Home Office did nothing and on that occasion the Tote did nothing until they were forced to do something.
Lord BELSTEAD: My Lords, communications between my right honourable friend the Home Secretary and the Attorney-General are always open and no doubt they would discuss a serious matter of this sort.
Lord WIGG: My Lords. I thank the Minister: that is all I am asking.
Lord BELSTEAD: My Lords, the noble Lord will not thank me quite so readily when I tell him that if he is suggesting to the Government that they should therefore question fundamentally the findings of the Aglionby Report, then I must say to him that I disagree fundamentally with what he is saying, and I will now explain why.
Lord WIGG: My Lords, I did not say it then and I do not say it now. I am asking—I have asked the question before and I put it again now to the Minister—just that he should put the facts to the Law Officers of the Crown and ask them if there has been a breach of Section 14(3), and in particular Section 14(3)(b). I repeat, if the answer is No, then l fade out of the act. If the answer is Yes, then all it has done is to establish as a question of fact that the Tote is in breach, as they were in 1976.
Lord BELSTEAD: I must say, my Lords, that I find these interruptions of the noble Lord quite extraordinary. Let us for a moment consider what happened. In July last year there were a number of allegations in the Press relating to the transmisison of off-course bets for the on-course pools. What happened? The chairman of the Tote Board discussed these allegations with the Home Secretary, which I think was perfectly proper. The chairman of the Tote Board took the initiative of asking that an independent inquiry should be arranged, to be conducted into the Tote's procedures for the inclusion in their on-course pools of bets made off the course. As a result, my right honourable friend the Home Secretary announced on 26th July last year that he had appointed for this purpose Mr. Aglionby, a recorder of the Crown Court.
The noble Lord is—despite his protestations—asking the Government simply to overturn the findings of a man who has been a recorder of the Crown Court for four years, who has been called to the Bar for 20 years, and who had, during the course of his inquiry, the benefit of a special audit of the Tote's pools carried out by Messrs. Deloitte, Haskins and Sells. Mr. Aglionby took oral evidence from a number of witnesses, and this evidence was given on the understanding that it would be treated in confidence. The noble Lord may feel that that was a mistake, but in
986
terms which I certainly understood, and which I very much appreciated, the noble Lord, Lord Harris of Greenwich, explained why he felt that this was a very sensible and a very wise course to follow. I have to say to the House tonight, and to make it crystal clear, that it was because the inquiry was conducted in that way—which I believe, on behalf of the Secretary of State, to be quite right—that the Home Secretary has decided not to publish the report.
I do not want to weary your Lordships, but because from all sides of the House it has been agreed that this is a very serious matter, and because in some parts of the House there is perhaps misunderstanding of exactly what Mr. Aglionby found, may I, in your Lordships' House, go through his findings, though very briefly. Mr. Aglionby found, first, that the various transmission procedures operated by the Tote did not involve any breach of any statutory provision or of the common law. Secondly, he found that the transmission of debts before September 1977 was conducted properly. Thirdly, he found that the procedures subsequently adopted for transmitting to the relevant pool bets laid off by Tote Credit Limited put Tote Credit into a uniquely and unfairly privileged position.
Fourthly, a malpractice occurred which usually took the form of failing to transmit losing money which normally would have been transmitted before the race. Fifthly, some employees of Tote Credit Limited transmitted to the pools bets which bore no relation to the bets received from clients—
Lord WIGG: It is a breach of the Act.
Lord BELSTEAD:—and which were intended to reduce the dividend artificially. Fifteen out of 697 audited forecast pools were affected in this way. Sixthly, the procedure whereby bets lodged with Tote Credit Limited for inclusion in the pool were transmitted after the result of the race was abused in six cases out of 995 win pools examined, because not all losing bets were put into the pool.
Seventhly, these various malpractices did not arise, Mr. Aglionby found, out of a desire for personal financial gain, and no individual in the Tote, or in its subsidiary companies, benefited thereby. Eighthly, there was no evidence to suggest that the

987
pools, other than the forecast and win pool, were improperly conducted. Ninthly, there were some errors in transmission which could fairly be attributed to innocent human error. Tenthly, since 17th July 1979 all bets must be transmitted before the start of a race. This procedure is entirely fair.
Eleventh, in practice, therefore, the overwhelming number of transmissions had been made fairly, but certain procedures were open to abuse and were abused. That situation no longer exists. Finally, and twelfth, those involved in these various abuses were all employees of Tote Credit Limited. The chairman of the Board of the Tote, the members of the Board, the chief executive and other senior officials were ignorant of these abuses.
The noble Lord, Lord Wigg, said in his speech that my right honourable friend the Home Secretary has not expressed any view about the Aglionby Report, and this debate gives me the opportunity to say I think that those findings raised four main considerations; the position of the board and their staff; the position of the punters; the adequacy of the law; and the transmission arrangements which apply now and for the future.
So far as the first matter is concerned—the position of the board and their staff—I repeat that Mr. Aglionby found that the board chairman and members were unaware of the abuses that had occurred. I must say I was grateful to the noble Lord, Lord Trevethin and Oaksey, for explaining why, in his view, this was a totally logical finding for Mr. Aglionby to reach. In Mr. Aglionby's view the fault lay with certain members of' the staff of Tote Credit Limited, whose actions were governed not by a desire for personal gain, but by a misguided loyalty in that they sought to increase the profitability of Tote Credit Limited by reducing the dividend, not perhaps realising that high dividends also attract punters to the Tote. Following the publication of Mr. Aglionby's findings, the board have taken appropriate action as regards all the staff concerned.
It has been suggested in the debate, as I understood it, by the noble Lords, Lord Wigg and Lord Airedale, that the response
988
bility for this situation should lie possibly with the chairman and members of the board and that this matter was of a criminal nature. I think I must make it clear to noble Lords that it is not for the Home Secretary to suggest that criminal proceedings should be considered. Mr. Aglionby's brief was to examine the Tote's transmission procedure, and it would be quite improper to invite the prosecuting authorities to look at the evidence given to Mr. Aglionby, since that evidence was given in confidence. However, may I add that when the Home Secretary's decision to hold an inquiry was announced, it was also reported that the chairman of the Tote was calling in the police to investigate whether criminal offences had been committed. I am sure that your Lordships would want me to say that the Metropolitan Police subsequently discussed the matter with officers of the Tote and reached the conclusion that on information available to them there were not sufficient grounds for a police investigation.
So far as the punters affected are concerned, here again let us be quite clear about the position. The 21 cases where the dividend was improperly reduced by a significant amount were referred to in the published findings. The Tote have recompensed those persons in respect of the race at Carlisle on 4th July 1979, which gave rise to the inquiry. The Tote Board have now published full particulars of the other 20 cases and have invited the punters who can show that they had a winning bet on one of those pools to submit claims for recompense.
Lord WIGG: My Lords, would the noble Lord not agree that as the Tote have been very fair and have offered to pay up to those punters who received less than they should have received, the Tote Board are now under a similar obligation to pay out to those bookmakers who paid out more than they should have paid out because of the arbitrary action of the chairman of the Tote Board in order to get Ascot dividend?
Lord BELSTEAD: My Lords, I was at great pains at the beginning of my speech to try to explain to the noble Lord that that is precisely the kind of question about which my right honourable friend does not take a view because he is not

989
statutorily empowered to do so. Therefore if the noble Lord wishes to indulge in this sort of dialogue, it should not be with me on behalf of my right honourable friend, but with other people.
The question of the adequacy of the law, however, does fall to my right honourable friend. I should like to say to your Lordships that the Home Secretary is not convinced that the need to amend the law has been demonstrated, and he thinks that the detailed regulation of betting procedures is best left to non-statutory arrangements. In case that sounds a little bland, may I add that I understand that bookmakers, as well as the Tote, have their own rules on betting procedures. I really do not think that we should attempt to deal with those matters by statutory provisions.
What I think is essential—if I may turn to the final point which I think arises—is that the Tote's procedures now and in the future should not permit of the malpractices which Mr. Aglionby's inquiry revealed. On 17th July last the Tote altered its procedures so that transmission of bets after the start of a race ceased for all pools except the jackpot and the placepot. The new procedures are based upon time-stamping and photographing of original documents, tape recording telephone conversations between the course and the Tote's London racing room, and continuous audit of all transmissions by an outside security firm. Mr. Aglionby has examined the present procedures, and is satisfied that they are entirely fair; and the chairman of the board has assured my right honourable friend the Home Secretary that all necessary steps have been taken to ensure that the staff adhere to the new procedures.
Before I finish may I refer to an entirely different matter. The noble Lord, Lord Wigg, in his speech, suggested that the Home Office is doing nothing about the report of the Royal Commission on Gambling. I am sure he will not think that I am being discourteous if I say that that assertion chimed in with other remarks which the noble Lord made during his speech, indicating that in some way or another my right honourable friend was being negligent with regard to gambling. The suggestion by the noble Lord, Lord Wigg, that the Home Office
990
is doing nothing about the report of the Royal Commission on Gambling is totally untrue. My right honourable friend the Home Secretary said at the conclusion of his speech last October in another place that there was a clear need for substantial legislation. It has been made clear by (if I may say so) myself in your Lordships' House this Session, on the Betting, Gaming and Lotteries (Amendment) Bill, that the Home Secretary understands this, and intends to introduce such legislation.
If we have disagreed this evening—and I am afraid I have ventured to disagree with some of your Lordships—I think that where we can all reach common ground is in agreeing that the reduction of dividends is a very serious matter. But these malpractices occurred within the Tote's activities on a very small scale and over a limited period of time. The inquiry of Mr. Aglionby has ascertained the facts and has concluded that the chairman and members of the board were ignorant of the malpractices which occurred. I should also like to add that, in view of the very thorough examination by the accountants under these circumstances, my right honourable friend does not consider that any further auditing of these pools would be justified. The Tote is prospering today, and this is good, is it not, for British racing? In view of the fact appropriate steps have been taken as regards the staff and punters concerned, and the transmission procedures, I hope your Lordships will agree that this matter should now be considered closed.