Lords Sitting of 23 January 1980

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Derby.
The Lord Butler of Saffron Walden—Took the
Oath.

DISARMAMENT:GENEVA COMMITTEE
Lord BROCKWAY:My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what progress has been made by the Geneva Committee to implement the recommendations of the United Nations Special Assembly on disarmament.
Lord TREFGARNE:My Lords, the committee has not met since July last year, although the disarmament debate has continued in the United Nations General Assembly. I therefore have nothing to add to the Answer I gave to my noble friend on 23rd October last year.
Lord BROCKWAY:My Lords, is the noble Lord aware that some of us have been able to obtain greater details than he has been able to give us? Is it not the case that the Geneva Committee has been unable to discuss the test ban; nuclear weapons; chemical weapons and verification, because those matters are already being discussed by the two super-powers? Is it not desirable that those matters should be discussed, for two reasons? The first is that there has been a long delay—the test ban has been discussed for 10 years. Secondly, is it not important to have the views of the 40 members of the committee, and not only those of the two super-powers?
Lord TREFGARNE:My Lords, yes, it is important to have the views of all the members of the committee. I can
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tell the noble Lord that the next session of the committee will begin on 5th February. We expect that it will continue its discussions of the important issues mentioned by the noble Lord—such as, the bans on nuclear testing as regards chemical weapons—and indeed get down to actual negotiations on the draft treaty to ban radiological weapons. It will also consider elements for a comprehensive negotiating programme drawn up last year by the United Nations Disarmament Commission
Lord BROCKWAY:My Lords, I thank the noble Lord for that reply. Is it the case that the Soviet Union proposed halting the manufacture of all nuclear weapons and proposed their gradual reduction until ultimate destruction, and that the West's delegates declined to discuss that? Will the Government in the discussions this year support the proposals of the unaligned 21 Governments that that resolution should be considered?
Lord TREFGARNE:My Lords, we shall certainly consider all the proposals put forward by the USSR and anyone else. But the most important feature of any proposal that we consider must be its capability of proper vertification.
Lord GORONWY-ROBERTS:My Lords, I should like to ask the noble Lord to confirm two or three facts about the so-called disarmament negotiations. The first matter is that the Vienna talks are practically all concentrated on what we call conventional arms, with certain overtones of tactical nuclear weapon discussions; and nuclear discussions are substantially confined to the SALT talks. Therefore, Vienna tackles the conventional side. Secondly, on the important point raised by my noble friend about chemical weapons, is it not a fact that on British initiative a draft treaty on the banning of chemical weapons was prepared for the Geneva Committee, and it was then that the two super-powers undertook to consider that draft treaty and to return it with their observations to Geneva, where in fact the enlarged committee of 40 members—again the result of British initiative last year or the year before—will look at the treaty plus the comments of the two super-powers?
Lord TREFGARNE:My Lords, I should like to make two points. On the question of the MBFR talks in Vienna, yes, it is certainly right that they are principally, but not exclusively, concerned with conventional weapons although, as I mentioned in the House last week, I think, those talks are now more or less stalled, although not dead. As for the chemical weapons treaty, it is now, as the noble Lord rightly says, principally a matter between the two super-powers, but we shall continue to play our part in the discussions. However, as in the other proposals in the area of disarmament, verification remains an important matter.
Lord SHINWELL:My Lords, if the Russians are represented at the next Geneva conference on disarmament, could they be asked whether their invasion of Afghanistan is one of their contributions to disarmament?
Lord TREFGARNE:My Lords, that might be a very useful question.
Lord AVEBURY:My Lords, as regards verification, does it not appear from the development of nuclear weapons by countries such as Pakistan that, if any nation is sufficiently determined to divert nuclear materials from a civilian programme, it can, with the minimum technical competence, manufacture useable nuclear bombs? In view of those developments, would the disarmament conference take on hoard the need to tighten up the safeguards on the use of civil nuclear technologies, to ensure that very large numbers of developing countries do not obtain nuclear weapons in unstable parts of the world?
Lord TREFGARNE:My Lords, yes, we attach considerable importance to non-proliferation. As a depositary power for the Non-Proliferation Treaty, we shall work hard to ensure a successful outcome of the Second Review Conference of the treaty in August 1980. A successful conference would strengthen a non-proliferation regime and assist the development of a new and wider consensus on non-proliferation and nuclear trade for peaceful purposes in the 1980s.
On the question of Pakistan, which was very properly raised by the noble Lord, the Pakistan authorities have repeatedly
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said that their nuclear programme is for peaceful purposes. We very much hope that no country in the Indian subcontinent would build nuclear weapons. It would be a development which would have the most serious implications for the stability of the area and for the future of international non-proliferation arrangements.
Lord GORONWY-ROBERTS:My Lords, with the leave of the House, I should like to return to one very important point made by my noble friend Lord Brockway when he referred to the future of the chemical weapons ban treaty. I hope that the Minister is in a position to confirm that, while that treaty and its provisions have been given to the superpowers for their study and comments, it is understood that they will return it to the Geneva Committee, which has now been enlarged, so that there will be final participation by a wide range of countries about the ultimate proposals of a chemical warfare ban treaty. It will return to Geneva, will it not?
Lord TREFGARNE:Yes, my Lords. We expect the matter to be raised when the Geneva Conference resumes in February.

SCHOOL FUND-RAISING SCHEMES: CONTRIBUTIONS
2.46 p.m.
Lord GRIDLEY:My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are aware that members of the National Association of Head Teachers are being urged not to back fund-raising schemes by parents and industry which aim to provide classroom books and equipment to offset the effects of economies by local authorities.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Baroness Young):My Lords, I am aware of the advice given by the National Association of Head Teachers to its members. This is an issue on which the association is, of course, free to express its opinion,

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but in my view it is very regrettable: it would be a most retrograde step if parents and others wishing to make voluntary contributions to school funds were prevented or discouraged from doing so.
Lord GRIDLEY:My Lords, I thank my noble friend for her Answer. However, is not this instruction rather hard to understand? If public-spirited people, such as the parents of children in schools and in industry, out of their own pockets are prepared to offset cuts in grants in these difficult times in order to purchase books and school equipment, should not they be praised and thanked rather than discouraged?
Baroness YOUNG:My Lords, as I hope my original Answer made clear, the association is, of course, perfectly free to express what opinion it chooses. I merely give our opinion. We believe that, if parents wish to contribute to school funds, it is perfectly right for them to do so. Indeed, it has been a practice that has gone on for many years.
Baroness DAVID:My Lords, will not the Minister distinguish between parents making gifts to school funds for amenities and things of that sort, and making gifts for the basic essentials of education, such as books and equipment? Surely under the Education Act 1944 it is the duty of local education authorities to provide efficient education. Will the Minister not agree that there is this very sharp difference?
Baroness YOUNG:My Lords, the noble Baroness is quite right in saying that the Education Act 1944 lays a duty on local education authorities to make provision for sufficient and efficient education in their areas. I should also explain that in the Government's financial proposals relating to the rate support grant settlement for 1980–81 they have provided for real standards of provision in the broad expenditure category, which includes capitation allowances—that is, amounts allowable for books and other teaching materials required—to be 2 per cent. higher than they were in 1978–79. This in no way alters the fact that where parents wish to contribute voluntarily to school funds it is helpful for them to do so. I would entirely accept that it would be quite wrong if any pressure were brought on a parent to
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contribute. That would be another matter; but voluntary contributions have existed for many years.
Baroness DAVID:My Lords, while welcoming what the Minister said about the extra money for capitation in the rate support grant, may I ask how she explains that, so far as the information goes, so far, apparently, the cuts in local authorities average about 10 per cent. for capitation?
Baroness YOUNG:My Lords, the fact is that we have no firm information on what is happening; there is quite a bit of impressionistic information around. But the truth of the matter is that, when having to make economies, local authorities find it easier to make them on matters such as capitation grants rather than on other matters which, of course, would require a much longer period of time.
Lord ORR-EWING:My Lords, despite the present restrictions, has my noble friend observed that local authorities increased their staff by over 30,000 in 1979? Will she continue to urge that wastage in the number of local authority officers is a better solution, for it reduces the number of employees, than taking this out on the education service and the children '?
Baroness YOUNG:My Lords, I would entirely support the remarks made by my noble friend. We believe that the education service, and particularly the supply of books, is an extremely important matter.
Lord MURRAY of GRAVESEND:My Lords, in view of the Government's exhortations that the cuts should be fairly spread, would the noble Baroness agree that it is now about time that the Government abandoned their ludicrous scheme to subsidise independent schools under the guise of buying places?
Baroness YOUNG:My Lords, I think that that is rather wide of the original Question.

THE RHINOCEROS IN AFRICA
2.51 p.m.
The EARL of SELKIRK:My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action they have been able to take under the Convention on International Trade on Endangered Species to prevent the imminent extermination of the rhinoceros in Africa.
Lord MOWBRAY and STOURTON:My Lords, the rhinoceros is already listed on Appendix I of the convention as being in danger of extinction. Commercial trade in it and its readily recognisable parts and derivatives should therefore have stopped in and between states party to the convention. Since not all party states enforce controls on by-products to the same degree, usually due to differing views on what is readily recognisable, the United Kingdom, with Switzerland and the Federal Republic of Germany, prepared a list of parts and derivatives, including rhinoceros horn, which all parties would be expected to control. This was considered by the convention at its meeting in Costa Rica last March, but was not adopted. The United Kingdom has prohibited imports and exports of rhinoceros and their horns since 1976, except where otherwise permitted under the convention.
The EARL of SEKLIRK:My Lords, are the Government aware that in Kenya, as one example, in the last decade something in the order of 90 per cent. of the rhinoceros population has been killed by human agency, and this is directly due to international trade? Is the noble Lord saying that the convention is not much more than a facade? Can the noble Lord not arouse interest among Commonwealth members and members of the European Economic Community to recognise the significance of this development?
Lord MOWBRAY and STOURTON:My Lords, my noble friend is quite right; there has been an increase. The legal trade from Kenya in rhinoceros is believed to be less than the illegal trade. However, in fairness to our Commonwealth colleague, Kenya, I must say that the Government there has not only signed the convention but has ratified it. I have every belief that they are doing their best to stamp out this illegal trade. Furthermore, I should like to tell my noble friend and
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the House that the Minister for Overseas Development discussed this problem also with the Ugandan and Tanzanian authorities during his recent visit to East Africa, and made clear the concern felt in this country. They also shared our concern, and indicated that this trade should be stamped out. We are continuing to take every advantage of appropriate opportunities to encourage adherence to the Washington Convention. Perhaps your Lordships might like to be told that next week the standing committee of the Washington Convention, and the technical experts of the countries party to the convention, are both meeting in Bonn.
Lord MELCHETT:My Lords, while welcoming, as I am sure all noble Lords do, the action that the Government have taken, may I ask whether the noble Lord would agree that the list of readily recognisable parts and derivatives which he mentioned was drawn up very largely with the help of the voluntary bodies in this country? Will the Government now take note of the widespread concern of the voluntary bodies that the Customs are not giving the priority in this country that they should to controlling the import of parts of endangered species? Would the noble Lord agree that, while the developed countries, and this country in particular, do not give a sufficient priority to controlling such imports, it is a little unfair to point the finger at developing countries such as Kenya and say that they ought to take further steps to control illegal trade?
Lord MOWBRAY and STOURTON:My Lords, I am not clear that I understood the noble Lord. Did I hear him say that it was the Customs in this country which were partly at fault?
Lord MELCHETT:Yes, my Lords. Is the noble Lord aware that the voluntary bodies have been saying to his department, the Department of the Environment, for many years that the Customs in this country have not been giving the priority to controlling this illegal trade that they should?
Lord MOWBRAY and STOURTON:My Lords, I hear what the noble Lord says, and I have every respect for his intelligence and knowledge. I must confess that it is contrary to what I am

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given to understand. I am given to understand that the Customs and Excise here check that the appropriate documentation is always available at the time of import and export and do inspect consignments. Further checks and documentation are also made by the Department of the Environment, as management authority—as the noble Lord well knows—responsible for our import and export licensing. I detect in our Department of the Environment no looseness of feeling on this. There seems to be a general agreement everywhere with everyone I have talked to that they want to do their best, but we have the feeling that the main looseness in operation is not in this country either in the selling or the buying.
Lord BLYTON:My Lords, does not the noble Lord think that the Government ought to be engaged in preventing the rhinoceros of unemployment, inflation, high prices, trade union activism, and the whole of the rest of it that is creating havoc in this country?
Lord MOWBRAY and STOURTON:My Lords, I can only suggest that if there is any remaining rhinoceros powder left in this country the noble Lord should take a good dose of it.
Lord GRIDLEY:My Lords, in further support of my noble friend Lord Selkirk, may I ask the noble Lord whether he is aware that there is widespread public concern in this country about the danger of the extinction of the rhinoceros, and that this is being made manifest by the large amount of public subscriptions which are being made to a charity, the People's Trust for Endangered Species, in order to save the rhinoceros from extinction?
Lord MOWBRAY and STOURTON:My Lords, there is every worry about the rhinoceros. Live ones have only been licensed for import for breeding purposes in this country in accordance with the terms of the Washington Convention on International Trade in Endangered Species. Rhinoceros horns and skulls have only been allowed in for non-commercial purposes where they were already in ownership before 1976.
Lord MELCHETT:My Lords, is the noble Lord aware that I was not suggesting that the Department of the Environment were showing anything less than extreme enthusiasm for implementing these international controls? I welcome the lead which this country has taken in the negotiations over international conventions. However, in view of the widespread concern about the problems of the rhinoceros, I wonder whether the noble Lord would agree to look again at the priority which the Customs and Excise give to controlling the import of endangered species and their products.
Lord MOWBRAY and STOURTON:My Lords, I am glad to hear the noble Lord, Lord Melchett, say what he has about what the Department of the Environment is doing. As the noble Lord is probably aware, we are already having arrangements in Europe. The EEC is going to make the convention binding on all countries in the EEC. This is an educational matter for other countries as well as ourselves. It is not in Europe where we are primarily dealing with the prime offenders. Next year in 1981 when the full convention meets in New Delhi there will be really a full high court judgment given on any offenders. As I pointed out to my noble friend Lord Selkirk a moment ago, these meetings—the next one is next week in Bonn—deal with matters as they come up. Our experts and the standing committee are well aware of where the offenders lie, and are doing their damndest to stop the thing.
The Earl of SELKIRK:My Lords, I thank the noble Lord for the trouble he is taking in answering the points which have been raised. Is he aware that in the last century something like 100 mammal species have disappeared from the world? This is a critical moment in the life of the rhinoceros, who has been with us for something like 60 million years.
Lord MOWBRAY and STOURTON:My Lords, my noble friend is quite right, but with Kenya, Uganda, and Tanzania all now pledged to help, there should be an improvement in this situation.

RHODESIA: ASSASSINATION OF MR. OLIVER SAUNYAMA
3 p.m.
Lord GORONWY-ROBERTS:My Lords, I beg to ask Her Majesty's Government the Question of which I have given Private Notice, namely:
"To ask Her Majesty's Government whether, following the assassination last night in Salisbury of a candidate of one of the main political parties, they will make a statement on the progress of the cease-fire and the preparation for the elections".
Lord DENHAM:My Lords, with the leave of the House my noble friend Lord Trefgarne will answer that Question in the form of a Statement at a convenient moment after 3.30.

NEW HEBRIDES BILL [H.L.]
Lord TREFGARNE: My Lords, I beg to introduce a Bill to make provision in connection with the attainment by the New Hebrides of independence within the Commonwealth. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(Lord Trefgarne.)
On Question, Bill read 1a, and to be printed.

COMPETITION BILL
Brought from the Commons; read 1a, and to be printed.

SCIENCE AND TECHNOLOGY
The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers): My Lords, I beg to move the Motion which stands in my name on the Order Paper.
Moved, That a Select Committee be appointed to consider Science and Technology.—(Earl Ferrers.)
On Question, Motion agreed to.

SMALL BUSINESSES: CURRENT PROBLEMS
3.2 p.m.
Baroness SHARPLES Baroness SHARPLES rose to call attention to the problems facing small businesses; and to move for Papers. The noble Baroness said: My Lords, I wish at the outset to thank those noble Lords who intend taking part in this debate. Owing to the interest shown in this subject, it would seem, if I may presume to say so, that a maximum of five to six minutes each would be appropriate within the time limit to which we are committed.
Though I have asked for a debate about the problems facing small businesses, I shall in fact be referring to independent businesses because the word "small" has no precise meaning and has led to much misunderstanding. An independent business means any business which is not a public company, whether it be a little shop employing a couple of assistants or a factory with 1,000 employees. Their problems will be similar, but for the most part quite different from the problems of public companies and nationalised industries. I know the Government intend to carry out their undertaking to improve the environment for independent businesses and are considering various ways of helping them, but time is running out and the matter is so urgent that there is no time for experimental measures.
The situation was very similar in America after the last war; industry was depressed and independent businesses were going bankrupt in large numbers, partly because they found it so difficult to obtain enough equity capital or even long-term loan capital. Although bank deposits were rising and the banks declared that they were willing to finance the needs of independent businesses, they did not do so. Immediately after President Eisenhower came to office, he investigated the situation and finally solved the problem in 1953 by amalgamating several agencies into the American Small Business Administration, ESBA, which changed the whole climate for independent businesses in America. Since then, their independent business sector has prospered. It has made an outstanding contribution to the huge growth of American wealth by developing a mass of new applications for advanced technology.
I repeat, there is no time for us to experiment, so why should we not use those measures which have been tried and proved successful in America since the Small Business Administration was set up for the express purpose of overcoming the very difficulties which face independent businesses in Britain today? I would remind noble Lords that a few years ago many Americans were predicting that the new technology in the form of microelectronics would lead to an intolerable increase in their unemployment. Indeed, this has now been predicted in Britain today.
However, the American prophets of gloom have been proved wrong because independent businesses, particularly those engaged in the micro-electronic industry in America, created a vast number of entirely new jobs which were actually more attractive to workers than the jobs in heavy industry from which they were displaced. I quote from page 31 of the American BIRCH Report of 1979:
"Small firms, despite their difficulties in obtaining capital and their inherent high death rate, are still, on balance, the major generators of new jobs in our economy and, in slow growing areas, the only significant provider of new jobs".
Of course, some of the measures introduced by the American Small Business Administration were less successful than others, but those which have proved outstandingly successful in America should, I submit, be copied here without delay.
I therefore suggest, first, that Members of Her Majesty's Government should encourage those enterprising individuals who start and develop independent businesses by continually stressing in public their value to the community. Secondly, the Government should set up a special department to promote the interests of independent businesses, similar in all respects to the American Small Business Administration. It might well be staffed—and here I know that there will be many people who disagree with me—by combining, into one streamlined administration, the Council for Small Industries in Rural Areas (CoSIRA), the National Research Development Commission and various other development commissions and hoards.
Thirdly, it must be in our national interest to copy the American policy of
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specifically charging its Small Business Administration with the task of securing that contracts for a substantial part of all Government civil and military purchases are placed directly with independent businesses. Fourthly, it is often asserted that the financial needs of independent businesses can be met by loans from banks and financial institutions. But this is not the best way to finance independent businesses, particularly in the early stages of their growth, because independent businesses need equity capital rather than loan capital, and they need intimate links with their financiers.
Independent businesses are, by their very nature, risky. They cannot cope with a heavy load of loan capital on which they are obliged to pay interest each year. They should be financed by risk capital. To overcome these problems, the Americans devised the Small Business Investment Company, known as an SBIC. Provided an SBIC complies with rules laid down by the Small Business Administration, it can borrow three dollars from a bank for every one dollar of its equity capital. These bank loans to SBICs are then guaranteed by the Government, so the interest rate is only slightly above the Government borrowing rate.
The merit of this scheme is that the banks lend their money to SBICs, and so their loans, quite apart from the Government guarantee, are protected because the SBICs must lose all their equity capital before the money which they have borrowed from banks is lost. It is interesting to note that the total losses sustained by the American Government as a result of guaranteeing loans to SBICs have dropped from 5 per cent. at the end of 1976 to 3.3 per cent. at the end of 1978; but these losses have been more than offset by the extra taxes paid by expanding independent businesses and by the reduction in payments to the unemployed.
The results which have been achieved by the SBIC scheme have been remarkable, not so much because of the actual funds they have made available to industry, but because their existence has shown the banks and institutions, as well as private individuals, the advantages of providing equity capital to independent businesses and has given them a better understanding of the needs of independent businesses.

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The outcome has been that in America today there is a large pool of private capital available for investment in the equity of small and developing independent businesses.
Fifthly, I urge the Government to make it clear that they would like our Stock Exchange to provide a genuine over-the-counter market similar to that which operates in America. It is said that our independent businesses are reluctant to come forward and ask for help from institutions like ICFC. The reason is that they do not like to be dependent on loan capital supplied by banks or institutions on which interest must be paid whether they make a profit or loss; and, worse still, the institution can threaten to withdraw the loan at the end of a few years.
American independent businesses are not reluctant to seek loans from institutions after they have passed the earlier stage of development which has been financed by "risk" capital. This is because they know that institutions do not want to tie up their money indefinitely, and so in due course will help the independent business to repay the loan by obtaining equity capital from the public through the American over-the-counter market. Our Stock Exchange has so far been unwilling to help unless at least £1 million is required and the company has been earning £400,000 a year. Thus, there is a serious gap in our financial structure between the early stages of an independent business, which can be financed by the founder and his friends, and the stage when the independent business can earn £400,000 a year and seek equity capital from the public through the Stock Exchange. Indeed, many independent businesses will never earn £400,000 a year.
The financial ladder is easier in America. At the first step, their independent businesses are generally financed by the founder and his friends, as in the United Kingdom. The second step in America is when equity capital, supported by loans, is made available by an SBIC. At the third step, the SBIC will obtain a loan from an institution for an independent business which it has fostered.
The gap comes at the fourth step, when the business expands and requires still more equity capital. In America, this is obtained through the over-the-counter
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market. In Britain it is not yet easily available through the Stock Exchange until the business has become very large indeed.
There is one more American practice that we could, with advantage, copy. We should change the law so as to allow companies to buy back their own shares. The original reason why this was made illegal is no longer relevant. In America, it is legal and it has not been abused, but has attracted a great deal of private capital into American independent businesses. This is because so many people who now earn large incomes and so can accumulate savings, are still nervous of the Stock Exchange, and so are inclined to invest their savings in property, even at inflated prices. In America, such individuals are inclined to invest at least a part of their savings in the equity of expanding independent businesses. They are well aware of the risks. They do not need dividends from such investments. The attraction is that they can take a real interest in the business and, if it is successful, the business will some years later be able to buy back their shares, at assets value, which often shows very handsome profits. This arrangement enables the investor to help an independent business, with the prospect of making a capital gain himself.
I should now like to mention three points which are peculiar to the British scene. The first point is that there are a number of public companies which are entrusted with main contracts for civil and military equipment by Government agencies and can, therefore, rely on regular progress payments. However, they can exploit their buying power by extracting between 90 and a hundred days' credit from their component suppliers, who, for the most part, are relatively small independent businesses. Some of these companies have large credit balances at their banks earning handsome interest, made possible by extracting long credit from their suppliers and so forcing them to borrow from their banks and pay high interest.
This abuse of near-monopoly can be exerted by main contractors on their component suppliers, and it has a most damaging chain reaction. The Government may well claim that they have no power to intervene in private business, but our Government purchasing agencies

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have the right, as well as the power, to insist that, as a condition of a contract, main contractors shall pay their suppliers within 30 days of invoice, which is normal trading practice. I can supply my noble friend the Minister with examples, should he wish for them.
The second point is that the training levy system should be abolished because it proves a hardship to independent businesses which are obliged to pay, while it is no burden to big businesses which enjoy the benefit without paying. The training levy is I per cent. of the wage bill, and if this proves to be less than, say, £5,000 to £6,000 a year it is not worthwhile for a small business to pay the salary of a man, and a secretary, in order to fill in the paperwork necessary to avoid paying the levy, even though the business probably trains operators, which would entitle it to exemption. On the other hand, a big company with a personnel department can take this work in its stride, and so does not pay the levy.
The third point is that the last Government declared their intention of fostering the expansion of the British electronic industry in order to take advantage of the micro-electronic age. However, according to the Press, a Post Office contract has lately been placed with a Canadian company for £30 million-worth of equipment (known as the CDSS). Bearing in mind that the last Government handed out cash grants to encourage the development of electronic components, and that the prototype of this particular equipment was developed in Britain for the Post Office with the help of many component manufacturers who developed special parts, our electronic component manufacturers have been most discouraged by this news, because the Canadians are more likely to buy their components from America than from England.
Here I should like to pay a tribute to the noble Lord, Lord Lever of Manchester—who will be speaking later in the debate—who understood the points I have tried to make and who in the last Government did so much to improve conditions for independent businesses.
I have attempted to highlight some ways in which the Government could assist independent businesses, but I should also like to suggest an overall objective at
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which they should aim. For many years it has been said that the Government should encourage a property-owning democracy. This was a grand project, but it has now virtually been achieved. It requires very little further special attention from the Government. I suggest that today it is more important for the Government to concentrate on promoting an equity-owning democracy. A very large part of our population is now able to save money, but the bulk of these savings is, by various fiscal devices, syphoned off into savings funds, insurance companies and building societies where they have, for the most part, been used as loan capital to finance excess Government expenditure, or to finance big business. Very little of these savings has been used to finance independent businesses. Without going into detail, I suggest that the time has come for the Government to adjust the fiscal incentives so as to encourage equity investment in independent businesses, which would promote a more stable equity-owning democracy in which every family could look forward to owning an equity interest in some business activity. My Lords, I beg to move for Papers.
3.18 p.m.
Lord BYERS: My Lords, the House is indebted to the noble Baroness, Lady Sharples, for introducing this very important Motion. I am only sorry that it is not the subject of a long debate and that we are constrained to two and a half hours. There has been an increasing, if slow, recognition over the past three years of the important part which the small firm can play in job creation, in the reduction of unemployment, and in the development of new and profitable ideas. It is also coming to be recognised that a small firm, starting up from scratch or expanding in size, can make an important contribution to the regeneration of our derelict inner cities. It is remarkable, I think, how one or two people with a bright idea, good advice and adequate resources can develop an innovation whose production, packaging, marketing and dispatch gives employment to unskilled workers as the firm develops; and there are many examples of that.
There is no shortage of talent in this country. In fact, there is almost a new Parkinson's Law, which is that if premises

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are provided at a suitably low rent, they will be filled by a man, or a girl, or both, to create a new business venture. The application of this can be seen in the numerous workshop ventures in London and elsewhere: the Barley Mow at Clerkenwell, the Rotherhithe co-operative, and many others.
However, we should not delude ourselves into thinking that everything is going smoothly. The proper encouragement of the small firm is a complex problem in which many agencies have an increasing part to play, and a great deal more to learn. I think that it was one of the bonuses of the Lib-Lab Pact that we were able, without any difficulty, to secure from Mr. Callaghan the appointment of Mr. Harold Lever, as he then was—now Lord Lever; and we welcome him to our House—as the Minister with primary responsibility for small businesses; and he did an extraordinarily good job. Much impetus was given to the better understanding, and the importance, of the small firm in the regeneration of the inner cities by the leadership shown by Mr. Peter Shore.
There is, however, a great deal which remains to be done if the small firm is to make its maximum contribution to the well-being of our economy. I cannot possibly list all the things which I believe should be done, but let me mention just a few. From the Government, I think that first of all there ought to be a Minister in the Cabinet responsible for ensuring that policies are developed to help the small firm and that other policies, particularly those emanating from the Treasury and the Department of Employment, do not impede or undermine the viability of the small firm. This, as the noble Baroness said, is very much in line with American thinking.
Next, I believe, is the need to make it easier to acquire and develop unused land. There are acres and acres of land in the big cities owned or leased mainly by the public sector—in particular, the railways—and this land would be developed by developers or local authorities if it could be made available without too much fuss and too much bureaucracy. One of the principal needs of the small business is finance. The high level of the minimum lending rate has exacerbated this problem, and, unlike the United States, we are lacking the
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individual investor—the Aunt Agathas of the world.
The most important action I think the Government could take in this field, and at very little cost, would be to create a climate of incentive for the individual investor to take part of the equity in small firms. That should be an aim of the Treasury policy in this country. One scheme which has been put forward by the London Chamber of Commerce would use the profit-sharing tax legislation as a model, so that individuals would get tax relief according to the length of time they held the shares, with full relief after, say, 10 years. Finally so far as the Government are concerned, may I ask this: What is happening to the money which was to be made available under the Inner Urban Areas Act? Is it achieving results? If so, what are those results, and how are they being achieved?
That brings me to the role of the local authorities. At a time of public expenditure cuts I believe some authorities are reluctant to use this Act, since they have to find 25 per cent. of any money they seek from the Government under the Act; and this, I believe, also applies to individuals. I think it is time, after 18 months' working of the Act, that we had an authoritative statement of what it is achieving at the present time. There are two other ways in which local authorities could help small firms. Rent and rates relief is one. If such a policy were to lead, as I think it would, to more start-ups and to expansions, then the income forfeited in the short term would be very easily recouped in the longer term by the income from the rates. The second method which the local authorities could use to help is to cut out red tape and to increase the tempo of dealing with applications, particularly those in the planning field.
Apart from central and local government, there are two other areas with an important part to play in helping the small firm. There are the voluntary agencies. I am not going to name them all, but a good example is the Action Resource Centre, which, in addition to its other activities—and they are manifold—has developed a small business counselling service in Islington; and already, in a few months, it has dealt with something like 150 cases. It looks like a potential success. It is manned by people seconded

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from big business, and it helps small companies with advice. It does not manage and it does not provide finance, but it steers applicants in the right direction and deals with them objectively and with candour; and this service is much appreciated in the community.
I would not be doing justice to the private sector if I did not refer to the real contribution which some of our leading companies are making to the combined task of aiding the small firm and helping with the inner city problems. I have been closely associated over the last three years with the development of the concept of an enterprise agency through which large companies can help small companies to start up and to expand, and, working closely with central Government, local government and the other, voluntary agencies, make advice available and give help speedily and effectively. The enterprise agency with which I am most closely associated is the London one, and this has served as a pilot model. There are plans, I am glad to say, for several other cities to adopt a similar pattern. It was launched on 11th April 1979 with the object of identifying projects worthy of support, to provide a link with central and local government and to give help and advice to existing firms and start-ups. It is already helping firms to find premises. While it does not provide finance, it will put firms in touch with financial sources and help them in the preparation of their cases and their applications. It also has an important research function.
Already it has become clear that big business can not only help small business but, in the process, help themselves. They help themselves by broadening the horizons of the employees they second. It is quite remarkable the effect on a seconded employee when he is given responsibility for running or helping in a counselling service. But it is not only that. In this way big business obtains a clearer view of the problems of the community. The problems of the small business, my Lords, are not just the responsibility of Government. They can be solved only if all the relevant agencies, public and private, make a positive contribution.
3.26 p.m.
Lord GRAM: My Lords, I join the
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noble Lord, Lord Byers, in thanking the noble Baroness, Lady Sharples, for giving us the opportunity of this debate, because it enables us to recall that increasingly today in business—and, indeed, in public affairs generally, not least in local government—we have all become the victims of bigness. Economists have rightly taught us about the economies of scale, and those economies are of course real and important. But the economies of scale are by no means universal. Even when they can be clearly identified by accountants there are countervailing factors on the other side—factors of bureaucracy and of imperfect communication, which seem to bedevil large organisations and very often result in human frustrations. It is especially true that where the market is local and personal the big organisation tends to fail, and it is here, therefore, that in my view the need for the small business is most obvious. Increasingly, when something in the home goes wrong and needs repair, the housewife finds it more and more difficult to get prompt service; and it is the small firm, and perhaps only the small firm, which can benefit from what I would call economies of small scale. The small firm benefits from being small because it can respond more effectively than a big firm to the local and personal needs of its customers.
We have heard from the noble Baroness, Lady Sharples, and from the noble Lord, Lord Byers, however, that small firms suffer from handicaps in comparison with large organisations. I think those handicaps really fall under two headings: handicaps in relation to finance and handicaps in relation to know-how, particularly when a small firm is starting up. At that time it has no financial record, and perhaps little collateral, with which to impress the bank manager; and, as to business know-how, even the best of small businessmen cannot be expected to have all the knowledge that modern business life requires. He may be first-class in organising the manufacture of an excellent product, but he may not have the knowledge (or, if he has the knowledge, he may not have the time) to deal effectively with marketing and publicity, with taxation or legal matters, with the form-filling to which the noble Baroness referred, or, indeed, with detailed accountancy. He has to try to be a kind of Poo-bah, covering all these things, or else buy in

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professional services, and this puts him at a costly disadvantage compared with the big firm, which can provide such services for itself internally. In other words, the small firm, because it is small, is faced with what I would call an "organisational minus" by comparison with its larger competitors. Therefore, what we have to look for, I suggest, on behalf of the small firm, is an "organisational plus" to counterbalance that minus factor.
I believe—and it is my own personal philosophy in my public life—that that plus would be found if small businesses would organise themselves as co-operative societies. They can do so either under the Companies Act or, preferably, under the special legislative framework provided by the Industrial and Provident Societies Act. There are several hundreds of examples in this country of this having been done successfully and many hundreds more in Europe. I have in mind, for example, a group of workers made redundant when a Courtaulds factory closed at Skelmersdale, who had the initiative to set up their own wood-working co-operative. A more local example is that across the river in Lambeth where a group of ladies have successfully organised an office-cleaning co-operative. These people are finding what I suggested they need, an organisational plus". Working in a co-operative team, they know that they can join in making business decisions and that they will benefit personally from the greater productivity of the team as a whole.
This industrial co-operative movement is growing at an encouraging rate. It is a movement which can be acceptable and welcome to people of different political ideologies. I am glad that the present Secretary of State for Industry, Sir Keith Joseph, is on record in another place as favouring the growth of a producer co-operative sector; and he and I had a constructive exchange recently when I had a talk with him in my capacity as chairman of the Co-operative Development Agency. Co-operative societies can take many forms. I believe that they could help overcome many of the problems towards which today's debate is directed. It is not just the business itself which can be a co-operative; there can also be a co-operative of small businesses which can greatly benefit the individual enter-
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prises by providing them with common services. I know, for instance, of a co-operative society, the members of which are the proprietors of independent toy shops. Their co-operative provides them with a central warehouse and, by bulking their purchases, gives them the benefit of discount terms which would otherwise not be available to them.
What all this means, I suggest—and one could give many examples all over the country—is that by using the method of mutual aid, which is at the heart of the recognised code of co-operative principles, small businesses can get the best of both worlds. They can have the benefits that I have described of the individual enterprise in meeting the personal needs of their customers; that is, they can get the benefit of what I call the economies of small scale; but by working together and supplying themselves co-operatively with their common needs they can also get the benefits, the economies, of large-scale operations. I believe that, because of these considerations, this method of co-operative working, which is very flexible in its application, deserves greater attention in this country than it has had so far.

RHODESIA: ASSASSINATION OF MR. OLIVER SAUNYAMA
3.34 p.m.
Lord TREFGARNE: My Lords, with the leave of the House I will now repeat a Statement being made in another place in answer to a Private Notice Question on Rhodesia. The Statement is as follows:
"We naturally greatly regret the incident to which the right honourable gentleman refers. I understand that police investigations are in hand. My right honourable friend the Lord Privy Seal gave a full account of progress on the cease-fire and preparations for the elections in this House on Wednesday, 16th of January. I have nothing to add to that and to the remarks I made during the debate on the two Southern Rhodesia orders the following day".
My Lords, that is the end of the Statement.
Lord GORONWY-ROBERTS: My Lords, may I first thank the Minister for

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repeating that Statement and join with him in expressing not only concern about this tragic and dangerous incident but also sympathy for the relatives of Mr. Saunyama, an accredited parliamentary candidate taking part in what we all hope will be free and fair elections in Zimbabwe. May I also welcome what the noble Lord has said about the police investigation being in hand and, implicitly, that this terrible incident, this crime, will be dealt with by due process of law. Would the Minister further agree that whoever is found to be responsible it is now more than ever necessary that the Governor should continue to be empowered, and, indeed, encouraged, to keep a very tight hold on the so-called auxiliaries and to use only the proper statutory and disciplined armed forces for the maintenance of law and order in Zimbabwe?
Finally, may I refer him to what Mr. Nkomo and Mr. Mugabe have said about the auxiliaries over the past few days and ask the Government to pay attention to what they have said; so that incidents of this kind, which are tragic in themselves and potentially of very great danger to the kind of future that we are all trying to build for Zimbabwe, can be averted? As to the statements of his right honourable friend in another place the day before yesterday and his own yesterday, for the moment we shall not pursue any further questions arising from the two orders; but, of course, the Government will understand that we may return to the question of the progress of the cease-fire in the next few days or, certainly, in the next few weeks.
Lord GLADWYN: My Lords, naturally we on these Benches associate ourselves with the expressions of regret made by the noble Lord, Lord Goronwy-Roberts, at this regrettable incident and should like to express our sympathy for the family. But if we look at things from the practical point of view, I should imagine that it is only too likely that some kind of incident of this sort may take place again before the elections next month and I should doubt whether on every occasion on which a similar incident occurs it is necessary to put down a Private Notice Question and interrogate the Government. We must assume, and I think we can assume, that the Governor is doing all he can within his means and powers to
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suppress such incidents and that that is all he can do at the present.
Lord TREFGARNE: My Lords, I am obliged to both noble Lords for their response. To take up the point made by the noble Lord, Lord Goronwy-Roberts, about the auxiliaries, they are part of the Rhodesian forces and are equally obliged to observe the cease-fire. Any complaints against their activities will be investigated and dealt with appropriately. This has already happened in a small number of cases.
Lord WIGG: My Lords, I must refer to the statement made by the spokesman for the Liberal Party today and similar kinds of statement from the Liberal Party spokesman yesterday. The Liberal Party are quite a small, uninfluential and, in my judgment, unimportant section of the community. They take upon themselves the role not of schoolmaster—for that would be a reflection on my ex-schoolmaster—but of schoolmistress, which is much more likely, and so far as I am concerned, I am not wearing it.
Lord NUGENT of GUILDFORD: My Lords, is my noble friend aware that the view of every noble Member of this House is of equal value?

SMALL BUSINESSES: CURRENT PROBLEMS
Debate resumed.
3.40 p.m.
Lord SPENS: My Lords, reverting to the subject of the debate so ably introduced by the noble Baroness Lady Sharples, and so well supported by the two previous speakers, I shall try to keep myself within the time limit laid down by the noble Baroness. Therefore, I want to confine myself to making only one point. That point T made, in fact, in a debate on 7th November. It was a long debate running to a fairly late hour and I was not able to stay until the end of it so that the noble Lord the Minister (who is not the Minister down to reply to us this afternoon) was able to avoid giving me an answer.
I want to raise the point again and look at it from another angle. It is the problem

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of VAT for the small business. I do not think that many of us realise how small a business can be to be involved in having to collect and pay over VAT to the Customs and Excise authorities. At the moment, the turnover of that business has to be less than £10,000 to avoid paying or getting involved in this exercise. Just to give you an example, I look after the accounts of a small corner shop which now has a turnover of just over £100,000 in a year. But I should be surprised if the profit that comes out of the turnover of that shop is more than £5,000. A profit of £5,000 for a sole proprietor is less than that of a wage-earner earning £100 a week. So we are really looking at very, very small businesses which are involved in the collection and payment of VAT.
The total number of those businesses from the last statistics that are available, which was in the Customs and Excise annual report for 1977–78, amounted to just over 1¼ million. The Revenue obtained a net collection of some £4,200 million from those one and a quarter million businesses. Of those businesses, over one million had a turnover then of less than £100,000 a year. Between them they raised only a net revenue of some £320 million. I realise that to raise the lower limit of the VAT threshold too high is going to change the nature of the tax; but it is a nonsense that this situation should apply at the moment. I am speaking of 1978 which was before VAT was increased to 15 per cent.
At the lower limit of the businesses with less than £20,000 turnover in the year—and that is a very small business indeed—there are some later figures which were given in a Written Answer in another place last October. That showed that there are some 375,000 of such businesses which between them raised a net £25 million for the Revenue. The cost of collecting that revenue from those businesses appears to be £25¼ million, so that there are 375,000 businesses contributing a net loss of a quarter of a million pounds to the Government. My Lords, that surely is a complete nonsense and if the Government are unable to raise the threshold for VAT too high, I ask them to consider raising that threshold to at least £20,000 so that they do not continue to make a loss out of collecting this tax.
3.45 p.m.
Baroness MACLEOD of BORVE: My Lords, like other noble Lords, I should like to thank my noble friend Lady Sharples for introducing a very important debate. That is already apparent. I for one am sorry that it is only a short debate because in such a short time it is difficult to draw attention to more than one or two of the problems which arise for a small shopkeeper. There are two distinct categories of small shopkeepers; the one which struggles to keep going in a town where every year more of the big stores are expanding and taking business and customers. His main worry is competition, the increased costs of employing a few staff, the increase in rates, the increase in National Insurance contributions and often the failure of wholesalers to deliver the goods.
The second category is the village shopkeeper. He is often the centre of the village. He performs an invaluable service for the community. In my local village the one shop stocks groceries, toys and stationery. The owner also stocks and delivers newspapers. He is also a sub-postmaster. Every week he, aided by his wife, works more than 70 hours. At the moment all sub-postmasters are worried about the possibility that social security benefits might be paid through banks. In the country districts this would not only he an inconvenience to the consumers, giving them extra expense in travelling to the bank, but it would deprive the shopkeeper of valued customers in that those who collect social security benefits often buy goods from that shop.
The problem that is common to both these categories is the failure of both Governments to implement their policy of metrication. Whatever our views on the metric system, it is a fact that since 1964 Governments have accepted that the country shall go metric in the interests of our survival in the world markets. Until, by order, the Government complete the change, small shopkeepers will continue to face the time-consuming and unnecessary work which is involved when dealing in both imperial and metric systems. The shopkeeper has to be constantly on his guard to check delivery documents from his suppliers. Some operate in metric, but some still operate in imperial. Some sizes and prices of packs are metric and

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some are imperial. I do not suggest for one moment that a shopkeeper cannot cope with this problem; but it is an extra burden of work which adds to costs which will eventually be borne by the consumer. Until orders are laid to complete the procedure, consumers will be worried in case they are not getting value for money, and the small shopkeeper might be discouraged from continuing his valuable service to the community. It was Napoleon who said that England is a nation of shopkeepers. I hope that the Government will do all in their power to encourage these shopkeepers.
3.49 p.m.
Baroness PHILLIPS: My Lords, I should like to follow the noble Baroness. Lady Macleod of Borve, and refer to the question of the small retailer. I consider that we have the best shops in the world, whether we are speaking about large or small ones. It is not by accident that people travel both from the West and from the Continent in great numbers to come to our shops. We should be very proud of them. As the noble Baroness said, Napoleon, wishing to insult us, called us a nation of shopkeepers. In my travels I find that invariably the small shopkeeper is the backbone of the community where he has his small shop. I meet them all the time in social clubs, from youth groups to cultural groups. One realises the great contribution, mainly unsung, that they make to the community.
Various Governments have encouraged businesses of all kinds to take on more staff and then, when the employers take on more staff, they add an extra surcharge on the staff they already employ. The National Insurance surcharge, it seems to me, is really more like a poll tax so far as the small trader is concerned. It seems to me, too, that it is nonsense to suggest that small businesses, and particularly small retailers, should have to conform to the same legislative processes as the large public companies and the large public undertakings.
I happen to have the privilege of being one of the vice-presidents of the National Chamber of Trade, who put forward a very reasoned argument for the introduction of a different type of company, which would be known as "an incorporated limited partnership". I believe
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they have already approached the Government on this and have had an audience. I hope very much that the Government are looking into it. I personally had the opportunity to set up a small trade association; and one observes how nonsensical it is that with a staff of three, one still has to employ someone to do the high-powered accountancy which would be exactly the same, I suspect, as that for the very much larger businesses.
Many of the small shops, in providing this service to the community, do, as we have heard, work on a profit which is so low that it is definitely less than the average wage taken home by a worker; and to pay rates of £500 a small shopkeeper would need certainly to take something like £3,000 worth of business. There must be some way in which we can get through the rating jungle. In my own high street in a London borough, I have watched, sadly, one after another, the small shops disappear, closing because of high rents, high rates, theft and all the other attendant problems. It is very sad to go along a high street in a London borough and see that each of the small shops now has to have steel shutters in front of its windows because of constant pilferage.
If the Government will put money, as they do, into large concerns to encourage greater efficiency, that in my book means a smaller number of people employed. The only sector left which can take up the mass of the unemployed is that concerned with small businesses, and particularly small retailers. They need all the encouragement that any Government can give them. It will be a sad day if the small man disappears. There will always be the elderly, the handicapped and mothers with small children who need desperately to use the small shop.
I would hope that we will remember that the United Kingdom is not a mass of conurbations. The more I move about the more I realise that, happily, it is still composed of a number of small towns; and small is beautiful. We create so many of our problems by our bigness; and I would therefore put in a very keen plea to the Government that they will look to the interests of the small retailer.
3.54 p.m.
Lord ROBERTHALL: My Lords, I was at one time economic adviser to the

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Government, and when I gave up that job I became adviser to a number of very large firms. But recently I have become the accountant to a one-man firm which is just going into business. If your Lordships will forgive this somewhat personal account, I give it because I think that anecdotal evidence—evidence from direct experience—is often more useful than a mass of statistics or generalisations.
The young man in question came from an academic background; all his relations had gone to school and university and then into academic or professional jobs. He did not care for that at all. He was very difficult. He got some casual work and then was on social security for a while. However, it transpired that he really wanted to run his own affairs if he could. He took a short technical course and then set up his own little busines to fill a gap which he thought could be filled. I ought to declare an interest: he is a connection of mine and I put up some of the capital, though I may say I do not expect any return on it. However, I am concerned.
The transformation in this man was very striking indeed. He became self-reliant, anxious to stand on his own feet—not like some of the people he knew, sitting around, drawing social security and expecting the Government to do something for them. He worked all night if that was necessary. He showed a great deal of enterprise and energy, and indeed all the qualities which I think this country wants so much. He lost money in his first year but is now beginning to build up his turnover and is just about in the black. But of course he has got to expand.
In front of him are a great many hurdles, the first of which the noble Lord, Lord Spens, has mentioned. He has to get his turnover up. He will soon be at the £10,000 level and at that stage he will need a more professional accountant and much more detailed records. Perhaps I should say at this stage that the only department he has seen so far has been the Inland Revenue. They were extremely kind and helpful to him, and I think it is a very good thing that that is the line the Revenue takes, because if it goes on like this he will begin to think of the department as a friend and not as an
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enemy. I give full marks there to the Inland Revenue.
But the VAT people will not be able to do that. They are tied down and have to keep very rigid records; and a very great burden will be imposed on him. He will probably need professional accountancy and, as the noble Lord, Lord Spens, has pointed out in detail, it is probably at this level an expense to the Government: the present allowance has not even kept pace with inflation. This must be true of a lot of virtuous and industrious young people in the country who are in the same situation as this particular young man I am talking about. The next thing will be to employ somebody, and then he will get a fresh load of responsibilities to take care of. He will have to stamp cards, deduct PAYE, and so on. If one looks at the ladder going upwards in front of the small businessman, one finds a succession of things imposed on him by Government requirements.
I do feel so strongly in favour of what the noble Baroness, Lady Sharples, said—I think one or two other speakers have also said this. In other words, it would be a very good thing if there were a department, as they have in the United States, which is concerned with small business. It would be very good if one of the things they did was to examine these problems encountered by a young man or young woman in rising up, and see whether things could not be made as simple as possible with as little red tape as possible. It would be very helpful to see that the departments concerned with this sort of thing keep a lenient an friendly eye on them and give them the sort of help which I think the Inland Revenue was trying to give to the man I am talking about.
4 p.m.
Baroness VICKERS: My Lords, I am delighted to have the opportunity of supporting the noble Baroness, Lady Sharples, who moved this Motion so well. I am also pleased to see that the noble Lord, Lord Lever, is in his place, because he stated:
"We must he careful that the Employment Protection Act is not turned into an Employment Destruction Act. If something is to be done for the pool of a million and a half unemployed, then small businesses are one of our best hopes … It is vital that we help small businesses to expand".

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He stated that in November, 1977, in the Sunday Times, and I think that he was right. This Act has done a great deal of harm to small businesses.
I want to talk about the decline of the rural areas, because this is a very important matter for this country. A survey was undertaken by the Standing Committee of Rural Community Councils in 1978, and it stated:
"Village shops are doomed and village life is dying".
This echoes what the National Chamber of Trade has been forecasting for many years. It also stated that the quality of life in our villages, and also in town centres and suburban areas, will deteriorate if nothing is done.
In another report by the National Chamber of Trade, the Director-General said:
"The sorrow will be all the more poignant for knowing that we all share the responsibility, including reporters and feature writers".
He added:
"If you wish to retain the services and the community interest of the remaining smaller businesses, what is needed is a bit more genuine support now by local people".
In 1977, between one quarter and one-third of all the villages in Avon, Gloucestershire, Wiltshire and Somerset had no village shop. One of the difficulties is in getting adequate supplies, and another is the increased number of weekenders who, unfortunately, bring all their food and drink with them.
A leading political and economic planning research scientist, Dr. Hillman, said publicly that hypermarkets are a serious danger to local communities and should be opposed by planning authorities. Action can be taken. For example, it was suddenly announced that a wet fish shop had to close down and it was reported to me that there were then queues for fish. The owner stated that if only half the people had been regular customers, it could have been a thriving business.
I understand that there will soon be a difficulty in regard to sub-post offices. I believe that payment is made according to the number of units. For example, if pensions are paid weekly, there are four units per month. But now they are being paid fortnightly, so that there are only two units per month. The sub-postmaster
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in one post office recently lost £8, while another made 50p profit in a month. I gather that there is now talk of paying through banks. How many villages have banks and how many villagers have bank accounts? Recently—and I agree with the noble Lord, Lord Oram, here—we in Wiltshire have managed to get a number of shops to collaborate with each other. For example, one shop will deliver for the butcher and bring all the other groceries. Furthermore, an off-licence has now been opened, so that instead of going 16 miles to get a bottle of whisky you can now get it delivered to your house, if you require one. This is a very great service.
I should also like to support the noble Lord, Lord Byers, in suggesting that local authorities should assist in providing adequate accommodation. They have quite a lot of empty shops, which they could easily let and make a slight profit. Also, it seems very unnecessary that electricity boards should have large shops in villages. They are not open all the time, they use a great deal of electricity and they take business away from local shops which are doing the same job. If you want anything done to your house it is no good ringing up the electricity board; you have to go to the local people to get it done. I suggest that careers officers in schools should be more helpful. In other words, there should be more teaching in thatching, plumbing, car maintenance and gardening for nurseries and interest should be stimulated in farming, carpentry, nursing and home helps. This would create more employment.
My final point is on tourism. The countryside is very much less expensive, as well as being very beautiful. But, regrettably, people come to London and very seldom have enough time to spend in the country. As prices in London have gone up tremendously, I should like to suggest that the Tourist Board makes a great effort to get people to go and stay in the countryside. From a great many places, you can get to London in a day, see the sights and then go back. This would give a better understanding of the British people, because London does not represent the British people and countryside. England, Scotland and Wales do.
Lord PARRY: My Lords, as the noble Baroness is about to sit down, may I

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ask whether she is aware that the Minister for Wales made a very welcome Statement on the importance of tourism? It is essentially an industry which attracts the activities of the small businessman and, in fact, the big businesses in tourism are small businesses in the Government terms.
Baroness VICKERS: My Lords, I am very glad to hear that there is Government support.
4.5 p.m.
Lord LEVER of MANCHESTER: My Lords, we are all very grateful go the noble Baroness, Lady Sharples, for enabling us to have this most rewarding debate. I am a little embarrassed to pay that tribute, in view of her overgenerous comment about the small amount of work that I did in trying to overcome the lethargy and indifference in Government Departments, which over a long period has been their habit.
One thing is absolutely clear. This country is missing out in the small business area. Until recently, the view was widely held that the small business area was some residual, unimportant relic of olden days which would finally be squeezed out of existence altogether. In fact, the small business area is potentially the most rewardingly dynamic area in the whole economy, in a period of accelerating world economic change. They have the adaptability, versatility and tendency to innovate which meets the challenges and responds to that change. No small part of our failure in Britain to be sufficiently responsive to the remarkable economic changes that have come about in the world in the postwar period, is due to our neglect of small businesses and our attitude, and the attitude of Governments, towards those businesses. At the heart of that attitude of Government is the kind of absurd notion, when Governments are legislating, that they are legislating for GEC, ICI and concerns of that kind. They virtually never, in their administrative and fiscal legislation, take into account that there are hundreds of thousands of small businesses and millions of their employees who have to work complicated legislation which has been imposed upon them, without the financial and departmental resources of those vast
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concerns. That is why you get problems in all fields and some have been mentioned today. I know that VAT was mentioned, and I am sorry that I missed part of the noble Lord's speech.
I was able, during my period, to persuade them to halve the number of questions that had to be filled in, and triumphantly announced this advance in the other place. Of course, nobody was alert enough to point out that what I was announcing was that for several years we had been asking twice as many questions as were really necessary, since we have survived with great fortitude the diminution of questions that was then inaugurated. That goes along the whole field. Idiot requirements to provide mines of useless statistical information at ludicrously over-frequent intervals are imposed upon the ordinary small businessman, and he is even more bewildered when he gets some of those forms than he is when he tries to fill in his football coupons. You have to see those forms to realise the total absurdity of many of them. This has to be cut down.
I accept the gentle tease of the noble Baroness, Lady Vickers, about the Employment Protection Act. I did, in fact, warn that the splendid purposes of that Act, which I fully endorse, must be tailored to the needs of small business as well as big business and, without diminishing from our purposes, let us make it possible for small businesses to maintain high standards in employment protection, without deterring them from taking on labour. I am sure that this is possible, though within the confines of this debate—and the speakers so far have a devastatingly good track record in keeping to the timetable—I do not want to go into too much detail. But we can do more in advisory services and in simplification of legislation, without prejudicing the very fine purposes behind it.
One of the great difficulties which has arisen from this indifference of Governments is that they have, without intending it, choked-off the flow of the crucial investment funds which are required for small businesses, because the crucial investment funds are the equity capital, and those come from people with local knowledge, family connections and association of interest. They are not forthcoming, mainly because the Government

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have given tax advantages to the institutions and, I may add, to themselves, in the form of tax-free gilt edged bonds which make it far more attractive for people to put their savings into Government bonds or into institutional arrangements of varying types of ingenuity, through insurance companies and the like. I do not want to take these away, but I insist that if you want a healthy small business sector, properly supported in its equity capital, you must give it the equivalent of the tax advantages which have been given to the flow of funds into Government and into the large institutions. That is not difficult, and strangely enough it is not very expensive. One could relieve small businesses of all capital taxation, which produces a trifling amount of money.
For example, there need be no capital gains tax on equity investments in small trading firms and no capital transfer tax on shares in small businesses, certainly not until the businesses are sold so that this could not in any circumstances he a burden on those businesses. It would be no burden upon ICI if I happened to die, leaving a great number of ICI shares, and if the Inland Revenue seized an excessive share of those funds. ICI could not care less; at least, I do not suppose that they would care very much about it. It would not trouble the business. If, however, I died leaving shares in a small family business, it would matter a lot to that business. This has never been recognised, and I am sorry to say that it is less recognised by some of the spokesmen for the present Government than it was by their predecessors. So we can deal with that, too.
Turning to the loan fund question, our branch banking services are remarkable, compared with those of any other country in the world. They are led by the Governor of the Bank of England who has encouraged them greatly in this area. In many respects they are trying to bring their attitudes up-to-date. I said that they are led by the Governor of the Bank of England, but in fact they are led by his eyebrows. He has no power over our joint stock banks, but he has a great deal of influence.
The Governor of the Bank of England has encouraged the banks and they have responded by increasing their interest advisory services and loan facilities to
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small businesses. This is not always received with total admiration by all applicants. Creditors are notoriously less avant garde in their monetary notions than debtors. Therefore the banks sometimes fall short in their response to the more romantic expectations of their customers. However, I believe that they are doing a very good service. The weakness is not so much at the loan end but at the equity end, and that weakness can be remedied only by a fiscal change.
Some of the existing public agencies are doing a very good job. In particular, I would cite CoSIRA. On a little money CoSIRA has provided great numbers of jobs, with negligible loss. I should like to see that experiment extended. CoSIRA might very well be asked to do a prototype effort in the town areas. They are restricted at present to the country areas. We might give them encouragement.
On the question of the more generous subsidised lending schemes. I am sorry to depart a little from the noble Baroness; she is somewhat to the left of me on this question of grandiose schemes using public funds. Alas! we have a shortage of public funds, and we have to make sure that where we give them they are effective and good value for money.
I must confess, too, that I am of the Macaulay school. I prefer an acre in Middlesex to a principality in Utopia. Incidentally, it is a pity that Lord Macaulay did not say this: I think it is harder to come by that particular acre than by the great principalities in Utopia.
I myself, therefore, favour very practical, immediate, pragmatic efforts to encourage our small business people. I think that the reward will be not only an economic reward but also a political reward—not in the party political sense but in the fibre of our nation. It means that you have hundreds of thousands of small businessmen—sturdy, reliant, independent and creative—and millions of their employees in an intimate relationship with them. This is not always possible in our great factories. I believe that from that you have a seedbed of great talent not only in the service of industry, not only in the service of our economy but also in the service of the Government and the people of our country.
4.15 p.m.
Lord ENERGLYN: My Lords, I do not think that we can extend too strong praise to the noble Baroness for bringing this subject into your Lordships' House at a time when the country is being bewildered by political warfare and also smothered by the blankets which we have heard so vividly described by the noble Lord, Lord Spens—for example, the paperwork invented by the bureaucrats. It is in this kind of arena, as I see it, that from an embryonic condition the small businesses have to try to emerge and come to life.
I should like to deal with one point which the noble Baroness made; namely, that these firms—as the noble Lord, Lord Lever of Manchester, pointed out—have not received adequate credit for what they do to the economy of this country. Small businesses have always underpinned, and always will underpin, the economy of any country. Before the war, this used to be the case in Britain.
It was customary then to see "Made in Birmingham", "Made in Sheffield". What do we see now? We see "Made in Bangladesh", "Made in Austria", "Made in Germany", or wherever it may be. Small businesses have emerged from these countries and they have planted their products upon us. Therefore I should like to say two or three words about recognition of these small enterprises.
Small enterprises have to fight their way into the market. We ought to recognise this. Also, we ought to recognise that in doing so they are taking their courage in both hands. Therefore should we not extend to them honours—for instance, through the wonderful Queen's Award to Industry and through the awards of the Association of Independent Businesses? Why should we not go further and denude the Honours List of the names of civil servants who are being rewarded only for doing jobs which they are adequately paid to do?
These apparently flippant observations have great commercial value. A person or firm who has had one of these awards from his country is recognised abroad as someone of substance. Therefore, his entrée into the market is made much easier. So it is not really a flippant point
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of view; it has substantial commercial value.
The second point I should like to pick up is entry into the marketplace. It is easy enough to manufacture a product from a bright idea, but without resources it is difficult to market it. No small business can hope to expand overseas if it has not got its feet firmly planted in the home market. To illustrate my point, I have in my hand two empty matchboxes. One of them is entitled "England's Glory"; the other is entitled "Traveller's Fare", and it has upon it the insignia of British Rail. Every match in the "England's Glory" box ignited first time, and not one of the 49 traditional matches broke. But not one of the matches in the "Traveller's Fare" box ignited first time, and one in eight snapped, which clearly indicates that British Rail are selling boxes of inferior matches Where does this box come from? It is printed, made and filled in Austria. This is just one example. I could recount dozens of examples where this simple act is denying the market to British manufacturers.
My point is that in every facet of our life we should try to convince—you cannot pass laws to do it—the public that the quality of British goods can once again resound throughout the world. We used to say quite safely and confidently "British is best".
4.20 p.m.
Viscount ROCHDALE: My Lords, like every other noble Lord who has spoken, I should like to thank my noble friend sincerely for introducing this very important debate, which I have found extremely interesting, particularly the noble Baroness's own speech and what she had to say about the United States of America. I want to confine my few remarks to the small manufacturing firm; and I take as my criterion the definition that was given it by the Bolton Committee on Small Businesses when they reported in 1971, which was a firm of fewer than 200 employees, a firm directed and managed by the owner and with little equity capital.
If we look at this field of manufacturing industry we find that it and the large industries are absolutely interdependent.

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That is a very important matter. After all, the small firm can be much more adventurous and aggressive in its innovation, in its design and in its competition. It is a very important source of high technology specialised goods for the major industries themselves. They rely upon such firms. It is very much better able to have short runs in its production and therefore it can have greater variety in what it produces, to the benefit of its customers. It has more intimate labour relations because, of course, the small firm is much more labour intensive and the evidence is quite clear that with small firms there are far fewer disputes and therefore there is more steady working.
With those advantages, where do we go from there? The noble Lord, Lord Byers, referred to its value in the inner city problem. I entirely agree with him, but I believe also that the small manufacturing firm has tremendous value in the rural areas because today we have here excellent schools producing highly skilled and ambitious young people. Where are they to find work'? Unless we have something that will exercise and challenge them in the country they will drift away and in time the local rural communities will disintegrate, which would obviously be a disadvantage to all of us.
With all those advantages for the small business firm, how is it that we and our Western competitors have had such a reduction in the number of our small firms? The noble Lord, Lord Lever of Manchester, referred to this, but, to give a figure, between the mid 1930s and the mid 1960s our small firms in the categories I am speaking about were more than halved—much more of a reduction than in other firms in West Germany, Japan, the United States, France and so on. But, fortunately—and I have no doubt that the noble Lord, Lord Lever, has great responsibility for this—the climate is greatly improving and there is a recognition of their importance. Today this field of industry represents something like 20 per cent. of our gross national product, and it is of interest that, so far as I can see, they have earned some 50 per cent. of the Queen's awards for export, which is tremendously encouraging.
So what are the problems? The two areas of problems that I have identified
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are similar to those identified by other noble Lords—one, finance, and the other, regulations. I will say very little about the provision of finance because other noble Lords have covered the matter very well and I can support everything that has been said, but I should like to say a word about taxation and particularly capital taxation, because that is important. I say that it is important not in the way that one often criticises high taxation and wants it to be reduced in order that one may place a carrot in front of the individual concerned. I say it not for that reason, but because what we need in these small firms is continuity—continuity for planning, continuity for direction, and therefore greater confidence for the future in the small companies.
I shall not say any more about finance but I want to say a few words on the question of regulation. Industry as a whole has to work, may be rightly, under a great many regulations: health and safety at work, employment protection, planning statistics, and so on. Small firms simply do not have the specialists to deal with these matters. There are agencies which help. I think the Department of Industry has a small firms division counselling service, but what we want the small firms to direct their specialising ability to is not these ministry matters, but to put their efforts into design, into invention, into research and into production. That effort on their part must on no account be blunted because, if it is blunted, then half the reason for their very existence would be done away with.
Therefore, I make two suggestions. As regards regulations under existing legislation I would suggest that perhaps there may be room for a more sympathetic application of some regulations. As regards new legislation, I should like to see a more penetrating look at the cost involved. When most Bills come to Parliament the Explanatory Memorandum at the beginning says that the cost to the Exchequer will be little or nothing, or so much. I should like to see some reference as to what is the likely cost of compliance with the regulations to the firms which are going to be affected. I do not know how difficult that would be, but I think it is an important matter which should be looked into. I believe that many of us are preaching to the converted—at

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least I hope we are—and I look forward to hearing what my noble friend has to say in reply.
4.28 p.m.
Lord GISBOROUGH: My Lords, there is a strong relationship between the financial strength of countries and the number of small businesses per thousand of the population. Yet Britain has some 30 or 40 per cent. fewer firms than France and West Germany and the rate of new firm starts per thousand of the population of Britain is one of the lowest among the developed nations and only a third of that in America. The rate of decline of small firms exceeds that of other countries where Government action has reduced that decline. In America 88 per cent. of new jobs between 1969 and 1976 were provided by small firms: new firms created 80 per cent. of those jobs. The capital employed per worker in big business averages perhaps £400,000 against £20,000 in small firms, so that a given capital provides 20 times more jobs if structured to a small firm than to a large firm. Also these small firms have proved to be more efficient, to have better labour relations and to have been more competitive than their larger counterparts. Small firms employ 6 million people and involve hard work, long hours and great financial risk to their owners, who deserve high rewards after tax and every encouragement and the thanks of the nation.
At a time when large industries are shedding labour, new ventures must provide the base for the creation of wealth and the provision of extra employment which is needed, and nowhere is that more important than in the North of England. Small firms have many special difficulties, both in formation and running, which have already been mentioned. They are at a considerable disadvantage in raising equity and venture capital has become even harder to find, as in the past taxation has reduced potential providers of equity, which is the best means of finance for new businesses. Also, loans are more expensive and security requirements stringent.
In America there is the Small Businesses Administration Department, which guarantees loans for the financing of venture capital. Indeed Britain is one of the very few countries with no direct government guarantee scheme. For example,
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Japan currently has £10,000 million lent to small firms. It is true that there is one British new town which is offering a guarantee scheme in conjunction with two of the clearing banks. Without adequate venture capital available a guarantee scheme of some sort is quite essential for this country. While some new firms will fail, those that succeed will become the medium firms of the next decade, providing the employment of the future. Otherwise, banks, if they will lend at all in start-up situations, naturally require their loans to be serviced even during the early period before sales and profits start to materialise. Furthermore, in the United Kingdom loans are made on the security of the value of the venturer's house and assets, which he will lose if the venture fails. It is surely better in the long run to finance a good venture than finance one just because it has the backing of a good home to lose. In Germany interest-free grants and loans have led to a healthy small firm sector of the economy and business failures have been offset by the successes.
Skill is one of the limiting factors in the growth of small firms in many parts of the country, and until the supply of skilled men can be vastly increased there must be restraint on growth in small and medium companies. No fewer than two-thirds of the companies interviewed in one study complained of shortage of skilled workers, and this is a field where the Government can help even further with training centres. The queston of skills is of course vital to firms large and small.
After skills comes the problem of business know-how. It is one thing to get a product made, another to organise the business side. The small trader often does not understand financial jargon and has little opportunity to learn. Yet where courses are run, such as the one at the polytechnic at Teesside in October, the course was overwhelmed with applicants. Schools should teach more business management and must help to break down the potential distrust felt by some sections of the public towards the enterprising entrepreneur.
Above all, the Government should set up an advisory service to help small firms in exactly the same way as A DAS helps farmers. The problems of large firms are soon known to the Government, but those of small firms can be undetected

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until too late, but they would soon be brought to the notice of the Government by an advisory service. If Government cannot do this they could get the financial institutions to do the job, but it is not an effective alternative just to give out cash grants without increasing competence. Banks do have advisory services to help small firms, but the sense of urgency can be judged by the fact that one particular clearing bank has only one man to cover this field for the whole of the North of England and the whole of Scotland.
Time is a big factor for small firms. The bureaucratic delay in paying a grant may be enough to kill off the tender shoot of a new venture while large firms can finance that delay. Small firms need quick money and quick solutions. Banks can move quickly, if Government cannot, and it might be quicker and cheaper for the Government to use the banks rather than their own departments as a vehicle for helping small firms, backed by a Government guarantee scheme.
There is the matter of legislation and of form filling, and a reduction in forms has already been made. They are often difficult for company lawyers to complete and they are a nightmare to the small trader. Little wonder then that the take-up of grants which are available is small as people are just not aware of them and do not understand how or what to claim. There is room for more positive advice in simpler language. Perhaps a parallel may be drawn with the way some companies now present their accounts in simple diagrammatic form.
A further penalty imposed on the venturer into self-employment is that he gives up his pension rights, and a United Kingdom small business man cannot use foreign social services as an employee can. Why should a businessman bear this penalty for his initiative and his creation of jobs? Could this not be overcome by the Government?
There are other factors for study, such as allowing companies to buy back their own shares to encourage temporary equity holdings, elimination of capital gains tax on lifetime transfers, decrease of capital transfer tax, and revision of employment legislation. How often I have heard, particularly in the North
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where I live, builders say that they could take on more labour and expand but prefer to stay small to avoid all the problems of employment protection legislation, dismissal legislation, unions and so on. Abolition of all that legislation would boost employment overnight. Also, product liability threatens to impose a severe strain on all companies and could do vast damage to growth and employment.
Finally, I turn to the North-East region, with its constant unemployment problem. There is compelling evidence that new firms are formed mainly by people who work in other small firms. Large manufacturing industry which predominates in the North-East has created its own problems in this respect, creating a low potential for the spawning of new firms by employees. Centralised management tends to remove management staff who might otherwise set up their own firms. In the short run large factories help employment but in the long term they tend to depress the rate of self-sustaining growth of small firms.
In conclusion, if these firms are to be encouraged, if wealth is to be created, and if unemployment is to be licked, the solutions must be radical, not marginal.
4.36 p.m.
Lord DAVIES of LEEK: My Lords, the track record, as the noble Lord, Lord Lever, said, has been excellent. I will try, reluctantly, to keep to it. I wish this debate had been a full debate rather than a short one. Nevertheless, we are all grateful to the noble Baroness, Lady Sharples, for having raised this issue. With that quick sentence I have to leave the praise.
I would certainly agree with the noble Baroness, Lady Vickers, when she pointed to post offices and old-age pensioners in rural areas. I know of a beautiful village near Macclesfield called Wincle, where 90 people used to collect their pension. In this particular hamlet it was from the village shop, with a sub-post office. It has closed down and there is only a bus service twice a week to Macclesfield, and the difficulty for these old people in collecting their pensions has been increased. An organisation that makes £400 million in general profit should not worry too much when a rural sub-post

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office is not quite making the grade on profit but is serving people who have served the country in rural industry and agriculture. I regret that nobody seems to check on this. I think the Government should look into the matter before sub-post offices in rural areas are closed clown.
Having said that, I would recall that under the leadership of the noble Lord, Lord Lever of Manchester, and Sir Harold Wilson, a committee was specially set up to report on the financing of small firms (Cmnd. 7503). Without going into that as deeply as I should like, this is of importance, and I would ask in passing if the spirit of that research is to be kept up by the Government now in power. The inquiry was set up in January 1977, to inquire into the role and functioning at home and abroad of financial institutions in the United Kingdom and their value to the economy; and one specific report, the one I have just mentioned, particularly spiked down the vital importance to small businesses of the financial institutions.
Then comes the reference made by the noble Baroness, Lady Sharples, to a change in the functioning of the Stock Exchange, making it simpler for investment into smaller businesses. With that overall broad canvas expression, I cannot go into details, but this is a well-informed House and noble Lords know exactly what I mean. Fifteen recommendations were made by that report, all of which are worthy of note. With that brief reference, regretfully, I have to pass on from that point.
I want now, in passing, to come to one favourite love of mine, and that is the Council for Small Industries in Rural Areas. This organisation was set up and it is a child of the Development Commission. There is a new report just about due, but I am quoting from the report of 31st March 1978. In speaking of the Council for Small Industries in Rural Areas we use the acronym CoSIRA. The Development Commission was appointed as long ago as 1909–10, so please do not think that we have dropped on a brilliant idea. It was brought in by that Welshman, David Lloyd George—my father knew him! The Development Commissions were appointed by Royal Warrant under the Development Road Improvement Funds between 1909 and 1910. Since those days people of all stations of the community have served upon them. Recently the Marquess of
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Bute retired after doing marvellous work in aid of Scottish rural industry and Sir Jack Longland and others have done great work in that respect.
The constituency of Leek, which I used to represent, had nearly 3,000 farms—1,430 acres. It is well and assiduously represented, I am pleased to say, by a Tory Member at present. In Leek CoSIRA's role is, in the main, that of agent of the Development Commission which has set up various industries in the Moorlands. It has been done with the co-operation of the Leek and Moorlands' local council, plus an intelligent and constructive approach by Staffordshire County Council.
I am watching the clock and, regrettably, I must sit down in the next half minute. I hope that the Government will look closely at the work of the Development Commission, and I should like to mention the number of jobs that it has found in that area. Although the Government have threatened to cut back this work, which is being done under the chairmanship of my noble friend Lord Northfield, I hope that they will think again before they do so. Regrettably, five minutes have passed. I hope that the Government will ensure that CoSIRA gets a square deal.
4.43 p.m.
Lord MONK BRETTON: My Lords, I put my name down on the list of speakers today because I happen to have served for a long time on one of CoSIRA's small industries committees—namely; the one in Sussex. In speaking today I am expressing my own views and not necessarily those of that committee. I also have a strong desire to encourage the Government as regards small business. So far they have made a good attempt to improve the general climate for business, which includes small business. All that I can say further—and I want to be encouraging—is that I trust that, if they go ahead as regards small business in the way that they have said that they would in their original election manifesto, then so much the better.
Having only four or five minutes in which to speak, first, I wish to convey that I believe, as a matter of urgency, that we should deal with the question of the express intervention in aid of small

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business which is necessary. It simply must be dealt with urgently because otherwise there will be a long delay in getting it going. Too much water has gone under the bridge already and no more than can be helped should go under it now. I am absolutely behind what my noble friend Lady Sharples has said and what the noble Lord, Lord Lever of Manchester, said by way of support of my noble friend.
I wish to make a few comments about CoSIRA. Presumably CoSIRA, the Development Commission, and the whole gamut of small business support will already be under review by Government, and therefore change is contemplated. I wish to emphasise from my experience how important it is that CoSIRA's role should remain a rural one. It should not become an urban agency: if possible, it should be retained as a rural agency because it is vital that the countryside should have specific consideration. In these days local government is more urbanised than it used to be and it does not give that consideration as fully as perhaps is necessary. In that light it is worth bearing in mind what my noble friend Lady Vickers said about country areas—they have their difficulties indeed. CoSIRA under the wing of the Development Commission, which also looks after the rural community councils, has a very important role to play, and I think it would be a great pity to see it upset.
The other anxiety which I have at present concerns the current use of CoSIRA's resources. I am afraid that all business support organisations—wherever in the world—have their critics as regards this matter. However, the position at present is that CoSIRA loans are currently available for the CoSIRA development areas, Government assisted areas, and elsewhere only in what are known as "established pockets of need." That situation has applied since the cutback that was announced in December 1978, which produced a considerable amount of alarm and despondency in the approximate two-thirds of the country which were not in the CoSIRA development areas or the Government assisted areas.
Those areas which were excluded had never been excluded since the setting up of the Rural Loan Fund. I believe that
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it was caused by a sudden increase in demand for loans. No doubt times were difficult, and that is why there was a sudden surge. However, I am not sure that the situation was as well managed as it might have been—it was certainly unfortunate. Therefore, there has been criticism. Of course, there is a school of thought that small business should be supported wherever it is, irrespective of other environmental considerations; in any case the impact upon employment is likely to be small until the firm becomes larger. Let the new businesses play their part in assisting employment later, as they grow, but do not deny help at the outset because the business is in the wrong area.
I think that perhaps the foregoing would not be entirely within the Development Commission's terms of reference, which are, after all, partly environmental. So, while recognising that there is increased need in the CoSIRA designated areas which would include, for instance, the hill country where matters are very difficult, nevertheless there are pockets all over rural England where there is trouble and where village communities are having difficulty in keeping going. Even in counties where employment may be fairly high overall, there may be villages within 15 or 20 miles of towns with high employment that will take a step back unless something is done. Such villages may well find that their schools have to close and that is the beginning of the disintegration of a village community. It is worrying to see this embargo. One very much hopes that it will be reviewed very shortly. I hope that Her Majesty's Government will keep a close eye on this and review it as soon as possible.
I very much hope that something will be done by way of guaranteed loans or, better still, by way of an equity scheme, to push this whole matter along, in which CoSIRA will doubtless share. Let us hope that progress will soon be possible and that the rather typically British period we have just had following the report of the Bolton Committee in 1971, of looking in one direction while progressing rather steadily in another, will now end.
4.51 p.m.
Lord MONSON: My Lords, I, too, should like to thank the noble Baroness,

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Lady Sharples, for giving us the chance to debate this extremely important subject. It is heartening to note how every quarter of the House, irrespective of politics, has been of one mind in this matter. I shall be brief as I want to concentrate upon only one point, on which the noble Baroness touched briefly in her opening speech.
So far the debate has tended to centre upon what Government should or should not do. Certainly there are all sorts of ways in which small business are hindered by Government policies, some of which have been mentioned by noble Lords: an astronomically high minimum lending rate, outdated company law, an excess of bureaucratic form-filling, the onerous provisions regarding maternity leave and other aspects of employment protection legislation, and so on.
However, it is not only the Government, of whatever political persuasion, who are at fault. There is another guilty party. Big businesses, or to be more accurate, a segment of big business, is also to blame for some of the difficulties in which small businesses find themselves. In this context I use the term "big business" to embrace not only private enterprise firms but also nationalised industries and Government agencies. All too often nowadays big business uses small business as a source of cheap credit. It does this by deliberately delaying payment of its suppliers' or sub-contractors' bills for months on end, in some cases for as long as six months. All too often when a small firm that is hit by this sort of practice objects, as understandably they tend to, a form of intimidation is used on the lines of, "If you keep on pestering us, we will start buying our components from another firm when the current contract expires".
The consequence of all this is that the small business either has to borrow at quite exorbitant rates of interest in order to keep its head above water or it sinks straight away. I submit that this policy, in which certain large firms tacitly indulge, is not only immoral but also extremely foolish and shortsighted; because the more rapidly small businesses vanish from the scene, the more certain it is that the political consequences will ensure that big business, or at any rate the private sector of big business, will eventually follow suit. Therefore, I would urge
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the guilty firms—and thank goodness they are only a minority—to consider the implications of what they have been doing and to start behaving in a more considerate and responsible manner.
4.54 p.m.
Lord WALLACE of COSLANY: My Lords, first, I should like to congratulate the noble Baroness, Lady Sharples, for having secured first place in the ballot, which I know somewhat startled her originally, but in the end it has resulted in a first-class debate. I should also like to congratulate her on her speech, which was clear, efficient and straight to the point and which has received a great deal of support from Members both behind me and in front of me.
This is self-denial day, or something to that effect, because I want to give the Minister adequate and ample time to reply to the many pertinent points that have been made. He may take note that we are waiting for answers. Concern about the well-being and future of small businesses is not the sole prerogative of any particular Government. The previous Labour Government had a good record in this field. The firms had a Minister in the Cabinet and it is a great delight that my noble friend Lord Lever of Manchester, the Minister who was in the Cabinet, was able to speak today. All of us acknowledge and admire the work that he put in. In addition, he was assisted by a nominated junior Minister responsible solely for small businesses.
I shall not deal too much with manufacturing businesses, but the noble Baroness made a number of points with which I want to deal. The first point I want to raise has just been made by the noble Lord, Lord Monson. I refer to the action of large companies in enforcing 90 and 100 days' credit from small suppliers. In fact, it can go further than that, as the noble Lord, Lord Monson, pointed out. This applies not only to firms with Government contracts, but to many other firms as well. As I know from past experience, bureaucracy is not unknown in large-scale private enterprise. Much of it is due to inefficient office management. These delays in payment are a scandal—there is no other word for it. The CBI themselves have expressed extremely strong views on the point.

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Obviously small firms waiting for overdue payment from their larger brethren are faced with serious problems. Although the Government can take action only on their contracts, they can also express strongly-worded advice using their ample publicity resources. This is a rather difficult point, but it is true that there may be those among us who can exert influence on this matter. I shall leave the point there.
I am afraid that I cannot completely agree with the noble Baroness that the training levy scheme should be abolished because of hardships to small businesses. Some small firms are exempt anyway. A recent report by the CBI states that:
"An acute shortage of skilled workers is limiting the growth of many small and medium-sized companies… The quality of apprentices in a wide range of skills had risen over the past two years (to the beginning of 1979), but the number had been inadequate for some time and still appeared to be falling."
The exemption of small firms from paying the levy does, in turn, provide special problems regarding training provision for such firms. Training boards do help in many cases through advisory services, through grants for key training activities and through organisation of courses of management training. The Manpower Services Commission was to review the levy arrangements in 1979. I do not know whether any firm decisions have yet been reached, but, with new technologies so much in evidence these days and with the allied development of new small firms, training of key workers in particular is an absolute necessity if success and growth are to be achieved.
As I indicated to the noble Baroness before this debate, I should like now to turn to another type of small business, that of the little shopkeeper. I am glad that a number of noble Lords and Baronesses have referred to these people. Their shops are often grouped in neighbourhood shopping centres on housing estates. The amenity value of these centres must not he overlooked, particularly to the old, to women with small children and as providing the widest possible range of goods. I have such a centre near my home; it is named the Oval, but it has nothing do to with cricket. It is so named because of a small, oval-shaped, open park plentifully planted with rose bushes.
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But it is not roses all the way for the small shopkeeper there or elsewhere. This is the point, and it is a very serious matter indeed. My noble friend Lady Gaitskell, who was to have taken part in this debate but who has had to leave, was going to raise a similar point. It would seem that the speculative landlords have moved away from dwellinghouses to the small rented shop property market. As a result—and I can vouch for this—sudden increases in rents, some up to and over 300 per cent., have taken place, imposing real hardship to many in a way that would not be tolerated in a housing situation. As a customer, I have been in touch with my local shopkeepers and also with the Sidcup section of the Chamber of Trade executive, and they have suggested that the powers of the fair rents officer could be widened to include small shops, sonic with small flats above. A limit, possibly based on rateable value, could be set and could be subject to annual review.
This is a serious situation. I do not like to see people who have given value and service being forced out of business and away from their livelihood. I plead with the Minister to give an undertaking that he will at least look into this particular problem of small retail businesses which is so widespread and still spreading.
I was not surprised when the shopkeepers and the Chamber of Trade asked for a reform of the rating system—long overdue—which they say should be based on ability to pay. In that, their customers heartily joined them. As with many other small businesses, the present massive interest rates may well prove to be the final straw. The cost of bank overdrafts needed to finance stocks may be just bearable if a price war is avoided, but a reduction in margins will drastically reduce the viability of small retailers who trade on a range rather than volume. They suggest the reintroduction of some form of price maintenance as a small price to pay for protecting so valuable an asset to local communities.
I pay tribute to the small shopkeeper. To many of us in these days of mass manufacture of foodstuffs they are a great necessity. I am lucky. In my little shopping area I have a baker who bakes his own bread. What a contrast to the wrapped plastic monstrosities that we buy

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elsewhere in supermarkets. I am lucky again in that I have a butcher who does not sell pre-packed meats from refrigerators as they do in the supermarkets. He cuts his joint according to the customer's requirement—and often tells me, when my wife sends me shopping, to tell my wife how to cook it. They render a personal service. They know us and we know them, and yet they are being kicked around in the fashion that I have stated. They do not want much, but they want to survive, and Britain needs them to survive if we are to preserve our community life.
To return to the type of businesses that form in the main the subject of this debate, and certainly in the mind of the noble Baroness. The noble Baroness mentioned that the infant mortality rate amongst them is high. Success and growth can also induce mortality with Big Brother's takeover (often by a multi-national) bringing redundancy, unemployment and despair to those workers who have played their part in building up the business. I knew a Mr. Morphy and a Mr. Richards many years ago. Only last week, under unfortunate circumstances, I met a lady from the United States who had been one of the eight original workers who started that little firm. She came back to the Cray Valley and the factory had gone, and a lot of the workers have had to find work elsewhere. They have been taken over, and one enterprise with a well-known name has disappeared.
Britain's small businesses have, over the years, pioneered many new developments. I carry on from the noble Lord who flourished matchboxes in the Chamber; fortunately they were empty, or he would have been arrested by Black Rod. Where today are British motor-cycles, weaving machinery, typewriters, sewing machines, radio equipment, and many other items now ranking as major imports? This, alas, is not a new process. It has been going on for years. I commend to the House the series of articles on the subject appearing in the Guardian newspaper this week.
My Lords, "Buy British" is re-emerging as a slogan. One noble Lord has already uttered the words. That is all very well in itself, but what we have to ensure is that our newly emerging small businesses, when they develop and grow in a highly competitive world, remain British and
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sell to the world. That, in a nutshell, is Britain's greatest industrial and economic problem.
Viscount BARRINGTON: My Lords, before the noble Lord sits down, may I say that he mentioned very truly that the noble Baroness's remarks had received substantial support from speakers both in front of him and behind him. Would it not be fair to add to the record that they also received support from those on the right and the left'' I would refer to both the second speech, that of the noble Lord. Lord Byers, and, I think, the seventh speech, that of the noble Lord, Lord Roberthall. I think that is worth noticing. It is something rather unique about this debate.
Lord WALLACE of COSLANY: My Lords, I would immediately insert "the whole House".
5.7 p.m.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard): My Lords, may I join those who have already thanked my noble friend Lady Sharples for introducing this debate at this time and for the way in which she introduced it. It was a speech full of knowledge and information, and the timing was excellent so far as Her Majesty's Administration are concerned. So many of these matters are currently under review. If I may, I shall leave the urgency in the tone of her speech and the way that she recommended her specific measures until the end of my remarks.
I too had noticed that we had apparently complete, all-party, whole-House agreement on the importance of this subject. Such total agreement on the overriding importance of small businesses, together with the tributes that have been paid to British talent, made me wonder how it can be that we can be sitting here, when we are all agreed, recording that far too few British small businesses exist, which is true. My right honourable friend the Parliamentary Secretary, David Mitchell, who has continued the deep studies to which the noble Lord, Lord Lever, made a major contribution, is convinced that we probably have 40 per cent. fewer small businesses on a pro rata basis than Germany, which he thinks is about the

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average for Europe. How can this be with all-party agreement about their enormous importance?
My right honourable friend has also tried to compare the birthrate of new businesses in this country. As noble Lords will know, this is difficult but it is certainly much less than in some other countries. I believe that the birthrate is more important than the point which the noble Lord, Lord Wallace, has just raised in relation to takeovers. Small businesses, as usually defined by the Government, include businesses with under 200 employees in manufacturing, and similar definitions elsewhere. As the noble Lord, Lord Gisborough, pointed out, they employ 6 million people, which is a quarter of the working population. But I believe that the birthrate is more important than the natural evolution which, as some of them get bigger, leads to some of them deciding rather than go public on the market and raising their money that way, to join another business which they believe will promote their expansion in the most efficient and congenial way.
There is no doubt about our past poor record and the need for improvement, and there is no need to convince this Administration. I shall during the course of my remarks list some of the things we have already done which underline the fact that we believe this is an area of major need. It is not, as many noble Lords have said, that the large businesses of this country are not very important and have not got a major contribution to make to the economy, but in the area of employment, and new employment particularly, the small business has a disproportionately good role to play. It also has always been responsible, outside major scientific breakthroughs, for a very high proportion of innovation and therefore it is vital for the future.
I cannot possibly deal with all the many valuable contributions that have been made in this debate. I will ensure that where I have been asked specific questions and do not have time to deal with them—and there will be some of those—I will write to the noble Lords concerned. I also assure the House that all the points mentioned will be taken into careful consideration by my right honourable friend. Noble Lords also know that,
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speaking from this Dispatch Box, particularly on matters which concern the future of our fiscal arrangements, a Government spokesman cannot go into the degree of detail that he would perhaps like to do in relation to many of the suggestions which have been made.
I shall leave out of my remarks a very important area; I shall come back to some of the points which the noble Lord, Lord Wallace of Coslany, just made, but in the main I shall have to leave on one side the wider implications of the social problems in the rural areas of the small village shops and, to a degree, of the small corner shops. All of these areas are being studied either by my right honourable friend the Secretary of State for the Environment or by my right honourable friend the Secretary of State for Agriculture, Fisheries and Food. These are vitally important questions, but I think the main thrust of my noble friend's Motion is along the lines of the main contribution to the British economy that small businesses can make.
I say straight away that I know of no threat that my colleagues in any department have made to CoSIRA in the way that the noble Lord, Lord Davies of Leek, suggested. We have reviews in all areas,—new Governments always do—but no threat has been made at any time, and as I go through the various important parts of this question I shall refer to the part that CoSIRA is playing.
While looking, as I shall try to do, at the many special aids which already exist for small businesses and at the possibilities for more special aids for them, I should start by saying that I am a little nervous of the phrase which I and some of my colleagues have used in the past—the word "package"—and I am a little frightened of the idea of the all-embracing organisation for small businesses because so many of the measures that can encourage small businesses are measures which affect the general industrial climate and they are therefore vital to all the main departments of Government, as I am sure the noble Lord, Lord Lever of Manchester, would agree. Therefore, one cannot look at them totally separately and, for the same reason, it is extremely hard, as it were, to look at this as a once and for all problem and produce a complete, comprehensive wonder package with a department with absolute powers to

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put in it. I prefer to think of it as the continuing, steady implementation of steps, some of which have been taken by our predecessors; some have already been taken by my Administration, and more are under consideration and will be brought in as appropriate and by the appropriate department.
The great dependence of small business on overall conditions is therefore something on which I should like to comment. I think it is clear from what my noble friend Lady Sharples said at the outset that the special American arrangements started at a period of many American bankruptcies, and there is no doubt that the special arrangements played a major part in triggering other attention from private institutions to be given to this problem. There is equally no doubt that, these general conditions having changed, we find that the major portion of the financing of American small business is now done by the institutions, which are doing a fine job.
It is hardly surprising, with the United Kingdom profitability of recent years, and with the controls we have had on industry as a whole—and the United Kingdom profitability of business as a whole has been less than that of our major competitors by a long way—that the normal institutions have not financed to the degree they should have the new business area where risk is also a factor. Would you put up equity, if you had equity, when income tax has been running at 83 per cent., or 98 per cent. on unearned income, in small businesses that you happened to know quite well and knew the proprietor whom you would have liked to back?
We cannot divorce the general conditions from the plight of small business now, and to a large degree it is the general conditions in which this country's industry has been placed in recent years that account for the fact that our small businesses are so far behind other people's; yet there is all-party, all-House agreement about their importance. One cannot divorce the position of small business from capital taxation as well as income tax, and I cannot add to what my right honourable friend the Chancellor of the Exchequer said at Budget time last year, that he is studying the problems of capital taxation. One
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cannot divorce small business from planning generally. There are particular problems for small business which we understand and are studying.
I now come to special measures which have been taken and to deal with some of the suggestions about new special measures, and I start with the question of organisation. We have of course studied from the Bolton Committee what those in the past have said who have considered this subject, and what they have said about organisation on the part of the Government to encourage small business. We believe that a Minister reporting to an important Cabinet Minister—reporting to my right honourable friend the Secretary of State—so that there is representation at Cabinet level, is the best way to co-ordinate all the important steps that need to be taken by all the main departments of Government. Because of this overlap with the general conditions as they affect business, whoever is appointed, it is in fact not possible to divorce many of the ideas mentioned today from the normal departments of Government. It is perfectly possible to have one Minister and a small staff, with a Secretary of State who is vitally interested in the regeneration of industry, responsible for co-ordinating all the areas. I have taken note of what the noble Baroness has said and of her clear description of the American situation; and reply that it has been studied in depth by my right honourable friend. I believe that exact copies are seldom very effective.
Let me turn to some of the measures that have been taken but have not been mentioned. On 7th November my right honourable friend announced a scheme in the Eastern Region involving the Small Business Counselling Service—which is his responsibility—and the Post Office Staff Superannuation Fund. This is a pilot scheme putting together the expertise and knowledge of small firms held by expert counsellors and the cash of a large pension fund. I believe that putting together expertise and cash is the key to providing finance for small business with small risk of loss. We very much hope that this experiment will prove successful, and if it does, we have every intention of expanding both it and the counselling service.
At this moment I should mention CoSIRA. They, too, have vetted many

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small businesses and then persuaded many large banks to advance money against their vetting of the risk area. These schemes are carried out without guarantee. We are looking at the whole question of guarantees and at many other possible fiscal measures; but guarantees are always costly, and inevitably guarantees will be given in areas where loans would have been advanced without them; and we have very little money. So while we acknowledge that there is a financial gap and that all will not come right, even after industrial conditions in this country have returned to the degree of profitability to which we hope they ultimately will, we believe that there is more than one way to be considered as to how to fill that gap.
On 24th July we announced that we were amending by order the Employment Protection Act—a subject raised by several noble Lords—and there are also measures incorporated in the Employment Bill. Between them these cover the qualifying period for unfair dismissal complaints, which was increased from 26 to 52 weeks for small businesses, and a compulsory period of notification of redundancies affecting less than a hundred people, which was reduced from 60 to 30 days. In the Employment Bill there are four provisions of considerable importance to small businesses, and in view of the lack of time I do not propose to record them all, as they will probably come up when that Bill comes into the House; but a very considerable amount of action has been taken in that area.
With regard to form filling and statistical returns, rather than take up the time of the House—which I have not got—I would refer your Lordships to Hansard of this House of 15th November, columns 1381–82, relating to my Answer to a Starred Question and to my supplementary answers, which showed that this Administration had taken decisions cutting out a million statistical forms out of some four and a bit million.
At this stage I must rebut a suggestion by the noble Lord, Lord Lever of Manchester—and I do not in any way want to detract from the many important matters that he brought to our attention, nor from the action that he had carried out on small businesses. For the reasons that I have already outlined I believe that
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this Administration have kept the good work going at a rather faster rate.
I shall write to the two noble Lords who have raised points regarding VAT. Of course we are fully aware of the impact of inflation on the limit of turnover at which VAT becomes payable. There already exist what are called special schemes which have been devised by Customs and Excise to try to simplify the matter by avoiding work for small businesses on every transaction. There are EEC constraints overall on exemption levels concerned.
I should like for a few moments to deal with factory building. We have introduced a new pilot scheme by the EIEC to build small factory units ranging from 500 to 1,000 square feet, and this is being carried out in the North. It means that, together with the excellent work of the Development Commission and the local authorities, we shall keep the small factory building going. It is a very good sign that all these small factory buildings are taken up so quickly. Indeed, the speed at which all offers are taken up is a sign that perhaps at last small business in this country is moving. If the experiment under the EIEC is successful, we shall certainly consider extending it.
In the time remaining I shall end my speech by saying that much is being done by private agencies, by private firms, large firms and banks—and this is more than was the case. I have in mind the London Enterprise Agency, the St. Helens Enterprise Trust, and the Birmingham Venture. All these consist of large firms working in partnership with small firms to help develop inner cities. I shall give a detailed answer in writing to those noble Lords who asked how far the Inner Urban Areas Act has yet been used in relation to loans and improvement areas.
So, my Lords, to wind up, let me return——
Lord DAVIES of LEEK: My Lords, will the noble Viscount translate the initials EIEC? I do not know what they mean.
Viscount TRENCHARD: My Lords, they stand for English Industrial Estates Corporation, which I think most noble Lords will know about and which undertakes the Government factory building programme in the assisted areas. I am sorry; I have got into the jargon habit.

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The urgency of the situation is understood, and I very much thank the noble Baroness for her timely introduction of this debate. I believe that we shall not answer her request for an immediate package or a copy package, hut that, as time goes by, she will not be disappointed by the degree of attention that this Government and their main departments will give to the small business area.
5.30 p.m.
Baroness SHARPLES: My Lords, I am extremely grateful for having had the opportunity to initiate this debate, and I am even more grateful for what has happened during the course of the afternoon. The speeches from all sides of the House have been varied and extremely interesting. My noble friend the Minister has dealt with nearly all the points noble Lords have put to him, and has assured us that, otherwise, he will write to us. Our time has been very short, for so much needed to be said, but it has been a wonderful and informative afternoon. My Lords, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

SCOTTISH FRESHWATER FISHERIES: LEGISLATION
5.31 p.m.
The DUKE of ATHOLL The DUKE of ATHOLL rose to call attention to the existing state of legislation relating to freshwater fisheries in Scotland; and to move for Papers. The noble Duke said: My Lords, we now turn to the more limited subject of freshwater fishing in Scotland. Although I have worded my Motion to draw attention to existing legislation, I strongly suspect that many noble Lords will draw attention to what they feel is lacking in the present legislation, and I may even be guilty of that myself. This should ensure a wide debate, which I welcome as much as I am sure my noble kinsman the Minister of State does.
My Lords, perhaps I may deal with a few preliminaries. I must declare an interest, as I am the owner of some very modest salmon fishings—rod and line only, no netting—and some quite good trout lochs and potentially good trout fishing in the Rivers Tummel and Garry. I hardly ever fish myself; I think it is a sport which
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does not quite suit my somewhat impulsive temperament. So most of my fishing is let: the salmon usually by the week to the normal sort of tenants, the trout fishing by the season—in the case of two of the lochs to individuals, and the rest to the Pitlochry Angling Club, who I might say welcome both day visitors and weekly visitors, as well as seasonal members, who of course live locally. This therefore enables tourists to obtain some trout fishing when they visit our part of Scotland. I should also like to say how pleased I am that my noble friend Lord Seafield has descended from his northern fastness to make his maiden speech on this Motion. I regard this as a great honour. I am sure we shall all benefit from listening to him; his experience of this subject is far greater than mine.
My Lords, I propose to deal mainly with trout fishing—I know other noble Lords are going to cover salmon—but before embarking on the former I should like to make one observation on the latter. The Scottish salmon is threatened by English drift-netting. While drift-netting is banned off Scotland, it is still allowed, under licence, off the North-East of England. Few of the fish caught (or, even worse, damaged) off Northumberland are heading for English rivers; they are making for the Tweed, the Tay, the North Esk, the South Esk or the Scottish Dee. This is a waste of potential, of much more valuable rod-caught fish, and it causes great resentment among Scottish fishermen, who are not permitted to drift-net—a law which I am afraid is not always obeyed. They cannot understand why it is permissible to drift-net out of Alnmouth but not out of Eyemouth. I hope my noble kinsman will be able to tell us that Northumberland drift-netting will be phased out over a few years. Incidentally, this would make our position much easier internationally. I have one further point on salmon. I hope the Government will revise the scale of fines urgently. With inflation, they have become much too low.
Now may I return to trout fishing. The last Conservative Administration, in 1971, produced a White Paper on freshwater fishing, off which I hope my noble kinsman will blow the dust. This was in many ways an excellent paper. It was better than the report of the committee chaired by Lord Hunter, in that it was

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much more practical. It was also infinitely better than the last Government's rather limited 1976 Act, which has proved almost impossible to operate. When it was first introduced into another place it had much to recommend it, but it was severely mutilated during its passage there and emerged in a form which made it extremely difficult for any river to obtain a protection order, due, first, to the cost of getting such an order; secondly, to the machinations of the Secretary of State's consultative committee—a Quango which we can surely do without—and, thirdly, to the impossibility of giving greater access when a river is already being fished almost to the limit of its capacity. The Act is aimed at increasing access without any reference to the importance of improving fishing. In addition, this Act does nothing for the reorganisation of fishing—something which has remained unaltered for over 110 years.
Incidentally, the 1971 White Paper is, I believe, unobtainable and out of print, and I would very much hope that the Government might consider republishing it with minor alterations, if that is the right word, because it was a very interesting White Paper and I think must be the basis for any future legislation on trout fishing in Scotland. The 1971 White Paper suggested that area boards should be set up to run freshwater fishing in Scotland. These area boards, which would be, according to the White Paper, about 14 in number, would be responsible for all aspects of freshwater fishing, particularly the development of trout and freshwater fisheries. The only aspect of river use for which they would not be responsible (other than purification and that sort of thing, for which they would not be responsible) was, I think, fish farming, because obviously the Ministry of Agriculture must be concerned with fish farming; and, while area boards should have the right to say yea or nay to whether a place is suitable for a fish farm, I do not think we could ever hold them responsible for controlling things like disease in fish farms.
Personally, I think 14 rather too few area boards. I feel 20 would have been a more suitable number, because some of the areas were going to be extremely large. For instance, I think that members of the
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area board who came from the far west of Argyll would have very little idea about fishing conditions on the Ness. Also, the cost of getting such boards together is obviously considerably greater when people have very long distances to come. So I would hope that in the revised version of this White Paper there might be rather more area boards. The composition of these boards I think should cover fishing interests, both rod and net, fortified (if that is the right word) by several nominees of the Secretary of State. I do not think local authorities should be represented on these boards unless those authorities are also riparian owners, which of course in many cases they are.
As to the financing of these boards, in the White Paper it was suggested that initially the Government might make available some money to cover them, or partially to cover them, for the first two or three years, but that after that they woud have to be self-supporting. The money suggested in 1971 was, I think, a quarter of a million pounds, and obviously, considerably more would now be needed. But they would eventually be financed partly by a licence fee—and perhaps I could go into that later—partly by the local authority rates levied on fishing, and partly by a fishing assessment, which most salmon fisheries, although not trout fisheries, already pay. It is interesting to consider the sums needed to make these boards work satisfactorily. The only figure I have been able to obtain is that, if the whole of the Highland region came under one board, as I believe has been suggested, it would cost something like half a million pounds per annum at present-day prices to run that board; and this, of course, is a formidable amount of money to raise in the Highland region.
The protection for trout and freshwater fishing as proposed in the 1971 White Paper seemed to me to be very adequate, except that, personally, I feel that blanket protection over the whole of Scotland is desirable. It is obviously going to be much more difficult to enforce protection where you have little bits of rivers here and there which are protected and other rivers nearby which are not. Therefore, I think that blanket protection would be highly desirable and that some system must be instituted so that area boards can force people who do not want to give

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great access to their water to do so. I fully recognise that, in a country where the right to fish for trout has been almost immortalised for anyone who wishes to do so, it would be difficult to deprive them of that right and not to offer an alternative. However, I think that the area board must have the power to insist that riparian owners give sufficient access to people, on suitable payment, to fish for trout.
Another power that I suggest for area boards—and it is much the most controversial one—is the possibility of changing annual closed seasons and weekly times. At the moment, you are not allowed to fish for salmon or sea trout on Sundays in Scotland although I believe you are allowed to do so in England and Wales. As a result, the brown trout fishermen descend in enormous numbers and throw everything into the river on a Sunday. If they capture a salmon, naturally, they do not throw it back and you cannot blame them. But it means that the river is more or less totally unprotected on Sundays. There are no two ways about it, the best people to look after a river are those who have an interest in it—and this means the other fishermen. Therefore, I would hope that in this legislation the Government would permit salmon fishing and sea trout fishing on Sundays.
The changing of the annual close seasons is also important. At the moment, to get a close season changed, you must apply it to the whole river system. This means that you cannot have different dates for various tributaries. The only exception to this—and I do not know how this arose—is that the Earn is different from the Tay. In many cases you can go on fishing much later in some rivers than in others, but at the moment all rivers in one particular area of one particular system have to have similar opening and closing times.
Area boards would also, I hope, have the right to remove obstructions by compulsion if necessary. Many waters could be improved if obstructions could be removed. Obstructions also frequently cause salmon to congregate below and this makes it easy for the poachers. The boards should also have the right to restrict, or prohibit by by-law, fishing at or near obstructions. They should have available the power to agree to
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traps, as suggested in the Hunter Report—although I am glad that the Government did not adopt this in the 1971 White Paper for I think that the cost would be absolutely astronomical. I am told that it would be difficult to make traps on many East coast rivers, but where, particularly in the West, an owner wished to put in a trap, the area board should be able to agree to this. At the moment, there is no way that you could put a trap in a river, however good your intentions.
The boards should have the right to introduce fish or eggs into their river systems and should have the right artificially to strip salmon and sea-trout. They should be consulted on water abstraction and should have right of access to statistics of the numbers of fish caught by various owners in their area. At the moment, these are sent to the Secretary of State where they appear to get buried and can only be published, anyway, for a whole river. This means that it is hard to run a river efficiently because you do not have all the facts. Obviously, there would have to be special measures in relation to the Tweed, which is on the borders of England, the Solway for the same reason and, probably, for Orkney and Shetland. I should like to see these area boards thought about again. They have a great part to play. The organisation of freshwater fisheries in Scotland has not been revised since 1868. It is obviously time it was revised and I hope that the Government will find time to do this.
My Lords, I said that one way of financing this would be by fishing licences. It is a moot point whether these should be national for the whole of Scotland or whether you should have a different licence for each area board area that you fish in. I should be prepared to accept either. I think also that it is a moot point whether they should be cheap so that there will be no incentive for people not to buy them or expensive so as to produce revenue. These licences would not entitle you to fish anywhere. All that they would do would be to entitle you to be in possession of fishing equipment, in the same way as a game licence entitles you to shoot game provided you have asked the owner of the shooting rights over the land on which you do it.
I should have liked to mention the international control of salmon fishing in the North Atlantic. This is very important. I hope very much that the Government will support the draft United States International Atlantic Salmon Convention and also Article 66 of the United Nations Law of the Sea Conference. I have tried to cover the ground as I see it. I am sure that many other noble Lords who are going to speak in this debate will make much more interesting points, but I should like to emphasise to the Government that if we want Scotland's salmon and trout fishing to remain the great assets that they are something must be done quickly to preserve them. I beg to move for Papers.
5.47 p.m.
Viscount THURSO: My Lords, I am grateful to the noble Duke, the Duke of Atholl, for introducing this subject into the House. I am always glad to talk about salmon and it is always a fascinating subject. As the noble Duke rightly pointed out, it is time that we returned to this subject and returned with an intention to legislate. It is also good to see that this short debate tonight has produced, or will produce, at least one maiden speech—to which I shall listen with great interest. I ought to start by declaring a number of interests. I am the chairman and principal shareholder of a company which owns a salmon river from source to sea, which operates the hatchery and sea net; and I own and let for various purposes, tourist and local, trout fisheries. I am chairman of the Thurso and District River Fisheries Board and the District Salmon Fisheries Board and I am president of the Association of Scottish District Salmon Fishery Boards, so I have a lot of interest in this subject in all senses of the word. I hope that I shall be able to keep my remarks suitably short for a short debate.
Probably the principal reason why the law relating to salmon and freshwater fisheries in Scotland has remained almost totally unchanged for over a century is that it has worked extremely well. Over a period of 100 years the rises and falls of catches in Scotland's major salmon rivers have been attributable more to natural causes such as weather cycles and disease cycles than to any cause arising
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out of defects or omissions in the law. Certainly I can show that the average annual catches to rod and line on the Thurso over the last half century have risen rather than fallen and that, in fact, annual catches in the last 25 years have averaged almost twice what they did in the previous 25-year period on the Thurso. This is not to say that the existing law relating to salmon and freshwater fisheries is perfect—far from it—but it does demonstrate the difficulty which legislators and their advisers have come up against in seeking to up-date this law: that of finding "a better 'ole to go to", to put it in the words of Old Bill.
We should ask ourselves, therefore, why and in what respects the law needs to be changed if it is working reasonably well. To say merely that changes are overdue is to talk rubbish. Need for change has to be clearly demonstrated and the changes proposed properly justified.
Let us set out therefore the requirements to be met by the laws governing freshwater fisheries in Scotland. First, they must safeguard the natural assets which exist in our rivers and lochs and in our coastal waters in the shape of populations of native freshwater and anadromous fish. Secondly, they must allow a proper exploitation of these assets, both as a food supply and as a source of recreation, alike for Scotsmen and for tourists. In doing so, they must reconcile the competing claims of commercial fishermen, local anglers and the tourist industry. Thirdly, they must not only allow but encourage the development of freshwater fisheries, for both food and recreation—both in natural waters and in the more artificial farming waters. These developments must be reconciled, of course, with the primary objective of conservation of the natural asset. In the fourth place, the laws must provide for the introduction of new methods and techniques of fishery management. Finally, the law must safeguard people's rights, property and jobs—not necessarily in that order, or any order.
If we accept these objectives, and examine the existing law in the light of them, what has happened in recent times—or even over the past century—to make alterations to the law desirable in order to achieve them? What are the dangers with which our fish stocks are threatened and which might make legislation to guard against

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them vital? What new discoveries make new forms of fishery management desirable but require new legislation to allow them to be put into effect? Let us look first at existing fish stocks. Here the threat, if one exists, is always greater when it is aimed at the breeding and rearing ground of the fish stock. The old law has dealt with this by imposing close seasons, and close times on coastal nets, by banning obstructions and phasing out cruives. No longer can one leister a fish on the redds to pickle for winter use. No longer can one block the salmon pool on the Thurso river and, in the presence of some astonished baillies, net out 2,000 or more salmon at a draught, as was once legally done. However, it still needs vigilance to keep the rivers clean enough for the breeding stocks to be able to reproduce, and river purification boards still have their work cut out to keep our waters fit for fish to live and grow in. However, the threat now to our fish stocks lies in the sea.
The use of monofilament hang nets or drift nets poses the new danger. Over-fishing on a massive scale by fishermen or fishing fleets that have killed off their traditional shoals of herring, haddock and cod, is a very real danger. It is happening now. It must be stopped and conservation of salmon stocks at sea must be sought by international agreement. Drift net and hang net fishing should be permanently banned off Scottish coasts. We should seek to phase it out of all fisheries in the United Kingdom and ultimately it should be outlawed throughout the whole Atlantic.
If the survival of Salmo Salar is to be assured, before we pass any laws or alter any legislation relating to salmon in this country, we must seek international agreement about the protection of salmon in the North Atlantic. Before we think about how to manage our salmon stocks, we must establish that they are our salmon stocks. In other words, we must reaffirm Article 66 of the United Nations Law of the Sea Conference which recognises,
"that the state in whose rivers an anadromous stock of fish originates has the primary interest in, and responsibility for, such stock".
If then we get our returning stock safely back from the sea we must be prepared to accept our responsibilities and manage it properly. To do this we must look at the administrative structure
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which will regulate our fisheries; in other words, our river board structure.
On the larger and medium sized rivers district fishery boards have, on the whole, worked well. But on many small rivers they do not have the "muscle" to function properly or they simply do not exist at all. Although in my evidence to the Hunter Committee I advised against amalgamating district fishery boards, I must confess that I now see that it is necessary for the sake of the smaller boards to amalgamate groups of rivers into area boards. Nevertheless, I should be much against an unnecessary and bureaucratic enlargement of such boards to unwieldy proportions. It should be possible for the principal officers of a board to travel from their headquarters to any part of a board's area, investigate a problem and then return home within a day. Board areas so big that this could not be done would be too unwieldy to be efficient. Therefore, even areas as big as the 14 in the appendix of the 1971 White Paper are too big in my view—and I was glad to hear the noble Duke, the Duke of Atholl, make this point and I support him strongly—especially if they are to take on the responsibility for brown trout and other kinds of freshwater fishes as well as salmon and sea trout. Sixteen boards would be a better number. But to cut the number of boards, as has been suggested in some quarters, to seven, would be a bureaucratic disaster. Do we never learn? Have we not had the pinch already with some of our local government reorganisations?
The way in which boards are to be composed will be most important. At the moment boards are elected by owners of either rod or net fishings. I accept that membership for area boards will have to be widened, especially if trout interests are also to be represented; but I regard it as important that the democratic principle should be maintained. Members of area boards should be elected and not appointed. The people who will pay for the boards should elect them. This means the people who will pay the licence fees and the rates should elect the members. Then one can fairly ask the boards to become independent of financial support from Government sources. If one appoints the members of the boards, one will be bringing to birth a whole new shoal of local Quangos. I am sure that the present Government would not wish to be seen as Quango

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breeders, and I therefore suggest to them that the principle of the triennial election should be kept—adding to the number of qualified electors those who pay rates, licence fees for trout fishing or for fish farming.
This brings me to the question of trout. The Freshwater and Salmon Fisheries (Scotland) Act 1976 was, in my opinion, an ill-thought-out mess from the start. What no one seems to have recognised is that where a protection order is made, trout fishings change their legal status, in that catchment area, into that of being heritable property, and the mind boggles at the complications which would arise if a protection order needed to be revoked in order to enforce conditions on someone. What should be done about trout fishings is that they should be given the same status as salmon fishings enjoy—that of heritable property. They could then be rated for the benefit of area boards, and responsibility for trout fishings should then be shouldered by the boards exactly as they will be expected to shoulder the responsibility for salmon fishings.
Your Lordships may ask me how boards could tackle the question of access for trout fishing, and I hope you will allow me to take a little time to explain my thinking on this question, bearing in mind that this is a short debate. Access to any water for any form of fishing has to be limited—limited, that is, to what the fishing can bear. The exercise of judgment on this matter is part of fishery management and may well become one of the tasks of area boards. In cases where one fishery is shared by several proprietors or used by several different users it may be necessary to lay down limits to each one's use in order to protect the fishing for the use of all.
A technical judgment on such a matter could probably best be made by an area board. An area board therefore should be in a position to define the optimum use which could or should be made of any piece of water. This would allow water to be rated as though it was being offered for public use at the full optimum intensity. The only way that a proprietor would then be able to seek reduction of his rates would be by demonstrating that his water was freely on offer for the full optimum amount of fishing
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but that the public were not availing themselves of the offer. I could develop this theme in greater detail and would be glad to do so to Her Majesty's Government or their advisers, but I think I have said enough to illustrate my point within the scope of a short debate.
In accepting area boards as the unit of administration of all freshwater fisheries in an area, I assume that they will be given responsibility and powers over all matters affecting fisheries excepting only those powers already being exercised by the river purification boards. It is essential that they be given power over and responsibility for fish farms within their area. In this sphere I disagree with the noble Duke, the Duke of Atholl. It think it is vital that area boards should have control over the disease problems within their catchment. It is something they would regard as one of their first and most important duties, to keep their catchment healthy and free of disease; and the operation of a fish farm within an area board's area could be a considerable embarrassment if that area board had no powers whatever over operations. The fish farms could be licensed in order to ensure standards of fishery hygiene and could contribute to area boards by paying rates to them rather than to local authorities. I am sure that if they have to pay rates at all they would rather the money went to a fishery board than to anyone else.
One of the main reasons why the Hunter Report was not immediately followed by legislation was that it took a gigantic leap into the future—a leap so vast and unexpected that it left legislators and fishery administrators alike gasping. The caution which legislators showed in not following the Hunter Committee has, I believe, been shown by the passage of time to be correct. The fact is that techniques and equipment, even today, are not yet sufficiently well developed to make the single trap fishery, which was the basis of the Hunter Report, feasible. Nevertheless, it is now desirable to legalise trap fishing if the new techniques of salmon ranching at sea are to be developed. Once again, in a short debate, I do not have time to develop the theme of salmon ranching, but suffice it to say that it appears to offer a means of supplying the public's demand for salmon for the table without increasing the pressure on the stocks of fish which run up our rivers.

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There is a need for protection of our fisheries. There is also scope for their further development, and to carry out both of these tasks requires further legislation. This legislation should not seek to turn everything upside down, however. Rather it should build on the structures which we already have, keeping those parts which have worked well and discarding only the outdated or archaic. Let me therefore suggest priorities and summarise what should be done to build upon the successful work performed for over a century by Scottish district fishery boards.
First, Her Majesty's Government must commit themselves to full support of the United States initiative in seeking to set up an international Atlantic salmon convention. At home they must give a lead by placing a permanent ban on hang and drift-net fishing. This will require legislation. Next, at home, area boards should be set up taking over from district boards and taking under their aegis brown trout and coarse fisheries and fish farming. Boards should have powers over methods of fishing, intensity of fishing effort, introduction or removal of fish or their eggs and the granting of rod, net and fish farming licences. They should be self-financing from rates and licence fees. They should have powers to alter annual close seasons or weekly close times. Boards should be democratically elected by those who pay the licence fees and those who pay the rates. Though the Secretary of State might be given overriding powers over some of the functions of boards, he should not have the power to appoint members to a board. Area boards should not be combined with the river purification organisation and there should preferably be 16 of them to cover Scotland.
Eventually I envisage that it would be desirable to place brown trout and coarse fishings on the same legal footing as salmon fishing, but in the meantime we shall have to work away with the 1976 Act. Once a protection order has been made under this Act, however, area boards should be empowered to administer, enforce or even vary the terms on which an order has been made. The trout fishings covered by such an order should become rateable and the rates should go to the area board concerned.
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Finally, my Lords, let us not forget that the Scottish district fishery board story is a success story. It has given to Scotland the best salmon fishery management in the world—with only the possible exception of Iceland. District fishery boards are still doing a serviceable job after a century of existence. So let us learn from them; let us build on them; let us use their experience to go forward into a new century of fishery management.
6.5 p.m.
The Earl of SEAFIELD: My Lords, I should like first to thank my noble friend the Duke of Atholl for his kind introduction, which is most appreciated. I should like also to declare my interest as being the owner of coastal nets, in the first instance; a member of the Spey District Fishery Board, in the second; and their representative to the Association of Scottish Salmon Fishery Boards, in the third.
My purpose in speaking this afternoon is not to argue for specific laws to be changed—or to be made, for that matter—but to stress the need to improve the existing legislation by looking at the economic aspects, and the tourist aspects for that matter, of freshwater fishery and everything that goes with it. Many of these facts I am sure many of your Lordships will be fully aware of. As a member of the Spey District Fishery Board, I have to treat the Spey as an example. There are no doubt parallels which can be drawn with other rivers, and I sincerely hope these will become apparent.
In 1963 the Hunter Committee issued an invitation to the Spey District Fishery Board to come and give evidence when they were looking into the whole question of drift netting. We went with one intention, which was—and I quote:
"to look at the economy of the Spey Valley in relation to salmon and sea trout fishing, with special reference to hotels and associations".
This meant that we were going to give evidence to show what income came into the Spey Valley and we included rates, direct employment, the drawings of hotels, garages, filling stations and tackle-makers. In 1963 we came out with a figure of £252,777. We also found that there were six associations and some 4,500 people enjoyed the salmon fishings, either through leasing them or throughfishing associations. In fact, the figure for people who enjoyed

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those benefits through fishing associations was 3,174.
There are no doubt certain aspects of the income coming into the Spey Valley area which we omitted to mention, so of late I have trial to up-date these figures by approaching the people who had been approached before, and also approaching some of the newer operators. Having done that, I have tried to use a common multiplier to reach some acceptable figure. I accept there are some discrepancies here, but in 1979 I found out that possibly there could be a figure in excess of 2 million coming into the Spey Valley on the same basis as before, and some 14,000 people enjoyed fishing there, with over 12,500 enjoying the facilities afforded by fishing associations. This probably shows that the Spey, anyway, has had a vast increase in the membership of associations, and instead of there being six associations, as there were in 1963, there were 12 in 1979.
I have tried to calculate the figure for Scotland as a whole, and I used the method of assessment that is applied to all the district salmon fishery boards by the Association of Scottish Salmon District Fishery Boards. Using that proportion, which is based on rates, I came up with £37 million which might be applicable to the whole of Scotland for salmon in rivers. I am told by many people that this figure is very low, but for the time being I cannot do any better than that with the method which I used.
Therefore, one must stress the importance of effective legislation to protect these assets which contribute so much to the rural economies in which they are present. There are controversial issues, such as seals, drift-netting and canoeing, and I hope that the economic importance and compatibilities of these will be looked at in relation to the economic importance of fresh waters and fisheries. I also hope that changes are not made for change's sake. If it works, leave it. Lastly, I trust that international agreement in legislative form is achieved in order to protect over-fishing on the high seas. This is one of the aspects which cause us all great alarm.
6.13 p.m.
Lord BALFOUR of INCHRYE: My Lords, it falls to me to have the privilege
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of thanking the noble Earl, Lord Seafield, for his maiden speech, of congratulating him on its execution and of paying tribute to the deep knowledge—which I know from experience he has—which he has given to your Lordships' House on the subject of the debate this evening. I sincerely hope that we shall hear him in the future, not only on fishing but on many other subjects. I should also like to thank the noble Duke, the Duke of Atholl, for giving us the opportunity of debating this fascinating subject of salmon. But I do not intend to detain your Lordships for more than a very few minutes, because I wish to deal with only one aspect of this problem, which was touched on by the noble Viscount, Lord Thurso.
The debate is on means to protect Scottish salmon—a great national asset. But beyond the much needed legislative measures to restrict damage and the depletion of our salmon stocks, there is a great international menace. The North Atlantic salmon stocks of Scotland and other countries remain wide open to international depletion on the high seas. So long as the EEC ignores the dangers of steady and swift depletion, so long will this state of affairs continue. So long as the EEC chooses to ignore the menace from Members who produce no salmon and have no rivers of their own, but continue to extract salmon for commercial reasons, so long will that menace continue.
In a very few sentences, I should like to summarise how the present open position of great danger to salmon has arisen. There have been attempts at international control of the North Atlantic, but these have come to nothing except words. The United States prepared a draft Convention, which included what became Article 66 of the United Nations Law of the Sea and which was quoted by the noble Viscount, Lord Thurso. In case any of your Lordships did not hear what that article said, I must remind your Lordships that it stated:
"that the state in whose rivers a stock of fish originates has the primary interest in, and responsibility for, such stock".
The EEC totally disregards Article 66. It is not interested. There are only three Members of the EEC who have rivers which produce salmon—Great Britain, including Scotland, Ireland and France. Therefore, the remaining Members are interested not in conservation in the long-term, but in

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stock commercial exploitation for short-term gain. In every debate on the common fishing policy, in Brussels and elsewhere, there has not been a mention of salmon stock preservation: herrings, yes; cod, yes; but salmon, no.
Then there was the Conference on Fishing in European Waters, which was recently held in London. There was not a mention of salmon. I cannot help wondering what the United Kingdom Members of the Commission are doing: why so silent on the United Kingdom's particular interest? I have a fear, which I hope the Minister will be able to remove from my mind. Is it possible that the EEC foresee trouble if they accept the principles of national responsibility in Article 66 for stock originations in national rivers? Do they expect trouble from the provisions of the Treaty of Rome covering accessibility and no discrimination?
Dr. Booss of the EEC recently gave a terrifying definition at the Fishing in European Waters Conference, when he said:
"Legal situation clear. Free access up to the beaches, no discrimination, 6–12 miles only, temporary derogations, which might be extended after 19732".
I wonder whether those fears bring the EEC into possible conflict with the provisions of the Treaty of Rome. I do not know, hut I hope that we shall hear something from the Government.
Finally, I appeal to the United Kingdom Members of the Assembly—and, after all, if they had the courage to upset a budget they will no doubt have the courage to do this—to use their influence to bring forward this issue and have it discussed and clarified in the EEC.
6.20 p.m.
Lord TRYON: My Lords, I, too, should like to thank the noble Duke, the Duke of Atholl, for introducing this most interesting subject, and to add my congratulations to the noble Earl on his most interesting maiden speech. It is clearly a subject about which he knows a great deal and, indeed, he has done very thorough and interesting homework, particularly in his attempts to cost the value of salmon to Scotland.
I make no apology for stepping in among so many kilted noble Lords.
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Possibly the only exception in this debate is the noble Lord, Lord Peart. For once, I have no particular interest to own up to other than that of being a keen fisher of salmon and other fish in Scotland, whenever I get the chance. The whole subject of salmon is one in which I am most keenly interested. It transcends national boundaries. I shall deal with this point in a minute. In recent years, plenty of interest has been shown by Scottish Peers in English subjects of a similar nature. Indeed, most of those who have spoken in tonight's debate have joined in debates on English game matters. I remember in particular that the noble Viscount, Lord Thurso, joined in the debate on the Deer Bill, a Bill which we tried several times to get passed in the last Parliament.
I am going to concentrate on salmon and I shall be brief, since the subject has been covered very fully. Indeed, to a large extent my thunder has been stolen by the noble Lord, Lord Balfour of Inchrye. I, too, was going to concentrate on Article 66 and the North Atlantic. However, may I stress that the management of salmon, which is so important to Scotland, completely transcends national boundaries.
During its time in the sea the salmon may pass through the territorial waters of several different nations as well as through completely international waters. The catching of salmon, other than in the estuaries and river systems in which it spawns, makes a complete mockery of any attempts at proper management. It is no use the authorities in any country—the river board or those responsible for any individual river system—carefully working out an acceptable harvest of fish in order to leave an adequate spawning stock, and then finding that half the fish fail to appear because they have fallen prey to a trawler or drift net hundreds or, maybe, thousands of miles away. This is a vitally important point. I am therefore looking forward very much to hearing from the Minister that the Government are taking every possible step to monitor the stocks and catches of salmon and to press for proper international agreements under Article 66.
Turning to the subject of monitoring, I agree with what was said by the noble Duke, the Duke of Atholl, about the

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difficulty of obtaining statistics. I hope that they are available to the Government; it is very hard for lesser mortals who try to follow this subject to come by them. When they do appear they are invariably two or three years out of date. If a serious decline in salmon stocks were to begin, I think that people ought to know about it sooner than they do now.
There is one other small matter which I should like to raise. I appeal to the Government to make a plea to riparian owners to exercise restraint. I have the impression that beats are being split into smaller lengths and that more rods are being put on. On top of the other threats about which we have heard so much tonight, there is quite serious pressure now from rod fishermen. Again may I thank the noble Duke for giving us this chance to debate the subject.
6.25 p.m.
Lord PEART: My Lords, I intervene in the debate as an Englishman because I know that this is a matter which is dear to the heart of Scotland; it is so important to Scotland. I have always taken an interest in fisheries. I thought that I would look up Criminal Law of Scotland, Gordon, second edition, which reminds me in one paragraph about fishing in the Tweed, the Solway and the Esk. It says:
"These waters, being partly in England and partly in Scotland, are regulated to some extent by their own private Acts. The Salmon and Freshwater Fisheries (Protection) (Scotland) Act 1951 applies to the whole Tweed, as do the Freshwater Fish (Scotland) Act 1902 …".
So in the past there has been a great deal of legislation. English fishermen were also affected. Fishermen in Cumbria were certainly affected, and also the fishermen who fish in the Solway. So we have an interest in the problem, although I recognise that basically it is of major interest to Scotland.
I should like to congratulate the noble Earl, Lord Seafield, upon his very informative speech. He dealt with the Hunter Committee and cogently argued the point of view which he put forward. He has had long experience as a member of a board. He suggested that there should be 12 associations. I think that the noble Duke, the Duke of Atholl, had in mind a similar figure. I hope that we shall hear the noble Earl speak again in our debates.
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I was interested in what the noble Earl had to say about seals. When I was Minister of Agriculture and went to the North, particularly to the North-East, I was often lobbied about the culling of seals. I got into more trouble over seals with the people who wanted to protect them than I did with the farmers. I believe, however, that there has to be culling of seals.
The noble Earl also argued that there should be international action. Indeed, most of the speakers on this subject, including the noble Duke, the Duke of Atholl, argued strongly in favour of international action and conservation. The noble Duke argued that the law is not always obeyed. He mentioned many incidents and said that the Acts have been defied. The noble Duke asked that there should be 14 area boards, but he also mentioned the figure of 40. I am not, therefore, sure how many area boards the noble Duke wants.
The DUKE of ATHOLL: My Lords, if I may correct the noble Lord, the 1971 White Paper suggested that there should be 14 area boards. I believe that the present Government are thinking of reducing that number to seven. I—and I think the noble Viscount, Lord Thurso, agrees with me—believe that it would be undesirable to reduce the number below 14. I believe the noble Viscount suggested that there should be 16 area boards. I personally opted for about 20, without being absolutely wedded to that figure.
Lord PEART: My Lords, I am grateful to the noble Duke for clearing up that point, because it is a very important matter. So far as the administrative structure which will monitor the industry and the activities affecting sport as well as food is concerned, it is important to have the right number and not a bureaucratic organisation. I think this was stressed by the noble Lord, Lord Tryon. I do not think that there is this bureaucracy. I read carefully the debates in this house on the Bills which became Acts, and the noble Lord, Lord Kirkhill, steered this legislation through this Chamber with great skill and I think they got it right. On the other hand, there are still problems, and these have been mentioned in the debate today.

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The noble Viscount, Lord Thurso, spoke about the Atlantic Salmon Convention and he said that we should ban drift-netting. This is a matter for the Government and I hope there will be a reply. He also said that the board should be democratically elected and the Secretary of State should have overriding powers. I think he mentioned 16 boards, but that does not matter. The noble Viscount also said that we must work away at the 1976 Act. I think that is right; it is too early to bring in any major legislation. Certainly it should be looked at most carefully, and naturally people who have interests in this matter will prod Ministers from time to time. That is right.
Other interests were also mentioned. The noble Lord argued about catches and he mentioned a remarkable figure, that today our annual catches are twice what they used to be many years ago. He said how important it was that we should safeguard our national assets, not only for food but for recreational interests and tourism. He said that it was essential to have commercial fishing. After all, fish farming is now with us. He also took the view that we should look at our fish stocks and should recognise that there are many abuses.
There is one example in the South of England, concerning the fishing of mackerel. Fishermen would fish mackerel and then go over to a Russian industrial trawler which was virtually a factory ship. I believe that to be a terrible thing to do in the present circumstances. I know that it has been raised with Ministers in another place from time to time. I always thought that it was wrong of us to do that within our own territorial waters, because if we did that, how could we criticise others in Europe?
I agree with the noble Lord about Europe, and I must confess that we really did not do enough when I was Minister, except when I attended with the noble Lord, Lord Ross of Marnock. I remember that he always took a great interest in the fishing side, and I believe he felt that we should have done more in that direction in connection with negotiations. I am not afraid to say that we ought to have done more. I was very busy on one section, and I know that although he took an interest in agriculture he also had a
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very deep interest in fishing, which is so important to Scotland. So I think what the noble Lord, Lord Balfour of Inchrye, said is perfectly right. I agree with him and I hope there will be a reply on that from the Government. We need international control; but he must know also that discussions are still going on with regard to the international law of the sea. I accept that there have been long delays. I took part in some of those discussions, but there has been no real progress, and from the point of view of the conservation of our own fisheries, little has happened.
As an Englishman I do not want to make a long speech. I believe that the noble Duke who raised this matter has done a great service. There will be a lot of Press coverage in Scotland about this debate and I hope that pressure will be put on the Government and they will recognise that they still have to look carefully at one of our most important industries, which not only gives food but gives pleasure to thousands of our citizens.
6.35 p.m.
The MINISTER of STATE, SCOTTISH OFFICE (The Earl of Mansfield): My Lords, first I must thank my noble kinsman the Duke of Atholl for giving the House the opportunity for discussion of this subject, but before I go any further I think it right that I should declare an interest. I own a somewhat undistinguished tributary of the Tay so far as fishing is concerned, and with my noble kinsman—and I think he forgot this—we are both trustees for my son, who owns a substantial interest in the Tay.
Having got that out of the way, my second very pleasant duty is to congratulate my noble friend Lord Seafield on his maiden speech. How nice it is to welcome one more expert to your Lordships' House! We look forward to having his contributions to our deliberations in the future. I was pleased, too, that the noble Lord, Lord Peart, acknowledged the vital importance of fishing to Scotland. I am referring to all fishing, but particularly, within the terms of this debate, to salmon and freshwater fisheries. When my noble friend Lord Balfour of Inchrye asked a question on the first day back after Christmas a noble Lord sitting behind the noble Lord, Lord Peart, whom I shall not name, asked whether it was suitable for the

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House of Lords to discuss such matters and we did not deign to answer. It is very important, as my noble friend Lord Seafield has said.
The EARL of LONGFORD: My Lords, I hope the noble Earl was not referring to me. I hope he did not mean the noble Lord sitting behind the noble Lord, Lord Peart, now.
The EARL of MANSFIELD: No, my Lords, I said "a noble Lord sitting behind the noble Lord, Lord Peart". The noble Lord was in the same geographical position as the noble Earl, but it was not in fact the noble Earl.
I asked my department, because I wanted to know for my own information, whether they could get out any statistics for me on the commercial values of fishing in Scotland. They did their best, in a rather different way from my noble friend. Perhaps I may illustrate it in this way. So far as net fishings are concerned, the recorded commercial catch of salmon, grilse and sea trout in Scotland in 1978—which is the latest available date for figures—amounted to a total of 1,050 tonnes and the gross value of that catch at first sale was estimated, at 1979 prices, at about £5 million. One can add extra value by the various sectors of processors, distributors, retailers and so on who lie between the netter and the final consumer, and it would be safe to say that the extra value would amount to at least another £5 million. Persons employed in commercial catching are believed to number about 1,250, but of course there are no estimates available of salmon-related employment in processing, and so on.
That is netting. But if one then goes on to sporting fisheries, a proper estimate of their value would have to take account, for instance, of the rents paid to the proprietors of fishings, the value added by hotel, tourist and transport sectors in so far as these relate to salmon. No comprehensive data are available, but in 1978 a departmental estimate was made to the effect that sporting fisheries for salmon had a current economic value of some £10 million to £15 million. So that is a guess and no more at the commercial value to Scotland of fishing, so far as salmon are concerned. It is quite impossible
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to put a value on trout fisheries but there is no doubt that they are of considerable actual and potential value.
The point that I want to make is that the economic benefits from salmon and freshwater fisheries are not evenly spread over Scotland but are of particular importance in rural areas. Where some small communities depend to a significant extent on the benefits derived directly and indirectly from the existence of the fisheries one can see the important place of fisheries in general.
I think the time is ripe for a discussion on this whole subject, partly because of the way in which the 1976 Act dealing with the protection of trout fishing has been operating, and also because I think it is time that the existing law relating to salmon and freshwater fisheries—much of which, as has been pointed out, relates to the last century—was reviewed. We have had the Hunter Committee which reported in 1965, but no substantial changes took place thereafter. In 1971 the previous Conservative Government published proposals for comprehensive legislation, as we have also heard, and a series of consultations subsequently took place but no progress was made because of pressure on parliamentary time.
Noble Lords will be aware from the reply that I gave to the noble Lord, Lord Glenarthur, on 22nd November last year that the Government have decided to review the existing administration of and legislation relating to salmon and freshwater fisheries in Scotland, and to that end a consultation paper was issued and circulated at the end of last year. A lot of the suggestions made this evening, I am glad to say, are on the lines of that consultation paper.
There is room for difference, quite obviously, on the number of area boards that there should be. I was, and at the moment am, attracted to the view that the number might follow the number of river pollution boards, but I think that much room for discussion and deliberation exists over this. What I think we are agreed about is that to a very large extent the area boards could take over the functions of the district salmon boards, and some others, including possibly fish farming. I think that requires very considerable thought. What I think they could not

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take over is the control of disease, because that, under the Diseases of Fish Act 1937, which relates to notifiable diseases, is the responsibility of my right honourable friend the Secretary of State, and I feel it would probably be inappropriate and certainly expensive if these responsibilities were delegated to area boards. But again, like everything else, this is something which is very much open for discussion.
I am sure your Lordships will appreciate that it would not be appropriate nor indeed proper for me to prejudge the outcome of this review which we are undertaking, which will take into account the principal issues raised in the 1971 White Paper and the various points which have been discussed since. What I would do is to urge all noble Lords, who have an interest in the subject in whatever way and whether or not they have taken part in this debate, to see to it that vigorous representations are made. In this way the Government will be confronted with the maximum number of views and they can be taken into account, and hopefully legislation will come forward which will be as satisfactory as possible in the circumstances.
I am going to say a few words about some of the individual contributions of noble Lords, but there are one or two matters which perhaps I could raise which were raised by several noble Lords. The first related to drift netting of salmon, which, as your Lordships will know, is banned in Scotland but is permitted within the six-mile limit off England and Wales, where it is licensed and supposed to be strictly regulated. As my noble kinsman said, and said quite rightly, a very large proportion of the harvest, if that is the word, of the main English drift nets fishery is in fact Scottish salmon homing back to Scottish rivers, and this has been a major source of contention over the years.
Enforcement of the present controls over salmon fishing off the North-East coast has been under review with the aim of closer co-ordination on both sides of the border. So far as the ban on any fishing on the Scottish side of the border is concerned, only last week I visited the headquarters of the Royal Navy Fishery Protection Squadron to have discussions on these and other matters, so it is being
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actively reviewed by the Government. So far as the English interests are concerned, what I can say is that at the moment inter-departmental discussions are going on between my department and the Ministry of Agriculture, and one hopes—and I can say no more than that at this stage—that they will eventually lead to new legislation.
A number of noble Lords took up the point of the Atlantic Salmon Convention, and it is, of course, extremely important. I do not believe that the situation is quite so bad, if I may use that word, as my noble friend Lord Balfour thought. Perhaps I can very briefly relate the history of the matter and then go on to say what is happening. Early in 1979 the United States Government proposed to the European Community and other parties an international convention on salmon in the North Atlantic Ocean, and your Lordships are well aware what the United States proposals were. The immediate reaction of this country, of course, is to favour any sound proposals which are aimed at conservation of salmon stocks and regulation of fishing for salmon at sea. Our policy is to adhere to the principles agreed in the United Nations Law of the Sea Conference, and particularly that the States of origin shall have the primary interest and responsibility for such stocks.
Being a member of the European Community, we have to negotiate through the Commission, so to speak, and in response to the American initiative the Commission have produced proposals for a negotiating mandate with the USA and the other countries involved. These proposals, which eventually will be presented for agreement in the Council of Ministers, are now the subject of discussion among the Member States of the European Community. The reason why they are not getting more publicity—and perhaps it seems that either the matter is not being attended to or is being allowed to slip—is that at the moment at any rate they are at official level, and will continue, I think at a higher level, next month. The reason for this is that so far as this country is concerned—and, as noble Lords have said, we are one of the three countries with salmon stocks—we were not satisfied and remain unsatisfied with the emphasis which the Commission wished to lay upon their negotiating stance so far as these

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negotiations are concerned. We look for substantial improvements in the mandate in the course of discussions, and finally to the fact that it will no doubt be agreed and be passed, as it were, by the Council of Ministers; and it is hoped then that substantive discussions will take place with the United States and other countries.
The United States, it is fair to say, is keen to make progress on the agreement of a convention during this year, 1980. In the meantime, it is reassuring to note that agreement has recently been reached between the European Community and the Canadian Government for the continuation into this year, 1980, of the previous agreement for the restriction of salmon catches in Greenland waters at the previous annual level of 1,190 tonnes.
I wish to turn now in a general sense to freshwater fisheries proper, and that of course really concerns trout. My noble kinsman himself raised the question of protection for trout fisheries. The 1976 Act—and as the noble Lord, Lord Kirkhill, is in his place, I must be careful what I say—provides for the Secretary of State to make a protection order for freshwater fisheries in a river system or part of a river system where he is satisfied that proposals by holders or occupiers of fishing rights to give public access to the fishings are adequate to meet public demand. Fishings for salmon and sea trout in fresh water already enjoy statutory protection and are not affected by the Act.
The first case considered under the Act, which was an application for a protection order from the proprietors of angling clubs on the Rivers Tweed and Eye, has been taken to a public inquiry in view of the large number of objections received. We are indebted to the Reporter for the careful and reasonable manner in which he examined the situation and for the positive attitude which he took in his report for developing our fishing resources in the interests of all concerned. Following the inquiry, my right honourable friend the Secretary of State has decided that a protection order should be made for an initial period of three years. That will provide a trial period in which to see whether his recommendations can be fruitfully implemented. I hope that a liaison committee will shortly be set up to monitor the operation of protection so
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that hopefully the order will come into effect in time for this season.
It is right to say that the Act has been heavily criticised by what I may term as "unattached" anglers mainly on the grounds that it provided "blanket" protection without comprehensive public access and the fact that the only sanction against breaches of the terms of the proposals in respect of which a protection order may have been made, is the revoking of the whole order. Whether or not those criticisms may be overstated, we must consider them in the consultations which are to take place.
I am bound to say—and particularly as the noble Lord, Lord Kirkhill, is in his place—that when this Act, as it is now, went through your Lordships' House I was among the first and most vociferous to criticise it. However, I think that in the time that we have lived with it—and it is, in fact, all too short—the experience of the Tweed Inquiry has been valuable. I can say that if persons or organisations on other rivers are minded to make a similar application, but may be dissuaded from doing so by the thought that the Government may be going to introduce comprehensive legislation so that they could go to a whole lot of trouble and expense for nothing, my reply is, "Do not worry; continue with your application". I would envisage—and I hope that I am not going beyond what I should do in this regard—that if there is further legislation it would, as it were, embrace the 1976 provisions. Therefore, any application which takes place in the interim period would also be embraced by any new legislation which comes about.
Various noble Lords have made suggestions as to how future legislation could affect trout. As I have said, my noble kinsman, I think, with the exception of what he said as regards the number of area boards—and other noble Lords, especially the noble Viscount, Lord Thurso, agreed with him—very much suggested something along the lines of the consultative document. Of course, it will be for the area boards to make provision for such matters as night fishing, Sunday fishing and the type of fishing which may be indulged in. One must remember that very many folk have different ideas and attitudes on the subject and that what be denigrated as a totally unsporting method of fishing by one section of the

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populace is regarded as being fair and enjoyable by another which has equal rights to state its view. It is a very difficult matter.
Similarly, I am not sure that I am in total agreement as to how the members of the area boards should find themselves in their positions. I am quite sure that a form of election will have to be the major way in which they find themselves there. I think that one must pay attention to the very large numbers of unattached anglers and, whether or not they become attached in some way, the public interest must recognise that they have, or should have, some say in what happens. Otherwise there will be a recipe for continual trouble because they will say that they are not represented and they do not see why they should not indulge in the free fishing which they have, in effect, enjoyed since time immemorial. That is a matter that we must face.
The noble Lord, Lord Tryon, referred to the decline of salmon stocks. I can tell him that that was a matter which I also tried to inquire into. It is extremely difficult and complicated partly because statistics are kept, if they are kept at all, in different ways; and partly because in the last few years the results on different rivers have been varying all too much. However, the inadequacy of the arrangements for obtaining data on changes in the Scottish salmon catch was recognized by many of the various committees and commissions that have reported on Scottish salmon fisheries since 1836. Provision for the collection and publication of comprehensive catch statistics on a district basis was eventually included in the Salmon and Freshwater Fisheries (Protection) (Scotland) Act 1951. Such statistics have been collected by my department since 1952, but there has been no regular publication of those statistics except for the annual total Scottish catch of salmon, grilse and sea trout made by each of three main fishing methods. Therefore, we now have no less than 26 years of comprehensive data on salmon catches on file in my department and it is now proposed to publish a detailed summary for those years and to make detailed catch statistics available on a regular basis. So I hope that a position which is admittedly now not very satisfactory will become rather more so in the future.
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I hope that your Lordships will appreciate from what I have said that the Government are anxious to review the law and legislation on salmon and freshwater fisheries in Scotland and, at the same time, to ensure that our international arrangements are so conducted as to ensure that the stocks of salmon are maintained in as healthy a state as possible.
However, on domestic matters, I should like to say that, following the present round of consultations, we propose to frame new proposals for legislation which it is hoped to bring to Parliament as soon as the legislative timetable permits—and that, I know, is a time worn phrase. But, in view of the long delay in tackling the issues dealt with by the Hunter Committee, I hope that we shall be able to make progress and to help create a new framework for conserving our stocks, and not least for improving the facilities for the increasing number of people who enjoy the sport of angling, and also for developing the undoubted potential of our fisheries as a significant part of the rural economy.
6.59 p.m.
The DUKE of ATHOLL: My Lords, I do not propose to make a long reply because I feel that that would be out of place in a short debate. But I should like to congratulate my noble friend Lord Seafield on his excellent and almost non-controversial maiden speech. I thought that his figures were most interesting and I only wish that we could have the same sort of figures for other parts of Scotland, because I think that we would find that the further North and West we go the more dependent the economies of those very rural areas are on fishing in general and salmon and trout fishing in particular. I thought that his statistics were most interesting and I very much hope that my noble kinsman will be able, sometime in the future, to produce some figures for other parts of Scotland based on the same premises. I should like to thank noble Lords who have taken part in this debate. I found it a very interesting debate, largely because I agreed with almost everything that was said, which has not always been the case.
There are just one or two points with which I did not entirely agree. The noble Viscount, Lord Thurso, said that the exist-

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ing law has worked. It has worked so far as salmon and sea trout are concerned, but I think it is beginning to creak even with them, and I do not think it has worked at all as regards ordinary brown trout. When the noble Viscount made that statement he may have forgotten about brown trout. I would also point out to him that I suspect that if either the Test or the lichen were in Scotland, they would not be the good trout rivers that they are, being in Hampshire. I noted he thought that fish farms should be controlled by area boards, and my noble kinsman dealt with that. Personally, I agree with him that control of disease must be carried out by the Secretary of State. Whereas area boards should be allowed to express an opinion and possibly even license fish farms in their area, I am convinced that the control of disease should come directly under the Secretary of State.
Both my noble friends Lord Balfour of Inchrye and Lord Tryon went into the international aspects in most interesting speeches, which I greatly enjoyed. I think I agreed with everything they both said. I can assure my noble friend Lord Tryon and the noble Lord, Lord Peart, that I was delighted, even though they are English,
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that they made a contribution to this debate. They added an extra dimension to the debate which was most welcome. I should like to thank them and all other speakers very much for taking part in the debate.
Before withdrawing my Motion, I greatly welcome the news—at least it was to me—that interdepartmental discussions are taking place between the department of my noble kinsman and the Ministry of Agriculture about the drift-netting off the North-East coast of England. That is very good news and has been one of the most cheering things to come out of this debate, as indeed was the fact that statistics will be published more regularly. The ones at present are totally inadequate, as I think my noble kinsman admitted. With those few remarks, I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

COMMITTEE OF SELECTION
Third Report from the Select Committee made and to be printed.
House adjourned at two minutes past seven o'clock.