Lords Sitting of 2 July 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 Norwich.

NORTHERN IRELAND: AMERICAN INVESTMENT
Baroness VICKERS: My Lords, on behalf of my noble friend Lady Emmet of Amberley I beg leave to ask the Question which stands in her name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what has been the total of fresh American investment attracted to Northern Ireland since the formation of this Government.
The PARLIAMENTARY UNDER-SECRETARY of STATE, NORTHERN IRELAND OFFICE (Lord Elton): My Lords, since the present Government took office in May last year, industrial development agreements have been concluded with American companies in respect of investment of some £120 million in Northern Ireland.
Baroness VICKERS: My Lords, I thank my noble friend for that very encouraging Answer and congratulate him on obtaining the money. Would he be good enough to tell me how many new jobs have been created?
Lord ELTON: My Lords, it is anticipated that some 2,800 jobs will eventually be created as a result of this investment.
Lord BLEASE: My Lords, I hope the noble Lord the Minister will not be too surprised if I compliment the Northern Ireland Ministers on the expeditious way they have pursued the investment of American capital in Northern Ireland and on the effective way they have built upon the groundwork done and the seeds sown by the previous Labour Administration. Would he agree that the major factors attracting productive investment from
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America to Northern Ireland are the good industrial relations and the availability of a readily adaptable and highly-skilled labour force, and that not in any way does low pay contribute to that attraction?
Lord ELTON: My Lords, like many attractive insects, that beautiful butterfly surprised us with a sting in its tail. But I accept most of what the noble Lord says, and of course the level of wages is a factor in any prospective investor's mind when he is deciding where to invest. I think I should add that the investment incentives offered to foreign concerns investing in Northern Ireland are among the best to be found, certainly in Europe and quite possibly in the Western world.
Lord DAVIES of LEEK: My Lords, may I ask the noble Lord how home investors have reacted to the encouragement given to American investment, particularly in view of the Wilson Report, showing the massive amounts of money which are in the insurance companies and the banks at the present moment?
Lord ELTON: My Lords, strictly speaking, that is a different question. I think home investors are encouraged by anything which strengthens the United Kingdom economy as a whole.
Lord ROSS of MARNOCK: My Lords, could the noble Lord tell us what was the cost of the inducement in respect of this investment?
Lord ELTON: Not without notice, my Lords.

MATERNITY PROVISIONS SURVEY
2.40 p.m.
Lord McCARTHY: 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 have received the results of the nationwide survey on the operation and effects of the maternity provisions of the Employment Protection (Consolidation) Act 1978 undertaken by the Policy Studies Institute for the Department of Employment; whether those

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results were taken into account in framing Clauses 10 and 11 of the Employment Bill; and when they expect to be able to publish the results of the survey.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, the Government have only recently received the results from the first part of the survey of the maternity provisions, which deals with the experience of working mothers. A summary of the findings has been published in the May edition of the Employment Gazette, and the full report was published on 30th June. The second part of the survey, which deals with the experience of employers, is under way, and a report on this part should be available by the end of the year. The results of the research were therefore not available when the Government were framing the clauses dealing with maternity in the Employment Bill. Nevertheless, now that they have been received they confirm the Government's view that the right balance between employer and employee has been struck in the Bill.
Lord McCARTHY: My Lords, I thank the noble Earl for that Answer. I hope he will accept that when I put the Question down I did not know that in fact the Government intended to publish an account of the first part of this study in the Gazette. In respect of the second part of his Answer, may I ask him how, in the light of that article in the Gazette, and even more so in the light of the full publication of the PSI, survey by Mr. Daniel, the Government can now justify what they are doing in respect of maternity? The PSI report makes it quite clear that the overwhelming majority of small employers will not have to find jobs for women who are pregnant more than once in every 15 years and once in every 30 years. How can figures of this kind justify what the Government are proposing?
The Earl of GOWRIE: My Lords, like all such surveys and all such figures, it depends on what you read into them. The results show that about two-thirds of the women who say that they intend to come back in fact do not do so; and that seems to us totally to justify our provisions in Clause 11 governing notice
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of return. But in fact we do not seek to rest our justification on one particular survey; we rest it on a matter of judgment.
Lord McCARTHY: My Lords, will the noble Earl agree that what the survey shows is that the overwhelming majority of small firms have no problems about maternity return?
The Earl of GOWRIE: My Lords, the survey has taken no account, neither was its remit to do so—and I make no criticism of it—of the fears of employers. You cannot survey the disincentive effects of measures on things that have not happened. We want things to happen. We want employers to take on people in work. You cannot place any judgment of any coherence on surveys of this kind. They are useful. We publish the results. But they make very little difference to our overall judgment.
Baroness SEEAR: My Lords, would the noble Earl agree that the extent to which people do not return to work suggests that it is ridiculous to ask them to say in writing before they leave whether they intend to return? Any sensible woman when asked will say that she will return; she does not know at that stage.
The Earl of GOWRIE: My Lords, the noble Baroness, experienced as she is in these things, has missed the point of the provision. It is to let the employer know roughly what the situation is. It is to create certainty where uncertainty reigned before. That is all that it is designed to do.
Lord McCARTHY: My Lords, will the noble Earl agree that all that the survey shows is that he only needs to know once every 30 years?
The Earl of GOWRIE: My Lords, as I have said on this Question today and in the debates on the Employment Bill, I give very little weight to surveys. However, when they occur, I do not seek to suppress them; I have them published in the Employment Gazette. I find considerable justification for the Government's measures in this survey if I am prepared to see through a particular lens; but when looking at it through another lens, I find less justification. It seems to me to have very little relevance.
Baroness SEEAR: My Lords, I do not want to go on about this matter, but will the Minister agree that if he wants to give employers certainty it is absurd to ask women to write letters to the employers to say whether they are going back before they have had their baby?—because the one thing that the employer does not get from that is certainty.
The Earl of GOWRIE: My Lords, we are dealing with a handful of cases where we are concerned to see that the employers have a reasonable certainty that they will be able to tell whether or not a woman is going to come back after having her baby. She has the right to do so if she wishes and our legislation confirms that. On the general issue of surveys, I would say to both the noble Baroness and the noble Lord that if you took surveys about the status of the closed shop in this economy you would have to abolish it overnight.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, if the noble Earl is going to ignore the results of the surveys which are commissioned by his own department and to use two different kinds of lenses, is it not possible that he might end up cross-eyed?
The Earl of GOWRIE: My Lords, I do not ignore surveys; I take them with a pinch of salt. But I take the advice of the noble Baroness and will try to see things steadily and in whole.
Lord HARMAR-NICHOLLS: My Lords, is my noble friend aware that people in charge of small businesses require a little help in coming to some conclusions in running their businesses? While the clause as it stands cannot give them certainty, it minimises uncertainty, and this is an advance in the right direction.
The Earl of GOWRIE: My Lords, I am grateful to my noble friend for that. I must be careful that we do not stray during Question Time into a debate on the Employment Bill.

COMMODITY PRICE STABILISATION: THE COMMON FUND
2.46 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what were the conclusions of the renewed discussions between North and South representatives on 18th-19th June on the Common Fund for stabilising commodity prices.
Lord TREFGARNE: My Lords, the final round of the UNCTAD negotiations on the Common Fund took place from 5th to 28th June. I am glad to say that agreement was reached on the text of the treaty to bring the fund into operation.
Lord BROCKWAY: My Lords, can the noble Lord say whether the Common Fund will come into operation this year and can he answer two particular points? How much will the individual commodity agreements contribute to assisting a particular commodity suffering from a disastrous fall in prices? May I also ask whether in the case of the second window of the fund, progress has been made towards reaching the 280 million dollars required for diversification and market promotion?
Lord TREFGARNE: My Lords, some progress has been made towards achieving the figure required by the voluntary part of the second account, as it is now called, but I cannot give the noble Lord precise figures on that, since most are confidential and in any case a number of countries have not yet reached agreement on it. As to the date when the treaty will come into being, I have not got the precise date but I think it is next year.
Lord GORONWY-ROBERTS: My Lords, will the noble Lord, with or without notice, let us know how many signatories are attached to this treaty (which is really an agreement with schedules) and whether the total signatories include, in reasonably equal proportion, representatives of the industrialised West, the OPEC countries and the Soviet Union and its allies in the East?
Lord TREFGARNE: My Lords, I have not got the precise details for which the noble Lord asks. I will find out and write to him.
Lord ROBERTHALL: My Lords, can the noble Lord say what is likely to be the United Kingdom contribution to the Common Fund?
Lord TREFGARNE: My Lords, we have not yet made up our minds on that.
Lord KALDOR: My Lords, has the noble Lord any information on the nature of the commodity schemes on which agreement has been reached, on what kind of commodities are in contemplation for inclusion in such agreements and on how they would operate?
Lord TREFGARNE: My Lords, that is a separate question. I will write to the noble Lord.
Lord BROCKWAY: My Lords, has not insistence by the industrialised countries that there should be separate agreements rather than an overall plan led to a situation where commodity agreements other than in rubber may not be completed at all? In that case would the Common Fund be able to act effectively?
Lord TREFGARNE: My Lords, certainly it will. That is the whole intention.
Lord TAYLOR of GRYFE: My Lords, will the noble Lord indicate how many Governments require to endorse the agreement reached on the Common Fund before it becomes operative?
Lord TREFGARNE: My Lords, speaking from memory, two-thirds, I think.

ANKARA CONFERENCE OF NATO FOREIGN MINISTERS
2.50 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government
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what conclusions were reached at the conference of NATO Foreign Ministers at Ankara.
The SECRETARY of STATE for FOREIGN and COMMONWEALTH AFFAIRS (Lord Carrington): My Lords, I attended the meeting on the 25th and 26th June. Discussion covered a wide range of international developments of concern to the alliance. It was a good meeting. The broad measure of agreement among the allies is reflected in the communique, a copy of which has been deposited in the Library.
Lord BROCKWAY: My Lords, while recognising the wide range of subjects, may I ask the Minister this question: While welcoming the commitment to the pursuit of verifiable measures of disarmament and the avoidance of competitive arms strengthened by the visit of the West German Chancellor to Moscow yesterday, may I ask him whether it is true that an ad hoc group has been set up by the United States, West Germany, Great Britain and Turkey, as reported, to consider arming the Afghan opponents of the Kabul Government? Would not this be very dangerous in widening the war, and would it not be better to support the initiative of the Islamic Conference to bring about a settlement of this problem?
Lord CARRINGTON: My Lords, the answer to the first part of the noble Lord's question is, No, and so the second part does not arise.
Lord HALE: My Lords, will the noble Lord say whether this matter has any connection with the more or less defunct Baghdad Pact which finally took root in Ankara with a Turkish staff and apparently no other members, all the other members having resigned? If it is virtually pursuing with different personnel the objectives of the Baghdad Pact, is there to be any reference to it?
Lord CARRINGTON: My Lords, Turkey is a member of NATO. The NATO Council meets in different capitals each year. This is one of those meetings.
Lord SHINWELL: My Lords, will the noble Lord the Foreign Secretary say whether the representations made by Chancellor Schmidt recently on his visit

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to Moscow represented the views expressed at the meeting in Ankara?
Lord CARRINGTON: No, my Lords. Chancellor Schmidt did not go to Moscow representing the views of any other than the German Government.
Lord BROCKWAY: My Lords, would the Minister agree that one of the values of the conference was that the representative of the United States accepted the view that Western Europe could have different attitudes from that of the United States?
Lord CARRINGTON: My Lords, what this meeting demonstrated was that the alliance was united.
Lord SHINWELL: My Lords, in view of the answer that the Foreign Secretary just gave to my question about Chancellor Schmidt—that is, that he was not representing the views expressed collectively at Ankara, but the views of the German Government—are we to understand now that unilateral arrangements are permissible?
Lord CARRINGTON: No, my Lords. Chancellor Schmidt was very anxious not to go to Moscow in the capacity of representative of the Western alliance. He went there as Chancellor of Germany. That was the invitation that he received from Mr. Brezhnev, which is not to say that what he said in any way differed from the views of the Atlantic alliance.

BUSINESS
Lord DENHAM: My Lords, with the leave of the House, at a convenient moment after 3.30 my noble friend Lord Elton will repeat a Statement being made in another place on the Government of Northern Ireland.
It may also be for the convenience of the House if I announce that it is intended to adjourn the Committee stage of the Housing Bill at approximately 8 p.m. The House will then take the Unstarred Question on the EEC Budget for 1980 in the name of my noble friend Lord O'Hagan.

BREASCLETE HARBOUR ORDER CONFIRMATION BILL
Brought from the Commons; read 1a, and (pursuant to the Private Legislation Procedure (Scotland) Act 1936) deemed to have been read 2a and reported from the Committee.
BRITISH RAILWAYS ORDER CONFIRMATION BILL
Brought from the Commons; read 1a, and (pursuant to the Private Legislation Procedure (Scotland) Act 1936) deemed to have been read 2a and reported from the Committee.
HIGHWAYS BILL [H.L.]
Report received.

HOUSING BILL
2.55 p.m.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Bellwin.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Earl of LISTOWEL in the Chair.]
Clauses 49 and 50 agreed to.
Clause 51 [Protected shorthold tenancies]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 112: Page 35, line 39, leave out paragraph (c) and insert—
(" (c) either a rent for the dwelling-house is registered at the time the tenancy is granted or—

(i) a certificate of fair rent has, before the grant, been issued under section 69 of the 1977 Act in respect of the dwelling-house and the rent payable under the tenancy, for any period before a rent is registered for the dwelling-house, does

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not exceed the rent specified in the certificate; and

(ii) an application for the registration of a rent for the dwelling-house is made not later than 28 days after the beginning of the term and is not withdrawn.")

The noble Lord said: This amendment provides another important safeguard for the tenant under the Government's short-hold proposal. Clause 51 already provides that shorthold tenancies, unlike any other class of regulated tenancies, must have a registered fair rent. This amendment ensures that the fair rent will apply from the outset of the tenancy. I shall explain how this is achieved.
If a landlord grants a shorthold for a property for which there is already a registered rent, that rent will apply equally to the new shorthold tenancy. The Bill already provides satisfactorily for this. We are concerned here with properties which have no registered rent but which the landlord wishes to let as shorthold tenancies. At present the Bill requires that the registration of a fair rent is applied for within 28 days of the tenancy commencing. Although this in itself is a unique protection for the tenant, the point has been made in another place that there will be no fair rent until the rent is registered by the rent officer—perhaps three months after the tenant moves in. Our amendment bridges this gap. The amendment requires the landlord to obtain a certificate of fair rent from the rent officer before granting the tenancy as well as applying for the registration of a fair rent not more than 28 days after it starts. The rent specified in the certificate will be the maximum the landlord can charge before the fair rent is registered.
The certificates of fair rent provisions are well established ones. They already exist under Schedule 12 to the Rent Act 1977 and need no modification for this purpose. They are specially designed for circumstances where there is not yet a tenancy, and are, for instance, often used by housing associations before conversions or new dwellings are let. Once a certificate has been obtained, the subsequent application for a fair rent is a straightforward procedure, and unless there has been a change in circumstances the registered rent would normally be the same as that in the certificate. I should
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add that nothing in this amendment implies that a landlord who gets a certificate must of necessity let on shorthold, or alters the status of certificates in relation to other lettings. The amendment gives the shorthold tenant the full benefit of knowing from the outset what the registered fair rent is likely to be, and paying no more than that. I beg to move.
Baroness BIRK: We start on a rather happy note. I am pleased to welcome the Government's amendment. I hope that this is going to be one of many concessions that we shall be seeing during the afternoon and evening.
On Question, amendment agreed to.
[Amendments Nos. 113 and 114 not moved.]
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 115:
Page 35, line 43, at end insert ("; and
(d) the dwelling-house possesses at all times throughout the tenancy the amenities prescribed by Schedule 6 to the Housing Act 1974.").
The noble Lord said: This is a very simple, straightforward amendment which seeks to impose on landlords a minimum standard of repair with which they will have to comply if they wish to take advantage of the provision of shorthold tenancies. It states that Schedule 6 to the Housing Act 1974 should be incorporated, which merely provides that there should be a fixed bath or shower, a hand washbasin and a water closet. I should have thought that this was the kind of amendment which, with goodwill, the Government might accept, since I am sure that the Government, in introducing the concept of shorthold, would not want the shorthold tenant to be any worse off or any worse provided for than if he or she were in another type of tenancy. Therefore, this seems to me a reasonable amendment which might find acceptance with your Lordships, and I beg to move.
Lord BELLWIN: The intention of this amendment would be to require that all dwellings to be let on shorthold would have to measure up to a particular standard. The Government cannot accept this. There seems to us to be no reason

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why there should be a requirement in respect of shorthold when there is no such requirement at present in the public or private sectors. Of course, the Government want all property, whether it is owner-occupied or rented, to be brought up to as high a standard of improvement as possible. I am sure that is a view that is shared by noble Lords on all sides of this Chamber. But to produce a requirement of the kind that is proposed in this amendment for shorthold would materially reduce the availability of shorthold dwellings. Many furnished dwellings in the private sector already have shared amenities and therefore the tenants do not have exclusive use of all the amenities referred to in Schedule 6 to the Housing Act 1974. Many people, especially in cities, may be perfectly happy to enter into arrangements of this type where they share amenities. I do not think it would be right that they should he denied the possibility of taking a shorthold tenancy, and I wonder whether perhaps, on further reflection, the noble Lord may accept the validity of this point and perhaps feel able to withdraw his amendment.
Lord EVANS of CLAUGHTON: There is a world of difference between tenants in the private and the public sector. The tenant in the public sector can go to his councillor and complain about the quality of the amenities that he enjoys or fails to enjoy. The private tenant has the security of tenure. The shorthold tenant does not have security of tenure, except for the limited period from one year to five years, and he or she therefore might perhaps not feel quite the same courage about challenging his or her landlord as regards the quality of the tenancy's amenities. Therefore, there is in my opinion a considerable difference between the level of competition, as it were, that the tenant enjoys in relation to his landlord in a shorthold tenancy as against that which he would enjoy in a public or private tenancy. Therefore I think that the tenant of a shorthold tenancy is much less protected as regards the rights that he enjoys than is a tenant in the private or public sector. That is the reason why I moved the amendment, and I think it makes it a different proposition from that which the noble Lord put before your Lordships.
Lord SHINWELL: May I ask the noble Lord a question arising from this amendment? Perhaps he can clarify the position for me. In the event of a shorthold agreement being arranged, is it not likely—indeed almost a certainty—that there would be some increase in the rent? In that event, surely the tenant has the right to demand that the premises should be raised to a reasonable standard: first, because it ought to happen and, secondly, because the tenant is called upon to pay an increased rent. Surely he has the right to say to the landlord: "Before I pay any increased rent you must promote a reasonable standard of conditions." Can the noble Lord clear up that point?
Lord BELLWIN: I am glad to clear up one point, namely, that in the case of shorthold it is not a matter of their being an existing rent at all. A tenant will only go into a shorthold which would be new premises. Where any tenant at present has a regulated tenancy, with all that flows from it, the Bill says quite clearly that it cannot be switched into shorthold. That is an express condition in the Bill. Therefore the matter of it being a new rent does not arise at all, because we are starting from scratch with a whole new area of accommodation; so switching or increasing rents does not arise.
I think the noble Lord's question helps me to come to the point which was made by the noble Lord, Lord Evans, when he said that surely a shorthold tenant will have less security, and so on, and therefore will be less protected. We shall be discussing shorthold at some length in the next hour or so, I imagine, and no doubt we can cover this point and others then. But at this moment, since it concerns the amendment, I would say that the whole purpose of shorthold is that it should be what it says: shorthold. In other words, it is a tenancy for a limited period of time of up to five years. A prospective tenant who goes into such premises as will be offered and as we hope will come on to the market and be newly available, where at present they do not exist, will have the opportunity of inspecting the place where he is hoping to live and will be able to decide whether or not it is of a standard which he thinks is good enough. He will then either accept or reject the

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opportunity to be a tenant; but to suggest that he should move in and from that point during the short term of his tenancy, then have a new right, which does not exist even in the private sector at the moment, to have the premises brought up to a certain standard, is creating the kind of restriction that indeed, like a number of other restrictions that are called for in the amendments, would defeat one of the objects of shorthold. For that reason—and I hope that the noble Lord will understand this point—the Government cannot accept this amendment.
Lord EVANS of CLAUGHTON: As the noble Lord will appreciate and as I am sure his noble friends will also appreciate, many of us have considerable reservations about the whole concept of shortholds. Some of us think they might conceivably be worth experimenting with if there were adequate safeguards for the tenants; and this is one of the safeguards that I thought might be an example of the kind of safeguards we are looking for. The Government have said that shortholds will make tenancies available, say, to young married couples starting out on the great journey of life. I would have thought that young couples, perhaps with a child, would want a fixed bath or shower, a hand washbasin and a water closet in their premises. I would have thought therefore that, because of the exposure that the shorthold tenant is in in relation to his landlord, these were the kinds of protection—these and many others—that your Lordships should be willing to impose on a landlord who is in a very advantageous position in relation to his tenants.
However, as the noble Lord, Lord Bellwin, said, we shall have ample opportunity, of which I am sure we shall take full advantage, of probing the shorthold tenancies and trying to limit the exposure of the tenant in these circumstances. Because of that, and because, if I am not satisfied by the end of the Committee stage on this matter, I know that I shall be able to reserve the right to raise this matter again at Report stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.9 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 116:
Page 36, line 4, at end insert (", or any other dwelling-house in the same building or any other dwelling-house owned by the landlord (within the same registration area within the meaning of section 62 of the 1977 Act).")
The noble Baroness said: One of the most disturbing aspects of shorthold when it was proposed in the first version of the Bill has now, it is true, been partially rectified. At first it appeared there was nothing to protect a tenant who was fully protected from having an insecure short-hold tenancy perhaps foisted upon him. Although that was denied, the Government introduced in another place an amendment which spells out that such a tenant will retain protection. However, there is a snag even here, because the safeguard only applies to the accommodation actually occupied. It would be easy for a landlord to offer a shorthold agreement instead of whatever fixed-term agreement he is accustomed to use.
This was expressed very well by the chairman of the Westminster Housing Committee, Councillor Weeks, as reported in a press release put out by Westminster Council; which, incidentally, is a Conservative controlled council. He said that he supported Sir Brandon Rhys Williams in the view that it was important to ensure that landlords would not be able to "winkle out" tenants from existing tenancies where they may be secure and into a new one which was less secure. He went on to say that he would like to see the shorthold tenancy procedures tightened up considerably. That was since the Government amendment was incorporated in the Bill.
This danger of "winkling" still remains in the Bill, particularly as so many of the people involved will not be lawyers or knowledgeable about their own situation and may in certain circumstances take a shorthold agreement and lose the protection which they originally had. That is because if they move from the fiat or house where they have complete security, that security goes when they leave and nothing remains with the flat or house that is left.
The example I have in mind is that a landlord may make a fully protected tenant an offer which he finds difficult

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to refuse. One may say that he should refuse it and ought to realise that he will be losing security, but when we legislate we must remember that not everybody is highly knowledgeable about these very complex matters. A protected tenant in a small room in a multi-occupied house may be offered a larger room somewhere else in the house, but this time it would be under shorthold. Eviction could then take place at the end of a one-year term.
In different circumstances a protected tenant would be threatened if the landlord has several houses and the tenant accepts the offer of alternative accommodation in another house. Here, again, he would be exchanging complete security for a shorthold. We must tighten up these loopholes. Through no fault of his own, and through not understanding these very complicated rent laws, a tenant might work himself from a completely secure tenancy into one that is insecure. As the Government appear to have made it clear that that is not what they want to see, it seems to me that, having gone as far as they did in another place, they should accept this amendment which would tighten up the procedure even further and in a way that is necessary. If the Government do not want this "winkling out" position to arise, then they must tighten up the procedure even more than they have done so far. Therefore I hope that the Government will accept the amendment. I beg to move.
Lord EVANS of CLAUGHTON: I am delighted to be associated with the amendment moved by the noble Baroness. I said in the Second Reading debate, and I say it again, that the vast majority of landlords are good landlords: I do not dispute that for one second. As a solicitor, I act for very many good landlords. But the point of laws is not to protect us against the good, but to protect us against the evil.
There is a minority of landlords who look for the nooks and crannies and loopholes of the law in order that they can obtain advantages which the law never intended they should have. I remember how under previous legislation loopholes were exploited by ruthless landlords. I had plenty of cases, both as a lawyer and as a councillor, of tenants who did not know their rights. Perhaps they should have known their rights, but the
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complexity of legislation and of Government forms is very difficult for people who may not be very well educated, or who are elderly or confused by problems. They do not think of going to the citizens advice bureaux, because they are confused and frightened.
I must say, from my own personal experience under previous legislation and from my own personal fears about a small minority of landlords, that the Government would be well advised to accept this amendment to prevent what could be a very pernicious style of Rachmanism, of oppression of tenants, which could happen under the legislation as drawn at present. I hope that the Government will accept this amendment.
Lord JANNER: May I support this amendment, particularly from the point of view already expressed by my noble friend and by the noble Lord, Lord Evans. Your Lordships will realise how in legal matters people take for granted things which they should know about but which they do not trouble to know about. Consequently, when trouble arises they come along to people in my profession and say, "What on earth is happening? I did not know this".
Let me give your Lordships a very simple illustration. A large number of people have no idea that when their leaseholds expire their homes fall into the hands of the freeholder. They will come into a solicitor's office—and I am sure that this happens all over the country—and say that when they bought their leaseholds they thought that they were all right, and that they would never he taken from them. I remember that when the leases fell in in a certain area, hundreds of houses suddenly fell into the hands of the landlord. I can appreciate the point that the noble Lord, Lord Evans, made that a large number of landlords have some kind of human understanding, but there are others who might attempt to sell the freeholds for very large sums. People do not know, not because they do not want to know hut because they think they are all right until something untoward happens. Therefore any precaution in the nature of the one that is proposed here is something that we should consider very carefully, to enable the tenant to understand his position.

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The noble Lord, Lord Bellwin, knows what we all know about the shorthold business, and I shall not go into that yet. But people do not understand it, and if a landlord offered alternative accommodation people would not go to a lawyer to ask what the difference would be, and would feel that their protection was the same as previously. I hope that the noble Lord will take that into consideration. It is not a great thing to ask of him, and I trust that he will agree to the amendment.
3.20 p.m.
Lord BELLWIN: I do indeed know what Members who sit opposite feel about shortholds, and I trust that in turn they know what we on this side feel about them. We shall have several opportunities, very shortly, to debate in depth the basic intentions behind the shorthold proposals. For the moment, I ought to stick strictly to this amendment. It would have the effect of preventing somebody who is already a statutory or protected tenant from being granted a shorthold in the same building or in any other dwelling-house in the same registration area belonging to the same landlord. I recognise the concern which has been expressed: that existing statutory and protected tenants may be persuaded to sign away their security by agreeing to take shortholds. That is why we have specifically provided in subsection (2) of the clause that a shorthold of the same dwelling cannot be granted to an existing statutory or protected tenant.
This amendment seeks to go further. It would prevent a shorthold from being granted to an existing tenant not only of the same dwelling but also of any dwelling in the same building, or even of any dwelling belonging to the same landlord in that registration area.
We have considered whether there should be circumstances of this kind—whether landlords should be prevented from granting a shorthold to an existing tenant. Our view is that they should not, for two reasons. First, there may be circumstances in which it would be in a tenant's interests to take the shorthold of a different dwelling from the same landlord. Secondly, it would be difficult to draft a provision which would be foolproof.
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For example, would two subsidiary companies be the same landlord? This is the sort of difficulty which would arise with a provision of this kind.
However, we recognise the need to prevent existing tenants from being tricked out of their statutory security by being offered shortholds without realising what this involves. Our solution lies in the use of the prescribed notice that the landlord must serve on the tenant under Clause 51(1)(b). This notice will specifically draw to the attention of any prospective shorthold tenant who is already a protected or statutory tenant that short-hold offers him less security than his present tenancy.
This seems to me the best way of ensuring that tenants know what a short-hold entails. It seems better than denying tenants who may want to do so the opportunity to take a shorthold tenancy. As I have said, there are many more aspects of this shorthold proposal which we need to talk about. We can talk very much about loopholes, and I am sure that we shall do so, but in the interests of progress I think that I should stay with it at that and ask the Committee to reject the amendment.
Lord GIFFORD: In his reply to the amendment the noble Lord has not given the Committee a good reason why it should not be accepted. I find it quite impossible to imagine circumstances in which it could he in the interests of a tenant to change from having a protected tenancy, with full security at a fair rent, to having a protected tenancy, without any security beyond a year, for a fair rent.
When looking at this amendment and at some of the others which are to be moved later this afternoon, I think we should bear in mind that in times—and they are frequent—when the value of property rises steeply, the difference between the value of a house with vacant possession and the value of a house with protected tenants is measured in tens of thousands of pounds. A landlord who wishes to realise the full value of a house with vacant possession can, and will, go to his legal advisers and say, "What can I legally do?" As the Bill is now drafted, they can tell him that one of the things he can legally do is to invite his tenants to move around from one floor

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to another or from one house to the neighbouring house. Without even misrepresenting the position it can be put in a most attractive way to a tenant who may not be enjoying a fair rent that he can have a fixed term for a year and that he can have a fair rent, a lower rent, and perhaps a larger place. All that will be repaid one hundredfold when, in a year's time, the vacant possession value can be realised.
That is why we need to make the Bill tight. In the Rent Act, it was recognised that tenants should not be subjected to the danger of being shifted from one part of a building to another. That is already part of the law—Clause 12 of the Rent Act 1977. Why at least can this not be considered where the invitation is that a tenant should move from one part of a building to another, which is the most likely invitation because it is the least disruptive to a tenant and one which he in his ignorance may most readily accept? Will not the Minister give some ground upon the amendment? It cannot be to anybody's detriment for this amendment, or something like it, to be accepted.
Lord HYLTON: I appreciate the concern which has obviously motivated this amendment. Also I appreciate very much what my noble friend said in his very careful reply. May I put to him this question and suggestion regarding the notice which is provided for under Clause 51(1)(b): In future, would the department draft a model notice which could then be circulated to landlords' organisations and to solicitors and their professional bodies and generally made as widely known as possible? If this could be done, I think it would be helpful.
Lord JANNER: Before the Minister replies, may I underline the suggestion which has been made? If the Minister does not accept the amendment will he at least give an undertaking that in the notice which is handed by the landlord to the tenant, or when a landlord wants to persuade a tenant to move, it will be stated categorically—and I say "categorically" with emphasis—that his protection is being taken away from him?
3.28 p.m.
Lord BELLWIN: I am grateful to my noble friend Lord Hylton for the point
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he has made. I thought I had said, when speaking, that the notice would be a prescribed notice. That was the word which I used. It would be just that. I am certainly able to assuage his concern. But if there should be any doubt whatsoever that it is not as I have said, then we shall very carefully consider it. I am absolutely sure that the notice will be categorical, that it will be clear and that it will be in a prescribed form, but now that my noble friend has emphasised it I will look more closely into it. I am fairly confident that I can assure him about it.
As to the rest of the observations made, I cannot accept them because I do not believe in them. We have to consider what it is that these proposals set out to do. Again I am being very tempted to get into the debate we shall be coming to in a few moments. I shall try as best I can not to do so, but I must make the point that the basic objective of these proposals for shorthold is to give to landlords—those who own homes, those who live in them, those who have premises which they have deliberately kept vacant, for whatever reason—an incentive to bring that accommodation on to the market for tenants who would like to be in it.
I take the point which noble Lords have made, especially the point made by the noble Lord, Lord Gifford, about the kind of situation he envisages. Of course it is not impossible. Nobody can say that anything would ever be impossible, whatever the regulations. And who would know that, may I say with respect, more than the noble Lord who does a good deal of work in this field? But with the safeguard I have mentioned of the kind of notice that we propose, offsetting that, and the great need that exists for this kind of accommodation on the one hand, against the possibility that has been referred to—which I do not entirely deny, because who could?—on balance we say that to achieve our overall objective in the whole of these shorthold proposals we could not accept this amendment. I cannot go further than that.
Baroness BIRK: I shall restrict myself at the moment entirely to this amendment. In view of what the Minister has said, although I think we have gone rather

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wide now, I will withdraw the amendment for the time being, but it will be subject to the production of a draft of the sort of notice the Government are thinking of issuing. Obviously I do not expect the Minister to say at this moment what will be in it, but if he is really considering that then I will not press the amendment. If he is not, or if he is going to be halfhearted about it, then I will press the amendment. But if he will produce something along the lines that my noble friend Lord Janner suggested, in time for us to be able to see it before Report stage, then I will withdraw the amendment for the time being.
Lord BELLWIN: I cannot say that I will reproduce this before Report stage, but what I do undertake is to take it away. I believe this is a critical part of what we are proposing. I entirely understand that, and I gladly assure the noble Baroness that if it is at all possible I will try to do it. But I cannot give an undertaking so to do. If I fail so to do because I cannot, then she will have to decide her course of action.
Amendment, by leave, withdrawn.
Lord MOWBRAY and STOURTON: There is a Statement to be made, and I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

NORTHERN IRELAND: GOVERNMENT
3.33 p.m.
Lord ELTON: My Lords, with the leave of the House I will now repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Northern Ireland. The Statement is as follows:
"With permission, Mr. Speaker, I propose to make a statement on Northern Ireland.
"The Government have today published a Command Paper entitled The Government of Northern Ireland—Proposals for Further Discussion. Copies are available in the Vote Office.
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"Publication of this paper is the latest stage in a process that began with the resolve expressed in the Gracious Speech to:
seek an acceptable way of restoring to the people of Northern Ireland more control over their own affairs.'
"Last summer I held talks with the leaders of the principal political parties in Northern Ireland. And in October last I announced the Government's intention to hold a political Conference to identify the highest level of agreement on how powers might be transferred to locally elected representatives. To assist that Conference we published a Working Paper (Cmnd. 7763). That Working Paper set out certain principles to which the Government believe any transfer of responsibility should conform; and it gave a number of illustrations of ways in which transferred powers might be exercised.
"The Conference met in Belfast between January and March, and was attended by three of the four main Northern Ireland parties. It did valuable work. It identified a substantial number of issues on which very little seemed to divide the parties. It enabled the parties to describe in detail to me and to each other what their views were and the reasons for them. And it explored very fully the key questions which still have to be resolved if we are to establish any kind of acceptable local administration in Northern Ireland. In addition, we have had the benefit of submissions and views expressed by parties and individuals not represented at the Conference, including the paper submitted to the Prime Minister by the Ulster Unionist Party.
"The document published today has two principal aims.
"First, it describes those areas where it is now possible to see fairly clearly how powers might be transferred. For example, there is a clear desire for the transfer of both legislative and executive powers over a range of subjects similar to that transferred in 1973; and for the establishment of a single elected Assembly for Northern Ireland with about 80 members. As was made clear in the Working Paper the Government at Westminster would need to continue

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to be responsible for certain functions, especially law and order and the determination of Northern Ireland's share of the total of public expenditure; and some arrangements would be needed whereby elected representatives were able to give advice to the Secretary of State on the exercise of those functions.
"Second, the document analyses and puts forward for discussion proposals on those aspects where, as is well known, there is disagreement between the parties, namely, how the executive powers of government in Northern Ireland are to be exercised so as to take account of the interests of both parts of the community ', as the principles in the Working Paper put it.
"On the one hand, some wish to see the Executive formed by the leader of the party or parties commanding a simple majority in the Assembly. On the other, some believe that an adequate role for representatives of the minority community could only be assured if executive powers are exercised by a more broadly-based body.
"It is clear that further discussion and negotiation is needed in Northern Ireland on this issue; and the Government have set out in the Paper specific proposals, on two somewhat different approaches, as a basis for further talks with and between the parties.
"I do not need to tell the House the importance of this subject to the people of Northern Ireland and to the people of the United Kingdom as a whole. For that reason I ask, and I believe that the House would expect, that all concerned study this document with great care. I do not intend this afternoon to summarise the content of the document. It deserves more extended consideration, and my right honourable friend, the Leader of the House, has already promised an early debate, when I look forward to hearing the considered views of honourable Members.
"Following that debate, I and my colleagues will be discussing the proposals as widely as possible in Northern Ireland. I hope also to embark upon bilateral discussions with the Northern Ireland parties, and I shall of course
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welcome any views or ideas they may put forward for our consideration.
"I envisage these talks taking place in confidence and, to begin with at least, with the parties separately. It is not my intention for the time being to reconvene the Conference.
"For my part I approach these talks determined to make progress. I must emphasise that to make progress a constructive approach is needed from the people of Northern Ireland and their political representatives. It is my hope to complete this further stage by the end of the summer recess. The Government can then reach their own conclusions on what proposals it would be appropriate to put before the House.
"The document published today refers to the need for peace and stability in Northern Ireland as a basis for economic reconstruction. The present economic situation in the Province is a telling reminder of how urgent that task is and how desirable it is for the elected representatives of Northern Ireland to be directly involved in it.
"I would say one final thing. The House will be aware, Mr. Speaker, that the men of criminal violence will, if they can, disrupt the progress of political discussion and reconciliation; and honourable Members on all sides will, I hope, join with me in appealing to the people of Northern Ireland to support the security forces who are committed against terrorism, so that these further discussions about their future can take place quietly and with confidence".
My Lords, that concludes the Statement.
3.39 p.m.
Lord BLEASE: My Lords, I should like to thank the noble Lord the Minister for repeating the Statement to this House. The Statement is indeed a very critical stage of the Government's initiative to deal with the constitutional problems involved in the transfer of responsibility and the transfer of powers within the United Kingdom. But I must honestly say that I am disappointed at the Statement's flimsiness and general lack of content. I had expected more from it.

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However, I look forward to reading the Command Paper in due course. I think we must not ignore the fact that we are dealing and deeply concerned with longstanding problems connected with the economic situation in Northern Ireland as well as with constitutional problems and as well as with three hundred years of conflict, mistrust, abuse of power and with terrorism. Certainly we have waited patiently for the past eight months for this stage in the Government's initiative in the search for a constitutional advance, and I wholeheartedly agree with what has been repeated by the Minister in the Statement; it would be wrong to jump to conclusions at this stage, and I do not intend to do that.
As the Minister has already said, I believe we ought to give earnest thought and consideration to the Statement and the White Paper before taking up any traditional stances or any position which would be misleading or unhelpful to the people of Northern Ireland and perhaps unhelpful to the Irish problem and indeed to the people of the United Kingdom. So the point I wish to raise is simply one of clarification. Can the Minister indicate precisely what arrangements there are for having some form of debate in this House about the contents of the Command Paper, and can he further elucidate the timetable for the future talks? Is it intended that the Government shall introduce legislation in the next Session of Parliament, after proceeding with the talks?
Before I sit down I should like to indicate to the Government and to this House that in no way would these Benches wish to impede the Government in their efforts to obtain an agreed form of devolution in Northern Ireland. We are certainly concerned about the constitutional advance but we are also deeply concerned about the economic and social problems that exist in Northern Ireland. The one cannot be tackled without the other, and we should like to give equal care and thought and attention to each of those sections.
Lord HAMPTON: My Lords, I too should like to thank the noble Lord, Lord Elton, for repeating this Statement. We shall of course read the Command Paper
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carefully and I want now to make only a few points. First, perhaps I may echo the words of the noble Lord, Lord Elton, when, a little time ago, speaking of his right honourable friend the Secretary of State, he said that he was a man of both courage and patience. We hope sincerely to be able to add to that the words "of success", also. Certainly we believe that the Government have a correct sense of the urgency of the continued effort to find solutions in Northern Ireland and that the people there are looking for a constructive lead. But we are conscious that it is essential that the different parties in Northern Ireland should understand the meaning of the word "compromise" and realise that any lasting solution demands of them some "give" and not all "take".
Thirdly, I agree with the Government and also with the noble Lord, Lord Blease, in regard to the vital importance of dealing with the critical economic situation, which must not be lost sight of behind the worries about the terrorist position. Lastly, I should like to join the noble Lord, Lord Blease, in asking whether it is possible to have a debate in this House on all the problems of Northern Ireland, as indicated by the Statement, and at a reasonably early date.
3.46 p.m.
Lord ELTON: My Lords, I am grateful for the reception which the noble Lord, Lord Blease, and indeed the noble Lord, Lord Hampton, have given to this Statement. The noble Lord, Lord Blease, recognised the size of the problem and also the intimate nature of its connection with the welfare of the United Kingdom. He indicated, however, that he was disappointed by the flimsy nature of the Statement. I make no apology for that. It seems to me that the greatest disaster which could befall this initiative would be if people were to seize a summary of what was in the discussion document, took that to be the sum total of what was in it and the limit of its extent and then, publicly and in Hansard, sprang to conclusions thereon which would be widely quoted. Therefore, I am greatly obliged to both noble Lords for not pursuing the detail of the document, which I think could prove to be a counter-productive exercise.

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Of course, as a corollary to that, there is a need to debate the Paper properly in Parliament. The Statement referred to the occasion in another place, and in this House the Government regard it as essential that your Lordships should have an opportunity to debate this important Command Paper at the earliest possible moment. This is still a matter for the usual channels, but I understand that an opportunity will be given towards the end of next week, probably on Friday, 11th July. A Motion will be put on the Order Paper, probably today or tomorrow.
I think those are the things with which your Lordships will be most urgently and immediately concerned, but the noble Lord, Lord Blease, asked for clarification of the timetable. Of course, a lot depends on what happens in the summer, but it is the Government's intention to be in a position to digest during the Summer Recess what they have received and then to come to Parliament with proposals which may or may not take the form of legislation, although of course it is likely that they will, but I cannot anticipate the date of that.
I should like to welcome again the commitment of the noble Lord, Lord Blease, to the co-operation of his party in achieving a peaceful settlement for the future of the Province, which is a very valuable gift which he brings to this House. I accept the importance also—as I have already done this afternoon—of the state of the economy as being one of the factors in the context in which these discussions continue. Finally, I should like to thank the noble Lord, Lord Hampton, for echoing what I said on an earlier occasion about my Secretary of State. I think he has now given evidence to all concerned that he has both patience and courage, and I think those are the two most necessary attributes—in addition perhaps to a pair of ears—if we are to arrive at a successful conclusion.
Lord LEONARD: My Lords, while I also wish to congratulate the Minister and Her Majesty's Government on their attempt to bring about some form of compromise in Northern Ireland, I should like to state that it is utterly futile to hope for any form of success without consultations with the Government of Southern Ireland. To me that is absolutely imperative to bring about any form of peaceful
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solution. As I have stated in your Lordships' House on previous occasions, Ireland is a geographical entity and it is a recipe for further strife if Her Majesty's Government do not approach the problem with this in mind. It is natural that all Irishmen, including the overwhelming majority of peace-loving Irishmen, are interested in their country, North and South, and I can only say that, without bearing this in mind—
Several noble Lords: Question!
Lord LEONARD: Would the Minister not agree that, bearing this in mind, there is as much chance of a settlement in Northern Ireland as there is of Belfast becoming the Vatican City?
Lord ELTON: My Lords, the noble Lord certainly will not expect me to agree with that somewhat protracted exposition of his interrogative position. So far as the constitutional position is concerned, the Government are wholeheartedly committed to maintaining Northern Ireland as part of the United Kingdom so long as that is the wish of the majority of the people who live there, as it clearly is at present. However, the document recognises that it is legitimate to work peacefully for the aspirations of Irish unity, and if a majority were ever to give its free consent to a change in the present status then Her Majesty's Government would respect that wish.
As for more practical and immediate matters, if a new Northern Ireland Government has a wide range of powers, including powers over matters such as industry, employment and the environment, then it would be free to consider how best to co-operate on these matters with the Government of the Republic. That makes sense both on grounds of geography and because both Ireland and Britain are partners within the European Community. That is the practical Irish dimension. It also recognises the importance of a settlement in Northern Ireland in the context of the wider unique relationship which exists between the United Kingdom and the Irish Republic.
Lord DONALDSON of KINGSBRIDGE: My Lords, the noble Lord has promised us a debate, and having given us a Statement which really says nothing

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beyond the fact that there is a White Paper for us to study, it is essential that we should have that debate. As my noble friend has said, we are on the same side as the Government in regard to looking for a settlement. However, I think that to have a debate on a Friday of something as important as this is treating the subject in quite the wrong spirit. I think we ought to have a debate. It is far more important than half the Bills we are being asked to consider. I ask the noble Lord whether he could not arrange that we have a debate at a major period of our sittings.
Lord DENHAM: My Lords, I should like to assure the noble Lord, Lord Donaldson, and indeed your Lordships' House, that choosing Friday for this debate was no belittling of the subject at all. The object was to give your Lordships the earliest possible opportunity to discuss it. Now I have made that absolutely clear, perhaps further discussion could take place through the usual channels.
Lord MONSON: My Lords, I, too, would like to thank the noble Lord, Lord Elton, for repeating the Statement. May I ask whether he is of the opinion that the Government's proposals, or tentative proposals, tally with the promise implied in the Conservative election manifesto, even if not specifically spelled out in the manifesto, that Ulster would be treated just like any other part of the United Kingdom, without devolution, which of course the Conservatives rejected in the case of Scotland and Wales, but with the restoration of the upper tier of local government?
Lord ELTON: My Lords, the Province will be treated in exactly the same way as the rest of the United Kingdom in this respect: that the Government which is given to it and which it elects to have will be that which it is prepared to accept. There is no point whatsoever in pursuing forms which would be rejected by any major sector of the population. Our commitment is to give the people of the Province an increasing say in the conduct of their own affairs. That is the direction in which we are moving. This paper is a narrowing down of the options that were
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in the first discussion paper. May I make a technical point? I think I know the reason, but people are referring to this document freely as a White Paper and I think I have seen that mentioned in writing at one stage. Of course, it is a discussion paper. There is an important distinction of machinery here which I should not like to be overlooked.
Lord ELLENBOROUGH: My Lords, in thanking my noble friend for repeating the Statement, I wonder whether I might ask him three questions. First, are not the Government being strangely inconsistent in that having opposed devolution in Scotland and Wales they are now trying to impose some form of probably unworkable devolution in Northern Ireland? Secondly, am I not right in thinking that Ulster representation at Westminster is to be increased from 12 to 17, quite rightly, so as to reach parity with the United Kingdom as a whole, and is there not really some danger that these proposals are going to rekindle Scottish nationalism? Lastly, and most important, why do the Government not feel that the best way to heal the divisions between the two communities is by integrating Northern Ireland more closely within the much wider, and I should have thought much safer, context of the United Kingdom as a whole, rather than trying to set up a complicated assembly or parliament which will inevitably act as a focal point for suspicion, bitterness and rivalries as among the various factions?
Lord ELTON: My Lords, there is a considerable range of ways in which the situation in Scotland and Wales differs from that in Northern Ireland. I will not weary your Lordships by producing the catalogue, but merely say that in Northern Ireland the whole of the population wishes to move in the direction of devolved government, and that cannot be said of either the Kingdom or the Principality. I also made it clear, and I really think the House would accept this point, that there is no prospect of a solution of any kind if it is not broadly acceptable to all the considerable bodies of opinion within the Province. If we tried to impose integration which would be repugnant to a very large number of people, we should really have wasted our time for 14 months.

HOUSING BILL
House again in Committee, on Clause 51.
3.58 p.m.
Lord STRABOLGI Lord STRABOLGI moved Amendment No. 116A:
Page 36, line 4, at end insert—
("(3) A tenancy of a dwelling-house is not a protected shorthold tenancy if it relates to a dwelling-house which—

(a) was subject to a regulated tenancy at the commencement of this part of this Act; or

(b) has, since the commencement of this Part of this Act, become vacant.").

The noble Lord said: I beg to move Amendment No. 116A standing in my name. I think it is conceded that the principle of shorthold will make considerable inroads into security of tenure. This is not a party matter. The noble Lord. Lord Bellwin, on one of the previous amendments spoke about "the views of noble Lords opposite". Well, I think the views that we hold will be held also by many of his noble friends. Security of tenure we owe, I think, principally to Mr. Christopher Tugendhat, the previous Member for Westminster, who was my Member, and other central London Conservative Members of Parliament. Mr. Tugendhat was a very good MP, and I personally was sorry when he left Westminster to take up an important post in Europe.
The reason why he strove so hard, and eventually got the Government of Mr Heath to agree, to put security of tenure on most flats below a certain rateable value, which indeed was to include most flats except the expensive penthouses, was because at that time we were in the middle of the break-up era which began in the late 'sixties and then came to its height in the early 'seventies, and the Rachmanism that went with it. Indeed over the last 10 or 15 years we have seen a complete revolution in the methods of tenure of apartments, in the centre of London mainly, and the other big cities.
In the era of cheap money, when they were able to borrow money cheaply from the banks, property developers then acquired these blocks of flats from old-fashioned companies, many of them family trusts. They then persuaded, or threatened in various degrees, the tenants
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with having to buy the long lease or to get out. It was called "winkling out". Of course many tenants then bought their long leases and lost the security of tenure, if those leases were for over 21 years, and those tenants are now in trouble with their service charges, as we shall find when we come to Schedule 18. Therefore, security of tenure was put on most flats in London and the big cities.
One of the snags of shorthold is that it removes the security that goes with the flat or the dwelling. At present if a tenant leaves his dwelling and a new tenant moves in the new tenant enjoys the same protection. But after shorthold comes in, if anybody has to move the tenancy will then go into shorthold. The Government say that nobody has to do this and that all existing tenants will have the same security that their party put on tenancies some 10 years ago. People often have to move. The family may grow or they may want to have their mother-in-law to live with them. They may have been abroad and have returned. Not all people have large companies who buy houses and apartments for them. Many of them have to find their own accommodation. They will go on to shorthold where they will he given a choice of a tenancy of one year, perhaps; if they are lucky, five years, with no opportunity to renew it. They will therefore have an increasing sense of insecurity. It will not even be worth having the curtains made.
I concede that there may be a case for shorthold on empty property. If there are as many properties empty as the Government claim, there may be a case for that. But there is no case for changing all properties into shorthold because, within a decade or two, there will be no security of tenure left at all—this, of course, in an area of acute housing shortage. This all started, of course, with a Private Member's Bill by Sir Brandon Rhys-Williams, but the aim of his Bill did not extend at all to future property becoming vacant. It was made quite clear that this was only for empty property. Indeed, the sponsor of the Bill and all the other Conservative MPs in Central London—this is not at all a party matter—are very concerned about this development and about the genie that has been let out of the bottle. They probably did not know what had been started.
The Government's switch of policy will lead to greater insecurity in the private sector, and it must also be seen in conjunction with increasing rents, the services charge loophole, and the acute pressure on housing in Central London. It is also not in line with the Government's very clear undertaking during the election campaign. One of their spokesmen (and I heard this myself) was asked by a listener who phoned in just a few days before polling day:
"I have always voted Conservative all my life. One thing I am worried about though are the proposals that you have for shorthold".
The spokesman said:
"There is no need to worry, only properties that are empty on a given date can fall within the scheme that we propose as regards shorthold".
If it is empty now, not if it becomes empty subsequently—I think I have made that point quite clear. Later on he said:
"What we have said is that where there are empty properties on a given date then those could be rented on fixed terms which would give security during the period of that term".
That was reinforced by the Conservative election manifesto which said:
"There are now hundreds of thousands of empty properties in Britain which are not let because the owners are deterred by legislation. We intend to introduce a new system of shorthold tenure which will allow short, fixed-term lettings of these properties"—
I repeat that, "of these properties"—
"free of the most discouraging conditions of the present law. This provision will not, of course, affect the position of existing tenants".
As the noble Lord, Lord Evans, said, there are many good landlords. I have always been fortunate in that respect myself. But there are also a number of landlords who will take advantage of this new provision. If, as the Government claim, there are all these huge numbers of empty properties, why do they not concentrate on the properties that are empty now and leave the other ones alone? That is why I submit this amendment to the Committee, because the tenants of Central London are considerably worried about it, and so are their Conservative representatives. There is considerable worry about this, and I hope the Government will have second thoughts.
4.5 p.m.
Lord BELLWIN: Again, I shall resist the temptation to make some of the
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observations on the generality of the intentions behind the shorthold proposals, although I was very interested in some of the historical points made by the noble Lord, Lord Strabolgi. These amendments would have the effect of restricting short-hold to tenancies that were not being let on regulated tenancies at the time the Act came into operation. It would also prevent from being let on shorthold any dwelling that became vacant after the Act comes into operation. Any dwelling that becomes vacant after the Act comes into operation would, if this amendment were passed, be prevented from being let.
I presume from what the noble Lord said that the intention of this amendment is to ensure that there is a continuing supply of accommodation available for lettings on ordinary regulated tenancies. I do not believe it would achieve this. In my view, the effect would be precisely the opposite. It would encourage landlords to sell as soon as they obtained vacant possession. The Government certainly hope that shorthold will encourage landlords who have been holding property vacant because they are deterred from letting by existing legislation, and that they will make that accommodation available for renting. We firmly believe that properties that are currently vacant should be a source of shorthold lettings, but the Government do not believe that this should be the only source. One of the reasons for the decline of the private rented sector is that landlords are selling when they get possession. I hope that shorthold will encourage them to consider re-letting rather than selling. The effect of this amendment would be to prevent them from letting on shorthold, and it would therefore severely restrict the opportunities for so doing. That may well be its aim.
I just cannot see how it can be logical to suggest that because a dwelling was at one time let on a regulated tenancy basis it should thereafter remain empty. What is magic about the date of commencement of the Act? It just does not make sense to me. The noble Lord, Lord Strabolgi, said this is not a party matter. I am glad to hear him say so. Would that his party had not already committed itself not only to doing away with shortholds but to going much further, as I shall mention when we come to discuss the matter

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further. I would have thought it was very much a party matter. It is true that there are members on, if I may put it that way, my side who are concerned, but I am satisfied that as we go through these amendments and as we discuss the matter a little further during today we shall be able to give explanations that will satisfy them.
The noble Lord said, why not concentrate on empty properties? Certainly that is one of the very hopes of what shorthold will be, that it will induce those who own those empty properties now to let them, whereas hitherto they have been unwilling to do so. Now they will be able to see a time when that letting will come to an end should they so desire it to do. But at least for a time there will be properties brought on to the market, if this succeeds, which at present are not there. They are not available to anyone at the present time. They are either empty or they are premises which are under-occupied for whatever reason. That is a fact.
I keep saying, to make all the points I have to make on the general philosophies behind shorthold, that as far as this particular point is concerned it will not, as the noble Lord, Lord Strabolgi, says, create additional pressure on housing in the centre of London. It will have exactly the opposite effect. If it has any effect at all, as we believe it will, it will be precisely the opposite. It is for that reason that we must resist the amendment.
Lord STRABOLGI: I am sorry that the Government cannot accept the amendment. As I said before, it would have been much better if they had started this new experiment with empty properties and allowed security of tenure on existing inhabited dwellings. I do not think that they have any idea of the sense of insecurity that they are bringing to people who do not own houses but who live in these dwellings. When they go into a dwelling of this kind they do not know how long they will be there—it may be one year, three years, four years or five years. They will be there entirely at the whim of the landlord who, of course, will bring all kinds of pressures to bear upon them in other ways in respect of not going to the rent officer and so on.
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However, once again these are points which we can discuss on subsequent amendments. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.11 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 117:
Page 36, line 8, leave out subsection (4).
The noble Lord said: As the clause stands at present it appears to allow the Secretary of State a dispensing power to be exercised very freely to release the only shred of protection that a shorthold tenant has, which is that the rent he pays must be a registered rent. I think that I understand the philosophy behind the proposal in the Bill in that the Government hope that there will be so much vacant property available in various areas of the country that this regulation will not be needed. But I should have thought that in a matter of this importance the deliberate protection of the shorthold tenant is minimal, and that this shred of protection of enjoying a registered rent is not one that we should be willing to dispose of in this fairly easy and cavalier way. In my view the Secretary of State should have to come back to your Lordships' House and Parliament generally if he wished to dispense with this power.
It seems to me that because of the very sensitive nature of this legislation, and the very sensitive balance that many of us feel as to whether we can or cannot support it, it is ill-advised that this clause should be inserted in the Bill and that is why I beg to move this amendment.
Lord FOOT: I should like to speak in support of my noble friend on a rather different ground from the one on which he has put the matter to the Committee. It seems to me—and I do not know whether I am the only person in the Committee who has this reaction—that subsection (4), which the amendment seeks to delete, is almost unprecedented in the legislative history of this country. If one looks at the clause, one finds that subsection (1), paragraphs (a), (b) and (c), sets out the conditions which must be complied with in order that a tenancy can be a protected shorthold tenancy. That, of course, if it is enacted and carried, will be

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enacted—as every part of this legislation is enacted—under the authority of the preamble to the Bill. I shall quote the preamble which says:
"Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same".
Then, to my astonishment, when we come to subsection (4), which we are discussing at present, we see that it provides that:
"The Secretary of State may by order direct that subsection (1) above"—
that is the subsection to which I have been referring—
"shall have effect, either generally or in relation to any registration area specified in the order, as if paragraph (c) were omitted".
Am I wrong in thinking that what that is saying, in effect, is that it will be within the power of the Secretary of State, and within his unlimited power, to abrogate what Parliament has decided upon? He will not only be able to abrogate it geographically, because the subsection provides that he may nullify the condition (c) generally or in relation to any registration area. Therefore, he may not only nullify the whole decision of Parliament with his decision, but furthermore the power which he is given under subsection (4) appears to me to be entirely unfettered. At his whim, and subject to no control whatever, he may abrogate and nullify the condition (c).
There is no mention in the subsection of any considerations to which the Secretary of State must apply his mind. On that account I suggest—and perhaps the Law Officers will be able to deal with this point in due course—that the decision of the Secretary of State, if he does decide to annul this condition either in whole or in part, will be wholly unchallengeable in the courts because it is quite impossible to say that his decision is ultra vires if no conditions are attached to the way in which he exercises that discretion.
I suggest that the third consequence of this subsection is that, because the Secretary of State will be entitled to apply the subsection or say that the subsection shall not apply to one particular region but shall apply to another, it will be within the power of the Secretary of State, of the Executive, to distinguish between the
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rights of the subjects in this Realm depending upon the accident of whether they happen to live in one place or another.
To my mind it is astonishing that at this stage, after the Civil War that we fought in this country to contest the divine right of kings, we should be asked to enact today that it shall be within the power of the Secretary of State to decide whether something which has been enacted by this Parliament and this Queen in her Realm shall be altered, and shall be, if necessary, abrogated and nullified. This is a much bigger point than the point involved as regards the Housing Act. It is a constitutional point and I suggest, with respect, that the inclusion of a clause of this type in any Act of Parliament is wholly unconstitutional and wholly improper.
Lord HYLTON: It is important that the constitutional point has been raised. I feel that the onus is on the Government to show that subsection (4) is absolutely necessary, otherwise we are faced, it seems to me, with a very uncertain state of the law if we pass the Bill in its present form.
Lord STEWART of FULHAM: I have listened with great interest to what the noble Lord, Lord Foot, has said. Like him, I have been trying to think whether there is any parallel for this sort of thing. I doubt that there is, but I do recall an item in the Rent Act 1957 that made it possible for the Secretary of State, by order, to decontrol certain areas. Of course, it is not a very happy precedent. The experience of what was called "creeping decontrol" was so unattractive that, after a time, the Secretary of State had to give an undertaking that there would not be any more for a while—at least not until the next general election was over. However, it was not as drastic a defiance of what is in an Act of Parliament as is now proposed.
There are two further points. The Secretary of State can create a situation in which paragraph (c) can be set aside. What happens? I think that it is clear enough that certainly one thing happens; namely, any future shorthold tenancy created, can be created, if the Secretary of State has used these powers, without there being any registration of rent.

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But what about shorthold tenancies already in existence with a registered rent? The offending subsection says:
"The Secretary of State may by order direct that subsection (1) above shall have effect, either generally or in relation to any registration area specified in the order, as if paragraph (c) were omitted".
I do not know whether, if he made such an order, that would be interpreted to mean that shorthold tenancies already in existence with a registered rent under subsection 1(c) no longer had such a registered rent; that the tenant had no certainty as to what the rent might become. I may be wrong in my interpretation of it, but I think that he would be a very resolute person who would flatly and confidently contradict me immediately. The tenants really ought to know where they stand on this matter. Does it apply only to future shorthold tenancies, or does it undermine the situation of people who have already entered into shorthold tenancies with a registered rent?
Then the noble Lord, Lord Foot, very wisely mentioned the unfettered nature of the power of the Secretary of State. Even the regulations under the 1957 Act allowing for creeping decontrol had to be made by means of an order which required the approval of Parliament. Surely if the Secretary of State is to make an order of this kind, it ought to be one that runs the gamut of parliamentary approval. Perhaps one might be able to dig out somewhere in this voluminous Bill a clause saying that an order made under Clause 51 must have the approval of Parliament. However, I am bound to say that I have not yet found it, though he would be a rash man who would say for certain that anything was not in the Bill.
Lord FOOT: Perhaps I may interrupt the noble Lord in order, I hope, to help him. I should like to draw his attention to Clause 140, which provides that:
"Any power of the Secretary of State to make an order or regulations under this Act shall be exercisable by statutory instrument subject, except in the case of regulations under"—
and then it quotes certain sections—
"or an order under section 59 or 142, to annulment in pursuance of a resolution of either House of Parliament".
In other words, certain regulations can become effective only if they are endorsed by Parliament; but that provision does
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not include Clause 51(4), which is the one we are talking about at present.
Lord STEWART of FULHAM: It is that which worries me. I think that the Government ought to look at this again. They should be able to say to us with confidence what the position is of a tenant who has already entered into a shorthold agreement, if this power is used, and be able to tell us on what authority they make that pronouncement. Secondly, they ought to put some greater limit on the powers of the Secretary of State than there apparently is in the Bill as it at present stands.
Lord BELLWIN: In moving the amendment, noble Lords have argued that wherever and whenever a shorthold letting takes place the rent must be one which the rent officer has registered. They have suggested that without a registered rent tenants will be subject to excessive pressure. In so arguing they have illustrated a tendency in landlord and tenant legislation which your Lordships may agree has caused much unnecessary difficulty. The tendency of which I am thinking is to legislate for the whole country on a uniform basis in response to a problem which has arisen in pressure areas. For example, can anyone seriously question that it was something of a disaster to apply full Rent Act protection to furnished lettings everywhere, as was done in 1974 when the problem, such as it was, and is, was alleged to be serious only in London and other city areas—areas of housing stress. The same is true of rents. In many places landlord and tenant would probably be happy to agree rents between themselves without the need for statutory intervention.
Where these rights have been established we are not, of course, taking them away. I am simply illustrating the fact that much previous legislation in this area has been far more sweeping than necessary. Perhaps I may digress for a moment and say that when I was on the committee studying the workings of the Rent Acts 1965 and 1968, to which task I was appointed by the noble Lord, Lord Greenwood of Rossendale, one of the facts that impressed me so much, when reading through and when taking oral submissions of evidence from hundreds and hundreds of organisa-

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tions and individuals, was the great problems that have been created by legislating for everywhere on a uniform basis in this way. There were also many other problems, some of which will come up during the course of discussions on other aspects of the Bill. This certainly was one of them. There were also the great fears to which it had led in landlords who had wanted to be landlords and who were only waiting for the day when they could no longer be landlords—landlords who wanted to get out of renting for reasons about which we all know.
Referring to the amendment specifically, where the rights, to which I have referred, have been established we are not, of course, taking them away. I am simply illustrating the fact—and I repeat it—that much previous legislation in this area has been far more sweeping than necessary. It is clear that this thought had occurred to the authors of the Labour Rent Act 1977. Section 143 says that where in relation to an area the Secretary of State is satisfied that the demand for rented accommodation of a certain category is not substantially greater than the supply, he can, by order, provide that no such accommodation in the area shall be the subject of a regulated tenancy. In other words, both security of tenure and rent regulation could disappear completely.
Turning back to shortholds, as it so happens we have been more stringent than the Rent Acts by providing in Clause 51(1)(c) that a fair rent must be registered for shorthold. In an ordinary letting the Rent Acts provide that a fair rent may be registered; in other words, registration is optional. In the subsection which this amendment seeks to remove we have simply allowed for a reversion to the normal Rent Act position of optional registration. If your Lordships agree that conditions in private renting can differ radically from one area to another—and I should hope that that is not disputable—it seems only sensible that we should have a power to revert to the normal Rent Act position by area if that seems reasonable in the circumstances. I certainly do not rule out a use of this power. There would otherwise be no point in having it in the Bill. Whether it is used, and where, would be a matter for my right honourable friend to decide
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in the light of national and local circumstances.
I should like to touch upon the point referred to by the noble Lord, Lord Stewart, about the position on rents already registered. I should like to stress that reverting to the normal Rent Act position would in no way take away the force of any registered rent in operation for a shorthold; nor would it take away the right of landlord or tenant to apply for a fair rent at any time. When one considers that the Labour Rent Act contains a power to remove the whole fair rent system and security by area, Clause 51(4) seems a very mild proposal indeed. I am quite sure that it should be retained.
I should like to refer to one or two other observations that were made, certainly by the noble Lord, Lord Foot. With respect, I should have to point out that Clause 51(1)(c) can, in fact, only be brought in by order by a Negative Resolution and, therefore, if prayed against it could, of course, be debated—it could not happen on its own. Whether or not there are, indeed, any aspects of this whole matter which are unconstitutional, in that the point has now been made, I am sure that my colleagues will look very carefully at that. I hope that that will satisfy my noble friend Lord Hylton who expressed concern on that matter. Of course we shall look at it. From my own knowledge of this, I certainly doubt it, but if it is so, quite clearly we must and shall look at it.
As for other points made by the noble Lord, Lord Stewart, who cited the precedent of the 1957 Act for decontrol, we shall be discussing certain aspects of that a little later. I am not sure that I quite follow how this makes a point in favour of the amendment; nevertheless, it is a matter about which I am looking forward to talking later. I do not think that I can helpfully add much more. I believe that it is another part of the objections to shorthold which I fully understand are held by noble Lords sitting opposite. I hope that in turn they would accept from me that we believe, with equal sincerity and conviction, that these proposals are a tremendous advance and step forward in this problem. I fear that so far as the amendment is concerned, I cannot accept it.
4.30 p.m.
Lord FOOT: May I follow the noble Lord before the noble Lord, Lord Boyd-Carpenter, because there is something I want to withdraw? When I interrupted the noble Lord, Lord Stewart, and drew his attention to Clause 140 of the Bill, I was in error. It is correct that the particular subsection we are talking about does come under the Negative Resolution procedure. I accept that, and I apologise to the Committee for having, temporarily at any rate, misled them.
However, that does not go to the gravamen of the argument that I was addressing to the Committee. The noble Lord, Lord Bellwin, sought to draw an analogy between this subsection in this Bill and a section in some earlier Rent Act. The section that he quoted—and I can only remember it from what he had to say—went something like this: "The Secretary of State shall, having regard to this, that, and the other, if he sees fit and thinks reasonable, make an order". That is very different from the subsection we are trying to delete from this Bill. The discretion of the Secretary of State here is unfettered in any way whatever. He has not got to be satisfied about anything. He has not got to apply his mind to anything. There is no way in which, if he laid an order, it could be challenged in the courts as being ultra vires.
I address my remarks now not on any party basis whatever but because I believe that we should be making at any rate a minor blunder if we allowed this subsection in this Bill to establish a precedent for the future. I dearly hope that if this matter is carried to a Division the Government Whips will not call upon their cohorts to come here and vote upon a matter of constitutional principle, when most of them—I do not complain about this, of course—have heard nothing of the discussion that has gone on. I hope that if we see fit to carry this amendment to a Division the Whips will not be put in control of their supporters in order to vote the amendment down.
Lord BOYD-CARPENTER: From the practical point of view, my noble friend the Minister has satisfied some of the doubts on this amendment that I held at an earlier stage of the debate. I hope he will not think it offensive if I say that
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he left me a little less happy on the constitutional point which was so well deployed—it is indeed a family habit well to deploy these constitutional points—by the noble Lord, Lord Foot.
It is now clear—and here the noble Lord, Lord Foot, has generously admitted that he was in error on the original point—that if the Secretary of State sees fit to make an order under subsection (4), that order will be subject to the Negative Resolution procedure. That is certainly how I also read it. But those of us who have had some experience of the Negative Resolution procedure know what an inadequate safeguard this is for a matter of substantial importance. In another place, as I understand it, the time for discussion on Prayers to annul these Negative Resolution instruments is restricted. It takes place late at night. In this House it is a very long time indeed since such a Prayer was carried to a Division. I wonder whether the Negative Resolution procedure is sufficient to cover a situation in which the Secretary of State will be giving himself power to suspend the operation of quite an important part of this Bill—soon, I hope, to be an Act—in respect of particular areas.
I formed the impression that my noble friend was his usual confident self on the practicalities of housing administration—and he has reason to have every confidence in himself on that subject because his experience is almost unique in this House—but seemed to me less than happy when he indicated that he would have another look at the constitutional aspect. For my part, I should he greatly relieved if my noble friend, without making any commitment, would say that between this stage and the next of this Bill he would, with his right honourable friend the Minister, have a look at the idea of substituting the Affirmative for the Negative Resolution procedure in respect of these orders.
As the Committee knows, if you have the Affirmative procedure the Government have to bring the instrument before the House, and they normally have to do it at an hour of the day when debate is effective. I hope that my noble friend, who seems to me very reasonable on this aspect, will indicate that he would be prepared, in view of the doubts raised—some of which seem to me to go beyond

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the normal party or controversial issues of this Bill—to see whether the Affirmative procedure could be substituted.
I know it iF never popular in Government circles to provide an additional order that comes in the Affirmative procedure. From the point of view of the Whips it is a nuisance, because they have to find time for it at some stage. But there is some force in what the noble Lord, Lord Foot, said about the fact that the subsection which would be suspended is to be the outcome of a considered legislative decision of both Houses of Parliament. Its suspension, perhaps over wide areas—I express no view; it might be sensible to suspend it over wide areas; I do not know—is quite an important constitutional act for any Minister of the Crown to take. Although I have the utmost confidence in the present Secretary of State there is always the possibility that there may one day be another in whom one might have much less confidence. I should like to see the Affirmative procedure adopted.
Lord HYLTON: In support of my noble friend Lord Boyd-Carpenter, may I just point out that Clause 59 of the Bill is already proposed to be under the Affirmative procedure.
Lord BELLWIN: Of course I readily agree that we should do precisely what my noble friend says. I am grateful to him for the way he put it. As I think I indicated before, how could I be on certain ground when a constitutional point is raised by noble Lords of experience and knowledge? Clearly one would have to look at it. The suggestion that my noble friend makes, that possibly the Affirmative order procedure might be better, could indeed be an answer. I cannot say, and I know he does not expect me to say at this moment, that that is so. I cannot make a commitment, but I think the point is valid that we should look at it. I think also that the power to the Secretary of State would be a far-reaching one and involve an important matter. Therefore I have no hesitation in saying yes, of course, we will do precisely that.
Lord AIREDALE: While the Minister is in this receptive mood, may I suggest to him that if he wants to rely upon that
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section of the earlier Act which he quoted, which began,
"The Secretary of State, if satisfied that certain circumstances exist, may make an order",
he should take this subsection away and write into it what the Secretary of State has to be satisfied about; because Parliament really would like to know what has to go through the Secretary of State's mind before he makes an order under this subsection.
Lord BELLWIN: I do not want to drag out this matter—we have so much ahead of us—but on that latter point I should have to say that of course we will look at it, but I am very doubtful whether the Secretary of State would want to lay down such rigid lines. It would take away from him any flexibility whatsoever. Indeed, the point I made earlier was that one of the matters that have so bedevilled housing above all other things in this country has been some of the attempts to legislate nationally for situations which differ so much locally. Having said that, I would add that of course if we are looking at this matter we shall look at everything, that is said on it.
Lord EVANS of CLAUGHTON: I had not realised the extent of the problems that would arise when I moved the amendment. From the housing administration point of view, the point of view on which I am perhaps more expert than I am on the constitutional point, I am not happy with the proposal to allow the Secretary of State to make these orders. However, in the light of what the Minister said and the helpful remarks made by noble Lords in all parts of the Committee about this, and the undertaking the Minister has given to have another look at it—bearing in mind that I can always return with an amendment on Report if I am not satisfied—I will withdraw the amendment. I had not realised that I said the Secretary of State was taking cavalier powers to himself, but on listening to my noble friend Lord Foot, I realise how apposite those words were, particularly bearing in mind the distinguished father he had who was a great expert on keeping cavaliers in their place. On those terms, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 118 not moved.]
4.41 p.m.
Lord STRABOLGI Lord STRABOLGI moved Amendment No. 118A:
Page 36, line 20, at end insert—
("(6) A tenancy of a dwelling-house is not a protected shorthold tenancy if prior to the grant of that tenancy a previous protected shorthold tenancy of that dwelling-house had been granted by the landlord and had been the subject of proceedings for possession under Case 19 in Part II of Schedule 15 to the Rent Act 1977.").
The noble Lord said: With permission, I will speak at the same time to certain consequential amendments, namely, Nos. 122A, 122B and 282A. This amendment, I submit, is an improvement on No. 118, which was not moved. This series of amendments seeks to give the shorthold tenant first option on any subsequent letting of the dwelling-house. It will be recalled that the idea that the shorthold arrangement should provide for such an option originally came from Sir Brandon Rhys Williams' Private Member's Bill, which I referred to earlier but which, like so much else, has been changed by the present Bill.
All that the amendment requires is that the notice served on the tenant should contain a declaration by the landlord that he does not intend to grant a further tenancy of the dwelling-house. Should the matter go to court, that declaration would then be part of the landlord's case for possession. This proposal thus entirely avoids the difficulties foreseen by the Minister in another place in establishing a separate procedural mechanism to deal with the offer and acceptance of an option. Nor is the amendment linked to the proposal that the rent officer should keep a separate register of all short-hold tenancies. That is a propsal that has its merits, but the Minister made clear on Report in another place that in his view a register for shortholds would be cumbersome, and there is probably much in what he said.
If the landlord cannot give some good reason why the existing tenant is unsatisfactory, and the landlord wants to continue letting the accommodation, then he is constrained to offer the existing tenant the option to remain. That is the nub of the option. The landlord can only get possession against the bad tenant when he intends to take the dwelling
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out of the market for renting. Thus good, shorthold tenants—I am sure there are many good shorthold tenants, just as the noble Lord continually reminds us that there are many good landlords—know they will be secure not only for the initial term of the tenancy but until the landlord no longer wishes to rent the dwelling. I beg to move.
Lord BELLWIN: This series of amendments would severely restrict, in a way we could not accept, the circumstances in which shorthold could be used. Their effect would be that a landlord could be sure of letting any particular dwelling on shorthold once only and that he could not let on shorthold at all any dwelling he might want to let again, whether on shorthold or, for that matter, on any other type of tenancy at some time in the future. That would be quite unacceptably restrictive. The Government's view is that shortholds should be widely available to encourage landlords to go on letting and to make more accommodation available. That is the whole object of the exercise.
The only restriction we are placing on the the use of shorthold is that an existing statutory or protected tenant cannot have his tenancy converted to a shorthold. We have done that because of our manifesto commitment that short-hold would not affect the security of existing tenants. As I have indicated, these amendments would completely undermine the whole concept of shorthold, and we therefore cannot accept them.
Lord STRABOLGI: The purpose of this series of amendments was effectively to give the shorthold tenant the option to remain where the landlord intends to continue renting and where there is no reason why, if he is a good tenant, the landlord should not continue renting to him. However, clearly they are not acceptable to the Government and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.46 p.m.
On Question, Whether Clause 51, as amended, shall stand part of the Bill?
Baroness BIRK: We are dealing with the whole basis of this part of the Bill

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and it seems that to have a general debate on the matter on Clause 51 is as good a place to have it as on, say, Clauses 50, 52 or 53. We are dealing with the whole principle of shorthold. I find—and I do not think this view is restricted to myself or members of my party—very little enthusiasm for this concept, except probably among members of the Conservative Party. It is clear from a Westminster Council press release which I read that they have very grave doubts about it, and they too discuss the problems of shorthold as set out in the Bill. Tenants do not like it because it leaves them with the threat of homelessness. I also find it strange that, while it is called "protective shorthold", the protection is very limited; the shortholds as laid down in the Bill are from one to five years and, as we know, in such a situation the minimum will become the maximum, so the likelihood is that shortholds will not be longer than one year.
Landlords do not like it. Certainly I have not seen a great deal of correspondence from landlords saying, "Support this". They are concerned about it because there is very little financial return in it for them. The taxation position makes it far more advantageous for a landlord to sell than to rent. Despite what I am sure the Minister will say, we have seen that from as far back as 1900, the private rented sector in this country has been shrinking all the time. Even after decontrol in 1957 the rented sector continued to decline. This seems, therefore, to be an ideological creature of the Conservative Party, who are committed to reviving the private rented market despite all the evidence to the contrary.
Indeed, there is very little evidence that this will generate new lettings. The surveys do not show that it will bring more accommodation onto the market and it will mean that lettings which are at the moment secure will, when they come to an end, become shortholds, so the whole area of secure tenancies will gradually be eroded—and it will not be such a gradual process because I fear it will happen quite quickly, and then we shall have a generation of homelessness. This is a delayed time bomb because once one gets beyond the first phase of shorthold lettings, when the tenant of the so-called protected shorthold will have
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no protection, it will become a very insecure shorthold letting and may necessarily go on for a period of only one to three months.
Today the private sector can exist economically only on high rents; this is what we are seeing. What about the average family who are looking for somewhere to live, but are unable to buy? Where can they go? Their only resort is to local authority housing—the public sector—or to housing associations; and these are the bodies which should be, and are, taking over the stock of rented accommodation. Here I refer to Part I of the Bill dealing with the compulsory sale of houses, or as the Bill describes it, the right to buy. These provisions make it extremely difficult for local authorities to increase their housing stocks, or even to keep them up. Because of the cut in the housing investment programme there will be a fall in rented accommodation, which is so very important for many families in this country.
What I regard as particularly unfortunate about the Bill is that the safeguards which were included in the Private Member's Bill moved by Sir Brandon Rhys Williams in another place have largely been dropped. Those which were in fact, accepted had to be pressed on the Government. I have in mind, for example, the provision about rent registration in relation to the application for shorthold. There has been no willingness to include in this Bill basic safeguards which in another place were incorporated in a series of Bills with considerable Conservative as well as Labour support.
In the original Private Member's Bill, for example, there was a provision that to start with only empty property should be available for shortholds, which makes sense. The aim was to bring empty properties into the market, and there is something to be said for that. We moved some amendments the other evening on those lines. The present Bill contains nothing regarding the minimum standards, and now the Government have just rejected a proposal regarding a tenant having first refusal at the end of a short-hold. My noble friend who moved the amendment providing for that was absolutely right. If the tenant becomes a nuisance and gets into arrears, he can be evicted; but he should have the first

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option. Yet under this Bill that will not happen.
I can see some of the effects of short-holds. There will he, for instance, the breaking up of many mansion blocks of flats. The landlord will be able to hold on to the shortholds as they become vacant, until the market rises, or alternatively sell the lot as an entire portfolio. Another of the effects will involve flats above shops in instances where the shop owners do not want to live there but do not want to create secure tenancies. In such cases, there should be shorthold lettings. However, in other respects short-hold lettings represent a frightening danger to security of tenure for tenants in this country.
The Government have often spoken about the single homeless, and when they were in opposition they were very concerned about them. It is claimed that the new form of tenure will benefit single people, particularly young single people. But in fact it will not. It will worsen their already desperate housing situation. Surveys carried out among young people by CHAR and After Six show quite conclusively that in 1979, for instance, most inquirers were wanting not temporary or short-term accommodation, but secure accommodation. About 5,000 people were already homeless. Half of them were on the streets and half of them were in temporary accommodation.
I cannot see how shortholds will help the single homeless, the average family, or indeed the majority of people looking for rented accommodation in this country, who in fact want permanent accommodation. At this stage I am restricting my remarks because we have a large Bill to get through. Many of us feel very strongly about this matter, and I urge that Clause 51 should not stand part of the Bill.
Lord EVANS of CLAUGHTON: T have given considerable thought to the question of shorthold tenancies, and believe that many of us, in all parties, will probably want to praise Sir Brandon Rhys Williams most warmly for the initiative that he took in the other place in introducing in season and out of season proposed legislation for the introduction of shortholds. Perhaps he was unduly idealistic in his belief that the proposal
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would produce in the private sector houses available for letting to young people. Nevertheless, it was a very fine initiative, and one which many of us supported at the time. Ever since the introduction of the rent and mortgage interest restriction Acts people have been looking for ways to revive the private housing sector, and the initiative of Sir Brandon Rhys Williams was perhaps one of the best. But, unfortunately, the protections which Sir Brandon and his friends included in his Bill have not been incorporated by the Government in the legislation that they have now presented.
I considered that the Government were most insensitive in that they did not include Sir Brandon Rhys Williams in the deliberations on the Committee stage of the Bill in another place. He is well known as an expert in this field, but because of the guillotine on Report he was not able at any length, to put forward the views that he and people like him hold on shorthold tenancies. Therefore, there was a tendency for the provisions on shortholds to go through in another place without being properly and fully debated, without the protagonists of a liberal short-hold policy having the opportunity to speak. Therefore we must try to fill that gap as best we can in this Chamber.
I think that the concept of Sir Brandon Rhys Williams was idealistic, but it was none the worse for that; and perhaps one is not a member of my party if one is not a bit of an idealist. In my view the gap in private lettings, which we all know about, is being filled best by housing associations. They are doing very well. I believe that it is widely accepted that despite Government cutbacks, the housing association movement is probably providing rented accommodation in the semi-private sector, as the noble Viscount, Lord Gage, is the first to tell us. Therefore I should have thought that in the future that kind of accommodation, outside the public sector, will most likely be found through the housing associations.
Not all landlords are bad; only very few are. Probably the average landlord owns only two or three houses. The advantages of selling in the present economy, rather than letting again, even on shorthold, are so great that most landlords would not in any event seek to take advantage of the shorthold pro-

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visions, as the noble Baroness pointed out. There is another point here. In the other place the honourable friends of the noble Baroness, particularly Mr. Kaufman, stated pellucidly that if there was not greater protection, a future Labour Government would abolish the concept of shorthold. That will be another obvious disincentive to landlords to take advantage of the system.
As I have said—and I am trying to keep my remarks to the minimum because of the time—I think it is basically a good idea which ought to be developed. I believe very strongly that it is not too late for noble Lords on the Government Front Bench or for the Minister and the Secretary of State and their colleagues to get together with those people who put forward the shorthold concept and other people who are interested in this subject. It is not too late for them to get together with those people to see whether a short-hold system might be introduced which would have adequate protection and could get the support not only of the Government themselves but of many members of the Government party who now oppose the inadequate nature of the protection, as well as the support, perhaps, of the Labour Party and, certainly, of my party.
I think the statesmanlike thing for the Government to do at this stage would be to have a conference with all the people interested to see whether some form which is widely acceptable could be worked out. But since the Government are quite clearly not willing to accept the amendments which are moved in reasonable terms from the Labour Benches and these Benches, as things stand at present we shall feel compelled to support the noble Baroness in her objections to this clause.
Lord HYLTON: I hope the noble Lord, Lord Evans of Claughton, realises that the housing association programme for the current year for England has been cut by very nearly 50 per cent. I do not know what are the prospects for it in the year after this one, but they are not all that bright, I am afraid. As a landlord, I disagree with the Opposition on this clause, and I will give just one instance of why I do so. At the moment I have one house which is let for less than two-thirds of its current rateable value. This
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was done intentionally, in order to preserve the possibility of regaining possession. When shorthold becomes law, my financial position in respect of that particular house will be very considerably improved. It may not be all I would hope, but at least it will be a lot better than it is now.
While I am on my feet, may I ask a question which will probably expose my ignorance about this particular part of the Bill? It is clear that unfurnished properties are covered by the shorthold concept, but I should like to know whether furnished ones could also come under the shorthold provisions.
5.2 p.m.
Lord JANNER: I am very disturbed about this particular proposal. Those of us who passed through the stages of the Rent Acts, the Leasehold Reform Act and the provisions which were being made by reasonable Governments after long discussions dating from 1915 onwards, were desirous of protecting those who occupied their homes—and let us use the word "homes" instead of "houses". We were desirous of protecting their tenure of places which they regard as home and which they have so regarded, in many cases, for very many years. We found ourselves at the end of the First World War in a situation in which unscrupulous landlords (I do not say all landlords) took advantage of the position, with the result that a large number of people were either evicted or were about to be evicted, and tremendous efforts were made in order to protect them. That is why the Rent Act is as it is.
But I quite understand why this proposal is introduced by the present Government. I do not blame the noble Lord who is carrying, I was about to say, the burden of having to try to convince us all that the Government are doing the right thing, but I hope that he will come to some other problems in addition to those which have been raised. I am not going to repeat what my noble friend Lady Birk has already put forward very well indeed; I want to deal with the general principles. The Government are determined to finish protected tenancies. There is not the slightest doubt in my mind that that is what they are after; and if you look at the effect of this particular clause you will

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see how simply it leads to that. Noble Lords may agree with it or they may not agree, but the fact of the matter is that the Government are intending to stop protecting people in relation to their homes.
Pensioners and old people, people who have lived in their home for years and years, are eventually going to be deprived of their tenancy. Take, for instance, the protected tenant. There are 200,000 protected tenants, I believe, in the country at present. They are people who have relied on remaining in their homes at a rental. It is perfectly true that there are difficulties, of course. There are always difficulties on both sides of the fence, if I may put it in that way. Many landlords suffered; but one has to look at the effect on human beings, 200,000 of whom are going to be deprived altogether of their protected tenancies.
Then we come to the question of the regulated tenancies. Later on we shall be discussing the kind of rents that are being demanded of regulated tenancies. If noble Lords will look at it they will see that pensioners who are living on non-linked incomes, and many thousands of other people, will be involved if the kind of pressure which there is at present to remove the Rent Acts altogether—because that is what it is intended to do—succeeds. Millions of people have depended on the provisions of those Acts—not thousands, but millions of people throughout the country. Millions of people have retained their homes because there have been these provisions protecting them.
I am thinking, of course, of unscrupulous landlords. There are some landlords who will not take advantage to the extent that they will be entitled to if the legislation contemplated in this particular Bill is put into force. There are some people with human hearts; some people who know their tenants, and who are not going to deprive them of their home. I want to emphasise that point, my Lords—that it is homes we are dealing with; it is not a question of houses, it is a question of the people being allowed to remain in their home to the end of their days. We must also remember that their children have lived in the home, too, and know the home and want to remain in it.
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Of course, I realise that there is no hope. They say that hope springs eternal, but I do not suppose for one moment that the Government will change their mind with regard to this. I want them to realise, however, that what they are in fact doing is to cut away 50 or 60 years of protection which people have had—protection for people who cannot afford to be put into the hands of landlords who are unscrupulous and who will take the biggest advantage they possibly can by removing the tenants and giving them this so-called short-term security, so that when the short term finishes the whole tenancy becomes free of any protection at all. I say it is an inhuman and unbalanced view to take in respect of protection for people who are tenants and who want to remain in peace.
Lord SANDFORD: I was glad to hear the noble Lord, Lord Evans, say that he approves and supports the concept of shortholds. I would have been moved, and I am sure all noble Lords would have been moved, by the noble Lord, Lord Janner, if this particular clause, which has to do with shortholds, affected at all the security of the existing tenants; but it does not. This proposal has nothing to do with existing tenants. The noble Baroness, Lady Birk, put forward the argument that this must be a had clause because the tenants are not cheering for it. Of course they are not; it has nothing to do with them. This clause concerns people who are not tenants at the moment but who want to obtain property for a short let of something between five years and one year. For them it is of enormous benefit.
However, I do not believe that this is the chief benefit of shorthold. The chief benefit is that it brings back on to the market hundreds of thousands of dwellings which previous legislation has taken off the market. This piece of the Bill makes its chief contribution in easing the heavy burdens placed on the housing authorities who would otherwise have to provide accommodation for people who will get it under the shorthold and it eases the burden of the housing associations, the point to which my noble friend, Lord Hylton, referred, who, if left to tackle this sector on their own, would never be able to cope with it in the present circumstances. This is the chief reason

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why we strongly support the provisions in Clause 51.
Lord GOODMAN: If I may briefly intervene, I am totally in agreement with what was said by the noble Lord who has just spoken. This clause relates only to new tenancies and therefore I think that the very warm-hearted deprecations of the noble Lord, Lord Janner, are not relevant. I am not in agreement with the noble Lord, Lord Janner, in smelling sulphur in every clause of this Bill which I think is a well-intentioned one and, in parts, even intelligible. That is a matter for complimenting the draftsmen. But think that this consideration ought to be taken into account: the purpose of this clause is to make available a greater amount of accommodation for letting; and it may do that.
But against that one must weigh the consideration that this would be appropriate for a more expansive period in the supply of housing and accommodation. At the moment there is a desperate shortage and, we are still in a situation where people are desperately in quest of accommodation, so that I feel that it is a premature provision. One must remember that a great many people will take short-hold tenancies because they cannot get anything else. They will feel a total sense of insecurity throughout the period of the tenancy. One of the great evils in the relationship between landlord and tenant—and I base this belief, if I may say so, on my too many years of experience of it—is the sense of insecurity that you may lose your home. I cannot help feeling that the benefits secured by having available a greater supply of letting accommodation will be more than counteracted by the sense of greater insecurity on the part of people who have to seize this accommodation because they can get nothing better.
I might suggest to the Government, if it is not too late, that the provisions of the old Rent Act which enabled a landlord to secure accommodation on the grounds of greater hardship should be reintroduced into this situation, so that in the case of genuine hardship the landlord could get his accommodation back without the same burden of proof that applies at the moment. It might be a more relaxed burden of proof. It would remove the
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deep social evil of a great number of people in terrible dread and apprehension that they may lose their homes.
5.15 p.m.
Lord BELLWIN: I am deeply grateful to everyone who has spoken on this. As the noble Baroness, Lady Birk, has said, this clause really is the fundamental part of this whole matter and I am glad that we can talk right across the whole spectrum of it. There are a few facts that I should state and I shall try to do so as quickly as I can, but I do feel obliged to try to cover the points that have been made.
Between 1961 and 1977 the number of houses and flats let by private landlords fell from 4.3 million to 2.2 million, and there is every sign that the decline continues unabated. This is fact and we can all agree about it. We may differ about the reasons for it. Possibly the growth of owner-occupation and the tax relief and subsidy available in the main housing sectors have played some part. But anyone who tries to pretend that the effect of the Rent Acts has not been a major, indeed, overriding cause of the massive withdrawal of private rentable accommodation is burying his head in the sand. The combination of rent restriction and security of tenure unto the second generation has proved to be devastating. Once vacant possession has been achieved, landlords have voted with their feet in their tens of thousands and got out. And who can blame them?
Relatively speaking, it was perhaps not so bad up to 1974. Before then, even though long-term renting in the unfurnished sector was certainly declining, the furnished sector was playing a vital role in housing the mobile worker, the newly-married and the young and single. But, despite the clearly expressed warning of the Francis Committee, the Labour Party blundered in yet again and, with the clamp-down on furnished letting in the Rent Act of 1974, the situation became even more desperate at a time when the need for short-term accommodation was growing.
I find it hard to believe that all the members of the party opposite both here and in another place did not realise in their heart of hearts that in the 1974 Act they had gone too far. Surely, they

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knew that many furnished tenants had been given a life-long security they did not want and that the price was paid by the homeless and frustrated movers who could not find a place to rent. For every tenancy this made secure, how many thousands more were denied the housing they so urgently needed?
I suppose that the nearest the Labour Party came to admitting that all was not well was the announcement in 1975 of yet another of their reviews of the Rent Act. Of course, they did say of the private rented sector in their 1977 Green Paper entitled Housing Policy (Command 6851).
"If the decline continued unabated and no action were taken to compensate for the loss of accommodation from the sector, many people particularly new and mobile households—might not be able to find the housing they need. To guard against this we need to consider what action can be taken to stimulate the supply of lettings within the private sector and what can he done to provide accommodation in the public sector".
"What action can be taken?", they said. And what action did they take? There are no prizes for guessing that it was none whatsoever. Far from legislating on the matter, they did not even publish the findings of their review which had been on the go for four years—presumably because it was not propitious so to do. Four years during which another half million or so private lettings went out of existence. What about that as an example of masterly inactivity! We can all understand why as prisoners of their own own history, the Labour Party made no constructive proposals of their own. Yet here they are, hack in Opposition—and with what vigour they criticise our proposals! We have shown that we are prepared to modify our shorthold proposals in the light of parliamentary and public discussion. What the Committee and the country cannot understand is why the Labour Party have adopted not merely a totally negative but a destructive attitude to shorthold. They have not merely said they would dicsontinue shorthold if and when at some future date they might come hack to power. They have said that life-long security will be given to everyone in a shorthold letting at that time.
The noble Lord, Lord Evans, was absolutely right—a very substantial contribution to try to ensure that shorthold
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does not succeed. Without even being prepared to see how it works and what it achieves, they rush to announce that if returned to power they will repeal it. I can only say that it may well turn out to be poetic justice for that undertaking will surely prove to he one of many which might have an influence on the likelihood or otherwise of their being returned to power.
Everyone—of whatever party—professes to be anxious that accommodation should be available in the private rented sector for those who seek it. Shorthold is a carefully considered proposal to encourage landlords to make accommodation available to meet that need. It recognises the fact that most people who are currently looking for accommodation in the private rented sector do not want or need long-term security. They are looking for relatively short-term lettings while they attend college, take up their first job away from home or save up to put a deposit on a home of their own. Surely it is better that they should be guaranteed security for one or two or up to five years under shorthold than that they should be unable to find any accommodation at all?
There has been a considerable amount of alarmist talk, both inside Parliament and outside, about the threat to tenants' security posed by shorthold. I should therefore like to take this opportunity, as my honourable friends have done in another place, to repudiate these claims, and to go over again the important safeguards for tenants that are incorporated in our shorthold proposals. First, we have ensured that there is no threat to the security of tenure of existing tenants from shorthold. The Bill makes it impossible for an existing statutory or protected tenant to have his tenancy converted to a shorthold.
Lord STRABOLGI: My Lords, I am sorry to interrupt the noble Lord; he is always so courteous. What happens if somebody wants to move who is at present a regulated tenant? The only choice that he will have will he buying a house, probably at a price he cannot afford, or becoming a shorthold tenant. What protection is that for regulated tenants? The Government assume that people will remain in their dwellings for the rest of their byes. People have to move.
Lord BELLWIN: My Lords, if someone wants to move who is currently a regulated tenant, first of all he will surely take into account the security that he has if he stays where he is. If he wishes to go into the open market for something else I would presume that, with the security he already has, he would make quite certain that he did not do so until he had found something that was an alternative. If the suggestion is that the shorthold provision that we are proposing will make it more difficult for him so to do, I respectfully suggest that the noble Lord does not follow the arguments that I am trying to make. I believe very deeply that there will be so much more such accommodation available. It will be up to the tenant who has the security at the present time to decide if that is or is not in his best interests.
But, if I may continue, I say that the second point is that a fair rent must be registered for a letting to be a shorthold. Compulsory rent registration has never been a feature of any previous Rent Act legislation, and thus the proposal provides an entirely new safeguard for tenants. Following the Committee's acceptance of the Government amendment we have just discussed, No. 112, the Bill now ensures that the tenant will pay no more than the fair rent right from the start of the short-hold. Third, we have ensured that tenants who stay beyond the end of the fixed term will be guaranteed a further year's security under shorthold, provided that the landlord has not exercised his right to recover possession during the last three months of the shorthold term.
Fourth, as shortholds will be protected tenancies under the Rent Acts, shorthold tenants will have the full protection enjoyed by other protected and statutory tenants with regard to such matters as the over-payment of rent and the charging of deposits. Fifth, the landlord must under Clause 51(1)(b) serve a prescribed notice on the tenant before the grant of the tenancy setting out the terms of the shorthold. This means there will be no question of tenants being unaware of their rights under shorthold, or of the fact that shorthold does not offer the same security as a fully protected tenancy. It will also spell out the conditions with which the landlord must comply in order to create a shorthold. If he does not
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comply, the letting will not be a shorthold.
And finally, we have given tenants the right to leave before the expiry of the fixed term, without penalty, provided that they give the landlord appropriate notice. What more safeguards can one practically give without destroying the scheme before it starts? It is constantly said—both the noble Lord, Lord Evans, and the noble Baroness said it today—that we have not incorporated safeguards proposed in the Private Members' Bills promoted by the honourable member for Kensington and Chelsea in another place. We have of course examined those Bills with great care but we have decided that there are simpler and more effective ways of safeguarding tenants who take shorthold than he had been able to devise. There was nothing in Sir Brandon Rhys William's Bill to say that shortholds should apply only to dwellings vacant on a particular date.
But I am bound to say that a number of proposals which have emanated from the Opposition—some in the guise of sweet reasonableness, some I am sure in an attempt to be helpful—are not really safeguards at all but limitations of one kind or another intended to ensure that the number of properties eligible for shorthold should be kept as minute as possible. For example, the proposal to confine shorthold to self-contained dwellings with all standard amenities would have applied a condition which is currently nonexistent in owner-occupied and public and private rented sectors alike. An even more extreme demand which emerged at a late stage during proceedings in another place and was Amendment 116A was that shorthold should not be possible in any dwelling with a private tenant in it on commencement date, even if he leaves and the property stands empty for a year. Incredible indeed! But surely also revealing in its stark highlighting of the Opposition's great wish—I put it no stronger than that—to undermine our attempt to bring more private accommodation back on to the market.
It has been claimed that shorthold means the demise of security of tenure in the private rented sector. The noble Lord, Lord Janner, said that with great feeling and belief. Let us look at this very emotive statement carefully. First

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of all, it assumes that in future every landlord will let on shorthold and not on any other basis. The Law Society have been quoted to this effect—no less an authority than that. But while I have great respect for that very distinguished body—indeed should I not?—I do not think they are in a position to speak for all landlords. What they said has in fact been contradicted by a number of landlords, including, if I may quote him, Mr. HoHamby of Chestertons, whose views were quoted in another place.
After all, shorthold will involve the procedural formalities of going to the rent officer and the serving of a notice spelling out the tenant's rights, and there may well be landlords who will choose to let at an agreed rent to a tenant without going through these formalities. There is no reason to think that every landlord will be concerned about the length of his letting and will automatically opt for short-hold. But let us just suppose that landlords find shortholds so attractive, that very large numbers of shorthold lettings are made. That, in itself, will mean that even for those looking for long-term security it will be of much less importance than it has been in the past because the shortage of accommodation to rent will be substantially eased.
The most important point of all, which is fundamental to our thinking in bringing forward shorthold, is that the overwhelming majority of people seeking private rented accommodation these days are the young, the mobile, newly-married couples who want somewhere quickly but not necessarily for long. Just to give one figure, 20 per cent. of all lettings in the private sector turned over to a new tenant in 1977. We are doing nothing to disturb the established arrangements of long-term tenants but we do feel strongly that the Rent Acts need reshaping to meet the needs of the 'eighties rather than the 'forties and 'fifties. Raising the spectre of the end of security of tenure is rather like bemoaning the end of the silent movies and the coming of the "talkies". Nostalgia for the concept of life-long security is no help to a young worker who wants a flat for a year or two for his first job away from home.
I have to try to comment on one or two of the other points made by noble Lords
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a little earlier. So far as the noble Lord, Lord Janner, is concerned, I have always respected deeply his great wanting to see a betterment of the conditions and availability of accommodation. No one questions that for a moment, least of all I. I was grateful to the noble Lord, Lord Goodman, for pointing out that he really has this one wrong. It will not have the effect on existing tenancies to which he referred. I am sorry that he used some other language which was so emotive. It makes pensioners and the others to whom he referred worry, when they really have no cause to worry. It is essential that I make that absolutely clear.
I was grateful to my noble friend Lord Sandford who pointed this out again and said that the clause is not about existing tenants. He said—and this is our dearest wish in this whole matter—that it would bring back thousands of dwellings which other legislation has taken away. We do not know whether it will bring them back and no one would be so arrogant—least of all I—as to say that is what it will do; but it might do, and if it does the prize is very great indeed and certainly worth the attempt. As long as we put in the safeguard to which I have referred and others which we may put in, if people bring them forward and they are meaningful, not meant to destroy the basis underlying the intentions, and if they are constructive—providing we do this, at least we are trying to do something about a problem which really is becoming worse. It would be wrong simply to go on letting it drift.
I said that the last Government talked for four years and did nothing. Well, we are doing something, and if it is not to the liking of everyone at least let us give it a try to see what it achieves. If it fails, then of course it will he done away with, but if it succeeds can anyone really envisage that the Labour Party, or anyone else, would take something which had succeeded and then do away with it? I suggest that they would not dare; nor would they want to, if it came to that. I beg to move that this clause stand part of the Bill.
Baroness BIRK: There are just a few points I should like to make on what the Minister has said. I am sure I heard him refer to "nostalgia for long-

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term security". This is hardly "nostalgia". What most people are looking for is security and, if I may use this analogy, I thought that his shop window was very attractive but that the goods behind it were not quite in such prime condition.
I took down what he said about the numbers of people looking for relatively short-term lettings. Most people are not looking for relatively short-term lettings and, with regard to this picture of a young couple who want something for a year or so, the noble Lord, Lord Goodman, answered that when he referred to the anxiety on behalf of people and the need for people to know that they had security. As regards this young couple whom the noble Lord says want a tenancy for only a year or so, under the Bill they can be evicted after one year. The landlord does not have to keep them there for five years: then he gives them notice to quit—
Lord BELLWIN: Will the noble Baroness allow me to intervene? With great respect, that is not correct. The tenant will not he able to he evicted within one year. He will not be able to be evicted during a period of less than the term for which he has signed the agreement for the shorthold, which can be up to five years. There is no way in which he can be evicted within one year.
Baroness BIRK: With respect, I did not say "within one year"; I said, "after one year". After all, it is more than likely, when a landlord can let for a maximum of five years to a minimum of One year, that he will opt for the shorter period. He would be less than human if he did not, and he could then see how things worked out. Of course, he may want to sell the property.
When my noble friend Lord Strabolgi asked about people moving, the Minister said that if they leave a protected tenancy they should find out whether they are moving to another protected tenancy. If they could not do that, the impression he gave to us was that they should stay put. So what price all this need for mobility of labour? In industry we want to encourage people to be able to move around the country, and every amendment moved on the first part of the Bill to encourage that in the public section was
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turned down. The same thing is happening and no doubt will go on happening throughout the passage of this Bill. If the Government really see the process by which people are having to leapfrog from one shorthold to another shorthold, there is no security in this at all: that is the anxiety and the worry.
The noble Lord refers to looking for relatively short-term lettings, but that is not going to help the basic housing situation in the country. I entirely agree with the noble Lord, Lord Evans, and others who see that, unless you get to very high rents, the rented sector in this country must be supplied by local authorities and housing associations. This, through other provisions of the Bill, with compulsory sale and also the cutting of the housing programme, means there will be less and less rented accommodation. This is the nub of the argument: not the question of whether there are a few more short-term lettings. The noble Lord, Lord Goodman, was absolutely right when he queried whether this was the time, given the economic situation as it is, to embark on this.
Finally, I would say that the noble Lord made a great deal of the safeguards that have been introduced. Those which have been brought into the Bill were brought in with the Government screaming against them. He is taking credit for amendments which, frankly, were absolutely pressed on the Government. As to the other safeguards which were in the Bill of Sir Brandon Rhys Williams, the noble Lord says they were examined very carefully before the Government decided against them, but that does not make them any less valid safeguards. As regards whether the next Labour Government would repeal this whole section, that depends, as my colleagues in the other place put it, on how far the Government are prepared to accept more safeguards and to accept improvements which would improve the Bill in the way we feel is necessary, so that people will have as little anxiety and insecurity as possible. For these reasons, I am afraid my friends and I will be pressing this Question to a Division.
Lord GOODMAN: May I ask the Minister a question before we divide? The noble Baroness has indicated her intention to divide and I must say it will

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leave some of us very troubled indeed as to how to make our decisions on this matter, The noble Lord said he was prepared to consider amendments to these provisions at a later stage. Could he give us a little amplification of that?—because I did indicate one possible amendment that has occurred to me and I think there are other safeguards that could be introduced. If the Government retain an open mind, I personally should abstain from the Division.
Lord BELLWIN: I am sorry if I did not earlier touch on all the points that have been raised, and I apologise to noble Lords for that. One point was that made by the noble Lord, Lord Goodman. In his suggestion about hardship, I thought he was referring in the main to the position as it is in the existing Rent Acts. It is a very interesting one to me. I gladly assure him—and I am sure that even noble Lords opposite will confirm to him that whenever I say that we will take something away and have a look to see whether
something can be done, we always do. I give him that undertaking.
As to the amendments, we have not felt able to accept any of the amendments that have been brought forward so far, but I meant it very genuinely when I said that if we can make this a better Bill we shall do so. The noble Baroness said that some of the amendments were inspired by others than our own people and put into the Bill, and I would reply: so what? What we are seeking is to get the best Bill we can. If we can make it better, of course, that is exactly what we want to do and yes, of course, we will consider anything that is suggested. I hope that will not be taken to mean that, if I resist some of the amendments that have been tabled today, I am going back on what I have said.
5.37 p.m.
On Question, Whether Clause 51, as amended, shall stand part of the Bill?
Their Lordships divided: Contents, 99: Not-Contents, 91.

CONTENTS

Ailesbury, M.

Falkland, V.

Merrivale, L.

Airey of Abingdon, B.

Ferrers, E.

Monson, L.

Alexander of Tunis, E.

Ferrier, L.

Morris L.

Allen of Abbeydale, L.

Forbes, L.

Mottistone, L.

Amory, V.

Fortescue, E.

Mowbray and Stourton, L.

Ampthill, L.

Fraser of Kilmorack, L.

Moyne, L.

Auckland, L.

Gage, V.

Murton of Lindisfarne, L.

Bellwin, L.

Glenkinglas, L.

Norfolk, D.

Belstead, L.

Godber of Willington, L.

Northchurch, B.

Berkeley, B.

Gormanston, V.

Northesk, E.

Bessborough, E.

Gowrie, E.

Nugent of Guildford, L.

Blake, L.

Greenway, L.

Orkney, E.

Bourne, L.

Gridley, L.

Orr-Ewing, L.

Broadbridge, L.

Grimston of Westbury, L.

Redmayne, L.

Cathcart, E.

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

Robbins, L.

Chelwood, L.

Rochdale, V.

Clifford of Chudleigh, L.

Hanworth, V.

St. Aldwyn, E.

Clitheroe, L.

Henley, L.

Saint Oswald, L.

Cockfield, L.

Holderness, L.

Sandford, L.

Colville of Culross, V.

Hylton, L.

Sandys, L. [Teller.]

Craigavon, V.

Hylton-Foster, B.

Selkirk, E.

Cranbrook, E.

Killearn, L.

Sempill, Ly.

Croft, L.

Kimberley, E.

Shannon, E.

Cullen of Ashbourne, L.

Lindsey and Abingdon, E.

Skelmersdale, L.

Davidson, V.

London, Bp.

Soames, L. (L President.)

De Freyne, L.

Long, V.

Spens, L.

De La Warr, E.

Lonsdale, E.

Strathcona and Mount Royal, L.

Denham, L. [Teller.]

Luke, L.

Trefgarne, L.

Digby, L.

Lyell, L.

Vaux of Harrowden, L.

Drumalbyn, L.

Macleod of Borve, B.

Vivian, L.

Elliot of Harwood, B.

Malmesbury, E.

Westbury, L.

Exeter, M.

Mansfield, E.

Young, B.

Fairfax of Cameron, L.

Marley, L.

Faithfull, B.

NOT-CONTENTS

Ardwick, L.

Gifford, L.

Pargiter, L.

Avebury, L.

Gladwyn, L.

Peart, L.

Aylestone, L.

Glenamara, L.

Plant, L.

Balogh, L.

Gordon-Walker, L.

Raglan, L.

Banks, L.

Goronwy-Roberts, L.

Rhodes, L.

Beswick, L.

Gosford, E.

Ritchie-Calder, L.

Birk, B.

Greenwood of Rossendale, L.

Rochester, L.

Blease, L. [Teller.]

Gregson, L.

Ross of Marnock, L.

Blyton, L.

Grey, E.

Sainsbury, L.

Boston of Fuversham, L.

Hale, L.

Seear, B.

Bowden, L.

Hampton, L.

Shinwell, L.

Brockway, L.

Harris of Greenwich, L.

Simon, V.

Bruce of Donington, L.

Hatch of Lusby, L.

Southwark, Bp.

Burton of Coventry, B.

Henderson, L.

Stedman, B.

Caradon, L.

Houghton of Sowerby, L.

Stewart of Alvechurch, B.

Chitnis, L.

Jacobson, L.

Stewart of Fulham, L.

Cledwyn of Penrhos, L.

Jacques, L.

Stone, L.

Collison, L.

Janner, L.

Strabolgi, L.

Crowther-Hunt, L.

Jeger, B.

Taylor of Mansfield, L.

Cudlipp, L.

Kaldor, L.

Underhill, L.

Darling of Hillsborough, L.

Kilmarnock, L.

Wall, L.

David, B.

Lee of Newton, L.

Wallace of Coslany, L. [Teller.]

Davies of Leek, L.

Leonard, L.

Davies of Penrhys, L.

Llewelyn-Davies of Hastoe, B.

Wells-Pestell, L.

Denington, B.

Lovell-Davis, L.

White, B.

Diamond, L.

McCarthy, L.

Wigoder, L.

Donaldson of Kingsbridge, L.

McNair, L.

Willis, L.

Evans of Claughton, L.

Maelor, L.

Wilson of Radcliffe, L.

Fisher of Rednal, B.

Meston, L.

Wootton of Abinger, B.

Foot, L.

Ogmore, L.

Wynne-Jones, L.

Gaitskell, B.

Oram, L.

On Question, amendment agreed to.

Resolved in the affirmative, and clause agreed to accordingly.
Clause 52 [Right of tenant to terminate protected shorthold tenancy]:
5.45 p.m.
Lord MONSON Lord MONSON moved Amendment No. 119:
Page 36, line 26, leave out ("one month") and insert ("two months").
The noble Lord said: I beg to move Amendment No. 119 and, with the leave of the Committee, I will speak at the same time to Amendment No. 120. Although not consequential, it is closely related to the previous one. On Second Reading, many Opposition speakers claimed that this whole new concept of shorthold tenancies was not only largely wrong in principle, but would in practice be a non-starter—a damp squib, in other words—and this assertion has been repeated this afternoon by some noble Lords on both the Labour and the Liberal Benches. I am bound to say that if the dice remains so loaded against a landlord, as I hope to be able to demonstrate, the Opposition's forecast will prove all too accurate.
The Conservative election manifesto promised,
"a new system of shorthold tenure … free of the most discouraging conditions of the present law".
I do not think that the proposed new system is free of all the shortcomings of the present law; for one thing rents are to be held below the market value. But to the extent that they are, new disadvantages are introduced which do not exist in the present law. Clause 52 gives the tenant a unilateral right to terminate after only one month, in the case of a shorthold tenancy of two years or less, and after three months in the case of a longer shorthold tenancy; in other words, a tenancy of between two and a half and five years. No corresponding right is granted to the landlord, should his circumstances unexpectedly change for the worse.
I ask your Lordships to consider the case of a small landlord, owning perhaps only one property, who happens also to be an engineer, who is offered and accepts a posting in Nigeria, say, or Western Australia for two years. He goes to the trouble and expense of finding a tenant and going through all the necessary legal formalities. He packs up and stores most of his possessions, he purchases

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a one-way ticket for Lagos or Perth and sets out on his journey. A fortnight after he arrives, he receives a communication to the effect that his tenant has given him one month's notice. It will not work like that, in practice, because if he is out in the hush or the outback letters will take fully a fortnight to reach him, so he will effectively have only two weeks' notice. It may be in the middle of winter in the United Kingdom. He is almost certainly likely to be worried about frozen water tanks or frozen pipes. What on earth is he to do? Is he to ask for a fortnight's unpaid leave only a month after arriving in the country, and to expend a large sum of money on returning to England? I submit that one month's notice is far too short in the circumstances.
I appreciate that there has to be some provision for early termination since shorthold tenancies cannot, under the Bill as it stands, be assigned. But if the intention was to equate the period of notice provided under Clause 52 with the time it will take, in the case of a traditional tenancy, to find an alternative tenant—an assignee, in other words—to secure references, to get the references approved, to get the legal formalities completed and so on, then I suggest that the Government have got their calculations quite wrong, because all this would certainly take more than one month.
It may well be that my Amendment No. 120 is superfluous—that the period of three months proposed in the subsection as it stands is not entirely unreasonable, given the difficulty of balancing the interests of the landlord and the tenant. Subject to what the noble Lord, Lord Bellwin, has to say, I do not intend to press my Amendment No. 120; but I think it is essential that the period of one month should be lengthened. I should have preferred a common period of notice, irrespective of the length of tenure, whether it be one year or five years. Failing that, I submit that it is vital to raise the minimum period of notice from one month to at least two months.
5.51 p.m.
Lord MOWBRAY and STOURTON: As he has explained, the amendments which the noble Lord, Lord Monson, has just moved, are concerned with provisions to enable a shorthold tenant to
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terminate his tenancy without penalty, provided that he gives appropriate notice to the landlord. What is provided for in the Bill is that a tenant must give at least one month's notice where the short-hold is for two years or less. For short-holds of between two years and five years, we have provided that three months' notice should be given.
I accept that our figures are not infallible. They are matters of judgment. When selecting the period of notice which would be required we had particularly in mind students who may not want to stay for a full year's shorthold. Normally they would pay their rent either weekly or monthly and it seems reasonable that they should give to the landlord at least one month's notice of their intention to leave. This should give the landlord adequate time to find a new tenant. However, for longer shortholds where the landlord has committed his property to the tenant for between two years and five years, with no opportunity of changing his mind, it seemed reasonable to us that the tenant should be required to give three months' notice of his intention to leave.
As I have said, there is no scientific basis for these periods of notice. Our main consideration was that rent is often payable either monthly or quarterly. These are easily memorable periods of notice which a landlord might expect to receive or which a tenant might expect to give. The amendment would extend these periods to two months and four months.
I must confess that I am not convinced that there is any justification for this. The noble Lord, Lord Monson, gave the example of a man who was suddenly called abroad to do engineering in the Gulf, or somewhere similar, and who would be out of touch. I suggest that it would be a very foolish man who went far away without giving the power of attorney to somebody at home. He could give it to a relative or to his legal adviser. A man who went abroad to do a full time job would be rash to try to deal with, for example, burst pipes. People who go abroad to be soldiers, sailors or diplomats normally grant a power of attorney to somebody at home. On balance, I think that we have got it about right and I would ask the noble Lord to take back his amendment.
Lord MONSON: I cannot agree that the Government have got it about right. I concede that they may have got it about right so far as longer tenancies are concerned; I also concede that there may be something in the argument put forward by the noble Lord. Lord Mowbray and Stourton, about students. But he is talking about a one-year not a two-year tenancy. If the one-month period of notice were confined to one-year short-holds it might be acceptable, but I do not think it is fair when one is thinking of a shorthold tenancy of 18 months or two years.
I ask the Government to think again about this point and to give serious consideration to what I have said. I reserve the right at the next stage to come back to Amendment No. 119. although I would not wish to go any further with Amendment No. 120. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 120 not moved.]
Clause 52 agreed to.
Clause 53 agreed to.
Clause 54 [Orders for possession]:
5.56 p.m.
Baroness DAVID Baroness DAVID moved Amendment No. 121:
Page 37, line 15, leave out (" (or is treated under section 54(2) of the Housing Act 1980 as having been so let)").
The noble Baroness said: In moving this amendment. I should like also to speak to Amendment No. 123 which leaves out subsection (2) of Clause 54. Rent registration is compulsory for shorthold, and the Government amendment means that registration will take place before the beginning of the tenancy. Therefore it is quite unnecessary for an element of discretion to be devolved to the courts when considering a claim for possession. This amendment seeks to remove that discretion from the Bill.
Clause 54(2) sets a precedent. It introduces an entirely new concept into the relationship between protected tenancies and rent registration. It seeks to extend
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the principe of court discretion, at present only applicable in cases applying to grounds for possession, to the giving of notice that tenancies will fall, under those cases, to the question of rent registration. At present, wording similar to that proposed in Clause 54(2) is included in Mandatory Cases 11 and 12 of Part II of Schedule 15 to the Rent Act 1977. Case 11 refers to owner-occupiers who let while temporarily absent, while Case 12 refers to owners who let the property which they intend to occupy later when they retire.
In both cases, the exercise of court discretion in relation to preconditions to the grant of tenancy concerns the giving of notice that possession might be recovered under these cases. Matters of rent registration have nothing to do with it. There is therefore no precedent for the concept contained in Clause 54(2). What possible circumstances can there be in which it is just and equitable for a registered rent not to apply to a shorthold tenancy? If the answer is that the Government take the view that failure by the landlords or the tenant to apply for registration should not be allowed to stand in the way of repossession, then what is the point of the requirement that rent registration is compulsory? Since the original publication of the Bill various changes have been made, or promised. The Minister has recently told us that he is willing to consider making more. Compulsory registration of rent by the beginning of the shorthold tenancy is one of the things upon which he has given way.
We felt that the need for Clause 54(2) was unproven when the Bill was in its original form. In the light of the Government's action on rent registration, we feel that Clause 54(2) has become completely redundant. Were it to remain in the Bill following these changes, it would amount to an unnecessary complication of what, without it, would be the clear role of county courts in such cases. I hope that the Minister will feel able to accept this amendment. I beg to move.
Lord GIFFORD: I support this amendment and I do so as a result of many years' experience of the vagaries of county court judges. The clause in the Bill which Amendment No. 123 seeks to delete gives a completely open discretion to a county court judge to determine whether

417
it is just and equitable to order possession, even though the rent had not been registered or even though the proper notice has not been given. In the old days it used to be said that what was equitable was as long as the Lord Chancellor's foot. Even that was predictable when one knew who one's Lord Chancellor was. But now we have a provision for "just and equitable" which is going to be as long as 300 county court judges' feet. It means, quite seriously, that if one is advising a tenant who has a year's tenancy, but there is no fair rent, one cannot say whether or not it is going to be a protected shorthold tenancy until one knows what judge one is going to come before.
I know that what is likely to be said is that this clause is intended to cover only some bona fide mistake which may have been made in the drafting of the notice, or maybe a few days' delay in the application to register the rent, or some innocuous circumstance of that kind. If that is the case, as I anticipate it is, I would ask the Government to consider spelling that out in the Bill, because, whatever the noble Lord says, Hansard cannot be quoted in the courts, and this question of "just and equitable" will be completely at large in the county court.
Lord BELLWIN: I think I detected in the observations of the noble Lord, Lord Gifford, something of a cri de æcceur. His concern for past vagaries, as he put it, strikes a sympathetic note. I do not know whether or not I can help him, but certainly it does that. I think it is important that I should try to remove a misconception about Clause 54(2). It is not intended that this should allow a court to grant possession under Case 19 where there has been a major infringement of the shorthold requirements; for example, where the landlord has failed to serve any notice on the tenant or where no rent had been registered during the whole of the tenancy. In view of the express statutory requirement for these provisions in the Bill I do not think it would be possible for a court to be satisfied that it would be just and equitable to regard a tenancy as a shorthold if either of these requirements had been completely ignored.
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However, there are mistakes the landlord might make which in my view should not inevitably prevent him from being able to reclaim possession under Case 19. For example, there might be a defect in the formal notice that he has served on the tenant. The application for a registered rent might be made, say, 30 days after the start of the tenancy rather than 28, as required. These are the sort of circumstances in which, if no real harm had been done to the tenant, I think it is right that a court should have the power, subject always to the point made by the noble Lord, Lord Gifford, to grant a landlord possession under Case 19, provided they are satisfied that it would be just and equitable to do so. It is allowance for this for which Clause 54(2) is designed.
I would remind your Lordships that this provision mirrors an equivalent provision in Cases 11 and 12 of Schedule 15 to the Rent Act 1977, concerned with a temporarily absent owner-occupier and retirement homes. I understand that that provision was introduced in the Rent Act 1974, which was a Labour measure, and I am not aware of its having caused any difficulties in practice. It must surely be only right that there should be an equivalent provision in the shorthold, and therefore, while having carefully noted what has been said—we will note it carefully again later—I would ask the noble Baroness whether she feels able to withdraw the amendment.
Baroness DAVID: I thank the Minister for that explanation, which of course we shall study with care, but for the moment I shall withdraw the amendment.
Amendment, by leave, withdrawn.
6.5 p.m.
Lord GIFFORD Lord GIFFORD moved Amendment No. 122:
Page 37, line 26, at end insert ("; and
(c) the landlord has not knowingly received from the tenant any amount on account of rent in excess of the registered rent, or any premium.").
The noble Lord said: I beg to move this amendment, which stands in my name and the names of my noble friends. This is an important amendment because it seeks to deal with what I feel is a real, almost inevitable, danger in the shorthold pro-

419
visions as they are drafted at present; that is to say, there will be illegal overcharging and the demand of illegal premiums, either at the beginning of a tenancy or possibly as a condition of a renewal. There is the requirement, which has now been made a requirement at the beginning of the tenancy, that the rent should be registered. But let us consider what there is to stop a landlord charging a rent which is in excess, perhaps well in excess, of that which is registered. The only sanction at the moment is that the tenant has the right under the Rent Act to bring an action in a county court to recover the rent which has been overpaid.
A tenant who finds that he is being overcharged and who wishes to stay in his shorthold tenancy for more than the minimum term will be in this dilemma. Either he brings his action for the recovery of the rent overcharged, which almost certainly is going to be met with a notice at the end of the first year, or he sits tight and pays the excess rent. We have some experience that that is likely to be the case from the experience of rent control in the furnished sector. I appreciate that the provisions were different, in that there was not a compulsory registration, but the rights given to furnished tenants to apply to the rent tribunal to get a rent fixed were really a dead letter. No furnished tenant would exercise his rights because lie knew that that would be likely to be met with a notice to quit. And it is rather the same here.
This amendment seeks to give teeth to the fair rent system, to provide an effective penalty for the deliberate over-charging of rent, by inserting an extra proviso into the grounds which have to be established before possession of a shorthold can be obtained; that is to say, the landlord must show that he has not knowingly or deliberately overcharged rent or accepted an illegal premium. A landlord in that position would have to be advised that if he wants the shorthold provisions then he must not charge in excess of the registered rent. There may be different ways of dealing with this, and I shall be interested to hear how the noble Lord, Lord Bellwin, answers, but I suggest that there should be something much more effective to prevent a black market in excess rents.
Lord SHINWELL: So far I have endeavoured to refrain from excessive intervention in the debates, although there have been occasions when I was sorely tempted, but this particular amendment has a profound interest for me. In fact, I am an interested party, not as a landlord but as a tenant. I have observed in the course of the debate that we have gone all round the perimeter but have ignored the central feature, which in my judgment has not been so much the principle which is embodied in the Bill, the new device the Government propose to employ, hoping for success. A number of other items have been raised by my colleagues and by noble Lords on the other side of the Committee.
Reference has been made more than once to fair rent, hut no one has endeavoured to define it, not even the Minister himself. The assumption is that this is a matter primarily for the landlord to determine in the first instance. Subsequently, if there is disagreement about the amount demanded, a submission can be made to the rent officer. He comes to a decision which may be disagreeable to either party and the matter is referred to the rent tribunal. Who is to determine what is a fair rent and what is the criteria? Is it scarcity? Obviously that is a factor which can be excluded because indeed the whole purpose of the Bill is to deal with scarcity and to provide some remedy. Scarcity will not do. What worries me are the implications that derive from the language used in this amendment. I do not object to it—far from it. I seek to understand it and how it will operate.
It will operate in this fashion: there are in the United Kingdom at the present time and there have been for some considerable time—and to this I raise no objection whatever—many people who have come from other countries, some even from Iran. Some of them are neighbours of mine. I have not arranged it; it has been quite fortuitous, although one offers no opposition—why should one? A landlord has very little difficulty with people of that kind because they do not dip their hands into their own pockets in order to pay their rent or even the cost of the house or flat which they seek to obtain.
The sums required are usually paid either by the Governments they represent or by the business firms they represent.

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All the landlord has to do is to say, "I want a certain amount as rent", or a certain sum as the price of the house. No objection will be raised—or hardly ever. They can obtain flats and houses as easily as falling off a log and I understand (if your Lordships will excuse the cliché) that that can be done without much difficulty. But when it comes to a citizen of the United Kingdom who seeks to obtain a tenancy at a fair rent and he comes before the rent officer, can he be assured of impartial treatment? Is there any guarantee of that? Again I ask the question: What are the criteria upon which he comes to a judgment? I think we ought to know.
Without delving too far into this matter, I could say a great deal about it out of my own experience, but I do not want to make accusations against anybody in their absence. I prefer to make any accusations facing them, eyeball to eyeball. Nevertheless, I am bound to say that I have been somewhat disturbed and I want some protection, not only for myself. Indeed, I can look after myself. I can even go so far as to say (but do not tell the Inland Revenue) that I can look after myself financially and in other directions I am quite capable of looking after myself. However, I want some protection not only for myself but for others: neighbours, tenants nearby, where they are forming tenants' associations. Why are they forming tenants' associations? Most of them voted for Mrs. Thatcher in the last election, which of course amuses me. The people who are squealing most are those who asked for it at the last election. They were perfectly entitled to do so; this is a free country, as we know—so far—but now they are complaining. So strident are their complaints that they are forming tenants' associations. I have been asked to join one myself. All I have done is to refuse to commit myself more than to pay a subscription (that I can afford) in the hope of gaining something in consequence.
I am speaking for other people. I want the Minister to tell me, as clearly as he can—and there is one thing he can do, as was demonstrated in the course of our debates; he can speak clearly. He knows what he is talking about, even if we do not agree with it. I want him to answer this question: Are we going to place any kind of restriction?—and I ask noble
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Lords to excuse the use of the term "restriction" because the Minister himself has complained about its frequent use and has rejected it when it has been suggested by implication, and even directly in the course of the debates. What kind of restriction are we going to place on the landlord and, subsequent to the landlord's decision, on the rent officer?
Let me deal with the landlord first. I make no accusation against landlords at all. I am not acquainted with many; I know nothing of them and I agree with the noble Lord who said that the majority of landlords are decent, respectable, responsible people. I do not object to that at all. I can understand it and if the landlord seeks to make a profit there is nothing wrong in that. But what are the landlords going to do? They are going to try to obtain the highest possible price for letting either a flat or a house. I do not blame them, but we have to protect ourselves. I want the Minister to say what kind of protection he can afford for tenants who are probably unable to pay the price demanded either for letting or for buying and what kind of restriction we are going to impose on landlords who take advantage of the situation to obtain a price which is neither fair nor reasonable. That is a simple question and I should like a simple answer.
Lord BELLWIN: I will try to answer the noble Lord. Strictly speaking, it is not the subject of the amendment at all and indeed many of the points raised by the noble Lord are more apposite for discussion under the Rent Acts of 1977. Nevertheless, I will gladly try because he put it so well to me. Your Lordships will excuse me if I try to do it quickly in order to cover the points which the noble Lord made.
First, I am glad that he referred to the point about protection and tenants' associations and the fact that people are getting together in that way. I do not think that is ever a had thing. Why should there be fewer tenants' associations in the private sector than in the public sector? However, there is a great deal of misunderstanding about the proposals in regard to shorthold. The points referred to by the noble Lord were almost all to do with the Rent Acts of 1977. First, he asked what is the definition of a fair rent? I will tell him: a fair rent is

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defined as a market rent with the scarcity element removed. I do not have that from a brief; I remember it from the days of the Francis Committee, many years ago. I hope it is right. The noble Lord then asked how do we know if it is fair? That is a tremendously broad subject which I am sure no one will want me to go into now.
Basically, it is the rent officer who decides that and if the tenant or landlord is not satisfied with the rent officer's decision he then has the right of appeal to a rent assessment committee. Before the 1974 Act in the case of furnished lettings it was to a rent tribunal, but now it is to the committee. He may well consider at the end of the day that it is still not fair in the sense of "fairness", but the rent officer is trying to be fair as between the landlord and the tenant.
Inevitably this is a no-win situation, because if one is satisfied the chances are the other is not, once the matter has had to go to adjudication in this way. A perfect system no one would claim it is, but one that has worked reasonably well, and despite the reservations of the noble Lord, Lord Gifford, I am sure that he would agree with that. I think it has achieved a great deal in an area which is so complicated and complex. I am only saying, so far as the shorthold proposals go, that the benefit of this protection (a word which the noble Lord used) continues absolutely; in no way is that in the slightest affected. This proposal does not affect existing tenants at all, and if the noble Lord's question has enabled me to emphasise that yet again I am grateful to him.
If I can come to the amendment, the Government do not accept that there is a need for special provisions of this kind for shortholds. Because shorthold tenancies will be protected under the Rent Acts the same provisions relating to overpayment of rent and premiums will apply to shortholds as apply to other tenancies. Perhaps it would help noble Lords if I explain what these provisions are. First, with regard to over-payment of rent, the Rent Act of 1977 provides that once a rent has been registered any rent above the level of the registered rent is irrecoverable; that is to say, the tenant is not obliged to pay it and can get back any
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excess he has paid in the previous two years. Once the rent has been registered it remains the rent limit until either a new rent is registered or the registration is cancelled.
So under shorthold the registered rent would be the rent limit not only during the fixed term but also during any period that the tenant stays on beyond the fixed term. The tenant will have the same right to recover any excess rent he has paid as any other Rent Act tenant. Secondly, there is the question of premiums. Sections 119 and 120 of the Rent Act 1977 make it an offence to charge a premium for granting or assigning a protected tenancy. This applies to shortholds just as it does to other protected tenancies. So does the clarification of what constitutes a premium which we are introducing in Clause 76 of the Bill.
These provisions seem to me already to provide adequate protection for tenants against being charged too much rent or being asked for a premium. I see no reason for extra provisions for shortholds. I cannot accept the implication that landlords who let on shortholds would be likely to try to trick the tenant in the way that might be suggested or implied. Nor would it seem to me to be right, as the amendment proposes, that the court should be required to consider whether the landlord has asked for excess rent or a premium before granting possession of the Case 19 tenancy. These are quite separate matters for which there are already separate provisions in the Rent Acts.
I fear that I may not have covered one or two of the points the noble Lord, Lord Gifford, made, for which I apologise. On the other hand, he may feel that what I have said is adequate in the circumstances, albeit not as satisfactory as he would have liked. If I have missed anything which he considers most important, I would be glad if he would take it up with me privately and discuss it with me.
Lord GIFFORD: I agree with the noble Lord, Lord Bellwin, in this at least, that the rent officer system has worked well since it was introduced by a Labour Government in 1965. But the rest of what the noble Lord said did, I suggest show an astonishing ignorance of what actually happens. What we are talking

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about—and I gladly reiterate my noble friend Lord Shinwell—what the amendment is about is people cheating. It happens now. Again and again the tenant is in complete ignorance that a rent for the property has been registered and is being charged double or more. But at least in the normal working of the Rent Acts so far there has been this protection, that when he finds out he can sue for the back rent or withhold his rent so as to compensate for what he has overpaid, without any fear that anybody, particularly the landlord, can impose any sanction or penalty or revenge upon him. This situation is changed with the shorthold provisions, because with the shorthold provisions there is always a threat that if you are not co-operative about the extra over-payment then the shorthold can be brought to an end.
Having said that, I am wanting to try, with the Government, to find a constructive solution to what I hope they will feel in a greater or lesser degree is a problem that ought to be looked at during the course of the passage of this Bill. As I said earlier, there may be other ways of dealing with this problem. For instance, the court, before it orders possession, could be required to make sure, to order, that any sums overpaid are repaid before the actual order is made; because at the moment the court would have to order possession on a mandatory ground leaving any question of over-payment to be put off to the future, and maybe to dilatory payment over months or more. Will the Minister look at this problem which I have sought to outline and, before Report stage, see whether some protection—perhaps not the one I have proposed in this amendment—might not be inserted to discourage and to sanction this kind of cheating?
Lord BELLWIN: May I say that I do not at all accept the point that if the tenant under a shorthold starts to take proceedings, or makes attempts to do anything at all about the rent, the shorthold tenancy will be brought to an end. I entirely fail to see that. The position is no different from that under the Rent Acts. On the contrary, the safeguard is even greater under the shorthold proposals, for two reasons.
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In the first place, the shorthold tenant has his fixed term in any case. Secondly, why should he need to go to court on the subject of rent, because the rent is fixed once, it is registered and it cannot be increased at all, not only during the term of the tenancy but even beyond if the tenancy should continue. So I do not take that point. But what I do accept is that if there is a better way to cover some of the points the noble Lord mentioned which concern him—I said it earlier and I meant what I said, and we will read very carefully what the noble Lord has said—I will of course consult with those who are more expert than I am on these matters. If the noble Lord thinks of another way that he has not mentioned, he should not hesitate to come forward with it. We want the best Bill we can get. If we can make it better, why not?
Lord GIFFORD: I say no more at this stage. We shall come back to this. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 122A, 122B and 123 not moved.]
6.39 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 124:
Page 38, line 6, at end insert—
("(3) For the purposes of the Housing (Homeless Persons) Act 1977 no person shall he treated as having become homeless intentionally or become threatened with homelessness intentionally by reason of his having accepted a protected shorthold tenancy of any premises and thereafter having been required to give up possession thereof.").
The noble Lord said: I hope I do not need to detain your Lordships long on this amendment, because it is an amendment which is really seeking information. It seems to me, as the legislation is at present drawn, that if a person becomes a shorthold tenant he or she knows, or can be assumed to know, that that tenancy is going to come to an end after one, two, three, four or five years. At the end of that time the person will have to remove himself or herself from the shorthold tenancy. It seems to me—and I believe I mentioned this to other members of my profession, and to members of Lord Gifford's branch of the profession—that it could be argued

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in the courts that any person who takes on a shorthold tenancy knowing that it is going to come to an end is, in fact, in danger of rendering himself or herself intentionally homeless under the Housing (Homeless Persons) Act 1977, in which case if you render yourself intentionally homeless the local authority does not have to rehouse you. Consequently, by accepting a shorthold tenancy, technically that person would be rendering himself or herself intentionally homeless, and therefore could not benefit from the provisions of the Housing (Homeless Persons) Act.
If the Minister could reassure me that that interpretation is wrong, I should be very happy, but I feel on a technical ground—and learned counsel do tend to use technical grounds; so do members of my part of the profession—it may be found that local authorities do not have to rehouse people. That would be a very serious outcome of the proposal which I am sure that neither the Government nor anyone else wishes. I should be glad to have an explanation.
Lord SANDFORD: I wonder whether I could respond to that request for information from the noble Lord, Lord Evans, before my noble friend replies to it. It is a matter to which the housing authorities, or at least those represented by the Association of District Councils, 300 or so of them, have given a good deal of thought. It is on their shoulders that the housing of the homeless under the Housing (Homeless Persons) Act 1977 chiefly falls. Their view is that when the shorthold provisions are enacted their burden under that Act will he considerably reduced, certainly reduced to some extent, the extent depending on the extent to which the shorthold tenancies are or are not sabotaged by the Labour opposition. But they will be reduced to some extent.
That leaves open the further fact that the operation of shorthold will produce in some cases a situation of hardship for tenants whose shorthold is ending, but it will also introduce to a small extent the possibility of deliberate abuse by tenants. It is, therefore, the view of the association as a whole that it would he better to leave the Act of 1977 and this Bill as it is drafted under which they can exercise their discretion as to what
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actually has occurred, whether it is a case of abuse or a case of hardship.
Lord STRABOLGI: Before the noble Lord replies, I must say that I think the noble Lord, Lord Evans, has a point here. I do not want to repeat the excellent arguments that he has put forward, but I may say that should fears on this question seem exaggerated it is worth noting that a survey by Shelter in 1978 and 1979 of local authorities' policies regarding applicants coming out of out-of-season lettings, showed that four authorities, as policy, judged all such applicants as intentionally homeless. Also in a regional newspaper the local health and housing officer was reported as saying that:
"Fixed term agreements already exist, but a landlord can have great trouble in getting a tenant out if he has to go to the courts. We regard anyone forced out of such a tenancy by the courts as voluntarily homeless, whereas we would do our best to house anyone who informed us their shorthold was running out".
Lord BELLWIN: I listened closely to what has been said and would say that the Government are in full agreement with the principle that a tenant should not be disadvantaged under the homelessness legislation merely because he has taken a shorthold and the shorthold has come to an end. We do not, however, think that there is a real problem here. Under existing legislation there are various types of letting where the tenant does not have permanent security of tenure. For example, tenants in houses let by absent owner-occupiers or by people pending their retirement can be made to leave under the mandatory grounds for possession in the Rent Acts. Tenants of resident landlords only enjoy limited security of tenure, and the occupants of tied cottages and lodgers have even less security.
The Homeless Persons Act does not provide that anyone who takes one of these lettings and then has to leave cannot thereby be intentionally homeless. Although there has been a recent case in the court of appeal—in fact reported in The Times yesterday—where someone was declared intentionally homeless at the end of an out-of-season holiday let, this depended very much on the circumstances of the case where a secure council tenancy had been given up in favour of the winter "holiday" letting. The mere fact of taking such a letting does not

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mean that someone will be making himself intentionally homeless. There is no reason to suppose that a court would take such a view of the ex-shorthold tenant. Therefore, there is no need for this amendment.
Moreover, and this is crucial, if we were to provide that taking a shorthold does not put a person into the intentional homelessness category, we should immediately be casting doubt on the status of all other tenants or occupiers without permanent Rent Act security. That would be highly damaging to the operation of the Homeless Persons Act and, I have no doubt, is far from the intentions of the noble Lord, Lord Evans, in whose name the amendment stands.
Lord EVANS of CLAUGHTON: I shall have to think more about this matter and take more advice. The noble Lord, Lord Strabolgi, has shot my fox a little, in that he brought up the precise points I was going to mention, and it is absolutely right that there are large areas here where there is uncertainty. I thought that this additional paragraph would make an area which is admittedly in the mind of barristers and solicitors an uncertain area, into a certain area. I should have thought that for the protection of themselves and their shorthold legislation, the Government might have welcomed this. I take the point made by the noble Lord, Lord Sandford. With no disrespect to him, the kind of problems which I envisage as a vice-president of the AMA, are probably more likely to crop up in metropolitan areas than in the areas of the ADC. What I will do, with some reluctance and a considerable amount of reservation, is to withdraw the amendment at this point, but I am going to consider it again and I may well come back to your Lordships' House with it again.
Amendment, by leave, withdrawn.
Clause 54 agreed to.
Clause 55 [Assured tenancies]:
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 124A:
Page 38, line 36, at end insert—

("(6) The preceding provisions of this section do not apply to a tenancy if, before the
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grant of the tenancy, the landlord has given the tenant a valid notice stating that the tenancy is to be a protected tenancy or, as the case may be, a housing association tenancy and not an assured tenancy.

(7) A notice is not valid for the purposes of subsection (6) above unless it complies with the requirements of regulations made by the Secretary of State.").

The noble Lord said: This amendment to Clause 55 removes from the assured tenancy scheme one unintended restriction on the ability of the landlord to let on a protected or housing association tenancy should he prefer to do so. Under Clause 55 as presently drafted a tenancy is automatically an assured tenancy if three conditions are met. These are: that the landlord has been approved by the Secretary of State; that the property was built after the Housing Act received Royal Assent; and that it was not previously let other than as an assured tenancy.
An approved landlord who has built new homes will, therefore, have no option but to let on assured tenancies. This restriction was never intended. It would, for instance, prevent an approved landlord from entering into an arrangement with a local authority whereby part of a building was let at fair rents. It would also prevent a housing association, which specialised in new-build, from becoming an approved landlord unless it was prepared to abandon building for letting at fair rents. A mixed programme of fair rent and assured tenancies would not be allowed.
The amendment puts this right by providing that an approved landlord can let on ordinary protected or housing association tenancies if he serves a notice to that effect on the tenants concerned. The notice must comply with the regulations made by the Secretary of State. It is a useful modification to the assured tenancy scheme which I hope will commend itself to your Lordships.
On Question, Whether Clause 55, as amended, shall stand part of the Bill?
Lord STRABOLGI: I should like to ask the Government three questions on Clause 55. I am bound to ask these questions because, as we said at the beginning of this Committee stage, they have not made

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the background notes available to the Opposition. First, with regard to approved bodies, what happens to the tenant if an approved body loses that status? Would the tenant be fully protected? Secondly, what sort of bodies do the Government have in mind for "approved body" status? Thirdly—and this is important with so many overseas interests buying in to our property—will approved bodies have the right to sell their interests to other non-approved bodies? If so, what parameters will be used to judge the eligibility of potential approved bodies? If the noble Lord cannot answer all of those questions, perhaps he will write to me about the matter.
Lord BELLWIN: Clearly, I could attempt to give an answer to the points that have been raised, as I understand them, but I would far rather ensure that the answers were authoritative and absolutely accurate. So, I thank the noble Lord for his suggestion and I certainly take it up.
Clause 55, as amended, agreed to.
Clause 56 [Effect of Interest of landlord ceasing to belong to approved body]:
6.42 p.m.
Baroness DAVID Baroness DAVID moved Amendment No. 125:
Page 38, line 37, leave out subsection (1).
The noble Baroness said: I beg to move Amendment No. 125 and I should like to speak also to Amendment No. 126. The Government's attention must now be devoted to what happens to the tenant if an approved body loses that status. These amendments relate to the status of tenants following loss of approved body status by the landlord. We see no reason why the tenant in this position should not enjoy full Rent Act protection. We want to look after individual tenants who may come up against bad landlords taking over from the approved bodies.
Clause 55(4) states that:
"'approved body' means a body, or one of a description of bodies, for the time being specified for the purposes of this Part of this Act in an order made by the Secretary of State".
Has the Secretary of State decided yet which will be the approved bodies? I feel that before we can really take in these three clauses dealing with assured tenancies we need to know a bit more about the whole matter. I beg to move.
Lord BELLWIN: These amendments relate to the Government's proposals under Clauses 55 to 57 to allow landlords approved by the Secretary of State to build for rent outside the Rent Acts. This assured tenancy scheme is a strictly controlled experiment designed to test the possibility of attracting new investment into private renting. The main sorts of body we have in mind for approval under the scheme are building societies, pension funds and insurance companies or housing associations backed by such bodies. But that, of course, is not to exclude other bodies if they are considered suitable. As we are speaking of an experiment, we shall monitor it carefully. I should stress that Clauses 55–57 are concerned only with new build, and hence will have no implications for existing tenancies.
These amendments would delete subsection 56(1), which contains a transitional arrangement whereby tenancies existing at the time of a variation in the order taking a landlord off the "approved list" would continue to be assured tenancies. Landlords subject to such an order would then have all their assured tenancies converted automatically into protected tenancies on expiry of the three-month period provided by subsection 56(2).
These amendments would make the assured tenancy scheme less attractive to potential approved landlords. If they are to commit finance towards the building of new homes, it does not seem reasonable that the potential rental income can be reduced at a stroke—to use a phrase—perhaps simply because Government policy has changed rather than because the body concerned has not proved a good landlord.
Tenants in occupation at the time when a variation order is made will have taken on their tenancies in the knowledge that they will pay market rents, and it seems reasonable that they should continue to do so. They will of course have the protection of their leases and of Part II of the Landlord and Tenant Act 1954 as modified by the Bill. If a landlord is

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taken off the approved list the sanction will be that he cannot build any new dwellings under the scheme or create new tenancies. If the body was in financial difficulty it would be a double blow to have the value of its existing holding cut as proposed by the amendment. I I wonder whether, with that explanation, the noble Baroness will feel able to withdraw the amendment.
Baroness DAVID: Once again I should like to study what the Minister has said and find out whether the answer is entirely satisfactory. But, for the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 126 not moved.]
Clause 56 agreed to.
Clause 57 agreed to.
Schedule 5 agreed to.
Clause 58 [Rent officers and applications for registration of rent]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 127:
Page 39, line 33, at end insert—
("(1A) In section 67 of the 1977 Act (application for registration of rent) for subsection (2) there is substituted the following subsection—
"(2) Any such application must be in the prescribed form and must—

(a) specify the rent which it is sought to register;

(b) where the rent includes any sum payable by the tenant to the landlord for services and the application is made by the landlord, specify that sum and be accompanied by details of the expenditure incurred by the landlord in providing those services; and

(c) contain such other particulars as may be prescribed."").

The noble Lord said: I beg to move Amendment No. 127 and for the convenience of the Committee I shall speak also to Amendments Nos. 128, 129 and 130. Under the present legislation, which is not changed by our proposals in Schedule 18 to the Bill, tenants with fixed fair rents are not statutorily entitled to information from their landlord on the cost of providing services. This is because they have the rent officer to protect them against unreasonable claims
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by the landlord. The rent officer also fixes service charges for the full registration period—which will be two years under the Bill—even though costs may rise substantially. The benefit this confers at a time when wages and the cost of fuel and repairs are rising rapidly should not be underestimated.
However, we have received representations that the right to information about costs could help tenants in their arguments before the rent officer and rent assessment committee on re-registration. Many fixed fair rent tenants have expressed concern that landlords influence rent officers to fix higher rents than they would otherwise have done by producing spurious data on services at the last minute without the tenant having the opportunity to contest it. I am by no means sure that rent officers are so easily misled, but these amendments to Clause 58 and Schedule 6 provide additional protection to fixed fair rent tenants by giving them the opportunity to challenge landlords' evidence to the rent officer on service costs. In introducing these amendments we are fulfilling an undertaking given in another place.
The amendment requires the landlord, when applying for a rent registration, to state on his application how much of the rent sought is attributable to services. He will also have to attach supporting evidence. The rent officer is then required to serve this information on the tenant. The tenant will then be asked whether he wants a consultation, as in all applications. If a consultation is to be held the amendments require that it should not take place until at least 14 days have elapsed since the serving of the notice.
This amendment will ensure that tenants on fixed fair rents always have the opportunity to see in advance and challenge the evidence on which their landlord is seeking an increase in rent attributable to services. I hope noble Lords will accept this—as I consider it to be—important new safeguard.
Lord STRABOLGI: I think that the Government's amendment goes some way, although it does not go far enough. We shall probably deal in more detail with the service charges when we come to Schedule 18. But I may say that, as a result of one case—I think that it was

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Campden Hill Towers v. Gardner in 1977—it was found in the courts that tenants can be charged for large-scale major repair works even though they are protected by Section 32 of the Housing Act 1961. The cost of works on flats other than their own can be put on the service charges. That is surely doubly unjust because tenants will have to pay towards maintaining the capital value of properties in which they have no capital stake, and as regards which there should really be a capital expenditure on the part of the landlord. And tenants have to pay twice—once through the service charges and again in rents, increased as a result of the repairs. This is a major scandal which is going on in particularly many of the flats in London, and I hope that it is something to which the Government will give their attention.
I am also very glad that the Ministers and the department concerned will be called before a Select Committee of another place which is to look into the question of London accommodation—particularly in flats—in some depth. Therefore, I hope that the Government will take some action to repair what is a very great injustice to many flat-dwellers in London and in the other large cities. However, as I say, the amendments go some distance, and we are grateful for that.
Clause 58, as amended, agreed to.
Schedule 6 [Applications for registration of rent]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 128:
Page 108, line 18, after ("application") insert—
("(b) stating any sum specified in the application in accordance with section 67(2)(b) of this Act;")
The noble Lord said: I have already spoken to this amendment when I spoke to the last amendment. I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No. 129:
Page 108, line 24, at end insert—
("(2) Where, in pursuance of section 67(2)(b), the application was accompanied by details of
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the landlord's expenditure in connection with the provision of services, a notice under this paragraph shall be accompanied by a copy of those details.")
The noble Lord said: I also spoke to this amendment with Amendment No. 127. I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No. 130:
Page 108, line 42, at end insert—
(".In sub-paragraph (2) of paragraph 4, for the word "notice" there are inserted the words "notice, or 14 days in a case falling within paragraph 3(b) above".")
The noble Lord said: I spoke to this amendment when I spoke to the last amendment, Amendment No. 127. I beg to move.
Schedule 6, as amended, agreed to.
Clause 59 [Applications for new registered rents and phasing of increases]:
6.53 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 131:
Page 39, line 38, leave out subsections (1) to (4).
The noble Baroness said: I shall be very brief on this amendment. It has had a very wide airing in the other place and has been discussed widely in newspapers, and so on. This clause reduces the normal period before fair rents can be re-registered from three years to two years, and alters the phasing of rent increases accordingly. It seems to me that if the Government had set out to find the worst possible time to introduce something that will fuel inflation in this way, this is it. To change the reviews at a time when inflation is over 21 per cent., with rates of interest as they are, and without any solid reason for so doing, is bad timing.
As rents increase, the money needed to gain access to new tenancies increases proportionately. As rents have increased, as I shall show, and are increasing, not only will tenants be paying more—and this is quite apart from the question of the change in reviewing and phasing—but Clause 76 of the Bill lays down that a £200 deposit can be charged, in addition to supposing that a tenant is paying

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£25 a week, a month's rent in advance and possibly, on top of that, a hefty agency fee. Therefore, the whole effect of this is, again, to increase the cost of living, to increase wage demands and to increase the vicious spiral that the Government say all the time they are trying to break.
The average registered rent for Greater London in the fourth quarter of 1979 was £18·70 a week. This represented a 33 per cent. increase on the previous year. For the rest of England and Wales the average for the last quarter of 1979 was f13·96 per week, which represented an increase of 36 per cent. on the previous year. Therefore, without changing the review system and phasing, I should have thought that rents are showing quite a considerable increase.
If this remains part of the Bill, it means that rents will increase 50 per cent. more rapidly over the next two years; and as a result of the change in reviewing from three years to two years and the phasing from two years to be spread over one year, it will require more rent officers, and more time and effort will be spent on going through the procedures every two years. As there is at present a bottleneck over rent reviews, I beg the Government—not, I am afraid, with very much hope—to look at this again. It will increase the need for manpower. It is increasing everyone's anxieties. Almost before one review has been completed, the next one will be on the way. It is bad from a human point of view; it is bad financially and it is bad economically.
Finally, if one looks at the takeup of rent allowances, one sees that only between 50 per cent. and 55 per cent. of people take them up at all. The whole system is so complicated. Unfortunately, it is one of the least effective of the grants or allowances available to people because they do not understand it, and because they have to present evidence of the rent charged, people are often uneasy and worried about doing so.
If rents are not registered—and, of course, this applies to more than half the rents—there can be no rent allowances. Therefore, the rent allowances in no way balance the effect of very considerable increases in rent. I am quite sure that the Minister will explain how landlords have fallen behind; and I submit that the
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increases which I have given have been quite considerable. Compared with some years ago—and I shall not bother your Lordships with the figures—when inflation was very much lower, it is true that rents were much lower. To do this at this particular time seems to add to a bureaucratic jungle and to be unviable, either financially or socially.
Lord GOODMAN: Without wishing to repeat what the noble Baroness has said, I should like to urge the Government to consider this on the purely administrative considerations that she advanced. I should declare a special interest here for I am the president of the Rent Officers' Association and, as such, I have a good knowledge of rent officers. I understand that at their last conference, at which I made a short address, there was a move to reduce their number. I wonder whether the Government will consider what the expenses involved in this earlier and more frequent rent review will be, as opposed to any increase in rents that might benefit the landlords. I have a feeling that if it were to be worked out, it would be found that a very considerable amount of administrative expenditure is involved. It is disheartening to the rent officers. Already they have to deal with a considerable backlog. I think that the Government ought to give it further thought and consideration on that ground alone.
Lord JANNER: I should like to support this amendment for perhaps a different reason. Today tenants' associations are very disturbed indeed—and I am not talking about the amounts to which my noble friend Lady Birk has referred—at increases as high as 500 per cent. being charged to tenants of flats by rent tribunals. Increases of between 200 and 300 per cent. are being charged in a vast number of cases. I do not think that three years is enough. If we are to reduce the period, the feelings of security that a tenant of a flat has will also be reduced by two-thirds. In my view and in the view of the tenants it is a very important consideration that that period should not be reduced.
Lord MONSON: I should like to oppose what the Opposition say about these amendments. So long as you have any phasing whatsoever, the whole concept of a fair rent is completely bogus

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and fraudulent. You are always one or two steps behind. After all, what is adjudged to be a fair rent in 1980 cannot possibly be a fair rent in 1981, still less in 1982 at the present rate of inflation or at any rate of inflation we have had in recent years. When the Labour Government were in power we had a Price Commission. The Price Commission did not come along to a manufacturer and say, "We adjudge the right price for a certain brand of children's shoes to be £10. This is a price which gives you a reasonable return. However, this year we will allow you to charge only £8 and next year £9." They allowed the manufacturer to charge £10 straight way. That is how it should be with fair rents.
I notice incidentally that in the Scottish Bill there is no phasing whatsoever. This is something that has only just been brought to my attention. I am not aware of the attitude taken by the Opposition to this fact, but if there is no phasing in Scotland there does not seem to me to be any case for phasing in England, and certainly not for retaining the three-year phasing which the Opposition wish to have.
7.2 p.m.
Lord BELLWIN: This amendment would delete the new provisions in Clause 59 relating to the period before a new fair rent can be registered and to the phasing of increases in fair rents. These are important measures which bring the present rent registration system into line with current circumstances. I should have thought that those were the operative words. I shall deal first with the provisions relating to the minimum period before a new fair rent can be registered. At present once a rent has been registered it remains the rent limit for three years. This period was introduced in 1965 when the fair rent system came into being and when the annual rate of inflation was only about 4 per cent. By reducing this period to two years Clause 59 seeks to ensure that the real value of the registered rent does not fall due to the present higher inflation rates as rapidly as it does now under the three year registration period.
Clause 59 makes a parallel change in the system of phasing increases up to a
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fair rent. It provides that increases will be phased in two annual instalments following a new registration rather than three as at present. The full fair rent will therefore become payable a year after the registration of the new rent instead of two years as at present. It is important that the tenant has some measure of protecton against steep increases in rent. However, under the present system, which the noble Baroness wishes to retain, a fair rent does not become payable in full until it has long since ceased to be fair. On that I entirely accept the observations made by the noble Lord, Lord Monson, and I am grateful to him for his comments.
I think I can best illustrate this by taking the example of a fair rent of, say, £7 which is increased on re-registration to £10. Let us first look at what would have happened in 1965 in these circumstances. Noble Lords will appreciate that at that time there were three years between the rent registrations but there was no phasing at all. In the first year the tenant would therefore pay the full registered rent of £10. With inflation running at 4 per cent. the rent would be 4 per cent. below (and this is the point Lord Monson made) the real value of the fair rent in the second year and 8 per cent. below it in the third year. At the beginning of the fourth year it would be re-registered and, assuming that the rent goes up broadly with inflation, the fair rent would go up from £10 to £11·25 and, once again, because it would be paid in full immediately, it would be at its full real value.
I will now take the same example with a rate of inflation of 14 per cent., and with phasing in three annual instalments as was introduced in 1975. In year one the tenant would not be paying the full fair rent of £10; because of phasing he would be paying £8 rent. That is 20 per cent. below the real value of the fair rent. In year two, as a result of the second instalment of phasing, the rent would increase from £8 to £9, which would still be 21 per cent. below the fair rent in real terms. In year three the rent would increase to £10 and would still be 22 per cent. below the real fair rent. In year four the rent would be re-registered, and again because of the effect of phasing the rent payable would be £11·57, which is still 21 per cent. below the full real value.

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The essential difference is that when fair rents were first introduced the rent remained at its real value for two out of every four years, and for the two intervening years it was only slightly below it. The effect of a high rate of inflation plus three annual instalments of phasing means that throughout the whole of the four year period in the latter example shown the fair rent remains about 20 per cent. below its real value.
It is this situation that Clause 59 seeks to alleviate and that the amendment strives to preserve. All that the changes in Clause 59 will mean is that tenants will pay the full fair rent more quickly, following its registration, than at present. The rent allowance system is available to those who have difficulty in meeting their rent. I entirely take the point the noble Baroness made about the degree of take-up at the present time. It is a matter of considerable concern. Frankly, it has always been a matter of concern ever since the introduction of the Rent Acts. But the Government are trying to do something positive about that, in that we are launching a publicity campaign to ensure that people are aware of the benefits which are available to them as of right.
From 1st July we are increasing the maximum rent allowance payable to £25 a week in London and £23 elsewhere. I can illustrate the very limited effect of the Bill on tenants' rents by again taking a typical case. At present if a tenant is paying a fair rent of £9 per week, he might expect an increase of £1 per week in the first year following re-registration of this rent. Under the Bill the equivalent increase would be £1·50. If it is assumed that the tenant was married with two children and had an income of say £5,000 a year, at least 90p of the £1·5O increase would be met by rent allowance. In some areas of London such as Westminster, El or more would be met by rent allowance. The net increase to the tenant would still be beneath the general rate of inflation.
The provisions of Clause 59 are designed to ensure that a fair rent means what it says, both to landlord and tenant. We had some discussion with the noble Lord, Lord Shinwell, as to what a fair rent would he. The amendment proposed by the noble Baroness and the noble Lord would perpetuate the present inequities in the pri-
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vate rented sector—I see that the noble Lord looks puzzled. Perhaps I may be able to do something about that later. May I just finish what I am speaking about now, and come back to the point later. The amendment would perpetuate the present inequities in the private rented sector which are forcing landlords to find other uses for the rented accommodation which is so badly needed, especially by the young and the mobile. I hope that noble Lords will reject this amendment.
Viscount SIMON: May I ask the noble Lord one question? In the interesting figures he gave us he appeared to be assuming that it would be fair and reasonable that rent should increase along with inflation. But is that right`? Surely only a part of the rent is required by the landlord for current expenditure. A large part of it is amortisation of his original capital, and that does not have to go up with inflation.
Lord BELLWIN: The point is that what the rent will become in due course, the new rent that it will lead to, will be a matter for determination by the rent officer. What we are talking about is the impact of inflation upon the rent which has been fixed for the time until the next registration. It is that that I was trying to give examples about when I was referring to it before. I think that that is what he wanted to be sure about.
Lord HYLTON: May I just say to the noble Viscount, Lord Simon, that a great part of rents is consumed by the expenses of repairs, and building costs over recent years have tended to rise more rapidly than general inflation.
Baroness FISHER of REDNAL: I follow what the noble Lord on the Front Bench was saying. One can follow that argument through. But then I come to the conclusion that the Government must expect for ever and ever to be facing inflation. One listens to the points put through the media that it is hoped to bring inflation down within the next three years. If the Government are so successful, will the tenant he able to appeal to the rent officer, when inflation is down, for a decrease in his rent?
Lord BELLWIN: I have every confidence that the Government's intentions

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regarding inflation will be entirely successful, and I am sure the noble Baroness would expect me to say no less. Should that happy event take place (I might say "when" it does; sooner rather than later is perhaps the best phrase I can use) we shall then have to see the extent of it. I was talking about giving illustrations of rents set when the rate of inflation was 4 per cent. We hope one day to return to that happy state, and when we do that will be the time for us to reconsider the kind of situation the noble Baroness happily presents to us as a possibility. Let us look forward to the moment when it becomes a probability and a fact.
Lord JANNER: Is the Minister aware that he is basing the whole of his argument on the question of inflation? Does he realise that today the increases that are being demanded are very much higher than the rate of inflation? Is he prepared in the circumstances to do something to prevent increases higher than the rate of inflation?
Lord BELLWIN: With respect, the noble Lord is talking of a separate category altogether. We are talking about rents which are applied under the Rent Acts where the determination of the new rent is fixed by the rent officer, and the basis the rent officer uses to do that is the formula we discussed earlier, which I am sure noble Lords would not wish me to go over again. The point which the noble Lord, Lord Janner, is so troubled about and which, understandably, he raises regularly in your Lordships' House, is rather different and, with respect, does not come within the context of the amendment now before the Committee. I am sure that will not prevent the noble Lord from raising it
again on many occasions in the future, and I will do the best I can either to assuage his fears or satisfy him as best I can.
Baroness BIRK: I thank the Minister for all he has said. I listened carefully to his remarks and to the comments of other noble Lords. I have not heard from the Minister a convincing reason why this change in review and phasing should take place at this time, and certainly there has been no answer to the points raised by myself and by the noble Lord, Lord Goodman.
Lord BELLWIN: May I ask the noble Baroness to permit me to intervene to correct a point she raised earlier? I am sure she would like me to put the record right because her figures were wrong. She probably gave figures for furnished lettings. The average rent registered for unfurnished lettings in London in 1979 was £668 or £12.84 per week. In England and Wales the figure was £483 or £9.20 per week. The noble Baroness gave percentage increases on the previous year, but those were misconceived because when rents are re-registered they are increased on a rent registered at least three years before, and the average increase on re-registration after three to four years in 1979 was, in fact, 47 per cent.
The DEPUTY CHAIRMAN of COMMITTEES (Lord Segal): I have to point out to the Committee that if Amendment No. 131 is agreed to, I cannot call No. 132.
7.14 p.m.
On Question, Whether the said amendment (No. 131) shall be agreed to?
Their Lordships divided: Contents, 62; Not-Contents, 88.

CONTENTS

Ardwick, L.

Davies of Leek, L.

Jacques, L.

Balogh, L.

Davies of Penrhys, L.

Janner, L.

Birk, B.

Denington, B.

Jeger, B.

Blease, L.

Donaldson of Kingsbridge, L.

Kaldor, L.

Boston of Faversham, L.

Evans of Claughton, L.

Lee of Newton, L.

Bowden, L.

Fisher of Rednal, B.

Leonard, L.

Brimelow, L.

Gaitskell, B.

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

Brockway, L.

Gifford, L.

Bruce of Donington, L.

Glenamara, L.

Lloyd of Kilgerran, L.

Chitnis, L.

Greenwood of Rossendale, L.

Longford, E.

Cledwyn of Penrhos, L.

Hale, L.

Lovell-Davis, L.

Collison, L.

Hampton, L.

McNair, L.

Cudlipp, L.

Hatch of Lusby, L.

Maelor, L.

David, B. [Teller.]

Jacobson, L.

Oram, L.

Peart, L.

Ross of Marnock, L.

Taylor of Mansfield, L.

Pitt of Hampstead, L.

Seear, B.

Underhill, L.

Ponsonby of Shulbrede, L.

Segal, L.

Wall, L.

Raglan, L.

Simon, V.

Wallace of Coslany, L.

Rhodes, L.

Stewart of Alvechurch, B.

Wells-Pestell, L.

Ritchie-Calder, L.

Stewart of Fulham, L.

White, B.

Rochester, L.

Strabolgi, L.

Wynne-Jones, L.

NOT-CONTENTS

Airey of Abingdon, B.

Fortescue, E.

Morris, L.

Amory, V.

Fraser of Kilmorack, L.

Mottistone, L.

Armstrong, L.

Gage, V.

Mowbray and Stourton, L.

Auckland, L.

Glendevon, L.

Moyne, L.

Bellwin, L.

Glenkinglas, L.

Murton of Lindisfarne, L.

Belstead, L.

Godber of Willington, L.

Northchurch, B.

Bessborough, E.

Gowrie, E.

Northesk, E.

Blake, L.

Greenway, L.

Nugent of Guildford, L.

Buxton of Alsa, L.

Gridley, L.

O'Hagan, L.

Campbell of Croy, L.

Grimston of Westbury, L.

Orr-Ewing, L.

Chelwood, L.

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

Redesdale, L.

Clitheroe, L.

Redmayne, L.

Colville of Culross, V.

Harmar-Nicholls, L.

Reigate, L.

Colwyn, L.

Holderness, L.

Rochdale, V.

Cork and Orrery, E.

Hornsby-Smith, B.

St. Aldwyn, E.

Craigavon, V.

Hunt of Fawley, L.

Saint Oswald, L.

Craigmyle, L.

Hylton, L.

Salisbury, M.

Croft, L.

Hylton-Foster, B.

Sandford, L.

Cullen of Ashbourne, L.

Kimberley, E.

Sandys, L. [Teller.]

Davidson, V.

Kinnoull, E.

Selkirk, E.

De La Warr, E.

Lindsey and Abingdon, E.

Selsdon, L.

Denham, L. [Teller.]

Long, V.

Skelmersdale, L.

Digby, L.

Lonsdale, E.

Soames, L. (L. President.)

Drumalbyn, L.

Lyell, L.

Strathcona and Mount Royal, L.

Elton, L.

Macleod of Borve, B.

Trefgarne, L.

Fairfax of Cameron, L.

Mansfield, E.

Vaux of Harroden, L.

Faithfull, B.

Margadale, L.

Vivian, L.

Falkland, V.

Marley, L.

Ward of Witley, V.

Ferrers, E.

Monson, L.

Westbury, L.

Ferrier, L.

Montagu of Beaulieu, L.

Moved accordingly, and, on Question, Motion agreed to.

7.22 p.m.
Lord MONSON Lord MONSON moved Amendment No. 132:
Page 40, line 1, leave out subsection (2).
The noble Lord said: I beg to move this amendment, and with the leave of the Committee I shall speak also to Amendment No. 151, which is more or less consequential. As the Committee will have gathered from my intervention on the last amendment, I consider the whole idea of rent phasing to be totally immoral. It ensures that allegedly fair rents always in practice remain unfair rents. Phasing does not occur in any other sphere of economic activity in this country or, so far as I know, in any other country. When I speak of economic activity I am referring to essentials as well as non-essentials and luxuries.
If private individuals are hard up as a result of rising rents and in consequence
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deserve a subsidy, the subsidy should surely be provided by the state, not by other private individuals. But in fact I do not think that such subsidies are to any great extent justified, because, despite what the noble Baroness, Lady Birk, and the noble Lord, Lord Janner, said, I believe that if they examine any 5-year period since fair rents were first introduced, they will find that the fair rents have always lagged behind the retail price index and, even more, behind earnings. In other words, the fair rents represent a smaller and smaller proportion of earnings. I know that the Labour Party is anxious that rents should not take up a higher proportion of the average person's earnings than they do, but if noble Lords look at the record they will find that what I say is the case. Fair rents—and excluding other rents—represent a decreasing, rather than a rising, proportion of these earnings. The reason that I move the amendment is that anything that reduces the period of delay in bringing into effect the full rent ought to be encouraged,

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and I hope that the noble Lord, Lord Bellwin, can give me some assurance on this.
Lord BELLWIN: The amendment would delete subsection (2) of Clause 59, which ensures that the new 2-year period before fair rents may be reviewed applies only to rents registered after commencement of the Bill. The 2-year period would therefore apply also to existing registrations. I do not think it reasonable that we should change the rules in mid-stream in the manner proposed by the noble Lord, Lord Monson. Tenants with existing rent registrations will not be expecting another change in the registered rent, except through phasing, until three years are up. They will probably have received notices of increase covering the whole period. If at the very moment that they were about to start paying the full fair rent under the existing registration a further increase were to be imposed from a new registration, this would cause confusion, not to say concern.
The amendment would moreover place a major burden on the rent registration system, which was referred to earlier by the noble Lord, Lord Goodman. All rents registered between two and three years previously would become due for review on the date of commencement, and the result would inevitably be delays, some of which could be very serious. I hope that on reflection the noble Lord will decide not to press his amendment. My sympathy for the philosophy behind his motivation in raising the matter is not inconsiderable, but I hope that in practical terms he will feel able to withdraw the amendment.
Lord MONSON: The noble Lord has very successfully convinced me of the difficulties that would ensue if the amendment were passed, and therefore I beg leave to withdraw it.
Amendment, by leave, withdrawn.
The DEPUTY CHAIRMAN of COMMITTEES: Amendment No. 133. I have to point out to the Committee that if this amendment is agreed to, I cannot call Amendments Nos. 134 to 136.
[Amendments Nos. 133 and 134 not moved.]
Lord MONSON Lord MONSON moved Amendment No. 135:
Page 40, line 34, leave out ("or increasing")
The noble Lord said, I beg to move this amendment. I find it very strange that a Conservative Government propose giving the Secretary of State the option to increase the period of delay. I suppose that in order to be consistent I should have introduced an amendment to delete the words "or increasing" in line 32 as well as in line 34, but because of the complexity of the wording I omitted to do so.
What is proposed in this clause seems to be a rather dangerous thing to do. I cannot visualise this Government seeing any occasion when they might wish to increase the period of delay before higher rents came into operation. It would give hostages to fortune if, "heaven forbid"!, a Government of highly Tribunite complexion were to come to power, since they would immediately seize upon the opportunity afforded them by the clause as it stands to increase the period. They might well do that by means of legislation later, but it seems rather silly for a Conservative Government to give them a toe-hold whereby they could do it that much sooner. I think it is quite unnecessary to provide for any possibility of the period being increased. I beg to move.
Lord BELLWIN: I say to the noble Lord, Lord Monson, I hear what you say. The Bill provides for the period of delay to be one year, which means that fair rents will be phased in two instalments, with the second instalment being due one year after registration. We believe that this is right for present circumstances, but would not necessarily be so in future. In particular it might be necessary to amend the period if the minimum period between registration was amended, as is also possible by order under Clause 59.
The amendment would provide that the Secretary of State could only reduce the period of delay, not increase it. That would detract from the flexibility that we are seeking to introduce and would make the power a one-sided affair. I can see no purpose in that. The amend-

449
ment would also have the anomalous effect that once the order-making power had been used to reduce the period of delay—say, to six months—it could then be used subsequently only to achieve a further reduction from six months. It would not be possible to revert to a period of one year without primary legislation. I dare say that this would provide a deterrent to the power being used at all, which is not, I think, what the noble Lord would wish to see. I hope the noble Lord will see the merit of the flexibility which Clause 59 as currently drafted provides, and perhaps will not press his amendment.
Lord MONSON: I do not intend to press the amendment now, of course, but I really would ask the noble Lord, Lord Bellwin, and his colleagues to look at this very carefully, because it really does give hostages to fortune. Can he really visualise a situation in which a Conservative Government might wish to increase the period before a new rent comes into operation? I cannot think so. I see one of the difficulties mentioned, which could be got round, perhaps, by a little redrafting; but I would ask the noble Lord whether he would look at this point seriously before the next stage, and on the assumption that he will do so I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.32 p.m.
Lord HYLTON Lord HYLTON moved Amendment No. 136:
Page 40, line 38, at end insert—
("(d) setting a limit on rent increases for any category of landlord for such a period as he may determine".).
The noble Lord said: This amendment, No. 136, may not be, strictly speaking, necessary, but I put it down to prevent unnecessary hardship to a small minority of housing association tenants. I have brought with me some examples of the kind of financial hardship which these tenants may face, and precise details of rent levels. However, in the interests of brevity I will not quote them now, but if my noble friend on the Front Bench would like to see them I will willingly let him have them. Suffice it to say that the new, much larger level of rent allowances is extremely welcome. However, it will
450
not help all the housing association tenants, because only if they are in extreme poverty can they benefit from the allowances unless the total rent per week exceeds £10. The result is that some housing association tenants will find themselves more harshly treated than similar tenants of local authorities or private landlords. In addition, there is also the point that rent allowances cannot relieve service charges which are sometimes made in respect of flats.
My noble friend and others who have studied these arcane matters will know that housing associations generally are not obliged to charge the full fair rent, or even the full permitted increase, and can therefore limit the extra burden on tenants to some reasonable sum, such as £3 a week or a little more. However, associations now receiving revenue deficit grant are expected by the Department of the Environment and the Housing Corporation to maximise their income. Concern therefore arises about a minority of tenants and a minority of associations. I hope that my noble friend will be able to make a statement that will set our fears at rest. I beg to move.
Lord EVANS of CLAUGHTON: I merely wish to say that the reason why I did not move Amendment No. 134 was that I thought, first, that the amendment to be moved by the noble Lord, Lord Hylton, was worded slightly better than mine and, secondly, that he would explain it very much better than I could. I want to say that I agree with everything he has said, working from the same basis as that from which he works—from a housing association basis—because housing associations do, as the noble Lord said, feel concerned about this and are looking for reassurances.
Baroness DENINGTON: May I give my support to the amendment moved by the noble Lord, Lord Hylton, and hope that the Minister will be able to help us. No doubt we have all had information from various housing associations, but some of it is absolutely alarming. There can be rent increases up to £12 a week, which is quite phenomenal. I have another example here that I received only today, I think, from an association of which I was for many years a member. They say that the rent increases will range

451
from £2 to £4·50 a week. I think it would be correct to say that probably for council tenants rent increases will be in the region of £2, and we are pleading for housing association tenants, who are going to be required to pay way beyond that particular figure. Some are going up (in this association they have done their homework) by £4 to £7. In addition to that, there have got to be service charge increases. The whole situation is really very serious.
I happen also to be a member of the Sutton Housing Trust, where we are not in receipt of revenue deficiency grant, and we have already taken a decision that £3 is as much as we can possibly put on our tenants. I would be so delighted if the Minister could indicate that that was the kind of figure that he would have in his mind.
Lord BELLW1N: I understand it has been suggested that I am taking a long time in dealing with some of the points raised. I fail to see how I can move more quickly when so many noble Lords feel—and I see no reason why they should not—that they wish to raise points; and I really can do no better than to speak at a rather rapid rate of knots, greater than is my normal wont, as I am sure your Lordships will agree. But I am doing my best from my side, and I will try to do the same on this amendment, also.
Let me deal with what I believe to be the principle behind these amendments. I believe they are saying that the fair rent system is all very well, but that it should be overridden if it results in increases in rent above a certain specified cash level. I would suggest that this is misconceived. Increases in registered fair rents over the last three years have been much the same as the average increases in earnings; that is, about 45 per cent. in both cases. However, because of phasing, tenants have not paid these increases in full—a point we were talking about earlier—for two years; that is, five years after the previous fair rent was fixed. This follows a period when fair rent increases were generally less than the level of inflation. Since 1970, for example, earnings have gone up by 258 per cent., and fair rents by 111 per cent. Of course, there are individual cases where recently registered fair rents
452
have risen more sharply than the average of 45 per cent. or so.
Some may ask: Why is this? The first reason is that the previous rent will often have been fixed several years ago, and this really is an answer that I ought to give to the noble Lord, Lord Janner, when he so frequently raises the same point. It really is, What is the starting base? For example, an 80 per cent. rent increase may sound very startling at first, but if the previous rent was registered, say, six years ago, the increase is rather less than in other indications of inflation. If a ceiling was placed on rent increases, it would be extremely difficult to take account of such factors. The landlord would be penalised for not having increased his rents sooner, which is hardly fair.
The second reason is that the fair rent system is not meant to be some means of index-linking. Where a rent has already been registered and is then reviewed without a change of circumstances, it is perhaps likely to be increased certainly in line with inflation. There are many cases where circumstances have changed since the previous legislation; where, for example, the property has been improved, or where rents are being registered for the first time. Two hundred thousand such cases will result from the conversion of controlled tenancies into rent regulation under Clause 63, and I am sure we shall be talking about that soon—at any rate, I hope soon.
The purpose of the fair rent system is to create an equitable and consistent system for rent fixing based on the statutory criteria in Section 70 of the Rent Act and on the building up of experience of comparable properties and circumstances. I need hardly remind your Lordships that this was a Labour measure. However, if a ceiling is placed on increases, the system becomes distorted. Comparable properties will not have comparable fair rents. In fact, rents will cease to be fair rents and become something quite different. In some cases—and a good example here is those properties coming out of control under Clause 63, where rents are at present pegged at 1956 levels—the result would be patently absurd. Where increases in fair rents do cause difficulties for individual tenants, the correct way of preventing hardship

453
is not by distorting the fair rent system but by a phasing of increases and by rent allowances. It is often not appreciated how substantial rent allowances are, especially in meeting increases.
As I said earlier, from 1st July we are raising the maxima payable very considerably. I will not repeat the figures again in the interests of time, but may I say on this that if my noble friend Lord Hylton cares to send me his figures, as he said he would, I would be very interested to see what they are and what significance they may have in the context of this whole matter.
I hope that on reflection these amendments will not be pressed. I could talk to them at greater length but, at the end of the day, we really have a basic principle here. I think the great need is to ensure that people know what are their rights. We must do what we are suggesting. We will launch a new campaign—and some noble Lords may say, "Yet again"—I know it will not be the first. We will try to make it a better one. We want people to know what are their rights. The whole purpose is that they should be able to have this protection. They are the ones who need it and we will do our best to help them.
Lord HYLTON: I have no intention of pressing this amendment. My noble friend the Minister has given me a splendid answer but has given it on a very high plane of generality. I wish he had been able to take on board my particular point about the housing associations now receiving revenue deficit grant. This kind of thing applies very much where there has been a planning agreement between the housing association and the local authority when a particular property came to be modernised with the result that sometimes a tenant has been enabled to go on paying the old, unmodernised rent even after he has moved back into the new, fully-modernised property. This is the kind of case where we will have huge jumps in rent levels in the next re-registration.
I am not quite sure whether my noble friend took my point about rent allowances. Of course the increases are splendid and we are grateful. I hope that more will be taken up in future than in the past. But they do not bite immediately in a
454
case where you had a very low old rent and a medium, moderate £8-to-£10-a-week new rent. They work higher up the scale but not at that point. Could my noble friend say a little more?
Lord BELLWIN: I cannot remember the figures, but in an answer to a question recently I gave some examples; or, if I did not give them, they were in the brief that I had. They were very impressive as to the level at which allowances start to bite. The best thing that I can do is to write to my noble friend with that information. If noble Lords opposite would like to have the same, then I think I should do that, too. I felt that they were very impressive and I should like everyone to know clearly what they are. If anything is to be raised following that, then it will be done.
Lord STRABOLGI: We should be grateful to accept the noble Lord's offer.
Viscount GAGE: I hope that the noble Lord will look at the figures produced by my noble friend. I have noticed in other directions that where there are basic principles which I am in favour of, they sometimes produce ridiculous results. There ought to be some ministerial power to make some sort of allowances. It is a difficult question, but I do not think that all these things should be grouped under the heading of a principle which, in no circumstances, can be changed.
Lord HYLTON: With a little goodwill, which I am sure is available, these can be arranged by administrative means without amendment to the Bill. I am grateful for what my noble friend said when he spoke again. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord BELLWIN Lord BELLWIN moved Amendment No. 137:
Page 40, line 38, at end insert—
("(6A) An order under subsection (6)(a) above may make a corresponding reduction or increase in any of the periods for the time being mentioned in section 13 of the 1976 Act (application for registration of rent) and sections 73(1)(a) and (1A)(a) (cancellation of registration of rent under Part IV), 80(2) (reconsideration of rent under restricted contract) and 81A (cancellation of registration of rent under Part V) of the 1977 Act.")
The noble Lord said: Clause 59 enables fair rents under the 1977 Act to be reregistered after two years. This two-year period may be reduced or increased by an order made by the Secretary of State under subsection (6) of Clause 59. There are, however, other two-year periods in the Bill affecting the rent registration system for which there is at present no corresponding order-making power. These are subsection (2) of Clause 61 which enables fair rents to be cancelled after two years; Clause 68, which provides that reasonable rents for restricted contract lettings may be reconsidered after two years; and Clause 69 which provides that reasonable rents may be cancelled after two years. If the order-making power under subsection (6) of Clause 59 were exercised to alter the period between fair rent registrations this period would become out of line with the other periods I have just mentioned. This would create anomalies since the reason for a change in the period between fair rent registrations would apply equally to the period under the other clauses.
This amendment therefore allows the Secretary of State to vary the two-year period for the reconsideration of reasonable rents in Clause 68, the cancellation of fair rents in Clause 61 and the cancellation of reasonable rents in Clause 69. This is achieved by an extension of the order-making powers which subsection (6) of Clause 59 already grants the Secretary of State. No new order-making powers are created. I beg to move.
Clause 59, as amended, agreed to.
Clause 60 [Effect of registration of rent etc.]:
7.46 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 138:
Page 41, line 1, leave out subsection (1).
The noble Lord said: This is an amendment which is very important in the consideration of the Bill. I would admit that the present drafting of the existing Section 72(1) of the 1977 Act is not perfect; but there is general concern expressed by a large number of people involved in rent
456
and by rent officers about the re-wording of it. As the law stands at present, unless the rent officer fixes a different date, a registered rent takes effect from the date on which the application is made to the rent officer—that is, the date on which the party, whether landlord or tenant, making the application lodges the documents with the rent officer. This rule applies to both landlord and tenant. If the tenant is being overcharged and the rent officer fixes a lower rent, the tenant is entitled to a refund. If the landlord makes the application because the rent is too low, any increase awarded is backdated to the date of the application unless there are special reasons why this should not be so.
The most important advantage of the existing system is that neither landlord nor tenant can profit by deliberate delay or by the current backlog of work—of which noble Lords are aware—for rent officers, particularly in the Greater London area. The Bill's proposals as they stand would reverse this rule by making the registration effective from the date the application is heard, without any discretion to fix another date. If this stands as drawn, it will give a powerful incentive, on the one hand, to the landlord who knows that the rent is likely to be reduced and, on the other hand, to the tenant who knows that an increase is probable to delay proceedings for as long as they can. The existing text of the Bill needs simplifying in other respects, but the basic point that I make is that the date of the application should be the governing date and not the date of the decision.
I cannot understand the reason why the Government have made the change. I can understand that the drafting of the clause needs improvement, but why the philosophy of the date on which the new rent comes into force should be changed defeats me; particularly because of the present position with regard to rent officers. I wonder whether the noble Lord when replying could give some idea whether, with his Government's legislative attitude to public expenditure, he envisages appointing a sufficient number of rent officers to do the additional work which will be required; for otherwise the present position will, because of the changes, become considerably worse.
I move this amendment on two grounds. First, I feel that it is a matter of some

457
importance. I believe, for the reasons I have given, that it is fairer that the rent should be effective from the date of the application. Secondly, do the Government have in mind appointing more assistant rent officers in parts of the country where they are at present grossly overburdened and where this Bill is likely further to overburden them? I beg to move.
Lord GOODMAN: I wonder whether I may, with temerity and diffidence, venture a suggestion. The rent officer is vested with total discretion on much more important matters than the question of when the new rent is to start. Would it not be a complete solution to leave it to the rent officer to determine from what date the new register is to start, on the basis it does not start earlier than the application?
Lord GIFFORD: The noble Lord, Lord Evans of Claughton, has taken the same point as I and my noble friends are proposing to take on Clause 60 as a whole. We should therefore speak to it now. I do not know whether his amendment or mine better meets the point being made. Even as a lawyer I find the drafting of these amendments to the Rent Act and amendments to those amendments very difficult. Behind all the legal jargon there is one enormously important point on which I hope the Government are going to move: that is that when a tenant who is paying an excessive rent in an area of scarcity takes his rights to apply to a rent officer, he can at the moment do so in the security that if he is right and he is being overcharged, then when the rent is registered it will be effective from the time that he makes the application. This Bill changes that position completely. It is, as the noble Lord, Lord Evans, pointed out, an invitation to procrastinate on behalf of the landlord, who may be getting £20 or £30 a week for every week he could put off a determination. That cannot be desirable.
There is an even more problematic area which has to be considered. Very often when a tenant goes to a rent officer, and the rent officer asks for the landlord's representations, the landlord says: "He is not a protected tenant because I am a resident landlord", or
458
because it is a holiday let or something of the kind. What happens very frequently is that the rent officer feels that he cannot properly determine that issue and that it ought to be determined in a county court. He adjourns the application and invites the parties to go to a county court and get a declaration from the judge as to exactly what the position is. That extends the period over which the application is pending by months and possibly more than a year. All this time the tenant has to pay what may turn out to be an exorbitant rent, with no possibility of getting it back. I hope that, whatever the right form of the amendment needed to take account of that situation, the noble Lord will indicate that this is going to be considered.
7.54 p.m.
Lord BELLWIN: Clause 60 seeks to remove the confusion that has been caused by the present provisions relating to the date from which a fair rent takes effect and the date from which the minimum period before re-registration is calculated. This amendment would, by omitting subsection (1) of Clause 60 of the Bill, restore this confusion and the inequity that goes with it. The present provisions relating to the date on which the new rent takes effect are unfairly biased against the landlord. If the registration results in a rent reduction, the reduced rent is effective from the date of the application to the rent officer, and hence the reduction is back-dated. If, however, the new fair rent represents an increase, the increased rent, although theoretically effective from the date of application, can be recovered only from the date of registration—and then only if the landlord serves the correct notice on the tenant. This amendment will perpetuate that system.
When the Rent Acts were first introduced a significant number of rent registrations resulted in a reduction in rent because they were first registrations. They were therefore payable from the date of application for the registration of a fair rent and thus were in line with the date from which the minimum period before a rent can be re-registered runs. Now, however, the vast majority of registrations are re-registrations and will therefore inevitably result in rent increases. This is reflected by the fact that in England and Wales

459
in 1978 only 4.8 per cent. of all applications for rent registrations were made by tenants. Although these rent increases take effect in the real world from the date of registration, their theoretical "effective date" is the date of application. It is this theoretical date, which has no other significance, from which the three-year period before re-registration is calculated. This causes considerable confusion to landlords and tenants alike.
Subsection (1) of Clause 60 removes this source of confusion by providing that all fair rents will take effect from the date that they are registered by the rent officer, except in the tiny minority of cases where the rent is changed on appeal to the rent assessment committee—currently about 2 per cent. All registered rents whether reductions or increases, will be payable from this effective date, which will also be the "relevant date" for calculating the period before re-registration can be obtained. Landlords will still, however, be required to serve notices of increase which cannot be back-dated for more than four weeks. This is simpler for landlord and tenant, and I believe much preferable to the present position which the amendment would restore.
The noble Lord, Lord Evans, and the noble Lord, Lord Goodman, earlier, made a point about administration, the number of rent officers, and so on. On that, I should like to say this: we accept this point that Clause 59 particularly—which we have gone past but the same point is still here now—will result in more registrations. In order to meet this, we have been reviewing rent officer output together with rent officers. A report was prepared and its recommendations were discussed with the Institute of Rent Officers (of which the noble Lord, Lord Goodman, is president) as a result of the amendments to the Bill which were introduced in another place to speed up rent officer procedures. This flowed from that. These have the full support of the Institute. We and they are confident that the increased number of registrations can now be dealt with with little or no delay and at only modest extra cost. If noble Lords have reservations as to that, I shall be pleased to hear them and of course to look at them. Indeed, if necessary, I will try to give more chapter
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and verse on them, if it is called for either by correspondence or in Committee.
I understand the points that have been made and that trouble the noble Lord, Lord Gifford. The answer that I have given covers them. I see the noble Lord shakes his head to intimate that it does not cover them. In that case I repeat what I have said: we will study what he has said very carefully. If we feel it is as he says, then of course he need not bring it back; we will bring it back in another way. Beyond that I cannot go at the moment.
Lord GIFFORD: The noble Lord may have a point with re-registrations. There is not the same problem of a rent which is probably excessive being charged. But when it is a first registration, the point that the noble Lord, Lord Evans, and I have made must be met. This is a matter which could be considered between now and the Report stage.
Lord MONSON: I wonder whether I could add my plea to the noble Lord, Lord Bellwin, to think about this matter again. The British Property Federation does not usually find itself in close harmony with the Labour or Liberal Parties, but it takes exactly the same view as they do about this clause. They would far prefer things to be left as they are. They anticipate an enormous log jam with the burden upon rent officers being uplifted by 50 per cent. as a result of the shortening of the re-registration period. Like noble Lords on the Labour Benches they would prefer matters to be left as they are.
Lord EVANS of CLAUGHTON: I take the point that the noble Lord, Lord Gifford, has made; it is a very good point. The noble Lord, Lord Bellwin, made the same point: it may well be that in the case of re-registrations the position is in order. So far as first registrations are concerned, the position from my point of view and that of a great number of people who have spoken to me about it is most unsatisfactory. The remedy that the noble Lord, Lord Goodman, suggests may well be the remedy, but we have not an amendment to that effect before us. No doubt it is a matter which the noble Lord the Minister would consider.
I am glad to hear what he says about rent officers. I hope and believe from

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what has been said that reconsideration could be given to the terms of this clause. I am not suggesting that the present Section 72(1) of the 1977 Act is perfect. I have been thinking of amendments I would make to that which I think would he far better, but they may only he far better in my opinion. They may well not he better in the opinion of the noble Lord the Minister, but if he could consider the position—we see the point as regards re-registration—on first registration and the inequitable result that will come principally to tenants, but which could also be unfair to landlords in the circumstances I have mentioned, perhaps we could have another look at it during Report stage. If the Minister were willing to say he could do that, I should feel able to withdraw the amendment.
Lord BELLWIN: I have to be very careful in what I say over these things, as I have learnt. I would only go so far as to say that some of the points that have been made, particularly by the noble Lord, and the noble Lord, Lord Evans, were interesting ones. I undertake that we will look at everything that has been said, and should points prove to have merit—because I repeat again that we want to get the best Bill we can—then of course we will do something about it. Beyond that I feel I cannot go.
Lord EVANS of CLAUGHTON: I am willing, on the whole, to accept that. It seems to me that when we get to the Report stage there may be hundreds of Divisions, but I hope it will not come to that. I thank the noble Lord for what he has said and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 60 shall stand Part of the Bill?
Lord STRABOLGI: The amendment to leave out Clause 60 is not to be moved.
Clause 60 agreed to.
Clause 61 [Cancellation of registration of rent]:
Lord GIFFORD Lord GIFFORD moved Amendment No. 138A:
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Page 43, line 10, leave out ("subject to a regulated tenancy") and insert ("occupied as a residence by any person (other than an owner-occupier)").
The noble Lord said: Clause 61 deals with cancellation and, as I understand it, the purpose of the clause is that cancellation of a registered rent under the present law is rather difficult and it is the intention of Clause 61 to make it easier. A landlord will be able to apply to cancel and indeed have the registered rent cancelled after two years if the dwelling-house is not being let on a regulated tenancy. What the amendment proposes is to change that and allow cancellation only if the premises are not being occupied as a residence by anybody.
The point is that it may well be that a landlord applies to cancel when he has let the property on what he thinks is not a regulated tenancy: that is to say, a holiday let or a licence arrangement, which may or may not be a protected tenancy. He can apply to cancel without giving any notice at all, under the Bill, to the occupier of the dwelling-house, and the rent will then be cancelled. It may be then that some months later the occupier will wish to go to a court and obtain a declaration that he has been all along a protected tenant. If he succeeds in that, the position will be quite chaotic. Will he be able to obtain a rebate on the excess rent he has overpaid? Probably not, because the registration will no longer be in the rent officer's book. It is to meet that sort of objection, and in the hope of being constructive, that I beg to move this amendment.
Lord BELLWIN: The effect of Amendments Nos. 138A and 138B is to add a further restriction to the circumstances in which a landlord can apply to the rent officer for cancellation of a fair rent. Clause 61 provides that where the rent was registered more than two years earlier, where there is no current regulated tenancy in the dwelling, the landlord can have the old rent cancelled. The amendments alter the second condition. Instead of no regulated tenancy in the dwelling the proposal is that a rent can be cancelled only if no one other than an owner-occupier is living there. The purpose, presumably, is to ensure that someone who is letting a property outside the Rent Act in some way cannot at the same time

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cancel an old registered rent for it. I do not see the justification for such a restriction.
The purpose of allowing cancellation under Clause 61 is to prevent the landlord from being penalised by the existence of an out-of-date registered rent. At present there is no means of cancelling an out-of-date registered rent where there is no current tenancy. Once a tenancy has started, although a new rent can be registered, the increase from the old rent to the new rent is phased: so the out-of-date rent which the landlord cannot otherwise cancel reduces the amount of rent that he can recover after re-registration.
Clause 61 removes the problem by allowing cancellation of an old rent. This seems only fair to me, whoever is living in the property, always providing it is not a regulated tenant. For example, if someone has let a property to an aged parent or to a friend at a nil or a very low rent, why should he not be able to cancel a registered fair rent at the same time? There is nothing wrong with bona fide lettings outside the Rent Acts. These amendments imply that there is, because it prevents someone using the property in that way from availing himself of this proposed new means of cancelling an out-of-date rent. If a rent is out of date and if there is no regulated tenancy, it is only fair that the owner should be able to cancel it, even if he is putting the property to some other use in the meantime. That is what Clause 61 provides, and I hope that noble Lords will accept this and perhaps the noble Lord may feel able to withdraw his amendment.
Lord GIFFORD: We are getting on to slightly technical ground. I must take up the noble Lord when he talks about "letting outside the Rent Acts". The circumstances in which you can let outside the Rent Acts are very, very limited indeed and concern only friendly arrangements, holiday lets and things of that kind. Obviously I am not going to press this to a Division; but will the noble Lord, who knows quite well that there are constantly in big cities lettings that may or may not be outside the Rent Acts—disputed holiday lets and things of that kind—undertake to consider what the impact of a cancellation would be when someone is in possession without know-
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ledge of a cancellation and subsequently comes to be declared a protected tenant all along? That is the particular difficulty I have in mind.
Lord BELLWIN: I can only say, as I tried to do on the last amendment, that if we are not careful we shall indeed, in an attempt to avoid dividing the Committee—if that is what is decided—be building up for ourselves at Report stage a situation that will be absolutely impossible. I have no intention, from where I am, of doing that. I would only repeat—and if I did not make it clear earlier I now say it again—that where points have been raised that are considered to be important, I assure noble Lords that everything that is said is sifted carefully; where points are raised which in the Government's opinion are valid, in the sense that they have not been considered or they raise new matter which we ought properly to be doing something about, I give the assurance that they will be looked at very closely. I cannot say that that is the same as saying, "We will withdraw" or, "We will consider formally". I cannot do that, but I can say, of course, that everything is sifted in detail.
Lord GIFFORD: I am sure the noble Lord will take it from me that lawyers and courts, let alone landlords and tenants, can get into terrible tangles in understanding the Rent Acts. It is on such a point, not on a point of great principle, that I asked for and have received that assurance. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord DENHAM: We said we would adjourn the Committee at approximately eight o'clock. I understand that if we go on to the next group of amendments, which rather naturally fall together, it could take us beyond a quarter-past eight. If one has said approximately eight o'clock and one goes beyond a quarter-past, then one is going beyond the spirit of the undertaking.
So perhaps I may move that the House do now resume.
House resumed.

EEC BUDGET FOR 1980
8.10 p.m.
Lord O'HAGAN Lord O'HAGAN rose to ask Her Majesty's Government whether they will make a statement on the draft EEC budget for 1980 and the consequences for the United Kingdom; and whether they will state their views on Part III of the Report of the European Communities Committee on the 1980 budget (57th Report, HL 301). The noble Lord said: My Lords, the draft 1980 budget of the European Economic Communities is branded on my sub-conscious. I am a member of the European Parliament's Budgets Committee, and we seem to have been in continuous session since the Parliament first met after direct elections. Matters have reached such a pitch that the other night I awoke in a nightmare, having dreamed that I was giving a press conference in French about the latest developments on Parliament's attitude to the budget.
I hope that this evening's debate will not convince your Lordships—whether I speak in French or not—that you are reliving that nightmarish experience. I am taking the opportunity to provide a chance for this House to examine the very curious development of the draft 1980 budget, if it still is a draft, and to assess the merits and the consequences of the settlement of our own national contribution to the coffers of the European Economic Community.
The draft 1980 budget should have been a real budget by Christmas. We are discussing a baby which is six months overdue and whose final birth as a real budget is still, if only marginally, in doubt. I must say that it has been a fascinating and an educational experience to take part in the activities dealing with the budget from the Parliament's point of view. I should like to begin with that and then broaden out.
We have dealt with this budget in great detail and the first dramatic point referred to in this report from the European Communities Committee of your Lordships House—an admirable report which I wholly endorse, with one exception which I shall mention later—was the rejection by the Parliament of the budget last year. We all felt a little like the poet Wordsworth at the dawn of the French Revolution, and we dreamed for a few seconds that
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we were embarking on a new chapter in constitutional history, only to discover as the days and weeks drew on that the likelihood of our making a real dent in the textbooks was a little less clear than it first seemed.
But there is one fact about that budget rejection which I would bring again to the attention of your Lordships, especially as it has had very little remark made on it in the British media. The fact is that out of the 288 who voted for rejection, there were 17 Frenchmen. Seventeen Frenchmen voted against a budget designed to prolong and extend expenditure on the common agricultural policy. That is something worth noting. It is also worth noting—and, again, this is a point to which I shall refer later in more detail—that all the noises, both articulate and inarticulate, that had been made by the British about the common agricultural policy for years prior to the settlement of our contribution are now beginning to be made by the Germans.
So that when we are looking at the core of the problem of the financing of the European Community, we are approaching a state of political mobility in which the two other major contributors to the EEC budget are beginning to change the degree to which they adhere to the common agricultural policy in its present form. If the Parliament gave a little opportunity for beginning that process, and demonstrating that part of that process had already occurred in France, then that itself was no mean part in saving the finances of the European Community, which are, on present calculations, doomed to reach bankruptcy within a very short space of time—probably next year, certainly the year after and certainly pretty much at the same time as enlargement. Therefore, the road towards CAP reform has been, if not made straight, at least signposted by the actions of the European Parliament in rejecting the budget earlier in its life, late last year.
The second point I would make about the nature of this year's budget—and the analysis of its content, its defects and its advantages is very well spelled-out in the report from the sub-committee—is that the attitude of the Parliament itself to the direction of European Community expenditure was not a right-wing attitude, or a British Conservative attitude or a partisan, mono-national attitude. I mean

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that the Conservatives themselves, as part of a group, let alone the group strength itself, are only 60 out of a Parliament of 410.
Our Budgets Committee is chaired by a distinguished Socialist, Herr Erwin Lange, who I am sure the noble Lord, Lord Bruce of Donington, may remember, and our rapporteur on the budget was a most remarkable and quadrilingual Dutch Socialist, Piet Dankert, who guided the Parliament through all its tortuous negotiations with the Council and towards the evolution of a sensible strategy for reducing, restraining and controlling agricultural expenditure, so that other more serious new policies could be gradually elaborated.
We were guided through our activities, both as a Budgets Committee and as a Parliament, by Socialists working in co-operation with people of other parties, not only ourselves but Liberals and, indeed, a strong contingent of Italian Communists. Therefore, the pressure for reform of the Common Agricultural Policy, as expressed through the Parliament's view of the draft 1980 budget, is something that was worked on from a cross-party basis which, to me, is not only highly satisfactory but part of the purpose of the European Community. It was not only cross-party, but cross-national, and I welcome it.
What is most interesting is that the logic of that position has been reinforced by the activities of Her Majesty's Government in making sure that our own contribution is no longer as glaringly out in front of all the others as it was. Naturally, I should like to congratulate my right honourable friend the Prime Minister on her pertinacity and force of argument, and my noble friend the Foreign Secretary on his skill and charm in tying up the package.
But what is important is that their combined forces are not only something which serves the British interest. They go rather beyond that in what they have achieved, because they add to, or confirm, the two pressures that I was referring to. There is a general anxiety in other large member states at the cost of the Common Agricultural Policy, which threatens not only to fossilize the CAP as something which drains more and more of the
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Community's resources, but which prevents the development of new policies whether it is an energy policy, a better transport policy or whatever it may be.
So when we are assessing this budget—I hope this is the spirit which the noble Lord, Lord Bruce of Donington, and the noble Lord, Lord Brimelow, and their friends in this House will be able to share—I hope that we shall not be looking at it in the same spirit as the Opposition in another place, where I understand that they have a three-line Whip against the Government's achievements in re-jigging our contribution as a member state of the European Community. To disapprove of and vote against what has been hard won by the Government is also to disapprove of and vote against the steps towards a genuine and fundamental reform of the budgetary balance of the European Economic Community's finances and the only method by which reform of the Common Agricultural Policy is likely to be achieved in the immediate future, because it is up against that threshold of the I per cent. value added tax ceiling, against which agricultural expenditure is straining, which will provide the opportunity for an overhaul of the Common Agricultural Policy as a whole.
Far be it from me as a temporary, if unwilling, absentee from your Lordships' debates and the arduous labours which noble Lords have been going through on all the Bills which they have been discussing in recent weeks to say how this question should be dealt with by other participants. I have seen my own role as modest—one of fulfilling the purpose of a dual mandate by bringing to your Lordships a brief account of how development of the budget has seemed from the point of view of a European parliamentarian. I should like to add to the report that I believe there are serious defects in some aspects of the budgetary control procedure in the European Community. Again this is a subject of which I know the noble Lord, Lord Bruce of Donington, has made a special study. Indeed, his final report, his valedictory tone, is still being referred to very much now that the Parliament has finally established a separate control committee.
I do not think that the paragraphs of the 57th Report, which deal with the provisional twelfths, really represent the truth. I do not think that the European Com-

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munity has yet developed a mechanism for checking the expenditure made by the Commission if and when a budget is rejected. I would hope that our own European Communities Committee, perhaps, and the Parliament's budgetary control committee, certainly, in alliance with the auditors, could look at this particular provision. Unless the provisional twelfths system really works, rejection of the budget is a meaningless exercise, because expenditure, grossly distorted on export restitutions, on unnecessary intervention, or whatever it may be, can continue and in my opinion may well have continued, particularly in the last two or three months. So I would dissent from that aspect of the 57th Report.
The European Parliament has a role in the budgetary procedure which is going to take some time to develop fully. It is not limited merely to rejection or amendment and modification. It extends to control and to the final act of discharge which is, as yet, an unexplored power. I hope that my noble friend Lord Cockfield will be able to give us a hint on whether the Government are prepared to see the budget of the European Communities as something a little more than an accounting exercise for policy decisions already taken. This is my final point and I shall allow myself just a few minutes to elaborate it.
By and large, if you think in French or speak in French your conception of a budget is merely the conception of the man who draws up the bus timetable after higher powers have decided when the buses should start and should stop, whereas those of us who think in language derived from political experience in the House of Commons see the budget itself as a policy instrument, if not the supreme fiscal policy instrument and the supreme instrument of spending money. What has yet to be resolved is the extent to which the Council of Ministers is prepared to make a decision between these two conceptions.
An examination of the Treaty, in my view—and in the view, I suspect, of most members of the European Parliament—shows that the original authors saw the budget as a dynamic instrument. It is not enough merely to enter something in the budget if there is no legal base. I quite agree with that criticism which is
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sometimes made by the Commission. Nevertheless, the powers over the budget given to the Parliament are not those which could be given to an elected body if all the policy decisions were outwith the powers of the Parliament itself. There would be no point in giving powers to a Parliament to deal with a budget which was merely a technical expression of decisions taken elsewhere.
If, therefore, for one second my noble friend Lord Cockfield could look beyond the immediate problem and the difficulties that have vexed the Treasury night and day, I am sure, just as much as Members of the European Parliament over this year's budget, which has nearly completed its birth pangs and soon is to become a proper budget, and say to which side of the argument Her Majesty's Government incline, this would provide your Lordships not only with an opportunity for hearing from the Government how they now see the 1980 budget in its wider framework but also with an indication that we in this country, after our national contribution has been dealt with, at least for the next two or three years, are now going to pick up the treaty, not hide behind it and use it as a defence, and work in it, with it and through it to construct a genuine European Community with a wide range of new policies that will make the European Community worth working for, and in, rather than merely the technical and remote bulwark against communism and extremism which it now seems to he to most people in this country and, I suspect, in other member states.
8.28 p.m.
Lord GLADWYN: My Lords, I think that we should all be very glad that this important matter has been raised by such a young, energetic and important Member of the present European Parliament as the noble Lord, Lord O'Hagan, who, I understand from his reference to the poet, was a year ago glad to be alive, but to he young was very heaven! I can only hope that the noble Lord, Lord O'Hagan, feels the same at the present time.
I propose to touch only very briefly on the second part of the Unstarred Question; namely, to ask the Government to state their views on Part Ill of the excellent report of the European Communities' Committee on the 1980 Budget. Para-

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graph 36, to which I hope the noble Lord, Lord Cockfield, will refer, inquires whether the Government are convinced that there is a reply to the five queries contained in that paragraph, which seem to throw certain doubts upon the expenditure solution which was agreed to in the recent compromise in Brussels on the British contribution to the Budget. There seem to be certain doubts about this, but I understand from the evidence that the Treasury officials are convinced that there is nothing in them. If that is so, perhaps the noble Lord, Lord Cockfield, will explain to us exactly why. I should be very grateful if he would.
I shall confine my brief remarks more to the future of the Community arising out of the budget debate, and the future of the Parliament and the Community as a whole. I suppose that the chief question in the chequered history of the 1980 budget was whether the European Parliament was in fact justified in rejecting it after they had refused to accept the amendments proposed by the Council of Ministers, though of course legally it was perfectly possible for them to do so. My own view, and without going into it at any great length, is that the gesture of the Parliament was justified if only because it demonstrated that the Parliament was a force to be reckoned with and that Ministers would have to take its view in future into serious consideration.
Of course, one can argue to the contrary. Those who are opposed to the European concept generally, and therefore more especially opposed to the European Parliament, undoubtedly will argue that the rejection was not justified because, in the event, the Parliament had effectively to climb down, and therefore it only showed that it had no real power, and so on. I do not believe that that is true. I believe it was justified for the reasons I have given. But clearly, apart from the overriding consideration, the gesture of the Parliament was ineffective. The approved budget—it was approved finally the other day—only gives the Parliament a very limited degree of satisfaction with regard to regional and social funds. And the chief object which the Parliament tried to achieve in rejecting the budget, namely, the freezing of agricultural prices, was rendered inoperative by the Council's decision of May of this year, when,
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as we all know, they accepted the 5 per cent. rise.
I suppose it can also be argued, though perhaps I would not argue it myself, that had it not been for the British veto on the rise in agricultural prices negotiation for the new United Kingdom contribuiton, which has now happily been agreed at two-thirds of what was originally asked for, would have been more difficult. As we all know, that agreement in Brussels the other day was based on an agricultural deal whereby in return for the very notable concessions made to us in regard to our contribution we had to agree, or we did agree, to a 5 per cent. increase in agricultural prices.
The Commission's proposals for the 1981 budget are, I understand, not yet formulated. I suppose they will shortly be discussed, as usual, with the Parliament in the relevant Committee. As we all know, discussions between the Commission and the Parliamentary committees are usually very fruitful and very constructive. The Parliament puts forward certain views and the Commission accepts them or not. Anyhow, there is usually a consensus which is then put up by the Parliament to the Ministers for acceptance or rejection. That, I suppose, will happen and the Ministers will then get the resulting document later in the summer. It will probably come before the Parliament in October. The Parliament will then reconsider it and before the end of the year it has again to accept it or reject it.
If a budget can be prepared in this way by the Commission and submitted to the Ministers—a budget which provides for the present expenditure in regard to the Common Agricultural Policy; that is to say, if the Commission believe that they will not be running short of cash in 1981, and I think there is some reason to suppose that they will not run short of cash in 1981 —then the European Parliament will probably have before it much the same sort of budget that it had towards the end of last year. I should have thought that it cannot differ very substantially from the 1980 budget. As we all know, the Parliament rejected that budget. Nevertheless, the Parliament will surely try to improve this document. It may do so to a certain extent, though surely only within strict legal limits.
In so far as the present recession goes on, as it probably will, the Governments

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will by the very force of things become increasingly niggardly from the Parliament's point of view, and therefore it is not to be expected that the Parliament will have very much success in amending the budget in accordance with its obvious wishes. I hope, therefore, that in those circumstances the European Parliament will not, if things work out in that way, repeat its gesture, not because I think it was unjustified last year but because, as I believe, it will have to reserve all its strength, as it were, for the immense debates which will naturally take place on the 1982 budget, a year later. A very significant struggle will obviously take place then. For what will happen in respect of the 1982 budget is that the Community will have run out of cash; I think there is no doubt about that. It will run out of cash and there will not be enough money to finance the Common Agricultural Policy. Therefore major decisions will obviously be necessary.
The budget, if it is eventually passed, will have to be completely restructured, involving naturally a revision of the CAP, which cannot be avoided in the circumstances. Surely there must be a re-think then about the whole purpose and future of the Community. If the Community is to go on it must be more broadly based financially than it is at present; in other words, there must be some increase in what are called "own resources" of the Community—its own money. Hence, one would have thought that in principle the 1 per cent. VAT which is now subscribed in addition to Customs receipts by all the member states will have to be increased if there is going to be any valid solution. That will have to happen if any really satisfactory solution is to be found. If the Governments have any sense at that point they will agree to increase the "own resources" because that is the only way in which one will ever work towards what is called convergence of the economies; that is to say, more money diverted perhaps from agriculture into the regional and social funds, more money circulating generally, and the only way to achieve in the long run any kind of sensible Common Agricultural Policy.
At the moment there is no prospect whatever of any such decisions. If the "own resources" are to be increased, as understand it, not only all the Nine
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Governments have to agree but all the Nine Parliaments, too. At the moment that is clearly out of the question. A deepening recession makes this improbable; nor is it, as I have said before, immediately necessary. But what will happen a year or a year and a half from now in the presence of perhaps a deepening recession? If they cannot agree on some such lines it seems to me that in all probability the Community will be in danger of disruption. Powerful forces will be working for protection as a result of any increasing slump. They will be working for protection in all the countries of the Community, but more especially, I think, in this country of ours. If they prevail, then inevitably we shall have separate and what are called directed economies in all the countries of the Community, and certainly here.
By the very force of things those will be run by elements hostile to NATO and who are possibly in favour of some deal with the Soviet Union. It is quite possible to imagine that these elements could be in power in 1983 or 1984. One does not have to be very imaginative to contemplate such a possibility. I do not think this is at all a flight of fancy or a prophecy of doom; it is a very real possibility which we must contemplate. If we choose the path of protection in 1983, or even 1982, which we may do—and the decision of this country will depend largely on what happens in Europe—then, as I see it, economic disintegration will inevitably imply and involve political disintegration, the one inevitably resulting from the other. In such distressing circumstances 1984 will certainly witness, if not the emergence of what Orwell called Airstrip One—a rather outdated conception, because Orwell wrongly imagined that we were going to have a nuclear war in the late 'fifties—at least the emergence and effective creation of what he called Eurasia, of which we should then be an integral part.
I think there are already a considerable number of people in this country who would not find this solution absolutely insufferable. Quite a few even now would not object to our becoming the equivalent of the German Democratic Republic which, after all, has not done badly for a communist state, and if the recession persists into 1982 and 1983—and this is not just alarmism—they could be a

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majority. In those circumstances of course there would not be a nuclear war, which would be a great achievement as such, but obviously we should have lost our freedom.
So I think we can at least all agree—and I hope the Government will agree—that the budget of the EEC will become more and more important as the years go by, and perhaps we can further agree that the role of the European Parliament in the formation of the budget, in conjunction with the Commission, will become more and more significant. I do not think that at the moment there will be many in this country who would also believe that unless we can agree in the European Economic Community to a measure of supranationality we are in for the gravest trouble. But I fear that we only have to wait for a year or two before this stark choice becomes increasingly plain.
8.43 p.m.
Lord SHERFIELD: My Lords, I should like to add my thanks to the noble Lord, Lord O'Hagan, for putting down this timely question on the EEC 1980 budget and for adding to his burdens by coining here at a rather late hour this evening to give us a first hand and authoritative account and interpretation of the proceedings of the European Parliament on this issue.
This budget has survived an exceptionally rough passage and has had to weather two separate major storms: the first was its rejection by the European Parliament and the second was the controversy over the British budget contribution. I shall not deal with the former because all the speakers in this debate know much more about it than I do but I will say a few words about the budget contribution.
There has been plenty of criticism of the tactical handling of this issue in the negotiations with our European partners, but I think the result has shown that the strategy was sound. There has also been criticism of the outcome. But since this was so much better than was generally expected I feel that there is more than a trace of sour grapes here because I would wager that if the Opposition or Liberal Ministers had brought back the same amount of bacon they would have been
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as pleased with themselves as the Government were.
Lord GLADWYN: My Lords, did the noble Lord say that the Liberals would be just as pleased? Of course we are very pleased with the compromise arrived at in Brussels. The Liberals are delighted.
Lord SHERFIELD: My Lords, however that may be, there was of course an element of compromise in the result. It was not practicable to deal with the budget issue in isolation. It was necessary to relate it in some degree to the resolution of other issues. That was to be expected, if not inevitable. So I find the objections which have been raised to the settlement somewhat contrived. It seems to me that only a committed opponent of the European Community would insist upon getting 100 per cent. of his opening demand in this kind of deal. It was not a perfect solution. There may still be some uncertainty about some of its implications, but it was a far better outcome than seemed obtainable at any previous stage of the negotiations, and our own negotiators—and also our Common Market partners—ought in my view to be heartily congratulated on the result.
Having said that, my Lords, I now want to say something about the report of your Select Committee on the European Communities on the 1980 Budget, which was published two days ago. I do this in the lamented absence of the noble Lord. Lord Plowden, the chairman of the subcommittee concerned, who was unable to be in his place this evening. The subcommittee took evidence from Mr. Pieter Dankert, a member of the European Parliament and the rapporteur on the budget questions; from Mr. Taylor and Mr. Balfe—two more members of the European Parliament—and from Treasury officials, and it also took evidence at an earlier stage from Mr. Nigel Lawson, the Financial Secretary to the Treasury. The committee is grateful to all those who helped in the production of this report.
The report itself is in three parts. The first gives an historical account of the rejection of the budget by the European Parliament, and its consequences. The second gives a similar historical account of the negotiations about the British contribution. These are matters of record and I shall not discuss them further tonight, other than to say, with reference

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to my opening remarks, that the committee considered that the final agreement represented a considerable achievement in temporarily redressing the balance of the United Kingdom contribution and they particularly welcomed the commitment to a review of the structure of the budget.
The third part of the report deals with the future and gives the conclusions of the Select Committee. Those of your Lordships who have followed the question of the British contribution over the years may recall that in 1975 the Council approved the adoption of a financial mechanism designed to refund in part excessive gross contributions to the budget. Owing to a number of restrictive criteria and conditions which were written into the document setting up this mechanism, the device was not particularly effective and the first solution proposed by the Commission to meet the British problem was to remove these restrictive conditions and to enable our contribution to be reduced by £350 million in 1980. It was this proposal which was rejected at the Dublin Summit in November of last year. It was a solution which covered one year only.
The final conference at Brussels last month covers two years explicitly and makes contingent provision, on similar lines, for a third year. But it contains two elements: the "mechanism solution" and the "expenditure solution"—that is to say, the adoption of special temporary and ad hoc measures for the purpose of increasing the current low level of Community expenditure in the United Kingdom.
Your committee were assured that the required level of expenditure in the United Kingdom could he attained without difficulty even if the agreemen' covered a third year and no doubt the Government are satisfied that these expenditures will, in the event, be forthcoming. Nevertheless, the solution found for our budgetary problem is, in essence, a transitional one and your Lordships' committee emphasise that the expenditure method cannot effectively form the basis for the permanent solution that must be found when own resources" have to be incteased. The Commission had originally itself criticised the expenditure solution on a number of grounds, as the noble Lord, Lord Gladwyn, pointed out. They have now accepted it, however, as an essential in-
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gredient of the compromise agreement, though their criticisms still have validity. They are five-fold. They are contained in paragraph 36 of our report, and I do not think that I need read them out this evening.
When he gave evidence to our subcommittee last December the Financial Secretary to the Treasury said that the Government believed that the best solution would be a new mechanism operating on the net contribution to the budget. Such a mechanism would be more consistent with Community principles, leaving revenues to be collected in accordance with the own-resources concept instead of their being artificially arranged so as to produce a desired distribution of net budgetary contributions.
Nobody, I am sure, will doubt the extreme difficulty of finding a solution to the Community's budget problem when the existing "own resources" run out in a year or two. But it was your committee's view that the objective should be a solution based on a mechanism controlling net contributions rather than a programme of Community expenditure in member states, which would need to be negotiated year by year, and would he liable to cause uncertainty, delay and friction. I think that this report of your Select Committee is highly relevant to this debate and I commend its conclusions to the House and to the Government. I hope that the Minister will be able to take some account of it in his reply to this debate.
8.52 p.m.
Lord CAMPBELL of CROY: My Lords, I, too, thank my noble friend Lord O'Hagan for giving us this timely opportunity to discuss this question, and also for giving us his own first-hand account of the events which led up to the Brussels meeting at the end of May. I am glad also to follow the noble Lord, Lord Sherfield, who has introduced the report which is referred to in the text of the Unstarred Question which we are discussing. In particular, he referred to Part III, in which the sub-committee who worked on this put forward their ideas for the future. As a member of the sub-committee myself I am grateful to the noble Lord, and to the noble Lord, Lord Plowden, for the amount of work

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that they have done in the preparation of this report.
I should like to start by congratulating the Government and my noble friend Lord Carrington on the success of the Brussels meetings. Agreement was reached at the end of May and it was outlined in my noble friend Lord Carrington's Statement in this House on 2nd June. Formulae were agreed for 1980, 1981, and for 1982 if more permanent arrangements have not by then been made. I will not examine these complex formulae tonight, but they do constitute welcome and justifiable relief for the burdens which the United Kingdom has been carrying, burdens which have been increasing.
I will tonight simply make three points. First, I would point out that fortuitously this year the annual determination of farm prices and the major decisions on agriculture have taken place at the same time as decisions on the annual budget. The two Councils, one of Foreign Ministers and the other consisting of Agriculture Ministers, were meeting at the same time. This happened by chance because of the budget having been rejected by the Parliament. Could not this be repeated in future years? Could not the EEC arrange for their financial year to coincide in future with the agricultural year? This is something which many of us have been pressing and we hope that Her Majesty's Government will also press it. I trust no one in your Lordships' House will consider that I am inciting rebellion when I suggest that it might even be worth the Parliament throwing out the budget every year on the first round if it were to lead to these decisions being taken sensibly at about the same time. Certainly the additional twelfths system which enables the Community to go on ticking, although it has great shortcomings which my noble friend Lord O'Hagan pointed out, none the less enables the EEC finances to continue.
My second point is this. It is the same as the one made by the noble Lord, Lord Sherfield, so I will be brief. The Brussels agreement is in two parts; first, the financial mechanism and, secondly, the special additional expenditure for the United Kingdom. The 1975 financial mechanism, which was part of the renegotiations and therefore related to the referendum which took place in 1975, I
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am sure was entered into in all good faith. But it has proved to be ineffective. The United Kingdom did not fulfil all the conditions required before the mechanism could be activated, even when we were bearing a very heavy burden and that burden was increasing. So that defective system has now been put right, we hope, for at least three years. The second part of the agreement, the special expenditure for the United Kingdom, does also carry with it some examples. They are given as the financing of coal projects, transport infrastructure, special interest rates on loans connected with the EMS, and agricultural improvement schemes. Those examples, I think, will cause your Lordships to realise that these are not matters which can be put into action very quickly.
I am delighted that it has been thought possible to do this for a period of two or three years and it is welcome that plans for this are already in hand. But as stated in Part III of your Select Committee's report, it is not easy to arrange for one member country to have, for example, additional expenditure on special public works programmes, which are not really seen as necessary, because if that happens it will be unpopular with the membership as a whole in the EEC. It may be acceptable for a short period as proposed, but it is not a long-term solution; so for the longer term we must concentrate on a mechanism solution. That is my second point. The mechanism governing net contributions must be the key to a long-term solution. There is a commitment to review the
"patterns of expenditure and the operation of the budget".
"The United Kingdom will be able to press for lasting reforms which will help solve the British budgetary problem".
These are extracts from the Statement made by my noble friend Lord Carrington, and they bring me to my third point.
I believe that the United Kingdom Government ought to be working now on possible solutions. If they are not they ought to start now. The Commission is due under the agreement which has been reached to submit proposals by June 1981. That is less than a year from now. The whole Commission itself is due to be replaced or reappointed during these coming months. The Commissioners themselves are in a state of uncertainty. It is in our interests in the

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United Kingdom to help with the groundwork and the vital quest for a satisfactory and lasting solution. Perhaps we could do this in consultation with the Germans. After all, they are now going to be the largest net contributor to the EEC budget. The formulae for a future mechanism must take into account the expected enlargement of the Community to 12 members. Greece is due to join in January, Spain and Portugal at some time from 1983 onwards. The one thing we do know is that they are to be net beneficiaries for their early years in any case, which means that their additional membership will add to the total burden being borne by existing members.
So I do urge the Government to give all the help they can to the EEC Commission in working out proposals which are likely to be acceptable for the Commission to put forward by June of next year. Those proposals may well have to be complex. That does not matter, provided they allow for all the situations that are likely to arise in the coming years. I feel sure myself that the Commission will be glad of suggestions from any interested quarter. Their task is hard enough in all conscience. Work should be started soon in preparation for this radical review which will inevitably be of the greatest importance to the United Kingdom.
9.2 p.m.
Lord ARDWICK: First, I would like to say a word of gratitude to the noble Lord, Lord O'Hagan, for arranging this debate today. I should also like to say a word about the report itself. Perhaps I ought not to do that since I am a member of the committee which produced the report, and indeed of the sub-committee which was responsible for it. Nevertheless, as an old editor I cannot resist giving my private Pulitzer prize to whoever it was who put the words on paper because they have dealt with a most difficult subject in a beautifully clear and concise manner. I am afraid that when you leave the rhetoric behind and get into the detail, many of the subjects with which the European Community deals are rather heavy going, none of them more so than the Community budget.
Even as a member of the European Parliament I was reluctant to spend my passions on it, and indeed there was no
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need because my noble friend, Lord Bruce, brought his political zeal together with his professional expertise. May I say for once that that word is used exactly—expertise. He led the battle of the budget. Meanwhile, he explained at every stage to us, the semi-numerate members, what the Ministers were up to and why they must be attacked. Had we followed his lead, the budget would have been thrown out by the old Parliament, and for exactly the same reasons that inspired the new one. What we learned two or three years ago under Lord Bruce's tutelage is now common knowledge: roughly three-quarters of the budget goes to agriculture, and only one-quarter to such things as the regional and social funds.
The first kind of largesse, the gift of town to country, it is generally agreed now is too lavish. It over-rewards the rich farmer and it calls forth huge surpluses of food that are costly to store and can be sold only to underserving foreigners at knock-down prices. The second largesse is inadequate. There can be no significant progress towards closer economic integration in Europe, there can be not much progress towards convergence, there cannot even be progress up the foothills beneath the summit of monetary union, without substantial transfers of resources to the poorer regions.
The present scale of redistribution effected by the regional and social funds is still so small that it is little more than a token, and the increase that Parliament asks for is a token increase, an assurance that the Community even in these dark days of world recession, of national stringency which we all find ourselves in, a sauve qui peut situation—that in spite of all this the Community has not lost all vision of the goal of closer union.
It would be reassuring to learn that this Government, despite their relentless though not unjustified pursuit of national interest in Europe, still adhere to that goal. The formula that the Government adduced to rectify the unintended fiscal injustice to this country was that of the broad balance, which meant that Community expenditures in the United Kingdom should be roughly equal to our gross contribution. It was a good formula in these special circumstances. But I hope it is a temporary formula, pending the grand reforms of the budget and of the

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CAP that are to be achieved over the next few years, for if it became the universal rule it would paralyse the development of the Community and end all hope of economic convergence.
This year I think we have talked too much about the budget and too little about the Community's actual works. This has been the consequences of the budget's involvement in two distinct but inseparable crises: the scandalous burden it put on Britain; and the desire of the new, elected Parliament to test its muscles by demanding larger non-compulsory spending.
The new Parliament was not only taking on where we had left off. The arguments about the CAP and the regional fund were unchanged. The only difference was that the new Parliament resolved to use its powers to the full. The powers, of course, are no different from those limited powers that we, their predecessors, had. How limited those powers are the new Parliament has now discovered. But the idea of an elected Parliament was conceived in a bed of beguiling illusions. Because a European federal government would require an elected Parliament with full legislative and budgetary powers, many people believed that an elected Parliament could demand such powers and pave the way to a federal government. Not a hope!
The next illusion was that the sheer legitimacy of an elected Parliament had such mystical force that the council would collapse before it and do its will. One blast of the legitimate trumpet and these walls of Jericho would fall. The advocates of this theory drew on a false historical comparison. Elected parliaments, they said, gained in power simply because they were the voice of the sovereign people, and so the tyrannous executives had to yield to them. It would be much nearer to the truth to say that parliaments have traditionally gained power because they, and only they, could raise the taxes from the people that were needed by the executive to run the state. The European Parliament, I am afraid, has not the power to raise one penny piece in taxation, not even for its own expenses.
As The Times pointed out the other day, this is in the hands of the national Governments responsible to their own democratically elected Parliaments. The only
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budgetary power that the European Parliament has is to have a say in how the money should be spent and to hold up the budget for a limited period if it disagrees with the proposed solutions. In the end, if the budget is held up too long, then the process must stultify the work of the Parliament itself. So it is a very limited power.
The six months war between the Parliament and the Council is now over. The Parliament has not gained a victory. The budget is not very much different from the one they rejected, but I do not think that they want to be too despairing on that account. After all, I think that it was Cyrano de Bergerac who said that the vain gestures are the most beautiful of all. They have not sustained a humiliating defeat. And, by what they have done as regards withholding funds in the dairy sector, they have signified their demand to be consulted when the reforms of the CAP are being discussed. I think that they can take quite a lot of pride in what they have done, even though the final result is rather disappointing.
Of course, the budget itself will have little effect on Britain which will have to pay some hundreds of millions of pounds less into the Community, or on France and Germany which will have to pay some hundreds of millions more, in consequence of the stand taken by the British Government. Because, large as those sums may seem in themselves, the Community budget is a pale shadow besides the gigantic budgets of national states—I think that it is less than 1 per cent. of the gross domestic product of the Community. The changes effected by this budget will make no visible change of which we shall be aware in our standard of living.
So I hope that the new Parliament will be less obsessed by the next budget and that as a consequence the very good work which is now being done by the MEPs in the committees, of scrutinising and working out amendments to the draft legislation, will be seen by the electorate to be both important and effective.
There is work of great importance to do in preparing the Community for the day when it will be possible to plan a concerted reflation or expansion on the basis of stable currencies and stable exchange rates. There is important work to he done, too, on eliminating the non-tariff barriers to trade, on developing

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an industrial policy and an energy policy and a creative and enlightened role vis-à-vis the developing countries. There is, in short, plenty of work, apart from these budgetary protests, for the European Parliament to do.
I was very struck by what the noble Lord said about whether policy should follow the budget. That can never happen. It is not only a French thing—it does not happen here. The Chancellor of the Exchequer does not say, "How much money can I raise?" and then look for worthy objects on which to spend it. Anyone who has experience of the Treasury knows that it is much harder than that. No, policy must precede the Budget. Surely the Community will find the money for the policies that it wants to carry out. The most significant and powerful work that Parliament can do is to change those policies and get those policies adopted by the Council of Ministers, rather than engaging in these splendid but rather futile demonstrations.
9.12 p.m.
Lord BRIMELOW: My Lords, when I fist became a Member of your Lordships' House, the noble Lord, Lord O'Hagan, was a Member of the European Parliament and I was deeply impressed by the quality of the contributions which he made to the debates on Community affairs. His introductory speech tonight again shows the advantages which a diligent Member of both the European Parliament and this House can make to these debates. I join gladly in the tributes which have been paid to him hitherto.
After the brilliant speech by the noble Lord, Lord Ardwick, I wish my own contribution to be brief and pedestrian. In his Question, the noble Lord, Lord O'Hagan, sought to elicit a statement from the Government. I should like to elicit such clarification as the Government may be willing and able to give of that part of the Brussels agreement which is reproduced verbatim in paragraph 29 on page xii of the Select Committee's report. It deals with the 1982 budget of the Community, and the noble Lord, Lord Gladwyn, emphasised the importance of that budget. It begins by saying that the Community is pledged to resolve the problem by means of structural changes. Yet, if we turn to Part III of the Select Committee's report—as the noble Lord,
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Lord Sherfield, has pointed out—in paragraph 37, the Select Committee draw attention to the evidence given by the Financial Secretary on 13th December last year, stating that the Government believe the best solution will be a new mechanism operating on the net contribution.
Is there not a potential contradiction between the recommendation of the Select Committee and the Brussels statement, with its emphasis on the structural solution? Have the Government any comment to make on that? Paragraph 29 continues:
"The examination should concern the development of Community policies".
The noble Lord, Lord Ardwick, spoke of a grand reform of the budget and the Common Agricultural Policy, not of the development of those policies:
"… without calling into question the common financial responsibility for these policies".
The noble Lord, Lord Gladwyn, said that the Community was going to go beyond the limit of its own resources. The question was raised in evidence—I refer to the right-hand column on page 24—and the witnesses said that if we get to the ceiling we must have procedures to gain time
"for a solution to be negotiated. These might include some form of national financing of expenditure which at the moment is financed from the Community, or possibly the raising of a levy on the production of particular agricultural products".
Is that ruled out by that part of the Brussels statement which says that there must be no:
"calling into question the common financial responsibility".
I think that this is potentially important, because if part of the present Community expenditure were to be transferred to the financial budgets, the relief on the Community budget could he considerable.
But the Brussels statement does not envisage that. It continues:
"without calling into question … the basic principles of the Common Agricultural Policy …".
The Treaty of Rome has nothing to say about the basic principles of the Common Agricultural Policy; it uses different language. It talks about the purposes and aims, not about the principles. It may be that this wording is intended to give the Community some freedom in its choice. I am not aware that there are

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agreed basic principles, but are the Government able to throw any light on what the Commission is likely to regard as the basic principles? If the answer is, "No", I shall take that as a completely satisfactory answer.
Then it says that:
"This examination will aim to prevent the recurrence of unacceptable situations … If this is not achieved"—
and here we have a safety-net under the preceding provisions—
"the Commission will make proposals along the lines of the 1980–81 solution and the Council will act accordingly".
The noble Lord, Lord Campbell of Croy, quoting the noble Lord, Lord Carrington, seemed to indicate that that is the more likely outcome: that this is something on which work will have to be done, and he called for suggestions. Do the Government also think that this is a more likely line of development than the preceding part of that statement? It is on those points that I should be grateful for such elucidation as the Government feel able to give.
9.18 p.m.
Lord ROBERTHALL: My Lords, I should like to associate myself with everything that has been said about the noble Lord, Lord O'Hagan. It was most refreshing and most interesting to hear directly from someone who is a Member of the European Parliament, and although this is very far from being a maiden speech, perhaps I could use the time-honoured formula used for such speeches, and say that I hope we shall hear a great deal from the noble Lord on some other occasions. It was most interesting.
Speaking as the last of the non-official speakers, I am in the usual position in that everything I had thought of saying has already been said, and I suppose that I should sit down at once. However, I should like to mention two of the points that have been stressed. As has been pointed out by several speakers, including the noble Lord, Lord Brimelow, the second part of the Question of the noble Lord, Lord O'Hagan asks the Government for their views on Part III of the report. Essentially, Part III deals with the two methods of financial adjustment—the financial mechanism and the expenditure. I very much agree with several speakers—
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including both the noble Lords, Lord Brimelow and Lord Campbell of Croy—that the Committee's strong recommendation to go for the mechanism is certainly the right one.
I agree with the view that has been expressed that our own Ministers did a splendid piece of negotiation. I should like to join in the tributes to our own Lord Carrington. Nevertheless, it was somewhat disquieting that there was so much stress paid in the negotiation on the principle of getting out as much as you get in, which is quite wrong for a body like this. I feel that the Government ought to go for a mechanism which will get it properly tied up so that you do not have this financial haggling, and also so that you do not have to give away all sorts of other points in order to get a settlement about money.
The second point I want to make has been touched on by several speakers—by the noble Lord, Lord O'Hagan, at the end of his speech, expecially by the noble Lord, Lord Gladwyn, and again by the noble Lord, Lord Brimelow—and that is that the review which has been promised to us, which is mainly going to be a review of the financial mechanism, is not really going to go far enough at present. The two things which are basically wrong with the Community at present are the Common Agricultural Policy and the failure to make any progress with convergence. We had a good debate on the Common Agricultural Policy on 17th April. Three of the speakers then called attention to the fact that the CAP now has diverged a good deal from the original intentions of Article 39. I am sorry that the noble Lord, Lord Gordon-Walker, is not with us tonight. He made a splendid speech in the debate on this very question.
That is closely tied up with the question of convergence, because the problem of the Common Agricultural Policy is not only that it has moved into a bad position but that it is taking three-quarters of the budget. What it takes for that is taken away from everything else, so that the convergence question in my view—and I agree with the noble Lord, Lord Gladwyn, on this—is going to get worse and worse with the enlargement that is taking place. The strains that will be set up in the Community if, instead of converging, the disparities in wealth and social standards,

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and that sort of thing, go on, will be a real threat to the Community. Although I do not suppose that the noble Lord, Lord Cockfield, can go as deep as this, I feel that we ought, if possible, to take the opportunity of this review, which has to be made because the money is running out, to look at where the Community is going and where it had hoped to go.
9.24 p.m.
Lord BRUCE of DONINGTON: My Lords, I should like to join in the expressions of appreciation which have come from all parts of the House to the noble Lord, Lord O'Hagan, first for having brought this subject on to the Order Paper at all, and secondly for the detailed and constructive account he gave of his activities, particularly in the Budget Committee of the European Parliament, and for the account he gave of the Parliament as a whole in regard to the budget. I am one of those who most certainly welcome the noble Lord, Lord O'Hagan, back in this House again. I recall that when it was first of all my privilege to be selected to represent your Lordships' House in the European Parliament it was a matter of great regret to me that on that occasion he unfortunately left the European Parliament, happily for only a temporary period. I also confirm in general what the noble Lord indicated about the spirit that pervades the European Parliament. It is of course true—and was certainly so during the time I was there—that very often the arguments cut right across both political and national boundaries.
I would, however, enter a small word of caution here. I found—I do not know whether the noble Lord has found it yet—that at the beginning of the budget year, which normally starts about May, when the Commission's preliminary draft budget is introduced, it meets with a united hail of abuse from all sections of the Parliament and lamentations concerning the gross defects of the Common Agricultural Policy wax loud from all sections of the House. However, one finds as the year passes that the protests gradually become muted as the respective delegations become more acquainted with the views of their national parliaments as to the way the budget should develop. It was one of my disappointments, which I hope is not given to the noble Lord, that in the end all one had when the budget was finally
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disposed of was a very mild whimper indeed out of Parliament.
Doubtless matters have changed, and as one who voted uniquely in 1976—I think I was the only Member of the European Parliament at that time to vote for the rejection of the budget—I rejoice in the consummation that has occurred recently and which has had certain constitutional consequences, which were dealt with very adequately by the noble Lord and by my noble friend Lord Ardwick, on the position of Parliament itself.
I had hoped that the Government might have considered it wise, in view of the importance of this subject, to make a statement immediately following the introduction by the noble Lord, Lord O'Hagan. That would have given the House some opportunity of taking a considered view on an expressed standpoint taken by the Government.
There may be perfectly good constitutional and other reasons why that did not happen, and I am certainly making no accusation or imputation of any kind in the establishment of the procedure that has been adopted. That being so, however, it leaves me and some of my noble friends in a position where, after having studied the response we shall get from the noble Lord, Lord Cockfield—which of course we shall not know until the end of the discussion—we may seek an early opportunity of debating the whole matter in very great detail.
Having said that, and addressing myself to the matters which were dealt with by the noble Lord, Lord O'Hagan, we come, first, to the refund of what the right honourable lady the Prime Minister described enthusiastically as "our money", or at any rate a certain proportion of it, by the negotiations that have taken place in Brussels, Luxembourg, Dublin and elsewhere. I say straight away that on the principle that some redress is better than none at all, certainly I welcome it. It means, I trust, that the public sector borrowing requirement will be reduced, although there are certain uncertainties with which I shall deal later. It is, of course, tempered by the fact that some £450 million still remains the net contribution of the United Kingdom, and that at a time of considerable stress in this country.

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For those like the noble Lord, Lord Gladwyn, who think in terms of the European dimension, the sum of £450 million out of the United Kingdom Exchequer is small beer. That could be. But when one considers the cuts that have been made in public expenditure, £450 million paid out to the EEC is a very large sum indeed. It represents money that could otherwise have been spent in the National Health Service on, for example, kidney machines, of which there is now a shortage, or on equipment to deal with infant resuscitation, which is in short supply, to the danger of infants. Such money could have avoided the hassle that we have had over the cuts in school meals and school transport. It could have avoided, had we had it available, the necessity for making economies in the provision of school books and so on. In other words, had we had this particular money, and of course on the assumption that Her Majesty's Government were willing to spend it on these items, it could have afforded us very considerable relief. So let us make no mistake; the £450 million that remains is still a very substantial drain on this country's resources.
Nevertheless I tell the noble Lord, Lord Cockfield, in advance that if he wishes to make it, I shall give him the political point that in this respect the Government have done much better than the preceding Government. In case he may be tempted to make the point, may I additionally say to him, as one who fought this question in the European Parliament over many years, that when, three years ago, I ventured to raise in your Lordships' House the question of the deficit, I was, as nearly as was decent for your Lordships' House, howled down for having suggested the possibility that there was a deficit. I am bound also to inform your Lordships that in the European Parliament itself members of the Conservative Party spent much of their time denying that there was a deficit in Britain's contribution to the European Budget. But, be that as it may, we have some money back, and I for one am very pleased indeed about it.
However, there are one or two small snags. In the first place we have the financial mechanism amendments to, I believe, Regulation 1172 of 1976—and I
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would ask the noble Lord whether he will kindly cause to be placed in the Library, or alternatively printed in the Official Report, the details of the manner in which this particular matter actually applies. He will recall that in Volume 4 of the Commission's preliminary draft budget there was set out on pages 513 to 517 inclusive an exact working-out, based on the then criteria, of how Britain would benefit by the application of the financial mechanism.
The financial mechanism will now be amended by the new draft regulation, and it would be of assistance to your Lordships, and I am sure of assistance in particular to the noble Lord, Lord O'Hagan, if we could have set out exactly in a paper, in accordance with the new mechanism, the calculation of the sum involved, which I believe is to produce in the region of £350 million.
I turn now to the second part of the rebate and, like the Select Committee report, referred to by the noble Lord, Lord Sherfield, to the supplementary measures under Title 5, Chapter 58 of the Community budget for 1980, in which the Regional Fund provisions—and the Regional Fund regulations themselves have been partly amended for this purpose—are to be used as a means of refunding money to the United Kingdom in respect of specific projects.
As the Select Committee of your Lordships' House pointed out, there are quite a number of snags in connection with this. The projects which are to be supported by means of this supplemental relief have got to fall into certain categories, and it is not at all easy to comply with these categories, which I shall not go into for reasons of time. I sincerely hope that Her Majesty's Government will have, as I am sure they will, a whole list of projects, together with the required particulars, to put into the Commission as soon as possible in order that these may be considered.
The hurdle I am a little bothered about is the Regional Policy Committee itself, composed of the technical representatives of the Nine, and sometimes also the ambassadors, which has to consider these proposals and then, I think, sometimes on the basis of a qualified majority but sometimes unanimously, has to give approval to the projects before they are further considered. I hope I am not being unduly cautious when I say that, in view

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of the remarks made by President Giscard d'Estaing on, I believe, 6th June, when he indicated that there would be difficulties with the refunds to Britain unless some understanding was reached in other fields —I believe, fish, as the noble Lord, Lord 011agan, says—I sincerely hope that account has been taken of that, because it would be quite alarming if the whole of this remaining sum, or any substantial part of it, were to be prejudiced by an obstructive action being taken by one or more member states, now that the matter has been agreed in general principle, when the matter came to be discussed in detail. As I am quite sure your Lordships are aware, whereas there is a tendency in the United Kingdom, to which I have previously drawn your Lordships' attention, to comply rigidly with EEC law and to make the appropriate enactments, there are some countries—and I have no hestitation in mentioning France —which are sometimes prone to obey just those directives and regulations which suit them, and to disregard the rest. So I sincerely hope that the Government's optimism about the recovery of these sums is well founded.
My Lords, there is one other anxiety to which I would draw your Lordships' attention, and it relates to what has been said by many noble Lords concerning the I per cent. VAT ceiling which was established under the decision of 20th April 1970. This particular budget, which has now been enlarged to somewhere in the region of £10,000 million, now represents the fact that we have achieved a rate of VAT of 0.7216. One normally allows 0.01 of a per cent. for each 100 million units of account of expenditure. This is the official method of calculation which the Commission itself uses. I venture to draw your Lordships' attention to the draft budget itself, where, if you examine the items under Chapter 41 and Chapter 58, which deal with the money to be paid out by the financial mechanism and also the money which is going to be paid to Britain by the supplemental means, you will find that there is a token entry only, which means that the total which will become due to the United Kingdom has not been allowed for in the total of the budget which produces this VAT rate of 0.7216.
It is a matter of elementary mathematical calculation to realise that the total number
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of units of account required to meet these extra payments to Britain, on the assumption that they in fact materialise, amount to 0·11 per cent., which brings the total up to 0·83. If agricultural expenditure continues at its existing rate—and the Chancellor of the Exchequer speaking in another place this afternoon seemed to indicate that it probably would—and bearing in mind that there is a supplementary budget due later this year when the harvest is complete, it is quite clear that we shall be beyond the 1 per cent. VAT (as indicated in the decision of 20th April 1970) by mid-1981; and consultations unofficially with the Commission confirm that that is the date they are expecting.
Lord O'HAGAN: My Lords, I followed the noble Lord's analysis and I agree with his conclusion. May I ask about one step in the logic? Is the case that he is putting forward dependent upon the British refund being in this year's budget or in next year's budget? My understanding is that because the budgetry years of the United Kingdom and the EEC differ, it is most likely to be in next year's.
Lord BRUCE of DONINGTON: My Lords, for all practical purposes it makes no difference. A slightly larger sum will have to be taken into account next year in any event. The short point that I am putting is that this is very likely. If the noble Lord, Lord Cockfield, has information to the contrary, I should be glad if he were to give it to the House. My information, and my mathematical conclusions on the basis of extrapolation of past statistics, is that this is highly likely. If that is so, when mid-1981 comes, what is going to give?—because something has to give unless a unanimous decision is made to amend the decision establishing the I per cent. VAT base.
I think that the noble Lord, Lord O'Hagan, will agree—and I hope that I will carry the noble Lord, Lord Cockfield with me on this—that one thing that will not give is the expenditure established under the existing agricultural regulations; because, under the admission of Mr. Gundelach, they are uncontrollable. If there is a large harvest or a poor harvest or harvests of varying qualities, it is an open-ended commitment which gives a contractual right to the individual farmers

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concerned. Clearly that cannot give; it will have to go on in law. If we are in the middle of 1981 and this 1 per cent. is reached, it means that other expenditure will have to fall to the ground. I trust that the noble Lord, Lord Cockfield, may be able to express his confidence that I am wrong, but one of the things which may go in the massacre of the expenditure in keeping the Community within its cashflow limits would be the refund of monies to the United Kingdom. I put that to the noble Lord as a distinct possibility and I hope that he is able to reassure me to the contrary.
It is quite clear that there is much in what the noble Lord, Lord Campbell of Croy, said, when he said that he thought that the EEC budget year ought to coincide with the agricultural year. Of course it should—because that is all that the EEC budget is about. It is only about agriculture. The rest of the items are completely peripheral. It would be far more honest to face the position that the EEC, originally conceived as a European Economic Community—and I have the articles here—is, in fact, nothing of the kind. It is an agricultural community, heavily protected, with its prices fixed with a lot of other peripheral activities surrounding it and giving it some grounds for assuming respectability.
It is like the emperor without any clothes. Everybody pretends that this is a wonderful European Economic Community. In fact, it is nothing more than an organisation for the basic protection—and I am not complaining about this—of the agricultural interests in Europe. This is its main fundamental purpose. I willingly concede that there are political advantages in the membership of the Nine. There is an advantage in political cohesion; there is an advantage in the continuous consultation that the Nine have about a whole series of matters outside the economic sphere. Why not be honest about that and say that the real impact of the EEC has very little to do with economics outside the agricultural sphere and is really all concerned with politics?
Unless we face this—and I base this on the examination of the budget itself—
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the people of our country are not all that dumb and there is a growing realisation that the grand vista of the Common Market, as once laid before them, is not really what they were led to believe it was. There is a growing disenchantment with it, and there is a very good reason for this because whatever political benefits it has brought—and I would agree with the noble Lord, Lord Gladwyn, and other that these have been many—if the noble Lord, Lord Cockfield, can get up and recite in net terms the economic benefits that have accrued to the United Kingdom and its population at large, then I am sure that the whole country would be most grateful.
Has not the time arrived when we look to the EEC for what it is as distinct from what a large number of people would like it to be, affect to pretend it to be or imagine it to be? Look at it starkly. When people say they are going to amend or reconstruct the CAP, let those who have any faith in those declarations of determination to alter agricultural structures without altering the principles, which I believe is the current stance taken by the Prime Minister, remember in Lord O'Hagan's experience, most certainly my experience, Lord Ardwick's and Lord Brimelow's experience; we have had these sonorous statements now for years. We have had proposals galore from the Commission for reconstructing agriculture. This time we want to know whether a really genuine effort is going to be made.
For this purpose, will the noble Lord, in his reply—and I am trying to be helpful to him in this respect—interpret to the House just what his right honourable friend the Prime Minister considers to be the basic principles of the Common Agricultural Policy in which she still believes? If they are those comprised already in the treaties, then one would be very glad to know how exactly it is proposed to alter them.
I renew my thanks to the noble Lord, Lord O'Hagan, for having raised this subject and extend also my grateful thanks to other noble Lords who have made some extremely constructive observations during the course of the debate. I hope that the Government may take the opportunity this time to make a very constructive statement as to what their intentions are.
9.49 p.m.
The MINISTER of STATE, TREASURY (Lord Cockfield): My Lords, we are all greatly indebted to my noble friend Lord O'Hagan for giving us the opportunity of debating these important matters. It is of course of particular interest to listen to somebody who is actually involved in the budgetary process in the European Parliament telling us exactly and precisely what went on. What he has told us this evening is, of course, ample justification for the existence of the dual mandate. We look forward to hearing from him again on many occasions to keep us in close touch with what is going on in Europe. The debate also provides us with the opportunity of discussing the report of the Select Committee of your Lordships' House on the 1980 budget of the Community, and it is to this that I propose directing my remarks rather than pursuing the broad anti-European line deployed by the noble Lord, Lord Bruce of Donington. We owe a real debt of gratitude to the Select Committee and particular to Sub-Committee "A" both for their vigilance and their penetrating analysis.
Reference has been made by a number of noble Lords to the fact that the report presents the issues involved clearly, simply and intelligibly. For all practical purposes, of course, the 1980 budget has now been adopted, and now that has been done and the question of Britain's budgetary contribution has been settled, it is possible to discuss these matters in a calmer and more reflective atmosphere. Indeed, the debate in your Lordships' House pays ample testimony to that. With the risk of confrontation now removed, we should all be able in the Community to proceed with the vitally important job of permanent reform of the financial structure.
Settlement of these matters has had another important effect, and my noble friend Lord O'Hagan referred to this in a very telling passage of his speech. So long, of course, as we were the only major net contributor, and indeed one of only two net contributors, other countries could regard these matters with a degree of detachment, if not indifference; but now that other countries have also become major contributors a greater sense of
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realism is already being brought to bear on the problems involved.
Tribute has been paid by nearly every noble Lord who has spoken, and particularly by my noble friend Lord Campbell of Croy, by the noble Lord, Lord Ardwick, and by the noble Lord, Lord Sherfield, to the success of the negotiations conducted by my right honourable friend the Prime Minister and my noble friend the Secretary of State for Foreign and Commonwealth Affairs. There has been some criticism of the settlement on the ground that we did not get all that we originally set out to get but, as the noble Lord, Lord Sherfield, so pointedly says, in this life one never does get everything one sets out to get, and where interests conflict, as they do here, and negotiations ensue, some degree of compromise is inevitable. We did in fact get two-thirds of our original objective and by any standards that is a considerable achievement—one in which we can take real satisfaction and also one on which we ought to congratulate both my right honourable friend the Prime Minister and my noble friend the Secretary of State for Foreign Affairs.
There is a further point here, namely, that any agreement needs to be satisfactory to both sides if it is to form the basis of future co-operation, and we do need to recognise that what we have gained other people have to pay. That is very clearly brought out in the table which appears in page XIII of the Select Committee's report. If we look at the actual facts of the settlement at Brussels, for 1980 our net contribution is now agreed at £370 million instead of £1,080 million: a reduction of £710 million. For 1981, our contribution will be £440 million instead of £1,300 million—a reduction of £860 million. For 1982, if the radical review of the pattern of Community expenditure and the operation of the budget is not then complete, there will be a corresponding reduction in the level of the United Kingdom's net contribution. In addition, there is a risk-sharing formula which ensures that if net contributions exceed the present estimates, we pay only a small and modest proportion of the increase.
The noble Lord, Lord Bruce of Donington, suggested that the amount we

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were left paying was still excessive, but I feel I must remind him that in 1978 our contribution was no less than £803 million, in 1979 it was £947 million and for both of those years, of course, the Labour Government, of which he was such a distinguished supporter, were responsible. So for those two years we contributed £1,750 million, while under the new agreement for 1980 and 1981 combined we shall be paying £810 million, which is less than half.
Just as important as agreement on figures was the agreement reached that there should be a fundamental review of the pattern of Community expenditure and of the operation of the budget. This is underlined by the agreed conclusion of the Foreign Affairs Council on 29th and 30th May. What they said was that this was,
"to prevent the re-occurrence of unacceptable situations for any of the member states".
There is, therefore, a very clear commitment to reform on these lines. But quite apart from the determination which is expressed in these agreed conclusions, as a number of noble Lords have said, the ceiling set on "own resources" by the 1 per cent. limit on the rate of VAT accruing to the Community is itself a powerful force compelling reform.
It is perhaps a matter of great significance that both the French and the German Governments made it clear that they, like ourselves, take the view that this limit must be retained. No one would disguise the fact—and this point was raised not only by the noble Lord, Lord Bruce of Donington, but by other noble Lords as well—that this presents a very considerable problem for the Community. But the Community has faced great problems before and it has found answers to them, and this is another problem to which we are confident the right answer will be found.
The comments made in the Select Committee's report about the nature of the procedure to be adopted to give effect to the agreement reached on the reduction of the United Kingdom's net contribution, are a matter of great
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importance. These comments appear in Part III of the report. As the Committee say, the solution is a mixture of a mechanism solution and an expenditure solution and, in a technical sense, this is perfectly right. We appreciate the anxieties which the Select Committee express and we are as much concerned as they are to avoid any untoward consequences. In particular, it is important that undertaking expenditure qualifying for assistance from EEC funds should not have the result of weakening control over the aggregate of our public spending in the United Kingdom, and we are determined that it should not do so. It is also important that the adoption of this particular mechanism should not lead to bureaucratic delays, a matter to which the Select Committee also draw attention.
Perhaps it is important in this respect to make the point that while the programmes qualifying for support under Article 235 will need to be approved by the Commission, approval will not be required for individual projects within the programmes, and this in itself should avoid the kind of delays which have been feared. But the final safeguard, and perhaps the most important point of all, is that the mechanism solution and the expenditure solution are intended as means to secure an end; namely, to give effect to a firm agreement that there should be refunds of net contributions of the agreed amounts for 1980 and 1981 and, if needed, for 1982 as well.
It is the Government's belief that the arrangements under Article 235 can be satisfactorily implemented so as to give effect to the settlement. Indeed, the Community as a whole is politically committed to this. While therefore we believe that the anxieties expressed by the Select Committee are met, so far as the present agreement spanning 1980, 1981 and 1982 is concerned, we agree that the situation is one which needs watching, and we note the reservations expressed by the Select Committee about the inclusion of an element of this kind in a permanent solution. It is certainly our intention to press for a permanent and simple solution to this problem in the course of the radical review of the budgetary arrangements to which I have referred and to which the Community is now committed.

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There are perhaps one or two individual points which were raised on this that I shall endeavour to answer. Lord Brimelow suggested that there might be some conflict between the resolution or the agreement by the Council of Ministers which is reprinted on page xii of the Select Committee's report, in which it is said:
"For 1982, the Community is pledged to resolve the problem by means of structural changes";
and the statement by the Financial Secretary which is quoted on page xv of the report, namely:
"that the Government believed the best solution would be a new mechanism operating on the net contribution".
The first point to which I must draw attention is that the Financial Secretary's statement which is quoted was made on 13th December 1979 before the negotiations were brought to a successful conclusion and he was stating what we felt to be the best solution which we ought to strive to achieve. In the event, it was necessary to compromise with the other member states in the Community on a mixture of both a mechanism solution and an expenditure solution. Nevertheless, it remains, as I have said, our view that the best long-term solution is a new mechanism. There is therefore no conflict between what was agreed by the Council of Ministers and what we have said, because what we have said represents the point of view that we shall press in the course of the review.
Lord Bruce of Donington asked specifically if we could supply the House with details of the calculations underlying the financial mechanism refund to which the United Kingdom will be entitled for 1980 and 1981. It is not possible to do that at this stage because the precise entitlement of the United Kingdom can only be ascertained when the Commission's accounts for the year have been closed. Nevertheless, if it is the wish of the House, we will certainly make available a model calculation of the United Kingdom's entitlement, based on the Commission's latest estimates of the various quantities involved.
My noble friend Lord Campbell of Croy raised the question of the agricultural year and he was supported in this by, I think, the noble Lord, Lord Ardwick.
Several noble Lords: No.
Lord COCKFIELD: He was supported elsewhere in your Lordships' House. The problem here is that if one changes the date of the accounting year one either has to have one very short year, in which event one has two years in the course of one calendar year, or one has to have one very long period of accounts—in this instance it would be an account for 17 months—which raises very difficult issues of forecasting. Interestingly enough, this is an issue which has been raised in this country over the last 200 years over the question of the financial year in the United Kingdom. Many people think it would be a great advantage if the financial year were made to correspond with the calendar year; but the transitional problems have always been felt to be such that the change has never been made. The same considerations apply very much in the case of the Community budget. But do not let me deter my noble friend from continuing to press on this front if he feels that this would be the right solution.
My noble friend Lord O'Hagan raised the question of the budgetary process itself and also the question almost of the division of power between the Council and the European Parliament in relation to the budget. There have, of course, been differences between the Council and the Parliament over the budget ever since 1974 when the Parliament was first given powers over it. These differences arise from different views of the functions of the budget, as my noble friend so clearly explained in the graphic illustration he used of the French approach and the British approach to budgetary matters. The Council considers that the budget should provide for the expenditure likely to result from existing policies while the Parliament considers that the budget has a policy role and should take account of future developments in other policies. As has been said in the course of this debate, these differences in view led to disputes in both 1979 and 1980.
I was greatly relieved to hear the view expressed by more than one of your Lordships that similar difficulties were not likely to be experienced over the 1981 budget—a matter of great importance, of course, because the refund to the United

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Kingdom arises, as my noble friend Lord O'Hagan mentioned, primarily under the 1981 budget rather than under the 1980 budget. As was mentioned in the course of the debate, there is a token entry which has been put into the 1980 budget, which is to enable advance payment to be made if there is a shortfall in expenditure in other directions and the money therefore is available. But I think the real answer is that the Community and its institutions are still in the process of development, and it is inevitable, therefore, that from time to time differences should develop. We must hope—and there are good grounds for so doing—that future differences will be solved in just the same way as were the differences in 1979 and 1980 and that in the end the Community will emerge stronger as a result.
Finally, I should just like to say this. The agreement reached on our contribution to the Community budget means that a major source of discord between the member states of the Community has been removed. It means also that in the period immediately ahead our net contribution will be held within reasonable bounds. This will allow time for the Community to complete the radical review of its policies and of the budgetary arrangements which has been agreed and which is designed to ensure that unacceptable situations of the kind we have had to face in the past do not recur either for us or, indeed, for other member states.
The commitment to this review is an integral part and a crucial element in the settlement. The necessity for this review and the determination to carry it out is buttressed by the fact that the ceiling on existing Community revenue makes such a review inescapable. The review will provide us with an opportunity which has never been available before, since we joined the Community, an opportunity to work together with other member states for lasting reforms which are to the advantage and in the interests of all the members of the Community.
Following the settlement of our contribution the member states will now be able to concentrate on ensuring that the review results in the changes to Community policies which are essential if it is to continue to develop. We have now for the first time for many years the oppor-
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tunity to take full advantage of all the opportunities that membership of the EEC offers us. There was never a time when we were in greater need of opportunity. It now rests with us to show the determination to take advantage of this opportunity.

FALMOUTH CONTAINER TERMINAL BILL [H.L.]
The order made on 9th June last discharged, and Bill committed to the Committee on Unopposed Bills.