Lords Sitting of 3 March 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 Carlisle.

EEC: EXPORT OF SUBSIDISED FOODS TO RUSSIA
Lord BOYD-CARPENTER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Questions was as follows:
To ask Her Majesty's Government what action they are taking to stop the export of subsidised food to Russia by or on behalf of the European Economic Community.
The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers): My Lords, the Government have made clear in the Council of Ministers their total opposition to such exports. We shall continue to urge our Community partners to prohibit sales of subsidised food to Russia.
Lord BOYD-CARPENTER: My Lords, while thanking my noble friend for that
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reply, may I ask him whether he can confirm the statement made on the radio this morning that there are 12,000 tonnes of butter in this country which are about to be exported at a subsidised price to Russia? Would my noble friend agree that at a time when every effort is being made to bring home to the Russians the enormity of their performance in Afghanistan, it would be intolerable for them to be supplied with subsidised food from this country?
Earl FERRERS: My Lords, I have every sympathy with my noble friend. I did not hear the report to which he has referred but I can tell him this: it is our intention to persuade our Community partners not to allow subsidised food to go for export. However, in the event of our not being able to persuade them in that way, this country would be in breach of its arrangements with the European Community if we were to act unilaterally. However, if I may tell my noble friend this— he may well be aware of it already— there was so much concern within the European Parliament that the European Parliament not only threw out the budget but also passed a resolution in which they said they might retrospectively prevent the subsidy money being forthcoming.
Lord WIGG: My Lords, would the noble Earl be good enough to explain, if these surpluses of butter and sugar and the wine lake are not exported, what it is proposed to do with them?
Earl FERRERS: My Lords, that is precisely the reason why our partners in the European Community want to export these surpluses. Our only complaint is that it is wrong to send them to Russia.
Lord GORONWY-ROBERTS: My Lords, if the Minister did not hear the report on the radio this morning, perhaps by chance he saw the very circumstantial and detailed report by a reputable correspondent in the Daily Telegraph this morning, saying plainly that 12,000 tonnes of butter drawn from our storage portion of 27,000 tonnes in this country is to be offered to Russia. Would he confirm or deny that that is so?
Earl FERRERS: My Lords, if there is to be an export to Russia of subsidised butter and if subsidies are permitted, then it is not within our choice to prevent that butter going to Russia.
Viscount St. DAVIDS: My Lords, while appreciating that it is important that this butter, and indeed these other materials— all these unlikely mountains and lakes— should be sold and not given away, surely there are other markets in the world besides Russia which would be rather pleased to receive such things at a subsidised price from us? Can this matter not be looked into further? Also, would it not be a very good idea not to allow the Russians to have all this food, which in fact only has the effect of allowing them to divert men from their tottering agriculture to their arms industry?
Lord BOYD-CARPENTER: Hear, hear!
Earl FERRERS: My Lords, the situation is this: any butter which goes into intervention is Community butter, irrespective of the country in which it is held in intervention. The Commission have recently changed the system, and individual tenders now have to be made for individual consignments of butter. This did not happen before, and the proposals for the special sales of butter to Russia are in suspense for about two weeks because of the resolution which was passed by the European Parliament, to which I referred a few minutes ago. Within that general framework, the Government's sympathies are entirely with the view of the noble Viscount, Lord St. Davids, and
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my noble friend Lord Boyd-Carpenter that it is wrong for the Community to sell subsidised butter to Russia.
Lord GORONWY-ROBERTS: My Lords, I am most grateful to the noble Earl for the care he takes in answering this Question, which concerns Members on both sides of the House. Could he tell us whether the new tender system will result in a lower subsidy on the price to, for instance, Russia than the old system, which amounted to a subsidy of 50p per pound— a subsidy which would be most acceptable to the British housewife?
Earl FERRERS: My Lords, there are a number of questions in that. First, may I say to the noble Lord, Lord Goronwy-Roberts, over the subsidy to the British housewife, that is perfectly true, but it merely exacerbates the problem because if there is a surplus within the Community, however desirable it may be to subsidise the housewife, the real problem is to get rid of the surplus. The second point is whether the new system will change the rate of subsidy. I am bound to tell the noble Lord, Lord Goronwy-Roberts, that it will not change the rate but it will give the Management Committee — those are the people who authorise these sales— a chance to consider each tender and to vote on the tender. On every occasion the United Kingdom has voted against sales to Russia.
Baroness ELLES: My Lords, would my noble friend ensure, through our representative on the Management Committee, that the maximum price is accepted for the sale of butter? Is not the problem that low prices have been accepted for sales to Russia instead of the highest price available on the world market? Surely this is where the Commission needs very strict control by Members of our Government.
Earl FERRERS: My Lords, I can assure my noble friend that we are bringing every pressure we can to bear upon the Commission to prevent these sales. But as the House will appreciate, in the end, we are part of the Community and it is a Community decision. My right honourable friend the Lord Privy Seal, my noble friend the Secretary of State for Foreign and Commonwealth Affairs and my right honourable friend the Minister

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of Agriculture have all tried to persuade the Commission against the sales. But I will certainly see that the point which my noble friend has made is drawn to their attention.
Lord PEART: My Lords, did the Minister not consider giving old age pensioners butter at cheaper prices— a token policy— which was done under a previous Administration?
Earl FERRERS: That is perfectly true, my Lords; it was. I can tell the noble Lord that one of our great complaints at the moment is that the Commission is proposing that the 100 per cent. subsidy which we got on butter from FEOGA should stop. This is something from which Britain has benefited.
Lord ORAM: My Lords, will the Minister bear in mind that there is a well-established system of food aid in the world, whereby donor countries give surplus food to developing countries, and the money that is generated in those developing countries by the sale of that food is then used for internal development projects within the developing countries. If, as a result of the boycott of Russia, food surpluses emerge either in Europe or, as they may well do, in the wheat lands of North America, would it not be a practical proposition to enhance the system of food aid, thereby following up the boycott of Russia, helping those who are producing surpluses in America or Europe to dispose of their food and, also, do an enormous amount of good in the developing countries?
Earl FERRERS: My Lords, I think that that is certainly a point of view which should be looked at and, so far as possible, pursued. But in the end, of course, the food has to be paid for somehow, by somebody, and if we have a surplus the main thing to do is to get rid of that surplus. I would only repeat and re-emphasise, if there are noble Lords who are concerned that we, as part of the Community, should be exporting butter to a country which has been involved in Afghanistan in the way in which it has, that this Government are equally concerned and we are also concerned to try to stop it.
Lord WIGG: My Lords, the Minister has been good enough to tell us that the
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subsidy is not really the problem; the problem is to get rid of the butter. So that is correct, and the Russians are doing us a good turn by taking the butter, and we are paying them to take it away for the simple reason that the amount we pay them to take it away is beneficial in relation to the cost of storing it. So is not this another example of the Government's utter muddle in terms of their relations not only with external countries, but also with the Common Market?
Earl FERRERS: My Lords, I was trying to follow the thread of the noble Lord, Lord Wigg. I cannot see that there is any reason for suggesting that the Government are in an utter muddle.
Lord WIGG: Of course they are.
Earl FERRERS: Of course they are not. With the greatest respect to the noble Lord, we are part of the Community and we are trying to encourage the Community to take the right action and not what we believe to be the wrong action. That is not muddle.
Lord BROWN: My Lords, is it not a fact that the only realistic attack on this problem is to get down support prices for food under the Common Agricultural Policy and thereby reduce the production of surpluses? Are not Members on the opposite Benches a little ashamed now of the continued caustic comments which they made on the efforts of Mr. Silkin to this end, while we were in Government?
Earl FERRERS: My Lords, I think that the remark which Mr. Silkin made over the week-end, in which he was quoted as saying, "Damn the Common Market", would not meet with the accord of the present Government. That is not our view. Our view— and I agree with the noble Lord, Lord Brown— is to try to restrict the products which are in structural surplus, and to that end we are content to see those prices not increased. What we are not content to see is the proposals of the Common Market acting unfairly against the United Kingdom, as opposed to other Members of the Community; and under their present proposals that is what is happening.

AGRICULTURE: MARKETING INVESTIGATION
2.48 p.m.
Baroness ELLIOT of HARWOOD: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what progress has been made by the five marketeers appointed by the Minister of Agriculture in their investigation into the marketing of agricultural products; and whether they will make a statement.
Earl FERRERS: My Lords, the five advisers have principally been considering the potential for improved marketing in bacon, potatoes, milk and apples. They have also been looking at co-operation policy and export promotion. My right honourable friend the Minister of Agriculture, Fisheries and Food has already acted on their advice on co-operation. Changes are being made in the organisation of the Central Council for Agricultural and Horticultural Co-operation and in the emphasis of its work. They will continue to advise my right honourable friend in the course of the work which they are undertaking.
Baroness ELLIOT of HARWOOD: My Lords, I thank the Minister very much for his Answer. Have these recommendations which arc now coming from the department been discussed with, for example, the National Farmers' Union or any of the agricultural organisations, particularly of course the marketing boards, because I have not as yet seen any published proposals from the five advisers?
Earl FERRERS: My Lords, my noble friend is quite right. There has not been any publication, nor, indeed, is it anticipated that there will be. These are five individual people whom the Minister has asked to look into various sectors of marketing and to advise him in such a way as they think fit. Their remit is very wide. They can look into something individually or collectively, or as a group of two or three. They may publish their advice if they wish, but they are not obliged to do so.
Lord PEART: My Lords, surely it is important that the industry should know what is happening and how the Government are responding. I think it would have been sensible to publish a small White Paper. Will the noble Earl consider that?
Earl FERRERS: My Lords, of course I will consider anything which the noble Lord, Lord Peart, suggests. But the distinction is that this is not something which they have been asked to do which has a finite end to it. They are investigating the possibilities of marketing throughout quite a range of products, over quite a period of time. Of course, there will be many points which they raise which they will wish to be discussed, and we have no intention of inhibiting such discussion.
Baroness ELLIOT of HARWOOD: My Lords, if they are not going to discuss the matter with, let us say, the Milk Marketing Board or any of the other marketing boards, shall we in this House or in the other place be able to discuss the reports and the proposals before they are put into effect? Last Thursday we had one recommendation which was put through which had not been discussed by anybody, so far as I can see, and it is something which has caused a certain amount of anxiety among agricultural people. I am anxious that the agricultural community should co-operate with the Government, but I think that there should be opportunities for discussion, and the reasons for the Government taking certain action on the recommendations of these people should be made clear to us.
Earl FERRERS: My Lords, I quite see my noble friend's concern. I think that there is a slight difficulty in her mind and I should like to try to simplify it for her. These five marketeers have been appointed by the Minister to give him such advice as they think fit and, if they wish to publish it, to do so. There is no question of my right honourable friend taking decisions upon their advice without having first consulted the people concerned. Of course, there will be consultation, but they are not a council which will periodically issue reports.
The Earl of BESSBOROUGH: My Lords, if this is a sort of Conservative Quango, as some people might say it

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is, could my noble friend tell me exactly how much this inquiry and investigation cost?
Earl FERRERS: My Lords, it is not really a Quango. However, I can tell my noble friend that apart from the Secretariat's cost of three full-time officers who have been seconded from the Ministry, the cost to date, to 3rd March, has been £ 315.
Lord STANLEY of ALDERLEY: My Lords, could I ask my noble friend whether I heard him correctly, that these five wise men are going to encourage the agricultural marketing boards and the agriculture co-operatives? If he did say this, which I think he did, I wonder whether he could pass on those comments to his noble friend before the Report stage this afternoon of the Competition Bill so that they might be able to help us when we come to that matter?
Earl FERRERS: My Lords, my noble friend either is being mischievous or is hard of hearing. I did not say that they were going to encourage any kind of marketing. What I said they are doing is that they are trying to look into marketing in order to advise my right honourable friends on the measures that ought to be taken.

GOVERNMENT STATEMENTS
Lord DENHAM: My Lords, with the leave of the House, my noble and learned friend the Lord Chancellor will repeat at a convenient moment after 3.30 a Statement being made in another place on the Lambeth, Southwark and Lewisham Area Health Authority. This will be followed by my noble friend Lady Young who will repeat a Statement on the Warnock Report.

EDUCATION (NO. 2) BILL
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Baroness Young): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That it be an instruction to the Committee of the Whole House to whom the Education (No. 2) Bill has been
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committed that they consider the clauses and schedules of the Bill in the following order, viz:—

Clause 1

Schedule 1

Clauses 2 to 7

Schedule 2

Clauses 8 to 16

Schedule 3

Clause 17

Schedule 4

Clauses 18 and 19

Schedule 5

Clauses 20 to 22

Clause 24

Clause 23

Clauses 25 to 34

Schedule 6

Clauses 35 to 40

Schedule 7— (Baroness Young.)

On Question, Motion agreed to.

STANDING ORDERS (PUBLIC BUSINESS)
2.54 p.m.
The LORD CHANCELLOR (Lord Hailsham of Saint Marylebone)The LORD CHANCELLOR (Lord Hailsham of Saint Marylebone) rose to move, That Standing Order No. 48 be amended as follows:
At end insert—
("(6) Any affirmative instrument which but for the provisions of the Northern Ireland Act 1974 would have been enacted by a Consolidation Bill, whether public or private, or by a Statute Law Revision Bill.").
The noble and learned Lord said: My Lords, I rise to move the Motion standing in my name on the Order Paper. I think I can do so in practically no words. First of all, what is the object of this Motion? The object is that instead of an affirmative instrument being necessary for consolidation of Northern Ireland matters, they should be referred, like British Bills, to the Consolidation Committee. I think it is obviously right. I had better explain exactly why it is being done.
Since the demise of the Assembly in 1974, most legislation for the Province which would have been within the powers of the Assembly, or previously within those of the Stormont Parliament, has been promulgated by Orders in Council which, of course, arc generally subject to

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the Affirmative Resolution procedure. From time to time it is necessary, as it is in this part of the United Kingdom, to consolidate domestic legislation in Northern Ireland. This is now also effected by order so that the body of Northern Irish law, so consolidated, can be kept as one, separate and distinct from the law affecting either England, Scotland or Great Britain. However, unlike a consolidating Bill, a consolidating order is not subject to special procedure. It is laid before Parliament and requires approval in exactly the same way as any other Northern Irish order of the kind I have mentioned; that is, it is subject to the affirmative procedure.
In theory, of course, the affirmative procedure involves parliamentary scrutiny. In practice, however, a consolidation order is apt to go through on the nod. Some of these orders are of very considerable proportions. Your Lordships will, I hope, agree that the proper way of dealing with consolidation in this House, whether it is in Northern Ireland or elsewhere, is to refer it to the Select Committee, whatever part of the United Kingdom it comes from. I understand that the committee are willing to undertake this additional burden, but of course they do not have power to do so. The purpose of this amendment is to give them that power by changing the Standing Orders.
Your Lordships will wish to know what is being done in another place. If the House consents to this amendment, a similar Resolution will be moved there and thereafter a consolidation order laid before Parliament will be referred immediately to the Joint Committee for their consideration. By analogy with the procedure on Consolidation Bills, it will be the practice that no resolution for approval of any consolidation order will be moved in either House until the Joint Committee has reported on it. My Lords, I beg to move.
Moved, That Standing Order No. 48 be amended as follows:
At end insert—
("(6) Any affirmative instrument which but for the provisions of the Northern Ireland Act 1974 would have been enacted by a Consolidation Bill, whether public or private or by a Statute Law Revision Bill.")— (The Lord Chancellor.)
On Question, Motion agreed to.

HIGHWAYS BILL [H.L.]
The LORD CHANCELLOR: My Lords, I beg to move that this Bill be now read a second time. It consolidates the law relating to highways, with amendments made to give effect to recommendations by the Law Commission, contained in their Report No. 100. The last consolidation of highways law was of course in 1959. It was, as your Lordships will see, a mammoth undertaking, involving the bringing together of legislation going back many centuries. Twenty-one years have passed since then, and there have been further developments. There have been changes in the substantive law; there have also been radical changes in local government organisation, and these have had their impact on the law concerning the administration of highways. So it is thought that the time has come again to bring the law together in one place. The enormous Bill to which I am speaking, I hope without undue length, is now the result of it. I need hardly say that, if your Lordships see fit to give a Second Reading to this Bill, it will be referred to the Joint Committee on Consolidation Bills in the usual way. I beg to move.
On Question, Bill read 2a, and referred to the Joint Committee on Consolidation Bills.

STATUTE LAW REVISION (NORTHERN IRELAND) BILL [H.L.]
The LORD CHANCELLOR: My Lords, I rise to move that this Bill be now read a second time. It is a conventional statute law revision Bill and it repeals therefore obsolete, spent, unnecessary or superseded enactments. Unlike a State Law (Repeals) Bill it does not seek to repeal provisions on the ground that they are of no practical utility. The Bill extends only to Northern Ireland. It will of course be considered in detail by the Joint Committee, and for that reason I do not wish to highlight any of its somewhat arcane provisions, except

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to say that a superficial reading of it appears to me to lay finally to rest the dead bones of the old office of Lord Chancellor of Ireland. I beg to move.
On Question, Bill read 2a, and referred to the Joint Committee on Consolidation Bills.

BEES BILL
3 p.m.
Read 3a, with the amendments, and passed, and returned to the Commons.

BRITISH AEROSPACE BILL
3.1 p.m.
Lord TREFGARNE: My Lords, I beg to move that the Bill be now read a second time. No one with any knowledge of the aerospace industry can doubt the importance of the proposals before us today. British Aerospace embodies a proud tradition: the names of its distant predecessors (De Havilland, Vickers Armstrong, Hawker, Supermarine, AVRO, Bristol Aeroplane and others) must thrill any listener who, like me, has worked and lived with the sounds and smells of aeroplanes. I list the names of some of the predecessor companies not merely to recall a past tradition, but to make the important point that British Aerospace is the British aircraft industry. It represents the culmination of a process pursued by successive Governments of different political persuasions, to bring together in one organisation the main British aircraft manufacturing capabilities.
The last stage in this process, namely the merging of the airframe manufacturing interests of Hawker Siddeley Aviation and the British Aircraft Corporation, was one of the few desirable effects to flow from the Aircraft and Shipbuilding Industries Act of 1977. There is no doubt that the present strong position of British Aerospace is due to a very considerable extent to the strength of the companies who were the immediate predecessors, but I must, in fairness, say that it is also due to the dedication and skill of the management and workforce of the corporation, who, of course, came largely from the old companies.
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The present organisation covers military aircraft, civil aircraft, guided weapons, and also the small, but growing, space activities. Furthermore, the range of products which British Aerospace now produce provides a spread of business both commercial and geographical, which helps to protect it against a down-turn in any one of its markets. On the military side, the Harrier, Jaguar, and very soon, the Tornado, provide the main capability upon which the air defence of this country depends, while the Hawk is already training the pilots who will be required to fly these aircraft. In the field of guided weapons, British Aerospace is able to provide our Armed Services with a range of missiles which, like the aircraft, make a very substantial contribution to the NATO Alliance and, thus, to our collective security. Names like Rapier, Seawolf, Skyflash and the Swingfire may have a ring of the Boy's Own Paper about them, but they are in fact a deadly addition— indeed, an essential feature— of our defence posture.
I turn now to the civil side of British Aerospace's business and would touch on their three most important projects, which are at different stages of development. First the HS 125, an executive jet in production since the early 1960s of which nearly 500 have been sold to date, more than half for the North American market. Is it not quite remarkable that this aircraft produced by British Aero-space and one of its predecessor companies, should have achieved such conspicuous success in the most competitive market of all, on the very doorstep of the world's largest aircraft producer? Secondly, I refer to the Airbus, in which Hawker Siddeley was originally only a contractor, but in which British Aerospace is now a full participating member. The A 300 variant has now achieved total orders and options of 275, and the smaller A 310, launched much more recently, 129.
These sales, including especially the recent one to Eastern Airlines, prove what a fine aircraft the Airbus is, and British Airways will, in my personal view, live to rue the day that they bought the Boeing 757 instead. Finally, may I mention BAE's latest civil project, the 146. This aircraft, designed as a replacement for types like the successful Viscount, is expected to fly for the first time early next year and will, I believe, prove a

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steady source of business for many years to come. It is the first wholly new civil project since the era of the VC 10, the Trident, and the BAC 1– 11 and is, I suppose, the largest airframe project which British Aerospace could be expected to undertake without collaborative partners.
Before coming to the details of the Bill itself, I should like to refer to Concorde. While no one can claim any commercial success for this project, it stands none the less as a striking monument to British and French technical achievement, and indeed all the production aircraft built are now in service either with Air France or British Airways and will doubtless remain so for many years. The technical features of Concorde speak for themselves and while its economics, particularly following the dramatic and unforeseen rises in fuel costs, may leave much to be desired, it has shown none the less, that the skill of European designers and technicians is second to none in the world, and also, most important, that it is possible for collaborative projects, working on the very frontiers of knowledge, to be pushed forward to a successful conclusion. I believe that it is upon that assumption that the success of the major projects of the future will rest, for without that concept no single nation, certainly no single European nation, can hope by itself to find the necessary resources.
The Bill before your Lordships, though short and relatively simple, is quite fundamental in its effect. The prime purpose may easily be described: on a day to be appointed, the whole of the present business of British Aerospace is to be transferred to a new limited company, initially owned entirely by the Government, and in which we intend to sell on an initial flotation about half the shares. My noble friend Lord Cullen of Ashbourne will describe in more detail the arrangements we envisage for this, particularly for employees.
There will of course be many points of continuity between the present statutory corporation and the successor limited company. First, the new company British Aerospace Limited, will be the universal successor to the present enterprise: the whole of the business of the statutory corporation will be transferred to the
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new company lock, stock and barrel; there will be no dismemberment of the present business into separate parts. Second, there will be complete continuity of employment: all those employed by British Aerospace will continue to be employed by the successor company on the appointed day, and contracts of employment (and their associated pension rights) will pass unchanged— like all other contracts— from British Aerospace to British Aerospace Ltd.
Third, the Government's existing commitments to British Aerospace will of course continue to be honoured as if they had been made to British Aerospace Limited. Thus, the Government's ultimate underwriting of the debts of British Aerospace and its wholly owned subsidiaries transferred to the successor company— but not, of course, the company's new liabilities— will be continued, under Clauses 8 and 9 of the Bill. Where the Government have entered into memoranda of understanding with other Governments in relation to British Aerospace these will be honoured as if no change had occurred; in particular, and perhaps most significant of all, the Government's undertaking in relation to British Aerospace's involvement in the European Airbus project will be fully recognised. In all these important respects, the change from statutory corporation to public limited company will bring about no change. I have stressed these important aspects of continuity because we believe they are important elements in enabling the future company to flourish, since they preserve the vital elements of the present organisation.
The change from statutory corporation to limited company (which lies at the heart of this Bill) is itself only technical. But the effects of that change go far beyond the mere addition of "Limited" to British Aerospace, or the substitution of equity for public dividend capital. They represent a change in outlook and direction which will be pervasive and complete. British Aerospace competes in one of the most fierce of international markets: its success depends upon its ability to respond to the pressures and demands of those markets. Our aim is to ensure that it can do so wholeheartedly and without distraction. In future, British Aerospace Limited will be liable to those pressures — and only those pressures— which apply

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to any other private sector company. It will have no special position— of favour or of disadvantage— in relation to Government. It will be completely free from the statutory incubus which is unavoidable for a nationalised industry: there will be no place for the special requirements established in law for consultations, or for corporate plans, which hang about the necks of the nationalised industries like chains of office. All these matters will be left to the good sense and judgment of the directors of the new company, as they are throughout the private sector. The successor company will be free to raise its finance on the commercial markets of the world: it will have no special claim on the public purse.
The Government's role in the affairs of British Aerospace Limited will he no different from that in respect of other companies. General schemes, such as those administered under the Industry Act 1972, will be available to British Aerospace Limited as they are to all companies, but it will have no special position. In particular, the new company — unlike the present statutory corporation — will not be precluded from seeking assistance under the Civil Aviation Act 1949 or the Science and Technology Act 1965. Thus the Government will be able to provide aid— including launch aid— if it so desires within the constraints established by the need to restrain public expenditure. Finally, the Government's financial responsibility— subject to the specific arrangements I have mentioned earlier— will be that of any shareholder in a company, and limited to its shareholding. I wish to emphasise that our intention is to create a free-standing company, independent of Government and, by the same token, divorced from automatic Government subsidy. This is an essential departure from the usual practice adopted for a nationalised industry.
The new company will be required, like any other private sector enterprise, to face the consequences of its own decisions. Just as there must be no doubt about the financial independence of the company, so too there must be no doubt as to the responsibility for its management and direction. An essential feature of the Government's policy is to ensure that responsibility for this key industry lies in the hands of those who work in it. We
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shall not intervene in the commercial administration of the company. As the sole shareholders for a transitional period, we shall appoint the first board of the company. But thereafter we do not expect to have to use the voting rights associated with our shareholding in opposition to a majority of the board of directors.
The policy I have described places great weight on the shoulders of these directors. They will be subject to the normal retirement by rotation and re-election by shareholders at general meetings. The Government have made clear that we intend to secure continuity in management at the level of director, as at other levels, by offering appointment as directors in the new company to those who serve on the hoard of British Aerospace on the appointed day. We hope that all the present board of British Aerospace, except for the present chairman, the noble Lord, Lord Beswick, who has indicated that he does not wish to continue, will serve on the board of the new company. As already announced Dr. Pearce, at present a non-executive board member, will be the new chairman. My Lords, we are fortunate in having such a powerful, experienced and able board in British Aerospace. It would be wrong for me to allow this opportunity to pass without paying tribute to them for the work they have done, and I do so gladly.
I want to say a word about the noble Lord, Lord Beswick, who has been the chairman of British Aerospace through-out the two years or so of its existence. The noble Lord's appointment was not without its critics, but I was not among them. I believe that he has guided British Aerospace during this difficult period with skill and dedication. The noble Lord must have known, or anyway guessed, that a Conservative Government would reinject some measure at least of private ownership into British Aerospace, which no doubt he regrets, but it is my duty to record that the noble Lord has none the less served both British Aerospace and the Government with total loyalty, and we wish to express our gratitude to him.
Turning again to the future, the board will be further strengthened by a special provision to be included in the articles of association of British Aerospace Limited to give the Government the power to appoint two part-time non-executive

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directors. This power will be used to ensure that these directors, who will be chosen for their financial, commercial or industrial experience outside the aerospace industry, will add a further width of vision and experience to the board. Their duties will be to the company as a whole, not to the particular shareholder to whom their appointment is due. To prevent any conflict of interest, they will be precluded from voting on contracts with the Government. Otherwise, they will be free to act as any other director. The new company's articles will also require all the directors to be United Kingdom citizens. This is part of our determination to ensure that British Aerospace Limited, which is of such importance to the nation's defence, shall remain in British hands. My noble friend Lord Cullen will expand on the measures, largely in the articles of association of the new company but extending beyond them, which we are taking to make sure that British control continues.
My Lords, I have described at some length the policy which lies behind this Bill, and the effects that will flow from it. I hope your Lordships will allow me a moment more to describe briefly the details of the Bill itself. Clause I provides for the whole of British Aerospace's business to vest in one successor company on a day to he appointed by order. Clause 2 provides for British Aerospace's liability to the Government in respect of commencing capital and public dividend capital to be extinguished. Clause 3 provides for shares in the successor company to be issued or allotted to the Secretary of State. The effect of this is that the Government's present investment in British Aerospace will be exchanged for shares in the successor company, which on the appointed day will be entirely owned by the Crown.
Clause 4 is a technical provision pro-viding, if the company's capital is smaller than the former Government investment in the corporation, that the balance is to be carried to a special reserve, called the "statutory reserve ", with limited use only. Clause 5 gives the Secretary of State the right to acquire ordinary voting shares or any other form of security which may be converted into ordinary voting shares. These shares may be held by nominees, by virtue of Clause 6. These powers are
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subject to the target investment limit established under Clause 7, which must initially be set at the proportionate shareholding retained by the Government after the offer for sale of shares. This limit may subsequently be reduced, but not increased. The Government shareholding must not exceed the limit in force at any time. It may help noble Lords if I say that this power can most easily be thought of as a downward ratchet, setting an upper limit on the Government shareholding in the company. In other words, this Bill provides only for the disposal of shares in British Aerospace Limited, not their acquisition.
Clauses 8 and 9 I have already explained: they give effect to the principle that the Government will stand behind the obligations of British Aerospace and its wholly-owned subsidiaries which vest in the successor company. Clause 10 makes provisions for the eventual dissolution of British Aerospace by order, for the transitional period, and provides for certain provisions of the Aircraft and Shipbuilding Industries Act 1977 to cease to apply from the appointed day. Clauses 11 to 15 contain supplementary provisions, of which the most important is Clause 12, which provides that the successor company is to succeed to the tax position of British Aerospace. This ensures that the new company will suffer no tax disadvantage purely as a result of vesting.
My Lords, I believe that if British Aerospace were to remain in the public sector it would not be long before all the disincentives and disadvantages of nationalisation would be hanging round its neck like an albatross. What future could there be for all the people working in British Aerospace if we had to compare its performance with the most famous failures of our public sector? The flexible formula we have devised for the future ownership of British Aerospace Limited without the shackles of Government control means simply this: that, provided the new company can continue to produce the right products at the right time, and at the right price, then the world will heat a path to their door. I beg to move.
Moved, That the Bill he read 2a. — (Lord Trefgarne.)
3.24 p.m.
Lord PONSONBY of SHULBREDE: My Lords, many Bills have been brought

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before the House during the current Session. We find ourselves in agreement with many parts of those Bills and believe that many of them are for a good public purpose. However, for the life of me, I am unable to understand the good public purpose of this particular Bill. In my view it is one of the most unnecessary Bills which has been brought before the House this Session. As far as I can see, it serves no good public purpose other than satisfying the Government's ideological aspirations.
Even the Secretary of State in moving the Second Reading in another place made it clear that he had no criticism whatsoever to make of British Aerospace. Indeed, the noble Lord, Lord Trefgarne, repeated that view this afternoon. I would pause for a moment and join with the noble Lord in the tribute which he paid to the noble Lord, Lord Beswick, for the leadership which he has given to British Aerospace since it was formed.
However, I am bound to ask: Why the Bill? It is, of course, because the Government do not believe that nationalisation is the right framework for so intensely competitive an industry. Personally, I have never believed in change for change's sake. I have believed in change and I have believed in reform when there is some very good reason for it and when there is some need to improve the situation. I can see no reason for it in this instance.
The Bill is succeeding in introducing an element of uncertainty into the industry. It may be said that, with an element of private capital within the industry seeking higher rewards and therefore demanding increased efficiency, the new organisation will do even better. However, if there is some magic about private ownership, one wonders why the Government are not trying it out on British Rail or British Shipbuilders. Is it perhaps because British Aerospace is a profitable industry, and it is only profitable industries which are selected for this treatment?
In 1978 British Aerospace made over £ 60 million. I am told that for 1979 the figure will be in excess of that. I wonder whether the noble Lord can give us the cost of this transaction? Presumably the City firms, the merchant bankers and others who will be responsible for the
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flotation of 50 per cent. of the company, will need to be paid. No doubt much study has already taken place as regards this matter and I think that the noble Lord, Lord Cullen of Ashbourne, will be giving us details later. Lawyers and accountants will need to be called in. One wonders what will be the cost of all this work. I am told that the cost of this transition could be in the region of £ 3 million, £ 4 million or £ 5 million.
When it comes to the financing of the new company, one wonders whether the cost of raising money for the new company will be less than it is at present. I am told that it would be fair to say that every £ 1 million raised in the open market could involve the new company in finding an extra £ 5,000 or £ 10,000 as a cost for that money, because it would be anticipated that the new company would have to pay something like 0.5 per cent. extra in interest rates over and above what a Government organisation would pay. That is the situation. The cost of flotation will place a heavy burden on the industry, and the cost of running the industry will be higher.
Once the new company has been formed we do not yet know exactly how great a share the Government intend to take in that company. The noble Lord, Lord Trefgarne, repeated the figure "about 50 per cent.". He has refused to be drawn— as his colleagues have refused to be drawn in another place— as to exactly what is meant by that figure. Are we talking about 49 per cent., 50 per cent. or 51 per cent.? We do not know, but I should have thought it was something which should have been written into the Bill.
There is the provision in the Bill— the ratchet situation— under which the level of Government investment can be reduced down and down to 25 per cent. One wonders under what circumstances the other 25 per cent. will be sold off by the Government. Will it be sold off if the company is more profitable, or will it be sold off if the company is less profitable? I would add that the minimum figure of 25 per cent. is not in the Bill. Again, it is an item to be included in the memorandum and articles of association. It is known that it will be there because of an assurance given by Mr. Adam Butler, the Industry

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Minister, in Committee in another place. Surely the minimum figure should be written into the Bill?
The present wording of Clause 7, despite the assurances given by the Government, would enable the Government to reduce their holding to nil. It does not appear to have been taken sufficiently into account that much of the business of this industry is done with Governments, that a great many of its projects are collaborative projects with other Governments and that there has to be, for such projects, agreement between Governments. That being the case, other Governments will want to know the type of company and organisation with which they are entering into agreements.
When one has a quasi-autonomous Government organisation, such as the new British Aerospace, one can well see that there will be concern by other Governments in entering into negotiations. Certainly a great part of the work of British Aerospace is in the area of defence equipment, and foreign Governments would want to be satisfied of the standing of the organisation from which they were buying. Everybody appears to be in agreement that it would be quite wrong for this important British industry to come under foreign control, but the Government are prepared to see a 15 per cent., stake held by foreigners. One wonders whether they are quite satisfied, and whether that would be the limit.
Noble Lords reading recently about how a group of shareholders were able to establish a very sizeable stake in Consolidated Goldfield, will wonder whether a similar situation could not develop within British Aerospace. Can the foreign shareholding in fact be properly monitored? I think that the House needs to be very clear that such a monitoring operation can in fact be adequately policed. One wonders whether there ought not to be tighter provisions and a lower limit placed on the foreign shareholding. But again, the figure of 15 per cent. is not in the Bill: it is in the memorandum and articles of association.
The Industry Minister, Mr. Butler, has said that the articles will prevent foreign shareholders acquiring more than 15 per cent. of the shares; but, of course, the
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directors of any company can change their articles of association. The Government have said that they do not wish to exercise control over the company through any of their appointed directors. Recently, for example, British Petroleum changed its articles of association in order to appoint a foreign director. British Aerospace could do the same. However, it has been said that, in fact, this would not be so because a Government shareholding of 25 per cent. could prevent such a change. As I have already said. there is no provision for this in the Bill. This ought to be brought within the Bill and not left to be worked into the articles at a later stage.
It is, indeed, ironic that all this proposed change of control of British Aerospace is happening at a time when other Governments are increasing their involvement in their own aircraft industries. In the United States there are close links between the Government and its aerospace industries, where more than 70 per cent. of production is bought by the Government. In France the major aerospace companies are State-owned. In Germany there is increasing State involvement by increased State shareholding in the aerospace industries.
One of the main motives in bringing the aerospace industry into public owner-ship was in order to ensure the maintenance of an independent aircraft manufacturing capacity in this country. We are still the only country in Western Europe with a complete airframe and engine industry.
On the dynamics side of the industry, British Aerospace produces a larger range of tactical, defensive missile systems than any other manufacturer in the United States or Europe, and this was very fully detailed by the noble Lord, Lord Trefgarne. Under the Bill there is no guarantee that this would stay within the company. There is nothing to stop the sale of a share in the company by the successor company, although we have had an assurance this afternoon from the noble Lord, Lord Trefgarne, that there will be no dismemberment of the company. Again, one would have thought that this should be included in the Bill.
Basically, this is an enabling Bill. The real decisions on it will come later when the memorandum and articles of association of the company are approved.

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I believe that your Lordships' House should ensure that much of this detail finds a place in the Bill. By tradition we shall give this Bill a Second Reading today, but I do not think it deserves one.
3.34 p.m.
Earl AMHERST: My Lords, we are all grateful to the Minister for taking us through this Bill, which details the machinery for denationalisation of British Aerospace and for turning it into a commercial company. However, I do not think that the Bill explains— and, with due respect, nor do I think the noble Lord fully explained— just why at this juncture this is necessary, when, according to my information, British Aerospace, a vital and go-ahead organisation, has done and is doing very well. I should like to support what the noble Lord has already said about the noble Lord, Lord Beswick, whose performance has been superb. Is it thought that by taking this action sales of the new company will be increased, its considerable international reputation enhanced and its relations with its foreign partners and business contacts strengthened? If so, how is that to be done? Perhaps the noble Lord, Lord Cullen of Ashbourne, will be able to amplify that.
Again, unless I have misread the Bill, it seems that in the first instance the Secretary of State is to hold all the issued share capital of the new company. I gather that these shares are to be ordinary shares carrying the usual voting powers. The Secretary of State is to fix the nominal value. Later he is empowered to allot— which I suppose means sell— the shares to various people. He is to fix a target for Government participation which he can decrease but not increase. He is also empowered to nominate representatives on the new board.
However, for all those activities the Secretary of State must obtain Treasury consent. From that it would seem that this side of the company's new business and its influence will be under the dead hand of the Treasury. It is for question whether this will encourage such organisations as pension funds, insurance companies and other big investors to invest. In the Bill there is also mention of a special fund, which I confess I do not
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quite understand, to enable a bonus share issue to be made, which the Bill says is to be available to members of the new company. Does that include the workforce of the new company, irrespective of grades? I can find nothing in the Bill that provides for the offer of ordinary shares to the workpeople of the company. But we on these Benches hope that that is what is intended.
I and my colleagues are strongly of the opinion— and I support what the noble Lord, Lord Ponsonby, has said on this— that the Government's shareholding should not be allowed to fall below 51 per cent., always assuming that a simple majority controls the order of the day, with a corresponding number of Government nominee hoard members so as to prevent any attempt at infiltration by foreign interests, and even foreign Governments, through their nominees, irrespective of what the articles of association may say. We believe that so much of the company's activities make it abundantly clear that such protection is of the utmost importance.
The D and P of such a company cannot be other than costly, with long delays between the time a new project leaves the drawing board and when it becomes saleable. In the meantime the company is liable to require a great deal more money. It is often commercial practice that such an eventuality is covered by what is known as a rights issue, which can involve shareholders and a proportion of their shareholdings. I can find no reference to this in the Bill, but perhaps this is to be included in the articles of association, which I understood were still being printed but which are being spoken about this afternoon. Perhaps the noble Lord, Lord Cullen of Ashbourne, can inform me on this matter.
Finally, we on these Benches consider this whole Bill to he a very considerable experiment. We hope that special provision will be made for all ranks of the workforce of the new company to invest in it if they so wish. We also hope that the company will be free to go about its business without any further political interference. Having said that, we on these Benches will support the Second Reading.

LAMBETH, SOUTHWARK AND LEWISHAM AREA HEALTH AUTHORITY (TEACHING)
3.40 p.m.
The LORD CHANCELLOR: My Lords, this might be a convenient moment for me to repeat, as the Chief Whip indicated, a further Statement now being made in another place by my right honourable friend the Secretary of State for Social Services about the future of the Lambeth, Southwark and Lewisham Area Health Authority (Teaching). The Statement is as follows:
"I reported to the House last Tuesday. On Wednesday I had a meeting with Mr. Stanley Hardy, the chairman of the AHA(T), who told me that the soundings he had taken among members of the authority led him to believe that the authority would in future accept its responsibility to comply with cash limits. On Thursday, I received a letter from the solicitor for the London Borough of Lewisham, writing on behalf of the three London boroughs who were the applicants in the case before the court informing me that his clients would not object to the commissioners remaining in a purely caretaking role until 31st March 1980. He envisaged that the authority, on resuming control from 1st April, would have freedom of action to review decisions taken by the commissioners, but accepted that the authority's expenditure should stay within cash limits. As the House knows, there is a clause in the Health Services Bill now in committee which, if approved by Parliament, will impose a statutory duty on all health authorities to comply with the Government's requirements on cash limits.
"The House will, I know, recognise the importance of these expressions of intent and the recognition they imply of the position which it was always my intention to sustain. In these circumstances, I thought it right to invite members of the AHA(T) to meet me last Friday to review the position, and I am grateful to the many members who at such short notice attended the meeting. The discussion took place in a helpful and constructive atmosphere. For their part, the members present,
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nearly two-thirds of the total membership, unanimously assured me that they will be prepared to accept an obligation to keep the authority's expenditure within cash limits. For my part, I assured them that on that basis they would be free to review any of the decisions taken by the commissioners, and moreover, that during, the short caretaker period up to the 31st March, the commissioners would not initiate any changes of major significance. I saw the commissioners' task as preparing for an orderly handover to the members of the authority, taking only such routine decisions which were essential to maintain services in the meantime.
"It seems to me that this would be a not unsatisfactory outcome and I have accordingly decided not to appeal against the judgment of Mr. Justice Wolff, but instead to arrange for the members of the authority to resume their functions from 1st April next.
"The solicitors for the three councils may seek a formal order from the court within the next day or so. Since the judgment effectively declares invalid the directions I gave last August, legislation will be necessary to regularise the position over the past seven months and to give immediate backing to the status of the commissioners up to the end of this month. The Government are therefore laying a Bill before the House to give legal effect to the decisions and actions taken under the directions from 1st August 1979 up to and including 31st March 1980. Copies of the draft Bill are available in the Vote Office.
"My right honourable friend the Leader of the House will make a statement about the arrangements for the Bill in due course following discussions through the usual channels. I offer my full and unqualified apology to the House in this matter and in particular for the trouble and inconvenience which the Bill will cause to honourable and right honourable Members."
My Lords, that concludes the Statement.
3.44 p.m.
Lord ELWYN-JONES: My Lords, the House will be grateful to the noble and

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learned Lord the Lord Chancellor for repeating the Statement made in another place by the Secretary of State for Social Services. It arises from a serious situation where a Minister has purported to exercise powers he did not possess and to give instructions and directions which were illegal, without legal basis or authority. Whenever that situation arises in a democratic State like ours it is of course a grave matter, and it is gratifying that in this Statement the Secretary of State responsible has offered a full and unqualified apology to another place, and in particular for the trouble and inconvenience which the Bill will have caused to honourable and right honourable Members in another place. It is a rather more appropriate Statement, if I may say so, than was made on the previous occasion. But there it is— it is a full and unqualified apology. It calls now for retrospective legislation. I can only wonder what storms would have broken over the head of a Labour Minister in this situation. But I do not wish to be ungenerous on this occasion in the face of a full and unqualified apology.
However, a number of questions fall to be answered. It may well be that when the occasion of the examination of the indemnity Bill (if that is the right way of describing it) comes before the House we shall have a full opportunity to ask these questions. What is to be done with those who, during the seven months illegal exercise of powers by the commissioners, suffered loss or detriment as a result of the illegality? Did any of the patients who were removed from the hospitals that were closed suffer illness, death, as a result of these illegal acts? Are there payments due to those who may have been dismissed, sacked, as a result of the illegal acts? These are all matters of gravity which we shall expect to see explained and dealt with in due course. I do not expect the noble and learned Lord the Lord Chancellor to deal with them right now, but I tell him, and give due warning, that we shall await anxiously what the contents of the indemnity Bill will be.
Another thought that troubles me a little is this. The Statement that has been read to the House indicates that when discussions "took place in a helpful and constructive atmosphere ", a satisfactory conclusion was arrived at. Were
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such discussions attempted before the matters complained of arose, and before the Secretary of State arbitrarily, I think peremptorily and with excessive haste, sacked those concerned before being sure he had the legal authority to do so? It gives rise to anxious concern as to whether there was here a sort of instant Tory politics in operation: act first, think afterwards. I am reluctant to enter into the purely political scene, but the House may think that these are reasonable and fair questions put with my customary detached impartiality, and I hope that we shall get an answer.
It seems to suggest that a better approach, a better attitude of constructive discussion instead of confrontation is what we are faced with here. Again I am in danger of becoming party political, but is not this being reflected also in other scenes? But if I were to dwell on that the House would become a little impatient with me. Here there are serious questions that your Lordships may think it important to answer. These circumstances of indemnity legislation to correct illegality are rare in our democracy, but when they arise they are matters that this House above all takes with great gravity.
3.49 p.m.
Lord WIGODER: My Lords, it appears to us on these Benches that the reactions both of the Secretary of State and of the area health authority to the judgment of Mr. Justice Wolff have been highly commendable. This is clearly a situation which has arisen as a result of the Secretary of State acting in perfectly good faith— I do not think anybody has queried that— in order to deal with the problem posed by an area health authority that was unwilling to be constrained by cash limits, and indeed had indicated that to the predecessors of the present Government. It is, is it not, in a sense only an accident of politics that it is not the noble and learned Lord, Lord Elwyn-Jones, who has this afternoon been making this Statement?
Lord ELWYN-JONES: I cannot allow that to pass, my Lords, The noble Lord is now implying that my Government would equally have permitted this gross abuse of powers and illegality to take place.
Lord WIGODER: My Lords, I cast no aspersions on anyone. It is clear that

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what has happened in this case is that the Secretary of State acted on mistaken legal advice— and mistaken legal advice is equally available to both parties. In the circumstances, it appears to be sensible, first, that there should be legislation, a short Bill, to regularise the acts of the commissioners. As I understand that legislation, it will mean that there will then have been no illegal acts done by the commissioners, and I would be grateful if the noble and learned Lord the Lord Chancellor would help about that matter.
Secondly, it appears to be sensible that the Secretary of State and the area health authority have agreed that the authority shall have the right to review all the decisions taken by the commissioners during that period of time. Thirdly, it appears to be sensible that the area health authority should have indicated that it is prepared to be bound by cash limits in future. In those circumstances, it seems to us on these Benches that this is, on the whole, a not unsatisfactory solution to a very difficult problem.
The LORD CHANCELLOR: My Lords, I should thank the noble and learned Lord, Lord Elwyn-Jones, who managed to contain his schadenfreude within reasonable limits, though not absolutely as much as perhaps the noble Lord, Lord Wigoder; but I thank them both for the relatively genial way in which they received this Statement. I think the noble and learned Lord's memory is getting shorter with old age; he seems to have forgotten Thameside, Mr. Jenkins and the wireless licences, the Laker legislation, the Clay Cross legislation, the sewerage point and one or two other little episodes in the rather checkered career of the previous Government. So although he treated it as a grave matter on the whole he was wise not to pursue his schadenfreude beyond the point he did.
As regards the apology, I am glad he accepted it, but he did it in a rather niggardly way. When my right honourable friend made his Statement to the House the other day, he had not then received a transcript of the judgment, the meeting with the local area authority had not taken place and he had not decided whether or not to appeal. Obviously, the apology, which was unqualified, was made at the proper time, today, when the
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decisions had been arrived at— which I therefore should have thought was at the proper time.
I cannot quite give the information for which the noble and learned Lord asked, about the discussions in August, because I am not very fully briefed about them, but I would just tell him that my recollection of the matter is that the confrontation was the other way about— that the area health authority rather indicated that it was not their intention to abide by the law, by the direction— and the noble and learned Lord would do well to remember that the learned judge who tried the case and heard the evidence, which the noble and learned Lord did not, said that my right honourable friend had behaved not only in good faith, which one would take for granted, but also reasonably. So perhaps the limited extent to which he attempted to show schadenfreude was possibly misconceived.
Having said that, let me say that I am very grateful to both noble Lords for the genial, or relatively genial, way in which they have accepted this Statement. I took it upon myself to reply to it because as a Bill— not of indemnity: I think it is called of validation— is contemplated, it was right that the only available member of the Cabinet should make the Statement. It was in no way intended to reflect on my noble friend who ordinarily answers for my right honourable friend in this House, and I hope the House will think it was a proper decision to take. Again, I thank both noble Lords for the relatively genial way in which they have accepted this Statement, which was not an easy one to make.
Lord CAMPBELL of CROY: My Lords, is not this course the best and most satisfactory that could be adopted now in these circumstances and, speaking with the same political detachment as the noble and learned Lord, Lord Elwyn-Jones, may I ask my noble and learned friend the Lord Chancellor if he would agree that Ministers' powers can be in some doubt because of the legal advice available to them. which can be both vague and contradictory? May not this also have been the case when Mr. Mulley was having to deal as Secretary of State for Education with a similar kind of case and was found to have exceeded his powers? I speak with some feeling in this matter as a former Minister who had a

33
similar situation but was fortunate myself in the courts to have been proved correct; but I could easily have been found the other way round on receiving legal advice of a different nature.
The LORD CHANCELLOR: My Lords, I am very grateful to my noble friend. I think that in the present state of delegated legislation and powers conferring it, Ministers of all parties are liable to run the risk of tripping up. Sometimes we even find that the courts differ as to the extent to which powers have been exceeded. None of us I think can claim to he entirely blameless in these matters and I think the less schadenfreude we show on these occasions the more honourable we appear to be.
Lord ELWYN-JONES: My Lords, I am not sure I find myself feeling that what I said was dishonourable, if that is what the noble and learned Lord has in mind. All I can say is that the reproaches which I have uttered today in this instance do not compare with the storm, the torrent and thunder of noises that came; and I wonder whether the exchanges that have taken place today with the noble and learned Lord on the Woolsack would have been as gentle as those which have befallen today? May I say this to the noble and learned Lord: they have been in office for only nine months. We were in office for years, which gave a little more time for error to be committed.
The LORDCHANCELLOR: My Lords, I hope I shall learn better from experience than the previous Government. I do not wish to be ungenerous to the noble and learned Lord, and I certainly did not intend to suggest any failing in the highest standards of courtesy and honour which he always observes, and he knows that I have the very highest opinion of him in every personal way. I thank him for his kindly approach to this matter and I do not know that we can carry it usefully very much further.

BRITISH AEROSPACE BILL
Second Reading debate resumed.
3.58 p.m.
Lord ORR-EWING: My Lords, to resume after that unusual intervention, I
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wish to reply briefly to what the noble Earl, Lord Amherst, said concerning the interference of the Treasury. I would agree with him in that I am always suspicious of Treasury decisions. I recall asking a Question a few years ago about how many chartered accountants there were in the Treasury, and the answer was three; this is the Ministry responsible for financial control over the whole spectrum of British life.
I am also suspicious that there are not quite enough people with trained engineering and scientific knowledge, and as a result sometimes projects of great promise are torpedoed by the Treasury, and I believe wrong decisions were made in the time of the last Government and probably it was the Treasury that tried to persuade them to cancel Concorde and the Channel Tunnel. Fortunately, Concorde went ahead, because it was a joint project. When the French wanted to cancel it we did not, and when we wanted to cancel it, the French did not; and in any case they had by agreement to go to the International Court to get agreement. The party who made the cancellation had to pay all the fees and the costs of the other party; and that was a very good discipline. Concorde went ahead, and is now making a profit. I think that no single, advanced scientific venture has captured the imagination of the public all over the world more than has this particular aircraft, which I believe might have been cancelled. So I should not wish to see the Treasury play too big a part when this great industry of aerospace is returned half to Government and half to the private sector.
The noble Lord, Lord Ponsonby of Shulbrede, in his engaging way said that he simply could not understand why the proposal is necessary. I shall try to point out why I believe that it is necessary. Since the end of the war the nationalised industries have in general produced rather disastrous results. I feel sorry for the Labour Party because, despite Mr Gaitskell's gallant efforts, they never really managed to get rid of Clause 4, and I have no doubt that in their next manifesto they will still have some reference to further nationalisation. I remember what Manny Shinwell (as he then was) said in 1947, with his engaging and refreshing honesty, which has not deserted him in any way since he came to this House and has grown even more mature.

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He said that when they started on the great nationalisation programmes after the war they did not realise how many problems there were, and if they had realised, perhaps they would not have undertaken them. Perhaps I may borrow the phrase used by the noble and learned Lord, Lord Elwyn-Jones: they were acting first, and thinking afterwards.
It is true that a few of the nationalised industries have made profits, but the great majority have made losses. In my weekend reading I found that the Economist was apt on this point. When one looks to see which nationalised industries are making a profit and which are not, it is very difficult to make comparisons because it is not a case of comparing like with like. This is what the Economist says:
"… oddly enough, hardly anyone knows how profitable or otherwise they are. This is mainly because they choose to adopt inconsistent and occasionally bizarre accounting policies".
Later on it says:
"State industry chairmen have up to now fiddled the figures to suit their books".
As I understand it, the Treasury are now taking steps to try to standardise the accounting procedures of all our nationalised industries, and it will then be easier for Parliament, in both Houses, to compare the performance.
Certainly it is true that from time to time huge debts have been written off. It is so difficult to compare the performance of nationalised industries one against another because of these debts. They certainly all make gigantic demands, and targets have been set by successive Governments regarding their external financial borrowing limits. The strain on the PSBR is obviously great as a result of these demands. The last Government, under IMF instructions, reined back the PSBR very rigidly, and relatively successfully; that is how they managed temporarily to get down the inflation rate substantially.
Much of the brunt of this financial drain is borne by the taxpayers. It is worthwhile for a moment to look at the biggest borrowers among the nationalised industries. British Rail's borrowing is £ 715 million in the current year, and will be £ 750 million next year. The second biggest borrower is the National Coal Board, with a figure of £ 709 million for this
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year and £ 834 million for next year. British Steel, which is in such trouble, has a borrowing figure of £ 700 million for this year, and after the closures, as we hope, the figure for next year will be £ 450 million. So by any standards the nationalised industries are not profit earners— except in very rare cases— and they are certainly enormous borrowers. That is one of the reasons why we desire to have a joint venture owned partly by the Government and partly by the private sector.
Surely every political party must agree that the nationalised industries, not because of lack of good management or lack of good will, but by virtue of their enormous size, their management structure, and, above all, because of political pressures— no party has solved this problem— cannot be as flexible and responsive to market demands, particularly international market demands, as the private sector companies— —
Lord STRAUSS: My Lords, surely the noble Lord appreciates that one of the reasons why some of the nationalised industries have not made profits, or their profits have been lower, has been that the Government have stepped in and controlled the prices of the products. That is the most important factor which the noble Lord must take into account.
Lord ORR-EWING: My Lords, I would absolutely agree. This is one of the difficulties of nationalisation. One of the three points that I mentioned is that they suffer from political pressures. Therefore they do not always attract the best managing directors or chief executives, because people do not want to go into an industry where they become a political football, kicked about in the public sector and in the newspapers and other parts of the media. It is exactly that political interference that distorts that which is probably in the long term good of the particular industry.
Lord PONSONBY of SHULBREDE: My Lords, I fail to follow the noble Lord's argument. He complains of the enormous size of the nationalised industries, and says that this is one of the reasons why they cannot react quickly to market trends. Yet the proposal here is that British Aerospace will remain exactly the same

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size; there will be no dismemberment at all of the corporation. So I cannot see how the noble Lord's argument affects British Aerospace.
Lord ORR-EWING: My Lords, it would be a very brave man, a prophet, who would say that there will be no restructuring of the British aerospace industry over the next 20 or 30 years— because that is what we are thinking of. Whether or not their size remains the same depends on how thoroughly they meet the requirements of customers, both internationally and at home. If they make the right aeroplanes they will continue at the same size. If they do not make the right aeroplanes, if their decisions have been wrong, they must run down, just as British Steel is being forced to run down.
I want to make the point that in the last five years the drain on taxpayers from the nationalised industries has totalled £ 3.8 billion. In regard to British Steel alone, there has been a subsidy equivalent to £ 200 for each taxpaying family in this country. So huge sums of money have been invested by the taxpayers in a modernisation programme and in support of these nationalised industries.
There was the report of the noble Lord, Lord Beswick; and I should like to endorse in as generous terms as possible what has been said already. Under his leadership British Aerospace has done extremely well. The noble Lord has worked most assiduously, as he always does— we know him for that in this House — and I should like to endorse the thanks of the nation. We had the Beswick Report on steel in 1974– 75. I want briefly to touch on the steel industry because it is very much in our minds while we are discussing the merits of nationalisation or denationalisation. As long ago as January 1976 there was a joint statement by the management and trade unions that working practices would have to be greatly improved and, above all, productivity increased. That was— if I may borrow the old term— a solemn and binding undertaking, and I am sorry to say that it was never honoured. So for a long time it has been realised that something had to be done to streamline BSC. In the following three and a half years the Labour Government believed— and I think they still believe in opposition — in Government interference, but it
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does not seem to have been used on that occasion to pressurise either BSC or the unions to increase productivity. Political pressures were being exercised, and actions to close unproductive units were delayed. There was delay, procrastination and postponement— in some cases of course until after the election.
If one looks at the position in France, Germany, Belgium and Italy, one sees that there was a much quicker and more flexible response to the world market conditions. They have all had problems, but they realised that steel capacity had to be cut, and they made arrangements for retraining for alternative jobs, redundancy payments and all that makes the situation less difficult and more palatable.
Of course, British Aerospace has done well, but this is on a two-and-a-half-year run. What we are trying to look forward to is the next 10 or 20 years. Until now they have been marketing aircraft which were developed, tested and became operational while the decisions were being taken by private enterprise. It takes a long time to make these decisions and to bring an aircraft to operational use. Eight to 10 years for the development of an aircraft is not unusual; a further 10 years for the mainstream production, during which there is updating and improving of the aircraft and its engines; then, probably, a period of 10 to 20 years on top of that, when the aircraft is in operational use and there will be work for the manufacturers in restructuring it, updating it and the like. So you here have decisions taken today which will affect the aircraft industry for the next 10, 20 or even 30 years, particularly in the military field. So I think the solution is a sensible one. We have a mixed economy in this country, and I only wish it was accepted that it should stay mixed as at present, with each side of it making their efforts— —
Several noble Lords: Mixed?
Lord ORR-EWING: Mixed. Yes, my Lords, because this is going to be a mixed company, as I am going on to say— a mixed economy. It must not be the ratchet principle which has been used— that every time something is nationalised it cannot be denationalised— because in that way we shall end up as a Soviet State, with everything in the hands

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of the Government, and no social democrat would wish that. But in a mixed economy we were asking for mixed ownership, not dissimilar to the BP model, and I think that has worked pretty well. I thoroughly support it. I noticed that there was no mention, no welcome, from the opposite side as to the employee shareholding. I would have thought that that was a step forward in what has been a nationalised industry. Certainly I believe we shall get a quicker and more flexible response, and I believe we will get a more market-oriented company.
I should like to offer a little comfort to the Opposition. This is what they said in their Labour Manifesto of 1945 about nationalisation.
"Amalgamation among public ownership will bring great economies in operation and make it possible to modernise production methods and to raise safety standards in every colliery in the country. Public ownership of gas and electricity undertakings will lower charges …".
Then it goes on:
"Public ownership of iron and steel.— Private monopoly has maintained high prices and kept inefficient high-cost plants in existence. Only if public ownership replaces private monopoly can the industry become efficient".
That, my Lords, is an industry which is at present on strike. I do not believe that even the Opposition would use those words today, so certainly the Labour Party have learned something since 1945, and the public has learned a whole lot more; that is, if you want to have a progressive, dynamic industry, do not nationalise it. That is why I support this Bill.

THE WARNOCK REPORT
4.13 p.m.
Baroness YOUNG: My Lords, with the leave of the House, I should like to repeat a Statement being made in another place by my right honourable and learned friend the Secretary of State for Education and Science about the Warnock Report on the special educational needs of handicapped children.
"The committee under the chairmanship of Mrs. Warnock presented its report in March 1978. Shortly afterwards a consultation document was
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issued to seek the views of the many organisations concerned with the education, health and welfare of the handicapped. Their reponses were almost wholly favourable. In addition a thorough inter-departmental study of the report's recommendations has now been made and completed within the Government.
"In view of the anxieties expressed on both sides of the House during discussion of the provisions of Clause 9 of the Education (No. 2) Bill, my right honourable friend the Secretary of State for Wales and I have decided that it would be right to announce at once the Government's response to the report. My right honourable friend the Secretary of State for Scotland will be dealing separately with the application to Scotland.
"The central recommendation of the report was that, in the light of the experience gained since the passing of the Education Act 1944, the concept of special educational treatment appropriate to defined categories of bodily or mental handicap should be replaced by that of the special educational needs of individual children. Such a change, which would reflect enlightened current practice, was welcomed by the bodies we consulted. The Government accept the arguments in the report for changes in the current statutory provisions relating to special educational treatment and intend to introduce early legislation to enact a new framework substantially on lines recommended in the report. The new legislation will incorporate provisions designed to safeguard the interests of children with severe or complex special educational needs, including arrangements for more widely-based assessment and for the recording of individual needs.
"The legislation will also define and protect the rights of parents to adequate information and consultation about the education offered for their children, taking account of the relevant recommendations of the report and in the spirit of the provisions about information and parental preference embodied in the Education (No. 2) Bill.
"Many of the other recommendations in the Warnock Report were not

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addressed directly to Government but to those concerned with the local provision of education, health and welfare services. Some recommendations— for example, those relating to nursery education, teacher training and further and higher education— have major implications for central and local government expenditure, and their implementation must be considered in the light of the economic situation and the need for restraint which it entails. The Government's current expenditure plans provide for the maintenance of expenditure on special education at its present level despite the fall in the size of the relevant age groups.
"We propose to lay before Parliament in due course a White Paper outlining the form the new legislation might take and dealing with other recommendations made by the Warnock Committee.
"In conclusion, I would like to congratulate Mrs. Warnock and the members of her committee for their carefully presented consideration of the many issues surrounding the education of handicapped children and young persons. Their report will I am sure he a constant source of reference for many years to come for all with an interest in the development of special education."
4.17 p.m.
Baroness DAVID: My Lords, we should like to thank the Minister for repeating that Statement. We join with her in her thanks to Mrs. Warnock and her committee, and congratulate them on their very comprehensive and human report. We, too, welcome the change in the definition, and the new term "children with learning difficulties". The Minister said that the report would be
… a constant source of reference for many years to come".
Is that a full acceptance of the report as a blueprint for the future? Do the Government accept the recommendations in the report as their long-term aims for these children? We are surprised that the Government are proposing to produce a White Paper outlining new legislation when an Education Bill is going through Parliament at the present time— a Bill which has raised queries about the education and welfare of these children, and of their parents. Why not amend this Bill?
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There certainly will be amendments put down by others, if not by the Government. The Statement refers to the White Paper appearing "in due course". When will that be?
It seems to us a strange way to refer to the Warnock three areas of first priority as:
"Some recommendations— for example, those relating to nursery education, teacher training and further and higher education ",
which is what the Statement does. These are vital points in the report and major areas of anxiety. I suppose it is easy to guess the reason for the Government's shy approach when one thinks of the action being taken on nursery schools in the present Education Bill, and the cuts which are being made. We must remember that Warnock said that nursery education provision should be substantially increased for all children as soon as possible, since this would have the consequence that opportunities for nursery education for young children with special needs could be correspondingly extended.
I think, too, that post-16 education is grossly inadequate for these young people at the moment, and I would have hoped that we might have something positive there. In-service training, too, is desperately needed. Would the Minister agree that in-service training is about the cheapest way to get an improvement in this field; and what are the Government's plans here? We welcome the fact that expenditure on special education is being maintained at its present level, but one cannot help wondering whether local authorities, faced with having to make large cuts, may not chop a certain amount off this field. There are some very cheap recommendations in the report— I mean cheap from the point of view that they do not take a lot of money to implement— and I ask the Minister whether the Government are going to do anything about that— for instance, as to a governing body having a governor with special responsibility for these children, and for having links between special schools and ordinary schools. There are a number of things in the report which could he implemented quickly. I should like to hear what the Minister has to say about that.
Lord BEAUMONT of WHITLEY: My Lords, we very much welcome this

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Statement by the Government and are very glad indeed that the main recommendation of the Warnock Report is going to be adopted and that the Government are going to move forward. But, together with the noble Baroness who has just spoken, we are rather anxious to have some indication of when the White Paper is to be published and when legislation will come. I know this will be difficult for the noble Baroness to answer; nevertheless, she should be under no illusion about the widespread sense of bitterness that there will be if, because of the legislative queue, this rather unfortunate Education Bill now before us leads to putting off dealing with the needs of the handicapped.
In particular, before we get to the Committee stage of the Education Bill I should like to know the answer to one question. Recommendation 3 of Chapter 5 says that a handbook should be available for each area committee to give information about local facilities for children with special needs and their parents. I think it would be true to say that the Committee stage of the Bill will go a great deal more smoothly if, before it takes place— and I am not asking for it today— we could have some assurance that that recommendation certainly will be carried out by the Government and as soon as possible.
4.22 p.m.
Baroness YOUNG: My Lords, I should like to thank both the noble Baroness and the noble Lord, Lord Beaumont, for the way they have received this Statement today. Not unnaturally, both have asked what is going to be the timing of both the White Paper and the legislation. I think it is only right for me to be quite frank with the House over this matter. As noble Lords will know— and many in this House take a great deal of interest in this subject— it is two years since the report of Mrs. Warnock was received. We have been carrying out extensive consultations. As I indicated, we have brought forward the Statement particularly so as to have it before the Committee stage of the current Education Bill. I cannot anticipate what will be in the next Queen's Speech but I should like to say that the Statement refers to early legislation; and that means that there will be no unavoidable delay
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in introducing it. One would expect the White Paper to precede it.
I have been asked what will be in the White Paper. There are already, from the Questions and points that have been raised, a number of issues that require considerable public debate and on which it would be helpful not only to know your Lordships' views but those of others before details of the legislation are published. It would be for that reason that we should wish to publish a White Paper. On the question of resources, I should like to reiterate that the Government's expenditure plans for 1980– 81 provide for the maintenance of expenditure on special education. This will be confirmed within the plans of the main expenditure White Paper later on this month.
I have been asked whether or not we intend any changes in the Bill currently before the House. I should like to say on that point that consideration is being given to the possibility of amending the present Bill so as to extend its scope at least in part, to the parents of handicapped children; but, to be honest with the House, any such amendments would be set in terms of the present arrangements for special educational treatment which the Government have now declared their intention to replace by early legislation. I was asked what we meant by accepting the Warnock recommendations. I think it is right to say that the whole subject of integration will be fully discussed within the White Paper; but the 1944 Act presumption of categorising handicapped pupils and putting them into special schools would go, in fact, under the concept of the Warnock proposals.
Lord RENTON: My Lords, may I, as the parent of a handicapped child, and as chairman of the National Society for the Mentally Handicapped, thank my noble friend for the Statement she has made? In doing so, I should like to say that in the National Society the fact that the Government have accepted our views on the Warnock Report is greatly welcomed. One can understand that the present Education Bill would not be a suitable vehicle for wide implementation of the Warnock Report but I hope that my noble friend will heed the suggestions made for a limited implementation of it, in particular with regard to parents' rights. Parents of mentally handicapped children

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feel very strongly that they should have the opportunity of parental choice so far as possible. I hope that my noble friend will bear that in mind between now and further consideration of the Education Bill.
Baroness YOUNG: My Lords, I should like to thank my noble friend Lord Renton for his remarks. I can assure him and other noble Lords that there is no disagreement between us about the principle that he is evolving. We should like to apply as far as possible the principles which are in our current Bill to parents of handicapped children. There are a number of difficulties of a legal nature in amending our Bill to take account of the whole concept of what I would call the Warnock framework. It is for that reason that we believe that a separate Bill is required. We will certainly look at the point to see whether it is possible to amend our present Bill to go part of the way but I think it would be wrong to say that we could at this stage introduce the whole of the Warnock concept into our Bill. That must wait for later legislation. The reason for bringing forward the Statement today and indicating our timetable is, I hope, to assure the House that we have the needs of the handicapped very much in mind and wish to act on the Warnock Report as soon as possible.
Lord SEGAL: My Lords, I missed the Statement of the noble Baroness by the skin of my teeth and through circumstances beyond my control. I should like to say, however, that I know that the Statement will be studied with the utmost care, and I hope that it will go a long way towards relieving the unease that at present is being felt by so many parents of handicapped children all over the country. I should like to thank the noble Baroness for having so expeditiously made the Statement so soon after the Second Reading of the Education Bill. We understand the difficulties that the Warnock Report has created and we welcome the opportunity of a full Government Statement very shortly on the matter.
Baroness YOUNG: My Lords, I thank the noble Lord, Lord Segal, for his support of this Statement. My colleagues and I recognise the concern of parents of handicapped children. It is for this
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reason that we brought forward the Statement at this time.
Lord HARMAR-NICHOLLS: My Lords, is my noble friend aware that while she has made clear why she made the Statement today— to let people who are interested in this subject know the forward thinking— she should bear in mind, on tactical grounds, that it may be a disadvantage in getting the present Bill through its final stages unless she gives us the White Paper early and an indication of what will be in the new Bill rather earlier than her answers seemed to indicate?
We live in a real world. If, in resisting some of the amendments that will be put down to the existing Bill, my noble friend will ask the House not to proceed with them because of something that might be in a Bill which has not yet been defined, then I assure her from past experience that she will be building up a lot of trouble in negotiating that Bill. With that tactical consideration in mind, I would urge an early White Paper and an early indication of the possible details of the future Bill, so as to avoid misunderstanding.
Baroness YOUNG: My Lords, I will note of course certainly what my noble friend Lord Harmar-Nicholls has said on the whole question of tactics. My own view about this, and that of my colleagues, is that this is an extremely important area which is of great concern to a lot of people. I believe that it is very necessary to get it right. I can assure the House that, so faras I and my colleagues are concerned, we do not wish for any more delay than the parliamentary timetable would require.

BRITISH AEROSPACE BILL
Second Reading debate resumed.
4.30 p.m.
Lord WYNNE-JONES: My Lords, when the noble Lord, Lord Trefgarne, introduced this Bill's Second Reading I was fascinated listening to him because it seemed to me that he did not produce any reason at all for introducing the Bill. On the one hand, he explained how extremely well British Aerospace have done their job. He went out of his way to tell us how many different new aircraft they had

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introduced; he went out of his way to show how British Aerospace had reached agreement with Aerospatiale and the Germans over the airbus; he went on to explain that they had the HS. 125 going. He talked about all their work and he went on to congratulate the noble Lord, Lord Beswick, on the excellent way in which he had done his job. He also pointed out what was surely the whole purpose of the nationalisation, and that was that the various companies had been brought together and had formed an extremely successful working combine.
Let us remember the Bill was passed only three years ago almost to the day; let us remember that it went through after long discussion in both Houses. This has been apparently, on the noble Lord's own admission, very successful. Do we every two or three years go and upset a successful organisation? Is that the way in which we try to run the affairs of the country? If so, it is not surprising that we do not do remarkably well. Surely, when we have an organisation working well, we allow it to go on functioning.
I look back at the debate which took place on Second Reading in your Lordships' House and I think that possibly the noble Lord, Lord Orr-Ewing, is one of the few people taking part today who took part in that debate.
Lord TREFGARNE: My Lords, I did.
Lord WYNNE-JONES: Yes, my Lords, but with not quite the same speech, whereas the noble Lord, Lord Orr-Ewing, delivered almost the same speech on that occasion. He has brought it up to date of course. Some of the figures are a bit different. In the same way as on that occasion, which was 28th September 1976, he has not paid any attention at all to the purpose of this Bill. He scarcely mentioned in his speech today the British aerospace industry; he told us about British Steel; he told us about all the other nationalised industries; but not a word about British Aerospace. I looked down and I wondered what Bill we were indeed discussing. It clearly was not the Bill that was printed. We were discussing something quite different. We were discussing apparently his views and observations on nationalisation.
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My Lords, that is not the purpose of this Bill. The purpose of this Bill is to disintegrate something which was set up and has worked well. I remember on that occasion, 28th September 1976, the speech of the noble Lord, Lord Kings Norton. I am sorry not to see him here today because there is no one in this country who has a better understanding of the aircraft industry than the noble Lord. He has been in it from a boy and has worked his way right through it and has held almost every position; he has not only taken part in building the heavier-than-air machines but also he helped to build a dirigible. The noble Lord has done the whole lot. He said on that occasion that he was himself in favour of an industry of this type being run by private enterprise. But at col. 252 of Hansard he went on to say:
"I do not think that any noble Lords will want to oppose the Second Reading of the Bill "—
that was the nationalisation Bill—
"The outcome, I think, is a foregone conclusion, and not only many of your Lordships but most of the people in the industry itself want the Bill to be law and as soon as possible … Decisions long deferred can then be taken, and the organisation to implement them created. The British aircraft industry, particularly on the design side, can again gather momentum".
In the small part of his speech which the noble Lord, Lord Orr-Ewing, devoted to this particular Bill he mentioned— and I agree with him entirely— that there is a long lead Lime in designing and building aircraft. Precisely because there is a long lead time, precisely because designs have already started, precisely because things are under way, surely that is the very reason why one does not upset the organisation. If the lead time were a few weeks one might argue that it does not matter very much; but when it is eight years, as he said, towards a design, one does not after three years during which this organisation has been going ahead suddenly scrap it and say, "We want a new organisation".
I always thought that the Conservative Party stood for conservatism, not for whimsical innovation; not for changing things every day just because some queer, bizarre notion came into their heads. What is the bizarre notion here? We are told, I understand from the noble Lord, Lord Trefgarne, that they will do their best to retain the organisation. I received a different impression from the noble Lord, Lord Orr-Ewing. He was talking about

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changing the organisation. I see that the noble Lord shakes his head but he said definitely that over the next 10 to 20 years they would want to change the organisation.
One cannot really have this made a plaything of political whimsy like this. One cannot say one day "We shall create an organisation and hope that it will do something good ", and when it does something good turn round and say, "Now it has done something good we can make some money by selling it. Let us sell the thing and see what happens and hope for the best". That is no sensible way to run an important, great industry such as has been built up in this country. Surely it is time we realised that this national industry is an important one. I do not claim to have been involved in it deeply but I spent some years of the war inside a Royal Aircraft establishment. There I came into contact with the industry and learned an affection for it which I have never lost. I feel very strongly that anything that we do which affects the good working of that industry is something which is bad for the industry and can be disastrous for this country.
I personally have not been satisfied with the assurances given by the noble Lord, Lord Trefgarne. Let me make it clear that I do not for one moment suggest that he is not absolutely sincere in making those promises, but one thing we always know with Governments is that no promise made by a Minister is worth anything at all legally: it is only if it is actually put down in the Bill. We have had it on a number of occasions, and it is no disrespect to the Minister to say that we cannot be satisfied with assurances that the control of British Aerospace will be kept within this country, unless we see that written clearly and emphatically into the Bill.
There are so many peculiar things about finance. I am not a financier and I hope that the noble Lord, Lord Cullen, will be able to deal with some of these points. I look at The Times today and find there that the original owners of BAC have only been paid, I think, at most, 20 per cent. of what they claim they ought to have had; and now the assets which they used to have are going to he sold. This is a very peculiar position because, with regard to Vickers, GEC and other firms
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such as Lairds who owned the BAC and other aircraft interests, for which they claim they have never been paid except for a small amount on account, the assets which were theirs are apparently now to be sold.
I gather from The Times that, although the Bill has not gone through, arrangements have already been made for sales to take place of up to 49 per cent. of the shares in British Aerospace. Once that happens, what happens to the compensation to the firms which originally owned the BAC? Are they to be left nicely out in the cold? What is to happen to them? I want to hear it stated: I thank the noble Lord for his nod, but a nod is as good as a wink to a blind horse and on this occasion I am blind and I wish to hear what is being done in this matter.
The matter which is to me crystal-clear is that this industry is not being dealt with in this way for any sound commercial reason or for any sound administrative or operational reason, but simply to satisfy the political inclinations of the noble Lord, Lord Orr-Ewing, and others who think like him. In other words, they are allowing political dogma and political prejudice to dictate what is to be done to an important industry in this country. They turn round always, as the noble Lord, Lord Orr-Ewing, has done today, and accuse us on this side of dogma. It is like the old saying about heterodoxy:
"Orthodoxy is my doxy but heterodoxy is the other man's doxy".
They are saying that we are the people who, because we hold views, are wrong. They are the people who, because they hold views, must be right, whatever destruction they may cause in operating them. If it were possible to vote against this Bill on Second Reading I would do so, but as it is not a tradition to vote against a Government Bill on Second Reading, I merely say that it is a deplorable Bill.
4.45 p.m.
Lord CULLEN of ASHBOURNE: My Lords, that there are differences in principle and in detail between the views of noble Lords on the Labour Benches and those which are held by the Government is, of course, inevitable. I do not propose to go down the route that the noble Lord, Lord Wynne-Jones, encour-

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ages me to take regarding dogma on one or other side of the House. In the few years I have been coming here regularly I have heard this very often, and I do not think it does much good to say it many times more. What I do believe is that there is not so much between us as the noble Lord, Lord Ponsonby, and the noble Lord, Lord Wynne-Jones, suggested. The previous Conservative Government made many efforts to bring together into one organisation those famous companies referred to by my noble friend Lord Trefgarne. The last Labour Government achieved that by nationalisation and what we are proposing under this Bill is what we believe to be the best of both worlds.
It has been suggested by noble Lords on the Labour Benches that this Bill is in some way a destructive measure and will be a cause of disruption in the aerospace industry. I believe, on the contrary, that it is a moderate measure which will provide continuity and stability for the industry; and this will be the theme of my remarks today.
In saying this, I do not seek to minimise the importance of the change that will be brought about by the Bill: the effects of the change from statutory corporation to private sector company will be fundamental and far-reaching, as my noble friend Lord Trefgarne emphasised. But the essence of the change is that it will give greater opportunities and greater freedom to the existing organisation and to the people who manage it and work in it.
The organisation itself will be unchanged, and I emphasise this to the noble Lord, Lord Wynne-Jones. There will be no division of the business. People employed by British Aerospace will continue to be employed by the successor company when vesting takes place: their contracts— like all other contracts— will pass unchanged to the successor company. All the Government's existing commitments to British Aerospace— most notably in connection with its membership of Airbus Industrie— will be honoured. The Government's relationship with the company as a customer for its defence products will be unchanged; and the Government will be willing to consider, on the same basis as in the past, entering into memoranda of understanding with overseas Governments in relation to contracts
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placed with British Aerospace Ltd. Finally, the Government will retain a substantial shareholding in the company; this will emphasise that there is an important element of stability underlying the break between public sector and private sector. We believe that in the private sector British Aerospace Ltd. will be better able to build on its present strength and to prosper in the competitive international markets in which it must do business, and that is why we have brought this Bill before Parliament. There is nothing in the Bill that will weaken the commercial position of British Aerospace in any way.
Having emphasised this theme of continuity, I should now like to deal with some of the points that have been raised during the debate. I think the fears of noble Lords will be allayed if they reflect on the degree of stability which the Government are determined to secure. It has been suggested that not enough is known about the company in which British Aerospace's business is to vest. This has not been mentioned here today, but I should like to deal with this matter. I hope I shall be able to show that this criticism is not justified.
The first point to emphasise is that so far as its business is concerned the company will be identical to British Aerospace. Not only will it inherit all British Aerospace's contracts and employees; in addition, the initial board of directors will be drawn from the members of British Aerospace. This continuity will be reflected in the company's memorandum of association, which will be based on the memoranda of the companies which vested in British Aerospace on nationalisation; its broad purpose is to ensure that the successor company can do anything which British Aerospace or its predecessor companies could do. The substance of the memorandum can be seen in that of the shell company which is available in the Library. That memorandum will need to be amended when the company's share capital is increased shortly before the appointed day. However, its substantive provision, the objects clause, should be unchanged.
The articles of the shell company will be replaced by articles appropriate to a public company. These will be based on those in table A of Schedule 1 to the Companies Act 1948, brought up to date

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in various ways. The articles will contain only three special provisions: first, to permit the appointment of two Government directors; secondly, to prevent foreign control and, thirdly, to make any necessary provisions for an employee share ownership scheme. I shall have some more to say about these last two subjects a little later in my speech. But before that I should like to emphasise that the Government are convinced that British Aerospace Ltd. should, like any other limited company, have its objects and constitution defined in its memorandum and articles; not in legislation.
The noble Lord, Lord Ponsonby, asked me what would be the cost of the flotation. He suggested some figures and asked for more. I accept without demur that there will be a cost of flotation, and that in order to boost public receipts it is necessary to spend some money, but I am afraid that I cannot give precise figures. There will be many expenses, but by far the most important will be the cost of underwriting and sub-underwriting the issue which, as noble Lords know well, are charged as a commission on the amount of the issue. I accept that that there will be costs and these could run to millions, but they will be small in comparison with the receipts from the flotation. They will be still smaller in comparison with the long-term benefits that we believe will flow from the freeing of a great organisation from the toils of nationalisation. We all know how easy it is for a Government to intervene in the affairs of a nationalised industry and how debilitating this is in the long run.
I come now to the need to prevent British Aerospace Ltd. from falling into foreign control. This point was raised by the noble Lord, Lord Ponsonby. I think there is no dispute here as to the objective, and I hope that by setting out in some detail the measures the Government propose to take, I shall be able to demonstrate to noble Lords that the objective will indeed be achieved.
The company's articles of association will contain a provision restricting the proportion of voting shares that may be foreign-held at 15 per cent., as mentioned by my noble friend. A draft of this article was placed in the Library of the House on 6th February. It is a complex article, and I will not outline all its provisions
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now. However, I would like to stress three central features of it. First the definition of "foreign-held share "is drawn very wide. It encompasses not only shares whose nominal holder is a foreigner, but shares which are in any way under the control of foreigners, foreign corporations, or corporations under foreign control. Thus there is no danger, for example, of shares held by United Kingdom nominees on behalf of foreign interests escaping the net.
Secondly, the directors will be required to obtain a declaration as to whether any owner or part-owner of a share is a foreigner, a foreign corporation or a corporation under foreign control, before that share is registered; that is, before it confers a right to vote. Thus it should always be known whether or not a share is foreign-held before it is entered on the register. And if to register a share would take the total foreign holding above 15 per cent., then of course it would not be registered. Thirdly, if, notwithstanding the precautions I have outlined, the foreign shareholding did exceed 15 per cent., it would be the duty of the directors to disfranchise the excess foreign-held shares, and then to ensure that they were transferred to United Kingdom ownership.
The Government will ensure that they are able to preserve this article and to prevent any undesirable amendment to it. They will do this by retaining a shareholding over 25 per cent., and by voting their shares against any resolution to remove the article or to amend it in any unacceptable way. The Government believe that the arrangements I have outlined provide the most effective possible means of ensuring that BAe Ltd. cannot fall under foreign control.
Ministers have made clear that they will be prepared to vote their shareholding to prevent any amendment of the foreign control article, and to prevent the election to the board of a director representing a foreign interest. Even if the Government were required by law to retain a shareholding of over 25 per cent., it would still be up to the Government of the day to decide whether to vote their shares. To ensure that the foreign control safeguards remain, we must in the last resort rely on the determination of the Government of the day. I take it there can be no doubt that any Government will be so determined.

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I have explained that the Government will retain a shareholding of over 25 per cent. in order to protect the foreign control article. This brings me to the question of what size of shareholding the Government will retain after the initial flotation. The noble Lord, Lord Ponsonby, has criticised the Government for being unable to say precisely what the proportion of shares owned by the Government will be. With respect, I think that criticism is misplaced, because of what we have said about the Government's relationship with the company: what matters is not whether the Government have the potential for control, but whether they will, in fact, exercise control.
I should like to illustrate this point by referring to the precedent of BP. Since 1914, when the Government acquired 51 per cent. of the voting shares in BP, the Government have always had the potential for control; they have never exercised control. At various times, the Government have held as high as 70 per cent., or as low as 46 per cent. of the shares in BP. At no time have they exercised control. It is accepted on all sides that BP is, in practice, a private sector company and that the Government do not intervene in its affairs. Accordingly, successive Governments have not attached importance to the exact size of the Government shareholding, whether it has been more or less than half. The Government's relationship with BP has in no way been affected by changes in the size of their shareholding.
The same will be true of British Aerospace Limited. My noble friend Lord Trefgarne has stressed that it will be a free-standing private sector company and that the Government will not intervene in its management. This was reiterated time and again during the debates on the Bill in another place. This being so, I think noble Lords will agree that the exact size of the Government's shareholding is not of crucial significance: just as in the case of BP, the Government will not exercise control over the company, whether they have a potentially controlling stake or not. The Government's shareholding after the initial flotation will be about half. This will provide an important element of stability after the change from statutory corporation to private sector company. But the exact
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proportion will depend on such factors as financial advice as to the number of shares that should be offered for sale, and the number that are taken up by employees. Clearly these are matters which cannot be known at present.
The Government's policy with regard to the size of their shareholding is reflected in Clauses 5 and 7 of the Bill. Clause 5 enables the Secretary of State to acquire ordinary voting shares or anything else (for example, convertible loan stock or share warrants) which may eventually result in the ownership of ordinary voting shares. This ensures that the Government can maintain a given proportionate shareholding if they wish to do so and, in particular, guarantees that the pledge to retain a stake of more than 25 per cent. can be fulfilled. At the same time, the target investment limit under Clause 7 will ensure that the Government's proportionate shareholding cannot be increased above the level that results after the initial flotation; and by allowing the limit subsequently to be lowered, Clause 7 envisages the possibility that the Government may decide to sell further shares.
I should also like to say a little about our plans to enable employees to own shares, a matter raised by the noble Earl, Lord Amherst. This is the other subject on which a special provision may need to be included in the articles of association. As noble Lords will know, the Government are committed to promoting wider share ownership, and we are considering various ways of offering shares in British Aerospace Limited to employees on a preferential basis. We have discussed all the possibilities with British Aerospace and have invited views from trade unions with members in the industry. We hope that British Aerospace Limited will develop their own permanent arrangements for employee shareholding, but that will be a matter for them.
What I have to say now concerns the arrangements to be made in the initial flotation. We have, of course, a wider range of options. At one extreme, it might prove possible merely to give employees priority in allocation so that they could subscribe secure in the knowledge that their applications would be accepted. At the other extreme, shares could simply be given away, or sold on preferential terms. Noble Lords will

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know the precedent of the arrangements made for BP, where employees who subscribed for shares which were lodged in a trust were given a matching share. That is certainly a precedent we should wish to study and are indeed looking at closely. It might be possible to ring some changes on the precedent.
One scheme the Government are considering would involve two stages: an allocation of free shares to all employees who satisfied a given service qualification, and an opportunity to purchase further shares which would be matched with an equal number of free ones. This second part of the scheme would be comparable to the arrangements adopted in the recent BP issue. All three categories of shares— those allocated completely free, those bought and the matching free allocation— would have to be vested in a trust established in accordance with the provisions of the Finance Act 1978. This would confer tax reliefs, provided the shares are not sold for a number of years.
I should emphasise that no decisions have been taken. The scheme i have outlined is only one of the possibilities we arc considering, and we are ensuring that there is a full opportunity for consultation with British Aerospace and with the trade unions concerned. However, it seems to us to be a way of encouraging employees to buy shares on the one hand while on the other enabling all employees to own at least some shares, even if they do not have any money available to spend. Whatever the precise details of the scheme decided on, we shall ensure that employees can have a continuing stake in the business— indeed, a more genuine stake than they have at present with the industry under state ownership. We hope to be able to make a more definite announcement of the arrangements we propose in the near future.
The noble Lord, Lord Wynne-Jones, asked me what is going to happen to the assets of the underlying companies which have not yet been compensated. It will not have any effect on the assets. It will simply be that a proportion of the shares that the Government take will be sold to the public. So it will have no effect at all on the assets. It is a purely financial operation. In conclusion, as I said earlier, I do not believe that there is much between us.
Lord GRANVILLE of EYE:My Lords, before the noble Lord sits down, may I ask him to make one point quite clear. He has indicated in his speech that at present large orders, certainly for military aircraft and civilian aircraft, are very much a matter for governments. Certainly that is so with regard to sales to the United States of America. May I ask the Minister with regard to permits, currency and all the rest whether that function is to continue?
Lord CULLEN of ASHBOURNE:My Lords, it most certainly is, yes. In conclusion, as I said earlier, I do not believe that there is so much between us. What this Bill proposes is a transfer of the whole of the business of British Aerospace to a Companies Act company, of which about one half of the shares will initially be owned by the Government. This will be analogous to the situation which has for many years existed with BP, a situation which was not disturbed by the last Labour Government. We firmly believe that this change will be beneficial. It will ensure the stability of the industry and of those who work in it, and it offers the best prospect for those in British Aerospace to build on the present strength of the industry and to achieve lasting prosperity. I commend the Bill to the House.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

COMPETITION BILL
5.6 p.m.
Report received.
Clause 2 [Anti-competitive practices]:
Lord PONSONBY of SHULBREDE Lord PONSONBY of SHULBREDE moved Amendment No. 1:
Page 2, line 26, at end insert ("or the use of land in the United Kingdom or any part of it for the purposes of carrying on a business.").
The noble Lord said: My Lords, during the Committee stage of the Bill I put down a similar amendment to this one and the noble Lord had some sympathy with it. He told us that this was a matter which was being considered by the Government but that their consideration of it was not yet complete. It was a question of whether business leases should be brought within

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the ambit of this section. I hope that the noble Lord may have some good news for us. I beg to move.
Lord TREFGARNE: My Lords, I am afraid that I have to disappoint the noble Lord— which is sad, so early in the Report stage of the Bill. Since the point has not been fully understood, perhaps I may say just a few words.
I want to emphasise, first, that the practices which involve restrictions on the use of land are not excluded from the Bill as it stands, provided they meet the various conditions set out in Clause 2(1). The essential condition is that the practice must have some effect on competition in the supply or acquisition of goods or services in the United Kingdom. The restriction on the use of land clearly may have such an effect, and if it does then it can already be investigated.
On the point, however, that the noble Lord specifically raised again on this occasion, the question of conditions of tenure, landlord-tenant relationships and so on is, we believe, best considered in the context of that relevant legislation. I am sorry to say that our considerations on this matter are not yet complete and indeed are unlikely to be so in the near future, but I will ensure that the discussion of these matters which we have had on the various amendments to the Bill are brought to the attention of my relevant right honourable, honourable and noble friends. Your Lordships may perhaps be interested to hear that the Law Commission are preparing a report on certain matters relating to this topic, such as restrictive covenants. I am sorry that I cannot be more forthcoming and helpful to the noble Lord, Lord Ponsonby, but I hope that he will see fit not to press his amendment.
Lord PONSONBY of SHULBREDE:My Lords, may I thank the noble Lord largely for repeating the remarks which he made during the Committee stage of the Bill. I hope that his examination of ways and means under the Landlord and Tenant Act 1927 to solve this particular problem will eventually meet with success. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.10 p.m.
Lord JACQUES Lord JACQUES moved Amendment No. 2:
Page 3, line 29, at end insert—
("( ) The Director shall publish Guidance Notes in which he shall inter alia give an illustrative list of practices which may restrict, distort or prevent competition in certain circumstances").
The noble Lord said: My Lords, this amendment was discussed in Committee and I will go over the main points. First it deals with an area in which there is some conflict of interest: on the one hand, the administrator of the law prefers a general and wide definition of anticompetitive practices. He knows that circumstances and practices change; he wants to be in a position to deal with any practices which in the particular circumstances could be anti-competitive. On the other hand, the trader dislikes uncertainty. He feels that the law should be specific; he feels that if certain practices are going to be outlawed they should be specified. That is a view which I think should be respected. For my part I accept the administrators' view— the view that there should be a general and wide definition so that anti-competitive practices can be caught, even though circumstances might change and practices might change. Nevertheless, I have sympathy and respect for the trader's point of view. I think at least he should be given some guidance.
I am not trying to change the primary law or any secondary law or even asking for a code of practice. I am simply asking that the Government should issue guidance notes. This is done frequently and in fact it has almost become general practice. For example, on Thursday last, when we were discussing the National Heritage Bill, without being asked, the Minister said, "There will of course be guidance notes". All I am asking is that there should be guidance notes in the case of this Bill. I am asking that those guidance notes should give an illustrative list of practices which may restrict, distort or prevent competition in certain circumstances. But I am already fortified by the knowledge that in the working party's report which was in the Green Paper of March 1979 (Cmnd. 7512) that was contemplated, so in the opinion of the experts it is obviously practical. I believe that this is one small step to assist the trader without in any way handicapping

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the administrator of the law. I have pleasure in commending this amendment to the House. I beg to move.
Lord AIREDALE:My Lords, as in Committee I just point out for the convenience of the House that I have tabled Amendment No. 49 to Clause 18 as being an alternative route to achieving the same objective as the noble Lord, Lord Jacques, is now seeking to achieve. I think it would be better if we were to discuss Amendment No. 49 not now but when we come to it. I only say this now because I hope that on this occasion I shall not be told, as I was in Committee when I moved my similar amendment, that the whole thing had been discussed on this amendment. I hope we shall have a separate discussion on Amendment No. 49.
Lord TREFGARNE:My Lords, I must confess that I am rather disappointed that the noble Lord, Lord Airedale, made that intervention, because I was proposing to deal with this amendment and with Amendment No. 49 in the same way. But of course the noble Lord is perfectly entitled to move his amendment and to say whatever he thinks. I am now going to speak quite comprehensively on this Amendment No. 2, and the noble Lord may find himself satisfied when I sit down. Who can say?
Lord AIREDALE:My Lords, I am only too willing to take whatever course the House thinks best and if the Minister would like to discuss my amendment at the same time and if we may treat what he has just said as an interruption so that I can continue speaking, I will outline my case on Amendment No. 49.
Amendment No. 49 is to Clause 18, which is the clause which says that the Director shall, when he considers it expedient to do so, direct himself to members of the public about the operation of the Act. My Amendment No. 49 spells out that one of the things about the operation of the Act that the Director shall mention is,
"any course of conduct which in his opinion constitutes an anti-competitive practice".
There were two objections taken by the Government to that course of action at the Committee stage. The first was that it is not necessary for the Director to make a pronouncement of this kind, but the
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Government sought to have their cake and eat it, I thought, because they went on to say that if the Director was going to speak about particular anti-competitive practices he could do so in his annual report. My reply to that is that the annual report operates too slowly. Suppose the Director has reported in January and has published his annual report then; in February or March there may be brought to his attention some new gimmick which is spreading throughout a particular industry and which is an anti-competitive practice that the Director would like to see nipped in the bud, because in all these things prevention is much better than cure. If he is not going to be able to mention this until his annual report next January the trouble will have spread far too wide and prevention will have been prevented, if I may use that expression.
Surely it is much better, if the Director sees some objectionable practice arising, that he should be able to direct himself to the public and explain what it is and that he finds it objectionable. I should have thought the best answer to my Amendment No. 49 was that in fact it is unnecessary because the clause is widely drawn and virtually says that the Director may tell the public anything about the operation of the Act, which would include some particular anti-competitive practice to which he wished to draw attention.
My final word is that it was suggested in Committee that the amendment I then proposed appeared to be comprehensive and appeared to be requiring the Director to produce a comprehensive list. That was not my intention at all. Admittedly, I used the plural in the phrasing of it; I was criticised for that so I have been careful on this occasion to use the singular and I think there can now be no doubt that I am not talking about comprehensive lists at all. So, when we come to Amendment No. 49 to Clause 18, I hope that, first, I shall be able to move it formally and, secondly, it will be acceptable to the House.
Lord TREFGARNE:My Lords, I hope your Lordships will bear with me if I speak at a little length on this amendment. In so doing I hope to set the fears of the noble Lord, Lord Airedale, at rest so that when we come to Amendment No. 49 he will not feel obliged to pursue the matter. Our objections to the principle of both

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these amendments is one of principle, not detail. I hope, therefore, that the House will resist these amendments, and that the noble Lord, Lord Airedale, will not press his amendment.
We have noted your Lordships' concern about the difficulty of knowing what the Director General will be investigating under his new powers in the Bill. But we do first of all think that the problem is exaggerated. Perhaps it may help if I explain how we arrive at the form of the legislation and how we expect it to operate. As I have said before, there are two main possible lines of approach to the question of how to deal with anti-competitive practices. On the one hand, one can attempt a legal definition of particular practices which are felt to be normally both anti-competitive and against the public interest, and prohibit them. Such an approach is acceptable if one is reasonably certain that the practice is normally harmful. It was followed, for example, with resale price maintenance. The other approach, the one followed in this Bill, does not assume that any named practice is invariably harmful— that is to say, that it is both anti-competitive and against the public interest. Whether it is harmful will depend on the circumstances in which it is practised. These circumstances will vary from case to case and will depend on the economic (as opposed to the legal) effect or intention of the practice.
The approach in the Bill is thus essentially agnostic a priori about any particular practice. The effect of a practice will tend to depend on whether the firm which pursues it has real market power. This requires a case by case approach, the corollary of which is that there should be no sanction against a firm for having in the past pursued a harmful course of conduct.
We do not believe that an illustrative list will be helpful, nor is it consistent with this approach. The effect could be positively misleading. The Opposition spokesman in the other place produced a list of 26 anti-competitive practices. Frankly, we thought that was a good list of potential anti-competitive practices, although there were one or two which seemed unlikely to be genuinely anticompetitive, and we could perhaps have added some others. But the most im-
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portant reason why we reject the idea of a list is that it could only list the practices by description; it could not specify the circumstances in which a particular practice would in fact restrict competition. This is important because what is anti-competitive in one set of circumstances might not be so in another, and whatever cautionary words are added the list of practices will tend to be regarded as generally suspect.
Because of these difficulties we came to the conclusion that our approach must be flexible, allowing each case to be judged on its merits. This approach is generally of considerable benefit to industry. Any method, however, of allowing individual circumstances to be taken into account has its problems. It cannot be as definite and dogmatic as otherwise. It was for this reason that we so designed the Bill that the Director General has to work in the open. He has to announce in public the cases he is investigating and he has to publish his report. In itself this will be a discipline on him and ensure that he is consistent and fair in his judgment; if he is guilty of maladministration the Ombudsman can investigate his action, and if he acts improperly or unreasonably his decision is subject to judicial review.
Let me give some examples of practices that may be covered and investigated by the legislation. Before doing so I must emphasise, however, that a practice may be anti-competitive in one set of circumstances but not in another. Generally speaking, a firm that is in a dominant position in a particular market will be in more of a position to act anti-competitively than one that is not. If a manufacturer producing a range of cosmetics, say, will only supply one particular type of cosmetic on condition that a retailer purchases all the others made by that manufacturer he may well be acting anti-competitively, again depending on the particular circumstances of the trade in question. If a supplier deliberately limits his distribution channels by refusing to supply potential customers, that too might be anticompetitive, again depending on the individual circumstances.
Using the economists' terms for the practices, one can mention: supply only to certain classes of trader; tie-in sales; rental-only contracts; loyalty rebates;

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discriminatory pricing; predatory pricing; discriminatory discounts; delivered pricing systems; and full line forcing. This is by no means a comprehensive list. I am afraid that, the ingenuity of human nature being what it is, the list of practices which may be devised to damage competition (because that is what we are discussing) could be a long one. Further, as I have stressed before, the practices are not necessarily anti-competitive. Indeed in some circumstances they may be positively pro-competitive; for example, when employed by a small firm fighting for entry to a market. One of the main considerations will be the degree of market power the firm carrying out the practice enjoys. I must also stress that the final decision whether a particular practice is anti-competitive and whether a particular anti-competitive practice is against the public interest is a matter for the MMC, not the Director General.
The object of the legislation is to encourage positive competition. There is no intention of stopping genuinely competitive efforts. Indeed, I do not believe that the genuine introductory offers of the type described by my noble friend Lady Hornsby-Smith at an earlier stage of the Bill are normally likely to be anticompetitive.
I ought also to stress that the procedures in the Bill will not require any firm to give up a practice without notice. The Director General cannot stop a practice as a result of his own investigation. Only after a Monopolies Commission report can the Secretary of State ask the Director General to seek an undertaking or can he prohibit a practice by order. Before he can do this the Commission must find that a practice is both anticompetitive and against the public interest. The procedures of the Bill (and I realise here that I may be laying myself open to charges that the procedures are too relaxed) will take some time. There is the period of the preliminary investigation by the Director General, followed by the four to eight-week period in which firms may volunteer undertakings if they choose not to face the inquiry by the Commission, followed by an inquiry by the Commission itself of up to six months. Only when all that is complete is there any question of a company being forced to stop a practice.
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I accept that, at least initially, there may be come uncertainty, but this will be progressively dispelled by publication of reports of the Director General and the MMC on individual cases.
Baroness SEEAR:My Lords, I am sorry to interrupt the noble Lord, but it is on a point of some importance which I have not got clear and it may be the House has not got clear. I understood the Minister to say that the Director General could not enforce a change; this could only be done by the MMC. That, of course, is technically correct. But in so far as the Director General can ask for an undertaking it is tantamount to enforcing, is it not? I know the company can say they will not accept it and then go to the MMC, which would be the next step, presumably. But does not this mean in practice that the Director General in a number of cases will be telling a company, or at least agreeing with a company, that a practice has to stop? This is getting very near to the Director General enforcing, surely.
Lord TREFGARNE:No, my Lords, I think not. The fact is that for a company to be in a position where they must stop the practice that practice has to be found to be both anti-competitive and against the public interest by the MMC. If companies wish voluntarily to give undertakings before that stage is reached they are free to do so, and the Bill provides for that. But it is not true to say that the Director General can order the company to give up a practice, because the company can insist, and no doubt many will, that their case should be taken before the MMC.
I do not think that any useful purpose will therefore be served by this amendment to Clause 2 or by the Clause 18 amendment of the noble Lord, Lord Airedale. Clause 18 already places a clear duty on the Director General to disseminate such information as he considers appropriate, and I think it entirely right that he should give as much guidance to industry as he can. This may well be informal advice, as I have said before, to individual firms, though we must recognise that it will often not be possible for that advice to be categorical, since it may well not be clear to him, without an investigation, what the true facts are. He already publishes a lot

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of information about his powers under other legislation, and this has, I believe, been found by industry to be useful.
The Director General has assured us that he will continue to do so under this legislation and will give as much guidance on anti-competitive practices as he reasonably can. Such information would refer, wherever possible, to the circumstances in which practices may be anti-competitive. He cannot, however, be expected to give an exhaustive description of every circumstance in which every practice will or will not be anti-competitive. That would be impossible, but he will do what he can both formally and informally.
I apologise for the length of my remarks. I hope that they will have helped your Lordships to see why we have proceeded in the way in which we have and will reassure your Lordships that guidance will be given, and persuade your Lordships that these two amendments ought not to be included in the Bill.
Lord WALLACE of COSLANY:My Lords, before the noble Lord, Lord Trefgarne, sits down there is one small point that I should like to raise with him in a friendly manner. Will he kindly refrain from verbal shorthand? I have had anxious inquiries regarding the MMC. I have given the right information, but many noble Lords may not understand what those initials mean.
Lord TREFGARNE:My Lords, I apologise to the noble Lord and to the House. The MMC is the Monopolies and Mergers Commission.
Lord JACQUES:My Lords, it was never suggested that the illustrative list would be exhaustive or that in all circumstances the practices that were illustrated would be anti-competitive. That was made clear in the Green Paper of March 1979. The whole of the Government's defence has been based upon the question of illustrative practices and the wisdom or otherwise of publishing a list. Would the Government accept the need for issuing guidance notes, in general, without reference to any illustrative practice in so far as the Director General may feel that that should be part of it? It is general practice, as regards other legislation, to
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have guidance notes. Would the Government not accept that there should be guidance notes, and leave it at that?
Lord TREFGARNE:My Lords, I think that the noble Lord, Lord Jacques, is hoping for me to say something more, and with the leave of the House I should like to do so. I am not sure how I would describe the information that is to be published by the Director General if it is not to be by guidance notes. I fancy that that is just what it would be.
Lord JACQUES:My Lords, I would regard that as an interruption. I am strongly tempted to divide the House. I take the view that the Government are acting unreasonably in not being prepared to issue guidance notes and probably the time has come when those who support this unreasonableness should be counted. However, having put this amendment in principle during the Committee stage and lost it there, 1 shall have to leave the matter at that. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.35 p.m.
Lord STANLEY of ALDERLEY Lord STANLEY of ALDERLEY moved Amendment No. 3:
Page 4, line 4, at end insert—
("(9) For the purposes of this Act a course of conduct is not an anti-competitive practice if it constitutes an agreement which is excluded from the application of the Restrictive Trade Practices Act 1976 by virtue of section 33 of that Act (Agricultural and Forestry Associations, and Fishery Associations).").
The noble Lord said: I beg to move Amendment No. 3. My reason for moving this amendment, which is the same as the one I moved in Committee, is to give the Government an opportunity to enlarge upon the promise to help to resolve the problem of agricultural co-operatives trying to operate under the Bill. 1 shall not bore the House by repeating all that I said in Committee, but would merely say that, if the Bill is left as it is, agricultural co-operatives would be at a disadvantage compared to others. I would also repeat that, if any agricultural cooperative attempts any restrictive or uncompetitive action, it can be controlled at present under the Restrictive Trade Practices Act, and indeed by Ministerial Order. Therefore, I hope that the Govern-will feel inclined to accept my amendment.
Lord TREFGARNE:My Lords, we have given considerable thought to this matter since it was raised by my noble friend in Committee. We accept and wish to encourage the co-operative principle in agriculture, fisheries and forestry, and would not wish action under the Bill to undermine that encouragement. We do not regard it as desirable for those courses of conduct pursued by agricultural cooperatives and their members which constitute, and do no more than constitute, the provision by co-operatives of services to their members and the carrying out by members of their commitments to trade with or through their co-operatives, to be investigated under the Bill. We therefore intend to take the opportunity under Clause 2(3) to exempt these aspects of agricultural co-operatives from the definition of anti-competitive practices which may be investigated under the Bill. That would leave it open, however, for conduct of a kind which was genuinely anti-competitive and potentially undesirable, which represented an abuse of a strong market position, to be considered under the Bill. Therefore, I hope that my noble friend will feel able to withdraw his amendment in the light of that assurance.
Lord MOTTISTONE:My Lords, I hope that the closing remarks of my noble friend on the Front Bench mean that, whatever is done under Clause 2(3), it will be quite certain that the activities of these co-operatives are fully treated in a similar anti-competitive fashion to the activities of any other trader with whom they may be in competition. I would be grateful if my noble friend could reassure me on that particular point.
Lord TREFGARNE:My Lords, with the leave of the House, I should like to say: Yes, I can give that assurance.
The Earl of CAITHNESS:My Lords, I should like to ask my noble friend when he proposes to introduce the appropriate amendment so that we can see the exact wording under Clause 2, as promised.
Lord TREFGARNE:My Lords, I apologise for intervening yet again, because this is a Report stage. The answer is that it will not be an amendment to the Bill: it will be an order made under the Bill, and I am afraid I cannot produce that for my noble friend's inspection at this stage.
Lord STANLEY of A LDERLEY:My Lords, I must be honest— and it is not very often that I am— and say that I did not expect to get so much sympathy and understanding from the Government when I originally tabled the amendment. I am therefore very grateful to them. As I understand it, we shall have an order after the Act has been published. Of course, I need hardly tell them— and 1 hope that the wine does not turn sour in their mouths— that I would have preferred my amendment, because that tics the Ministers down. But, believe it or not, I understand the difficulty that, if the Government accepted my amendment, they might offend my noble friend Lord Mottistone, which I would not like to do. I hope that the Government's attitude of generosity and thought will be displayed when I move my next amendment, No. 17. I beg leave to withdraw— —
Lord ORAM:My Lords, before the noble Lord, Lord Stanley of Alderley, asks leave to withdraw his amendment, I wonder whether we can have from the noble Lord some information as to whether the order that will be introduced will be an affirmative order or will be subject to the Negative Resolution procedure? In other words, I am asking whether the House will have an opportunity at some point of examining the nature of the order that is to be brought in.
Lord TREFGARNE:My Lords, I apologise for speaking yet again. I am speaking without a note, but my recollection is that these orders are not subject to either Negative or Affirmative Resolution procedure.
Amendment, by leave, withdrawn.
Clause 3 [Preliminary investigation by Director of possible anti-competitive practice]:
5.40 p.m.
Baroness SEEAR Baroness SEEAR moved Amendment No. 4:
Page 4, line 7, after ("the") insert ("Director shall afford him an opportunity to make representations within such a period as the Director considers reasonable in the circumstances, and after taking into account any representations made to him the").
The noble Baroness said: My Lords, this amendment is similar to one that I

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moved unsuccessfully at the Committee stage. Its purpose is quite simply to give appropriate protection to the person who may be investigated. This is based on the belief that the knowledge that an investigation will take place can be detrimental to the person being investigated, and that it is reasonable that he should have the opportunity to make representations before it is announced that an investigation is to take place. I beg to move.
Lord AIREDALE:My Lords, I should like to support this amendment. From time to time it must happen to all of us that we hear of a complaint against someone and at first sight it looks a very serious complaint. But we learn by experience not to decide flatters without hearing both sides of the case. Sometimes when we hear the version of the person complained against we emerge with a very different picture of the seriousness of the matter complained about. What happens to all of us from time to time is also likely to happen to the Director from time to time. It might be rather unwise for the Director ever to launch out into an investigation without giving the person complained about on opportunity to make representations.
Lord TREFGARNE:My Lords, the point made in this amendment is, I think, very similar indeed to that being made in Amendment No. 5, which follows, and which the noble Lord, Lord Wallace of Coslany, and his friends are moving. However, I shall speak to this amendment and if I can say any more later, I shall do so.
As I think I said at the previous stage, I have some sympathy with the underlying purpose behind this amendment, but I do not believe that it is either desirable or necessary. The purpose of the Director General's initial formal investigation is to find out quickly what is going on, to see whether it is worth referring a firm to the Monopolies Commission for a full investigation. There is nevertheless and inevitably a certain amount of formality written into the Bill about this preliminary
investigation. It is undesirable now to add a further formal stage before the preliminary inquiry begins. As I said on an earlier amendment, the procedures in the Bill are quite long and drawn out enough as it is, and I do not think that we should add to them.
It is already open to the Director General to contact firms before mounting his preliminary investigation. I can assure your Lordships that, wherever possible, the Director General will carry out preliminary inquiries with a firm he is considering investigating and that firm will have the opportunity at that time to make representations. Therefore, I hope that the noble Baroness and the noble Lord will not wish to press their amendment.
Baroness SEEAR:y Lords, I am sorry to disappoint the Minister but it seems to me that since, as he says, there are in any case a certain number of preliminaries to be gone into— and we are not asking for a long delay— the need to protect the individual organisation against what could be serious damage is such that I am afraid I must divide the House.
Lord WALLACE of COSLANY:My Lords, the noble Lord rather implied that my Amendment, No. 5, is on the same point as Amendment No. 4. In point of fact it is not. Later on I shall speak about representations being made to the Director about possible investigations that he might make on behalf of consumers. I shall deal with that point later. It has nothing whatever to do with the point, with which I agree, made by the noble Baroness, Lady Seear, and the noble Lord, Lord Airedale.
Lord TREFGARNE:My Lords, again with the leave of the House, if I misinterpreted the amendment, I shall deal with it in a moment.
5.44 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 60; Not-Contents, 67.

CONTENTS

Ailesbury, M.

Barrington, V.

Brooks of Tremorfa, L.

Airedale, L.

Birk, B.

Cledwyn of Penrhos, L.

Ardwick, L.

Blease, L.

Collison, L.

Avebury, L.

Blyton, L.

Cooper of Stockton Heath, L.

Aylestone, L.

Boston of Faversham, L.

David, B.

Banks, L.

Brockway, L.

Davies of Leek, L.

Diamond, L.

Lloyd of Kilgerran, L.

Stedman, B.

Elwyn-Jones, L.

Longford, E.

Stewart of Alvechurch, B.

Gladwyn, L.

Lovell-Davis, L.

Stewart of Fulham, L.

Glenamara, L.

McCarthy, L.

Stone, L.

Gordon-Walker, L.

Monson, L.

Swaythling, L.

Goronwy-Roberts, L.

Northfield, L.

Tanlaw, L.

Granville of Eye, L.

Oram, L.

Taylor of Mansfield, L.

Hale, L.

Peart, L.

Wallace of Coslany, L.

Hampton, L.

Ponsonby of Shulbrede, L. [Teller.]

Wedderburn of Charlton, L

Harris of Greenwich, L.

Whaddon, L.

Henderson, L.

Sainsbury, L.

Wigoder, L.

Jacques, L.

Seear, B.[Teller.]

Willis, L.

Kilmarnock, L.

Sefton of Garston, L.

Wynne-Jones, L.

Kirkhill, L.

Segal, L.

Llewelyn-Davies of Hastoe, B.

Simon, V.

NOT-CONTENTS

Allen of Abbeydale, L.

Grimston of Westbury, L.

Orkney, E.

Alport, L.

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

Orr-Ewing, L.

Atholl, D.

Penrhyn, L.

Avon, E.

Halsbury, E.

Renton, L.

Belstead, L.

Henley, L.

Rochdale, V.

Caithness, E.

Hives, L.

Romney, E.

Campbell of Croy, L.

Hylton-Foster, B.

St. Just, L.

Cullen of Ashbourne, L.

Killearn, L.

Saint Oswald, L.

Daventry, V.

Kilmany, L.

Sandford, L.

de Clifford, L.

Kinnaird, L.

Sandys, L.[Teller.]

Denham, L.[Teller.]

Lauderdale, E.

Selborne, E.

Drumalbyn, L.

Long, V.

Sempill, Ly.

Ebbisham, L.

Lyell, L.

Stanley of Alderley, L.

Eccles, V.

McFadzean, L.

Strathclyde, L.

Elliot of Harwood, B.

Mackay of Clashfern, L.

Strathspey, L.

Elton, L.

Macleod of Borve, B.

Trefgarne, L.

Exeter, M.

Mancroft, L.

Trenchard, V.

Fraser of Kilmorack, L.

Mansfield, E.

Vaux of Harrowden, L.

Gainford, L.

Margadale, L.

Vickers, B.

Galloway, E.

Mowbray and Stourton, L.

Vivian, L.

Gibson-Watt, L.

Newall, L.

Westbury, L.

Godber of Willington, L.

Northchurch, B.

Willoughby de Broke, L.

Gowrie, E.

Nugent of Guildford, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.53 p.m.
Lord WALLACE of COSLANY Lord WALLACE of COSLANY moved Amendment No. 5:
Page 4, line 7, after ("Director") insert ("after taking into account any representations made to him").
The noble Lord said: My Lords, as I have already indicated, this is not the same as Amendment No. 4, which has just been narrowly defeated. In the Committee stage, as the House will recall, I moved a more comprehensive amendment designed to ensure that representative bodies of consumers could make representations to the Director. The noble Lord, Lord Trefgarne, said in reply that he agreed that everybody ought to have the right of approach to the Director General with their representations. He further stated that under the Bill as drafted the Director General is entirely free to take any representations into account when selecting cases for investigation.
This may be so, although I am not at all satisfied that the Bill as drafted says so; yet I grant that it may be sincerely held by the Government to be their intention.
The amendment accepts the Government's intention and simply clarifies the position in a few simple words. The operative word is "any". There would be occasions when the Director would take action without representations being made to him, 'but the amendment makes it clear that representations could be made and that the Director could take them into account. I do not wish to labour the point unduly, but I honestly feel that there is an important principle at stake: the right of citizens to make representations to authorities.
I have strong personal views on this. During the many years I have served in public life I have always defended the right of people to express their views to authority, and I have always put their views although at times I may not personally have agreed with them. This is the democratic right, and it perhaps explains

75
why I am so keen about this amendment. I hope that the Government will accept this simple amendment. We have disposed of the Price Commission issue, and our purpose is constructively to improve the Bill. The amendment is intended to do that, no more and no less. I beg to move.
Lord MOTTISTONE:My Lords, I should like to support this amendment, even if talking from these Benches. It seems to me that it is important. It comes back to the fundamentals we went into in Committee, and I am not going to repeat it all now. It is important on this initial stage of an investigation when undertaken in this connection that the maximum protection should be given to the people who are the targets of the investigation, to cover them in the event that the investigation turns out to be unnecessary; to cover them in the event that they give an undertaking, or perhaps several undertakings, to make sure that they themselves are protected as much as possible because they are going to get publicity. That I fear we have to accept, and the debates we had at Committee stage rather made this point.
Whereas I did not agree with the previous amendment because it invited people to make representations, this makes allowance for the fact that if somebody so cares to make representations then proper account must be taken of them. It seems to me that this is a sensible amendment, which the Government might well consider worthy of inclusion in the Bill.
Lord TREFGARNE:My Lords, I am afraid not. We did, in all fairness, go through this matter at considerable length at Committee stage. Indeed, there was a Division on a similar amendment. Again, may I say that I have sympathy with the underlying purpose, but I think the amendment is unnecessary. It is already open to the Director General to hear representations from people as to what he should investigate. Indeed, one would imagine that complaints would form an important, possibly the principal, source of information prior to an investigation. We think it is quite unnecessary to write anything further into the Bill for this purpose. I think that the fears of the
76
noble Lord, Lord Wallace, and particularly of my noble friend Lord Mottistone, are unfounded. I hope therefore that the noble Lord, Lord Wallace, will not press his amendment.
Lord WALLACE of COSLANY:My Lords, I am going to disappoint the noble Lord because in point of fact I cannot see why on earth the Government cannot accept this small amendment. He may say, quite rightly, that the Director General has powers to receive representations; but it is not in this Bill. If I remember correctly, it is under the Fair Trading Act. Therefore, if it is not in this Bill, and the Government need to reassure the public generally as well as the people affected by any possible change, and those who wish to make representations about anti-competitive practices, then the Government in all decency should put it in the Bill. I do not understand why the Government will not accept the amendment. Up to this stage in debating the Bill we have had nothing but a stonewalling defence from them. Noble Lords on the Front Bench opposite would make excellent Boycotts in cricket in stonewalling against the bowling.
Lord TREFGARNE:My Lords, what is there in the Bill to prevent people or firms making representations to the DG?
Lord WALLACE of COSLANY:My Lords, for the very simple reason, to put it in vulgar terms, "it ain't in the Bill". People must have clear rights in legislation of this sort which affects the consumer and producer. It is not in the Bill and the Minister must now admit it is not, so why not insert it?
Lord AIREDALE:My Lords, the noble Lord, Lord Wallace of Coslany, has made an important point. If it is the case, as the noble Lord says it is, that in some other Act with rather similar objectives it is written in that the director shall receive representations, and if that is left out of this Bill, distinctions will be drawn and it will be said that if Parliament had intended the director under this measure to receive representations, Parliament would have said so, in the same way that Parliament said so in the other Act. It is important to have consistency to prevent lawyers from finding discre-

77
pancies and exploiting them and I therefore urge the Government to reconsider the point and give way on this amendment.
Viscount TRENCHARD:My Lords, may I ask the noble Lord, Lord Airedale in which other Act or Acts he believes this phrase— that an authority, a director, should receive representations— is included'? I have just asked the gentlemen of great knowledge what the other Acts are and they could not tell me of one.
Lord AIREDALE:My Lords, I was taking up a point which the noble Lord, Lord Wallace of Coslany, made when he said that in some other Act— did he say the Fair Trading Act?— these words were included.
Viscount TRENCHARD:My Lords, may I ask the noble Lord, Lord Wallace of Coslany, what other Acts he is referring to?
Lord WALLACE of COSLANY:My Lords, I was going back to what the noble Lord, Lord Trefgarne, said in Committee, and he said it was in the Fair Trading Act.
Viscount TRENCHARD:I am sure it is not in any other Acts, my Lords, or at any rate my advisers cannot tell me of any, and in view of that I would urge the noble Lord not to divide the House on, if I may say so, a rather platitudinous statement that a director general should be open to representations when clearly he will be open to representations.
Lord WALLACE of COSLANY:No, my Lords, I cannot accept that position. If it is not in any other Act— and we can quarrel about that later, and it certainly was said— then it should be in this Bill. There is no argument about that and the Government should not be afraid of creating a small precedent. If the Government will not give way on this, I must force a Division.
6.4 p.m.
On Question, Whether the said amendment (No. 5) shall be agreed to?
Their Lordships divided: Contents, 60; Not-Contents, 75.

CONTENTS

Airedale, L.

Glenamara, L.

Peart, L.

Avebury, L.

Gordon-Walker, L.

Ponsonby of Shulbrede, L. [Teller.]

Aylestone, L.

Goronwy-Roberts, L.

Banks, L.

Greenwood of Rossendale, L.

Sainsbury, L.

Barrington, V.

Hale, L.

Seear, B.

Birk, B.

Hampton, L.

Sefton of Garston, L.

Blease, L.

Harris of Greenwich, L.

Simon, V.

Boston of Faversham, L.

Henderson, L.

Stedman, B.

Brockway, L.

Hornsby-Smith, B.

Stewart of Alvechurch, B.

Brooks of Tremorfa, L.

Jacques, L.

Stewart of Fulham, L.

Bruce of Donington, L.

Jeger, B.

Stone, L.

Cledwyn of Penrhos, L.

Kaldor, L.

Strabolgi, L.

Collison, L.

Kilmarnock, L.

Swaythling, L.

Cooper of Stockton Health, L.

Kirkhill, L.

Taylor of Mansfield, L.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Wallace of Coslany, L.[Teller.]

Davies of Penrhys, L.

Lovell-Davis, L.

Wedderburn of Charlton, L.

Diamond, L.

McCarthy, L.

Wigoder, L.

Donaldson of Kingsbridge, L.

Monson, L.

Willis, L.

Elliot of Harwood, B.

Mottistone, L.

Wynne-Jones, L.

Elwyn-Jones, L.

Northfield, L.

Gladwyn, L.

Oram, L.

NOT-CONTENTS

Allen of Abbeydale, L.

Craigavon, V.

Exeter, M.

Alport, L.

Cullen of Ashbourne, L.

Fraser of Kilmorack, L.

Atholl, D.

Daventry, V.

Gainford, L.

Avon, E.

de Clifford, L.

Galloway, E.

Bellwin, L.

Denham, L.[Teller.]

Gibson-Watt, L.

Belstead, L.

Drumalbyn, L.

Gowrie, E.

Boyd of Merton, V.

Duncan-Sandys, L.

Grimston of Westbury, L.

Caithness, E.

Ebbisham, L.

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

Campbell of Croy, L.

Eccles, V.

Carrington, L. (A Principal Secretary of State.)

Elles, B.

Halsbury, E.

Elton, L.

Henley, L.

Hives, L.

Mowbray and Stourton, L.

Sempill, Ly.

Holderness, L.

Newall, L.

Sherfield, L.

Hylton-Foster, B.

Northchurch, B.

Stanley of Alderley, L.

Kilmany, L.

Nugent of Guildford, L.

Strathclyde, L.

Kinnaird, L.

Orkney, E.

Stracona and Mount Royal, L.

Lauderdale, E.

Orr-Ewing, L.

Strathspey, L.

Long, V.

Penrhyn, L.

Swansea, L.

Lyell, L.

Renton, L.

Trefgarne, L.

McFadzean, L.

Rochdale, V.

Trenchard, V.

Mackay of Clashfern, L.

Romney, E.

Vaux of Harrowden, L.

Macleod of Borve, B.

St. Aldwyn, E.

Vickers, B.

Mancroft, L.

St. Just, L.

Vivian, L.

Mansfield, E.

Sandford, L.

Westbury, L.

Margadale, L.

Sandys, L.[Teller.]

Young, B.

Morris, L.

Selborne, E.

Resolved in the negative, and amendment disagreed to accordingly.

6.13 p.m.
Lord MOTTISTONE Lord MOTTISTONE moved Amendment No. 6:
Page 6, line 16, at end insert—
("(11) Where a report is published under subsection (10) above, it shall in the first instance be provided only to the Secretary of State and to the person or persons concerned. If the Director accepts an undertaking in accordance with subsection (3) of section 4 below the report or any part of it may not subsequently be made public where, subject to section 16(1), the Director and person or persons concerned have reached agreement to restrict the publication of all or any part of it.").
The noble Lord said: My Lords, my amendment was put down in desperation at not having received a letter from my noble friend, but a letter later arrived, and I do not wish to press this matter. The arguments involved were well rehearsed at the Committee stage, but this would perhaps be a good opportunity for my noble friend to say publicly what he said to me in his letter, which is not entirely satisfactory, but which is perhaps acceptable under the circumstances. I beg to move.
Lord TREFGARNE: My Lords, in the light of those very helpful opening remarks, may I say that I am happy to repeat the assurance that I gave to my noble friend in a letter and which has been given by the Director General; namely, that he would always give the firms concerned an opportunity to see the factual parts of his report before it was finalised and published. I hope that in the light of that assurance my noble friend, as he foreshadowed, will not press his amendment.
Lord MOTTISTONE: My Lords, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Clause 5 [Competition references]:
Lord MOTTISTONE Lord MOTTISTONE moved Amendment No. 7:
Page 8, line 35, leave out ("not exceeding twelve weeks").
The noble Lord said: My Lords, with the permission of the House I should like to take with this amendment Amendment No. 8 as well, the two being related. These amendments are designed to get over a particular situation which might arise when there is a conflict between speed and thoroughness, as was well discussed in committee. The object of the amendments is to extend the period in which undertakings are negotiated and the decision finally taken by the Director on whether to make a competition reference to the Monopolies and Mergers Commission. The Bill provides for a period of eight weeks extendable to 12 weeks for the negotiation of undertakings following an adverse Director's report. The period may be too short. As the Director said on page 9 of his annual report for 1978, in connection with undertakings in respect of restrictions in registrable amendments:
"Particularly when long-standing practices are at stake, the parties to an agreement need to think through the consequences of giving up restrictions. This calls for much patient discussion between the parties and my staff".
The procedure laid down in the Bill could conceivably lead to a situation in which both parties— the Director and the company— wish to agree on a suitable undertaking but perhaps because of the complexity of the matters are unable to finalise the details in the time period. In such a situation the Director would have no alternative, but to refer the case

81
to the Monopolies and Mergers Commission. We consider that that is undesirable for all concerned, and accordingly I beg to move.
Lord TREFGARNE: My Lords, as my noble friend said, we discussed this matter previously, but may I say that the onus is entirely on the firm to decide whether to offer an undertaking, and it is important that the procedure should not be used as a means of prevarication or delay by firms. Even where both the Director General and the firm may consider that a negotiation is likely to succeed if it is allowed, say, a further eight weeks or 12 weeks beyond the eight weeks originally specified, there can be no certainty that this will prove to be the case even where the firm is not deliberately trying to use the procedure as a means of delaying action. We are most anxious that it should not be used as an excuse for delay, and we regard 12 weeks as the absolute limit if the procedure is not to lose credibility. I hope that my noble friend will not press his amendment.
Lord MOTTISTONE: The object of the amendment is to cover a situation where there is agreement. Amendment No. 8 refers to
"the agreement of the person or persons "
and this would involve the agreement also of the Director General. As I said when I introduced the amendment, the Director General himself has had this problem under somewhat similar circumstances and has commented upon it in his report. I wonder whether the Government really wish to reject this out of hand, or whether they might consider an amendment of their own at Third Reading to allow for this particular situation when there is agreement by both sides and the matter is a complex one. I should have thought that there might be an opening there.
Lord TREFGARNE: My Lords, I do not want to seem inflexible in these matters. I am speaking to Amendment No. 7, although I recognise that my noble friend referred also to Amendment No. 8. If my noble friend was speaking to Amendment No. 8 only, I might have been better able to accommodate him, but as it is I am prepared to give an undertaking to consider this matter further and to consult him before the next stage of the Bill.
Lord MOTTISTONE: My Lords, that is extremely generous, and with that undertaking I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendment No. 8 not moved].
Clause 8 [Conclusions and reports of the Commission]:
Lord JACQUES Lord JACQUES moved Amendment No. 9:
Page 12, line 39, at end insert—
("(6) When in the opinion of the Commission a person has been put to unnecessary and unreasonable expense because the reference should never have been made to the Commission, the Secretary of State shall refund those expenses.").
The noble Lord said: My Lords, when I moved this amendment at the Committee stage the noble Lord, Lord Mottistone, told the Committee that in an earlier year, 1977, he had moved a similar amendment and that I, as a Member of the last Government, had rejected it. I said that I had no recollection of that, and I invited the noble Lord to produce the relevant Hansard. I want to deal with this point first because it puts my amendment in proper perspective. The noble Lord not only produced the relevant Hansard, but he handsomely apologised, because the Member of the Government who dealt with that particular amendment was not me; it was someone else. But that is of no significance, and I do not want to deal with it.
I want to deal with the noble Lord's amendment and contrast it with the present amendment. His amendment was an amendment to the Price Commission Bill, and he sought to make the Government responsible for a company's total expenses when there was an investigation by the Price Commission. Presumably the Government were to be required to pay, whether or not the investigation was deserving. The noble Lord said it was a probing amendment. I think that if one reads the report in Hansard one will come to the conclusion that it was a protesting amendment— protesting against expenses being inflicted upon companies by legislation. I have kept my ear to the ground since there has been a change of Government, and I have heard far fewer protests

83
from the noble Lord about the same aspect. In fact, in the case of this Bill he is not protesting at the very same thing.
The amendment which the noble Lord moved on that occasion was one which no Government could accept. It would have created a precedent which would be completely unacceptable. Under this Bill, the Price Commission is abolished, and for the purpose of investigations the Director General takes the place of the Price Commission. Under Clause 3 of the Bill the Director General can investigate. I have not suggested that any expenses incurred by a company arising out of such an investigation should be borne other than by the company itself, so that there ends the comparison which the noble Lord sought to make. I am not dealing with investigations, as he was dealing with investigations.
In this Bill, after the investigation by the Director General there is a further stage. The Director General can refer the matter to the Monopolies and Mergers Commission. The Commission will be obliged by statute, if this Bill becomes a statute, to make its inquiries. I therefore contend that the inquiry by the Monopolies and Mergers Commission is a statutory inquiry by that Commission, and I contend that the award of costs should follow the report of the Council on Tribunals on the Award of Costs at Statutory Inquiries, 1964 Command Paper 2471 — and as your Lordships will see, the amendment is worded precisely to agree with the report of that council. Recommendation No. 4 is as follows:
"Costs should normally be awarded against a party who behaves unreasonably, vexatiously or frivolously".
Recommendation No. 5— and this is important because the amendment is based upon it— says:
"In considering what constitutes unreasonable behaviour justifying an award of costs, the main criterion is whether a party has been put to unnecessary and unreasonable expenses because the matter should never have come to inquiry ",
Your Lordships will see that the amendment is precisely worded to agree with the council's recommendations.
What it means is this. The question of the award of costs does not arise when there is simply an investigation by the Director, but when there is an inquiry by
84
the Monopolies and Mergers Commission costs shall be awarded in accordance with the 1964 report of the council dealing with such costs. That does not mean that if a party wins a case he will necessarily be awarded costs. He will be awarded costs only if he wins a case and, in addition, the Director General, in referring to the Commission, has acted unreasonably and in accordance with the definition laid down by the council itself. That is what the amendment means and I have pleasure in moving it in the hope that, because it is so reasonable, it will be accepted by the Government. I beg to move.
Lord MOTTISTONE: My Lords, I feel I must now speak and apologise very deeply, both to the House and to the noble Lord, Lord Jacques, for the mistake that I made in misquoting him as my opponent in the debate on 12th July 1977, which is fully reported in cols. 849 to 852. The noble Lord with whom I was jousting was in fact the noble Lord, Lord Oram, and I hope noble Lords will forgive me because on those occasions, in 1976 and 1977 particularly, the two noble Lords were frequently representing the Government on the Front Bench and taking Bills alternately, and one never quite knew who was dealing with which. My memory let me down, and I apologise.
It also let me down in another respect, and that was that I opened with the remark that it was a probing amendment, so there was therefore no question of being shot down by the noble Lord, Lord Oram, or anybody else, because I was not even asking to be shot. However, it was a probing amendment. It was a probing amendment with a purpose, because I believe that, as to the amendment that the noble Lord, Lord Jacques, has now moved and the one that I put down before — mine may have been much too broad, but I would have thought that his, perhaps, is not ideal— the principle of the thing is getting to be more and more important. I think there may be other opportunities— perhaps not now, but certainly as bodies are set up— for it to be an accepted practice that, under the appropriate circumstances (and I think that the noble Lord, Lord Jacques, made quite a good point on this), companies could expect to be recompensed for the amount of money they spend in helping public bodies to comply with Acts of Parliament.

85
Companies spend millions of pounds— I have mentioned this earlier on this particular subject— or have done, when dealing with inquiries from the Price Commission. They also spend similar sums of money for an ordinary inquiry by the Monopolies and Mergers Commission. Obviously, there must be freedom (if you like) for people like the Director General and the Monopolies and Mergers Commission itself to operate freely if a job has to be done under the terms of whatever Act of Parliament we are dealing with, and, to that extent, if it is said that the Government would always pay a share of the cost of the thing it may be that this would be a restraint. It may be that this would mean that the Government of the day would have to say to the Director General, "Go easy on the number of cases you bring because we have not got enough spare cash". I am over-simplifying it, but that is the principle of it.
The fact of the matter is that there is also a need to consider the problems of the unfortunate companies, and in civil law this gets resolved with the apportionment of costs. Very recently a valuation officer who had a particular view about rateable values of a certain piece of equipment lost his case against a section of industry and, as a result of that, the Government had to pay costs. I think that was right and reasonable, because the companies had been involved in something for which they had to pay, which was in effect keeping the law and helping the law to be enforced. So we are on a rather special sort of issue, which I believe is so special and so general that it is not really the subject for putting clauses into Bills where it comes up, like this— and I think I was probably at fault earlier on in trying it on the Price Commission Act, as it became.
I would have thought that this was something which is sufficiently important and general for the Government to be prepared to introduce proper and special legislation for the purpose, and I shall be very interested to know whether my noble friend will consider that as being a possible way out of this dilemma.
Viscount SIMON: My Lords, before the noble Lord replies, may I be allowed to ask the noble Lord, Lord Jacques, if he has the permission of the House, to elucidate one point? He, and to some
86
extent the noble Lord, Lord Mottistone, seem to have talked exclusively about legal costs. I take the amendment as drafted to be much wider than that, to include expenses that might have been incurred as a result of the original reference. Will the House give the noble Lord, Lord Jacques, permission to speak again to elucidate that point?
Lord SWAYTHLING: My Lords, before the noble Lord, Lord Jacques, replies, can he explain why he used in the amendment the words "unnecessary and unreasonable expenses "? It appears to me that if the expenses are unnecessary they would automatically be unreasonable and, if unreasonable, they would be automatically unnecessary. It is always better to have as short a statement as possible in the law and I should have thought it better to have only one expression.
Lord JACQUES: My Lords, with the permission of the House, may I repeat what the report said? It was a report of the Council on Tribunals on The Award of Costs at Statutory Inquiries.
A noble Lord: My Lords, legal costs.
Lord JACQUES: My Lords, it did not say legal costs. Recommendation No. 5 reads:
"In considering what constitutes unreasonable behaviour justifying an award of costs, the main criterion is whether a party has been put to unnecessary and unreasonable expenses because the matter should never have come to inquiry".
All I have done is to copy the recommendation of the Council on Tribunals.
Lord TREFGARNE: My Lords, since our debate in Committee on a very similar amendment to this one, we have looked at this matter again, as I undertook. But I have to tell the House that the amendment remains unacceptable. The report of the Council on Tribunals on the Award of Costs at Statutory Inquiries, on which, I think, the noble Lord, Lord Jacques, relies, dealt primarily with planning inquiries and recommended the awarding of costs in the terms that the noble Lord has described. Planning inquiries and other statutory inquiries by their nature deal with cases where there are direct disputes and conflicts of interest between parties. This is not the case under this Bill. Once a reference had been

87
made to the commission it is the commission's function to investigate and report on the practice before them to decide whether it is being pursued,whether it is anti-competitive and whether it is against the public interest. The Director General of Fair Trading is not a party to the proceedings, which should not be seen as a dispute between him and the firm concerned.
So far as investigations under the Bill are concerned, I would remind the House that there are a very great number of safeguards built into the procedures under the Bill. I recited those under an earlier amendment. I should like, however, to make one further remark in relation to costs generally. This is important. It may be suggested that firms whose behaviour is not anti-competitive or not against the public interest should have their costs reimbursed. However, this is only half the picture. At present, the Government, and hence the taxpayer, bears the full costs of the commission's own expenses in conducting its inquiries under the Fair Trading Act as well as, in future, under this Bill, the cost of publishing the commission's reports.
Third parties in proceedings bear their own costs.
If the principle whereby each party bears its own costs is changed, I think we should have to consider very carefully whether parties who are found to be behaving in a way which is against the public interest should not themselves bear the costs to the taxpayer of the inquiries, and, perhaps, also, the costs to third parties. There may well be an element of rough justice in the present system but it is far from clear that there are real benefits in attempting to obtain a finer balance. I hope that the noble Lord will not press his amendment.
Lord JACQUES: My Lords, I believe
that if the Commission come to the view that a case ought never to have been referred to it, the Director General will have acted unreasonably and the Secretary of State should bear the costs. I shall press the amendment.
6.34 p.m.
On Question, Whether the said amendment (No. 9) shall be agreed to?
Their Lordships divided: Contents, 48; Not-Contents, 76.

CONTENTS

Airedale, L.

George-Brown, L.

Oram, L.

Avebury, L.

Gladwyn, L.

Peart, L.

Aylestone, L.

Glenamara, L.

Ponsonby of Shulbrede, L.

Banks, L.

Gordon-Walker, L.

Seear, B.

Barrington, V.

Hale, L.

Simon, V.

Birk, B.

Hampton, L.

Stewart of Alvechurch, B.

Blease, L.

Henderson, L.

Stewart of Fulham, L.

Boston of Faversham, L.

Houghton of Sowerby, L.

Stone, L.

Brockway, L.

Jacques, L.[Teller.]

Strabolgi, L.

Brooks of Tremorfa, L.

Kaldor, L.

Swaythling, L.

Cledwyn of Penrhos, L.

Kilmarnock, L.

Taylor of Mansfield, L.

Collison, L.

Kirkhill, L.

Wallace of Coslany, L.[Teller.]

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Wedderburn of Charlton, L.

Diamond, L.

McCarthy, L.

Whaddon, L.

Donaldson of Kingsbridge, L.

Monson, L.

Wigoder, L.

Elwyn-Jones, L.

Northfield, L.

Willis, L.

NOT-CONTENTS

Alport, L.

Drumalbyn, L.

Grimston of Westbury, L.

Atholl, D.

Duncan-Sandys, L.

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

Avon, E.

Ebbisham, L.

Bellwin, L.

Eccles, V.

Henley, L.

Belstead, L.

Elles, B.

Hives, L.

Boyd of Merton, V.

Elliot of Harwood, B.

Holderness, L.

Caithness, E.

Elton, L.

Hornsby-Smith, B.

Campbell of Croy, L.

Exeter, M.

Hylton-Foster, B.

Carrington, L. (A Principal Secretary of State.)

Fraser of Kilmorack, L.

Kilmany, L.

Gainford, L.

Kinnaird, L.

Cockfield, L.

Galloway, E.

Lauderdale, E.

Craigavon, V.

Gibson-Watt, L.

Long, V.

Cullen of Ashbourne, L.

Godber of Willington, L.

Lyell, L.

de Clifford, L.

Gowrie, E.

McFadzean, L.

Denham, L. [Teller.]

Greenway, L.

Mackay of Clashfern, L.

Macleod of Borve, B.

Penrhyn, L.

Strathclyde, L.

Mancroft, L.

Renton, L.

Strathcona and Mount Royal, L.

Mansfield, E.

Rochdale, V.

Strathspey, L.

Margadale, L.

Romney, E.

Swansea, L.

Morris, L.

St. Aldwyn, E.

Trefgarne, L.

Mottistone, L.

St. Just, L.

Trenchard, V.

Mowbray and Stourton, L.

Sandford, L.

Vaux of Harrowden, L.

Newall, L.

Sandys, L. [Teller.]

Vickers, V.

Northchurch, B.

Selborne, E.

Vivian, L.

Nugent of Guildford, L.

Sempill, Ly.

Westbury, L.

Orkney, E.

Stanley of Alderley, L.

Willoughby de Broke, L.

On Question, amendment agreed to.

6.43 p.m.
Clause 10 [Orders following report on competition reference]:
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 10:
Page 14, line 44, leave out ("substantially to the same effect as") and insert ("similar in form and effect to").
The noble Lord said: My Lords, may I on behalf of my noble friend move Amendment No. 10. We agreed in Committee to accept in principle the amendment to this clause tabled by my noble friend Lord Mottistone to ensure that an order made following a report on a competition reference should not extend to a course of conduct which was different in form to that specified in the report. My noble friend's amendment was slightly defective. The present amendment, however, achieves the desired result. I hope that your Lordships will accept it. I beg to move.
Lord MOTTISTONE: My Lords, I should like to thank my noble friend on the Front Bench for having put down this amendment in response to his undertaking.
Clause 11 [References to public bodies and certain other bodies corporate to the Commission]:
Baroness SEEAR moved Amendment No. 11:
Page 15, line 33, at end insert—
("( ) issues raised by bodies representing consumer interests concerning,").
The noble Baroness said: My Lords, if ever there was an amendment which should appeal to the hearts and minds of the Conservative Party it is surely this one. We are now dealing with Clause 11
which deals with the nationalised industries and consumers' influence in connection with the nationalised industries. I know that the noble Lord will say that of course issues will be raised by consumers organisations. But the nationalised industries are of very particular concern to consumers. With electricity and gas, we are all too frequently reminded how important they are to consumers. They affect the housewife, they affect the industrialist and every aspect of daily life. They are the monopolies to a very large extent.
We know that attempts have been made through consumer bodies to give consumers a voice in what happens in these vitally important industries. We also know— and this is agreed on all sides— that consumers' organisations and consumers' councils, statutory or otherwise, have found it extremely difficult to make any impact on the thinking or actions of the nationalised industries. All I am suggesting in this amendment— which is a weaker amendment, I frankly admit, than the one which was defeated at Committee stage— is that it is written into the Act that the Secretary of State will consider issues raised by the consumer organisations. It is to give a status, a recognition, to the important job that consumer organisations should be playing and need to be playing in these all-important industries. There are, I know, many people in the Conservative Party who really believe that the proper representation of consumers in nationalised industries is of the utmost importance. I very much hope that the Government will see fit to accept this amendment. I beg to move.
Lord WALLACE of COSLANY: My Lords, I should like to support the noble Baroness in the amendment that she has moved. So far in this Bill there has been very little chance for the consumer to get much of a look in. This is an ideal opportunity for the Government to express their support for the consumer organisations which do— as I think noble

91
Lords will accept— play a very important and vital part in the life of our country and in preserving the rights of individuals The Government have not been too willing, but I hope they will relent on this one.
Lord TREFGARNE: My Lords, as I said during the Committee stage when we were considering, as the noble Baroness reminded us, a similar amendment to this, the Government would of course consider very carefully any representations from consumer bodies about a nationalised industry's, or other public body's costs and efficiency, standard of service or possible abuse of a monopoly situation. Such representations are most likely to raise questions which are probably already covered by the three sub-paragraphs in Clause 11(1) or by the earlier provisions of the Bill; and, in the circumstances, I hope the noble Baroness will not wish to press her amendment.
May I say a word about the nationalised industry consumer councils which I think were in the mind of the noble Baroness when she was speaking just now. As I think we have already announced, the
future of these councils is under review. The present legislation is not the appropriate vehicle for setting out their rights of representation to the Government. I hope that the noble Baroness will agree with that and not press her amendment.
Baroness SEEAR: My Lords, I very much regret that I cannot agree with that. I worded this amendment in the way that I did because the noble Lord said last time that the consumer councils as such were under consideration, and so this is a more open amendment. It does not refer specifically to the consumer councils. I cannot see why, because there is going to be a further review of the consumer position, this clause cannot be written into the Bill, therefore giving status to consumer organisations. I am afraid that I shall have to press the amendment.
6.49 p.m.
On Question, Whether the said amendment (No. 11) shall be agreed to?
Their Lordships divided:
Contents, 47; Not-Contents, 71.

CONTENTS

Airedale, L.

Gladwyn, L.

Oram, L.

Avebury, L.

Glenamara, L.

Peart, L.

Aylestone, L.

Gordon-Walker, L.

Seear, B.[Teller.]

Banks, L,

Goronwy-Roberts, L.

Simon, V.

Barrington, V.

Hale, L.

Stanley of Alderley, L.

Birk, B.

Hampton, L.

Stewart of Alvechurch, B.

Blease, L.

Henderson, L.

Stewart of Fulham, L.

Boston of Faversham, L.

Houghton of Sowerby, L.

Stone, L.

Brockway, L.

Jacques, L.

Strabolgi, L.

Caithness, E.

Kaldor, L.

Swaythling, L.

Cledwyn of Penrhos, L.

Kilmarnock, L.

Taylor of Mansfield, L.

Collison, L.

Kirkhill, L.

Wallace of Coslany, L.[Teller.]

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Wedderburn of Charlton, L.

Diamond, L.

McCarthy, L.

Whaddon, L.

Donaldson of Kingsbridge, L.

Monson, L.

Wigoder, L.

George-Brown, L.

Northfield, L.

NOT-CONTENTS

Alport, L.

Ebbisham, L.

Holderness, L.

Avon, E.

Eccles, V.

Hornsby-Smith, B.

Bellwin, L.

Elliot of Harwood, B.

Hylton-Foster, B.

Belstead, L.

Elton, L.

Kilmany, L.

Bethell, L.

Fraser of Kilmorack, L.

Kinnaird, L.

Boyd of Merton, V.

Gainford, L.

Lauderdale, E.

Campbell of Croy, L.

Galloway, E.

Long, V.

Carrington, L. {A Principal Secretary of State.)

Gibson-Watt, L.

Lyell, L.

Godber of Willington, L.

McFadzean, L.

Cockfield, L.

Gowrie, E.

Mackay of Clashfern, L.

Craigavon, L.

Greenway, L.

Macleod of Borve, B.

Cullen of Ashbourne, L.

Grimston of Westbury, L.

Mancroft, L.

de Clifford, L.

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

Mansfield, E.

Denham, L.[Teller.]

Margadale, L.

Drumalbyn, L.

Henley, L.

Morris, L.

Duncan-Sandys, L.

Hives, L.

Mottistone, L.

Mowbray and Stourton, L.

St. Aldwyn, E.

Strathspey, L.

Newall, L.

St. Just, L.

Swansea, L.

Northchurch, B.

Sandford, L.

Trefgarne, L.

Nugent of Guildford, L.

Sandys, L.[Teller.]

Trcnchard, V.

Orkney, E.

Selborne, E.

Vaux of Harrowden, L.

Penrhyn, L.

Sempill, Ly.

Vickers, B.

Renton, JL.

Strathclyde, L.

Vivian, L.

Rochdale, V.

Strathcona and Mount Royal, L.

Westbury, L.

Romney, E.

On Question, amendments agreed to.

6.57 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 12:
Page 15, line 37, leave out ("body") and insert ("person").
The noble Lord said: My Lords, once more on behalf of my noble friend Lord Trenchard, I beg to move Amendment No. 12 and wish at the same time to speak to Amendments Nos. 13 to 16 inclusive, to Amendments Nos. 18 to 30 inclusive and to Amendments Nos. 39, 48 and 58.
During the Committee stage, my noble friend Lord Teviot moved an amendment seeking to remove most bus undertakings from the scope of Clause 11. The Government have considered carefully the points that he made during the debate, but we remain of the opinion that there may on occasion be a need for such bodies to be referred to the Monopolies and Mergers Commission for external scrutiny. The basis of our view is that there may be circumstances in which a local monopoly exists in the provision of bus services and in which questions of efficiency or standards of service need to be examined by somebody other than the Traffic Commissioners or the Passenger Transport Authority. However, we accept that the ambit of Clause 11(3)(b) is unnecessarily wide and the amendments which we have tabled seek to reduce the scope of that paragraph.
Amendment No. 18 permits the Secretary of State by order which, under Amendment No. 58, would be subject to Negative Resolution, to exclude from subsection (3)(b) persons of such description as may be specified in the order. It is intended that this power will be used to provide a minimum cut-off figure, based on turnover, below which a bus undertaking cannot be referred to the Commission. I cannot indicate what that figure will be, but interested parties will be consulted before the order is made.
Amendment No. 12 also provides that a body described in Clause 11(3)(b), or a subsidiary of such a body, may not be referred to the Commission under Clause 11 unless the reference relates to the carriage of passengers. This will include bus or light railway activities, but will exclude other matters referred to by my noble friend, such as car sales, travel agency and haulage.
The Government have been happy to introduce these amendments. However, I understand that there are a number of partnerships, as opposed to companies, engaged in the provision of bus services. The Government feel that an undertaking should not be able to escape scrutiny under Clause 11 merely because of its legal status. It therefore seeks in Amendment No. 15 to substitute the word "person" for "body corporate" in Clause 11(3)(b) thereby bringing in partnerships and sole traders. These, like companies, will of course benefit from the minimum turnover provision to be introduced by order and from the proposed restriction on the scope of references.
I should add that the bodies which the remaining paragraphs in subsection (3) seem to cover must inevitably be bodies corporate, and so the problem I have described in relation to paragraph (b) does not arise elsewhere. The remaining amendments in this group are purely consequential upon Amendment No. 15. Accordingly, I now beg to move Amendment No 12. I have also spoken to Amendments Nos. 13 to 16 inclusive, Amendments Nos. 18 to 30 inclusive and Amendments Nos. 39, 48 and 58.
Lord TREFGARNE Lord TREFGARNE moved Amendments Nos. 13 to 16:
Page 15, line 40, leave out ("body") and insert ("person").
Page 16, line 7, leave out ("bodies") and insert ("persons")
Page 16, line 16, leave out ("body corporate") and insert ("person")
Page 16, line 17, leave out ("which") and insert ("who").
7 p.m.
Lord STANLEY of ALDERLEY Lord STANLEY of ALDERLEY moved Amendment No. 17:
Page 16, leave out lines 24 to 26.
The noble Lord said: My Lords, I withdrew this amendment in Committee because my noble friend Lord Trenchard promised to try to meet me halfway. But, without appearing to be too ungracious, I found on studying his remarks in column 692 of Hansard of 19th February, that my noble friend had offered me only a stone when I had asked for bread. In fairness to my noble friend, I have to admit that I confused the issue somewhat in my summing-up, due, I should like to say, to the reporting, but in all honesty I strongly suspect that I was somewhat muddling and colloquial, partly because I was completely amazed that my noble friend did not accept my argument or my amendment.
I shall not repeat my original reasons for wishing the agricultural marketing boards to be removed from Clause 11, as I know that my noble friend will have studied them. But I will mention that all the reasons given by my noble friend to me, and also to my noble friend Lord Caithness in Committee, carry absolutely no substance whatsoever. I am sorry to be blunt, but I am a farmer and I hope he understands how I feel.
In every case, the points that he raised are covered more fully by the Minister of Agriculture and the Agricultural Marketing Act 1958. I would repeat that Clause 11 refers only to the internal workings of the board, except for subsection (1)(c). I and my noble friend Lord Caithness still wait with the greatest interest for an example of when Clause 11(1)(c) would be used, when the situation would not already be covered by Clauses 2 and 10 of this Bill— and I repeat that we are not taking the boards out of that part. I feel very strongly indeed that to include the agricultural marketing boards in Clause 11 is complete nonsense. It will cause unnecessary bureaucratic duplication and unsettle the present arrangements, which are very satisfactory not just to the farmer but, in particular, to the consumer.
I shall finish with a little story, which is that as the Bill stands at the moment we could have the Minister of Agriculture considering reporting a particular board to the Monopolies and Mergers Commission. We could also have the Office of Fair Trading as well as the Department of Trade considering the matter. There could be all these bodies separately considering the matter before they came to consult. If that is not a waste of bureaucratic time, using up more and more civil servants, I do not know what is. I therefore ask the Government to accept this amendment, or, if they really feel they cannot, to give me some assurance that they will look at this matter again before Third Reading. My Lords, I beg to move.
Lord CLEDWYN of PENRHOS: My Lords, I fully support the case which has been put so well by the noble Lord, Lord Stanley of Alderley. The amendment was fully explained to the Committee and to the Government, and I regret that I was not able to be present at that time to speak to it. But I thought that the arguments were so conclusive that there would be no doubt of the Government's reaction. I am very deeply disappointed by the response of the Government, as I see it, in the amendments to Clause 15 on the Marshalled List tonight. The amendments which they have seen fit to put down do not allay my fears about the consequences of Clause 11, as it now stands, or the consequences of Clause 11, as amended by the Government's amendments to Clause 15.
Let me try to summarise my apprehension. As things are now, agricultural marketing boards are subject to the Agricultural Marketing Act 1958. That Act has worked well. It was introduced by the Conservative Government in 1958. I remember it going through another place. I was able to support it, because I thought that the proposals in respect of the agricultural marketing boards were reasonable and should be supported. It set up machinery, as the House knows, which involved committees of investigation and consumer committees, as well as ministerial directions and other arrangements, and it has proved extremely effective in protecting the public interest since then.
I have heard no evidence to the contrary, and the one thing which Government spokesmen must satisfy the House about

97
tonight is that there is something wrong with the 1958 Act; that, somehow or other, the machinery which they, the Conservative Party, set up under the 1958 Act has not worked adequately, because there could be no other justification for the provisions of this Bill. If the procedure laid down in the 1958 Act is effective, why is it necessary to include the agricultural marketing boards in Clause 11? I think that the Minister who replies has an obligation to explain to the House this evening, in the clearest terms, why the Government are not satisfied with the 1958 Act machinery.
If the boards arc included in Clause 11, they will still be subject to the 1958 Act and to this Bill's provisions for the control of anti-competitive practices, together with the possibility of a reference to the Monopolies and Mergers Commission. In other words, to include the boards in this Bill will be to add again to the procedures which already exist under the 1958 Act, thereby making the lives of those who work in the boards excessively difficult. The Government's proposed amendments to Clause 15 do not preclude this difficulty and they do not therefore meet our main argument. I do not think that the consultation with the relevant Minister which is proposed is an adequate solution to the problem which the Bill as it stands will create.
What the Government are saying, as I understand it, is, "We want the agricultural marketing boards to be subject to the 1958 Act and to this Bill". Why is that? Why do the Government want the agricultural marketing boards to be subject to this Bill in addition to the 1958 Act, or do they propose to repeal the relevant part of the 1958 Act to take the agricultural marketing boards out of it? I think that the House is really entitled to know. We have not had a satisfactory explanation of the Government's policies and the Minister must work very hard to satisfy me, as otherwise I shall have to consider my position at the end of the debate.
The Government have said that they want to reduce the volume of legislation. They said that in their election manifesto and I agree with it. Since the war, there has been too much legislation in this countr by far, by successive Governments of all parties. The Government are also on
98
the record as saying that they want to reduce machinery of this kind. That is another argument which they have used and I agree with that. I do not want to increase the machinery which exists in Clause 11. They have also said that they want to reduce paper work. On that, I agree again. There is far too much form-filling in this country and, as I well know, farmers are subjected to a great deal of it. The Government have said that they want to reduce officialdom. I agree with that as well.
But when I read what is proposed for the agricultural marketing boards in this Bill, I begin to wonder whether the Government were as sincere as they might have been when they made these promises. I shall sit down in a moment, because I do not want to detain the House for too long, but the result of this clause, if it goes through as it now stands, will be to create greater confusion than before, to create more machinery than before, to create more "officialese" and more paperwork than before. Is that what the Government want? That will be the effect of this clause as it stands, if the Government do not propose to change it. They are doing it in a field of vital importance; namely, the agricultural marketing boards which are doing a splendid job in the interests of agriculture and in the interests of the country as a whole.
I appeal to the Government at this stage to think again, otherwise they will undermine the confidence of very important organisations in this country. If the noble Lords on the Front Bench opposite give this matter very careful thought, I think they are bound to conclude that to close the door now to these arguments will be to damage bodies which are vital to the interests of food production in this country at the present time.
Baroness ELLIOT of HARWOOD: My Lords, before the noble Lord speaks, I wonder whether I may say a word, because I feel very strongly about this matter. The marketing boards, started and organised by the Conservative Party and supported by all the other parties, are working extremely well. They are subject to all the safeguards which noble Lords want in connection with the Agricultural Marketing Act 1958. Suddenly, therefore, to include these boards in

99
the Bill is, I think, the greatest possible mistake. You will get nothing out of it at all; you will only complicate everything. Only a very short time ago the EEC said that they would not support the Milk Marketing Board from the point of view of the British within the EEC unless 80 per cent. of dairy farmers voted in favour of it, and when they took a ballot 99· 2 per cent. voted in favour.
Surely it is very, very foolish to do away with what is working extremely well. When something is working well, why alter it? Certainly alter a thing when it is not working well, but this agricultural organisation is working very well; so why not leave it alone? What is the point of altering it when you have got a first-class job being done and when all the safeguards that you want are already there? I beg the Government to omit paragraph (d) because it is a most wrong thing to do— and, I think, quite irresponsible. It is only going to make for very great trouble. It will also do a lot of harm to the goodwill that the farming community has towards the Government. I beg the Minister to agree to our amendment.
Lord DAVIES of LEEK: My Lords, since the 1945 period I have watched in the hill farming areas, and everywhere else, the strength of the marketing boards. As was rightly said by the noble Baroness, Lady Elliot of Harwood, originally there was the impetus of the Conservative Party for these marketing boards. That is why we appeal that lines 24 to 26 should be omitted. Common sense shows that all the machinery for consumer safeguards and for all the other safeguards is there. I do not want to make a party-partisan speech, but I really do feel that Friedmanism has gone mad here. Friedmanism is setting fire to a first-class thing that has helped the prosperity of British agriculture. On both sides of this noble House, 99 per cent. of us are interested in the health of British agriculture. Therefore, without repetition I beg the Government to look carefully at the consensus of opinion in the farming fraternity, in the business fraternity and on both sides of this noble House.
Lord GODBER of WILLINGTON: My Lords, I should like, just for one moment, to reinforce what has been said
100
on both sides of the House on this matter. I feel strongly about the issue. The agricultural marketing boards have done tremendous good over the years. The point at issue seems to me to be that they have been long established. There have been no cases recently of abuse of which I am aware, and if there are cases of abuse the Agricultural Marketing Act provides adequate provision for dealing with them. There is no proposal to introduce new agricultural marketing boards at this time. Indeed, they are already under attack in Brussels. To attack them in this country as well seems to me to be quite wrong, I urge the Government most seriously not to press ahead with this, for it seems to me to be totally unnecessary. I do not understand the reasons for including it. I shall not repeat the very clear arguments which have been made on both sides of the House. I totally agree with all that has been said.
The Earl of SELBORNE: My Lords, I should like the opportunity to support the noble Lord, Lord Stanley of Alderley, and the other Members of your Lordships' House who have spoken to this amendment. I should declare that I am chairman of the Hops Marketing Board. Therefore, I take some considerable degree of interest in the matter and look with alarm at the Bill as at present drafted.
The point which has been made so often on both sides of the Chamber must be valid. The present Minister of Agriculture and, indeed, previous Ministers of Agriculture, have ensured that over the years marketing boards should evolve to fulfil a very great marketing need. They are doing just that. But one thing which cannot be done is to encumber them with unnecessary bureaucratic ties. In a monopoly position it is right that marketing boards should have checks and balances, but they already exist, as has been said already, under the Agricultural Marketing Act 1958. This Bill misguidedly tries to introduce yet further checks, with the real threat that the Secretary of State for Trade, the Minister of Agriculture, and the Office of Fair Trading will all be putting their oar in and making life for the marketing boards very much more complicated and certainly less effective.
It is no exaggeration to say that things will run smoothly if they are kept simple.

101
The Agricultural Marketing Act 1958— so far as I know, and I speak as a member of a marketing board— has been working efficiently and effectively. There are occasionally committees of inquiry. That is the way in which any complaints are looked at; and if necessary action can be taken. The Minister did not show during the Committee stage that there was any reason to suppose that these procedures are working ineffectively. He must, I suggest, show today why the present procedures are ineffective. If so, I should be very interested to hear of them.
I suggest, however, that even if there are procedures which are ineffective the way to deal with them is to amend the Agricultural Marketing Act. That Act is tailor-made for these marketing boards which, as has already been said, are very dear to the hearts of farmers. They are under threat in Brussels and this measure in no way, I suspect, helps us to maintain the very great strength to be derived from these boards. I hope very much, therefore, that the Minister will take very seriously the points which have been made on all sides, and the deep concern which is felt in the Chamber about this issue.
Lord MOTTISTONE:My Lords, I should love to hear from one of my farming friends just why they deserve to he singled out to be excluded from this Act which is to apply to practically every other trading business in the country. What is so special about the farmers— —
The Earl of CAITHNESS: My Lords, I wonder whether the noble Lord would give way?
Lord MOTTISTONE: My Lords, I wonder if I could finish my sentence. What is so special about the farmers that makes them justifiably excluded from this Act, and nobody else?
The Earl of CAITHNESS: My Lords, the point is that the agricultural marketing boards do not want exemption from the Act. That is a total misapprehension. They want exemption from this clause, and this clause deals with the internal workings of the boards. That is what is covered by the 1958 Act. We are not taking the boards out of the Bill. If this amendment were to be agreed to, it would in no way affect the application of
102
the other provisions of the Bill to the agricultural marketing boards. In particular, the boards would remain subject to the provisions dealing with the control of anti-competitive practices. We have not had one good reason why our case is not a valid one. We have not had one good reason for the inclusion of the boards in this clause of the Bill. I am sure my noble friend will appreciate that point.
Lord MOTTISTONE: My Lords, I should like to ask my noble friend whether that is a speech or an interruption in my speech?
The Earl of CAITHNESS: Which does the House prefer?
Lord MOTTISTONE: My Lords, with the permission of the House, may I say that I was rather swept off my feet by my noble friend. It seems to me that if we have a body which is in a semi-monopolist position it is only reasonable that as well as being subject to the rest of the Act it should be subject to Clause 11, and I cannot see why the farmers need special treatment.
Lord BLEASE: My Lords, I support this amendment. I fully concur with the views expressed by noble Lords opposite and by my noble friends on this side of the House concerning the operation of this clause. It is my view that there is nothing in the provisions proposed in this clause that makes it possible for any question affecting a board to be dealt with more effectively than is possible through the existing provisions of the Monopolies and Mergers Commission and the Fair Trading Act 1973, and the way powers of investigation and control are available under the Agricultural Marketing Act 1958 and— the main reason why I rise to my feet— the Agricultural Marketing (Northern Ireland) Act 1964, because this provision will apply to Northern Ireland also.
In my opinion to include the boards in Clause II will achieve nothing of benefit to the consumer, to the producers or to the interests of the general public. Indeed, its inclusion will tend to cause confusion and impede arrangements for existing effective investigation and control. In my view clearly it would be regrettable if legislation, such as this Bill will create

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through this clause, should result in a waste of resources and the time of all concerned. Therefore, in view of the remarks which have been made on both sides of the House, I hope the Minister will agree to this amendment.
Lord TREFGARNE: My Lords, several noble Lords and noble Baronesses have said that they feel strongly on this amendment. I do, too. The agricultural marketing boards have been included in Clause 11(3) because of their monopoly position, under statute, in which respect they are little different from many of the other bodies covered by subsection (3). Nevertheless, in view of the special position of the Ministers for agriculture in relation to agricultural marketing boards under the Agricultural Marketing Act 1958, the Government have tabled amendments to Clause 15 which we shall be able to discuss later. These will have the effect of requiring the Secretary of State formally to consult the relevant agricultural Minister before a board is referred to the Commission under Clause 11. The amendments also require similar consultation about the use of the Secretary of State's power of veto under the earlier clauses of the Bill.
The noble Lord, Lord Cledwyn of Penrhos, and I think other noble Lords as well, asked me about the problems of the 1958 Act. The 1958 Act allows agricultural Ministers (if that is the right expression) to deal with a number of questions affecting these boards. Committees of investigation, when asked to do so by the Minister, can consider and report upon reports made by consumers' committees and upon complaints made to the Minister which he considers are not for the consumers' committees. Consumers' committees can deal with the effect of any scheme on consumers of the product concerned and with complaints by consumers. But there is no specific provision for the general efficiency audit of a board and it is this kind of inquiry which Clause 11 of the Bill is intended to cover. The Bill also provides a wider scope for the investigation of anti-competitive practices.
I do not understand why it is that noble Lords seek to exempt the agricultural boards from these efficiency audits. We have heard a number of speeches which, if one had been an outsider one might have
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ventured to think that we were threatening the very future of these boards. That is far from the case. Our feelings are quite clearly that we ought to expose these boards, where necessary and where there is agreement by the Ministers concerned (as provided for by our subsequent amendments) to the scrutiny of the Monopolies Commission in appropriate cases. We are quite adamant that we propose to resist these amendments, and I hope they will not be pressed.
Lord CLEDWYN of PENRHOS: My Lords, will the noble Lord deal rather more specifically with some of the points that have been raised by noble Lords? Given that the agricultural marketing boards have been in existence for many years— indeed, the Milk Marketing Board has been in existence for over half a century— is there any evidence over the whole of that period that these boards should be referred to the Monopolies Commission or to an efficiency audit? Has any new evidence come to hand in recent months or years which prompts the Government to take this quite extraordinary action? What is worrying noble Lords is that the agricultural marketing boards will now be the only organisations which will be subject to two Acts of Parliament. Other organisations will be subject to this Act: the agricultural marketing boards will be subject to this Act and also to the Agricultural Marketing Act 1958. An additional burden is being placed on them which does not apply to the other boards about which the noble Lord, Lord Mottistone, is so concerned. Can the noble Lord deal with that?
Lord TREFGARNE: My Lords, as the noble Lord has said some of these boards have been in being for a good number of years and, by and large, they have not been subjected to the sort of scrutiny which we are now providing for, where the Ministers concerned feel that the investigation is appropriate. I would turn the question about: The noble Lord asked me whether we have any positive evidence that these boards are in need of audit. No, I have not. Neither has the noble Lord any evidence that they are perfect.
Lord CLEDWYN of PENRHOS: My Lords, with respect, the noble Lord is not being fair to me or to the House. He has

105
not answered my question. Is he satisfied with his colleagues in the Government, that the Agricultural Marketing Act 1958 is working satisfactorily? Is there any evidence in recent years which has prompted the Government to include the agricultural marketing boards in Clause 11 of this Bill? The information I have is that the marketing boards are working efficiently and that there has been no complaint for several years. It is ten years since I was Minister of Agriculture, and I can say to the noble Lord and to the House that there was complete satisfaction at that time, not only in the Ministry of Agriculture but in other Departments of State as well. The marketing boards were working efficiently and well. By taking this step the Government are saying to us and to the country that for some reason or other these boards are not working as they should. We need evidence before we can agree to this clause and the noble Lord has not given the House the necessary evidence to enable us to support it.
7.29 p.m.
Viscount TRENCHARD: My Lords, in deference to the noble Lord, Lord Cledwyn of Penrhos, and to my noble friend Lord Godber of Willington, both of whom have been Ministers of Agriculture, I want to say two things: one, that my right honourable friends the Secretaries of State for Agriculture and for Trade have discussed this at great length and are happy with what we are putting before the House. Secondly, we are not trying to undermine the 1958 Act in any shape or form, nor do I believe we will. It is not a question of whether these boards are going to be referred; it is a question of whether they could conceivably be, in relation to an anticompetitive practice.
There are no examples that I can quote of these bodies behaving in a way that is contradictory to the 1958 Act. We are not actually talking about the 1958 Act; we are talking about the two differences which my right honourable friend mentioned. It is also true to say that in relation to anticompetitive practices we have no evidence against almost any other body in the country. If the noble Lord is following me, I was saying that we have no evidence against almost any other board in the country that they are behaving in an anticompetitive way. Therefore, simply
106
because one has no evidence that they are behaving in an anti-competitive way is no reason not to apply the Bill to a board with a monopoly situation, which they undoubtedly have, bearing in mind the ability in that powerful position to treat individual customers quite differently, which consumers committees might not regard as an anti-competitive practice. Neither is there a power in the 1958 Act to look at the efficiency in general. For these two reasons there could be an exceptional case, and what we are saying is why should they be excluded from reference in an exceptional case when both Ministers have considered that the reference should be made.
The EARL of CAITHNESS: My Lords, my noble friend mentioned anti-competitive practices. Would he not agree that the agricultural marketing boards are already caught, under this particular heading of anti-competitive practices, under Clauses 2 to 10 of this Bill?
Viscount TRENCHARD: My Lords, I am informed not in relation to practices that the board might perform in relation to one customer or another and the effect that that might have between first point of sale, first-hand trading, wholesaler retailer beyond. I am informed that the aspects which my noble friend covered very clearly the 1958 Act does not fully cover. We are talking about the very unlikely occurrence that there is a reference, agreed by both Secretaries of State, in relation to aspects of this Bill which are not covered in the 1958 Act. Agriculture is being treated completely exceptionally in bringing in the need to consult in all the earlier clauses of the Bill.
Lord CLEDWYN of PENRHOS: My Lords, I crave the indulgence of the House for intervening once again. I am grateful to the Minister of State for his intervention. It is always agreeable to listen to the Minister of State, but he has not helped me a great deal. He has not taken account of the fact that these agricultural boards have statutory obligations and that they are very much under ministerial control, as it is. He knows perfectly well that the Milk Marketing Board has been under ministerial control from the start, and that milk is one of the most important commodities so far as the consumer is concerned. The price of milk is strictly

107
controlled. It is about the only commodity that is controlled. I would hope, therefore, that the Front Bench will think again before the House comes to a final decision.
Lord STANLEY of ALDERLEY: My Lords it seems as though I have to sum this up and I am not sure I am going to do it very well. Perhaps I may start by saying that in agricultural terms my Front Bench are quite wrong and they have not answered any of my questions or any of my noble friends' questions. I am sory to put it so bluntly, but the Front Bench opposite suffered from me last year so you have to suffer from me now. You really have not answered the questions. It is a disgrace, if I may say so. We are a revising House. There is nothing political in this. My noble friends and my old friend Lord Cledwyn have brought all these points up and you have not answered them. First, let me say that we are very different. Agricultural marketing boards are controlled under the Agricultural Marketing Act 1958, in every aspect, I can tell my noble friend. With regard to efficiency audit, the Minister of Agriculture can call for an efficiency audit if he wishes. What is the difference between him and the Secretary of State for Trade, might I ask? Why duplicate the damned thing? I am sorry; why duplicate it? Then it is said expose these boards. Well, they can be exposed and scrutinised again under the Agricultural Marketing Act. They can be exposed and scrutinised by the consumer committees, by the investigation of inquiries. Anyway, what happened to the Egg Marketing Board. What happened to the Tomato and Cucumber Board? They were exposed, once by farmers for inefficiency and once by consumers. I do not suppose the Secretary of State for Trade is going to expose people any better than I can expose them, I hope. You have not answered any of my questions.
Lord DENHAM: My Lords, if I may just remind my noble friend, he is addressing the House and not Her Majesty's Government.
Lord STANLEY of ALDERLEY: I take the point, my Lords, but the House does not need addressing because they
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happen to be with me. I will try my best. The questions have not been answered by the Government: it is not my noble friends; they have answered the questions. In regard to Clause 11(1)(c), which is the one dealing with monopolies, they have not given me an example of when this could be used. The only possible example was given by my noble friend Lord Trenchard when he said it would be in exceptional circumstances. I have always understood that to legislate for exceptional circumstances made really bad law. I am not prepared to accept that.
I should like to thank those who have supported me. The noble Lord, Lord Cledwyn, said that greater confusion could arise; that was the understatement of the evening. We had my noble friend Lady Elliot saying that the goodwill would be destroyed between the boards and the Government, the Minister of Agriculture. It will. It has worked very well; why disturb it? Then there was my noble friend Lord Godber— I am correcting one Minister of Agriculture after another— who must know a little bit more than I do, I should have thought. He asked whether there was any question of abuse. There has never been any question of abuse over these boards. Yet you want to change it.
My noble friend Lord Selborne, who runs one of these boards, reminds your Lordships that it will make it more difficult for him. We are very grateful for those who run boards, even though they may be called Quangos. I do not want to make his life any more difficult. Finally, my noble friend Lord Mottistone asks, what is so special about the agricultural marketing boards? A lot is; they are very efficient for one thing. They are controlled by the 1958 Act; that is what is so special, that they are totally different from the others. I will not go on repeating myself. If the Government cannot give me anything more, I shall have to test the opinion of the House.
7.38 p.m.
On Question, Whether the said Amendment (No. 17) shall be agreed to?
Their Lordships divided: Contents, 45; Not-Contents, 61.

CONTENTS

Airedale, L.

Elliot of Harwood, B.

Orkney, E.

Ardwick, L.

George-Brown, L.

Peart, L.

Barrington, V.

Gladwyn, L.

Romney, E.

Birk, B.

Godber of Wellington, L.

Seear, B.

Blease, L.

Greenway, L.

Selborne, E.

Blyton, L.

Hale, L.

Sempill, Ly.

Boston of Faversham, L.

Henley, L.

Simon, V.

Brockway, L.

Houghton of Sowerby, L.

Stanley of Alderley, L. [Teller.]

Brooks of Tremorfa, L.

Hylton-Foster, B.

Stewart of Alvechurch, B.

Caithness, E.

Jeger, B.

Stewart of Fulham, L.

Cledwyn of Penrhos, L.

Kaldor, L.

Stone, L.

Collison, L.

Kirkhill, L.

Strabolgi, L.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Taylor of Mansfield, L.

Davies of Penrhys, L.

Northchurch, B.

Wallace of Coslany, L.[Teller.]

Donaldson of Kingsbridge, L.

Northfield, L.

Whaddon, L.

NOT-CONTENTS

Alport, L.

Gainford, L.

Mottistone, L.

Avon, E.

Galloway, E.

Mowbray and Stourton, L.

Bellwin, L.

Gibson-Watt, L.

Newall, L.

Belstead, L.

Gowrie, E.

Nugent of Guildford, L.

Boyd of Merton, V.

Grimston of Westbury, L.

Penrhyn, L.

Brougham and Vaux, L.

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

Renton, L.

Campbell of Croy, L.

Rochdale, V.

Canington, L. (A Principal Secretary of State.)

Harmar-Nicholls, L.

St. Aldwyns, E.

Hives, L.

St. Just, L.

Cockfleld, L.

Holderness, L.

Sandford, L.

Craigavon, V.

Hornsby-Smith, B.

Sandys, L.[Teller.]

Cullen of Ashbourne, L.

Kilmany, L.

Selkirk, E.

de Clifford, L.

Linnaird, L.

Strathcona and Mount Royal, L.

Denham, L.[Teller.]

Lauderdale, E.

Strathspey, L.

Drumalbyn, L.

Long, V.

Swansea, L.

Duncan-Sandys, L.

Lyell, L.

Terfgarne, L.

Ebbisham, L.

Mackay of Clashfern, L.

Trenchard, V.

Eccles, V.

Mansfield, E.

Vaux of Harrowden, L.

Elton, L.

Margadale, L.

Vickers, B.

Ferrers, E.

Monson, L.

Vivian, L.

Fraser of Kilmorack, L.

Morris, L.

Westbury, L.

Resolved in the negative, and amendment disagreed to accordingly.
7.45 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendments Nos. 18 and 30:
Page 16, line 33, at end insert—
("(3A) The Secretary of State may by order exclude from subsection (3)(b) above persons of such descriptions as may be specified in the order.
(3B) No question concerning a person falling within subsection (3)(b) above or a subsidiary of a body falling within that subsection may be referred to the Commission under this section unless it relates to the carriage of passengers by the person or, as the case may be, the subsidiary.").
Page 17, line 7, leave out ("body") and insert ("person")
Page 17, line 31, leave out ("body") and insert ("person")
Page 17, line 34, leave out ("body") and insert ("person").
Clause 12, page 17, line 41, leave out ("body") and insert ("person").
Clause 12, page 18, line 2, leave out ("body" and insert ("person")
Clause 12, page 18, line 4, leave out ("body") and insert ("person")
Clause 12, page 18, line 5, leave out ("body") and insert ("person")
Clause 12, page 18, line 21, leave out ("body") and insert ("person")
Clause 12, page 18, line 23, leave out ("such a body") and insert ("a body falling within that paragraph")
Clause 12, page 18, line 24, leave out ("body") and insert ("person")
Clause 12, page 18, line 32, leave out ("body") and insert ("person")
Clause 12, page 18, line 37, leave out third ("the") and insert ("a").
The noble Lord said: My Lords, I have already spoken to these amendments. I beg to move Amendments Nos. 18 to 30 en bloc.
On Question, amendments agreed to.
Clause 13 [Investigations of prices directed by Secretary of State]:
Baroness SEEAR Baroness SEEAR moved Amendment No. 31:
Page 19, line 15, leave out from beginning to ("under") in line 19, and insert—

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("(1) The Director may carry out an investigation into any price which appears to him to be of public concern with a view to providing the Secretary of State with information, recommendations and observations relating to that price; but an investigation").
The noble Baroness said: My Lords, I beg to move Amendment No. 31. For the convenience of the House I shall speak also to Amendments Nos. 35, 36, 37, 38 and 47, which is consequential. These are, of course, amendments of considerable substance. The point behind them, as was explained in the Committee stage, is that at present there is very great anxiety about increases in prices. It is extremely desirable, in the absence of a Price Commission, that the Director General should be able, on his own initiative and not having to wait for references from the Secretary of State, to conduct an investigation into a price increase. It is, of course, a substantial change in the purpose of the Bill, but we believe that, while a Price Commission is not in our view necessary, it remains extremely important that there should be the possibility of intervening quickly as regards matters of prices which are causing very considerable public concern.
At a time when it is being urged continuously that discretion should be used in attempting to increase wages, but when there is no policy on wages as such, we take the view that to ask for restraint and good sense in the area of wages, when there is no opportunity for intervention as regards prices, is extremely unwise. Therefore we propose the power of intervention which will not depend on the decision of the Secretary of State, which is limited, as the Bill stands, to matters of major concern. That should not be the policy of this legislation, but instead the Director General should have the power to intervene on his own initiative. It is for that purpose that I beg to move the amendment.
Viscount TRENCHARD: My Lords, we discussed very fully the question of price control both on Second Reading and in Committee. Thus, I shall be as brief as possible in reiterating only the main points that we made previously. It is intended that investigations under Clause 13 should be purely fact-finding. These amendments, taken in conjunction with the proposed new clauses, are totally
112
at variance with that intention. The amendments are similar in scope to those considered at the Committee stage in another place and in Committee in this House and the reasons given for resisting them are still valid.
The intention is that the powers in Clause 13 should be held in reserve for use only in cases where public concern about a particular price issue makes it desirable for an independent inquiry to establish the reasons for the price level concerned. It is, therefore, right that the Secretary of State alone should have the right to initiate these investigations and that he should have the duty of defending his decisions before Parliament. If, as a result of a price investigation, there is evidence that a price is unjustified, the appropriate follow-up action could be through use of the competition legislation — for example, the earlier provisions of this Bill dealing with anti-competitive practices or action.
I turn to Amendments Nos. 37 and 38. The new clauses introduce the concept of price control, which is quite contrary to the purpose of Clause 13 or to that of the Bill as a whole. The Government have made it clear that their attitude towards price control is quite different from that of the previous Administration. It follows that these new clauses are not acceptable.
We have said that the effect of the Price Commission on prices in the past has been minimal, and we have drawn evidence to support that. We believe that if competition is strengthened— and this Bill will strengthen it— the room for abuse is also minimal. Therefore, we believe that it is only in very exceptional cases that the Secretary of State should have to use his powers. I beg your Lordships not to divide again upon this amendment as we have argued the case so often.
Lord WALLACE of COSLANY: My Lords, I should like to make a brief remark on this. At the Third Reading in another place the Minister said that the Secretary of State would have no responsibility for prices, that that would be the responsibility of the respective Ministers, whoever they might be. Do I understand the position to be that, in fact, the Government, and the Secretary of State in particular, take no responsibility for prices?
Viscount TRENCHARD: My Lords, I think that the noble Lord refers to quite another question, the question of which Minister in the other place would answer questions about price levels of particular commodities, services or what-have-you, where it has been decided that the Minister whose department is responsible for that area should answer those questions.
Baroness SEEAR: My Lords, in view of the late hour and of the results of recent Divisions, I very reluctantly ask the leave of the House to withdraw these amendments.
Amendment, by leave, withdrawn.
7.53 p.m.
Lord WALLACE of COSLANY Lord WALLACE of COSLANY moved Amendment No. 32:
Page 19, line 26, leave out ("major").
The noble Lord said: My Lords, I beg to move amendment No. 32. At the same time I should also like to speak to Amendment No. 33. The purpose of this amendment is to remove the extremely tight wording of subsection (2) of Clause 13. The discussion on my more drastic amendment during the Committee stage provoked so many heated exchanges that the Committee did not receive an adequate reply from the Government Bench. That was mainly my fault and, if humanly possible, I do not intend to provoke the Minister unduly now.
As subsection (2) is drafted, it would seem that only in the most extreme cases would the Secretary of State give a direction. It provides a perfect loophole to evade responsibility. Public concern is quite sufficient reason for the Secretary of State to consider and, if satisfied, give a direction, and avoids the problem of deciding what constitutes major public concern". On paragraph (a), it is accepted, particularly in the present financial situation, that "general economic importance" is relevant, although the inclusion of "general" is a little vague. With reference to paragraph (b), the inclusion of the word "significantly" is, if I may say so, another example of over-emphasis. Surely the fact that the consumers are affected, directly or indirectly, by the price is sufficient ground for the Secretary of State to consider whether the effect on consumers is significant enough to warrant action.
By accepting Amendment No. 32, the Government would give a clearer indication that they have the interests of the consumer in mind. As the clause stands, it gives the impression that only in the most extreme cases would the Secretary of State give a direction to the Director General. As it stands, there would appear to be only a very remote possibility of action being taken.
As the noble Baroness, Lady Seear, mentioned, costs and prices are a very emotive subject, particularly at the moment, and there exists in the average household extreme sensitivity— whether it be on the part of the housewife (the family Chancellor of the Exchequer), or of any member of the family complaining to her. I do not want to be too pressing on the Government, but I believe that there are reasonable, adequate and sensible grounds for this amendment to be accepted, because it does not alter the clause in any major fashion whatever, and gives a greater impression of the flexible approach that the Government might take. I beg to move.
Viscount TRENCHARD: My Lords, again, we have been over this ground before. The power in this clause is not a replacement for the price control powers of the Price Commission legislation. It is intended to be a fact-finding exercise to be used only in exceptional cases. Both these words, "major" and "significant", would allow a myriad of small complaints to be made and they would not advance the situation of the level of prices. We really have to divide the question of the level of prices and the events that are responsible for it and the effect of price control upon it. We have been through that on many occasions. I recognise that prices are an emotive subject and I realise that during the time— which lasted for many long years— when this Government and the previous Government appealed for adherence to an incomes policy as such, it was argued that as a quid pro quo prices must be controlled.
I mentioned on Second Reading that it was my belief that most of the action taken by the Price Commission was purely cosmetic in this effect; that it did not get an incomes policy to stick; that, in so far as it did knock the odd tiny percentage off the RPI, it did damage to investment

115
and almost certainly, as a result, damage to prices the year after next, even if not in the year in question. Therefore, this Government's approach is quite different, and we very much hope that what we believe is the illusion that prices must be controlled in order to keep them lower than they would otherwise be will soon be realised not to be the fact of the matter.
As we have said on many occasions, the proof of the pudding seems to be in the levels of margins in this and other countries achieved by industry, which is working under strong competitive terms, which will be made stronger. We believe that this clause should only be an absolute reserve, and we do not want it in any way to become the usual method under which the Secretary of State asks for price investigations. We believe that it is unnecessary; we believe that our approach is more in the interests of consumers and, indeed, wage-earners. I hope that the noble Lord, Lord Wallace of Coslany, will not press his amendment.
Lord PONSONBY of SHULBREDE: My Lords, I am slightly surprised at the remarks of the noble Viscount. He is quite right that we have been over this ground before. The fact is that the clause as now worded— as he calls it, an absolute reserve— is such that it will never be used. We would in fact like this clause to be worded in such a way that it is capable of being used. While accepting the general principle of the Government philosophy that competition is better than price control, this amendment proposed by us would bring the clause within the field of a clause which could actually be used for the purposes for which it is proposed, rather than of a clause which would never be used. It seems to me that the clause as at present worded is, in a sense, a sop to the public; it is a sop to your Lordships, but does not in fact come into the area of a clause which would be used. Our amendment is to bring this clause within the area of a clause which could be used by a Secretary of State.
Viscount TRENCHARD: My Lords, with the leave of the House, I will only say that I believe that this clause can be used in a question of major public concern into prices of great significance, and that is what it is intended for.
Lord WALLACE of COSLANY: My Lords, I am not going to delay the House on this. I think that the noble Viscount has made a mountain out of a molehill by implying that this is a back-door method of introducing price control. It is nothing of the sort. What I and many people object to is the way in which the clause is worded so that, as my noble friend Lord Ponsonby has just said, nothing would be done. It is said that it would be a question of receiving masses of minor complaints. I do not think that that would be the case. Anyway, why not let people make complaints? Are they going to regard the British public as a lot of dull, sitting ducks, to do as they are told?
Viscount TRENCHARD: My Lords, would the noble Lord allow me to intervene? Nobody is going either to legislate or achieve a situation where the British public will not complain. I am quite sure that they will complain. What we are talking about is the Secretary of State's initiative to use the powers under Clause 13, and he does not envisage using those powers except in the circumstances prescribed in the Bill.
Lord WALLACE of COSLANY: My Lords, when the noble Viscount refers to the Secretary of State's initiatives, the blunt fact is that there is practically no initiative afforded to him at all, except in the most remote and extreme cases. This is an important issue. At Committee stage I moved a much stronger amendment, which I have deliberately watered down this time in order to get some result out of the Government, but the fact is that on this Bill the Government do not intend to accept any amendments whatever, except perhaps those that come from certain sections behind them. That is true.
A noble Lord: Order!
Lord WALLACE of COSLANY: My Lords, it is not a question of "order". I am stating a blunt fact. I do not want to provoke the same atmosphere that I did before. I restrained myself, praying that the charitable minds of the noble

117
Viscount and his cohorts would at last break into the open and make a concession. I am not satisfied. I am sorry that there are not many Members of the House present, but on principle I insist that we have a Division.
[Amendment No. 33 not moved.]
8.12 p.m.
Lord AIREDALE Lord AIREDALE moved amendment No. 34:
Page 20, leave out lines 1 to 6 and insert—
("(5) A direction under subsection (1) or (3) above shall specify a period within which the Director is to report on his investigation to the Secretary of State and the Director shall report accordingly—")
The noble Lord said: My Lords, subsection (5) contains a curiosity in that in line 2 the Director is to report, while in line 5 he is to make a report. I should think this is a distinction without a difference and I wonder how it crept in. I dare say it was because the subsection is so verbose and seems to suggest it is necessary to say things twice. I have ventured to shorten it considerably without affecting in any way the sense.
8.5 p.m.
On Question, Whether the said Amendment (No. 32) shall be agreed to?
Their Lordships divided: Contents, 23; Not-Contents, 59.

CONTENTS

Airedale, L.

Kaldor, L.

Seear, B.

Blease, L. [Teller]

Kirkhill, L.

Stewart of Alvechurch, B.

Boston of Faversham, L.

Llewelyn-Davies of Hastoe, B.

Stewart of Fulham, L.

Brockway, L.

Northfield, L.

Stone, L.

Brooks of Tremorfa, L.

Peart, L.

Strabolgi, L.

Cledwyn of Penrhos, L.

Pitt of Hampstead, L.

Wallace of Coslany, L.

Collison, L.

Ponsonby of Shulbrede, L. [Teller.]

Whaddon, L.

Davies of Leek, L.

Hale, L.

NOT-CONTENTS

Alport, L.

Grimston of Westbury, L.

Orkney, E.

Avon, E.

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

Penrhyn, L.

Bellwin, L.

Rochdale, V.

Belstead, L.

Harmar-Nicholls, L.

Romney, E.

Brougham and Vaux, L.

Henley, L.

St. Aldwyn, E.

Caithness, E.

Hives, L.

St. Just, L.

Craigavon, V.

Holderness, L.

Sandys, L.[Teller.]

Cullen of Ashbourne, L.

Hornsby-Smith, B.

Selborne, E.

de Clifford, L.

Lauderdale, E.

Selkirk, E.

Denham, L.[Teller.]

Long, V.

Sempill, Ly.

Drumalbyn, L.

Lyell, L.

Stanley of Alderley, L.

Eccles, V.

Mackay of Clashfern, L.

Strathclyde, L.

Elliot of Harwood, B.

Macleod of Borve, B.

Strathcona and Mount Royal, L.

Fraser of Kilmarock, L.

Mansfield, E.

Strathspey, L.

Gainford, L.

Monson, L.

Swansea, L.

Galloway, E.

Morris, L.

Trefgarne, L.

Gibson-Watt, L.

Mottistone, L.

Trenchard, V.

Godber of Willington, L.

Mowbray and Stourton, L.

Vickers, B.

Gowrie, E.

Newall, L.

Vivian, L.

Green way, L.

Northchurch, B.

Westbury, L.

Resolved in the negative, and amendment disagreed to accordingly.

Lord TREFGARNE: My Lords, the House will be much in sympathy with the noble Lord's intention to simplify the wording in Clause 13(5) but I am sorry to say that I am advised that the amendment is defective because, as it stands, it refers to a direction made under subsection (3). But subsection (3) is concerned only with a variation or revocation of a direction; subsection (4) makes clear that a direction, in subsection (1), has an identity separate from both a variation and a revocation, and I hope therefore that the noble Lord will not press the amendment.
Perhaps I should add that if the term "direction" is said to include a variation or a revocation of a direction, then the amendment is still faulty because it would have the effect of requiring a direction revoking a direction to be made under sub-section (1) to specify a period within which the Director is to report to the Secretary of State. I hope in the light

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of these difficulties that the noble Lord will not press the amendment.
Lord AIREDALE: I am obliged to the noble Lord for that reply, my Lords. I should have thought that a variation or revocation of a direction was itself a direction. But the noble Lord said other things which I shall have to read in Hansard tomorrow and, in the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 35, 36, 37 and 38 not moved.]
Clause 14 [Applications by Crown concerning patents]:
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 39:
Page 20, line 35, leave out ("body") and insert ("person").
On Question, amendment agreed to.
Clause 15 [Agricultural schemes: special provisions]:
Lord TREFGARNE Lord TREFGARNE moved Amendments Nos. 40 to 44 en bloc:
Page 21, line 20, at end insert—
("( ) The Secretary of State shall not—

(a) give a direction under subsection (5) of section 3 above or a consent under subsection (9) of that section in relation to an investigation under that section, or

(b) give a direction under section 7(2) or (3) above in relation to a competition reference, or

(c) make or vary a reference under section 11 above,

in a case where the person to whom or to whose conduct or activities the investigation or reference relates falls within section 11(3)(d) above unless he has first consulted the relevant Minister.")
Page 21, line 23, after ("1958") insert ("or the Agricultural Marketing Act (Northern Ireland) 1964")
Page 21, leave out from the beginning of line 27 to ("and") in line 28 and insert ("relevant Minister")
Page 21, line 32, after ("the") insert ("relevant")
Page 21, line 32, at end insert—
("( ) In this section the relevant Minister" means—

(a) in the case of a board administering a scheme under the said Act of 1958, the Minister who would have power to make an order under section 19 of that Act in relation to that board or the board administering that scheme, and

(b) in the case of a board administering a scheme under the said Act of 1964, the Department of Agriculture in Northern Ireland.").

The noble Lord said: My Lords, these amendments are in compliance with an undertaking I gave to the noble Lord, Lord Stanley of Alderley, who, in his fury, does not seem to be here to listen to the concessions which I have to make, but never mind. In the debate in Committee on agricultural marketing boards, I gave an assurance that the Government would be considering further amendments to the Bill in view of the special position of the Ministers for agriculture in relation to these boards under the Agricultural Marketing Act 1958 and the Agricultural Marketing (Northern Ireland) Act 1964. These amendments accordingly provide that the Secretary of State shall not take any action under his powers in the Bill in respect of the boards without prior consultation with the relevant agricultural Minister. The amendments therefore cover both the Secretary of State's powers of veto in relation to the anti-competitive practice provisions of the Bill— that is Clauses 3 and 7— and his powers of referral of the boards to the Monopolies and Mergers Commission under Clause 11.
On Question, amendments agreed to.
Clause 16 [General provisions as to reports.]:
8.17 p.m.
Lord MOTTISTONE Lord MOTTISTONE moved Amendment No. 45:
Page 22, line 6, at end insert—
("( ) A final draft of any report made under sections 3(10), 8(1), 11(8) and 13(5) above shall be made available to the person or persons who are the subject of the report prior to its publication as indicated below—

(a) reports under section 3(10) at least 72 hours before publication,

(b) reports under sections 8(1), 11(8) and 13(5) at least 14 days before publication.")

The noble Lord said: My Lords, with permission I will speak at the same time

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to Amendment No. 46. Like an earlier amendment of mine, these amendments were tabled because there was some unforeseen delay in a letter I was promised by my noble friend. The letter has now been received, but I think it would be helpful to have the substance of that reply declared to the House, and accordingly I beg to move.
Lord TREFGARNE: My Lords, first I should like to repeat, to make it absolutely clear, that it has been the Monopolies and Mergers Commission practice under the Fair Trading Act to check the accuracy of the factual material which may be used in their reports with the persons concerned. This is a long-established practice which works well, even though it is not written into the Fair Trading Act. We have not received representations that this practice has given rise to any problems in the past. I can assure the House once more that the factual material in reports under this Bill will be checked with the firms concerned both by the Monopolies and Mergers Commission and by the Director General. Reports into prices under Clause 13 do raise rather different issues, since they could he extremely general, but I am sure that the Director General will do whatever seems necessary to check the factual accuracy of reports under Clause 13. I hope this meets the point my noble friend has put and that these assurances will enable him to withdraw the amendment.
Lord MOTTISTONE: My Lords, I thank my noble friend very much for that answer and I beg leave to withdraw the amendment.
Amendment by leave, withdrawn.
[Amendment Nos. 46 and 47 not moved.]
Clause 17 [Laying before Parliament and publication of reports]:
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 48:
Page 22, line 18, leave out ("or body").
On Question, amendment agreed to.
Clause 18 [Information and advice about operation of Act]:
8.20 p.m.
Lord AIREDALE had given Notice of his intention to move Amendment No. 49:
Page 23, line 12, after ("about") insert ("any course of conduct which in his opinion constitutes an anti-competitive practice and otherwise about").
The noble Lord said: My Lords, having regard to the last words that the Minister spoke in reply to Amendment No. 2 of the noble Lord, Lord Jacques, I do not think it is necessary for me to move this amendment.
[Amendment No. 49 not moved.]
Lord PONSONBY of SHULBREDE had given Notice of his intention to move Amendment No. 50:
After Clause 22, insert the following new clause:
"Exclusive Copyright Licences
It is hereby enacted that:—

(1) The Restrictive Trade Practices Act 1976 shall have effect and be deemed always to have had effect as if it had been made with the addition, in Schedule 3 thereto, of the paragraph set out in Part I of Schedule 1A to this Act.

(2) The Restrictive Trade Practices Act 1956 shall be deemed always to have had effect as if it had been made with the addition of the section set out in Part II of Schedule 1A to this Act.

(3) The Fair Trading Act 1973 shall be deemed always to have had effect as if it had been made with the addition of the section set out in Part III of Schedule 1A to this Act."

The noble Lord said: My Lords, I do not intend to move this amendment in view of the fact that the noble Viscount has put down Amendment No. 57, which covers the points of this amendment.
[Amendment No. 50 not moved.]
Clause 25 [Suspension of declarations under section 1(3) of Restrictive Trade Practices Act 1976 pending appeals]:
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 51:
Page 26, line 29, leave out ("Restrictive Practices").
The noble Lord said: My Lords, I wish to speak now to Amendment No. 51, and

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at the same time to Amendments Nos. 52 to 55 inclusive, as well as Amendments Nos. 56, 60, 61 and 62. When the noble Lord, Lord Ponsonby of Shulbrede, moved amendments in Committee seeking to exempt agreements relating to copyright from the restrictive trade practices legislation, I promised to give sympathetic consideration to this matter. As I indicated in Committee, there appears to have been a fairly general assumption, from 1956 onwards, that agreements relating solely to copyright could not contain restrictions which made them liable to registration. However, more recently some doubt has been cast on this assumption. The problem arises principally in the field of exclusive copyright licences, where the licensor not only promises not to grant a licence to anyone other than the licensee, but also undertakes not to exercise his own rights under the Copyright Act 1956; for example, to publish the work in question. For an agreement to be registrable, it would be necessary that two or more persons should accept relevant restrictions within the meaning of the restrictive trade practices legislation; for example, where joint authors both accept restrictions in connection with a licence.
The Government consider that there would be considerable confusion for anyone concerned with the licensing or assignment of copyright if the law were not speedily clarified. This confusion could arise not merely in the field of books (in which the problem first came to light), but in any branch of copyright. We have considered whether any harmful effects might arise from the exemption of these agreements generally. However, we have concluded that, as in the case of patents and registered trade marks (for which there are already specific exemptions in the Restrictive Trade Practices Act) licences or assignments relating solely to copyright are unlikley to have any significant effects on competition. We therefore accept the case for an exemption. Such agreements, however, will not be totally immune from scrutiny. Where a firm's practices in relation to copyright have the effect of restricting. distorting, or preventing competition in connection with the production, supply, or acquisition of goods, or the supply or securing of services in the United Kingdom, such a course of conduct may be investigated under Clauses 2 to 10
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of the Bill. Practices relating to copyright may also, in certain circumstances, be included within a monopoly reference under the Fair Trading Act 1973.
Amendment No. 57, which seeks to give effect to the Government's proposals, draws heavily on the exemption for patents already contained in the Act of 1976. Subsection (1) of the new clause amends the third Schedule to the Act of 1976 by including within the agreements exempted from registration licences granted by the owner or licensee of any copyright, assignment of any copyright, or an agreement for such a licence or assignment. The exemption is conferred in respect of Part II of the 1976 Act (which deals with goods agreements) and of Part III (which deals with services agreements). In either case, the exemption is limited strictly to copyright licences, assignments, or agreements where restrictions are accepted, or information provisions made solely in relation to the work or other subject matter in which the copyright subsists. An agreement which contained other restrictions or information provisions would not be exempted from registration.
In view of the number of agreements which could be effected by the problem which has come to light, the Government consider that retrospection of the exempion is justified. This is achieved by subsection (2) which deems the agreements specified in subsection (1) to have been exempted from registration since 1956, when the current system of registration of restrictive trading agreements was first introduced.
Amendment No. 64, which amends the Long Title, incorporates the present amendment and all other amendments to the restrictive trade practices legislation which have been included in the Bill so far.
For the reasons I have outlined, the Government consider that the problem which has come to light in respect of copyright licensing needs to be remedied promptly, and for this reason we have sought to provide a solution in the current Bill. I beg to move.
Lord PONSONBY of SHULBREDE: My Lords, may I thank the noble Lord for this amendment and the subsequent amendments. I am glad to know that the difficulties have been resolved and

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that the noble Lord feels that they should be promptly dealt with in this Bill. This is indeed a good omen.
Lord TREFGANRE: My Lords, I am advised that I have not given your Lordships all the information that you should have had, and there are some rather important points that I should mention. What I said earlier was not totally comprehensive. Amendments Nos. 60, 61 and 62 arc technical amendments dealing with interpretation. Amendment No. 62 relocates in a single subsection the interpretation provisions contained in Clause 25 and other clauses to the new clause on exclusive copyright licences, which amend the restrictive trade practices legislation. It mirrors Clause 32(2) and (3) which make similar provisions for Clauses 2 to 24 of the Bill. The remaining amendments in this group are all consequential, with the exception of Amendment No. 61, which includes the expression "the Director" within the interpretation provisions of Clauses 2 to 24. With that further enlightenment I commend the amendments.
On Question, amendment agreed to.
Clause 26 [Suspension of declarations under section 1(3) of Restrictive Trade Practices Act 1976 pending revision of agreements]:
8.28 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendments Nos. 52 to 54:
Page 27, line 1, leave out ("Restrictive Practices")
Page 27, line 7, leave out ("that") and insert ("the")
Page 27, line 27, leave out ("Restrictive Practices").
On Question, amendments agreed to.
Clause 27 [Recommendations by services supply associations]:
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 55:
Page 28, line 38, leave out ("within the meaning of that section").
On Question, amendment agreed to.
Clause 29 [Exemption of certain undertakings from Restrictive Trade Practices Act 1976]:
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 56:
Page 30, line 22, leave out subsection (3).
On Question, amendment agreed to.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 57:
After Clause 29, insert the following new clause:
"Exemption of copyright agreements from Restrictive Trade Practices Acts
"— (1) The following paragraph shall be inserted in Schedule 3 of the Restrictive Trade Practices Act 1976 (excepted agreements) after paragraph 5:—
"Copyrights
5A.— (1) This Act does not apply to—

(a) a licence granted by the owner or a licensee of any copyright;

(b) an assignment of any copyright; or

(c) an agreement for such a licence or assignment;

being a licence, assignment or agreement such as is described in sub-paragraph (2) or sub-paragraph (3) below.
(2) The licence, assignment or agreement referred to in sub-paragraph (1) above is in relation to Part II of this Act one under which no such restrictions as are described in section 6(1) above are accepted or no such information provisions as are described in section 7(1) above are made except in respect of the work or other subject-matter in which the copyright subsists.
(3) The licence, assignment or agreement referred to in sub-paragraph (1) above is in relation to Part III of this Act one under which—

(a) in the case of an order under section 11 above, no restrictions in respect of matters specified in the order for the purposes of subsection (1)(b) of that section are accepted except in respect of the work or other subject-matter in which the copyright subsists; or

(b) in the case of an order under section 12 above, no information provision with respect to matters specified in the order for the purposes of subsection (1)(b) of that section is made except in respect of that work or other subject-matter.

(4) In relation to Scotland references in this paragraph to an assignment mean an assignation."
(2) The said Act of 1976 and Part I of the Restrictive Trade Practices Act 1956 shall be deemed never to have applied in relation to—

(a) a licence granted by the owner or a licensee of any copyright,

(b) an assignment or assignation of any copyright, or

(c) an agreement for such a licence, assignment or assignation,

by virtue only of restrictions being accepted or information provisions being made under it in respect of the work or other subject-matter in which the copyright subsists."
On Question, amendment agreed to.
Clause 30 [Orders and regulations]:
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 58:
Page 30, line 38, after ("10") insert ("11(3A)").
On Question, amendment agreed to.
Clause 32 [Short title, interpretation, repeals, commencement and extent]:
Lord AIREDALE Lord AIREDALE moved Amendment No. 59:
Page 31, line 16, after ("provisions)") insert ("as amended by section 23 of this Act").
The noble Lord said: My Lords, as a former practising lawyer, I watch out for any pitfalls that lie in the way of people who have to look at Acts of Parliament, with a view to erecting a signpost to direct anyone away from a pitfall. It must be borne in mind that people who do not read Acts of Parliament from beginning to end and commit to memory the whole thing may have to dart about from section to section. So where there is, as here, an interpretation clause of this Bill which refers one directly to the expressions in the interpretation section of another Act, one may be excused for turning straight to the interpretation section of the other Act, and one may be excused also for not noticing that that section of the other Act to which one has been referred has already been amended by one of the earlier clauses of this Bill. That is what has happened here, and my amendment is simply a signpost which tells the practising lawyer, or whoever it may be, "Don't forget that the section of the other Act you have been referred to has already been amended by Clause 23 of this Bill." I beg to move.
Lord TREFGARNE: My Lords, I am sure your Lordships are again grateful to the noble Lord, Lord Airedale, for his attempts to ensure the maximum clarity in our legislation, but I am afraid I am advised that what he seeks with this amendment is already provided by
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Section 20(2)of the Interpretation Act 1978, and is therefore unnecessary. Where an enactment has been amended, it is subsequently referred to without specifying the amendments which have been made, and I am advised that to adopt a different approach in this instance might cast doubt in other references in the Bill to enactments which have been amended, such as the reference in Clause 23 itself to the Caravan Sites and Control of Development Act 1960, which has since been amended by the Caravan Sites Act 1968. I do not suppose I have persuaded the noble Lord any more effectively than I have previously this evening, but, nonetheless, I hope he will not press his amendment.
Lord AIREDALE: My Lords, the Minister is quite right: he has not convinced me at all. It could do no possible harm to insert this signpost. But I have always made an undertaking with myself that I will not divide the House on a purely drafting matter, so I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The DEPUTY SPEAKER (Lord Alport): My Lords, I think I am right in saying that the noble Lord spoke to the three amendments, Nos. 60, 61 and 62, together.
Lord TREFGARNE: That is so, my Lords.
Lord TREFGARNE Lord TREFGARNE moved Amendments Nos. 60 to 62:
Page 31, line 20, leave out from ("are") to the end of line 21.
Page 31, line 26, at end insert (""the Director"")
Page 31, line 38, at end insert—
("( ) Section 43 of the Restrictive Trade Practices Act 1976 (interpretation and construction) shall have effect in relation to sections 25 to [Exemption of copyright agreements from Restrictive Trade Practices Act] above as if those sections were contained in that Act and for ease of reference the expressions which are used in those sections and have meanings assigned to them by the said section 43 are—

"agreement"

"the Court"

"the Director"

"goods"

"information provision"

"restriction"

"services supply association"

"supply".")

On Question, amendments agreed to.
[Amendment No. 63 not moved.]
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 64:
Line 11, leave out from ("1973") to ("to") in line 16 and insert ("to make amendments with respect to the Restrictive Trade Practices Act 1976").
On Question, amendment agreed to.

GAMING AMENDMENT BILL [H.L.]
Returned from the Commons agreed to.