Lords Sitting of 19 May 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 Bradford.

HELSINKI AGREEMENTS: MADRID REVIEW
Lord AVEBURY Lord AVEBURY: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will give notice that they will not take part in the forthcoming Madrid review of the Helsinki Agreements unless the members of the Soviet Helsinki Monitoring Groups who have been arrested or sentenced are released.
Lord TREFGARNE: No, my Lords; we believe that the best way of supporting those whose only crime is that of working for the full implementation of the Final Act is to continue to take part in the Helsinki process.
Lord AVEBURY: My Lords, does not the Minister agree that we have made some efforts in the past, including at previous review meetings of the Helsinki Agreement, to persuade the Soviet Union to honour the undertakings which they entered into freely, particularly those concerned with the freedom of expression and the emigration of people who wish to join their relatives abroad? Is the noble Lord aware that in particular a conference was held just last weekend in Amsterdam, attended by the former Prime Minister of Portugal, former Ambassador Andrew Young and many other distinguished persons, which unanimously issued a demand for the release of the prisoner of conscience, Anatoli Shcharansky, so that he can join his wife in Israel; but that there are many thousands of other people in the same position as Anatoli Shcharansky, on whose behalf the efforts of Great Britain are urgently needed? Therefore, if the noble Lord will not
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accept the suggestion in my Question, will he undertake at least to ask his colleagues personally to raise at the Madrid review meeting as many of the individual cases as are brought to their attention?
Lord TREFGARNE: My Lords, as for raising the matter of individual cases with the Soviet Union, we do this on a selective basis. First, of course, we make representations on those where we have a formal locus; that is, those who have an English or British connection of some kind. But in other cases we do so on a selective basis only because otherwise we think we might degrade the effectiveness of our representations. As for attending the Madrid review conference, what the noble Lord says is entirely right about the Russians' failure to live up to their undertakings in these matters. But we think that to go to Madrid and to draw their attention to their shortcomings in a public forum is the best way in which to proceed.
Lord GORONWY-ROBERTS: My Lords, on the question of monitoring groups in various countries which are signatories of the Helsinki Agreement— a very important development in between the conferences— can the noble Lord tell us whether, leading up to the Madrid meeting this year, there has been a similar group in this country, independent of the Foreign and Commonwealth Office although acting with its full approval, to the one that was set up before the Belgrade meeting in 1977-78? Can the Minister also tell us whether the United States Congress, which produced a very useful report before the Belgrade Conference in 1978, has similarly been engaged in preparation for the Madrid Conference?
Lord TREFGARNE: My Lords, I am afraid that I am not informed as to what is going on in the American Congress at the present time. But as for a British group on this matter, there are a number of people who are, of course, taking an interest, not least the noble Lord, Lord Caccia, who I see in his place now.
Lord CACCIA: My Lords, is the Minister aware of the gratitude with which his remarks will be received by many of the monitoring groups outside the Iron Curtain and in Western Europe? Without any breach of confidence, may I

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also say, as the chairman of the group of the David Davies Institute which did this monitoring before Belgrade and which is engaged in this work at the present time— which has been referred to by the noble Lord, Lord Goronwy-Roberts— that the representations that we have received from all these groups are in the strongest terms that the West should go to Madrid in order to act exactly as the Minister has said, and that it would give grave disappointment if they did not do so?
Lord TREFGARNE: My Lords, I am sure that what the noble Lord says is exactly right. Indeed, as the noble Lord will know, the Foreign Office gives his current group every support.
Lord BROCKWAY: My Lords, although we are deeply concerned about the persecution of dissidents in the Soviet Union, will the Minister not agree that persecution is also taking place in many countries? Will he not agreee that the main elements of the Helsinki Agreement were the development of economic and disarmament co-operation, and will not progress in those directions be the best way in which to establish a climate in which the rights of the dissidents in the Soviet Union could be respected?
Lord TREFGARNE: My Lords, the noble Lord has put that assertion to me before and I am afraid that I must again refute it. The factors which the noble Lord mentions are, indeed, part of the Helsinki Final Act, but not, I think, necessarily the most important part. The matter of human rights is certainly the one which has attracted the most international attention, and rightly so.
Lord JANNER: My Lords, I should like to thank the Minister and the Government for the active part, which includes monitoring, that they have taken with regard to these particular people. Is it possible for us to discuss with other nations what can be done in order to ensure that there will be no interference with monitoring in the USSR?— particularly because it is a very important subject and because the Russians themselves know what is going on in the USSR and whether or not, in fact, that is interfering with a proper appreciation of what
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has been happening. While appreciating the fact that perhaps it is best for us to attend the conference, may I ask whether he will try to get such nations as he is in contact with to help in the matter?
Lord TREFGARNE: My Lords, I think the only way of persuading the Russians, for example, to comply with, and live up to, their undertakings given so freely in regard to the Helsinki Final Act is to persuade them in open forum, and to bring to bear the full weight of international public opinion. That is why we think it is so important that we should go, for example, to the Madrid Conference.
Lord AVEBURY: My Lords, while accepting what the Minister says about the problem of modus, is he aware that in the recently published Amnesty International document, Prisoners of Conscience in the USSR, there are literally dozens of cases of individuals who are being persecuted and imprisoned who have very strong British connections? In particular, Anatoly Shcharansky has many friends in the British computer world, including Professor Donald Michie, the Professor of Machine Intelligence in the University of Edinburgh, who has issued appeals on his behalf. Will he therefore undertake to raise in particular the case of Mr. Shcharansky at the Madrid review meeting?
Lord TREFGARNE: My Lords, the case of Mr. Shcharansky, which I referred to in your Lordships' House when I answered a Question from my noble friend Lord Renton on 1st April, is indeed one of particular concern, and we made a representation on that particular case some months ago. But in general, as I have said before, we have to be selective in these matters, because if we were to make representations in each and every case that is brought to our attention— and, as the noble Lord says, there are indeed a great many altogether— I think we would degrade the effect of our representations.

MRS. S. DE-SILVA: DETENTION
2.45 p.m.
Lord AVEBURY: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will explain why Mrs. Sujatha De-Silva, a citizen of Sri Lanka who was convicted of shoplifting and working in the United Kingdom in breach of conditions on 8th April, though she was still within her permitted leave to remain, and who was not given a custodial sentence, has nevertheless remained in Holloway prison ever since that date, and how they reconcile this with the policy of the Secretary of State for reducing the prison population.
The PARLIAMENTARY UNDERSECRETARY of STATE, HOME OFFICE (Lord Belstead): My Lords, the Immigration Act provides that a person recommended for deportation by a court is to be detained pending the making of a deportation order unless the court or the Home Secretary directs that he be released. The court gave no such direction in Mrs. De-Silva's case, nor did my right honourable friend the Home Secretary feel able to release her. She had pleaded guilty to four charges of theft and to working in breach of her conditions, in spite of having earlier given an explicit undertaking to the Home Office that she would continue to comply with the conditions attached to her stay here. A deportation order was made against her on 8th May and she left the country three days later.
Lord AVEBURY: My Lords, would not the Minister accept— of course he will because he gave me the answer himself on 16th May— that at the end of March this year 200 persons were detained in our prisons under the administrative powers in the Immigration Act 1971? Is not this wholly inconsistent with the declared policy of the Home Secretary to reduce the prison population? In the particular case of Mrs. De-Silva, would the Minister confirm that she was held in custody from 9th April to 11th May at a cost to public funds of £ 63642? Is this not also inconsistent with the Government's policy of reducing public spending? Therefore, will the Home Secretary exercise the powers which, as the noble Lord has said, he possesses to release people from prison when they have not been given a custodial sentence by the courts, and the Secretary of State is considering whether or not to
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exercise his power to deport them following a recommendation of the court?
Lord BELSTEAD: My Lords, a case of this nature is wholly inconsistent with my right honourable friend's policy of trying to see that fewer people are kept in custody. People like Mrs. De-Silva cause very great problems to the prison service, and I should like to make that crystal clear to the noble Lord. I confirm, to the best of my knowledge, that the dates that the noble Lord put to me are correct for the period of time that Mrs. De-Silva was kept in custody; and the reason was that she had committed a series of criminal offences, and, in spite of her explicit undertakings, had engaged in unauthorised employment, and this record inspired no confidence as to her likely conduct if she was released.
Lord ELWYN-JONES: My Lords, are the Government examining alternatives to prison custody for those who are held for some breach or other of immigration procedures, bearing in mind, as the noble Lord has just said, the plea of the Home Secretary for a reduction in the prison population? The overcrowding in prisons, as the noble Lord knows, has now reached scandalous proportions.
Lord BELSTEAD: My Lords, we would like to find a solution to this particular problem, but if one takes a case of this kind where someone who comes as a visitor to the country commits criminal offences, quite apart from the undertaking which that person gave with regard to immigration control, it really is then extremely difficult to see how such a person can be released pending deportation. The fact of the matter is that in this case neither the court nor my right honourable friend felt able to direct such release.
Lord ELWYN-JONES: My Lords, I did not apply my question to the immediate case in hand but to the general practice. Are there not alternatives means, hostel or other more or less secure accommodation, to lessen the load and burden on the prisons?
Lord BELSTEAD: My Lords, I absolutely take the point which the noble and learned Lord makes. The reason why I attached it to this particular case was that it is the sort of case, as the noble

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and learned Lord will know, which occurs and recurs. The fact of the matter is that experience shows that a number of those recommended for deportation and not detained subsequently disappear and cannot be traced. Of course we shall look, and are looking, at the problem which the noble Lord premises, but it is very difficult in this particular situation to see what the solution is to be.
The Earl of HALSBURY: My Lords, has the noble Lord ever considered reviving that ancient custom of the stocks?
Lord BELSTEAD: No, my Lords.
Lord NUGENT of GUILDFORD: My Lords, is my noble friend aware that while we all wish to see the prison population reduced, we also expect his right honourable friend the Home Secretary to be aware of his responsibilities to protect the public against predatory characters?
Lord BELSTEAD: My Lords, I am glad my noble friend made that point, a point which remains always in my right honourable friend's mind.
Baroness HORNSBY-SMITH: My Lords, will my noble friend bear in mind that one of the biggest problems at the moment is shoplifting? We are repeatedly seeing cases where foreign visitors with vast sums of money in their pockets are still shoplifting, to the detriment of shopkeepers. Will he agree that it is against the wishes of the general public that because they happen to be visitors they should be treated more leniently than our own citizens? Am I right in thinking that my noble friend informed us that this lady had not only abused her conditions of landing by taking employment but had shoplifted as well? Although it is reprehensible that we had to keep her in prison, would my noble friend agree that she would probably have gone off and done it again if we had not?
Lord BELSTEAD: My Lords, without prejudicing or appearing in any way to interfere with the judicial discretion of the courts, my answer to the supplementary questions asked by my noble friend is, yes, in each case.
Lord AVEBURY: My Lords, is the Minister aware that it is not yet a provision of our law that preventive detention, especially for first offenders, should be imposed on anyone who is inclined to shoplift, and that to keep someone in prison for five weeks, as Mrs. De-Silva was, when the offence for which she was convicted was thought worthy of a fine, which was immediately paid, is not consistent with the principles of British justice? Is the noble Lord further aware that in Holloway there are 245 places for the 411 women who are now in custody there? Does he agree that every possible step should be taken to reduce the overcrowding particularly in this prison, which is far worse than the average of prisons in England and Wales?
Lord BELSTEAD: My Lords, I am most concerned that by the first part of that supplementary question the noble Lord should suggest to your Lordships' House that in some way the way in which this lady was dealt with was not consistent with the maxims of British justice. The period of time that Mrs Dc-Silva was kept in detention was a period during which a right of appeal might be exercised and which under the Act must be allowed to expire. The noble Lord then intervened, as he had every right to do, and that had to be considered. It was a week later that the deportation order was signed, and Mrs. De-Silva left three days later. Regarding the point the noble Lord raised about Holloway prison, as he will be aware, that prison is being rebuilt at the present time and that project is being pushed ahead with at the greatest possible speed.
Lord MORRIS: My Lords, would my noble friend agree—
Lord DENHAM: My Lords, we have already spent 16 minutes on only two of the four Starred Questions. Perhaps the House might now wish to proceed to the next Question.

RADIOLOGICAL WEAPONS
2.53 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the Disarmament Committee at Geneva has reached a decision on the prohibition of radiological weapons.
Lord TREFGARNE: My Lords, the Committee on Disarmament has established a working group to agree a convention prohibiting radiological weapons. The group has before it the elements of such a convention, presented jointly by the United States and the Soviet Union. We hope that agreement can be reached by the end of the committee's summer session.
Lord BROCKWAY: My Lords, while I welcome the joint action by the United States and Soviet Union and their initiative in this matter, may I ask the noble Lord whether he is aware that some of us are rather puzzled by the distinction between this convention and the convention adopted in 1975, endorsed by 87 nations and ratified by 30, which prohibited the development and stockpiling of biological and toxin weapons? Will something be done to co-ordinate these two conventions?
Lord TREFGARNE: My Lords, these two conventions deal with quite different classes of weapon. The radiological weapon, which is the subject of this Question, is a weapon which relies for its effect on the deliberate, widespread and indiscriminate dispersal of highly radioactive materials stored in the weapon. No nuclear explosion or any other explosion is involved, and this is therefore quite different from the kinds of weapon considered in the convention to which the noble Lord refers. We think it is right that a separate convention should apply to these weapons, and that is why we are proceeding as I described.
Lord GORONWY-ROBERTS: My Lords, does the noble Lord agree that what he has said is encouraging from quite another point of view?— namely, that, since the reorganisation of the Disarmament Committee, as it is now called, on a more representative basis, and the taking away of the giant monopoly of the chairmanship from the two super powers, we have all been expecting progress in the Disarmament Committee on specific
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issues. Radiological weaponry is one. The chemical warfare agreement which this country really produced is another. May I give the noble Lord notice that I shall put down a Starred Question which in due course I hope either he or the Foreign Secretary will answer as to the progress of the specific agreements under the new structural organisation of the Disarmament Committee in Geneva?
Lord TREFGARNE: I am indeed glad to receive that notice, my Lords. As for chemical weapons, about which the noble Lord has asked me several times, on the last occasion when the noble Lord asked about them I undertook to write to him on the matter in more detail. I agreed the draft of that letter this morning, so he should receive it very shortly.
Lord BROCKWAY: My Lords, while thanking the Minister for his explanation— and quiet honestly I wanted the information— may I ask him whether the 1975 convention did not deal with biological weapons, and are they not complementary to the radiological weapons which come under this convention?
Lord TREFGARNE: I do not think they are, my Lords. I think they are really a quite separate class of weapon, and that is why we are proceeding as I described.

EPSOM DOWNS: FUTURE
2.57 p.m.
Lord KILMANY Lord KILMANY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when it is expected that the Epsom and Ewell Borough Council will promote legislation to protect the Epsom Downs in such a way as to ensure the future of the Epsom Derby by replacing the Epsom and Walton Downs Regulation Act 1936 before it expires in 1984.
Lord MOWBRAY and STOURTON: My Lords, I understand that the council hope to promote a Bill at the end of 1981.
Lord KILMANY: My Lords, while I thank my noble friend for that reply, which would seem to be very satisfactory, may I ask him to bear in mind that private legislation can take a long time? Would it not be just as well to get on with putting this on the statute book without further delay to remove any possible anxieties there might be about the future holding of the Derby?
Lord MOWBRAY and STOURTON: My Lords, these local Bills take a good deal of work and much drafting and the council may have it in mind to do a few other things in the local Bill which they will bring forward. If the legislation in Parliament were so clogged up that it looked as though there would be a danger of these local Bills not meeting the 1984 deadline, it would if necessary always be open to the Government to introduce an order delaying the 1984 deadline.

DINNERS
Lord DENHAM: My Lords, it may be for the convenience of your Lordships to know that dinner will be available this evening at the usual time. The Committee stage of the Transport Bill will be adjourned at about seven o'clock for approximately an hour. The Dental Qualifications (EEC Recognition) Order 1980 will be taken during this adjournment.

IRAN: SANCTIONS
2.59 p.m.
The SECRETARY of STATE for FOREIGN and COMMONWEALTH AFFAIRS (Lord Carrington): My Lords, with your Lordships' permission, I shall make a Statement on Iran following the decisions taken during the informal meeting of Foreign Ministers of the Nine in Naples on 17th and 18th May. A copy of the Statement issued by the Foreign Ministers of the Nine will be printed in the Official Report.
We reviewed the latest developments in Iran. There were some grounds for encouragement, but nothing which constituted decisive progress leading to the hostages' release.
Accordingly, as agreed in our declaration of 22nd April, we decided to proceed
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without delay with the economic sanctions set out in the Security Council draft resolution of 10th January. The necessary orders will now be drawn up. There is agreement that the conditions and circumstances of application to be followed will be decided in common with our partners. It is accordingly our intention to act simultaneously with our partners on the basis of legal instruments coordinated to achieve parallel effect.
The House will have the opportunity to debate the orders after they have been laid. As was made clear at the time when the House was considering the Iran (Temporary Powers) Act 1980, the Government intend to follow a variation of the Affirmative Resolution procedure for orders made under this Act. This means that such orders will lapse unless approved by the House within 28 sitting days. A parallel procedure will be followed for orders made under the Import, Export and Customs (Defence) Act 1939. On the question of existing contracts, it was agreed that the contracts for the export of goods to Iran entered into after 4th November 1979 would be affected by the sanctions. Export of goods under such contract would be prohibited under the 1939 Act. However, service contracts will not be affected, except for new service contracts in support of industrial projects which will be banned as from the date of the entry into force of the appropriate Order-in-Council. We shall be co-ordinating closely with our Community partners to achieve parallel effects on these questions.

DECLARATION BY THE FOREIGN MINISTERS OF THE NINE CONCERNING IRAN
At their meeting in Naples on 17th and 18th May 1980, the Foreign Ministers of the Nine member states of the European Community reconsidered, in accordance with their declaration of 22nd April, the situation resulting from the detention of the American hostages in Iran, which constitutes a flagrant violation of international law.

The Ministers examined the information emanating from Iran. While noting that there were a number of developments which could be important for the release of the hostages, in particular the completion of the second round of parliamentary elections and the forthcoming convening of the Majlis, they were obliged to recognise that no decisive progress leading to the release of the hostages had been made since 22nd April last.

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Consequently, they decided immediately to apply the measures provided For in the Security Council draft resolution of 10th January 1980, according to jointly agreed conditions and procedures. They agreed, in particular, that all contracts concluded after 4th November 1979 will be affected by these measures. They will continue to consult closely pursuant to Art. 224 of the Treaty of Rome.

The sole purpose of these measures is to hasten the release of the hostages. At the same time, the Ministers reaffirmed their intention to respect the independence of Iran and the right of the Iranian people to determine their own future.

The Ministers expressed great satisfaction at the decision of the UN Secretary-General to entrust to Mr. Adib Daoudi, member of the UN Commission of Inquiry, the task of entering into contact with the Iranian Government in order to enable the Commission to resume its work and to secure the resolution of the crisis. They fully support the Secretary-General and will remain in constant touch with him in order to establish whether the progress of the UN mission is such as to enable them rapidly to suspend the measures taken in respect of Iran.

3.5 p.m.
Lord GORONWY-ROBERTS: My Lords, the House will be grateful to the Foreign and Commonwealth Secretary for coming to the House to make that Statement. The House will equally share with him the deep regret that no decisive progress leading to the release of the hostages was reported at the meetings over the weekend, but we note with cautious satisfaction what the noble Lord said about there being some grounds for encouragement, and if the Foreign Secretary feels able to expand a little on that phrase, I am sure that we should all be very grateful.
With regard to the timing of sanctions, the Statement said that the meeting:
" decided to proceed without delay with economic sanctions set out in the Security Council draft resolution of 10th January ".
May I pointedly put to him the following question: When in fact will the sanctions take effect? When will they start? I am not pressing the noble Lord to see that they start precipitately. I think that I explained our attitude to sanctions sufficiently clearly, and I hope responsibly, in our debate last week. We should like to know whether the phrase "without delay" still means that there will be adequate time for every possible diplomatic approach and pressure to be made to Tehran in order to obviate the use of sanctions, if at all possible, and certainly
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very firmly to obviate the possibility of even sterner measures.
Is the Foreign Secretary— in whom we have very great confidence in regard to this matter, and other very delicate matters— convinced that there will be sufficient time for him and others to make every use of, for instance, the latest initiative in Tehran by Dr. Waldheim, the Secretary-General of the United Nations, that is in cause now?
With regard to the question of coordinating action, it is not very clear from the Statement whether this is coordination among the Nine, or among the Nine plus Japan, Australia, New Zealand and one or two other countries; or is it co-ordination among a wider range of countries?— the wider, the better, of course. The question that follows from that is: Will there be proper machinery for co-ordination? The phrase used in the Statement is:
"to act simultaneously with our partners on the basis of legal instruments "—
nationally conceived, I imagine—
"co-ordinated to achieve parallel effect ".
If possible we should like to be assured that there will be proper machinery for central co-ordination of the application of whatever sanctions are found to be necessary. In this way we shall perhaps learn from the admitted inadequacy of the machinery of monitoring and of application during the Rhodesian sanctions. If the sanctions prove to be necessary, we must not move towards them nationally with a loose kind of consultation deemed to achieve co-ordination. There should be proper machinery for this purpose.
As to the question of existing contracts, it seems that the action is to be rather more retrospective than was our impression when we debated the Bill, but I have only now heard the Statement and looked at it, and I should like to study that aspect of it more closely, as no doubt will my right honourable friends in another place. Suffice it to say— and I know that in every part of the House there is sympathy for this view— that whatever is done will, we are sure, take into account the undoubted and substantial anxieties of employers and trade unions in various industries and firms in different parts of the country. If there is a constructive delay before the application of sanctions, taken up by

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diplomatic and other moves, then the Foreign Secretary will be assured of the united support of this House and of another place.
Lord BANKS: My Lords, I, too, wish to join in thanking the Foreign and Commonwealth Secretary for the Statement that he has made this afternoon. We on these Benches have all along condemned as strongly as we could the holding of the hostages. We supported the Iran (Temporary Powers) Bill last week, though we had reservations about the effectiveness of sanctions, but we give a very high priority to the need for Western unity at the present time.
We recognise that the proposals announced in the Statement are a modest move towards full economic sanctions. I think I am right in saying that they fall considerably short of what would have been required by the vetoed United Nations resolution. They are limited of course because they affect only the contracts agreed after 4th November 1979, necessitating, as the Statement makes clear, the use of the 1939 Act, and not the Act which we passed last week; though ot course that will be used as well.
I should like to conclude by asking three questions. Is it correct that trade between the Community and Iran has been running at a rate of about £ 500 million per month? Have the Government any estimate of what proportion of that trade is likely to be affected by these sanctions? Finally, do the Government expect any difficulty in distinguishing between a new contract and the renewal of an existing contract?
3.8 p.m.
Lord CARRINGTON: My Lords, first, I ought to apologise to your Lordships for not having been present in the House during the passage of the legislation last week. During the last eight days I have spent only three hours in this country, and it was not possible for those three hours to be at the same time as when the legislation was being dealt with. I must apologise; but I have an idea of what went on.
The noble Lord, Lord Goronwy-Roberts, asked me what were the good signs. I believe that they are very mildly
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encouraging; I would not put it any higher than that. We have been disappointed over mildlyencouraging signs soofteninthe past that I should not care to go into this aspect in any greater detail. However, we should at any rate be grateful to the Secretary-General of the United Nations for the proposals that he has made, which meant starting again on the lines that he tried previously. I am afraid that the signs were not sufficiently encouraging to enable the nine Foreign Ministers truthfully to say that there had been decisive progress towards the release of the hostages, and consequently it was decided that the sanctions should come on forthwith. Depending upon the drafting of the Orders-in-Council, we expect that this will occur probably some time this week. Of course there will be an opportunity for debate, as I explained to your Lordships in the original Statement.
The reason why the nine Foreign Ministers chose the date of 4th November 1979 is, I think, obvious to your Lordships. It was a logical and presentationally sensible date. It was the date upon which the hostages were taken in Tehran, and it seemed that if we were going to take action of this kind against the Iranian Government the date on which the hostages were taken was a suitable date to choose. But, of course, because the legislation which your Lordships passed last week is not in any sense retrospective, it will be necessary to use the 1939 legislation for those contracts between 4th November 1979 and today— and those, of course, are equally subject to the procedure that I outlined in the Statement that I made to your Lordships. We intend to set up a co-ordinating machinery among the Nine which, I hope, will bring about what the noble Lord wants to happen; and we are co-ordinating with the other countries. I think your Lordships will have seen that the Japanese have already come out and followed suit with proposals which are much the same as the Nine have proposed.
With regard to the questions asked by the noble Lord, Lord Banks, I probably ought to have the figures with me, but I am afraid I have not got them, or the breakdown of them, and I could not give them without notice; but I will certainly get them and write to the noble Lord. I think that we shall have to look more closely at the problems which arise between

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new and existing and renewed contracts. As your Lordships will realise, this decision, although we had done a lot of work on it, was taken only yesterday morning, and so far there has not been any time to look into it in any great detail. But certainly work will have to be done in that respect.
Lord SHINWELL: My Lords, while applauding the efforts of the Foreign Secretary in this connection, may I ask whether he really believes that in view of the reluctance of some of the Government representatives at the conference, and their attitude, the sanctions are likely to prove effective? Further, was there any discussion, whether public or private, on the subject of the Russian invasion of Afghanistan; and can he say what was the reason for the hurried departure of President Giscard d'Estaing to meet Mr. Brezhnev? Was it for the purpose of asking not only his consent on the subject of sanctions against Iran but also about their attitude on Afghanistan?
Lord CARRINGTON: My Lords, I think that the Nine countries represented at the meeting in Naples yesterday, at which I was present, are all intending to do and to carry out the policies which were decided yesterday, and I have no doubt whatever about that. As to whether they are successful, time alone will tell; but I think there are two important factors which have to be borne in mind— and I have said this to the noble Lord before. One is that we are part of an alliance, and when our friends are in trouble and they ask us to do something, and we are concerned about the future of that alliance, we do not disregard our friends when they are in trouble. The second thing is that there is no doubt whatever about it that the very fact that the nine leading European countries have decided to take this action will be noted in Iran as evidence of the disapproval by the Nine of the action which the Iranian Government has taken and continues to take.
With regard to the other question which the noble Lord, Lord Shinwell, asked me, this, as the noble Lord opposite knows, was one of those private, unstructured meetings which are not supposed to take place with anybody's knowledge. On this occasion it took place with everybody's knowledge because we had to make a
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decision about Iran. But I do not think that an informal meeting of this kind ought to be the occasion when I let your Lordships know exactly what happened during the meeting. I think it was an informal meeting, and not a council meeting; but exceptionally it made the decision about Iran. With regard to the motives behind President Giscard d'Estaing's visit to Warsaw, I think perhaps the noble Lord might address himself to the source.
Lord GORONWY-ROBERTS: My Lords, may I, with the indulgence of the House, intervene briefly once more and assure the Foreign and Commonwealth Secretary that his absence was more than agreeable to the House— I hope he will not take that in the wrong way— in that we knew that he was engaged in very constructive work in other places. We only wish that the meetings he had in Vienna might conceivably be duplicated in, let us say, other capitals of Europe, such as Warsaw. We would feel a little more confidence about the future if that were so. But may I support my noble friend Lord Shinwell in what he has said, admittedly about an aspect of the discussions which did not figure in today's Statement; namely, our great concern as to how things are going in the exchanges about Afghanistan. No doubt the Foreign Secretary, as he always does, will seek the earliest possible opportunity of causing a Statement on the progress of discussions about Afghanistan, and the situation arising from the position there, to be made in the other place, and will himself present it in this place.
Lord CARRINGTON: My Lords, of course I will do that. I think that there is at the moment, in a sense, a disturbing lack of progress over Afghanistan. But last week there was an opportunity, particularly in Vienna, for an exchange of views which I think was very useful. I had an opportunity to meet Mr. Muskie and the French and German Foreign Ministers together, and we had a discussion; and I also had an opportunity to meet Mr. Gromyko. Nothing else, as far as I was concerned, but Afghanistan was discussed with Mr. Gromyko. I cannot say that I was enormously encouraged, in the sense that there is obviously still a very wide difference between the positions of the Soviet Union and Britain; but I still think that if there is

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any chance of success it is worth talking, and I hope that we shall go on doing so. But there should be no misunderstanding on the part of the Soviet Union that because we are prepared to go on talking it means that we have retreated in any degree from what we said at the beginning.

TRANSPORT BILL
3.17 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, that the House do now again resolve itself into Committee.— (LordBell-win.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
Clause 24 [Duty to give traffic commissioners information about vehicles]:
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 101:
Page 24, line 13, leave out ("passengers") and insert (" occupants of the public service vehicle ").
The noble Lord said: This amendment seeks to change the word "passengers" in line 13 for the words "occupants of the public service vehicle ". The provision in subsection (1) is that the holder of a public service vehicle operator's licence shall report to the traffic commissioners any failure or damage— and I quote—
" calculated to affect the safety of passengers or of persons using the road ".
The amendment seeks to ensure that anything calculated to affect the safety of the driver, and also the conductor if there is one, is also covered by this provision. It would appear that if the wording is left as it is this matter will not be covered in the clause. I beg to move.
Lord MOWBRAY and STOURTON: On such a sunny afternoon I am very happy to start off on a very sunny atmosphere and say that I thank the noble
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Lord for this most helpful amendment, which has the effect of ensuring, as he has said, that the driver of the vehicle is included in the category of those protected by the clause. I am most happy to accept it.
On Question, amendment agreed to.
3.20 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 102:
Page 24, line 14, after ("practicable") insert (" or in any event within seven days ").
The noble Lord said: I hope that the sunshine may continue at least for a few moments while I move Amendment No. 102 and, with your Lordships' permission, speak to Amendment No. 102A. At the Committee stage in the other place the Minister, Mr. Kenneth Clarke, said that a previous phrase, "as soon as may be" was something which was meaningless to him and that therefore he was substituting for that the words, "as soon as practicable". The matter of reporting the bad state of a vehicle is a serious one; and the words "as soon as practicable" have such an uncertainty that, while still wanting to adopt them, I would ask the Committee to say that at least a maximum period should be inserted. That is the reason for the insertion after those words of "or in any event within seven days". The same point applies to Amendment No. 102A and I will not burden the Committee with the same remarks in regard to that amendment. I beg to move.
Lord MOWBRAY and STOURTON: I fear that a cloud is coming over the sun at this particular moment. There is, I am afraid, in our opinion no point in spelling out a time limit in these cases. The time within which it is practicable and reasonable to report these occurrences or to supply the information must depend on the circumstances. For example, a driver who suspects that he has a mechanical defect might have the vehicle tested before reporting or it may occur at holiday times; so that an exact requirement of one week might be quite unreasonable for reporting a defect of a comparatively minor nature. The words "as soon as practicable" adequately cover the merits of each case better than the exact timing of "within seven days". I hope that the noble Lord will see that

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this is not a matter of our being obstructionist. We think that our wording is better.
Lord LLOYD of KILGERRAN: May I endeavour to remove what the noble Lord has said was a small cloud? It seems to me that in relation to an important matter like this, "practicable" is too general and unrealistic a word. I believe that there should be some time limit in addition. It is realistic to have a time limit. If we leave in the clause words like "when it is practicable", all kinds of parameters and difficulties arise. On an important matter like this there should be a time limit. There is no magic in the words "seven days"; and I do not think that the noble Lord, Lord Mishcon, would necessarily tie himself to a limit of seven days. But a time limit should be introduced rather than to leave this airy-fairy word in the Bill.
Lord DERWENT: What happens if the time limit decided upon is not practicable?
Lord MOWBRAY and STOURTON: I think that my noble friend Lord Derwent has a good point. I am conscious that I am speaking to two "legal gentlemen" in the noble Lords Lloyd of Kilgerran and Lord Mishcon. I am assured by learned counsel that there is judicial authority for construing "practicable" as meaning "capable of being carried out in action or feasible"— that is the meaning to be found in the Oxford English Dictionary — and as imposing a stricter standard than "reasonably practicable". What is "as soon as is practicable" must be determined on the facts of individual cases. The expression "as soon as practicable" can be compared perhaps with the expression "forthwith". There is a judicial authority for the view that "forthwith" is stronger than "within a reasonable time" and implies prompt and vigorous action. Whether there has been such action is a question of fact to be determined in the circumstances of the individual case. Also, there is judicial authority for construing "forthwith" as meaning "at once, having regard to the circumstances of the case" or "with as little delayas possible". It is considered, all in all, that in this context the expression "as soon as practicable" is clearer and more apt than "forthwith".
Lord ROBBINS: Would not the insertion of the word "immediately" satisfy-both parties— "immediately practicable"?
Lord MOWBRAY and STOURTON: I shall certainly ask our Parliamentary draftsmen to look at that. But "immediately", as my noble friend Lord Derwent said, can be impossible to comply with— for example, as I said, during holiday times. "Immediately practicable" really means "as soon as practicable".
Lord MISHCON: We have a long day before us and I do not intend to take up the time of the Committee on matters of this kind. I would only observe that I always find the tones of the noble Lord, Lord Lloyd of Kilgerran, so mellifluous when he agrees with what I say. I found his voice very acceptable on this amendment. I would only ask the Minister to consider this point before Report stage. Where there is serious risk (as is implied in the clause) to the safety of passengers and crew, it does seem to be so foolish, if I may use the term, to have an offence prescribed in a Bill for the contravention of the duty to inform the authorities of such a bad stage of repair or danger, and to leave the question so arguable before the courts as to whether or not the report was made "as soon as practicable". It means that in every single case there will be an argument. That was the reason I believe that inspired the agreement of the noble Lord, Lord Lloyd of Kilgerran. I merely ask the Minister if he will have another think about it before Report. I do not want to detain the Committee any longer on this.
Lord MOWBRAY and STOURTON: I shall certainly have another think, but I must point out that in another place we resisted this particular amendment in several Divisions. I have very little doubt that my answer will be the same at Report stage and at Third Reading as it is now. I shall certainly take on board what noble Lords have said.
Lord MISHCON: In the circumstances, I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 102A and 102B not moved.]
Lord BELLWIN Lord BELLWIN moved Amendment No. 103:
Page 24, line 40, leave out (" knowingly ").
The noble Lord said: I have spoken to this amendment with Amendment No. 20. I beg to move.
On Question, amendment agreed to.
Clause 24, as amended, agreed to.
Clause 25 [Certificates of qualification]:
3.30 p.m.
On Question, Whether Clause 25 shall stand part of the Bill?
Lord LUCAS of CHILWORTH: May I ask my noble friend whether it is intended that the provisions for certificates of professional competence applicable to Northern Ireland are those that are currently ruling in this country? If so, is he able to say anything at all about the continuance of the current scheme whereby the qualifications are vetted by a group (including trade unions) before the certificate of professional competence is granted; or whether in fact (as seems to be felt in some quarters) the present method of awarding the certificate is going to be changed?
Lord BELLWIN: I am not sure that I can help my noble friend regarding the intention on this point. So far as I am aware, there is no intention to change the basic procedure as to that; the basic requirements now being set down in the Bill, which calls, as he knows, for the certificate as to good repute, professional competence, and so on, will apply generally. I would not have thought there was any reason why what will pertain here will be any different from what will pertain in Northern Ireland. I will gladly undertake to have a look at this point and see if I can confirm this and satisfy my noble friend.
Clause 25 agreed to.
Clause 26 [Appeals to the Minister]:
3.31 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 104:
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Page 26, line 6, after (" may ") insert (" within 14 days in the case of a decision under paragraphs (a) or (b) below, or 7 days in the case of a decision under paragraph (r) below ").
The noble Lord said: Clause 26 deals with the appeal to the Minister against first of all the refusal of an application by the holder against the removal or variation of any condition or indeed of his actual licence. Therefore these are important matters to any licence holder. Under subsection (9) of this clause provision is made for regulations which relate to those appeals, and there is a provision thereto that time limits shall be laid down in the regulations.
I have heard Members of the House of Lords from many quarters say that regulations are confusing to the citizen, and when his rights are very much an issue it is correct to try to put any time limits and any procedures, where possible, in an Act. I do not ask for the procedure in regard to appeals to be put in an Act; but I ask that in the Act somebody who wishes to appeal against something which is so vital should know by looking at the clause within which time it is that he has to appeal. Therefore I ask the Minister to make up his mind now as to that time limit and to put it in. I beg to move.
Lord BELLWIN: Time limits must of course be laid down within which appeals can be made. At present they are contained in regulations under the Road Traffic Act 1960 along with other necessary requirements about the procedure for making appeals. Subsection (9) of this clause provides that such matters must be prescribed in regulations and this amendment therefore is not necessary. In any case, the time limits suggested are very short— much shorter than at present. It would be unreasonable to impose such stringent requirements on licence holders. They are entitled to a reasonable time for consideration of whether or not to pursue an appeal, and time to prepare their case. At present one month is allowed and we will be discussing— and this really is moving towards what the noble Lord, Lord Mishcon, is wanting— with the industry and other interested parties whether this should be changed when we consult with them on the new regulations. I hope with that reply that the noble Lord may feel able to withdraw his amendment.
Lord LLOYD of KILGERRAN: The Committee will not be surprised that I am again supporting the noble Lord, Lord Mishcon, in view of the charming and attractive words that he used in relation to one of my previous speeches! To treat the matter seriously: in the Bill there should be a time limit introduced, particularly having regard to the words of subsection (9) of this clause. It is all very well to say that subsection (9) says:
" (9) An appeal under this section must be made within the prescribed time and in the prescribed manner, … ".
The person reading this of course will immediately know that there is a definition section, Section 23A, and that the word "prescribed" means "prescribed by regulations made by the Minister". Then of course he will know that there are regulations and he has to find these regulations.
One is now dealing with matter of fact affairs of transport involving drivers and people of that kind. It seems unrealistic to approach the matter in the way the Government are doing at the present time and that it would be helpful for the ordinary person to know some limits about the prescribed time. There is no magic about the actual times set out in this amendment; but I agree, despite the possibility of masses of legal opinions which the Government have received about this and judicial decisions about other matters which we heard from the noble Lord who is supporting the Minister, that as a practical matter time limits should be introduced in some form at this stage in the clause.
Lord BELLWIN: It seems that I will have to alter my approach in the way I refer to the noble Lord, Lord Lloyd of Kilgerran, if I am to get his support to a greater degree than I seem to be doing at present. I should have thought the point I made regarding the intention to consult with the industry and with other interested parties was the relevant one. We are not saying— are we?— that there should be no time. We are certainly very dubious about the time of seven days proposed in the amendment. Perhaps it would be helpful if I were to add that in addition to the present regulations there is a leaflet fully explaining the procedure. We intend to amend that leaflet and ensure its widest distribution. It will contain, in
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so far as time is concerned, that which comes forth from the discussions that I referred to. I hope that in the light of this the noble Lord may feel able to withdraw the amendment.
Lord AIREDALE: Has there not been time already for consultation with the industry with a view to putting the time limit in the Bill? The disadvantage of doing it by ministerial regulation is that Parliament can only either agree to the regulation or else throw it out and require the Government to come forward again with some other regulation giving some other time limit and the matter cannot be freely debated in Parliament, whereas if these important matters are put not in regulations but in the Bill, then in Committee stage in both Houses of Parliament the matter can be properly debated. A time limit can be arrived at of which Parliament approves.
Lord BELLWIN: I cannot tell the noble Lord the extent of the consultations or discussions— call them what you will— which have taken place already. That I do not know. The fact that at the present time one month is allowed— and here we are talking in an amendment of seven days— illustrates the point that there clearly needs to be something more than we have at the present time. Whether that should be done in the procedural way suggested or in the way that the noble Lord says, is a matter of opinion. At the end of the day what really matters is that we get a time that is reasonable to all concerned— and who more concerned, I would have thought, than the people within the industry and the interested parties themselves. I do not think I can add much more, although I am trying to be helpful. For the third time I wonder whether the noble Lord feels able to withdraw the amendment.
Lord MISHCON: I find the tones from the Liberal Benches most harmonious. The only principle that I am advancing is that the citizen shall know, on looking at a clause of the Bill which affects him vitally, what his time limits are. They should not be put in regulations. The question of how long the period of time should be is unimportant as compared with that principle. Regarding local government, consultations have been des-

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cribed by the noble Lord, Lord Bellwin, in a previous debate that we had in Committee as unending and difficult. It seems extraordinary that with an existing time limit of one month it is not possible, the industry having considered this matter no doubt very carefully, between now and Report stage or now and Third Reading to find whether or not the industry agrees with 28 days— which has been the period up to now— or whether they want a shorter or longer term and for the Minister to make up his mind. Therefore if the noble Minister will kindly say that he will endeavour to hurry up negotiations and consultations on this small matter, and if he finds, miraculously, that there is agreement between the Minister and the trade on this, it can be brought into the Bill and noble Lords who have been kind enough to agree with this amendment will no doubt be as pleased as I shall.
Lord LLOYD of KILGERRAN: May I, too, encourage the noble Lord, Lord Bellwin, to take this course, because it seems to me that what he is saying to an applicant is really: "Do not bother about the Act; all you need bother about are the regulations". That seems to me to be rather the wrong way round. The Act must be before the applicant on many occasions, and I should have thought that the introduction of a time limit of some kind would be the appropriate way of dealing with this matter.
Lord BELLWIN: I gladly undertake as the noble Lord, Lord Mishcon, said, to see whether by the time of the Report stage we have something which may enable him to feel happier about what we have here. At this moment I cannot offer anything, but I will certainly undertake to do that.
Lord MISHCON: On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.41 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 105:
Page 26, line 23, after (" may ") insert (" within 3 days of such refusal ").
The noble Lord said: This is not an appeal we are dealing with but a pro-
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cedure under which the traffic commissioners can decide or not that on an application by a licence-holder whose licence may have been suspended or indeed withdrawn, the effect of their decision shall not come into operation until the expiration of the period that is allowed for appeal to the Minister. Against that decision of the traffic commissioners there is a right of the licence-holder to go to the Minister and ask the Minister for a stay of execution— which I think is the appropriate term— and the time limit within which the Minister must do that is very sensibly laid down in the clause.
This is not governed by subsection (9) because it is not an appeal, and therefore there is no question of the Bill saying that regulations will be made about time limits. The one thing which is absent here is the time limit within which the aggrieved person wanting to appeal and wanting a stay of execution has to lodge his application for the Minister's determination. The 14 days is there for the Minister but not for the applicant. I have no doubt the Committee will take it for granted that the person concerned would want to do this as expeditiously as possible, and no doubt he would; but the real question is that the traffic commissioners ought to know where they stand. It may be a very bad case, and normally would be when they have revoked a licence. They would want, having refused a stay of execution of their decision pending an appeal, to know what was being done in the meantime by the operator. Is their decision to revoke to be operative and to continue to be operative until the Minister has come to his decision? Therefore the purpose of my amendment is to say that the person who is aggrieved by the traffic commissioners' decision not to have a stay of execution must make his application to the Minister— I repeat that it is not an appeal— within three days. I beg to move.
Lord MORRIS: I can see a practical problem with this amendment. If the traffic commissioners were to hear a case on Friday and if it happened to be a bank holiday weekend it would not leave very much time for the applicant to make his application to the Minister.
Lord MISHCON: If I may say so without sounding pompous, lawyers are used to that difficulty and rules are made which do delete non-working days, holidays and so on. But once again may I repeat to the Committee that it is not a question of time that binds me in this amendment; it is a question of principle.
Lord BELLWIN: Subsection (4) empowers traffic commissioners, if so requested, to suspend the operation of a change in the conditions of a licence or its revocation, suspension or curtailment until the expiration of the period within which an appeal must be lodged, and then until the appeal is disposed of. If the commissioners refuse to grant such a suspension of the operation of their decision, there may be an application to the Minister to direct them to grant it and there must be a decision on such an application within 14 days. A similar provision is to be found in the goods operator licensing system for goods vehicles.
Revocation of an operator's licence can destroy someone's livelihood perhaps beyond the possibility of repair, even by a successful appeal. On the other hand, to allow a criminal or utterly reckless operator to continue in business for the months it may take to determine an appeal could positively endanger the public and it would be wrong to make suspension of the commissioners' action an automatic consequence of an appeal. Therefore, for justice to be done there must be provision for a quick decision by the appellate body as to whether execution should be stayed. A special procedure will be required for dealing with applications for directions under this subsection.
They are not appeals and the procedure will not have to be laid down specifically or to be the same as prescribed under subsection (9). It is not envisaged that any time limit will need to be specified. In effect, an application could not be made once the time limit within which the appeal itself could be made had passed. In practice, if the matter is of such importance to the holder— and I believe the noble Lord, Lord Mishcon, made this point too— that he wishes to seek a direction, he might be expected to apply instantaneously. Even so, it would appear to be unreasonable to prevent the holder from applying at any time up to the end of the appeal limit, if he so wishes.
Lord MISHCON: I confess to some disappointment that the noble Minister read to the Committee a definition, description and clarification of a clause which I believe, if I may say so with deep respect, was clear to them before the explanation was even given. It does not deal in any way with the point which I tried to make to the Committee. I said, as the Minister was fair enough to repeat, that obviously the person concerned will, one would imagine, make his application as soon as possible. What I said was that because there is no time limit here, the traffic commissioners will not know what the position is because the application can be made at any time up to the time of the expiration of the appeal period. Again, because I feel this is a rather technical point, although I believe an important one, I wonder whether the noble Lord the Minister will be good enough to look at what has been said between now and the Report stage and possibly find that he can be rather more helpful on that occasion.
Lord BELLWIN: I was aware that I was in fact stating the position, but I felt that it was, as the noble Lord has said, such a complex subject that there was no harm in doing that. Indeed we may well feel the need to do that again before the day is out. I take the point that is being made and I have found difficulty in trying to be precisely clear as to exactly what is the point which has most concerned the noble Lord. I think I would have no difficulty at all in saying that we will consider this very carefully again before Report. I gladly undertake to do so.
Lord MISHCON: On that very courteous basis, I ask for the Committee's leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord MORRIS Lord MORRIS moved Amendment No. 106:
Page 26, line 25, at end insert, (" and pending this decision the licence shall remain in force.").
The noble Lord said: My only regret, in view of what has gone before, with regard to this amendment in this rather strange melange of names is that the name of the noble Lord, Lord Lloyd of Kilgerran, has not been added. I believe this amendment would make an improvement to the Bill. The point is very

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simple and not dissociated from the previous point made by the noble Lord, Lord Mishcon. As your Lordships are aware, Clause 26 (4) envisages the procedure in which the licence-holder has specifically requested a moratorium during the time allowed for appeal. If the commissioners agree to delay the operation of their decision to allow time for an appeal, there is no problem. If they refuse, there could be a period during which the contested decision is enforced, even though it may yet be overturned by the Minister.
The provision does not relate to urgent safety requirements and does not affect the power to put dangerous vehicles off the road. It does not involve a protracted delay, because the Minister has a maximum of only 14 days in which to decide that he will deal with a licence holder's application to him. In these circumstances, it is respectfully submitted that variations of the licence imposed by the traffic commissioners should not become operative during the few days until the Minister's decision is given. This is a short delay, which could prevent considerable hardship and disruption to the operations of a licence holder. I beg to move.
Lord BELLWIN: I listened very carefully to what my noble friend Lord Morris said on this amendment, but I should have thought this was essentially a matter of judgment. How far should we go in laying down safeguards for every eventuality? When do we reach the point when we say that we should leave it to the good sense of the traffic commissioners? After all, why do we have independent tribunals if we are not prepared to trust them with this kind of judgment?
What we are considering is what happens to a licence during the very short period of 14 days after application has been made to the Minister. It is extremely unlikely that the commissioners will take any action during that short period. Indeed, I feel there must be some presumption against it. There could be exceptional circumstances in which the commissioners believed that they could not, in the interests of the public, let an operator continue for even one more day, but is that not a matter of judgment? I stress that the circumstances would be
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exceptional, and is not that judgment one that we could trust the commissioners to make? I should respectfully have submitted that it was.
I must say, without any commitment, that if my noble friend really feels that this is a matter of such moment that he would like me to pursue it further, then I am certainly in a position to say that I will so do, which, perhaps, is not the kind of observation one makes when one first comes to the Dispatch Box. But, quite frankly, I am today in the business of getting on with this Bill, and if I feel that there is something I can do I am going to say so. Before sitting down, I hope my noble friend may feel that in the light of the explanation I have given, and despite my offer, he may be able to withdraw the amendment.
Lord MORRIS: I am most grateful to my noble friend. In the light of his remarks, I am most happy to withdraw this amendment.
Amendment, by leave, withdrawn.
Lord BELLWIN Lord BELLWIN moved Amendment No. 107:
Page 27, line 15, at end insert—
(" In this subsection "local authority" means—
(i) in relation to England and Wales, any local authority within the meaning of the Local Government Act 1972;
(ii) in relation to Scotland, a regional, islands or district council.").
The noble Lord said: Clause 26 (8) defines the third parties who have a right of appeal on certain road service licence matters. They include local authorities. It was originally thought unnecessary to define "local authority" as we were making no change in the present position. However, one or two queries have made us realise that ambiguity, even ambiguity of long standing, is undesirable and this amendment therefore introduces a definition. I beg to move.
Lord UNDERHILL: I am delighted to see this amendment, because, in effect, it brings in the district councils, which is what we have tried to do by proposed amendments. Therefore, we express great appreciation to the Government for bringing in this amendment. But in view of what appears to us to be a conflict

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with a clause which the Minister rejected, I shall be writing to him to see whether that can be reopened.
Lord LLOYD of KILGERRAN: I feel that I should give some satisfaction to the noble Lord, Lord Bellwin, by saying that on this occasion I warmly support what he has been saying.
On Question, amendment agreed to.
Clause 26, as amended, agreed to.
3.54 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 107A:
After Clause 26, [in substitution for Amendment No. 113], insert the following new clause:
(" Further appeals on points of law
. — (1) An appeal lies at the instance of any of the persons mentioned in subsection (2) on any point of law arising from a decision of the Minister on an appeal from a decision of the traffic commissioners for any area—
(a) to the High Court where the proceedings before the traffic commissioners were in England or Wales; and
(b) to the Court of Session where the proceedings before the traffic commissioners were in Scotland.
(2) The persons who may appeal against any such decision of the Minister are—
(a) the person who appealed to the Minister,
(b) any person who had a right to appeal to the Minister against the relevant decision of the traffic commissioners but did not exercise that right; and
(c) the traffic commissioners whose decision was appealed against.
(3) The High Court or Court of Session may on an appeal under this section—
(a) give any decision which might have been given by the Minister; or
(b) remit the matter with the opinion or direction of the court for rehearing and determination by the Minister.
(4) No appeal to the Court of Appeal may be brought from a decision of the High Court under this section except with the leave of the High Court or the Court of Appeal.
(5) An appeal shall lie, with the leave of the Court of Session or the House of Lords, from any decision of the Court of Session under this section; and such leave may be given on such terms as to costs, expenses or otherwise as the Court of Session or the House of Lords determine.").
The noble Lord said: It will, I hope, aid clarity and understanding and save time for your Lordships if I deal with this new clause along with Amendment No. 112 and two very small consequential amendments to Schedules 5 and 9 (Nos. 128 and
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193). There is currently a right of appeal to the High Court on a point of law from any decision of the Minister on bus licensing appeals of the kind covered in Clause 26 of this Bill. That right is provided in Section 13 of the Tribunals and Inquiries Act 1971.
But the fact is that the references to appeals on traffic commissioner cases in the 1971 Act are misplaced in that Act. No one involved in a bus licensing appeal would expect to look in the Tribunals and Inquiries Act, for his rights of further appeal from the Minister's decision. He would reasonably expect to find those rights spelt out along with his other appeal rights in the relevant bus licensing enactment. That is what this group of amendments achieves.
The first amendment inserts into the Bill the right of appeal to the High Court, which is now provided in a similar form in Section 13 of the Tribunals and Inquiries Act. Amendment No. 112 provides for a parallel right of appeal from the Minister's decision on the new London appeals. This will be placed in Section 23 of the Transport (London) Act 1969 where the London appeal provisions will be found. The minor amendments to Schedule 5 and, in particular, Schedule 9 take out the references to traffic commissioner appeal cases in the 1971 Act.
Your Lordships will appreciate that the amendments do not reproduce exactly the wording of the 1971 Act. That wording was not the most appropriate for this subject. Furthermore, legal practice and usage has moved on since 1971 and the wording is, therefore, brought up to date. I would also stress that the appeals with which these amendments are concerned are not further appeals on the merits of the decision reached by the Minister. His decision on the balance of the arguments is final. Further appeal to the High Court is provided only where there is a point of law at issue. I beg to move.
Lord MISHCON: May I first welcome the very correct dictum of the noble Lord the Minister, which I should have loved to hear before, that in order that people may know what are their rights, these should be incorporated in the Bill and not referred to in a schedule. It is absolutely correct, as the noble Lord has

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said, that there is a right under the Tribunals and Inquiries Act 1971 to take the traffic commissioners, and, indeed, the Minister, on appeal to the High Court or to the Court of Session in Scotland, and, indeed, to the Court of Appeal if suitable permissions are given on a point of law. It is also absolutely true that this is a reproduction of Section 13 (5), which is now repealed by this Bill. But there is an odd situation arising out of the closing words of the Minister who said that it will not be for the High Court or the Court of Session, on an appeal, to go into the merits of a case before the traffic commissioners or before the Minister, and the sole point will be one of law.
Peculiarly enough— and I hope that the Minister will have taken advantage of this— in the old Section 13 (5) of the 1971 Act, which Act deals with tribunals that are very different in their objects and areas from those of the traffic commissioners, there is a power which is reproduced in subsection (3) of this amendment. That states that:
" The High Court or Court of Session may on an appeal under this section—
(a) give any decision which might have been given by the Minister ".
That means literally what it says: that the High Court and the Court of Session in Scotland arc empowered, if they want to on hearing an appeal and deciding that the traffic commissioners or the Minister misdirected themselves in some way on the law, to say, "We notice that under this section we are given the power to make the same decision as the Minister or the traffic commissioners might have made, and in the case of transport this is ludicrous.".
The Minister may well be thinking at this moment of saying to me in reply that this has been perfectly all right until now; we have not walked into any difficulties since the 1971 Act. However, the Bill now before the Committee deals with a very different situation: that there is a difference so far as onus is concerned before the traffic commissioners. An applicant can come before them and the traffic commissioners can refuse an operator's licence only if they find that to grant it would be contrary to the public interest. That would be a complete change of onus. Therefore your Lordships ought
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to envisage that there may be a number of matters now coming before the High Court on which the traffic commissioners can be challenged, and so can the Minister because of that change of onus where there is refusal of a licence.
Very helpfully to the Committee the Minister said that he was dealing not only with Amendment No. 107A but also with Amendment No. 112 which deals with appeals from the London Transport Executive to the Minister. This is now possible, whereas it was not possible under the old legislation. Amendment No. 112 deals with the situation where the London Transport Executive say that they do not want to have an agreement with somebody over transport in the London area. How extraordinary it would be if the court were given the power to do what the London Transport Executive and ihe Minister could do; namely, to sanction an agreement or to say that an agreement should not lake place. These are not considerations in transport which can lie with the High Court or the Court of Session.
This section of the 1971 Act having been repealed— I think it is Amendment No. 193 or Amendment No. 198 which does that in the case of the London Transport Executive, while an earlier one relates to the other matters coming before the traffic commissioners— I hope that the Minister will consider wiping out that provision which negates the very thing which he made so clear to the Committee; namely, that the High Court and the Court of Session cannot go into the merits of the matter.
Having said all that, I do not expect anything more from the Minister than again the statement that having possibly surprised him with this point— it is a new amendment and I had no opportunity to give the Minister notice of it— he would like to consider it and then let me know his views between now and Report stage so that I can consider whether or not to put forward an amendment.
Lord BELLWIN: Before I answer the noble Lord, may I ask him whether he has overlooked subsection (3) of Amendment No. 107A which says:
" The High Court or Court of Session may on an appeal under this section ",

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deal with any point of law arising? I wonder whether the noble Lord still feels the same having considered, I repeat, that
" An appeal lies at the instance of any of the persons mentioned in subsection (2) on any point of law arising "
and then, underneath, "under this section ". If the noble Lord still feels that he would like me to pursue the course that he proposes, I shall have no difficulty at all in so doing. The noble Lord may wish to consider this. If so, perhaps we can deal in any case with the whole matter in the way he suggested, which I am glad to do.
Lord MISHCON: I shall detain the Committee only for one minute. I should have been delighted to accept that point were it not for the wording in the second line of subsection (1):
"… on any point of law arising from a decision of the Minister ".
Since the word "decision" is used there, and not in regard to a point of law, there is in any view dubiety as to whether or not the decision later referred to is a decision on the merits.
Lord LLOYD of KILGERRAN: I did not want to interrupt this bipartisan conversation, but I spoke at Second Reading about appeals generally, and it seems to me that the amendment now introduced by the noble Lord, Lord Bellwin, clarifies many of the points and difficulties I had seen in the original Bill. I was glad to hear the Minister say that legal practice has moved on since 1971. It is always a great thing to have official recognition by the Government that legal practice is sometimes modified.
With great respect to the noble Lord, Lord Mishcon, I am sorry that on this sunny afternoon I cannot recognise the odd situation which he says arises from the speech of the noble Lord, Lord Bellwin. I am not quite clear as to the point he is endeavouring to make, but that is entirely my fault on this sunny afternoon.
On Question, amendment agreed to.
4.7 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 108:
After Clause 26, insert the following new clause:
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(" Partnerships and related matters
".— (1) Provision may be made by regulations for modifying the provisions of this Part, and any other statutory provisions relating to public service vehicles, in their application to the operation of vehicles and the provision of services by persons in partnership.
(2) A road service licence or PSV operator's licence shall not be granted to an unincorporated body as such or to more than one person jointly except in cases permitted by regulations under this section.").
The noble Lord said: This clause puts the position of partnerships beyond doubt by making it clear that licences can be held by partnerships though not by other unincorporated bodies. Regulations will spell out the details about good repute and the like. It will be made clear in the regulations that an individual can hold an operator's licence in his own name and as one of a partnership. I understand that this has been a matter of concern to the industry and I am sure that they will welcome this assurance. I beg to move.
Lord MISHCON: I am sure that the industry will be heartened by this amendment. Perhaps I can save the time of the Committee by speaking now to Amendment No. 139 which stands in my name and those of my noble friends. First, I repeat the point about the inappro-priateness of dealing by regulations with matters which really ought to be in a Bill. May I express the hope that the consultations the Minister may be having will enable him at the Report stage not to deal with this matter by way of regulations but to make it part of the Bill.
The reason that this matter is considered to be of considerable importance to operators is that it deals with Clause 18 (3) of the Bill which prohibits any person from holding two public service vehicle operators' licences in the same traffic area. There are many circumstances in which independent operators who are in partnership also own and operate public service vehicles as individuals; but because this partnership does not have a separate legal entity the operators concerned would be unable to continue the practice unless one or more of the existing firms was made into a limited company with a separate legal personality.
If the law can be evaded in that way, there seems to be no purpose in it and

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no reason to put people to the extra cost of company incorporation merely to protect the way in which they wish to operate. If the Minister could kindly give me an assurance that in his view the regulations will cover this point, I shall not be troubling the Committee with my amendment when it comes to be moved.
Lord BELLWIN: I am not sure that I can give the noble Lord that assurance. I can only say— and I seem to be saying it very much this afternoon because the sun is, apparently, still shining— that we will look at that as a possibility. I fear that it cannot by itself preclude— and I am sure the noble Lord does not expect it— my moving the amendment. I can only say again that because we are anxious that at the end of the day the Bill should be the very best Bill and that it should allow for all possible eventualities that one can foresee, of course we will take note of what the noble Lord has said.
Lord TEVIOT: Like other noble Lords I will speak only briefly, to remind my noble friend of his cardinal principle that statutory regulations should be avoided except when demonstrably necessary. One finds it difficult to see why it should be necessary to deal with this particular issue by way of regulations. I suggest to your Lordships that, so far as this Bill is concerned, the problems of operators brought together by partnership agreements can readily be covered by the Bill itself. I hope your Lordships will agree with me that, by including a definition of the word "person", which is in Amendment No. 139 in Clause 36, the practical problems which might be encountered in the operation of Part I of this Bill can be overcome.
The amendment to this effect is considered to be of great importance by many independent operators, in membership of the Confederation of Passenger Transport, in family businesses where for good reason a complex pattern of vehicle ownership may arise. I support the amendment.
On Question, amendment agreed to.
4.11 p.m.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 109:
After Clause 26, insert the following new clause:
(" Death, bankruptcy, etc. of licence-holder
— (1) A road service licence or PSV operator's licence is not assignable or, subject to the following provisions of this section, transmissible on death or in any other way.
(2) A road service licence or PSV operator's licence held by an individual terminates if he—
(a) dies; or
(b) is adjudged bankrupt or, in Scotland, has his estate sequestrated; or
(c) becomes a patient within the meaning of Part VIII of the Mental Health Act 1959 or, in Scotland, becomes incapable of managing his own affairs.
(3) In relation to a road service licence or PSV operator's licence held by an individual or by a company regulations may specify other events relating to the licence-holder on the occurrence of which the licence is to terminate.
(4) The traffic commissioners by whom a road service licence or PSV operator's licence was granted may—
(a) direct that the termination of the licence by subsection (2), or under subsection (3), be deferred for a period not exceeding 12 months or, if it appears to the commissioners that there are special circumstances, 18 months; and
(b) authorise the business of the licence-holder to be carried on under the licence by some other person during the period of deferment, subject to such conditions as the commissioners may impose.").
The noble Lord said: This is an unexciting but useful new clause which clarifies the law on this matter and meets more precisely the requirements of the Community Access Directive as to the circumstances in which businesses can continue to operate for short periods on the death of the holder or when other disruptive events occur. The clause will provide assurances to those who hold licences that, in the event of their death or incapacity, their business will not simply fold up owing to the termination of their licences, but their heirs or personal representatives will be able to carry on the business for a temporary period until more permanent arrangements are made. I beg to move.
Lord MORRIS: I rise to support this amendment but I am in need of clarification with regard to subsection (2) (c). It appears from the wording of this subsection that there is a presumption in Scottish law that if anyone becomes incapable of managing his business affairs he must necessarily be a lunatic. I may

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have misunderstood it but that is how it appears to me.
Lord MOWBRAY and STOURTON: I am not sure that I am able to satisfy my noble friend at this moment, but I will certainly find out and will let him know.
Lord MISHCON: I wish only to raise two points on this new clause. I think it is a most sensible clause and I am sure that the members of the Committee are glad to see it on the Marshalled List. One of my two points is major and the other, I must confess, is minor. The major one arises under subsection (3). The Committee will be aware that this is a question of a power to terminate a licence. Without any doubt at all, if we look at the matters in subsection (2), subject to the point raised by the noble Lord, Lord Morris, with regard to subsection (2) (c), it is eminently fair and reasonable; but hidden in subsection (3) we find that the regulations:
" may specify other events relating to the licence holder on the occurrence of which the licence is to terminate ".
I hope that anyone interpreting this subsection would say that it must be other events similar to those in subsection (2). That would be a reasonable interpretation, but it is an interpretation which is open to argument, and I do not feel that the Committee would be happy to give an overriding power without any discussion in Parliament with regard to the serious matter of the termination of a licence, by saying to the Minister: "That is perfectly all right, you may make regulations, if you will, which can terminate a licence; we do not know now what the occasions will be which are broadly described as ' other events' but we are perfectly happy with it." That does not seem to me to be a proper way to carry out our duty to examine legislation carefully, especially when it comes from another place and we are expected to devote that amount of skill and care which is not always apparent in the other place, but I hope is always apparent in your Lordships' House. In those circumstances, I ask the Minister if he will be good enough to look into the question of "other events."
My minor point is that there is also a phrase which is used in subsection (4) (a) where the termination can be deferred if it
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appears to the commissioners that there are special circumstances. Professional colleagues will know the trouble that those words "special circumstances" have caused in the Road Traffic Act in regard to endorsements and suspension of licences. There has been great argument and decisions have been made in the courts as to whether it is special circumstances relating to the person or special circumstances relating to matters in general. Here, one ought to know: are they special circumstances relating to the individual concerned— the personal circumstances— or are they special circumstances relating to a traffic problem, or are they meant to be both?— in which case, again for clarification, the Act ought to say so.
I merely ask that those two points should be looked at because they are of some importance, and if they can be looked at between now and Report stage, and if the noble Lord can repeat the words which are now happily heard on this side of the Committee, that these matters will be looked into (because they are points of substance) I certainly would not ask the Committee not to accept this new clause at this juncture.
Lord MOWBRAY and STOURTON: I understand that the regulation-making power in subsection (3), to which the noble Lord referred, enables events like bankruptcy and mental incapacity, which happen outside United Kingdom jurisdiction, to be covered. It will also enable other such parallel events in relation to a company winding up or the appointment of a receiver to be dealt with. But on this sunny day, like my noble friend I will certainly take this matter back and have a look at it, although I think we shall probably find that it is all right as it is.
Lord HARMAR-NICHOLLS: I want only to say a word on the point made by the noble Lord, Lord Mishcon, which was very impressive as it stood but, having had a little experience as a magistrate dealing with the particular example that he raised, I thought he should have gone a little further. He made his general point but I think he should have given a hint as to how he would interpret it: how he thinks the special circumstances ought to be written into the Bill. While I have a lot of sympathy with the point he made,

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that it is so much easier if you know exactly where the boundaries are in this sort of legislation, at the end of the day and no matter how hard you try you never can find words to cover everything; and what we are aiming to do is to educate people, who in the end have to give a decision, to use sensible discretion. If you try to remove all the discretion by trying to spell out everything you might well not enable people to dispense justice.
Lord HALE: The noble Lord, Lord Mowbray and Stourton, made some observations about the position of the holder and the heirs or relatives or successors of the holder, or very often those who had been working his business during the holder's long illness, and what would happen on his sudden death. What is the authority for carrying on pending an application to the traffic commissioners? Obviously one could expatiate at considerable length on this point. The PSV holder could be a victim of an air crash in Tenerife or something like that, or could be missing for a time. How is the operation of the licence to be continued pending the hearing by the traffic commissioners? Can the application to the traffic commissioners by the heirs be heard with a certain guaranteed speed, and can a temporary authority be issued from the office?
Lord MOWBRAY and STOURTON: I think it is precisely to deal with such a case, an accident in Tenerife or one of those tragedies, that this amendment is framed. The local service does not want to have to fold up, and this is precisely to cover this sort of eventuality. I do not think there is any problem for the son, daughter, daughter-in-law or representative. I will look at what the noble Lord has said, and if there is anything more that I can add I will write to him, but if he will read what I have said, I think the position is clear.
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 110:
After Clause 26, insert the following new clause:
(" Fare-paying passengers on school buses
.— (1) Subject to subsection (2), a local education authority may—
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(a) use a school bus, when it is being used to provide free school transport, to carry as fare-paying passengers persons other than those for whom the free school transport is provided; and
(b) use a school bus, when it is not being used to provide free school transport, to provide a local bus service;
and the following provisions, that is to say, section 144 of the 1960 Act (public service vehicle drivers' licences) and sections 15, 16, 17 and 18 (1) of this Act shall not apply to the driving or use of a school bus in the course of its use by a local education authority in accordance with this subsection.
(2) Subsection (1) does not affect the duties of a local education authority in relation to the provision of free school transport or authorise a local education authority to make any charge for the carriage of a pupil on a journey which he is required to make in the course of his education at a school maintained by such an authority.
(3) In this section—
"free school transport" means transport provided by a local education authority in pursuance of arrangements under section 55 (1) of the Education Act 1944 for the purpose of facilitating the attendance of pupils at a place of education;
" local bus service "means a stage carriage service other than a service as regards which the condition specified in section 3 (3) (A) above is satisfied;
" school bus ", in relation to a local education authority, means a motor vehicle belonging to that authority which is used by that authority to provide free school transport.
(4) In the application of this section to Scotland—
(a) for the references to a local education authority there shall be substituted references to an education authority;
(b) in subsection (2) for "maintained by" there shall be substituted "under the management of"; and
(c) in subsection (3) for the definition of "free school transport" there shall be substituted—
"" free school transport" means transport between a pupil's home and place of education provided in pursuance of arrangements under subsection (1) () of section 51 of the Education (Scotland) Act 1962 (pupils for whom such transport facilities are necessary) or, in pursuance of subsection (2) of that section (other pupils allowed to use vacant seats free of charge) ".
(5) The repeal by this Act of section 12 of the Education (Miscellaneous Provisions) Act 1953 and section 118 (4) of the 1960 Act shall not affect the operation of those provisions in relation to any consent given under the said section 12 which is in force immediately before that repeal takes effect.").
The noble Lord said: I spoke on this amendment with Amendment No. 4. I beg to move.
Lord UNDERHILL: There is just one minor point. When we discussed this in conjunction with Amendment No. 4, I raised the question of the definition of "local bus service" that appears halfway down on page 5 of the Marshalled List. While the definition is given here, the point I raised was whether or not the local bus service was to be in the locality covered by the education authority or whether it could be anywhere. It would appear to me that that needs to be clearly defined one way or the other; otherwise there could be quite a lot of controversy and argument later on. We, of course, would prefer it to be within the area of the education authority. It needs to be defined.
Lord BELLWIN: I hear what the noble Lord says and I presume he said the same thing when we discussed it earlier. As I recall, I think I answered then by saying that a definition of this would take into account the 30-mile limit which we were talking about then. I will certainly refer to this again when we come to look at it, as we shall be doing.
On Question, amendment agreed to.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 111:
After Clause 26, insert the following new clause: (" Use of certain vehicles by educational and other bodies.
— (1) In subsection (1) of section 1 of the Minibus Act 1977 (exemption of certain vehicles from requirements applicable to public service vehicles) for "vehicle which is adapted to carry more than seven but not more than sixteen passengers" there shall be substituted "small passenger-carrying vehicle", and after that subsection there shall be inserted the following subsection—
" (1A)] f a large pasesenger-carrying vehicle is used for carrying passengers for hire or reward, then, if and so long as the conditions set out in paragraphs (a) to (c) of subsection (1) above are satisfied, the following provisions shall not apply to the driving or use of the vehicle, namely—
(a) section 144 of the Road Traffic Act 1960 (public service vehicle driver's licences);
(b) section 23 (2) of the Transport (London) Act 1969 and section 4 of the Transport Act 1980 (licensing of stage carriage services); and
(c) section 18 (1) of the Transport Act 1980 (PSV operator's licences).".
(2) In section 1 (2) of that Act (persons authorised to grant permits) —
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(a) at the beginning of paragraph (a) (powers of traffic commissioners) there shall be inserted "in the case of small passenger-carrying vehicles,"; and
(b) at the beginning of paragraph (b) (powers of designated bodies) there shall be inserted "in the case of small or large passenger-carrying vehicles.".
(3) After section 1 (3) of that Act (designation orders) there shall be inserted the following subsection—
" (3A) Different provision may be made by orders under subsection (3) above in relation to large passenger-carrying vehicles from that made in relation to small passenger-carrying vehicles.";
and a designation order made under the said section 1 (3) before the commencement of this section shall not apply in relation to large passenger-carrying vehicles.
(4) In section 3 (1) of that Act (power to make regulations), in paragraph (e) (power to prescribe conditions of fitness) for "vehicles" there shall be substituted "small passenger-carrying vehicles".
(5) After section 3 (1) of that Act there shall be inserted the following subsection—
" (1A) Regulations made by virtue of any of paragraphs (a) to (d) of subsection (1) above may make different provision in relation to large passenger-carrying vehicles from that made in relation to small passenger-carrying vehicles.".
(6) In section 3 (2) of that Act (consequences of breach of regulations) for "Section 1 (1) "substitute" Subsection (1) or, as the case may be, subsection (1A) of section 1 ".
(7) In section 4 (2) of that Act (interpretation) after paragraph (b) there shall be inserted the following paragraph—
" (bb) "small passenger-carrying vehicle" means a vehicle which is adapted to carry more than eight but not more than sixteen passengers, and "large passenger-carrying vehicle" means a vehicle which is adapted to carry more than sixteen passengers; ".").
The noble Lord said: In moving this amendment, I would like to speak to Amendment No. 131 as well. I am sure this new clause is one which will be welcomed on both sides of the Committee. Perhaps it would help if I explained a little of the background to it. In recent years it has become increasingly difficult for charitable organisations, schools, church and youth groups and so on, to continue to offer transport, organised trips or whatever, on a purely charitable basis. The costs are often just too high, and they have had to recoup these costs by asking passengers for a contribution. This of course brings the vehicles into the PSV licensing net, with all that that implies. The Minibus Act 1977 was passed to deal with this problem by exempting

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from the PSV regime minibuses used by voluntary and other similar bodies, pro-voided that certain safety standards are met and that there is no question of profit-making or running services for the public at large. All the indications are that the Act has worked extremely well.
During the passage of the present Bill in another place it was put to the Government that the Minibus Act was proving unduly restrictive in one particular respect; it did not cover vehicles with more than 16 passenger seats. The stark difference in licensing requirements for the small and large vehicles forces voluntary bodies, schools and so on, into choosing small vehicles, not because they are the most suitable size for their needs but because they can charge fares in them without getting involved in licensing. With this new clause we are seeking to provide a way round the difficulty without opening the door to lower vehicle safety standards or to unfair competition. The new clause provides certain licensing exemptions for larger vehicles used within the normal Minibus Act framework. There is no question of running for profit or picking up members of the general public.
There will be additional safeguards. First, although no PSV licence will be required for operator service or driver, the vehicles will remain PSVs and be subject to the normal PSV conditions of fitness. They will be subject to examination by the PSV examiners. Secondly, only specially designated bodies will have the power to grant permits for these larger vehicles. Our intention is to designate only local authorities and to describe in the order the kinds of bodies to which they may grant permits. In this way the authorities can exercise some control over the use of the larger vehicles. This is a small measure. I accept that very few organisations will need to make use of it, but it may be of considerable help to particular community welfare schemes whose need is for a larger vehicle. I recommend it to the Committee. I beg to move.
Lord UNDERHILL: I wish to thank the noble Lord for his explanation. When we first heard the noble Lord, Lord Bellwin, mention the possibility that the introduction of an amendment was in mind, we were frankly, apprehensive.
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The explanation we have heard, together with the notes on clauses which the noble Lord, Lord Bellwin, kindly made available to us have removed a lot of those apprehensions.
There are two questions that I should like to put to the noble Lord. We readily accept that the proposals in the amendment confine the use of these vehicles to community organisations or educational organisations. Therefore, we can understand why there is no need for a road service licence or a PSV operator's licence. We are pleased to note that the normal safety provisions will continue to apply because they are public service vehicles. The first question that I should like to put to the noble Lord relates to the fact that there will be no PSV driver's licence required. Bearing in mind that all the Act says about the size of these vehicles is "over 16 passengers", there is no limit; they could be double-decker vehicles, and no PSV driver's licence is apparently to be required. Surely this is a vital question of safety which the Bill omits to deal with. I should like to hear the Minister's comment on that.
Secondly, as I understand from reading the Bill and hearing the noble Lord's explanation, the granting of a permit by traffic commissioners will be confined to the small minibuses; they will not be able to give permits for the larger vehicles. On the other hand, the local authorities, if they are going to be the designated bodies will be able to give permits for the small and the larger vehicles; in fact, permits for the larger vehicles will only be able to be given by the local authorities. Why is there that distinction? I cannot understand why the traffic commissioners, who are very experienced people, should be confined solely to issuing permits for the smaller vehicles.
Lord MOWBRAY and STOURTON: The noble Lord has very ably made his point about the PSV driver's licence. I agree that it is a matter of judgment and opinion. We did not want to impose additional requirements, for example, where a driver is already used to driving larger vehicles other than for hire and reward. This is the type of area where we should see how things go. If what the noble Lord is frightened about were to come about, and there is a problem, then

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I can assure him that the Minibus Act contains a power to prescribe conditions to be fulfilled by drivers. Of course, in any event all drivers must be over 21.
He also asked why the local authorities will be particularly involved in this exercise and not the traffic commissioners. I think that it is really a matter for local charities, and local councils will probably know more about these local charitable bodies. Sometimes the local councils will themselves be involved. As the noble Lord is probably aware, one of the instigators of this clause was the London Borough of Camden which wished to help disabled people in its borough with these type of vehicles. I do not think that there is a serious matter of principle at issue here. I hope that I have sufficiently explained the situation to the noble Lord to remove his worries on the two matters which he raised.
Lord TEVIOT: While not wishing to pour cold water on the amendment, which has been very well expressed by my noble friend, I, too, share the forebodings or share the idea that has been put forward about the non-PSV driver driving a group of 16 people or more. I cannot see why it would be an impediment for the drivers of these minibuses, larger minibuses, or indeed double-deckers to take a PSV licence. It is not a terribly difficult thing to acquire and I should have thought that it was in the interests of everyone for the driver to go somewhere and take a course and take a PSV licence. As my noble friend has said, we must see how it goes. But I should have thought that that was a matter at which he should look immediately.
Viscount SIMON: I should like to support the noble Lord as regards the point he raised about the drivers' licences. I think that it is rather shocking that we should allow them, whether for charitable or whatever reasons, to have a driver who is not fully qualified to drive this type of vehicle. I do not know whether my recollection is at fault, but I can remember that not so long ago there was a tragic accident somewhere in Yorkshire in just such a case where a party of old age pensioners were being taken out. I do not know whether in that case the drivers had a licence, but I should have thought it very desirable that anyone
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taking such a coach for a trip with old people should have a proper licence for driving a large vehicle.
Lord MOWBRAY and STOURTON: I seem to be getting advice from all sides of the Committee. I shall certainly take the matter away and consider what noble Lords have said. As I said at the beginning of my remarks, it is a matter of judgment. We thought— and we still think— that it would be better not to require it at this stage, but I shall take the matter away and we shall consider the points that have been made by noble Lords on all sides of the Committee.
Lord UNDERHILL: I am grateful to the noble Lord for that kind gesture. I should like to make one final point before I leave the matter. The noble Lord said, "Let's see how it works." However, there could be a fatal accident while we are seeing how it works. Even if there were only one accident it could be a great tragedy; it could ruin a scheme; and it could lead to loss of life. Therefore, we hope that the matter will be looked at very carefully.
On Question, amendment agreed to.
Clause 27 agreed to.
Clause 28 [Amendment of Transport (London) Act 1969]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 112:
Page 29, line 18, at end insert:
("Further appeals on points of law
(23B.— (1) An appeal lies to the High Court at the instance of any of the persons mentioned in subsection (2) of this section on any point of law arising from a decision of the Minister on an appeal under section 23A of this Act.
(2) The persons who may appeal against any such decision of the Minister are—
(a) the person who appealed to the Minister;
(b) any person required to be notified of that appeal under subsection (2) of section 23A of this Act; and
(c) the Executive.
(3) The High Court may on an appeal under this section—
(a) give any decision which might have been given by the Minister; or
(b) remit the matter with the opinion or direction of the court for re-hearing and determination by the Minister.
(4) No appeal to the Court of Appeal may be brought from a decision of the High Court

591
under this section except with the leave of the High Court or the Court of Appeal.").
The noble Lord said: I spoke to this amendment with Amendment No. 107A. I beg to move.
Lord MISHCON: When dealing with Amendment No. 107A I made the observations that I wanted to make as regards Amendment No. 112, so I shall not repeat them. The Minister has been kind enough to give an assurance that he will look at certain points and I am grateful to him.
On Question, amendment agreed to.
Clause 28, as amended, agreed to.
On Question, Whether Clause 29 shall stand part of the Bill?
Lord UNDERHILL: This Clause deals with the abolition of the need for conductors' licences. It may seem rather a small matter, but when I have explained a few points your Lordships will see that it could be of some consequence. First, I wonder whether or not there have been consultations with the union which covers the personnel involved. The Transport and General Workers' Union, which covers a great number of these personnel, has made certain points quite clear to me. It is concerned that the conductors' licence, which is at present required, gives some partial protection to conductors. It gives them a greater authority to collect fares. The union feels that the absence of a licence could expose a conductor to a greater degree of assault from those who seek to avoid paying fares.
Your Lordships will know that the licence is covered by a badge which the conductor wears and that is considered to be a partial protection. It carries a number and it is seen by most people to be a badge issued by a public authority and, therefore, it has some standing. The badge also bears the conductor's licence number. Therefore, if there is a complaint or any other matter arising to which reference needs to be made, the public or anyone else can easliy see the number of the conductor's licence.
Moreover, the removal of any control or licensing of conductors will, it would seem to me, carry also the abolition of the
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requirement that conductors must be at least 18 years of age. There will be nothing to stop an operator employing a 16-year-old. I know that the EEC regulations lay down that conductors must be over 18 for journeys of more than 50 kilometres. As regards that matter is not, in law, a conductor in charge of the vehicle, except for driving— or, if not in law, is it not generally recognised that the conductor is the person in charge other than actually driving the vehicle?
Conductors have responsibility for handling all types of problems and difficulties that arise. I know that it appears that the main purpose of the abolition of this provision by this clause is to remove the huge administrative task of issuing some 30, 000 individual licences for conductors. I do not know the views of the Transport and General Workers' Union on this matter, but in order to cover the legitimate points which I think it makes, I am wondering whether consideration has been given to issuing a block number of licences to an operator for the operator to issue and if necessary to report thereon to the commissioners. That would save the administrative problem, but it would also guarantee these points of partial protection which the personnel involved consider so important. I think that your Lordships will agree that we wish not only to save any bureaucratic administration but to ensure that the status, standing and authority of people such as conductors is not minimised in any way.
Lord TEVIOT: I thoroughly agree with what the noble Lord, Lord Underhill, has said. I believe that this clause was in no way discussed in the other place during all their 110 hours of discussion, and therefore it is very proper for the noble Lord to have raised it today. I know there is a need for cutting out administration and perhaps this is a very good way of doing it. The noble Lord mentioned a number of points and I would only dwell on one— namely, the conductor being in charge of the bus. The badge rather accentuates that point. He is very much in charge of the bus and has to deal with all sorts of funny situations. There are also times when he may threaten to call, or may even have to call, the police in dealing with someone who, say, is intoxicated or not

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very well in one way or another. That badge gave him some authority. I do not know what kind of brief my noble friend has at this stage, but I am eager to hear what he has to say on all these matters.
Lord BELLWIN: I am rather surprised that the noble Lord, Lord Underhill, made some of the points which he has made. In fact, the noble Lord may know that there were consultations with the trade union to which he refers; quite what the outcome of those were I am not in a position to say. But, for myself, I had assumed that that trade union had not objected to what is now being proposed.
This clause removes the requirement in Section 144, of the Road Traffic Act 1960 that public service vehicle conductors be licensed. We think that this is now an anachronistic function which the licensing authorities have performed since the controls were introduced on PSV operations in the Road Traffic Act 1930, and that it should now be abolished. The need for statutory screening of conductors to ensure that operators could employ only those licensed by virtue of physical fitness and good character might have been defensible in the early years, but nowadays conductors' suitability should properly be a matter for their employers or prospective employers, as it is in almost all other kinds of works. In fact, over the past decade only a handful of applications have been refused or licences revoked.
The noble Lord, Lord Underhill, very fairly referred to the point that I would have made; namely, that there is a considerable bureaucratic involvement here and an enormous clerical effort in handling some 30, 000 applications a year. Whether or not his point about issuing a block number of licences to an operator is an interesting, practical and valid one, I do not know, but I am quite sure that the fact that he has made it ensures that it will be considered elswhere. On the point of the badge, which my noble friend Lord Teviot and, indeed, the noble Lord, Lord Underhill, mentioned, surely there is absolutely nothing to stop an operator supplying a badge with a number to every conductor, if that is something he wishes to do.
Altogether, I should not have thought that this was particularly contentious;
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certainly we had no intimation that it was. In fact, I thought that it was so logical in what it sets out to do that it would automatically have been quite welcomed. However, I take the point about the possibility of a block number of licences. Of course we shall look at that, as, indeed, we intend to look at many of what I consider to be constructive and helpful suggestions that have been made earlier today.
Clause 29 agreed to.
Clause 30 agreed to.
4.44 p.m.
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 114:
After Clause 30, insert the following new clause:
(" Repeal of s. 29 (4) of Transport Act 1968
. The provisions of section 29 (4) of the Transport Act 1968 (which relate to the Railways Board not having power to carry passengers by road) shall cease to have effect.").
The noble Lord said: On a number of occasions the Minister has explained that one of the purposes of the Bill is to bring more operators into the operation of public transport; in his words, to provide the opportunity for greater competition. The Bill provides that new applicants to run a service shall be granted a licence, unless to do so would be against the public interest. The provisions of Section 29 (4) of the Transport Act 1968 prevent the Railways Board from making any arrangements to carry passengers by road, except where a railway service has been temporarily interrupted or discontinued.
It seems unreasonable that in the light of all the new circumstances to be provided under the Bill, this bar should continue. My information is that although British Rail has power to provide bus services where a service is interrupted or closed, it does not go in for direct operation of buses itself, but relies upon reputable operators to do this under contract. I further understand that if this amendment is agreed, the relaxation of the powers would almost certainly be developed through contractors. This relaxation would not only be equitable— and if we are to have free competition for everybody, there is no reason whatever why it should be denied to British Rail— but would also enable increased development of integrated rail-bus services (which is

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something that all noble Lords would like to see) with, in particular, the provision of bus services to railway stations. This could possibly be developed on a general scale if this amendment is agreed. I beg to move.
Lord BELLWIN: As I understand it, the legal position at present is that the Railways Board has powers to operate bus services where the rail service has been temporarily interrupted or in replacement of a railway passenger service which has been closed. The Government are not aware of any circumstances which might arise in the future which would make it necessary for the board to have wider powers to operate bus services than those which it already has. The Railways Board has made no representations to my right honourable friend the Minister about the need for wider powers, although of course, it is always open to them to do so.
However, even if wider powers were thought appropriate, I do not think that an amendment along these lines would be sufficient. The intention of this amendment appears to be to attempt to resurrect the somewhat complex and qualified powers to operate bus services granted in 1928 to the four main private rail companies by the four railway-road transport Acts of 1928. Those local acts relate to quite different circumstances from those of today, and would be a quite inappropriate way of granting to the Railways Board broad powers to operate bus services. In these circumstances, we could not agree to accept this amendment.
Lord UNDERHILL: I am sorry to learn from the noble Lord that the amendment cannot be accepted because one would have thought that this would fit in with the very thing which the Government seek; that is, the widest possible competition. I simply cannot understand why British Rail should be the one body that is precluded. I do not know whether or not British Rail has made representations to the Minister's noble friend the Secretary of State, but I do know that the right honourable Albert Booth, Member of Parliament, has raised this matter with the Secretary of State as recently as early in April. What the outcome of that was, I do not know. However, I
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should seriously like to ask the Minister to take a look at this in order to follow the Government's own desires for competition.
Lord BELLWIN: Obviously, I do not know what representations Mr. Albert Booth has or has not made. What I do know is what I have already said, that, to the best of my knowledge and information— and as recently as today no one has altered it— the Railways Board has made no such representations. I should have thought that that was most apposite. However, I shall, of course, make inquiries along the lines which the noble Lord, Lord Underhill, suggests. If there should prove to be a need further to consider the point, the noble Lord can be assured that it will be considered. However, as I stand here at the moment I should have thought that the most significant point is the one about the attitude of the British Railways Board.
Viscount HANWORTH: What matters to many of us is that the consumers should have a reasonable transport service. Of course, since the Beeching axe, in many cases they have not had one. It seems that what the railways provide could often be improved by a bus service which would be linked in with the railway timetable. I can appreciate the view that one does not want to start the railways running their own buses, which, in a way, is diversifying, and this might be a temptation. But it seems to me that it would be perfectly reasonable to allow them to do so as long as they did not run their own fleet.
Lord TEVIOT: I have hesitated to intervene so far on this, but it is an amendment on which I disagree with the noble Lord, Lord Underhill, and one viewed rather with pessisism by the transport industry. I take the point of the noble Viscount, Lord Hanworth, but I think he ended up by saying that the existing operator should run these services. In that case surely the bus companies concerned ought to be responsible for this, and so far as I know they do not want to ask British Railways to run any trains. Therefore, I would say that it is better to leave matters as they are.
Viscount HANWORTH: One must realise that many bus services are in fact

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supported by the local council, and of course the railway would be free to alter their timetable to suit themselves without any notice to the bus company. One hopes that they would give it. I think there is a case for allowing a limited number of connections organised by the railway but using an outside contractor.
Lord BELLWIN: There are already circumstances and situations in which British Rail make arrangements with bus operators to provide bus links to rail networks. I am reminded that a recent example is the new Kettering to Corby bus service. All I can add to what I said before is that for myself the mind boggles when one considers some of the problems that would face both kinds of service. If we were to have it laid down that there should be obligations for them to coordinate in the way that I understand the amendment means, then I can think of all sorts of great problems which would arise. However, bearing in mind that there obviously is flexibility, or room for flexibility, at the present time, I thought that that might have satisfied noble Lords.
On Question, amendment negatived.
Clause 31 agreed to.
Clauses 32 and 33 agreed to.
4.52 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 115:
After Clause 33, insert the following new clause:
(" Temporary modification of penalty
. In section 96 (11 A) of the Transport Act 1968, at the end add—
" Provided that, until 31st December 1983 or such later date as the Minister may by order for the purposes of this subsection prescribe, where a driver or member of the crew of a motor vehicle has contravened any such requirement of the applicable community rules but—
(a) has not, insofar as is material to the offence, driven or been on duty for more, or been off duty for less, than the periods provided in the domestic drivers' hours' code, or
(b) the offence relates to distance driven, the fine shall not exceed £ 1." ").
The noble Lord said: I hope that the Committee, and certainly the noble Minister, will have realised that the attitude of the Opposition throughout in regard
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to the Committee stage of this Bill has been, as was said at Second Reading, to adopt the democratic decision in another place in regard to the philosophy of this Bill, and then try to do its best to help noble Lords, wherever they may sit, to make this an effective Bill. I cannot think of a more constructive example of that than the amendment I am about to move, which has indeed nothing to do with philosophy at all but an awful lot to do with practicability.
The first thing I want to stress regarding this proposed clause is that it is transitional and aimed at meeting what is felt to be a temporary situation. The United Kingdom is in the process of phasing in the Community rules contained in regulation EEC 543/69, as amended. The phasing in will not be completed until the end of this year, but next year, in 1981, Britain will be following the Community regulation, in so far as it is applicable, in its entirety.
There are a number of matters which the United Kingdom has been seeking to have amended in the EEC regulations; notably, the retention of the fixed week, Sunday to Saturday, as opposed to the rolling week of any seven consecutive days. There are other matters which other countries want to raise. It is anticipated that if the subject is reopened by the Council of Ministers there would be a broad reconsideration of the existing regulations, possibly involving a number of changes.
Because of the phasing-in arrangements the worst of the regulation has not yet had impact on British transport operations. It is thought that it would be undesirable for heavy penalties to be imposed in respect of legal provisions which it is widely recognised will require alteration. Indeed, quite apart from the question of heavy penalties there is the question of whether prosecutions ought even to be instituted. It is to cover the period of negotiation of these changes that the proposed new clause envisages modification in the present British law regarding enforcement for a three-year period. Because it cannot be certain that negotiations can be completed in those three years, particularly having regard to the proposed expansion of the Community, provision is made for further temporary extension of the period by ministerial order.
I wish again to make it clear that what is proposed by this amendment is a transitional arrangement based on a rational approach to the subject, and is certainly not meant to be an irresponsible attack upon regulations which Britain agreed to accept on joining the EEC. The need for transition has been recognised in other member States, even those who were parties to the formulation of the requirements laid down in Regulation 543/69. The notable example of this is France, but I shall not bore the Members of the Committee by saying how France and other countries are dealing with these transitional matters unless the Minister— which I do not anticipate— is unhelpful in his reply, in which case I may have to trouble the Committee with those details in order to show how justified this amendment is.
There is a substantial body of opinion in the transport industry which feels that the current European regulation, which is being severely enforced in the United Kingdom, is working to the detriment of British operators as compared with those in other member States, and that it is both logical and desirable to relax the level of enforcement until final agreement and harmonisation of conditions are achieved for the whole of the enlarged Community.
It is obviously important that any change sanctioned by Parliament does not leave a vaccum in enforcement in this country, and therefore the amendment is designed to continue the same strict level of enforcement where anyone contravenes our pre-EEC law. To achieve this the proposed clause envisages two levels of offence with maximum penalties appropriate to each, although the offence would continue to be against the European regulation as incorporated into the provision of Part IV of the Transport Act 1968, as amended.
If I may use the analogy to the Committee, it is rather like saying that if a motorist exceeds the 30 mph speed limit but does not exceed 40 mph the penalty will be X pounds but if in a 30 mph restricted area he exceed 40 mph the penalty will be 2X pounds. This is a decision within the jurisdiction of Parliament, which has the responsibility for enforcing the European law. I commend this amendment to the Committee.
Lord TEVIOT: I cannot be sufficiently strong in my support of this new clause. It is the most important amendment we have had this afternoon. Your Lordships will remember the problems of reforming law on drivers' hours which started with the Transport Act 1968, at which time, during the long Recess, I conducted my own experiments to support the arguments on the views presented to the House. My main memory of driving coaches throughout that summer was the need for flexibility in the law. A long day's driving might be followed by a short one— excursions to the seaside, with plenty of time to relax. The work could be hard, but it had its compensations. So I understand the problems of the industry with this very rigid EEC regulation.
This rigidity means that the European law must inevitably be amended in the near future. It seems that everyone in Europe wants to see changes, and the trouble is that there is no unanimity on the precise changes which should be made. It is because of this— to allow time for the law to be amended— that this new clause is necessary as a temporary transitional measure. It must be understood that the question of fixing penalties is left within the discretion of individual member states. That is stated in Article 18 of this regulation, No. 543/69, so if it is a matter for the member states, then the "competent authority" is our British Parliament. In other countries they treat this regulation in a rather more cavalier fashion. It is openly admitted that 543— a number quoted with much disaffection— is frequently honoured in the breach.
The noble Lord, Lord Mishcon, mentioned France and said he would not bore the Committee. I too do not want to bore the Committee but I must mention a few points about France in this connection. While the Government in France say that the provisions of 543 are the law, the Secretary of State for Transport has made it clear that his enforcement staff have been instructed not to prosecute unless other, more relaxed, limits have been contravened. These limits are, in fact, similar to the old British law, which still applies where transport operators in Britain are outside the scope of the EEC regulation. I have with me copies of the French journals in which these matters are clearly set out, but that is well known

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to the Government. One appreciates that this is a subject on which it might be inappropriate for the Government themselves to introduce this temporary change in the law, but, if it is the will of Parliament, I feel sure they would be glad to accept it.
Without wishing to be patronising, one appreciates that the Committee will not be familiar with the technical complexities of a regulation such as this. As I say, it is the rigidity and complexity which create so many problems. To give one example— and the noble Lord, Lord Mishcon, mentioned this— the greatest single problem in Britain in this sphere is the rolling week of any seven days, whereas we have always used a fixed week, from Sunday to Saturday. The effect of the change is that a new week starts or finishes every single day, and operators have to schedule for seven rolling weeks every fixed week. That has to be done in a demand-responsive industry, where, for example, a fine summer day may bring out two or three times as many trippers as would have travelled if the day were wet. That is not a trivial example because it is not our bus services, which are exempt, but the express and excursion coaches which are now beginning to suffer from this EEC restriction.
I have tried to concentrate on the aspects of the new clause of which I have personal knowledge. The noble Lord, Lord Mishcon, explained its implications in a way which the Committee will have appreciated. I have been anxious to add the views of the driver who, at the end of the day, is the man who suffers from a theoretical, insensitive and frequently misguided piece of European legislation. The new clause offers a sensible and necessary bridge until such time as the regulation can be brought nearer to reality. It is with some fervour that I appeal to noble Lords on all sides of the Committee to agree to the new clause.
Lord BELLWIN: I do not know if the noble Lord, Lord Mishcon, will consider my remarks helpful. I suspect he may consider them not unhelpful, but perhaps not sufficiently helpful to get him to where he would like to be. The noble Lord will be aware that the EEC rules on drivers' hours were agreed long before we joined
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the Community. Thus, we had no say in their drafting, and certainly many of the provisions are not those we would have chosen for ourselves. Nevertheless, I am encouraged by the industry's attempts to adapt to this more stringent regime. The effect of the amendment would be to nullify the EEC drivers' hours rules where they apply in this country, as nobody would take a £ 1 fine seriously. Indeed, to put a £ 1 fine in the amendment is derisory, as doubtless it is intended to be. Regretfully, therefore, I have no alternative but to reject it. I am advised that in any case it would be a breach of the Treaty of Rome and would be overridden by the provisions of the European Communities Act. There is now European Court case law making it clear that national law which obstructs the implementation of EEC regulations is of no effect
I listened carefully to the points which were made and the reference to EEC Regulation No. 543/69, which says that it is "binding in its entirety" and is "directly applicable" to all member states. Whether or not that is, as my noble friend Lord Teviot said, honoured in the breach rather than in the observance, is something of which I am not aware. That and the whole question of how far a country like France does or does not observe the regulations is a very wide subject indeed, but, so far as we are concerned, we try to abide by the regulations, and try, if we do not like them, to have them altered by negotiation. I can tell noble Lords that most member states are at present against any changes in EEC regulations. We watch the position very closely in Brussels. The three years we negotiated were the maximum we could get and, as for the rolling week point to which my noble friend referred, there is no evidence yet that it is causing many problems, though of course it is something we shall have to watch very carefully.
A ruling by the European Court in 1978— the Ratti case— found that national law that obstructed the implementation of EEC regulations was of no effect, and thus the amendment could be interpreted as bringing the law into disrepute. I am not without sympathy, despite what I have said, with what the noble Lord, Lord Mishcon, said, because quite clearly there

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are arguments which, in my view, are strong. But I think the overriding factor here has to be the position in regard to the EEC regulations, to which we at least try to conform, and the fact that the case law which is now being built up on this is not without relevance. Therefore, perhaps not without some regret, I must advice the Committee to reject the amendment.
Lord MISHCON: The forecast of the Minister, that I would have some pleasure and some displeasure at his remarks, was completely accurate. My pleasure is that I have his sympathy. My displeasure is that it is passive sympathy and that nothing has been proffered by the noble Lord to deal with the situation which he himself acknowledges is unjust. Are we really to continue to be faced with a situation where other Governments in the Community decide to do various things to protect their trade and industry and our Government sit idly by?
I promised noble Lords earlier that I would not bore the Committee, unless I had to, with examples of what happens elsewhere, but I am afraid the Minister has made it necessary for me to bring to the Committee's attention what is being done elsewhere in regard to Regulation No. 543/69— for example, in France. I am reliabily informed that the regulation did not start to be seriously applied in the original six member states until the mid 1970s. In the summer of 1975 M. Marcel Cavaille, the French Secretary of State for Transport, made it known that for a transitional period after 1st September 1975, while the law would remain in accordance with Regulation 543/69— as would be the case with the new clause proposed by the amendment— transport operators would not normally be prosecuted if they did not exceed certain limits which were more relaxed than those prescribed in the EEC regulations.
It is interesting to know what the limits were: maximum period of continuous driving, five hours as against the EEC requirement of four hours; maximum driving in a day, 10 hours as against the EEC requirement of eight hours; minimum daily rest, eight hours as against the EEC requirement of 10 hours, with compensation allowed. If an offender were
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to be prosecuted, it was made clear that the courts would apply the European regulation but it was understood that this would happen only if prosecutions were initiated on other grounds beyond those I have just indicated.
I had hoped that at the very least the Minister might have said that perhaps it is not appropriate to include such a situation in an Act of Parliament, though I am advised that it is perfectly proper for our Parliament to decide— while acknowledging thatthis isthelaw— what the penalty shall be during the transitional period while these matters are being looked at. If the Minister is advised to the contrary— that it is not proper for Parliament to pass such an amendment; and I do not concede that that is so— then I should have thought that at the very least the Minister would have said that he would if necessary confer with his right honourable friend the Secretary of State for the Home Department, and see that an intimation was given to the police in regard to these offences that, for a transitional period, if there was merely a breach of the regulation— and it is not a home-based situation, as it was, and still may be after negotiation— prosecution should not normally be brought.
I personally regard that as being possibly less advantageous to the point that the Minister is apparently making; namely, that what is being considered here would be a breach. I should have thought that to repeat the law and to say that the EEC regulation is binding, but that there should be only a nominal penalty, would be the way to get over the matter; and I cannot see the slightest harm in that. But for us to place our own operators in a disadvantageous position as compared with other members of the community— when everyone knows what is happening and when these matters are being negotiated— seems to me to be entirely wrong. Unfortunately without such a provision as that contained in the amendment our courts will be completely misled when prosecutions are brought and the matters come before them. There may be imposed convictions and fines which are completely out of proportion, having regard to the situation which your Lordships' Committee has patiently listened to me develop this afternoon.
Lord BELLWIN: I do not think that I can go much farther on this matter. I am surprised if in fact the noble Lord, Lord Mishcon, is really pressing the point that we should follow the French example which in so many ways we deplore when they depart from the regulations. I should not have thought that that was the way we wanted to go. Nevertheless the noble Lord made some very telling observations in his closing points. I certainly cannot agree that we can accept this matter. I repeat what I said previously; namely, that we are obliged to consider carefully the points that the noble Lord makes, particularly his final points. I assure him that we shall look at them very carefully, but for the moment I cannot accept the amendment as it stands.
Lord MISHCON: It is with some hesitation that in regard to this amendment I take the course that the Minister has invited me to take. I know how helpful the Minister tries to be, and I know that he, like so many of us, wishes the Bill to be as effective as possible, whether or not we like the original policy in regard to it. I am accepting his assurance in its literal sense: that he will really have the matter looked at very carefully, with those of his colleagues who may be able to assist in regard to questions of police prosecutions and so on. On the clear understanding that he will be good enough to let me know— and no doubt the noble Lord, Lord Teviot, would also wish to be informed— of progress regarding his thoughts and those of his right honourable friend on this matter, and will do so well before Report stage, so that if necessary we shall know that we have to repeat the amendment in some form or other at that stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 4 agreed to.
Clause 34 [Supplementary provisions with respect to offences]:
5.15 p.m.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 116:
Page 32, line 2, leave out (" body corporate ") and insert (" company ").
The noble Lord said: I spoke to this amendment when dealing with Amendment No. 78. I beg to move.
On Question, amendment agreed to.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendments Nos. 117 to 119:
Page 32, line 5, leave out (" body corporate ") and insert (" company ").
line 7, leave out (" body corporate ") and insert (" company ").
line 9, leave out (" body corporate ") and insert (" company ").
On Question, amendments agreed to.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 120:
Page 32, line 12, leave out (" body corporate ") and insert (" company ").
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 121:
Page 32, line 13, leave out subsections (3) to (8).
The noble Lord said: This is a largely technical amendment consequential on the new clause about partnerships. Any special provisions about partnerships will, under that new clause, be made in regulations. There is no need to have special provisions about unincorporated associations, since they will not be permitted to hold licences as such. Therefore we can simplify the Bill and delete the subsections in question. I beg to move.
On Question, amendment agreed to.
Clause 34, as amended, agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 122:
After Clause 34, insert the following new clause:
(" Defences available to persons charged with certain offences.
.— (1) It shall be a defence for a person charged with an offence under any of the provisions mentioned in subsection (2) to prove that there was a reasonable excuse for the act or omission in respect of which he is charged.
(2) The provisions referred to in subsection (1) are—
(a) sections 7 (7), 14 (6), 23 (5) and 24 (4);
(b) in the 1960 Act—
(i) so much of section 144 (8) as relates to contravention of section 144 (l) (a);
(ii) sections 146 (2) and (3), 147 (2) and 148 (2);
(iii) so much of section 232 (3) as relates to failure to comply with the requirement of section 232 (2) (6); and
(iv) section 239.

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(3) It shall be a defence for a person charged with an offence under any of the provisions mentioned in subsection (4) to prove that he took all reasonable precautions and exercised all due diligence to avoid the commission of any offence under that provision.
(4) The provisions referred to in subsection (3) are—
(a) sections 4 (5) and (6), 16 (3), 17 (8) (Z>), 18 (5) and 21 (7);
(b) in the 1960 Act—
(i) so much of section 144 (8) as relates to contravention of section 144 (1) (); and
(ii) sections 148 (2) and 157 (2).").
The noble Lord said: I spoke to this amendment along with Amendment No. 20. I beg to move.
Lord MISHCON: I rise only to ensure that a point that I previously made when the noble Minister spoke on this matter has been looked at by him. Alternatively, if he has not had the opportunity to do so, which I can quite understand, I should like to know whether he still has the point in mind. I should like to take the Committee through only the four matters dealt with in subsection (2) (a) of the new clause; namely, Clauses 7 (7), 14 (6), 23 (5) and 24 (4). With regard to all those matters it is a defence to prove that there was a reasonable excuse for the act or omission in respect of which the defendant is charged.
Clause 7 (1) deals with failing to supply particulars of a change in fares. I have not the slightest quarrel in regard to a reasonable excuse for the act or omission being a defence in that case. Clause 14 (6) deals with failing to give or publish a notice in regard to stage carriage services in trial areas. I have not the slightest quarrel with the provision that a reasonable excuse should be a defence in that connection. Clause 24 (4) deals with failure to give traffic commissioners information about certain matters. Again, though the Bill originally included the word "knowingly", I have not the slightest objection to the fact that now a reasonable excuse for the act or the omission is a defence.
However, I have the strongest feelings regarding Clause 23 (5), which deals with failure to give the commissioners information of relevant convictions. The only defence in that regard in the Bill as drawn was that the person concerned did not knowingly commit the offence. To alter
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the situation from that which included the word "knowingly" to a defence that there is a reasonable excuse for the act or omission seems to open an avenue of defence in regard to failure to give details of a relevant conviction which may be of the utmost seriousness and importance in regard both to the traffic commissioners and the question of safety of transport. I asked the Minister to look at that again. I do not know whether he has had the opportunity to do so. If he has, he will doubtless intimate it; if he has not, I merely ask for his assurance that he will look at it very soon.
Lord BELLWIN: I can gladly assure the noble Lord that we are in fact looking at it, and that I will certainly let him have this decision, and anything else which goes with it, by the time we come to Report stage.
On Question, amendment agreed to.
5.21 p.m.
Schedule 5 [Minor and consequential amendments relating to public service vehicles]:
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 123:
Page 62, line 10, leave out paragraph 13.
The noble Lord said: In order to simplify the provisions governing a breach of regulations, we have decided that all aspects of the keeping and producing of documents required for international services should be dealt with in the regulations which govern the operation of international coach services. This paragraph is therefore no longer necessary. I beg to move.
On Question, amendment agreed to.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 124:
Page 62, line 42, at end insert—
(" TRANSPORT ACT 1962 (c. 46)
In section 4 (5) (by virtue of which the Railways Board are not authorised to carry passengers by road in certain hackney carriages adapted to carry less than eight passengers), for "eight" substitute "nine".").
The noble Lord said: This is a purely consequential amendment. It brings the passenger seat threshold in this subsection of the 1962 Act into line with the definition

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of a public service vehicle in Clause 2 of this Bill, where the threshold has been increased from 8 to 9. I beg to move.
On Question, amendment agreed to.
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 125:
Page 63, line 7, after (" 1980) ") insert (" and if in relation to a new bus service it is available to the general public ").
The noble Lord said: In moving Amendment No. 125 I should like, in addition, to speak to Amendment No. 181. This amendment, No. 125, proposes the insertion, in the place specified in the amendment, of the words:
"and if in relation to a new bus service it is available to the general public ….".
Amendment No. 181 proposes to omit, from the place specified in the amendment, the words,
" is available to the general public and ….".
These two sets of words may seem contradictory, but I shall endeavour to explain as simply as I can. These two amendments both relate to amendments which the Bill as at present worded would make to subsection (8) of Section 92 of the Finance Act 1965, which applies to new bus grants and reimbursement of fuel oil duty for bus services.
In trial areas, with which Amendment No.. 125 is concerned, under the Bill any operator could convert a regular contract into a fare-paying service so as to qualify for this Government support; and we must keep in mind that there will be no licensing or other controls in trial areas. Moreover, a change of this kind could be purely artificial. An operator could arrange that a company hiring its vehicle for the purpose of transporting the company's workers should charge the workers a nominal fare. This would make the service one which was eligible for the Government support. I am certain that this is not what the Government intend, but I am advised that this is what could take place under the present wording of the Bill.
Amendment No. 181, which relates to Clause 52, is the reverse situation— the position outside the trial areas. There are at present bus services which may carry only certain persons; for instance, a fare-paying school bus and a works' bus service. Passengers on those services
610
are restricted by the licence to pupils of a school or employees of a particular works. These services qualify for Government support. I am advised that under the terms of the Bill they would cease to do so. The fact that the Government are changing various definitions in the Bill should not penalise these special regular services. So existing operators, in the circumstances outlined, should not be penalised; and in the trial areas there should surely be a safeguard for the expenditure of public money. These are the two points which these two amendments seek to deal with. I beg to move.
Lord BELLWIN: I think the need for this amendment falls with the amendment to Clause 52. If there was no general test of availability to the general public for eligibility for fuel duty rebates and new bus grant, I can see that one might be required in trial areas; but it must surely be right for the availability test to be general. The new bus grant and fuel duty rebate have always been designed to help the local bus network. As a consequence of the changes in definitions of the different categories of bus service made by this Bill, it has been necessary to change the criteria for eligibility for these grants. In doing this we have kept the basic purpose of the grants always before us. They were not intended to help services with a special clientele, and, in the past, most of these have been excluded by the minimum fare condition of the stage carriage. We are now excluding them in so many words.
Admittedly, a few services now eligible for grant will either lose their eligibility or will have to be opened to the general public. If they are so opened, this may mean a new public transport facility. If they are not, then those benefiting from them— say, the workers or the employer— will have to meet some (presumably a little) extra cost. But there is an important point of principle here on which we are firm. Parliament has agreed to make available money as an aid to public transport, not for private arrangements. We must maintain this important distinction.
Lord UNDERHILL: The noble Lord has explained quite definitely that some services outside the trial areas will lose Government grants. What he has not

611
explained is why these grants have been paid for some period but the Government have now decided to stop them, because it is in completely changed circumstances that they have decided that they shall no longer continue. What I did not gather from the noble Lord— and it may be my own fault that I did not grasp it— is this. He did not deal with the point I made, which is the second amendment, dealing with the position in the trial areas. Here, undoubtedly, there could be artificial arrangements which could mean the expenditure of Government grants in circumstances which, frankly, cannot possibly be justified. On that point, perhaps the noble Lord would say why, there, they are prepared to expend Government money, whereas in the case of other services, which have continued for some time now to have Government grants, the Government propose to stop them outside the trial areas.
Lord BELLWIN: All I can add, really, is that since availability to the general public is to be a criterion of eligibility throughout Great Britain, there is no need for any special provision for the trial areas. As to the other points made, I fear there is nothing more I can add at this time; but I would have thought that the arguments made were pretty convincing in this instance. I hope the noble Lord may feel so.
On Question, amendment negatived.
5.30 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 126:
Page 63, line 41, at end insert ("; and
(b) for the definition of "bus service" substitute—
" "bus service" means a stage carriage service within the meaning of Part I of the Transport Act 1980 which is neither—
(a) an excursion or tour; nor
(b) a service as regards which the condition specified in section 3 (3) () of the Transport Act 1980 (long journeys only) is satisfied;"").
The noble Lord said: This amendment is purely consequential on the re-definition in the Bill of "stage carriage" and "express carriage" and brings the definition of "bus service" in the Transport Act 1968 into line with the Bill. I hope the
612
Committee will feel able to accept the Amendment. I beg to move.
On Question, Amendment agreed to.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 127:
Page 64, line 4, leave out paragraph 2.
The noble Lord said: This small amendment corrects an error in Schedule 5. It deletes a provision which need never have been included. I beg to move.
On Question, amendment agreed to.
The DEPUTY CHAIRMAN of COMMITTEES (Baroness Wootton of Abinger): If Amendment No. 128 is agreed to, I shall not be able to call Amendment No. 128A:
Lord BELLWIN Lord BELLWIN moved Amendment No. 128:
Page 64, leave out lines 8 to 13.
The noble Lord said: I spoke to this amendment when moving Amendment No. 107A. I beg to move.
On Question, amendment agreed to.
Lord MORRIS Lord MORRIS moved Amendment No. 128B.:
Page 65, line 20, leave out (" of operator ").
The noble Lord said: I hope it will be for the convenience of the Committee if, in moving this amendment, I speak to Amendment No. 129. I am rather at a loss as to why Amendment No. 128A falls, but that is another matter. This amendment is a purely drafting amendment of sublime simplicity. It corrects two references in the Bill in Schedule 5 to the description of Clause 14 of the Bill. The rubric to Clause 14 reads:
" Duty to publish particulars of stage carriage services in trial areas ".
I believe it would be helpful if references in other parts of the Bill to what will become Section 14 of the Transport Act 1980 are consistent and precise. I beg to move.
Lord MOWBRAY and STOURTON: I am grateful to my noble friend Lord Morris for his helpful drafting amendment which provides consistency in the reference in Schedule 5 to the description of Clause 14. I am pleased to accept it.
On Question, amendment agreed to.
Lord MORRIS Lord MORRIS moved Amendment No. 129:
Page 65, line 21, leave out (" bus service in trial area ") and insert (" stage carriage services in trial areas ").
Lord MOWBRAY and STOURTON: I should like to thank my noble friend for this amendment. The Government willingly accept it.
Lord MISHCON: May I inquire whether the noble Lord, Lord Morris, is thinking of changing his profession and becoming a parliamentary draftsman?— because the number of occasions on which he has suggested drafting improvements which have been accepted by the Government, while possibly making the responsible parliamentary draftsman not so happy, makes the Committee happy that they have Lord Morris in their midst.
Lord MORRIS: All that I would say to that is, God forbid!
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 130:
Page 65, line 22, after (" 2 (9) ") insert—
(a) in the definition of "commercial vehicle" for "not more than five passengers" substitute "not more than eight passengers"; and
(b) ").
The noble Lord said: The Passenger Vehicles (Experimental Areas) Act 1977 permits various relaxations to the bus licensing system on an experimental basis but limits those with commercial vehicles to vehicles adapted to carrying not more than five passengers. This limit of five is out of line with that of eight which we are adopting generally in the Bill. The small increase on the limit will facilitate experiments with the use of commercially operated small minibuses. I beg to move.
On Question, amendment agreed to.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 131:
Page 65, leave out lines 31 to 33.
The noble Lord said: I spoke to this amendment when moving Amendment No. 111. I beg to move.
On Question, amendment agreed to.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendments Nos. 132 and 133:
Page 67, line 25, leave out (" Subsections (6) and (7) ") and insert (" Subsection (6) ")
line 28, leave out (" they apply ") and insert (" it applies ").
The noble Lord said: I spoke to these amendments when moving Amendment No. 20. I beg to move the two amendments en bloc.
On Question, amendments agreed to.
Schedule 5, as amended, agreed to.
Clause 36 [Interpretation of Part I]:
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendments Nos. 134 and 135:
Page 33, line 13, at end insert—
(" "company" means a body corporate; ") line 18, at end insert—
(" "director", in relation to a company, includes any person who occupies the position of a director, by whatever name called; ").
The noble Lord said: I spoke to these amendments when moving Amendment No. 78. I beg to move the two amendments en bloc.
On Question, amendments agreed to.
[Amendment No. J36 not moved.]
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 137:
Page 33, line 29, leave out from (" concerned ") to (" the ") in line 31 and insert (", whether or not any driver leaves or enters ").
The noble Lord said: This is a useful Opposition amendment to the definition of "international operations" and was accepted in Committee in another place. We have since discovered that the definition can be expressed more clearly and concisely. This is what this amendment does. I beg to move.
On Question, amendment agreed to.
5.38 p.m.
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 138:
Page 33, leave out lines 36 and 37 and insert—
(" "operating centre" includes office and shop premises and maintenance facilities owned or rented by a holder of or an applicant for a public service vehicle operator's licence and, in relation to a

615
vehicle, means the place at which the vehicle is normally maintained or based; ").
The noble Lord said: This amendment seeks to give a more precise definition of "operating centre "by substituting the words in the present Bill for those that are on the scheduled list. The words in the Bill are:
" ' operating centre', in relation to a vehicle, means the base or centre at which the vehicle is normally kept".
We regard that as totally inadequate, Every public service vehicle business, noble Lords will agree, should be properly conducted. This requires a suitable operating centre. It can be safely left to the traffic commissioners to decide what is suitable in each individual case. Where the operator carries out his own maintenance the provision of the necessary facilities will have to be taken into account. But where maintenance is contracted out, there should be suitable parking arrangements for vehicles and also there is a need for each operator to have office facilities adequate for his type and size of operation. These things are essential to good public service and should be specifically referred to in the legislation.
While Clause 18 (3) of the Bill limits any one person to one licence in any traffic area, Clause 18 (2) provides for a licence holder having:
" one or more operating centres in that traffic area ".
Indeed, facilities may often be shared among different centres and the position required to be looked at as a whole. For example, minor maintenance may be carried out where the vehicle is based or kept but all major work should be carried out at other premises. Again, a small operator may keep vehicles on a coach park or car park overnight and have them maintained by someone else, perhaps on a wholly satisfactory contract basis, but would also need to have office premises. These facilities must be looked at as a whole. This approach which, it is submitted, is the only practical one means that the operating centre needs to be defined. The proposed definition to replace that at present in Clause 36 reflects a situation which, in moving this amendment, I have endeavoured to set out. I beg to move.
Lord BELLWIN: I am bound to say
616
that this amendment makes nonsense of the phrase "operating centre" as used in the Bill. Under Clause 18, licences can only be granted by the traffic commissioners in whose area the applicant has an operating centre. The same clause provides that the vehicles authorised to be used under the licence are only those whose operating centre is in the area of the commissioners who granted the licence. Clearly, the operating centre must be identifiable at a particular place. It cannot be any number of different places. If the operator has a large concern, such as an NBC subsidiary, these places may not even be in the same traffic area.
The noble Lord, Lord Underhill, is apparently concerned that commissioners should be able to look at an operator's premises in deciding on a licence application. I fail to see why. The commissioners are only concerned with the operators' suitability to run public service vehicles. They will be interested in where those vehicles are maintained— but this may not be at the operator's own premises. He may have a contract with another operator or a nearby garage. Hence the wording of Clause 20 (3) which directs the commissioners' attention to maintenance facilities or arrangements. The commissioners will be interested in how the operator proposes to run his business— his financial standing, professional competence and good repute. But they have no interest in the state of his shops or offices; and, as I have said on an earlier amendment, they have no locus in environmental matters.
Lord UNDERHILL: I will take note of what the Minister has said and look at this more carefully in the Official Report. We are anxious that the licensing commissioners should be able to look at the whole question of an operation which in proposing the amendment we had in mind would cover all the points to which I referred. In view of the Minister's reply, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord MISHCON Lord MISHCON had given Notice of his intention to move Amendment No. 139:
Page 33, line 43, at end insert—
(" "person" includes any unincorporated body such as a partnership, club or

617
association, which is for the purposes of this Part of this Act a separate entity from its members; ").
The noble Lord said: We have had a full discussion before the Committee regarding Amendment No. 108. Now that this amendment is called, apart from partnerships, clubs or associations that arc dealt with in the amendment, would the Minister please, in accordance with his kind undertaking, also look at clubs and associations in the light of what I said? On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 140 not moved.]
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 141:
Page 34, leave out lines 20 to 22.
The noble Lord said: I beg to move this amendment and to take with it Amendment No. 185. These are standard definitions which are needed to avoid doubt as to the meaning of "modification" and "statutory provision". They are now placed in Clause 58, and apply to the whole Bill. Without these amendments, the use of these expressions in Clause 58 could have been open to some confusion. The definitions provided are well prece-dented. I beg to move.
Lord MORRIS: May I ask a question regarding the amendment to Clause 58? The amendment inserts the definition of "modification" and reads:
"includes addition, omission and alteration, and related expressions shall be construed accordingly".
To my mind this means that "modification" has some other meaning. I wonder whether my noble friend would be good enough to tell me what meaning it could possibly have other than the meaning as defined.
Lord MOWBRAY and STOURTON: I should not like to reply off the cuff. I will certainly find out and let my noble friend and anyone else who is interested have the answer.
On Question, amendment agreed to.
5.45 p.m.
Lord UNDERHILL Lord UNDERHILL moved Amendment 142:
Page 35, line 7, at end insert—
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(" (4) In this part of the Act "prescribed" means prescribed by regulations and "regulations" means regulations made under section 160 of the Road Traffic Act I960.").
The noble Lord said: We hope that it is considered helpful to move this amendment. We are trying to identify the powers of the Minister for making the various regulations envisaged in the Bill. We think that our cross-reference to the 1960 Act may do this. I beg to move.
Lord MOWBRAY and STOURTON: I am advised that this amendment is unnecessary, although we sympathise with the noble Lord for moving it. Clause 1 of this Bill, subsection (3), provides for the construction of Part I as if it were contained in Part III of the Road Traffic Act 1960. We must read the two together as if they were a single enactment.
Some sections of Part III of the 1960 Act have of course been repealed. The rest remain, some with amendments. Section 160 is one of those. It enables the Minister to make regulations for any purpose for which regulations may be made under "this Part of this Act "and for
" prescribing anything which may be prescribed under this Part of this Act ".
Because of Clause 1 the term
" this Part of this Act "
will on enactment include Part I of this 1980 Bill. Moreover, Clause 1 (3) specifically mentions that the interpretations in Clause 36 will apply to the 1960 Act. It is therefore not only unnecessary to refer to regulations being made under Section 160 of the 1960 Act but it would be a rather odd interpretation to apply to that Act. All this to-ing and fro-ing between enactments is, of course, confusing. Consolidation is needed and as my noble friend Lord Bellwin indicated at Second Reading, it is already underway. I am afraid that is very complicated but I hope my speech was intelligible to the noble Lord opposite.
Lord UNDERHILL: I thank the noble Lord for explaining why we cannot be helpful to him. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 36, as amended, agreed to.
Clause 37 [Transfer of undertaking of National Freight Corporation]:
Lord MISHCON Lord MISHCON moved Amendment No. 143:
Page 35, line 22, at end insert—
(" Provided that no such order shall be made until a draft thereof has been laid before, and approved by a resolution of, both Houses of Parliament.").
The noble Lord said: We are now entering into a different part of this Bill, one which deals with the demise of the National Freight Corporation, its resurrection— if I may say so— into that of a limited company and its consignment to heaven or hell dependent upon who in private enterprise manages to succeed. In another place a Member— understandably passionately— described the various stages. He also apparently had great powers of elocution: he described it as the write-off rip-off followed by the sell-off rip-off and then by the strip-off rip-off!
In the very delicate and gentlemanly atmosphere of this Committee, I do not copy these descriptions at all; and by agreement— as Members of the Committee know— there will be no argument about policy but only how to carry out the policy dictated— "dictated" is the wrong word— decided in another place to the best advantage of the industry and those engaged in it.
The amendment before the Committee at the present stage is that no order shall be made fixing the appointed day until a draft has been laid before both Houses of Parliament and approved by a resolution.
The amendment is not intended in any way at all to be a trick amendment, a delaying amendment or an obstructive amendment. It is to preserve the sovereignty of Parliament in dealing with a matter which is of great importance to the nation.
At the moment, when the appointed day occurs, the whole of the National Freight Corporation goes "without further assurance", if I may use the term in the Bill, to a company which is defined as a company limited by law or an ordinary limited company. As from that stage— but one does not know when— two things will follow. One is a complete write-off of the indebtedness of the National Freight Corporation, amounting to £ 100 million, which takes place just before the
620
appointed day. One does not know what the precise amount will be on the appointed day, because one does not know when the appointed day will be.
Then it is the intention of this Bill that there shall be a sale thereafter, again at a date unknown, on terms unknown and to purchasers unknown. The company will be operating under a memorandum and articles of association, the terms of which have not yet been disclosed to either House of Parliament. I need not tell your Lordships, many of whom are experienced in commercial matters, how vital memorandums and articles of association are. For example, they deal in matters of this kind with provisions which safeguard the question of sale to foreign interests, which is a matter that has been of some concern to the nation in other industries in recent times.
Therefore, what my noble friends and I are seeking to do by this amendment— and, I repeat, with no wish to delay or impede— is to see that when an order is made (I repeat that we do not know when it is going to be) for the appointed day to occur, Parliament shall have an opportunity of considering that order, the terms of it, the relevance of that date to various considerations: I shall not repeat those to which I have already drawn your Lordships' attention. It seems to me that, unless Parliament is to throw its obligations upon Ministers, which has been criticised in very many places and indeed in this Chamber and in another place by those independent Members who believe in preserving the sovereignty of Parliament, and unless we are to fail to follow the principle of parliamentary responsibility, then it is absolutely wrong for anyone to oppose this amendment too.
That does not mean that the Minister will not seek to do so, but I hope that, having heard this speech, having been imbued, as he was in his local government days, with the independence of individual councillors when they sat at a council meeting, and having now learned— as I am sure he has done so easily— what parliamentary duties mean to those of your Lordships who still keep your independence and what they will mean to honourable Members in another place, he may be converted and in those circumstances will gracefully accept this amendment.
Lord BELLWIN: The matter has been so beautifully put that I should like only to say that, although it is quite true that in another incarnation I was always impressed by the independence of individual councillors, I was also impressed by the fact that when the time came to put your hand up to vote you alv/ays voted in line with the party, and so I fear that the independence broke down at the end of the day.
Lord MISHCON: May I intervene, with your Lordships' permission, to say that that is not the experience in this place, as I hope the noble Lord will find in a few minutes.
Lord BELLWIN: No, I have already found that is not the experience in this place: I entirely accept that without question. I must say in fairness, however, before I leave this, that I occasionally found the same thing in another sphere. I accept that the appointed day order is an important technical device in determining exactly when the NFC's undertaking is to be transferred to the successor company; but the appointed day will not represent any new policy departure or give rise to any new issues of substance. It will merely give effect to the provisions set out in Part II of the Bill and to which Parliament will have already given approval. Thus, it is quite inappropriate for the appointed day order to be subject to an Affirmative Resolution or, for that matter, to any additional parliamentary procedure. It would simply mean repeating discussion which had already been held, and extensively held, on the Bill itself.
The noble Lord, Lord Mishcon, was concerned that the Bill is not specific enough on the nature of the successor company or on the Minister's intentions. The Bill is quite specific as to the nature of the successor company. Subsection (5) provides that the company must be a standard Companies Act company, limited by shares and with all the shares held by or on behalf of the Minister. The Government's intention on the use of the provisions is quite clear. The Minister will form a company, acting under powers already available to him as a natural person, for the sole purpose of nomination as the successor company to the National Freight Corporation.
622
I do not share the fears of the noble Lord, Lord Mishcon, as to all the dreadful things that might happen under this part, and indeed under the whole, of the proposals as regards the NFC and I fear that on this occasion I would have to oppose the amendment.
Lord MISHCON: The Committee will have noticed that not one single reason has been given by the Minister as to why the order should not be affirmed by both Houses of Parliament. The Minister has not pleaded that this would in any event mean a delay— it would have been extraordinary if he had because, as I have said, the appointed day has not yet been fixed. Nobody knows when it is going to be. There will not be any hurry thereafter. It is a question of a sell-off and it is purely a question of becoming, as we have heard, an ordinary limited company.
It is not very common for any transfer of this importance to take place without— and I am repeating some of the things I said before, but I am going to add to them— Parliament knowing the amount of the debt that is, the precise nature and amount of the debt to be extinguished by means of a Bill; without knowing what are the powers, duties and rights by way of protection in regard to new shareholders, who may become shareholders of the company limited by shares; and without knowing— I did not mention this before— the nature of the securities to be given to the Minister in compensation, among other things, for the debt which is to be extinguished; without knowing what the intention of the Minister is after the appointed day in regard to the date of sale; without knowing the nature of the purchaser the Minister is going to find. I could in fact dilate upon this, because the Minister was kind enough to write to me but I shall be dealing with his letter in regard to another amendment and I will not embarrass him unnecessarily by quoting his letter now.
It is completely uncertain— this I can tell your Lordships— as to the type of purchaser that is to be found. It may be thrown to the market and so on. In all those circumstances, I ask your Lordships, wherever you may be sitting, to have regard to the sovereignty of Parliament in a matter of this kind, and I ask all your

623
Lordships, regardless of party or of no party at all, to have that principle in mind when voting on this amendment— and we shall in fact be dividing upon it.
Lord BELLWIN: I really feel that we are making of this something which it is not. I should repeat what I said before, but perhaps in another way. The fact is that on this matter of such great moment, to which the noble Lord, Lord Mishcon, is drawing attention, the order designating the appointed day will not be subject to parliamentary procedure, as it will not involve any new policy departure. The noble Lord said that I had not given any reason why we take this line, but I thought that I had given the very best reason of all; namely, that the matter would have been extensively discussed on the Bill itself. That has been so in another place and will be so here.
This procedure is simply the mechanical step which is necessary to bring into operation the relevant provisions in Part II of the Bill. It is desirable to retain maximum flexibility as to the date on which the NFC's undertaking is transferred to the successor company, and the appointed day procedure is the technical means intended to achieve this. But the designation of the day will not give rise to any policy issue of substance. It will merely put into effect— and this is the key part— provisions that have been fully debated in Parliament.
I am not sure whether the noble Lord would like me to go into greater detail as to the kind of company it will be; I suspect that he does not wish me to do that. But the point is that I am satisfied, and I feel that this Committee will be satisfied that the proposals here are entirely in keeping with what has gone before as a matter of policy in another place, with which we are concerned on this part of the Bill in this Committee. Therefore, if the matter is pressed to a Division I hope that your Lordships will accept the Government's line on this, which I think is a very fair one in all the circumstances.
Lord MORRIS: I rise to support my noble friend on this point. The noble Lord, Lord Mishcon, showed a certain fear for putative shareholders, but it is worth saying that any future shareholder
624
has the ultimate right of protection. He does not have to buy shares in this company when it is formed. He will have every opportunity to decide whether or not to do so. I do not think there is any reason for the noble Lord, Lord Mishcon, to express fear on behalf of any future shareholder.
Lord MISHCON: I rise only to clarify the point and will do it very quickly. I was not expressing fears on behalf of shareholders. I was expressing fears on behalf of the nation, as to who the shareholders might be.
Viscount SIMON: When I first read the amendment and heard what was said. I was inclined to support the noble Lord. Lord Bellwin, but I wonder whether he could help by explaining this to me. As I understand the position, the order will simply establish the appointed day. Does it do anything else? Does it simply say "The appointed day will be such-and-such "'? Does it give any of the information for which the noble Lord, Lord Mishcon, has asked'.' If this is the only way that we are to know how the outline of this plan is being filled in, then I agree that we should like to see that outline filled in before Parliament. But, on the face of it, all that the order will do is to say, "The 1st January shall be the appointed day". It will not say anything else.
Lord BELLWIN: That is absolutely right. The purpose and effect of the amendment, as I am advised and as I interpret it, is to make subject to Affirmative Resolution the order whereby the Minister, with the consent of the Treasury, appoints the day on which the NFC's undertaking is transferred to the successor company. As drafted, the order is not at all subject to parliamentary procedure.
Lord MISHCON: Will I be forgiven if I rise— and I promise that it will be for the last time— in order to make one point abundantly clear? It is a completely truthful answer which the Minister has given, as one would expect of him, but the truth has been expressed in a summarised form. It is absolutely correct that all it will say is, "This is going to be the appointed day", but whether Parliament agrees that that should be the appointed day and that vesting should take place

625
depends on the situation at that time, for the very good reason that immediately the order is made certain things flow, of which Parliament will be completely unaware. I must repeat them, only because the noble Viscount, Lord Simon, who is always so clear on these matters, appears to be under a possible misunderstanding which may be shared by other noble Lords.
The fact of the matter is that on that day vesting takes place into a limited company, the memorandum and articles are not seen by Parliament, the nature of the provisions to protect against foreign shareholders and so on are not seen by Parliament, and the amount of the debt to be extinguished— which is completely dependent on when that day is— is not known. All those things will be before Parliament, because questions could be asked in this House and in another place, in order to clarify certain issues before an Affirmative Resolution was made. That is the importance of the whole matter. If it were a technicality, I should not have been taking up the time of your Lordships as I have done. It is a matter of principle in regard to the sovereignty of Parliament.
Lord BELLWIN: I must make one
further point which was touched on by the noble Lord, Lord Mishcon, and which is relevant to the concern expressed by the noble Viscount, Lord Simon. The fact is that when the company is set up, the memorandum and articles must be registered at Companies House. There will be no secret about that and, for convenience, we can arrange for a copy to be placed in the Library of the House as, in any case, they will have to be in existence before the appointed day. That would avoid the charges of noble Lords opposite about the NFC being transferred to some shadowy, unknown organisation. I could elaborate on this again, but there is probably no point at this time. As I said originally, the essence of the amendment concerns the appointed day. The noble Lord, Lord Mishcon, was quite right. Yes, I interpreted it as it was literally set out, and that is what we have to do when considering this amendment.
6.8 p.m.
On Question, Whether the said amendment (No. 143) shall be agreed to?
Their Lordships divided: Contents, 48; Not-Contents, 98.

CONTENTS

Ardwick, L.

Gosford, E.

Peart, L.

Bacon, B.

Hale, L.

Pitt of Hampstead, L.

Beswick, L.

Houghton of Sowerby, L.

Ponsonby of Shulbrede, L. [Teller.]

Blease, L.

Janner, L.

Boston of Faversham, L.

Jeger, B.

Sefton of Garston, L.

Brockway, L.

Leatherland, L.

Shinwell, L.

Caradon, L.

Lee of Newton, L.

Stewart of Alvechurch, B.

Cledwyn of Penrhos, L.

Leonard, L.

Stone, L.

Collison, L.

Llewelyn-Davies of Hastoe, B.

Strabolgi, L.

David, B.

Lovell-Davis, L.

Strauss, L.

Davies of Leek, L.

Maelor, L.

Taylor of Mansfield, L.

Davies of Penrhys, L.

Milner of Leeds, L.

Underhill, L.

Donaldson of Kingsbridge, L.

Mishcon, L.

Wallace of Coslany, L. [Teller.]

Fisher of Rednal, B.

Noel-Baker, L.

Whaddon, L.

Gaitskell, B.

Northfield, L.

Wootton of Abinger, B.

Glenamara, L.

Oram, L.

Wynne-Jones, L.

Goronwy-Roberts, L.

NOT-CONTENTS

Ailesbury, M.

Cathcart, E.

De Freyne, L.

Alexander of Tunis, E.

Chesham, L.

Denham, L. [Teller.]

Alport, L.

Chitnis, L.

Drumalbyn, L.

Amory, V.

Cockfield, L.

Ellenborough, L.

Armstrong, L.

Colville of Culross, V.

Elliot of Harwood, B.

Auckland, L.

Cork and Orrery, E.

Exeter, M.

Avon, E.

Cottesloe, L.

Faithfull, B.

Beaumont of Whitley, L.

Craigavon, V.

Ferrers, E.

Bellwin, L.

Craigmyle, L.

Fortescue, E.

Belstead, L.

Cullen of Ashbourne, L.

Gainford, L.

Brougham and Vaux, L.

Daventry, V.

Glasgow, E.

Caithness, E.

Davidson, V.

Glenkinglas, L.

Campbell of Croy, L.

de Clifford, L.

Godber of Willington, L.

Gowrie, E.

McFadzean, L.

Romney, E.

Gridley, L.

Macleod of Borve, B.

Sandford, L.

Grimston of Westbury, L.

Mansfield, E.

Sandys, L. [Teller.]

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

Margadale, L.

Selsdon, L.

Marley, L.

Sempill, Ly.

Hampton, L.

Masham of Ilton, B.

Sharpies, B.

Harmar-Nicholls, L.

Merrivale, L.

Simon, V.

Hatherton, L.

Morris, L.

Spens, L.

Henley, L.

Mottistone, L.

Stamp, L.

Hereford, V.

Mowbray and Stourton, L.

Strathspey, L.

Hornsby-Smith, B.

Murton of Lindisfarne, L.

Teviot, L.

Hylton-Foster, B.

Northchurch, B.

Trefgarne, L.

Keyes, L.

Nugent of Guildford, L.

Trenchard, V.

Killearn, L.

Orkney, E.

Trumpington, B.

Kilmany, L.

Orr-Ewing, L.

Vaux of Harrowden, L,

Kimberley, E.

Rawlinson of Ewell, L.

Vickers, B.

Lauderdale, E.

Redmayne, L.

Vivian, L.

Long, V.

Reigate, L.

Wigoder, L.

Lucas of Chilworth, L.

Renton, L.

Wynford, L.

Lyell, L.

Rochester, L.

Young, B.

Resolved in the negative and amendment disagreed to accordingly.
6.16 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 144:
Page 35, line 27, leave out subsection (4).
The noble Lord said: Members of the Committee will know that this amendment relates to subsection (4) of the clause which transfers the undertaking of the National Freight Corporation to a company limited by shares. What subsection (4) seeks to do is to extinguish immediately before the appointed day the commencing capital debt of the corporation and outstanding loans to the corporation from the Minister. The total of that amount appears to be some £ 58.72 million of the commencing capital debt and some £ 41.3 million of subsequent borrowings, making a total of £ 100 million. This is money that is owed to the nation. It was being repaid, in regard to interest payments, by the National Freight Corporation at the rate of £ 8 million a year.
The Committee may well wonder why that debt should be extinguished if the company to which the corporation is to be transferred is to be sold off on the market or to some other purchaser or purchasers in the private sector. As I understand it, at the moment the Minister is not sure which way he is going to dispose of this undertaking— or, if he is sure, his decision has not been communicated to the House.
It seems wrong that the nation should be deprived of these very substantial sums merely because it would benefit a private
628
purchaser or private shareholders. I observed that at the Second Reading in another place the Parliamentary Secretary said:
" One of the immediate effects of our proposals is that the capital structure will be very much more attractive ".
I have no doubt that it will be more attractive, but the taxpayer, and the nation, ought to find it much more unattractive.
It may be argued that this is a sensible provision, because the Minister is going to get some securities in place of the loans and the initial capital outlay of £ 57.3 million, and that if those securities are sold on the market or to the public they will be that much more valuable by virtue of the extinguishment of the debt and therefore the nation will get it back in that way. With great respect to any such argument, that just is not the way— and your Lordships will know this very well without any word from me— in which a valuation will take place. It will not be upon the value of net assets if shares are sold, and certainly if they are sold in sections where only a minority interest is passed. These shares will be bought upon the basis of past earnings and some computation will be made by those skilled in these matters as to what, on the basis of past earnings and on the anticipation of future earnings, the shares may be worth. In the interests of the shareholders and the nation, subsection (4) should not be part of this Bill. I beg to move.
Lord BELLWIN: There is no question whatsoever of the Government's existing financial interest in NFC just being thrown to one side. The debt will not be written

629
off without further ado. The liabilities will instead be exchanged for securities which the successor company will be required to issue to the Government under Clause 38. In other words, the Government's financial interest will take the form of securities rather than capital debt as at present. The exact nature of these securities stands to be decided nearer the appointed day. It is likely that they will consist mainly of shares but there will also be scope for other types of security (for example some fixed interest loan stock) if that is thought appropriate.
Noble Lords opposite really have no grounds to complain about the writing off of debt because I should like to remind them that their Government's capital reconstruction wrote off entirely debts totalling £ 53 million. So, all else apart, I do not think the noble Lord will be too surprised to hear that we oppose this amendment.
Lord MISHCON: Nor will the noble Lord the Minister be surprised if in one sentence I answer his last observation: it is a very different thing to write off part of a debt for the benefit of the nation represented by the National Freight Corporation. However, if one writes off a further £ 100 million for the benefit of the subsequent purchaser in the private sector one is dealing with a very different matter— and the noble Lord knows it.
Viscount SIMON: I should like to ask the noble Lord, Lord Mishcon, to help me again. It seems to me that the way in which people will assess the value of these shares (or whatever it is that are sold) is a complicated matter but surely when buying shares in a company which owes £ 100 million and buying shares in a company which does not, the amount to be paid for the shares will take that into account, will it not?
Lord MISHCON: I know that when the noble Viscount addresses questions to me he always does so in order to be helpful and I take that question in precisely that spirit. Of course it is correct— and I cannot deny it— that any purchaser will very much prefer to buy his way into a company which owes £ 100 million less than otherwise would be the case. The point that I am making is that the nation will lose by it, in the sense that the price that
630
will be offered, although it may be a more beneficial price, would not be so to the extent of £ 100 million, whereas, if the £ 100 million remained as a debt and had to be paid off subsequently, the full £ 100 million would be paid.
If I may try to clarify what I have said, it would be a perfect argument if one could say that the £ 100 million was going to be represented by an additional £ 100 million (if we wipe it off) that would come to the nation. The noble Viscount himself has said that calculations are not made in that easy way and he has indicated— and he is quite correct— that a bigger price would definitely be given if the £ 100 million were extinguished. Of course he is right, but my point is that it would not be to the extent of £ 100 million. Therefore if the £ 100 million had remained as a debt for the private sector to take over, the nation could have expected to receive the full £ 100 million.
Viscount SIMON: The noble Lord is more confident than I am about inflation being caught. I am not sure that I would not prefer to receive £ 75 million in cash as a result of the difference in the price rather than get £ 100 million paid over a period from the loan to the company.
Lord MISHCON: I will answer that question from the noble Viscount very briefly. There would not be any question of waiting. As I understand it, it is not a deferred loan; it is a loan which could become immediately payable. Therefore the purchaser would have to provide for the repayment of the loan since the National Freight Corporation would be passing on this liability to the company and therefore presumably the company would have to pay. The securities would be sold and the loan would have to be repaid.
Viscount SIMON: We can turn this into a discussion between the noble Lord, Lord Mishcon, and myself, but I think he has made my point. If in fact the company has to repay the loan at once it will have to recover the cash and where would it recover the cash from, except by selling the shares?
6.27 p.m.
On Question, Whether the said amendment (No. 144) shall be agreed to?
Their Lordships divided: Contents, 48; Not-Contents, 87.

CONTENTS

Ardwick, L.

Hale, L.

Peart, L.

Bacon, B.

Houghton of Sowerby, L.

Pitt of Hampstead, L.

Blease, L.

Janner, L.

Ponsonby of Shulbrede, L. [Teller.]

Boston of Faversham, L.

Jeger, B.

Brockway, L.

Kaldor, L.

Ritchie-Calder, L.

Cledwyn of Penrhos, L.

Leatherland, L.

Sefton of Garston, L.

Coliison, L.

Lee of Newton, L.

Stewart of Alvechurch, B.

David, B. [Teller.]

Leonard, L.

Strabolgi, L.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Strauss, L.

Davies of Penrhys, L.

Lovell-Davis, L.

Taylor of Mansfield, L.

Donaldson of Kingsbridge, L.

Maelor, L.

Underhill, L.

Fisher of Rednal, B.

Milner of Leeds, L.

Wallace of Coslany, L.

Gaitskell, B.

Mishcon, L.

Whaddon, L.

Glenamara, L.

Noel-Baker, L.

Winterbottom, L.

Goronwy-Roberts, L.

Northfield, L.

Wootton of Abinger, B.

Gosford, E.

Oram, L.

Wynne-Jones, L.

Gregson, L.

NOT-CONTENTS

Ailesbury, M.

Gainford, L.

Mottistone, L.

Airey of Abingdon, B.

Glasgow, E.

Mowbray and Stourton, L.

Alport, L.

Glenkinglas, L.

Murton of Lindisfarne, L.

Amory, V.

Godber of Wellington, L.

Northchurch, B.

Auckland, L.

Gowrie, E.

Nugent of Guildford, L.

Beaumont of Whitley, L.

Gridley, L.

Orkney, E.

Bellwin, L.

Grimston of Westbury, L.

Rawlinson of Ewell, L.

Belstead, L.

Hampton, L.

Redmayne, L.

Caithness, E.

Hatherton, L.

Reigate, L.

Campbell of Croy, L.

Henley, L.

Renton, L.

Cathcart, E.

Hereford, V.

Rochester, L.

Chesham, L.

Hornsby-Smith, B.

Romney, E.

Chitnis, L.

Hylton-Foster, B.

Sandford, L.

Cockfield, L.

Killearn, L.

Sandys, L. [Teller.]

Colville of Culross, V.

Kilmany, L.

Selsden, L.

Cork and Orrery, E.

Kilmarnock, L.

Sempill, Ly.

Craigavon, V.

Kimberley, E.

Sharpies, B.

Craigmyle, L.

Lauderdale, E.

Simon, V.

Cullen of Ashbourne, L.

Long, V.

Spens, L.

Daventry, V.

Lucas of Chilworth, L.

Stamp, L.

Davidson, V.

Lyell, L.

Strathspey, L.

de Clifford, L.

McFadzean, L.

Teviot, L.

De Freyne, L.

Macleod of Borve, B.

Trenchard, V.

Denham, L. [Teller.]

Mansfield, E.

Trumpington, B.

Drumalbyn, L.

Margadale, L.

Vaux of Harrowden, L.

Ellenborough, L.

Marley, L.

Vickers, B.

Elliot of Harwood, B.

Masham of Ilton, B.

Vivian, L.

Faithfull, B.

Monson, L.

Wigoder, L.

Fortescue, E.

Morris, L.

Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.
Clause 37 agreed to.
Schedule 6 [Supplementary provisions with respect to transfer under section 37]:
6.37 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 145:
Page 68, line 36, at end insert—
(". The transfer to the successor company by virtue of section 37 of the property, rights, liabilities and obligations of the Corporation shall have effect notwithstanding any statutory
632
or other restriction on the powers of any other body affected by the transfer.").
The noble Lord said: This amendment appears rather general and its purpose may not be immediately clear. However, I can assure noble Lords that the amendment is aimed at a particular problem. This concerns British Transport Advertising Limited, a non-profit-making joint subsidiary of the British Railways Board and the National Bus Company. They have a contract with the NFC whereby on an agency basis they enter into contracts with third-parties for display of advertisements of those third parties on NFC property.

633
It appears that, although under Clause 37 this contract will be transferred from the NFC to the successor company, BTA will, as the Bill now stands, be unable to perform it. This is because they are limited by Section 14 of the 1962 Transport Act to dealings with other transport boards, to which select group the NFC will on the appointed day cease to belong.
The amendment, therefore, seeks to safeguard this contract. It does this by ensuring that the transfer to the successor company on the appointed day of the property, rights, liabilities and obligations of the corporation shall have effect notwithstanding any statutory or other restriction on the powers of any other body affected by the transfer. This overrides the general limitation of British Transport Advertising to dealings with transport boards and therefore makes it possible for BTA to continue to fulfil their contract.
I should perhaps also add that the effect of the amendment will be of a transitory nature only. It applies only to obligations, et cetera, which are transferred under the Bill on the appointed day. These will run their course, but there is no permanent widening of the powers of British Transport Advertising or any other body in a similar case. Indeed, no other bodies are known to be affected in such a way. I beg to move.
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 145A:
Page 68, line 40, leave out (" (a) ").
The noble Lord said: It would be convenient, with your Lordships' permission, to take with Amendment No. 145A, Amendment No. 145B, to Schedule 6, No. 164A to Clause 41 and Amendments Nos. 180F and 180G to Clause 51. The amendments are essentially technical, but, even so, your Lordships may like to have some explanation as to their purpose, which will probably not be apparent from the Marshalled List. It is the policy of the Bill that, on the appointed day, the successor company should step into the shoes of the corporation. Clause 37 and Schedule 6 are intended to secure a smooth transition. They transfer the rights, liabilities and obligations of the corporation to the successor company. However, an agreement can refer to the
634
corporation without imposing obligations or conferring rights. We have discovered one such reference in the trust deed constituting the NFC (1978) Pension. Fund. There may be other such references lurking in other documents. The amendments to Schedule 6 widen the existing transitional provisions so as to convert, as from the appointed day, any such reference into a reference to the successor company. The amendments to Clauses 41 and 51 are associated drafting amendments. I beg to move.
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 145B:
Page 68, line 42, leave out from (" 37 ") to ("a") in line 3 on page 69 and insert (" that agreement shall have effect on and after that day as if—
(a) the successor company had been a party to the agreement; and
(b) for any reference (in whatever terms and whether expressly or by implication) to the Corporation there were substituted, in relation to anything falling to be done on or after that day, a reference to the successor company; and
(c) for any reference (in whatever terms and whether expressly or by implication) to an officer or employee of the Corporation, not being a party to the agreement and beneficially interested therein, there were substituted, in relation to anything falling to be done on or after that day, ").
The noble Lord said: I spoke to this amendment with Amendment No. 145A. I beg to move.
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 145C:
Page 69, line 37, at end insert—
(" Pension schemes
. — (1) Subject to sub-paragraph (2), the provisions of section 74 of the Transport Act 1962 (Minister's powers to make provision about pensions in the nationalised transport industry) shall have effect on and after the appointed day as if—
(a) the expression "Board" included the successor company; and
(b) the references in subsection (l) (a) (ii) of that section to the Commission included references to the Corporation; and
(c) the reference in subsection (2) (e) of that section to a pension scheme in which employees of the Commission, or a subsidiary of the Commission, participated before the date there mentioned included a reference to a pension scheme in which

635
employees of, or of a subsidiary of, the Corporation participated before the appointed day.
(2) Except on the application of the successor company, no order shall be made under the said section 74 on or after the appointed day which has the effect of placing the successor company or a subsidiary of the successor company in any worse position; but for this purpose the successor company or a subsidiary shall not be regarded as being placed in a worse position because an order provides that any changes in a pension scheme are not to be effected without the consent of the Minister.
(3) An order such as is mentioned in subparagraph (2) which is made without the application of the successor company shall not be invalid because in fact it does not have the effect of securing that the successor company and its subsidiaries are not placed in any worse position, but except in so far as the successor company approves the effect of the order the Minister shall as soon as may be make the necessary amending order.
(4) Subject to sub-paragraph (6), any order under the said section 74 and any regulations to which paragraph 17 of Schedule 7 to the Transport Act 1962 applies (which continues in force certain earlier pension provisions) which—
(a) are in force immediately before the appointed day; and
(b) relate to the Corporation, its employees or its pensions schemes,
shall continue in force, subject to any provision made by virtue of sub-paragraph (1), and as respects anything falling to be done on or after the appointed day shall have effect as if for any reference (however worded and whether express or implied) to the Corporation there were substituted a reference to the successor company.
(5) A person who on the appointed day—
(a) ceases to be employed by the Corporation and becomes employed by the successor company; or
(b) is employed by a company which immediately before the appointed day was a subsidiary of the Corporation but on that day becomes a subsidiary of the successor company,
shall not thereby cease to be eligible to participate in any pension scheme in which he was a participant immediately before the appointed day.
(6) Subject to sub-paragraph (5), a person who on or after the appointed day leaves or enters the employment of the group consisting of the successor company and its subsidiaries (in this sub-paragraph referred to as "the NFC group") shall not be eligible by virtue of any provision of an order under the said section 74 made before that day—
(a) to participate in any of the Corporation's pension schemes by reason of any employment outside the NFC group; or
(b) to participate in a pension scheme other than one of the Corporation's pension schemes by reason of his employment within the NFC group.
636
(7) In this paragraph—
(a) "participant", in relation to a pension scheme, means—
(i) in relation to a scheme under which benefits are or will be receivable as of right, a person who has pension rights under the scheme (whether he has contributed or not); and
(ii) in relation to a scheme under which benefits are not or will not be receivable as of right, a person who (whether he is referred to in the scheme as a member, as a contributor or otherwise) has contributed under the scheme and has pension rights thereunder;
and "participate" and "eligible to participate" shall be construed accordingly,
(b) " pension", "pension rights" and "pension scheme" have the same meaning as in section 74 of the Transport Act 1962; and
(c) references to the Corporation's pension schemes are to schemes established by the Corporation or in relation to which the rights, liabilities and functions of the Transport Holding Company were transferred to the Corporation by the British Transport (Pensions of Employees) (No. 1) Order 1968.").
The noble Lord said: Amendment No. 145C is to do with pensions, but it has nothing to do with Clauses 41 and 42 or with Part III of the Bill. It inserts into the Bill transitional provisions to secure that the transmutation of the NFC into the successor company has no untoward consequences on the pensions front. The background to the amendment is this. First, until recently, it was the practice for many nationalised transport industry pension arrangements to be embodied in orders made under Section 74 of the Transport Act 1962. Many such orders are in force, and some have a continuing effect. Some existing pension schemes cannot be amended except by such an order. Secondly, there is a measure of criss-crossing of pension scheme membership between British Rail and NFC schemes. About 3, 000 British Rail employees are members of NFC schemes and about 1, 500 NFC employees are in British Rail schemes.
The amendment provides for existing orders to remain in force after the appointed day and for references in them to be read as references to the successor company. So— and it is important to note this— the rules of existing pension schemes will not be affected. The amendment also provides— and this is also an important point which must be understood—that

637
nobody will have to change his pension scheme in consequence of the conversion of the NFC into the successor company. In particular, the existing criss-crossing of pension scheme membership can continue, though after the appointed day employees who transfer to or from the successor company will have to join their new employer's pension scheme, which is, of course, the normal practice in the private sector.
The amendment also provides for a limited order-making power to continue in relation to the successor company's schemes. I should say that we have no desire to use this power and it is most unlikely that we would do so except on the application of the successor company. The power is necessary, however, to provide a means of amending existing orders if this should turn out to be desirable. I beg to move.
Lord MISHCON: The Committee will have observed that this is a new amendment which found its way on to the Second Marshalled List. Unfortunately the Minister has not been able to accord the usual courtesy of supplying notes on clauses and he must, therefore, forgive me if the questions that I pose to him turn out to be misconceived. We have done our best in the interval— it has been a very short one— with such expert guidance as we have, to understand the amendment which in general terms seems acceptable, but upon which certain questions do arise.
I am perfectly sure that the Minister will not be able— or possibly even if he were able would not wish— at this time to give answers to these questions. Therefore, I assure him that all that I expect this evening is that a record should be made of the questions that I pose and if, with his usual courtesy, he could let me have replies at his convenience, I would be most grateful because, as he will realise, dependent upon his replies would be the decision as to whether amendments are put down at a further stage.
The first question is as follows. Suppose British Rail wished to give their own employees in membership of the NFC group pension funds an option to join the British Rail pension schemes, and the successor company object on the ground that it would weaken the financial position
638
of their pension funds, how can the successor company be compelled to allow such transfer to take place? Obviously, if they cannot, some amendment will be needed.
Secondly, suppose in future a ministerial order is made which causes an extra liability to arise in respect of members of British Rail pension schemes, what provision is there to ensure that the NFC group meet their fair share of the burden in respect of their own employees who belong to the British Rail pension schemes so that that portion of the liability does not fall on the British Railways Board? Again, such a provision should be included if it is not there.
Thirdly, and finally, there seems to be an ambiguity about persons who are transferred from the corporation to the NFC group on the appointed day— and I emphasise the word "on". It seems clear that such persons can retain their membership of their former pension scheme but do they do so by virtue of subparagraph (5) or by virtue of an order made under Section 74 of the Transport Act 1972? If— and I think that this seems likely from the wording, but one is not sure— it is by virtue of sub-paragraph (5), what provision is there to ensure that the NFC group reimburse to British Rail an appropriate share of the costs? I am advised that this happens at present in the case of the NFC. As I have said, if the Minister would be kind enough to consider those questions and on advice, very probably, let me have replies to them, I shall know where to go from there.
Lord BELLWIN: Of coure, I gladly undertake to do that. I am sorry, indeed, about the inability to deliver the notes on clauses. We have done so as regards just about all the clauses in the Bill as best we could, but with the great pressures of time and the pressures that there are on everybody it sometimes happens that it is not possible, and this was one of those times. Yes, of course, I shall endeavour to see that the noble Lord has a reply to his three questions. I was wondering whether he would have asked a fourth question!
On Question, amendment agreed to.
Lord UNDERHILL Lord UNDERHILL moved Amendment 146A:

639
(" 9. The obligations of the Corporation transferred by virtue of section 37 include—
(a) the settlement by negotiation of terms and conditions of employment of persons employed,
(b) the resolution of trade disputes within the meaning of the Trade Union and Labour Relations Act 1974,
(c) the promotion and encouragement of measures affecting efficiency, in any respect, in the carrying on of the activities by the Corporation and any subsidiary company, and
(d) the discussion of other matters of mutual interest to the parties to the agreements.").
The noble Lord said: May I first apologise to the Committee for having to put down this manuscript amendment in place of Amendment No. 146. In fact, the only change in the manuscript amendment arises in the introduction. That was changed to enable it to fit into the appropriate place in the Bill.
The purpose of the amendment is to protect the machinery of negotiation within the National Freight Corporation and to maintain trade union rights on consultation. Since the creation of the corporation in 1969 the industrial relations issues have been pursued through an agreed machinery of negotiation. The machinery operated was built on the well-established system followed on the railways. In addition to a machinery of negotiation, there is also provision for trade union consultation within subsidiary companies of the National Freight Corporation and direct with the corporation.
Section 45 of the Transport Act 1968 imposed a duty on the Railways Board and the NFC to undertake reviews of the affairs of the respective organisations and to report to the Minister. Subsection (2) of that section of the 1968 Act also laid down that, before reaching conclusions in consequence of a review, the board or the corporation should seek consultation with organisations representing those employed.
The NFC and, in particular, National Carriers, a subsidiary, have been exemplary employers so far as consultation is concerned. National Carriers have gone so far as to invite the trade unions to become involved in corporate planning. Schedule 9 to the Bill now before us repeals that part of the 1968 Act relating
640
to consultation with National Freight Corporation employees, presumably on the basis that there is no longer any obligation to report to the Minister. That repeal is regrettable.
While the Government remain the major shareholder and the current composition of the board of the Freight Corporation remains largely unaltered, there is no reason to believe that consultation will not continue with the unions as hitherto. However, in the event of a change of ownership that cannot be guaranteed. In a situation where the ownership of the corporation is transferred, the amendment seeks to provide for the maintenance of machinery of negotiation, and for the continuation of existing arrangements for staff consultation; that is, that consultation will continue to take place at company level and with the National Freight Corporation or the successor company. I beg to move manuscript Amendment No. 146A.
Lord BELLWIN: This amendment would impose duties concerning industrial democracy on the successor company along the lines of those to which the NFC is subject as a nationalised transport industry. The Government are very much in favour of genuine consultation and participation in industry. Their commitment in this area is demonstrated by the insertion in the Companies Bill, at present before Parliament, of a provision to require directors to have regard to the interests of the company's employees in general as well as the interests of its members.
I welcome the progress that the NFC has made in developing machinery for participation. This has proved invaluable in the past, as the noble Lord, Lord Underhill, has said, and also to the benefit of the corporation and its employees. No doubt the successor company will wish to build on this. But this will be a matter for the company itself to decide. It is an essential feature of a policy that the successor company should be a normal Companies Act company, subject only to the general legislation which governs all companies, and not to special statutory duties. Therefore, I am sure noble Lords will not be too surprised to hear that the Government must also resist this amendment.
Lord UNDERHILL: I am very sorry to hear what the noble Lord has had to say because I am sure that the whole Committee will wish to see, in undertakings of this kind, that there are not only satisfactory industrial relations but also opportunities to consult with the appropriate unions on the workings and efficiency of the company. In the past when companies have been transferred or broken up, maybe under separate public ownership, we have been able to maintain these provisions. But in the light of what the noble Lord has said, it is clear that there is no intention of including this in the Bill. Therefore, we shall read very carefully what he has had to say in the Official Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.52 p.m.
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 147:
Page 70, line 41, at end insert—
(" Promotion of research and development 9. The obligations of the Corporation transferred by virtue of section 36 include any obligation under subsection (2) of section 46 of the Transport Act 1968 to promote research into matters affecting the functions of the Corporation or any subsidiary and the doing of such work as is requisite to enable the results of such research to be turned to account.").
The noble Lord said: This amendment asks, not for the insertion of trade union rights, but that we should make certain that in the successor company there will continue the promotion of research and development. Section 46 of the 1968 Act imposed on the board, constituted under that Act, a definite duty to carry out research. As was stressed during the Second Reading debate, all sections in the other House praised the National Freight Corporation for its efficiency and for the fact that it had a very high reputation within the road haulage industry for its research and development work. For example, the Freight Corporation's project on energy saving is unique to the industry, and recently the corporation also carried out a detailed study of the economic and operational potential for heavier lorries.
It would appear from the Bill that Section 46 of the 1968 Act is not being repealed, and the National Freight
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Corporation will continue to have a duty to undertake research. This is what we are endeavouring to write into the Bill.
The Price Commission Report on the road haulage industry found that the National Freight Corporation was by far the largest individual operator. In 1977 the turnover from the corporation's freight services was almost three times that of the largest private operator. As your Lordships will be aware, road haulage is a highly fragmented industry with 85 per cent. of the 46, 000 professional hauliers operating five vehicles or fewer. Possible fragmentation through the breakup of the National Freight Corporation could only be considered a backward step, as it must inevitably make research and development in the industry more difficult. The amendment seeks to ensure that the promotion of research and development will continue, and that is the purpose of the amendment which I beg to move.
The DEPUTY CHAIRMAN of COMMITTEES (Lord Alport): I have to advise your Lordships that in the second line of this amendment "section 36" should read "section 37".
Lord BELLWIN: The section of the 1968 Act which this amendment seeks to apply to the successor company typifies the unnecessary restrictions under which the NFC is forced to operate as a nationalised industry. Clearly the successor company will, while operating commercially, carry out research in those areas which may be of value to it. To impose a statutory obligation to do so on a private company would, however, be totally inappropriate, and contrary to the aims of the Bill, which seeks precisely to remove restrictions of this kind. Like some other amendments on this part of the Bill by noble Lords opposite, this amendment seeks to impose on the successor company statutory obligations of exactly the kind which this Bill seeks to remove. These are the very kind of public sector obligations which many think have held back the NFC from achieving its potential. We cannot accept this amendment.
Viscount SIMON: I wonder whether the noble Lord, Lord Bellwin, can tell us what will happen to the staff of the National Freight Corporation who have been engaged in these research activities.

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Are they to be split up and thrown on one side?
Lord BELLWIN: As I speak, I do not know how many of the staff are engaged on research facilities. I do not know if any are engaged solely and only on research facilities. Clearly I do not know that at this moment in time. But the intention of the Bill is to transfer the ownership of the successor company and that will operate as a commercial company. If in the past this activity has been proven by carrying out research as it has been carried out— or in some other way that they may so wish— then, of course, they will continue to do so. But clearly it would be impossible to impose a statutory obligation on a company— to which, in effect, we shall be selling the NFC— that they should among other things carry out research for some purpose which may then be entirely inappropriate to what they are doing. As to what the staff would do, I repeat that it depends on what staff we are talking about, what exactly they are doing and what the direction will be of the successor company.
Lord UNDERHILL: I am very sorry to have to be critical because the noble Lord has been so helpful and co-operative on other matters. But I am surprised that in the light of this amendment, frankly, the department has not supplied the Minister with the figures as to the number of personnel in the corporation and its subsidiaries who are engaged on research and development work, particularly in view of the praise from a number of places that has been given to this development work.
I am also surprised at the reasoning given by the noble Lord as to why this provision should not go in the Bill, because it is an admission that when it is a public corporation there is a statutory responsibility as regards research and development. Now the noble Lord says that it will be transferred to a private company and it will be up to that company to decide whether or not it does it. If ever there was a justification for a public corporation, and in view ofits good record, this is it. There is obviously a clear difference between us and, although I shall not divide the Committee, I shall not withdraw the amendment.
Lord BELLWIN: I should like to make one further observation on this. If the successor company should be satisfied that what is being achieved by the research is indeed of such importance to the future advancement of the National Freight Corporation, I have no doubt whatever but that they will continue to do exactly the same thing. If it really is so good, they would be rather foolish not to go on doing so. But who is to say and who is to know?— certainly not us at this moment.
Lord MISHCON: I think what hurts so badly to those who sit on this side of the Committee— and I have an idea that this concern will be shared by many in whatever parts of the Committee they may sit, including the noble Viscount, Lord Simon, who has already put a question on this— is that it just shows— and I am not trying to make any dramatic point— the complete callousness with which the transfer of a great corporation such as this to private enterprise is made that, when we come to the Committee stage (and the Bill has already been through another place), the Government are unable to say, this amendment having been put down for some time, how many employees there are who are engaged on research; whether indeed they are engaged on research exclusively, or not. The noble Viscount's question was most pertinent. Possibly he was as surprised as I was when there was a reply such as that given by the noble Lord, Lord Bellwin.
Lord BELLWIN: With respect, I should have to say that it is not the Government that does not know, it is I, speaking here, who do not have this particular information at my fingertips. I am quite sure that there will not be the slightest difficulty in my getting this information. Whether it has relevance to the issue, I doubt very much.
Will your Lordships excuse me for one moment? I am still not in a position to give the actual numbers of people concerned. I think it is fair to say that the comment just received says in fact that the R and D of the NFC should not be overestimated. The research, on the other hand, is commercially orientated. If that is so, then I should have thought it highly likely that, if it is achieving what it should do in a commercially orientated way, then it will continue. But of course,

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a guarantee I cannot give. I need hardly say that the numbers in question will certainly be sent to noble Lords opposite and to anyone who is interested.
Viscount SIMON: As we cannot get any further on this at the moment, can the noble Lord give us an assurance, or obtain an assurance before the next stage of the Bill, that, in the interim period after the appointed day when the shares are vested in the Minister but before he has disposed of them, he will undertake not to dismantle the organisation that does research and development, and indeed the organisation that looks after the industrial relations?
Lord BELLWIN: There is no problem at all in my confirming that, because it is the clearly expressed intention that the Government want the NFC to go over in its entirety to the successor company, so there is no difficulty in my saying "yes" to the noble Viscount.
Lord MISHCON: Will the noble Minister please carry on with that undertaking before we adjourn and say that he will also see that such a department is not shut down, and that people in research are not dismissed on any sale of the securities from the company to the market?
On Question, amendment negatived.
Schedule 6, as amended, agreed to.
Lord BELLWIN: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

DENTAL QUALIFICATIONS (EEC RECOGNITION) ORDER 1980
7.4 p.m.
Lord LYELL: My Lords, I beg to move that the Dental Qualifications (EEC Recognition) Order 1980, a draft of which was laid before the House on 22nd April 1980, be approved. This Order-in-Council is intended to make those changes in existing legislation which are necessary to implement the directives of the Council
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of the European Communities concerning the mutual recognition of dental qualifications. The statutory power for making the order is contained in Section 2 (2) of the European Communities Act 1972, and the Affirmative Resolution procedure is adopted in anticipation of the continuing desire of Parliament to debate matters relating to the manner in which Community obligations involving substantial changes in United Kingdom legislation are proposed to be met.
The Treaty of Rome, among other things, provides for the issue to member states of directives covering the mutual recognition of qualifications and the granting of the right of establishment to various professional groups. The directives relating to doctors and nurses have already been implemented in the United Kingdom. The dental directives are similar in form and content to those already implemented. The recognition directive has the general effect of requiring member States to permit the practice of dentistry by nationals of other member states if their qualifications and experience meet the specified standards. The Dental Training Directive specifies in broad outline the training which students must in future undergo before they obtain qualifications which will be recognised elsewhere in the European Community.
My Lords, we are concerned tonight with the draft order for the implementation of the directives in so far as implementation involves changes which require legislation, and I turn now to the content of the draft. Article I cites the title of the order and specifies 1st June 1980 as the date on which it comes into operation. Article 2 identifies the two dental directives and contains other definitions. Article 3 provides for a substantial insertion in the Dentists Act 1957. The new Section 2A provides entitlement to registration in the dentists register, and thereby entitlement to practise dentistry in the United Kingdom, to EEC nationals who hold one of the European diplomas in dentistry listed in the new Schedule 1A if the diploma was obtained in accordance with the requirements of the training directive. It also provides entitlement to registration to those holding earlier diplomas if the syllabus complied with the training directive, or if the holder has lawfully and recently practised dentistry for at least

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three consecutive years. In Section 2B there is set out the same requirement as to linguistic knowledge as is found in The Medical Qualifications (EEC Recognition) Order 1977 and in The Nursing Qualifications (EEC Recognition) Order 1979.
It is, I think, common knowledge that this requirement that registration shall lapse after six months unless the practitioner satisfies the registrar that he has the necessary knowledge of English, has been challenged by the European Communities' Commission as being contrary to the Treaty of Rome and that there is the possibility that the Commission's view may be supported by the European Court. The Government have argued that it accords with the EEC directives because the provision in the directive which is common to those for a number of professions, is that,
"Member states shall see to it that, where appropriate, the persons concerned acquire, in their interest and in that of their patients, the linguistic knowledge necessary for the exercise of their profession in the host member state ".
Whether the objectives of this requirement might eventually be achieved in some other way has been under discussion with the interested bodies, including the Commission, for some months but there is an understandable reluctance among the professional bodies involved in the United Kingdom to depart from the principle already established in the doctors' and nurses' orders that registration should be linked to the acquisition of the necessary linguistic competence. It is therefore expedient meanwhile to establish the same basis as regards linguistic competence for dentists as has already been established for doctors and nurses. Thus while consultation continues on the language question the other non-controversial measures contained in the draft order can be implemented so that the registration and establishment in practice of dentists who have an adequate command of the language will no longer be impeded.
Paragraphs (2) and (3) of Article 3 make some minor amendments to the Dentists Act. Section 16 (1) of the Act is amended so that the qualified European practitioner may have his name registered in the same list of the dentists register as those of dentists with United Kingdom qualifications, and in Section 50 (1) is
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added a necessary definition of "recognised European diploma". There then follows the insertion of the new Schedule 1A listing the scheduled European diplomas to which I referred earlier. Article 4 of the draft order provides that a dentist who has been disqualified in a member State from practising dentistry because of some criminal offence or professional misconduct shall not, while so disqualified, be entitled to registration under the provisions of the proposed new Section 2A.
Article 4 (2) (a) of the order emphasises that a disqualifying decision in this respect is limited to one expressed to be made on the grounds that the dentist has committed a criminal offence or has misconducted himself in a professional respect and not on any other grounds. Article 4 (2) (b) emphasises that the effect of a disqualifying decision is that the dentist is prohibited from practising in his own state.
The Joint Committee on Statutory Instruments have expressed concern that this provision might be the cause of injustice in that it would allow a person disqualified in his own State for a criminal offence of a trivial nature to be debarred from his entitlement to registration in this country. The Joint Committee asked why, in Article 4 (2) (a) of the order, the reference was to a criminal offence simpliciter and that the article contained no qualification that it should not be of a trivial nature. The reason is that it is for each member state to decide what its disciplinary legislation shall be. There is no need to assume that in framing and operating disciplinary legislation, controlling bodies of the dental profession in respective member states will not be responsible or fair minded.
Article 4 (4) of the order provides that a person refused registration in the United Kingdom on the grounds of a disqualifying decision in his own state may appeal to the General Dental Council. Any such appeal is to be decided by the disciplinary committee of the General Dental Council and is to be noted that the issue before the disciplinary committee in such an appeal is the issue whether or not the disqualifying decision was a disqualifying decision within the meaning of Article 4 (2). It is not for the disciplinary committee to go into the merits of whether or not it would have disqualified the dentist

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concerned had it been seized of the matter. Article 5 makes the General Dental Council the authority competent to issue certificates in relation to specialist training or practice which they would not otherwise issue.
I come to Article 6. The dental directives, like those relating to doctors and nurses, require member states to permit fully qualified and established nationals of other states, subject to the rights and obligations which apply to their own professionals, to render services temporarily without first securing normal registration. Because in the United Kingdom the practice of dentistry is permitted only to those who are registered, it is necessary to make special arrangements to control and legalise such temporary provision of service. This is done in Article 6. The principal control measure is by means of a written notification to be provided by the practitioner to the registrar of the General Dental Council giving particulars of the services to be rendered and the periods in which the practitioner expects to render them. Certification must also be provided of the possession of qualifications and the lawful practice of dentistry in his own country. Sections 34 (1) and 35 (1) of the Dentists Act 1957 are amended to permit such persons to practise dentistry and to use dental practitioners' titles. In the Medicines Act 1968, the Misuse of Drugs Act 1971 and the Poisons Act 1972 the definition of dentist is amended to place these persons on a par with registered dentists in relation to the handling and use of drugs.
As persons rendering dental services temporarily while visiting the United Kingdom will not be registered in the dentists' register, the disciplinary procedures provided in the Dentists Act for use against registered dentists could not be applied. Article 7 provides a parallel procedure which might be operated by the disciplinary committee of the General Dental Council to impose a prohibition on the person concerned in respect of the rendering of dental services in the United Kingdom in the future.
The recognition directive requires that in the temporary provision of services, the visiting dentist shall be subject to the same rules of conduct which apply in the host state. The wording of Article 7 therefore follows closely that used in
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Section 25 of the Dentists Act 1957 which relates to the erasure of a name from the dentists' register kept by the General Dental Council in the United Kingdom. In particular, the disciplinary committee of the General Dental Council, under Section 25 of the Act, may not cause erasure of a person's name on account of a conviction for an offence which does not, either from the trivial nature of the offence or from the circumstances under which it was committed, disqualify a person from practising dentistry. Consequently, article 7 (2) of the draft order excludes consideration of criminal offences of a trivial nature when the disciplinary committee is considering imposing a prohibition on a visiting dentist providing services temporarily.
The provisions of this draft order constitute no departure in principle from those contained in the existing orders relating to doctors and nurses. Furthermore, the drafting of the EEC directives in 1978 and, more recently, the means of implementing them in the United Kingdom have been the subject of the closest consultation and agreement both with the General Dental Council, on which will fall the duty of registering EEC dentists who wish to work here, and with the British Dental Association representing the profession itself.
This order is not directly concerned with the recognition and acceptance of our own dentists in other member states, which is of course the other side of the coin which was minted by the Council of Ministers when the dental directives were adopted. Nevertheless, our own dentists are assured of corresponding benefits as other states implement similar measures, which the directives require them to do. The amendment of United Kingdom legislation by means of the Dental Qualifications (EEC Recognition) Order 1980 is an aspect of this mutual co-operation. I beg to move.
Moved, That the draft order laid before the House on 22nd April be approved.— (LordLyell.)
Baroness DAVID: My Lords, I thank the Minister for the very full account he has given of the order and for answering the points which were raised by the Joint Committee about the disciplinary provisions. I have no comments to make,

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except to say that we are very glad about the requirement of linguistic knowledge, because it is obviously extremely important when foreigners come to practise in this country that patients can understand them; there must be full communication. We therefore support and approve the order.
On Question, Motion agreed to.
Lord SANDYS: My Lords, I beg to move that the House do now adjourn during pleasure until 8 o'clock.
Moved, accordingly and, on Question, Motion agreed to.
[The Sitting was suspended from 7.19 until 8 p.m.]

TRANSPORT BILL
House again in Committee.
Clause 38 [Initial government holding in successor company]:
Lord MISHCON Lord MISHCON moved Amendment No. 148:
Page 36, line 8, at end insert (" and the Minister or his nominees shall at all times retain such a proportion of the said securities as shall give to the Minister a controlling interest by way of having a majority of voting power in the successor company ").
The noble Lord said: I wonder whether the Minister, having had a very well deserved but short respite, will look rather more favourably at this amendment than he otherwise would have done. I wonder whether the Committee can persuade the Minister and those who support him that, having achieved the main aim of the Bill— namely, that the National Freight Corporation shall be transferred to a successor company— and having achieved the opportunity for the private sector to invest in the successor company, it is the element of doctrinaire thinking carried to the absolute extreme not to retain at least voting control in the hands of the Government on behalf of the nation. The National Freight Corporation has over 30, 000 employees. Its assets are very considerable. At 31st December 1978 they amounted to £ 183 million. The corporation earned fervent praise from the present Minister when he did not hold his present exhausted position—
Lord DONALDSON of KINGS-BRIDGE: Exalted.
Lord MISHCON: I am so sorry; I am corrected by my noble friend. I said "exhausted" position. I was thinking of the noble Lord, Lord Bellwin, when I used that word. I meant "exalted" position when I referred to the right honourable gentleman Mr. Norman Fowler.
I have specially worded the amendment so as to relate to the control of voting power— though the parliamentary draftsman might improve upon the wording— and not to 51 per cent. of the shares. I have done that on purpose so that there could be an issue of shares to the private sector, which would retain all the rights to dividends, profit and so on and would therefore encourage investment. But at least in the national interest the control would be vested in the Government, who would have the right to see what kind of board there was, and how the employees were protected. Indeed, the Government would even know how many people there were in the research department and in those circumstances might be rather more concerned about their future. What I suggest seems to be the right thing to do.
I hope that the Government do not wish to go down an extreme doctrinaire road and say, "Oh, no, it isn't just a question of denationalising or of giving free enterprise the opportunity. We are going to see that the nation has nothing to do with the running of what was a very successful enterprise in the past". It is in that spirit that I beg to move the amendment.
Lord MORRIS: I cannot help feeling that the noble Lord, Lord Mishcon, is inadvertently misleading himself on this amendment when he refers "merely to retaining" voting power in the successor company. Surely, the voting power is the power when it comes to considering a company. To try to divide the voting power in terms of, say, the rights of interest in profits or capital interest is not possible, because those who have the voting power can always vote away the financial interests, be it by way of profits, dividend, or capital interest of the future shareholders.
Lord MISHCON: I am sure that the Committee is not prepared to have a discussion on company law, which would bore it, even though the subject may be of interest to the noble Lord, Lord Morris, and myself. Quite obviously there is nothing to prevent the inclusion of a provision that the memorandum and articles of association cannot be altered unless a certain number of votes is cast— say, 75 per cent. Therefore, it is possible to include in the original memorandum and articles of association what are the rights of profits for the various holders of shares, and that is unalterable unless some other shareholders go in with those who have 51 per cent. of the voting control. I do not wish to continue this argument with the noble Lord, Lord Morris, but he may take it from me— I hope that he will— that it is quite possible to secure the rights of shareholders to dividends and profits as set out in an original memorandum and articles of association and still have 51 per cent. of the voting control.
Lord BELLWIN: If it is doctrinaire to wish to transfer control of the NFC firmly, fully and irrevocably to the private sector, then surely it is equally doctrinaire, from the other point of view, to wish to retain it as it is at present, or to retain a control. I take the last point of the noble Lord, Lord Mishcon; it is quite right by itself. However, in the context of what we are discussing here I consider that the point made by my noble friend Lord Morris is apposite.
I should not have mentioned this particular matter again today, but in view of the fact that the noble Lord very kindly has given me the opportunity so to do, I think that both he and the noble Viscount, Lord Simon, will be interested to learn that I now do know the number of NFC people employed on R and D. The fact is that there are no people employed full-time on R and D by the NFC. I think that that information will comfort the noble Viscount, Lord Simon, in that he will not have to be too worried about what will happen to those people. It may not comfort the noble Lord, Lord Underhill; but nor will it dismay him.
I should now like to proceed to try to answer the other points that the noble Lord, Lord Mishcon, made regarding
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the amendment. I do not wish once again to go over the Second Reading arguments, but I am convinced that there is no justification at all for state involvement in road transport, cold storage, removals, travel et cetera. As we see the matter— not in the same way as noble Lords opposite see it, yet equally categorically and clearly— state ownership has denied the NFC management the commercial freedom which is open to private sector firms. It has shielded them from the rigours of commercial disciplines, and the overall result has been a history of financial losses and commercial mistakes, the burden of which has been borne by the taxpayers. Thus, it is clearly in everyone's interest— that is, Government, taxpayer, and not least the NFC itself— to get the corporation out of the public sector altogether. The amendment proposed thus stands entirely in the way of Government policy. It is quite fundamental, and we must therefore oppose it.
Viscount SIMON: I have a good deal of sympathy, not with the principles of nationalisation, as the noble Lord, Lord Mishcon, knows, but for some provision by which the interest of the State could be in some way preserved, simply because they have the responsibility of having built up, through this organisation, this very considerable business with, as the noble Lord said, a large number of employees. I think he gave the number, but I do not remember what it was.
Lord MISHCON: It was 35, 000.
Viscount SIMON: It is not at all unusual, I think, when an ordinary Companies Act company, to which the noble Lord, Lord Bellwin, referred, takes over another company, that some guarantee is given as to the employment of the staff of the company. I am just wondering whether there is any provision by which this can be safeguarded when the appointed day comes. The difficulty as I see it— and I speak entirely subject to correction, because I do not know the intricacies of the law— is that they will presumably be offered employment by a new company, but, as it is a new company, they will have to start all over again their period of service before they are entitled to redundancy payments if they are put off. Is there some arrangement— I have not

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discovered it anywhere in the schedule— by which the existing employees of a company are protected, or can the new company, acting according to their commercial judgment, just get rid of them all? This is the sort of question which worries me a little.
Lord BELLWIN: I am open to correction here, but I would have thought that there was no question of the danger which the noble Lord mentions. If the employment is taken over by a successor company, or another company, then they certainly also take over the responsibilities to the employees of that company as regards redundancy or whatever. I would have thought that that was absolutely so.
Lord UNDERHILL: Perhaps I may briefly intervene, because I think the noble Lord said that one reason why the Government wanted to change their policy on the Freight Corporation was because it has made so many losses over recent years. I have been looking quickly at the report of the Freight Corporation for the last 12 months. There was a trading profit in 1978 of £ 20.1 million. This was an increase of £ 9.6 million over the previous year. Profit on trading has risen by some £ 30 million over the past three years. I believe that some five years ago there was a loss, but ever since, due to their forward-looking policy and forward-looking management, there have been consistent profits. Therefore, that appears to be a very bad argument that the noble Lord has put forward.
Lord BELLWIN: I would not think
it was a bad argument. I would suggest that the profit to which the noble Lord has just referred is the gross profit. Whether or not that is the profit before taking into account interest and other charges, I would very much question because my information is that the company is now breaking even overall. But I should like to say that, if it is breaking even or making a profit, then it is to the credit of all concerned, because it is in spite of the limitations which its present status imposes upon it, certainly not because of this; and I am sure that this will not be overlooked as a potential and possibility by the prospective purchaser.
Lord MISHCON: I make only a brief comment, and it is this. I hope that nobody will be voting upon this matter, if a vote is in fact necessitated, on the basis of whether or not there is profit or whether or not there is redundancy. I think it is a general question of the need to have control of this corporation in the national interest by at least the percentage that I mentioned. I therefore hope that the Committee will feel that that is a principle that they ought to endorse. It is not one, I beg to assure the noble Viscount, which embeds within it the principle of nationalisation. That is not so at all; it is the very principle that I remember the noble Lord, Lord Lloyd of Kilgerran, mentioning on Second Reading was one with which he had the utmost sympathy.
8.15 p.m.
On Question, Whether the said amendment (No. 148) shall be agreed to?
Their Lordships divided: Contents, 31; Not-Contents, 64.

CONTENTS

Bacon, B.

Gosford, E.

Ponsonby of Shulbrede, L. [Teller.]

Blease, L, [Teller.]

Hale, L.

Boston of Faversham, L.

Hall, V.

Rhodes, L.

Brockway, L.

Houghton, of Sovverbv, L.

Stewart of Alvechurch, B.

Cledwyn of Penrhos, L.

Kaldor, L.

Strabolgi, L.

Collison, L.

Lee of Newton, L.

Taylor of Mansfield, L.

David, B.

Llewelyn-Davtcs, L.

Underhill, L.

Davies of Leek, L.

Lovell-Davies, L.

Wells-Pestell, L,

Donaldson of Kingsbridge, L.

Maelor, L.

Whaddon, L.

Elwyn-Jones, L.

Mishcon, L.

Wynne-Jones, L.

Glenamara, L.

Peart, L.

NOT-CONTENTS

Abinger, L.

Balerno, L.

Brougham and Vaux, L.

Airey of Abingdon, B.

Bellwin, L.

Caithness, E.

Ampthill, L.

Belstead, L.

Campbell of Croy, L.

Chesham, L.

Gridley, L.

Mowbray and Stourton, L.

Cockfield, L.

Grimston of Westbury, L.

Murton of Lindisfarne, L.

Cork and Orrery, E.

Hampton, L.

Orkney, E.

Craigavon, V.

Hatherton, L.

Orr-Ewing, L.

Craigmyle, L.

Henley, L.

Reigate, L.

Cullen of Ashbourne, L.

Hereford, V.

Renton, L.

de Clifford, L.

Hornsby-Smith, B.

Sandys, L. [Teller.]

De Freyne, L.

Kilmany, L.

Sharpies, B.

Denham, L. [Teller.]

Kilmarnock, L.

Simon, V.

Drumalbyn, L.

Kimberley, E.

Skelmersdale, L.

Ellenborough, L.

Lloyd of Kilgerran, L.

Swinfen, L.

Elliot of Harwood, B.

Long, V.

Teviot, L.

Faithfull, B.

Lyell, L.

Trefgarne, L.

Ferrers, E.

McFadzean, L.

Trenchard, V.

Fortescue, E.

Macleod of Borve, B.

Trumpington, B.

Gainford, L.

Margadale, L.

Vaux of Harrowden, L.

Glasgow, E.

Morris, L.

Vickers, B.

Godber of Willington, L.

Mottistone, L.

Wigoder, L.

Gowrie, E.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendment No. 149 not moved.]
8.23 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 150:
Page 36, line 8, at end insert—
(" () The securities which the Minister or his nominees determine should be offered for sale shall be in respect of the whole of the successor company and not of a subsidiary of the successor company").
The noble Lord said: I have the idea that the Committee may be in the mood for short speeches at this stage, and I therefore propose to make one in regard to an important amendment which deals with ensuring that the securities which the Minister determines should be offered for sale shall be in respect of the whole of the successor company and not a subsidiary of the successor company. I believe the best way of making a short speech— and, hopefully, an effective one— is to deliver to the Committee three short quotations, one from the Minister— and I am quoting from col. 1129 of the Second Reading debate on 27th November.
"… we are not going to be selling off individual NFC subsidiaries to the highest bidder. The whole purpose of this Bill is to enable us to sell shares in the enterprise as a whole. We want it to go into private ownership as a single entity, without any major change in size or range of interests ".
Mr. Higgins, a fervent and informed member of the party opposite on matters of transport, said in column 1190 that it was not right to break up the NFC and, if broken up, that it would have:
"… a traumatic effect on morale and [would discourage] senior management. The NFC
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would not [be] given a fair chance. The Minister has the right approach … [The employees] are concerned about their long-term job prospects".
My last quotation is from the speech of the Parliamentary Secretary in the Second Reading debate (in column 1243):
" We believe that the corporation makes sense as a whole. We are therefore selling it as a corporation and we are resisting pressures to sell off Pickfords and so on ".
I could not have said with more expressive power what this amendment seeks to achieve: namely, that it should be sold off as an entity, and not to the detriment, I am quite sure, of the nation, in bits and pieces. In those circumstances, I commend the quotations of the three representatives of the Government and look forward to being able to quote my noble friend Lord Bellwin (if I may so term him) as a fourth proponent of the same principle and therefore in favour of this amendment.
Lord BELLWIN: The noble Lord, Lord Mishcon, may quote me as a disciple with exactly the same views; but that is not to say that, because of that, we feel the amendment is necessary. The essential purpose of the Bill is to enable shares in the successor company to be sold to investors with the aim of transferring control of the enterprise as a whole to the private sector. The Government have repeatedly made it clear that they have absolutely no intention of bringing about separate disposal of subsidiary companies. But, in any case, the shares of the subsidiaries will be held by the successor company rather than by the Minister.
It is not possible to say whether at some future date the new company will wish to dispose of or acquire subsidiaries. At present, there seems no reason to

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forecast any disposals. Transfer of ownership of subsidiaries is a normal business activity in which the National Freight Corporation has already been involved. There is no difference at all between what the noble Lord, Lord Mishcon, is suggesting and what the Bill says. There is no necessity at all for this amendment.
Lord MISHCON: There is nothing in the Bill which secures the principle of the amendment. I would remind the noble Lord that this amendment has nothing to do with endeavouring to stop the sale of subsidiaries in the years ahead. The amendment is quite specific. It says that the securities to be offered for sale
" shall be in respect of the whole of the successor company and not of a subsidiary ".
And these are the securities which the Minister or his nominees will be selling. Therefore, it will be entirely in the Minister's hands. As I understand it— and I do not want to predetermine what the noble Lord may be about to say now— if the noble Lord is saying that this is a principle which the Government adopt, then one only wants to be able to give security to the employees (and to the nation, I may say) by having this properly incorporated in the Bill. I repeat that I am merely dealing with what the Minister does and not with what the future shareholders do.
Lord BELLWIN: I must confess I am not entirely with the point. The amendment, as I understand it, would add a new subsection to Clause 38 restricting the way in which securities of the successor company are offered for sale. The proposed subsection would stipulate that the securities offered for sale must be of the successor company and not of any of its subsidiaries. We are talking about the intentions of the Government in selling the NFC to the successor company. The quotations that the noble Lord read out, and which I have confirmed tonight, make it clear that that is the intention: that it will be sold to the successor company as a whole entity. But the amendment goes on to restrict the way in which shares of the successor company are offered for sale. That was not the same thing. I think our intention is the same; but as I understand the way in which the
660
amendment is worded— and I am open to correction— it could mean that slight difference, which is all-important.
Viscount SIMON: With great respect, there is no question of selling something to the successor company. The successor company is created and then shares in the successor company are offered for sale. The object of Lord Mishcon's amendment is simply that they are offered for sale as they stand as shares in the company and not as shares in subsidiaries held by the company.
Lord BELLWIN: I am much obliged to the noble Viscount. That is quite right. When one figures through a process of course that is absolutely right. That is exactly the way it is intended. I still make the same point: namely, the amendment is not necessary because the intention is, as I have said, that the company be disposed of as a whole, in its entirety. Those were the quotations which the noble Lord read out and with which I concur.
Lord MISHCON: I hope the noble Lord will be patient with me. If he concurs with every word of the amendment and merely has the point that it is unnecessary, I hope that in those circumstances he will not dream of opposing it. If intentions expressed in either House of Parliament were all that was necessary in order to govern the future events of this nation, there would be no point in having Bills or Acts of Parliament.
All I am trying to do is to enshrine in the Bill something which the Minister said he intends to do; the Parliamentary Secretary in another place said he intends to do; and the Minister has repeated both on Second Reading and now that the Government intend to do. I merely wish to give the security to everybody to see it in the Bill. I take it from what the Minister says that he does not oppose it being in the Bill.
Lord BELLWIN: There is a difference here, a difference of interpretation or understanding. The fact is that the Minister will never own any shares in the subsidiary company at all. Therefore, there can be no question of his disposing of them. Maybe that is where we are at slightly cross purposes. The shares will

661
be held by the successor company, not by the Minister. I would have thought that was it. What I will say is that if it should prove to be based upon what the noble Lord has said— I cannot accept the amendment as it is— that the effect of the amendment will be the same as the Government's intention, while my understanding is that it is not, of course I will come back with it to the noble Lord.
Lord MISHCON: The Minister is saying— this is how I have understood him— that if the amendment on further consideration means what I have said it means tonight, then it will be an amendment that will be accepted by the Government; if it is capable of another interpretation he may have to have second thoughts. If that is the understanding between us, then I am perfectly prepared not to press the amendment tonight and to see exactly
[Amendment No. 151 not moved.]
Clause 38 agreed to.
how on further examination the Minister finds his interpretation on advice.
Lord BELLWIN: Not quite. On that basis, I could not accept it. The basis is the one that I have said. If it should prove to be that the wording of the amendment means contrary to what I think it means, that it in no way inhibits the Government's intentions in this matter, then of course we shall accept it. But only if it should do that. I will gladly say, as I said a moment ago, that of course we will look at it.
8.35 p.m.
On Question, Whether the said amendment (No. 150) shall be agreed to?
Their Lordships divided: Contents, 35; Not-Contents, 63.

CONTENTS

Bacon, B.

Hale, L.

Rhodes, L.

Blease, L.

Hall, V.

Sefton of Garston, L.

Boston of Faversham, L.

Houghton of Sowerby, L.

Simon, V.

Brockway, L.

Kaldor, L.

Stewart of Alvechurch, B.

Cledwyn of Penrhos, L.

Lee of Newton, L.

Strabolgi, L. [Teller.]

Collison, L.

Lloyd of Kilgerran, L,

Taylor of Mansfield, L.

David, B.

Lovell-Davis, L.

Underhill, L.

Davies of Leek, L.

Maelor, L.

Wells-Pestell, L.

Donaldson of Kingsbridge, L.

Mishcon, L.

Whaddon, L.

Elwyn-Jones, L.

Peart, L.

Wigoder, L.

Gaitskell, B.

Ponsonby of Shulbrede, L. [Teller.]

Wynne-Jones, L.

Glenamara, L.

Gosford, E.

NOT-CONTENTS

Abinger, L.

Elliot of Harwood, B.

Margadale, L.

Airey of Abingdon, B.

Faithfull, B.

Morris, L.

Ampthill, L.

Ferrers, E.

Mottistone, L.

Auckland, L.

Fortescue, E.

Mowbray and Stourron, L.

Balerno, L.

Gainford, L.

Murton of Lindisfarne, L.

Bellwin, L.

Glasgow, E.

Orkney, E.

Belstead, L.

Godber of Willington, L.

Orr-Ewing, L.

Bessborough, E.

Gowrie, E.

Reigate, L.

Brougham and Vaux, L.

Gridley, L.

Renton, L.

Caithness, E.

Grimston of Westbury, L.

Sandford, L.

Campbell of Croy, E.

Hatherton, L.

Sandys, L. [Teller.]

Chesham, L.

Henley, L.

Selkirk, E.

Cockfield, L.

Hereford, V.

Sharpies, B.

Cork and Orrery, E.

Holderness, L.

Skelmersdale, L.

Craigavon, V.

Horsnby-Smith, B.

Swinfen, L.

Craigmyle, L.

Kilmany, L.

Teviot, L.

Cullen of Ashbourne, L.

Kimberley, E.

Trefgarne, L.

de Clifford, L.

Long, V.

Trenchard, V.

Denham, L. [Teller.]

Lyell, L.

Trumpington, B.

Drumalbyn, L.

McFadzean, L.

Vaux of Harrowden, L.

Ellenborough, L.

Macleod of Borve, B.

Vickers, B.

Resolved in the negative, and amendment disagreed to accordingly.

8.43 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 152:
After Clause 38, insert the following new clause:

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(" Laying of Memorandum and articles of association of the successor company
. Before the appointed day the Minister shall lay before both Houses of Parliament an order containing the memorandum and articles of association of the successor company to the National Freight Corporation.").
The noble Lord said: Again, I hope I can be brief. I understood the Minister to say that there would be a full opportunity for Parliament to see the memorandum and articles of association of the successor company, and indeed to debate them if necessary. If that is confirmed by the noble Lord, I have no need to proceed with this amendment. I shall be happy to withdraw it.
Lord BELLWIN: Yes, I am pleased to confirm that that is so. I, too, have a set piece to say but I feel perhaps in the circumstances there is no need to deal with that. It will be as I said previously: the memorandum and articles of association will be made available and a copy will be put in the Library of the House before the appointed day. Unless the noble Lord wishes me to expand on the point, I shall be quite happy not to do so.
Lord MISHCON: I am quite happy with the Minister's assurance, and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 153 not moved.]
Clause 39 [Transitional provisions with respect to reserves, etc.]:
[Amendment No. 154 not moved.]
Lord MISHCON Lord MISHCON moved Amendment No. 155:
Page 37, line 16, at end insert—
(" (6) Notwithstanding any other provisions of this Act, any tax losses which before the appointed day were available to the Corporation shall not for the purposes of the Taxes Acts be available to the successor company, ").
The noble Lord said: Amendment No. 155 deals with the question of tax losses and any tax losses being taken for the benefit of any purchaser. The Committee may feel that it is a very, very wrong principle that the taxpayer should suffer as a result of private enterprise making profits in the future on the acquisition of this company in the market by being able to take advantage of losses made in
664
various subsidiaries in the past by the National Freight Corporation. It seems to be a most insidious way of dealing with out tax affairs and I hope the Committee will regard it as such. I must say I was somewhat amused, if the Committee will forgive my saying so, on reading the contribution made by the honourable Member for Faversham on the 22nd Sitting of Standing Committee "H" on this Bill, on 14th February, at col. 1634. The honourable Member said, and I quote:
" If it is to begin life as a free enterprise company "—
Lord SANDYS: It is a convention in this Chamber— and I myself have been called to order on this particular one— that only Government Ministers may be quoted from Standing Committee and not Members of another place.
Lord MISHCON: I am most grateful for the correction. I am in some difficulty, because the Minister in fact answered him and to quote the answer of the Minister without being able to quote the contribution to which he made the answer is rather difficult.
Lord MOWBRAY and STOURTON: I think the solution is that they are allowed to be paraphrased.
Lord MISHCON: I am most grateful for the help I am getting from all sides, which is really most courteous. May I take it in this way. The honourable Member for Faversham made a reference to the happy position in which a future purchaser would be by being able to take advantage of these tax losses, and the Minister, the Parliamentary Secretary, Mr. Kenneth Clarke, replied as follows— I am quoting from column 1644:
" My honourable friend the Member for Faversham raised a specific point about tax losses and the position of the new company. He has touched on a very pertinent point, to which I am not able to give an instant answer ".
After that it was made quite clear in Committee by the Minister— and I think at the Report stage, too— that there would be an opportunity to take advantage of tax losses in subsidiary companies where that business was carried on, as against future profits of that individual subsidiary company. It is a principle that I am asking the Committee to deal with.

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As I said, it seems absolutely wrong that the ordinary taxpayer should have to pay more, if I may put it this way, in regard to his tax liabilities by virtue of a purchaser here being able to take advantage of tax losses inside the National Freight Corporation's subsidiaries.
Lord BELLWIN: I believe this amendment springs from a misconception which I understood had been cleared up in another place. It seeks to withhold from the successor company any tax losses which before the appointed day were available to the NFC. But as my honourable friend in another place spelt out in Committee— and I would refer here to Hansard of 21st February, column 1785: I think I am in order as he is a Minister— tax losses made by NFC subsidiaries, principally National Carriers, are available to be set off only against future trading profits of the same business. There is therefore no way in which another company can buy a controlling interest in the successor company and in some way use NCL's past lax losses to offset future profits in another subsidiary or another part of the business. These tax losses therefore cannot be considered as some kind of asset which a purchaser might wish to acquire so as to avoid paying taxes on his other businesses. To accept this amendment would be to create a positive tax disadvantage for subsidiaries of the successor company which would not otherwise exist.
If the amendment were to become effective, companies such as the NCL would not be able to set off past tax losses against future trading profits. Their competitiveness would suffer and prospects for both the companies involved, and their employees, would be severely worsened. I cannot believe that this is what the noble Lord, Lord Mishcon, wishes to see and, in these circumstances, I wonder whether he would care to withdraw his amendment.
Lord MISHCON: If I may say so with great respect, the noble Lord merely repeated what I had, I hope, properly told the Committee was the position as explained by the Minister; that is, that tax losses would be available to be set against future profits only within the subsidiary that had made the losses. But my point is that if that subsidiary is taken over by private enterprise, as is
666
envisaged here, that means that previous tax losses can be taken advantage of. One either agrees with this principle or one does not. But the facts are as I stated them. I was not under any misunderstanding, and I hope that the Committee was not. The principle still remains the same. I think it wrong and I ask the Committee so to decide.
On Question, amendment negatived.
Clause 39 agreed to.
Clause 40 agreed to.
8.52 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 156:
After Clause 40, insert the following new clause:
(" Avoidance of asset stripping
.— (1) It shall be unlawful for the successor company or a subsidiary of the successor company to dispose of any interest in land which forms part of the undertaking of the Corporation without the written consent of the Minister.
(2) The Minister shall not give his consent under subsection (I) unless he is satisfied that the proposed disposition would not constitute a transaction of an unusual nature for the successor company or the subsidiary in question of the successor company to enter into having regard to the activities (being activities which relate to the transport of freight) in which the successor company or the subsidiary is engaged at the time of the proposed disposition and which would constitute a transaction which would not be reasonably necessary for, or which would be contrary to, the purpose of those activities.
(3) A consent given under subsection (1) may be given subject to conditions, including conditions enabling the Minister to require the proposed disposition to be made in favour of such person as he may nominate provided that, in the case of such a nomination, the disposition is to be made on terms reasonably comparable to those which the successor company or subsidiary could have obtained if the disposition had been made to a willing purchaser buying at arm's length on the open market.
(4) In this section "subsidiary" has the same meaning as in the Companies Act 1948.").
The noble Lord said: Again, I hope to move this amendment briefly, in spite of the fact that it is a long one. It seeks to ensure that land and buildings owned by the successor company, as a result of the take-over from the National Freight Corporation, shall not be sold off in the future destiny, whatever it may be, of this company. In other words, it is a protection against asset-stripping.
So that the Committee should know what it is dealing with, I ought to say that the assets of the National Freight Corporation at 31st December 1978 were £ 183 million, of which some £ 58 million— that is, about one-third— represented land and buildings. There is a note to the accounts which states that the market value is in excess of book value. I cannot guide the Committeee— no doubt the Minister can— as to the present value of the land and buildings, and this will have to be in any prospectus when it is floated off to the public. As I said, the intention is to stop asset stripping, which I think would be the wish of the Committee. That is the reasoning and the thought behind this amendment and I beg to move.
Lord BELLWIN: This new clause would impose an intolerable limitation on the commercial freedom of the new company. There is no reason why the company should wish to dispose of any property on a large scale. But it is essential that it can take advantage of any opportunities to dispose of property no longer required, as and when these arise, without going through the laborious procedure of seeking ministerial consent in the way that the new clause proposes. Such restrictions could prevent any negotiations from ever being completed. Disposal of redundant property is a normal part of everyday commercial activity; indeed, the NFC does it now without prompting any controversy. The whole purpose of the Bill is to ensure that the new company, as from the appointed day, has the commercial freedom enjoyed by any private sector company. This new clause would be entirely inconsistent with this and for that reason we cannot accept it.
Lord MISHCON: All I can say in regard to that is: if the Minister feels that it would be a wrong principle for asset stripping to take place, would he not agree that, at least, an undertaking by the Government at this stage that that would be discouraged would meet part of the point of this amendment?
Lord BELLWIN: As the noble Lord knows, I am at all times anxious to be helpful. Indeed, throughout all the 150-odd amendments that we have discussed we have, in the main, been so. But we are now talking about fundamentals on
668
which there is clearly a difference of view between noble Lords opposite and we on this side. There is nothing wrong with that; we knew it at the time of Second Reading. It was said so and it is so.
But if you talk of asset stripping in the emotive sense and, at the same time, consider the point I made a moment ago— namely, that it is normal commercial practice for any company which has properties or anything else which may be surplus to its requirements, as the NFC finds to be the position at the present time— you would not call that asset stripping. Or would noble Lords describe as asset stripping what the NFC now does, in the normal course of its business, when it sells some property or land? They may say that it is that in the use of the term, but it is part of the normal commercial and, presumably, logical process. All we are wanting to ensure is that the successor company which takes over is not so restricted that it cannot operate in a normal open, commercial way. For that reason, I say, again, that I am not able to be as helpful as the noble Lord would like.
On Question, amendment negatived.
8.57 p.m.
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 157:
After Clause 40, insert the following new clause:
(" Compensation for loss of employment etc.
. — (1) The Minister shall by regulations provide for the payment by the Minister or by such person as may be prescribed by or determined under the regulations of compensation to or in respect of any person who is, or prior to the making of the regulations, has been in any employment as may be so prescribed and who suffers loss of employment or loss or diminution of emoluments or pension rights or worsening of his position which is attributable to any provision of this Act or any instrument made under this Act.
(2) Regulations made under this section may—
(a) include provision as to the manner in which and the person to whom any claim for compensation is to be made, and for the determination of all questions arising under the regulations,
(b) make different provision for different classes of persons and for other circumstances and make or authorise the Minister to make exceptions and conditions,
(c) be framed so as to take effect from a date earlier than the making of the regulations,

669
but so that regulations having effect from a date earlier than the date of their making shall not place any individual in a worse position than he would have been if the regulations had been so framed as to have effect only from the date of their making.").
The noble Lord said: This amendment is to protect the overall conditions of service of staff on the transfer of ownership of the National Freight Corporation. A very powerful case could be made out for this, but in view of the time I shall be extremely brief. It has been longstanding practice, when employees are involuntarily transferred from one employment to another, that provision should be made for compensation in various circumstances. For example, under the Railways Act 1921, many of the smaller railway companies were amalgamated into four companies, and the Act specifically provided for compensation in the event of any employee having his conditions of service worsened. Similarly, in the Transport Act 1947 there was provision for compensation when the railway companies were taken into public ownership. As your Lordships will recall, this principle has been extended far beyond the railway industry and legislation protecting the interests of employees was introduced by the Conservative Government when they brought in local government reorganisation in 1973. Therefore, the principle is one which is accepted. The same provision was made in 1968, when the British Railways Board was divided into three parts.
To sum up, the purpose of this amendment is to include provision for compensation for staff who, if transferred to the employment of another organisation as a result of the sale of shares, suffer loss of employment or a worsening in their general conditions of service, compared to those they would have had if they had remained with the National Freight Corporation or the successor company. It is a principle which has been accepted before. It was accepted and written into the Local Government Reorganisation Act, and we should like to see this amendment written into this Bill. I beg to move.
Lord BELLWIN: The concern over this issue, while fully understood, is, in my view, entirely misplaced. Employees have no cause to fear the transfer of ownership to the private sector. The
670
Government believe that by taking advantage of the greater commercial freedom available in the private sector, the company will be assured of a secure and prosperous future. This will help to ensure greater job security for employees. In any case, the proposal is wholly unacceptable on the point of principle. It entirely contradicts one of the fundamental aims of the Bill, which is to free the National Freight Corporation from stifling restrictions and impositions of precisely this kind. It is essential that the rights and obligations of the successor company should from the outset correspond to those of any Companies Act company without any of the special obligations that now apply to the National Freight Corporation as a statutory corporation. Only then can the company compete on fair and equal terms in the free market.
Obligations of the kind proposed in the amendment could involve the company in an open-ended commitment. It would be a severe burden; it would be a deterrent to investors. The need to make provision for this type of compensation is long past. The staff will have the benefit of the substantial protection afforded to all employees in both the public and the private sectors by the Employment Protection Acts. There is no reason at all why employees of the company should have any special protection beyond what is available to all employees.
As for the point on the Bill representing a removal of the protection already given to employees in earlier legislation, this is not so. The legislation provides in Schedule 6, paragraph 4, for the company to take on the compensating functions now carried out by the National Freight Corporation under the Transport Holding Company Act 1968. I fear that once again we cannot accept the amendment.
Lord UNDERHILL: I am sorry that the noble Lord cannot accept the amendment. His reference to the schedule related to the obligations at present existing; it has got nothing to do with the position of employees who are to be transferred as a result of the disposal of the National Freight Corporation. I am sorry that the noble Lord used the words "stifling restrictions" because we are talking about compensation for employees who suffer not as a result of

671
anything that they have done but as a result of legislation passed by Parliament. What we are endeavouring to do in the amendment is to protect their interests in the same way as noble Lords opposite undoubtedly supported similar provisions in the Local Government Act.
If it is being suggested that when one is dealing with the public service, conditions should be of a higher character than when one transfers to a private shareholding, it is a suggestion which I am sorry that the noble Lord should make. Previous legislation throughout the whole
Clause 41 [Funding of relevant pension obligations]:
9.11 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 158:
Page 38, line 1, leave out ("may, with the consent of the Treasury ") and insert (" shall ").
of the railway industry and its subsidiaries has made this provision; it has been in past legislation and it is an important aspect of industrial relations, which very shortly we shall be considering in this House. I am sorry that the noble Lord cannot accept the amendment. It is a question of great principle and I cannot withdraw the amendment.
9.3 p.m.
On Question, Whether the said Amendment (No. 157) shall be agreed to?
Their Lordships divided: Contents, 30; Not-Contents, 65.

CONTENTS

Blease, L.

Gosford, E.

Ponsonby of Shulbrede, L. [Teller.]

Boston of Faversham, L.

Hale, L.

Brockway, L.

Hall, V.

Sefton of Garston, L.

Cledwyn of Penrhos, L.

Houghton of Sowerby. L.

Simon, V.

Collison, L.

Kaldor, L.

Strabolgi, L. [Teller.]

David, B.

Lloyd of Kilgerran, L.

Underhill, L.

Davies of Leek, L.

Lovell-Davies, L.

Wells-Pestell, L.

Donaldson of Kingsbridge, L.

Maelor, L.

Whaddon, L.

Elwyn-Jones, L.

Mishcon, L.

Wigoder, L.

Gladwyn, L.

Peart, L.

Wynne-Jones, L.

Glenamara, L.

NOT-CONTENTS

Abinger, L.

Elliot of Harwood, B.

Morris, L.

Airey of Abingdon, B.

Faithfull, B.

Mottistone. L.

Ampthill, L.

Ferrers, E.

Mowbray and Stourton, L.

Armstrong, L.

Fortescue, E.

Murton of Lindisfarne, L.

Auckland, L.

Gainford, L.

Orkney, E.

Balerno, L.

Glasgow, E.

Orr-Ewing, L.

Bellwin, L.

Godber of Willington, L.

Reigate, L.

Belstead, L.

Gowrie, E.

Renton, L.

Bessborough, E.

Gridley, L.

Sandford, L.

Brougham and Vaux, L.

Grimston of Westbury, L.

Sandys, L. [Teller.]

Caithness, E.

Hatherton, L.

Selsdon, L.

Campbell of Croy, L.

Henley, L.

Sharpies, B.

Chesham, L.

Hereford, V.

Skelmersdale, L.

Cockfield, L.

Holderness, L.

Swinfen, L.

Cork and Orrery, E.

Hornsby-Smith, B.

Teviot, L.

Craigavon, V.

Kilmany, L.

Trefgarne, L.

Craigmyle, L.

Kimberley, E.

Trenchard, V.

Cullen of Ashbourne, L.

Long, V.

Trumpington, B.

de Clifford, L.

Lyell, L.

Vaux of Harrowden, L.

Denham, L. [Teller.]

McFadzean, L.

Vickers, B.

Drumalbyn, L.

Macleod of Borve, B.

Wynford, L.

Ellenborough, L.

Margadale, L.

Resolved in the negative, and amendment disagreed to accordingly.

The noble Lord said: I hope to earn a slight amount of popularity in the Committee by speaking to Amendments Nos. 158 to 164 and doing it briefly. As I understand it, this clause refers to road-based obligations of the NFC under pension schemes. It provides that if on the offer for sale there is a deficit in the funding of the relevant pension obligations the Minister may, by various methods, make up the funding. The amendment

673
aims, in view of the fact that the employers may be in jeopardy in private hands (as would not be the case in a public corporation) to make it mandatory upon the Minister to hand over with the pension fund obligations being properly covered and not conditional, among other things, upon the amount the Minister receives for the relevant securities that will be sold. The requisite sum to fund the obligations is to be jointly determined under these amendments by the Minister and the trustee of the funds. I hope that this idea will commend itself to the Minister, and I beg to move Amendment No. 158.
Lord SANDYS: From this side of the Committee I can say that we are very much obliged to the noble Lord, Lord Mishcon, for dealing with Amendments Nos. 158 to 164 together. I am anxious to point out to the noble Lord, first, as I hold in my hand a copy of the Official Report of Standing Committee H, one particular matter. He will of course be aware that considerable discussion took place on these amendments relating to this clause and indeed later amendments, all of which (with the exception of Amendment No. 161) have been discussed in considerable detail in another place.
I say this in no sense in criticism, but what I am attempting to emphasise is that considerable care has been devoted in another place to examining the particular arguments. Where probing amendments have been withdrawn I think it could fairly be said at this stage that the details of the particular situation have been very fully discussed.
I think the point I should like to make further about amendments in this particular situation is this. Where an amendment has been tabled and called and spoken to and indeed resolved in another place one can say with some justification that it is a spent amendment. If, however, it is associated with a group of new amendments or there is a new aspect, I think we will naturally re-examine the position. But as my right honourable friends and honourable friends in another place have spoken to nearly all these amendments together, I think there is remarkably little we can add other than to emphasise particular aspects. I listened with great interest to Lord Mishcon's speech on Second Reading, and I have since then
674
read it again. I know how much importance he attaches to this group of amendments.
I should like now to turn to the substance of Amendment No. 158 and say this. This amendment, we believe, would serve little purpose. It is the normal convention to require Treasury approval in financial legislation of this kind, and I see no reason to break with this convention. As part of the normal processes of government the Treasury would in fact be consulted anyway whether or not this was written into the Act. The change, therefore, from "may" to "shall" would have no practical effect, since the Minister would still retain discretion on the amount of payment. My right honourable friend's remarks in column 1806 in Standing Committee H on 26th February also refer to this.
In regard to Amendments Nos. 160, 162 and 164, if I may be permitted to speak to them together as the noble Lord, Lord Mishcon, has done so, I think I can consolidate my remarks and say this. The NFC's road-based pension liabilities stand at present to be discharged by the corporation out of revenue. The payments are currently £ 2-| million a year, which compares with the total turnover of the corporation of £ 480 million. The previous administration saw no call to support these road-based obligations, and I see no reason to question that decision. The position will, however, be rather different when the corporation comes to be moved out of the public sector. Investors might well be concerned if the balance sheet reflected pension fund deficiencies. Clauses 40 and 41 have therefore been included in the Bill to facilitate the sale of shares. Investors are likely to prefer to pay a higher price for NFC without the deficiencies rather than a lower price with the deficiencies. What we are, therefore, proposing is that a part of the proceeds of the sale should be set aside to fund those deficiencies.
However, it would not be desirable to write into the statute a requirement that funding should be complete. What constitutes complete funding would be a matter of actuarial judgment, and the judgement of actuaries in such matters can differ widely. Attempts to write a requirement of this kind into the statute could lead to unproductive litigation.

675
I can, however, give the assurance that the Government intend that the amount of funding to be offered under this section will be sufficient to enable the actuaries to certify that the NFC's pension funds are in a satisfactory state.
On the individual amendments, No. 160 would delete subsection (3) from Clause 41. Subsection (3), as your Lordships are already aware, is one of the less important provisions in the Bill. It was included more by way of tidiness than anything else, since it secures that the power to apply the proceeds of sale to the funding of the road-based obligations is available even if the proceeds of sale fall short of the sum originally specified. It is, however, unlikely that we would ever wish to make use of the power, but I see no virtue in deleting it.
Amendment No. 162 would introduce a requirement that any payment made under subsection (4) should be sufficient fully to fund the obligation. As I have explained, what constitutes full funding is a matter of actuarial judgment, and it would not be helpful to write a requirement of that kind into the statute.
Amendment No. 164 would require the successor company to make payments to the funds to cover any difference between the payments made by the Minister and full funding. Apart from the problem of defining full funding, this amendment would be otiose and surplus. Clause 41 is concerned with the obligations of the successor company and its road-based subsidiaries. Because they are obligations, the successor company is already required to meet any deficiencies corresponding to them. The only question is whether they should be met by immediate lump sum payments, or by periodical deficiency payments, and on that the amendment is silent. The obligation will already rest with the company, so the amendment would achieve nothing.
I have not specifically spoken to Amendment No. 163 which I think my noble friend Lord Cullen of Ashbourne may wish to speak to separately. However, I can assure the noble Lord, Lord Mishcon, that we regret that we cannot accept his amendments.
Lord MISHCON: I think that it would be very sensible if I were able to study
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what the noble Lord has said when I read the Official Report, and then see if there is any further step that ought to be taken in the other stages of the Bill. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 159 to 164 not moved.]
Lord BELLWIN Lord BELLWIN moved Amendment No. 164A:
Page 38, line 41, leave out ("specified in") and insert (" for the time being within ").
The noble Lord said: I spoke to this amendment when we dealt with Amendment No. 145A. I beg to move.
Lord MISHCON: I am not quite sure that the Minister is right. He may be right, but in view of the hour, I think that both of us had better see what the situation is after we read the report of the proceedings. We can deal with the matter, if necessary, later on.
On Question, amendment agreed to.
Lord MISHCON Lord MISHCON moved Amendment No. 165:
Page 38, line 43, at end insert—
(" (7) National Freight Corporation pension schemes other than the relevant pension obligations defined in sections 41 and 44 of this Act shall continue to operate and shall not be worsened by the successor company.").
The noble Lord said: Happily I can, once again, be very brief. This amendment deals with pensions other than road-based and rail-based pensions— that is to say, current service obligations. The purpose of the amendment is to see that they shall not be worsened by the successor company. I hope that this amendment, at least, can be agreed to by the Minister.
Lord SANDYS: I fear that I am going to disappoint the noble Lord, Lord Mishcon, in that regard. This amendment, once again, was moved in another place in Standing Committee. I refer your Lordships to column 1852 of the proceedings of Standing Committee "H". My honourable friend the Parliamentary Secretary to the Ministry of Transport, Mr. Kenneth Clarke, spoke to this matter in some detail at column 1859. I think that at this hour it would be unnecessary

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to repeat his words in full, but I quote that reference for a particular purpose? The amendment was negatived at that particular stage.
It is a matter of regret that the drafting of this amendment has remained exactly as it was then.
Lord MISHCON: It should be "section 45".
Lord SANDYS: I am at a loss to know the point that the noble Lord is making.
Lord MISHCON: I thought that the Minister, with his usual kindness, was trying to help me, because it should read: "… defined in sections 41 and 45 of this Act" and not "section 44", as the Bill now stands. I thought that the noble Lord was referring to that.
Lord SANDYS: Yes, I think that this is a printer's error. I should like to point out that it is an error which appears to have been repeated on this occasion. The purpose of the amendment is to impose a restriction on the successor company which does not apply to the corporation at present and which does not apply to private sector companies. It is thus inconsistent with the general policy of Part II of the Bill, which seeks to put the successor company into the shoes of the NFC, but to free it from limitations appropriate only to a statutory corporation. In any event, the amendment does not appear to relate very closely to the actual facts of the corporation's present pension arrangements. It may be helpful to the Committee if I very briefly describe those arrangements.
Ninety-five per cent. of the corporation's employees are members of one or other of the two big schemes established in 1971— either the Salaried Staff scheme or the Wages Grades scheme. Each of these schemes has both rail-based and road-based members and pensioners. Relevant pension obligations, as defined in Clause 42, are owed in respect of each of these schemes. I might say that relevant pension obligations, as defined in Part III of the Bill, are also owed in respect of each of these schemes. One must, however, bear in mind that a pension obligation which is relevant for the purposes of Clauses 41 and 42 is irrelevant for Part III of the Bill, and, of course, vice versa.
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When the new schemes were set up in 1971, those employees who joined were allowed to transfer some or all of their previous pensionable service to the new schemes. They were granted back-service credits. The corporation guaranteed the payment of the benefits corresponding to the back-service credits. These guarantees make up the greater part of the historic pensions obligations of the corporation. The corporation's obligations will pass to the successor company, and Clauses 41 and 42 and Part III of the Bill are intended to provide the wherewithal for those obligations to be discharged.
The security for the current service pension rights of NFC employees is provided by the funds themselves. They and their employer have paid contributions into the funds and these contributions have been invested by the trustee outside the corporation's business. The investments are held on trust and are not available for use by the corporation or by any successor company. I might say that as far as we are aware the current service sections of the funds are adequately funded and the assets are sufficient to support the benefits laid down in the rules of the Funds.
That deals with the corporation's main pension schemes. The other 5 per cent. of the corporation's employees are members of old British Rail schemes, or of old NFC schemes, or of no scheme at all I would underline one point. These employees have had the opportunity to join the new schemes. If they did not do so, it would have been their own decision. The amendment is, of course, concerned with the old NFC schemes; that is to say, the schemes inherited from the Transport Holding Company. I understand that these schemes are in a satisfactory condition and that the assets will be sufficient to meet their liabilities. I should say that these schemes are also funded schemes and that their assets are not at the disposal of the corporation or the successor company.
Finally, there are some NFC employees who are not members of formally constituted pension schemes but who are entitled to what are called "customary practice" or "ex gratia" pensions. These terms are somewhat misleading, as the pensions concerned are now, to all

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intents and purposes, legal entitlements. In any event, the pensions concerned have now been brought into the NFC (1978) Pension Fund, and are relevant pension obligations for the purposes of the Bill. I regret that I cannot advise your Lordships to accept this amendment which is, as I have said at all too great a length, unnecessary in practice and in principle, and will conflict with the policy of the Bill.
Lord MISHCON: I am most grateful to the noble Lord for the trouble he has taken in regard to the detailed reply which he has given to the observations that I made. They are worthy of such respect that I would want to ponder upon them when they appear in the Official Report, and then possibly he would permit me to communicate with him if I have any further points to raise.
Amendment, by leave, withdrawn.
Clause 41, as amended, agreed to.
Clause 42 agreed to.
[Amendment 166 not moved.]
Clause 43 agreed to.
Schedule 7 agreed to.
Clause 44 [Payments by Minister in respect of B.R. and N.F.C. pension schemes]:
9.32 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 166 A:
Page 41, line 3, leave out (" sections 48 and 49 ") and insert (" section 49 ").
The noble Lord said: With Amendment 166A, which is a paving amendment, with your Lordships' permission it would be convenient to take Amendments Nos. 177A, 177B, 179A, 179B, 180A, 180C, 180D and 180H. All these amendments relate to Clause 48, which is the clause which deals with surpluses in "basic" schemes. I anticipate that there may be differences of opinion about this clause when we come to later amendments in the Marshalled List. However, I hope these amendments will not cause any difficulties. Amendments 166A,
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177A, 177B, 179A and 179B correct a technical defect in the clause as now drafted. We had inadvertently contrived to reduce the Minister's liabilities to the supplementation scheme by more than the reduction in the liabilities of the supplementation scheme. Amendment 177B recasts subsection (2) of Clause 48 to remove this defect, and the other amendments are consequential drafting amendments.
Amendment 180A discharges an undertaking given in another place. There are some British Rail pension schemes, including in particular the British Transport Police Force Superannuation Fund, which pay increases of pensions to some of their pensioners but not to others. The others receive their pensions increases from the supplementation scheme. The amendment provides that Clause 48 will only apply to so much of any surplus in such a scheme as is attributable to those of the members and pensioners as stand to receive their increases from the supplementation scheme.
Amendments Nos. 180C and 180D also discharge an undertaking given in another place. Surprising as it may seem, the rules of some British Rail schemes do not permit the trustees or the management committees to increase the pensions paid by those schemes. The amendments confer on them the necessary power. I should make clear that the trustees will not be obliged to increase pensions, but they will have the power to do so if they wish. Amendment 180H is a consequential drafting amendment which moves a definition now in Clause 48 into the main definitions clause, since the definition is now needed elsewhere in Part III. I beg to move.
Lord MISHCON: The Minister is to be congratulated on the ease with which he managed to meander through the maze of amendments which he discussed together. If I am not quite so successful in treading my path through them, I hope he will forgive me, but there are some observations I wish to make on some of the amendments with which he dealt. First, in regard to Amendment No. 177B— and I do not expect the Minister to reply now, but it would be a courtesy if he would communicate with me on the points I am now raising— the wording does not seem very clear. Suppose that in 1985 a surplus is revealed in one of the basic

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schemes (for example, the LMSR section of the BR superannuation fund) and that 85 per cent. of the surplus is sufficient to meet either, first, 90 per cent. of the cost of the 1986 scheme of supplementation or, secondly, 10 per cent. of the cost of all future schemes of supplementation.
It is understood to be the intention, which BR would, I understand, support— and I say at once that many of the observations I am making tonight on pensions come out of the concern of the BR pension funds, whose officers have supplied me with certain information— that interpretation B should apply; that was the second interpretation I gave, the 10 per cent. of the cost of all future schemes of supplementation. If we are supposed to consider all future schemes of supplementation as a group in order to reach that second interpretation, which I called interpretation B, we must presumably also treat them as a group for the purpose of understanding the opening phrase, and that is:
" If, at any time before the increases first become payable under the supplementation scheme ".
This would lead to the position where, as soon as a scheme of supplementation had been introduced, Section 48 would cease to apply to the basic scheme for ever. I think it very doubtful if that is the Government's intention. There is a further problem about the wording. It states:
"… the obligation to pay or secure the payment of the increases or, if less, the relevant proportion of the increases shall not be regarded as a relevant pension obligation ".
If that were so, then of course it would not qualify for Government support. Until the board pays the increases, they are not under an obligation to pay them. Reference might usefully be made here to Clause 45 (6) (b). Suppose, in the example already quoted, the board decides to reduce future schemes of supplementation by 10 per cent. so that a supplement which would otherwise have been £ 100 becomes £ 90, thereby hoping to get Government support for the whole £ 90— and that, I understand, is the intention— under the proposed wording, the board's obligation is only £ 90 and it would appear that £ 10 of that is not to be regarded as a relevant pension obligation. Hence Government support would be available for only £ 80 and not £ 90 as intended.
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In regard to Amendment No. 180A, although acceptable in principle, I must tell the noble Lord in sheer honesty that I wonder whether he really means the clause to imply what it appears to imply. There seems to be some ambiguity, at the very least, as to whether the assets and liabilities for members of the basic scheme who have not yet retired are to be taken into account. This is because such members are not yet in receipt of
"… pensions increases of which are payable under the supplementation scheme ".
Lastly, as to Amendment No. 180B, this would be acceptable if the word "all" between (a) and (b) were changed to "and". As drafted, the Minister could fail to support the transfer value but also meet less than the whole of the pensions obligations. As I said, I do not expect the Minister to reply now. These are matters of detail, although they are matters of great importance to the pension scheme people. I therefore hope he will be kind enough to read what I have said and let me have his observations in due course.
Lord BELLWIN: Of course I shall readily and gladly do that. I may be able to help a little by confirming that we intend interpretation B rather than interpretation A. Certainly we shall look at all the other points, and we might have to do this in regard to the complex matters relating to many other amendments with which we are yet to deal. It is very difficult to absorb this kind of matter the first time round without looking at it in writing, and I am sure that no one on either side would expect otherwise.
Viscount SIMON: When the noble Lord is looking at this matter again— as he says he will— will he pay particular attention to Amendment 180A and the word "of" in the last line?
On Question, amendment agreed to.
9.41 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 167:
Page 41, line 26, after (" year ") insert (" which may be applied towards the payment of such of the pensions, increases and expenses payable under or incurred in connection with the scheme as correspond to the obligations ").
The noble Lord said: This is a drafting amendment. It picks up a stitch which

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was dropped when Clause 44 was originally drafted. Clauses 46 (3) and 44 (2), when taken together, provide for unfunded proportions of unity to be determined for certain British Rail and NFC pension schemes. The schemes concerned are those which have negligible assets with which to discharge their historic pensions liabilities. For these schemes the Minister's payments under Clause 44 will be equal to the difference between the total historic pensions outgo of the schemes and the corresponding income and assets.
The amendment is necessary to make sure that only the "historic" income (if one may call it that) of the scheme is brought into the calculation. The scheme might have non-historic liabilities, and an income to correspond. The non-historic income obviously ought to be used to meet the non-historic liabilities, and the amendment makes sure that it is available for this purpose. I beg to move.
On Question, amendment agreed to.
Clause 44, as amended, agreed to.
Clause 45 [Meaning of "the relevant pension obligations"]:
Lord MISHCON Lord MISHCON moved Amendment No. 168:
Page 42, line 16, after ("scheme") insert (" taking account of the amendments which were introduced with effect from the date when employments in respect of which pension rights are earned under the scheme were contracted out under the Social Security Pensions Act 1975 ").
The noble Lord said: The main railway pension schemes were contracted out under the Social Security Pensions Act 1975. This took place with effect from 6th April 1978, and hence the pension scheme rule changes made in order to meet the statutory contracting out conditions occurred after 1st January 1975, which is the date mentioned in Clause 45 (l) (a) of the Bill. This means that the changes do not count as "relevant pension obligations" even though they relate to the same period of pensionable service as the other relevant pension obligations, and hence they would not qualify for Government support.
It may be argued that one of the most important effects of contracting out is that the national insurance scheme is responsible now for paying post-retirement pension increases on part of the fund
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pension. This means that the railway pension funds no longer have to meet the whole of the liability for pension increases and this has resulted in a saving in the Government support which would otherwise have been required. It therefore seems not unreasonable that, having made this saving, the Government should be prepared to meet the relatively very small additional cost which would be involved if they support the additional liabilities resulting from the contracting out changes. This is what the amendment is designed to achieve, and I beg to move.
Lord SANDYS: I have listened with interest to the arguments of the noble Lord, Lord Mishcon, and perhaps I should first remind the Committee of the purpose of Part III of the Bill. It is intended to reproduce by a different means the support for the board's historic pensions obligations that was to have been provided under the Railways Act 1974. In particular, we are seeking to define the relevant pension obligations of the board in Clause 45 of the Bill in such a way that they equate to the obligations that were to have been supported under the Railways Act 1974. The pensions provisions of the 1974 Act formed only one part of a comprehensive reconstruction of the board's finances. We are not seeking to reopen the general financial settlement laid down in the 1974 Act.
It is not in dispute, I think, that support was not going to be provided under the 1974 Act for the increases in the board's obligations which are the subject of the present amendments. These increases flowed from a decision which the board themselves took. They decided to change the rules of certain of their pension schemes so that the employees who were members of those schemes could be contracted out of the state earnings-related scheme. They were not obliged to take that decision, but they considered that it was in their interests to do so.
It is true that contracting out will have consequences for future supplementation payments. But there are two things that I would say to that. First— and I admit that the argument is somewhat technical— there is a risk of not comparing like with like. If the employees concerned had not been contracted out, their total

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pension entitlements would have been higher than those entitlements in fact are. Thus, it is not surprising that the cost of providing those pension entitlements would have been higher than it in fact is. But the Bill, like the 1974 Act, is concerned with the pension entitlements that existed at 1st January 1975, and not with subsequent increases in those entitlements. Secondly— and this brings me back to my main point— we are treating the change in the burden of supplementation no differently under the Bill than it was to have been treated under the 1974 Act.
I quite agree that we ought to avoid unnecessary administrative complications; but that it not an argument for widening public expenditure commitments. In any event, I am not persuaded that the administrative difficulties here are insoluble. I am informed that there have been discussions by officials on the question, and for our part we have made it clear that, when it comes to arithmetic, we are ready to accept a degree of approximation.
I would suggest to noble Lords that it would be as well to be cautious before suggesting that it would be equitable for this or that obligation to be brought within the Bill, or that it is anomalous that this or that obligation is excluded from Clause 45. The principle underlying the clause is simple. It is aimed at obligations owed on 1st January 1975, and later obligations to pay supplementation. The Bill, like the 1974 Act, is concerned with obligations incurred in the past. It left the board with full responsibility for the future. The obligations owed at 1st January 1975 may have been something of a rag-bag. Most inheritances are. But if we are going to look at the merits of later obligations with a view to including them in the Bill, we might also look at the inherited obligations which are in the Bill to see whether there are any that merit exclusion.
The Government have not undertaken such a review as we are proposing to retain the principle to which I have referred. However, if we were to move to some different basis it could not be assumed that all the changes would be in one direction. For example, for some British Rail employees, present and future service is a historic liability, as is the indexation of the pensions corresponding to that service. This might be thought to
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be odd, since current and future employment is not what is normally understood by the term "historic" liability. Nevertheless, the obligation was owed on 1st January 1975, and it is within the Bill. I am sorry I have had to speak at some length here. I am sure that it will be very much easier to follow these arguments when we relate them to each other in the Official Report; but I regret that we cannot accept this amendment.
Lord MISHCON: I will study all that the noble Lord has said. I find his reply somewhat disappointing. Perhaps I shall see a glimmer of light when I read the Official Report.
Amendment, by leave, withdrawn.
9.51 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 168A:
Page 42, line 20, after second ("of") insert (" or sums representing accrued rights in respect of").
The noble Lord said: With Amendment No. 168A it would be convenient, with the Committee's permission, to take Amendments Nos. 171 A, 172A, 180B and 180E on the Marshalled List. These amendments raise two aspects of transfer values; that is to say, the payments made by one pension scheme to another when a member transfers. Amendments Nos. 168A and 171A discharge an undertaking given in another place: they provide for the historic element of a transfer value paid by a British Rail or NFC pension scheme to be treated as part of the historic pensions outgo of the scheme, even though the board or the corporation were not at the operative date under an obligation to guarantee the payment.
New clause 180B is intended to permit block transfers. The board or the successor company might at some fufure date wish to give their employees the option to transfer to new pension schemes. The new clause provides for the old schemes, if I may call them that, to receive the same support as if the people concerned had not transferred. These arrangements are complementary to each other. In the case of individual transfers, or transfers to other employers. Amendments Nos. 168A and 171A provide for support for the transfer payment. In the case of block transfers, the new clause will

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apply. Amendments Nos. 172A and 180E are consequential drafting amendments. I beg to move.
On Question, amendment agreed to.
Lord MISHCON Lord MISHCON moved Amendment No. 169:
Page 42, line 20, leave out (" and ").
The noble Lord said: Perhaps with the permission of the Committee, I may take Amendments Nos. 169, 170 and 172 together. When I reach Amendment No. 171, I propose to withdraw it in view of Amendment No. 168A. Under the Bill as drafted, there seems to be a danger that members of the BT Commission Male Wages Grades, pensions scheme will lose the benefit of the future pension increases for which the Government Actuary allowed in the 1974 valuation. It was assessed at that time at 4 per cent. per annum. The valuation was made as at 31 st March 1974 and the Government Actuary reported on 17th October 1974 that he has assumed:
"… the average annual rate of increase in the pension benefits in future for both pensioners and members in service will be 4 per cent. ".
Even after allowing for these increases, the valuation showed a surplus of £ 1-42 million and pensions for all active members and pensioners were increased by 28p a week. Later in 1974, the pension scheme became part of the BR 1974 pension fund. If the funding arrangements under the Railways Act 1974 had remained undisturbed, then in calculating the amount of funding debt to be prescribed in respect of the BR 1974 pension fund, clearly account should be taken of the value of the prospective increases in pensions from the BTC Male Wage Grades pension scheme. This would have enabled the BR 1974 pension fund to provide the future pension increases of 4 per cent. per annum for which the Actuary had allowed.
If the fund had had a favourable investment experience, the members might well have benefited to a greater extent than 4 per cent. per annum. Under the Transport Bill, it would seem that the situation is different. There appears to be no provision for Government support to pay for the pension increases in question. Once the assets of the BR 1974 pension
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fund have been exhausted— as will happen during the first few months of operation after the Bill has become law, then even if the valuation of the BTC Male Wages Grade pension scheme showed that the 4 per cent. increases could justifiably be paid, there would not appear to be any provision whereby the Government could make the necessary money available. This is because the increased pensions would result from a rule change after 1st January 1975. I suggest that the situation is clearly unjust since there was a firm expectation existing before 1 st January 1975 that these pension increases could be paid, and the amendment seeks to restore that position. I beg to move.
Lord BELLWIN: We are dealing with Amendments No. 169 and, as I understand it, Nos. 170 and 172. Amendments Nos. 171 and 169 were tabled also in another place and my honourable and learned friend the Parliamentary Secretary agreed to consider the point which they raised. As a result, Government Amendment No. 168A has appeared on the Order Paper. It is one of a group of Government amendments on transfer values and, if the noble Lord, Lord Mishcon, is willing to withdraw Amendments Nos. 169 and 171, perhaps I might speak to the Government amendments on transfer values as a group. A number of rather complex points arise on this amendment, and it may assist the Committee if I briefly explain the background before I come to the point of the amendments.
The British Transport Commission (Male Wages Grades) Pension Scheme was established by the BTC in 1954. The scheme was closed to new entrants in 1967, when the British Railways Board established a new pension scheme for their wages grades, the British Railways (Wages Grades) Pension Fund. The BTC scheme was of an unusual type. It is contributory, but there is no fund. Members' contributions were treated by the BTC as income, and benefits were paid by the Commission out of revenue. Responsibility for the scheme was transferred to the British Railways (1974) Pension Fund, which was a fund established in 1974 to embrace the various railway pension schemes which had no assets. The benefits of the BTC scheme are fixed in money terms, and by today's standards are very poor. For instance,

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the basic pension entitlement under the scheme is 9 old pence a week for every year of service, with a maximum of £ 1-50 a week for 40 years' service. The scheme at present comprises 5, 000 serving members and 15, 000 pensioners. It was previously much larger, but many of the original members exercised the option, which was offered to all members in 1967, to transfer into the more modern wages grade scheme, which provides for better benefits.
As I have explained, the scheme has no assets, but its rules provide for five-yearly actuarial valuations, to be conducted on a notional basis. These valuations assume notional contributions from the employer. The last valuation of the scheme was conducted in 1974. This was done by the Government Actuary, because he happened to be the scheme's actuary, but his valuation was not in any way related to the introduction of the new Government support arrangements which were introduced in the same year. That valuation, which was done on a notional basis, revealed a notional surplus. The actuary therefore recommended that this surplus should be used to increase the benefits by 22 per cent., and this was duly done by means of an order which provided for a flat-rate increase in the benefits of 28p per week. However, in order to decide how much of the surplus he could recommend for distribution, the actuary made an assumption about the likely future rate of increase in benefits: he chose to assume 4 per cent. per annum. I must stress however that this was merely an assumption used for the purposes of the 1974 Actuarial valuation: There was nothing in the rules of the scheme at the time to provide for these increases; nor has this been written into the rules of the scheme subsequently.
The board have, however, represented to the department that, because the actuary made an assumption that benefits would be increased by 4 per cent. per annum from 1974, there was some presumption that these increases would be made. The purpose of the amendments we are considering is to provide that such increases would qualify for Government support under the new arrangements proposed in this Bill, notwithstanding the fact that they were not provided for in the rules of the scheme in 1975.
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It has always been a central principle of the Government's approach to the arrangements for support for the British Railways pension obligations that the support should be restricted to what are termed "historic" obligations. The word "historic" means obligations on the board as at 1st January 1975. There is, of course, no objection to the board improving the terms of their pension scheme subsequent to 1975, but there is no Government commitment to meet the cost of such improvements. It seems to me clear beyond doubt that the board were under no obligation, in 1975, to improve the benefits of this scheme and so I regret that the cost of such improvements cannot possibly qualify for Government support. I must therefore advise the Committee to reject the amendment.
In giving this advice, I am very conscious that the pension benefits provided by this scheme are derisory by modern standards and I can further accept that the fact that the scheme is operated on the basis of notional funding has meant that the members have not enjoyed as much of the benefits which inflation can bring to pension funds as they would had the scheme been properly funded. But that is not the point at issue here.
It is perhaps convenient to remind ourselves of the basic principle of the legislation we are considering. The purpose of the 1974 Act was to assist the board to meet certain binding commitments to its pension funds, commitments which existed at that date. The 1974 Act was not concerned with terms of the pension entitlements themselves, whether they were good or bad. The present Bill seeks to reproduce the support that was provided for in 1974, but by a different method. It was not the purpose of the 1974 Act to allow improvements to benefits provided by outdated pension schemes, nor is it the purpose of the present Bill. If the board consider, in their judgment, that it would be right to allow some improvements to the benefits provided by this scheme, that is a matter entirely within their discretion, but they cannot expect that the cost be reimbursed under this Bill.
When similar amendments to those we are now considering were considered in another place, the Parliamentary Secretary to the Ministry of Transport undertook to consider whether the cost of the 4 per cent.

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per annum improvements would have qualified for support under the 1974 Act arrangements. This is a hypothetical question to which I fear there is no answer. I am advised that, during the five years between the passing of the Railways Act 1974 and the suspension of the negotiations about its implementation in 1979, the board never raised this point with the department. They now maintain that they would have raised the point before the grand revaluation was completed, and they would have pressed the department to make allowance for these improvements in pension terms in settling the funding debt to be provided under the 1974 Act. I am clear, however, for the reasons that I have explained, that the department would not have been prepared to agree to this, because it would have been in breach of the principle that the Government are only providing support in respect of "historic" obligations. I have, of course, every sympathy with the members of this scheme, who are in receipt of only very poor pensions under it, but we must not forget that these rail-waymen all rejected the option to transfer into a modern scheme with better benefits. And even the benefits of the BTC scheme are fully indexed in line with inflation after the member of the scheme retires. Therefore, while sympathising and not without some regret, I must advise the Committee to reject these amendments.
Lord MISHCON: I thank the Minister for his expression of sympathy, but it does not appear to have very much practical application. I equally note his expression of regret, and I hope that it, at least, covers the pomise to look further into this matter. It may very well be that some-
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thing can be done about it before Report Stage, which will satisfy the basic requirement of the amendment, in which case I shall not have to press this matter further on behalf of myself and my noble friends. This is a very sorry position, as the Minister himself confirmed.
On Question, amendment negatived.
[Amendment No. 170 not moved.]
Lord MISHCON Lord MISHCON had given Notice of his intention to move Amendment No. 171:
Page 42, line 25, at end insert—
" and
(d) any obligations of the Board in respect of any sums payable under the scheme in respect of any person and representing the whole or any part of his accrued pension rights under the scheme, insofar as those accrued pension rights correspond to obligations of the Board which were owed on the operative date in connection with the scheme.").
The noble Lord said: I shall not move this amendment, in view of what happened on Amendment No. 168A.
Lord BELLWIN Lord BELLWIN moved Amendment No. 171A:
Page 42, line 35, after (" of") insert (" or sums representing accrued rights in respect of ").
On Question, amendment agreed to.
[Amendment No. 172 not moved.]
Lord BELLWIN Lord BELLWIN moved Amendment No. 172A:
Page 44, leave out lines 8 and 9.
On Question, amendment agreed to.
Clause 45, as amended, agreed to.
Clause 46 [Unfunded proportion of relevant pension obligations]:
[Amendment No. 173 not moved.]
10.7 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 174:
Page 44, line 30, at end insert—
(" () In determining what proportion of the relevant pension obligations of each BR or NFC pension scheme has not been funded the Minister shall use the same economic assumptions for every pension scheme subject to the determination.").
The noble Lord said: During the Commons Committee stage at, I think, column 2027 of the Official Report, the Government gave an assurance that they would be adopting the same general assumptions for the BR and NFC pension schemes, and the amendment was on that basis withdrawn. If the Minister would kindly confirm that assurance, I could take a similar course now. I merely wanted the assurance reiterated, so that there was no doubt about it. I beg to move.
Lord SANDYS: I am looking at the Official Report of the Commons Committee stage, column 2027. I think that when this amendment was debated in another place, my right honourable friend the Minister gave an assurance about the general approach that we intended to adopt when the unfunded proportions were determined, and I am happy to repeat that assurance in this House. I wonder whether that is a sufficient answer to the noble Lord at this stage, or would he prefer to hear the remainder of my comments on the amendment?
Lord MISHCON: I am sure that the Committee would be greatly educated by the Minister elaborating on what was said, but as I merely sought a repetition of the assurance I think I can spare the Committee's time. In view of theassurance which has been repeated, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord MISHCON Lord MISHCON moved Amendment No. 174A:
[In substitution for Amendment No. 177]
Page 44, line 30, at end insert—
(" () Before confirming or varying the said determination the Minister shall consult the
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persons administering the pension scheme concerned about the proportion he proposes to specify in the said order in respect of the scheme, and in the event of those persons giving notice in writing to the Minister within two months that they object to the said proportion, the Minister shall appoint an independent actuary, to be nominated by the president for the time being of the Institute of Actuaries, to report before the end of the second financial year on the proportion which would be appropriate and the Minister shall thereupon by order confirm or vary the proportion so as to give effect to the said report.").
The noble Lord said: This amendment provides for arbitration on the actuarial basis. The Department of Transport wrote on 7th December 1977, that the basis for the valuation to be made in connection with the Railways Act 1974— and I quote this to the Committee with some emphasis, in view of the statement made by the noble Lord, Lord Belstead, when he dealt with matters akin to it on Second Reading—
" will be freely agreed by all the parties involved— the Government, the Board and the Funds on the basis of the actuarial advice available to them. "
Reference was also made in that same letter to the report of the Public Accounts Committee. The letter continued:
" However, if policy were to be changed in the light of this review, one must I think assume that this would be done in such a way as to leave the position of members and pensioners of the fund as secure as it is now. In other words, if a change were made, the security which is effected by full funding would be replaced by some other equally effective security for the membership ".
In the Second Reading debate the Parliamentary Secretary, Mr. Clarke, made the following statement on the actuarial basis, and I quote him:
" The actuarial basis is being considered, and we hope that it will eventually be agreed between the Government and the board and the unions, but we cannot guarantee that. Someone has to decide, and actuarial judgments involve a matter of opinion in the final analysis. Certainly at present we would hope to reach agreement, if we can, on the actuarial basis ".
The Parliamentary Secretary also stated:
" There is absolutely no threat to the pension rights of the railwaymen who are affected by these historic rights provisions ".
Clearly the Parliamentary Secretary's statement meant only that he will try to reach agreement on the actuarial basis, but in the last resort the decision must be the Minister's. This is quite different from the 1977 statement which I quoted, that

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the basis for the valuation would be— I quote it again:
"freely agreed by all the parties involved ".
In the light of the 1977 assurance, one would clearly have expected that if there had been any failure to reach agreement on the actuarial basis, then some kind of outside arbitration might well have been decided upon in order to avoid the undertaking being breached.
The present amendment proposes to keep the spirit of the 1977 undertaking inviolate. It provides for completely independent arbitration which would be binding on the Minister. If this amendment is accepted, not only will justice be done but it will be seen to be done.
10.12 p.m.
Lord BELLWIN: The question of the choice of actuarial assumptions has caused almost as much misunderstanding as the rest of the pensions provisions put together. It is said that the Bill changes the position that existed under the 1974 Act. Let me make the position about the choice of actuarial assumptions quite clear.
First, there is the former position. Under the Act the Minister was to determine the amount of funding debt that was to be created. He did not have to obtain the agreement of anybody else. The position was the same under the Bill as introduced, but in another place my right honourable friend the Minister wrote into the Bill a requirement that there should be consultation with the parties before the unfunded proportions are determined. He will have to consult with the management committee of the scheme concerned— with the board or the corporation, as the case may be. Secondly, there is the extra-statutory position. I believe that it was the intention of the previous Administration to seek to reach agreement on the actuarial assumptions to be used with the board, the corporation and the pension schemes. However, as I commented on Second Reading, it takes two to reach an agreement.
The noble Lord, Lord Mishcon, has referred to a letter written in December 1977. That letter was written to an outside body and it is available to me. I understand that the circumstances in
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which that letter was written were as follows. It was written in the context of one of the interim funding orders which were made under the Railways Act 1974. These funding orders were to lead up to a grand revaluation of the board's historic liabilities. That particular funding order was calculated on a different basis from its predecessors. The letter was written at the request of the board for the sole purpose of confirming that there was at that time no intention of abandoning the grand revaluation itself. While its wording might have given a different impression, both the addressee of the letter and its signatory knew that this was its purpose. It was not intended to constitute a new commitment as to the choice of actuarial assumptions.
We will be consulting those concerned before the unfunded proportions are determined. We will be trying to reach agreement but we cannot undertake to reach an agreement. This is no different from the position under the 1974 Act. If there is disagreement, then the decision has to be taken by somebody and that decision is the Minister's reponsibility. Substantial sums of the taxpayers' money are at stake and it seems right for the Minister who is accountable to Parliament and the public to take the decision. We do not regard this as a suitable matter for arbitration. The key issues are not issues of actuarial theory or practice. They are not issues on which the Government can pass responsibility to an outside arbitrator. Therefore we cannot endorse the amendment.
Lord MISHCON: The Committee will possibly realise that we are coming to some important amendments in a moment. I am referring to that of the noble Lord, Lord Selsdon, and to Amendment No. 176, and I have an idea that it may lead to clarity of thought if I withdraw this amendment at this stage instead of having it formally confirmed or negatived, and leave the decision as to what is done in regard to this amendment until after we have seen the result of either Amendment No. 175A or Amendment No. 176. On that basis I ask leave to withdraw the amendment, but the principle which I have tried to enunciate is certainly not withdrawn.
Amendment, by leave, withdrawn.
10.17 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 175:
Page 44, line 48, at end insert—
(" () The Minister shall inform the Trustee in the case of NFC pension schemes and the Management Committee of the Fund in the case of BR pension schemes what proportion of the scheme is funded and how this proportion has been calculated before he makes an order under subsection (1).").
The noble Lord said: Happily I can be very brief on this amendment. The purpose of this clause is to place the basis of calculation on record so that if difficulties should arise in the future it will enable a proper assessment of the reasons for the difficulties to be made. It will also ensure that those who run the pension schemes have an opportunity to check that the facts which have been taken into account are correct from a technical viewpoint. I beg to move.
Lord CULLEN of ASHBOURNE: This amendment was one of a group debated in Commons Committee and later rejected on a Division. A requirement in the Bill on the lines of the amendment would serve a real legal purpose only if the information to be provided by the Minister were to be used at some further stage of the proceedings. It is not, however, envisaged that there will be any further proceedings once the unfunded proportions have been determined.
I would begin by reminding your Lordships of the amendment which my right honourable friend moved in another place to what is now Clause 46. That amendment followed upon discussion of a group of amendments which included the present amendment. The Bill now lays down a statutory requirement for consultation with the board, the corporation, and the BR and the NFC schemes before final determinations of the unfunded proportions. I would hope that the requirement to consult would produce the general effect which the amendment would produce. It would, however, have the advantage that information would pass in both directions. It would not be a question merely of the Minister stating what it was that he intended to do. It would also be a question of the views of the board and of the schemes themselves being relayed back to the Minister.
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I ought perhaps also to make clear that subsection (5) of Clause 46 has not been included in the Bill merely by way of ornamentation. At the technical level, we are envisaging that the actual arithmetic of determining the unfunded proportion will be done by the actuary to the scheme, and not by the Minister or the Government Actuary. He will have to be informed what assumptions have, after consultation, been decided on. Indeed, we would envisage that the actuaries will participate in the discussions and consultations.
There is no question of the schemes being left in the dark about how the unfunded proportions have been calculated. Accordingly, I would advise your Lordships that the amendment is unnecessary.
Lord MISHCON: Again, I am going to study what the noble Lord the Minister has said in order to see whether this matter could or should be brought forward at the Report stage. In those circumstances I ask leave of the Committee to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord SELSDON Lord SELSDON moved Amendment No. 175A:
Page 45, line 4, at end insert—
(" (6) Either the Minister or the persons administering a BR pension scheme shall have the right to require a review of the unfunded proportion from time to time, provided that no such review shall be made before 31st December 1986 or before the expiry of 5 years after the previous review under this subsection unless the Minister and the persons administering the scheme consent. Within 2 years after such a review is required the Minister, after consulting with the persons administering the scheme and the Board, shall make the best possible estimate of the proportion of the pensions corresponding to the relevant pension obligations which cannot then be met by the assets held by the scheme in respect of such obligations and shall make an order to replace the proportion referred to in subsection (i) by the said estimate, which order shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.").
The noble Lord said: I have two reasons for moving this amendment. One is a personal one in that my family were associated with one of the railways prior to nationalisation and I know that my antecedents, respecting the hereditary principle, would like me to make sure that

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their former employees were well protected and looked after for future generations. Secondly, I feel that there is a chance that we could reach a situation in the future of considerable unfairness, whether this be to the taxpayer or to the employee of British Railways.
The reason for this is that I do not have full confidence in the ability of Government, Civil Service departments, or Government actuaries to forecast the level of inflation in the future. This is an assumption which must be made if a fair assessment of the unfunded portion is to be made. I quote examples of unfairness. The one I think of first is, if in the assessment a level of inflation is assumed and that level of inflation rises, then the commitment by the Railways Board to fund pensions increases, and they may not be able to afford this. Consequently, if the level of inflation falls the taxpayer will be contributing a higher level than could be deemed to be fair.
This amendment simply calls for a review. I do not necessarily say it is worded correctly, but what I would ask is that the Government would give consideration to an amendment of their own that might consider a review every five years, or at a convenient or suitable date.
I must inevitably try and bring this point back to the individual. I have asked for, and obtained, examples of just one particular situation, which is a true one. There is the case of a Miss W who was a secretary with British Rail for 40 years. She entered the service of LNER in 1940 and retired as a senior secretary earlier this month on a pension of £ 50 a week. She now looks after an aged father in Ilford. She originally joined the LNER superannuation fund, but in 1970 she elected to join the new pension fund which was then introduced. This meant she had to pay more, but her pension would be price protected after retirement. She does not understand all these things. My question to the Government is, will her pension be price protected after retirement if there are insufficient funds available from the board, and if so by whom?
There are other points that have been raised on this. For example, we know that the Railways Act 1974 provided for
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a once-for-all assessment, and the Government quite rightly quote this to us. But this was under a funding situation as opposed to a pay-as-you-go situation, so there is a difference. Arguments which were advanced in another place are perhaps not as strong as people may have thought at that particular time. When I was approached to raise this I tried to assess in my own mind whether we were talking about a political amendment— that is, people were trying to reintroduce points made in another place and defeated in a Division— or whether we really did have an unfair situation.
I have a feeling that this situation could be unfair if you bear in mind the possible oscillation in levels of inflation. I would submit that noble Lords opposite have an opinion that the Government's policies may not reduce the level of inflation and that inflation may remain high. I, on the other hand, believe that inflation will begin to fall. They may, therefore, argue that there will be insufficient funds to fund pensions, and I might argue that there could be too much money, which is taxpayers' money. Somewhere in between lie the Government, because there can be no one else in the middle. My proposal is simply that there should be an opportunity to review, and that as we always have confidence in Ministers of Transport and those in this field we should leave it to Ministers at a future date. I beg to move.
Lord BELLWIN: I am most grateful to my noble friend Lord Selsdon, not only for the amendment, but for the way in which he has moved it, which I think commands even greater consideration and respect for it than might have been elicited simply by looking at the amendment as originally tabled.
Let me deal with the two main points that he has mentioned, the first of which is his concern about the effects of the forecasts of levels of inflation. May I respectfully suggest that the critical question, in fact, is not the level of inflation, but the real returns on the investments and the real movements in pay rates'? The forecast of inflation is actually less important than under the 1974 Act, because the Government will not be paying a fixed proportion of the liabilities. If inflation rises, the Government's payments will rise, and vice versa.

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It would seem clear from the example of Miss W which my noble friend quoted that perhaps he has not fully appreciated the purpose of the Bill. The purpose of the Bill is to reproduce the fixed and limited Government support that was to have been provided under the Railways Act 1974 to assist the Railways Board to discharge their historic pensions obligations. The Bill does not affect the legal duty of the board to secure that Miss W's pension is paid. To suggest that Miss W's pension might be reduced, is to suggest that the board of a nationalised industry will default on their payments to their creditors. No Government has allowed a nationalised industry to default on its financial commitments and it is worrying even to suggest that pensioners are at risk.
The amendment presents openly an issue which underlies new Clause 176, which the noble Lord, Lord Underhill, and his noble friends have tabled. The question is whether the unfunded proportion should be open to review, and whether the ultimate responsibility for the historic liabilities should be transferred to the Government.
The substance of the amendment is that the Minister should take full responsibility for the historic pensions liabilities. Support would take the form of long-term deficit financing. Many of the arguments for the amendment are equally arguments for deficit financing of railway passenger services. But we know from experience that deficit financing is a bad system.
Your Lordships should bear in mind that the quantum of the historic liabilities is not fixed and immutable. It depends, at the margin, on current management decisions of the board and of the corporation. So if, for instance, overtime and bonus payments were to be consolidated into basic pay, the quantum of the historic liabilities would rise.
Equally, the value that will be obtained from the historic assets will depend on the decisions of BRB's and NFC's fund managers. At the moment they have a strong incentive to achieve the best possible return on their assets. If they fail to obtain a return on their works of art, for instance, the board will want to know the reason why. Under the amendment,
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however, they would have no incentive to do anything of the sort, because it would be the taxpayer who would be footing the bill.
The Committee has been told that surpluses and deficiencies might emerge under the Bill— and so they might. But much bigger surpluses or deficiencies would have emerged under the 1974 Act. The size of these deficiencies can easily be exaggerated. I do not blame the board for seeking to transfer responsibility for the historic liabilities. But the case for a transfer is nothing like so strong as has been suggested. Within the range of actuarial assumptions that actuaries ordinarily use, the surpluses or deficiencies that one might expect would be no longer than might be expected in any normal on-going pension fund.
Clearly one has to have sympathy for the amendment as tabled. I should certainly like to say to my noble friend that, while we cannot accept it as it is at present, he himself suggested— at least, I assumed he was suggesting— that perhaps we might look at it to see whether we are, indeed, entirely satisfied that there could not be any of the problems which I think very properly concern him. I certainly undertake that we shall do that, and do it quickly. I cannot accept the amendment as it is for the reasons that I have given. However, I repeat the fact that I think we owe it to the noble Lord to look at it in this way, and I gladly undertake to do so.
Lord RENTON: I am glad that my noble friend Lord Bellwin has decided to look at this amendment again, because undoubtedly my noble friend Lord Selsdon put forward a very convincing argument. At this stage, I should like to make an appeal to the noble Lord, Lord Mishcon, because the amendment which he moved— No. 174A— has basically the same intention, the same purpose, as that of my noble friend Lord Selsdon. But, of course, my noble friend's amendment has the advantage that it will be unnecessary to make what I would call "risky actuarial assumptions".
Therefore, I think that if assumptions have to be made of the kind that the noble Lord, Lord Mishcon, mentioned— whether with an independent actuary or with the actuary who in any event will

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advise those concerned and who is referred to in Clause 46— then difficulties are certain to arise. Those difficulties will make it less likely that my noble friend Lord Bell-win can help. But to have what one would call a realistic— if you like, open-ended— review of the kind envisaged by my noble friend Lord Selsdon would, I think, give rise to a much more satisfactory result.
Lord MISHCON: I almost rush to the Dispatch Box in order to deal at this hour very shortly and simply with a matter that I believe the noble Minister and I thought would take a very long time. I say that because of the arguments that could be advanced both ways in. regard to what was said on Second Reading and what is said now. There is not a scrap of politics in the amendment in the name of the noble Lord, Lord Selsdon, or in the amendment which stands in my name and that of my noble friends. Our one desire— and we think that it is a united desire of this Committee— is to see that justice is done, that there is honourable dealing, that promises are promises and that Governments are honourable, whatever may be their political complexion.
It is in that spirit that I understand that the noble Lord, Lord Selsdon, asks in his amendment for reviews which are subject to notices and which, therefore, may not take place if all goes well. I thought that the contribution of the noble Lord, Lord Renton, was as usual most helpful, most calm and most considered. If this Committee can accept the proposition of the noble Lord, Lord Selsdon, in this amendment I would not dream, and nor would my noble friends, of moving the amendment in my name and theirs. We should be perfectly content.
All that I want to do is to protect the position of the noble Lord, Lord Selsdon, who moved— I thought, in such an attractive way— the amendment that came before the Committee. I want to protect him and all the members of the Committee in order to see precisely what it is to which the Minister is agreeing. If the Minister is saying— as I believe the noble Lord, Lord Renton, thought he was saying, and as your Lordships and I hope he is saying, because there is a case for having a look, if it be necessary, on either side in
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the future— that what is required here is some thought about the proper way of doing it (whether it be the precise way of the noble Lord, Lord Selsdon, or the amendment which follows and which I hope I shall not now move), then I shall immediately take my seat. I pledge my support and that of my friends to the noble Lord, Lord Selsdon. I trouble the Committee no more with my amendment and we can all go peacefully to bed tonight knowing that justice has been done, whereas at the moment there is a grave injustice.
Lord BELLWIN: I clearly cannot say that I can accept the amendment as it is, nor do I think that my noble friend Lord Selsdon is asking me to do that. What I can do is to confirm that I think the points that he raises, and indeed the other points made by the noble Lord, Lord Mishcon, in his succeeding amendment, are of sufficient merit to deserve our taking it away to have another look. Where I shall get to with it, or where my right honourable friend will get to, I cannot say as I stand here now, but I say that I think we ought to do just that and I gladly undertake to do that before we come back next time.
Lord MISHCON: I think it may be for the noble Lord, Lord Selsdon, to speak more than I, but I feel that the Minister has expressed sympathy with the idea— I think that should be recorded— and a wish to try to be accommodating. In those circumstances, and if that be the spirit, I certainly would be prepared, if the noble Lord, Lord Selsdon, is, to withdraw my amendment when it comes. I believe that the noble Lord, Lord Selsdon, may have the same view about his amendment.
Lord SELSDON: I am most grateful to noble Lords for their comments, and particularly for the unheralded support from noble Lords opposite. I have two brief points to make, because if the noble Lord, Lord Mishcon, and I can take credit for shortening this session tonight I am sure that noble Lords will be most grateful to us. I am grateful for these comments made by my noble friend, and his reassurance that nobody would suffer because the Government would be bound to stand behind British Rail is much appreciated because, as he knows, at the moment there

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is no Government guarantee, and this was causing concern.
I would, however, take issue with him on one point. He said that the trustees would not have the incentive to manage the investments efficiently. He knows that trustees are required by law to manage their investments efficiently, and I know he would not wish to cast any doubts at all upon the abilities or the motives of pension fund managers who are, of course, over and above all politics. In view of his comments, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 46 agreed to.
[Amendment No. 176 not moved.]
Clause 47 agreed to.
Clause 48 [Reduction of payments in respect of certain supplementation schemes]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 177A:
Page 45, line 30, after (" obligation ") insert (" arising after the passing of this Act ").
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 177B:
Page 45, leave out lines 34 to 44 and insert—
(" (2) If, at any time before the increases first become payable under the supplementation scheme, the actuary to the basic scheme certifies that the assets of that scheme exceed its liabilities, then, in relation to the supplementation scheme, the obligation to pay or secure the payment of the increases or, if less, the relevant proportion of the increases shall not be regarded as a relevant pension obligation for the purposes of any determination made under section 47 (1) for a financial year beginning after the date of the actuary's certificate.").
On Question, amendment agreed to.
Lord MISHCON Lord MISHCON moved Amendment No. 178:
Page 45, line 35, leave out (" exceed its liabilities ") and insert (" exceeded its liabilities on 31st December 1979").
The noble Lord said: I shall try to be as brief as I can. Under the Railways Act 1974, an allowance for surpluses existing at 31st December 1979 might have been made in calculating the funding to be
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created at that date. No allowance could however have been made for surpluses revealed after that date. It is therefore unfair to take account of such future surpluses now, and inconsistent with the Minister's assurance that no pensioner will be worse off.
I appreciate that the counter-argument is that under the funding arrangements there would have been less likely to be future surpluses since certain funds would have been amalgamated and the combined fund would have been less likely to show a surplus than the two funds taken individually. There is, I admit, some truth in this in respect of surpluses arising from certain causes, for example inflation, although the amalgamations could not have taken place without the consent of the trade unions. Indeed, the board had given an undertaking to the unions in the autumn of 1978 that amalgamations could not take place without their consent.
However, it does not apply to surpluses arising from other causes, for example mortality in excess of that assumed. To give an example, consider a small pension fund where some of the pensioners die prematurely in a future year. Under the 1974 Act, arrangements there would have been a resulting surplus, to increase the pensions of the remaining pensioners, some of whose pensions may be very small. Under the Bill, 85 per cent. of that surplus will be clawed back by the Government. How can it be said that the pensioners will be no worse off? I beg to move.
The DEPUTY CHAIRMAN of COMMITTEES (Viscount Hood): I am afraid that the noble Lord, Lord Mishcon, is out of order in moving this amendment. It is my fault; I should not have called it because the passage to which the noble Lord has been speaking was amended by the previous amendment.
Lord MISHCON: Whether what I have said appears in the Official Report I know not. If it does, I shall at least have made some point and achieved some object.
Lord BELLWIN: I will only use a term I have heard since arriving in your Lordships' House: "I hear what you say."
10.42 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 179:
Page 45, line 44, at end insert—
(" () If the actuary to the basic scheme certifies that following a reduction as specified in subsection (2) of this section in payments to the persons administrating the supplementation scheme the basic scheme has liabilities exceeding its assets at any time later than one year after the reduction was made, the payments to the persons administering the supplementation scheme made under section 43 (1) shall be increased for each financial year after the date of the actuary's certificate by the aggregate amount for that year of such of the increases mentioned in subsection (1) as become payable from that date or, if less, the relevant proportion of those increases.").
The noble Lord said: I hope that if this time I am out of order, your Lordships will be spared and I shall be silenced at the outset of my remarks. Under the Bill as drafted, it will be possible for the Government to claw back 85 per cent. of the surplus by reducing supplementation payments and for the basic pension scheme concerned then to run into unforeseen financial difficulties. The amendment seeks to provide that in such circumstances the Government support will be increased again. The wording of the amendment is a mirror image of subsection (2). In the Commons Report stage the Parliamentary Secretary stated that he could not meet this point, his reasons being:
" Summarised, the argument is that if we were to accept this amendment or anything along the lines proposed, it would be possible, as soon as a basic scheme got into surplus, for the fund managers hastily to rearrange matters, to start giving out improvements in benefits to their members and to make sure that they were in deficit again fairly smartly to prevent the Treasury from taking its 85 per cent. We would have to take powers to control the scheme to prevent that temptation arising, and we would rather not do that ".
I do not comment any further on the Minister's view of how people behave in matters of this kind, but I go on to deal with his argument on the basis that it is a worthy argument. It overlooks the fact that, if a scheme did distribute a surplus, the members and pensioners would retain only 15 per cent. of it. If the scheme then went back into deficit, the additional support payments from the Government would be limited to 85 per cent. of the amount by which the liabilities of the scheme exceeded the assets. The amendment is a straightforward safeguard which would not be abused. I beg to move.
Lord BELLWIN: In Committee in another place the Parliamentary Secretary promised to think further about this amendment. My advice to the Committee is that an amendment is not necessary, and that for the effect to be achieved it would be necessary to complicate still further what is already a complicated clause. The effect of the amendment as drafted would largely be to nullify the purpose of Clause 48. Once Clause 48 had operated once, the basic scheme could so arrange matters that the offset under the clause operated for one year only. That would be done by arranging for benefits to be increased with effect from one year ahead, thus increasing the liabilities of the scheme from that date.
This is not merely a drafting point. If the principle of the amendment were accepted, the Government would be obliged to take power to control the way in which improvements to the pension schemes were made, because otherwise the whole purpose of the clause would be nullified in the way that I suggested.
In all this legislation we are anxious not to become directly involved in the actual rules of the funds on the terms of the benefits. We would be reluctant to have to do so in the very specialised circumstances involved here, and as I shall explain, the likelihood that arrangements of the kind which this amendment is proposing are required is remote in the extreme.
There is one general point about the clause; namely, that it concerns the way in which we envisage a surplus being distributed. It is not the intention that 85 per cent. of any surplus should be distributed immediately. It is not the intention that a surplus should go to offset all, or most, of next year's scheme of supplementation. What is intended is that a small proportion of next year's scheme of supplementation should be offset; the same proportion of the scheme of supplementation in the year after that; and so on. In other words, the proportion of the surplus that is used to offset supplementation will be very gradually distributed over the term of the pensions liabilities of the basic scheme.
There is a substantial measure of self-correction under such an arrangement. The basic schemes to which the clause

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applies are schemes where the benefits are largely fixed in money terms; and for all these basic schemes pensions in payment are fixed. The most likely scenario in which the balance of assets and liabilities would be less favourable at one actuarial valuation than it was at the previous valuation would be one in which the expected inflation rate had dropped sharply. But in such circumstances, the burden of meeting the relevant proportion of future schemes of supplementation would equally fall. Equally, if the rate of inflation were to rise, so would the rate of return on the assets of the scheme, and thus the size of the surplus.
This self-correction can best be illustrated by example. Suppose the actuary certifies that a basic scheme is in surplus. Suppose he certifies that the relevant proportion is 30 per cent. That means that 30 per cent. of the cost of future supplementation stands to be met by the basic scheme. Suppose that inflation then falls to zero. Obviously the interest earned on the assets of the scheme will also fall. But there will be no future supplementation and therefore no offsetting under the clause. Thus, there would be a smaller surplus, but none of it would stand to be distributed in supplementation. I have deliberately chosen an extreme example, but it shows that there is self-correction in the clause as it stands.
The clause does not specify what basis of valuation the actuary is to use. It will be open to him to hold back a contingency reserve by using a prudent basis of valuation. All the clause says is that, in so far as a surplus is distributed, a certain proportion should be used to offset supplementation. It does not compel a distribution if the actuary thinks that it would be proper to hold some, or even all, of a surplus back for the time being.
In view of that explanation I wonder whether the noble Lord will feel able to withdraw the amendment. Bearing in mind how lengthy and complicated it was, he may wish to consider it further after he has read it.
Lord MISHCON: I shall do just that. In those circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord BELLWIN Lord BELLWIN moved Amendment No. 179A:
Page 46, line 2, after (" proportion ") insert (" (if any) certified by the actuary to the basic scheme to be the proportion ").
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 179B:
Page 46, line 3, leave out (" the basic ") and insert (" that").
On Question, amendment agreed to.
10.49 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 180:
Page 46, line 4, leave out (" 85 ") and insert (" 60 ").
The noble Lord said: It has been the practice for a number of years that pension increases granted by the board under schemes of supplementation should be reduced by the amount of any increase which the pensioners have had from their basic scheme after retirement. The justification for this offsetting is that the purpose of the schemes of supplementation is to place the pensioner in the same position in terms of purchasing power as he was in when he retired. If he has had an increase from his basic scheme, then to that extent there is no need for him to be supplemented in addition. In practice however the offsetting has been less than complete. This is partly because offsetting does not occur until at the earliest the next date on which increases are granted under a scheme of supplementation, and partly because there is no offsetting in respect of active members of a scheme.
The net effect of these factors is that in the various distributions of surplus that have occurred in railway pension schemes over the last few years the proportion of the surplus which has been offset has so far averaged only about 60 per cent., or perhaps rather less. That is the background to this amendment, which I now move.
Lord BELLWIN: Under the Bill, the unfunded proportions of unity stand to be determined for the two supplementation schemes; that is, the British Rail (1974) Pension Fund and the NFC (1978) Pension Fund. That means that the taxpayer will become responsible for the

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whole of the historic pensions payments of these two funds. It will not surprise your Lordships if I say that neither the board nor the corporation, nor the pension funds, nor the unions, have raised any objection to this arrangement. Things would have been different under the Acts of 1974 and 1978. Fixed amounts of funding debt would have been allocated to the schemes, and these amounts might not have proved to be sufficient.
We ought to pause to consider what would have happened if the taxpayer had not stepped in. In the private sector, when a surplus is revealed in a pension scheme which does not provide in its rules for automatic pension increases, it is normal practice, although not universal, for pension increases to existing pensioners to be treated as a first charge on the surplus, although not necessarily to the exclusion of other forms of distribution. Furthermore, in the past, when the cost of supplementation fell on the board rather than on the Exchequer, it was common for part of any surplus to be used to reduce the board's liability for supplementation.
I could go on to talk further about this particular point, but I think your Lordships will have gathered by now that there is really no question of the surplus in the new section being used to meet the cost of supplementation to pensioners in other schemes. It may be that this, too, is something which the noble Lord may feel he wants to discuss again at a later stage, or he may feel that such as I have said is sufficient for the time being. If he would care that I should supplement my comments on supplementation in another form, needless to say I shall be very pleased to do so.
Lord MISHCON: I think it would be extremely helpful if that did take place, because there are many arguments, on which I am briefed, to what the noble Minister has already said, and it would be most inconsiderate if I inflicted those arguments on the Committee now. It would be much more practical, I think, if we had an exchange.
Lord BELLWIN: I will write.
Lord MISHCON: I am most grateful.
Amendment, by leave, withdrawn.
Lord BELLWIN Lord BELLWIN moved Amendment No. 180A:
Page 46, leave out lines 16 to 21 and insert—
(" (5) References in this section to the assets and liabilities of the basic scheme are references to the assets and liabilities of that scheme so far as it relates to the payment of pensions increases of which are payable under the supplementation scheme.")
The noble Lord said: I have already spoken to this amendment, as I have to all those up to and including Amendment No. 180H. I beg to move No. 180A.
On Question, amendment agreed to. Clause 48, as amended, agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 180B:
After Clause 48, insert the following new clause:
" Exclusion of payments in respect of certain transfer values
(. Where the whole or any part of a person's accrued pension rights under a B.R. or N.F.C pension scheme are transferred to any other pension scheme, being a scheme established by the Board or the successor company or any subsidiary of either of those bodies, the Minister may direct that for the purposes of—
(a) any determination of the aggregate amount of the pensions, increases and expenses payable under or incurred in connection with the first-mentioned scheme; or
(b) any determination under section 47 (1) in relation to that scheme,
it shall be assumed that the said rights had not been transferred and that the payment of any sum representing those rights had not been made)."
On Question, amendment agreed to.
Clause 49 agreed to.
Clause 50 [Supplemental provisions]:
Lord BELLWIN Lord BELLWIN moved Amendments Nos. 180Cand 180D:
Page 47, line 19, after (" scheme ") insert (" or any other pension scheme established by the Board or the Corporation ")
line 21, leave out (" bringing it") and insert (" enabling them to pay increases of pensions payable under the scheme or otherwise bringing the scheme ")
On Question, amendments agreed to.
Clause 50, as amended, agreed to.
Clause 51 [Interpretation of Part III]:
Lord BELLWIN Lord BELLWIN moved Amendments Nos. 180E to 180H:
Page 48, line 15, at end insert—
(" "subsidiary" has the same meaning as in the Transport Act 1962; ")
line 20, leave out (" specified in") and insert (" for the time being within ")
line 24, leave out (" specified in") and insert (" for the time being within ")
line 27, at end insert—
(" () References in this Part to any pension scheme established by the Board include references to any scheme in relation to which the rights, liabilities and functions of the British Transport Commission were transferred to the Board by the British Transport Reorganisation (Pensions of Employees) (No. 3) Order 1962.")
On Question, amendments agreed to.
Clause 51, as amended, agreed to.
Schedule 8 agreed to.
Clause 52 [Grants towards duty charged on bus fuel, and new bus grants]:
[Amendment No. 181 not moved.]
Lord BELLWIN Lord BELLWIN moved Amendments Nos. 182 and 183:
Page 48, line 40, leave out (" the Transport Act 1968 ") and insert (" that Part ")
line 42, leave out (" the Transport Act 1980 ") and insert (" that Act ")
The noble Lord said: I have not spoken to these amendments, but I can deal with them quickly. They are drafting amendments, and I think call for no special comment. I beg to move.
On Question, amendments agreed to.
Clause 52, as amended, agreed to.
Clauses 53 to 55 agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 184:
After Clause 55, insert the following new clause:
" Abolition of Railways and Coastal Shipping Committee
(. The Railways and Coastal Shipping Committee established under section 150 of the Transport Act 1968 is hereby abolished)."
The noble Lord said: I can speak to this amendment if the Committee feel it necessary. There is nothing that I need particularly to explain. I think it is straightforward. I beg to move.
Viscount SIMON: I do not want to detain the Committee, but this is an area in which at one time I had considerable
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interest. I only want to ask the noble Lord if he could confirm whether this does away with the committee on which problems about competition between the railways and coastal shipping were discussed. Has this clause been agreed with the General Council of British Shipping?
Lord BELLWIN: The purpose of the clause is to secure the abolition of the committee to which the noble Viscount referred. It forms part of Government policy to review and, where possible, to reduce the number of non-governmental bodies. It was established by the then Minister in 1969. The committee has not met since 1974. During the whole of its existence, it received no complaints about charges. I should have thought that, in the circumstances, there would not be too much concern.
On Question, amendment agreed to.
Clauses 56 and 57 agreed to.
Clause 58 [Citation, etc.]:
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 185:
Page 50, line 24, at end insert—
(" "modification" includes addition, omission and alteration, and related expressions shall be construed accordingly;
"statutory provision" means a provision contained in an Act or in subordinate legislation within the meaning of the Interpretation Act 1978.").
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 186:
Page 50, line 28, after (" 55 ") insert (" (Abolition of Railways and Coastal Shipping Committee) ').
On Question, amendment agreed to.
Lord TEVIOT Lord TEVIOT moved Amendment No. 187:
Page 50, line 41, at end insert—
(" Provided that section 12 shall not come into force until 3 years after the passing of this Act.").
The noble Lord said: This is where the train is going to stop, for I am afraid that I will move this amendment and discuss it. It is like the drawing room comedy before the war when a well-dressed gentleman— not me— always came in in

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the third act and put everything right. I do not say this amendment does that. We have already debated the provisions relating to trial areas and your Lordships are well aware of the concern that is felt in many quarters regarding their possible effect. It has been suggested that it was the established operators of bus services who opposed the trial areas because they wished to protect their vested interests, or perhaps it was thought that they failed to be adventurous. It is difficult to know where a network bus operator thinks that the interests of the travelling public start. There are private companies which operate networks as well as public sector undertakings.
I am sure that we are all agreed, and have said often before, that in Parliament our responsibility is to protect, first, the public interest, and only secondly the legitimate interests of others. The problems of trial areas relate to the travelling public. In many cases, bus operators would be delighted to withdraw services if their responsibility was commercial only, but they recognise that they perform a public service. If therefore the network is destroyed, the problems of restoring any services withdrawn will be ten times greater than merely maintaining the existing provision of services. If anyone doubts this then let him look at the example of the USA. In that great country public transport was allowed to decay. Now the President himself takes a personal interest in restoration and is ready to invest tens of billions of dollars because he sees it to be in that country's interest.
Compared to this, trial areas are very small fry. But the principle is the same. Moreover, we have through this Bill provisions which will radically alter the licensing— and the pattern of provision— of bus services in this country. I ask the Committee to recognise the need for this new system to find its own equilibrium— and I submit that this will take several years. Until the new system has been tried, and proved to be successful— or otherwise— it would be premature to have the impact of total delicensing in trial areas. I do not suggest that the merits of this further experiment should be ignored. What I do suggest is that counties concerned, and the Government, should not rush in where angels fear to
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tread. For this reason I commend to you this amendment, which will allow a three-year period to elapse before the further experiment of trial areas is superimposed on the changes made by this Bill. I beg to move.
11.2 p.m.
Lord BELLWIN: Contrary to the arguments deployed by my noble friend, trial areas are an integral part of the reform of the bus licensing system that this Bill is designed to bring about. Everything we are doing is aimed at increasing competition and efficiency in the bus industry. Everywhere it will be easier to get road service licences, and the balance of presumption before the traffic commissioners will be changed. And it will be open to county councils and their Scottish equivalents to go further, and to choose to have road service licensing abolished altogether in their area. County councils may feel— and it is a view with which I have much sympathy— that unfettered competition will better serve the people of their area than traffic commissioner restrictions. If they do, they will be able to apply to my right honourable friend the Minister for designation as a trial area, and, after he has considered the proposal and any representations received, he will decide whether to make the order as requested.
Experience in trial areas— and I can assure the Committee that they will be carefully monitored— will help to decide the question whether road service licensing is on balance in the public interest, and will be a guide to future policy. Experimentation here, as in the physical sciences, will help valid conclusions to be reached.
I see no reason for putting off the time at which applications for designation can be made. If counties want freedom, I do not see why they should have to waste three years waiting for it like a princess in a fairy tale. The Government are not compelling any county to apply at once, though we certainly hope that two or three will, soon after the Bill comes into force. If a county wants to wait and see what are the effects of the other changes in the Bill, before making up its mind, there will be nothing to stop it; there is no time limit in the Bill for applications.
I have listened throughout the whole Committee stage of this Bill to my noble

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friend Lord Teviot speaking on a number of occasions, and I have the greatest respect for his experience and knowledge, as he knows. But the trial areas are exactly what they say they are: trial areas. There is no compulsion, no pressing for anyone to go into them; but once we are going to go into them— and why should we not give a trial?— let us give them a fair wind so that we can see. If it should prove to be that they are not the solution to what we are seeking, then so be it. But if they are, as I have said before, look at the prize that is there to be won. The least we can do is to give them a fair wind in that trial. This really is fundamental to the Bill, and I hope the Committee will not accept the amendment.
Lord UNDERHILL: It was not my intention to intervene, but the noble Lord the Minister has compelled me to do so. I rise to support the amendment moved by the noble Lord, Lord Teviot. Noble Lords will realise that we have been critical of some aspects and we are very pleased that the noble Lord the Minister agreed to look at a number of these; otherwise I would have taken part in the discussion on whether Clause 12 shall stand part of the Bill. However, the Minister has agreed to look into certain aspects of that clause.
I am surprised the Minister says that the trial area scheme is an essential part of the Bill— if it is, we have been wasting something like 15 hours in this Committee and 33 sittings in a Standing Committee elsewhere. We are not opposed to innovations or changes, but to rush into a trial area scheme might be unwise in view of the fact that noble Lords opposite would agree that there are some very far-reaching propoals in the Bill and they should be worked through to see exactly what their effect is. Some of the changes could have a considerable effect. I would like to ask this: Have the Government assessed what has happened to the 15 routex schemes? Have they indicated to the Committee whether they have been successful? That was an experimental scheme which had Government support.
My noble friends and I suggest that this amendment is worthy of consideration. It would give the counties the utmost time to consider the position in the light of the new proposals and would give existing opera-
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tors ample time to look at their position, and a similar opportunity to new operators, without asking anybody to rush into a hasty decision on this matter.
Lord RENTON: I regret to say that I hope my noble friend's amendment will not be accepted. For a third of a century I represented a huge rural constituency, and throughout that time the bus services declined. They declined for various reasons with which, at this late hour, I shall not trouble your Lordships. Also the experiment whereby local authorities could subsidise bus services did not work very well either; and the only hope that people living in rural villages have, who do not have transport of their own, is that the trial areas should be attempted as soon as possible.
Lord TEVIOT: The intervention of the noble Lord, Lord Underhill, was a surprise and a pleasure to me. From what he said I think I shall answer the point of my noble friend Lord Renton first. He represented an excellent county, the source of so many of our cereal crops and vegetables and of our architectural heritage— the county of Huntingdon. We rush through it frequently on the train; it is bounded in one corner by St. Ives, and there is Ramsey. I can well see what he means: I think it was probably represented by the National Bus Company, and it is a small area. But I would hate to think how, even in that area, if it were a trial area, the services would be decimated. If there is anybody lurking in Godmanchester, St. Ives or Ramsey, they might like to come to the rescue.
Turning back to the comments of the noble Lord, Lord Underhill, his support was a rather pleasant surprise because if I was going to get any support I should have expected to get it before my noble friend gave his answer. On Part I of the Bill, I think we were extremely tolerant. We let my noble friend off the hook by accepting his undertaking that he would go back and consult about it. I am quite sure that between now and Report stage we are going to get some delightful surprises. I mean that: this is not a flippant or cynical remark. In the other place, some amendments were made. We often quote ministerial promises which, for one reason or another— probably very good reasons— are not fulfilled in the

719
final stages. But we look forward to so much in Committee stages in your Lordships' House. Trial areas are very experimental, and those in the industry are extremely frightened of them. This is a very radical Bill and one should watch to see what happens, and that there is a trial period. Therefore, I am afraid that I shall not withdraw this amendment.
On Question, amendment negatived.
Clause 58, as amended, agreed to.
Schedule 9 [Repeals]:
Lord BELLWIN Lord BELLWIN moved Amendments Nos. 188 and 189:
Page 72, line 34, at beginning insert—

1 & 2 Eliz 2 c. 33.

ducation (Miscel laneous Provisions) Act 1953.

Section 12.")

Page 74, line 3, column 3, leave out ("entry relating to") and insert (" entries relating to section 12 of the Education (Miscellaneous Provisions) Act 1953 and").
The noble Lord said: I have already spoken to these amendments. I beg to move.
On Question, amendments agreed to.
Lord BELLWIN Lord BELLWIN moved Amendments Nos. 190 and 191:
Page 74, line 20, column 3, leave out (" 138 (1) (a) ") and insert ("138, in subsection (1) (a) ")
line 22, column 3, at end insert (", and in sub-section (3) (a) the words "subject as mentioned in subsection (l) (a) of this section".").
The noble Lord said: These are both very minor consequential amendments. I beg to move.
On Question, amendments agreed to.
Lord BELLWIN Lord BELLWIN moved Amendments Nos. 192 to 194 en bloc:
Page 74, line 43, column 3, at end insert ("; and paragraph 11.")
line 44, column 3, leave out from beginning to end of line 48 and insert—
("Section 13 (5).
In section 13 (6) (a) the words from "or to a decision "to" traffic commissioners ".").
Page 77, line 9, column 3, at end insert (" Section 150.").
The noble Lord said: I have already spoken to these amendments. I beg to move.
On Question, amendments agreed to.
Schedule 9, as amended, agreed to.
In the Title:
Lord BELLWIN Lord BELLWIN moved Amendment No. 195:
Line 8, after (" Council ") insert (" and the Railways and Coastal Shipping Committee ").
On Question, amendment agreed to.
Title, as amended, agreed to.
House resumed: Bill reported with the amendments.