Lords Sitting of 18 June 1981

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Oxford): The LORD CHANCELLOR on the Woolsack.

Discounted Air Tickets
Baroness Burton of Coventry: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action they propose to take to create "a better legal framework" [Official Report, 19th May 1981; col. 830] to deal with the problem of discounted air tickets.
The Parliamentary Under-Secretary of State, Department of Trade (Lord Trefgarne): My Lords, a better legal framework might make it easier to mount a successful prosecution, but it would not deal with the problem of discounted air tickets. As I have said so often both inside and outside your Lordships' House, we shall see a reduction in discounting only when, as on the North Atlantic, the airlines can compete freely over fares.
Baroness Burton of Coventry: My Lords, the variety of Answers never ceases to amaze me. I hope that it amazes the House, too. May I ask the Minister whether he recalls that on 4th June at col. 1354, in reply to his noble friend Lord Morris, he said that he would be happy to initiate legislation to clarify the law as a matter of urgency? As the Answer today indicates as always, I am sorry to say, that the Minister and his department have no intention of doing any such thing, may we be told what he does intend to do? In view of his last remarks, may I ask him whether he would be good enough not to hide behind cheap fares to Europe or to America, which is not what I am dealing with, and not to hide behind his international partners as IATA have said that the British Government are failing to legislate on their own laws?
Lord Trefgarne: My Lords, if I were to recite again the steps which we have taken and which we are taking I fear that I might unduly weary your Lordships, because I have done so on a number of occasions. The noble Baroness has tabled an Unstarred Question for the week after next, I believe, and I certainly look forward to the chance of giving a full and considered reply on that occasion to the points made by the noble Baroness.

Ambulancemen's Strike
3.3 p.m.
Lord Molloy: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they intend to take to avert an ambulancemen's strike.
The Minister of State, Department of Education and Science (Baroness Young): My Lords, the Management Side of the Ambulancemen's Whitley Council has offered an increase of 7¾ per cent. in basic rates. We consider that this will lead to earnings by ambulancemen which are fair both to the men themselves and to the general body of taxpayers who have to find the money. The Government greatly regret that the sick are being harmed by industrial action taken by ambulancemen in pursuit of higher earnings.
Lord Molloy: My Lords, I thank the noble Baroness for her reply. May I ask her whether she is aware that the ambulancemen have shown exceedingly great patience? As long ago as 1966 there was the Miller Report. This was followed in 1970 by the McCarthy Report, which recommended the rationalisation of the ambulance service, proper training and proper qualifications, and a sane system of collective bargaining. In 1979, the Clegg Report recommended an all-in salary covering weekend work in precisely the same was as it affects firemen and the police. In so far as ambulance staffs are a vital part of our emergency services, what the ambulance staffs are asking for and what they have waited for for nearly four years is that the treatment meted out to them should be as near as possible to the conditions meted out to their colleagues in the police force and the fire service.
Baroness Young: My Lords, the Government fully recognise the important role which the ambulance service plays as part of the National Health Service accident and emergency service. The fact is that the Clegg Commission considered the ambulancemen union's claim for pay to be settled in relation to the pay of police and firemen but concluded that emergency work was only a part and by no means the most time-consuming part of the job of each of the three services.
On the comparison of the pay of ambulancemen with that of firemen, may I say that the comparisons are complicated? If, however, one takes an ambulanceman of two years' service working the fire service's duty system—that is, 42 hours a week with duties rotating over seven days and 24 hours a day—he would earn on ambulance scales about £108, which would now go up to £116. This should be compared with the fire service's rates of pay since 1st April 1981 of £110 a week. So they are very nearly similar when an accurate comparison is made.
Lord Rochester: My Lords, would not the noble Baroness agree that it might help to avert action of this kind if the Government were to enter into consultations with representatives of employers and trade unions aimed at establishing agreed, long-term arrangements for pay determination on a much wider basis than those which are required to deal merely with ambulancemen or, for that matter, ambulancemen, policemen and firemen?
Baroness Young: My Lords, so far as ambulancemen are concerned, which is the point at issue in this Question (the others are wide of the Question) the negotiation of pay and conditions of service is still the responsibility of the Whitley Council, which includes representatives of the four relevant trade unions, the National Health Service employing authorities and the three health departments. In this particular intance, the management side have responded to an invitation to exploratory talks at ACAS on 11th June with a view to settling the dispute.
Lord Orr-Ewing: My Lords, can my noble friend say whether or not it is true that the ambulancemen are wishing to consolidate all the various payments that they now get for unsocial hours, for overtime and for other special circumstances in their basic pay henceforward? If this were to be brought about, is it not true that they would then be getting £170 a week? Would not this be disproportionate when one considers the amount that the other people in similar circumstances are receiving?
Baroness Young: My Lords, I think I have said enough to indicate that if you try to compare like with like, under the new proposals ambulancemen will receive more or less the same rates of pay for the same amount of work as do firemen. I think all noble Lords will recognise that the police are a different service, in that there are various restrictions which apply to them which do not apply to the other services. The latest evidence which I have is that on the new rates of pay which have been offered, assuming the sum expected for overtime, shift work and weekend work, a leading ambulanceman in London could expect to earn about £184 a week and a qualified ambulanceman in London about £166 a week. The rates of pay are somewhat lower outside London.
Lord Molloy: My Lords, is the Minister aware that the ambulance staffs—there are ambulancewomen as well as ambulancemen—are highly skilled and very important people? When there is a fire, they may be without the police but the ambulance staffs are always there. If there is a riot or a severe police problem, ambulance staffs are required. The point is that the co-ordination of these three services is admirable and I give credit to all three of them. Is the Minister aware that on 12th of this month the Secretary of State issued a press statement in which he made certain remarks concerning pay? If he means them, the Confederation of Health Service Employees, which represents the ambulancemen, are prepared from this moment onwards to meet him, because they believe that this is the first time he has made them and that they represent a real basis for negotiation.
Baroness Young: My Lords, as I indicated earlier, the Government recognise the important work which ambulancemen and ambulancewomen do, but all the evidence is that only about 10 per cent. of their time is spent on emergencies. Their other work, which is extremely valuable, is not in precisely the same category of difficulty and danger as is emergency work. This is the difference between the ambulance service and the other services.

New Businesses
3.10 p.m.
Baroness Sharples: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are satisfied with the number of new businesses started this year.
The Minister of State, Department of Employment (The Earl of Gowrie): My Lords, the Government are encouraged by the rate of new business activity but of course would not pronounce themselves satisfied. But I am in no doubt that the measures we have taken to improve the environment for small firms, including the recent measures announced by the Chancellor of the Exchequer in his Budget Statement, will stimulate both the establishment of new enterprises and the expansion of existing business.
Baroness Sharples: My Lords, I thank my noble friend for that reply and his reference to the recent tax relief, but would he agree that perhaps more encouragement might be given to new businesses in country areas because there are many derelict buildings in the country which could be used and, as he will appreciate, people in the country do not necessarily wish to work in towns?
The Earl of Gowrie: My Lords, I am in agreement with the sentiments expressed by my noble friend and it would be quite wrong to assume that dynamic and new commercial activities are restricted to towns. There is of course in this context the work of CoSIRA as well as some help provided by my own department under the Community Enterprise Programme.
Lord Leatherland: My Lords, can the noble Earl also tell us how many businesses have gone out of existence during the same period?
The Earl of Gowrie: No, my Lords.
Lord Avebury: My Lords, if the Minister is encouraged by the number of new businesses which have been started since the beginning of this year, can he tell us how many of them there have been and how many new jobs have been created in those businesses and what are the comparable figures for last year, say up to the end of May in each case?
The Earl of Gowrie: My Lords, one of the predominant needs of businesses old and new is for stable, or indeed lower, rates of interest, and the kind of additional costs on public spending required to correlate the sort of information that the noble Lord would wish to have would be quite contrary to that need.
Lord Avebury: My Lords, how can the noble Earl be encouraged when he cannot give us the figures?
The Earl of Gowrie: My Lords, people feed information to Governments in a number of different ways.

759
Statistics in this field are unreliable; to make them reliable would need expenditure that we are certainly not proposing to make.
Lord Blyton: My Lords, if the Minister is pleased about the success of the increase of small businesses can he explain to me why it is that unemployment keeps rising every month?
The Earl of Gowrie: My Lords, one of the major policies of both the previous Government and this Government has been to reduce employment in old, overmanned industries, and that is liable to continue for a considerable length of time.
Lord Whaddon: My Lords, is it true that under the proposed loans guarantee scheme the Government are suggesting charging 3 per cent. above normal bank interest charges, making loans cost possibly over 19 per cent., and will this not be liable to render the whole scheme nugatory and will the Government reconsider these extortionate charges?
The Earl of Gowrie: My Lords, the essence of getting lower charges for loans for businesses, whether provided by Government or by the financial sector, is to have lower rates of inflation and therefore lower rates of real interest.
Lord John-Mackie: My Lords, is the Minister satisfied that the county councils are co-operating with CoSIRA in dealing expeditiously with the planning situation mentioned by the noble Baroness, Lady Sharples?
The Earl of Gowrie: My Lords, I do not think any Minister expresses himself satisfied, but I am confident that such co-operation exists and I am grateful to the noble Lord for drawing attention to its necessity.

Voting Rights for EEC Citizens
3.15 p.m.
Lord Orr-Ewing: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they are taking to correct the anomaly whereby British citizens abroad are, together with Irish citizens abroad, the only EEC citizens unable to vote in European elections.
The Parliamentary Under-Secretary of State, Home Office (Lord Belstead): My Lords, the Government are sympathetic to the proposal that United Kingdom citizens resident in other states of the European Community should be able to vote at elections to the European Parliament. We do not, however, think it right to pursue this matter until the European Parliament has put forward its own proposals on this aspect of a uniform electoral system.
Lord Orr-Ewing: My Lords, while thanking my noble friend for that reply, may I ask whether he will bear in mind that sometimes when you wait for co-ordination and for everything to be put right in one massive Bill you may perpetrate an injustice? Would it not perhaps be quicker if this particular injustice were to be put right in a simple, one clause Bill rather than wait for the European Community to come to an omnibus solution?
Lord Belstead: My Lords, this is one of the matters being considered by my right honourable friend the Home Secretary as part of his review of electoral law and procedures. As I am sure my noble friend is well aware, it raises issues of principle and, indeed, practical problems, but my right honourable friend hopes to make a Statement about these matters before long.
Lord Brockway: My Lords, in view of the welcome fact that the noble Lord, Lord Carrington, is now to preside over the Foreign Ministers in the EEC, may I ask the Minister whether we can expect him to remove this anomaly where European citizens in this country are allowed to vote and British citizens in other European countries are not allowed to vote?
Lord Belstead: My Lords, my original Answer said that we felt it right to await the deliberations of the European Parliament. When they have been completed they will be put forward to the Council of Ministers. I think we must go through the proper procedures although no doubt, as in many other things, we rely on the good offices of the Foreign and Commonwealth Secretary.
Lord Derwent: My Lords, when the noble Lord says "before long" does he mean before the Summer Recess?
Lord Belstead: My Lords, my noble friend is referring to my right honourable friend's hoped-for statement; I cannot be any more specific than I was in the first supplementary answer that I gave to my noble friend Lord Orr-Ewing.
Lord Kennet: My Lords, is it not curious how both major parties in this country, who after all invented and developed parliamentary democracy, should so stubbornly oppose or postpone all moves to modernise it?
Lord Belstead: My Lords, f find it "curiouser and curiouser" that the noble Lord, Lord Kennet, should think that the proper consideration which is being given to this and many other matters by the European Parliament for recommendations to the Council of Ministers should be translated into "stubborn resistance" by the Government of this country so far as these particular matters are concerned. I believe that the way which I have outlined in my supplementary answers is the right way to go about these important matters, and I think it is both fair and constitutional generally.
Lord Kennet: My Lords, does the noble Lord agree that the wording of the original Question implies that

761
all major states except the United Kingdom and Ireland have already made this necessary reform?
Lord Belstead: That is correct, my Lords.
Lord O'Hagan: My Lords, is the noble Lord the Minister aware that he is concealing the likely truth from the House—not, I am sure, on purpose—and is the Minister aware (as he must be) that it is most unlikely that the European Parliament will come to a view on the whole range of these matters with any degree of unanimity before the next European elections? Is it not therefore the case that in denying them the right to vote in European elections Her Majesty's Government are condemning British citizens not merely to an anomaly but to an injustice?
Lord Belstead: My Lords, I am concealing nothing. I said quite openly that the Government are awaiting the review which the European Parliament will bring forward and I have said quite openly that my right honourable friend the Home Secretary hopes to make a statement about these matters before long.
Lord Molloy: My Lords, great play has been made of the need for directly elected members of the European Parliament. Therefore, why should not the British be entitled to the pledge that they should have the right, wherever they are, to cast their votes and why should we be left outside on a promise that was given? I believe that it is the responsibility of our Government to see that it is honoured.
Lord Belstead: My Lords, no promise has been given that I am aware of. What I should just like to repeat to the noble Lord is that this important matter raises issues both of principle and of practice. That is why I have been at some pains to say that it is being looked at carefully in Europe and that my right honourable friend hopes to make a statement about this and other matters before long.
The Lord President of the Council (Lord Soames): My Lords, I think it is in the interests of the House that we should move on to the next business.

The National Freight Company Limited
Lord Sandys: My Lords, at a convenient moment after 3.30 this afternoon, my noble friend Lord Bellwin will, with the leave of the House, repeat a Statement which is to be made in another place on the National Freight Company.

Compulsory Purchase (Vesting Declarations) Bill [H.L.]
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I beg to introduce a Bill to consolidate the provisions of the Town and Country Planning Act 1968 concerning general vesting declarations, and related enactments. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(The Lord Chancellor.)
On Question, Bill read 1a, and to be printed.

Broadcasting Bill [H.L.]
The Lord Chancellor: My Lords, I beg to introduce a Bill to consolidate the Independent Broadcasting Authority Acts 1973, 1974 and 1978 and the Broadcasting Act 1980. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(The Lord Chancellor.)
On Question, Bill read 1a, and to be printed.

Industrial Diseases (Notification) Bill
Read 3a, and passed.

British Telecommunications Bill
3.21 p.m.
Further considered on Report.
Lord Elwyn-Jones Lord Elwyn-Jones moved Amendment No. 70:
After Clause 65, insert the following new clause:
("Interception of mail
.—(1) A person who—

(a) intentionally intercepts the contents of the mail carried by the Post Office;

(b) instigates any person engaged in the business of the Post Office to intercept the mail; or

(c) discloses the contents of any mail intercepted under paragraph (a) or (b) above.

unless acting in obedience to a warrant issued pursuant to the following provisions of this section, shall be guilty of an offence and liable on conviction on indictment to a fine not exceeding £5,000 or to imprisonment for a term not exceeding three years or to both.
(2) Proceedings for an offence under subsection (1) above shall not be instituted in England or Wales except by or with the consent of the Attorney-General, or in Northern Ireland except by or with the consent of the Attorney-General for Northern Ireland.
(3) No person shall be guilty of an offence under subsection (I) above as respects any act done by him whilst engaged in the business of the Post Office.
(4) The Secretary of State may, on the application of a chief officer of police or the Commissioners of Customs and Excise, issue a warrant for the interception and disclosure of the mail if he is satisfied that—

(a) it would assist in the detection of a serious offence;

(b) normal methods of investigation have been tried and have failed or from the nature of things are unlikely to succeed if tried; and

(c) there is good reason to think that the interception would result in a conviction for that offence.

In this subsection "serious offence" means—

(i) an offence for which a person not previously convicted could reasonably be expected to be sentenced to imprisonment for a term of three years; or

(ii) an offence in which either a large number of people is involved or there is good reason to apprehend the use of violence.

(5) The Secretary of State may, on the application of a chief officer of police or the Director-General of the Security Service issue a warrant for the interception and disclosure of the mail if he is satisfied that—

763

(a) it would assist in the detection of a major terrorist or espionage activity giving rise to external or internal danger to the defence of the Realm; and

(b) normal methods of investigation have been tried and have failed or from the nature of things are unlikely to succeed if tried.

(6) An application for a warrant under this section shall be made in writing and shall specify—

(a) the person whose mail it is sought to intercept; and

(b) the facts and circumstances in support of the application; but the Secretary of State may allow any information required under paragraph (b) above to be provided orally and not in writing in respect of an application for a warrant under subsection (5) above.

(7) Except in a case of emergency, any warrant under this section shall be issued only under the hand of the Secretary of State; and, in any such case, shall be confirmed under his hand as soon as reasonably practicable after issue.
(8) In this section "intercept" includes the doing of any act designed to enable an interception to take place, and "intercepts", "intercepted" and "interception" shall be construed accordingly.").
The noble and learned Lord said: My Lords, in this amendment we return to the issues that were raised in the Committee stage of the Bill on the important question of interceptions of communications taking place between private citizens, either by the exercise of the state, through the Secretary of State, of a power to do so, or by persons or bodies with no such power. The purpose of the amendment is to give statutory authority and form to the actions now being taken in this field by the Secretary of State, and to prevent, so far as the law is able to do so, and to punish appropriately unauthorised interceptions of the contents of mail carried by the Post Office.
In Committee we debated and divided upon an amendment relating to telephone tapping. Later, we discussed, only very briefly and inconclusively, this amendment which we are now discussing relating to the opening of letters. In view of its importance, we have thought it right that the House should reconsider it on Report, grateful as I am to the noble Earl, Lord Gowrie, for having written to me about some of the matters we just began to canvass at the Committee stage.
Mail interception is an age-old practice, and I understand it dates back to the 17th century, when the Monarch was given the monopoly right over transporting the mails, and when it was thought that mail interception, to use a contemporary phrase, was the best way to discover those with wicked designs against the Commonwealth. There are still those with wicked designs against the Commonwealth and the common weal. Serious crime, not only on the domestic but on the international front, with terrorists and others, is being carried across frontiers of states by criminal gangs. There is no sign alas! of the diminution of that. The sinister and profitable drug trade continues, as, of course, does espionage, and accordingly in this situation powers are needed by the state for the protection of the people.
Nevertheless, the opening of private letters between citizens is a serious invasion of their privacy, just as much indeed as is listening to their private telephone conversations. I am sure noble Lords will agree with what the noble and learned Lord, Lord Diplock, wrote earlier this year in his report on the interception of communications in this country: that the exercise
764
by the state of any power to read or listen to communications taking place between private citizens involved an invasion of their privacy which has always been looked on by the public with suspicion and distaste.
There is another factor that must be considered and it is this. That is the obligations of the Government of this country under Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, which in terms says that everyone has the right to respect for his private and family life, his home and his correspondence. What the amendment proposes is to ensure that the invasions of privacy that we are discussing here are clearly authorised by the law. That is not the position now.
As to telephone tapping, Sir Robert Megarry, the Vice-Chancellor of the Chancery Division, in his judgment in the case of Malone v. Commissioners of Police of the Metropolis, said that "any adequate and effective safeguards against abuse are at present wanting", adding that telephone tapping was a subject which cried out for legislation. So, I submit, does the opening of letters. In regard to mail interception there does not appear to be any statutory authority or, certainly, any express legal authority for what is happening. Your Lordships may think it very significant that early this year when the Royal Commission on Criminal Procedure reported—and of that Commission Lord Justice Eveleigh was a member, as was Sir Arthur Peterson, a former Permanent Under-Secretary at the Home Office, and Sir Douglas Osmond, the Chief Constable of Hampshire—in dealing with surreptitious surveillance they said this in paragraph 3.56 of their report:
"although we have no evidence that the existing controls are inadequate to prevent abuse "—
and it is fair that I should say that that is also the view held by the noble and learned Lord, Lord Diplock—
"we think that there are strong arguments for introducing a system of statutory control … As with all features of police investigative procedures, the value of prescribing them in statutory form is that it brings clarity and precision into the rules; they are open to public scrutiny and to the potential of parliamentary review. So far as surveillance devices in general are concerned this is not at present so".
They go on to recommend that the use of surveillance devices by the police—and they specifically say, including the interception of letters—should be regulated by statute and that surveillance should require specific authorisation to be obtained from magistrates' courts and be limited in place and duration and contain reasons for the intrusion: in effect, the same procedures as they recommend for search warrants. They add:
"We do not consider that the application of such controls will cause any substantial hindrance to the police in their work".—(paragraph 3.59.)
This is, of course, the point the noble Earl was emphasising when we last discussed this matter.
The report goes on to say that they consider that these matters should be placed upon a statutory footing and they recommend that:
"Application for a warrant, which would have to be ex parte and (obviously) heard in private, should contain reasons for the intrusion; and the evidence should be recorded in writing".
Then interestingly they go on in paragraph 3.58 to say:

765
"At the hearing of the application the interests of the person subject to surveillance should be represented by the Official Solicitor or a similar body; we see this as a necessary means of securing consistency in practice".
They then add, and I mention this because of the anxiety expressed by the noble Earl last time as regards the risks involved in judicial intervention:
"Unless judicial authority to the contrary is obtained, the person subjected to the surveillance should be told of the surveillance after the event, as is the requirement in a number of other countries. By these means, it should be possible for the justification of surveillance to be challenged, and, if not justified, for redress to be obtained. These proposals would enable the police to use evidence obtained by surveillance in court, which they are at present unable or unwilling to do in relation to telephone tapping".
I make no apology for spending some time upon those authoritative recommendations of the Royal Commission with the distinguished representation both of the police and the Home Office, and of the judiciary.
It is right that I should say, before I leave those recommendations, that none of the safeguards there suggested exists at present although, as will be argued no doubt, other safeguards, particularly the monitoring and the responsibility of the Secretary of State to the public and to Parliament, will be called in aid. But, with respect, it would seem to me that such procedures as that would indeed be apt for the area where surveillance is used which is referred to in subsection (4)—namely, assistance in the detection of serious offences—although I admit that that procedure might be a little difficult in regard to espionage investigations which might call for special provision. However, there is an authoritative view supportive of what we were venturing to say last time round on this matter. What is proposed in the amendment is nothing like as radical as that.
All that we are proposing to do is to make an honest, law-abiding man of the Home Secretary and to make sure that that which he is doing now has a firm, legal and statutory basis instead of being lost in the mists of prerogative and mere ancient usage. What we propose does not involve the suggestions, valuable as they are—and it may well be that we shall come round to those at some other time. All that we propose to do is to give proper statutory effect to what is already taking place.
There is, in addition, a provision to increase and make severe the penalties for those who unlawfully intercept the mail although as far as that is concerned, of course, it is much more difficult in regard to letters than in regard to telephone tapping for obvious reasons, and improper intervention by the Post Office servants in opening mail et cetera is already severely punished.
What we propose in the amendment is no more than a statement of what the Secretary of State has said is his current practice. I ask your Lordships to look at subsection (4) where it says:
"The Secretary of State may, on the application of a chief officer of police or the Commissioners of Customs and Excise, issue a warrant for the interception and disclosure of the mail if he is satisfied that—

(a) it would assist in the detection of a serious offence;

(b) normal methods of investigation have been tried and have failed …

(c) there is good reason to think that the interception would result in a conviction for that offence".

766
The offence is then defined. That is precisely what the Secretary of State says that he is doing now, but he has no statutory authority to do it. When we come to the action of the Secretary of State, it says:
"The Secretary of State may [issue a warrant] on the application of a chief officer of police or the Director-General of the Security Service"
in the field of terrorist or espionage matters. The precise language that is used in that paragraph is the language which the Secretary of State has used to describe his conduct in this field. It says that warrants are issued if the Secretary of State is satisfied that:
"it would assist in the detection of a major terrorist or espionage activity giving rise to external or internal danger to the defence of the Realm; and
(b) normal methods of investigation have been tried".
Therefore, it is a far more modest proposal than is recommended by the Royal Commission.
There is one factual aspect of this field as regards which I would invite the assistance of the noble Earl, Lord Gowrie. In the earlier debate I asked the noble Earl if he could help us about the extent of mail interception. I did so in the light of statements that were made in the debate in another place where it was said that the figure for mail interception is "enormous". The honourable gentleman in another place added that half a dozen agencies, apparently called "requesting agencies", have a right to demand interception of mail. I would be grateful if the noble Earl could comment on those assertions of fact because the only information that the noble Earl has communicated to the House is from the White Paper on the interception of Communication in Great Britain. The White Paper gives the number of letter interceptions as only 52 by the Home Secretary in 1979. Indeed, as he pointed out, if those are the accurate and full figures of all that goes on, it does show a steady decline in the number of letter interceptions since 1958. However, there is a good deal of public anxiety that that table does not represent accurately what is actually going on. I think that it would be reassuring if we could get from the noble Earl himself some assurance about that and if he would deal precisely with those allegations that were made in another place.
Whatever the number of mail interceptions may be, we on this side of the House—and I suspect that there may be support in all parts of the House for this view—feel that the interceptions do require a far more certain and establishable legal base than they have at present. I think that it would put the position right in law; secondly I think that it would operate in the way that the Royal Commission has suggested, and would reassure the public. Finally, I think that it would greatly strengthen our position in Strasbourg in proceedings before the European Convention if it could be established beyond doubt that these practices are authorised expressly by the law. In those circumstances, I beg to move the amendment.
3.40 p.m.
The Earl of Gowrie: My Lords, I must, first, apologise to the noble and learned Lord and, indeed, to the House for not being wholly clear on one point that the noble and learned Lord made when he moved a very similar amendment during the Committee stage of the Bill. At that time I made a guess, which I think,

767
in fact, turned out to be the right one; but one should not guess and I have now been able to confirm, as the noble and learned Lord said at the time, that the same principles apply to the interception of mail as to the interception of telecommunications, and I had been dealing at the previous stage fundamentally with telecommunications.
I shall not take up the time of the House by repeating once more the speech which I made at a previous stage, although it is still, of course, directly relevant and related to the present amendment. I would simply remind the House of the main elements of the Government's case against putting the mail and telecommunications interception arrangements of this country on a statutory footing, as the amendment of the noble and learned Lord would seek to do.
I think that everyone who has spoken has appreciated the sad necessity for interception in certain circumstances. There is agreement on the value of interception as a weapon against crime and other wrongdoing. But, if interception is to be effective, it must necessarily be carried out in secret. Public interception is a contradiction in terms, if you like. If someone is planning an armed robbery and knows that his telephone is being tapped or is likely to be tapped, or that his letters are being opened or are likely to be opened, he simply will not divulge his plans on the telephone or in his letters. But it is equally important that any of his associates who were disposed to tip off the police and direct the attention of the police to the crime, should have their identity and the information which they were giving also kept secret.
If the criteria for interception are laid down in an Act of Parliament, then necessarily the courts would have to be empowered to look into individual cases. They could only decide such cases if they had laid before them all the information which had led to the decision to authorise the interception. That includes, of course, the information given—possibly at considerable personal risk—for whatever motives, by the armed robber's associate or other criminal associates. As the case would have to be heard in the presence of the complainant—for example, the armed robber—he would thus learn not only which of his associates might be giving information to the police but also what information was in fact being given. Such a situation is not one to be contemplated seriously in the combating of crime.
On the points made by the noble and learned Lord about the Royal Commission on Criminal Procedure, in so far as the Royal Commission's recommendations bear on the interception of postal and telephone communications, the Government have, of course, considered them most carefully. The Royal Commission themselves drew attention to the sketchy and preliminary nature of their views and they were, of course, referring only to criminal cases. For the reasons that I set out in my speech in Committee, I do not believe that it would be right to follow the Royal Commission in the matter of interception. First, they recommend putting our practice into law and, therefore, as I have just said, before the courts. They recommend that the product of interception should be used in evidence, and they recommend that, at any rate retrospectively, the fact of interception
768
should be disclosed. Again, that would be a damaging departure from our practice and would necessarily expose the secret facts of interception. In our view, it would not enhance the protection now given to the individual, but at the same time it would weaken the protection given by the practice of interception to law-abiding citizens.
The Royal Commission recommend that authorisation should pass from the Home Secretary to the magistracy. The Government considered this suggestion in preparing the White Paper and my right honourable friend the Home Secretary has now considered it again. But the balance of advantage seems to us to lie in making no such change. The transfer of responsibility to the magistracy or the judges would again tend to weaken rather than strengthen the undivided control over interception which is exercised by my right honourable friend. It would also make for inconsistency in the application of the principles governing the control of interception.
On the issue of "requesting agencies", I must say that I am not quite clear what is meant by these expressions. The allegations about hundreds of addresses being intercepted are altogether without foundation. The White Paper sets out the position, as the noble and learned Lord acknowledged. Applications for interception have to be made to the Home Secretary. They may be made by the police, by customs and excise or by the security service. On the point about the numbers, the number of warrants for the interception of mail issued in 1979—the last year for which I have figures—was 52 in all.
Therefore, the nub of the Government's case is that interception can be effective only if kept secret, and that legislation would destroy this secrecy and thus the effectiveness of interception, because the whole point of legislation is that it would be for the courts to enforce it. However, that said, the Government of course recognise the great concern that the public feel that the power to authorise the interception of private communications should be very strictly controlled indeed. I urge all noble Lords who have expressed anxiety about this, or who are in any state of anxiety about it —and I sincerely believe that such anxiety is reasonable and responsible—to read carefully the White Paper published in April last year (Cmnd. 7873) on the Interception of Communications in Great Britain. This White Paper sets out in the very greatest detail the rigorous procedures adopted to safeguard individual rights and also to ensure that the power is not misused.
I also urge the House to read the report by the noble and learned Lord, Lord Diplock, (Cmnd. 8191) on his monitoring of these procedures. The noble and learned Lord's role as monitor enables him to look into individual cases, into all the information behind them and to test them against the criteria set out in the White Paper. That, in the Government's view, is a really effective and disinterested safeguard for the individual. Perhaps I could conclude by quoting two passages from the noble and learned Lord's report. He said:
"My discussions with the responsible officers of each of the authorities on whose behalf warrants are issued by the Secretary of State, supplemented by my personal inspection of the actual products of interception in individual cases which I selected at random to follow through in detail, have satisfied me that the

769
interception of communications, particularly telephone conversations, remains an effective, indeed an essential, weapon in the armoury of those authorities responsible for the maintenance of law and order and the safety of the realm.
"I conclude, therefore, from the monitoring of the procedures for the interception of communications that I have been able to undertake up to the present date, that those procedures are working satisfactorily and with the minimum interference with the individuals' rights of privacy in the interests of the public weal".
If this amendment were passed, it would bring joy to the darkest corners of national and international life. I am confident that the House will have the wisdom to reject this amendment if the noble and learned Lord decides to press it—which I hope very much he will not do.
3.50 p.m.
Lord Gardiner: With respect, I should have thought that my noble and learned friend Lord Elwyn-Jones made an unanswerable case for this amendment. We have heard what the noble Earl has said but I should like to raise two points in particular. The noble Earl has laid great stress on the Diplock Report and I am sure that there is no Member of your Lordships' House who has more complete confidence in that noble and learned Lord than I have. However, when we were discussing telephone communications I did ask the noble Earl if he would be good enough to tell me whether I was right in thinking, first, that not all our own security services came within the terms of reference of the Diplock Report; secondly, that so far as telephone tapping was concerned the Diplock Report did not cover—because it was outside its terms of reference—telephone tapping by Government Communications Headquarters; thirdly, that the Diplock Report's terms of reference did not include telephone tapping by American security forces in England. The noble Earl was good enough to say he would write to me with the answers. I have since had a letter from the noble Earl, but it did not answer any of my questions. It is some little time since I raised these questions; so could the noble Earl now tell me the answers to them, and could he also say which agencies are authorised to open and read letters—or read without opening, as I understand one can do now? Do they include, for example, agencies which are security services serving foreign Governments?
Also, the noble Earl has not dealt in any way with the point made by my noble and learned friend about the European Convention. The European Convention is quite clear in providing a right of privacy, which applies to both telephone tapping and mail opening. It then provides for exceptions in the usual form; it states that any party to the convention may make a law allowing, whether for security reasons or for the prevention of crime and so forth, telephone tapping or mail opening, but that there must be a law made to that effect. Does the noble Earl agree with what my noble and learned friend has suggested, which I believe is unanswerable, that unless and until we have a law we are, in both these fields, in breach of the European Convention? As the noble Earl must know, Western Germany and many other Western European countries which are party to the convention have made just the kind of law proposed in this amendment. If these laws can work
770
perfectly well in other West European countries, why should they not work here?
Lord Hooson: I agree that the noble and learned Lord, Lord Elwyn-Jones, has made an unanswerable case for this amendment. I believe what worries your Lordships' House are not so much interceptions made with a warrant but interceptions made without one. The noble Earl, Lord Gowrie, stated that there were 52 cases of warrants issued by the Home Secretary in the last recorded year, which I understand was 1979. Could the noble Earl assure your Lordships' House that there were no other interceptions? I do not believe that he can. It is the instances of interceptions made without a warrant which greatly disturb your Lordships' House. The noble Earl said that there was a "sad necessity" for interceptions. His exact words were:
"There is agreement on the value of interception as a weapon against crime and other wrongdoing".
But, in fact, how many cases are solved in this way? There must be a limit, and surely what the amendment proposes are essential safeguards in a civilised community. If other European countries do not find it necessary to do things merely as a matter of practice without any backing in law, which is the position in this country, why cannot we do the same as they do? The noble Earl has not answered that point at all.
The Earl of Gowrie: The noble and learned Lord, Lord Gardiner, said that I wrote to him, but that I did not answer a number of points that he required me to answer. That is true and I did not answer him inadvertently. I have subsequently sent the noble and learned Lord a letter apologising for the fact that the tail-end of my letter was omitted from the original draft, and the noble and learned Lord now has it. My answer may not, from his point of view, be very satisfactory, but I did not intend any discourtesy in my original answer—it was simply an error for which I have apologised.
Lord Gardiner: I do of course accept the noble Earl's explanation. I have not had his answer, but I daresay that it is waiting for me upstairs.
The Earl of Gowrie: I am grateful to the noble and learned Lord. Obviously this is not a closed issue between the noble and learned Lord and myself, and I will now take up the answers to his questions, which should have been given in my original letter. The noble and learned Lord is slightly incorrect in giving the air that there are some agencies which have the right to intercept our mail or telecommunications, for whatever worthy ends. Agencies are not automatically authorised to do so. As I said previously, they are simply able to make applications to the Home Secretary. The noble and learned Lord asked me which agencies are involved and I repeat that they are the police, customs and excise, and the security service. These are the agencies which can make applications and my right honourable friend can grant an application or withhold it, and he exercises that right in each individual case.
On the security issues, I do not feel that it would be right for me to go further. The noble and learned

771
Lord will be well aware of the very long-standing convention that Ministers do not answer questions which would bear on intelligence matters affecting the external defence and essential foreign interests of the Realm. I do not think that there is anything unusual or sinister in my reluctance to depart from that convention, which has obtained with successive Governments over many years. I can tell the noble and learned Lord that facilities are not made available to foreign Governments or their agencies to intercept United Kingdom telephone, postal, and telex services. Nor do we have any evidence of unauthorised interception of United Kingdom communications within the United Kingdom. If such evidence came to light, we would, of course, take appropriate measures.
The noble and learned Lord asked me whether our arrangements were not in conflict with the European Convention. I do not believe it is for me or for the Government to give a definitive ruling on whether or not our arrangements are a breach of the convention. In the Government's view, our arrangements fully protect the liberty of the subject, which is the purpose of the convention, because the procedures, conditions and safeguards are published and practised. They ensure strict political control by Ministers who are ultimately responsible to Parliament and they are buttressed by the undertaking that they will not be changed without Parliament being informed. On top of those long-standing protections we have added the overdrive, as it were, of the monitoring arrangements by the noble and learned Lord, Lord Diplock. His first report has in fact endorsed them. The Government will present their case before the human rights institutions at Strasbourg on the basis that I have outlined, because the Government are quite confident that that basis is sound.
I do not think I can answer again in detail the question from the noble Lord who sits on the Liberal Benches about the observation by others of these conventions, or how others interpret the Human Rights Convention. But the noble Lord on the Liberal Benches, as we all know, is far from naïve, and it would be naïve to assume that security precautions and procedures by sovereign states who are signatories to the convention do not in fact exist or take place.
On the question of unauthorised interception, interception not granted by my right honourable friend the Home Secretary, we have no evidence of such unauthorised interception. It would in any event be very difficult to conduct this unauthorised interception without the co-operation of Post Office officials. It is quite a tricky business. It would be a serious offence for any Post Office official to do any such thing. It would of course be a criminal offence punishable by imprisonment.
I do not think that I can make the case any more clearly than I have done. I would remind the House that the procedures and conventions that I have outlined have been a matter of consent in this country for some years, and that far from simply resting on that consent we have augmented it in the way that I described through the work of the noble and learned Lord. I would finally remind the House that while we are justifiably anxious at this period of history about violations of privacy, we are also facing something of
772
an international epidemic not only in ordinary crimes of gain but in terrorism. I would very much doubt whether the House would wish to weaken what is alas! liable to be a continuing fight against this sinister but widespread historical development.
Lord Elwyn-Jones: My Lords, I confess that I did not feel particularly alarmed at the startling picture that the noble Earl painted of the thieves and villains and criminals in the dark corners of the world tonight raising three cheers that my amendment had passed through this noble House. I think that that is a grotesque paranoia on his part, if he does not mind my saying so, when the effect of the passing of this amendment will be to make more certain and more effective the exercise of the powers which at present the Secretary of State is using. It will certainly be more sure of seeing us through Strasbourg, and it will bring us in line with contemporary societies whose Governments have done the sort of thing that I am recommending. I do not think it will give them any comfort if they think again about it, in so far as they think at all in those dark corners of the world where the criminals foregather. I am sure that they would find no comfort in this.
What has disturbed me a little is the lack of confidence that the noble Earl has shown in the ability of our judicial system to protect the security and secrecy of interventions, when it is necessary that those who invade the security of the country and the criminals come up for trial. I, like other noble Lords, have taken part in secrecy cases in the Old Bailey where matters of the most intimate importance are canvassed, dealt with and tried; and so far as I am aware the dangers of breaches of security have been contained by the judicial process. No, I am sorry that the noble Earl has not been impressed more by the views expressed in the Royal Commission which seemed to run quite contrary to the conclusion that the Government have come to. In all the circumstances, I am afraid that I must ask the House to express a view on this amendment.
4.5 p.m.
On Question, Whether the said amendment (No. 70) shall be agreed to?
Their Lordships divided: Contents, 81; Not-Contents, 106.

CONTENTS

Airedale, L.

David, B.

Amherst, E.

Denington, B.

Amulree, L.

Donaldson of Kingsbridge, L.

Ardwick, L.

Elwyn-Jones, L.

Aylestone, L.

Ewart-Biggs, B.

Banks, L.

Fisher of Rednal, B.

Barrington, V.

Foot, L.

Beaumont of Whitley, L.

Gaitskell, B.

Beswick, L.

Gardiner, L.

Birk, B.

Gladwyn, L.

Bishopston, L. [Teller.]

Glenamara, L.

Blease, L.

Hale, L.

Blyton, L.

Hampton, L.

Boston of Faversham, L.

Hanworth, V.

Brockway, L.

Henderson, L.

Byers, L.

Hooson, L.

Cledwyn of Penrhos, L.

Houghton of Sowerby, L.

Collison, L.

Hunt, L.

773

Jacobson, L.

Sefton of Garston, L.

Jacques, L.

Segal, L.

Janner, L.

Shinwell, L.

Jeger, B.

Somers, L.

Jenkins of Putney, L.

Stedman, B.

John-Mackie, L.

Stewart of Alvechurch, B.

Kennet, L.

Stewart of Fulham, L.

Kings Norton, L.

Stone, L.

Leatherland, L.

Strabolgi, L.

Listowel, E.

Strauss, L.

Lloyd of Kilgerran, L.

Taylor of Mansfield, L.

Longford, E.

Underhill, L.

Lovell-Davis, L.

Wallace of Coslany, L. [Teller.]

Mishcon, L.

Morris of Grasmere, L.

Wells-Pestell, L.

Peart, L.

Whaddon, L.

Phillips, B.

White, B.

Ponsonby of Shulbrede, L.

Wigoder, L.

Porritt, L.

Wilson of Langside, L.

Rathcreedan, L.

Wilson of Radcliffe, L.

Roberthall, L.

Wootton of Abinger, B.

Rochester, L.

Wynne-Jones, L.

Ross of Marnock, L.

Young of Dartington, L.

NOT-CONTENTS

Abercorn, D.

Henley, L.

Allen of Abbeydale, L.

Hylton-Foster, B.

Allerton, L.

IIchester, E.

Alport, L.

Kilmany, L.

Ampthill, L.

Kinloss, Ly.

Avon, E.

Lane-Fox, B.

Balfour of Inchrye, L.

Lauderdale, E.

Bellwin, L.

Lindsey and Abingdon, E.

Beloff, L.

Long, V.

Belstead, L.

Lyell, L. [Teller.]

Berkeley, B.

McAlpine of Moffat, L.

Bessborough, E.

Mackay of Clashfern, L.

Burton, L.

Malmesbury, E.

Caccia, L.

Mancroft, L.

Campbell of Croy, L.

Marley, L.

Chelwood, L.

Marshall of Leeds, L.

Clancarty, E.

Mersey, V.

Clitheroe, L.

Mottistone, L.

Clwyd, L.

Mowbray and Stourton, L.

Cockfield, L.

Moyne, L.

Cork and Orrery, E.

Newall, L.

Cottesloe, L.

Northchurch, B.

Cromartie, E.

Nugent of Guildford, L.

Cullen of Ashbourne, L.

Onslow, E.

Daventry, V.

Orr-Ewing, L.

Davidson, V.

Perth, E.

De Freyne, L.

Portland, D.

De La Warr, E.

Rankeillour, L.

Derwent, L.

Robbins, L.

Drumalbyn, L.

Rochdale, V.

Dundee, E.

Rodney, L.

Eccles, V.

Rugby, L.

Elliot of Harwood, B.

Saint Oswald, L.

Elphinstone, L.

Sandford, L.

Elton, L.

Sandys, L. [Teller.]

Energlyn, L.

Savile, L.

Exeter, M.

Selkirk, E.

Faithfull, B.

Sharples, B.

Ferrier, L.

Skelmersdale, L.

Foley, L.

Soames, L.

Fortescue, E.

Spens, L.

Garner, L.

Strathcarron, L.

Geoffrey-Lloyd, L.

Strathclyde, L.

Gibson-Watt, L.

Swinfen, L.

Glendevon, L.

Teviot, L.

Gore-Booth, L.

Tollemache, L.

Gormanston, V.

Trefgarne, L.

Gowrie, E.

Trumpington, B.

Hailsham of Saint Marylebone, L.

Vaux of Harrowden, L.

Vickers, B.

Halsbury, E.

Vivian, L.

Hankey, L.

Ward of Witley, V.

Hawke, L.

Westbury, L.

Hayter, L.

Resolved in the negative, and amendment disagreed to accordingly.

The National Freight Company Limited
4.13 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin): My Lords, with the permission of the House, I shall repeat a Statement being made in another place by my right honourable friend the Secretary of State for Transport:
"The House will know that under the provisions of the Transport Act 1980, the National Freight Corporation, comprising British Road Services, National Carriers, Pickfords and other well known subsidiary companies, was wound up and the assets transferred to the National Freight Company Limited. This was done with the intention of selling the shares to private investors as soon as possible. The Act made special provisions to allow me to fund the deficiency in their pension scheme from the proceeds of sale.
"Flotation has not so far proved practicable, but I can now tell the House that I have, within the last few days, been approached by a group of the company's senior managers. They are seeking outside financial backing with the intention of putting together a widely based consortium of managers and employees to purchase the company. Their proposal, which indicated an offer worth in excess of £50 million, is at present at an early stage and there are still a lot of details to be worked out. I have encouraged them to press on with their plans. At the same time, I am considering it with my financial and legal advisers. All this will take a few weeks.
"This is an imaginative and exciting proposal and I have told the managers concerned that I hope it will prove possible to achieve such a sale."
Lord Underhill: My Lords, I thank the noble Lord for repeating that Statement, a brief one but one with very wide implications. During our debates on the Transport Act 1980 we on this side strongly condemned the sale of the National Freight Corporation to private interests. During the passage of that measure I and other noble Lords stated that there was general agreement that it was a well-managed business, was very strong on professional standards, had forward-looking ideas and had an imaginative management. It was also recognised that the corporation played a pace-setting role in the road haulage industry. It was emphasised that road haulage was a fragmented industry and that while the National Freight Corporation handled 10 per cent. of the industry's business, and was still the largest unit in road haulage, it was therefore not in any way in a monopoly situation. We on these Benches believe that a substantial unit, of the kind the corporation is, is necessary to the industry, and therefore in any sale we hope there will be no question whatever of the freight corporation and its subsidiaries being broken up.
The possibility, as mentioned in the Statement, of a sale to a consortium of managers and employees

775
opens up a completely new situation and there are a number of questions I wish to put to the Minister. Is there any indication how much will be on offer to employees as distinct from managers; is there a possibility of this being made a genuine co-operative; and will a public holding be retained in the new company? On Second Reading of the Transport Act 1980, the Minister said that to do so would deter some subscribers for shares. One cannot imagine that being the case if the consortium is to be of existing managers and employees. Therefore, will a public holding be retained, and if so of what percentage?
It will be generally agreed that a sale at this time would be in a depressed market; that no doubt explains why it has not been found possible to have a flotation as was envisaged when the Transport Act was passed. The Statement refers to a possible sale at £50 million. Is that a fair price? I see from the recently published report of the corporation, to the end of September 1980, that the balance sheet shows the assets of the corporation and its subsidiaries at £100·8 million, and the final figure in the balance sheet gives net assets of £73·5 million. The Statement also refers to the funding of pensions from the proceeds of the sale. What arrangements will be made for funding pensions until the sale is completed? At the proposed price, allowing for the funding of pensions, what net sum will be realised for the public as a result of the sale?
The Statement says, and we can understand why, that it will take some weeks to carry out discussions with the Secretary of State's financial and legal advisers. I hope sufficient time will be given also to take into consultation the trade unions affected, because they will be interested not only in the well-being of the company and the workforce but, if there is to be the possibility of actual employee involvement in a new company, they will be intensely interested in that possible development.
Lord Byers: My Lords, we welcome the fact that the Statement has been made, although we welcome it in principle, because I assume it is far too early for the noble Lord, Lord Bellwin, to be in a position to answer any questions such as we might wish to put to him on matters of detail while negotiations are going on and a consortium is being formed. If this turns out to be a co-operative, it will be an exciting and interesting venture. But if it does not, I take it that it would be a public company in which the public would have the right to invest and that there would be provision for the employees in the company to have a shareholding in it. Bearing in mind the position that the National Freight Corporation has established as a pace-setter and an upholder of high standards in the industry, I would also assume that there would be a strong case for it retaining some kind of stake in the new company or consortium, so that it could insist upon the standards that we wish to see in this country.
4.21 p.m.
Lord Bellwin: My Lords, the noble Lord, Lord Underhill, asked whether there was any indication of how the percentage will be broken down between employees and managers. At this stage I have no
776
indication of that at all. However, I understand that the approach was made by a group of senior managers, who had discussed the matter with over 100 other managers, and that the wish, indeed one might almost say the need, will be to involve as many employees as possible. In a way this also covers a point raised by the noble Lord, Lord Byers. It is presumed by those who have approached us that as many as possible of the employees will want to take as big a shareholding as they can. The question of whether it would be a co-operative will depend on the final outcome, and I cannot say more than that at this stage.
Here, I am covering a point raised by the noble Lord, Lord Byers, and perhaps your Lordships will permit me to cover the points raised by both noble Lords as I go along. I understand that it will not initially be a public company. Whether or not in a few years' time there would be an intention to float I do not know, but I think that it is the likeliest objective. But initially, it is to be bought by the managers and the employees; that is the intention. It would not be the intention to retain a public holding as such. With regard to the point about a depressed market, I would say that we are talking of a figure in the order of upwards of £50 million. It is not exactly that figure, but that is what is at present being talked about. But floatation or not, that is the ball park figure—if I may use the term—that we have had in mind for some time.
This is a really important point. After all, we are talking about the country's assets, and I wish to reassure all noble Lords that the taxpayers' interests will be watched very carefully, so that we receive a proper price. This matter is under negotiation at present, and will be negotiated in more detail, subject to it going forward.
The noble Lord, Lord Underhill, asked about the arrangements for the funding of pensions until the sale was completed. The existing arrangements will continue until that time. If the transaction goes forward—I must put it that way, because it is not certain that it will go forward—it will have no effect on Government support for rail-based pensions, but the Government have agreed to fund road-based pension deficiencies from the proceeds of the sale. Indeed, I am told that a major part of the proceeds of the sale will go to doing just that.
Finally, there is the point about consultation with trade unions. I understand that consultation is taking place as of today. I thank the noble Lord, Lord Byers, who welcomed at least in principle what is proposed, and I should like to repeat that this is a rather unusual and interesting development, which could be advantageous to all concerned.

British Telecommunications Bill
Consideration on Report resumed.
Clause 66 [General classes of acts not infringing the postal privilege]:
4.25 p.m.
Lord Lloyd of Kilgerran Lord Lloyd of Kilgerran moved Amendment No. 71:
Page 56, line 19, at end insert—
"(l) the sending, collection and conveyance of letters where the sender and addressee is outside the United Kingdom").
The noble Lord said: My Lords, I beg to move the amendment which stands in the name of my noble friend Lord Winstanley and my own name. The amendment is directed towards adding another class of acts to those listed in Clause 66 of the Bill which would not infringe the
"exclusive privilege to the Post Office with respect to the conveyance etc. of letters."
The class of acts with which our amendment is concerned is:
"the sending, collection and conveyance of letters where the sender and addressee is outside the United Kingdom".
There is now a growing practice whereby air couriers pick up letters abroad—perhaps in Germany, for example—to be delivered to another foreign country—for example, Nigeria. Often such letters cannot conveniently or urgently be carried from, as in the case of my illustration, Germany to Nigeria. A practice has grown up involving a central point for the air couriers in the United Kingdom where the letters are sorted. All that happens to the letters in this country is that they are sorted at the central point. There is no question of any delivery of the letters in this country, and therefore it is considered that it would be valuable to make clear in Clause 66 that such a class of acts does not infringe the exclusive privilege of the Post Office. I beg to move.
The Earl of Gowrie: My Lords, naturally I have listened with great care to the noble Lord, Lord Lloyd of Kilgerran, and I understand him to be saying that the amendment is necessary in order to give some security for the activities of the air courier companies which at present carry express letters both to and from the United Kingdom. However, I am not sure that the amendment is necessary and I certainly think that it would have undesirable consequences.
The House might be aware that when this clause was debated in Committee in another place an amendment was made, which now appears as Clause 66(1)(d). This subsection makes an exemption from the monopoly —the monopoly which is at the basis of the postal system—for the conveyance of a letter by a messenger sent for the purpose by the sender to an aircraft for onward conveyance by that particular aircraft out of the country. It therefore covers that part of the activities of air couriers which involve a messenger leaving the express letter with the aircraft for onward conveyance, rather than taking it all the way to the addressee.
When the amendment was debated in another place my honourable friend the Parliamentary Under-Secretary said that he was not prepared to agree to an amendment covering incoming foreign letters, since the conveyance and delivery of incoming foreign express letters by air couriers would in fact be covered by the general suspension for express mail—which is to be effected under Clause 68—and in any case, it would be very difficult to draft an exemption to cover incoming mail which would apply only to air couriers. The amendment poses an identical problem and would allow any person, not just air couriers legitimately engaged in that business, to convey and deliver both incoming and outgoing foreign letters. It would lead to a substantial loss of business for the Post Office, and would, I think, strike at the heart of the integrity
778
of the basic network, which we seek to preserve, even as we seek to liberalise that which can operate in connection with it, or parallel to it.
The amendment could allow a private operator to contract with, for example, the United States postal service for the conveyance and delivery of all United States mail sent to addresses in the United Kingdom. My advice is that that would be possible. I am glad to see that both noble Lords on the Liberal Benches shake their heads. Obviously they do not wish that to happen; nevertheless my advice is that that could happen under the amendment.
It is certainly not the Government's intention that the primary Post Office monopoly should be eroded in that way. Indeed, under the suspension we have granted carriers will be required to charge £1 per item in order to prevent any large-scale erosion of the monopoly. I could not therefore accept the amendment for this reason alone, but there is also another consideration which I would ask the House to bear in mind. Some foreign postal administrations have already expressed considerable concern about the concession which we have already made in respect of air couriers, though I, for one, welcomed that concession—the concession which appears in Clause 66(1)(d)—and this concern which they have expressed would be hugely augmented were we to accept this amendment.
I therefore believe that the very considerable liberalisation which we have accepted under the concession agreed to in Clause 66(1)(d) goes far to meeting the air couriers' case—a legitimate case, and one we wish to encourage, as I have acknowledged. I do not really believe I can go further, and I hope that the noble Lord will not press me to do so.
Lord Winstanley: My Lords, I listened with great interest to the noble Earl's reply, although I did not have the benefit of hearing my noble friend move the amendment; but it seemed to me that the noble Earl had a difficulty for every solution. I am bound to say that on one or two aspects of what he had to say to your Lordships it seemed to me he had been wrongly advised. This deals only with letters in respect of which both the sender and the addressee are outside the United Kingdom. I think that is utterly clear in the amendment, and it seemed to me that what it was proposed to do by the amendment was in line with what is generally, I think, urged within the EEC as a whole. I was rather disappointed in the noble Earl's reply. I assure him that I will study it with very great care and seek further advice on it, but I thought it only right to let him know that I personally, at least, was disappointed with the kind of reply he gave us.
Lord Lloyd of Kilgerran: My Lords, like the noble Earl, Lord Gowrie, I welcomed, of course, the amendment to Clause 66(1)(d), dealing with certain aspects of the actions of air couriers; but, as my noble friend said, it seems to me that the advice given to the noble Earl fails to appreciate that the object of my amendment is only to enable the sending, collection and conveyance of letters where both the sender and the addressee are outside the United Kingdom. As my noble friend Lord Winstanley has said, we will

779
study the noble Earl's reply and perhaps come back to it at another stage.
The Earl of Gowrie: My Lords, If I may have the leave of the House, I would say that I have received further advice and I acknowledge—and I apologise for this—that I overstated the case, in that the amendment before us deals only with mail passing in transit through the United Kingdom. I think, however, that my primary objection is not altered by that, though I acknowledge that the rhetorical emphasis, so to speak, that I gave is changed. But the integrity of the monopoly, which is my prime objection, added to the extent to which the Government have met the air couriers' case, which I also repeated and on which noble Lords and myself are in complete agreement, I think still remain valid. Perhaps the best thing would be for noble Lords to see what I have said on that in the light of my retraction of one part of my remarks, and then they can decide whether they wish to return to the matter.
Lord Lloyd of Kilgerran: My Lords, may I say, with the leave of the House, that I think the noble Earl the Minister has been very fair, and I am very grateful to him for the retraction he has made. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 72:
Page 56, line 26, leave out ("employed by one of the correspondents or by") and insert ("an employee of one of the correspondents or of").
The noble Earl said: My Lords, this amendment is consequential. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendments Nos. 73 to 75:
Page 56, line 30, leave out ("employed by the same person or by") and insert ("employees of the same person or of").
Page 57, leave out lines 20 and 21.
Page 57, line 38, at end insert—
(""ship" includes any boat, vessel or hovercraft.").
The noble Lord said: My Lords, I hope it might be for the convenience of the House if we take Amendments Nos. 73, 74 and 75, standing in the name of my noble friend, together. These are consequential upon Amendment No. 67, which was agreed late in the evening at the previous stage. I hope it will be to your Lordships' convenience if I move Nos. 73, 74 and 75 together. I beg to move.
On Question, amendments agreed to.
Clause 67 [Saving for things done under a licence]:
4.37 p.m.
Lord Ponsonby of Shulbrede Lord Ponsonby of Shulbrede moved Amendment No. 75A:
Page 57, line 40, leave out ("either unconditionally or subject to any conditions specified in the licence, and").
The noble Lord said: My Lords, during the Committee stage of this Bill I moved a series of what I described as modest amendments to this clause.
780
They would have had the effect of introducing some basic safeguards; to assure the public that persons to whom licences are granted are fit and proper persons to hold them, and to ensure that licensees do not operate anonymously.
Despite the modesty and, I believe, the sound common sense of these objectives, the noble Lord, Lord Trefgarne, who replied to the amendments for the Government on that occasion, opposed them. However—and I was heartened by this—he acknowledged in his speech that some of the things I had suggested that it might be appropriate for licensees to so (such as, for example, putting their name and address on the communications which they handled) perhaps ought to be imposed in certain cases as a condition of the licence that is to be issued. Where I take issue with what the noble Lord said in that debate is that he did not regard the imposition of such a condition as this as a matter for primary legislation.
I have read the noble Lord's arguments very carefully. They are founded on the general hypothesis that conditions which are appropriate for one licence may not be altogether appropriate for another licence. I do not know what sort of licences or conditions the noble Lord may have had in mind when he made this generalisation. What I am certain of is that the particular condition I am seeking to introduce is not one of limited relevance but of general validity. I should like to take a little of your Lordships' time to explain.
At the moment, with very limited exceptions, the Post Office has the monopoly of carrying all letters. If I, as an addressee, find that a letter which has been delivered to me has taken rather longer to reach me than it ought to have taken, I know precisely to whom to complain about that. I complain to my local postmaster. But what will happen when the Bill becomes law? In the first place, we know that the Secretary of State plans to grant licences so that document exchanges may function legally, and charities may deliver Christmas cards. But we also have hints, in what the noble Lord, Lord Trefgarne, said in Committee, that "one day" there may be "more comprehensive" licensed services. That phrase has an ominous ring to my ears, but I am not going to pursue that particular point with your Lordships this afternoon.
In the second place, we know, because the noble Lord, Lord Trefgarne, told the Committee, that Government policy will be to grant licences to "classes of persons", not to particular persons. I explained when moving amendments to this clause in Committee the effect of granting licences to classes of persons. Once the licence is granted the Secretary of State will have no idea of who, within the class, is operating under it. There will be no central record of such operators and their activities. They will be able to operate anonymously.
Where all this leads me, my Lords, is to suggest to your Lordships that, given the existing Precedent whereby if the Post Office lets down a customer, that customer is in no doubt as to whom he can complain; and, given the inherent risk that under this Bill unknown numbers of operators, licensed under a general licence to a class of persons, could carry mail anonymously, it is only sensible to introduce into this clause a provision which will enable users of letter-carrying services, when

781
licensed services are operating, to be able to identify from the items delivered those whose services have been used.
In layman's terms, the amendments standing in my name and in that of my noble friend, will require a licensee to ensure that each letter that he conveys or delivers bears an endorsement indicating either his own name and address or that of one of the other licensed people who handled the letter during the course of its transmission. Ideally, and probably most conveniently from the practical point of view in most circumstances, the endorsement should be made by the licensee who receives or collects the mail in the first place. However, I am not proposing to be as restrictive as that, and where a chain of different licensed carriers is involved I think it could be left to them to work out an arrangement that is operationally the best for them. I see no real need for, and should not want to impose a requirement that every licensee in the chain should endorse his identification on the item carried. Customers with a grievance could make inquiries of the licensed carrier whose name and address the letter bears. It would then be up to that carrier to pursue the matter raised by the customer with the other licensed operators whose services were used during the handling of the specific item.
The endorsement of the name and address of the licensee could be written, but I should expect it to be more convenient for it to be by a stamped impression or by means of an adhesive label; whichever method would be the most convenient for the licensee. This requirement will not impose any real burdens on licensees. The running of even a rudimentary postal service is going to involve a sortation stage at some point. That will be a suitable opportunity for stamping on the endorsements to be made. Or, I suppose, the sender could be encouraged to purchase and affix an adhesive label bearing the licensee's name and address. One could even envisage that many licensees, or at least the efficient ones, will be pleased to advertise their services in this way. Indeed, that could lead to their adhesive labels becoming collectors' items!
I hope it will not have escaped the attention of the noble Lord who is to reply that this series of amendments will impose absolutely no additional administrative work on the Secretary of State or his department. During Committee stage the noble Lord, Lord Trefgarne, criticised the amendments that I then moved because—and I use his words:
"their effects would be far from modest, in terms of the bureaucracy needed to administer them".
I do not necessarily agree with the noble Lord's criticism; but I certainly cannot be accused of that charge now. I hope, in fact, that the noble Lord will be able to tell your Lordships' House that he is prepared to accept these amendments. If, however, he is not disposed to do so, I should be grateful if, in explaining to the House why not, he would deal with the following points.
First, could the noble Lord say why he does not consider that this particular condition should apply to all items carried under licence? Does he think that there could be circumstances where it is in the public interest that some mail carried under licence should be carried anonymously? Your Lordships may recollect that during the speech of the noble Lord,
782
Lord Trefgarne, in Committee, he placed some emphasis on the theme of laissez-faire; that it can be left to "market forces" to sort out the good from the bad operator. I cannot see that that philosophy will stand up to any test if the licensed services can be run anonymously. Secondly, the noble Lord, Lord Trefgarne, made some play with the point that services to be provided by licensees will be contractual and that any customer who has a complaint against a private operator will be able to take up his complaints in the courts, should he so wish. The noble Lord referred to "any customer" but I suspect he meant the sender, because in the normal course it will have been the sender who has paid the licensee the necessary fee; and the contract will be between him and the contractor.
Now, my Lords, let us imagine the situation where the sender has learnt, presumably from the addressee, that a letter sent by means of a licensee has been inordinately delayed. Let us imagine further that the condition I am proposing as a general condition has not, in fact, been imposed in the licence under which this particular letter has been conveyed. Without straining credulity too far, let us assume that the licensee has not, of his own volition, put any endorsement on the letter to indicate that he has conveyed it. So, therefore, what we could easily have is an annoyed customer with a legitimate complaint, and the corpus delicti—the envelope containing the delayed item. But unfortunately, there will be no evidence on this envelope that it ever passed through the hands of the licensee. One wonders what the courts would make of that. What would be the legal remedy then?
My Lords, I could press this line of argument much further, but I shall give only one or two other examples of the sort of difficulties that could occur if licences are issued without the condition I am advocating. There could be the, hopefully rare, operator who does not deliver mail but just dumps it somewhere. Assuming that it is ever found, ought not that licensee to be readily traceable? And would not the inclusion of a general requirement that a licensee's identity should be endorsed on items carried be something of a deterrent against that sort of thing happening in the first place? Finally, let us look at the issue from the point of view of licensed operators. Would they be content, I wonder, if customers would allege that they had used a certain licensee's service and his service had failed to deliver the letter on time, if the letter bore no indication at all that it had been entrusted to a licensed service?
My Lords, I hope that the noble Lord will bear these examples in mind when he lets us have his views on the points I have just put to him. I suggest that, assuming he is still minded to oppose my amendments, he should have to convince your Lordships that the clause as drafted will adequately protect both potential customers and licensees. The advice I have is that it does not. I should have mentioned that, in moving this amendment, I speak as well to the subsequent six amendments. My Lords, I beg to move.
4.50 p.m.
Lord Lyell: My Lords, we have listened with great care to the arguments put forward by the noble Lord,

783
Lord Ponsonby. The last two sentences of his speech filled me with relief because I had visions that he had a separate point with four queries on each of the six amendments. His explanation will have persuaded the House that all the amendments lie together and are an attempt to qualify somewhat Clause 67. As the noble Lord pointed out, my noble friend Lord Trefgarne discussed with him this particular matter at an earlier stage. The gist of what my noble friend said was that we did not consider the provision outlined by the noble Lord, Lord Ponsonby, should be necessarily contained in primary legislation.
Clause 67(l) empowers the Secretary of State to attach whatever conditions he thinks fit to any licence that he may grant, and this permission will allow the maximum flexibility to vary any condition to suit each licence. It is an important point to note that a licence can be issued only after consultation with the Post Office who, I am sure, will put forward their views very clearly on the kind of conditions which they consider ought to be included when any licence is granted.
We do not at present envisage including such a condition as has been outlined by the noble Lord, Lord Ponsonby, in the licences which we shall be granting under Clause 67; that is, to allow charities to deliver Christmas cards and to allow document exchanges to transfer mail between one another in bulk. I do not believe that this requirement will substantially improve the position of the consumer.
The noble Lord, Lord Ponsonby, raised the very important point that the consumer will not know to whom to address his complaint if his letter arrives late. But of course the recipient will know who the sender is. The sender will certainly know by whom he sent the letter. Thus it would appear to us that the sender who will be paying a fee to the licensed carrier, who would certainly have the major cause for complaint if letters arrive late or did not arrive at all than the addressee or the recipient.
We appreciate the spirit of the amendments and what the noble Lord is seeking to do. We also appreciate very much that the noble Lord, Lord Ponsonby, is making an attempt to protect the position of the consumer; but we do not believe these amendments are necessary or appropriate. I repeat what my noble friend Lord Trefgarne said at an earlier stage: even when private operators have been licensed to operate letter services, the final decision as to who should be entrusted with mail lies with the customer and he will of course always be able to choose the Post Office if he is not prepared or is unable to trust the alternatives.
I would add a note of reassurance; once licences issued by the Secretary of State are operating, if a demonstrable case is made out that there is a need for a condition such as the one being proposed by the noble Lord, then the Secretary of State would certainly consider varying the licence to include such a condition as would be appropriate. As a point of detail, I note that Amendment No. 75C inserts into this clause a requirement that all licences shall be in writing, while Clause 67(5) only requires licences issued to classes of persons to be in writing. I can assure the House that although the clause does not specifically say that licences issued to individuals must be in writing, that of course is the intention and it certainly will be our
784
practice. I hope that my remarks have covered the points raised by the noble Lord. We believe that Clause 67, as drafted, will meet the needs of the consumer. We do not feel that further amendment is necessary in this case.
Lord Ponsonby of Shulbrede: My Lords, I am sorry that the noble Lord has not felt able to accept the spirit of these amendments. He is quite right that a person who receives a communication late can ask the sender to whom he entrusted it. But it is not always easy to get in touch with the sender who may not be on the telephone or who may have moved away. There are various problems one can think of in getting in touch with the sender in order to complain. I have some comfort from the noble Lord's reply when he indicated that these could be conditions which are imposed when the licences are granted. I confess that despite the arguments he used I fail to see how these minor suggestions would not be applicable in all cases. Nevertheless, it is not my intention to divide the House on this issue. I shall look once again very carefully at what the noble Lord has said to see whether there is any further progress which we might be able to make on this. It was my intention to move Amendment No. 75C and the noble Lord seemed to indicate that would be accepted if I did so. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 75B not moved.]
Lord Ponsonby of Shulbrede Lord Ponsonby of Shulbrede moved Amendment No. 75C:
Page 58, line 6, after ("shall") insert ("be in writing and shall").
The noble Lord said: This is essentially a drafting amendment. As the noble Lord, Lord Lyell, mentioned, Clause 67(5) already provides, inter alia, that licences granted to persons of a class must be in writing. It does not, however, provide that requirement in respect of a licence granted to a particular person. This amendment, by inserting those words, ensures that that is done. The noble Lord, Lord Lyell, I think indicated that that was the intention. I beg to move.
Lord Lyell: My Lords, I said that Amendment No. 75C was inserting one or two conditions into the clause and the noble Lord especially mentioned Clause 67(5). I hope I gave the assurance that it is our intention that licences issued to individuals must be in writing. That certainly would be the practice of my right honourable friend when issuing licences. I am advised that Amendment No. 75C would be otiose and that it is not necessary in the Bill in that we shall be insisting upon this.
Lord Ponsonby of Shulbrede: My Lords, I find that a very odd argument because in fact included in Clause 67(5) are the words "in writing". They are there in the Bill and therefore I should have thought that for the sake of consistency, if it is the intention that licences in either case should be issued in writing, there is really no reason why the Government should not accept this very minor amendment.
Lord Lyell: My Lords, by leave, I would repeat that my instructions are that it is not necessary. I

785
understand that Clause 67(5) was the relevant key clause and that it would refer back to Amendment No. 75C.
Lord Ponsonby of Shulbrede: My Lords, does the noble Lord not wish to add anything further to what he has said?
The Earl of Gowrie: Not really, my Lords.
Lord Ponsonby of Shulbrede: My Lords, I find the argument rather difficult to follow. I certainly would not press this amendment to a Division, but I shall smile if the Government themselves come back with their 72nd amendment on Third Reading, adding the words "in writing", I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 75D, 75E, 75F and 75G not moved.]
Clause 68 [Suspension of the postal privilege]:
5.2 p.m.
Lord Lyell Lord Lyell moved Amendment No. 76:
Page 58, line 37, at end insert ("; and in this subsection "letter" has the same meaning as in section 65").
The noble Lord said: My Lords, this amendment is consequential on Amendment No. 67 which we agreed at an earlier stage of the Bill. I beg to move.
On Question, amendment agreed to.
Lord Byers Lord Byers moved Amendment No. 77:
Page 61, line 38, leave out ("and the approval of the Treasury").
The noble Lord said: My Lords, I beg to move Amendment No. 77. It may have been thought that we went over this ground in some detail on Amendments Nos. 47 to 51, but I make no apology for moving this amendment, though it is similar, because in our view it goes to the heart of Government financial policy and it follows logically on that final debate which we had last Monday. I raised this whole question of capital investment for nationalised industries on the Loyal Address last November. I also raised the same principle on the Second Reading of this Bill, and the discussion which took place on Monday on Amendments Nos. 47 to 51 enabled the noble Earl, Lord Gowrie, to reiterate the Government's policy on the raising of money by the private sector, and particularly nationalised industries such as British Telecom.
What he said then was vitally important to the whole debate on the nationalised industries in that he invited your Lordships to suggest alternatives to the Governments present policy. He said at col. 510 of last Monday's Hansard (15th June, 1981):
"I can console the noble Lord, and indeed the House, by saying that the Government will unconditionally welcome any valid means of raising extra finance for telecommunications investment outside public sector borrowing requirement constraints."
The noble Earl stated the Government's case very fairly indeed when he said at col. 513 on the same day:
"…where a nationalised industry whose financing, whether
786
current or capital, carries an implicit Government guarantee, one is in the territory of external financial limits, whether one likes it or not."
Quite correct: I do not quarrel with that. What I do quarrel with is the idea that because an industry is nationalised there must be an implicit Government guarantee when it borrows money. I do not accept that at all. In my view, this is at the root of the wrongheaded thinking which is constraining much-needed investment and depriving the private sector of the orders it needs to give employment to its workers. Restrictions on capital investment in the public sector practically always result directly in reduced orders for the private sector. This, I think, is quite wrong thinking.
I contend that British Telecom should be allowed to try to find part of its capital investment requirement from the financial institutions in the private sector. In doing so, it must make it clear to the lenders that there is no Government guarantee, either implicit or explicit. That is not a difficult thing to do. One can put it in bold print at the top of the contract which is agreed and make it absolutely clear that there is no need to give an implicit or explicit guarantee because it is a nationalised industry. The acid test is whether the institutions will provide the cash and on what terms they will provide it, and the risks they will be taking will be reflected in the terms. But I must say that where you are dealing with an undertaking like British Telecom, which has a strong potential revenue, there should be very little difficulty in raising funds.
It could be that the financial institutions would not provide cash to British Telecom. I do not believe that, but at least there ought to be negotiations to see whether they will. I think the financial institutions will make no bones about the fact that if a contract is signed it is their risk and they accept it. It may well be that British Telecom will conclude that the terms required by the financial institutions are too stiff, in which case they will either re-negotiate or they will not accept them. But our contention is that British Telecom should not be prevented from trying to raise part of its capital funds in this way from the private sector. As I say, the test lies in the negotiations between British Telecom and the institutions and not with the Treasury, and it has nothing to do with the public sector borrowing requirement.
I am not going into the "overcrowding" theory which is put forward so often. That, I believe, has been totally exploded by a number of financial experts in the last month or so; but this process of negotiating with the financial institutions has the added advantage that British Telecom's capital investment will be subjected to the detailed scrutiny of expert financiers who are extremely unlikely to agree to the provision of cash for current purposes but who will be interested in financing an on-going capital investment on which there will be an adequate return to them. If this policy of negotiating investment finance free of guarantee can be substituted for the policy of external financial limits within the constraints of the PSBR, the result must be to provide orders and jobs in the private sector and to arrest the trend of increasing unemployment and factory closures. What is more, it will enable the private sector institutions to help some of our basic industries to get really up-to-date.
All that is required is to permit British Telecom to try its hand at raising money outside the PSBR and to shift the risk-taking from the Treasury to the financial institutions. If they will not accept the risk there is probably something wrong with the capital investment plan, but at least we claim that BT should be free to negotiate. That is the purpose of this amendment. I hope the Government will be prepared to accept this line of thinking, which I believe is basic to the recovery in the private sector. I beg to move.
The Earl of Gowrie: My Lords, I have to confess at the beginning that I had not anticipated going over this particular argument again at this stage because we dealt with it in considerable detail at Committee stage, and also it came up again a couple of days ago on the first day of the Report stage. But I altogether acquit the noble Lord, Lord Byers, of, as it were, bowling me a fast one, because I share with him the view—and I have expressed this from this Box, as well as elsewhere—that one of the central issues in current political and economic debate is the scale and funding of Government deficits. This is a major area of intractable difficulty for Governments of either political party and if we could get it right, and if we could get a breakthrough into new or more effective systems, it would be very much for the good of industry in the country. Therefore, I welcome the chance to go over one or two of the arguments again.
The other point about which I should like to reassure the noble Lord, Lord Byers, is that I do not fall into the trap of making too glib a distinction between public and private sectors. When talking about the public sector, I usually make a distinction between the public trading and the public service sectors. They are obviously considerably different. I well appreciate, as the whole Government do, the connection between private industries supplying large public corporations. Indeed, one of the reasons why the Government have, at a time of considerable pressure on their resources—as the previous Government experienced—released large sums of public money for, let us say, British Leyland, is the connection between that public corporation and many small, medium or, indeed, large-scale private sector organisations supplying the motor industry. So we do not, as it were, make a glib distinction between public and private.
But without wearying your Lordships with the same difficulties over again, perhaps I may engage in a brief fantasy. Let us imagine that a Liberal Government is formed, either in its own right or in alliance with some other group in the political system, and we all of us enjoy the good fortune to have the noble Lord, Lord Byers, as Chancellor. Let us also suppose that, as Chancellor, he suggests that the PSBR is as it were, cut in two, three or four, and that good and virtuous capital spending, where there is a likelihood of return, be put out to private tender without Government guarantee and, therefore, without showing up on the Government's books; not for the purposes of his Government's theology or doctrine, but for the very practical purpose of what the Government say when they go out into the national and international money markets, looking for monies to fund their deficits.
788
What the money markets or the capital institutions will say to the noble Lord in those circumstances is, "Fine! We accept that this portion of borrowing is for capital investment, but how are you going to guarantee to us that you will not guarantee the loss? For instance, this is a large public corporation. It is supplying a public service, it is supplying a public service in the form of a monopoly in the primary instrument use, and we do not imagine that you, or your electorate, will take it very well if, for some reason or other, the use of the network is withdrawn from one section or other of the community, because of an outstanding liability on British Telecom which they have not been able to meet on the monies that we have lent them. What are you going to do then"?
Knowing the experience and ingenuity of the noble Lord, Lord Byers, I do not doubt that he would, were he Chancellor, look with his officials, for ways of, as it were, ring fencing—to use that jargon—a particular bit of investment of British Telecom from the pay of British Telecom's employees, or from the network or services that British Telecom was, by statute, enjoined to provide. All I can tell him is that he would not find that ring fencing an easy job.
I should like to meet him, because I agree with him that some form of fencing ring, or creation of lines of demarcation between capital investment and current investment, is highly necessary and desirable. But, in the end, both these corporations and the Government that sponsors them have to look in the markets, whether they like it or not, for these monies. All the evidence we have is that the markets would not find it easy to lend money without an implicit guarantee, and that it would be difficult for the Government to divorce one sector of a large corporation's borrowing from another, or to prevent drift, as it were, with monies borrowed from one purpose floating into another purpose; let us say, increased pay in that sector.
But, having outlined the difficulties, we have not rested on our laurels about this. When my honourable friend the Minister of State for Information Technology granted an increase recently of £200 million—I am doing this from memory, but I think I am right in saying that—he created conditions, as, as it were, the corporation's banker, which ensured that that money should not drift into other requirements—for instance, pay—of the kind that I have mentioned. Therefore, I can say to the noble Lord, Lord Byers, that the Government themselves are very exercised by this as banker. They are trying to improve ring fencing or, if you like, demarcation within the corporations that they fund. This also occurs with British Steel, British Leyland and the rest. It may be that, as the Government struggle to find internal solutions, so some of these solutions will be exportable from the Government into the capital and financial markets.
I do not think it would be appropriate to undertake something of a revolution in the methods of funding nationalised industries and monopoly services, by means of an amendment at a late stage of a Bill in your Lordships' House. But I hope that the noble Lord will be persuaded by me that we are as exercised as he is about this issue. We welcome anybody to do work on it, we are trying to work on it ourselves and we must all hope that someone will soon come up with the answer.
Lord Byers: I should first like to say to the noble Earl that these ideas have been developing over the past few months, and I believe that it is a good idea that we should debate and discuss them. I believe that the noble Earl and I have a lot in common in thinking along these lines. But I think I am a little ahead of him, partly because I have had some experience of raising relatively large sums of money, many millions, in a team which did it for mining in different parts of the world. These were not nationalised industries, but the principle was absolutely clear. It was that we raised money from the financial institutions and we negotiated the terms in such a way that the risk was taken by those financial institutions at a price. I believe that this is the way that we are going to have to work with the nationalised industries.
I was associated with raising a large sum of money for exploiting the uranium deposits in Canada. There we had to give option warrants attached to the loan money, so that if it were a success the people who had lent the money could exercise those options and get into the equity capital of the uranium mines. Something along those lines might well work in the case of British Telecom. If a major contract were to be let for the improvement of the telecommunications industry, it might well be possible to put together a financial consortium which would insist on terms such as that. If it worked out properly, they could come into the equity of British Telecommunications or one of its subsidiaries. Something along those lines might work.
The reason why the Government have to provide cash for British Leyland and British Steel is because they cannot put forward a viable plan of capital investment which will give a good return at the moment. They might be able to do so later. If Michael Edwardes is very successful, it is possible that he could go to the market. I do not believe that it is impossible to have what has been called this ring fencing. I believe that this is a matter for negotiation round the table. When one asks for £200 million to be put up by a consortium from the private sector, they will look at it and will help the Government to put the ring fence round so that it does not trickle off into higher wages.
I believe that this is the way we ought to be proceeding. I agree with the noble Earl that of course we cannot do it by way of an amendment at this late stage in the Bill, and I shall withdraw the amendment. However, this is an avenue which we ought to look at very carefully both for British Telecommunications and for other nationalised industries. I do not believe that there will be any difficulty at all in raising cash for the Channel Tunnel, whether this is done by the Government, by the French railways or by anybody else. I believe that this is the way we ought to go. We have got to give to these nationalised industries the freedom to negotiate, where they can, as much of their own capital requirements as they can. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 75 [Power of the Secretary of State to make orders about pensions]:
5.21 p.m.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 77A:
Page 65, line 28, after ("supplemental") insert ("or incidental").
The noble Earl said: My Lords, this amendment is consequential on Amendment No. 54. I beg to move.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 77B:
Page 65, line 29, after ("of") insert ("any statutory provision and").
The noble Earl said: My Lords, again this amendment is consequential. I beg to move.
On Question, amendment agreed to.
Clause 77 [Interpretation and extent of Part II]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 78:
Page 66, leave out lines 32 to 38.
The noble Earl said: My Lords, this amendment is consequential on Amendment No. 67. I beg to move.
On Question, amendment agreed to.
Clause 79 [Extended application of the Telegraph Acts]:
[Amendment No. 79 not moved.]
Lord Lyell Lord Lyell moved Amendment No. 80:
Page 67, line 40, at end insert—
("(2) For section 26 of the said Act of 1863 there shall be substituted the following section—
"Determination of objections by arbitration.
26.—(1) As soon as may be after the receipt by British Telecommunications of such a notice of objection, party may require the objection to be referred to an arbitrator to be appointed, in default of agreement, by the President of the Chartered Institute of Arbitrators; and the reasonable expenses and remuneration of the arbitrator shall be paid by British Telecommunications.
(2) In the application of this section and sections 27 to 29 and 33 of this Act to Scotland, any reference to an arbitrator shall be construed as a reference to an arbiter.
(3) The Arbitration Act (Northern Ireland) 1937, except the provisions set out in Schedule 3 to that Act, shall apply in relation to any arbitration under this section or section 33 of this Act in Northern Ireland as if the arbitration were pursuant to an arbitration agreement and as if this Act were such an agreement, except in so far as that Act is inconsistent with this Act."
(3) In consequence of subsection (2)—

(a) in section 24 of the said Act of 1863 the words "and send" onwards shall be omitted;

(b) in sections 27 to 29 of that Act for the words "Board of Trade", wherever occurring, there shall be substituted the word "arbitrator";

(c) in section 33 of that Act for the words "the Board of Trade" there shall be substituted the words "an arbitrator to be appointed, in default of agreement, by the President of the Chartered Institute of Arbitrators; and the reasonable expenses and remuneration of the arbitrator shall be paid by British Telecommunications"; and

(d) section 34 of that Act shall be omitted.

(4) Subsection (1) shall extend to the Isle of Man; and subsections (2) and (3) shall come into operation on the appointed day.").
The noble Lord said: My Lords, if it is convenient to the House, I should like to speak also to Amendments

791
Nos. 83, 109 and 110. This group of amendments effects an overdue reform of the Telegraph Act 1863 which governs the carrying out of works done by British Telecom. One example is the placing of telegraph poles and wires. Sections 26 and 33 of the Telegraph Act 1863 provide for certain minor disputes about the siting of telegraph works to be determined by what is known as the "Board of Trade".
In the view of the Government, arbitration offers a simpler, speedier and much more efficient but equally fair alternative. The 1863 Act already provides in Section 34 for the Minister to appoint an arbitrator. The president of the Chartered Institute of Arbitrators is empowered to act to resolve any disagreement about the appointment of an arbitrator. The change in the Long Title is necessary to encompass these amendments which amend "rather than" extend the application of "the Telegraph Acts. I beg to move.
On Question, amendment agreed to.
Clause 81 [Tax provisions]:
Lord Lyell Lord Lyell moved Amendment No. 8IA:
Page 69, leave out lines 26 to 32.
The noble Lord said: My Lords, these amendments do two things. They remove the present subsection (4) of Clause 81 which is no longer needed since Clause 46 of the Finance Bill contains a similar provision applying to all statutory bodies and thus to British Telecom and the Post Office. The new subsection (8) inserted by Amendment No. 81B serves to clarify subsection (2) of Clause 81. It ensures that subsection (2) does not apply before British Telecom's first accounting year. Therefore it rules out any possibility of reopening any issues concerning the tax due from the Post Office for previous tax years—that is to say, before the creation of British Telecom. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 81B:
Page 70, line 16, at end insert—
("(8) Subsections (2) and (3) shall have effect in relation to accounting periods of the Corporation and of the Post Office ending on or after the appointed day.").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Clause 84 [General interpretation]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 82:
Page 72, line 9, at end insert—
(""pension" includes allowance and gratuity;").
The noble Earl said: My Lords, I spoke to this amendment with Amendment No. 59. I beg to move.
On Question, amendment agreed to.
Clause 88 [Repeals and savings]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 83:
Page 74, line 27, after ("extends") insert ("(other than an enactment contained in the Telegraph Act 1863)").
The noble Earl said: My Lords, I spoke to this amendment with Amendment No. 79. I beg to move.
On Question, amendment agreed to.
Schedule 2 [Provisions as to transfers of property, rights and liabilities]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 83A:
Page 78, line 26, after ("paragraph") insert ("and paragraph 1A").
The noble Earl said: My Lords, this is a technical amendment which should be considered with Amendments Nos. 87A, 95A, 95B and 95G. I beg to move.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendments Nos. 84 to 87:
Page 78, line 31, leave out ("held or subsisting partly for the purposes of ") and insert ("comprised partly in").
Page 78, line 33, leave out ("for the purposes of") and insert ("in").
Page 79, line 10, leave out ("rights or liabilities held or subsisting") and insert ("right or liability comprised").
Page 79, line 12, leave out ("their") and insert ("its").
The noble Earl said: My Lords, with the leave of the House I should like to move Amendments Nos. 84, 85, 86 and 87 en bloc. They are all technical amendments. I beg to move.
On Question, amendments agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 87A:
Page 79, line 28, at beginning insert ("1A").
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 88:
Page 80, line 8, leave out from ("determining") to second ("and") in line 10 and insert ("that matter").
The noble Lord said: My Lords, this is a technical amendment dealing with the transfer of property, rights and liabilities from the Post Office to British Telecom. I hope it is the wish of the House that I should move it formally.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 89:
Page 80, line 14, leave out ("to, and by virtue of this Act") and insert ("by this Act to, and by virtue thereof").
The noble Lord said: My Lords, this amendment is consequential. I beg to move.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendments Nos. 90 to 95:
Page 82, line 10, leave out ("(however worded and whether express and implied)") and insert ("(whether express or implied and, if express, however worded)").
Page 82, line 14, leave out from ("reference") to ("engaged") in line 15 and insert ("(whether express or implied and, if express, however worded) to a person employed by, or").
Page 82, line 16, after ("transferor") insert ("and holding a specified office or serving in a specified capacity").
Page 82, line 19, leave out from ("to") to ("and") in line 22 and insert ("a person employed by, or engaged in the business of, the transferee who corresponds as nearly as may be to the first-mentioned person;

793
(cc) any reference in general terms (however worded) to persons employed by, persons engaged in the business of, or agents of, the transfer or were, as respects anything to be done on or after the transfer date, a reference to persons employed by, persons engaged in the business of, or agents of, the transferee;").
Page 82, line 42, leave out ("and (c)") and insert ("(c) and (cc)").
Page 82, line 43, leave out (" employees ") and insert ("persons employed by, persons engaged in the business of, or agents").
The noble Earl said: My Lords, with the leave of the House, I should like to move Amendments Nos. 90 to 95 en bloc. They are all technical amendments. I beg to move.
On Question, amendments agreed to.
5.30 p.m.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 95A:
Page 83, line 23, leave out ("1(5)") and insert ("1 A(5)").
The noble Earl said: My Lords, we spoke to this amendment with Amendment No. 83A. I beg to move.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendments Nos. 95B and 95G:
Page 83, line 24, leave out ("1(7)") and insert ("1A(7)").
Page 83, line 28, leave out from (" paragraph ") to (" to ") in line 29 and insert ("1A(5) or a direction under paragraph 1A(7)").
The noble Earl said: My Lords, Amendments 95B and 95G are both technical. I beg to move them en bloc.
On Question, amendments agreed to.
Schedule 3 [Consequential amendments]:
Lord Lyell Lord Lyell moved Amendment No. 96:
Page 88, line 25, after ("205") insert ("205A").
The noble Lord said: My Lords, this is a technical amendment which extends to British Telecom the benefits of statutory undertaker status for the purposes of the new Section 205A which was inserted in the Town and Country Planning (Scotland) Act 1972 by the Local Government (Miscellaneous Provisions) (Scotland) Act which has just received Royal Assent. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 97:
Page 97, line 10, leave out ("As from the appointed day").
The noble Lord said: My Lords, this amendment is consequential upon Amendment No. 60, to which we spoke earlier. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 98:
Page 97, line 17, at end insert—
("(2A) As from the appointed day, section 37(1) of the 1969 Act (loans by the Secretary of State to the Post Office) shall have effect as if for the words "section 35(1) or (2) of this Act" there were substituted the words "section 72(1) or (2) of the British Telecommunications Act 1981".").
The noble Lord said: My Lords, this is a technical
794
amendment dealing with the borrowing powers of the new Post Office. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendments Nos. 99 to 102:
Page 97, line 33, leave out ("As from the appointed day").
Page 97, line 34, leave out from ("effect") to first ("in") in line 35 and insert—
("(a) as from the appointed day, as if").
Page 97, line 39, after ("(b)") insert ("as if").
Page 97, line 40, after ("words") insert (""section 7(1)(d) or (f)" and, as from the appointed day, as if for the words so substituted there were substituted the words").
The noble Lord said: My Lords, these amendments are all consequential upon Amendment No. 60, which we dealt with earlier. I beg to move them en bloc.
On Question, amendments agreed to.
Lord Lyell Lord Lyell moved Amendments Nos. 103 and 104:
Page 100, line 27, at end insert—
("(4A) Section 209(3) shall also have effect as if—

(a) after the word "section" where it first occurs there were inserted the words "199 of this Act authorising the stopping up or diversion of any footpath or bridleway is made by a planning authority or an order under section";

(b) in paragraph (a) after the words "which the" there were inserted the words "footpath or bridleway is stopped up or diverted or as the case may be the" and for the words "local authority" there were substituted the words "authority which made the order";

(c) in paragraph (b), for the words from "to the" to "months" there were substituted the words "not later than the end of the said period of three months to the authority which made the order"; and

(d) in each of paragraphs (d) and (e), for the words "local authority" there were substituted the words "authority which made the order.".")

line 29, at end insert ("and for the words from "under" to "local authority" there were substituted the words "to which subsection (3) of this section applies, the authority which made the order".").
The noble Lord said: My Lords, these are technical amendments reproducing in Scotland the effects of paragraph 53(5) which deals with England and Wales. I beg to move.
On Question, amendments agreed to.
Schedule 4 [General transitional provisions]:
The Earl of Gowrie The Earl of Gowrie moved Amendments Nos. 105 to 107:
Page 110, line 6, leave out ("statutory provision, agreement or other provision") and insert ("provision or agreement")
Page 110, line 15, leave out from ("by") to ("agents") in line 24 and insert ("persons engaged in the business of, or agents of, the Post Office were (or, if the context so requires, included) references to persons employed by, persons engaged in the business of, or")
Page 110, line 25, after ("references ( ") insert ("whether express or implied and, if express,").
The noble Earl said: My Lords, these are all technical amendments. I beg to move.
On Question, amendments agreed to.
Schedule 6 [Enactments repealed]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 107A:
Page 130, line 10, at beginning insert—

("31 & 32 Vict. c. 110

The Telegraph Act 1868.

Section 11.")

The noble Earl said: My Lords, this is a technical amendment. I beg to move.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 107B:
Page 130, line 13, column 3, at end insert ("Section 14.").
The noble Earl said: This amendment has already been spoken to, my Lords. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 108:
Page 130, line 48, column 3, leave out ("section 107") and insert—

("In section 86(1), in the definition of "local authority", the words "county borough".

Sections 106 and 107.").

The noble Lord said: My Lords, this also is a technical amendment. I beg to move.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 109:
Page 131, line 34, at beginning insert—

("26 & 27 Vict.c.112.

The Telegraph Act 1863.

In section 24, the words from "and send" onwards.

Section 34.").

The noble Earl said: My Lords, this amendment was spoken to with Amendment No. 79. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 109A:
Page 132, line 30, leave out ("paragraph") and insert ("paragraphs 78(1), 79, 86(1) and").
The noble Lord said: My Lords, this is a technical amendment dealing with public rights of way which are made under the New Towns Act and they have to be sent to the Post Office. I beg to move.
On Question, amendment agreed to.
In the Title:
Lord Lyell Lord Lyell moved Amendment No. 110:
Line 7, leave out ("extend the application of") and insert ("amend").
The noble Lord said: My Lords, this is the last amendment of the series, to which I spoke with Amendment No. 80 earlier. I beg to move.
On Question, amendment agreed to.

Iron and Steel Bill
5.36 p.m.
The Earl of Gowrie: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Comittee.—(The Earl of Gowrie.)
On Question, Motion agreed to.
House in Committee accordingly.
[THE LORD SEGAL in the Chair.]
Clause 1 [Modification of Corporation's functions]:
Lord Ponsonby of Shulbrede Lord Ponsonby of Shulbrede moved Amendment No. 1:
Page 1, line 8, leave out from ("section") to end of line 10.
The noble Lord said: With Amendment No. 1 I should like also to speak to Amendment No. 2. This Bill is about the reconstruction of British Steel's finances, with which we are basically in agreement, as I indicated at Second Reading. However, the Government have tacked on to this Bill a bit of political ideology which we believe is irrelevant to the future of British Steel. Section 2 of the Iron and Steel Act 1975 imposes a general duty on the Corporation and subsection (2) of this clause removes that general duty.
During his speech on Second Reading in another place the Secretary of State said that the Bill has two main purposes: first, by removing the British Steel Corporation's duties to supply iron and steel products it removes any limitations which may exist to the privatisation of BSC's activities. This provision, the removal of the duty to supply iron and steel products, will also enable BSC to withdraw from activities on which a profit cannot be made if that should prove to be necessary. Later on he said:
"The British Steel Corporation's prime aim as set out in the plan is to become internationally competitive. It aims to regain its pre-strike domestic market of 54 per cent.".
Those latter remarks of the Secretary of State seem to be in conflict with a removal of the duties of the corporation and of the purported rundown of its activities. It will indeed be difficult for the corporation to achieve its aim if some of its assets are to be disposed of.
By including the threat of privatisation in this Bill, the Government are adding yet again to the great instability felt in the steel industry by those who work in it and their families, because the industry, as your Lordships will know, has undergone a great deal of difficulty in recent times. One wonders whether it is really necessary to include this subsection in the Bill. One would have thought that it would be much more practical for the Government to do something about the problems which British Steel faces, such as, for example, about import penetration. That would have a far greater impact on the future of our steel industry than any change of ownership is likely to have.
Mr. MacGregor was appointed to revitalise the corporation. Everything he has done, although we do not necessarily agree with all of it, has been aimed at re-establishing the industrial virility of the corporation. These provisions will enable the Government piece by piece to dismantle the corporation and will leave an umbrella organisation with nothing under it. The provisions of Section 2 of the Iron and Steel Act 1975 are not inconsiderable in respect of the corporation's duties. Section 2(1)(a) refers to the corporation's duty,
"to promote the efficient and economical supply by the Corporation and the publicly-owned companies of iron and steel products".
The duty referred to in paragraph (b) is, "to secure that neither the Corporation nor a publicly-owned company shall show undue preference to, or exercise unfair discrimination against, any such person, or any class of such persons, in the supply and price of iron and steel products". The duty imposed in paragraph (c) is "to take such steps as appear to the

797
Corporation to be practicable and desirable for the promotion of the export of iron and steel products." Paragraph (d) says they are "to take such steps, in accordance with a general programme settled from time to time with the approval of the Secretary of State, as appear to the Corporation to be practicable and desirable for the promotion of research" and "the doing of work as is requisite to enable the results of research" to be turned to account. We believe that these obligations should remain in the 1975 Iron and Steel Act. I beg to move this amendment, which will have the effect of retaining those provisions.
Lord Rochester: I am afraid that we cannot support these amendments. We take an entirely contrary view to that of the noble Lord, Lord Ponsonby, in feeling that the extensive changes in the duties and powers of the corporation are calculated to make the corporation more competitive internationally, by enabling them to withdraw from activities on which a profit cannot be made, by removing the limits on the extent to which the corporation can place its assets in private hands or take part in joint ventures.
I suggest that BSC should never have been nationalised. It is true that it is not a monopoly, but it has received vast subsidies from the State and is a huge organisation. For my part I welcome the prospect of private firms now getting a look in. They have certainly had a rough time. I recall 18 months ago, when the ill-conceived steel strike was at its height, some private firms fighting very hard to survive. Some have since failed, to the great disadvantage of the nation. Now there seems to be a chance of more and fairer competition, and this can only be for the benefit of the community as a whole.
The Earl of Gowrie: I am glad that for the duration of this amendment there is a Conservative-Liberal pact, so to say. I congratulate the noble Lord on the ingenuity of his amendment. It cuts right across the primary policy of the Bill, which is—and again I apologise to your Lordships for using the word—about privatisation. One of us will come up with a better word one of these days—denationalisation—I do not know. The policy is also about removing the burden of the corporation from the taxpayer if there is no prospect of viability. There is, of course, no compulsion for the activities of the corporation to be made private in this way, and the Bill as it stands allows for a variety of possibilities, one of which is that the corporation might need to dispose of its iron and steel assets, whether or not to private sector interests. Therefore, the policy is to achieve the maximum flexibility.
The point could be reached that, in pursuing a programme of making private or in reducing activities to bring about a more viable steel industry, so many disposals had in fact been made that further disposals would be unreasonable and therefore ultra vires. I cannot speculate as to whether this precise point might be reached, or when, but it is clear that it could be notionally, and it is to guard against the possibility that the corporation would thus be frustrated in their efforts to go private in their activities, or to withdraw from activities where a profit is literally incapable of being made, that we have sought to remove the statutory
798
duty in the corporation to supply iron and steel products. The amendment would insist that that duty remains. It would be incompatible with the policy for the Corporation or indeed the Bill as it stands, and I hope the Committee will resist it.
Lord Ponsonby of Shulbrede: I did not expect for one minute that the amendment would be successful, because, as the noble Earl, Lord Gowrie, says, it strikes at the very heart of the Bill, and we, as noble Lords will know, do not agree with the ideology of privatisation. I was surprised that the noble Lord, Lord Rochester, said that he would never have nationalised the steel industry in the first place. I always felt that, despite any ideological arguments there might have been about the nationalisation of the steel industry in the 1960s, there was very good industrial logic for it to take place at that time, because the areas of operation of individual steel companies were far too small to make industrial sense. I do not think any noble Lord has maintained that if you had kept the steel industry in private hands it would have done any better than British Steel has done. That argument is not an argument which I have heard used. I do not intend to withdraw this amendment but on the other hand I do not intend to press it to a Division.
On Question, amendment negatived.
[Amendment No. 2 not moved.]
The Deputy Chairman of Committees (Lord Segal): The next amendment is Amendment No. 3. I must point out to the Committee that if Amendment No. 3 is agreed to, I cannot call Amendment No. 4.
5.50 p.m.
Lord Ponsonby of Shulbrede Lord Ponsonby of Shulbrede moved Amendment No. 3:
Page 1, line 15, leave out subsection (3).
The noble Lord said: I beg to move Amendment No. 3 and I shall speak at the same time to Amendment No. 4. Amendment No. 3 deletes subsection (3) which specifically relates to the powers for carrying out specific functions rather than there actually being carried out. This amendment to the 1975 Act will enable joint ventures to be carried out. It will obviously be difficult to determine in advance what responsibility and control each party contributing to a joint venture will bear. But inevitably, of course, such joint ventures in which there is heavy involvement by BSC are matters of major public interest and there will be a major public interest involved and one would want to know what are likely to be the terms of apportionment of control between the public and private sectors for such joint ventures.
We do not see that subsection (3), which the amendment proposes to delete, is in any way necessary for the operations which the Government carry out at present. Surely there is no question of the corporation abandoning the supply of iron and steel products. It seems to us that this is threatening the total liquidation of the corporation. The 1975 Act already gives the corporation adequate powers to do certain things with the approval of the Secretary of State. This subsection is a part of the dismantling process of the corporation and, in short, it gives the Secretary of State power

799
to force the corporation to wind itself up—and that we are opposed to. I beg to move.
The Earl of Gowrie: As the noble Lord, Lord Ponsonby, has made very clear, his amendments would remove the proposed modifications to the corporation's powers contained in the Bill. Our view is that the modifications of the powers will be important in meeting the objectives of securing the transfer of the British Steel Corporation's owned businesses to the private sector. These new powers which must, of course, be considered in conjunction with the matters which we discussed on the previous amendment, with the removal of the duty to supply iron and steel products, will allow the corporation to form companies, to carry on iron and steel and non-iron and steel activities or to hold shares in companies carrying on those activities in conjunction with Clause 1(2). They will permit the corporation lawfully to carry on no activities themselves, but merely to promote other companies in which they hold shares to carry on such activities and also, as the noble Lord reminded us, will permit the corporation to reduce their own undertakings to minimal proportions.
We have considered it appropriate to retain the requirement on the corporation to seek the Secretary of State's consent or his general authority before they can form or take part in forming these companies. That obligation is contained in Section 3(3) of the 1975 Act and it is therefore proper to retain it. Without retaining it, it would be possible for the corporation to develop in ways which might not be in the best interests of the public as judged by the Secretary of State responsible to Parliament. But nothing in the Bill affects the rights of the corporation, without Ministerial consent, to hold shares in companies which vested in the corporation in 1967, and to acquire shares in a company consequent upon a rights issue. In all other cases the Secretary of State's consent or general authority is required.
Again—though less openly a wrecking amendment than the previous amendment—the noble Lord's amendment is incompatible with the policy behind and contained in the Bill and I hope, therefore, that the Committee will resist it.
Lord Ponsonby of Shulbrede: I should like to thank the noble Earl for his response to this particular amendment. Once again I was not in any way surprised by anything that he said. Our view is that the present section of the 1975 Act should stand as it is, unamended. We feel that these specific amendments to the Act have been tabled for ideological reasons and we object to them. I do not intend to withdraw the amendment.
On Question, amendment negatived.
[Amendment No. 4 not moved.]
Clause 1 agreed to.
Clause 2 [Organisation of the Corporation's activities]:
The Earl of Gowrie The Earl of Gowrie moved Amendments Nos. 5 to 11:
Page 3, line 15, leave out from ("may") to end of line 18 and insert (", after consultation with the Corporation, by order, give to the Corporation directions—")
Page 3, line 19, leave out ("a direction to the Corporation")
Page 3, line 23, leave out ("a direction to the Corporation")
Page 3, line 28, leave out from ("company") to end of line 34 and insert ("and the Corporation shall give effect to any directions so given")
Page 3, line 38, leave out subsection (6).
Page 3, line 42, after ("dispose") insert ("or secure the disposal")
Page 4, leave out lines 23 to 27.
The noble Earl said: With the leave of the Committee, I beg to move Amendments Nos. 5 to 11 en bloc. These are all Government amendments which remove the power of the Secretary of State to give directions direct to a publicly-owned company to dispose of its property rights, liabilities and obligations. The passage in the Bill was designed to facilitate the imposition of restrictions in Section 4A(7)(b) which Clause 2(1) of the Bill inserts into the Iron and Steel Act 1975. Those restrictions enable the Secretary of State to maintain control of the nature and assets of the company which is formed as the result of his direction. But the basis of the relationship between Ministers and the chairman and board of BSC is that control of the corporation's subsidiaries should be in the hands of the corporation themselves. It would be inconsistent with this view for the Secretary of State to take powers to give a direction to the subsidiaries which was not, in fact, channelled through the corporation and that is an over-riding consideration. The amendments also have the advantage that they considerably shorten the Clause and I, therefore, commend them to the Committee. I beg to move.
On Question, amendments agreed to.
Lord Rochester Lord Rochester moved Amendment No. 12:
Page 5, line 4, leave out paragraph (a).
The noble Lord said: I beg to move Amendment No. 12. I should like to remind the Committee that one of the purposes of Clause 2 of the Bill is to remove the power of the Secretary of State to give directions as regards the way in which the corporation should organise itself. The clause removes, among other things, any obligation on the corporation to carry out a formal review of the way in which its activities are organised or to report the conclusions of that review to the Secretary of State. In consequence Section 5(2) of the 1975 Act is also removed—that is the subsection which obliges the corporation, in a review of its organisation, to consult with employee representatives.
I regret that this requirement has been removed and would suggest to the Committee that when an industry, such as the steel industry, is being reorganised and reduced in size to the extent that this one is, the maximum amount of understanding on the part of employees and of consultation on the part of the employer is needed. Sir Ray Pennock, President of the Confederation of British Industry, is constantly saying that employers should do more by way of seeking to enable their employees to participate more fully in influencing decisions that are taken that affect them. Surely the run-down of the steel industry—necessary as it is, in my view—affects the employees of the corporation very severely.
The corporation is not, of course, a private firm, but I suggest to the noble Earl that there is a certain additional onus on the Government to give a lead in the case of an organisation like this, a nationalised

801
undertaking. It is not as though we are starting with a green field and suggesting to the Government that some clause should be inserted into the Bill making it a requirement that there should be consultation. It is the case that a requirement for consultation is being omitted from the Bill.
On Second Reading the noble Earl indicated that he had some sympathy—if I have not misread his remarks, for I was not able to be present myself—with this view. At any rate he said, if I may remind him, that he was keen on this issue of participation. But he also said that he felt that it would be inconsistent for the Government, when they are urging participation on firms of a voluntary kind, to leave a statutory requirement on the books in this instance. However, he did say that he would look at the point again, which was an indication of his sincere interest in the matter, and he also suggested that it was a point to which we might return at later stages in the Bill.
The easiest way of enabling the noble Earl to give us the benefit of the reconsideration that I am sure he has given to this matter seemed to us to be simply to table this amendment to leave out altogether Clause 2(3)(a). This would have the effect of reintroducing Section 5, subsections (I) and (2) of the Iron and Steel Act 1975; in other words, bringing back a situation where the corporation would have to review and, after consultation, report on organisation. I am not suggesting that this is necessarily the best means of achieving the end that we desire, but it is the principle with which we are concerned. As I say, I wanted to give the noble Earl an opportunity to state his current view on the matter, and I very much hope that he will find it possible to say something at least which will help us in this matter.
The Earl of Gowrie: The noble Lord, Lord Rochester, could go a little further and put even more forcefully the fact that I have sympathy with the position that he has taken. The Government are passionately keen on consultation and participation within industry between managers and employees. We believe that that is the only real way forward to improved industrial relations in this country. We also recognise that where the run-down or de-manning of a major industry is involved, the Government have their own duty to consult, to participate and to hold meetings. I am glad to be able to tell the Committee that my honourable friend the Minister of State for Industry met the TUC Steel Committee only last week for a general discussion of a very wide range of matters affecting the corporation's future, and that the meeting was friendly and constructive, and opened channels of communication for further such meetings.
We think that that kind of activity is essential and we believe that it is essential that there should be effective consultation between the corporation's management and its work force. I have an eloquent three or four-page speech about the necessities of participation, but I have made it so often here and outside that I shall not repeat it this evening. The only difference between us is two-fold. We are sceptical about the role of statute in these issues and generally, and we have a specific objection in this case in that consultation would be retained by statute in respect of a public corporation, and one particular public
802
corporation, which did not exist for other public corporations and, indeed, for private corporations generally.
Therefore, if we were to accept the amendment which the noble Lord has put forward, even though we may agree very much with him and share his interests and concerns in this matter and try to pursue them ourselves, we believe that we would be putting the statute book into an anomalous muddle. We do not think that that would help either the statute book or the corporation. That, rather than the Second Reading spirit of the matter, so to speak, which the noble Lord has just outlined and which was outlined very forcefully again by his noble friend Lady Scear on Second Reading, and rather than any sentiments, is behind our request that the Committee resist the amendment.
Lord Rochester: I take this opportunity, incidentally, to apologise for the absence of my noble friend Lady Seear, who has had to go to Brussels. I am disappointed because in this matter on these Benches we have been consistent; that is, I recall in the Industry Bill before the last one that I tabled an amendment to a somewhat similar effect in relation to the National Enterprise Board and, on that occasion, was told that if something of this kind was inserted into that Bill, the National Enterprise Board would be an exception. Now I am told that it is the British Steel Corporation which will be the exception to the general rule. Of course, I realise that it is a statutory undertaking for which I am asking.
What I fear—and the noble Earl is in the best position to know this for himself—is that we shall be pressed by directives emanating from Europe to introduce into our statute laws relating to consultation which are considerably more demanding on managers, and likely to be much less popular than the very limited law that I have proposed. I am thinking of something like the Fifth Directive and another directive, of which the noble Earl will be aware, relating to trans-national and other organisations of a complex nature. I am disappointed but I am not going to press the matter to a Division at this stage in the proceedings. However, I think I should indicate that I would like to consult further with my noble friends and reserve my position for a later stage in the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 13:
Page 5, line 7, leave Out paragraph (b).
The noble Earl said: When speaking earlier to Amendments Nos. 5 to 11, I should have pointed out that I was also speaking to Amendment No. 13. In fact I have already spoken to Amendment No. 13 and I now beg to move the amendment.
On Question, amendment agreed to.
On Question, Whether Clause 2, as amended, shall stand part of the Bill?
6.13 p.m.
Lord Ponsonby of Shulbrede: My Lords, I should like to comment briefly on why we believe that Clause 2

803
should not stand part of the Bill. I have no desire to weary your Lordships with old arguments, but there are two reasons in particular why we hold the opinion that Clause 2 should not be included. The first of these is that we find it very odd that this clause should be introduced at Report stage in the other place—after the Bill has been debated on Second Reading and after it has been considered at length in Committee. It is perhaps not unusual for new clauses to be introduced at Report stage, but it is rather unusual that this particular clause should have been introduced, because its length is almost as great as the total length of all the other clauses in the Bill. Clause 2 is 95 lines long, compared with 134 lines for all the other clauses in the Bill. One has the situation in which almost a whole new Act was inserted at Report stage in the other place and was not dealt with in Committee there.
The second reason why we feel this clause should not be included is that it allows the Secretary of State to intervene in the management of the corporation in a very detailed way. We find this very odd. We find it very odd that Mr. MacGregor and the corporation are willing to acept this. It was our understanding that the Government's philosophy was to cut down the amount of Government interference in industry and to let industry get on with making the decisions which it thinks are the right ones in order to flourish. I am sure that is the intention of both Mr. MacGregor and the corporation. This clause means that the Government are taking a major step backwards in respect of involvement in the day-to-day running of the steel industry. We think that is wrong. As I said, we do not wish to go over old ground because, when discussing many Bills in recent months, the question of Government involvement and privatisation have been major themes in those debates. I beg to move.
The Earl of Gowrie: Once more I congratulate the noble Lord, Lord Ponsonby of Shulbrede, on his ingenuity. In effect he has said that there is a lot of talk about "going private" and all the rest of it but that in fact the new clause, shoved in at a late stage, involves more interference by the Government rather than less. The short answer is that it is not the Government's fault or the Government's choice that British Steel has grown into so large a figure in the industrial landscape as it has. We introduced the powers complained of by the noble Lord opposite simply to ensure that competition between British Steel and private sector companies could be seen to be fair, because this was a matter of great concern to private sector companies. We received representations from private sector companies—and that is part of the reason for taking a Bill through Parliament; it gives time for people to make their representations. That is why we inserted Clause 2.
These powers are necessary because a serious situation developed in areas where the British Steel Corporation was competing with the private sector. It was not a serious situation that went unrecognised by the British Steel Corporation or by Mr. MacGregor —whom, I may say, we highly esteem. The corporation itself recognised the gravity of the situation and it has given certain assurances and has taken positive action,
804
by transferring two of its businesses to two separate companies.
The powers I am discussing are, it is hoped, to be reserve powers only, but in our view they are necessary even if it transpires that their sole function is to serve as guidelines for the way in which we believe the corporation should manage those of its businesses which are in direct competition with the private sector. The powers are a mark of our determination to improve matters in this difficult area of overlap. It seems to us to be most important that the private sector should be able to see that the corporation is competing on equal terms. I do not believe that the noble Lord, Lord Ponsonby of Shulbrede, would disagree with me when I say that the representations made by the private sector were reasonable and that the Government behaved very reasonably in introducing Clause 2, albeit at a slightly later stage in the progress of the Bill. I hope therefore that the noble Lord will not press for these powers to be withdrawn.
Lord Ponsonby of Shulbrede: I thank the noble Earl for his reply, which again does not surprise me. It is not my intention to press this particular matter to a Division.
Clause 2, as amended, agreed to.
Clauses 3 to 5 agreed to.
6.20 p.m.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 14:
After Clause 5, insert the following new clause:
("Corporation's members' terms of appointment, etc.: no need for statements to be laid before Parliament.
. The following provisions of the 1975 Act shall cease to have eflect:—

(a) in section 1, subsection (6) (after appointing member of Corporation, Secretary of State to lay before Parliament a statement of term of appointment); and

(b) In Schedule 1, paragraph 8 (Secretary of State to lay before Parliament a statement of certain determinations about remuneration etc. of Corporation's members).").

The noble Earl said: This is an amendment to insert a new clause after Clause 5. These amendments take the opportunity afforded by the Bill to remove from the Secretary of State the duty to lay before Parliament certain statements about members of the corporation. Section 1(6) of the Iron and Steel Act 1975 requires that as soon as possible after appointing a person to be a member of the corporation the Secretary of State shall lay before each House of Parliament a statement of the period for which he has been appointed. Schedule 1, paragraph 8, of that Act provides that the Secretary of State shall also lay before each House of Parliament a statement of the remuneration and allowances as well as of the pensions of board members, whenever there is a change in the amount being paid.
It is considered that these provisions are no longer necessary. Information on these matters concerning board members will still be available to the House since the corporation publish similar details in their annual report and in the accounts which are laid before Parliament. If the corporation should take it on itself to discontinue this practice it would of course be open to the Secretary of State under Section 24(1) of the 1975 Act to direct the corporation to resume it. Amendment No. 14 as well as the amendments in my name to

805
Schedule 2 and in the Title—I should have said that these are all amendments that I wish to speak to together—follow the precedent set in respect of the remuneration of the pensions of board members of the other nationalised industries which are sponsored by the Department of Industry. I beg to move.
On Question, amendment agreed to.
Clause 6 agreed to.
Schedule 1 [Related and consequential amendments]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 15:
Page 9, line 1, leave out ("and section 19(1)(a)").
The noble Earl said: The purpose of the amendment is to remove the change in what constitutes the British Steel Corporation's statutory borrowing limit which Schedule 1, paragraph 6(2), of the Bill brings about. The Bill, by paragraphs 6(1) and (2) of Schedule 1, provides for a number of alterations to the 1975 Act to reflect the likelihood that a number of the corporation's activities may be carried on through subsidiaries in which there is a minority private sector stake.
To take account of this the Bill provides for the words "publicly-owned company" defined as a wholly-owned subsidiary of the corporation to be changed to the word "subsidiary" in certain places in the Iron and Steel Act 1975. One of the places where this change has been made was in Section 19 of the 1975 Act which sets the statutory borrowing limit. The position as it now stands under the Bill therefore is that the limit would embrace all BSC subsidiaries including those in which its stake is less than 100 per cent., and also it would cover overseas as well as United Kingdom companies.
The effect of this would clearly be to act as a disincentive to any private sector company which sought to take a minority stake in a BSC subsidiary, since the subsidiary's borrowing powers would be curtailed if the borrowing limit which relates to the corporation had been reached. This is again some of the territory we went over as a matter of general principle in the debate on the British Telecom Report stage recently. The desire of the Government is that we should not materially inhibit the corporation's prospects of recruiting minority partners for joint ventures. That would be contrary to our general policy, and the amendment I am proposing therefore restores the situation to where it stood under the 1975 Act, in that it does not place statutory controls on the extent of borrowing by non-wholly-owned subsidiaries of the British Steel Corporation. I beg to move.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 16:
Page 9, line 4, leave out from ("theirs") to the end of line 8.
The noble Earl said: This amendment is consequential upon the previous amendment. I beg to move.
On Question, amendment agreed to.
Schedule 1, as amended, agreed to.
Schedule 2 [Enactments repealed]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 17:
Page 10, line 4, column 3, at beginning insert—
("In section 1, subsection (6).").
The noble Earl said: I spoke to this amendment on Amendment No. 14. I beg to move.
On Question, amendment agreed to.
[Amendment No. 18 not moved.]
The Earl of Gowrie The Earl of Gowrie moved Amendments Nos. 19 and 20:
Page 10, line 19, column 3, at end insert—
("In Schedule 1, paragraph 8.").
Page 10, line 23, column 3, leave out ("in section 3, paragraph (b)").
The noble Earl said: I spoke to Amendments Nos. 19 and 20 when dealing with Amendment No. 14. I beg to move Amendments Nos. 19 and 20 inclusive.
On Question, amendments agreed to.
Schedule 2, as amended, agreed to.
In the Title:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 21:
Line 4, after ("companies") insert ("to remove from the Secretary of State the duty to lay before Parliament certain statements about members of the Corporation").
The noble Earl said: Again, this amendment is consequential on Amendment No. 14, and I spoke to it then. I beg to move.
On Question, amendment agreed to.
The Title, as amended, agreed to.
House resumed: House reported with the amendments.

Transport Act 1962 (Amendment) Bill
6.29 p.m.
Lord Mowbray and Stourton: My Lords, I beg to move that this Bill be now read a second time. This is a small and simple Bill and I do not propose to make a heavy meal of it, especially at this time in your Lordships' House. This Bill was very ably introduced in another place by my honourable friend Mr. Speller, the Member for Devon North. It is simply to give British Rail the power to open, or reopen, lines at present closed to passenger traffic without the risk of the experiment, if the experiment is not viable, of the present lengthy and expensive processes of closing them again.
There are some lines now open for freight which British Rail might decide could usefully handle passengers as well. Since 1970, when I first began to answer for the Department of Transport in this House, I have noticed that although we have all paid lip service to the British Railway Board being commercially enterprising and flexible, in many ways their hands have always been tied by legal restrictions. In this time of recession, it is of vital importance that the framework for future advance and progress should be as good as can be. Here, in a small way, which will chiefly affect rural communities, we have the opportunity to give British Rail, working with local councils, whose funding help will of course be necessary, a chance to do something about this.
Public passenger transport shows an everlasting pattern of change. The motor-car has certainly largely

807
taken over in my lifetime. But for many groups of people or areas of country there is still a great deal of hardship for many, and any links which may help to make our lives easier in moving about are to be encouraged. Rail, bus, air and car—all are on that chess board. It is for us to enable the pieces to move in the way most suitable for our needs. This very small Bill will help the British Railway Board to experiment more where they think fit on those few closed passenger lines, and I therefore beg to move.
Moved, That the Bill now be read 2a".—(Lord Mowbray and Stourton.)
6.32 p.m.
Lord Mountevans: My Lords, it is almost a year to the day since I took my seat in your Lordships' House and since that day I have been ever aware, and increasingly conscious as I have listened to debates, of the awe which your Lordships' House inspires in its new Members. One cannot but notice the courtesy and forbearing with which it conducts its business, and as I rise for the first time tonight to speak, it is to that forbearance that I appeal.
I support the Bill strongy as I believe that by removing a statutory restraint on the possible re-opening of railways on an experimental basis, or of railway stations from which services have been withdrawn, it will open up a number of opportunities in both rural and metropolitan Britain, opportunities which may be of benefit to those travelling to and from work, to those travelling on duty or to study, for health reasons or for any number of reasons arising out of our increasingly urbanised society.
The restraint, as so simply and well-explained by the noble Lord, Lord Mowbray and Stourton, is that of the statutory procedures for subsequently withdrawing an experimental service. I feel that one should consider the effects of the statutory procedures a little further. Only some 10 miles from here, British Rail is seeking to withdraw completely services over the four-mile section of line between Elmers End and Sanderstead, a modest route with only three intermediate stations where services in March this year boarded on average each day some 220 passengers, with one station generating only 16 passengers on average per day, perhaps reflecting the fact that within the area served by the local district council concerned, there are no less than 24 British Rail stations, so the passenger has a wide choice.
British Rail published notice of its intention to close the route earlier this year, having failed to obtain consent to close it in the Beeching era. The consultative committee has held its inquiries and I understand has made its recommendations which are now in the hands of the Minister. He will eventually grant or withhold the consent for which British Rail has asked. As one does not know when that will be, one cannot work out how long the procedure has taken, but there is evidence that each month it takes before the consent is granted, as hopefully it will be, it costs British Rail over £5,000 simply to operate a very limited train service.
That may not be an enormous sum in the context of British Rail, or even one that would be saved by the
808
enactment of the Bill we are discussing tonight—I fully appreciate that the Bill is not applicable in this context—but this sum (and there are other sums in other instances; in Scotland there is a line where, again, consent has been sought which I believe is costing British Rail some £750,000 per annum to keep open) has got to be found out of fare revenue or from other Government or local government sources. It is also a sum which, grossed up, is one which I think could prove fatal to a proposal to re-open a rural railway elsewhere on an experimental basis, and its existence, or sums like it, constitute a good reason for supporting the Bill.
As a loyal supporter of railways, and even a very occasional writer on them, I feel that British Rail and the British public are well served by the policy of the PSO grant. I note from British Rail's last annual report that central Government support in this form increased by 19 per cent. in 1980. I also note from the same source that support by passenger transport executives amounted to almost £58 million, an increase of 24 per cent. This is a sound example of central and local government working together and being involved in the creation of a situation which enables passenger transport executives, such as the West Yorkshire one, to have examined 36 locations or sites either for new stations or for re-opened ones on existing routes. Of those sites, I believe that 17 have been shortlisted for further study and that the executive hopes that three will have actually been re-opened as stations in 1982, with perhaps nine being constructed and re-opened by 1984. It is estimated that if the programme is completed, British Rail will gain about £91,000 of new fare revenue by 1982–83, rising to £567,000 by 1985–86. If some of the sites I mentioned are only marginal, I would hope that the case for them, in instances of re-opening, perhaps even only experimentally, will be strengthened by the Bill.
This is a sound Bill. I believe that, if enacted, it will provide both British Rail and local authorities with an important and interesting opportunity. If we give the Bill a green light tonight, I shall follow with interest the use made of that opportunity.
6.38 p.m.
Lord Lucas of Chilworth: My Lords, it is a pleasure to follow a maiden speaker because it gives one the opportunity of expressing the gratitude of the House to him, and I do that in no small measure tonight. It is perhaps even more welcome for me to hear somebody speaking on transport matters; I sometimes think we are rather lean in this House on transport matters, and the noble Lord, Lord Mountevans, has shown us that he has a keen grasp of the subject. Indeed, his quickness with figures was perhaps a little unnerving for me. No doubt his past in promotions management at the British Tourist Authority has provided him with that background; if he went to British Rail he might enhance their reputation as well. He reminded us that he has been with us for only a year, but now he has made his maiden speech I hope we shall have the opportunity of hearing him again.
The noble Lord, Lord Mountevans, really dealt with virtually everything I wanted to say. As he said, this small measure will make some contribution to

809
British Rail's trading effort. If your Lordships accept the Bill, British Rail will be able to play a further part in the Government's general plan to make available more free choice to passengers in various parts of the country.
As restrictions on the use of energy, involving perhaps motor-cars, and other restrictions affecting the rural areas force people to look at alternative methods of transport, British Rail might be able to capture part of the market; I hope that it does. Such a situation would give it an opportunity to demonstrate some of its expertise, and we should look forward to that. I cannot think that any part of this measure, so briefly but so ably described to us by my noble friend Lord Mowbray and Stourton, will attract objection from any part of the House, and so I support the Second Reading.
6.41 p.m.
Lord de Clifford: My Lords, I apologise for intervening in the debate without having put my name on the list of speakers. I wish to join my noble friend in congratulating the noble Lord, Lord Mountevans, on what I thought was an admirable maiden speech, and I look forward to hearing what he has to say on transport matters in the future. I, too, should like to welcome the Bill. I believe that through district councils the Bill could lead to much closer public involvement in the running of the railways. That would be particularly valuable in rural areas. The links which used to exist between the population and the railways appear to have vanished completely, and any measure that will bring closer public involvement in the running of railways would be a very good thing. I trust that your Lordships will give the Bill fair weather.
6.42 p.m.
Lord Underhill: My Lords, I should like to join other noble Lords in congratulating the noble Lord, Lord Mountevans, on his maiden speech, which showed that he is well informed on transport matters. I am sure that he is well informed on other subjects, too, and I look forward to hearing him speak in future debates on transport and other matters. I also wish to congratulate both the noble Lord, Lord Mowbray and Stourton, who has brought forward the Bill in your Lordships' House, and the honourable Member for Devon, North, who introduced it in the other place. The Bill gives an opportunity for an intelligent, worthwhile, flexible, approach to railway lines or stations that are closed. I was pleased to note in the other place the Government amendment providing for the opening of stations which are closed on lines that are still in service. It is clear that without this small Bill British Rail would be very seriously inhibited in conducting experiments.
However, I must make it prefectly clear that though we support the Bill, in no way shall we be prepared to forgo those provisions of the 1962 Act which have to be followed regarding the closure of services other than those that are to be experimented with. We regard the consultative procedures as being of the utmost importance. We had an excellent debate on transport policy in your Lordships' House on 12th January. I then asked for experiments in public transport, and I instanced in particular post bus services and the possible
810
development of the rail bus, on which experiments were being conducted. Things seem to have moved very fast since then. This month's Rail News carries a very informative article on what is described as a great British achievement. The article states:
"Put a Leyland bus and BR know-how together, and what do you get? The answer is a rail bus".
This Bill, together with the development of the rail bus, give opportunities for a flexible approach to rural transport.
Obviously the Bill can affect some urban areas as well, but in particular it gives opportunity for experimentation in the rural areas. The Bill (if passed by your Lordships) and the development of the rail bus could together considerably aid experimentation with and development of services in the rural areas. I understand that the cost per vehicle of the rail bus will be about £140,000, compared with about £400,000 for a new type diesel two-coach unit, which British Rail propose to introduce elsewhere. The vehicle would carry 100 passengers, 64 of them seated. It would have a maximum speed of 74 miles per hour, and would do 10 miles to the gallon on diesel fuel, compared with three miles to the gallon for the conventional diesel motor unit. Obviously there is opportunity for the Bill to bring about experimentation and to deal with the development of the rail bus, which could also be an export winner, if British Rail is able to experiment with it on a considerable scale. Other noble Lords have stressed how useful could be such an opportunity in terms of alleviating traffic on the roads.
The report of the National Bus Company for 1980 indicates that, due to the recession, bus services suffered a 10 per cent. drop in passengers during the year, and 2,000 fewer vehicles were operated. The chairman of the bus company has stated that in 1981 one mile in nine on offer to the public in 1980 will no longer be provided. If people change their arrangements for travelling to work, and some services are taken off, that affects passengers who want to travel other than to work. The Bill gives an opportunity possibly to assist in covering some of the services that the bus companies may have to drop. As we have already pointed out, there is every possibility of unremunerative services being deleted from the bus networks in times of recession or where competition arises on the profitable routes. Car sharing will not be the answer, and I hope at the appropriate time—not in this debate—to pass a few comments on the letter of the Under-Secretary of State in today's Times. If British Rail can experiment with opening rural lines in particular, possibly using the rail-bus, it could be a great boon.
I believe we are all concerned that British Rail has not been able to spend £50 million of its investment programme because it has had to keep within its cash limits. We all know the problems facing British Rail, with track at risk, signalling to be modernised, and rolling stock to be replaced before it is completely worn out. I am pleased to note that the Secretary of State has said so determinedly that talk of closing 40 rail services is rejected by the Government. I was also pleased to learn that the Minister had refused to agree to the closure of the Epping-Ongar line (near to where I live) which is an extension of the Central Line of the Underground.

811
But, someone has to meet the cost, and I notice that the Under-Secretary of State, speaking in another place on this Bill, said on 15th May, as reported at col. 1063 of the Official Report:
"Local authorities that wish to fund experimental rail services will have to be prepared to find the necessary funding from within realistic sources—that means the resources that they are prepared to find from the ratepayers, supplemented by the reasonable level of grant that they can expect to receive within the grant-giving procedures that we have set down".
That means in effect that the county councils, which receive the transport supplementary grant, will be expected to meet from it the cost of any experiments that British Rail might wish to undertake. But with the recession there will also be a wish to keep the transport supplementary grant for the bus services.
I have been looking at figures given in Written Answers in the other place on 5th June, and reported at cols. 448 and 450 of the Official Report. I see that in Wales, based on 1979 figures, between 1979–80 and the current year, 1981–82, there has been a drop of 20 per cent. in the transport supplementary grant. In the whole of England there was a drop of 7 per cent. and, taking the English shire counties alone, which are the ones which are going to be affected greatly by experimentation, I hope, in British Rail services, there was a 16 per cent. drop in real terms in the transport supplementary grant.
Therefore, while we welcome the Bill it must be paid for, and the Government may have to take a careful look at the transport supplementary grant if British Rail need to be financed to carry out some of these experimentations. As the Ministers concerned, those for Transport and the Environment, are in the same building, I hope they talk to each other, and that it may be possible for them to realise that something may have to be done for the transport supplementary grant if we really want to carry into effect the opportunities that this important little Bill presents.
6.51 p.m.
The Earl of Avon: My Lords, the Government welcome this Bill, which my honourable friend the Member for North Devon, Mr. Tony Speller, introduced in the other place as a Private Member's Bill; and I am grateful to my noble friend Lord Mowbray and Stourton for introducing it so clearly and concisely this evening. I should also like to join in the congratulations to the noble Lord, Lord Mountevans, on his maiden speech, which I found both detailed and well-reasoned. I hope we may hear more from him, perhaps in a better attended House, on the next occasion.
The provisions in the Transport Act 1962 governing proposals to close rail passenger services were designed to safeguard the interests of users. The purpose of the present Bill is to ensure that these entirely necessary safeguards for the users of existing rail passenger services do not act as an inadvertent obstacle to the introduction of worthwhile new services on a trial basis. This Bill would enable the Railways Board to test the market for new services in the knowledge that, if there was insufficient demand for the service, then it could be withdrawn at relatively short notice without them having to bear the expense of that service while
812
the often lengthy statutory closure procedures were gone through. I am pleased to be able to tell noble Lords that the Railways Board have welcomed this Bill as a useful contribution to their operating flexibility.
This Bill is in harmony with Government policy towards local rail services. My right honourable friend the Secretary of State for Transport has made it clear on many occasions that the Government are not prepared to see substantial cuts in the rail passenger network; and my honourable friend the Parliamentary Under-Secretary of State for Transport repeated this assurance when moving Government amendments to this Bill in the other place. I am pleased to repeat this assurance to noble Lords: this Government are not planning another round of Beeching cuts. Obviously, I cannot say there will never be another closure; the provision of public transport must change over time to meet changing patterns of demand. But we are not prepared to see any wholesale closure of local railway services. The House will recall that, where there are objections to a closure proposal, the statutory procedures give the final decision to my right honourable friend the Secretary of State for Transport. I hope that these remarks will reassure the noble Lord, Lord Underhill, as regards some of his observations.
On the basis of this firm assurance, we are looking to the Railways Board to take positive steps further to safeguard the future of local services by reducing operating costs. I have in mind the introduction of radio-signalling to replace outmoded mechanical signalling; automatic level crossings to replace expensive manned crossings, and lightweight "railbus"-type rolling stock to replace the ageing diesel multiple units that now operate these services. The noble Lord, Lord Underhill, touched on this point, and I appreciate his enthusiastic remarks; also, his warnings about future bus travel. But I do not think they really have very much to fear from this measure, certainly in the immediate future. My right honourable friend the Secretary of State for Transport is encouraging the Railways Board to implement their proposal for a demonstration project for these low-cost operating techniques on a rural line. I believe that the introduction of these techniques can only improve the prospects for introducing experimental services.
The decision whether to introduce an experimental service must be a matter for the Railways Board. But they are unlikely to be prepared to do so unless a service is capable of generating sufficient earnings to meet its allocated costs, or unless central or local government, or any other body, were prepared to subsidise any gap between earnings and costs. Here I particularly appreciated the remarks of my noble friend Lord de Clifford. The Government pay the public service obligation grant to the Railways Board in order to compensate them for having to provide passenger services generally comparable with those that they operated at the end of 1974. At present, this grant amounts to some £2 million a day; but like other public expenditure, it is subject to cash ceilings, and the Government would not be prepared to increase this ceiling in order to allow the board to run a new passenger service where the revenue from that service would fall short of the allocated costs.

813
We must, therefore, look primarily to local authorities to make use of their powers to make grants to British Rail to finance these services. It would be for these parties to agree on suitable terms, but the knowledge that an unsuccessful service could be withdrawn quickly should make it easier to reach agreement. In conclusion, may I say that the Government welcome this Bill, and I hope that noble Lords on all sides of the House will support it as a useful contribution towards the flexible operation of the railways and as a means of meeting the changing transport needs of rural areas in particular.
6.56 p.m.
Lord Mowbray and Stourton: My Lords, it only remains for me to add my thanks to all noble Lords who have spoken in this debate, and for their general consensus of good will towards this Bill. In particular, of course, I should like to pay my respects and offer my humble congratulations to the noble Lord, Lord Mountevans, upon his most able speech. To my rather sparse skeleton he added welcome flesh and blood, if I may say so, which was greatly to the advantage of your Lordships' House.
My noble friend Lord de Clifford spoke of the climate being fair weather for this Bill. We had the doyen of transport speakers in this House, the noble Lord, Lord Lucas of Chilworth, helping us in our decision; and my noble friend Lord Avon has given us the Government's blessing. I hope we shall not need to commit this Bill, and, that being the case, I hope we shall shortly be able to see it on the statute book. I thank your Lordships for your help and for having spoken.
On Question, Bill read 2a, and committed to a Committee of the Whole House.