Transport Bill

HL Deb 29 July 1982 vol 434 cc362-413

3.34 p.m.

Report received.

Clause 1 [Bus Company's powers of disposal]:

Viscount Ridley moved Amendment No. 1: Page 2, line 2, after ("power") insert ("for the purpose of reducing the Bus Company's capital debt").

The noble Viscount said: My Lords, I should first apologise for not putting down these amendments in my name at an earlier stage of the Bill. I had hoped that, with discussions going on behind the scenes, I could persuade the Government of the total reasonableness of what I wished to say and that it would not have been necessary to move them. Alas!, that is not so, and I therefore have pleasure in moving Amendment No. 1. This Part of the Bill is that which allows the National Bus Company to sell shares in any of its subsidiaries and to dispose of the whole or part of the undertakings or of the property of its subsidiaries. Later on we shall come to Clause 3 which will empower the Secretary of State for Transport to give such directions to the National Bus Company requiring them to exercise such powers, and to impose a duty on the company to give effect to any directions made. All the proceeds of disposals should go to the company and, in the Government's view, would be expected to lead to a reduction in the company's requirements for external finance.

I should say that I have no objection whatever to the principles behind this Part of the Bill, but I think there is a point which should be raised from the standpoint of the non-metropolitan county councils who are by law providing revenue support for subsidiaries of the National Bus Company. There is a great, and I think real, fear that the profitable parts of the National Bus Company, or the best assets of its subsidiaries, will be sold off, leaving the unprofitable stage carriage services more than ever dependent upon the local authorities for financial support. As your Lordships are well aware, this is running at very large sums these days and likely to increase.

Since a large proportion of this support is made up of the subsidiaries' share of the cost of servicing the National Bus Company's capital debt, the Association of County Councils think—and I very much agree with them—that all the proceeds of disposals should be applied in the first instance to reduction of this capital debt. This would have the advantage also of overcoming the need for the National Bus Company to replace any existing debts with others at higher interest rates. I think there is a danger that the National Bus Company could be tempted to use any new capital which it got from the sale of its subsidiaries or other operations to finance new projects, treating the receipts perhaps as a windfall—which, I think, would be a danger; for surely the test of any new capital projects should be whether or not they are efficient and likely to yield a profit, and not rest purely on the availability of such capital which may have arisen.

I know that the Minister will feel that one option open to the National Bus Company would be to use the proceeds of any disposal to discharge the debt; but I believe that it should be the first charge on the bus company not only to think of this but actually to reduce this debt before they start using the finance for any other purpose. Otherwise, there is a grave danger of leaving the local authorities picking up the bill for an increasing subsidy and they would be worse off than they are now in a situation where the local authority finance, as your Lordships are aware, is under considerable pressure. I beg to move.

Lord Underhill

My Lords, I appreciate the argument which the noble Viscount has put forward, particularly as it could be read into his amendment as being only one reason why there should be disposal of any part of the National Bus Company. My interpretation of the amendment would mean that the bus company has power to dispose, provided that it is for this purpose and this purpose only. That would appear to be the completely wrong reason. The last thing that we on this side of the House would want would be that we dispose of any part of the National Bus Company merely because that would help to reduce the capital debt of the company.

That seems to be a completely wrong reason. One might reduce the capital debt and completely impair the services. That will be a matter that we shall be dealing with in later amendments. When I look at the annual report for 1981 of the National Bus Company, I find that the bus company itself makes the comment that part of the problem is—and these are their words—that a number of local authorities do not accept that it is right to reimburse the National Bus Company's operating companies for their share of any interest liability. The National Bus Company has very heavy liabilities for the original capital debt, so much so that, again in the annual report for 1981, the National Bus Company draws attention to two reports of the House of Commons Select Committee on Nationalised Industries which urge a restructuring of the debt of the National Bus Company with relation to the conversion of original and and subsequent debts.

Those are matters which have been pressed upon the Government. It seems that that is the way to handle the capital debts. But it should not be a reason for the disposal of any part of the National Bus Company's operating units.

The Earl of Avon

My Lords, I appreciate my noble friend's arguments and I shall try and set his mind at rest; and, while so doing, obviously walk a tight rope between the noble Lord, Lord Underhill, and my noble friend Lord Ridley.

My noble friend's amendment would require the bus company to use the proceeds of disposals under Clause 1 for the purpose of reducing their debt. The Government would not be opposed to the bus company using the proceeds in this way. It would reduce their call upon the taxpayers' credit, and it would reduce the interest burden which they are obliged to pass on to their customers including in some cases the local authorities. But we do not believe that the amendment is necessary in order to enable the bus company to discharge debt from the proceeds of sale; and the Government believe that it would be unwise to force them to do so.

Let me be clear that the proceeds of disposals would in the first instance flow to the bus company. The Government would regard the sum involved as one of the company's sources of external finance. Subject to that, however, the Government believes that it should be for the board to weigh the arguments for reducing the debt against their other financing requirements. Although reduction of debt may well be the preferred course, it is possible to envisage circumstances in which use of the proceeds for other purposes, such as investment, might be to the overall financial advantage of the bus company (and therefore of their customers, including the county councils). For example, it may be that the element of the board's debt to be repaid bore a relatively low fixed rate of interest, in which case it might be sensible for the bus company to keep the loan. By analogy, if a homeowner has a mortgage of £15,000 and suddenly inherits or wins £15,000, it does not follow that his best course is to pay off the mortgage. It might be better to use his legacy for home improvements which would otherwise have to be financed by an expensive bank loan.

I hope I have said enough to make it clear that, although the Government are opposed to the inflexibility of this amendment, they are by no means opposed to the bus company using the proceeds of sale to reduce their debts if that is the course which the board believe would be in the best interests of the company and their customers.

I should like to draw the attention of noble Lords to the fact that my right honourable friend has published today a summary of the report by Touche Ross and Company on the funding of NBC's capital debt. This report was commissioned jointly by the company and the Department of Transport. Copies are available in the Library.

The consultants say that the overall size of NBC's debt is not excessive, inasmuch as it is fully backed by operating assets. They propose a new method of allocating interest between subsidiary companies, which they believe would provide NBC with a better framework for their future operations. The implications of these recommendations are wide-ranging and the Government will give them careful consideration in the light of discussions with the company. I hope that I have said enough to set my noble friend's mind at rest so that he may feel able to withdraw his amendment.

Viscount Ridley

My Lords, I have no intention of pressing this amendment. I hope that my noble friend in the Department of the Environment, when he sees the plight of some county councils when faced with an expanding bill for services (which are getting more and more uneconomic), will be sympathetic in dealing with the transport with the transport supplementary grant. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

3.44 p.m.

Lord Mishcon moved Amendment No. 2: Page 2, line 9, at end insert— ("( ) In exercising their powers under subsection (1) above the Bus Company shall retain after all such disposals securities controlling not less than 26 per cent. of the voting rights of any such subsidiary.").

The noble Lord said: My Lords, this is not a new theme that I bring before your Lordships. Nevertheless, it is a very material one. In 1981, when a Transport Bill was then before your Lordships' House, I together with my noble friend Lord Underhill, put down a similar amendment. It is interesting to refer to what was said. I am referring now to the Official Report of 4th June 1981 at col. 1374. Your Lordships will be relieved that that is not a reference to my speech but a reference to the speech of the noble Lord, Lord Bellwin, the Minister who replied. This is what the noble Lord said: The policy of the Government and the Railways Board is that in disposing of their non-rail subsidiaries the board should, if they wish, be able to retain a substantial minority stake in the businesses". I say that this shows in summarised form that is it the intention of the Government that there should be still a substantial minority stake in the businesses of the Railways Board as it was at that stage.

Turning to col. 1375, the noble Viscount, Lord Simon, speaking with the authoritative voice that he does on behalf of the Liberal Benches, said this: With great respect to the noble Lord, Lord Bellwin, I should not have thought that this was an issue on which there was a great basic difference between the two sides of the Committee. It is a question of a business transaction and what it is wise to do. The noble Lord said that they might wish to have more than 26 per cent. and quoted the case which has been mentioned already, in which they evidently do, but there is nothing to prevent them having more than 26 per cent.".

Turning to a representative in another part of your Lordships' House, at col. 1376, the noble Lord, Lord Harris of Greenwich, said: Rather like the noble Viscount I do not see that there is a substantial ideological issue here and I was mildly surprised to hear the Minister suggest that there was. It seemed to me that the noble Lord, Lord Mishcon, made a reasonable case. He pointed out the relevance of the 26 per cent. proposal in this amendment".

So I merely refer to a situation when last year we were discussing a Transport Bill, to show your Lordships that there was some amount of unanimity in the benefits of this amendment in various parts of your Lordships' House, although unfortunately I did not find favour on Government Benches in the same measure. Being an optimist, I am hoping to persuade the Government Benches today, and I hope that the loyal support which I had on the last occasion from the various Benches behind me will still subsist.

We are dealing now of course with 1982. I am wondering whether there is any difference in the situation. Looking at the Official Report of the debate in your Lordships' House at the Committee stage of this Bill on 5th July, when we were dealing with an amendment which sought a 51 per cent. control, the noble Lord the Minister, Lord Bellwin, promulgated the following view at col. 564 of the Official Report: "We envisage NBC retaining a significant (and I shall come back to that word in a moment) minority interest in a subsidiary in which private capital is invested". Then later, at col. 565 he said: I am sorry to sound vague but I think it is not unreasonable to say that a 'significant' shareholding depends very much on how many, in whose hands, and what is the situation applying at the time". That was in reply to an amendment which sought that the Government should retain a controlling interest. At this stage, the Report stage, we on these Benches have to concede that that amendment was not successful at Committee. So we are merely dealing now, as we did last year, with a situation where the Government say that they anticipate that they will be retaining a significant interest.

If I may now turn your Lordships to this particular consideration, I hope that your Lordships will think that the amendment on this occasion should certainly find your favour. What does "significant" mean, unless some power or other is still to be vested in the Government to prevent things from going wrong? Enough very real debating points have been made about Amersham, and I have an idea that your Lordships are a little fed up with those points being made at every stage of the Bill, where one talks about the Government taking over and the Government selling various interests. So I promise your Lordships that I am not going to deal with Amersham, except to say that some interesting figures were revealed over the past few weeks which showed that, contrary to the idea of the Government as expressed, that the shareholding which had been disposed of into private ownership would go into the hands of quite a few little people, it was found—and I merely state it as a fact without trying to give any rhetorical emphasis to it—that the substantial holdings in the company—and by "substantial" I am referring to over a quarter of a million shares—were vested in very few hands, and the small holdings were now quite insignificant.

When I talk to your Lordships, as I do in moving this amendment, about trying to provide for proper security in the national interest in the future, I am talking about a situation on which we have now had a precedent, because we see that the shareholdings do go into other hands. They may be very reputable hands at this stage, and I am assuming for the purpose of this argument that they are. With the evolution that goes with time, with things that happen in different financial circumstances and with people from abroad who might well be interested in taking an interest, and a substantial one, in some of our vital industries, one has to provide for the future. What does 26 per cent. mean? Is it significant? I notice that the noble Lord the Minister has just entered the Chamber. He is always welcome, and since he was the one who defined "significant" by saying that there was no definition for it of which he could think, I am delighted that he is present to hear the next few sentences.

"Significant" can only mean that it gives the shareholder, the one who is in possession of the shareholding, very vital and important rights. I have taken the trouble to list those things within a company which cannot be done unless there is a 75 per cent. vote in its favour. It is not a long list that I will weary your Lordships with. A 75 per cent. holding means that if one holds 26 per cent. one can prevent something happening, and I am sure your Lordships will listen with some attention to what these items include; changing the name of the company; altering the objects as stated in the memorandum; altering conditions contained in the memorandum which could have been contained in the articles; altering or adding to the articles or any existing special resolutions.

If I may pause there, your Lordships will know that the memorandum normally consists in the objects of the company. The articles consist in the way in which the company is governed, what happens in regard to transfer of shares, what happens in regard to the voting rights and things of that kind. I end the parenthesis and continue. The items further include; reducing capital; declaring that any portion of the unpaid capital shall be capable of being called up only in the case of a winding up; rendering the liability of directors, managers or managing director unlimited; and lastly, declaring that the affairs of the company ought to be investigated by an inspector appointed by the Department of Trade.

I have listed vital matters where the Government and the nation will be safeguarded by what I have deliberately called a significant shareholding, because that is the term that the noble Lord the Minister used with great care in saying that that was what the Government wanted to retain. I am asking for the support of your Lordships in what we regard as a very vital amendment, this being the last ditch to which we have been beaten back. No controlling interest now, but at least the significant interest which means something, to which the noble Lord the Minister has already referred. I beg to move.

The Earl of Avon

My Lords, I hope the House will forgive me if I reply to this amendment, but perhaps it might be refreshing to have a new voice on the word "significant". First, I do not believe that the difference here is very great. The noble Lord mentioned Lord Simon and the great basic difference, and the noble Lord, Lord Harris of Greenwich, and the substantial ideological issue. I do not put those arguments forward at all. There is a very small point at issue and I will try to put the Government's point of view. I recognise that in moving the amendment the noble Lord, Lord Mishcon, is concerned basically to exclude the possibility that a former NBC subsidiary might be taken over by shareholders intent, perhaps, on closing the business down and getting what they can for the assets, or putting the company into voluntary liquidation; and he has today given us more examples of what could happen if we were to go below the 26 per cent. figure.

I must point out that there are in the Bill two safeguards which we believe make that outcome extremely unlikely. First, in the normal course of events, it will be the bus company itself which will be in the lead in arranging disposals; and it seems to me highly improbable that the bus company would deliberately set out to dispose of a subsidiary in the way described. Secondly, any disposal of shares requires the Secretary of State's consent. Again, I do not believe that any Secretary of State would actively seek a sale resulting in closure of a business; and the risk of this happening as a result of subsequent transactions is one of the factors which a Secretary of State no doubt would wish to take into account in deciding what level of shareholding the bus company should retain.

This amendment is well intentioned, but I believe, and it is our case, that it would be or could be restrictive It would require that the bus company's holding should never fall below 26 per cent. Consider how this constraint might operate in practice if, instead of a pessimistic prophecy, the privatised business were profitable and wished to expand. Surely, it would be a pity if, as a precondition of any expansion involving the raising of new equity capital, the bus company had to borrow money from the taxpayer to maintain a minimum share. Of course, in some circumstances it might be sensible to do just that; but it might equally put an unnecessary strain on public resources at a time when private investors were ready and willing to put up the money. It is that really narrow issue which I believe is between us.

My noble friend Lord Bellwin said in the course of our Committee debates that the Government thought it unwise to put a firm figure on the size of NBC's retained shareholding in any former subsidiaries, although my noble friend indicated that the proportion would certainly be less than 51 per cent. and probably, though not essentially, more than 20 per cent. I believe that if the House considers carefully the implications of the amendment before us it would like to see the wisdom of the Government's point of view and the slightly additional flexibility that it would give. It is on that that the Government rest their case.

Lord Mishcon

My Lords, I welcome the introduction into a House that governs the United Kingdom of the phrase "I rest my case", which I can quite honestly say I have heard on television and in various films, but never realised I would hear it from the Government Front Bench. Obviously, we were very much interested in hearing the noble Earl's answer. It was a different voice but it was the same theme, and it is not very convincing when we come to look at it. Your Lordships are told that there is very little difference between the spirit and, I suppose, the letter of the amendment that I have ventured to move and the Government's position. That is a very healthy start for anyone who is hoping to get the amendment passed.

Then your Lordships are told that the real reason for not putting it into the Bill (although this would be a safeguard, and it is admitted) would be the following. First of all, obviously the National Bus Company would be very careful into whose hands the shareholdings went. I have not the slighest doubt that that is right. But what happens after the shareholdings go into the very responsible hands into which the National Bus Company has seen that they go? There is no possible control by the National Bus Company as to where those shareholdings find their eventual end; therefore there is no answer in that point. Then we are told that flexibility might be required if the company is prosperous. Obviously, it would then be the wish of those in control of the company to see that money was raised, and there might be a difficulty if the Government had to keep up this 26 per cent.

What an extraordinary situation, my Lords, if the Government and the taxpayer are supposed to invest only in industries and enterprises which are failing, in order to support them, but cannot possibly be envisaged as participating in industries and enterprises by means of a shareholding where private capital is very happy to invest because that enterprise is so prosperous. But the Government dare not and cannot invest by virtue of the fact, presumably, that that industry is prosperous. Those two arguments really do not hold up at all. Therefore, with some amount of confidence, I wish to test the opinion of the House.

4.2 p.m.

On Question, Whether the said amendment (No. 2) be agreed to?

Their Lordships divided: Contents, 78; Not-Contents, 104.

DIVISION NO. 1
CONTENTS
Airedale, L.	Diamond, L.
Amulree, L.	Elwyn-Jones, L.
Ardwick, L.	Ewart-Biggs, B.
Avebury, L.	Gaitskell, B.
Aylestone, L.	Hampton, L.
Balogh, L.	Harris of Greenwich, L.
Banks, L.	Hatch of Lusby, L.
Beaumont of Whitley, L.	Hughes, L.
Bishopston, L.	Hunt, L.
Blease, L.	Jacobson, L.
Blyton, L.	Jacques, L.
Brockway, L.	Jeger, B.
Brooks of Tremorfa, L.	Jenkins of Putney, L.
Bruce of Donington, L.	John-Mackie, L.
Burton of Coventry, B.	Kilmarnock, L.
Byers, L.	Leatherland, L.
Collison, L.	Leonard, L.
Cooper of Stockton Heath, L.	Listowel, E.
	Llewelyn-Davies of Hastoe, B.
David, B.—[Teller.]
Davies of Leek, L.	Lloyd of Hampstead, L.

Lloyd of Kilgerran, L.	Shinwell, L.
Longford, E.	Simon, V.
Lovell-Davis, L.	Somers, L.
McCarthy, L.	Stedman, B.
McCluskey, L.	Stewart of Alvechurch, B.
McNair, L.	Stewart of Fulham, L.
Mayhew, L.	Stone, L.
Meston, L.	Strabolgi, L.
Mishcon, L.	Strauss, L.
Molloy, L.	Tanlaw, L.
Oram, L.	Tordoff, L.
Phillips, B.	Underhill, L.
Ponsonby of Shulbrede, L. —[Teller.]	Wallace of Coslany, L.
	Wells-Pestell, L.
Rathcreedan, L.	Whaddon, L.
Rea, L.	White, B.
Redcliffe-Maud, L.	Wigoder, L.
Rochester, L.	Winstanley, L.
Ross of Marnock, L.	Wynne-Jones, L.
Sefton of Garston, L.

NOT-CONTENTS
Airey of Abingdon, B.	Killearn, L.
Alexander of Tunis, E.	Kimberley, E.
Auckland, L.	Kinloss, Ly.
Avon, E.	Kinnoull, E.
Balerno, L.	Lane-Fox, B.
Balogh, L.	Lauderdale, E.
Belhaven and Stenton, L.	Long, V.
Bellwin, L.	Lyell, L.
Beloff, L.	McFadzean, L.
Belstead, L.	Mackay of Clashfern, L.
Bessborough, E.	Macleod of Borve, B.
Birdwood, L.	Mancroft, L.
Boardman, L.	Marley, L.
Boyd-Carpenter, L.	Massereene and Ferrard, V.
Braye, L.	Merrivale, L.
Caccia, L.	Mersey, V.
Campbell of Alloway, L.	Mottistone, L.
Campbell of Croy, L.	Moyne, L.
Cathcart, E.	Murton of Lindisfarne, L.
Chelwood, L.	Newall, L.
Clitheroe, L.	Nugent of Guildford, L.
Coleraine, L.	Orkney, E.
Cork and Orrery, E.	Orr-Ewing, L.
Cottesloe, L.	Platt of Writtle, B.
Craigavon, V.	Reigate, L.
Cullen of Ashbourne, L.	Renton, L.
Daventry, V.	Ridley, V.
Davidson, V.	Romney, E.
De Freyne, L.	Rugby, L.
Denham, L.—[Teller.]	St. Davids, V.
Drumalbyn, L.	St. John of Bletso, L.
Eccles, V.	Sandys, L.—[Teller.]
Ellenborough, L.	Selkirk, E.
Elles, B.	Skelmersdale, L.
Elton, L.	Spens, L.
Ferrers, E.	Stamp, L.
Ferrier, L.	Strathcarron, L.
Fraser of Kilmorack, L.	Strathcona and Mount Royal, L.
Gainford, L.
Garner, L.	Strathspey, L.
Glenarthur, L.	Swinfen, L.
Glenkinglas, L.	Terrington, L.
Gridley, L.	Thomas of Swynnerton, L.
Hailsham of Saint Marylebone, L.	Thorneycroft, L.
	Trefgarne, L.
Hatherton, L.	Trumpington, B.
Hayter, L.	Vaux of Harrowdean, L.
Hives, L.	Vickers, B.
Holderness, L.	Vivian, L.
Home of the Hirsel, L.	Wakefield of Kendal, L.
Hylton-Foster, B.	Ward of Witley, V.
Ilchester, E.	Westbury, L.
Ironside, L.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

4.10 p.m.

Lord Underhill moved Amendment No. 3: Page 2, line 11, after ("above") insert (", and under subsection (i)(b) above with the exception of the disposal of any assets which are surplus to the Company's operational needs,").

The noble Lord said: My Lords, although there was a somewhat similar amendment, but in rather different terms, at the Committee stage, I think it will be necessary to explain briefly the background to this matter. Subsection (1) of Clause 1 provides in paragraph (a) that the Secretary of State must give consent to the disposal by the National Bus Company of any shares or other securities held by the company or by any of its subsidiaries. Under paragraph (b), consent is not required for the disposal of the whole or any part of the undertaking or of a subsidiary.

At the Committee stage, an amendment to provide that the consent of the Secretary of State should be required for both classes of disposal was put forward. It was pointed out that there was a particular kind of anomaly, in that the sale of any holding of shares required the consent of the Secretary of State, but the sale of an entire subsidiary where there was no sale of shares would not require the consent of the Secretary of State. That seemed to be ridiculous.

The point was also made that it was not the purpose of the amendment to prevent the sale by the bus company, or any of their subsidiaries, of any odd buses or other items that were not required. As a matter of fact, I said that if the Government were worried about the sale of odd items, perhaps they would suggest an amendment of their own to cover that point. The noble Lord, Lord Bellwin, who replied on that occasion, followed up that point and said that the amendment which was put forward at Committee stage would interfere with the National Bus Company's existing power to dispose of any parts of a subsidiary's undertakings which were no longer required for the purpose of the business. If your Lordships will look at the wording of this amendment, you will see that it seeks to deal with that problem.

The noble Lord, Lord Bellwin, also said that the suggestion that the National Bus Company might seek to dispose of an entire subsidiary was not a credible one. But that is the power in the Bill, and I must emphasise, over and over again, that it does not matter how many assurances Ministers may give about provisions in a Bill; it is the powers that are in a Bill that matter, whether they are for this Secretary of State or another Secretary of State, or whether they are for this Government or another Government. So we have in the Bill the possibility under paragraph (a) of the disposal of the whole or part of any subsidiary, and my noble friend Lord Mishcon emphasised that the disposal of the whole of a subsidiary need not require the sale of any shares. That point is important, because it is covered by paragraph (b), which does not call for the consent of the Secretary of State.

The noble Lord, Lord Bellwin, kindly said that he would take the point away and talk to his advisers and colleagues about the issue. I said that we on our side would also look at the situation and see what might be done on Report. The amendment before the House this afternoon is rephrased to deal with both classes of disposal. The consent of the Secretary of State will be required in both cases, but the amendment accepts that a disposal under paragraph (b) will be of assets which are surplus to the operational needs of the bus company. In other words, we are meeting the arguments put forward by the Government. We recognise that consent need not be given for the disposal of items that are no longer required for the operational needs, but on the other two points we are removing the anomaly and making common sense of what seems to be a ridiculous situation. My Lords, I beg to move.

The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin)

My Lords, the Government have considered carefully whether they could accept an amendment along these lines, which is a refinement of Amendment No. 3 which was moved in Committee. I have to say that we have concluded that we cannot, but before I explain why, perhaps I could say that I recognise and am grateful for the efforts which the noble Lord, Lord Underhill, has made to meet the objections which I raised to his earlier amendment in Committee.

My difficulty, however, is that our principal objection remains. Under the terms of this amendment, the bus company would need to decide, before disposing of any asset, whether or not it was surplus to their requirements. Suppose, my Lords, that they were considering, for example, a bus garage, which they wished to sell to the privatised coach company as a maintenance facility. The bus company might reasonably conclude that the garage was surplus to their requirements, if, for example, they planned to transfer work on stage carriage vehicles to a larger garage nearby. They might therefore decide that the Secretary of State's consent to the disposal was not strictly required. But might they not also be conscious that someone could challenge the disposal in the courts, relying on this amendment to argue that the Secretary of State's consent should first have been obtained, because the garage was not genuinely surplus?

I put it to your Lordships, that, faced with this possibility—and I do not think the situation I have described is at all unrealistic—the bus company's natural reaction would be to obtain the Secretary of State's consent beforehand, just in case. And so the Secretary of State would become a party to a series of decisions on matters which are well within the competence—and indeed, which ought to be the preserve—of the bus company's management.

It may be that noble Lords opposite recognise the truth of this, but feel that the risk of unnecessary interference is worth taking, in order to avoid the possibility that the bus company might one day take it into its head to adopt a policy of disposing of operating subsidiaries against the wishes of the Secretary of State. It would achieve this, presumably, by selling off the major assets of the subsidiaries, rather than the shares in the subsidiaries, thereby avoiding the need to ask the Secreatry of State for his consent. I find it difficult to envisage circumstances in which the bus company would want to adopt such a remarkable policy.

It seems to me that those who point to this remote possibility ought to look with favour on Clause 3 of this Bill—to which several noble Lords opposite have objected—and not on this amendment. Clause 3 provides the Secretary of State with a power to direct the bus company, to exercise their powers under sections 1 and 2 … for such purposes and in such manner as may be specified in the directions". So here we already have a vehicle—and, if I may say so, a more suitable one than is proposed in this amendment—for ensuring that the Secretary of State could act if the bus company were planning to use their power of disposal in an unacceptable way. I hope that in the light of what I have said the noble Lord will feel able to withdraw his amendment. It seems that there is a misinterpretation, and I hope that the noble Lord will see why we do not agree with the amendment.

Lord Mishcon

My Lords, I want to acquit the noble Lord the Minister of any desire to resist an amendment merely for the sake of resisting it, and I am sure that, when he says that he has considered the matter very carefully, he has done so. Having said that, I must confess that I completely fail to understand the reasoning behind his reply. The Minister asks us to rely upon Clause 3. Clause 3 is written in terms which mean—and will be interpreted as so meaning—that it is a clause which tells the board of the bus company that what they must do is to exercise their powers and dispose. It takes an extraordinary reading of Clause 3 to say that it is meant to be the power for the Secretary of State to tell the bus company not to exercise their powers by disposing.

Having said that, I turn to the first point that the noble Lord the Minister made with his usual lucidity, but without any strength in the argument whatsoever. We are asked to envisage a situation. He did not quote the words of the amendment. Very carefully, I thought, he avoided them. The words of the amendment are "operational needs". There can be no doubt about what those words mean: "Do you or do you not need this to be able to operate?" It is not a question of "surplus to requirements" or anything like that, which could be a vague phrase. It is "operational needs". To argue that if you put that in somebody may come forward and say that the National Bus Company acted ultra vires in selling off a garage because it was supposed to be surplus to operational needs though it was not so thought by the National Bus Company, is laughable. All that would have to happen in those circumstances, in order to stop any such argument at the very start, would be for the Minister to write a short letter saying, "In spite of the fact that I do not think my powers are necessary to be exercised at all, I confirm that in my view the National Bus Company did sell something which was surplus to operational needs", and the argument would immediately cease. It would cease within 24 hours of such a letter being written.

I hope that the Government are not just seeking reasons—I tried to acquit the Minister of this at the very commencement of my address to your Lordships—for not agreeing to perfectly sensible amendments. The noble Lord the Minister saw the purpose of this amendment and saw that it had advantages. His answer to the plea of my noble friend Lord Underhill that your Lordships should include this amendment in the Bill has no substance to it.

Lord Underhill

My Lords, may I add one or two words to what my noble friend Lord Mishcon has said. The noble Lord, Lord Bellwin, said that the National Bus Company would have to decide whether or not any particular item or items were surplus to their requirements. My noble friend explained that the amendment says quite clearly "operational needs of the company". On previous occasions the noble Lord, Lord Bellwin, has stressed that we can leave matters of this kind to the good sense and the commercial sense of the National Bus Company. Surely the commercial sense and the good sense of the National Bus Company is not going to make them get rid of something which is not surplus to their requirements. The two things do not hang together.

My other point is that I have heard nothing in the arguments put forward against the amendment about the anomaly which we have endeavoured to show: that the Secretary of State will be compelled by the Bill to give consent where there is disposal of any shares or securities but that where there is a disposal of the whole of any subsidiary his consent will not be necessary. We have attempted to meet the argument of the Government about the disposal of odd items, but the Government have not dealt at all with the other matter. Having said that, we are very tempted to divide the House on this issue, but we shall not do so. However, we shall not withdraw the amendment.

On Question, amendment negatived.

4.24 p.m.

Lord Underhill moved Amendment No. 4: Page 2, line 12, at end insert— ("( ) The Secretary of State shall not give his consent to any disposal under subsection (1) above unless he is satisfied that such action would not impair the integration of services available to the travelling public.").

The noble Lord said: My Lords, Amendment No. 4 deals with the same principle that was dealt with in an amendment which was moved at the Committee stage. This amendment has been simplified to deal solely with the situation where a proposed disposal could impair the integration of services available to the travelling public. I should like to emphasise that at this stage we are not arguing the point of disposal of any subsidiary. That principle has already been determined by other decisions which your Lordships have taken. We are concerned with the possible effect of any disposal. I am certain that that must be in the minds of all noble Lords in this House.

The amendment provides that the Secretary of State shall not give his consent unless he—nobody else—is satisfied that a disposal will not impair the integration of services. We believe that the Secretary of State must safeguard the public in this way. If the disposal of a whole subsidiary may have adverse effects on the integration of services of the National Bus Company, that would be contrary to the interests of the public and the Secretary of State should withhold his consent. Similarly, disposal of part of a subsidiary could have the effect of impairing the integration of services provided by that particular subsidiary of the National Bus Company. Again we suggest that in such circumstances the Secretary of State should not give his consent.

When we considered another amendment on the disposal of National Bus Company property, it may be recalled that the noble Lord, Lord Tanlaw, made this very point about integration. We were dealing with the disposal of National Bus Company property—garages and so on. Therefore we are concerned with the disposal of the whole or part of any subsidiary and the effect on services available. I spelled out during the Committee stage exactly how disposal could possibly affect various services, but I shall not weary the House by going through them again.

The amendment is not seeking to instruct the Secretary of State. We are not laying down anything more than a condition which the Secretary of State should satisfy himself upon before he gives his consent to a disposal. The wording of the present amendment has removed points about disposal not being in the best interests of the company and each of the subsidiaries, points to which the noble Lord, Lord Bellwin, took exception at the Committee stage. The amendment is now limited to the very practical and constructive point that no disposal should impair the services to the travelling public and that the Secretary of State should satisfy himself that this will not be the case before he consents to a disposal. I beg to move.

Lord Bellwin

My Lords, this amendment highlights a difference of philosophy between the Government and the noble Lords opposite. For a very long time the Labour Party has regarded integration as the be-all and end-all of public transport policy, and their approach is embodied in this amendment. Its iniention, I take it, is that if a change produces more integration it should go ahead, but that if it produces less it should not. We on this side of the House see things rather differently. Of course we are in favour of integration where it leads to better services for the travelling public. We accept that integration is a very important concept at the local level. My noble friend Lord Ridley has pointed out that the county councils have a vital role in securing a co-ordinated and efficient service. But although we believe in integration, we also believe in freedom of choice, and choice means competition—which in some ways, I suppose, is the antithesis of integration. Nowhere has the need for competition been more successfully demonstrated than in the express coach market. I have made it clear on a number of occasions that this is one of the principal areas of the National Bus Company's activities where we wish to see private capital introduced.

In deciding whether to agree to a particular proposal in this area, the Secretary of State would wish to take into account a good deal more than integration. He would wish to take account, above all, of the interests of the travelling public. It may well be that they would be happy to have a little less integration if only they could have a little more choice. If the bus company were of their own volition to come up with proposals for disposing of a stage carriage company, then the Secretary of State might well wish to give more weight to the concept of integration. But I submit that we should not tie his hands in this Bill by laying down that integration should be the paramount consideration.

In considering the merits of possible disposals, the Secretary of State has to form an overall judgment of where the public interest lies. This amendment, by giving, in my view, overriding importance to the concept of integration, over-simplifies that judgment to the point where the Secretary of State could be forced by the wording of the Act possibly to come to the wrong conclusion. This is really an area of philosophy and I hope that the noble Lord, Lord Underhill, will be prepared to accept it as such and perhaps leave it at that.

Lord Molloy

My Lords, the noble Lord, Lord Bellwin, is quite right in saying that there is some difference of philosophy between us, but one can argue that about every subject that comes before this House or before another place. I would ask the noble Lord seriously to consider that it is not merely a principle of philosophy or, if one could accept it, a philosophy of the constitution of these Parliaments.

I am sure your Lordships would agree that it does happen from time to time—and, if I may say so, this is one of the great assets of our democracy—that Ministers see to it that they write into a Bill which they expect will be enacted that they will not have certain powers; that it is made transparently clear that they will not have certain powers. Equally, in many Bills, before they are enacted, it is made transparently clear that the Ministers will have certain responsibilities. One would have though that on this question of integration there might from time to time be disputes and arguments between various sectors and various parts of the country. The arena where these arguments are joined in the end must be Parliament. The means whereby these arguments may be discussed could be, for example, a statutory instrument. I believe that might be acceptable in this case.

I cannot totally accept the submission of the noble Lord the Minister that great freedom of choice is here for the travelling public. We heard that load of rubbish before the nationalisation of the railways. Do your Lordships really believe that if someone wanted to go from London to Cardiff he would go by Southern Railway or LNER? Of course not. It is precisely the same thing today, except that under public ownership there has been much more integration. I should have thought that this example would enamour itself to the Government.

It is not solely a question of difference of philsophy, although there is bound to be an element of that. There is another element which ought to unite us, irrespective of our philosophies, and that is the element of efficiency and practicality, and those decisions will not necessaruly be taken by a dictatorial edict of the Minister. We have the ways and means in this Parliament whereby these issues can be discussed in various ways—such as on a statutory instrument, as I have indicated—and I believe that this would be a worthwhile safeguard which I hope would unite both sides of this Chamber.

Lord Tanlaw

My Lords, I should like to support the noble Lord, Lord Underhill, in the way that he presented his amendment and on the content of it. The only worry I have is whether it is necessary at all. I am equally worried that the noble Lord the Minister talks about philosophy. It is surely common sense for all sides of the House and for the travelling public to have an integrated transport system. I do not see any philosophical problems in incorporating the word "integration" and the implications of it in the Bill. I stand to be corrected by the knowledge which the noble Lord the Minister has on this matter, but surely the history of the bus and rail companies shows that it was their very rivalry which forced the bus stations and the railway stations to segregate, so to speak, because they were looking at the future of the travelling public as their profits. They did not want integration because of their competition and rivalry.

I am hopeful that if integration is incorporated as a general philosophy to help the travelling public, when it comes to property this rivalry will stop. British Rail have been put under pressure to sell their properties to solve some of their very great financial problems. The operators of the bus companies may look at it simply within the narrow confines of their financial problems and profitability. Integration and the interests of the travelling public are, I believe, going to lose their priority, as they have done in the past.

This is a very harmless amendment and I do not see any philosophical problems of a political nature in it. I should like to support it simply on the grounds of common sense and as a reminder to the operators of all travel companies—nationalised or non-nationalised—that they have the interests of the travelling public to serve first. Obviously they have to make profits, but there is a golden mean between them, and that comes under the term "integration".

Lord Bellwin

My Lords, with the leave of the House, I will respond to the noble Lord, Lord Molloy. Quite clearly he does not see this as a difference of philosophy and I do. We shall probably have to disagree on that point. The thrust of our objection to this amendment is that if it were approved it would mean that, The Secretary of State shall not give his consent to any disposal under subsection (1) above unless he is satisfied that such action would not impair the integration of services available to the travelling public. Immediately one can see the challenge open in all kinds of situations. All else apart, in practical terms, there is a problem straight away if one accepts the amendment. When I was referring to the philosophies, what perhaps I failed to put over was that the purpose of the amendment is in effect to prevent disposals by the bus company which would, in the Secretary of State's opinion, impair the integration of services available to the travelling public.

Taken to its extreme, the concept of integration, I suppose, would lead to the end of competition between coaches and the railways. I am quite sure that is not what the noble Lord, Lord Underhill, means by his amendment, but that is the projected implication of the amendment. It would mean that there would be no competition at all and that one would have to say that an integrated service means one bus, one coach, one railway—one whole transportation network. Some might think that that is a good thing. In fact, the noble Lord, Lord Underhill, probably thinks that it is a good thing, but in practical terms I do not think it is, and I do not believe that it is what most people would want to see. Certainly we do not believe that we should go along with this, and that is the basic reason why we do not go with the amendment.

Lord Taylor of Gryfe

My Lords, before the noble Lord the Minister sits down, will he just compare this with the practice in the PTEs with which he is familiar and in which there is not necessarily an exclusion of one form of transport to the advantage of another but where the services are integrated and complementary? Is this not the general philosophy contained in this amendment?

Lord Bellwin

My Lords, if I may speak yet again and for the last time may I say that, no, I do not think it is. It may be that that is what the noble Lord, Lord Underhill, intends, but I am concerned with what the amendment would mean in practice. When I said that it could lead to challenges in the courts I am sure that it could and would, if some people wanted to make it so. This is a very real difficulty as I see it.

Lord Underhill

My Lords, I am very disappointed at the Minister's reply to the arguments in this case. Of course there are differences of philosophy between the Opposition and the Government on the merits and demerits of private sector passenger transport and public passenger transport, but that is not the issue in this amendment. I should have thought that far from being an argument civet philosophy the amendment was a constructive transport policy and a logical transport policy, which is what is proposed in the Bill. I am certain the Minister would not wish it to go on record that the Government are opposed to an integrated policy on transport, but that is what his argument has led to. As has been pointed out by the noble Lord, Lord Tanlaw, and the noble Lord, Lord Taylor, whose support I very much appreciate, integration is a commonsense thing which is essential, and it is a complementary system we are after.

The noble Lord said that the Secretary of State may wish to take in other factors. This amendment does not prevent his taking in other factors. What we are saying is that this is one factor he must consider and he must satisfy himself—nobody is twisting his arm—that this will not impair integration of services available to the public. It is service to the public that we are really concerned about. As with the last amendment, it is not our purpose to divide the House on this issue, but we shall read very carefully what the Minister has said, because there may be yet another way to bring forward this important principle at Third Reading. We regard it as one that is essential for the travelling public.

Viscount Massereene and Ferrard

My Lords, before the noble Lord sits down may I point out to him that if his only concern is—and of course it is a very worthy concern—that it will not impair transport services to the public, all you need to say is: "if the Minister is quite sure it will not impair the transport services to the public." Then you would not have to include integration. The noble Lord said the important thing is not to impair transport services to the public. You do not have to include integration. There is no guarantee that integration will improve services to the public.

Lord Teviot

My Lords, before the debate on this amendment comes to a conclusion, may I say that the noble Lord says he is not going to divide the House. I am rather sorry that he is not. Having listened right the way through to all sorts of arguments on the point of integration, I think that if there is no integration in some services—and the noble Lord has not been specific—perhaps the point is well worth another amendment on Third Reading. If you do not have integrated services in some rural areas you will end up by having no services at all, and that will be dreadful. I do not think that that point has been spelled out. I hope the noble Lord will reconsider it today, or we should have another go at this at Third Reading, because I do not think anybody in any part of the House is very satisfied.

Lord Underhill

My Lords, as both noble Lords started by saying "before the noble Lord sits down", I beg leave to speak again. I appreciate the points the two noble Lords have made. Although the importance of this amendment is such that we would have liked to insist upon it, there are other matters ahead. In view of the pressure and the importance of this matter I think we should not wait for Third Reading, as I suggested, but ask the House to decide upon it now.

4.43 p.m.

On Question, Whether the said Amendment (No. 4) shall be agreed to?

Their Lordships divided: Contents, 65; Not-Contents, 100.

DIVISION NO. 2
CONTENTS
Ardwick, L.	Lloyd of Kilgerran, L.
Avebury, L.	Longford, E.
Aylestone, L.	Lovell-Davis, L.
Banks, L.	McCarthy, L.
Birk, B.	McCluskey, L.
Bishopston, L.	McNair, L.
Blease, L.	Mishcon, L.
Blyton, L.	Molloy, L.
Boston of Faversham, L.	Phillips, B.
Briginshaw, L.	Ponsonby of Shulbrede, L.—[Teller.]
Brockway, L.
Brooks of Tremorfa, L.	Rea, L.
Burton of Coventry, B.	Redcliffe-Maud, L.
Byers, L.	Rochester, L.
Collison, L.	Ross of Marnock, L.
Cooper of Stockton Heath, L.	Shinwell, L.
David, B.	Somers, L.
Davies of Leek, L.	Stedman, B.
Diamond, L.	Stewart of Alvechurch, B.
Ewart-Biggs, B.	Stewart of Fulham, L.
Gaitskell, B.	Strauss, L.
Harris of Greenwich, L.	Tanlaw, L.
Hatch of Lusby, L.	Taylor of Gryfe, L.
Houghton of Sowerby, L.	Taylor of Mansfield, L.
Hughes, L.	Teviot, L.
Hunt, L.	Underhill, L.
Jacobson, L.	Wallace of Coslany, L,
Jacques, L.	Wells-Pestell, L.
Jeger, B.	Whaddon, L.
Jenkins of Putney, L.	White, B.
John-Mackie, L.	Wigoder, L.
Kilmarnock, L.	Winstanley, L.
Leatherland, L.
Llewelyn-Davies of Hastoe, B.—[Teller.]

NOT-CONTENTS
Airey of Abingdon, B.	Hylton-Foster, B.
Alexander of Tunis, E.	Ilchester, E.
Ampthill, L.	Ironside, L.
Auckland, L.	Killearn, L.
Avon, E.	Lane-Fox, B.
Balerno, L.	Lauderdale, E.
Balfour of Inchrye, L.	Long, V.
Belhaven and Stenton, L.	Lyell, L.
Bellwin, L.	McAlpine of Moffat, L.
Beloff, L.	McFadzean, L.
Belstead, L.	Mackay of Clashfern, L.
Bessborough, E.	Macleod of Borve, B.
Boyd-Carpenter, L.	Mancroft, L.
Braye, L.	Marley, L.
Caccia, L.	Marshall of Leeds, L.
Campbell of Alloway, L.	Massereene and Ferrard, V.
Campbell of Croy, L.	Merrivale, L.
Cathcart, E.	Mersey, V.
Chelwood, L.	Mottistone, L.
Clitheroe, L.	Moyne, L.
Cork and Orrery, E.	Murton of Lindisfarne, L.
Cottesloe, L.	Newall, L.
Craigavon, V.	Nugent of Guildford, L.
Cullen of Ashbourne, L.	Orkney, E.
Daventry, V.	Orr-Ewing, L.
Davidson, V.	Porritt, L.
Denham, L.—[Teller.]	Rankeillour, L.
Dilhorne, V.	Reigate, L.
Dormer, L.	Renton, L.
Drumalbyn, L.	Romney, E.
Ebbisham, L.	Rugby, L.
Eccles, V.	St. Davids, V.
Ellenborough, I.	St. John of Bletso, L.
Elles, B.	Sandford, L.
Elton, L.	Sandys, L.—[Teller.]
Ferrers, E.	Selkirk, E.
Ferrier, L.	Skelmersdale, L.
Fortescue, E.	Spens, L.
Fraser of Kilmorack, L.	Stamp, L.
Gainford, L.	Strathcarron, L.
Gardner of Parkes, B.	Strathspey, L.
Garner, L.	Swinfen, L.
Glenkinglas, L.	Trefgarne, L.
Hailsham of Saint Marylebone, L.	Trumpington, B.
	Vaux of Harrowden, L.
Harmar-Nicholls, L.	Vivian, L.
Hatherton, L.	Wakefield of Kendal, L.
Hives, L.	Ward of Witley, V.
Holderness, L.	Westbury, L.
Home of the Hirsel, L.	Young, B.
Hornsby-Smith, B.

Resolved in the negative, and amendment disagreed to accordingly.

4.52 p.m.

Viscount Ridley moved Amendment No. 5: Page 2, line 12, at end insert— ("( ) Before exercising their powers under subsection (1) above in relation to any of their subsidiaries, the Bus Company shall consult with every county council in whose area area that subsidiary provides bus services.").

The noble Viscount said: My Lords, I beg to move Amendment No. 5. I do not think that this requires any lengthy explanation because I believe that what I am seeking here is very clear indeed. I would say—I repeat it again—that my noble friend is well aware that in the matter of subsidising bus routes, the county councils have an increasingly important part to play and very large sums of money are involved increasingly in supporting bus routes. Therefore, it seems to me that their interests are so vital that it is only logical that they should be consulted when the bus company wishes to make any sale or other disposal of its assets.

As regards the previous amendment, my noble friend invoked the principle of philosophy between himself and noble Lords opposite. I do not think there can be any possible quarrel between him and me on the philosophy of this amendment for the simple reason that in Clause 3 of the Bill, which we shall shortly reach, he has himself written in under subsection (2)(b) that the Secretary of State shall consult every county council in whose area the subsidiary provides bus services. Therefore, it seems to me only logical that when the Secretary of State is consulting county councils, the bus company should be forced to do the same thing. I cannot see how this could possibly affect the philosophy or in any way the passage of the Bill. I beg to move.

The Deputy Speaker (Lord Hayter)

My Lords, Amendment No. 5: Page 2, line 12, at end insert the words on the Marshalled List. Your Lordships will note the printing error in the penultimate line.

Lord Underhill

My Lords, I was about to make way for the noble Lord, Lord Bellwin, because I thought that he might wish to accept the amendment, but perhaps I had better speak just in case I am wrong. I should like to support the noble Viscount in this amendment for the particular reasons that he has stressed. First, in Clause 3 there is the provision that, before the Secretary of State gives a direction to the bus company, he must consult the county council in which the National Bus Company may have services which will be affected by the decision. That is already in the Bill. Therefore, it would seem to me to be absolutely logical that where, under Clause 1, there is any suggestion of the National Bus Company itself disposing of property, or any of its equipment or assets, there should be again the opportunity of consultation with the county council which may be affected by the services.

As the noble Viscount has said, county councils play a large part in the financial assistance to the various subsidiaries of the bus company through the transport supplementary grant which the Government give, and I should have thought that it was in the Government's own interests that there should be consultation with the county council concerned. I hope that the Government will accept this particular amendment because it seems to be absolutely illogical not to do so.

Lord Bellwin

My Lords, there certainly is no difference of philosophy between my noble friend and myself and, for that matter, between the noble Lord, Lord Underhill, and myself on this particular subject. I entirely understand the concern that has been expressed about the possible implication of certain disposals for county councils, although I think that they are unfounded. Perhaps I should make it clear that the Government are certainly not against consultation with the county councils in all relevant cases. Indeed, they believe that such consultation will, from time to time—although perhaps not always—be absolutely essential. Our doubt about the amendment is not that it is misdirected, but only that it would add an unnecessary extra layer of statutory consultation.

National Bus Company subsidiaries and county councils are already under a legal duty to co-operate with one another in the exercise and performance of their respective functions. It follows, I believe, that the bus company would be duty bound to consult any county council whose policy or financial interests would be materially affected, before exercising their powers under Clause 1 of the Bill. That argument was, I think, accepted in another place. It was pointed out that it might not hold good in the unlikely event that the bus company were proceeding under a direction from the Secretary of State. The Government, therefore, agreed to amend the Bill to provide specifically for consultation with county councils in such cases. Subsection (2)(b) of the present Clause 3 is the result.

In making that addition to the Bill I think that the Government have shown that they do take seriously the importance of the county councils in NBC's affairs and the degree of financial commitment which many counties have to NBC's stage carriage subsidiaries. Despite the fact that our plans are directed at the commercial, express and holiday operations and not at the stage carriage companies, we have tried to meet the points that have been made.

I believe that, having regard, as I have said, to the existing statutory requirements and Clause 3 of the Bill, we now have adequate provisions for taking account of the interests of the county councils. My only concern—and it is the only one that have in this connection—is about adding another unnecessary layer of bureaucracy. Apart from that I am in agreement with what my noble friend is trying to achieve here. I cannot accept the amendment. However, what I would like to do is perhaps to think about the point again and to look into all that might be required by way of consultation and what it would mean. If my noble friend would withdraw his amendment knowing, as I am sure he does, that I cannot give him an undertaking by any means to come back with something that would accept this amendment, nevertheless I do promise him that we would talk about it again and make absolutely sure, if necessary in discussion with him, that we were completely satisfied as to the point we were taking.

Lord Mishcon

My Lords, I beg of the noble Viscount to do no such thing. We are in a late stage of the Bill. The noble Lord the Minister and those advising him have had opportunity after opportunity extending over a very long period to deal with the question of consultation, and one would have thought that in any event this amendment, which if I remember correctly has been down for a few days, would certainly have given that period of time. What your Lordships have heard today is something that astounds me. I am hoping to find another word in the vocabulary for "astound", because I find myself using that word much too often in the course of this Bill. I had better move next time to saying that it is a question of amazement. But I shall leave it at being astounded on this occasion.

The Minister knows perfectly well when he addresses your Lordships that when he refers to Clause 3 he is referring to a completely different situation. That is where the Secretary of State issues a direction to the bus company to tell the bus company that they should exercise their powers either under Clause 1 or Clause 2. When he does that he has, first—before issuing the direction—to consult with the county council that may be concerned. The Minister knows perfectly well that under Clause 1 the bus company is empowered to act on its own accord and, therefore, need not have the direction of the Secretary of State, and that is where something could go wrong. One obviously assumes that the Secretary of State—with all his responsibilities and all his knowledge of his duty to the nation and, indeed, to local authorities—would not issue a direction which makes the bus company part with assets and so on before consulting with the local authority concerned. That is safeguarded in this Bill, as the Minister says.

But there is a much greater danger of the bus company, as against a Minister, exercising these powers without properly having consulted the local authority. I am particularly amazed at the noble Lord the Minister, who has earned the affection and respect of this House ever since he has been here. But he came here with a reputation made for him, which he has enhanced. His reputation was as the champion of local authority rights. To see him so beguiled by his ministerial responsibilities as to forget his old loyalties and his old speeches when he represented local authority associations and addressed Ministers on their behalf, is indeed to see a metamorphosis, which I really regret and which I know your Lordships regret with me.

So if we can return the noble Lord the Minister to the right views and opinions which he held when he was a local authority man, he will know as well as your Lordships do that if it is necessary to tell a Secretary of State to consult before using these powers, it must be necessary to tell the bus company that that is what it has to do. It is only asked to consult, nothing more. This needs no further reflection; this needs no argument about philosophies; this merely needs a little bit of common sense; and this amendment ought to be accepted. If it is not, the House ought to tell the Minister where he stands now, which is where he stood many years ago.

Viscount Ridley

My Lords, with friends like these, who needs enemies? As I said earlier, I must apologise to the House that this amendment has not been before your Lordships as long as it should have been. That is entirely due to another nationalised industry—the Post Office—but never mind that. It has not been on the Marshalled List long enough for me to feel it would be right to force it. However, I do grasp at the straw that my noble friend has given about looking at it before Third Reading, because by now he must be well aware that there is a serious point here, and that it is a serious worry that the bus company could act before—and the word I would emphasise is "before" —exercising their powers and not afterwards. I have had experience of negotiating with subsidiaries of the bus company, and they are very apt to tell you what they have done and not what they will do. So this is a serious point. Although I realise that my noble friend can give no such assurance, I am sure that the benign sunshine of Leeds will put him in such a rewarding frame of mind after the Recess that he will accept a similar amendment at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.4 p.m.

Viscount Ridley moved Amendment No. 6: Page 2, line 25, at end insert— ("(5) In exercising their powers under subsection (1) above, the Bus Company shall compensate adequately a county council which has contributed to the provision of the asset which is the subject of disposal.").

The noble Viscount said: My Lords, again, I think that this amendment needs very little explanation from me. As I have already said, in many cases county councils have been involved in this matter of subsidising bus operations and very particularly here over the years they have provided many grants towards the infrastructure of the bus company—such things as bus and coach stations, depots, garages and so forth.

It is a matter of considerable concern to these councils that, if these assets are to be disposed of without adequate compensation, there will be a real problem. There may well have been agreements entered into between the local authorities and the bus operators that would cover the case in some instances, but I submit that this Bill will change a great deal when it becomes an Act of Parliament and in those changed circumstances there may well be cases—in fact, I believe that there are cases—where the Act would not have been anticipated and this could go wrong.

Surely there must be a case here—and the county councils must be compensated as a statutory right, as an obligation—that the first duty on the National Bus Company, if it sells assets for which it has received the benefit of taxpayers' or ratepayers' money, is that that money should be returned whence it came, to the county council or, if necessary, to the Treasury as a first charge on the sales. I can see no reason whatever why my noble friend, again, perhaps with the benefit of reflection during the Recess, cannot accept this principle. I beg to move Amendment No. 6.

Lord Bellwin

My Lords, once again, we have thought carefully about the amendment in the time available. Perhaps it would help if I very briefly repeat what the Bill is about. It does not confer requisitioning powers; it simply extends the circumstances in which the bus company may dispose of what is legally theirs in the course of normal commercial transactions. There is no question of the bus company being able to use their powers under subsection (1) to dispose of the property of county councils; nor could the Secretary of State direct them to do so.

Frankly, the Government see no need to supplement the existing legal framework within which sales are conducted in order to give special protection to county councils. Where the NBC propose to sell an asset which includes an element of infrastructure paid for by the county council, the question of repayment will depend on whether or not the county council retains a legal interest in the asset, on the terms on which financial assistance was given, and on the nature of any other relevant contract that may exist between the county council and the bus company.

I cannot believe that a prudent county council, in giving financial aid to a bus operator, would not have considered the possibility that the operator might one day wish to dispose of its interests in the site in question—as it would be fully entitled to do even before this Bill if, for example, it decided that the site was no longer required for the purpose of its business.

In the same way, the Department of Transport has for many years paid new bus grant on new vehicles acquired by bus operators, including NBC subsidiaries, for use on stage carriage services. The conditions of grant stipulate that if the grant vehicle is disposed of within a certain number of years, then grant is repayable to the Secretary of State, in whole or in part. That seems to me to be a sensible way in which to proceed. I cannot believe that my noble friend would argue that local authorities have less foresight in this respect than a Whitehall department.

The law governing the sale of assets is clearly understood and generally regarded as fair. This Bill does not alter in any way—and this is what I ought to stress—the terms on which sales by the bus company would be conducted, and this is why the Government see no need for an amendment along the lines proposed.

I understand what my noble friend seeks to do with this amendment and, on the face of it, it makes very good sense. But I am suggesting to him that in practice there will not be the kind of problem situation arising that he fears. Perhaps just as I undertook last time that I would think carefully and consider the point he raised, he, with this amendment, may feel inclined to do the same and consider what I have said on this point.

Lord Underhill

My Lords, I am always trying to insist that we should put things into Bills to be certain, so there is no dubiety whatever. Everthing that the noble Lord, Lord Bellwin, has said justifies to the hilt why the previous amendment should have been carried and accepted; that is, the need for consultation on these matters.

Viscount Ridley

My Lords, I think that my case would be far stronger if I produced examples of what I fear may happen if bus stations could be sold and a large element of taxpayers' money never recovered. It is difficult for me to do that here and now in view of the fact that I have not been able to put this amendment down for very long. I may come back at Third Reading, or possibly not, and I should like to withdraw the amendment at this stage.

Amendment, by leave, withdrawn.

Clause 3 [Powers of Secretary of State to give directions]:

[Amendment No. 7 not moved.]

5.11 p.m.

Lord Underhill moved Amendment No. 8: Page 4, line 2, at end insert— ("( ) Should any direction given by the Secretary of State under this section not be acceptable to the Bus Company, such direction shall not have effect unless approved by a resolution of each House of Parliament.").

The noble Lord said: My Lords, at Committee an amendment was put forward to provide that no direction for disposal by the National Bus Company should be given by the Secretary of State unless such direction was approved by a resolution of each House. This was argued at the time because the clause gives far-reaching powers to the Secretary of State. Although there is provision for consultation with the National Bus Company—and, as we heard in relation to a previous amendment, and where there are relevant services involved, also consultations with the relevant county council—there is no necessity for the Secretary of State to abide by the views put forward by those bodies.

At Committee stage I recalled that the noble Earl, Lord Avon, at Second Reading had emphasised that the provisions in this clause was only a reserve power. But, as I said on another amendment, the powers are in the Bill; the powers of direction are in the Bill. There is no reference whatever to it being a reserve power. The noble Lord, Lord Bellwin, in answering the amendment at Committee on 5th July said at column 580: So it has been decided to include a power of direction in the Bill to carry the policy through should there be an irreconcilable difference between ourselves and the company". At that stage the noble Lord, Lord Balfour of Inchrye, stressed that there was a difference between the negative and affirmative procedures. I would draw attention to the fact that there is no provision for any accountability whatever in this clause, not even for the negative procedure. The noble Lord, Lord Bellwin, said that we were making a mountain out of a molehill, that the issue would seldom arise, and that direction would only be given where there was a difference between the Secretary of State and the National Bus Company.

I recall that I pointed out that it was just when such a situation arose that there would be need for parliamentary approval. That is what the amendment seeks to do. We have removed from the previous amendment the necessity for every direction that the Secretary of State intends to give to require approval of Parliament. Instead, it is suggested in this amendment that there should be an affirmative resolution only where a direction is not acceptable to the Bus Company.

In other words, if the bus company is happy to accept a direction, that will be the end of the matter; no need for parliamentary accountability at all. But where there is the exceptional difference, to which the noble Lord, Lord Bellwin, referred at Committee stage, between the bus company and the Secretary of State, Parliament should have an opportunity to take a decision upon that matter, and there is no provision whatever in this clause for such an eventuality. That is what is proposed in this amendment. Again it seems common sense, and I hope that the Government may see fit to accept this amendment. I beg to move.

Lord Bellwin

My Lords, we return with this amendment to the important question of parliamentary accountability. The amendment would provide that, where the bus company disagreed with a proposed direction, it should not take effect until approved by a resolution of each House of Parliament. Before turning to the basic question of the respective roles of the legislature and the executive, may I say that I find it rather odd that the bus company should be the ones to decide whether or not a proposed direction does or does not need to be considered by Parliament. The amendment presupposes the sort of fundamental conflict between the board and the Secretary of State which would normally end in resignations or dismissals—not in a sort of appeal to Parliament to resolve the dispute.

Be that as it may, the basic question we are considering is how far is it appropriate for Parliament to be involved in the implementation of a policy, once it has been debated and approved by the passage of a Bill. I am clear in my own mind that in this case the answer is that implementation should be left to the bus company and to the Secretary of State. That does not mean the end of accountability to Parliament: the Secretary of State is answerable for all his actions at the Dispatch Box in another place. But it does mean that Parliament would be saying: "Very well, we have listened to the exposition of your policy, and we agree that it should go ahead. Now get on with it".

We have made clear in many hours of debate, in this House and in another place, what our policy objectives are. We plan to introduce private capital into National Express, National Holidays, and NBC's property portfolio. We plan to proceed by agreement, but we ask Parliament for a reserve power of direction. Once this Bill is enacted, it should be left to the Secretary of State and the Bus Company to give effect to the policy I have described and to achieve the modest objectives to which I have referred.

I recognise that this line of argument may not appeal to noble Lords opposite, basically because they do not like the policy and do not share the objectives. But that reflects a basic difference of approach, not an argument about parliamentary accountability. I wonder if we would have heard the same views had we been talking of a Bill which was dealing with nationalisation and not privatisation. One thing is certain: it would be wrong to leave it to the bus company to decide whether a direction should be subject to the affirmative resolution procedure. We should decide now, and I hope the House will agree with me that the matter should be left to the executive.

Lord Mishcon

My Lords, we have had a lot of discussion about philosophy this afternoon. The philosophy that we have just heard expounded is the following: where there are national assets—not where there are assets in private hands, and the query is whether or not they should be passed into the possession of the nation—the philosophy expressed by the noble Lord the Minister is that the Secretary of State for the time being should have the power, in spite of the objections of those who have the responsibility of carrying out an essential national service with those assets, to direct the national industry so concerned (not necessarily just transport), and even though that company, knowing its responsibilities, says that it differs from the Secretary of State, there is no appeal to the voice of the people. That is what that means.

I want the noble Lord the Minister to know—and I say this with all sincerity—that even if he could come up with examples of where nationalised industries were concerned and the Secretary of State in that case had powers that did not require him to come back to Parliament, even if there was a difference of opinion with some vital national group, I would fight for what I am speaking for now with exactly the same zeal.

There comes a time when Parliament itself must consider whether or not it has an ultimate voice in the people's affairs and in the nation's assets; or whether it puts into an Act of Parliament—regardless, of the form of government there may be in the future regardless of their nature and regardless of the capabilities and philosophies (I see that word again) of a Secretary of State—the power to ride roughshod over those who have been given the duty of looking after national assets and essential national services.

Your Lordships may disagree with me and say that is a power you want vested—that you want Parliament divested of the last word—and if you agree with the Ministers' philosophy on this, then you will be against the amendment. But if your Lordships do not feel that—I say this because the Minister referred to the views of the Opposition as though this were a view which would be taken only because the Minister's party happens to be in power—then I repeat, at the risk of boring the House, that the principle which my noble friend and I are trying to enunciate is that, regardless of party and regardless of the nature of the national assets, you must not (I say this with every deliberation) give too much power to the executive and rob this and another House of the right to say, before those national assets are disposed of—it is not just a question of a Statement being made in Parliament by the Minister concerned; it may be after the direction has been given and everything has been done, so that he must justify himself—that where there is such a difference of opinion, ought not the opinions of the elected representatives of Parliament in another place, and the reviewing body which your Lordships' House is, have an opportunity of deciding what ought to happen to those national assets?

This is not a frivolous amendment. It goes to the principle of our constitution. It is a safeguard for the future, whichever party happens to be in power. I say with respect that, when the Minister limits his argument on philosophy, I am led to tell him that there are more things in heaven and earth that are dreamt of in his interpretation of philosophy in this instance. It is not such a narrow field; it is a wider field, and I say in all humility that your Lordships should dwell on it, and so should the Minister, before refusing the amendment.

Lord Underhill

My Lords, I need not add much following those remarks by my noble friend Lord Mishcon. The Government have said time and again that these are reserve powers. I remind the House again that they are in the Bill not as reserve powers; they are there to enable any Secretary of State to give directions as he thinks fit. That is the important principle, and we have throughout these debates spoken of the wide-ranging powers given to the Secretary of State by the clause. In view of the adamant attitude of the Minister, however, the best thing we can do is to look at the issue again, bearing in mind that there will be one final opportunity to raise it. We must be concerned with this exceptional case, the irreconcilable care to which the Minister referred. Perhaps, having examined the matter again, we shall by Third Reading have a satisfactory form of words which the Minister will be able to accept. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.24 p.m.

Lord Underhill moved Amendment No. 9: Page 4, line 3, leave out subsection (3) and insert— ("(3) In exercising the power to give directions under subsection (1) above the Secretary of State shall have regard to the duties placed upon the Bus Company by section 24(2) and (3) of the Transport Act 1968.").

The noble Lord said: My Lords, noble Lords will note that contrary to what was said on a previous amendment, there can be a number of matters concerning which the Secretary of State should exercise his powers. I believe this is the fourth one which has been brought forward, and therefore there is not just one issue with which the Secretary of State should concern himself before using his powers. This amendment is concerned with the duties placed on the National Bus Company by the Transport Act 1968. It seems wrong that the Bill should give authority to the Secretary of State to give directions to the NBC for a disposal, even though such disposal may limit or prevent the company from exercising the duties placed on it by Parliament.

In Committee it was emphasised that we are talking about duties, not powers, placed on the bus company. At that stage the Minister rejected the amendment, saying that a major clash was unlikely but that there was a necessity to make clear in the Bill which duty should have precedence in the event of a clash. I commented that it was not the intention of the amendment to give authority to the company to refuse a direction of the Secretary of State, and that we would look at the wording to see whether a revised amendment might be tabled for Report which would deal with that point. The amendment has been revised to provide that before giving a direction to the bus company for a disposal, the Secretary of State shall have regard to the duties placed upon the Bus Company by … the Transport Act 1968".

I will not go into the duties in detail because we discussed those in Committee. This is a reasonable and sensible amendment, one which we believe is essential. It does not say that the Secretary of State shall do certain things; only that he shall have regard to the duties which have been placed on the bus company by the Act. We regard this as an eminently reasonable and sensible proposal which the Minister should accept. I beg to move.

Lord Bellwin

My Lords, Clause 3 provides, as has been made clear at earlier stages, a reserve power of direction. Subsection (3), which would be deleted by the amendment, provides that the bus company should be under a legal duty to give effect to any direction which the Secretary of State might find it necessary to give under this power. Thus, the amendment would remove from the clause the means by which ministerial directions are made statutorily binding on the recipient. We would be left with the legal nonsense that the Secretary of State could give directions to the bus company, but it would be up to the bus company to decide whether to give effect to them.

I take it, however, that that is not the main purpose of the noble Lord's amendment. He remains concerned about the words in brackets in subsection (3), which would provide for the bus company's duty to give effect to privatisation directions to override their duties under Sections 24(2) and 24(3) of the 1968 Act. These sections of the 1968 Act imposed duties on NBC to co-operate with certain other transport operators in the provision of services.

It may help the House if I said something about the background to this. The 1968 White Paper, Public Transport and Traffic, set out proposals, later embodied in the Transport Act 1968, for the establishment of passenger transport authorities and executives in our major cities. The White Paper explained that NBC would be under a statutory duty to co-operate with the executives within their areas, and that this could involve transfers of bus services between an executive and NBC. It was made clear that working agreements would be needed between NBC and the PTEs in order to achieve co-ordinated service provision. Such agreements between NBC and the PTEs have already been concluded, so that NBC has in effect already fulfilled its duty under Section 24(2). Nothing in this Bill could override the provisions of those agreements, which are, I understand, legally binding.

The White Paper envisaged something less specific in relation to co-operation between NBC and other operators, including British Rail and London Transport. It referred to, co-operation to ensure the provision of services in as efficient a manner as possible", In practice the main points of that co-operation have been in liaison through Standing Committees and, in some instances, the provision of rail replacement bus services. It is no part of the Government's intention to disturb those arrangements.

I hope that I might have persuaded the House that the prospect of a major clash of duties is remote. We nevertheless thought it right to include in the Bill a provision which made it clear which duty would take precedence in the event of such a clash occurring. It is in no one's interest for the law to be ambiguous. Indeed, I am somewhat surprised that the noble Lords' amendment would require the Secretary of State merely to "have regard" to the 1968 Act duties when exercising his power of direction. It was argued strongly by the Opposition in another place that it would be a grave mistake to leave it to the executive to decide whether or not to override a duty imposed by Parliament. I must say that I have some sympathy with that point of view, which is why I am in favour of the clarity provided by the present wording of subsection (3).

I hope that the noble Lord, Lord Underhill, has followed the point that I am trying to make, since here we are entering into matters of legal interpretations and definitions. If, as I am sure is the case, he has followed my point, I hope that he will not want to press the amendment.

Lord Underhill

My Lords, the noble Lord the Minister said that he was surprised by the wording of our amendment. Well, I would point out that it has been so worded because he would not accept the wording of the amendment on the previous occasion. The wording on the last occasion corresponded with what the Minister has now said we should be proposing. On the last occasion we proposed that "no direction shall be given", which conflicted with the duties. Now we have modified that wording, since the Minister would not accept it, and it was regarded almost as an instruction. In the present amendment we propose that in exercising his powers, the Secretary of State shall have regard". So we have endeavoured to be completely conciliatory and understanding in order to meet the objections of the Minister. That is one of the points in having a Report stage. If one cannot get one's way at the Committee stage, one does one's best at the next stage; and I am certain that the Minister recognises that.

It is not a question of the National Bus Company deciding whether it will accept a decision. That has nothing to do with the present amendment. The position of the National Bus Company is not mentioned at all. The amendment states that the Secretary of State shall have regard to the duties", before he gives a direction. That is what he will consider, and, as was said previously, when the Minister gives a direction the National Bus Company must accept the decision. All that is involved is the Secretary of State having regard to the duties. I am sorry that my noble friend Lord Mishcon has had to leave the Chamber for a short while, since I am certain that he would have taken up the legal points. However, we shall reflect very carefully on what the Minister has said. I still believe that the principle of the amendment is correct. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 [Pensions for employees of related companies]:

5.33 p.m.

Lord Underhill moved Amendment No. 10: Page 4, line 30, at end insert ("and shall not give his consent to any disposal by the bus company under the provisions of section 1 of this Act unless he is satisfied that arrangements will be made for a pension scheme which will not worsen the position of employees of the bus company who would be transferred to the new company").

The noble Lord said: My Lords, this is a very important amendment—as, similarly, were the others that we have moved—and it deals with the pensions for employees of the National Bus Company who may be transferred to a new company in consequence of the disposal of a subsidiary. Your Lordships will recall that in Committee we had a long debate on an amendment which sought to provide that the Secretary of State shall use his power to make an order requiring that the terms and conditions of a pension scheme offered by the new employer shall be not less favourable than those provided by the National Bus Company. During the debate in Committee there were set out in some detail the arguments of the Minister at both the Committee and Report stages in another place, and therefore I shall not go over them again today.

At our Committee stage an important contribution to the debate was made by the noble Lord, Lord Byers, who explained that he held the important position of chairman of the Company Pensions Information Centre. The noble Lord said that though he agreed that the aim of the amendment put forward at the Committee stage was laudable, it could create conditions in which the new private sector companies could not avoid bankruptcy because of the financial burden that might be imposed upon them. The noble Lord also stressed that the future of a pension scheme must be left to negotiation between the new employer and those who represent the workers who are transferred to the new company.

That point was also stressed by the noble Lord, Lord Bellwin, and indeed it was the reason why the Minister rejected the amendment. He said, at col. 599 of the Official Report, that there would be negotiations, But, at the end of the day, it will still come down to the ability … to pay". On this side of the Chamber we saw the force of the points made by the noble Lord, Lord Byers. But, in withdrawing the amendment, I said, as also reported at col. 599: We are dealing with employees who are affected by a decision of Parliament, which has said that a certain property or subsidiary may be disposed of. The workers have to follow a decision about disposal because their subsidiary has been transferred to the private sector". I added: This is a human problem which opens up the whole question of whether disposal ought to take place at all, because employees are being transferred from a settled occupation into a doubtful one". I concluded: It opens up the whole question of whether, when the Secretary of State is considering a transfer, he ought to consider the future of the workers".

We have considered very carefully what was said at the Committee stage, and in the light of the force of the views expressed by the noble Lord, Lord Byers, clearly this is a matter which should be looked at before agreement on disposal, and not be left for negotiations after disposal. The amendment provides that the Secretary of State shall not give his consent to any disposal by the bus company … unless he is satisfied that arrangements will be made for a pension scheme which will not worsen the position". of the workers to be transferred.

We say that when other commercial matters are being negotiated the important question of employees' pensions is an essential one that should be dealt with at that stage. In other words, we are accepting the argument of the noble Lord, Lord Byers, that there could be difficulties in discussions on any scheme after disposal has been agreed upon. This is an essential matter in the interests of both industrial relations and the position of workers, and it ought to be part of the negotiations on whether or not a particular disposal should go ahead. I beg to move.

Lord Bellwin

My Lords, the amendment seeks to do two things, one of which I believe is unwise and the other of which may well be impossible. First, it seeks to involve the Secretary of State in deciding whether the pension arrangements devised for employees of a private company are, or are not, satisfactory. The Government are opposed in principle to that kind of specific statutory interference. There is a general legislative framework with which all pension schemes have to conform, and the rules of all contracted-out schemes must be approved by the Occupational Pensions Board. Subject to that, pension arrangements are a matter for negotiation between employers and employees; indeed they are often at the centre of such negotiations, as regards both the level of contributions and the level of benefits. The Government believe that it would be in the highest degree unwise to intervene in that process, where over the years trade union representatives have shown that they are well able to look after their members' interests.

Secondly, in my respectful submission, the amendment seeks to do the impossible. It asks the Secretary of State to satisfy himself that the new pension scheme will not worsen the position of employees. No Secretary of State could give such a guarantee in relation to a private sector pension scheme unless he was prepared to back it with the taxpayers' money. As the noble Lord, Lord Underhill, reminded us, that is the point that was so ably made by the noble Lord, Lord Byers, during our debate in Committee. But I have to remind the noble Lord, Lord Underhill, that the noble Lord, Lord Byers, said not only that the amendment was laudable; he also said, at col. 594, that the Government were right to resist it. Lord Byers reminded us that the only real safeguard for future pensions was the prosperity of the business. It is that prosperity which our whole policy of introducing private capital is designed to secure. We cannot legislate for prosperity; we can only legislate to provide the conditions for enterprise and growth. I understand what the noble Lord is seeking to achieve here, and I also understand his concern; but I really feel that the point I have made is the practical point, the reality of what it is like in the real world of this situation, and I hope that on consideration he will perhaps accept that and not pursue this amendment.

Lord Underhill

My Lords, I can understand the arguments being put forward by the Minister, but what it boils down to is that, on a disposal, everything of a commercial nature can be taken into account when considering whether the transfer is satisfactory, but not the interests of the workers being transferred. Even if the wording of our amendment is not right, even if certain powers do not reside in the Minister, in these days, when we are talking about improved industrial relations, that seems to me a nonsense. It should be possible, in discussing terms for a possible disposal, for the Secretary of State to ask, "Is it possible for your company to come to a decent arrangement in relation to a pension scheme? " We ought to be able to do that; and that, I suggest, is good industrial relations.

It may be that the wording of our amendment is wrong, and I would have been satisfied if the Minister had said, "While we cannot make this a statutory duty it will be a matter which will be discussed". But we have not even got that assurance from the Government. It seems as if the position of the workers to be transferred is just incidental; it is the prosperity of the business, the noble Lord the Minister says, which matters. On this side of the House we do not accept that position, but we will not divide the House because of the possible defects in the wording of our amendment. But I believe the principle is right. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 [Private-sector vehicle testing]:

The Deputy Speaker (Lord Wells-Pestell)

My Lords, in calling Amendment No. 11, I understand that Nos. 11 and 12 are alternatives, and they will no doubt be discussed together.

Lord Underhill moved Amendment No. 11: Page 6, line 34, leave out ("any person") and insert ("a single non-profit making organisation").

The noble Lord said: My Lords, we are now in a different line of country. We are discussing the question of the transfer of the testing of heavy goods vehicles and public service vehicles to the private sector. These amendments are precisely the same as those which were brought forward at the Committee stage, and I will endeavour to explain to your Lordships why they are the same. I have no intention of going through all the many points that were advanced at the Committee stage, but I will remind the House of just a few.

When the proposals of the Government were first announced, there was universal opposition from road haulage and passenger service operators—the Road Haulage Association, the Freight Transport Association and the Confederation of British Road Passenger Transport. These represent private operators, public bus networks and local authority operators—in fact, they represent 95 per cent., I believe, of the operators in this country. They all wanted the present system, administered through the Department of Transport, to continue. They expressed complete faith in the existing scheme—its impartiality, its independence from commercial pressures and the fact that it was reasonably uniform in its testing standards. In addition, a formidable list of other organisations associated with the haulage and road passenger industries also opposed the proposals.

In addition, the House of Commons Select Committee on Transport, an all-party Committee, after a very detailed survey, opposed the proposals and recommended that the present testing arrangements should continue. That view was reaffirmed by that same Select Committee in a recall consideration some months later. During the first survey the Select Committee considered a proposal from the Confederation of British Road Passenger Transport that, if there had to be a change, consideration be given to the possibility of transferring the testing to an organisation associated with Lloyd's Register. As I understand it, the view of the operators is that if the Government insist on a change it should be to a single organisation; whereas the Government's original intention was to transfer the testing to a number of chains.

I will quote only one conclusion of the Commons Select Committee, in its second report—and these are the last few lines in its conclusion No. 21. They said: On the basis of this most recent evidence we have concluded that the transfer of the vehicle testing system to a single organisation or consortium is the only solution acceptable to the industry, and we believe that the Government's proposals should be amended so as to preclude any alternative solution". That, my Lords, is the purpose behind these two amendments—as the Chair says, the alternative amendments.

I was encouraged at the Committee stage when the noble Lord, Lord Bellwin, stressed that the Government were as determined as all those who spoke in that debate that there should be no commercial pressures on testing. That is the point made in our amendment, and there is a later amendment in the name of the noble Lord, Lord Lucas, which deals with this commercial aspect as well.

The noble Lord, Lord Bellwin, added, in col. 607 on 5th July: We have made it quite clear that we are not contemplating the authorisation of any organisation with commercial interests". But that intention is not in the Bill. Neither is the intention to transfer to a single organisation in the Bill. Clause 8(1) of the Bill provides—and I quote: … the Secretary of State may authorise any person to conduct a business … as a vehicle testing business …". There are provisos in subsection (2) of the clause which exclude the holder of a goods vehicle operator's licence or the holder of a public service vehicle operator's licence from being authorised as a vehicle testing business.

The Government have been conducting negotiations with a view to the testing being transferred to Lloyd's Register Vehicle Testing Authority, and when this matter was debated in Committee the noble Lord, Lord Bellwin, said that no final conclusion had yet been reached but there was an agreement in principle. At this stage I should like to thank the Minister and his colleague for the various letters which have been sent since the Committee stage explaining various aspects of the transfer of testing and, in particular, the progress being made in talks with Lloyd's Register; but it would seem clear that negotiations have not yet reached finality. Therefore, this amendment is still essential. There could be a breakdown in the negotiations, even at this stage. Further, it could be that a review of the practical working of a scheme (which may be with the Lloyd's Register) after a period of time may indicate that it was not progressing satisfactorily.

At the moment, we have to deal with what is in the Bill, not with what Ministers say—and I repeat this time and time again. My noble friend Lord Mishcon says, "Quite right". I am a novice at the law, but I have been in your Lordships' Chamber sufficiently long to have heard learned Law Lords say that it is not what Ministers say, it is not the arguments they use, it is not the intentions that they guarantee; it is what is in the Bill that matters. Under the Bill at the moment, the Government could have as many testing authorities as they wish. That would be against the views of all the operators, and we should make provision in case the Lloyd's Register scheme should fail.

First, the first amendment says that there should be one single non-profit-making organisation. On that, there is no reason whatever why Britain should follow what other countries do, but there must be some reason why, as I said at the Committee stage, only one of eight West European countries has a private testing organisation. All the other seven have either completely Government-run agencies or, in the case of two of them, independent organisations in which the particular Government have a very substantial majority holding. There must be some reason why those eight West European countries have a single organisation and, in all cases, a non-profit-making organisation. What we are attempting to do in this amendment is to say, in the first amendment, that there should be a single non-profit-making organisation. If that is not acceptable to the Government, the second amendment says that there should be one organisation, either one company or a group of companies. These seem to be what the operators want. I hope that either of those amendments will prove acceptable to the Government.

Lord Lucas of Chilworth

My Lords, I think it might be helpful to my noble friend if I intervened at this stage. May I thank him for a number of letters following conversations on this matter. Most of these letters have proved to be very helpful. However, I still remain somewhat worried and the main worry is that although the Government's intention and Lloyd's intentions are quite clear and, in the absence of anything better and in the face of the Government's determination (which I can understand) to return the testing system to the private sector there remains, I believe, a considerable amount of doubt.

Lloyd's, as I understand it, is still an embryonic company and still there are a number of matters to be ironed out. My noble friend's letter to me suggests that he at least does not think that these difficulties are going to be insurmountable; nevertheless, throughout our earlier discussions we have heard the Minister speak of alternatives that might be necessary at another time. The Lloyd's system is to be set up in 1983. It may be, for example, that by 1985 it is found to be unsatisfactory and they would wish to rid themselves of perhaps part of the scheme, part of the 91 stations which it is proposed that they take over.

In that event, the Secretary of State would have to find an alternative. I think that it is here that we would like to see closer control by virtue of one or other of these amendments (of another one to which I shall speak shortly) to ensure that there is uniformity, that there is no undue commercial pressure brought to bear in the testing situation. In the correspondence, my noble friend says that all these fears are understood and, in fact, they are taken care of in Clause 8 in a number of subsections, notably subsections (9) and (10). He rests on the fact that the ultimate proposals shall have to be brought before Parliament and shall have to be passed by resolution of both Houses. We have asked for this on a number of occasions, particularly in road safety matters where regulations are concerned. These are regulations that involve discussions with other bodies and a final decision from the Minister.

In this case, much negotiation with commercial bodies will have to take place before any of those proposals could be laid before Parliament to be approved. It would then be commercially suicidal for either House of Parliament to say, "No, we do not like these proposals. Start all over again!" It is for this reason that I give some measure of support to what the noble Lord, Lord Underhill, is aiming to achieve by virtue of one or other of these amendments.

5.54 p.m.

Lord Bellwin

My Lords, there is certainly no difference in intention, no difference in our wanting to be at the same place at the end of the day in this whole matter. As those noble Lords know who took part in the Committee stage of this Bill, the Government share the aim behind this amendment. We have every intention of doing what the noble Lords opposite and my noble friend are seeking, through this amendment, to require us to do; that is to authorise as the approved testing authority one respected and impartial organisation which will carry out testing to the highest standards.

I do not believe that it would be wise to amend the Bill in the way proposed. We have, it is true, decided that on balance the best course would be to transfer the testing system to Lloyd's Register Vehicle Testing Authority. We believe this is a proposal which will maintain the high safety standards and impartiality to which everyone in the industry and in this House rightly attaches great importance; and that it will improve the service given to vehicle operators. But this is not to say that transfer of testing to Lloyd's is the only option for the future of the system. Testing must be carried out impartially, thoroughly, consistently, and to the proper standards: but that does not imply that the system must be organised in one particular way.

We fully expect that our negotiations with Lloyd's Register will be successful, and a testing system operated by Lloyd's Register Vehicle Testing Authority will undoubtedly be an excellent one. But are competence and honesty really in such short supply that no other arrangement could work? And are we so wise that we can be confident of having found the one true answer to the practical questions about how to run a testing system, not just now, but for ever?

I am sure it would be a mistake to seek to embody in primary legislation one particular solution to the question of how best to arrange for the routine testing of lorries and buses. Surely we ought to leave room for flexibility, for development, for natural growth and change. I am not asking for the Government to be given carte blanche. I would remind the House of the provisions in this clause which require the Secretary of State to gain the approval of Parliament for any proposal to authorise an approved testing authority. These guarantee that no proposal can be implemented unless Parliament is satisfied with it: they guarantee that any proposal will be judged on its merits, in the light of full information, and that Parliament will have every opportunity to assess how well we have achieved the essential objectives in terms of safety and integrity.

On those grounds, I think it would be wrong in principle to seek to amend the Bill as proposed. But there are also more technical reasons why it might well prove to be a mistake. Let me give an example. At this stage we do not have a final blueprint for the new authority, and the details of its constitution and operation are subject to further discussion. As the House knows, the constitution of Lloyd's Register itself prohibits the distribution of profits to members, and it is certainly intended that the new authority will follow that model. But if its income in any year exceeds its expenditure, would it satisfy the description "non-profit-making"? I believe that if we write into the Bill some description of the kind of organisation we have in mind, we risk imposing a straitjacket on the practical business of working out the arrangements which will best serve our aims.

To add an extra provision at this stage, writing in some specific description of the new authority, could well prove to be a mistake which we would come to regret. We could find that we had unintentionally closed off some sensible option for the structure or organisation of the new system—one with which your Lordships would have been entirely content, when you had the opportunity to consider the proposal in context. In the Government's view the right approach is to leave some practical freedom now, but with a requirement for parliamentary approval when we have a complete and detailed proposal to lay before you. That is what the Bill provides.

The noble Lord, Lord Underhill, reminds me, not for the first time and I hope—God willing—not for the last time, that it is not what Ministers say, it is not the good intentions expressed, however honestly, it is what is in the Bill. I accept that. I know it well enough; I have been familiar with these matters now for long enough to know that that is so. We, too, wish to see testing put into the safest possible hands. We mean to ensure that that is what happens. We do not believe that the amendment will be helpful. I hope for the reasons that I have expressed that the noble Lord will accept what I say and will not proceed with the amendment.

Lord Tanlaw

My Lords, we, too, should like to support the noble Lord, Lord Underhill, in the principle behind this amendment, which was covered well in Committee, It expresses the doubts and concerns which the industry and many of us have about the possibility of the format of the testing organisation not being one single body but with testing offices in different parts of the country. The Government's position here is somewhat strange. It needs clarification. By all means, let this matter come before Parliament; but we do not have anything before Parliament. There is no blue print, as the Minister has said. How can you expect Lloyd's Register Vehicle Testing Authority to come into a contract with Government when they do not even have a blue print of what the testing authority is to be?

I may have misunderstood the noble Lord; but if I have not done so I believe that it is essential that something like the suggestion of the noble Lord, Lord Underhill, should be put in the Bill as an insurance policy. We are being asked to pass this Bill without any idea of whether Lloyd's Register Vehicle Testing Authority is going to take on the contract of this job. Also, we have no idea what the blue print is to be for these testing stations. If, as the noble Lord the Minister suggests, Parliament is the final arbiter of this system of testing, I am afraid that I am a little vague as to what Parliament has been asked to do. I should like to see this amendment accepted for the reason that I have given. The industry itself would like a little more detail.

Lord Bellwin

My Lords, will the noble Lord allow me to explain? If I have not made this clear, perhaps I should have done so. The blue print—if I may call it that—has to be brought before Parliament to be approved in due course.

Lord Tanlaw

My Lords, I did not realise that. The point I was making was: how can Lloyd's Register Vehicle Testing Authority give any indication that they are prepared to take on this job if they have not been given sight of the blue print? If Lloyd's have not been given a blue print, and we have not been given a blue print, when is such a blue print going to be put forward? What is the timescale that the noble Lord is expecting? Are we talking about one year or two years? There is a lot which has not been put before us. I am supporting the noble Lord, Lord Underhill, here because I feel that this Bill at this stage needs an insurance policy and his amendment gives it one.

Lord Mottistone

My Lords, I should like to support my noble friend. He gave a thorough understanding of the points which the noble Lord, Lord Underhill, advanced and which I share. He seemed to me to give us all the reassurances that we wanted. The Government's thinking seems to be in line with what we want. Any proposals will have to come before Parliament, and I should have thought that that was really enough. Underlining within the major legislation in the way that this amendment and the subsequent one would require, is unnecessarily restricting in view of the possible developments that might happen in the future. The great safeguard is that the proposals have to come before Parliament for approval.

Lord Underhill

My Lords, if the House will permit me to do so before I indicate what attitude I wish to take on this amendment, may I ask the Minister, as he rejects the position—as I think he does—of the nonprofit-making organisation, as in Amendment No. 11, what his view is regarding Amendment No. 12? We agreed they should be taken together.

Lord Bellwin

My Lords, I understand the point that the noble Lord is seeking to make regarding Amendment No. 12. I have already considered the arguments for and against restricting the Secretary of State to the authorisation of one single body. I do not believe that this amendment would achieve what the noble Lord intends. I am advised that to alter the reference from "any person" to "a person or company or group of companies" would not have the effect of preventing the Secretary of State from authorising more than one such person or company. It might make the provisions of Clause 8 less clear. It would not rule out what I believe the noble Lord wishes to see ruled out. I hope that the noble Lord will agree with me, if he follows the point that I am trying to make.

While still on my feet, speaking again by leave of the House, may I respond to the point made by the the noble Lord, Lord Tanlaw? He was anxious that we did not have before us the blue print in question. He wondered how Lloyd's Register Vehicle Testing Authority could be considering this. Lloyd's are looking at a blue print. I think I said during Committee stage that they have approved the outline of a scheme and they are now looking at—if I may put it this way—the nuts and bolts, the details. Would that we had been able to be here today and say that this has been agreed. I entirely take what the noble Lord, Lord Underhill, said about that. It has not been agreed and it would be wrong of me to imply that it has. That is why I have tried to make the further point that even in the unlikely event that it should not be, then I have made my other points. The important point is that Parliament would still have to approve. Even when they have seen and agreed the scheme it still has to be approved by Parliament. That is surely where the safeguard lies.

Lord Underhill

My Lords, the noble Lord has been very helpful in his last observations that he has been given legal advice that Amendment No. 12 will not achieve what I want it to achieve. What we wanted in the amendment was to have a single organisation, which is what the operators want: either a single company or group of companies. As the noble Lord, Lord Bellwin, said that his legal advice is that it would not achieve that, I must bear that in mind and take a careful look at it.

In the other points that the noble Lord makes, he says that there is every intention—and I accept what he says—providing everything goes well with Lloyd's to do what we are requesting in this amendment. But the noble Lord goes on to say "Although this is our intention, why should we commit ourselves now to one set form?". At the moment, the Government have committed themselves to one single organisation which they hope will be Lloyd's. I accept the argument of the noble Lord, Lord Tanlaw, that there must be some form of insurance. In case Lloyd's fails or in case it is subsequently found that it is not a good set up. I appreciate also the support of the noble Lord, Lord Lucas.

It is clear that the Government do not like Amendment No. 11. I am very tempted to divide the House on Amendment No. 12; but in view of the legal advice which has been given to us I propose to take a careful look at it. If the Government accept the principle of a single organisation, then I should like to see them come forward with an amendment based on all the legal advice that the department can get, which might be better than ours. In the meantime, I beg leave to withdraw the amendment. But I will definitely come back to this subject on Third Reading with an amendment which I hope will meet the Government's point. It would be helpful, however, if the Government were to say they recognise the point and will bring forward their own amendment, with all the legal advice they have on it.

Amendment, by leave, withdrawn.

[Amendment No. 12 not moved.]

Lord Lucas of Chilworth moved Amendment No. 13: Page 7, line 6, at end insert— ("or (c) engaged in the manufacture, sale or repair of motor vehicles;"). The noble Lord, said: My lords, in discussing Amendment No. 13 we return to points that I raised during the Committee stage in relation to who shall be a testing authority or even part of a testing authority. I do not want to go over all the ground again but there are three points that I should make. The first is that in the discussion that I have had with my noble friend he has made it quite clear that, while the Government are looking at the Lloyd's Register arrangement, which has advantage, the Government nevertheless preferred not to rule out the possibility of organising testing differently at some stage in the future. I assure noble Lords that this is not a rehearsal of what we have just been through.

My noble friend says that there are sufficient provisions in the Bill as it is written perhaps to persuade me that we could allow commercial interests, including garage interests, to become involved in testing. That is the first point. I am not so persuaded. With the experience of the passenger car testing scheme which is operated by the retail motor trade, largely in a fairly good manner, and appreciating that this is very different, that there is a different number of testing stations here, a number of different pegs and that they deal with a vastly increased number of vehicles, nevertheless the principle of the motor industry is the same and there has undoubtedly been concern during this whole argument about goods vehicle testing as to the impartiality, safety and the pressures that commercial interests bring. In fairness, I should remind your Lordships that for many years I was involved in the retail garage industry and so I appreciate a little how these commercial pressures can arise.

Secondly, at the Committee stage I had a fairly widely drawn amendment which said, in effect, that no person who was concerned with the motor industry or motor manufacturing should take any part in vehicle testing. Noble Lords will see that this amendment has been changed and reduced in size; and it now says quite clearly that a further exclusion to Clause 8(2) should apply to a person engaged in the manufacture, sale or repair of motor vehicles; that is positively engaged in, actively engaged in, not necessarily concerned with. This does not preclude an organisation which has an involvement with motor people who may not then be actively engaged in, that is, commercially engaged in, the profit and loss of the manufacture, sale or repair of motor vehicles. These are the exclusions. I believe I have indicated to your Lordships where the dangers lie.

There is one further point on this amendment. It will be seen that under Clause 8(2): The Secretary of State may not under subsection (1) above authorise any person who is for the time being either— (a) the holder of a goods vehicle operator's licence granted under Part V of the Transport Act 1968"— that is, a heavy goods vehicle operator— ("or (b) the holder of a PSV licence granted under Part II of the 1981 Act …". It is fairly obvious to me that this is to ensure that nobody who has a direct interest in the activities of the vehicle undergoing test has any say in the testing procedure. I cannot see the logic of refusing to exclude any person engaged in the manufacture, sale or repair of motor vehicles. I suggest to your Lordships that the same argument holds good. In any event, we are talking about safety and other matters. As I understand it, the arrangement with Lloyd's is that there shall be on the governing body of the new authority which Lloyd's are proposing to set up representatives from the motor manufacturing industries through the Society of Motor Manufacturers and Traders, and the repairers, through the MAA; so there seems to be an element of trade in Lloyd's who may not be engaged in, but would be concerned with; and yet the Government still refuse to exclude the garage industry itself.

In moving the amendment, I should like to ask my noble friend if he can tell us a little more about this involvement of the SMMT and whether any other bodies are to be included in the authority; for example, representatives of the users themselves, let alone the makers or the repairers. It seems an odd arrangement and I mention it at this stage notably for the noble Lord, Lord Underhill, to take into account when he is considering what he might do vis-a-vis his earlier amendment.

Finally, I can see nothing in my amendment to which the Government might object. The principle has been established already by the other two operators. It would remove from those engaged in the haulage industry a disquiet that at some time the very people who sell them lorries and who repair them are to end up by being testers. I beg to move.

Lord Underhill

My Lords, I wish to say a few words in support of the amendment of the noble Lord, Lord Lucas of Chilworth, for two reasons. First, as I mentioned on the previous amendment, the Minister made quite clear at the Committee stage that the Government are not contemplating the authorisation of any organisation with commercial interests. That is what the noble Lord's amendment wishes to make absolutely clear. Therefore, this amendment is perfectly in line with what the Minister said at the Committee stage, of which I reminded your Lordships when we discussed the previous amendment.

The other point is that in the discussion on the whole question of transfer of testing of heavy goods vehicles and passenger service vehicles I have been keen to listen to what the operators say. I am not talking now merely about those operators who are in public hands, publicly owned, but about all operators, privately owned and others. They all say that, as well as wanting one organisation, what they wish to avoid having anything at all to do with in the new testing organisation is any possibility of commercial interests being involved as well in repairs to vehicles. That is their view. They want to avoid that, and I believe on those grounds alone the Government would be well advised to accept this amendment.

If they do not like the actual wording perhaps they could accept something along the same lines, bearing in mind that already they have seen fit, very rightly, to insert two provisos in the Bill that no heavy goods vehicle operator or no public service vehicle operator can be an authorised testing station. The Government obviously see the dangers that could arise in that connection. The views of the operators should be taken into account and this amendment should be supported.

Lord Tanlaw

My Lords, I also should like to support this amendment, for the reasons given by the noble Lord, Lord Underhill, and also for a couple of other reasons. In Clause 8(2) the Bill says this: The Secretary of State may not under subsection (1) above authorise any person …". I should like to ask the noble Lord the Minister: What about that person's brother? This is the problem. The noble Lord, Lord Lucas of Chilworth, has brought in the manufacturers, but, once various members of a family become involved, I believe you are then getting into the realm of what the Inland Revenue call, "connected persons", and that is why the whole industry are not keen on this section of the Bill. They are worried about the difference between fair competition and unfair competition.

If the Government reject this amendment—the implication which the noble Lord gave is quite clear to me—the implication is that there is a possibility at some future date of independent testing stations; there may be one, two or three different bodies could be running them, and the Government want a free hand to choose this. Therefore, all the problems and doubts of the industry come back to this: Is there going to be unfair competition, in that so-and-so is connected with a testing station in one form or another, be it through the industry or through a blood relative? The full force of the argument comes into these last three amendments we have discussed.

The noble Lord, Lord Lucas, is attempting to bring in some safeguards for the industry. I do not really think he has gone far enough. I think you have to go right the way on down to what the Inland Revenue calls "a connected person", and once you start doing that you might as well put testing stations to where they are at the moment, in the public sector. Then everyone would be much happier.

Viscount Cross

My Lords, may I say I understand from the Bill who is not going to be allowed to do the testing, but at the same time may I ask the noble Lord the Minister who the Government have in mind as doing the testing?

Lord Bellwin

My Lords, on the latter point, just to dispose of it straight away, clearly the expectation is that Lloyd's Register will be concerned with this, although, as I said earlier, the arrangement with them is not yet concluded. We fully expect that it will be, but I readily concede that until it is concluded it is not a fact. But I also went on to say that, if it should turn out not to be so, an alternative in the same basic form—that is, one organisation—would still apply.

Apart from the fact that the amendment, as worded, we believe is technically deficient in that the words are very vague and, if interpreted widely, could well catch bodies whose connection with the commercial side of the industry were very remote. In other words, it might be more restrictive than my noble friend Lord Lucas imagines. However, he has once again described very clearly the concern behind his amendment. I said in Committee that the Government recognised the very great importance of making sure that vehicle testing is not run by anyone with commercial interests which might influence his business. I must say once again that there is a great deal of common ground between us. But, as I said in my recent letter to my noble friend, I do not believe that there is any need to make an amendment to the Bill to deal with these concerns, and indeed, I think it would be unwise to do so.

To put what I am about to say into context—as I hope I did in writing to my noble friend—I must emphasise that when we consider the possibility of a person with commercial interests becoming involved in this activity we are not talking about a very likely event. We are, as I have said, encouraged by our discussions with Lloyd's Register and confident that our agreement in principle will be put into practice. We have nevertheless preferred not to rule out the possibility of organising testing differently, and it is obviously right that we should have proper provision for these other cases. We do not believe that the involvement of commercial interests, under proper control, would be impractical. We naturally accept that there would need to be a number of safeguards. But I would say that the Bill already provides a formidable array of these, which we have included to make sure that the possibility—and it is no more than that—of a commercial company becoming involved could be catered for.

It might help the House, as this matter obviously has caused some concern, if I were to explain these safeguards in some detail. I hope my noble friend will hear with me if I point once again to the provisions which I honestly believe should meet his concern, which I fully understand. First, the power to attach conditions to authorisations under Clause 8 of the Bill gives us a very powerful tool. Incidentally, I hope that, when I make these remarks, your Lordships will consider them carefully and not with minds perhaps already closed on this issue—because I rather suspect that many of your Lordships may have come to a conclusion—and that is why I am going to the trouble of explaining why we have the safeguards which cover my noble friend's anxieties on this matter. So I say again that first there is the power to attach conditions to authorisations under Clause 8 of the Bill, which gives us a very powerful tool. If the approved testing authority or authorities had any commercial interests we would insist on a complete separation of management between the testing business and those other interests, probably taking the form of a separate subsidiary company. We would make sure, using our powers in Clause 8, that the management of the testing side was responsible directly to the highest level in the group and to no one else.

Secondly, we would insist that any testing authority should devote reasonable resources to an effective system of standards control, and we should require the results of these in-house checks to be made available to the Secretary of State. We would also, however, have our own very thorough system of supervision as a double check on this. Civil servants would continue to carry out standards-control checks on behalf of the Secretary of State; and their routine examination of vehicles in the course, for example, of roadside checks would also provide valuable information about the condition of the vehicle population. All this will be an effective check on how individual stations are performing. And, my Lords, this is all in addition to the computer analysis of test results, which will continue and which would quickly reveal any abnormal pattern of results which might indicate an improper influence on testing standards.

This is a comprehensive system of control. The way in which it is used will of course depend on the circumstances. A single testing authority is likely to be much easier to supervise than a system divided between several different companies. But, whatever the system, we will make sure that it functions properly, and we will devote whatever resources may be necessary to the task of supervision and control.

I hope I have reassured the House, including my noble friend Lord Lucas—I suspect not; but I hope so—that, while we are not in fact intending to involve commercial companies in this area, we do believe it would be feasible, with the controls in this Bill, so to do. I hope that I have managed to convey the practical way in which the testing system will be controlled. I would once again, however, point to Clause 8(9) and (10) of these if there remains any disquiet. These require the approval of both Houses of Parliament before the Secretary of State can implement any proposals for the authorisation of a testing authority. Both Houses need to be satisfied that nothing which is proposed would endanger the high standards of testing, which we all regard as so important. If at that stage there is still concern, then it will be within Parliament's power if necessary to reject the proposals.

Parliament itself will be the judge of whether we have devised a system which will truly provide integrity in testing and a good service to the industry, and Parliament will make that decision, not on the basis of hypothetical discussions and abstract principles, but on a specific proposal and in the light of full information about what the Government intend. Surely, that is the right way to exercise control. Amending the Bill now, I would suggest with every respect to my noble friend—and he knows that for his considerable knowledge and experience in this field I have every respect—is not the right way and, in the light of what I have said about the safeguards which already exist, and which would in fact apply, I hope that he will feel able not to press the amendment.

6.31 p.m.

Lord Mishcon

My Lords, I wonder whether the noble Lord the Minister would deal with the central point which I believe is worrying noble Lords. That point is not whether there are safeguards in the Bill, in regard to the respectability of an authority that may be put before either House. That disquiet is not, indeed, in regard to the safeguards of which the noble Lord the Minister has been good enough to remind the House. The safeguard that is wanted is something which is very well known in commercial and professional life. It is to avoid a conflict of interest, and operators are anxious to see that there is no possible conflict of interest. A conflict of interest is possible where somebody is engaged in the motor trade, and essentially somebody who is engaged in the repair side of the motor trade, because the operators feel—and it may be a fault that will eventually not worry them, but the principle is there; or, if I may copy the Minister's favourite word, the "philosophy" is there, from the point of view of the operator—that the Act of Parliament which will face them should be one which shows a manifestly fair, proper, impartial and disinterested authority, and it is the disinterested part, in regard to the exclusion of the motor trade industry, the repair industry, that has to be shown upon the face of this statute to be there.

That is the safeguard that is wanted and, if I may say so with respect to the Minister, he did what he usually does, which is to take the House fully into his confidence by explaining the provisions of the Bill which he thinks are safeguards. But the noble Lord failed to deal with the central point, quite apart from the fact that, quite unintentionally, he misquoted the amendment when he spoke of a technical objection to it. But I have an idea that, as it is his amendment, the noble Lord, Lord Lucas, will want to deal with whether or not he was correctly quoted, and it would be an impertinence for me to go on with that point.

Lord Bellwin

My Lords, I wonder whether, by leave of the House, I might make a brief comment on what the noble Lord, Lord Mishcon, has just said. Of course, I entirely agree with him as to the desirability—indeed, the essentiality—of there being a no-conflict situation. That is as fundamental to the Government in their thinking in this matter as it is to the principle which he enunciated. But surely the very fact—and this must be the answer to that point—that, at the end of the day, it is Parliament (and we cannot belittle the importance of that) which will have a say as to whether or not the organisation brought forward for approval has the kind of impartiality that it would require to see, is the greatest test of all; and that is there. That is the answer to the point which the noble Lord made.

Viscount Cross

My Lords, may I say that the system described by the noble Lord the Minister sounded to me very like the present system—

The Earl of Avon

My Lords, I think that this is the second time that the noble Viscount has spoken on this amendment, and he should ask for the leave of the House.

Viscount Cross

My Lords, with the leave of the House, may I just say that the system described by the noble Lord the Minister sounded to me very like the present system, which I believe works very well, and it would be a very great pity to change it. It is very important to have an impartial authority, something similar to the people who do the weights and measures, and as the present system is run by such an authority it would be a great pity to change that part of it.

Lord Lucas of Chilworth

My Lords, I am most grateful to my noble friend the Minister for giving a very full explanation of the proposals. To start at the beginning, the Minister said he thought that my amendment was defective and was too widely drawn. He said that excluding people concerned with the industry drew too wide a net. Perhaps my noble friend misread me, or perhaps I misled him when I said what my previous amendment was concerned with. This amendment uses the words "engaged in", which is a much narrower net. But it is not for me in this matter to be at all satisfied. It so happens that I am not, but it is not for my noble friend to satisfy me. He has to satisfy the industry or, to put it in another way, we in Parliament have to satisfy the industry— I would not put it solely upon my noble friend's shoulders—and we have not done so up to this moment.

I do not disagree at all about the controls, the levels of expertise to be engaged in testing, the supervision, the roadside checks and the monitoring. Neither do I dispute that any competent well-trained motor vehicle engineer could do this work. I am concerned with the grey area. If I had been a pupil of the noble Lord, Lord Mishcon, instead of an engineering apprentice in my younger days, I could have put it better.

I shall be quite blunt about this. Some years ago I was the manager of a garage who had the responsibility of examining taxicabs on behalf of the local watch committee. There were pressures brought to bear well outside the competence of the inspection, and it was bluntly put, "I am sure we are going to buy a new taxicab next year, if you could just see us through this year". That is the grey area and that is the conflict of interest. I have said before that it is not unknown for garage mechanics engaged in the testing of motor-cars, who happen to be paid on a time-saved bonus system, to increase the ardour with which they express their opinions on certain testing matters, which may reflect itself in the work in an idle workshop. Those are the grey areas. You can apply conditions, such as that Mr. X, who will be a testing authority at some time in the future, shall not do this, that or the other. But it does not remove the grey area, if he has a garage up the road, or if, as the noble Lord, Lord Tanlaw, said, his brother has one, and the distancing of a subsidiary company is a delicate matter.

So I very much regret that I am not reassured. There is this area which the industry will be unhappy about, having enjoyed the confidence and the good reputation of the Government scheme. This is not at all to imply that Lloyd's Register cannot do the job. But we have to satisfy those who are going to pay—the customers. They want to be absolutely satisfied that the interests which obtain with a commercial vehicle are as far removed from the testing as is humanly possible. I believe that your Lordships will agree with me. In fact, I am going to ask your Lordships so to do.

6.40 p.m.

On Question, Whether the said amendment (No. 13) shall be agreed to?

Their Lordships divided: Contents, 53; Not-Contents, 60.

DIVISION NO. 3
CONTENTS
Aylestone, L.	Diamond, L.
Banks, L.	Ferrier, L.
Bernstein, L.	Hampton, L.
Bishopston, L.—[Teller.]	Harris of Greenwich, L.
Blease, L.	Hatch of Lusby, L.
Blyton, L.	Hirshfield, L.
Boston of Faversham, L.	Houghton of Sowerby, L.
Brockway, L.	Howie of Troon, L.
Brooks of Tremorfa, L.	Hylton-Foster, B.
Collison, L.	Jacques, L.
Colwyn, L.	Jeger, B.
Cross, V.	Jenkins of Putney, L.
Davies of Leek, L.	John-Mackie, L.

Kilmarnock, L.	Rea, L.
Kinloss, Ly.	Rochester, L.
Leatherland, L.	Ross of Marnock, L.
Llewelyn-Davies of Hastoe, B.	Shinwell, L.
	Stedman, B.
Longford, E.	Stone, L.
Lucas of Chilworth, L.—[Teller.]	Tanlaw, L.
	Tordoff, L.
McCluskey, L.	Underhill, L.
Mishcon, L.	Wallace of Coslany, L.
Mottistone, L.	Wells-Pestell, L.
Newall, L.	White, B.
Peart, L.	Wigoder, L.
Phillips, B.	Wynne-Jones, L.
Ponsonby of Shulbrede, L.

NOT-CONTENTS
Airey of Abingdon, B.	Kimberley, E.
Alexander of Tunis, E.	Lane-Fox, B.
Auckland, L.	Lauderdale, E.
Avon, E.	Long, V.
Balerno, L.	Lyell, L.
Bellwin, L.	McFadzean, L.
Beloff, L.	Mackay of Clashfern, L.
Belstead, L.	Macleod of Borve, B.
Boyd-Carpenter, L.	Marley, L.
Cathcart, E.	Marshall of Leeds, L.
Chelwood, L.	Mersey, V.
Cork and Orrery, E.	Murton of Lindisfarne, L.
Craigavon, V.	Orkney, E.
Cullen of Ashbourne, L.	Pender, L.
Davidson, V.	Rankeillour, L.
Denham, L.—[Teller.]	Sandford, L.
Dilhorne, V.	Sandys, L.—[Teller.]
Dormer, L.	Selkirk, E.
Drumalbyn, L.	Skelmersdale, L.
Eccles, V.	Strathspey, L.
Elton, L.	Swansea, L.
Ferrers, E.	Swinfen, L.
Fisher, L.	Thomas of Swynnerton, L.
Gainford, L.	Trefgarne, L.
Gardner of Parkes, B.	Trumpington, B.
Glenarthur, L.	Vaux of Harrowden, L.
Harmar-Nicholls, L.	Vickers, B.
Hives, L.	Vivian, L.
Home of the Hirsel, L.	Ward of Witley, V.
Hornsby-Smith, B.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

6.48 p.m.

The Deputy Speaker (Lord Wells-Pestell)

My Lords, I have been informed that Lord Balogh voted in both Lobbies in Division No. 1 on Amendment No. 2. In accordance with the procedure applicable in such cases, his name will be struck off the lists and his vote will be disregarded. The numbers who voted were, therefore, Contents, 77; Not-Contents, 103.

Clause 9 [The testing and surveillance functions]:

Lord Bellwin moved Amendment No. 14: Page 8, line 36, leave out ("(where appropriate)").

The noble Lord said: My Lords, I think it may be convenient, in taking the first Government amendment to this clause, also to consider Amendments Nos. 16, 17 and 39. In moving this amendment, I know that I am proposing the deletion of a provision which has caused some concern. Even at this stage there is an amendment down from the noble Lords, Lord Underhill and Lord Mishcon, seeking to make it clear that these lines in Clause 9 would not allow authorised inspectors to supervise private sector examinations on behalf of the Secretary of State.

I want to explain why the Government are making this amendment, because there are purely technical reasons. The provision which this amendment would delete was intended to allow the Secretary of State to transfer to authorised inspectors further functions which appear to him to be connected with the testing functions listed in Clause 9. The thinking behind this was that the Secretary of State would want to authorise inspectors to carry out functions which were related to existing statutory functions but which were not themselves the subject of statute, such as the issue of plates to goods vehicles, and that he might wait to transfer further minor or ancillary statutory functions to authorised inspectors. It was thought that the provision would allow all this to be done.

The provision was not intended to allow the approved testing authority to conduct related commercial activities, and the deletion of the sub-paragraph makes no difference to the position in that respect. No company or individual needs the authorisation of the Secretary of State to engage in ordinary commercial activities. Whatever is said or not said about it in Clause 9, makes no difference. Any testing authority will be free in law to undertake any business it pleases, but under the powers in Clause 8 the Secretary of State may attach conditions to authorisations to make sure that anyone who wants to remain an approved testing authority cannot operate in any way which could bring commercial pressures to bear on testing.

This amendment is not about moving out commercial activities. What it does is to delete a provision which I am advised is now simply unnecessary and has no substantive effect. The Secretary of State's powers to extend the function of authorised inspectors are limited by the provisions of primary legislation, as prospectively amended by the explicit provisions in this Bill for the transfer of named functions. This final paragraph in Clause 9 will not permit the Secretary of State to do what the primary legislation does not allow. Where the primary legislation would allow further minor functions to be exercised by authorised inspectors—for example, the issue of Ministry plates for goods vehicles—then that is what it allows, and this paragraph in Clause 9 adds nothing. In fact, the provision is misleading, since it appears to give the Secretary of State a significant extra power, when in reality it does nothing of the sort and, in the Government's view, it would be better deleted. Amendments Nos. 16 and 39 are merely consequential changes to the drafting of another part of Clause 9 and of Schedule 5. I hope that this explains the amendment and will remove any need for the noble Lord, Lord Underhill, to move his amendment to the same paragraph. I beg to move.

The Deputy Speaker

My Lords, I have to inform your Lordships, as Amendment No. 16 has been mentioned, that if Amendment No. 16 is agreed, I cannot call Amendment No. 17.

Lord Underhill

My Lords, I am grateful to the noble Lord the Minister for explaining the purpose of these various Government amendments and the fact that the paragraph dealing with further functions is now to be deleted. As has been rightly said, that means that my amendment, Amendment No. 17, which the noble Lord the Minister said would be taken in conjunction with these other amendments, cannot be moved presuming that Amendment No. 16 would be agreed to.

I want to thank the noble Lord the Minister for os kindly writing to me since Committee stage about the provisions of subsection (11) of Section 10. Having had his letter, which was very helpful, and having read it very carefully, it has made me very worried as to whether my amendment, if it had been permitted, would have been what I desired. As I refer to subsection (11) of Section 10 in my amendment, I assume that I am in order in raising one or two points upon it. For the benefit of other noble Lords, perhaps I could read the section concerned. A paragraph in this subsection reads: No person other than an officer of the Secretary of State may be authorised by, or under regulations so made to supervise or review an examination carried out in the course of a vehicle testing business carried on by, a person other than his own employer. The noble Lord the Minister has kindly informed me that any testing from outside the testing authority—any supervision—can only be carried out by officers of the Secretary of State. That is what is provided there. But then he refers to in-house supervision by private sector staff.

With reference to the last few words of the section that I read, which says: carried out by a person other than his own employer", I wonder whether the noble Lord the Minister can explain exactly what the in-house supervision will be? I presume that will not take precedence in any way over the outside supervision; in other words, that every piece of in-house supervision will be examined, if necessary, by the outside supervision. If the noble Lord cannot answer that, perhaps he will send me a further letter. This raises a very important issue and there will still be an opportunity to deal with it, if necessary, at Third Reading.

Lord Bellwin

My Lords, with the leave of the House, I would have said that in-house supervision really means the normal kind of management supervision one would expect. To what extent there is an element of outside supervision of the inside supervision is something on which I shall certainly write, not as lengthy a letter as those which I have been writing to the noble Lord, but one long enough to explain the point which concerns him.

On Question, amendment agreed to.

Lord Bellwin: moved Amendment No. 15: Page 9, line 41, at end insert— ("The carrying out or supervision of examinations and the issue or refusal of certificates under section 10 (certificates of conformity to type for public service vehicles).").

The noble Lord said: My Lords, I believe it may be for the convenience of the House if, in considering Amendment No. 15, we also take Amendments Nos. 18, 19, 20, 21, 22, 28, 29, 30, 31, 38 and 40, which I will then move formally in their proper places. I would not want your Lordships to believe that the length of these amendments indicates a substantial revision of the Bill. In fact, they leave what is before us quite unaltered, but make sensible additions to the list of functions which may be carried out by the testing authority and its inspectors. The lengthy speaking note I have before me simply sets out more detail, which I shall be glad to give if called upon; otherwise, I beg to move.

On Question, amendment agreed to.

Lord Bellwin moved Amendment No. 16: Page 10, leave out lines 14 to 18.

The noble Lord said: My Lords, I have already spoken to this amendment, and I beg to move.

On Question, amendment agreed to.

[Amendment No. 17 not moved.]

Clause 10 [Provisions supplementary to Section 8]:

Lord Bellwin moved Amendments Nos. 18 to 22: Page 11, line 11, after ("(8)") insert— ("(ee) in section 10(2) of that Act, after the words "the certifying officer""). Page 11, line 31, leave out from ("or") to ("an") in line 32. Page 12, line 38, leave out from ("or to") to end of line 41 and insert ("the prescribed testing authority"). Page 13, line 19, after ("6(1A)") insert ("10(4)"). After Clause 10, insert the following new clause:

("Approval of public service vehicles as type vehicles by prescribed testing authority. —(1) In section 10 of the 1981 Act (approval of public service vehicle as a type vehicle and issue of certificates of conformity to type)—

1. (a) in subsections (1) and (2), after the words "the Secretary of there shall be inserted the words or the prescribed testing authority";
2. (b) in subsection (1), for the word "he" there shall be substituted the words "the Secretary of State or that authority"; and
3. (c) in subsection (3), for the words from the beginning to "approval of a type vehicle" there shall be substituted the words "Approval of a type vehicle (whether given by the Secretary of State or the prescribed testing authority) may at any time be withdrawn by either of them".

(2) At the end of that section there shall be inserted the following subsection— (4) Regulations may make provision with respect to—

1. (a) the examination of vehicles for the purposes of this section by or under the direction of authorised inspectors;
2. (b) the approval of vehicles as type vehicles by the prescribed testing authority on such examinations, or the withdrawal of such approval by that authority on such examinations;
3. (c) the issue or refusal of certificates under subsection (2) above by authorised inspectors; and
4. (d) the authorisation by the prescribed testing authority of persons to make declarations under subsection (2) above" ").

On Question, amendments agreed to.

Clause 12 [Investment by the Secretary of State in Government-controlled company interested in, former Government testing stations]:

Lord Bellwin moved Amendments Nos. 23 to 27: Page 14, line 26, leave out from ("company") to ("on") in line 28 and insert ("with a present or prospective interest in Government testing station assets"). Page 15, line 26, leave out from ("to") to ("and") in line 36 and insert ("have a present or prospective interest in Government testing station assets if it holds any estate or interest in or right over former testing station land or owns any former testing station property, or if the Secretary of State proposes to transfer or grant to the company any estate or interest in or right over testing station land or (as the case may be) to transfer to the company any testing station property"). Page 15, line 41, leave out from beginning to (" "voting") and insert— ("In subsection (8) above—

1. (a) in paragraph (a"testing station land" means land held by the Secertary of State as or as part of a goods vehicle testing station provided by the Secretary of State under section 45(9) of the 1972 Act, and "testing station property" means property owned by the Secretary of State for use at any such station; and
2. (b) in paragraph (b)").

Clause 14, page 16, line 21, leave out from ("over") to end of line 25 and insert ("any testing station land or former testing station land, or to transfer any testing station property or former testing station property;"). Clause 14, line 43, at end insert— ("( ) In subsection (2)(a) above "testing station land" and "testing station property" have the meanings given by section 12(9)(a) of this Act.").

The noble Lord said: My Lords, with Amendment No. 23, may I also move Amendments Nos. 24, 25, 26 and 27. Although these amendments appear substantial they are very limited in their effect. In fact, they are purely technical amendments which will improve the drafting of the Bill. I beg to move.

Lord Mishcon

My Lords, perhaps I can take this opportunity to thank the noble Lord the Minister for his usual courtesy in sending me numerous letters, which are extremely clear and most helpful, in regard to a question that I raised, and indeed which I think it may be for the convenience of the House that I speak to now because the noble Lord is dealing with a whole series of amendments en bloc. That was the concern I had in regard to the interest rate that might be charged. Without having to read the whole of the note which I am sure has been prepared for him, I wonder whether the noble Lord the Minister would care to tell the House what safeguards there are in seeing that within his amendments there is provision for a proper rate of interest to be charged, and if it be a beneficial rate because of the Government interest that this does not extend by virtue of the provisions of this Bill to private interests who may have shareholdings in companies. If that is not an easy thing for the noble Lord to do at this time, I would think that the House would be perfectly satisfied, as I would be, if in his kindness he would write to those concerned in order to make this position abundantly clear.

Lord Bellwin

My Lords, I am most grateful to the noble Lord, Lord Mishcon, not for the first time, for his suggestion, and I gladly undertake to write as he suggests.

On Question, amendments agreed to.

Clause 20 [Amendments with respect to appeals.]:

Lord Bellwin moved Amendments Nos. 28 to 31: Page 23, line 27, leave out ("and") and insert ("(3A)"). Page 23, line 29, after ("(a)") insert ("after subsection (5) there shall be inserted the following subsection— (5A) A person aggrieved by the refusal of the prescribed testing authority to approve a vehicle as a type vehicle under section 10 of this Act or by the withdrawal by that authority under that section of such approval may appeal to the Secretary of State"; (aa)"). Page 23, line 39, after ("subsection") insert ("(5A)"). Page 24, line 2, leave out from ("appeal)") to end of line 5 and insert ("for the words from traffic commissioners" to "certifying officer" (in both places) there shall be substituted the words "authority concerned" and, at the end of that subsection, there shall be inserted the words— In this subsection, "authority concerned" means the traffic commissioners, prescribed testing authority, certifying officer, public service vehicle examiner or authorised inspector as the case may be"").

The noble Lord said: My Lords, I have already spoken to Amendment No 28 and to the next three amendments. I beg to move Amendments Nos. 28 to 31 en bloc.

On Question, amendments agreed to.

Lord Bellwin

My Lords, I believe this is the point at which it was agreed we should adjourn the proceedings until October. I beg to move that further consideration on Report be now adjourned.

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