Lords Sitting of 19 April 1983

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Lincoln.

Mergers: "Public Interest" Guidance
Lord Campbell of Alloway: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are satisfied that the provisions of Section 84(1) of the Fair Trading Act 1973 afford adequate guidance to the Monopolies and Mergers Commission in the quasi-judicial approach to "public interest" in the case of mergers.
The Secretary of State for Trade (Lord Cockfield): My Lords, it has never proved possible to define "the public interest" with the degree of precision required for legislation. This indeed is evident from the fact that Section 84(1) of the Fair Trading Act 1973 specifies certain criteria by way of example rather than by way of exhaustive definition. It is for this reason that where the commission rules against a merger, either unanimously or by a sufficient majority, the ultimate decision is reserved to the Secretary of State.
Lord Campbell of Alloway: My Lords, may I thank my noble friend the Minister for that very full and considered reply. Will he agree that as each member of the Monopolies Commission is enjoined to make a value judgment, unless the reservations of the members of the commission are made known before final submissions, then the justification of mergers will become unduly burdensome?
Lord Cockfield: My Lords, I note the point that my noble friend makes. The reports of the Monopolies Commission are always expressed in great detail and the reasons for the decision are set out at length.
Lord Oram: My Lords, does not the noble Lord's Question arise out of the commission's decision in the Anderson Strathclyde case? We recall that the noble Lord the Minister acted with complete honour in relation to his personal position in that case. But will the Minister now resist the suggestion of his noble friend—as that suggestion was unwelcome within the Department of Trade—that if you do not like the referee's decision, you think of changing the rules of the game?
Lord Cockfield: My Lords, I am grateful to the noble Lord for his initial remarks. As regards the main point of his supplementary question, there is an area of legitimate debate here. The monopolies legislation, on which the merger legislation in this country is based, proceeds on the test of the public interest. In the United States the relevant tests are purely competition ones. There is a pefectly legitimate argument that the tests to be applied might well be more closely defined
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than they are at present. I express no view on this, but it is a legitimate issue of policy.
Lord Jenkins of Putney: My Lords, does the noble Lord agree that, in order that unworthy suspicions shall not be held, it would be desirable for all Ministers to divest themselves of all shares upon assuming office?
Lord Cockfield: No, my Lords, I do not think that that arises out of this Question; nor has it ever been the practice.

British Leyland and Maestro Car
2.40p.m.
Lord Sandys: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many orders have been placed for the new Maestro car made by British Leyland and what is the likely effect on employment within the company.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Trefgarne): My Lords, figures from the Society of Motor Manufacturers and Traders show that 8,233 Maestros were registered in March, the month in which the car was launched. This total represents 4.28 per cent. of the domestic car market. Austin Rover have so far received over £100 million worth of orders for the car from fleet buyers alone, and the level of interest from private buyers has also been high. I cannot say what the future effects on employment will be, but clearly much depends upon the swift resolution of the current dispute.
Lord Sandys: My Lords, I thank my noble friend for that very full reply. Will he not agree that the advent of the Maestro is both a considerable stimulus to production in the British motor industry and also a great incentive to sales in both the domestic and the overseas markets?
Lord Trefgarne: My Lords, yes, my noble friend is quite right. The Maestro represents a very important step forward for British Leyland, particularly in the middle range.

Supplementary Benefit: Capital Disregard
2.41 p.m.
Lord Monson: My Lords, I beg leave to ask the first Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why implementation of the proposed rule allowing a family to retain £3,000 rather than £2,500 of their savings without becoming ineligible for supplementary benefit is being delayed until November.
Lord Trefgarne: My Lords, the level of the capital disregard was raised from £2,000 to £2,500 as recently as November last year. It is usual for increases in the supplementary benefit disregards to come into effect at the same time as the uprating of the benefit rates themselves, and we are not persuaded that there are any special reasons for implementing this further substantial increase in the disregard at a date earlier than November 1983.
Lord Monson: My Lords, I thank the noble Lord for his reply, disappointing though it is. Will he agree that the administrative arrangements and the paperwork necessary for putting into effect the increased limit need not take eight days, let alone eight months? Will not the delay cause considerable hardship to many tens of thousands of people who have become unemployed through no fault of their own and who will now have to spend £500 more of their hard-earned savings on supporting their families than would be the case if the changes were implemented with the minimum of delay?
Lord Trefgarne: My Lords, I have no doubt that the noble Lord is right when he says that the administrative arrangements could have been made more quickly than was, in fact, the case. But the fact remains that administrative arrangements are not the only matters we have to see to. There is also the matter of finding the money, and the full year cost of this change is £7 million.
Baroness Jeger: My Lords, when these changes come into effect could the Government look at changing the rule which causes the cashed-in value of life policies to be included in the capital resources of the family? Surely it is only prudent—and I should have thought it would have appealed to the Government—that people should provide for the future, and to include even child endowment policies in the capital sum seems to be very unfair. Secondly, is it a fact that the value of the owner-occupied house is disregarded but that no similar consideration is given to tenants and leaseholders?
Lord Trefgarne: My Lords, the Government announced recently that the first £1,500 of the surrender value of life insurance policies would be disregarded, and that is of course in addition to the £2,500 sum, as it presently is, of capital disregard. As for the home point that the noble Baroness raised, it is the case that the value of an owner-occupied house is disregarded, but so, too, I think, is the rent requirement for a tenant.
Lord Winstanley: My Lords, further to the noble Lord's encouraging answer to the noble Baroness, may I ask whether the noble Lord agrees that if a long-term unemployed person surrenders an insurance policy in order to qualify for supplementary benefit that person may not be able to get that insurance policy reinstated in November, which could in fact be very regrettable? Does the noble Lord agree that the valuation of assets for the purpose of the capital cut-off rule is very much a discretionary matter for supplementary benefit officers, and could those officers not be encouraged to exercise that discretion liberally between now and November?
Lord Trefgarne: My Lords, although it is true that supplementary benefit officers have some discretion in this matter, I think it would be wrong to encourage them to anticipate the wishes of Parliament in relation to the change of regulations, which of course have not yet been expressed. As for the other point raised by the noble Lord, perhaps I may write to him about that.
Lord Wells-Pestell: My Lords, the noble Lord the Minister has mentioned that there will be a saving at the moment of £7 million. How many people does that figure of £7 million represent?
Lord Trefgarne: My Lords, I do not think I said that there would be a saving of £7 million. I said that the total year cost of the change which we are now effecting is about £7 million. That is to say that £7 million more of benefit will be paid because the capital cut-off disregard is higher.
Lord Wells-Pestell: My Lords, surely it can be translated into the number of people who would be able to apply if it was £3,000 and the number of people who are getting it now that it is only £2,500?
Lord Trefgarne: My Lords, I think that about 10,000 to 15,000 people will come into supplementary benefit who were not included before.
Lord Kilmarnock: My Lords, would the noble Lord agree that there is no obvious relation between the capital disregard amount and the normal index-linked uprating which takes place at the end of November?
Lord Trefgarne: My Lords, it is true that the uprating is not precisely linked to the benefit rate uprating, but, nevertheless, as I said, it has been the practice to effect the uprating itself and the raising of the capital cut-off limit at the same time.
Lord Molloy: My Lords, if, as the noble Lord said in answer to the noble Lord, Lord Monson, administrative arrangements can be speeded up and are taking too long, would he try to achieve that in the interests of those who are so concerned in this matter?
Lord Trefgarne: My Lords, as I explained to the noble Lord, Lord Monson, although it would no doubt be possible to speed up the administrative arrangements we would then have to find additional funds for this purpose. I have to say that the calls on our funds are such that we cannot meet them all, and we think it right to meet those in greatest need in the first instance.

Mr. Stancu Papusoiu
2.47 p.m.
Lord Monson: My Lords, I beg leave to ask the second Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how much time they granted to refugee organisations to seek permanent asylum in another Western country for Mr. Stancu Papusoiu, following the decision that he must leave Britain, before deporting him to

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Romania; and how much time they normally allow in similar cases.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, Mr. Papusoiu was informed in August 1982 that his application to remain in the United Kingdom had been refused. The London representative of the United Nations High Commissioner for Refugees and the British Romanian Association were both informed of the case in the same month, and, as I told the House on 29th March, inquiries were made about the possibility of Mr. Papusoiu returning to France. Since he was not removed until 16th March 1983, these organisations had ample time to seek his resettlement elsewhere.
There is no fixed period during which action is deferred to allow an unsuccessful applicant for asylum to apply to go to a third country. Each case is treated on its merits according to individual circumstances, but I can assure the noble Lord that any request for such deferment is considered most sympathetically.
Lord Monson: My Lords, I am grateful to the noble Lord for his reply. Would he agree that, while most people will wholeheartedly endorse the Government's view that an overcrowded country like ours cannot accept for permanent settlement every single individual who arrives on these shores, it is nevertheless our duty to do everything in our power to try to find other countries in the free world which may be prepared to accept these people before they are sent back to a totalitarian régime to face imprisonment, and possibly worse?
Lord Elton: My Lords, I certainly accept the first part of the noble Lord's proposition. As to the second, there are various voluntary agencies involved in seeking alternative accommodation. Perhaps I should remind the noble Lord of the undertaking given by my honourable friend in another place on the 31st March at col. 524, when he said:
"The refugee unit at the Home Office will in future give formal notification to the United Kingdom Immigrants' Advisory Service refugee councillors of all cases when no other agency or hon. Member has previously intervened and a negative decision has been proposed."
Baroness Birk: My Lords, when the Home Office refuses an asylum application, would they give full details of the reasons for the refusal, since not only is this justice but it would enable the person refused to get assistance in approaching other countries which might take a different view from the Home Office? While we are delighted that the Home Office is now going to inform the United Kingdom Immigrants' Advisory Service when it intends to refuse an application for asylum, would it not be even more appropriate to inform the service as soon as the individual has been interviewed and before the Home Office comes to a decision?
Lord Elton: My Lords, on the first question the noble Baroness asked me, I am not certain of the administrative detail. I shall have to write to her. She is suggesting a change, and naturally I could not undertake that on my honourable friend's behalf. On the second question, what my honourable friend has
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proposed is as soon as there is a decision in principle, as I understand it; that is, very early on. This would have brought forward the point in the case we are now considering, and the information would have been given, from August to about April. I think that is a fairly considerable advance which will be of benefit to those who seek to assist these people.
Lord Nugent of Guildford: My Lords, is it a fact that, as reported in the press, this Romanian was convicted in his own country of rape and violence and was convicted of theft in France? Is this part of his record?
Lord Elton: My Lords, I can neither endorse nor contradict statements made in the press, but the statements are fairly current and your Lordships will know by whom they are made.
Lord Avebury: My Lords, would it not have been helpful if the Minister could have given the answer about the United Kingdom Immigrants' Advisory Service councillor in this House when he was asked to do so a few days earlier than Mr. David Waddington gave it in another place? Will he say whether it is not possible to notify the United Kingdom IAS refugee councillor immediately after the first interview, rather than when a refusal is given, bearing in mind that the Home Office frequently needs to conduct several interviews to ascertain whether a person's claim for asylum is valid and that these may take as much as a week or even longer in some complicated cases? Will the noble Lord say what has happened to the second suggestion that has been made; that is, that a non-trivial applicant for asylum should have a right of appeal to an adjudicator even though he or she may not be within permitted leave to remain in this country?
Lord Elton: My Lords, the noble Lord's first question repeats that asked by the noble Baroness, Lady Birk, immediately before him, as I understood it.
Lord Avebury: It does not, my Lords.
Lord Elton: My Lords, if I may respond to the question as I believe it to be, the noble Lord will correct me if I am wrong. He would like information to be passed to the UKIAS immediately after interview, which is what the noble Baroness asked me. I have replied that all I can undertake is that that information will be given as soon as a refusal is proposed. I am not saying it should be when a final decision is taken, which is what happened in this case, but when it is proposed, which is very much earlier.
The noble Lord then referred to an application to an adjudicator. Of course, that right in fact exists, and the man in question is free to exercise it now from his present place.
Lord Renton: My Lords, when it has been firmly established after long consideration that a man is not entitled to political asylum in this country and is not a genuine refugee but is an undersirable alien, is there any obligation on the Home Office but to make arrangements for him to return either to his own country of origin or to the country from which he came when he came here in the first place?
Lord Elton: My Lords, this is what my right honourable friend did in this case. I think it was the right thing to do.
Lord Hale: My Lords, is the noble Lord aware that the source of the allegations made against Mr. Papusoiu after he apparently returned for a time to Romania emanate from a dictator Government which, in the same statement, he accuses of using him brutally and cruelly? The Minister is aware—for he has said so himself—that the allegations made against Mr Papusoiu in the concluding stages of the debate, when no one else could advise him, were based on information that the Home Office had been assimilating for some considerable time, none of which was at any material time communicated to those who were acting on his behalf.
Lord Elton: My Lords, I have taken very great care not to make use of allegations as though they were fact, and your Lordships will notice that I did not even advance what my noble friend Lord Nugent of Guildford put forward, which was commonly current in the press. I have merely stated the facts as they have come to hand. More have come to hand since this person left this country which further place his credibility into question.
Lord Campbell of Alloway: My Lords—
Lord Avebury: My Lords, I am not sure whether the Minister is being deliberately obtuse, but I did ask him whether the person would have the right of appeal to an adjudicator when he was not within his permitted leave to remain in this country. By that I meant whether he would be allowed to exercise that right in the United Kingdom and not from Romania, or from wherever he was deported.
Lord Elton: My Lords, I never find it necessary to pretend to be obtuse; it always comes naturally to me. In this case the noble Lord is correct, in that the right exists after he has been removed from the country.
Lord Campbell of Alloway: My Lords, I apologise to the noble Lord, Lord Avebury. Will my noble friend the Minister agree that an appeal to the adjudicator is not appropriate at all, for that fetters the accepted jurisdictional discretion of the Secretary of State in all such matters?
Lord Elton: My Lords, there is a right of appeal to the adjudicator, but after the person has left the country.

Dinner
Lord Denham: My Lords, it may be for the convenience of the House if I remind your Lordships that dinner will be available at the usual time of 7.30 this evening.

Energy Bill
2.58 p.m.
The Parliamentary Under-Secretary of State, Department of Energy (The Earl of Avon): My Lords,
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I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee—(The Earl of Avon.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clauses 1 and 2 agreed to.
Clause 3 [Nuclear-powered generating stations]:
On Question, Whether Clause 3 shall be agreed to?
Lord Tanlaw: In proposing the amendment to leave out Clause 3 I appreciate that it may appear at first glance to defeat itself, and by removing this clause one would be removing an important safeguard in the Bill in which the Secretary of State's consent will be required for the building, extension or operation of nuclear-powered generating stations, and it would be an offence to proceed without such consent.
When I proposed this amendment I felt that it should be seen in the overall context of public misgiving and some doubt about nuclear power generation in general. I am asking Her Majesty's Government to look at this clause again and ask themselves whether it should be in the Bill at this stage. I hope the Minister will agree that the Bill, even without Clause 3, will be perfectly operative in the sense that the situation covered in Clause 3—that is, of a private nuclear generating plant—does not exist in this country today and is unlikely to exist for a very long time into the future. It is also within the context of a large excess of generating capacity in the country today. Do we need any more generating plant in both the private and public sector? Also the clause appears in the Bill at a time before the Sizewell inquiry has completed its deliberations on major matters of principle about the future of generating capacity in this country.
On the whole this is an excellent Bill which has our general support. I am asking the Government why we should detract from some of the good qualities of the Bill by interposing Clause 3, which many people will hold against the Bill as a whole. It is the private generating industry in the United States, and, in particular, the Three Mile Island incident, which has created public misgiving about nuclear power as a whole. I think that there are still many doubts that there would be cost-cutting and possibly cutting in safety matters if private nuclear generation happened here prematurely. I am asking the Government to take this clause away and to think again. They have always time to bring in such a clause at a later date.
There is another factor which the noble Earl may be able to give himself as a reason for consideration of why this clause should be withdrawn and looked at again. It concerns the definition of "nuclear power generating plant". In this clause, that definition of such a plant is covered, apparently, under Section 1 of the Nuclear Installations Act 1965. Is there in this Bill an actual definition of what is a nuclear generating plant? It is my understanding that there is not such a definition. I should like to ask the noble Earl whether, if companies such as Amersham (where they are doing many experiments with nuclear material) created a

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generator which in any way could be described under this Bill as a nuclear generator, this would not be within the meaning or the whole point of this clause in the Bill. As I understand it, such a generator, even for experimental purposes, would come under this clause. If I am correct in that, I do not believe that this clause is properly drafted. I hope that the noble Earl will give a definite answer to that question.
If he is unable to do so, perhaps he will consider this reason—apart from the general one of the misgivings which I and my party have about the whole business of private nuclear generation—as one which would allow the Government to take the clause away, to look at it again; or, possibly, to remove it altogether. Under Clause 2 of the Bill, there are plenty of safeguards on the size of the generation plant. I am not going into a long provocative debate about nuclear power. It is merely a question of whether this clause enhances the Bill, whether this clause has contained in it some parts which are not actually correct and whether the Bill would be much better without this clause. I beg to move.
Lord Strabolgi: I should like to say a few words in support of this amendment to which I have given my name. I have little to add to the case and to the speech made by the noble Lord, Lord Tanlaw. I agree with him that the Bill would be just as good without the clause, and that it makes very little difference to the general aims of the Bill. I think that this Committee stage gives us the opportunity to ask the Government to justify their wish to privatise nuclear energy. I know that they like to privatise everything they can but, as the noble Lord, Lord Tanlaw, has said, nuclear energy is really something different. It is an unknown field in many ways. I think it is something that does not lend itself to private enterprise.
On Second Reading, I said that it is not something with which the private sector should seek to dabble. Therefore, we shall look forward to hearing what the noble Earl has to say. With regard to its relevance to the whole Bill, I am interested to see that in the Long Title to the Bill nothing is said about this matter. The only reference to nuclear is in Part II of the Bill, the nuclear installations. I would submit that we go ahead with the rest of the Bill, which has been passed by another place, without this clause unless the noble Earl gives a very good reason why it should be in the Bill—beyond the Government's general policy and mania for privatisation, wherever they can.
Lord Somers: I am no scientist and, therefore, I cannot speak with any authority on the question of nuclear power stations. I wish that my noble friend Lord Halsbury were here, because he speaks with authority on this question; and he has assured the House more than once that it is perfectly safe. There is one point which comes to my mind. It is that we have very little else in the way of natural sources of power. Switzerland, for instance, has all the hydro-electric possibilities that it could want. We have practically none. If we do not adopt nuclear power stations, I am wondering from where we are going to get our power.
Lord Strabolgi: Before the noble Lord sits down, may I say I was not attempting to say that we should
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do without nuclear power. I am a very firm advocate of peaceful nuclear power; I have said so in many speeches in this House. The question is this. Who is to run it?—whether it be the public sector or the private sector. This is the point at issue.
3.7 p.m.
The Earl of Avon: There was a great deal of (I believe) artificial worry generated in another place about the prospect of privately-owned nuclear power stations. These fears are unfounded as I hope your Lordships will realise once I have outlined the system of licensing and the protection which exists in the United Kingdom to ensure safe nuclear power. The most important point to bear in mind is that it is not the ownership of plant which governs its safety but the comprehensive regulatory system which this country enjoys. This has several stages which apply to all prospective operators of nuclear power stations, whether in the public or private sector.
First, ministerial consent must be obtained, under Section 2 of the Electric Lighting Act 1909 for electricity board stations and under the Bill for private stations. I must emphasise that Clause 3 introduces a new consent procedure for private nuclear stations and strengthens the existing requirement which would allow private nuclear stations whose output was mainly for the operator's own use to be established without such consent. Far from liberating private generators in this area we are, in fact, closing an existing loophole and introducing a further safeguard. If the Secretary of State considered it desirable, he could cause an inquiry to be held. A proposal to build a private nuclear station would be an unusual and rare event. I would fully expect an inquiry to be held so that all issues of public interest could be aired.
Secondly, the proposal for any nuclear power station would come before the Nuclear Installations Inspectorate of the Health and Safety Executive which would have to grant a nuclear licence under the Nuclear Installations Act 1965. The Health and Safety Executive is a unique organisation independent, not only of all other Government departments but of Ministers in its day-to-day operation. It provides independent advice to the Government on all aspects of industrial safety including nuclear safety.
The proposal would receive detailed and thorough scrutiny from the inspectorate, which is experienced in all matters relating to nuclear safety. No nuclear power reactor may be constructed or operated without a nuclear site licence granted by the NII (the Nuclear Installations Inspectorate). This carries out a monitoring process that starts at the initial planning stage, continues throughout the design, engineering and commissioning stage, covers the operation of the plant throughout its lifetime and ends only when, after decommissioning, there is no longer considered to be any radiation hazard at the site. At no point in the succession of events can an operator proceed to the next stage until the inspectorate is satisfied that all safety criteria had been met. Once a plant has been commissioned, its operation continues to be governed by the conditions attached to the nuclear site licence. These are designed to ensure that all possible steps are taken by the licensees to protect their staff and members of the public and the environment generally

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against the risks associated with nuclear material. A typical operating licence will have up to 60 conditions covering such matters as plant operating limits; testing and maintenance procedures; modifications; radio-logical protection; arrangements for dealing with accidents or emergencies; and management of radio-active waste.
The third stage in the prospective operator's proposal is to obtain planning permission. The applicant would be subject to all the planning procedures of the local authority and the Department of the Environment. A local authority may impose conditions on the granting of planning permission. If planning permission is refused, the developer can appeal to the Secretary of State for the Environment, who may also call in for decision by him an application made to the local authority. In this case, a public inquiry will be held and the Secretary of State will usually impose conditions.
Given this background and the extent of scrutiny afforded to both public and private stations, the Government are satisfied that any private development would take place within a well-established and highly efficient framework of regulatory control.
I should like to suggest to the noble Lord, Lord Tanlaw, that he withdraw his amendment. I am sure that this was not his intention, but were we to accept his amendment private nuclear stations could be established without ministerial consent. I have already mentioned the regulatory control system. Although there are at present no private nuclear power stations in this country, they do exist in other countries: for example, in the United States, Finland, Spain and Japan.
It is estimated that about half the 270 nuclear power stations throughout the world are owned and operated by the private sector. It is a common feature in all countries where nuclear power stations exist that whether these are publicly or privately owned the Government take responsibility for ensuring that plant meets strict requirements throughout all stages of planning, construction and development. This recognises legitimate public concerns over nuclear power, but leaves the case for banning for all time any private nuclear station still to be made.
Those who have argued against private nuclear stations, both in your Lordships' Chamber and in another place, have not put forward compelling reasons why the Government should encourage private generators generally but close to them one particular method of generation. Our nuclear safety record is second to none, and our regulatory system, including the new consent procedure under this clause, will ensure that it remains so.
The noble Lord, Lord Tanlaw, asked what is a nuclear power station, as defined in this Bill. I understand the definition here is: a generating station for which a nuclear site licence is necessary. Whether or not a station generates electricity is a matter of fact. We believe that the private sector should be allowed to go ahead with nuclear as well as with conventional power stations. I hope that the Committee will agree with me and enable this clause to stand part of the Bill.
The Earl of Lauderdale: I must apologise to the noble Lord, Lord Tanlaw, because I was not in my place to hear him proposing his amendment: I was held up on the way. I have thought about it beforehand and I wanted to make several points. Most of them have now been made by my noble friend, but there is one other point I should like to raise. Another country which allows private enterprise operation of a nuclear power station is Germany, and that country was not listed by my noble friend.
But surely the critical point is that a private enterprise operator would be subject to all the conditions to which the CEGB is now subject—all the Sizewell inquiry business: the lot—so there would be no differentiation here. And—if I may go back to the phrase used by the noble Lord, Lord Strabolgi, on Second Reading—it is not a case of private enterprise "dabbling in nuclear power". It is a responsible operator whose responsibility is attested in the same way as is the CEGB. So I hope that the Committee will support my noble friend in resisting this amendment.
The Duke of Portland: If the proposed amendment were to be accepted and Clause 3 were left out of this Bill, nuclear-powered generating stations would remain subject to the Nuclear Installations Act of 1965, in which some 30 clauses and two schedules lay down a complicated procedure for the licensing of privately-owned nuclear-powered stations and do not afford any encouragement for the private construction and operation of such stations. It is unlikely that applications will be made in the near future for a licence to construct privately-owned nuclear-powered stations, as small nuclear-powered stations of some 200 to 250 megawatts are not yet economically viable.
However, if the construction of small, privately-owned nuclear powered stations were to be encouraged rather than obstructed, greater efforts might be made to develop those stations. When they succeed, and a 200 to 250 megawatt privately-owned station is operating economically in the United Kingdom, it is probable that foreign orders will be received, in particular from developing countries. That would restore to our nuclear industry the lead which this industry has been losing during the past 25 years. Therefore I urge that the proposed amendment be rejected.
Lord Tanlaw: I have listened with great care to what the noble Earl the Minister has said and I accept most of the points he has raised, except perhaps one major one. I fail to see how, if this clause was removed from the Bill, anyone would wish to make a nuclear power station generating fewer than 10 megawatts, in which case he would be forced to come under scrutiny and prevention under Clause 2 of the Bill.
I want to make the position quite clear that nuclear power, whether private or public, has not yet been tested as to whether it can produce cheaper electricity than any other form of generation in this country. I was asking Her Majesty's Government to consider whether it is necessary to have any more nuclear power stations, private or public, since this has yet to be decided. I am not against it in principle; but from what the noble Earl has said, I cannot see how a privately-built and operated nuclear power station that went through all the regulations and checks that this Bill

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puts forward could produce cheaper electricity for the general public. That would have to be proved; and especially if the cost of a public inquiry would have to be put on top of that of the construction of the power station.
I am extremely grateful to the noble Earl because this is of more than passing interest to me to know that a public inquiry would be necessary. I think this would be an encouraging factor for those of us who have had some doubts about this clause. Also, to take the noble Duke's point, this would in no way affect British industry in contributing to nuclear power stations in this country or abroad. I think that if the truth were told, and if the noble Lord, Lord Weinstock, were in his seat, he would infinitely prefer to supply parts to a nuclear power station rather than to be asked to build one and make electricity.
There are two very different matters here. One of them is that British industry will prosper in providing parts for nuclear power stations. However, I do not see how a private nuclear industry would prosper—and the noble Duke confirms this—because it cannot make an economical power station. But in view of what the noble Earl has said and taking account of the comments made by other speakers, I am quite happy at this stage to withdraw this amendment.
Clause 3 agreed to.
On Question, Whether Clause 4 shall be agreed to?
Lord Drumalbyn: I should like to ask one question on this clause. I doubt whether many of your Lordships will have gleaned very much from reading this clause. Also, I should like to know how it is that the Scottish Office (I take it) have decided on this particular formula. At present it is unlawful, except with the consent of the Secretary of State given after consultation with the two Scottish Boards, for any body or person to establish in the district of either of the two boards a new private generating station operated by water power and having plant exceeding, as it is at the present time, 50 kw, or to extend any existing private station so operated in that district by the installation of plant with a rating exceeding 50 kw. We have been talking in terms of 2,000 mw and goodness knows what, and the clause is concerned with raising the present limit of 50 kw for hydro-electric stations to 1 megawatt. Anything over 1 mw would require the permission that is at present required under the Electricity (Scotland) Act 1979 for anything over 50 kw. I think that I have correctly stated the position.
I am wondering to what kinds of establishment in Scotland this clause would apply. On what grounds has this limit of 1 mw been fixed and what will be the social benefits of this? I quite understand that my noble friend may not be able to give a full answer on this matter for Scotland. But I should be grateful if he would confirm what I believe to be the effects of this series of amendments, and perhaps he would be good enough to write to me and give a fuller explanation of the effects that are likely to occur. In other words, what benefit is likely to flow from these amendments so far as Scotland is concerned?
The Earl of Avon: This clause is primarily concerned with bringing the wording of Section 35 of the Electricity (Scotland) Act 1979 into line with the terminology used in this Bill. As my noble friend noted, the one significant change is to increase from 50 kw to 1 mw the level above which a private hydro-electric station in Scotland requires the consent of the Secretary of State for Scotland. It also ceases to be a criterion, for the purposes of consent, whether the output of the station is for sale to others. Hydro-electric stations are of special significance to energy policy in Scotland, and particularly in the NSHAB area. Their development is politically sensitive and could have significant environmental implications. Moreover, control over developments is required to ensure that a new scheme does not abstract water which is used to power another scheme.
The limit above which hydro-electric schemes in Scotland will require the Secretary of State's consent is, as I have said, being raised from 50 kw to 1 mw. We have raised the limit to encourage the development of hydro schemes, but we wish to retain consent above 1 mw because of the significance of such schemes in terms of the environment, energy supply and the potential impact of one scheme upon another. We believe that developments should take place in a planned fashion. After saying those words, I very much hope that my noble friend will feel able to accept this clause. I will, of course, write to him with more details when I have been able to read his remarks.
Lord Ross of Marnock: I do not want to press the Minister very far on this, but, if he is going to write to one Scottish Lord, can he write to the rest of us as well?
The Earl of Avon: I think that to write to all Scottish Lords would be very burdensome, but I will certainly write to the noble Lord, Lord Ross.
Lord Bowden: Before the noble Earl sits down, may I ask him whether, when a plant of this kind is built and is privately owned, there is any obligation on the Central Electricity Generating Board's distribution circuit—in other words, the grid—to buy power which it generates if it is surplus to requirements and available, or is this not to be insisted upon?
The Earl of Avon: If I understood the noble Lord correctly, this is the main purpose of the Bill. This now makes arrangements for private generators to sell to the boards.
Clause 4 agreed to.
Clause 5 [Private generators and Electricity Boards]:
3.25 p.m.
Lord Strabolgi Lord Strabolgi moved Amendment No. 1:
Page 3, line 19, leave out ("or local authority")
The noble Lord said: I beg to move Amendment No. 1 and, with the Committee's permission, I should like to speak to Amendments Nos. 2, 9 and 11, which are consequential on it. These amendments are of great interest to local authorities. The GLC, for example, is already engaged in generating electricity by incinerating solid waste at the Edmonton solid waste incineration plant. In fact, the GLC is the largest

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private contributor to the United Kingdom grids and sells some 160 million units of electricity each year to the Eastern Electricity Board, creating an income in 1981–82, for example, of £3 million.
The council's power to generate electricity is, of course, as a waste disposal authority under Section 21 of the Control of Pollution Act 1974, or as a local authority under the similar provisions of Section 1 1 of the Local Government (Miscellaneous Provisions) Act 1976. Under these two parallel provisions, local authorities which generate electricity may use it themselves at the installation where it is produced or in any premises occupied in connection with the installation, or they may sell it, but only to an electricity board.
Developments in the field of combined heat and power district heating may lead to an increasing involvement by local authorities in the generation of electricity, and it is felt that the opportunity presented by this Bill should be taken to free local authorities from the restrictions on them concerning the production and disposal of electricity contained in the 1974 and 1976 Acts, in order that they may be in a position to play a positive role in any future developments and optimise both the use of resources hitherto wasted and the production and conservation of energy, where practicable, through combined heat and power district heating schemes.
Amendments Nos. 1 and 2 are therefore proposed in order to apply to local authorities the same provisions as will apply to other private generators—I am sure that this will find favour with the noble Earl, Lord Lauderdale—and other suppliers of electricity in their relationships with the electricity boards, concerning the supply or purchase of electricity by the boards, and the use of the board's transmission and distribution systems.
Amendments Nos. 2 and 9 will amend the Control of Pollution Act 1974 and the Local Government (Miscellaneous Provisions) Act 1976 and empower local authorities to sell or otherwise dispose of electricity generated by them under those enactments to persons other than electricity boards. The remaining amendment is consequential. I beg to move.
Lord Ezra: I should like to support the amendment proposed by the noble Lord, Lord Strabolgi, on the ground that I think it most important, when the effective use of energy is so vital to this country, that we should be giving local authorities every conceivable stimulus to use their powers and their skills to make sure that, in their conversion of refuse into heat and electricity, they can dispose of the resultant electricity as freely as anybody else. I should declare an interest, since I am the chairman of a heat service company which is working very closely with the GLC on this very subject. The prospects are very considerable. The Bill provides us with the opportunity to give full stimulus to local authorities to go ahead with these projects. I believe therefore that the amendments proposed by the noble Lord are worthy of the full support of this Committee.
The Earl of Avon: The noble Lord, Lord Strabolgi, supported by the noble Lord, Lord Ezra, seeks further
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to amend the position of local authorities under the Bill. The noble Lord, Lord Strabolgi, wishes local authorities to be considered under the Bill as private generators, thereby extending their powers under the statutes governing the generation and disposal of electricity by local authorities. The noble Lord spelled out these particular Acts.
I should like to emphasise to the Committee that local authorities already have certain rights and that this Bill gives others to them. First, they already have the right to a supply from a board, subject to the normal conditions. Second, since 1974 they have had the right, which this Bill will only now confer on other electricity producers, to sell surplus electricity to an electricity board, and the board is already obliged to take that supply. Third, in response to representations in another place, the Government agreed to extend to local authorities the provisions in the Bill to ensure that boards pay fair prices for all electricity sold to them. Fourth, the Bill also gives local authorities access to a procedure for determining disputes over the price offered or payment demanded by the board in taking a supply.
In the context of a very limited generation of electricity by local authorities, it seems to us to be entirely right that they should benefit from these rights which are given to private suppliers under the Bill. But the Government see no compelling reason why it should be necessary to treat local authorities as private generators in terms of the use of a transmission and distribution system. We are of course currently aware of only one local authority electricity generating scheme. It may well be that other local authorities may be encouraged to develop schemes in the light of the new provisions on fair prices for the sale of electricity to boards, as well as our provision for combined heat and power. This is part and parcel of the Energy Bill, and we hope that it does so encourage. But the Government believe they have gone as far as necessary to achieve this. They would prefer to leave the Bill as it stands and not to accept the amendments moved by the noble Lord, Lord Strabolgi.
The Earl of Lauderdale: I am sure that the Committee will have listened with great interest to my noble friend's answer. Some of us have been wondering what that answer would be. We are told that there is no compelling reason for the amendment and that the Government would prefer to leave things as they are. If the purpose of the Bill is, as I understand it to be, to provide for the community as a whole a better and, hopefully, a cheaper supply of electricity by offloading the capital cost to others and not confining it to the public sector, the greater the competition the better. The amendment moved by the noble Lord, Lord Strabolgi, and supported by the noble Lord, Lord Ezra, surely fits the Government's philosophy of competition.
A further amendment which appears on the Marshalled List relates to a particular aspect of local authorities' disability in this matter, but I appeal to my noble friend to find out whether or not the Government would be prepared to have another look at it. It will not turn local authorities into greater dictators than some of them already are. It will not convert the GLC into a bigger soviet than it already is. It will not

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damage the rights of the citizen in the eyes of county councils, district councils, metropolitan councils and the rest. It will not damage the system in any way. All it will do is to tighten and sharpen competition. I appeal to my noble friend to show a little flexibility and to say that, in the light of what has been said, he will have another look at the matter.
The Earl of Avon: My noble friend spelled out many ideas for the future, which I am not at all sure I go along with. The difference between the Government and my noble friend relates particularly to the transmission and distribution system. At the moment, under the Energy Bill local authorities are able, just as is a private generator now, to sell their surplus supply, as laid down in the Bill, to an electricity board. The question is whether to go one step further and make available to local authorities something which is now available to the private generator. I am not convinced by this argument. If, however, my noble friend would like me to take it back and have another look at it I shall be willing to do so. However, I make no commitment that I shall be able to give ground.
The Earl of Lauderdale: I am much obliged to my noble friend for his response. Because he is a very reasonable and kindly person and has an open mind on all these matters, his response was very much what I felt sure it would be. For my part, I can only say that I am glad my noble friend has made this offer—without, of course, any commitment. I hope that the noble Lord, Lord Strabolgi, will feel able to respond in the same sense.
Lord Drumalbyn: I wonder whether my noble friend would also agree to discuss this particular amendment in relation to its impact on the Highlands of Scotland. There must be several areas in the Highlands of Scotland where there is no form of distribution system. If a private system on a local authority basis were to be established, or if it were to be a Highlands and Islands Development Board system or a private enterprise system, it would need, in order to be effective, to have its own local distribution service.
Lord Strabolgi: I am grateful to the noble Lord, Lord Ezra, and to the noble Earl, Lord Lauderdale, for their powerful support. I saw a little chink of light in the speech of the noble Earl, Lord Avon. I hope that, with his colleagues, he will look seriously at this matter. I do not see why local authorities should be treated as a second-class sector, much below the public sector and far below the private sector. Why they cannot be treated the same I cannot understand. If we are going to have greater competition, why cannot local authorities be brought into it? There seems to be no logic in the Government's attitude. I was inclined to divide the Committee, but in view of the noble Earl's undertaking to look again at the matter—besides which there will be two more stages of the Bill—I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Chairman of Committees: Amendment No. 2 not moved?
Lord Strabolgi: I should like to move Amendment No. 2 formally so that it appears in the Official Report, otherwise it will not.
Lord Strabolgi Lord Strabolgi moved Amendment No. 2:
Page 3, line 23, leave out ("or local authority").
The noble Lord said: I beg to move Amendment No. 2 formally, for the reason I have already given.
The Lord Chairman of Committees:Amendment proposed:
Page 3, line 23. leave out ("or local authority").
The Question is that this amendment be agreed to. As many as are of that opinion will say, Content? To the contrary, Not-Content?
Lord Strabolgi: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6 [Charges for supplies by Electricity Boards]:
On Question. Whether Clause 6 shall stand part of the Bill.
Lord Tanlaw: I wish to speak briefly on Clause 6, which determines how charges are to be made for the electricity supplied by an electricity board to a private generator or supplier. While a considerable amount of information is presented in the CEGB accounts, it is not clear what the cost of electricity from each power station is when both fuel and capital and maintenance overhead costs are taken into account. There is bound to be a variation between some nuclear plants which are very efficient and some nuclear plants which may not be so efficient. The same variation will apply in the case of coal plants, either because of technical problems, or because some of them are running very well, or because some of them are old while others are new. There is bound, therefore, to be a quite considerable variation in the efficiency of plants.
This is averaged out to the average price of electricity, which at present is apparently 3.980 pence per kilowatt hour, according to the minutes of evidence before the Select Committee on Energy, given in another place on 9th December 1982. The price of electricity has come in for some criticism from industry. In particular, this criticism appeared again in the report of Sub-Committee F on the EEC Community, on page 281, which showed that the price disadvantages suffered by, in particular, the larger HLF users in Great Britain have tended to worsen in 1982.
The reason I am asking this is because under this clause tariffs have to be set. It is not clear to me (and is it clear to the Secretary of State?) in terms of figures supplied by the CEGB, as to the varying economic efficiency of the plants operated by the CEGB. If appropriate capacity credits are to be given to private generators, and if there is to be a clear picture of the cost of electricity produced by different generating stations, then surely it is highly desirable that, in the same way as large companies produce reports and accounts for their subsidiaries, the CEGB should

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produce accounts for the Secretary of State to show the differing efficiency and the cost of electricity of the individual generating plants under the CEGB.
I should be very interested to know these various costs, as a member of the public. What concerns me is whether the Secretary of State has access, under the law or in effect, to the operating figures of these plants. Or are these figures merely kept by the CEGB and not made public to the Secretary of State? If the Secretary of State is to make any decisions on the matter of tariffs—and on purchasing tariffs in particular—then he should have these figures at his disposal. All I want the noble Earl to say is whether or not he has these figures at his disposal and whether or not he had them under consideration when this Bill was put before your Lordships' House.
The Earl of Avon: Clause 6 is an explanatory clause. It makes clear that where any electricity board supplies electricity to a private generator under an agreement resulting from this Bill, its price is to be in accordance with tariffs fixed by the board in the same way as prices to consumers generally. Tariffs for elecricity supplied to any consumer are subject to the Electricity Act 1947 and the Electricity (Scotland) Act 1979. These Acts establish the way in which tariffs for electricity are to be framed and published, and make provision for a system of consultation with consumer representatives. They also allow for a special agreement to be made where tariffs are not appropriate to the case in question. This will apply only where there are genuinely special circumstances.
In most cases the private generator will wish to take a supply to supplement his own or his customers' needs, or he may seek only to have a standby supply of electricity. In that case he will pay the board for making the supply available and will pay also for any electricity he subsequently takes. Clause 17 of the Bill provides that the supply tariffs may also include such availability charges. The clause ensures that, as far as possible, there is common treatment of private generators and other consumers as regards supply tariffs. I believe that the noble Lord, Lord Tanlaw, went fairly wide of this clause when he asked whether the CEGB have individual figures for their generating plants. Indeed, they do have these figures, and the Secretary of State is aware of these figures. I may be wrong, but I rather thought that these figures had been made available for the Sizewell B inquiry; but I should like to look at that again. I commend this clause to your Lordships.
Clause 6 agreed to.
Clause 7 [Charges for purchases by Electricity Boards]:
3.44 p.m.
Lord Tanlaw Lord Tanlaw moved Amendment No. 3:
Page 4, line 34, leave out ("other than the Central Electricity Generating Board").
The noble Lord said: This amendment brings in the Central Electricity Generating Board, which has been excluded under the Bill from setting tariffs for the purchase of electricity. The reason for doing this may not be apparent at first glance but it is my view that
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this effectively means that any setting of tariffs for electricity purchase from private generators is to be determined by the bulk supply tariff. It would be much more beneficial, in national terms, if the tariffs which were to be paid for electricity purchased by the electricity industry as a whole were allowed to develop as a totally separate structure. I do not see that electricity is different from any other commodity in which there is always a buyer's and seller's price. I cannot see the particular advantage of sticking to the same price both for the buyer and the seller, so to speak.
Noble Lords will be aware that the CEGB sells electricity to all the other boards and then they make their profit on that price to the consumer. If we look at this in reverse, a satisfactory tariff for the sale of electricity may not be a satisfactory tariff for the purchase of electricity, particularly as those wishing to invest in generating capacity look ahead for more than one year, whereas the rates of return set by the Government, which affect the cost of electricity in the bulk supply tariff, have varied from one year to another and can be subject to short-term manipulation—whereas any purchase tariff needs to be based on longer periods for its time horizons.
This is a major point to the private industrialist who wishes to invest in a plant which will no doubt help him industrially but at the same time will sell electricity to the board. He wants to know what price he is going to get, not just 12 months ahead but for a considerably larger period of time than that. It would appear that, under the Bill as at present, he cannot be given a price for more than 12 months ahead. I may have got this wrong, but when the noble Earl replies, perhaps he will be able to confirm whether or not that is the case.
Also, the removal of these words will produce a far more consistent arrangement in terms of the price paid by privately generated electricity where it is purchased by area boards on the one hand or by private consumers on the other. At present, under Clause 8 of the Bill, a private generator may rent the grid system in order to sell electricity to another party. It is quite possible that those wishing to generate electricity privately may use this part of the Bill to do so, in the sense that it would be more profitable for them. In the long term, this would be an unfortunate tendency, simply because there were not these two proper prices—a purchase price and a selling price—for a commodity such as electricity.
If there is to be no latitude in the area boards in negotiating their price for the purchase of electricity, many industries which are looking forward with acclamation to the passing of this Bill will be slightly depressed. The area boards will be able to take into consideration many of the criticisms that have been made against the CEGB, and indeed against the Government, for fixing the price of bulk electricity too high. If the area boards were able to negotiate and were able to operate a commercial purchase price for electricity, they might be able to assist to a very considerable extent some of the bulk users of electricity in their areas. It is those same bulk users of electricity who have been complaining to the Government and to others that they are paying too much for electricity.
I hope that this amendment will be looked at closely by the Government. When the noble Earl replies, I suspect that he will have to justify—with some difficulty in my view—why the bulk supply tariff should be used as a purchasing guideline as it is a selling guideline. These are two entirely different parameters. Also, those parameters differ even with the BST because, if economy is to be the yardstick of how the board sells its electricity, the overnight rate for electricity, which is less than the cost of the fuel needed to generate it, is not economic. I hope that this amendment will be considered to be a constructive one, and one that could be conceived of as being of general benefit to bulk users of electricity so that they may be able to reduce some of their criticisms of the Government in respect of the high price they are having to pay for electricity at the moment by comparison with their overseas competitors in Europe.
The Earl of Avon: Clause 7 requires area electricity boards and Scottish boards to fix tariffs for the purchase of privately generated electricity. This will ensure that private generators will know in advance the price that they are likely to receive for their electricity. Incidentally, in response to the noble Lord, Lord Tanlaw, there is nothing to stop contracts from being agreed between private generators and boards for periods beyond one year; the Bill places no restriction on that.
Where these tariffs are not applicable or appropriate. a board will be able to propose a price to the private generator. Both the tariffs and the prices proposed by a board in the absence of a suitable tariff will be subject to the same principles. I shall return to this shortly. The point of exempting the CEGB from the requirement to fix a purchase tariff is based purely on the practical situation. First, private generators invariably sell to an area board because of the amount of electricity likely to be involved. There are currently about 50 cases where area boards purchase from non-CEGB suppliers, but there is only one case where the CEGB purchases from a company. That company is BNFL, which is of course itself in the public sector. So there is no-one at present who will be interested in a CEGB tariff.
Second, there is only a handful of cases where the CEGB supplies direct to a customer, because of special circumstances relating, for example, to the size of load, voltage or location of supply. These same factors mean that it would rarely be appropriate for the CEGB to purchase electricity although it has said it is willing to do so in suitable circumstances. Such purchases would need to be negotiated on a case by case basis, and it would not, therefore, be sensible for the CEGB to fix a general tariff.
I am sure, however, that it is right to introduce a greater degree of transparency into private generators' dealings with boards. In that context let me emphasise that any price proposed by the CEGB for the purchase of privately generated electricity would have to be in accordance with the principles applying to tariffs and prices proposed by other boards which is stated in Clause 7(3); that is, that while electricity prices generally should not increase as a result of that purchase, the price must reflect the board's avoided
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costs. The price would also be subject to the disputes procedure under Clause 9. I hope that in the light of this explanation the noble Lord may feel reassured and will not wish to press his amendment.
Lord Tanlaw: I will have to read Hansard to follow the detail of what the noble Earl the Minister has said. I have the gist of it and the reassurance is given. But the outstanding question that I have, which no doubt was covered, was this difficulty of seeing why under Clause 8 the CEGB is included and under this clause it is excluded. No doubt it was covered and possibly I did not follow the noble Earl fully. Therefore, I will take his view, as I understand it, and withdraw my amendment. May I say in doing so that that I hope the noble Lord the Chairman of Committees will put it to the Committee, as he seems to have omitted to do with my first amendment. I beg leave to withdraw the amendment.
The Chairman of Committees (Lord Aberdare): The first amendment was on the Question that the clause stand part; it was not an amendment to the clause. Is it your Lordships' pleasure that this amendment be withdrawn?
Amendment, by leave, withdrawn.
Clause 7 agreed to.
Clauses 8 to 10 agreed to.
3.54 p.m.
Lord Strabolgi Lord Strabolgi moved Amendment No. 4:
After Clause 10, insert the following new clause:
("Waste disposal authorities
.—(1) This section applies to the production and use of electricity in accordance with section 21(3) of the Control of Pollution Act 1974 (production of heat and electricity from waste, etc).
(2) Where a disposal authority wishes to use any such electricity on premises occupied by the authority other than the installation at which it was produced and requests an Electricity Board to permit the authority to use the Board's transmission and distribution system for the purpose of supplying the electricity to those premises the Board shall offer to comply with the request unless on technical grounds it would not be reasonably practicable to do so.
(3) Subsections (3) to (6) of section 5 shall apply to an offer under this section as they apply to offers made under section 5(2).
(4) Tariffs of charges made under section 8 above shall apply to the use by disposal authorities of Boards' transmission and distribution systems made under this section as they apply to the use of such systems by private generators and suppliers under section 5 above.
(5) Section 9 above and regulations made thereunder shall apply to disputes as to offers made under this section as they apply to disputes within section 9(1)((a) to (e).").
The noble Lord said: I beg to move Amendment No. 4 and, with your Lordships' permission, to speak also to Amendment No. 10. The noble Viscount, Lord Ridley, has been unavoidably detained and is unable to reach London, and he has asked me to extend his apologies to your Lordships.
The Association of County Councils is concerned about this aspect of the Bill and I know would be interested in an amendment of this kind being included in it. The association represents non-metropolitan county councils in England and Wales, who are responsible for the function of waste disposal. Household and commercial refuse is collected mainly

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by district councils, although an increasing amount of commercial refuse is being handled by private companies. Both local authorities and commercial concerns, however, hand over the waste that they collect to the county council for disposal. Disposal of waste is carried out at present mainly either by land-fill or by incineration. An increasing amount is, however, being converted into fuel and fuel pellets and sold to electricity boards and others. The Greater London Council uses some refuse for electricity generation, and it may be expected that other waste disposal authorities will see the financial sense of this as fuel becomes scarcer and electricity becomes more expensive.
This fact was recognised some years ago when, by Section 21 of the Control of Pollution Act 1974, waste disposal authorities were given the power to generate heat and electricity from waste. That section gave authorities unlimited power to sell heat generated as a by-product of waste disposal or to use it for their own purposes either on site or elsewhere. Electricity, however, was treated differently. Under the 1974 Act it may either be sold to the electricity board or used by the authority on the waste disposal site but not elsewhere. These limitations were acceptable to the association at that time as they conformed to the general limitations on electricity generation imposed on the country as a whole.
However, under the Bill as presently drafted any person may generate electricity and may request an electricity board either to purchase such electricity or to permit the use of the board's transmission and distribution system to enable such electricity to be supplied to other premises owned by the private generator. The Bill also contains provisions to enable the price for such services to be fixed and for the settlement of disputes. However, local authorities are expressly excluded from the class of organisations given the power to generate electricity.
The Government have indicated that the Bill is intended to encourage electricity generation in the private sector, and the Association of County Councils accepts this. The Government have also indicated that to give local authorities access to the use of the boards' transmission and distribution systems would raise much wider issues of local authorities' powers. The associations recognise the Government's problems in this area and have accordingly framed the present amendments to take account of this. I beg to move.
Lord Tanlaw Lord Tanlaw moved, as an amendment to Amendment No. 4, Amendment No. 5:
After subsection (2), insert the following new subsection—
("( ) Where a disposal authority produces electricity in accordance with the said section of the Control of Pollution Act 1974, it shall be the duty of that authority to adopt and support schemes—

(a) for the combined production of heat and electricity, and

(b) for the use of heat produced in combination with electricity, or incidentally from its generation, for the heating of buildings or for other useful purposes.")

The noble Lord said: I wish to propose this amendment, which is really a supporting amendment in terms of the one put forward by the noble Lord, Lord Strabolgi. I would hope that this would be considered constructively by the Government, in the sense that if local authorities have to dispose of waste,
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which is one of their main tasks, they will do so in such a way as to maximise its use, not only by producing electricity but by doing it through the combined heat and power process which also would involve district heating as well.
I think that the Association of County Councils might on the face of it be slightly worried by the amendment which I am proposing to the Committee, on the basis that they would feel that they would be forced to do this. I hope the Government will see this in the sense that if a county council has a waste disposal problem that is not near a conurbation, then it would be able to combine with other county councils to maximise the unit for waste disposal, in that it could generate electricity and at the same time provide heat for industrial as well as domestic purposes, if the site of the waste disposal plant was some way from a conurbation.
In order to generate electricity, and to give your Lordships some idea, I am informed that it needs 700 tonnes of waste a day to keep a plant remotely viable and to produce electricity. Therefore such a plant, by warrant of the amount of waste needed, must be near a conurbation in which there are dwellings. If the Government are giving more than just lip service to combined heat and power this would be an excellent area in which CHP could be done on a small scale.
In doing so, let me make it clear to the Committee that this kind of use of combined heat and power with district heating is on a completely different scale from that which comes later, in Clause 19, where there would be a massive urban CHP programme for heating a great city. It is the question of scale on which I want to make this distinction. This amendment is concerned with local and county waste disposal whereby the community can benefit from the disposal of waste in terms of less cost, in getting cheap heat and possibly even a reduction in the rates by selling electricity.
I hope that the amendment put forward by the noble Viscount, Lord Ridley, and the noble Lord, Lord Strabolgi, which I fully support, will be taken together with my amendment by the Government, and if they are not in perfect form for the drafting of the Bill they will be somehow incorporated in the Government's legislative programme so that communities can benefit in the way put forward by those of us proposing these amendments. I beg to move my amendment to Amendment No. 4.
The Earl of Lauderdale: I sometimes think that combined heat and power is treated as a sort of religious solution to many of our energy problems. I know that is not the intention or implication of the noble Lord, Lord Tanlaw, but that is a common impression given by exponents of it. I am a tepid supporter of CHP, but I still believe that it is worth supporting. I therefore hope that the Government will take a further look at these two amendments, and I hope that the noble Lord, Lord Strabolgi, and the noble Viscount, Lord Ridley, in his absence, will be able to accept the amendment to their amendment proposed by the noble Lord, Lord Tanlaw.
Speaking generally, this whole business of the local authority position is already open to question. My noble friend has been good enough to say that he will

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have another look at the local authority position as it was raised on an earlier amendment. I hope that he will be able to do the same on these amendments, because if at the end of the day the effect is to encourage the generation of even a few kilowatts of extra power from waste, somewhere or other, and to generate a little more heat for houses—say, old people's homes—at even a one penny cheaper rate, then it is worth having. However marginal the benefits may be—and I think they are perhaps more marginal than the enthusiasts may think—they are still worth looking at. I therefore hope that my noble friend will be able to respond to these amendments in the same generous and constructive way as that in which he has already responded to the previous amendment on the position of local authorities.
Lord Ezra: I support the plea that the noble Earl, Lord Lauderdale, has addressed to the Government Benches that this whole matter be reconsidered in line with what has already been agreed by the noble Earl the Minister in relation to a previous amendment. The position of the local authorities in this whole matter is crucial. They need to be given every encouragement. Already many officials in local authorities and elected members are very keen on going ahead in this field. However, if it is felt by them, as is evidenced by the letter some of us have received from the Association of County Councils, that they feel they are somehow being discriminated against, then a worthy and desirable endeavour may be limited in its application.
I do not see how the amendment proposed by the noble Lord, Lord Strabolgi, and the amendment to it by my noble friend Lord Tanlaw, can do other than reinforce what is intended in the Bill. Those of us who are putting forward this amendment are in support of the intentions. What we are saying is: let us make it work and give the local authorities every possibility of contributing to those endeavours.
Lord Alexander of Potterhill: I am no expert in the field of energy, but I support this amendment in principle on the simple issue that I find it difficult to understand a Government which, with great regularity, badgers local authorities to become more efficient, to show more initiative and to become more cost-effective, but seem to be discouraging rather than encouraging when they do so.
The Earl of Avon: We are not trying to encourage or discourage; we are trying to get the method right on how the local authorities should supply their electricity to the boards. That is really the point, and the argument we had earlier was about generation.
Perhaps I can start by replying to the noble Lord, Lord Tanlaw. I see, of course, the apparent logic of giving local authorities a duty parallel to that placed by the Bill on electricity boards. But there is a difference in terms of the need for such a duty in each case. We can see that electricity board statutes, based primarily on electricity production, leave room for doubt over the role they might be expected to play in the use of heat. The Bill puts this beyond equivocation. On the other hand, local authorities have responsibility for waste disposal and specific powers in connection with
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electricity generation from waste. Under the Control of Pollution Act 1974 they may,
use waste belonging to the authority for the purpose of producing from it heat or electricity or both."
I see nothing unclear about that.
We are aware that local authorities are keen on CHP/district heating from their involvement in the lead city scheme feasibility programme. They already undertake limited generation from waste. They may expand this activity, given the right to fair terms for electricity which the board confers on them, and we hope that they will pursue the economic opportunities that this may offer to them. I do not believe that their general statutes constrain them on these matters.
To return to the amendment of the noble Lord, Lord Strabolgi, this proposes only a limited extension to the powers of local authorities by enabling those who generate electricity from waste to use the transmission and distribution systems in order to supply other premises occupied by them. I appreciate the intention that this should encourage the generation of electricity from waste. However, I would suggest that having the right to sell to the boards at fair prices should be encouragement enough.
Let us consider what would be the effect of the further changes proposed. They are redolent of a return to the days when electricity supply was concentrated, before nationalisation, in local electricity authorities. I am delighted by the Committee's faith in the fact that local authorities would be able to make a profit in this way of generating electricity. I wish I had equal confidence. The noble Lord contended that limiting local authorities to using the transmission and distribution system only for the supply of local authority premises will avoid this radical extension of their powers. But to what premises does the clause refer? Either it is to a very limited number of premises occupied by the local authorities for their own administrative purposes, such as offices, or it applies to the generality of local authority premises, including public buildings, blocks of flats and street lighting.
It will hardly be worthwhile negotiating arrangements for such small and probably isolated pockets of demand, and an arrangement to sell electricity to, and to buy it from, the board would surely be preferable. As the noble Lord. Lord Strabolgi, will be well aware, this is very similar to Amendments Nos. 1 and 2 that he moved. I said that I would take that point back and look at it, and as these amendments are consequential in everything but fact on those amendments I am prepared to do the same, on the same terms.
Lord Strabolgi: That is very generous and constructive of the noble Earl, if I may say so, and in view of that undertaking I beg leave to withdraw the amendment.
Lord Tanlaw: I was not sure of the formal order of speaking, but if I may repeat what the noble Lord, Lord Strabolgi, said and put words into his mouth, in view of what the noble Earl said and the very helpful way in which he has taken to the thinking behind these amendments, which we on these Benches greatly appreciate, I shall be pleased to withdraw Amendment No. 5.
Amendment to the amendment, by leave, withdrawn.
Lord Strabolgi: I apologise to the noble Lord, Lord Tanlaw, for jumping the gun, and I beg leave to withdraw Amendment No. 4.
Amendment, by leave, withdrawn.
Clauses 11 to 15 agreed to.
Clause 16 [Regulations relating to supply and safety]:
Lord Strabolgi Lord Strabolgi moved Amendment No. 6:
Page 9, line 28, at end insert—
("; and
(c) securing so far as practicable that any tariff in accordance with which prices are to be charged for the supply of electricity by an Area Board, a Scottish Board, or any other person (other than the Central Electricity Generating Board), is presented in such a way as to enable the prices to be charged in accordance with that tariff to be readily comparable with the prices to be charged under any other tariff").
The noble Lord said: Consumers, especially small industrial and commercial businesses, can be faced with problems which, because they may not have the expertise available to a large concern, they do not satisfactorily resolve when endeavouring to choose the most suitable rate presented to them by an electricity board's tariffs for the supply of electricity. The enactment of the Bill could, in my view, worsen the situation where consumers were in a position to choose a supply of electricity from a board or a private supplier. It is felt highly desirable that both private suppliers and the boards should be required to present their tariffs in a readily understandable form to allow a detailed comparison of prices to be made. It is thought that this might best be achieved by empowering the Secretary of State to make appropriate regulations under Clause 14 of the Bill. I beg to move.
The Earl of Avon: I must admit to the noble Lord that I did not at once see why he had tabled this particular amendment to this clause, as the clause deals more with technical and safety matters. However, I should like to point out to the noble Lord, Lord Strabolgi, that the presentation of supply tariffs is already dealt with in existing legislation. Under Section 37 of the Electricity Act 1974, supply tariffs (and these will include supply tariffs for private generators) must be framed so as to show the methods and principles by which the charges are to be made, as well as the prices to be charged, and must be published.
This is precisely the arrangement we have adopted for tariffs for purchase of privately generated electricity and for use of the system. Boards are obliged to set and publish tariffs so that private generators may see the prices and charges applicable for the service they are requesting from the board. The tariffs may not always be applicable, but will be an important basis for negotiation in special cases. All consumers will be able to see the different tariffs available for supply. They are also protected by the provisions under which boards are prevented from showing undue preference to or undue discrimination against any person or class of
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persons. There must be parity of treatment among all classes of consumer. I hope that, with that assurance, the noble Lord, Lord Strabolgi, will not feel it necessary to press his amendment.
Lord Strabolgi: I am grateful to the noble Earl. This was a probing amendment only. If I may say so, I think that it was worth venturing to move it because we have elicited this useful and full explanation from the noble Earl. In view of what the noble Earl has told the Committee, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 16 agreed to.
Clause 17 agreed to.
Clause 18 [Purchases by electricity boards from local authorities]:
4.13 p.m.
On Question, Whether Clause 18 shall be agreed to?
Lord Strabolgi: I do not propose now to move that we should leave out Clause 18. This clause is acceptable in itself but I should prefer a clause drafted on the lines of the amendments previously moved, which the noble Earl has said that he will look at. This clause was inserted by the Government in another place. As I said, it is acceptable so far as it goes but it does not go far enough. I hope that when the noble Earl comes to look at this matter he will perhaps see whether we can take it a bit further. In view of this, I do not propose to move the amendment.
Clause 18 agreed to.
Clause 19 [Combined heat and power]:
Lord Tanlaw Lord Tanlaw moved Amendment No. 7:
Page 11, line 28, at end insert ("promote,")
The noble Lord said: The amendment is clear; it asks to insert the word "promote" into the Bill. The worry that I have had over the Bill with regard to combined heat and power has been that it is quite possible, without any alteration to the existing legislation—without having this Bill at all—that the Government and the Department of Energy could say that they are extremely keen on combined heat and power and are doing all that they can to put schemes forward, except that there are problems with economics. The provision has been put into the Bill. The object of the amendment is to elicit from the Government more than just lip service that they will actively promote this method of heat and electricity generation.
I have placed on the Library table and made available to other noble Lords a copy of an extract from Energy Paper No. 35 of 1979 which was put to the Department of Energy. It was entitled Combined Heat and Electrical Power in the United Kingdom. It is quite clear from this paper that for primary energy requirements for the long term (that is, after the year 2000) combined heat and power, with district heating, is by far the most cost-effective way of producing electricity and heat to citizens in any country. Either this paper is completely wrong and misleading or it is

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right. Therefore, in my view the Government have to clarify their position more than they have done to date.
The object of the amendment is to elicit from the Government whether they are going to promote actively combined heat and power on the basis of Energy Paper No. 35. It is the most effective way of keeping our nation warm and giving people cheap electricity. There are other considerations apart from the obvious environmental ones—and the environmental considerations are considerable. If and when legislation is forced on us, either from Europe or from movements in this country, that the sulphur emissions from coal-fired power stations should be reduced, there are even more and greater reasons why CHP should be used as a standard form of electricity generation on a very large scale indeed.
There is another factor as well. It has been assumed—and I have said in this House on other occasions—that the space heating market after the year 2000 will be covered by the increase in nuclear electricity generation. It will be cost-effective and it will replace gas, which will be too expensive owing to the shortage of supply. From the debate that we have had in this House on other occasions, it is clear that the gas will be available in very large quantities by the year 2000, and that the pure electric space heating market will not be there. It will not be cost-effective. Therefore, it is my conclusion that the Central Electricity Generating Board has to look at combined heat and power as the only way in which it will get into this market at all.
The noble Earl is well aware of this paper. If he looks at the chart in the paper he will see that straight-forward electricity space heating is one of the most expensive and uneconomical systems when compared with the heating provided by CHP. This is a major policy point. The Government have not made their position clear, and nor has the CEGB, as to what they mean by encouraging combined heat and power. I should like to see the word "promote" put into the Bill to ensure that this is done on a massive scale in our conurbations. I beg to move.
The Earl of Avon: In speaking to this amendment, which proposes the insertion of the word "promote", the noble Lord has taken us on a grand tour of the energy industry. I think that the first sentence of my reply expresses my real feeling. As drafted the clause gives electricity boards a clear duty to promote CHP schemes. Existing statutes are designed principally around the production of electricity. Their duties in respect of associated heat are limited. This clause removes doubt as to the attitude that the boards are to adopt in connection with schemes for the use of heat from ordinary power stations. To their credit they have developed some of these projects on the grounds of energy efficiency and commercial sense.
There is also doubt in the statutes as to the attitude that boards are to adopt to CHP schemes where the production of heat at useful temperatures is an integral part of the design, and where the production of electricity is accordingly affected. There is no doubt that CHP schemes can lead to a high level of efficiency in terms of energy use, and we want them to go ahead
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where they are economically viable. The Bill gives boards a clear duty to promote such schemes, but nothing in the Bill means that boards have to act uneconomically; not does it impose additional burdens on their consumers.
If I may turn to the noble Lord's amendment, I would say that it seeks to require boards to promote CHP schemes. The words "adopt and support" were used to enable boards to carry out schemes themselves and to participate in schemes of others. Therefore, the words encompass most of what the word "promote" conveys. However, by adding that word an additional duty would be imposed on boards actively to encourage others to adopt CHP schemes on their own, and I do not think that it would be practical to impose a duty in respect of such schemes in which the boards have no involvement. On that rather technical point I would therefore ask the noble Lord, Lord Tanlaw, to withdraw his amendment, and I would hope that he will be happy to accept my opening words, which, if I may, I shall repeat: the clause gives electricity boards a clear duty to promote CHP schemes.
Lord Tanlaw: I cannot ask for much more than that, apart from the Committee accepting the amendment. The noble Earl's words are good enough for me at this stage, and therefore I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.22 p.m.
Lord Tanlaw Lord Tanlaw moved Amendment No. 8:
Page 12, line 27, after ("financial") insert ("and social").
The noble Lord said: Notwithstanding what the noble Earl the Minister has said, in speaking to this amendment I should like some further reassurance. A situation could arise where a board does everything actively to promote CHP only to find that the scheme is returned from the accounts department because it is stated not to be viable. Therefore, perhaps much to its relief, the board is able to say that under the terms of the Bill it does not have to pursue the scheme because it appears that it is not financially viable. I hope that that will never happen, but under the Bill as it stands it is a possibility.
I want to ask the noble Earl two questions. First, when the financial criteria are applied will they include savings in relation to foreign exchange and the actual cost of purchases of alternative fuel in competition with combined heat and power? There would be a great saving to the nation in terms of foreign exchange if CHP were used. Secondly, are there to be different rates of return imposed on CHP schemes because they are providing two different functions: one is to create electricity, the other is to create heat? I do not believe that they are directly comparable with existing financial criteria applied in respect of a normal, standard generating station.
I feel that adding the word "social" would enable a board to make a major contribution to a whole area under its domain. For instance, in Liverpool only 20 per cent. of the urban population are without central heating. In Newcastle 40 per cent. of the population are without central heating. Sadly, both of those areas have high unemployment rates, which are certainly not improving. I believe that there is a very strong case

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for introducing a CHP scheme, with the encouragement and promotion of a board, to alleviate the social circumstances in those cities, the inner parts of which are in serious decline, as well as to help the unemployment situation there. It would be wrong if a board were to look at the Bill as a straightforward electricity Bill, and no more. By adding the word "social" the Government have a wonderful opportunity to enable the board's directorate to look wider than the confines of its own balance sheet in producing electricity in the area.
I have raised this particular point on previous occasions in your Lordships' House. It seems that while the Government are quite happy for pavements to be dug up in inner city areas and disruption to be caused in order to provide cable television, they accept the CEGB's view that it is too disruptive to dig up pavements to lay pipes for a district heating scheme. In other great cities the sewerage systems are deteriorating. Successive Governments have constantly been reminded about this, but they have put it off from year to year. Is there not a case for looking at these matters altogether?
Can I possibly inspire the noble Earl to indulge in some lateral thinking in this area? I am sure that he is more than capable of that. Lateral thinking must be used in CHP schemes. I believe that such schemes will bring future social and financial benefits in a way which has not been achieved by any other scheme to which the noble Earl has put his name, so to speak. I hope that he will be as responsive and as receptive to this amendment as he has been to other amendments involving CHP which he has said he will look at. I beg to move.
Lord Strabolgi: I should like to add my plea to that of the noble Lord, Lord Tanlaw, because I believe that this matter has social as well as financial implications. The trouble with so much of the Government's cost-conscious policy, good and necessary as it may be, is that it is counterproductive and can have bad effects in other ways. This morning I received a copy of the latest issue of Practical Energy for April/May, which I was very glad to see contains an important interview with the noble Earl, Lord Avon. I should like to quote part of the interview to your Lordships. The editor of the magazine asked the noble Earl the following question:
"Why is more not being done about District Heating? In Denmark, for example, over 40 per cent. of homes are heated in this way, thereby not only saving the consumer money but conserving fuel. Many of the heating plants consume refuse and straw while others use waste industrial heat."
In reply the noble Earl, Lord Avon, said:
"We are doing research into combined heat and power and are awaiting the results. It seems to me, speaking before we've got any official reaction, that this sort of thing looks tremendously like commonsense. However, when you get the figures out to do the mathematics, the savings can turn out to be very small. One of the troubles we have found with combined heat and power is that when we make suggestions to industry they turn down the idea as the return on capital takes such a long time".
So judging from that, it seems that we are still very much in the cost-conscious world, and subject to a cost-conscious outlook and policy, important though it may be. However, I think that there are also important social implications which can be farreaching
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not only now, but in the future. Therefore I hope that the noble Earl will be able to give some reassurance when he replies to the amendment.
4.30 p.m.
The Earl of Avon: I knew I had been talking too much, but I had not expected my remarks to be quoted back at me to that extent today. I understand there is to be a debate on energy tomorrow. This second amendment of the noble Lord, Lord Tanlaw, I found rather intriguing. I was wondering what he would have to say. It would, in fact, require a Scottish board, if considering a CHP scheme, to apply the social criteria that applies to other expenditure. However, I presume that the noble Lord meant what he has been speaking to, and it is that to which I shall reply.
The clause specifies that a prospective scheme must meet the same financial criteria applied to other board expenditure. This is to ensure that the board is not obliged to adopt or support uneconomic schemes that would result in increased prices to consumers generally. This is one of the main principles underlying the part of the Bill dealing with private generation. I am sure that the Committee agrees that it is an essential one. The Government take the view that the nationalised industries should plan their investment according to commercial criteria. Effectively, that means that there must be a proper market for the goods that justifies the investment. We see no reason to depart from that principle for the electricity industry because it might be marketing heat as well as power.
In suggesting that the industry applies less stringent criteria to CHP schemes than to other investment, the noble Lord, Lord Tanlaw, is perhaps suggesting that CHP should be to some extent subsidised on the assumption that it would not compete directly with other forms of energy supply in terms of efficiency and value to the consumer. To adopt such an approach to CHP would not only distort the boards' investment programmes in favour of projects which were admittedly less efficient in contributing to their overall operations; such subsidies would also have to be paid for in the long term. They would be paid for by consumers meeting the costs of a less efficient overall supply system and by the nation as a whole through investment decisions which added less rather than more to the national wealth.
That does not represent any bias against CHP. Indeed, the Goverment's purpose is to encourage the industry to look positively at such schemes, but not at the expense of more productive investment. However, if two similar projects came forward at the same time and their investment appraisal indicated that there would be little to choose between them when taking into account all financial costs and benefits, the final outcome would rest on the many other factors which would come into play. I would suggest that these are, first, social, and then environmental, industrial and technical factors.
I do not believe that there can be any hard and fast rules, since the board must make its own investment decisions on the merits of each particular project whether it is a combined heat and power scheme or any other project. I know, of course, of the noble Lord's interest in CHP. I hope that, following our various talks on the subject, he will realise that the

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Government continue to look at these schemes, put forward in the Atkins Report.
Viscount Hanworth: I hope that financial viability will be considered broadly. There are, after all, enormous variables. First, one must rightly decide whether the plant, or whatever it is, is going to be viable over its expected life. Especially with CHP, financial viability depends enormously on interest rates. If interest rates are fairly low, it is easy to make a very good case. If, on the other hand, interest rates are high, the reverse may be true.
Another factor that cannot be determined with certainty is by how much—I emphasise the words "how much"—the cost of energy will rise in the future. That it will rise in real terms, I have little doubt. This has to be taken into account in assessing financial situations. It is not a straight equation as matters stand today. That is why I say that I hope finance will be examined in the broadest possible terms.
Lord Ezra: I should like to support the view expressed by the noble Viscount, Lord Hanworth. Financial viability can be regarded in a variety of ways. If all projects are to be treated on the same relatively short-term basis, there is no doubt that schemes of this sort will not come into effect. These are long-term schemes requiring fairly large amounts of money. They may cost a good deal in capital investment in the initial stages in order to bring long-term benefits. I hope very much that, even if the amendment cannot be accepted, the Government will make clear that the term "financial viability" is to be interpreted fairly flexibly in relation to these important schemes that can bring such important long-term benefits.
Lord Tanlaw: I apologise to the Committee for submitting an amendment in the wrong place. As the noble Earl has pointed out, it should have come after the word "financial" in line 1. It is possibly by chance that financial viability came under the Scottish section. As the South of Scotland Electricity Board has 100 per cent. over-capacity of electricity, it shows that assessment of viability or future projections cannot necessarily be perfect in the electricity industry. Indeed, if the noble Earl is saying that district heating is not viable through CHP, I become worried about Department of Energy Paper No. 35, which shows that it is viable. Its popularity has been proved in Denmark. To take up Lord Strabolgi's point, I was informed only today that cities in Denmark have had to be zoned because all the inhabitants wished to have CHP district heating. It was, however, the wish of the Government to introduce gas in certain areas, which costs more. There was no choice about the use of gas. The Government insisted that in certain zones gas had to be used even when the citizens would have preferred to use CHP district heating systems. It works effectively. People like it, and it is cheaper.
I am most grateful to the noble Earl for exposing the Government's thinking behind the clause. It appears that the Government are prepared under certain conditions to examine CHP, and that they do not simply intend to cut off their nose to spite their face in certain areas simply because the figures do not add up.
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The figures can be examined in many different ways. It would be sad if this great project of CHP district heating was abandoned simply on accountancy grounds. This would be to misread the general feeling of the public today. In view of the thoughts expressed by the noble Earl, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 19 agreed to.
Clause 20 agreed to.
Clause 21 [The Electricity Consumers' Council.]:
On Question, Whether Clause 21 shall be agreed to?
Lord Renton: I would be grateful if my noble friend Lord Avon would explain to a greater extent than one can derive from the Bill or the Explanatory Note, which is virtually silent on the matter, the proposed new Electricity Consumers' Council. The area consultative boards introduced under the 1947 Act have carried out, as intended, the function of acting as a two-way exchange of ideas. They have enabled the interests of consumers to be brought to the notice of those who are producing electricity, and have also acted as a channel of communication in the other direction.
It would seem that the Electricity Consumers' Council will be virtually a central council of area electricity consultative boards. That is a good idea. However, as it is rather difficult to derive this intention from a study of Clause 20 and Clause 22, it would be helpful if my noble friend could explain: first, what exactly will be the position of the Electricity Consumers' Council; secondly, what will be their relationship with the area consultative councils, all of whose chairmen are to serve upon it; and, thirdly, are the present functions of the area boards likely to be modified in any way as a result of the appointment of the Electricity Consumers' Council?
The Earl of Avon: I think that I can set my noble friend's mind at rest. The Electricity Consumers' Council already exists. These clauses simply put it on a statutory basis and, therefore, put it on the same basis as other consumer councils. We discovered when looking at the Bill that the Electricity Consumers' Council was the only one that was not statutory. All the area boards in point of fact have statutory consumer councils, and it is only this body that is left out. So that was our reason for doing it.
Statutory authority will increase the Electricity Consumers' Council's authority with the electricity supply industry and with the 12 area electricity consultative councils. The clauses will not entail any increase in the level of funding provided by the Government and it is expected that the ECC's workload will remain largely unchanged. The clause reflects the precedents established in the statutes establishing the area electricity consultative councils and the national consumers' councils. With that, I hope that I have set my noble friend's mind at rest.
Lord Renton: I am much obliged. One just wonders how it is, therefore, that the Electricity Consumers' Council—which, as my noble friend has pointed out and as I did not realise, already exists—has managed

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to derive statutory authority for the expenditure which it has incurred. No doubt some way of getting round that lack of statutory authority has been found, and nothing unlawful has been done. I am grateful to my noble friend for his explanation.
Clause 21 agreed to.
Clauses 22 to 38 agreed to.
Schedules 1 and 2 agreed to.
Schedule 3 [Electricity: minor and consequential amendments]:
Lord Strabolgi Lord Strabolgi moved Amendment No. 9:
Page 30, line 39, at end insert—
("Control of Pollution Act 1974
1974 c. 40.
11A. In section 21(1) of the Control of Pollution Act 1974, after the words "or otherwise dispose of any heat" there shall be inserted the words "or electricity".
Local Government (Miscellaneous Provisions) Act 1976
1976 c. 57.
11B. In section 11(1) of the Local Government (Miscellaneous Provisions) Act 1976, after the words "or otherwise dispose of heat" there shall be inserted the words "or electricity".").
The noble Lord said: This amendment is consequential on Amendment No. 1. I beg leave to move it formally so that it appears in the official record. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 3 agreed to.
Schedule 4 [Enactments repealed]:
Lord Strabolgi Lord Strabolgi moved Amendment No. 10:
Page 33, line 56, at end insert—

("1974 c. 40.

The Control of Pollution Act 1974.

In section 21 the words "in connection with the installation, but shall not use any of it elsewhere".").

The noble Lord said: This amendment is consequential on Amendment No. 4. I beg leave to move it formally for the same reason. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Strabolgi Lord Strabolgi moved Amendment No. 11:
Page 33, line 56, at end insert—

("1974 c. 40.

The Control of Pollution Act 1974.

In section 21, the words "subject to sub-sections (2) and (3) of this section" in sub-section (1); sub-sections (2) and (3).

"1976 c. 57.

The Local Government (Miscellaneous Provisions) Act 1976.

In section 11, the words "subject to sub-sections (2) and (3) of this section" in sub-section (1); sub-sections (2) and (3); and the words "(except the restrictions imposed by subsection (3))" in sub-section (7).").

The noble Lord said: I beg leave to move Amendment No.11. This is consequential on Amendment No.1. I ask for the indulgence of the
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Committee in explaining that I am moving these amendments formally because, unless they are moved, they do not appear in Hansard at all. This is particularly important because, if there are several amendments that are linked and a decision is taken on the first, which may consist of one word or two words, none of the other amendments appear at all in Hansard and they will mean very little to people outside the Committee. Therefore, with your Lordships' permission, I beg leave to move this amendment formally. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 4 agreed to.
House resumed: Bill reported without amendment.

Water Bill
4.45 p.m.
Report, on Clause 7, received.
Clause 7 [Arrangements by water authorities for representation of consumers' interests]:
Lord Sandford Lord Sandford moved Amendment No. 1:
Page 5, line 31, at end insert—
("(1A) Arrangements under subsection (1) above shall require each water authority to establish Consumer Consultative Councils.
(1B) Each water authority shall consult on such arrangements with organisations appearing to it to represent consumer interests in their area including each relevant local authority and on submission of a report to the Secretary of State under subsection (1) above, shall publish in the London Gazette and in one or more newspapers circulating in every part of its area, details of the arrangements indicating that representations thereon may be made to the Secretary of State within a period of not less than 28 days from the date of publication.
(1C) The water authority shall make provision in arrangements under subsection (1) above, as respects each Consumer Consultative Council, for:—

(a) at least one member thereof to be appointed by each relevant local authority and a number of other members to be appointed by organisations representing the interests of the consumers;

(b) the Chairman thereof to be appointed by the members;

(c) administrative and financial arrangements that will enable the effective and independent working of the Consumer Consultative Council;

(d) enabling policy issues which are not of an urgent or confidential nature to be brought before Consumer Consultative Councils before the water authority makes decisions on them and for meetings of Councils to be open to the press and the public;

(1D) In this section, "relevant local authority" means, in relation to a Consumer Consultative Council, the council of a London Borough or of a county or district as defined in relation to England in section 27(1) of the Local Government Act 1972 or of a county or district mentioned in section 20(3) of that Act (which relates to Wales) or the Common Council of the City of London of which the area or a substantial part of it is in each case included in the area of the Consumer Consultative Council.").
The noble Lord said: My Lords, I beg to move Amendment No. 1. In doing so, following the business to which we have just been listening, one cannot help reflecting what a pity it is that we cannot have a single Minister dealing with Clause 21 of the Energy Bill and Clause 7 of the Water Bill, so that we could get some consistency into the business of consumer consultative councils. However, in moving Amendment No. 1 I must refer to Amendment No. 3, because that is a

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Government amendment tabled after I and my various noble friends whose names are on the Marshalled List had tabled our Amendment No. 1 to Clause 7.
With the tabling of the Government Amendment No. 3, I hope we shall have the assurance of the House that the House will have one further look at this matter before the consumer consultative councils come into operation on the basis of the guidelines to be issued by the Secretary of State. That being so, my intention would be not to press Amendment No. 1, but to suggest to my noble friend on the Front Bench that he takes this debate as the opportunity to indicate to the House exactly where we now stand, the matters that are agreed about the characteristics which these consumer consultative councils are to have, the matters which have already been established by the first draft of the guidelines, which have been set out in the answers he gave to my noble friend Lady Trumpington a few weeks ago, and generally to put that on the record so that we know where we now stand and have a reference point for the day when the guidelines are laid before each House of Parliament in accordance with Amendment No. 3. On that basis, I beg to move Amendment No. 1.
Baroness Fisher of Rednal: My Lords, in seconding the amendment that has been moved, I should like to follow up what the noble Lord, Lord Sandford, has said by agreeing that, when the noble Lord, Lord Skelmersdale, has the opportunity to reply, he should indicate how far we have got. It would appear that fresh guidelines are to be issued, because some of the points have already been covered in statements which the noble Lord has made to the House, either through Questions for Written Answers or in Committee. Therefore, it would be helpful if the noble Lord could give us some indication as to when the second consultation document will be issued and perhaps the date of the return. Perhaps he could also help by enumerating some of the matters which he thinks ought to be included in the second consultation document.
I think that there is still a need to clarify the position of the secretaries of the consumer consultative councils and also the places wherein they might meet. I think that all Members of this House who spoke on the Second Reading debate and since in Committee have stressed that, if the consumer consultative councils are to be the bodies that we expect them to be, they will have to be consumer consultative councils not only in name but also in the way they act. Who will finance the secretariat, and where they will meet, are important points which ought to be included in the guidelines.
We recognise that there is a timetable. The new consultation document goes out; it has to come back in; the guidelines have to be set; these then have to go out to the water authorities; the water authorities return their comments, under Clause 7, to the Secretary of State; then, if they are approved, one presumes that the water authorities go ahead with appointing members to the CCCs. When does the noble Lord expect that a final date will be given by the Government and when shall we know who has been appointed to the CCCs? This is an important issue.
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We came to the conclusion in Committee that the only democratic part of this Bill relates to the consumer consultative councils. Therefore, it is envisaged that the people to be appointed to them will exert a tremendous amount of influence on the water authorities, and be part and parcel of some of the preliminary decisions of a water authority before they come to final conclusions. Unless these councils act in the true sense of a consumer consultative council their role will become, as with so many nationalised industry consultative committees, a much maligned one. One would not like to feel that the water authorities, or the Government, were going to place the CCCs into the category of being simply the names of people, but people without consequence and influence.
Lord Winstanley: My Lords, as I am one of the other signatories to this amendment moved by the noble Lord, Lord Sandford, it might be helpful if I indicated that the course of action recommended by the noble Lord to your Lordships' House with regard to this amendment is one which my noble friends and I on these Benches entirely support. We wish to thank the noble Lord, Lord Sandford, for his indefatigable efforts with regard to this important part of the Bill, efforts which have resulted not least in part of the Bill receiving a very effective scrutiny which perhaps it might not otherwise have had. I should also thank the noble Lord, Lord Bellwin, for having come forward, perhaps at the eleventh hour, with what appears to be a workable compromise which meets the needs and wishes of so many Members of your Lordships' House.
I think it would be right in the fullness of time, if this amendment is withdrawn having been discussed and commented upon, that we then unite to support the later amendment, Amendment No. 3. This really is a desperately important matter. Like many other noble Lords and noble Baronesses in your Lordships' House, I have had some experience of consumer consultative councils. From that experience I genuinely believe that there is always a risk of those bodies becoming no more than a receptacle for complaints, where those complaints are allowed to remain while time passes until perhaps the frustration or the anger of the complainant has been allowed to simmer down.
If the consumer councils are to have genuine effect they must have proper access to the activities of the body they are scrutinising. They must also have an opportunity to publicise what they are doing so that their efforts are seen by the public to be effective, and to be acting as a genuine scrutineer on behalf of the public of the body over which they are required to watch. Without the kind of detailed discussion we have had about these proposed guidelines and the various provisions which will be brought into the working of this part of the Act, there was perhaps a danger that these consumer consultative councils would be little more than ciphers. I myself have great hopes that at the end of the day they will prove to be effective.
If they do not, then we are embarking on a dangerous course. We have appointed water authorities with the press largely removed, with the ombudsman partly removed, and so on. Therefore, never has the need for a consultative council been more clearly demonstrated. I am grateful for the work that the

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noble Lord, Lord Sandford, has done to make sure that these gaps have been filled. I am also grateful to the noble Lord, Lord Bellwin—this will perhaps save me having to say it at a later stage—for the conciliatory approach which he has adopted to the arguments advanced to him.
Lord Campbell of Alloway: My Lords, I apologise to the noble Lord, Lord Sandford, because I missed his first opening remarks, but I shall of course read them in Hansard. I am grateful that this amendment is to be withdrawn, because on any objective analysis it really is possessed of several vices. It seeks to formalise what is otherwise informal, thus reducing the very flexibility of which other noble Lords have spoken. It seeks to introduce this novel and, I am afraid, unworkable concept by reference to decisions of policy not of an urgent or confidential nature, without any machinery by which such question could be resolved, and indeed on a question where it is possible to entertain a serious measure of genuine disagreement.
Lastly, it relates to the subsequent amendment, Amendment No. 4, by seeking to establish this new statutory body, the consumer consultative council. It paves the way to that Amendment 4 which envisages a piecemeal extension of the jurisdiction of the local commissioner in relation to complaints of maladministration by water authorities at the instigation of any member of the consultative body. There is no special need shown for that. If the amendment were to have been accepted it would have been unworkable in practice as any reasonable means of securing the interests of consumers, and on the contrary would have tended to clog the channels of due administration.
Baroness Jeger: My Lords, I rise briefly to seek some further information on the work of the consumer councils. I am concerned about the position of people who can get rate rebates and rent rebates, but apparently can get no rebate for their water charges. I wonder whether this question would be within the terms of reference of the consumer councils? I ask this in all sincerity because I put down a Question on 13th April, and the noble Lord, Lord Trefgarne, told me in a Written Answer that there was no provision under the Housing Benefits Scheme to help in the payment of water and sewerage charges. We must all know that these charges are becoming an increasing proportion of the domestic expenditure of many people, and for many households a worrying proportion of the household expenses.
The noble Lord, Lord Trefgarne, stated clearly on 13th April, at col. 302:
"The Government do not provide resources to assist water authorities to deal with cases of hardship, but these authorities normally make available special payment facilities for those in need".
I should like to ask whether there is any formalisation of the noble Lord's rather vague statement, and to know what part the consumer councils would be able to play in trying to help in cases of hardship. Also, are there to be any national arrangements or will it be left to each authority to do what it thinks best?
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I noticed, as did the noble Lord, Lord Campbell of Alloway, the reference in the proposed paragraph (d) to the rights of the consumer consultative councils to deal with policy issues which are not of an urgent or confidential nature and the fact that they should be dealt with before the water authority makes decisions on them. I do not know what the noble Lord had in mind in drafting this, but the most important matter for all water users is how they will meet their charges and what help there will be, either through the consumer consultative councils or from other directions, to deal with that problem. I realise that people on supplementary benefit would normally have these charges met, but some of the most hard-up people in this country are those who are just slightly above supplementary benefit level. They have no fat to cut into when there is a sudden increase in such essential services as water and sewerage charges. I should be interested to know what the Government and the noble Lord have in mind for such cases of hardship. While we have met a need through rent and rate rebates, there is a lacuna concerning water and sewerage charges.
Lord Nugent of Guildford: My Lords, may I add a query on the same subsection, particularly following the line of my noble friend. I should be glad if my noble friend Lord Skelmersdale would explain how these policy issues are to be decided. It appears, by implication, that the regional water authority itself will have to decide whether a policy issue is not confidential or urgent and can therefore be discussed by the consumer councils before it is decided by the regional water authority. But if the regional water authority decided that no such issue ever occurred the consumer council would never have such a matter before it. It might complain and ask why it did not. The answer would be that no such policy issue came before the water authority. In other words, the amendment which my noble friend Lord Sandford has put before us does not seem to me to be entirely practical. I shall be grateful if my noble friend Lord Skelmersdale will explain how he sees this paragraph (d) being put into action.
Baroness Birk: My Lords, I should like to support my noble friend Lady Jeger. She is absolutely right and on to a good point about rebates. If one of the alternative answers is to have one's water metered—as some people do now because they find it less costly—someone still has to pay for the installation of the meter. It is these people who cannot afford to pay for the installation of the meter who will be at a great financial disadvantage. This is another item which should be included with rate and rent rebates and the other schemes of rebate for people in financial need.
Lord Skelmersdale: My Lords, this debate has rather run away with itself, but I return to my noble friend Lord Sandford. With an offer like that, how could I possibly refuse? When we debated this matter the other day I made it clear that Government objections to Amendment No. 2, moved by my noble friend, existed, and exactly what they were. My noble friend, as he has explained, has taken note of my objections as set out in the Official Report, and has tabled this present amendment which differs in

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significant respects from that which we discussed in Committee.
My noble friend would prefer us, in subsection (1A), to refer to the consumer consultative councils rather than consumer consultative committees as in the guidelines. He has suggested that this change would underline their independence. We do not, however, wish to move in this direction. There are significant differences between what is proposed in the guidelines and the existing structure of nationalised industry consumer councils. In particular, the strongly local emphasis of our proposed committee and the need for a strong local government input—because, in a sense, the committees are taking the place of the local authority members hitherto appointed to water authorities—underline this difference. We are not saying that the committees should be committees of the water authority in the conventional sense; they will be genuinely independent, with an independent and independently appointed membership. They will not be operating to policy instructions from the water authorities. Nevertheless, we distinguish them from nationalised industry consumer councils and we prefer to retain the word "committee" which we do not consider to be ambiguous.
As for consultation and publicity, the water authorities will, no doubt, find it desirable to hold consultations on drawing up their reports. What is essential—and we will require this in the revised guidelines—is that publicity should be given to the proposed arrangements before a report is submitted to the Secretary of State. There should be good local publicity, which should inform individuals where they can see or obtain a copy of the draft report. We should not, however, require publication in the London Gazette, which would be an unnecessary expense. The water authorities will be required to submit a summary of the comments they receive, and how they have taken them into account, when they submit their report to the Secretary of State.
As for item (1C), we are agreed that each local authority wholly or substantially within the area of a CCC should have a right to appoint a member and we are agreed about the chairmanship. I have explained that the accommodation and secretariat should be provided by the water authority, which will be more efficient, less bureaucratic and less costly than any independent arrangement.
I was asked a number of questions, I believe, by the noble Baroness, Lady Fisher, about where these meetings would be held. It might be appropriate for them to be held (shall we say?) in the Maltings at Snape, and it might be appropriate for them to be held in county council offices or even in the offices of the water authorities themselves. This would be a matter in the consultation procedure of each water authority. I cannot at this moment say where would be appropriate in any particular case.
Since expenses are to be paid, since the committees will have control of their own agendas, since they must be consulted well in advance on major policy questions and since the water authorities and companies must supply whatever information is needed for the committees to discharge their tasks—for all these reasons, we believe that the
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effective and independent working of the CCCs is assured.
I was asked a number of questions by noble Lords. First, the noble Baroness, Lady Fisher, asked how far we have reached in the matter of timing. I have nothing further to report since she asked virtually the same question last week. The revised draft guidelines are to be issued soon for a short period of consultation which I would think would not be as long as four months, but probably greater than six weeks. Incidentally, last week I was asked a question by my noble friend Lord Drumalbyn, to which I did not reply at the time, which was: how many members would the consultative committees have? This would vary in each case, but I would not expect them to have more than 30 members.
The noble Baroness also said that the only democratic part of the Bill would be Clause 7 and the formation of the consumer consultative committees. I take issue with her on this because my noble friend Lord Bellwin was at pains to point out at an earlier stage of the Bill that the local authority representation on the water authority is a form of democracy in itself. As we shall be discussing later under Amendment No. 4, in the name of the noble Baroness, Lady Serota, there will be the opportunity for the aggrieved consumer to address his complaint, if it is not entertained by the water authority, to the local ombudsman. I should have thought that that was a defence of democracy, to use the noble Baroness's words.
The noble Lord, Lord Winstanley, rather stumped me when he referred to a conciliatory approach. I rushed to the dictionary as I had always thought it meant "giving way". But, having re-read the dictionary, I find that it means something entirely different. It means "doing things in a spirit of genuine understanding". This, of course, is exactly what I and my colleagues in the department have sought to do during the course of this Bill.
The noble Baroness, Lady Jeger, produced a rather different point. The snap answer is that the matter of water rebates is not primarily a matter for consumer consultative councils, but is a matter for the Government's social security policy. The Government approach is that help for those in difficulty over their water bills (as in the case of electricity and gas bills) should be brought about through the social security system. If the CCCs wish to make suggestions for alleviating hardship over water bills, they are entitled to do so. This must be taken as seriously by the water authorities as they would take any other matter which was referred to them by the consumer consultative committees. I think the noble Baroness, Lady Birk, asked about meters.
Baroness Birk: My Lords, I did not ask a question. I said it would be too expensive for people who would require, or deserve, a rebate to install a meter. I am saying that to the Minister so that he does not have to spend time answering a question that I did not ask. I stated a fact.
Lord Skelmersdale: My Lords, in that case, one comment can be answered by another. It is by no means clear that water meters save money. It depends

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on different cases. If the noble Baroness wants to take this up with me later, I shall pursue it. From what I have said earlier, I agree with my noble friends Lord Campbell of Alloway and Lord Nugent. It is not for me to defend part of the amendment which is concerned with enabling policy issues which are not of an urgent or confidential nature to be brought before the consultative councils. I am happy to reiterate what has been said on numerous occasions: that it is for the consultative committees to form their own agenda and to bring to the notice of the water authorities, once having discovered the facts, anything that they feel they need to do. I do not think that at this moment I need to go further than that. We shall be debating Amendments Nos. 2 and 3 in a moment.
Lord Nugent of Guildford: My Lords, if my noble friend will allow me, is he really happy to leave the uncertainties that there must be in this subsection as to what are the obligations of the water authorities in this matter? Is it really clear as to whether they have any obligation to put issues before the consumer councils; or can they say with their hands on their hearts, "We have heard nothing which is not either urgent or confidential and therefore can put nothing before you". Will this not leave a possible basis of misunderstanding between these important new bodies and the water authorities?
Lord Skelmersdale: My Lords, I shall have to consider that. I can see that it might if I were going to accept this amendment; but I am not. I explained to your Lordships on an earlier occasion that if you wished to have a debate when the guidelines were issued and laid before Parliament it would be possible by arrangement through the usual channels. I am happy to repeat that assurance today. With the assurances that I have made this afternoon and earlier in Committee, I hope that your Lordships will agree that there really is no need for Amendment No. 1. Accordingly, I invite my noble friend to do as he promised and withdraw the amendment.
Lord Sandford: My Lords, I hope that the House will agree that it has been useful to have these debates, and this one in particular. There was one important matter which I do not think my noble friend mentioned although we have discussed it before; namely, the assurance that the meetings of the consumer consultative councils will be open to the press and the public. I do not think that there is any need for him to restate that now. It was recorded earlier on. But I should like it to be on the record again as it is one of the things which has been established in the course of the debates on this clause. Having said that, I, personally, am well content to leave the matter now to the laying before Parliament of the guidelines when they have been finalised. That will be the moment, perhaps, to come back to the issue raised by my noble friend Lord Nugent. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Drumalbyn Lord Drumalbyn had given notice of his intention to move Amendment No. 2:
Page 5, line 34, at end insert—
("( ) It shall be the duty of the Secretary of State to lay before each House of Parliament a copy of any guidelines issued by him under subsection (2) above".)
The noble Lord said: My Lords, I do not propose to move Amendment No. 2 since it is in almost identical terms to Amendment No. 3.
[Amendment No. 2 not moved.]
5.17 p.m.
Lord Skelmersdale Lord Skelmersdale moved Amendment No. 3:
Page 6, line 40, at end insert—
("(10) The Secretary of State shall lay before each House of Parliament a copy of any guidelines issued by him for the purposes of this section".)
The noble Lord said: My Lords, the House may recall that when we debated this matter last week my noble friend Lord Drumalbyn had a virtually indentical amendment to that which he has tabled for debate today and which he has just very generously not moved. I indicated then that the Government accepted the principle of his amendment, that the guidelines should be laid before Parliament but that we preferred some slightly different wording. I undertook to bring forward an amendment at Third Reading. However, everyone concerned put their skates on and the Government tabled this amendment on Thursday last to be debated today. This was at the earliest possible opportunity. My noble friend follows the precedent of bullying the Government by putting his own amendment down again, which is a reasonable attitude for a Back-Bencher in your Lordships' House to take. At least, I hope so, because I have done it myself on at least one occasion. He has, however, again done the decent thing by not moving his amendment.
As I explained on Wednesday, we believe that there is advantage in providing formally for the guidelines to be laid before Parliament and that this underlines the statutory significance of the guidelines. The fact that they are laid before Parliament will be recorded in your Lordships' House; copies will be made available in the Printed Paper Office as well as in the Library and they will be advertised on the green Minutes of Proceedings and the pink paper. Noble Lords may then decide whether or not they wish to raise any points on the guidelines through the usual means. I have already referred to the fact that it would be possible, by arrangement through the usual channels, to have a debate on this subject if a Member of your Lordships' House particularly required it. In the light of what I have said, I hope that your Lordships will now agree that this is an acceptable and sensible position for the Government to take. I beg to move.
Lord Drumalbyn: My Lords, I should like to express my thanks to my noble friend. I dare say that he put his amendment down before he had seen mine. I think that we have reached the right solution. I should like to congratulate my noble friend on the dexterity with which he dealt with the last amendment. Obviously, it was quite impossible for him to say what progress had been made in the discussions; for probably there have not been any further discussions since the last time we debated this matter. Certainly, he has made it possible

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for my noble friend Lord Sandford and all of us who supported him to do what we wanted to do; which was to make certain that the matter came to Parliament in some form so that we would have the opportunity to debate it if it seemed necessary to do so.
I think that, in deciding whether or not to debate it, we should wait and see what representations we get from the various authorities and whether they are sufficiently unfavourable to warrant a debate on the guidelines. I do not think I need say anything more. What my noble friend Lord Nugent was saying is answered, because quite obviously it is impossible to say what the guidelines will contain in the matter of policy issues or anything of that kind. We now have to wait for the guidelines. We have had the assurance that there is the widest possible discussion in their preparation, and so I am quite certain that the Government will have no other object in mind than to get the greatest possible consensus. I personally am optimistic about this, and I should like to thank my noble friend very much for the way he has handled this matter.
Baroness Fisher of Rednal: My Lords, we on this side of the House should also like to thank the noble Lord, Lord Skelmersdale, and to pay a tribute to him. He listened to our criticisms during the Committee stage and discussed with us later the possibility of coming to some compromise. The amendment which has been tabled today goes a long way towards what we all desired, which was that even if the guidelines are not printed on the face of the Bill, parliamentarians in both Houses should be aware of what they are. The very fact that a copy will be laid before the House for any purpose under this clause is something for which we would thank the noble Lord. We admire the speed of the skates he used in being able to bring this forward in three days.
Baroness Burton of Coventry: My Lords, perhaps I might just say how very glad I am that this decision has been reached about the guidelines. Could I also say how sorry I was not to be able to get here earlier, but the monitoring machine in the Library was not working; otherwise, I should have liked to support the noble Lord, Lord Sandford, in the work he has done in this connection with the Consumer Council. I think the guidelines are a very important thing for any consumer council to have, and I look forward to further discussion on these particular issues. I really only wanted to congratulate the noble Lords, Lord Skelmersdale and Lord Bellwin, on the skates which have been used to such good effect.
Lord Campbell of Alloway: My Lords, may I be allowed to say very briefly that this amendment, inspired by my noble friend Lord Drumalbyn, is highly important and wholly apt because it acknowledges the obligation of the Executive to indulge in a requisite measure of open government in a situation where intervention by the Judiciary is not in any way envisaged. Therefore, it is, in submission, greatly to be welcomed, and my noble friend is also greatly to be congratulated.
Lord Lloyd of Kilgerran: My Lords, may I briefly follow the noble Lord, Lord Campbell of Alloway, in
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the substance of his theme and also in extending our congratulations to the Government and the Minister for bringing forward this amendment. I note, of course, that this amendment is concerned only with arranging for the guidelines to be set down in relation to Clause 7. May I express the hope that it may be possible on a later occasion for the Government to look with sympathy at a request to make out guidelines for Clause 5 in the same way?
Baroness White: My Lords, may I take it that the reference by the noble Lord, Lord Skelmersdale, in col. 263 of Hansard for 13th April, stands? That is, that the draft guidelines, which is a different document, will be in the Printed Paper Office and not only in the Library; because that is, from a practical point of view, for the convenience of the House. They are two separate documents, as we appreciate.
Lord Skelmersdale: My Lords, I am very grateful to the House for the reception of this amendment. Most certainly the Government will not publish final guidelines without the greatest possible measure of agreement. That I can certainly confirm. The noble Baroness, Lady White, was correct in saying that there are two different documents. As I said on a previous occasion, I will make arrangements for the draft guidelines, before they are decided upon, to be put in the Printed Paper Office; but I am afraid it will not be possible to have them covered by this amendment. If that assurance will satisfy the noble Baroness, I will certainly see that is done, and in the meantime I am very grateful to all who have spoken.
On Question, amendment agreed to.
5.26 p.m.
Baroness Serota Baroness Serota moved Amendment No. 4:
Page 6, line 40, at end insert—
(" (10) In section 26(2) of the Local Government Act 1974 (which relates to the entertainment of complaints by a local commissioner) there shall be inserted after the words "member of the authority, or any other authority concerned" the words "(including a member of a Consumer Consultative Council set up under section 7 of the Water Act 1983".")
The noble Baroness said: My Lords, I beg to move Amendment No. 4, which stems from the very strong views which were expressed on all sides of the House at earlier stages and which have been expressed here again today at Report stage. The new consumer consultative committees should be far more effective bodies in representing consumer interests than any of those we have seen so far in connection with the existing nationalised industries. The amendment would enable members of the new consumer consultative committees, in respect of whom the November draft guidelines (there are so many of these that I think it would be easier from the point of view of the noble Lord, Lord Skelmersdale, if in fact I mentioned the month, which in this case is November) envisaged some responsibility for dealing with consumers' complaints, to be able to refer complaints of maladministration causing injustice to individuals to the local Ombudsman if they are unable to settle the matter locally themselves or if the matter is of such a nature that it requires the resources and the expertise of the local Ombudsman to investigate it properly.
When at Committee stage the noble Lord, Lord Bellwin, generously conceded the case for retaining the local ombudsman's jurisdiction over the whole range of the reorganised water industry's activities, he agreed that it would be wrong, primarily for reasons of consistency and tidiness, to remove a public right of continuing value and on important safeguard. He also saw the Government's decision at that time as an important concession to local accountability, and I believe that the whole Committee welcomed his statement and the Government's willingness to accept the strength of the argument for retaining the local ombudsman's jurisdiction.
But unless this amendment is also agreed, the changed nature and size of the new authorities will considerably restrict the individual citizen's access to the local ombudsman, as all complaints will have to be channelled through one of the nine to 15 members who will be operating over very wide geographical areas and vast populations. Moreover, as we have been frequently reminded during the passage of this Bill through the House, these members are to be appointed for their managerial and executive skills and not for representative purposes, and the new consultative committees will in future represent the voice of the consumer.
When replying to the debate on the Recommitment stage of this particular clause, the noble Lord, Lord Skelmersdale, last week maintained that complaints to the ombudsman were always routed through a member of the body complained against, and I believe he looked to me for confirmation of that statement. That is certainly not the case in the instance of the National Health Service, where the patient or the patient's relative who wishes to make a complaint to the Health Service Commissioner has direct access to the Health Service Commissioner, provided he or she has first raised the complaint with the appointed health authority concerned.
In central and local government, MPs and elected councillors have long-established representative functions, based on their defined geographical constituencies and wards, quite unlike the new "watercrats" who are created by this Bill. I hope therefore, now that the Government have fully accepted the need for the local ombudsman's jurisdiction over this essential service, that they will also accept the amendment and thereby enable the members of the new consumer consultative committees to refer a complaint to the local ombudsman, if they cannot settle it locally, or if the complainant so wishes, and thereby not reduce the existing rights of individual citizens which will otherwise be substantially less as a result of this Bill. My Lords, I beg to move.
Lord Campbell of Alloway: My Lords, I oppose this amendment, because under Clause 7 of the Bill it appears that proposed arrangements for the representation of interests of consumers in an area, which is informal, in some way crystallises into the formality of the Consumer Consultative Council, which is a new statutory body to which it is proposed to give formal powers under this proposed amendment. Apart from the question of flexibility, which has been put and needs no repetition, there is an objection to any
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piecemeal extension of jurisdiction to the local commissioner, in relation to complaints at the instigation of any member of this new statutory body, in connection with maladministration by the water authorities. Is there really any special case of established need on the general merits, which has been made known to your Lordships? Is this formalising of what is informal, and extending this jurisdiction by piecemeal extension, appropriate? With the utmost respect, I would have submitted not.
Lord Skelmersdale: My Lords, I am happy to give the noble Baroness, Lady Serota, the assurances which I believe she is seeking with this amendment. She gave us a very concise, if not potted, history of this amendment and I must say I agreed with that.
When we agreed that the jurisdiction of the ombudsman over the water authorities should be retained, it was no part of my noble friend Lord Bellwin's intention that we should in fact restrict access to the ombudsman, nor is that the effect of the Bill as it now stands. There will, it is true, be fewer members of water authorities in future to act as a channel for complaints, but we do not believe that this will have any practical effect. In our view, it will be more than compensated for by the establishment of the new consumer consultative committees.
We have had a very helpful letter from the Commission for Local Administration in England commenting on our first draft of guidelines. The commission have suggested the need, which we fully accept, for the guidelines to include a clear and comprehensive statement of how complaints should be made and considered. This is a matter which we are looking at in the context of revising the draft guidelines. We will wish to consult the water authorities and the Commission for Local Administration. But I may say now that the guidelines must contain a reference to the citizen's right to take certain matters to the local ombudsman.
Complaints are, in the first instance, for the water authorities or companies to consider, in spite of what the noble Baroness, Lady Serota, said. As I understand it, the health service have their own ombudsman to whom a member of the public may bring a complaint if he has not succeeded through the original approach to the health authority concerned, whereas the local ombudsman has the approach defined through the aggrieved body, as I said on a previous occasion. I hope that this clears up the matter and that I shall not have to return to it.
Where there is an unresolved allegation against a water authority of injustice because of maladministration, the authority, or the CCC if they are aware of the matter, should draw the complainant's attention to his or her right to take the matter to the local ombudsman and should also point out how to exercise that right. In the first instance, this means by taking the matter to a member of the water authority—perhaps the member who is himself a member of the consumer consultative committee. This may or may not be appropriate, and this is one of the matters upon which we shall have to consult. The CCC will of course—themselves and quite separately—have an interest in the way complaints are handled and may in appropriate cases wish to take up these complaints. So there are matters to be clarified

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here, and there will be consultation. However, in the light of my assurances, I hope that the noble Baroness will see fit to withdraw her amendment.
Baroness Fisher of Rednal: My Lords, the noble Lord commented that there are problems and difficulties; and said that the Government have not made up their minds on even this point. If we are to have some guidelines, as he has just said, the point about the ombudsman has become part of them. I should like to support my noble friend, because it is very difficult for citizens to find out where to make their ultimate complaint, when they have approached the water authority itself, the consumer consultative council and everybody else who might be able to help. People may still not be satisfied, and my noble friend Lady Serota could give many examples of where a complaint about maladministration has finally gone to the ombudsman.
We are concerned that, at some stage, the citizen has to know how to get his rights resolved, and how to go through a certain person. The difficulty is where members of local authorities are sitting on consumer consultative councils. The member for the ward concerned will be very tempted to say to the complainant, "I shall take up your complaint as your local councillor". But unless we clarify this issue he will find that he cannot do that. The whole matter needs clarification. It is unfortunate that we could not have the clarification today, because, as my noble friend so ably explained, this amendment is dealing with the rights of the citizen and that is the important issue.
Baroness Birk: My Lords, I had not intended to speak to this amendment, but I am surprised at the Government's attitude to it. This is part of Amendment No. 1, which was moved by the noble Lord, Lord Sandford, most of which will now go into the guidelines. But this amendment was quite deliberately picked out and moved separately because there is such strong feeling that it should be on the face of the Bill. My noble friend Lady Serota explained the matter so well that it is unnecessary for me to take up the time of the House by going over it again. However, the Minister said that this would have no practical effect, that they are smaller authorities. The fact that the authorities are smaller makes out a case for the consumer consultative committees to be given more responsibility.
It seems to me that at this stage of the Bill the Government ought to accept this clarification. The Government accepted my noble friend's amendment that under this Bill the water industry should be covered by the ombudsmen. Although the Government believe that this provision is already included in the Bill, many of us do not believe that it is. The noble Lord, Lord Sandford, put down his name to the amendment, so it is not a party political matter. We need to put this matter beyond any doubt. The only way to do so is by putting it on the face of the Bill and making it part of the statute. The Government are being a little obstinate, or they are still making up their mind. I believe that the Government should agree to this amendment, and I hope that the Minister will say that they do.
Lord Winstanley: My Lords, I, too, had not intended to intervene in the debate. However, as the noble Baroness, Lady Birk, will recollect, it was my amendment—to retain the jurisdiction of the ombudsmen in this field—which was so graciously acccepted by the noble Lord, Lord Bellwin. I am not trying to take the credit; the credit clearly rests very much with the noble Baroness, Lady Serota, in whom there is no greater authority on this subject in your Lordships' House. However, I was very relieved that my amendment was accepted. I thought that that was the end of the matter, but if it now appears that some obstacle could be placed in the way of the aggrieved citizen getting his complaint of maladministration, from which injustice may have arisen, to the ombudsman, then it seems that our previous exercise was in vain.
I was puzzled by the answer given by the noble Lord, Lord Skelmersdale. At the outset he seemed to say that he could reassure the noble Baroness: that she would be delighted to hear that in his correspondence with the commissioner discussing the guidelines everything would be smoothed out and that access to the commissioner would be easy. But now it appears that it is not going to be quite so easy.
There have always been problems about access to the ombudsman. So far as the Parliamentary Commissioner for Administration is concerned, noble Lords will know that complaints have to be referred by a Member of Parliament—not necessarily by the complainant's own Member of Parliament but by any Member of Parliament. However, they cannot be referred by a Member of this House of Parliament, which seems to me to be a very odd exclusion. It must be referred by a Member of the other place.
With regard to the local commissioner, my impression—the noble Baroness, Lady Serota, who is a great expert, will correct me if I am wrong—is that the normal procedure is for a complaint to be channelled through a member of a local authority. However, where a complainant with a genuine complaint has found it impossible to get his complaint to the local ombudsman by that route, the local ombudsman—certainly in the case of the local ombudsman for the North, Mr. Pat Cook—has found it possible to investigate that complaint, even though it has been passed direct to him by the complainant.
I hope that a citizen with a complaint will be able to get it to the ombudsman. I do not think we have had an unequivocal assurance on this point from the noble Lord. The complaint can go through a member of the water authority but now it appears that it cannot go through a member of the Consumer Consultative Council. But can it, at the end of the day, as with local government, go direct from the complainant to the ombudsman if the complainant finds that in some way he is being obstructed? Unless at some stage we are satisfied that the channel of complaint to the ombudsman will be open in some way, we shall have to deal with the matter again. I am not entirely sure how the noble Baroness intends to deal with her amendment, but I hope that we do not leave the matter in its present state of uncertainty.
Baroness Burton of Coventry: My Lords, I, too, should very much like to support what was said by the

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noble Baroness, Lady Serota. I was waiting for the reassurance which I understood the noble Lord, Lord Skelmersdale, to say at the beginning he intended to give her. I support also very much what the noble Lord, Lord Winstanley, said. I thought that this matter had been dealt with. I very much hope that we shall be able to take it further. Or perhaps, as the Government have been really helpful on the matter—much more helpful than Governments usually are on consumer matters—the noble Lord, Lord Skelmersdale, could be equally helpful and explain what is the real objection of the Government to accepting the amendment moved by the noble Baroness, Lady Serota.
Lord Drumalbyn: My Lords, it seems to me that in this particular case there is no absolutely exact parallel which we could follow. We have to judge it on the composition of the bodies which could help and not seek to force a precedent which is not really a precedent. It seems to me that the obvious course for an individual in a particular part of the country to take is to go to his local representative on the consultative council. There are local representatives in all parts of the country. The local representative on the consultative council will have experience of water matters. It seems to me that the right course to take is to allow him to pass the complaint to the water authority. Several complaints in the locality may be involved. These complaints should be discussed by the consultative council before they approach the water authority. The water authority can then consider the matter and reply, Yea or Nay.
If all fails, at the end of the day the individual will have to go to the ombudsman, who will investigate the matter with the water authority. This seems to me to be the natural procedure to follow. It will cover all cases. I wonder whether my noble friend would consider that point when he deals with the other matters. I am sure he has not made up his mind. We are all agreed on the principles involved. The only question to be resolved is the best procedure to follow.
Lord Skelmersdale: My Lords, with the leave of the House, I ought to answer some of these very serious questions. Perhaps the House will permit me to begin by quoting from Section 26 of the Local Government Act 1974, which set up the local ombudsmen:
"(1) Subject to the provisions of this Part of this Act, where a written complaint is made by or on behalf of a member of the public who claims to have sustained injustice in consequence of maladministration in connection with action taken by or on behalf of an authority to which this Part of the Act applies, being action taken in exercise of administrative functions of that authority, a Local Commissioner may investigate that complaint.
"(2) A complaint shall not be entertained"—
these are the important words under this part of the Act—
"unless—

(a) it is made in writing to a member of the authority, or of any other authority concerned, specifying the action alleged to constitute maladministration, and

(b) it is referred to the Local Commissioner, with the consent of the person aggrieved, or of a person acting on his behalf, by that member, or by any other person who is a member of any authority concerned, with a request to investigate the complaint".

The noble Lord, Lord Winstanley, was absolutely correct. It goes on to say:
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"If the Local Commissioner is satisfied that any member of any authority concerned has been requested to refer the complaint to a Local Commissioner, and has not done so, the Local Commissioner may, if he thinks fit, dispense with the requirements in subsection (2)(b) above"—
to which I have just referred. So in the last resort, yes—there is direct access to the ombudsman. But I did not understand, when I was addressing the amendment of the noble Baroness, Lady Serota, that we were at that stage talking about the last resort. If I have confused the House, I apologise.
Lord Drumalbyn: My Lords, may I intervene again to make my point clear? We are not dealing here with local authorities. In any case, there will have to be an amendment to the Act, and we can make what amendments are the most appropriate.
Lord Skelmersdale: My Lords, I would remind the House that this is Report stage. Nonetheless, in accepting the amendment of the noble Lord, Lord Winstanley, my noble friend Lord Bellwin did in fact agree to amend the Local Government Act 1974 so as to include the water authorities in order that they may come under the jurisdiction of the local ombudsman. If I am wrong on that point, I shall of course inform the House.
The noble Baroness, Lady Fisher of Rednal, asked about the position of a member of a local authority. I am informed that a member of a local authority cannot take up a complaint against the water authority in the formal sense, as set down in the Local Government Act 1974, unless he himself is a member of the water authority. I hope that is clear.
There is obviously a division of opinion on this point. At least some of the steps to which the noble Baroness, Lady Serota, referred in her speech do seem to me to be logical and I have no doubt that in her answer to the draft guidelines the noble Baroness would make exactly that kind of point—as may the local commissioner, the local authorities, and the water authorities themselves.
I apologise to your Lordships because I did get myself into a slight muddle. My noble friend Lord Bellwin did not amend the Local Government Act 1974 because he did not need to do so; water authorities are covered by the Act and continue to be so, exactly as now.
Baroness Serota; My Lords, I do not wish to detain the House much longer on this amendment but I must express my gratitude to noble Lords who have spoken in support of Amendment No. 4 and for the many points that have been made in relation to the right of the individual citizen to take his complaint to the local ombudsman.
May I first assure the noble Lord, Lord Campbell of Alloway, that the intention of this amendment is by no means to extend piecemeal the jurisdiction of the local ombudsman or of any other ombudsman for that matter. It is concerned purely with the question of access. As I pointed out at an earlier stage of this Bill, in this country, access to the ombudsman is, with the one exception of France, the most restricted in the world—be it in a developing or developed country.
Tempted as I was at earlier stages to develop the question of extending citizens' access to the local

523
ombudsman, all I am asking for in this amendment is that access should not be further restricted. The noble Lord, Lord Drumalbyn, said there was no exact parallel. The nearest model, I believe, would be the National Health Service model—again, a service administered by appointed bodies subject to the jurisdiction of the health service commissioner. In that case, complainants' access is direct.
Again, I was not arguing that particular case—and nor were other noble Lords who put their names to this amendment. All they were asking was that the members of the consumer consultative committees should be able to refer complaints if they were unable to get them settled locally. I recognise, and I believe the whole House will recognise and appreciate, the further thought that the Government have given to this particular point. I accept their goodwill in this matter and I certainly agree with the proposal the Government have made—supported, as I understand it, by the Commission for Local Administration in England—that there should be a reference to complaints systems in the guidelines that are to be issued. I hope it will be laid down that all authorities should have clear and well-publicised arrangements for making complaints, and also that individual citizens will be advised of their right to go to the local ombudsman with a complaint if it cannot be settled locally.
As the noble Lord, Lord Skelmersdale, has just said, there is a strong division of opinion here. I feel that this is a matter that the House should decide. In those circumstances, I should prefer to leave this amendment to a vote of the whole House.
Lord Skelmersdale: My Lords, with the leave of the House—
Noble Lords: No!
Lord Skelmersdale: My Lords, with the leave of the House, I must make one point on this amendment which I have not made so far because—
Noble Lords: No!
5.56 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 84; Not-Contents, 92.

DIVISION NO. 1

CONTENTS

Ampthill, L.

Chitnis, L.

Aylestone, L.

Cledwyn of Penrhos, L.

Bacon, B.

Clifford of Chudleigh, L.

Baker, L.

Craigavon, V.

Beaumont of Whitley, L.

Cudlipp, L.

Beswick, L.

Diamond, L.

Birk, B.

Elwyn-Jones, L.

Bishopston, L.

Evans of Claughton, L.

Blease, L.

Ewart-Biggs, B.

Blyton, L.

Fisher of Rednal, B.

Bowden, L.

Foot, L.

Brockway, L.

Gallacher, L.

Brooks of Tremorfa, L.

Gladwyn, L.

Burton of Coventry, B.

Hale, L.

Caradon, L.

Hampton, L.

524

Hanworth, V.

Peart, L.

Harris of Greenwich, L.

Pitt of Hampstead, L.

Hatch of Lusby, L.

Ponsonby of Shulbrede, L.

Hooson, L.

Rochester, L.

Houghton of Sowerby, L.

Ross of Marnock, L.

Ilchester, E.

Rugby, L.

Irving of Dartford, L.

Sandford, L.

Jacobson, L.

Sefton of Garston, L.

Jacques, L.

Serota, B. [Teller.]

Jeger, B.

Shannon, E.

Jenkins of Putney, L.

Stewart of Alvechurch, B.

John-Mackie, L.

Stewart of Fulham, L.

Kagan, L.

Stone, L.

Kennet, L.

Strabolgi, L.

Kirkhill, L.

Taylor of Mansfield, L.

Lee of Newton, L.

Underhill, L.

Listowel, E.

Wallace of Coslany, L.

Lloyd of Hampstead, L.

Walston, L.

Lovell-Davis, L.

Wedderburn of Charlton, L.

McIntosh of Haringey, L.

Wells-Pestell, L.

Mackie of Benshie, L.

Whaddon, L.

McNair, L.

White, B.

Nathan, L.

Wigoder, L.

Nicol, B.

Willis, L.

Northfield, L.

Winstanley, L. [Teller.]

Ogmore, L.

Wootton of Abinger, B.

Oram, L.

Young of Dartington, L.

NOT-CONTENTS

Airey of Abingdon, B.

Lucas of Chilworth, L.

Alexander of Tunis, E.

Luke, L.

Allerton, L.

Lyell, L.

Avon, E.

McFadzean, L.

Bellwin, L.

Mackay of Clashfern, L.

Belstead, L.

Macleod of Borve, B.

Brabazon of Tara, L.

Mancroft, L.

Brougham and Vaux, L.

Margadale, L.

Caithness, E.

Marley, L.

Campbell of Alloway, L.

Massereene and Ferrard, V.

Carnegy of Lour, B.

Merrivale, L.

Cathcart, E.

Mersey, V.

Coleraine, L.

Mills, V.

Colville of Culross, V.

Milverton, L.

Cork and Orrery, E.

Molson, L.

Cottesloe, L.

Mottistone, L.

Daventry, V.

Mowbray and Stourton, L.

Davidson, V.

Newall, L.

De La Warr, E.

Onslow, E.

Denham, L. [Teller.]

Orkney, E.

Dilhorne, V.

Orr-Ewing, L.

Donoughmore, E.

Plummer of St. Marylebone, L.

Eccles, V.

Portland, D.

Elles, B.

Rankeillour, L.

Elton, L.

Renton, L.

Faithfull, B.

Rochdale, V.

Ferrers, E.

Romney, E.

Ferrier, L.

St. Aldwyn, E.

Fortescue, E.

Saint Brides, L.

Glanusk, L.

Sherfield, L.

Glenarthur, L.

Skelmersdale, L.

Grantchester, L.

Spens, L.

Gridley, L.

Stamp, L.

Grimston of Westbury, L.

Strathspey, L.

Hailsham of Saint Marylebone, L.

Swansea, L.

Swinfen, L.

Hives, L.

Swinton, E. [Teller.]

Hornsby-Smith, B.

Terrington, L.

Hylton-Foster, B.

Teynham, L.

Killearn, L.

Thomas of Swynnerton, L.

Kinloss, Ly.

Trefgarne, L.

Lane-Fox, B.

Tryon, L.

Lauderdale, E.

Vaizey, L.

Lawrence, L.

Vaux of Harrowden, L.

Lindsey and Abingdon, E.

Vivian, L.

Long, V.

Young, B.

Loudoun, C.

Resolved in the negative, and amendment disagreed to accordingly.

Ports (Reduction of Debt) Bill
6.5 p.m.
Lord Lucas of Chilworth: My Lords, I beg to move that this Bill be now read a second time. It is a simple measure which will relieve the Port of London Authority and the Mersey Docks and Harbour Company of part of their current debt burdens. It fulfils an undertaking given to Parliament by the Secretary of State for Transport on 15th December last year, when he announced the new financial régime for these two port authorities.
Noble Lords may find it helpful if I say something quite briefly about the background to this measure. Although most ports have felt the effects of the recession, London and Liverpool have, in addition, been very severely affected by the changes in the methods of handling cargo which have taken place over the past decade or so, and by the changes in patterns of trade. As a result, by the beginning of 1981 both the PLA and the Mersey Docks and Harbour Company were making heavy losses and had no further reserves to call upon. Each authority had then over 1,000 registered dock workers for whom there was no work, and no prospect of there being any. Urgent action was needed if the two ports were to continue in operation, and the Government therefore stepped in with an emergency measure, the Ports (Financial Assistance) Act 1981, which authorised the provision of funds within a ceiling of £160 million for severances and to enable ports to stay in business while these essential manpower reductions were being made.
Following the preparation of corporate plans for returning the two ports to viability, the upper limit on assistance was raised to £360 million by the Transport (Finance) Act 1982; that is, last year. At the time that legislation was going through Parliament the Government made it clear that the deficit grant which had been paid from the beginning of 1981 would cease at the end of 1982. We also explained, however, that Government funds would continue to be available for severances.
Over the past two years both the PLA and the Mersey Docks and Harbour Company have made considerable progress to reduce manpower and to improve efficiency. So far the Government have provided £215 million in assistance to the two authorities under the 1981 Act to which I have referred. More than half of this sum has been to pay for severances. Nevertheless, despite the massive changes which have been necessary in these two ports over the past two years, both the authorities have had to service large amounts of debt which reflect the time when their operations were on a very much larger scale. Both bodies have argued that in their new circumstances these interest payments are out of line with the revenue they can reasonably expect to earn. The Government have not accepted the case for a complete write-off of their debt, but we have agreed that a limited amount of debt relief is justified in each case, and it is in this Bill that we seek the necessary legislative authority.
The Bill enables the Secretary of State, with the consent of the Treasury, to reduce the debts of the Port of London Authority and the Mersey Docks and Harbour Company to the Government by up to £26
526
million, on the one hand, and £36 million, on the other. The precise amount will depend on the timing of Royal Assent and, in the case of Liverpool, on the results of detailed work now being carried out by the Secretary of State's accountants, Peat Marwick Mitchell and Company.
The Bill also empowers the Secretary of State to pay a grant of up to £22 million to repay a commercial loan—the so-called Lazard loan—which was made to the PLA. The Bill provides for these debt reductions to count against the £360 million limit on assistance to the two ports which was set out in the Transport (Finance) Act 1982.
In announcing these measures last December the Secretary of State for Transport also set out clearly the Government's intentions for the future financial regime which will apply to the two ports. Grants to meet the cost of severance and loans to provide for essential capital projects will be available until the two authorities are in a position to fund these requirements in the normal way. We have guaranteed overdrafts to meet normal trading fluctuations.
But grants to meet deficits which were available during 1981 and 1982 ceased at the end of 1982. This remains the position today. I take this opportunity of emphasising that there is no question of these grants for operating subsidies being resumed. I hope in particular that there is no misunderstanding about this, especially on the part of those engaged in the current and most regrettable strike by dockers at Tilbury. The longer this dispute continues, the more serious will be the effects on the authority's critically balanced finances. The only beneficiaries will be the rival ports to which the ships are being diverted, perhaps permanently. I urge dockers to think long and hard about the harm their action is doing to the future of their port and their jobs.
With this Bill we are establishing a fair framework within which the two authorities can continue their progress towards viability, and it would be a tragedy if those employed in the ports failed to seize the opportunity which the Bill offers to them. I beg to move.
Moved, That the Bill be now read a second time.—(Lord Lucas of Chilworth.)
6.12 p.m.
Lord Underhill: My Lords, the House will be grateful to the noble Lord, Lord Lucas of Chilworth, for explaining what he calls a simple Bill. From these Benches we give the Bill a general welcome in so far as it is essential for the wellbeing of the PLA and the Mersey Docks. But this is the fifth occasion in the past four years on which there has been legislation dealing with these docks and the docks position in general. The noble Lord referred to the Ports (Financial Assistance) Act 1981 and to the Transport (Finance) Act 1982, but we also had the Port of London (Finance Assistance) Act 1980, which provided for grants to the maximum of £70 million and which was repealed by the 1981 Act because the figure had to be raised to £160 million within a period of 12 months or so. Then we had the Transport Act 1983, which was passed by your Lordships' House just before the Easter Recess, Section 11 of which provides for £23.8 million

527
to be written off from the debt of the National Dock Labour Board, borrowed from the Secretary of State as part of the limit under the Ports (Finance Assistance) Act 1981 and representing the cost of the severance scheme in London and Liverpool in 1981. So there are four Acts, and now we have this fifth Bill brought forward today.
We are naturally concerned that there is no further decision on either the actual amount or the make-up of the write-off for the Mersey Docks. We can hope that this will not be long delayed. The noble Lord said that this will be determined soon after Royal Assent, but we hope that will not be so long because the Minister has made it clear in another place that until the write-offs are agreed the two authorities will have to make repayments of principal as these payments fall due. Therefore, we should like to know a little more about when a final decision on the amount and make-up of the write-off for Mersey Docks will be determined.
The noble Lord the Minister has repeated the statement that there is no intention of revising subsidies; that is, grants to meet the deficits to cover any operating losses. Questions were asked during the Committee stage in the other place with respect to alleged subsidies that are being made in some EEC countries to ports which are in fact potential competitors, if not competitors now, to some of our own ports. References were made to Rotterdam and Hamburg. Allegations were also made that help is given by local authorities and central Governments to subsidise some of the costs of ports which are possibly our competitors. As far as I can see there was no clear reply given in another place to those statements.
Similarly, on three occasions in another place—on Second Reading, in Committee and on Third Reading—references were made to what is termed the grid pricing system, whereby goods which are directed to a particular port because of the convenience of the shipping company are transferred to another port and subsequent land charges are met by the shipping company. I should like to know whether that is extensive and to what degree that operates. The only reply that was eventually given, on Third Reading, was by the Under-Secretary of State in the other place, who said that he would write to the Member who had raised this question at three stages of the Bill. I am certain that your Lordships will want to know the answer that was given, and will not just leave it to this information being given to one Member of Parliament.
There is, as the Minister said, these recurrent crises which have affected, in particular, London and the Mersey Docks in Liverpool. We are apprehensive as to whether this Bill is yet another stop-gap measure. We have already had four since 1980, as I mentioned. This raises the question of what is the Government's policy for the ports in general. Dealing with Section 11 of the Transport Act in Standing Committee in the other place, the Under-Secretary of State said on 25th July, when speaking of the write-off of some £23·8 million to which I have already referred:
"But this measure is introduced because it is part of a larger scheme of things, and is only part of the measures necessary to see our ports through revolutionary conditions in the best possible way. It is a part that requires legislation, and that is why it is in the
528
clause."[Official Report, Commons, Standing Committee "A", 25/7/82; col. 1039.]
We opposed the abolition of the National Ports Council under the Transport Act 1982. On what authority does the Minister, the Government, receive their present advice on what should be ports policy? The Labour Party will propose a National Ports Authority when we return to Government in order to ensure that there is adequate development where required. Referring to the statement from the Under-Secretary of State which I quoted, what is the larger scheme of things which the Government are proposing? It is not in this Bill, and there was no indication in the Minister's speech that there is any larger scheme of things proposed for the docks.
There are suggestions—and these were made in the other place—that there are other ports in urgent need of financial help. Bristol and the Clyde Port Authority were particularly mentioned. If that is the position, what assistance do the Government propose? The Minister has suggested in the other place—I just paraphrase his words—that the London and Mersey docks will remain major ports for a long time to come. Apart from the financial measures, what are the Government's proposals to ensure that that happens? I share the concern of the noble Lord, Lord Lucas of Chilworth, that the dispute at Tilbury should be settled soon, although in the context of this Bill I do not propose to discuss the nature of the dispute.
I have referred to the need to know what the Government's policies are for the docks industry in general. We have had another piece of ports legislation in recent years. Under the Transport Act 1981 there was provision for the sale of the 19 ports then operating under the British Transport Docks Board, which were renamed under that Act the Associated British Ports. The Government have recently carried through the sale of 49 per cent. of the shares. However, they made it quite clear that, although they were retaining 51 per cent., they would not take any part in policy matters. There is no argument whatever but that the British Transport Docks Board ports were functioning efficiently under sound management, and one of their last balance sheets showed a 15 per cent. return.
Allegations were made during the Second Reading stage in the other place regarding the value at which these shares were sold. In the space of three or four weeks the initial share price of 112p had risen to 143p. It is stated that the sale was over-subscribed some 30 times. We all know that about £80 million was written off before the company was put up for sale. It is suggested that the sale in no way related to the actual assets of those docks. As the whole position of the sale of those docks can affect the very matter which we are discussing in the Bill, I should like to know exactly how much was raised in that sale and whether it in any way became commensurate with the large assets that were available. Strangely enough, although the matter was raised in the other place, the Minister concerned did not reply to these points at all. He referred only to the question of employee shares, which had also been raised; he did not refer at all to these other major matters.
There is one other question which I should like to raise with the Minister. It is a matter which has been

529
raised by the London Wharfingers Association, whose members operate on private wharves alongside the river. They have raised the question of the port dues charged by the Port of London Authority. This, I understand, is a levy charged under the Port of London Act 1908 on all goods passing through the London port. At the time the purpose was to help develop the facilities of the then dilapidated enclosed docks. I am informed that the number of these privately owned wharves has fallen from 145 in 1967 to only 20 at present. But I am reliably informed that they all have substantial facilities with an asset value of around £15 million. The port rates levied by the PLA are on tonnage and vary according to the commodities. These are increased annually by the PLA. There has been no less than a 32 per cent. increase since 1980.
The association states that there is a grave danger of these wharves being driven out of business by virtue of these continually increasing port rates. If this should happen, substantial additional costs would fall on the PLA because of the consequential surplus of registered dock workers until severance was possibly arranged. I think that it will be agreed that it is important that these remaining wharf facilities along the river should continue. The PLA levies these dock rates, but the riverside operators are not provided with any facilities, such as a basic dock infrastructure, in return.
I recognise that if any action is taken—obviously the action desired is the abolition of these dock rates—it would affect the PLA finances. Therefore, it is timely that this matter should be raised in your Lordships' House. The present position cannot possibly be justified on grounds of equity and it certainly cannot be justified on the Government's view of market forces that a body should be charged for port rates when it gets no benefit whatever in return. This position must be taken into consideration when in future the Government are dealing with the PLA finance.
Mr. Reginald Eyre, the Under-Secretary of State, in the Standing Committee in another place on 24th March, stated:
"I recently had a useful discussion with the London Wharfingers Association about the impact of port rates. The association, as he knows, represents the riverside operators on the Thames. I pointed out that decisions, both on the overall level of port rates and on the charges for particular types of goods, were principally a matter for the PLA".—[Official Report, Commons, Standing Committee E, 24/3/83; col. 54].
I am reliably informed this morning that some of these talks took place with the PLA yesterday and have not produced any result on the lines of that which was desired. Therefore, this is an important matter which we are discussing in this Bill for the PLA as well as the Mersey Docks, and this is an issue on which I hope the Minister will be able to give me an answer.
As I said, we are sorry to have this repeated piecemeal legislation but we welcome the Bill in so far as it meets the critical situation both of the PLA and of the Mersey Docks.
Lord Brougham and Vaux: My Lords, I should just like to support my noble friend Lord Lucas of Chilworth in what he said about the position at Tilbury Docks at the moment. I would say to the noble Lord, Lord Underhill, that if the dockers carry on
530
there will not be a PLA much longer. I ship into Tilbury and I am reliably informed that the mood of the dockers at their meeting on Thursday is such that they will not go back to work. The strike has been going on for nearly five weeks and to prolong it can only do them more harm.
6.26 p.m.
Lord Lucas of Chilworth: My Lords, first may I thank the noble Lord, Lord Underhill, for the general welcome which he gave to the Bill. As I said when introducing the debate, the Bill is a simple measure. It has the quite straightforward purpose of providing the port authorities of London and Liverpool with a capital structure appropriate to their present size and situation. The debt reductions for which the Bill provides are smaller than the PLA and the Mersey Harbour Company would have liked but they offer a real prospect of returning to profitability in the years ahead.
The noble Lord asked me a number of questions which I shall do my best to answer. He asked first when would be the time that the final amounts of these two write-offs would be known. All that I can tell him on that is that the decision will be made very shortly and certainly before Royal Assent. He and other noble Lords will appreciate that as these debts are of a rolling nature, certain principal amounts become payable on various dates and the interest charges also become due on differing dates. Until one knows exactly when the whole debt is to be extinguished, it is not possible to make the calculation necessary to determine a final amount.
The noble Lord spoke about competition with European ports. The Government are aware that the level of port charges in the United Kingdom is higher than those prevailing on the Continent. The port authorities themselves are responsible for setting their charges according to their commercial judgment and it is not open to the Government to intervene. The United Kingdom ports are now in very strong competition with each other and especially in present trading conditions they have every incentive to be keen in their pricing. Although there is always room for improvement, major changes have taken place in the United Kingdom ports in recent years. The registered dock labour force is now little more than a quarter of what it was 15 years ago, and only last week the port employers asked for 1,000 voluntary redundancies in order to help match the costs and traffic.
Continental ports such as Rotterdam and Antwerp have the advantage of a much larger catchment area, and with the opportunities that that provides there are further economies of scale. Moreover the continental shipowner has to meet fewer costs than in the case in British ports. Continental ports receive considerable financial assistance from the state, or the municipality, or sometimes both, and the forms of assistance vary from place to place; but it can cover, or contribute heavily to, the cost of dredging, lights, marine works, and capital investment. However, the Government do not believe that they should follow that course in the United Kingdom; and, if I may, I shall in a few moments return to the question of the Government's general overall policy with regard to ports.

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The noble Lord spoke about the so-called grid system. This is largely a matter as between the shipping companies and the shippers. Certainly the shippers meet the cost of inland transport so far as the nearest base port, and the shipping company bears the rest of the cost of transport to the port that is actually used. Of course we accept that to some extent this system distorts competition between the ports, and in general perhaps the northern and western ports have been the losers, though there have been instances where the system has worked in their favour.
Frankly, I am not able to tell noble Lords very much about the system because I do not have an exact measurement as to its prevalence, and, as I have found, it is very difficult to establish exactly what are the benefits of the scheme and what would be the effects if it were to be withdrawn. How far the system has contributed to the switch in trade to other ports—ports in the south of England and East Anglia—and what would be the effects of changing it are, as I say, matters which are hard to judge.
The pricing structure is principally a matter for the shipping industry, and I confirm that at Third Reading in another place the Parliamentary Under-Secretary promised to look into the question. The only way in which I can respond to the noble Lord, Lord Underhill, is to say that I shall see that his comments are passed to my honourable friend, and that he takes them into consideration when looking into the matter. I shall certainly ensure that replies are given to the comments. The noble Lord will probably accept that to some extent this is a matter for my right honourable and honourable friends in the Department of Trade who handle shipping affairs.
I now wish to return to the Government's policy on the ports industry. While the noble Lord, Lord Underhill, was perfectly right in reminding us that only a few months ago we wrote off £23·8 million by means of Clause 11 of the Transport Bill (as it then was), I am quite sure that he will recognise that the £23·8 million was a payment to meet the national voluntary severance scheme, which has a massive takeup and which was in deficit. There was no way in which the industry would be able to replenish that amount of money. What we are discussing this evening are other matters, and I do not think that it is strictly fair to make a comparison in relation to these amounts of money.
The Government's general approach to the ports industry is that it should allow the ports to compete with one another on the basis of the prices and standard of service that they can offer. We believe this approach to be in the best interests of all those who use the ports, and of the industry itself. Attempts to direct traffic in particular directions, or subsidies to encourage the use of some ports rather than others, are in our view quite unjustified and can lead only to inefficencies from which all would suffer.
The problems of the two major ports—London and Liverpool—in adjusting to the very different cargo-handling business of today have been very much greater than those faced by any other ports, and Government assistance here really has been inescapable. However, all along it has been our
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intention to bring this assistance to an end as soon as possible, and to insist that the PLA and the Mersey Docks and Harbour Company should once more compete with other ports without benefit of Government subsidy. It is for that reason that last year we set a firm time limit on the availability of the deficit grants; and I spoke about those in my opening speech. These grants finished at the end of 1982, and they will not be reintroduced. There is no question of their being resumed, and I hope that there is no expectation in either port that it can simply turn to the Government for help if it runs into difficulty.
The noble Lord spoke about the assessment—I take it that he meant the viability—of the two ports. In arriving at those parts of the debts which are to be written off by the Bill we had the benefit of the views of the ports, the department and its advisers. Although, as I said earlier, the ports asked for a heavier write-off, we felt that that was not totally desirable. By virtue of the Bill we shall write off an amount sufficient to restructure the two ports to enable them, given good management and a fair opportunity, to prove viable over the next few years.
The noble Lord asked specifically about Bristol. The Government are aware that the port of Bristol is facing some difficulties, and the Secretary of State for Transport considered very carefully whether he could assist in relieving the port's problem, but for several reasons he has concluded that that would not be appropriate. Honourable Members who represent Bristol in another place, together with representatives of Bristol City Council, recently put to my noble friend Lord Bellwin proposals for different treatment of the city's expenditure on docks in the calculation of its grant-related expenditure. At that time my noble friend undertook to have those ideas examined in the Grants Working Group in relation to the 1984–85 RSG settlement. But I must now repeat what my noble friend then said: that he could not promise Bristol that the outcome of the examination would be to its satisfaction.
The noble Lord asked about the proceeds which the Government had received from the sale of Associated British Ports. The Government's net receipts were £46 million. That was made up of just under £22 million from the sale of 49 per cent. of the shares in the holding company, £25 million in cash for two securities issued by the group, and a little over £1 million from interest on one of the securities and on the money subscribed for the shares. The Government's expenses in connection with the sale amounted to £2 million. But, in addition, the Government still hold 48·5 per cent of the company's issued share capital, and I can tell your Lordships that at yesterday's closing price that was worth more than £29 million.
The noble Lord referred to the employee take-up. I can confirm that no less than 91 per cent. of those eligible acquired shares in the company. Admittedly, many of them were only taking up shares offered to them free of charge, but nevertheless 38 per cent.—a very high figure—also bought shares and thus demonstrated their confidence in the business by backing it with their own money.
The noble Lord sought to link the proceeds from the sale with the reduction of the PLA and Mersey Docks

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debt, but there is no connection whatever between the sale of these shares and the debts of the two ports that we are discussing. The Government decided on the conversion of the British Transport Docks Board into private enterprise long before we were faced at the end of last year with the decisions on the PLA and the Mersey Docks that led to this Bill. The timing of the sale was dictated by two considerations—the docks board's financial position after the long strike at Southampton in 1981–82 and the place of the sale in the Government's overall privatisation programme.
Lastly, the noble Lord asked me about the port dues in London. He was right in reminding your Lordships how this position arose. The port rates have been levied for some 70 years or so, and provide the authority with substantial income. The Parliamentary Secretary in the Department of Transport recently had discussions about the impact of port rates with the London Wharfingers Association. The Government are therefore well aware of the importance of the private sector within the Port of London and of the private sector's feelings in the matter.
Decisions on the overall level of port rates and on the charges for particular types of goods are a matter between the PLA and its customers. Certainly, yesterday, there was a discussion. I am sorry to hear from the noble Lord, Lord Underhill, that the meeting did not provide the wharfingers with a satisfactory outcome. Perhaps, further discussions in the light of what we have been talking about this evening may enable both parties to find some common ground. There is provision under Section 31 of the Harbours Act 1964 for the association, acting on behalf of its members, or for individual wharfingers to appeal to the Secretary of State, who could then set up an inquiry to advise him. It is now for the wharfingers themselves to decide how best to proceed.
I have no wish to get involved in a long discussion on the present dispute at Tilbury. I do not think that that would be helpful. I did, however, note what my noble friend Lord Brougham and Vaux had to say on that matter. Being in the business, he would know of the impact. Indeed, he reminded your Lordships of the impact that a continuation of the dispute would have on the Port of London.
As I have stated, the debt reductions provided for in the Bill give both the Port of London Authority and the Mersey Docks and Harbour Company a fair basis from which they may return to profitability. It is now up to all those who work in the ports of London and Liverpool, both management and workforce, to make good use of the opportunity that the Bill provides. I ask the House to give the Bill a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Building Societies: Reform
6.44 p.m.
Lord Young of Dartington Lord Young of Dartington rose to ask Her Majesty's Government what plan they have, in the light of what the Chancellor of the Exchequer has already said on the subject, for the reform of the building societies.
The noble Lord said: I would not have tabled the Question had I not thought that the building societies were in need of reform. That is obvious. I should also, however, like to acknowledge the considerable services that the building societies have performed for owner-occupiers throughout this country. I believe that this service that they have performed—and will, I hope, perform in the future—could be even better if the societies were reformed, as the Chancellor of the Exchequer, at the annual dinner of the Building Societies Association in May last year, said was clearly needed. He called then for a major re-examination of the building societies and promised legislation on the matter in the next Parliament. That was on the perhaps rather strange assumption that he himself would be there in the next Parliament to be responsible for this kind of legislation.
Since last May, there has been something of a chilling silence—chilling, certainly, to me—on the part of the Government. We have not even had a Green Paper. I am sure that all now appreciate that there cannot be legislation in this Session on building societies. I hope, however, that the noble Lord the Minister replying to the debate will be able to add at least something to what the Chancellor of the Exchequer said nearly a year ago and give some indication of what is in the Government's mind.
The last two years have been an exceptionally eventful period in the history of this institution. It is just over two years ago that the National Consumer Council published a report called Building Societies and Consumers, written by Marianne Rigge, the director of the Mutual Aid Centre, and myself. In this report, we asked for, among other things, the abolition of the building society cartel so that there could be more competition between building societies. The response generally of the building societies to that report was that all the competition that was needed already existed. It was as fierce as it could possibly be. What unprophetic words these have turned out to be. Since then, the banks have entered upon the scene in strength. What was once fierce competition, if it was fierce at all, has certainly become fiercer, at least until the last few months.
The results of competition have, in my view, been wholly beneficial for the consumer, for all the people who want mortgages in order to buy their own houses. As much was acknowledged in an extremely interesting paper published recently in the New Law Journal by Mark Boleat of the Building Societies Association office, who contrasted the value to consumers of competition and regulation and concluded that competition, particularly that from the banks, had brought far more benefit to the consumer than regulation ever had or could, and even also some benefit to the consumers of banks, since it was, in his view, the competition from building societies that had led Barclays Bank to open its doors once again on Saturday mornings.
But this competition from the banks has abated. The demands on their funds for other purposes have increased. They have not withdrawn form the market but they are putting less funds into it. As competition has lessened, the old problems—the problems of mortgage famine and the like—are with us again. Therefore, on the argument that I have just

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mentioned, the case for regulation is stronger than it was when competition was fiercer than it is now.
In my view, one problem will certainly not go away until there is new regulation, until there is the type of legislation which the Chancellor was envisaging. That problem is to do with the constitution of building societies, which are weakened by a fatal contradiction between the form and the practice. Building societies call themselves societies, but they are not; they are closed corporations. They refer to their borrrowers and their investors as members, but they give their members no rights. They are mutual organisations in law, and I am delighted that they are. I am delighted that the recent building societies' Spalding Report says that they wish to remain mutual organisations in law, but I am not at all delighted that they do not want to behave as mutual organisations in practice. If only they meant what they said about the value of the principles of mutuality, set out in the Spalding Report, one thing they would surely do is stop being so defensive and stop resisting every effort by ordinary Members to achieve election to the boards of directors.
The Chancellor himself drew attention to this failing when he said that:
"The management of some societies are too fearful to the working of the democratic process.".
It seems that their self-perpetuating oligarchies are ready to go to almost any length to keep power in their own hands. This was illustrated just recently by what happened at the Nationwide Building Society when Mr. Punt, one of the doughty and growing band of building society reformers, not only had down a great many questions to the directors but also was making an effort—and he did very well—to get himself elected to the board.
The management of that building society sent a circular to all the offices asking as many staff as possible to attend. It instructed them not to wear the kind of clothing that would enable them to be recognised as members of the staff. The manager said:
"If there is a 'demand' from other members of the society [at the meeting] for an indication of the number of staff present … members of staff should then ignore any such request.".
Then it goes on:
"Staff should be asked to take care in any discussions or comments"
that they make during the course of the meetings. Also, that informal meetings
"could take place anywhere in the proximity of the AGM such as staircases, the foyer, toilets"
et cetera. I quote again:
"It should be remembered that it would be quite possible for Mr. Punt or one of his supporters to be standing within a yard or two of such a group …"
If that is the principle of mutuality and not the principles by which the Militant Tendency is known, then I do not quite know where I am.
The Spalding Report, in the same sort of vein—but, of course, not in that kind of detail—said that the board is the proper body for carrying out a selection process for new board members. In my view—and this goes for the other people who are trying to secure reforms in the building societies—the impediments should be removed so that rank and file consumer members can have a fair chance of election. They are
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the kind of people who could help ensure that all directors' interests—that is, the interests of solicitors, estate agents, surveyors and builders who benefit by commission or otherwise from being directors—should be recorded in the annual accounts; they are the type of people who could ensure that generally fuller information is given to members; that an end is called to any propelling of new borrowers towards endowment mortgages from insurance companies from which building societies get commissions; that the truth in lending exemption, which has been given to the building societies, should be withdrawn; that women should be treated as having equal rights with men in all relevant particulars; and that from the inside of building societies there should be a call for the abolition—at last!—of the building society cartel.
Such new people could help to make sure that the new legislation, when it comes—as I greatly hope it will come—will be acted upon in the spirit as well as to the letter. So could the appointment of a building society ombudsman, which unfortunately the Spalding Report specifically rejected. I appreciate that the noble Lord the Minister will not be able to cover all these issues; nor all the issues that will be raised by other noble Lords who will take part in the debate. But even so, I hope that he will be able to add at least something to what was said—and so well said—by the Chancellor of the Exchequer when he opened a new debate on a new phase in the history of one of the most important institutions in this country and one which, in my view, is very drastically in need of reform.
6.56 p.m.
Lord Plummer of St. Marylebone: My Lords, the noble Lord, Lord Young of Dartington, has raised some very interesting points and, for the most part, it could be said some very critical points, in regard to the building societies. In view of his great experience in consumer affairs, I think it is important that we should study these very carefully. First, I should declare an interest in that I am chairman of a building society and I am also president of the Metropolitan Association of Building Societies.
My general impression of the criticisms which the noble Lord, Lord Young, brings forward is that while some might have been valid some years ago, changes have long since occurred which have largely met the points he makes. Under the pressure of intense competition, the building societies industry in recent years has undergone many changes, both in the structure of the building societies industry and in the management of individual societies. This undoubtedly will continue, and I emphasise that building societies are not fearful of reform, for it is they who are trying to bring it about.
The building societies are indeed anxious to widen their activities in the housing market and it would be interesting to know what the Social Democratic Party will propose in its manifesto. For example, will it in fact support legislation which will increase the ability of building societies to become more directly involved in housing activity, or will it inhibit the ability of building societies to assist borrowers more easily?
I should like to comment on some of the points raised by the noble Lord. At the same time I should

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also like to comment on some of the points which he made in his press release of 6th April, 1983, which prefaced this debate. First, in regard to cartels, the noble Lord argues that the cartel should be, to use his words, finally abolished, while also arguing that societies have become more competitive with each other, and that the banks and the TSBs have entered the mortgage market, although the banks, I would point out, have now retrenched very considerably.
Orderly marketing by building societies inhibits competition, and that, I submit, is its purpose. However, it is by no means clear that the abolition of the interest rate system would in fact benefit building society members. In a free system interest rates would move more frequently than they have done in the past. This could be detrimental to many borrowers, and of course costly to implement. It is for this reason that Governments of all political complexions have recognised the value of the system for recommending interest rates.
The noble Lord, Lord Young, also referred to self-perpetuating oligarchies. I should like to make a few comments in respect of this. It is true that included on the boards of building societies—and in his press release the noble Lord particularly criticised this fact—are surveyors, solicitors and builders. I myself am a member of the Royal Institute of Chartered Surveyors. Surely it is only natural that when building societies are involved in the property field their boards should have on them people who have expertise in property. I do not think their motives should be questioned in this way. In this respect, surely, the boards of building societies are a little different from the boards of other organisations.
Lord Young of Dartington: My Lords, would the noble Lord allow me to put a question and to make a clarification? I have no objection at all to surveyors and the like being members of boards of building societies. What I was objecting to was the fact that any commissions they receive because of work they do for building societies on whose boards they sit are not recorded, and particularly are they not recorded in the annual accounts of building societies. The Spalding Report discussed this matter and specifically recommended that there should not be recording of commissions received, and the like, in the annual accounts. This seems to me to be wrong. I was not objecting at all to the presence of these people on the boards.
Lord Plummer of St. Marylebone: My Lords, in 25 years of experience I have never met a situation such as the noble Lord describes. I think it would be true to say that Form AR 11, which has to be submitted to the registrar annually, clearly calls upon the members of boards to disclose anything of that nature. It is unfortunate that the noble Lord has totally failed to give any evidence of his serious allegation of vested interests influencing decisions. If he continues to make criticisms of that sort, he should bring forward facts.
The noble Lord, Lord Young, in his press release of 6th April, quoted the Building Societies Association as saying that the board,
"is the proper body for carrying out a selection process for new board members".
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But he failed to quote the remainder of the paragraph, which I should like to read and from which it will be seen that the noble Lord has not fully reflected what was in fact said by the association. The rest of the paragraph reads as follows:
"The practice often followed in building society boards, as in the boards of other organisations, is for directors to appoint people to fill casual vacancies, the members so appointed then standing for election at the next annual meeting. This is a proper course of action. Directors must choose people about whom they have been able to form a judgment and this is likely to mean people known to the board members. Boards generally (not just those of building societies) must be a team capable of arguing through and agreeing on corporate strategy. The board is the proper body for carrying out a selection process for new board members".
I should like to emphasise that this process does not preclude the appointment to the board of ordinary members of a society, provided of course they have the support of their fellow members. The suggestion that legislation should give members the same rights as shareholders—and by this I presume is meant shareholder's of limited companies—is a little strange as, for the most part, building society members already have similar, if not better, rights. However, to suggest that members should have an unqualified right of access to the register of members and to circularise them if they wish—and it could indeed be for commercial purposes wholly unconnected with the society—would not be in the interests of members, especially given current concern about the confidentiality of data on computer files. I do not think that many members of building societies would be happy with a situation in which their names and addresses were given to third parties, and could be used for any purpose at all. The present law permits access to the register of members in certain circumstances, and in other cases the consent of the Chief Registrar of Friendly Societies is required. This is, I am sure, a perfectly reasonable protection for members of building societies.
I would submit that the suggestion that societies should consider the inclusion in their rules of a provision to allow members seeking election to the board of a society to submit an autobiographical note was not given in any "grudging" sense, as the noble Lord suggested in his press release. The building societies' report makes this quite clear.
The other point is to improve on the information given to members. If you walk into any society you will find that there is a plethora of information available to members. It is quite wrong to accuse building societies of being backward in giving information to their members. Societies produce information to more people than almost any other comparable institution. It hardly seems necessary to require societies to display information about lending criteria. You have only to walk into any building society office and you will find that societies already have comprehensive literature on the terms of their loans.
I think it would be true to say that those who are engaged in the day-to-day building society business find that building societies are anxious to provide more information than their members really want. The reason why annual reports are not so informative as they might be is because they have to be sent, at considerable cost, to a large number of people—something like approximately 25 million

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people, it is calculated, many of whom, I think it is true to say, are not interested in receiving them. If the number of copies were reduced considerably the information given in the report could be increased.
The noble Lord said in opening that societies were in need of reform. The building society industry is not in any way complacent, but the changes suggested by the noble Lord, Lord Young of Dartington, are not well designed to improve the situation.
7.10 p.m.
Lord Houghton of Sowerby: My Lords, I have said more than once before that I am a vice-president of the Building Societies Association and a candid friend of the building society movement. I claim that my thinking about building societies is a step ahead of most of those engaged in the daily practice of building society work. It is a long time since I was directly concerned with the management of a building society; and then it was quite a small one. Through this connection and others I have kept closely in touch with what is happening in the world of building societies.
There are 34 vice-presidents of the Building Societies Association; 10 of them are Members of your Lordships' House. So when one of them, like myself, gets out of step, he is not very conspicuous. It is like a marathon; we are all running together and sometimes a few get ahead of others. I am grateful to the noble Lord, Lord Young of Dartington, for raising this matter. I share the tribute that he paid at the beginning of his speech to what the building societies have done over the years. Don't I know! I have been a member of a building society for the whole of my adult life; my father before me, a founder member of a building society in the last century, as with the co-operative movement. This was the environment of my birth and upbringing so I have seen this movement grow over the years.
I am a little irritated by the way in which the present tycoonery of the building societies talk about the building society industry. It is a movement. I hope it will remain a movement. If they call it an industry, they know where they are going. They are walking straight into company law, straight into the City, straight into financial institutions instead of great social movements.
I want to ask questions rather than to make comments. Doctrinally I suppose I stand between the noble Lord, Lord Young of Dartington, and the noble Lord, Lord Plummer of St. Marylebone, who has been speaking with great knowledge of a practical association with the working of this movement. What I want to know is what is going on, because on 28th March 1983 in another place the Economic Secretary to the Treasury, in reply to a Question by Mr. Craigen, the Labour Member for Maryhill, said that he did not think a further independent inquiry was called for, but he said the,
"Government will ensure that a wide canvass of views from interested parties and the general public will be invited in advance of any future legislation". [Official Report, Commons, 28/3/1983; col. 70].
I do not think that is good enough. If something is afoot, who is taking part in it? If preparations are being
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made for legislation in another Parliament, who is doing it just now? What opportunities will there be for many of us with views and experience of sharing in this enterprise? Do we have to wait until there is some kind of white paper, green paper, or pink paper—no, blue paper is the thing now; the possible variation in the colour scheme is for a blue paper. If it does not come from this Government it will be a red paper or a pink one. Anyway, the production of a paper is the stage at which, apparently, we shall all be invited to give our views. I do not think that is good enough. I think the opportunity should be taken of going very much more deeply than the present review of building society work and management now being undertaken.
What is the scope of this review? I think the social, economic and financial aspects of building societies need to be studied and reported upon. Of course, the constitutional matters which are raised by the noble Lord, Lord Young, will figure quite prominently in this review. I fear that the review may go little further than constitutional matters. I think it should be much broader than that. On constitution, management, structure and democracy, such as it is, I think that the building societies are now far too important to go pedalling along on the penny-farthing constitutions that were designed for another age in entirely different circumstances.
When I first understood about building societies' they were different in character and their membership relationship was very different. The house in which I was born was bought through a building society; literally a society of builders, those who wanted to build their own houses. Out of the kitty, the pool of contributions, a lot was drawn so that the successful member could then build his own house. But now the building societies are mortgage brokers on a mammoth scale. I do not want to say that they are moneylenders. That would be disparaging, having regard to the general view about moneylenders, but building societies are financial institutions and mortgage brokers. We have to see how they fit into the concept of management and control of bodies and institutions of such size and importance. As an official of the Halifax Building Society asked to me once, what form of democracy is practical when one has 8 million members? What indeed?
Perhaps the voting membership and participation in the affairs of building societies is too easily and too cheaply acquired. When we all control an organisation, none controls it. That is the position of building societies. No one controls them. I have never yet seen any signs of affection between the board of a building society and its members. When I was chairman of a small building society I always looked with suspicion on the few who turned up to the annual general meeting. I thought they were not up to any good.
One of my building societies has its annual meeting next Monday. I can quite understand the look on the faces of the board if I turn up. They say, "What does he come for?" They might well ask because if I do turn up, then they will know. There will not be any large assembly of approving members who are anxious to move a vote of thanks to the board for their splendid services during the year.

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The greatest assembly of members that I can recall in recent years occurred when a building society proposed to give a reasonable, but quite substantial, acknowledgement of the services of their president who had served them for many years. That was too much for the members locally. So many of them wished to come to pay tribute to the departing president that they had to go from the modest room in which the AGM was usually held and to rent a theatre. The president decided that, rather than be overwhelmed by this display of affection and generosity, he would reject the proposed gift, and save himself an awful lot of trouble.
That is when democracy in building societies can come to life. I think, frankly, that the qualifications for active participation by members in the affairs of the building society need to be thought about seriously. I ask the question: what are the claims of borrowers for membership of a building society? Even investing members, I think, can be required to possess some firm credentials. I would review the one-man, one-vote principle. I think that stake with stability might well be a firm basis upon which qualification for membership should be built, so long as it had limits to the acquisition of power within the building society and so long as both were reasonable as to stake and stability. That might be worth exploring. I certainly think that a person who joins a building society one day, puts some money into it and, two days later, draws it out, is scarcely entitled to become a member of that society. Indeed, the way in which building societies are lending themselves to a wide variety of banking transactions is asking for trouble in that particular way.
I now pass to the elections of boards of building societies. My noble friend Lord Young of Dartington referred to this and the noble Lord, Lord Plummer, commented upon it. We need reasonable opportunities for the exercise of choice and I am bound to repeat—I have it written down without any connivance with my noble friend Lord Young, that the boards of building societies are self-perpetuating oligarchies. Indeed, I believe that, at the present time, when I see the new appointments being announced to the building society boards, it is becoming a form of patronage—and there are no women, or very few of them, in it. I notice that two noble Baronesses are to speak in this debate. I hope that they will speak up in this atmosphere of chauvinistic government of building societies.
I accept fully what the noble Lord, Lord Plummer, has said about having quality on the board. You do need people with experience, character and reputation to take responsibility for the affairs of the board. They are handling very big assets indeed, and are responsible for important decisions on policy. Yet somehow members should have access. One wonders whether this is not the time to consider a two-tier board system for building societies—the supervisory board and the management board—or, at any rate, to have on the board members' nominees whose places are not filled when they become vacant by the patronage of the board but have to go to the vote of the members. To have two members on every board directly elected by members, never appointed by the board, might be a suitable compromise.
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Certainly these are matters for consideration. I think that we have to get off the beaten track. I know that we should all like members on our boards and committees whom we like, trust and can get on with. But life is not like that all the time. You sometimes work with people you do not like and you have to get on with people you do not like, and it is probably a good thing to have somebody around who is going to question what you do.
My noble friend Lord Young mentioned directors' remuneration. I am not aware of any building society that fails to disclose fees paid to directors as well as directors' fees—by which I mean fees paid for services rendered. There may be some cases; the noble Lord, Lord Plummer, said that he was unaware of any. I see from the report of a building society of which I am a member, that they give directors' fees, and fees paid to directors for other services. What worries me is that the fees that they get for other services exceed the fees they get for being directors. I want to know what they are. They are not stated, but the total is stated. I think that disclosure of payments to directors should follow the pattern already adopted in company legislation. Indeed, the registrar has recommended that building societies follow that pattern. A number of them do so and I think that it should be made a statutory obligation, as in the case of joint stock companies.
Now, my Lords, I come to the question of the removal of limitations imposed on the scope of the activities of building societies. This is crucial. This is where the pressure is coming from. The boards of building societies want more elbow room. If they are going to compete, they want to be able to compete in a wider area of activity and initiative and to show their imagination as well as their management ability. I am bound to observe in passing that ambition always seeks to expand. Small is not beautiful in the building society movement any more. The pride now is in the reduction in the numbers of building societies and not in the expansion of the scope of new building societies. No, it is reduction—reduction!
We are getting to a monopolistic position in the building society movement, not because the numbers are yet very small but because there are some building societies gathering in strength and power in the building society movement and they will dominate all the rest of the societies befor very long. The question is this. Should building societies be given a much wider field of service in housing—as the noble Lord, Lord Plummer—has said; in home making; in fact in everything short of marriage guidance and family planning? Where do we stop? How far can we go?
Is the review to assume—and I change now to another point—that we are to continue being a property-owning democracy with the financial help of the building societies and £2 billion a year of tax relief on mortgage interest? Is that how we are going to arrange the future of our home ownership? When tax gatherers complain about the black economy and the Keith Committee goes for the "moonies"—and I am referring to the moonlighters—do they realise the built-in injustices in the taxation system which lead a lot of people to regard it with contempt? Here is an area of injustice, if you like. The present methods of financing house purchase are open to the strongest criticism on grounds of equity in relation to other

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people in our community. They are an absolute bargain, at the expense of the small investor and the taxpayer. I will not enlarge on that: I am just suggesting that we want to go further than merely to "dress up" the existing system and not attend to some of the underlying matters of great importance.
The tax relief on building society mortgage interest goes back to the beginning, when people had money charges on their income. If you borrow money—I emphasise "money"—it is limited in purpose now, but you can get relief on the interest. If you buy the house, you get it: if you go in for hire purchase of the furniture in it, you do not—because you are not borrowing money but acquiring the ownership of property on a payment system. If you pay rent, you get nothing unless you are poor. And what about the investor? He pays tax indirectly whether he is tax-liable or not.
Therefore I would ask: are all these within the scope of this review? The Building Societies Association have produced some evidence which is very important and interesting. I do not think it is bold enough by any means but I am not going to comment on it in detail. I wonder whether this review could be opened up. Can it not be made a full-dress affair, or at least not the sort of hole-and-corner survey of the situation which appears to be going on at the present moment? Building societies and local authorities between them are shaping the nation's housing policy today. Both have their origins and many of their methods way back in past social conditions. Both have their own limitations and restrictions and their inflexible elements. They are restricted in their competitive practices by the limitations imposed upon them. There are not many ways in which building societies can become really competitive one with another, when they are operating in the same restricted field.
I think that one of the chief problems underlying the system of house purchase and a property-owning democracy is that we are going to become a stay-put nation—"can't move, won't move!" Is industry to be brought to the people like Meals on Wheels? Is that how it is going to be done? I think that the housing programme of the future will have to be adjusted to the concept of a new Britain, with a new industrial pattern and a new map of industry in Britain.
Anyone who is going to play a part in this will have a very important role to fulfil. Can we not have building societies that build? Can we not have building societies that build to rent? Can we not encourage building societies to become not mortgage brokers only but building corporations, with far more influence upon prices and contracts? There is great scope here for imagination, but I do not see it coming out of the Department of the Environment. It will have to come from a body with eyes above the day-to-day work of the building societies, a body that can visualise Britain in the year 2000. What we want now is people who are young enough, imaginative enough and determined enough to become men of the year 2000. We want to hear more about where Britain is going to be in the year 2000, if we are spared a war in between.
I think I have said enough to show that we want more than a mere routine Whitehall updating operation: we want an inquiry into the work and
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functions of the building societies that will be worthwhile and will set the pattern for many years to come.
7.35 p.m.
Baroness Gardner of Parkes: My Lords, that was a very fascinating speech by the noble Lord, Lord Houghton, and to listen to his personal experience of building societies has really been quite an education to me. I should like to begin my comments by taking the final sentence of the speech of the noble Lord, Lord Young of Dartington: his remark that the building societies are one of the most important institutions in this country. I think that is highly significant, and I am surprised, in a way, that we have so few people taking part in this debate tonight. I think that can only be because this is the very beginning of this topic, and tonight we are airing it for the very first time. I have no doubt that when it gets to the point that legislation comes forward, we will have very wide interest shown, not only in this Chamber but throughout the country, in the changes which should be made in building societies, in their constitutions and in their powers.
I should like to comment on some of the points made by my noble friend Lord Plummer, and in particular I would take up his point about the abolition of a cartel. I think it is true to say that the interest rates would move more frequently if there were not the present guidelines on interest rates. I do not think that would be in the interests of those who borrow and who take up their mortgage, having worked out their budgets fairly carefully as to what they can afford to pay. If the interest rates were subject to wide differences and sudden changes, it would make life extremely difficult for people, and I accept the case that the cartel system has helped in that regard.
I am not in favour of a cartel in so far as it reduces competition, but I notice now—and here I speak as a typical small investor in a building society; I cannot declare any great interest such as being involved in the managementside of a building society, as some other speakers are able to do—that, as an investor, you can shop around and get a little bit better or a little bit worse interest in the various societies. Very many people I know spend their time—in fact, quite a number of retired people find this is one of the most interesting occupations—studying where they can get the best interest and the best deal from local building societies.
I should like to support the noble Lord, Lord Houghton of Sowerby, in saying that the building societies should really be, and indeed are, a great social movement. I think it is important, therefore, that they progress, so that in the year 2000, to which the noble Lord referred, they will be right up to date with what they are allowed to do and the way in which they do it. It is essential to have a review. The Question we are debating tonight speaks of "reform", and I would not quibble about the difference between the words which are used there and the term used by the noble Lord, Lord Houghton. But the whole subject should be under broad review so that the powers, duties and rights of the building societies which engage in various types of activity may be clearly considered.
The point about participation by members is an extremely difficult one, because the sheer volume of

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membership—estimated to be in excess of 20 million people—makes it very difficult to circularise or contact these people by any means. Certainly, as someone who finds that a great deal of paper drops through her letterbox all the time, I know how many of these things are unread. Yet the cost of publishing over 20 million copies of annual reports, as is presently done—it is a legal requirement—must be a very big expense. If you are going to extend that and make even more information available in that form, it will be quite extravagant and wasteful, I think. If, on the other hand, there was some way in which an information register could be available, and if more detailed information could be sought out, that I would support.
I was delighted to hear the noble Lord, Lord Houghton, say that there are few women on the boards and that we should protest at that. I do, I suppose, register that comment; but if you look at the other side of it and see how many investors there are, I think you will find that the number of women is very great indeed. Many women look upon their building society account as their own little nest egg, their own little security for the future. It is perhaps something that their husbands do not even know they have. The fact that the interest is tax-paid means that it does not have to be declared to him, which has been of enormous benefit to women.
The noble Lord said that there are now so few building societies, but I notice that there are still 227, so it is not an inconsiderable number. But I would take issue with the noble Lord on the question of home ownership. I should like to see the absolute maximum home ownership in this country. I accept that there are times when people need to have short-term accommodation or flexibility, and I believe that building societies could play a great role in this.
I should like to see a reform which would enable societies to build property for assured tenancies. As your Lordships probably know, assured tenancies were brought in under the 1980 Housing Act. They do not give prolonged security of tenure, but a tenant would have accommodation available at a fair rent, and that is something that is desperately needed at the present time. The 1974 Housing Act virtually destroyed the private sector of rented accommodation, and the people who are discriminated against today, in terms of housing accommodation in this country, are the young British people wishing to marry. Many of them are not able to afford a home immediately; but with assured tenancies, under the control of reputable bodies such as building societies, they would have the option of renting something of that type until they were able to choose their own home to buy, or to raise a mortgage for something which they already had in mind but for which they needed more time to accumulate capital.
I would take issue, again, on the point that creating home ownership is producing a stay-put nation. In fact, I take exactly the opposite view. Nothing has locked the people of this country more securely into one place than the fixed council tenancy, which was not exchangeable or transferable to any other part of the country. Home ownership gives flexibility. It is your right to leave that home, to sell it or to let it to someone else for a time. Home ownership gives
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flexibility and mobility, which the present council rented system does not.
So I should like to see building societies continuing to promote as much home ownership as possible, as well as building for assured tenancies. At the moment, they do not have the legal right to do these things. Some building societies are embarking on new venturesome projects, but there is a slight doubt about whether or not they are right in doing so. This point should be clarified, and it should be established that they are able to play an active part in the housing market,
I would now bring to your Lordships' attention maturity loans—we cannot get away from jargon, whatever we are speaking about—and these are important for building societies in the future. I did not know what maturity loans were, so I asked, and it turned out that they are interest-only loans. These are to help the older person, perhsps the older homeowner, who not only cannot finance the necessary repairs or improvements to the home but lacks the confidence or the mental skill to organise someone to come and do the work. I know that it is being done in a small way by some building societies, but it would be most valuable for societies to lend on an interest-only basis to older people and to have the facilities to enable these people to have their homes repaired or improved.
It is not always entirely a matter of money. Many elderly people have a fear of some stranger coming into their house, and perhaps they worry about what might be done to the property. The confidence and trust that the people of this country have in the building societies would go a long way to helping people in that category. I should like to see people being able to feel that they can go to a reputable building society and know that they have available the services and the expertise, and can have explained to them how to apply for grants, because many people would be eligible for them but are not even aware that they can claim.
I should like to point out that the concern of most people today—and I speak from experience as a dentist who has discussed this with my young patients—is not the interest rate that they will be charged, but whether they will get a mortgage. That is their first concern. It is only after they have found that they can get a mortgage that they look at the rate, and ask how that will fit in with their finances. The rate is of secondary importance to the availability of the funds.
It is interesting to know, too, that the Building Societies Association has an officer who is willing to receive details of any overall problems. That is extremely important. Just as we can write to the Law Society if we are unhappy with our legal advice, in the same way we can write to the Building Societies Association. I am quite sure that it is in the consumer's interest to have yet one more tier in an overall association that can bring influence to bear on the societies.
I did not go into detail on the assured tenancies because I thought that I had said enough. But in those cases landlords have to be approved by the Secretary of State, and therefore it is quite a specific field. Banking is another field that building societies are

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going into. As has been pointed out tonight, the challenge has come to the building societies from the banks, and I think that the building societies are now responding to that challenge and saying, "We should like to have banking rights and banking facilities".
The atmosphere in a building society in your High Street is very friendly and co-operative, and many people find it easier to go there. I know so many people who have building society accounts but who would never dream of having bank accounts. They might consider the Post Office Savings Bank, but beyond that there would be no thought of any bank, because banks are somehow frightening to them. People who have always been paid in cash and have had their housekeeping in cash are quite well geared to thinking in terms of building society accounts.
The whole banking world is changing, and, very shortly, the building societies will have to be able to use credit transfers and other means that are common in the banking world if they are to give their investors and customers the best of what they require, to which they are entitled. They are competitive institutions and, as I said at the beginning of my speech, if you do not like your building society you move off to another. That is what investors do. They vote with their feet, and that, in itself, is a great consumer protection. I should like to see the building societies considerably reviewed, with changes that will bring forward new and imaginative ways, such as co-ownership or equity sharing, when people cannot afford to buy a house in the first instance. That must apply to many young people today. Under equity sharing, a young couple would buy just part of the property. As time went by and their income increased, they would be able to buy more of the property. This would help more young people in the early stages.
There are so many ways in which the building societies can and, I believe, will help the people of this country. In the past they have enjoyed the confidence and trust of the people of this country, and I am sure that they will continue to do so, but they must not be frightened of reform. Reform must be considered fully and carefully. New powers must be given to the building societies at the same time as any injustices which now exist are removed.
7.51 p.m.
Baroness Burton of Coventry: My Lords, it seems to me that tonight we have had a good, mixed bag of speakers. I can only hope that from our various remarks the building societies will draw some encouragement and that they will take to heart what we say, though I am afraid that some of our remarks may not be acceptable to all of them.
We have heard a great deal tonight about the consumer interest. I was particularly glad that this Question was put down by my noble friend Lord Young of Dartington. He has done as much, if not more, for the consumer interest as anybody in this country. We have heard a good deal recently about the consumer interest. There was a debate not so long ago on the nationalised industries and the consumer interest. The Water Bill has been before this House three times and we spoke about consumer councils.
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Tonight the consumer interest has been mentioned several times. I want to say something about the consumer in so far as the building societies are concerned. Many of us are consumers in relation to building societies.
First, perhaps I may pay a tribute to what the building societies have done. They have done a great service to many millions of owner-occupiers, but because of their importance and their very large organisation I believe that the time is now ripe for us to look at their future development. When I realised that the Chancellor of the Exchequer thought that the time had come to look at this matter, I hoped very much that the initiative taken tonight by my noble friend Lord Young would lead to some enlightenment from the Government. Yesterday, as probably other Members have done, I obtained a copy of the speech given last May by the Chancellor of the Exchequer to the Building Societies Association. I spent last night reading it and trying to learn something from it.
In general terms, the Chancellor of the Exchequer said he hoped that new legislation would be based on what he described, and what my noble friend Lord Young also described, as a major re-examination of building society matters. However, as I looked on, I noticed that the Chancellor went further. He said he thought that the managements of some building societies were too fearful of the working of the democratic process. The noble Lord, Lord Plummer of St. Marylebone, with his very considerable experience, took leave to doubt that statement. I am hoping that the noble Lord, Lord Plummer, will agree, perhaps reluctantly, that there is something in two matters I want to mention later.
I believe that some building societies have been self-perpetuating. I do not mind whether or not one uses the term "oligarchy", but that is the term I have written down here. My experience has been that building societies have tried to fend off ordinary members and to retain power in their own hands. That may not be true of all building societies but it is true of some. I have felt for a long time that directors should not be able to choose themselves and their successors.
I do not know whether the noble Lord, Lord Plummer, recalls a television programme last year which illustrated the problems faced by somebody who was trying to secure election to the board of a well-known building society. There was more than one episode of this television programme. I watched it. Every possible obstacle that could be put in the way of this person who wanted to stand for election was raised. I did not know the person concerned, but I thought that anybody less determined would have given up long ago. In the end, he won election to the board. If the Minister so wishes, I can give him the details later. I would rather not give them here. Strangely enough, last year, quite by chance, I met this person who had been elected to the board. I said to him, "I can't think why on earth your face is familiar to me". Then it dawned on me. No such obstacle should have been put in his way.
Therefore I wonder how many boards of building societies put the same obstacles in the way of other people. I do not know whether the noble Lord, Lord Plummer, can tell me whether or not the boards of some building societies afford fewer obstacles, or give

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a little more encouragement to people who wish to stand for election. The impression I gained from this television programme was that you had to persevere; you had to refuse to take "No" for an answer; and you had to be prepared to be put to a great deal of expense in order to get your material over to the electorate.
The House will probably know—certainly the noble Lord, Lord Plummer, will know—that the Director General of Fair Trading recommended to the Minister for Consumer Affairs that the present exemption of building societies from the advertisements and quotations regulations made under the Consumer Credit Act should be discontinued. Although this is short notice, I am wondering whether the Minister can tell us tonight if that recommendation is likely to be accepted by the Minister for Consumer Affairs and by the Government. If the Minister can do so, it will be of great interest. Because of the close competition in which the building societies are now engaged with the banks I should have thought that they ought to be required to inform potential borrowers, who are consumers in every sense of the word, of the annual percentage rate of interest on mortgages calculated in the way that the law in general now requires.
The House may wonder why I now go back to 21st November 1958. I go back to that date because it was the day on which I achieved fame in a cartoon in the Daily Express. The subject was the granting of mortgages to women. It was not alleviated by the statement that some societies required a woman to provide a male guarantor. Nor was the position improved when a spokesman for the Building Societies Association said that women were discriminated against simply because they were reckoned to be less creditworthy. I take considerable umbrage about this because a very well-known building society turned me down for a mortgage. As a member of the House of Commons and of Parliament, I should not have dared to default. But could I get a mortgage? No. I got one eventually from a smaller society but not from a large one. This gave me first-hand information about building societies.
In 1958, the then Minister of Housing and Local Government—the House will, I believe, be pleased to hear this—was Mr. Henry Brooke, now Lord Brooke of Cumnor. He could not believe what I told him, so I went to see him and took various cases to him. Obviously I was not the only one. These ċases were incredible. Though I am tempted to do so since I have taken much less time than anybody else, I shall not weary the House by going into those cases now. When I saw Mr. Henry Brooke we went through everything. I would not have been silly enough to take him anything that was not foolproof. I had no need to do so: one does not have to embroider if the case is good. Mr. Henry Brooke, as he then was, saw the building societies. The position improved, but not all that quickly—indeed, most reluctantly in some quarters.
I know that 1958 is a long time ago. I know also that, as the noble Lord, Lord Plummer, said, times have changed. Many examples—some of them quoted by my noble friend Lord Young—are no longer relevant. However, though 1958 was a long time ago, the Chancellor of the Exchequer, speaking 24 years on,
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told the Building Societies Association in a speech last May that:
"One line of criticism concerns the service you provide to borrowers".
An example given by the Chancellor of the Exchequer was:
"a reluctance to recognise that the head of a household can be female as well as male".
It looks to me as though, from the viewpoint on democracy and from the viewpoint on equal treatment of men and women, we still have a long way to go. I hope that it will not be another 25 years before we reach a further improvement in that stage.
The noble Lord, Lord Plummer of St. Marylebone, told us that building societies are not complacent but they do not believe that some of the changes and reforms proposed now should be made. I hope that the noble Lord will be able to agree—and I hope even more that his noble friend Lord Trefgarne will be able to agree—that the two reforms I have mentioned are still very relevant. The first is that the chance of being elected to the board of a building society, if one is good enough, should be made much easier for people to achieve—alternatively, that every conceivable obstacle should not be put in their way if they wish to stand. Secondly, the building societies should take the words of the Chancellor of the Exchequer to heart and accept that the head of a household can be female as well as male. I hope very much that the initiative shown by my noble friend Lord Young of Dartington will produce some enlightenment from the noble Lord the Minister.
Lord Plummer of St. Marylebone: My Lords, before the noble Baroness, Lady Burton of Coventry, sits down, I believe she has drawn me to my feet and so I will confirm to her quite seriously that I truly believe there should be equal opportunity for people to become directors of societies. A proper channel for this must be worked out. As regards who should be head of the household, I am absolutely amazed that this problem should exist; certainly it never exists in my own society.
8.2 p.m.
Lord Marshall of Leeds: My Lords, may I first apologise for not being in my place when the noble Lord, Lord Young of Dartington, opened this debate? Perhaps I may also say, however, that I had the advantage of reading the press release that was put out by the Mutual Aid Centre on Wednesday, 6th April, outlining the seven point charter for building society reform of which the noble Lord, Lord Young of Dartington is a part author and on which, no doubt, he has spoken this evening. Secondly, I declare an interest, as being a director of a building society.
I am always surprised that a movement which has helped so many people has so few friends on certain occasions when the future of the movement is being debated publicly. The seven point charter is, in my view, rather typical of those many modern day reformers who would wish to change—generally for the worse—any organisation or institution which is evidently and universally successful and which, in the case of the building society movement, is performing and has historically performed an outstanding role in

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the field of house purchase and owner occupation. I am certainly proud that 58 per cent. of the people of this country are occupying homes which one may describe as being in owner-occupation.
The technique of these so-called reformers is to make a series of allegations in order to make appropriate the opportunity to thrust forward their own patent medicine which, although designed to cure toothache, ends up by paralysing the patient permanently. This is something we should bear in mind. The seven point charter is something with which I beg to differ, and I should like to speak particularly about the first of the seven points.
Boards of building societies are little different from the boards of many other companies and organisations. The noble Lord, Lord Young of Dartington, has in my view failed to give any thorough-going evidence of the rather serious allegation the document contains of "vested interests" influencing decisions. The noble Lord describes the Building Societies Association as saying that the board,
"is the proper body for carrying out a selection process for new board members".
The remainder of the paragraph to which this sentence is the conclusion I will read to your Lordships in a moment, when it will be seen that the noble Lord, Lord Young of Dartington, has not fully reflected that which was said. I intend to be tedious for a moment and to read out what was said:
"The practice often followed in building society boards, as in the boards of other organisations, is for directors to appoint people to fill casual vacancies, the members so appointed then standing for election at the next annual meeting. This is a proper course of action. Directors must choose people about whom they have been able to form a judgment and this is likely to be people known to the board members. Boards generally (not just those of building societies) must be a team capable of arguing through and agreeing on corporate strategy."
Now here is the phrase which the noble Lord, Lord Young, quoted:
"The board is the proper body for carrying out a selection process for new board members."
This process does not preclude appointment to the board of ordinary members of the society. The suggestion that legislation should give members the same rights as shareholders (presumably of limited companies) is a little strange as, for the most part, building society members already have similar if not better rights than shareholders of companies. However, to suggest that members should have an unqualified right of access to the register of members and to circularise them if they wish—perhaps for commercial purposes wholly unconnected with the society—would not be in the best interests of members, especially given current concern about the confidentiality of data on computer files.
Members of building societies would certainly not be happy with a situation in which their names and addresses were given to third parties and could be used for any purpose at all. The present law permits access to the register of members in certain circumstances, and in other cases the consent of the Chief Registrar of Friendly Societies is required. This is a reasonable protection for members of building societies.
Why all the kerfuffle (if I may use that time-honoured word) about people trying to force their way
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on to the board of a building society? Do we ever hear about, or would the noble Lord, Lord Young of Dartington, like to ask the Mutual Aid Centre to undertake research into, the difficulties of forcing one's way on to the board of a joint stock bank or on to the board of Imperial Chemical Industries? We never hear anything like that. If the noble Lord wishes to intervene, I shall sit down.
Lord Young of Dartington: My Lords, I was just slightly puzzled because the noble Lord, Lord Marshall of Leeds, came in late and we have already heard all of this read out from end to end by the noble Lord, Lord Plummer of St. Marylebone. I was only thinking that the noble Lord was not making a very good case for the societies in which he believes.
Lord Marshall of Leeds: My Lords, if the noble Lord will be patient, I have only one more point to make, and that concerns the fourth point of the seven point charter of which the noble Lord, Lord Young of Dartington, is joint author. This, in my submission, is wide of the mark; it is the interests of building society directors. I attended this morning the annual general meeting of my own building society, and I was amazed to see that the members sitting in the audience were told, among other things, that I was a director of a philosophical and literary society, a company limited by guarantee. I was amazed to see they were also told that I was a director of the University College Buckingham Limited, a company limited by guarantee. This was knowledge which was superfluous, but I did not mind that my interests, commercial as well as non-commercial, were being disclosed to the members in annual general meeting.
So I do not think it is fair, even in the slightest way, to criticise in a rather smeary way the marvellous work which building society directors perform. And I may say this, that what has been proposed by the association goes far beyond the requirements for ordinary commercial companies. I end by saying this. The building society movement is not afraid of change, it is not afraid of reform. It had its last Act of Parliament in 1962. It would welcome fresh legislation because it would welcome a wider discretion to update its methods, to serve the public and go on serving the public in the same way as it has done for the past 150 years.
8.12 p. m.
Lord Ponsonby of Shulbrede: My Lords, I should like to start, as other noble Lords have started, by thanking the noble Lord, Lord Young of Dartington, for introducing this debate this evening. Indeed, as has already been pointed out, it is very appropriate that he should introduce this debate in view of the tremendous role which he has played in the growth of the consumer movement over the past 30 years. I should tell him that, as a member myself of the Consumers' Association almost since its foundation, I feel that there is some point in filling up the annual ballot paper which is sent to me, and that there are changes from time to time in the executive of the Consumers' Association. However, I feel very much less enthusiastic about filling in my annual ballot form for the Co-operative Permanent Building Society, now renamed the Nationwide Building Society, to which I have

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belonged for a similar length of time. The noble Lord, Lord Young of Dartington, spoke of the difficulties of individual members becoming board members, and indeed he described—in an hilarious way I thought—the problems which faced a particular member of this society in recent times.
Building societies began as local mutual aid societies and local people were very much involved, as has been graphically described by my noble friend Lord Houghton of Sowerby. But over the years the process of amalgamation has led to a gradual demise of the local society and the creation of larger and larger national societies divorced from the people who first started them. As the noble Lord, Lord Houghton of Sowerby, also said, building societies are a movement and not an industry and he spoke most eloquently of his involvement.
The constitutions of building societies, friendly societies, were designed in a very different age when people within a locality could express themselves, control a particular local society and could control how it worked. The situation now is very different, and one asks oneself what can be done. A possibility, I suppose, would be that the Registrar of Friendly Societies should have the power to appoint one or more independent members of the board of each building society, which would do something to introduce new life on to the board of a particular society. Another thought would be whether there ought to be statutory limitations on who can serve on the board of a building society, as there are for voluntary housing associations. My noble friend Lord Houghton of Sowerby suggested a two-tier system, a supervisory board of management. Indeed this would be rather like the Consumers' Association, where there is a double category of membership, and if you pay that £1 or so extra you have your right to vote; so you actually have to pay and to show an interest in order to take part.
The noble Lord, Lord Marshall of Leeds, tried to draw a comparison between the management of building societies and the management of large public companies. Large public companies have also developed into perpetual oligarchies. This, I think, was particularly so in a period about 10 years ago. But those oligarchies have been rather saved from becoming too perpetuating by the growth of pensions funds and other forms of public investment. Indeed, it is in recent times that those funds have started to exercise some form of supervision over the vast public corporations and to force those corporations to disclose information, for example about the perks which directors of those corporations receive.
One asks oneself—although it might be almost heresy to make the suggestion—whether the situation within a building society of there being a single vote for each shareholder is the right constitution for a friendly society of the type that a building society now is. The noble Lord, Lord Young of Dartington, spoke of the ability of a friendly society to pack its meetings with members of the staff, who, as small investors in a building society, would of course rank equally with every other member of that society. As one who has been involved in a friendly society, I can tell your Lordships I know that it is only too possible to do that. One wonders in the circumstances whether there
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might be some merit in relating the votes of individual shareholders to the amount of shares they hold in a building society. It would certainly stop the situation which the noble Lord, Lord Young of Dartington, outlined.
The noble Baroness, Lady Gardner of Parkes, (who is not in her place now) called for a review, and I am sure it is right that there should be a review. This debate has concentrated, quite rightly, on this most controversial aspect of the work of the building societies, because it is one to which there is not a ready answer. I have made a number of suggestions as to how one might solve this particular situation of a building society being responsible to its members and not being a self-perpetuating oligarchy. That is something on which one would like to see further research.
But the problems of the building society movement are wider than this. The noble Lord, Lord Young of Dartington, called for the abolition of the cartel. He pointed out that competition between building societies was not as fierce as it had been in recent times because there was now a mortgage famine. The Building Societies Association's own report was much more concerned with their own development as financial institutions. That report pressed for the freedom of the societies to establish, acquire or invest in a bank, insurance company, property company or hire purchase company. It suggested powers to offer estate agency, surveying and conveyancing services. It suggested abolition of the special advance procedure and the limit of £60,000 on loans.
These proposals would no doubt make the big building societies into even greater monolithic organisations. As noble Lords will know, there have been problems with some of the smaller building societies over the past few years and one fears that the lifting of restrictions could create further problems unless the management problems are resolved. Therefore, I think that the fact that this debate has concentrated so widely on the management issue is something of great importance because it is essential that public confidence in the building society movement should be preserved.
One must pay tribute to what the building societies have achieved and I think that these are problems which the association should look into very carefully. We all await with interest the reply from the noble Lord, Lord Trefgarne.
8.22 p.m.
Lord Trefgarne: My Lords, may I join with every noble Lord and noble Baroness who has spoken tonight in expressing my thanks to the noble Lord, Lord Young of Dartington, for raising this matter. We have had an interesting and, if I may say so, well-informed debate on this important subject. Before replying to the particular points that have been raised I must pay tribute to the activities of the building society movement over the past 200 years. Its contribution to the spread of home ownership has been immense, and it has, over the years, encouraged thrift as well. Indeed, the building societies have had an incalculable effect upon the social evolution of this country, and a not inconsiderable effect upon my own social evolution since I, too, have the benefit of the

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services of one of them. They have grown to a position of great significance in people's lives and in the country's financial system. They now hold over half of personal liquid savings. Over five million people are buying their homes with the assistance of building societies. The total assets of the movement exceed £70 billion.
It is right, therefore, that they should be a matter for wide discussion, and the Government therefore welcome this debate today. Indeed, it comes at an opportune moment. In a speech to the BSA last year, already widely quoted tonight, my right honourable friend the Chancellor of the Exchequer indicated that there was a growing feeling that the time was ripe for a wide-ranging review of the building society legislation. The Building Societies Association has recently published a report making a range of interesting recommendations about the future powers and constitution of buildings societies. The Government recognise the strength of the case for new legislation in the course of the next Parliament; but final decisions about whether in fact to introduce it, and on its contents, have not yet been taken. Indeed, they depend on a number of events outside our control.
The case for new legislation rests on the changes that I have already mentioned in the scale of building societies, and the changes in the markets in which they operate. The legislation on which they are based is largely over a hundred years old, being based on an Act of 1874, although there have been some minor changes and consolidation since then.
The noble Lord has drawn attention to the need to protect the consumer. But we should not underestimate the reforms which the forces of competition can help bring about in this area. Building societies have in recent years benefited not only from strengthened competition from national savings but also from the vigorous re-entry of the banks into the mortgage market.
Perhaps I can briefly draw your Lordships' attention to just how much progress there has been since the original report of the noble Lord, Lord Young, Building Societies and the Consumer, was published in February 1981. That report recommended that building societies make valuation reports available to potential purchasers. Buyers are now frequently able to see a copy of the building society valuation report. The report suggested that societies abandon the practice of charging a penalty for early redemption of mortgages. Such penalties are now much rarer than they once were. The report called on the Building Societies Association to set up a compensation fund for the protection of investors. The BSA announced last year the setting up of a voluntary scheme for the protection of depositors and shareholders.
Finally, the report asked that building societies help the elderly by making greater use of mortgage annuity schemes. One at least of the very largest societies now offers such a scheme. It may be that the noble Lord's report has played some part in hastening these developments. I think, however, he would agree that the principal agent for change in all this has been competition. Whatever now happens—and there is, of
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course, evidence of some falling away in the willingness of the banks to offer mortgages—I am confident that these benefits will remain.
The forces of competition are, of course, buttressed by the powers provided to the Office of Fair Trading to control anti-competitive practices. Discussions last year between the Office of Fair Trading and the Building Societies Association have gone a considerable way to provide house purchasers with a wider and freer choice of insurance company. In his recent charter the noble Lord endorses the recommendation made by the Director General of Fair Trading that the present exemption of building societies from the advertisements and quotations regulations, made under the Consumer Credit Act, be discontinued. The Government are studying the Director General's report and hope to consult interested parties shortly. I am sorry that I cannot go further. I know that was a point raised by the noble Baroness, Lady Burton, but I hope that she will be aware that the Government are at least considering that point very carefully and actively.
I reaffim, therefore, this Government's belief that healthy competition, as supported where necessary by the watching brief given to the Office of Fair Trading, is and will remain the best friend of the consumer. We are nevertheless prepared to consider amendments to the law on this matter, as on others where we are convinced that changes are necessary. The noble Lord has put forward a number of suggestions for improving the information which is available to borrowers. We shall look at his proposals carefully. When and if we come to draw up new legislation we will probably need also to consider other matters such as, for example, the likely impact of changing technology.
We already have automatic cash dispensers. The clearing banks are studying the feasibility of systems for electronic fund transfer at point of sale—direct debiting from the shop check-out. Electronic money transmission may change very profoundly the way we handle money. One building society has already made a first move in this direction by offering Prestel sets to some of its members. If nothing else, we must ensure that the legislation enables societies to compete in this new world.
Furthermore, many societies are keen to take new initiatives in housing. My right honourable friend the Secretary of State for the Environment has said that he welcomes this and is encouraging such developments. New forms of ownership and tenancies are being developed, and new ways of financing home ownership. It is right that building societies should play a full part in this, as they have in the past. Again, we need to look at the legislation to see if there are the appropriate powers. I am certain that those sentiments will find an echo with the noble Lord, Lord Houghton of Sowerby.
I now return, however, to the area on which the noble Lord, and indeed others, concentrated in their speeches: the accountability of building societies to their memberships. This is a question that has given rise to a good deal of comment over the last couple of years or so. It is one to which my right honourable friend the Chancellor of the Exchequer drew attention when he addressed the Building Societies Association. On that occasion he suggested that some societies had

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been too defensive. His words have been quoted at least once during the course of this debate. They should be ready to justify their policies to their members and to answer for what they have achieved. The Government hope that the societies will have taken note of these comments, and have been looking again at their practice in this respect to see what improvement they can make.
As well as encouraging good practice, however, the Government need to consider, as part of their overall review, how far the current legislative framework for accountability is right. Building societies are not companies. They do not have equity shareholders; but most of their investors are members with the right to elect the boards, generally on the basis of one man, one vote. Most boards of societies would agree that they have to be answerable to their members. But this does pose a dilemma. It is essential that individual building society members should be able to receive sufficient information, to question the policies of their society and to put themselves forward as candidates for election to the board. That should not be discouraged or obstructed in any way. But at the same time very many members do not take a close interest in the running of their society. The two largest societies each have about 8 million share accounts. There are therefore potentially formidable administrative costs for societies in disseminating information and arranging elections. Therefore, while there must, yes, be proper democratic accountability, there is a balance which needs to be struck. The Government will be considering whether the balance struck in 1960 still gets it right.
The noble Lord, Lord Houghton of Sowerby, asked me how we proposed to go about this consultation. I am not in a position to say precisely what colour of document will be published for the benefit of the noble Lord, and indeed of all your Lordships and of all those who care to study it; but the Government will most certainly be wishing to consult just as widely as possible before reaching conclusions on this matter. Of course in that context the debate which your Lordships are having tonight will be of particular value.
My Lords, as I said at the beginning of my speech, the building society movement has made an invaluable contribution to our national well-being. It is right for that to be acknowledged. It is also right to expect societies to continue to adopt and respond to changing circumstances. This has always been one of their strengths. I am sure they will rise to the challenges of the present day.

Dartford Tunnel Bill [H.L.]
Reported from the Select Committee with an amendment and recommitted to an Unopposed Bill Committee.

Hampshire Bill [H.L.]
Returned from the Commons agreed to with amendments; the amendments were considered and agreed to.
House adjourned at twenty-seven minutes before nine o'clock.