Lords Sitting of 15 December 1983

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

Gas and Electricity: Advertising Costs
Baroness Burton of Coventry: 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, in future financial targets set for the gas and electricity industries by the Secretary of State, account will be taken of advertising costs where these affect the financial targets.
The Parliamentary Under-Secretary of State, Department of Energy (The Earl of Avon): My Lords, financial targets for the gas and electricity supply industries are defined in terms of a return on net assets. The targets naturally take account of all revenue expenditure including that of advertising.
Baroness Burton of Coventry: My Lords, does the Minister realise that his reply is worth exactly nothing? Is it correct that between July 1982 and June 1983 the nationalised gas and electricity industries spent £21.8 million on advertising and promotion? Further, is the noble Earl aware of the advertising battle being waged by these two state-owned industries so that consumers are in utter confusion as to which of the various conflicting claims is true? Thirdly, does the noble Earl recall that on 8th December, in the Statement on NHS Pharmaceutical Prices and Profits, the Government announced a compulsory reduction in the amount spent on advertising and promotion? Will the Government consider doing the same on these two equally nationalised industries?
The Earl of Avon: My Lords, I am sorry that the noble Baroness did not appreciate my reply to her Question. I did try to answer what was down on the Order Paper. As regards advertising figures, the noble Baroness is correct. The figures are approximately £22 million for one industry and £23 million for the other. I believe the noble Baroness did not make that quite clear. As regards the campaign, I agree with the noble Baroness and, I think, with the rest of the House that we all deplore advertising which is a denigration of products. To the extent that this took place I think it was unfortunate. This has been brought to the attention of the industries and I believe it will not happen again.
Baroness Burton of Coventry: My Lords, I am very surprised at making a little progress because I always expect an unsatisfactory answer. May I ask the Minister whether he realises that the Advertising Standards Authority—he will be familiar with its
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advertising —is having great difficulty in deciding which of these claims is true? Surely the noble Earl will agree that the authority can no longer take the line, and I quote:
"The statistics have come from a variety of sources and they do not always agree"
Is the Minister aware that I have here a double page spread from the Daily Telegraph of 28th November in which gas is knocking electricity? While passing no opinion on the merits or demerits of the claim, does not the noble Earl think that something should be done about this? Will he accept, and will he feel able to pass on the Advertising Standards Authority the opinion of the Government that the authority must somehow now reach a decision on whether these claims are misleading or accurate and so help in the job they are supposed to do?
The Earl of Avon: My Lords, I think I ought to have made something clear in my earlier reply, and I shall try to do so now. The current campaign to which the noble Baroness referred, against the electricity supply industry, is being paid for by a private consortium of the gas central heating and gas wall heating manufacturers and not by the British Gas Corporation. I should have made that clear earlier. As regards going to the Advertising Standards Authority, the Electricity Council took these advertisements to the authority and I understand a report is shortly coming from the authority.
Lord Stoddart of Swindon: My Lords, I am very pleased to learn that the noble Earl deprecates this type of -yah boo" advertising. Indeed, I am glad that he has taken the boards gently by the shoulders and told them that it is not in the best interests of the public service and of the great public industries to descend to gutter advertising. Can the noble Earl assure me that in his future discussions with these industries he will impress upon them the need for co-operation between the two industries, and not competition, so that we can get a proper, rational, integrated energy policy in this country, in which the boards will not only co-operate in ensuring that the public know the best use of fuels but also co-operate in conservation, combined heat and power and in all other measures which would produce a decent—
Noble Lords: Speech!
Lord Stoddart of Swindon: It is not a speech, my Lords. I was asking the Minister whether he would impress upon the boards the desirability of these aspects in order that we may have a proper, rational and integrated fuel policy in this country. I should have thought that all noble Lords would want that.
The Earl of Avon: My Lords, of course the chairmen of the two boards are well aware of what goes on in this House and I am sure they will take account of what has been said. I should like to say something about what the electricity advertising costs are about. Of that total, £9 million is about energy efficiency and approximately £1 million is on education. I am sure we all welcome that.
Lord Jacques: My Lords, will the Government consider the French system, where they have two separate producing units but joint retail units for both gas and electricity? That would reduce unnecessary advertising.
The Earl of Avon: My Lords, I am grateful to the noble Lord for bringing that to my attention. I shall certainly consider it.
Viscount St. Davids: My Lords, would I be right in believing that I am more in line with the thinking of the noble Earl and less with the noble Lords on the Opposition Benches in suggesting that it is competition which is the most valuable advantage we could have, although no doubt a certain level of cooperation is necessary, and that that is the direction in which we should be moving?
The Earl of Avon: My Lords, certainly the noble Viscount has underlined one of the platforms of the present Government, which is to encourage competition.
Lord Molloy: Is the noble Earl aware that all these advertisements do is confirm the ancient adage that the market place is a place that is set aside for men to cheat each other? What we are really concerned about is how much of this cost will be taken into the calculations that might raise the price of both gas and electricity, particularly for old people, in the winter ahead, my Lords.
The Earl of Avon: I am sure that what the noble Lord, Lord Molloy, says is the purpose of the Question tabled by the noble Baroness and that is what we are bringing to the attention of the boards.
Baroness Burton of Coventry: My Lords. in view of the enormous profits that the industries have made will the Minister be coming to the House in the next day or so to make a statement on the proposed increase in the price of electricity?
The Earl of Avon: My Lords, I think that is quite another matter. We had an unstarred Question on that subject the other evening.

Wheel Clamping
3.8 p.m.
Baroness Gardner of Parkes: 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 will state the number of vehicles clamped, to date, in the Central London wheel clamp experiment, the gross revenue received and whether they are aware of the need for some special arrangement for the vehicles of service engineers called to carry out urgent domestic repairs.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, I am informed by the
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Metropolitan Police that between 16th May, when the experimental wheel clamping scheme was introduced, and 18th November, 22,430 vehicles were clamped. The gross revenue received up to 18th November was £431,418.
It would not be desirable or practicable to provide a general exemption from the wheel clamping scheme for service engineers. However, the police have discretion to grant exemption from waiting or loading restrictions in special circumstances.
Baroness Gardner of Parkes: My Lords, I thank my noble friend for that Answer. Has he seen the annual report of the Knightsbridge Association—the area where the wheel clamps were first introduced—which states that the introduction of the clamp seems to be generally popular with residents, since it has freed residents' parking spaces for their proper use? Following that, and in view of my original Question concerning service engineers coming to repair domestic appliances or meeting other domestic needs, does the local authority have the power, either directly or through the GLC, to implement the issue of, say, badges, presumably at considerable cost, to enable a limited number of accredited service men to use, on a short-term basis, the residents' parking spaces so that they can carry out these repairs?
Lord Elton: My Lords, in reply to the first part of my noble friend's helpful supplementary question, may I say that I look forward to seeing the report to which she refers. I have not vet seen it. In regard to the second part of the question, the answer is no. The power to make exemptions to schemes made under traffic management orders rests with the police. The Metropolitan Police general orders authorise station officers and traffic warden supervisors to grant exemption certificates where work cannot reasonably be carried otherwise. The certificate sets out the extent of the exemption and must be displayed on the vehicle.
Lord Underhill: My Lords, may I ask the Minister two questions? First, in view of the fact that one of the original reasons given by the Metropolitan Police for wheel clamping—and I supported the experiment—was to deal with persistent offenders, can the Minister say what method the police use to deal with that problem, and what percentage of the 22,000 cars clamped belonged to persistent offenders? In view of the fact that during the past year 1 million vehicles have remained untaxed, and there have been only 198,000 prosecutions, because of the limited resources of the police, does the Minister believe that wheel clamping can be used to look at the possible number of untaxed vehicles?
Lord Elton: My Lords, we are aware of and wish to pursue—I was going to say—the harassment of persistent illegal parkers by means of wheel clamps, but the difficulty is identifying them. When they are found and recognized, of course that is a matter for congratulation. But at the moment no specific method has been discovered to identify them in advance. As to widening the experiment to cover untaxed vehicles, again I can say that when a vehicle is clamped and found to be

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untaxed, it means big trouble for the owner. But it is not in the remit of the experiment, as I understand it. to use it in order to find untaxed vehicles.
Lord Paget of Northampton: My Lords, is the noble Lord aware that this power was sought of this House and of Parliament because it was said that it was required specifically for two purposes? The first was to deal with the diplomatic cars—and we now find that the Government have failed to do their homework and it could not work for that. The second was to deal with persistent offenders who did not pay the fixed penalties when notice was put on the vehicle. Again the Government did not do their homework and we are told now that nobody can find out who those people are. At present this is simply an arbitrary police power to increase a penalty quite casually and by selection. Surely that is quite un-English.
Lord Elton: My Lords, dealing with the diplomatic issues, I made a statement on this earlier this week which I think your Lordships welcomed. I am sure that the noble Lord would not wish us to break the law or international convention in enforcing the law in this country. As to the question of persistent offenders, the only way they can be identified is by local knowledge. Where that local knowledge is available, of course use is made of it.
Baroness Gardner of Parkes: My Lords, can the Minister confirm that apart from the reasons given for introducing the scheme, its aim was also to clear persistent obstruction in the streets, as the magistrates found that the previous parking penalties were proving ineffective? In this sense the wheel clamp has been successful and indeed welcomed by residents' associations such as the one I quoted.
Lord Elton: My Lords, it is agreeable for Ministers who give inadequate replies to have them bolstered by those who sit on the Back-Benches.
Viscount St. Davids: My Lords, will the noble Lord consider whether we might not establish some large plain sign, such as a red star—without political meaning of course—which would be in the nature of a request from the driver of the vehicle carrying this mark that it should be allowed to park for an extra time? This would not put any obligation on the police to accept the request but it would show that this was a particular vehicle which needed this extra time.
Lord Elton: My Lords, I often see such hand-written notes in windscreens as I walk the streets of London.
Lord Airedale: My Lords, may I ask the Minister another question on timing? Suppose that a busy surgeon parks his car illegally. Admittedly he should not do so. But suppose the police are also busy. How long is it liable to be before the surgeon can go through the procedure, whatever it is, and get somebody to come along to release his car?
Lord Elton: My Lords, the car of a busy surgeon ought not to be wheel clamped. A badge scheme exists and is operated by the British Medical Association whereby doctors and nurses involved in emergency
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work are exempted from parking restrictions. A car bearing such a badge would not be clamped. I suppose in the same way as one sometimes inadvertently locks oneself out of one's house, this scheme may fail occasionally. The recourse then is to ring the vehicle pound and assistance will come as quickly as can be managed.

Hospitals: Building and Closures
Lord Auckland: 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 hospital closures have taken place during the past ten years: how many new hospitals have been built during that period: and whether they will bear in mind the special needs which the cottage hospitals meet, especially in country areas.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur): My Lords, from 1st January 1974 to 30th September 1983, 413 hospitals were approved for closure. From 1st April 1974 to 31st March 1983, 141 major hospital building schemes were completed. Decisions about the organisation of services should reflect local needs and are primarily for health authorities following local consultation. This includes the role of small local hospitals.
Lord Auckland: My Lords, I thank my noble friend the Minister for that Answer, but the matter still gives rise to a great deal of concern. It is generally accepted that there has to be closure of old hospitals from time to time, but has his attention been drawn to an article in the Guardian on 14th December? It concerned Welwyn Garden City, which has a new general hospital, and the Westminster Children's Hospital, where bone marrow transplants are carried out. Can my noble friend confirm or deny that consultations took place with those hospitals before closure was contemplated? On the question of cottage hospitals, is my noble friend aware that in rural areas, especially with transport problems growing worse, it is becoming increasingly essential to keep cottage hospitals open where possible?
Lord Glenarthur: My Lords, my noble friend has asked a general Question about closures, and I do not think that it would be proper for me to be drawn on detailed issues. I am aware of the article to which he refers. The document referred to in the article is nothing more than a simple working document, illustrating the relationship between National Health Service resources and provision in certain parts of the North-West Thames area. Before any strategic proposals can he implemented, they must be the subject of full public consultation. Where proposals for changes in the use of hospitals are opposed locally, the final decision will rest with my right honourable friend the Secretary of State for Social Services.
We acknowledge the valuable part that is played by small, local cottage hospitals. There are many advantages to local communities in having a small

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hospital which they can identify and which treats cases that do not require the full range of investigation and treatment which is available in a district general hospital.
Lord Hatch of Lusby: My Lords, may I ask the noble Lord to be a little more forthcoming about the second part of the Question, which concerns cottage hospitals? Is he aware that in rural areas many cottage hospitals have been closed, or have had their services curtailed? I should like to give him one example. In the area of Skegness—which caters for about a quarter of a million people in the holiday period—in the evening, people needing attention now have to go to Boston, which is 25 miles away. Is it not sensible for the Government to grant extra facilities to cottage hospitals in rural areas where frequently the need is immediate?
Lord Glenarthur: My Lords, I hope that I said just now in answer to my noble friend Lord Auckland that the Government acknowledge the value of these hospitals. I am not aware of the point concerning Skegness. Of course health authorities are bound also to look at the cost of the service provided.
Lord Wallace of Coslany: My Lords, is the noble Lord aware that, as a result of financial pressure on district health authorities, inevitably the smaller hospital is the victim of projected or actual closure? The tendency today is for the larger hospital to survive at the expense of the smaller one. Furthermore, can he tell the House how many more projected closures are in the pipeline so far as the new policy of the Government is concerned? Perhaps he could break down the 413 closures since 1974 and tell us how many there have been since 1979.
Lord Glenarthur: My Lords, so far as the last part of the noble Lord's supplementary question is concerned, I am afraid I cannot give him that answer without working it out, which would take me more than a minute or two, and I have not got the latest figures available. So far as the district health authorities are concerned and their responsibility towards local hospitals, it is, of course, health authorities themselves which have got to determine how services should be organised to get the best value from the available resources for all the communities they serve. It is up to them to work out, in consultation with all others concerned, the pattern of services which best suits local needs.
Lord Renton: My Lords, is my noble friend aware that the Government's policy of getting mentally handicapped children out of hospitals and into the community is warmly applauded? Is he aware that there are a number of mental hospitals which are well known to be unsatisfactory? And can he say whether any mental hospitals of that kind are included among the figures he has given of hospitals closed down?
Lord Glenarthur: My Lords, not without notice, I am afraid; but certainly there are plans to close some mental hospitals because, as my noble friend will be aware, they are consumers of a considerable amount
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of revenue. That revenue, as he so rightly says, will be much better spent on care in the community.
Lord Kilmarnock: My Lords, the Government have introduced these cuts in the middle of the financial year. Some authorities, as I am sure he is aware, have underspent owing to their uncertainty of Government intention. Would the noble Lord agree that the best way to solve this problem would be to allow them to carry the money forward to the next financial year without penalty? Would not the solution be to raise the carry-over limit from 1 to 3 per cent. and allow it to be put to capital account so that this money is not spent on hasty financial window dressing?
Lord Glenarthur: My Lords, with respect, I think that question goes rather wide of the narrow Question on the Order Paper.
Baroness Masham of Ilton: My Lords, does the Minister agree with me that the small cottage hospital generally deals with low technology medicine and is usually for the elderly and the infirm? Would he agree that it is much easier to close a small hospital than a large one? But are the expenses of the ambulance services taken into consideration, because with rural transport being cut back the elderly and the infirm have difficulty in getting to hospital if it is not near their home unless they go in an ambulance?
Lord Glenarthur: My Lords, I am sure that the health authorities concerned will take the point about ambulances into account before they reach any decision on the closure of hospitals. But it is, of course, as I said earlier, a matter for the district to decide how they should best use the resources which they have at their disposal.
Lord Molloy: My Lords, would the noble Minister not agree that one cannot just shift the blame on to RHAs? What RHAs have to do is carry out the policy of the Government of the day. Several clauses have been implemented without any discussion whatsoever with the staff, nurses, doctors, midwives and so on—
Noble Lords: Question!
Lord Molloy: I am coming to the question—be patient. Would the noble Minister not agree that it might be a good idea for everyone—the RHAs themselves and their staff—if the staff were brought into discussions before the decision is made? If it goes the wrong way they then have to join the unemployed. Members of our National Health Service are now being added to the total of the unemployed. Surely, that cannot be a good thing.
Lord Glenarthur: My Lords, I do not agree with what the noble Lord says. The fact remains that there are representatives of the professions as members of regions, and they of course express their views at regional meetings. No doubt these are all taken into account when the district raises the possibility of closing a hospital.
Baroness Gardner of Parkes: My Lords, is the Minister aware that there are some districts—for

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example, one in north Westminster—where the meetings of the health authority have reached such a degree of consultation that the members of the district authority are almost suffering intimidation from the hundreds of people who attend who are all staff employees? This is really an attempt to intimidate those members in the decision making.
Lord Glenarthur: My Lords, I am not particularly aware of the point at the place which my noble friend mentions, but I entirely deplore that sort of attitude if it prevails.

International Development Association: Finance
3.26 p.m.
Lord Hatch of Lusby: 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 what is their present policy towards the financial difficulties anticipated by the International Development Association in 1984–85.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, the resources of the International Development Association are secure up to the end of June 1984, under the special funding arrangements for the current fiscal year which have been agreed by all donor countries except the United States of America. Thereafter, the seventh replenishment of IDA's resources should become effective. That would provide the association with funds for a further three years, until 30th June 1987.
Negotiations are continuing on the overall size of IDA 7, as well as on individual donors' shares. We are anxious that these should be concluded soon to allow the replenishment to take effect from 1st July.
Lord Hatch of Lusby: My Lords, is the noble Baroness aware that this gives me a very rare opportunity of congratulating the Government on their policy and leadership in the issue of overseas aid, although one would still say it is far too low? May I ask the Minister two specific questions regarding the IDA? Can she say anything about the meeting which is taking place today, I understand, between Britain, Japan, West Germany and France, to try to help the situation, or is this too early? If it is too early, will she make a satement next week after the meeting? Secondly, what influence is the British Government bringing to bear on the United States Government to give the IDA the money it requires to carry out its invaluable task after June 1984?
Baroness Young: My Lords, I thank the noble Lord for his kind remarks and I thank him in the spirit in which they were given. The answer to his first supplementary question is that the meeting in Paris is a consultation between IDA management and several major donors concerning what would be their shares of a United States 12 billion dollars IDA 7 assuming a United States share of 25 per cent. The total of 12 billion dollars is the target which all donors other than
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the United States thought appropriate in the circumstances when the replenishment was discussed by the UDA deputies in Paris last week.
On his second question as to what the Government are doing about this possible shortfall. I can confirm that all donors other than the United States have made known their view that the target for the next replenishment should be 12 billion US dollars rather than the 9 billion dollars implied by the limit which the US Government have currently placed on their contribution.
Viscount St. Davids: My Lords, will the noble Baroness confirm that this is a happy and rare occasion on which the words of the Paper actually say what is meant? The financial difficulties of the International Development Association have indeed been anticipated rather than merely expected, which is what the words are usually used to mean. In this case they are really being used in their proper sense.
Lord Taylor of Gryfe: My Lords, would the Minister agree that fundamental to the success of this excellent organisation is the contribution of the United States, since the United States has always been the major contributor? Would she stress to the United States Government that expediture of aid in this direction is frequently more important than purely military intervention in combating communism in the third world?
Baroness Young: My Lords, we and other donors have made clear our view that a replenishment of 9 billion United States dollars based on a United States contribution of 750 million dollars a year would be an inadequate response to the needs of the world's poorest countries.
Lord Oram: My Lords, does the Minister recall that the Prime Minister has said that at the recent Commonwealth conference she was asked to make a special personal effort to ensure an adequate replenishment of IDA finances? Furthermore, has not the Prime Minister agreed to send a message to President Reagan, as Chancellor Kohl of West Germany has done, urging that the United States should not reduce its contribution in the way that it has threatened? Can the Minister say whether the Prime Minister has taken such action, and with what effect? May I further ask what action the British delegation will take at the meeting in Washington on 11th January—which, I think, will be the conclusive meeting on these matters—to ensure that the gap is filled if the United States does what it has threatened to do?
Baroness Young: My Lords, I should like to make plain that we have made our views on this matter clear to the United States Government. I do not think that I can add anything further at this point. On the question of what would happen if there is a gap, I would point out that we are ready to play our part in a replenishment of up to 12 billion dollars on the basis of fair burden-sharing among the donors. But that has always presumed an increase in the United States Government's offer in this matter.
Lord Bauer: My Lords, will the Government consider substantial cuts in our taxpayers' contribution to the IDA? I ask that question in view of the lack of any effective parliamentary control over this form of aid, which may help to explain the numerous anomalies in regard to what it does.
Baroness Young: My Lords, I am well aware of my noble friend's views on this matter, since he has previously expressed them in your Lordships' House. But I think that I ought to say that we have agreed that our contribution to IDA 7 would be at a level that could be justified by reference to our relative economic strength.

Rate Support Grant—Scotland
Lord Denham: My Lords, at a convenient moment after 3.30 p.m. my noble friend Lord Gray of Contin will, with the leave of the House, repeat a Statement that is to be made in another place on the rate support grant for Scotland.

Business of the House
3.32 p.m.
The Lord President of the Council (Viscount Whitelaw): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That Standing Order No. 43 (No two stages of a Bill to be taken on one day) be dispensed with on Wednesday next for the purpose of taking the Coal Industry Bill and the Consolidated Fund Bill through all their remaining stages that day.—(Viscount Whitelaw.)
On Question, Motion agreed to.

London Docklands Railway Bill
3.33 p.m.
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move that this Bill be now read a second time.
In moving the Second Reading, may I say a brief word in explanation. The Bill results from the establishment of the London Docklands Development Corporation and its object is to link the docklands area by rail to the existing Underground system. The new railway will run above ground from the Isle of Dogs to a new station at the Minories making use of an existing but disused railway viaduct. The new station at the Minories will be within walking distance of Tower Hill Underground Station. Owing to the pressure that builds up on the Tower Hill Underground Station, especially, obviously, in the tourist season, the Bill, as deposited and as it is at this moment before your Lordships, provides for the enlargement of the present ticket hall.
However, this proposal met with considerable opposition from various local bodies on amenity and environmental grounds. The noble Earl, Lord Kinnoull, put down an Instruction on the subject in
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the No Day Named list. As a result, the promoters of the Bill have re-examined the scheme and have undertaken to drop their proposals for an enlarged ticket hall at Tower Hill and instead propose to build an additional ticket hall as a separate entity.
The noble Earl, Lord Kinnoull, has now withdrawn his Instruction and I understand that the other petitioners on this point are satisfied. The Bill therefore will be amended by the promoters in Committee so as to take out the Tower Hill works and the new proposals for a separate ticket hall are included in a new Bill promoted this Session—that is, the London Transport (Tower Hill) Bill. I beg to move.
Moved, That the Bill be now read a second time.—(Lord Aberdare.)
The Earl of Kinnoull: My Lords, I am grateful to my noble friend the Chairman of Committees for explaining briefly the purpose of my original Instruction and the subsequent action taken by London Transport, the promoters of the Bill. Perhaps I may add a few words on the history of this controversy and seek advice from my noble friend on the question of abortive costs. I say at once that I have no quarrel at all with the main purpose of the Bill, which is to provide a new rail link between the London docklands area and the City of London. It is a vital communication to the successful rebirth of the thousands of acres of derelict dockland area which is now underway with housing schemes, industrial enterprise zones and now even the possibility of a short take-off and landing airport. It is an exciting concept. I, and I am sure the whole House, wish the corporation responsible every success in the development of the area.
As the Chairman of Committees said, this Bill covers the new rail link from the Isle of Dogs to the Minories in the City. At that point, there is no direct connection into the London Underground service. London Transport has chosen—not, I think, the happiest solution—to provide a 400 yard pedestrianway connection to Tower Hill Underground station as the one positive link for travellers to the Underground service from this rail link. This connection into Tower Hill Underground station would naturally involve certain major improvement works. It was the design of the works that caused so much controversy and opposition on the grounds of adverse environmental impact.
Tower Hill station stands in a corner of the remarkably beautiful and ancient Trinity Square Gardens and Wakefield Gardens, directly opposite the Tower of London. It is perhaps one of the most important historical and environmentally sensitive landmarks in London and is most popular with visitors to London. It includes the site of the old Tower Hill scaffold with which forebears of many of your Lordships may have been too well familiar. Trinity Square Gardens has been a responsibility for the past 200 years of the Tower Hill Trust, an ancient charitable trust with distinguished trustees, including the governor of the Tower of London.
Trinity Square is also the home and headquarters of Trinity House, a much respected body that provides such a superb service of pilotage of ships around our coastal waters. Trinity House owns a number of

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buildings in Trinity Square, including Tower Hill station.
It was, to put it mildly, somewhat of a surprise to both these bodies when London Transport, with unusaul discourtesy, made no approach nor held any prior consultation with them before depositing its Private Bill last November year. Nor had it shown, I understand, any design plans of the proposals to either the local planning authority that is Tower Hamlets, or even notified the governor of the Tower of London. I understand, in making this point, that it is an unwritten rule of any planning scheme within 800 metres of the Tower that the governor is notified.
When London Transport eventually produced its proposals for the extended booking hall, the design proved a cheap, ugly, glass box construction wholly incompatible with this historic landmark which we all should cherish. As the parliamentary procedures only require a deposited plan showing the limit of deviation on site plans, and as the Bill will grant both compulsory purchase powers and planning consent to London Transport for this horrible glass box, Trinity House and the Tower Hill Trust decided that they were forced to take positive steps to persuade London Transport to rethink its awful design. They embarked upon the expensive course of putting forward an alternative scheme with the help of a team of professionals. It goes almost without saying that to London Transport that proved to be an unacceptable alternative, but at least it shamed them into engaging their own independent architect and consultants on what has now become scheme 3. I am glad to say that after further alterations, discussions, and meetings, scheme 3 has been accepted as being compatible in design with this very sensitive area. It is now the subject of a separate Private Bill entitled, London Transport (Tower Hill) Bill, which has been deposited.
So this environmental fight has ended, happily, on the right side. But should it ever have happened? I believe that if London Transport had held consultations in a civilised way before the Bill was launched over a year ago, the fight could have been avoided. I also believe that Trinity House were more than justified to go to the very considerable expense to which they went in order to achieve what they did. They saw the danger of London Transport seeking planning consent through the quick way of a Private Bill and, as custodians of the area, they felt the need to act positively, and they did so. However, the professional costs have proved enormous; indeed, as a result of all the negotiations that have ensued with London Transport, they have been above average. I believe that Trinity House should be entitled to seek from London Transport some proportion of these abortive costs.
My noble friend the Chairman of Committees has considerable influence and persuasive powers as regards Private Bills. This case will not now go to a Select Committee, which I understand on certain special occasions has powers in respect of costs. However, I believe that if the matter had gone to a Select Committee, they would have been more than sympathetic. So I ask my noble friend to see what influence he can bring to bear on London Transport to meet some of the costs that the charitable trusts have
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borne in a fight that should never have been, and the outcome of which is to the benefit of our very heritage.
3.43 p.m.
Lord Beswick: My Lords, we should be grateful to the noble Earl for giving us the background to the Bill. The question of costs—or, as the noble Earl put it, the abortive costs—which may arise for an interested party as a result of somebody promoting a Private Bill is one that this House ought to consider quite carefully. It is a narrow aspect in considering the Bill, but it is an important aspect; it is certainly important to the charity about which the noble Earl spoke. However, I suggest that it is a principle that has arisen before and could conceivably arise again.
The House may recall that in the last Parliament I opposed a Bill promoted by the Shrewsbury local authority. The planning proposals in that Bill had very serious consequences for the Shrewsbury Town Football Club, and they had to go through all the lengthy and costly process of petitioning against the Bill. The point that was made from both sides of the House in regard to that Bill was that there should have been a genuine effort through consultation, and possibly through local planning procedures, to obtain some agreement locally and, therefore, obviate a good deal of the expense which was incurred by following the Private Bill procedure. However, in that case the local authority chose to promote a Private Bill in Parliament. The Shrewsbury Town Football Club tell me that the legal cost incurred in arguing their case in those parliamentary proceedings amounted to £50,000. Their total costs were £70,000, but of that £50,000 was directly the result of their going through the Private Bill procedure. That Bill is still not on the statute book. It may or may not get on the statute book, but the costs have been incurred.
We now seem to have a somewhat similar case—certainly not a dissimilar case. The public authority chose to go to Parliament without first seeking consultation with the interests affected by their proposals. I gather that in this case after considerable effort—about which the noble Earl has given us some very interesting details—there has been a measure of agreement. But the costs have been incurred; and they have been incurred by what one might call an innocent party.
What about those costs? Ought there not to be some compensatory payment to the Tower Hill Trust? I remember being told on a previous occasion—and I suppose that I shall be told again—that it would be most unusual for Parliament to award costs. But I suggest that if it were not an unusual procedure to award costs, there would be a good deal more caution and care on the part of some of these public authorities before they come to Parliament to follow the Private Bill procedure. There would be an attempt to reach agreement with those who conceivably could be affected, or who certainly had a point of view. It is also conceivable that there might he a more serious attempt to proceed with some planning application through processes other than the Private Bill procedure. Certainly in son-le cases it might be less costly and more satisfactory to all concerned.
If the Bill now drafted is not opposed, then may be it would not be appropriate for the House to award

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costs. But I suggest that there is amoral obligation on London Transport to meet part of the costs, at any rate. If it is possible, as the noble Earl suggested, for the Chairman of Committees or for this House to suggest to London Transport that they have this obligation to meet part of the costs that have been incurred by the charity concerned, I hope that there will be some support for that concept this afternoon.
3.48 p.m.
Lord Teviot: My Lords, I was going to keep fairly quiet until I heard the noble Lord, Lord Beswick. I agree entirely with all that has been said by my noble friend the Chairman of Committees. This is a most necessary Bill which will provide a railway link from the Minories, from what was Fenchurch Street, to the Isle of Dogs. It will also lead to development of a rather derelict area, and that is a most important aspect. Nobody disagrees at all with that.
I believe that the argument arises over the aesthetics of the station that is to be located at Tower Hill. Speaking about London Transport totally apolitically, I would say that there might be a question of costs, but perhaps not great costs. They had to get busy and get the station under way. One only has to look at the City where there are some rather "unpretty" buildings. Whether this one would be the "unprettiest" of the lot, I do not know. But I do not think that we should argue about whether this building will be more or less elegant. However, I think that they have behaved fairly well and they might agree that there is a certain margin.
I rose to my feet after I heard what the noble Lord, Lord Beswick, had to say, following my noble friend Lord Kinnoull, whom I have known for ever and who put an extremely good case. I do not think that London Transport have behaved terribly badly. They have withdrawn the Tower Hill station. They are putting forward another Bill which will be totally acceptable. I have walked every inch of the railway. I went down at the Isle of Dogs and walked right through to Poplar and Limehouse, and through all the buddleias and so on. Once the project gets under way that part of London, which is at present absolutely derelict, will become an excellent area. It will be of great benefit to the community. I honestly do not think that we need worry too much. I do not think that London Transport have behaved terribly badly.
The Chairman of Committees: My Lords, I am grateful to the three noble Lords who have spoken on this Bill. I should like to make quite plain one point which I do not think has been completely understood because I did not mention it in my opening speech. The Bill is opposed. There are other petitions against it, so it will go to a Select Committee. Therefore, if the trust concerned wish to carry their case forward to that committee, they could continue with their petition and could be heard by the Select Committee.
I should like to make the formal position quite clear. Costs can be awarded to parties appearing before Select Committees on Private Bills. They are governed by the Parliamentary Costs Act 1865, which provides that. in cases where a committee reports unanimously that a petitioner against a Bill has been unreasonably
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or vexatiously subjected to expense in opposing the Bill, the petitioner is entitled to recover his costs, or part of them, from the promoters. Similarly, a committee may report that a promoter has been vexatiously subjected to expense by the opposition of a petitioner, in which case the promoter can recover costs from that petitioner. However, it is rare for either promoters of Bills or petitioners against them to be found, in the opinion of a Select Committee, to have been unreasonably or vexatiously subjected to expense, and hence costs are very rarely awarded.
I am sorry to hear that there has been a certain amount of criticism of the way in which the matter has been handled by London Transport. I am sure that London Transport will pay due attention to what has been said here this afternoon. In my experience, once a Bill has been promoted and there are petitions against it, normally the promoters are the first to seek to come to some accommodation with the petitioners. At that stage high costs should not really be involved. It is only when one comes before the Select Committee and one is paying counsel's fees that legal costs arise.
Lord Beswick: My Lords, would it not make for greater convenience all round if the consultation took place before the Bill was promoted?
The Chairman of Committees: My Lords, I simply cannot comment on that. It is a matter for the promoters in the particular circumstances. I am not here to defend the Bill, and I do not know what consultations were or were not held. However, I would agree with the noble Lord that obviously that is much the better way; the sooner the consultations can take place. the better. That is the formal situation. As I said, I am quite sure that London Transport will pay due heed to what has been said here this afternoon.
On Question. Bill read a second time, and committed to a Select Committee.

Milford Haven Conservancy Bill
Read a third time, and passed. and returned to the Commons with the amendments.

Restrictive Trade Practices (Stock Exchange) Bill
3.54 p.m.
The Chancellor of the Duchy of Lancaster (Lord Cockfield): My Lords. I beg to move that this Bill be now read a second time. The Bill exempts the Stock Exchange from the Restrictive Trade Practices Act. The rule book on the Stock Exchange was registered by the Director General of Fair Trading in October 1977 and referred by him to the Restrictive Practices Court in February 1979. Thus more than six years have passed since the rule book was registered and close on five years since the case was referred to the Restrictive Practices Court.
The Stock Exchange is an institution of great importance and value to the country. It plays a key role in the United Kingdom capital markets. It provides a large and liquid market for the issue of

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Government securities and plays a significant part in the financing of United Kingdom industry. Among our European partners we have by far the most developed and active Stock Exchange, and in the United Kingdom companies can look to the Stock Exchange for a much greater proportion of their financing than in the case of other member states.
It is essential that the exchange should continue to provide the efficient market in securities that is vital to the working of the economy. It also provides a very active large-scale secondary market for securities, which is an important service in itself, in addition to the role it plays in assisting new fund-raising. The Stock Exchange is an important contributor to the country's overseas earnings.
During the lengthy period the case has been in preparation—some five or six years—the Stock Exchange has been on the defensive, seeking to avoid action which might have prejudiced its case. This seriously inhibited its capacity to respond to changing circumstances and opportunities. This uncertainty was likely to continue for some time to come and, even when the stage was reached when judgment was given, a further period would have supervened in making whatever changes were necessary to conform with the judgment. The Government therefore took the view that it would be better to seek an early resolution of the matter out of court, if, but only if, the Stock Exchange was prepared to make changes in its practices which would meet the major concerns expressed both by the director general and more generally.
The Government and the Stock Exchange were not alone in recognising the necessity for there to be continuous development of financial markets. There was a general acknowledgement in the City of London that early action on such matters as commission scales was needed.
Discussions were therefore held with the chairman of the Stock Exchange on the major matters of concern to the director general with a view to seeing whether there was a basis for exempting the Stock Exchange from the Act. On the basis of certain major changes to be made by the Stock Exchange, my right honourable friend the Member for Hertsmere announced on 27th July that legislation would be introduced to exempt the Stock Exchange from the Restrictive Trade Practices Act. The present Bill gives effect to that intention.
The changes now made by the Stock Exchange are as follows: first, minimum commissions. The council of the Stock Exchange agreed to dismantle by stages, and with no unreasonable delay, all the rules which prescribe minimum scales of commission, completing this process by 31st December 1986 at the latest.
The council has already announced its decision that the first step in dismantling the minimum commissions will be to abolish them for overseas securities, and its intention that the relevant rule changes will come into force at the beginning of April 1984. The Government accept this as a significant first step, and one which is of particular relevance to the maintenance of the exchange's international competitiveness. Additionally, the Stock Exchange Council has announced that it is formulating rules that will enable firms to undertake international securities business on
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a similar basis to competing overseas firms. This and the move to fully negotiated commissions should enable brokers to compete and increase their market share in international securities business.
The second change concerns membership of the council and admission to membership of the exchange. For the first time, lay members will be included in the council of the Stock Exchange. The governor of the Bank of England and the chairman have agreed that lay members will account for up to 25 per cent. of the council and will be appointed by the council with the approval of the governor.
At least five lay members should join the council shortly. Further, a new appeal body, independent of the Stock Exchange members of the council, will be established. If the council rejects an application for membership by a person who fulfils the requirements of the rules, the appeal body can review the decision and overrule it. This body can include lay members of the council, but Stock Exchange members would not be eligible. The changes will also introduce people who are not Stock Exchange members of the council to the Stock Exchange's existing appeals committee on disciplinary matters so that they would constitute at least a majority on the committee. Lay members of the council will be eligible to serve on this committee.
Third, non-members of the Stock Exchange will be permitted to serve as non-executive directors of limited liability corporate members of the Stock Exchange, provided there is always a majority of directors who are members of the exchange. It is already possible for a limited liability corporate member to be wholly owned by non-members, and, with the permission of the council, for a single non-member to own up to 29.9 per cent. of such a corporate member, so long as control is exercised by members of the Stock Exchange. This further change will make it easier for member firms of the Stock Exchange to attract outside capital. There is already evidence that this is happening.
On one important point, no change is proposed. That is on the question of single capacity. Single capacity has been a clear-cut and well understood way of protecting investors against unfair trading practices. There are many who believe that single capacity cannot long survive the disappearance of minimum commissions. Time alone will tell. The crucial point is that, if single capacity does disappear, adequate safeguards should be put in place to protect investors—and in advance. Developments in the market and the implementation of these proposals will he monitored by the Government and the Bank of England. The Stock Exchange is fully collaborating with the authorities to this end.
The changes which have now been set in train represent a major step forward. They mean that the Stock Exchange must now operate in a freer, more competitive atmosphere. They fully justify the decision that the litigation should not be pursued further but that instead the matter should be dealt with by Act of Parliament. To proceed in this way is fully justified. Law enforcement agencies must proceed under the law as it stands. But responsibility for the law rests with Parliament and no one else. If Parliament decides that the law needs amendment, then it is

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for Parliament so to do. That is the justification for the Bill before your Lordships this afternoon.
I will as is customary deal briefly with the details of the Bill. The substantive provisions are all contained in Clause I. Subsection (1) describes the agreements which are to be exempted from the Restrictive Trade Practices Act. Subsection (1)(a) effectively exempts the rules and regulations of the Stock Exchange which, for the purposes of the Restrictive Trade Practices Act, constitute an agreement between members of the exchange. Subsection (3) makes explicit that this exemption includes the Deed of Settlement of the Stock Exchange and its various rules, regulations and usages, as well as recommendations made by its council.
Subsection (1)(b) covers agreements involving the Government or the Bank of England. It is possible that the Stock Exchange might enter into some arrangement with the Government or the hank in the course of the monitoring arrangements I have mentioned, and that this arrangement might be an agreement which would otherwise be registrable under the Act. It would be wrong that such an arrangement should become registrable simply because the Government or the bank were a party to it.
Subsection (2) will require the Director General of Fair Trading to remove the present agreement of the Stock Exchange from the Register of Restrictive Agreements, and formally terminates the proceedings which had already been started in respect of the present agreement. I have already referred to subsection (3).
My Lords, the Bill will enable the Stock Exchange to evolve and to respond to the changing needs of our times under the spur of competition, particularly international competition. Change is already evident and is proceeding at a greater rate than many would have thought possible. This is all to the good. My Lords, I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Cockfield.)
4.6 p.m.
Lord Bruce of Donington: My Lords, the House will be grateful to the noble Lord for his introduction of this Bill, but it is important to realise what is the basic principle behind the Bill. It is of course an interference with the process of law. There can be no question about that. Of course Parliament has a right, as the noble Lord has said, to do that, but it has very rarely interfered with the process of law once that process is in operation.
The Bill did not feature in the election manifesto of the party opposite, nor, so far as I am aware, was it referred to in any of the speeches made at the time of the election. That is not surprising, because of course the practical impact of the Bill, as such, as it affects the population as a whole is small. As noble Lords are probably aware, the percentage of the share of individual shareholdings in total investment in this country has progressively declined over the years. In 1963 the percentage of shares personally held by individuals was something in the region of 54 per cent. In 1980, the last year for which figures are available, that figure
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was down to some 24 per cent. Therefore, the number of individuals holding shares in companies quoted on the Stock Exchange is progressively diminishing.
Moreover, bearing in mind that some 1 per cent. of the adult population of the country own far more of the country's total wealth than the 80 per cent. of the population at the bottom end of the scale, and in view of the fact that there are about 7 million people at, or below, supplementary benefit level, it is easy to see that questions affecting individual shareholdings are not likely to be the cause of any general popular concern.
That does not mean that the questions raised by the Bill are not important. In this case, as the noble Lord has said, there was a notice of reference made by Mr. John Smith, the then Secretary of State for Trade in the then Labour Government, on 9th February 1979. Subsequent to that there was a general election in May 1979, as a result of which Mr. John Nott, as he then was, became the Secretary of State for Industry. As was quite natural—and the reference having been made to the Restrictive Practices Court by the former Minister—very long and consistent representations were made by the Stock Exchange to the then Secretary of State. He gave them his most careful consideration, as all Ministers do. If one views the publicity available at that time, and the words that were used. one finds that the activities of the Stock Exchange—to which the noble Lord has paid such great tribute and from which I would not wish to detract in any way—were made in almost identical terms in 1979. In other words, all the virtues of the Stock Exchange that have been put forward, its contribution to domestic investment and all the rest, were well known, well understood, well advertised and. presumably, were well accepted in 1979.
The Stock Exchange negotiated with the Minister. With your Lordships' permission, I should like to read the reaction of Mr. John Nott to the representations made to him by the Stock Exchange that it should be exempted from the provisions of the Restrictive Trade Practices Act. I quote from the Hansard of another place. This is what Mr. Non said:
"Several months ago the Stock Exchange requested that its agreement should be removed from the scope of the legislation on the ground that the Restrictive Practices Court is not an appropriate body to investigate its activities. There has been a considerable amount of correspondence between Ministers and the Stock Exchange and a great weight of evidence has passed between us.
I regret to tell the House that I cannot meet the request of the Stock Exchange. However, I am concerned that adequate regulation of the security markets should be preserved. I recognise the value of self-regulation in which the Council of the Stock Exchange has a central role to play. I believe that the amendment to the Act to which I referred earlier, and which will give this breathing space following the announcement of the finding by the court, may be of help to the Stock Exchange should the court make certain findings at the end of its investigation."
He emphasised that further by saying:
"I do not intend to lay an exemption order and I have made that clear. I have said that I cannot meet the request of the Stock Exchange."—[Official Report, Commons, 23/ 12/79: cols. 230–231.]
That was a reasonably clear statement: a statement made by the Minister after full knowledge of the facts, after careful consideration of all the factors that were laid before him and with full knowledge of the value of the Stock Exchange and its activities to which the noble Lord has referred today.

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The representations of the Stock Exchange were successful to a limited degree, because in one of the provisions of the Competition Bill (on which Mr. Nott was speaking at that time on 23rd October) which was of particular importance to the Stock Exchange, was that after the court had determined its opinion and given its findings, there would be a further period of nine months during which the Stock Exchange could give effect, presumably by stages, in order to be able to conform to the findings of the court. That provision was Section 26. That was on 23rd October 1979, some four years ago. The Minister was as good as his word, as I learned from the Stock Exchange that the reference was served on it six days later, on 29th October 1979. There the matter rested.
In January 1981 there was a new and distinguished Secretary of State, Mr. John Biffen, whose officials undoubtedly must have kept him fully informed as to how proceedings were going. He did not see fit to interrupt the proceedings in any way. As your Lordships will be aware, in April 1982 he left office and was succeeded by the noble Lord opposite. The noble Lord came into office in April 1982 and he was there until June 1983. If I may say so, he served in this office with distinction and we respected him for his activities in that post. During that time the noble Lord must have had consultations with the Director General of Fair Trading. He must have received representations from the Stock Exchange, if it was running true to form; yet even the noble Lord opposite—perhaps I should not say "even the noble Lord opposite", perhaps I should say "the noble Lord opposite with his great passion for development of free competition"—still adhered to the views of his predecessors that the activities of the Stock Exchange distorted the pattern of trade and were not in the public interest. The noble Lord opposite, in full conformity with his passionate belief in free competition, did not seek in any way to interfere.
It was only in July 1983, immediately following the election, when the noble Lord was succeeded by Mr. Cecil Parkinson, that we suddenly found that all the considerations that had led both the great parties of state in the United Kingdom to make and to support this reference in the public interest and in the interests of free competition were cast aside by Mr. Cecil Parkinson. Thus we have a situation in which it appears either that a gross error of judgment was made in the first instance by referring it at all—this would be hard to sustain in view of the comments that came from both sides of the House in this place and in another place—or there have been considerable misjudgments ever since. There is a complete volte-face. At one moment we were all behind the court reference. yet somehow—immediately following an election at which the party opposite were highly successful—there is suddenly a reopening of discussions with the Stock Exchange with the result that there is interference with the action itself.
It is important to note that the Bill does not merely interfere with the existing reference. It does not merely expunge any reference from the records; it does it indefinitely. It sets no period of time; it exempts once and for all the activities of the Stock Exchange from the operation of the Restrictive Practices Court.
One could have understood, perhaps, if the Govern-
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ment had seen fit to adopt a fall-hack position. Prudence would have suggested this. The processes of their thoughts from beginning to end on the matter have still to be explained. The Stock Exchange submitted its rules to the Director of Fair Trading in 1976, whereupon he found no fewer than 173 instances in which their rules infringed the laws as they then stood. If, after all this time, the Government were persuaded that voluntary action was desirable, why could they not have taken out an insurance policy? Why could they not say, "The agreement you have made with us expires on 31st December 1986, by which time you will have done the right thing"? Why did they not then limit the operation of this Bill to the years to 31st December 1986? After all, if the Government really believe that the agreement is going to be carried out, what harm is there in doing that?
As it is, it is not only the Stock Exchange that are exempted from the Restrictive Practices Act, it is also any agreements that are reached by them with the Bank of England and/or the Government and/or other bodies. So, despite the fact that those agreements were before the Director of Fair Trading, and were in fact referred to the Restrictive Practices Court, they might be found to be illegal; they might be found to be within the provisions of the Act itself. What the Government are doing in the Bill really is giving themselves liberty to arrive at agreements with the Stock Exchange that may infringe the rules of free competition and monopoly as described in the Fair Trading Act 1973 itself This seems to be a very shortsighted policy indeed. The noble Lord has referred to an agreement with the Stock Exchange. How does he propose to enforce that agreement if for any reason the Stock Exchange finds it inconvenient to perform the agreement? After all, it has found the existing legal provisions of the Act something that it does not like and has succeeded in persuading the Government to interfere in the legal process. Why should not the Stock Exchange, towards 31st December 1986, persuade the Government again? In those circumstances, will the Government come along to the House and say, "We are very sorry but in view of the legal costs involved"—and that sounds a little odd in view of the £7 million that was paid to the City in the flotation of British Aerospace—"we do not think it worthwhile to go on; it will interfere with the activities of the Stock Exchange"?
I want to know from the noble Lord opposite how the agreement to which he has referred is to be enforced. How does he intend to enforce it? Surely the most sensible way would have been to have allowed the Restrictive Practices Court that has been considering all the documentation and all the representations to arrive at its own findings and for the Stock Exchange then to have taken, if necessary, the nine months that were necessary to carry out its findings. The advantages of that are that there would be certainty as to what was lawful and what was not lawful. This is something that we are debarred now from knowing. If the court made its findings and the Stock Exchange complied with those findings within the period of nine months—though it first of all appeared as six months, with a right to apply to the court for a further three months under this particular section—this would be a far better and more sensible way of going about it.

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I have to suggest to the House that this Bill is a bad precedent. It gives some colour to the belief that there is one law for the strong who have money power behind them and another for the weak. May I give your Lordships two or three examples? Your Lordships will recall that when it came to Rhodesian sanctions the case was considered but that, because one or two of those who would have been involved in proceedings had died, it was decided not to proceed resolutely with the case. In fact, no case was brought. But there is another law for the weak, as one knows. This very often has expressed itself in a reluctance by the Government to enforce laws that protect the weak. I am referring to their reluctance to proceed against firms that do not obey the dictates of the wages councils inflicting minimum wages.
There is a very great reluctance to proceed against employers on that basis. There is very often a reluctance to bring cases involving safety factors and there is very often an enthusiasm to pursue relentlessly those among the lower-paid sections of our population who disobey the social security regulations; although I am not suggesting for one moment that they should do anything but obey them. But there the law is pursued with rigour. At the case at Oxford, as many of your Lordships will recall, some 100 people were detained for about ten hours in a very draughty school in Oxford and afterwards released, on the mere suspicion that they had broken the social security regulations. It would be unfortunate if the impression were given that there is one law for the strong and another for the weak. I do not think it would be in the interests of the country if that were apprehended.
May I remind your Lordships of the statement by the Prime Minister in another place two days ago? She said:
"The law is absolutely indivisible. People cannot choose which parts of it they uphold and which parts they flout. It must all be upheld".
I think that this particular case shows all too clearly that the powerful have been able to persuade the Government and that the Government have willingly given in to them to abate—which is rather a curious legal term which means withdraw—from the legal action which, the Stock Exchange apprehended, would embarrass them considerably.
In this House, by convention, we do not vote against the Second Reading of a Bill, but it is to be hoped that at Committee stage some support may be gained from all sides of the Chamber for amendments to the Bill which will limit its effect and make it more compatible with the traditions of law with which noble Lords on all sides of the House are familiar and which they support. In the meantime we must, I am afraid, take the view that this Bill should be discarded into the political dustbin.
4.31 p.m.
Lord Mais: My Lords, may I first say that I am not a stockbroker but I have, like most Members of your Lordships' House, had dealings with the Stock Exchange on frequent occasions both personally and for the charitable organisations with which I am connected. What concerns me most was referred to by the noble Lord. Lord Bruce of Donington: that is, why
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it was decided to withdraw the reference regarding the Stock Exchange from the Restrictive Practices Court and why the Director General of Fair Trading was required to erase from his register all entries currently made in respect of the Stock Exchange.
It is perhaps regrettable that the amendment proposed in another place by the honourable Member for Dagenham was not carried, because that would have ensured that the Stock Exchange did not completely escape from the terms of the Restrictive Practices Act. As it now stands, it will be free from any further action and free from the provisions of the Restrictive Trade Practices Act. It will be hound only by the unenforceable agreement which they have entered into, the terms of which expire in 1986. It is hoped that by 1986, or before, the Stock Exchange will have completed the agreement it has entered into, and presumably it will have included, I hope, lay members on the Stock Exchange Council. Even more important, it will have ceased to operate the minimum commission system.
I can understand the Government's desire and also the desire of the Stock Exchange that this should be settled in-house by the Stock Exchange rather than having it forced upon them by the Restrictive Trade Practices Act: but what I cannot understand is why should it take until 1986 before we come to a conclusion? And why will it be that period of time before they initiate the inclusion of lay members of the Council and end the minimum commission? Presumably when they have done this in 1986, or before, it will still have to be considered by Her Majesty's Government.
The Stock Exchange has obviously been well aware of these changes, or at least they had them in mind; and now that the ball has been put back into their court to find a solution which is acceptable both to Her Majesty's Government and to the Stock Exchange, it is hoped that they w ill put their proposals forward, in whole or in part, before 1986. It is in everybody's interest that this state of uncertainty should be cleared up as quickly as possible, and I should have thought that it would be a simple matter for the Stock Exchange to send progress reports to the Government reporting on how they have progressed and what reforms have been carried out. This House could then be informed of how far the actual reorganisation had progressed.
This is, after all, the first step towards the reform of the Stock Exchange and it will create something which many have thought is long overdue: that is, a competitive Stock Exchange, together with a series of reforms that will move in the direction of self-regulation, apart from the abolition of the minimum commission. We hope that the submission by the pension funds and the investment companies on this subject will bring additional influence to bear.
For a considerable number of years there has been a general view in favour of abolishing the minimum commission, the strongest of which, in my view, is the possibility that the compensation fund, which protects all investors, has to be looked at very carefully. There is a slight risk, but nevertheless a risk, that the compensation fund for investors might be in jeopardy. Furthermore, it has been said that the cost of purchasing investments or shares by the small investor is likely to increase. I do not think there are any

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Members of your Lordships' House who would disagree with the proposition that the protection of the investor is paramount.
Perhaps it would help this House in arriving at whatever conclusion we do arrive at to know how many of the Stock Exchange rules which were referred to the Office of Fair Trading were abolished or amended by that department, by agreement with the Stock Exchange, and whether the reference has not been terminated. One must not lose sight of the fact that one of the principal roles of the Stock Exchange is to raise finance for commerce and industry generally as well as for the Government. Because of this policy and its ability and enterprise over the years that it has been in existence, companies have looked to the Stock Exchange for many of their financial needs. It must also be remembered that the Stock Exchange system for dealing with Government borrowing is—I would not say "second to none", but it is very near it.
I also ask your Lordships to consider the relationship between the Secretary of State for Trade and Industry and the Director General of Fair Trading. The Bill demonstrates that the Secretary of State has treated the Director General of the Office of Fair Trading in—shall I say?—a rather cavalier manner. He has attempted to interfere in the relationship between the Director General and the Restrictive Practices Court. The Secretary of State has ordered the Director General, over whom he has no ministerial responsibility, to stop the proceedings; and they have in effect been terminated.
May I draw your Lordships' attention to the fact that the European Commission could well be involved in this matter? They have rules regarding restrictive practices. They may well take the view that the practices involved do not comply with the European Community rules. So we may yet have a third party in the battle before it is finally settled.
The situation as it now exists is somewhat confusing, with the Director General of Fair Trading obviously at cross-purposes with the Secretary of State. Apparently, no solution is likely before 1986, unless a policy is adopted of interim reports which can be made available to this House and another place. I do not see why this cannot be done. 1 am quite certain that, if the Stock Exchange was approached and told that Her Majesty's Government required interim reports as to how it was getting on with the reorganisation, it would be only too willing to comply.
Lastly, one must not lose sight of the fact that the Stock Exchange has provided a really first-class service to individuals and to businesses over many years. At the moment I do not know whether it is confused—I certainly am—as to exactly where it stands. I hope that any misunderstanding in this direction as regards both its present situation and its future situation will be cleared up as quickly as possible.
4.42 p.m.
Lord Brabazon of Tara: My Lords, in rising to speak for the first time in your Lordships' House, I must declare an interest, in that I am a member of the Stock Exchange. I hope that I can make a useful contribution to this afternoon's debate. I must say straight away that I am in favour of the Bill, as I think are the
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majority of members. The vote taken to make the necessary changes to the deed of settlement was overwhelmingly passed by the Stock Exchange membership. I never really believed that the Restrictive Practices Court was the right place to change such a complicated set of rules as the Stock Exchange has, but I hope that this will be history if the Bill is passed.
I should like to make the point that the rule book, as it now exists, is mainly to protect the public and the central market. Members must be qualified to give advice to their clients, firms must be financially sound and the books are inspected regularly. The broker-jobber relationship ensures as fair a price as possible for the transaction of business, settlement must take place effectively and efficiently and the companies listed must pass the rigorous rules of the quotations department.
Three major practices which offended the Office of Fair Trading were, first, the membership of the Stock Exchange and its council; secondly, minimum commissions; and, thirdly, the single capacity. As regards the Stock Exchange Council and its membership, it has already been agreed that this will change and, in fact, five lay members will be appointed very soon. I do not think that the noble Lord, Lord Mais, will have to wait long before that takes place. The new council may include up to 25 per cent. lay members. In fact, as the noble Lord said, the disciplinary committee will have a majority of lay members. Stock Exchange firms may already have outside shareholders. Two are fully quoted and outside directors are to be allowed to be appointed to the boards of these firms.
From the practical point of dealing in the Stock Exchange, the two most important factors are the ending of fixed commissions and the possibility of single capacity. The Stock Exchange has undertaken to abolish minimum commissions by 1986, but it is likely that these will end very much sooner than that. In fact, as the noble Lord the Minister said, the first steps are already being taken. It is now thought that the so-called "big hang", where all fixed commissions end on one day, may take place fairly shortly.
The single most important factor recently was the total removal of exchange controls in 1979. One of the effects of that is that a company such as ICI now has some 15 per cent. of its shares held in the form of American depository receipts in New York, traded on the New York market; and, of course, British investors can deal direct with American brokers on Wall Street, subject to negotiated commissions. That, plus the enormous improvement in communications, means that we are now all part of a global market providing a 24-hour service.
The question is: where will commission rates end? At the moment, big institutional deals in equities in this country probably attract a lower rate of commission than those negotiated in New York. In the gilt edged market, short gilts—that is, those up to 15 years—which account for 35 per cent. of the total Stock Exchange turnover, already have fully negotiated commissions. In the long end of the gilt market, which accounts for about 38 per cent. of the total Stock Exchange turnover, these commissions

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look as if they might fall fairly sharply, particularly on the larger orders. This may well not be before time, but I think that market forces would have forced it to happen fairly soon anyway.
It is worth reminding your Lordships that perhaps the biggest gainer on Stock Exchange dealings is the Chancellor. He takes 2 per cent. stamp duty, then he takes VAT on commissions and, if one is lucky enough to make a profit, there is capital gains tax to pay on that. The removal of the 2 per cent. stamp duty would be a marvellous step and would prove that this Government are in favour of wider share ownership.
Where will negotiated commissions lead us? Perhaps they will lead us to fewer, leaner broking firms; perhaps even to the small investor paying more commission, though I hope not. But will they lead to the disappearance of single capacity—the separation of principal and agent? The Government do not want to see this and it is the Government who hold the key' as to whether this could happen: first, by the operation of the stamp duty privileges given to jobbers, whereby they are allowed to hold stock over an account paying only a nominal amount of stamp duty in the equity market; and, secondly, in the gilt edged market by access to the Government Broker. No market maker in either market could survive without those two privileges.
At the moment, the single capacity system seems to work very well. The broker goes into the market on behalf of his client. He can check his price with one of several jobbers and find the best deal to suit his client. He makes only his commission. The jobber hopes to make a profit out of the deal and the client gets the best available price while, at the same time, maintaining his confidentiality. The jobbing system in London makes us one of the few markets in the world where you can always get a price to deal in a reasonable number of shares, because bargains do not have to be matched.
The arrangements between the Secretary of State and the chairman which led to this Bill have attracted certain criticism, but I would remind the noble Lord, Lord Bruce, that our motto in the Stock Exchange is "My word is my bond" and, if we have said that we will deliver the goods, I am sure that we shall. One positive factor, however, is the seemingly sudden recognition by certain opponents of the City of the value of the Stock Exchange in the funding of Government debt, in finding new capital for industry and, not least, in the overseas earnings of Stock Exchange firms. Under the threat of the court, no changes which might have prejudiced our case have really been possible. I hope that we can now adapt ourselves to the future and that the uncertainty will be over. I also hope that this House will support the Bill and will wish an important national institution well for the future.

Rate Support Grant—Scotland
4.50 p.m.
The Minister of State, Scottish Office (Lord Gray of Contin): My Lords, with the leave of the House, I shall now repeat a Statement being made in another place
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by my right honourable friend the Secretary of State for Scotland, but before doing so, and in the knowledge that my noble friend Lord Boyd-Carpenter will express the congratulations of the House to my noble friend Lord Brabazon of Tara, perhaps I may be permitted to offer my personal congratulations to my noble friend and say how much I enjoyed his maiden speech.
The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a Statement about the rate support grant settlement for Scotland for 1984–85. This amplifies the information given to the House on 12th December in answer to a Question by my honourable friend, the Member for North East Fife.
"I have completed my consultations with the Convention of Scottish Local Authorities about the rate support grant settlement and I shall lay before the House in due course the Rate Support Grant Order and Report for the financial year 1984–85. This provides for a total relevant expenditure figure of £3,205.9 million and aggregate grants of £1,930 million. The provision for current expenditure within the total is £2,736.6 million, slightly above the provisional figure which I announced on 27th July, reflecting mainly technical adjustments. The rate of grant derived from these figures is 60.2 per cent. compared with 61.7 per cent. in the present year.
"The provision for relevant expenditure represents a cash increase of 3.8 per cent. over the provision for 1983–84 once account is taken of the reduction in the national insurance surcharge. It is also some £60 million above the provision for 1984–85 indicated in the Public Expenditure White Paper, Cmnd. 8789. For 1984–85 £75 million will not be allocated to services in recognition that authorities are likely to spend more than the Government consider appropriate. Current expenditure guidelines were issued to all authorities on 18th November 1983 in Finance Circular 13/1983, a copy of which is in the Library of the House. Guidelines for 1984–85 include the provision not allocated to services and have been constructed to take account of the relative spending needs of authorities.
"In 1984–85 the needs element (which accounts for 87 per cent. of rate support grant) will be distributed on the same basis as that on which guidelines are constructed, namely the client group. Although COSLA officially asked that this change should be deferred until 1985–86, there is a wide measure of agreement that this method offers a much more systematic approach to distribution, and I did not wish to make the change coincide with the general property revaluation of April 1985. It will mean changes in the amount of grant paid to a number of authorities. In order to dampen the effects, I propose transitional arrangements which will limit the grant loss to authorities to the equivalent of a 2½p rate at regional level and a 1p rate at district level. All authorities have been told in Finance Circular 14/1983 issued on 14th December of the amounts of grant they will receive in 1984–85 if the House approves the Rate Support Grant Order. A copy of

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this circuar has been placed in the Library of the House.
"The rating effects of the settlement will depend mainly on the expenditure decisions of authorities. I urge them to get their spending into line with expenditure provision. If they do, there could be, on average, a decrease in rates, although I accept that the individual circumstances of authorities will produce variations round the average.
"I consider this to be a very fair settlement. There is no need for rates to go up if authorities reduce their expenditure, and I have been urging them to do so since 1979. If authorities overspend, I will take appropriate action but I very much hope that authorities will make that unnecessary."
My Lords, that concludes the Statement.
Lord Carmichael of Kelvingrove: My Lords, first may I thank the noble Lord for repeating the Statement. Despite what is said towards the end of the Statement, I am sure that the noble Lord is fully conscious that this is extremely bad news for Scotland. So far as I have been able to examine the figures which the noble Lord read out, it seems that the Government have dealt a double blow at Scottish local authorities and Scottish ratepayers. Not only has the level of rate support again been reduced but the figure for relevant expenditure has also been cut in real terms.
Since the noble Lord's Government came to power the rate support grant figure has been cut by a full eight points, from 68.5 per cent. of relevant expenditure in 1978–79 to 61.7 per cent. last year and to 60.2 per cent. this year, an overall reduction of between 9 and 10 per cent. in five years. If last year's figure of £ 1,924 million had been increased by 5 per cent. to take account of inflation, and if there had been no cut in the level of rate support, the new growth figure for Scottish local authorities from the Exchequer would have been £85 million more than the figure of £1,930 million which has been announced today. And £85 million would have been of great help to the very hard pressed local services and to Scottish ratepayers. Does the Minister realise that Strathclyde alone have lost by this formula about £32 million, the equivalent of a 6p or 7p rate?
To refer to the cutbacks, can the noble Lord tell the House where he and his honourable and right honourable friends think that cuts of this magnitude can be made in local authority services, taking into account those which have already been made? Did COSLA agree to any of these figures, or was COSLA's role merely reluctantly to accept the figures which had been decided by the Treasury?
Finally, is the Minister aware that the Statement means that all local authorities in Scotland—Labour, Tory and Independent, from the large authorities like Lothian and Strathclyde to the smallest ones—are faced with both increasing their rates and severely cutting the essential services which they provide to their ratepayers? The position of local councillors is now very serious. They are seen by their ratepayers as having the responsibility to operate local government but they are not being given the help from central Government which they need in order to do their job properly.
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As was said in another place yesterday when the English rate support grant was announced, local authority power is being steadily undermined. This criticism came from all sides of the House. I believe that this is another sad day for local government and for local democracy.
Lord Gray of Contin: My Lords—
Lord Mackie of Benshie: My Lords, there is another party; the noble Lord must understand these matters. But he is so accustomed to ignoring my party that he leaps to his feet. I, too, for some extraordinary reason, am expected to welcome the fact that the noble Lord has repeated this rather disastrous Statement, and in conformity with the rules of the House of course I do so. But it is a quite extraordinary Statement. It begins—at this point I echo the words of the noble Lord, Lord Carmichael of Kelvingrove—by saying that the Secretary of State has completed his consultations about the rate support grant settlement. Would the noble Lord clarify whether this is an agreed settlement or whether it has been imposed upon Scottish local authorities? I strongly suspect that it is an imposition. I object strongly to the hypocrisy—perhaps I ought not to use that word and should say instead the device of saying, for example:
"The provision for current expenditure within the total is £2,7366 million, slightly above the provisional figure which I announced on 27th July".
The Secretary of State's Statement continues in this vein. It is all very well to say that the figure is above the initially proposed figure. The Secretary of State could appear to be a devil of a fellow if he set a very low figure and then doubled it. The real position is accurately described when he says that the figure of 60.2 per cent. has to be compared with the figure of 61.7 per cent. In other words, it is down by 1.5 per cent., which is a lot of money in present circumstances. It does bear very hard on local government in Scotland.
We accept completely that the Government are entitled to try to induce economy. But, in a nutshell, economy is all very well but this is a bit much. Also, I want to go into the question of the figures. Clearly, when the noble Lord says that the imposition of the new client group guidelines—and I am not quite sure what that means, and perhaps the noble Lord can give the House a further explanation—will limit the grant loss to a 2¾ per cent. rate at regional level and 1 per cent. at district level, even that appears to me to be a fairly heavy imposition.
As regards democracy, and local democracy in local government, what are the Government trying to do? We had a case of an overspending authority in Lothian who were replaced by the electorate at an election, and then a modified budget was introduced, saving a great deal of money. The Government then imposed—and "imposed" is the correct word—through the local Tory group the figures they wanted. If you want local democracy, and if you believe in it at all, the Government really must acknowledge that they have to allow the ratepayers to decide whether they are going to bear the rates, if they think they are worth paying.

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The last sentences of the Statement show up the totally authoritarian attitude that exists, when they say:
"There is no need for rates to go up if authorities reduce their expenditure, and I have been urging them to do so since 1979. If authorities overspend, I"—
the great panjandrum—
"will take appropriate action".
That is a complete negation of democracy in local authorities.
If the electors want to elect people who are overspending, they will do so. It is not up to the Government to say that the Government will decide whether the electors are right or wrong. If the financial imposition is there, then the Government should leave it at that. If the Government feel—and I am sure this old argument will be trotted out—that many of the ratepayers are not representative, then it is up to the Government to do something about that. The Statement gives very little pleasure to me, and certainly it gives no pleasure to the local authorities.
5.3 p.m.
Lord Gray of Contin: My Lords, perhaps I may first apologise to the noble Lord, Lord Mackie of Benshie, because I had no intention of slighting him or his party; I can assure him of that. May I extend my warm congratulations to the noble Lord who spoke for the official Opposition on his first occasion at the Dispatch Box? We all welcome very much what he had to say; perhaps not exactly the words he chose, but he did fulfil the objective of an Opposition—and that is, to criticise and be constructive. We are grateful to the noble Lord for the part he played.
Both noble Lords who spoke mentioned that the percentage of the rate support grant has been cut and is now at 60 per cent. That is true and I make no apology for it. The percentage has been cut, and that is in line with what has happened in previous years. If I may go back to the years when the official Opposition were in government, there were occasions when they made cuts in the total amount of rate support grant. The difference is that the cuts which have been effected by this Government have been made because we genuinely believe it is imperative that the amount of public expenditure is cut. We are doing that on a voluntary basis. We are not doing it at the hand of the International Monetary Fund, which is why it was done when our opponents were in Government.
Therefore, if our action does not meet with the full approval of the Opposition, I am sorry—but they must agree that the reason for the cuts is that local authorities have been overspending. Indeed, in the early years of the present Government my right honourable friend in another place did not cut—and the result was that local authorities continued to overspend, and to overspend to an even greater amount.
As far as Strathclyde is concerned, it was suggested by the noble Lord that Strathclyde's rates might go up by something like 7p as a result of the grant cuts. As I indicated in my earlier remarks, there is certainly no need for local authority rates to go up by as much as 7p. I cannot forecast what will happen in an individual case, but certainly there is no need for a rate increase
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of that level if expenditure is reduced. The noble Lord also asked me to make some suggestions. I could make many suggestions, but that is not what I am here to do. It is the job of the local authorities to make suggestions, and it would he wrong of us to interfere with their list of priorities.
Noble Lords: Oh!
Lord Gray of Contin: To suggest, my Lords, that no cuts can he made by local authorities is very far from reality. Cuts can be made, and we will see that cuts will be made.
Noble Lords: Oh!
Lord Gray of Contin: Yes—and I say that because I am confident that local authorities will make cuts, my Lords. Indeed, more than 20 local authorities in Scotland made substantial cuts over the past year and they have not found any great difficulty in doing so. They have accepted the financial disciplines which local authorities have to accept in the same way that national authorities have to accept them.
Lord Mackie of Benshie: My Lords, if the noble Lord the Minister will allow me, can he tell the House whether the cuts they made were, in the main, on capital expenditure?
Lord Gray of Contin: I cannot without notice give an answer to that question, my Lords, I was saying that more than 20 local authorities managed to make substantial cuts. I do not believe that any of their ratepayers are worse off for those cuts; in due course, the ratepayers will probably be very much better off.
Another question about Scotland was also raised. While it was not directly indicated, it was suggested that this was a very bad day for Scotland. I believe it is far from being a had day for Scotland. Since 1978–79, current spending by Scottish local authorities has increased by 97 per cent. compared with 85 per cent. in England and 73 per cent. for prices. In that same period, rates have increased by 128 per cent. and the Scottish grant has gone up nearly in line with prices and substantially more than the English grant.
My right honourable friend's generosity over grant has just led to higher overspending—and that is what has happened. Scottish local authorities have to be realistic in this matter. I thank both noble Lords for the comments they have made, and I will now allow the House to move on.
5.8 p.m.
Lord Wilson of Langside: My Lords, may I ask the noble Lord the Minister two questions? First, how does he meet the charge levelled by the Convention of Scottish Local Authorities that the cuts in rate support grant expose the hypocrisy of the Government in relation to rates? The Government present themselves as the champions of the ratepayers on the one hand; on the other, they pursue policies which put pressure on councils to increase their rates.
My second question is, I believe, more important. Does the noble Lord not acknowledge that it was perhaps something of a misjudgment on his part that

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he should seek to gloss over this situation by exchanging party points with the noble Lord, Lord Carmichael of Kelvingrove, in his references to the circumstances in which the Labour Government took powers to control public expenditure as long ago as 1976? Does the noble Lord not acknowledge that a policy of repeated reductions in rate support grant will add a new dimension to the conflict between local government and central Government, which is perhaps one of the most damaging features of political life today—particularly in Scotland?
Lord Gray of Contin: My Lords, I would say to the noble and learned Lord that I consider that the action which the Government are taking confirms this Government in their endeavour to be the champion of the ratepayers. At the end of the day I genuinely believe that if local authority expenditure is disciplined and kept within reason the ratepayer must obviously be the beneficiary.
The second point made by the noble Lord concerned my making one or two party points. I see no reason why party points should not be made in debate if they are genuine, and I believe the points I raised were genuine. Indeed, I have certainly received many party points across the floor from the noble Lord who normally speaks for Scotland in this House and I have no doubt that I shall from the noble Lord, Lord Carmichael of Kelvingrove, as well.
The third point is one which I do not accept. I do not believe there is any need for this rate support grant decision to lead to any further conflict with local authorities. It is true that there are many members of COSLA who would like to be able to spend a great deal more, but we believe that it is not in the national interest that they should. I do not see why that should lead to conflict. It will unquestionably lead to argument, but the noble and learned Lord will agree that argument is healthy.
Lord Kirkhill: My Lords, it goes without saying that this most recent percentage cut in the rate support grant is seen as mean-minded on the Scottish scene. How does the Minister justify his earlier assertion that rate increases will not, therefore, flow from this decision if he bears in mind that, as he should know, almost all local authority expenditure is centrally imposed, either in the form of wage negotiations which must be carried out or through the various other statutes which are carried out by local authorities on behalf of central Government?
Lord Gray of Contin: My Lords, I answer the noble Lord quite simply. I do not accept that cuts cannot be made in local authority expenditure. To suggest that local authorities have made all the possible cuts which they can is to my mind simply not accurate. There are still many cuts which can be made and I believe that many local authorities will think very seriously about them and will find ways of making cuts to meet this.
Lord Kirkhill: With further job losses to follow, my Lords.
Lord Taylor of Gryfe: My Lords, will the Minister accept that demands on local authority expenditure
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are substantially a result of the economic situation in Scotland, which is the responsibility of the Government? Will he further accept—I know that he is a kindly man—that this kind of cut, if one forgets the statistics, will probably mean the reduction of services, of home helps, and the assistance of people in very serious need at this Christmas time?
Lord Gray of Contin: No, my Lords, I do not accept that that is the case. I think we must accept that there are occasions when it is necessary to make cuts. It is not the case that local authorities are totally efficient in every way. While I respect local authorities, I do not think they are above criticism. Local authority expenditure has not fallen to the extent that it should have done. Indeed, the 8th report of the Commission on Local Authority Accounts includes details of shortcomings in financial and tendering control procedures. It concludes a great deal more, but that is just one of its criticisms. That is an area which I believe could be examined and possibly savings could come as a result. That is only one and there are others. I believe local authorities will find them and act upon them.
Lord Hughes: My Lords, for a successive number of years the Government have said that it is still possible for more cuts to be made. The Minister says that it is still possible to cut expenditure. For how many more years does he think it will be possible to do that? Is he going to the ultimate conclusion where he suggests that local authorities should shut up shop altogether so that there will be no need for Exchequer equalisation grants or for rates to be levied?
Lord Gray of Contin: My Lords, I am certainly not making that suggestion. I believe there is still a reasonable amount of fat in local authority expenditure which can be cut off and saved. I am confident that such savings can be made.

Restrictive Trade Practices (Stock Exchange) Bill
5.15 p.m.
Second reading debate resumed.
Lord Boyd-Carpenter: My Lords, perhaps I may bring your Lordships back, in every sense, from the frozen North. I have the great pleasure and privilege on behalf of your Lordships' House, and on my own behalf, of congratulating my noble friend Lord Brabazon of Tara on what all your Lordships will agree was an absolutely first-class maiden speech. My noble friend wisely chose a subject of which obviously he has a complete mastery and the House greatly appreciated his speech. I hope my noble friend will allow me to say that it was a particular pleasure to those in this House, and there are many, who knew and admired his famous grandfather, to hear him excelling himself in this House this afternoon since one could not help feeling what pleasure it would have given to that great man to know that the family name was being carried on with such distinction.
Coming to the Bill, I am bound to say that I feel less enthusiasm. Indeed, I am rather less happy about this Bill than about any Bill which has come to us this

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Session. My unhappiness is increased to almost physical discomfort when I find myself being forced into at any rate some measure of agreement with the noble Lord, Lord Bruce of Donington, because something inside me says that if I agree with him I must be wrong.
This Bill seems to me—and I say this to my noble friend with all deference—to be somewhat contrary to the general philosophy and approach of the Government and of the other measures which Her Majesty's Government have, with the support of many of us, brought forward to this House. The emphasis which has been put elsewhere on competition and on the operation of the law seems to be a little blurred by these proposals. It is impossible to get away from the fact, as stated by the noble Lord, Lord Bruce of Donington, that this involves some interference in the operation of the law in respect of a particular case.
What puzzles me still more about that is why it has been thought necessary to take this action at this stage. It is nearly five years since the reference was made by the Director General of Fair Trading to the Restrictive Practices Court. If there was something so peculiar about the constitutional operation of the Stock Exchange as to make it inappropriate to have its activities examined by that court, one would have thought that that problem and difficulty would have manifested itself some time ago.
What I think is difficult to understand, and which I hope my noble friend Lord Cockfield will seek to deal with, is why it has been left so long, right up to this stage, before taking this action. Has there been some disagreement inside the Government machine which has involved the necessity to resort to legislation? I am sure my noble friend will appreciate that to those of us who do not know the answer it seems strange that if this action was necessary it should be taken at so late a stage.
I hope, too, that when he comes to reply my noble friend will be able to deal with the point put from the Benches opposite as to the enforcement of the agreement between the Government and the Stock Exchange. Of course I accept what was said by one noble Lord, that the Stock Exchange, which is an honourable body run by honourable men, will undoubtedly endeavour to carry out its bargain. But those of us with any commercial experience know that honourable men can differ as to the construction and effect of an agreement, particularly when it is an agreement covering complex factors, as in this case. In the event of disagreement—in the event of the Government being of the view that the Stock Exchange is not fully implementing the agreement—what instruments will the Government have for enforcing their will? As the Bill stands, they are completely cutting out from this area the operation of the monopolies and restrictive practices legislation, so presumably it would not be open to them to resort to that if anything were to go wrong in the implementation of the Stock Exchange agreement.
Also I find it difficult to understand why, as we have been told, it will not necessarily be until the end of 1986 that the system of minimum commission will be brought to an end. It is true that my noble friend Lord
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Brabazon of Tara, in his admirable speech, indicated that it might come to an end earlier. This is indeed the first that many of us have heard of this, and we should certainly welcome that. As I understand it, in the Government's statements and in the agreement there is no undertaking that these fixed margins should terminate until some three years from now. This is a very long time. On the face of it, it does not seem that the operation is so complex as to require that length of time to carry it out. Indeed, as we have been reminded, the New York Stock Exchange has operated on negotiated commissions for years, and is certainly not an apparently inefficient body. These fixed commissions are a handicap to the international use of our Stock Exchange. They are a discouragement. They are also very difficult to justify in principle.
I know that it is said—and said with truth—that many Stock Exchange firms maintain extremely valuable and helpful teams of analysts and research workers who can advise investors on their investment. This is a valuable service for many people. Those who avail themselves of it should pay for it. But with so much investment now being undertaken by large investors—pension funds, insurance companies, and so on—which maintain their own highly expert teams of investment analysts, et cetera, there is a large proportion of the work of the Stock Exchange which does not require the work of the stockbroking firms' own analysts. The sooner we can get into a system which again accords so much more with our present Government's present policy of letting individuals negotiate, shop around and see what terms they can get in respect of commissions, surely so much the better both for the Stock Exchange itself and for the British economy.
Again I hope that we may be given by my noble friend some encouragement on the lines of the encouragement given by my noble friend Lord Brabazon of Tara. I hope he will indicate that the Government will not be happy in leaving the whole of this salutary change for another three years. I have expressed these doubts. I am bound to say my enthusiasm for the Bill can at the moment be restrained within the limits of decorum. I have the highest admiration for the abilities of my noble friend the Minister. I can only say to him that in the conduct of this Bill he may well need those abilities.
5.26 p.m.
Lord O'Brien of Lothbury: My Lords, although my name is not down on the list of speakers, I hope with your Lordships' indulgence I shall be allowed to say a few words. Perhaps I should declare an interest in that my son is a member of the largest firm of Stock Exchange jobbers. We do not in fact discuss the questions which are before the House tonight to any great extent, our mutual interests lying elsewhere. I should like to preface my remarks by congratulating the noble Lord, Lord Brabazon of Tara, on his admirable maiden speech. What a joy it was to hear a young man speak in this House, as opposed to the old men like myself who tend to monopolise the proceedings!
I am going to take a rather different point of view from the majority of speakers tonight. First, I should like to assure the noble Lord. Lord Boyd-Carpenter,

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that his instincts are infallible. If he agrees with the noble Lord, Lord Bruce of Donington, he is undoubtedly wrong. I have been a close observer of the Stock Exchange—and I mean close—for nearly 57 years. In the middle of that period, for nearly a decade, I dealt daily in the market, admittedly only in gilt-edge but on a large scale. I think I can claim to have as intimate an understanding of the Stock Exchange as most people who are not actually in it. I have no doubt at all that it is an admirable institution. If my information is not out of date, I think it is now the third largest Stock Exchange in the world, after New York and Tokyo. I am sure that it provides as good a market for the investor as any Stock Exchange in the world.
I am not wishing to suggest that it is a perfect institution—what human institution is? But I have no doubt at all that it serves, and has served, the public well. I am equally sure that the original reference to the Restrictive Practices Court was a great mistake. It ought never to have been made. It has wasted a great deal of time and resulted in a lot of money being spent unnecessarily. I do not know whether the reference was made because of inadequate advice to Ministers or because of Ministers' own shortcomings. My experience is that such situations are usually a blend of both.
I have been a strong believer all my life in self-regulation—self-regulation per se in any area but particularly in the City of London. I do not say that self-regulation is something which should go on untouched. It should be subject to the approval of public opinion, to the comments and criticism of informed persons and to correction when those criticisms seem to be valid. I recall when there was great criticism of what was going on in the area of take-overs in 1966–67, when I was governor of the Bank of England, and when I created the take-over panel, which, I think, after 17 years has proved that self-regulation, reinforced by official intervention, can be even better than it was before. I think it is fair to say that Lloyd's, after the passage of its new Bill and with its recent troubles having come under public scrutiny, criticism and comment, has now reinforced its own self-regulation in a way which can only be good for its future.
As I say, I am a great believer in self-regulation. One cannot get self-regulation through the operations of a legalistic system—through a Restrictive Practices Court—and still less through the establishment of an SEC on the American lines, to which I should be strongly opposed. I give my very strong support to the Bill. In reference to what the noble Lord, Lord Mais, said about possible criticism from the European Community, from what I have seen of markets in Europe, they cannot stand up to open competition in the way that ours can. I do not greatly fear criticism in that field.
I think that the combination of the Department of Trade and the Bank of England, as provided for in this Bill, to over-watch the self-regulation of the Stock Exchange, keeping it on the rails, opening it up with flexibility and understanding, with an enlightened understanding of the way the world is changing in the financial field, and becoming, as it has been, for the past 20 years or more, more and more international, will produce a result which will be far better than could
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ever have been obtained through the action of a Restrictive Practices Court. I strongly support the Bill.
Lord Bruce of Donington: My Lords, the noble Lord has been kind enough to confer upon me the accolade of his dissent before he sits down will he say, following his argument, that he would advocate the repeal in its entirety of the Competition Act 1980, the Fair Trading Act 1973, and the Restrictive Practices Act 1976?
Lord O'Brien of Lothbury: Indeed not, my Lords.
5.31 p.m.
Lord Taylor of Gryfe: My Lords, I too should like to welcome a new voice into your Lordships' House and, as the noble Lord, Lord O'Brien, has said, how good it is that we have young and experienced Members of your Lordships' House to guide us in our considerations of complex matters such as the business before us this afternoon. I hope that the noble Lord, Lord Brabazon of Tara, will not be detained by Stock Exchange duties to an extent which will not permit him to pursue these matters in the Committee stage of the Bill.
May I just say a word about the point made by my good friend, the noble Lord, Lord O'Brien? The reason why this matter was referred to the Office of Fair Trading was that there was clear evidence of restrictive practices, and that is the purpose of the office: to examine in all areas of our industrial and financial affairs evidence of restrictive practices.
Despite the fact that we all prefer self-regulation to Government edict on all matters, I doubt whether the changes which have been announced today by the noble Lord, Lord Cockfield, following on the exemption of the Stock Exchange from the Restrictive Practices Court, would ever have appeared if the Stock Exchange had not been threatened with the possibility of legal action. I should like today to pay tribute to Sir Gorden Borrie and the office of Fair Trading over which he presides, for doing the important background work for five years and then, at the last stage, being frustrated by the exemption which is contained in this Bill.
I agree completely that it would have been wrong to have had this matter referred to the courts; I do not think the adversarial environment of the courts is the right place to pursue this; but at the same time there is no reason why if we approve this Bill there should not he a continued investigation by the Monopolies and Mergers Commission to supervise the effect of the changes which are promised in it. It is likely that on the Committee stage we on these Benches will wish to move amendments which will provide for a continuing role for the Monopolies and Mergers Commission.
I very much welcome the extremely lucid and helpful statement made by the Minister this afternoon in which he outlined just what were the consequences of the agreement which had been reached. The field of negotiated commissions is certainly an area where there is an element of fresh winds of competition. As the noble Lord, Lord Boyd-Carpenter, has just said, most of the large investment institutions in the City have very substantial economic analysis departments

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through which they offer guidance on investment to their clients. They should therefore be permitted to negotiate terms and commissions which would compensate them to some extent for the work which they do as they are riot dependent on stockbrokers for their decisions.
I very much welcome the provisions which are now made for the establishment of the minimum commissions. I also welcome the steps that have been taken so promptly to permit brokers to deal in international securities. I think this is bringing them into the real world of international finance. So far as the single capacity is concerned which the noble Lord, Lord Brabazon of Tara, was anxious to defend, I am sorry to say that the Government do not bring much comfort to him. I shall read now from the Financial Times an interview with the Minister of State concerned with these matters:
"he conceded then that single capacity might not be possible once commissions are negotiable".
I think that is a reasonable conclusion. He goes on to say:
"Although the broker/jobber distinction will probably disappear, investors may be protected in the same way as in the U.S., with market makers and all transactions being compulsorily recorded and published".
I think that the disappearance of single capacity will not necessarily jeopardise the protection which the investor is entitled to secure. Again, I have no objection at all to the new arrangements which are being made to enable purchase of shareholdings by outsiders in Exchange members. This is a highly dramatic change and the full implications of it may be read daily in the Financial Times with the acquisitions which are now being made by outside shareholders in member firms. This is probably not a bad thing.
I am not so sure that the arrangements which are being made for monitoring these changes are desirable or effective. With due respect again to my noble friend Lord O'Brien I think that we have to look at the Bank of England's role in relation to the City in this matter. While I would never reflect on the integrity of the Bank of England, they have too many conflicts of interest in the City to be a judge of the Stock Exchange in terms of its competition and its efficiency in providing funds to the public and private sectors, and I would have thought that the Council for the Securities Industry might have been a better body, but the Bank of England has made it clear that it will not cede its primary supervisory role to the CSI in the foreseeable future.
I think this is an area which has got to be examined quite objectively to see just what the role of the Bank of England is in this regard. Incidentally, when this matter was discussed in another place it was pointed out by one speaker:
"At the same time, the Government—rejecting the judgment of four previous Secretaries of State—have ridden roughshod over the considered advice of the Office of Fair Trading, without even consulting the Council for the Securities Industry whose chairman and vice-chairman are appointed by the Governor of the Bank of England.
Their responsibilities include:
"to keep under constant review the evolution of the securities industry, market practice and related codes of conduct and to scrutinise the effectiveness of existing forms of regulation and the
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machinery of their administration". [Official Report, Commons. 22/11/83: col. 201]
I should have thought that considering these responsibilities, the CSI might have been the appropriate body to take a continuing interest in these affairs, although it would appear that the Bank of England is anxious to preserve its position.
Similarly, I very much welcome—I am sure we all do—the introduction of lay members to the Stock Exchange Council and the introduction of appropriate appeals procedures for the membership. The introduction of a greater degree of competition in this area and the abolition of the closed shop are both ideas which appeal to the Social Democratic Party as being very much part of our general philosophy. I am glad that this at last is seeping into the Stock Exchange. We look forward very much to the consideration of the Bill on Committee stage when perhaps some of the views that I have mentioned can be discussed. We also look forward to the contribution of the noble Lord, Lord Boyd-Carpenter, at Committee stage. It should be a most interesting debate.
Lord O'Brien of Lothbury: My Lords, before the noble Lord. Lord Taylor, sits down, may I say for the record that I had intended to say that the one good thing to come out of the Restrictive Practices Court reference was the amount of information obtained. If that hastens reform, so much the better. I would not want anyone to think that I am against reform as such, but it has to be sensible reform in the proper quarter.
5.41 p.m.
Lord Cockfield: My Lords, I should like to start by congratulating my noble friend Lord Brabazon of Tara on a most interesting and well-informed maiden speech. He has a very direct knowledge of these matters. It is always of great value to have views expressed in your Lordships' House by someone with day to day experience of the matters about which he is talking. From this point of view, we were also most interested to hear from the noble Lord, Lord O'Brien, and the noble Lord, Lord Taylor of Gryfe, both of whom, while not members of the Stock Exchange, have a very close knowledge and experience of financial markets.
The noble Lord, Lord Bruce of Donington, referred to the Bill as being an interference with the due process of law. I cannot possibly accept that interpretation of what the Bill represents. The Bill is not an interference with the due process of law. It represents a decision by Government that the existing law is wrong and should be put right. Nor is it true that action of this kind is unprecedented. The noble Lord, Lord Bruce of Donington, is himself a distinguished accountant, and he will be well aware of numerous cases in which action not dissimilar to this has been taken in the fiscal field. May I refer him, for example, to Section 15(7) of the Finance Act 1971 which overturned the decision in Restorick v. Baker (47 Tax Cases 116)? The law in that case was changed retrospectively, the only exception being where there had been a determination by the commissioners or a court had actually given judgment. Again, Section 86 of the Finance Act 1981 overturned the decision in Berry v. Warnett despite the fact that in that case judgment had been given in the

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Court of Appeal and that judgment was under appeal to the House of Lords but not then decided. The position simply is that in matters of this kind the decision as to the content of the law is one for Parliament and the Bill therefore is a very proper Bill in that respect.
The noble Lord, Lord Bruce, also drew attention to the decline in the number and importance of private investors. We share his concern on this point, which is due, in part, to the nature of tax provisions which tend to favour investment through certain kinds of institutions. We would hope that the freeing up of the Stock Exchange under the proposals in the Bill will improve the opportunities open to private investors. The noble Lord, Lord Bruce, and, indeed, my noble friend Lord Boyd-Carpenter referred to the fact that the decision to refer the case to the Restrictive Practices Court—a decision which, incidentally, is taken by the director general and not by the Minister—had been upheld both by the right honourable gentleman who was Secretary of State for Trade in 1969, Mr. John Smith, and also by my right honourable friend Mr. John Nott, as he then was. Sir John Nott as he now is, in 1979. But both those decisions were taken very shortly after the first reference was made, and it would have been most remarkable if, at that stage, there had been a change in front. But many years have passed since then and there has been a very considerable change in the background against which a decision has to be taken. In particular—and I think it is important to make this point—the Stock Exchange has progressively shown a greater willingness to adapt itself and to abandon many of its restrictive practices. This is a factor of major importance. It was the judgment of Government that the continuation of the case would prevent the evolution of the Stock Exchange along lines that would result in greater competition and fewer restrictive practices.
The question was also raised by the noble Lord, Lord Bruce, and the noble Lord, Lord Mais, raised very much the same point, as to why the Stock Exchange was being removed completely from the ambit of the Restrictive Trade Practices Act and not merely for a period of time. We think that it would be undesirable and, indeed, unnecessary to introduce an exemption which would limit it in time in this way. In the extremely unlikely event of the kind of situation envisaged by the noble Lord, Lord Bruce of Donington, occurring (and the monitoring arrangements have been established specifically to enable the Government to see whether the agreement is being strictly observed) there would then be a totally new situation. What would then happen and what action should be taken would depend to a large extent on consideration of the conclusions reached by Professor Gowers' report on investment protection. As my noble friend Lord Brabazon of Tara has said, I, too, believe that the Stock Exchange, with its reputation for its word being its bond, will comply with the letter as well as with the spirit of the agreement that has been entered into.
The question was also raised by the noble Lord, Lord Bruce of Donington, and by the noble Lord, Lord Mais, of the date of 1986 which has been inserted into the agreement. That date relates only to the agreement to dismantle minimum commissions. It
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was set in effect as a terminal date but with the hope and expectation that much progress would be made long before that date occurred. But it was felt that, in view of the magnitude of the changes that were required, it was only right and proper to give the Stock Exchange sufficient time to absorb the impact of the changes.
So far as the other changes relating to membership, the appeals bodies, the introduction of outside capital, and so forth are concerned, no such date has been fixed. The reason for this is that we would expect these changes to be made more promptly than that and, indeed, there is every evidence that this is happening. The noble Lord, Lord Mais, suggested that the Secretary of State had ordered the Director General of Fair Trading to stop the proceedings. This was not so. When my right honourable friend announced to Parliament his intention that legislation of the kind we are now considering should be brought forward, the Stock Exchange applied to the court for an adjournment. The court granted such an adjournment to allow time for the legislation to be passed. The director general did not oppose the adjournment. Perhaps, at this stage, I may say—much the same point was made by the noble Lord, Lord Taylor of Gryfe—that the action of the director general in the pursuing of the Stock Exchange, if I may use that term in its technical sense, was one of the major factors in making the Stock Exchange willing and prepared to make very substantial changes in its rules and in its practices. The trouble, the difficulty or the problem that the Government originally faced in this field was the total unwillingness of the Stock Exchange to move. Against that background it is not surprising that both the right honourable gentlemen Mr. John Smith and my right honourable friend Sir John Nott (as he now is) should have felt that they could take no action on this case. But because of the pressures applied, the Stock Exchange has in fact made a very great movement in the direction of dismantling these restrictive practices.
On this point which was specifically raised by the noble Lord, Lord Mais, perhaps I might say—and I give this simply as a matter of information—that the director general identified 165 restrictions. Of those he was to challenge 59 as not being in the public interest, although of course the Stock Exchange did not accept that. The remainder of the restrictions he was not prepared to challenge. Of the 59 restrictions which were challenged, 52 relate to single capacity, minimum commissions or membership, which are the three major issues which we are now considering. That leaves a balance of only seven, six of which concern general regulation and one is an anti-tax avoidance provision to which I think no reasonable objection would be taken. So in fact what has happened is that the agreement which has been entered into by the Stock Exchange certainly deals with the major causes of concern in this field.
There was some suggestion from a number of noble Lords that the Government should closely follow developments and that the Stock Exchange should be required to report to Government what progress had been made. Of course, the monitoring arrangements which have been set in place are specifically designed for that purpose and it is intended very seriously that the Government themselves, through the Department

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of Industry, and the Bank of England, who have very great experience in this field, will be monitoring what goes on and will report to the Secretary of State. It follows, therefore, that information about what is happening in the Stock Exchange towards the implementation of these agreements will be a matter of public knowledge.
The noble Lord, Lord Mais, also raised the question of the EEC competition rules. The rules of the Stock Exchange have in fact been notified to the Commission in order to seek clearance under the competition rules. The Commission has not so far sought any changes in the rules of the Stock Exchange. Obviously I cannot forecast what future action might be taken by the European Community, but that is the position as it stands at present.
My noble friend Lord Boyd-Carpenter raised in some detail the question of why we should wait until 1986. I think that I have covered that point adequately. However, as I said in my speech at the beginning of this debate, the agreement is that there should be no unreasonable delay and 31st December 1986 is stated to be, "at the latest". Very considerable change has already occurred and we would expect to see this tempo of change continue.
The question of the involvement of the Council for the Securities Industry was raised by the noble Lord, Lord Taylor of Gryfe. Perhaps I might say that we have been in touch with the CSI. Our own judgment is that the Bank of England is a more appropriate body to monitor the performance of this agreement. The chairman of the CSI, Sir Patrick Neill, in fact issued a press notice on 29th July, when the Restrictive Practices Court adjourned the Stock Exchange case, expressing approval. We have undertaken to consult the CSI, and Sir Anthony Rawlinson, the Joint Permanent Secretary at the Department of Trade and Industry, met Sir Patrick Neill on 6th October.
I hope that I have answered the important issues which have been raised in the course of this debate. I should like to make one comment in conclusion. I realise that this is a contentious measure and I much appreciate the moderate terms in which views strongly held on both sides have been expressed.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Adjournment
The Earl of Swinton: My Lords, before I move the adjournment of the House, I am sure that it will be the wish of your Lordships that I, on behalf of all noble Lords, express to the Doorkeepers, who look after us so very well in this place, all best wishes for a very good dinner and a very happy evening.

British Railways Bill
Brought from the Commons; read a first time, and referred to the Examiners.
House adjourned at four minutes before six o'clock.